Casualty practice exam
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays
The excess over the self-insured retention. Retention is the equivalent of a deductible in property insurance.
All of the following are true statements regarding the supplementary payments of a commercial general liability policy EXCEPT
They pay defense costs even after the aggregate limit has been reached. Once the aggregate has been reached, the insurer will not be responsible for paying further claims; therefore, the insurer no longer pays to defend.
In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for
Uninsured motorist coverage. Trailers, while being towed by an insured auto, are covered automatically for bodily injury (BI), property damage (PD) and uninsured motorist (U/M) under Part A of a personal auto policy.
Under North Carolina's financial responsibility insurance law, no insurer may issue a policy to a resident with limits less than
$30,000/$60,000 bodily injury and $25,000 property damage liability. The policy must be written with limits that satisfy the financial responsibility; which are $30,000 for bodily injury or death of one person, $60,000 for injury or death of two or more persons, and $25,000 for damage to property of others.
In accordance with American Institute Hull Clauses, a pro rata return of premium will be given for all the following reasons EXCEPT
If the policy is cancelled by the insured. If the policyholder cancels, a short rate refund is due.
Anyone covered under an insurance policy, whether named or not, is known as the
Insureds. The insureds are anyone that covered under a policy, whether named or not.
Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss?
Liability Coverage Supplementary payments, found in Part A - Liability, include expenses incurred by the insured at the insurer's request, including $200 per day for attending trials or hearings.
Employee fidelity may be written in all the following ways EXCEPT
Location schedule. Fidelity bonds are purchased by employers and may be written for individual named employees, on a named schedule basis where one bond is issued for several employees listed by name, or position schedule where several positions are listed and whoever is occupying a scheduled position is covered.
Rental Reimbursement is only available if the policy includes which coverage?
Other Than Collision Coverage This endorsement is only available if the policy includes other than collision coverage. This endorsement will reimburse the insured for rental charges incurred because the covered auto is out of use because of a covered loss.
An insured invites his neighbors out for a day on the water in his boat powered with a 150 hp outboard motor. While attempting to tie the boat to dock, his neighbor's hand is broken when caught between the boat and dock. What coverage would apply to the broken hand?
The insured's boatowners policy Outboard boat and motor policies are property coverage only. Homeowners liability does not apply to outboards with more than 25 hp. Boatowners policies contain property, liability, and medical payments coverage.
If the underwriters direct a vessel to proceed to a particular port for repair, who pays the expenses, including wages and maintenance, of doing so?
The insurer If the underwriters direct the vessel to proceed to a particular port for repair, the insurer will pay the expenses of doing so, including wages and maintenance for the master, officers, and crew.
Under which of the following circumstances would a pretext interview be permissible?
The insurer suspects criminal activity and fraud. A pretext interview may be used to obtain information from a person for the purpose of investigating a claim where, based upon specific information available for review by the Commissioner, there is a reasonable basis for suspecting criminal activity, fraud, material misrepresentation, or material nondisclosure in connection with the claim.
The other insurances clause of an ocean marine policy allows coverage for which reasons?
To obtain coverage for war, strikes, and related risks not covered by the policy Standard American Institute Hull Clauses (AIHC) allow coverage for war, strikes, and related risks not covered by the policy.
Whenever a Bureau rate is held to be unfairly discriminatory or excessive and no longer effective by order of the Commissioner, the members of the Bureau shall have the option to continue to use such rate for the interim period pending judicial review of such order. Which of the following statements is correct?
Each member shall place in escrow account the unfairly discriminatory or excessive portion of the premium collected during such interim period. Whenever a Bureau rate is held to be unfairly discriminatory or excessive and no longer effective by order of the Commissioner, the members of the Bureau shall have the option to continue to use such rate for the interim period pending judicial review of such order, provided each such member shall place in escrow account the purportedly unfairly discriminatory or excessive portion of the premium collected during such interim period.
Which of the following statements is true concerning a bonded contractor who defaults on a construction performance contract?
The obligee may engage another contractor and then seek reimbursement from the surety. The bonding company would have to see that the job was completed and then seek recovery for its expenses from the bonded contractor (principal).
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT
Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. A personal auto policy does not pay the cost of the release of a vehicle impounded by a law enforcement agency.
The employee theft crime policy includes a coverage extension that applies to employees temporarily outside the coverage territory for up to
90 days. The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 90 days.
An insured owns and operates a ranch. The insured has several vehicles that are used in the ranching operation and for personal use. Which of the following could NOT be insured under a personal auto policy?
