AINS22

Which one of the following best defines premature death? Select one: A. A death that occurs before a person reaches his or her life expectancy B. A death that occurs before a person retires C. A death due to illness D. A death due to accident

A. A death that occurs before a person reaches his or her life expectancy

The Johnson family leases an apartment. Under the lease, the Johnsons agree to assume all liability of the landlord arising out of the leased premises. This is an example of Select one: A. A hold-harmless agreement. B. Insurance. C. Hedging. D. Retention.

A. A hold-harmless agreement.

An example of an uninsured motor vehicle under the Personal Auto Policy (PAP) is Select one: A. A vehicle with insurance for bodily injury liability through a policy that has a limit for bodily injury liability that is less than that required by the state where the named insured's covered auto is principally garaged. B. A vehicle that is self-insured under state law. C. An old travel trailer placed on blocks in the woods and used as a hunting lodge. D. An uninsured dune buggy designed mainly for use on sand while being used on a beach.

A. A vehicle with insurance for bodily injury liability through a policy that has a limit for bodily injury liability that is less than that required by the state where the named insured's covered auto is principally garaged.

One of the effects of the Personal Injury Coverage endorsement on an HO-3 policy is to Select one: A. Add the definition of personal injury. B. Add liability coverage for bodily injury. C. Add definitions for bodily injury and property damage. D. Add liability coverage for medical payments.

A. Add the definition of personal injury.

The HO-3 policy excludes liability coverage for Select one: A. Any motor vehicle that is rented to others. B. A motorized golf cart owned by an insured and used on a golf course. C. A motorized vehicle not requiring registration that is designed for recreational use off public roads and owned by an insured, and used on an insured location. D. A motor vehicle in dead storage on an insured location.

A. Any motor vehicle that is rented to others.

Unlike in the HO-3 policy, the DP-3 policy conditions Select one: A. Are contained in a single section. B. Apply only to Coverage A C. Apply to both Section I and Section II. D. Are added by endorsement.

A. Are contained in a single section.

Provisions of the Ordinance or Law Coverage endorsement available to a mobilehome policyholder Select one: A. Are virtually identical to the Ordinance or Law provisions of the homeowners policy. B. Provide 10% of Coverage A limits as additional coverage. C. Allow for the flexibility of selecting a desired dollar-value limit. D. Do not provide coverage for debris removal.

A. Are virtually identical to the Ordinance or Law provisions of the homeowners policy.

A policy excludes losses that result from the insured's carelessness. Which one of the following best explains the purpose for this exclusion? Select one: A. Assist in managing morale hazards B. Assist in keeping premiums reasonable C. Eliminate coverages requiring special treatment D. Reduce likelihood of coverage duplications

A. Assist in managing morale hazards

If Mary hits Betty in the arm, Mary has committed Select one: A. Battery. B. Slander. C. Assault. D. Trespass.

A. Battery.

Dirk has a restored 1968 Mustang. Dirk has spent a lot of money and time bringing the car back to a like-new condition. Dirk insures the Mustang under his Personal Auto Policy (PAP) with collision and other than collision coverages. Dirk can best establish the value of the Mustang with his insurer by attaching which one of the following endorsements to his PAP? Select one: A. Coverage for Damage to Your Auto (maximum limit of liability) B. Named Non-Owner Coverage C. Extended Non-Owned Coverage—Vehicles Furnished or Available for Regular Use D. Miscellaneous Type Vehicle

A. Coverage for Damage to Your Auto (maximum limit of liability)

Under an ISO Mobilehome Endorsement, accidental damage to permanently installed furniture is Select one: A. Covered under Section I, Coverage A—Dwelling. B. Covered under Section I, Coverage B—Other Structures. C. Covered under Section I, Coverage C—Personal Property. D. Covered under Section I, Coverage D—Loss of Use.

A. Covered under Section I, Coverage A—Dwelling.

The primary method of post-loss policy analysis is the Select one: A. DICE method. B. Financial impact method. C. Formula method. D. Scenario analysis method.

A. DICE method.

In addition to primary rating factors, auto insurers may use additional rating factors that can reduce the cost of insurance to the policyholder. A credit for driver education is justified by regulators because Select one: A. Driver training can help reduce the frequency and severity of losses. B. Competition is increased by the availability of discounts. C. Inexperienced drivers must be charged higher rates. D. Children of existing policyholders are less likely to change insurers.

A. Driver training can help reduce the frequency and severity of losses.

Regarding the Personal Auto Policy (PAP), which one of the following includes details on coverage related to state-specific laws and regulations? Select one: A. Endorsements B. Declarations C. Part F—General Provisions D. Agreements and Definitions

A. Endorsements

Under an unendorsed HO-3 policy Section I, earthquake and other types of earth movement, such as landslides, mudslides, mudflows, mine subsidence, and sinkholes, are Select one: A. Excluded perils. B. Covered perils. C. Subject to a special sublimit. D. Covered in excess of a large deductible.

A. Excluded perils.

The conditions under which the insurer can nonrenew a Personal Auto Policy (PAP) vary according to the length of the policy period. If the policy period is less than six months, the insurer Select one: A. Has the right to nonrenew every six months, beginning six months after the policy's original effective date. B. Has the right to nonrenew every year, beginning twelve months after the policy's original effective date. C. Has the right to nonrenew every 60 days. D. Does not have the right to nonrenew.

A. Has the right to nonrenew every six months, beginning six months after the policy's original effective date.

A flood hazard boundary map Select one: A. Identifies flood prone areas in the community. B. Is prepared by the Army Core of Engineers. C. Is also known as a Flood Insurance Rate Map. D. Determines that a community will be flooded at least twice within a three year period.

A. Identifies flood prone areas in the community.

A family funds a retention program by maintaining a savings account for the purpose of paying for any losses that fall within the deductible of its homeowners policy. Which one of the following steps in the risk management process is the family following? Select one: A. Implementing selected risk management techniques B. Selecting appropriate risk management techniques C. Examining the feasibility of risk management techniques D. Analyzing loss exposures

A. Implementing selected risk management techniques

With respect to a nonowned vehicle, medical payments coverage under a Personal Auto Policy (PAP) Select one: 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. Is excess over other collectible auto insurance that pays medical expenses.

The major advantage of the tort liability system for compensation of auto accident victims is that Select one: A. It provides a remedy for victims of negligent or irresponsible drivers who cause accidents. B. It eliminates time delays in reaching a settlement. C. It is less costly than other alternative approaches. D. It does not allow punitive damage awards to be included as part of the compensation.

A. It provides a remedy for victims of negligent or irresponsible drivers who cause accidents.

Sammy is the named insured on an HO-3 policy covering his family's home. Sammy and his wife, Sally, have a young daughter, Suzie, and a grown-up son, Steve, who lives with them, and they own a cocker spaniel puppy. While a neighboring couple and their five-year-old son, Jay, were visiting, the puppy bit Jay. Jay suffered a serious wound and his parents sued Sammy and Sally. All of the following are insureds under the HO-3, EXCEPT: Select one: A. Jay B. Suzie C. Steve D. Sally

A. Jay

A family rents its vacation home to others for several months each year. A fire caused extensive damage to the home just before the rental season began one year, and the family was unable to collect any rent on the property until it was repaired. This inability to collect rent is an example of which one of the following outcomes of loss? Select one: A. Lost income B. Increased expenses C. Reduction in value of property D. Special damages

A. Lost income

The Dwelling Policy Form is issued to provide flood insurance for which one of the following properties? Select one: A. Manufactured mobile homes B. Residential cooperative building C. Nursing home D. Apartment building

A. Manufactured mobile homes

Which one of the following describes a rationale for underinsured motorist (UIM) coverage? Select one: A. Many at-fault motorists have insurance that meets the state minimum liability limits but are unable to fully compensate an injured person. B. It provides an insured with an excess layer of liability coverage to protect an insured that causes a catastrophic accident. C. Because UIM payments are taxable, UIM provides a revenue source for the state. D. UIM replaces medical payments coverage for those who cannot afford comprehensive policy packages.

A. Many at-fault motorists have insurance that meets the state minimum liability limits but are unable to fully compensate an injured person.

Marcia has sustained serious injuries in an automobile accident with another driver. If the no-fault automobile insurance law in Marcia's state permits her to sue the other driver for economic damages only if her economic damages exceed her no-fault coverage limit, what type of no-fault law applies in Marcia's state? Select one: A. Modified no-fault B. Pure no-fault C. Add-on no-fault D. Personal injury protection

A. Modified no-fault

Under the HO-3 policy, Coverage B—Other Structures applies to structures Select one: A. On the residence premises that are not attached to the dwelling and are separated from the dwelling by clear space. B. On the residence premises and attached to the residence premises by permanent structures. C. On the residence premises and more than 100 feet from the dwelling. D. Not on the residence premises but owned by the insured.

A. On the residence premises that are not attached to the dwelling and are separated from the dwelling by clear space.

An add-on plan adds no-fault benefits to auto insurance policies. A feature that distinguishes an add-on plan from a modified no-fault plan is that an add-on plan Select one: A. Places no restrictions on the injured person's right to sue a negligent party for economic or noneconomic damages. B. Restricts the right of the injured person to sue a negligent party for economic damages, but places no restrictions on the right to sue for noneconomic damages. C. Is subject to a verbal threshold. D. Is subject to a monetary threshold.

A. Places no restrictions on the injured person's right to sue a negligent party for economic or noneconomic damages.

The timeframe, beginning with the inception date, during which insurance coverage applies, is known as the Select one: A. Policy period. B. Coverage date. C. Rating period. D. Expiration date.

A. Policy period.

Which one of the following, under the Personal Auto Policy (PAP), best identifies an additional duty required under Part D—Coverage for Damage to Your Auto? Select one: A. Prevent further loss B. Provide proof of insurance C. Notify security D. Provide photographs

A. Prevent further loss

Which one of the following statements regarding assets exposed to loss is true? Select one: A. Real property includes only tangible property. B. Earthquake damage to a swimming pool is an example of a personal property loss exposure. C. Personal property includes only tangible property. D. Hail damage to a motor vehicle is an example of a real property loss exposure.

A. Real property includes only tangible property.

The Public or Livery Conveyance Exclusion Endorsement Select one: A. Reinforces the public or livery conveyance exclusion in the personal auto policy. B. Removes the public or livery conveyance exclusion in the personal auto policy. C. Replaces the public or livery conveyance exclusion in the personal auto policy. D. Raises the premium for the public or livery conveyance exclusion in the personal auto policy.

A. Reinforces the public or livery conveyance exclusion in the personal auto policy.

Technical words or phrases used in an insurance policy but not defined in the policy are given their Select one: A. Technical meanings. B. Legal meanings. C. Cultural meanings. D. Ordinary meanings.

A. Technical meanings.

Which one of the following statements is true regarding Coverage A—Dwelling as it applies to the dwelling on the "residence premises" listed on the HO-3 policy declarations page? Select one: A. The HO-3 could cover the entire building for a policyholder who owns a four-family home, lives in one unit, and rents the other units to tenants. B. Coverage A does not apply to structures attached to the dwelling, such as a garage or deck. C. When buying insurance, a homeowner should determine the Coverage A limit based on the cost to replace the dwelling including the cost of the land. D. The land at the residence premises is specifically included in the property coverage.

A. The HO-3 could cover the entire building for a policyholder who owns a four-family home, lives in one unit, and rents the other units to tenants.

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)? Select one: 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. The balance of the loan or lease amount for the vehicle

Some states' underinsured motorists (UIM) coverage endorsements contain a "damages trigger." In states that apply the UIM damages trigger, UIM coverage applies when Select one: A. The negligent driver carries liability insurance limits that are lower than the injured party's actual damages. B. The insured has failed to acquire medical payments coverage for any injuries received while occupying a motor vehicle. C. The insured has failed to maintain the minimum limits required for bodily injury liability. D. The negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party.

A. The negligent driver carries liability insurance limits that are lower than the injured party's actual damages.

The Schedule of Coverages indicates the coverage and limits that apply to each listed auto, along with Select one: A. The premium for each coverage. B. The primary location of an insured auto. C. Each auto and trailer specifically listed. D. Each auto and trailer's rating class.

A. The premium for each coverage.

Which one of the following is an exception to the Coverage E and F Business exclusion to the HO-3 policy? Select one: A. Volunteer activities B. A plumbing business operated from the home C. Activities generating income of $10,000 or less during the year preceding the policy period D. Home daycare services performed for neighbors for a fee

A. Volunteer activities

In states that apply the limits trigger in underinsured motorists (UIM) coverage situations, the UIM endorsement applies Select one: A. When the negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party. B. When the negligent driver carries liability limits that are lower than the injured party's actual damages. C. When the negligent driver carries liability limits above the limits provided by the UIM coverage of the injured party. D. When the negligent driver carries liability limits that are equal to the limits provided by the UIM coverage of the injured party.

A. When the negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party.

Donna owns a car insured by a Personal Auto Policy (PAP) with the minimum liability limits required by her state, $10/$20/$5. While on vacation in another state where the minimum liability limits are $15/$30/$5, she causes an accident. For purposes of that loss, her liability limits under her PAP are Select one: A. $10/$20/$5. B. $15/$30/$5. C. $15/$30/$10. D. $25/$50/$15.

B. $15/$30/$5.

Under an ISO Mobilehome Endorsement, Section I, Coverage B—Other Structures is no less than Select one: A. 2% of Coverage A. B. $2,000. C. 10% of Coverage A. D. $1,000.

B. $2,000.

Anne and Joe have a home with a $300,000 replacement cost and an HO-3 policy 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? Select one: A. $2,500 B. $3,125 C. $4,125 D. $5,000

B. $3,125

ABC Auto Insurance (ABC) is one of two servicing insurers in a state with a joint underwriting association (JUA), servicing 50% of the market. XYZ Auto Insurance (XYZ) is not a servicing insurer, but writes 25% of the voluntary auto insurance in the state. What percentage of the JUA's underwriting losses and expenses is XYZ's responsibility? Select one: A. 0% B. 25% C. 50% D. 75%

B. 25%

Which one of the following is considered real property? Select one: A. An automobile B. A brick storage shed C. Household appliances D. A motorhome

B. A brick storage shed

The Agreement and Definitions page of the Personal Auto Policy (PAP) includes Select one: 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. A general agreement stating that the insurer is providing the coverage subject to payment of premium and to the terms of the policy.

Jon is a 17-year-old driver with six speeding tickets and an at-fault accident. Jon has chosen insurance as his preferred method to meet the automobile financial responsibility law in his state. Jon's applications for insurance in the standard market have been declined. All of the following programs (if available in his state) would help Jon secure auto insurance, EXCEPT: Select one: A. A reinsurance facility B. A modified no-fault system C. An automobile insurance plan D. A specialized program in a voluntary market

B. A modified no-fault system

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

B. Amount payable.

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

B. Applies to damage to a parked insured vehicle resulting from a passenger in another parked vehicle opening its door.

Which one of the following is a primary way a community's residents can become eligible for flood insurance? Select one: A. Adding a special flood endorsement to their homeowners policy B. Applying to the Federal Insurance Adminstration to be included in the National Flood Insurance Program C. Petitioning the Governor to declare their community a flood disaster area D. Applying to the National Disaster Recovery Agency to be included in the National Flood Insurance Program

B. Applying to the Federal Insurance Adminstration to be included in the National Flood Insurance Program

Which one of the following is an exclusion to part A of the Personal Auto Policy (PAP)? Select one: A. Any organization responsible for the acts of a person using a covered auto B. Bodily injury to an insured's employee C. A prejudgement interest payment D. Bodily injury to any family members using a covered auto

B. Bodily injury to an insured's employee

Bob and Martha have an unendorsed HO-3 policy. They purchased a new home and leased furniture for the living room and dining room. The furniture leasing company asked to be added as an additional insured for the leased furniture. If they incur a covered loss to the leased property, a claim draft would likely be payable to Select one: A. Neither the named insured nor the loss payee. B. Both the named insured and the loss payee. C. The named insured only. D. The loss payee only.

B. Both the named insured and the loss payee.

Carol has an unendorsed HO-5 policy with adequate limits and a $500 deductible. Carol rented a place at the shore for a week in August. While she was on the beach a sudden rainstorm developed and Carol suffered water damage to her personal property from the rain through a window she had left open. To replace the damaged items it cost her $650. After depreciation the personal property was valued at $450. How much would Carol be able to collect from her insurer? Select one: A. Carol would not collect anything as the HO-5 does not cover rain damage through open windows. B. Carol would not collect anything as her policy covers actual cash value less the deductible. C. Carol would collect $450 as her deductible does not apply to off premises claims. D. Carol would collect $150 as the HO-5 policy is a replacement cost policy.

B. Carol would not collect anything as her policy covers actual cash value less the deductible.

All of the following are steps in the risk management process, EXCEPT: Select one: A. Identify loss exposures B. Combine loss exposures C. Examine the feasibility of risk management techniques D. Implement the selected risk management techniques

B. Combine loss exposures

The Millers insure their dwelling under an HO-3 policy. They recently purchased a shed for their back yard where they will store tools, bicycles, and other sporting equipment. Which one of the following property coverages under Section I of the HO-3 policy would apply to the shed? Select one: A. Coverage A—Dwelling B. Coverage B—Other Structures C. Coverage C—Personal Property D. Additional Coverage

B. Coverage B—Other Structures

For liability, medical payments, and uninsured motorists under the Personal Auto Policy (PAP), a replacement auto is Select one: A. Not covered for more the fourteen days unless the insured asks for the coverage. B. Covered for the remainder of the policy period, even if the insured does not ask for coverage. C. Not covered without prompt notice to the insurer. D. Covered for the remainder of the policy period in addition to the physical damage coverage.

B. Covered for the remainder of the policy period, even if the insured does not ask for coverage.

The Transportation Network Driver Coverage (No Passenger) endorsement uses the wording of the Public or Livery Conveyance Exclusion and includes an exception that Select one: A. Adds a transportation network platform definition. B. Covers share-the-expense carpooling and operation of an auto without passengers while the driver is logged into a transportation network platform. C. Provides coverage when the insured is logged into a transportation network platform until the driver accepts a passenger's request. D. Specifies that coverage does not apply to Part C—Uninsured Motorists Coverage.

B. Covers share-the-expense carpooling and operation of an auto without passengers while the driver is logged into a transportation network platform.

The first step in determining the premium for an HO-3 policy is Select one: A. Reviewing the claim history. B. Developing the base rate. C. Considering the endorsements added. D. Determining the deductible.

B. Developing the base rate.

In the insuring agreement of Part D—Coverage for Damage to Your Auto of the Personal Auto Policy (PAP), the insurer promises to pay for Select one: A. All accidents not caused by an insured driver. B. Direct and accidental loss to a covered auto. C. Any unintended accident caused by a declared driver. D. All losses within the deductible amount.

B. Direct and accidental loss to a covered auto.

In a state with a modified no-fault plan, how will the insurance companies pay the bodily injury expenses resulting from an automobile accident between two unrelated drivers insured with the required no-fault coverage? Select one: A. Each insurer will pay for the other driver's damages. B. Each insurer will pay for its own policyholder's damages. C. The insurers must determine which driver was greater than 50% at fault. The insurer of that driver will compensate both parties. D. The insurers must determine the percentage to which each driver was at fault. The insurers will compensate each driver based on those percentages.

B. Each insurer will pay for its own policyholder's damages.

Which one of the following sections of the Personal Auto Policy (PAP) would provide coverage for medical costs and loss of wages when the insured is injured by a hit-and-run driver? Select one: A. Part B—Medical Payments Coverage B. Part C—Uninsured Motorists Coverage C. Part D—Coverage for Damage to Your Auto D. Part A—Liability Coverage

B. Part C—Uninsured Motorists Coverage

In evaluating the effectiveness of financial responsibility laws in providing protection against irresponsible drivers, critics point out that they may provide inadequate indemnification for injuries because Select one: A. The legal system is continually eroding the effectiveness of the financial compensation laws by generating compensation for minor injuries. B. Financial responsibility laws require only minimum amounts of financial responsibility, which might not fully compensate the injured person. C. The insurance companies providing insurance that meet financial compensation laws are unable to compensate accident victims in a timely manner. D. The costs of auto accidents are increasing too rapidly for the financial responsibility laws to keep pace.

B. Financial responsibility laws require only minimum amounts of financial responsibility, which might not fully compensate the injured person.

A family suffered extensive fire damage to its home and was temporarily unable to inhabit it. The family was forced to rent a hotel room while its home was under repair. The cost incurred to rent the hotel room is referred to as which one of the following outcomes of loss? Select one: A. Lost income B. Increased expenses C. Reduction in value of property D. Special damages

B. Increased expenses

Brian recently purchased a home in a wind-prone area along the coast. He is considering the possibility that a hurricane may cause wind damage to his new property. This possibility is best described as a Select one: A. Peril. B. Loss exposure. C. Cause of loss. D. Financial consequence of loss.

B. Loss exposure.

A policy issued by a mutual insurer describes each insured's right to vote in the election of the board of directors. This description is most likely found in the policy's Select one: A. Conditions. B. Miscellaneous provisions. C. Declarations. D. Definitions.

B. Miscellaneous provisions.

Which one of the following statements is true regarding no-fault automobile insurance? Select one: A. Under a no-fault system, an injured person does not need to establish fault, but must prove negligence in order to collect payment for damages. B. Most no-fault laws apply only to bodily injury and not to property damage. C. No-fault laws typically provide no benefits for loss of earnings for an injured person. D. An injured party must sue to obtain medical expenses above a particular monetary threshold in all no-fault plans.

B. Most no-fault laws apply only to bodily injury and not to property damage.

In the auto insurance policy definitions, an eligible private passenger auto, pickup, or van of which the named insured becomes the owner during the policy period is a Select one: A. Temporary substitute vehicle. B. Newly acquired auto. C. Replacement auto. D. Trailer.

B. Newly acquired auto.

Beth has an unendorsed HO-3 policy. While cleaning the closet where she stores her stamp and coin collection, Beth spilled cleaning solution on one of the albums of stamps. The accident resulted in the loss of stamps valued at $500. Is this loss covered by Beth's HO-3 policy? Select one: A. Yes, it is within the special sublimit. B. No, this is not a covered peril. C. No, this is not a covered property. D. Yes, the loss exceeds the deductible.

B. No, this is not a covered peril.

Regarding property damage coverage under the Section II—Additional Coverages for Damage to Property of Others in the HO-3 policy, the insurer will Select one: A. Not pay for intentional property damage to a neighbor's home caused by a 12-year-old insured. B. Not pay for any damage to property owned by the insured. C. Pay for damage to property owned by a tenant of the insured. D. Pay for damage to property owned by a resident of the named insured's household.

B. Not pay for any damage to property owned by the insured.

The Bankruptcy of Insured provision of the Personal Auto Policy (PAP) states that if the insured declares bankruptcy or becomes insolvent, the insurer is Select one: A. Relieved of obligations under the policy. B. Not relieved of any obligations under the policy. C. Required to pay more than its obligations under the policy. D. Not allowed to recover damages from a third party that is legally liable for a loss.

B. Not relieved of any obligations under the policy.

Which one of the following terms contained in the HO-3 policy is defined as an accident, including continuous or repeated exposure to the same general harmful conditions? Select one: A. Loss B. Occurrence C. Claim D. Exposure

B. Occurrence

Off-premises theft coverage is available under the ISO Dwelling Policy program Select one: A. On an ACV basis under Coverage C—Personal Property. B. Only if on-premises coverage is purchased. C. Up to the policy limits for money, jewelry, and firearms. D. Only under the Limited Theft Coverage endorsement.

B. Only if on-premises coverage is purchased.

After a loss covered by a homeowners policy, an insured may find that repairs must be made under a newer, stricter building code. An endorsement that provides increased coverage for such a situation is the Select one: A. Supplemental Loss Assessment Coverage endorsement. B. Ordinance or Law—Increased Amount of Coverage endorsement. C. Change in Code endorsement. D. Loss Contingency endorsement.

B. Ordinance or Law—Increased Amount of Coverage endorsement.

Under the HO-3 policy Section I—Conditions, the Appraisal condition Select one: A. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. B. Outlines a method for resolving disagreements between the insured and the insurer. C. States that the insurer will adjust all losses with the insured or the insured's spouse, if a resident in same household. D. Bars an insured from bringing legal action against the insurer unless the insured has complied with all policy provisions.

B. Outlines a method for resolving disagreements between the insured and the insurer.

Regulators usually approve the use of auto insurance rating categories such as "standard," which results in normal premiums, and "nonstandard," which results in higher premiums, because Select one: A. They allow the application of discounts and credits. B. Policyholders receive equitable treatment based on the loss exposure they represent. C. The overall cost of insurance is usually reduced for the consumer. D. Competition among insurers requires them to discriminate high-risk exposures from average exposures.

B. Policyholders receive equitable treatment based on the loss exposure they represent.

Bob has a Personal Auto Policy (PAP) with physical damage coverages. Bob got up early one morning to go to work and found vandals had broken the rear window of his car during the night. Two nights later it rained heavily, which ruined the back seat upholstery. After a few days, Bob submitted a claim to his insurer. Which one of the Duties After an Accident or Loss in the PAP has Bob failed to comply with? Select one: A. Cooperation with the insurer B. Prevent further loss C. Permit inspection and appraisal D. Proof of loss

B. Prevent further loss

Most Fair Access to Insurance Requirements (FAIR) plans will not cover Select one: A. Properties which the voluntary market is unwilling to insure. B. Properties that are vacant or open to trespass. C. Properties that are susceptible to damage by riot or civil commotion. D. Properties in need of credit support.

B. Properties that are vacant or open to trespass.

The DP-3 policy provides Coverage A protection under which one of the following approaches? Select one: A. Named perils B. Risk of direct loss to property C. Universal coverage D. Domestic coverage

B. Risk of direct loss to property

Which one of the following statements is true regarding watercraft liability coverage under the HO-3 policy? Select one: A. Watercraft owned by the insured that is stored at a marina is not covered. B. Sailboats shorter than 26 feet owned by the insured are covered. C. Inboard watercraft with 50 horsepower engines owned by the insured are covered. D. Sailboats longer than 26 feet not owned by or rented to an insured are not covered.

B. Sailboats shorter than 26 feet owned by the insured are covered.

Which one of the following is an excluded peril under Section I—Coverages A and B of the HO-3 policy? Select one: A. Unintentional loss B. Settling of the dwelling C. Hail D. Accidental leak of water from plumbing

B. Settling of the dwelling

Marc and Kathi have a Personal Auto Policy (PAP). Their foster child Marie, who lives with them, just got her license. Which one of the following statements is correct with regard to Marie's PAP coverage? Select one: A. She is covered as long as Marie is an operator of a vehicle owned by Marc or Kathi. B. She is covered because Marie lives in the household. C. She is not covered because Marie is not related by blood. D. She is not covered since Marie has not been adopted by Marc and Kathi.

B. She is covered because Marie lives in the household.

The definitions section of the Personal Auto Policy (PAP) uses Select one: A. Legal terminology to help insureds understand how to file claims under the policy. B. Simple-to-understand language to define important words and phrases that are used throughout the policy. C. Technical language to explain insurance terminology to individuals who do not work in the industry. D. Complicated language to define important words and phrases that are used throughout the policy.

B. Simple-to-understand language to define important words and phrases that are used throughout the policy.

Which one of the following is a form of social insurance used by families and individuals to mitigate the financial uncertainty associated with their retirement loss exposures? Select one: A. Unemployment compensation B. Social Security C. 401(k) plans D. Individual retirement accounts (IRAs)

B. Social Security

Which one of the following would be an exception to the Coverages E and F Business exclusion to the liability coverage provided by the HO-3 policy? Select one: A. Charging neighborhood families for home daycare services B. Teenage son of named insured painting neighbor's fence in exchange for a few dollars C. Full-time landscaping business D. Full-time beauty salon in the home

B. Teenage son of named insured painting neighbor's fence in exchange for a few dollars

A Web designer breaks three fingers and is unable to type until her fingers heal one month later. However, she is able to continue to work on various Web-design concepts. This is an example of Select one: A. Temporary total disability. B. Temporary partial disability. C. Permanent total disability. D. Permanent partial disability.

B. Temporary partial disability.

Which one of the following statements concerning the Scheduled Personal Property Endorsement is true? Select one: A. The Section I deductible applies to scheduled items. B. The Coverage C special limits do not apply to scheduled items. C. Cameras cannot be scheduled under the endorsement. D. The endorsement covers fewer causes of loss than does the HO-3 policy.

B. The Coverage C special limits do not apply to scheduled items.

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? Select one: A. 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. B. The exclusion of other vehicles owned by the insured or available for insured's regular use applies. C. The exclusion of vehicles owned by or available for family member's regular use applies. D. 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.

All of the following could lead to a liability loss for a family, EXCEPT: Select one: A. A guest slips on an icy sidewalk in front of the family's home and breaks his leg. B. The father trips on a broom he left lying in the driveway and breaks his arm. C. The daughter, who is 16 years old, sideswipes a neighbor's car and dents its fender while driving her own car. D. The son, who is 13 years old, throws a rock at a classmate who requires stitches for an injury to his head.

B. The father trips on a broom he left lying in the driveway and breaks his arm.

If a motorist incurs the cost to repair his vehicle after a collision, this result is best described as Select one: A. An asset exposed to loss. B. The financial consequence of loss. C. A cause of loss. D. A peril.

B. The financial consequence of loss.

Under an HO-3 policy, an insured who is moving from one principal residence to another will have Select one: 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. The full limit of Coverage C available at both locations for 30 days.

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

B. The insured's reasonable expenses at the insurer's request.

Under the HO-3 policy, if the named insured or his or her spouse should die, Select one: A. The policy is automatically canceled. B. The insurer agrees to cover the decedent's legal representative as an insured to the extent that the decedent had an interest in the property covered in the policy. C. The insurer agrees to cover the decedent's entire estate, including property not covered by the policy. D. Any insureds found guilty of manslaughter or murder of the named insured or spouse cannot receive policy benefits.

B. The insurer agrees to cover the decedent's legal representative as an insured to the extent that the decedent had an interest in the property covered in the policy.

Under the cancellation condition in the HO-3 policy, Select one: A. Neither the policyholder nor the insurer can cancel the policy during the policy term. B. The policyholder may cancel the policy for any reason but the insurer can cancel the policy only for certain reasons set forth in state regulations. C. The policy can only be cancelled by mutual consent of the insured and the insurer. D. Either the policyholder or the insurer can cancel the policy for any reason.

B. The policyholder may cancel the policy for any reason but the insurer can cancel the policy only for certain reasons set forth in state regulations.

Coverage F—Medical Payments to Others in the homeowners policy applies to bodily injury to a residence employee in all of the following situations, EXCEPT: Select one: A. The residence employee is on the insured location but is not working B. The residence employee is away from the insured location and is not working C. The residence employee is away from the insured location but is working D. The residence employee is on the insured location and is working

B. The residence employee is away from the insured location and is not working

Insurers and other organizations that make insurance available to those who are unable to obtain coverage from the standard market are collectively called Select one: A. A reinsurance facility. B. The residual market. C. The secondary market. D. An automobile insurance plan.

B. The residual market.

Which one of the following is an excluded peril under Section I—Coverages A and B of the HO-3 policy? Select one: A. Volcanic eruption B. Theft of construction materials C. Aircraft D. Accidental leak of water from plumbing

B. Theft of construction materials

One disadvantage of the tort liability system for compensation of auto accident victims is that Select one: A. It does not provide a remedy for victims of irresponsible drivers who cause accidents. B. There are substantial time delays in reaching a settlement either through negotiation or through the courts. C. It does not allow punitive damage awards to be included as part of the compensation. D. The minimal amount of protection is generally not enough to meet the full needs of accident victims.

B. There are substantial time delays in reaching a settlement either through negotiation or through the courts.

Which one of the following is the most commonly used method of compensating auto accident victims? Select one: A. Financial responsibility laws B. Tort liability system C. Uninsured motorist coverage D. Unsatisfied judgment funds

B. Tort liability system

The Public or Livery Conveyance Exclusion Endorsement is designed to be attached to all personal auto policies (PAPs) Select one: A. With insureds who are drivers for a transportation network company (TNC) but not to PAPs with insureds who are not TNC drivers. B. Unless one of the Insurance Services Office, Inc. (ISO) transportation network driver endorsements is attached. C. In combination with the Transportation Network Driver Coverage (No Passenger) Endorsement. D. And applies to only Part A—Liability Coverage.

B. Unless one of the Insurance Services Office, Inc. (ISO) transportation network driver endorsements is attached.

Most households choose risk management techniques by Select one: A. Analyzing loss timing. B. Using financial criteria. C. Analyzing loss control requirements. D. Using nonfinancial criteria.

B. Using financial criteria.

Under Coverage E—Personal Liability of the HO-3 policy, the insurer's obligation to defend ends Select one: A. When policy limits are exhausted by the claim expenses. B. When the liability limit for the occurrence is exhausted by payment of a settlement or judgment. C. When the cost of defense exceeds the personal liability limits. D. When the costs of defense limits are exhausted.

B. When the liability limit for the occurrence is exhausted by payment of a settlement or judgment.

Is accidental loss to tapes, records, disks, or other media owned by the named insured or the named insured's family member covered under the Excess Electronic Equipment Coverage endorsement? Select one: A. Yes, for an unlimited amount. B. Yes, but the media must be in or upon the covered auto or any nonowned auto at the time of the loss. C. No, because the endorsement only covers equipment that is permanently installed in a vehicle. D. No, loss of the tapes, records, disks, and other media is excluded by this endorsement.

B. Yes, but the media must be in or upon the covered auto or any nonowned auto at the time of the loss.

Liana insured her car with a Personal Auto Policy (PAP) that has split limits for liability coverage of $100/$300/$75. She was found by a court to be at fault for an accident that injured the other driver and ordered to pay a judgment of $98,000, plus $6,000 in prejudgment interest. How much will Liana's insurer pay under her PAP? Select one: A. $92,000 B. $98,000 C. $100,000 D. $104,000

C. $100,000

Jack and Gabriela rent the second floor of a two-family dwelling. They have an unendorsed HO-4 policy with a Coverage C—Personal Property limit of $90,000. Due to a fire on the first floor of the dwelling, Jack and Gabriela were forced to stay in a motel for five nights. The motel costs were $100 a night and they spent $50 a day on meals. They estimate their normal food budget to be $15 a day. There was no damage to the second floor of the dwelling or any of Jack and Gabriela's personal property, so they submitted a claim for $750 to their insurer. How much, if any, will their insurer pay? Select one: A. $0 B. $500 C. $675 D. $750

C. $675

A claim for money damages because of injury to another party or damage to another party's property best describes Select one: A. A tort. B. Errors and omissions. C. A liability loss. D. A property loss exposure.

C. A liability loss.

A state's no-fault automobile insurance law permits an injured party to sue the responsible party for noneconomic loss if the victim's medical and lost-wage expenses exceed $5,000. This feature of the no-fault law illustrates Select one: A. A deductible. B. An unsatisfied judgment fund. C. A monetary threshold. D. A verbal threshold.

C. A monetary threshold.

Underemployment occurs when Select one: A. A person loses his job. B. A person's unemployment is voluntary. C. A person's work hours are reduced. D. An employee is terminated for performance-related reasons.

C. A person's work hours are reduced.

Doris owns jewelry appraised at $10,000. She would like insurance coverage that will protect her jewelry for its appraised value. Doris also would like broad coverage for her jewelry in case she accidentally loses a piece or a stone falls out of a ring. Assuming that she purchased an HO-3 policy, which one of the following will provide the coverage she wants? Select one: A. An HO-3 with a Supplemental Loss Assessment Coverage endorsement with a $10,000 limit B. The unendorsed HO-3 C. An HO-3 with a Scheduled Personal Property endorsement scheduling all of the jewelry D. An HO-3 with a Scheduled Personal Property endorsement scheduling $9,000 of the jewelry, on top of the $1,000 coverage limit provided by the HO-3

C. An HO-3 with a Scheduled Personal Property endorsement scheduling all of the jewelry

The Auto Loan/Lease coverage endorsement of the Personal Auto Policy (PAP) amends physical damage coverage for leased vehicles or vehicles with outstanding loan amounts to include Select one: A. Penalties imposed under a lease for excessive use. B. Penalties imposed under a lease for high mileage. C. An unpaid amount due on the lease or loan. D. Costs for extended warranties.

C. An unpaid amount due on the lease or loan.

Following an accident with an uninsured motorist, Renee submitted an uninsured motorists claim to her Personal Auto Policy (PAP) insurer. The insurer made her an offer of settlement, which Renee rejected because she suspected her injury was more severe than the initial indications. The claim adjuster believes Renee's shoulder injury might have resulted from her years of playing golf. Renee and the adjuster are unable to come to an agreement. This claim can best be resolved through Select one: A. A proportional sharing between Renee's personal health care insurer and the personal automobile insurer. B. Negotiation between Renee's medical provider and the personal automobile insurer. C. Arbitration. D. Subrogation.

C. Arbitration.

In a state with a reinsurance facility for high-risk drivers, a private insurer that does not want to bear the risk of a high-risk applicant may Select one: A. Assign the application to the reinsurance facility to be underwritten and serviced. B. Accept and service the policy, but collect excess losses from the reinsurance facility. C. Assign the premium and losses to the reinsurance facility, and continue to service the policy. D. Accept the application, but assign servicing and losses to members of the reinsurance facility pool on a proportional basis.

C. Assign the premium and losses to the reinsurance facility, and continue to service the policy.

Some types of personal property are excluded under Coverage C of the HO-3 policy. Which one of the following is excluded from this personal property coverage? Select one: A. The insured's clothing while on a cruise ship B. A daughter's property in a college dormitory C. Birds owned by the named insured D. A laptop borrowed from a neighbor

C. Birds owned by the named insured

Bo was injured in an auto accident while using his car as a taxicab. Bo's car is covered by a Personal Auto Policy (PAP) that included medical payments coverage. Which one of the following statements about Bo's coverage for the accident is correct? Select one: A. Bo will receive medical payments under the PAP under the Public or Livery Conveyance coverage provision. B. Bo will receive medical payments under the PAP under the Vehicles Used in the Business of an Insured coverage provision. C. Bo will not receive medical payments under the PAP because of the Public or Livery Conveyance exclusion. D. Bo will not receive medical payments under the PAP because of the Taxi and Omnibus exclusion.

C. Bo will not receive medical payments under the PAP because of the Public or Livery Conveyance exclusion.

In general, a loss prevention measure is implemented to Select one: A. Spread loss exposures over numerous projects or products. B. Reduce loss severity. C. Break the sequence of events that leads to a loss. D. Keep backup information and assets in reserve.

C. Break the sequence of events that leads to a loss.

For a building or contents to be eligible for coverage under the National Flood Insurance Program, the Select one: A. Community must supplement the individual's costs. B. Owner must also purchase loss of use coverage. C. Building must be located in a participating community D. Owner must always be part of the emergency program.

C. Building must be located in a participating community

In the context of assets exposed to loss, elements such as fire, wind, hail, and theft are best described as examples of Select one: A. Real property exposures. B. Personal property exposures. C. Causes of loss. D. Consequences of property losses.

C. Causes of loss.

In the context of assets exposed to loss, long-term illness and loss of employment are best described as examples of Select one: A. Real property exposures. B. Personal property exposures. C. Causes of loss. D. Consequences of loss.

C. Causes of loss.

Which one of the following indicates persons or organizations, such as a loss payee, that have additional coverage interests under an insurance policy? Select one: A. Conditions B. Insuring agreements C. Declarations D. Definitions

C. Declarations

Under the Section II—Conditions of the HO-3 policy, the bankruptcy of the insured Select one: A. Relieves the insurer of its obligations at the discretion of the federal bankruptcy court. B. Relieves the insurer of its obligations to the same extent that the insured is relieved of its obligations. C. Does not relieve the insurer of its obligations. D. May relieve the insurer of its obligations under certain chapters of the bankruptcy code.

C. Does not relieve the insurer of its obligations.

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? Select one: A. Insurance score B. Claim history C. Dwelling location D. Package policy credits

C. Dwelling location

The Part B—Medical Payments Coverage of the Personal Auto Policy (PAP) contains an Other Insurance provision. If two automobile policies from different insurers cover the same owned vehicle, Select one: A. The policy with the lower limit of liability is primary. B. The policy with the lower limit of liability is excess. C. Each insurer pays its pro rata share. D. The first insurer to receive notice of the claim becomes primarily liable.

C. Each insurer pays its pro rata share.

The HO-3 policy Section I ordinance or law exclusion Select one: A. Applies to insured other structures but not dwellings. B. Applies to insured dwellings but not other structures. C. Eliminates coverage for losses resulting from any ordinance or law that reduces the value of the property or that requires testing for or cleaning up of pollutants. D. Eliminates coverage for the destruction, confiscation, or seizure by order of any governmental or public authority.

C. Eliminates coverage for losses resulting from any ordinance or law that reduces the value of the property or that requires testing for or cleaning up of pollutants.

Which one of the following is the best selection of a reason why Part D—Coverage for Damage to Your Auto in a Personal Auto Policy (PAP) requires deductibles? Select one: A. Increases premiums B. Induces the number of small claims C. Encourages policyholder responsibility D. Discourages carefulness

C. Encourages policyholder responsibility

The temporary map that is designed to identify flood-prone areas in the community is referred to as a(n) Select one: A. Flood Insurance Rate Map (FIRM). B. Emergency program. C. Flood hazard boundary map. D. Special flood hazard area (SFHA).

C. Flood hazard boundary map.

Which one of the following homeowners forms provides the broadest property coverage of any of the standard unendorsed homeowners forms? Select one: A. HO-8 policy. B. HO-3 policy. C. HO-5 policy. D. HO-2 policy.

C. HO-5 policy.

Jim and Sue, a young married couple, are under contract to purchase a condominium unit. Which one of the following ISO policy forms is best designed to meet their homeowners insurance needs? Select one: A. HO-2—Broad Form B. HO-4—Contents Broad Form C. HO-6—Unit-Owners Form D. HO-8—Modified Coverage Form

C. HO-6—Unit-Owners Form

Felipe purchases flame-retardant roofing for his house. Which one of the following steps in the risk management process is Felipe following? Select one: A. Examining the feasibility of risk management techniques B. Selecting appropriate risk management techniques C. Implementing the selected risk management techniques D. Analyzing loss exposures

C. Implementing the selected risk management techniques

Which one of the following is a potential disadvantage of auto financial responsibility laws? Select one: A. There are significant legal costs related to pursuing a case to judgment. B. They create substantial time delays in reaching settlements. C. Injured persons might not be fully indemnified for their injuries. D. They guarantee payment to all accident victims.

C. Injured persons might not be fully indemnified for their injuries.

An insurance policy contains the following statement: "We will pay all sums resulting from bodily injury or property damage to others for which the insured is legally liable." This is an example of a(n) Select one: A. Declaration. B. Condition. C. Insuring agreement. D. Miscellaneous provision.

C. Insuring agreement.

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) Select one: A. Are specifically excluded from coverage. B. Is primary for medical and funeral expenses. C. Is excess over other collectible auto insurance that pays medical expenses. D. Is shared on a pro rata basis.

C. Is excess over other collectible auto insurance that pays medical expenses.

Which one of the following best identifies an insured under Part C—Uninsured Motorists Coverage of the Personal Auto Policy (PAP)? Select one: A. Passengers in a covered auto who suffer bodily injury caused by an insured motorist B. A surviving neighbor of an insured killed in an accident caused by an uninsured driver C. Members of the named insured's family who as pedestrians are injured by an uninsured motorist D. Occupants of an uninsured vehicle that collides with the insured vehicle

C. Members of the named insured's family who as pedestrians are injured by an uninsured motorist

In order to determine the amount of life insurance to purchase, the Smith family is estimating its future financial needs after considering Social Security and other available income and assets. Which one of the following approaches is the Smith family using to determine the amount of life insurance it needs? Select one: A. Exposure-based B. Human life value C. Needs-based D. Defined benefit

C. Needs-based

Which one of the following statements is generally true about beachfront and windstorm plans? Select one: A. Applications are only accepted when a hurricane has formed within a certain distance of where the property is located. B. Only requests for increase in limits are accepted when a hurricane has formed within a certain distance of where the property is located. C. No applications or requests for increase in limits are accepted when a hurricane has formed within a certain distance of where the property is located. D. Eligible properties must apply for coverage when a hurricane has formed within a certain distance of where the property is located, or disaster relief will not be available from the state.

C. No applications or requests for increase in limits are accepted when a hurricane has formed within a certain distance of where the property is located.

The HO-3 policy provides Select one: A. Named perils coverage on other structures. B. Open perils coverage on personal property. C. Open perils coverage on dwellings. D. Named perils coverage on dwellings.

C. Open perils coverage on dwellings.

In addition to general duties under a Personal Auto Policy (PAP), a person seeking coverage under Part C—Uninsured Motorists Coverage must perform additional duties. Which one of the following is one of these additional duties? Select one: A. Submit to a physical examination conducted by a doctor chosen by the insurer B. Promptly notify police if a covered auto is stolen C. Promptly notify police if a hit-and-run driver was involved in the accident D. Permit inspection and appraisal

C. Promptly notify police if a hit-and-run driver was involved in the accident

Auto insurance protects against Select one: A. Property and premature death loss exposures. B. Property loss exposures only. C. Property and liability loss exposures. D. Liability loss exposures only.

C. Property and liability loss exposures.

Personal property coverage for watercraft is Select one: A. Provided by the homeowners policy and the DP-3 policy for watercraft under 25 horsepower. B. Excluded by the homeowners and DP-3 policies. C. Provided on a limited basis for rowboats and canoes under both the homeowners policy and the DP-3 policy. D. Excluded by the DP-3 policy but covered on a limited basis under the homeowners policy.

C. Provided on a limited basis for rowboats and canoes under both the homeowners policy and the DP-3 policy.

In homeowners policy rating, the base premium is based on several factors. Which one of the following is one of these factors? Select one: A. Package policy credits B. Insurance score C. Public protection class D. Claim history

C. Public protection class

Which one of the following is a component of the Personal Auto Policy (PAP) declarations page? Select one: A. Duties after an accident B. Provisions for cancellation of the policy C. Rating information D. Agreement and definitions

C. Rating information

Policy provisions of the mobilehome policy Select one: A. Are the same as those of the homeowners form. B. Differ widely from those of the homeowners form. C. Revise those of the homeowners form. D. Form the basis for those of the homeowners form.

C. Revise those of the homeowners form.

Installing burglar alarms, storing vehicles in a garage, and maintaining vehicles in good working order are all examples of which one of the following? Select one: A. Risk retention B. Transfer of risk C. Risk control D. Insuring loss exposures

C. Risk control

The deductible, which appears on the declarations pages of a homeowners policy, is deducted from Select one: A. All loss payments. B. The total of all losses during the policy period. C. Section I (property) losses. D. Section II (liability) losses.

C. Section I (property) losses.

John receives $600 cash in exchange for his computer and decides to keep half of it in his house and half of it in his parents' house until he can deposit it in the bank. Which one of the following risk management techniques is John practicing? Select one: A. Duplication B. Diversification C. Separation D. Avoidance

C. Separation

All of the following are policy conditions that apply to both Sections I and II of the HO-3 policy, EXCEPT: Select one: A. Death B. Liberalization C. Severability of Insurance D. Nonrenewal

C. Severability of Insurance

Which one of the following statements is true regarding automobile insurance rating? Select one: A. State regulators require that all insurers offer discounts on auto rates for passive restraints. B. Most insurers base automobile rates on primary rating factors and do not consider any other factors in establishing rates. C. State regulators require that rates be adequate, reasonable, and not unfairly discriminatory. D. Drivers with lower-than-average loss exposure are charged higher rates.

C. State regulators require that rates be adequate, reasonable, and not unfairly discriminatory.

While driving on a work-related sales call, a motorist is injured in an auto accident and is unable to work for three months, after which he makes a full recovery. This is an example of a Select one: A. Temporary partial disability. B. Permanent partial disability. C. Temporary total disability. D. Permanent total disability.

C. Temporary total disability.

Which one of the following is the primary risk to financial assets for a retiree? Select one: A. That the retiree will lose regular employment income B. That the retiree will lose employer-provided benefits C. That the assets allocated for retirement will be insufficient D. That the retiree will die prematurely

C. That the assets allocated for retirement will be insufficient

After using the DICE method to determine whether a claim is covered by a policy, the next step is for the insurer to determine Select one: A. The scenario under which the loss occurred. B. Whether the post-lost duties of the insured affect coverage. C. The amount payable. D. Whether the loss occurred within the coverage territory.

C. The amount payable.

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? Select one: 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.

C. The insured is entitled to UM coverage from the bus company's policy but not from his own PAP.

According to Part D—Coverage for Damage to Your Auto of a Personal Auto Policy (PAP), the insurer's limit of liability for a physical damage loss to a covered auto is Select one: A. The lower of the cost to repair the vehicle or the total loss value. B. The "blue book" value of the vehicle, taking into consideration the odometer reading and the vehicle condition. C. The lower of the actual cash value or the amount necessary to repair or replace the property with other property of like kind and quality. D. The estimated value as established by at least two auto appraisers.

C. The lower of the actual cash value or the amount necessary to repair or replace the property with other property of like kind and quality.

For a personal loss exposure to be present Select one: A. An actual loss must occur. B. An individual or family must cause another person to suffer injury or loss. C. The possibility of loss must exist. D. An individual or family must own their residence.

C. The possibility of loss must exist.

Mary is a transportation network driver. The transportation network company (TNC) she drives for provides a commercial policy that begins when a passenger enters Mary's personal auto. Based on this, which one of the following should Mary add to her personal auto policy (PAP)? Select one: A. Transportation Network Platform Definition Endorsement B. Limited Transportation Network Driver Coverage (No Passenger) Endorsement C. Transportation Network Driver Coverage (No Passenger) endorsement D. Public or Livery Conveyance Exclusion Endorsement

C. Transportation Network Driver Coverage (No Passenger) endorsement

A company that uses a mobile application or website to connect riders with drivers and arrange transportation in a personal auto for a fee is called a Select one: A. Personal auto company. B. Livery conveyance. C. Transportation network company. D. Limited transportation network.

C. Transportation network company.

In states that apply the damages trigger in underinsured motorists (UIM) coverage situations, the UIM endorsement applies Select one: A. When the negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party. B. When the negligent driver carries liability limits above the limits provided by the UIM coverage of the injured party. C. When the negligent driver carries liability limits that are lower than the injured party's actual damages. D. When the negligent driver carries liability limits that are equal to the limits provided by the UIM coverage of the injured party.

C. When the negligent driver carries liability limits that are lower than the injured party's actual damages.

Examining policy conditions can help the insurance professional clarify which one of the following points? Select one: A. Whether the property is covered B. Whether the cause of loss is covered C. Whether the post-loss duties of the insured and the insurer affect coverage D. Whether coverage exists if an insured party breaches the insuring agreement

C. Whether the post-loss duties of the insured and the insurer affect coverage

Phil was unable to obtain homeowners insurance for his desert canyon home through his private insurer because the area is subject to brush fires, so he was forced to obtain it through the local FAIR plan. Will Phil's private insurer likely be willing to provide theft coverage for this property? Select one: A. Yes, most FAIR plans provide theft coverage, so any private coverage would be excess. B. No, If FAIR plan coverage is provided, private insurance is not available. C. Yes, because fire is the primary loss exposure, and fire coverage is provided by the FAIR plan. D. No, because the private insurer would be forced to provide fire coverage as well, which is unacceptable to the insurer.

C. Yes, because fire is the primary loss exposure, and fire coverage is provided by the FAIR plan.

Jill and Tom have a home with a $300,000 replacement cost and an HO-3 policy with a Coverage A limit of $270,000. 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? Select one: A. $2,500 B. $3,000 C. $4,500 D. $5,000

D. $5,000

Li insured his car with a Personal Auto Policy (PAP) that has split limits for liability coverage of $50/$100/$25. He was found by a court to be at fault for an accident that injured the other driver and ordered to pay a judgment of $45,000, plus $5,000 in prejudgment interest. How much will Li's insurer pay under his PAP? Select one: A. $25,000 B. $30,000 C. $45,000 D. $50,000

D. $50,000

Which one of the following would qualify as a temporary substitute vehicle under a personal automobile policy? Select one: A. A van rented by an insured during a household move B. A trailer borrowed from a neighbor to transport a horse C. A company car used by an employee to run an errand for the employer D. A car rented by an insured while her own insured auto is being repaired

D. A car rented by an insured while her own insured auto is being repaired

All of the following items are examples of personal property, EXCEPT: Select one: A. A diamond wedding ring B. A set of cookware C. A fishing boat D. A detached garage

D. A detached garage

All of the following information is provided on the declarations page of a Personal Auto Policy (PAP), EXCEPT: Select one: A. A schedule of coverages B. A description of the insured autos C. The name of the insurer providing the coverage D. A schedule of policy conditions

D. A schedule of policy conditions

The Personal Auto Policy (PAP) contains a section outlining several important duties with which the insured must comply in order for the policy to provide coverage. Which one of the following is a general duty under the Personal Auto Policy (PAP)? Select one: A. Provide prompt notice to the state insurance department regarding the accident or loss B. Agree to submit to a physical examination at the insured's own expense C. Submit the state required regulatory compliance forms to the insurer within a reasonable amount of time D. Agree to an examination under oath if required by the insurer

D. Agree to an examination under oath if required by the insurer

A plan for insuring high-risk drivers, in which all auto insurers doing business in the state are assigned their proportionate share of high-risk drivers based on the total volume of automobile insurance written in a state, is Select one: A. A joint underwriting association. B. A reinsurance facility. C. Excess and surplus lines. D. An automobile insurance plan.

D. An automobile insurance plan.

An individual is concerned about dying in a train crash and chooses not to travel by rail. This is an example of Select one: A. Diversification. B. Separation. C. Loss prevention. D. Avoidance.

D. Avoidance.

Chris drives a late-model, high-performance car. He was recently involved in an intersection collision in which the other driver was at fault. Chris's car required $2,000 in repairs. Chris has now received a renewal notice for his auto insurance policy, and he noticed that his premium had decreased. Why might this occur? Select one: A. Insurers provide discounts for high-performance vehicles because they are more likely to be driven by experienced drivers. B. Chris's insurance company was able to recover the amount paid to him for his damages in the accident from the other party. C. The circumstances of the accident placed Chris in a safe-driver category, lowering his premiums. D. Competition among insurers for automobile business is intense. Chris's insurance company might be competing against other insurers.

D. Competition among insurers for automobile business is intense. Chris's insurance company might be competing against other insurers.

The Personal Auto Policy (PAP) contains a section outlining several important duties with which the insured must comply in order for the policy to provide coverage. Which one of the following is a general duty under the Personal Auto Policy (PAP)? Select one: A. Provide prompt notice to the state insurance department regarding the accident or loss B. Agree to submit to a physical examination at the insured's own expense C. Submit the state required regulatory compliance forms to the insurer within a reasonable amount of time D. Cooperate with the insurer in the investigation, settlement, or defense of any claim or suit related to the accident or loss

D. Cooperate with the insurer in the investigation, settlement, or defense of any claim or suit related to the accident or loss

Which one of the following is an example of a supplementary payment under the liability coverage of the Personal Auto Policy (PAP)? Select one: A. Emergency response assessment B. Traffic violation fines C. Pre-verdict interest D. Cost of bail bonds

D. Cost of bail bonds

A family must live in a temporary apartment until the damage to their residence caused by a covered cause of loss has been repaired. The HO-3 policy Coverage D—Loss of Use would likely cover all of the following expenses, EXCEPT: Select one: A. Laundromat costs to wash their sheets, and towels, and clothes B. Rental expenses for the temporary apartment C. Commuting costs for the extra 10 miles to work each day D. Food costs to prepare meals in the apartment

D. Food costs to prepare meals in the apartment

Sue and Rich are under contract to purchase a historic home in a city where local property values, including the value of the historic home, are far below replacement cost. Which one of the following ISO homeowners policies would likely be most suitable for Sue and Rich? Select one: A. HO-2—Broad Form B. HO-4—Contents Broad Form C. HO-6—Unit-Owners Form D. HO-8—Modified Coverage Form

D. HO-8—Modified Coverage Form

Most beachfront and windstorm plans provide coverage for which one of the following exposures in addition to windstorm? Select one: A. Erosion B. Fire C. Flood D. Hail

D. Hail

In general, which one of the following is the most effective risk management technique for managing a family's property and liability loss exposures? Select one: A. Retention B. Avoidance C. Noninsurance risk transfer D. Insurance

D. Insurance

The Personal Injury endorsement to a homeowners policy adds an additional liability insuring agreement expanding the homeowners policy to cover personal injury, which includes all of the following, EXCEPT: Select one: A. Publishing oral or written material involving libel, slander, or invasion of privacy B. False arrest, detention, or imprisonment C. Malicious prosecution D. Intentionally publishing material known to be false

D. Intentionally publishing material known to be false

The application of two or more underinsured motorists (UIM) coverage limits to a single auto accident because two or more separate policies apply is called Select one: A. Other insurance stacking. B. Pro rata stacking. C. Intrapolicy stacking. D. Interpolicy stacking.

D. Interpolicy stacking.

Personal liability coverage under the DP-3 policy Select one: A. Is not available. B. Is provided under Section II. C. Is only provided if a limit for Coverage E is shown on the declarations page. D. Is available using the personal liability supplement.

D. Is available using the personal liability supplement.

Which one of the following accurately describes the coverage modification created by the Mobilehome Endorsement (MH 04 01) when it is attached to the HO-3 policy? Select one: A. Section I loss settlement condition is changed to actual cash value (ACV) for all Coverage A items. B. Section II—Liability Coverages are limited to exclude coverage for all watercraft and motor vehicles. C. Coverage B—Other Structures is 50% of the limit that applies to Coverage A. D. It provides up to $500 for reasonable expenses incurred for the removal and return of the mobile home if it is endangered by an insured peril.

D. It provides up to $500 for reasonable expenses incurred for the removal and return of the mobile home if it is endangered by an insured peril.

An individual's liability losses Select one: A. May not exceed the value of his or her real property. B. May not exceed the value of all of his or her assets, including both personal and real property. C. May not exceed the amount of his or her current income. D. May consume most of his or her present assets and future income.

D. May consume most of his or her present assets and future income.

In an HO-3 policy, the definitions Select one: A. Are the same as dictionary definitions. B. Must comply with applicable provisions. C. Have no effect on the coverage provided. D. Might be different from dictionary definitions.

D. Might be different from dictionary definitions.

Which one of the following causes of loss is covered under the other than collision (OTC) section of the Personal Auto Policy (PAP)? Select one: A. Hitting a tree B. Overturn from the driver losing control C. Hitting another car D. Missiles or falling objects

D. Missiles or falling objects

Lori has a company car with insurance coverage provided by her employer and does she not own a car. On occasion, Lori helps her elderly grandmother, Nell. Lori occasionally drives Nell's car to pick up prescriptions. Lori knows that Nell has low limits of liability and is afraid that Nell might allow the insurance on her car to lapse. What coverage can Lori purchase to provide insurance for herself when she drives Nell's car? Select one: A. A Personal Auto Policy (PAP) covering her company car B. Miscellaneous Type Vehicle endorsement attached to a PAP C. Extended Non-Owned Coverage for Named Individual endorsement attached to a PAP D. Named Non-Owner Coverage endorsement attached to a PAP

D. Named Non-Owner Coverage endorsement attached to a PAP

The Definitions section of the Personal Auto Policy (PAP) defines several words and phrases. Which one of the following words is used in connection with Part B—Medical Payments Coverage and Part C—Uninsured Motorists Coverage, clarifying the coverages provided? Select one: A. Trailer B. Property damage C. Leased Vehicles D. Occupying

D. Occupying

Within the Personal Auto Policy (PAP), the name of a lender, loss payee, or lienholder is usually shown Select one: A. On the schedule of coverages. B. In the definitions section. C. In the insuring agreement. D. On the Declarations page.

D. On the Declarations page.

The HO-5 policy is designed to meet the risk management needs of Select one: A. Owners of condominium units. B. Owner-occupants of dwellings who may not meet insurer underwriting standards required for other policy forms. C. Tenants of apartments or dwellings. D. Owner-occupants of dwellings who would like the broadest coverage available among ISO's forms for their property.

D. Owner-occupants of dwellings who would like the broadest coverage available among ISO's forms for their property.

All of the following are usually analyzed as part of the DICE method of policy analysis, EXCEPT: Select one: A. Declarations B. Insuring agreement C. Exclusions D. Past loss experience

D. Past loss experience

Homeowners insurance protects against Select one: A. Property loss exposures only. B. Property and premature death loss exposures. C. Liability loss exposures only. D. Property and liability loss exposures.

D. Property and liability loss exposures.

Beachfront and windstorm plans are state-sponsored insurance plans whose primary purpose is to Select one: A. Provide flexible coverage to fill gaps in the National Flood Insurance Program's flood coverages. B. Provide a state-based alternative to the federally operated flood insurance programs. C. Restrict construction and limit land use in coastal areas exposed to heavy windstorm losses. D. Provide property insurance in coastal areas exposed to heavy windstorm losses.

D. Provide property insurance in coastal areas exposed to heavy windstorm losses.

Under the uninsured motorists (UM) coverage provisions of the Personal Auto Policy (PAP), coverage for an accident in which the insured is injured while occupying a vehicle the named insured does not own is Select one: A. Not provided. B. Provided on a pro rata basis. C. Provided on a primary basis. D. Provided on an excess basis.

D. Provided on an excess basis.

Property insurance coverage on dwellings and other structures covering all causes of loss not specifically excluded is known as Select one: A. Functional replacement cost coverage. B. Named perils coverage. C. Replacement cost coverage. D. Special form coverage.

D. Special form coverage.

An insurer's right to recover payment from a legally liable third party is Select one: A. Appraisal. B. Assignment. C. Salvage. D. Subrogation.

D. Subrogation.

When comparing Coverage D—Loss of Use as provided by the HO-3 policy and HO-4 policy, Select one: A. Both policies automatically provide coverage at 30% of the Coverage A limit. B. Both policies automatically provide coverage at 30% of the Coverage C limit. C. The HO-4 policy automatically provides coverage at 30% of the Coverage A limit, rather than 30% of the Coverage C limit, as in the HO-3 policy. D. The HO-4 policy automatically provides coverage at 30% of the Coverage C limit, rather than 30% of the Coverage A limit, as in the HO-3 policy.

D. The HO-4 policy automatically provides coverage at 30% of the Coverage C limit, rather than 30% of the Coverage A limit, as in the HO-3 policy.

Tom recently met with his insurance agent to discuss his homeowners coverage. The agent has suggested that Tom change his present HO-2 policy to either an HO-3 policy or an HO-5 policy. Which one of the following is a reason the agent might give to support his suggestion? Select one: A. The HO-5 will provide coverage without a deductible. B. The HO-3 will be less expensive saving Tom some premium dollars for similar coverage. C. The HO-3 will provide open perils coverage for Tom's personal property. D. The HO-5 will provide much broader coverage for his home and personal property.

D. The HO-5 will provide much broader coverage for his home and personal property.

Under the Personal Auto Policy (PAP), legal action can be brought against the insurer only when Select one: A. Coverage has been denied. B. Insurance subrogation attempts have failed. C. The liability of the insured is involved. D. The insured has fully complied with all of the policy terms.

D. The insured has fully complied with all of the policy terms.

Eddie and Janet Orr are married and have a Personal Auto Policy (PAP). Eddie's name is the only one listed on the declarations page of the policy. Janet is concerned because she thinks both their names should appear since they each own vehicles. Which one of the following is true? Select one: A. Only Eddie's name, as the primary named insured, should appear on the declarations page. B. Eddie and Janet should each have their own policy. C. The policy can be written in Eddie's and Janet's names by using an additional named insured endorsement. D. The policy can be written in Eddie's name, Janet's name, or both Eddie's and Janet's names.

D. The policy can be written in Eddie's name, Janet's name, or both Eddie's and Janet's names.

Organizations use a wide variety of methods, including loss control surveys, to identify their property and liability loss exposures. By contrast, individuals and families tend to rely on some or all of the following, EXCEPT: Select one: A. Friends B. Family members C. Their insurance agent or broker D. Their investment advisor

D. Their investment advisor

All of the following items are examples of personal property, EXCEPT: Select one: A. Sports equipment B. Silverware C. A fishing boat D. Underground pipes

D. Underground pipes

The primary factors that most states and companies use for determining the cost of personal auto insurance include all of the following, EXCEPT: Select one: A. Territory B. Driver age C. Use of the auto D. Vehicle horsepower

D. Vehicle horsepower

The Subrogation condition in the HO-3 policy allows the insured to waive all rights to recover against any person provided the Select one: A. Insured acts in good faith. B. Insured acts in its best interests. C. Waiver is in writing and made after a loss. D. Waiver is in writing and made before a loss.

D. Waiver is in writing and made before a loss.