A two-ton grain truck with a 6,500-pound capacity A two-ton truck weighs 4,000 pounds. With its cargo weight of 6,500 pounds, it exceeds the 10,000-pound gross vehicle weight (GVW) limit and would not be eligible. The GVW is the maximum recommended weight, including the weight of the vehicle, fuel and fluids, passengers, and all cargo.
A licensee decides to terminate his residency in this state. Which of the following would be an appropriate action?
Delivering the license to the Commissioner within 30 days Any licensee who decides to terminate his or her residency in this state must deliver the insurance license to the Commissioner personally or by mail within 30 days after terminating residency.
When an insurer requires a written proof of loss after notice of such loss has been given by the insured or beneficiary, the company must
Furnish a blank form to be used for that purpose. When any company under any insurance policy requires a written proof of loss after notice of such loss has been given by the insured or beneficiary, the company or its representative must furnish a blank form to be used for that purpose.
Extended nonowned coverage endorsement in a PAP broadens which of the following coverages?
Liability and medical payments This endorsement can broaden the liability only, or liability and medical payments coverage provided in the policy for individuals specifically named on the endorsement. It provides coverage for nonowned autos that are available for the regular use of the insured, the use of covered vehicles to carry persons or property for a fee, or use of the vehicle in other businesses (excluding the automobile business).
Which of the following terms refers to a person's ability to do some work or the need to do alternative work?
Temporary partial disability Temporary partial disability refers to a person's ability to do some work or the need to do alternative work.
The common policy condition is a modular part combined with other parts to create the contract. The common policy condition section contains provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy?
The first named insured may cancel the policy at any time by giving written notice to the insurer. The insurer is granted the right to audit books and records for a period of up to 3 years. The insurer is automatically granted the right to make inspections, surveys and such relating to the insurance. Only the first named insured may make requests for any changes in the policy.
According to the standard workers compensation and employer liability policy form, a state should be listed in Part Three - other states' insurance of the workers compensation and employers liability policy when
The insured expects to extend operations to that state. By naming a state in Part Three of a workers compensation and employers liability (WC&EL) policy, an employer provides that company operations may be conducted in that state.
Which of the following statements is TRUE regarding a policy during administrative and judicial review of an insurer's action to terminate the policy?
The policy shall remain in effect. A policy shall remain in effect during administrative and judicial review of an insurer's action to terminate the policy.
All of the following are true regarding notice of cancellation of an auto policy EXCEPT
The written notice of cancellation does not have to include a statement advising the insured of the penalties for operating a vehicle without insurance. When an insurer terminates (cancels or refuses to renew) an auto policy, it must provide a written notice to the insured by first-class mail at the insured's last known address. This notice must contain the reason for termination and a statement advising the insured of the penalties for operating a vehicle without insurance.
Liability imposed on one party as a result of the actions of another person is known as
Vicarious liability. Vicarious liability is liability imposed on one party as a result of the actions of another person; i.e., parent/child or employer/employee.
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties but representations. Representations are statements that are true to the best of the applicant's knowledge.
Workers compensation benefits will be retroactive to the beginning of a disability if it lasts for more than how many days?
21 days If a disability lasts for more than 21 days, workers compensation benefits will be retroactive back to day 1 (no waiting period would apply).
The initial binding period for new workers compensation coverage issued by the North Carolina Rate Bureau is
30 days When any such risk is called to the attention of the Bureau by receipt of an application with an estimated or deposit premium payment and it appears that the risk is in good faith entitled to such coverage, the Bureau will bind coverage for 30 days and will designate a member who must issue a standard workers' compensation policy of insurance that contains the usual and customary provisions found in those policies.
An employee injured at work must give notice within how many days of the injury?
30 days. An injured employee must give notice within 30 days of the injury or, in the case of occupational disease (excepting asbestosis, silicosis, and lead poisoning), within 30 days of learning of the illness.
What's the difference between a fidelity bond and a surety bond?
A surety bond guarantees something will happen; a fidelity bond guarantees something will not happen. A fidelity bond is sometimes called an honesty bond and pays if someone has been dishonest. A surety bond is a guarantee someone will perform as promised and pays if they do not.
In a personal auto policy, the medical payments coverage is similar to
Accident insurance, because it pays medical expenses regardless of fault. Medical payments will pay for accidental bodily injury of an insured, regardless of fault or auto. It will pay medical expenses of others occupying the insured auto.
Coverage A - Bodily Injury and Property Damage in the commercial general liability policy will cover
Losses due to the insured's negligence. Coverage A provides protection for bodily injury and property damage suffered by third parties due to the negligence of the insured. The rest are exclusions.
A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the
Penalty. A bond is written for a set limit, sometimes called the penalty. If the principal's obligation exceeds the limit, the surety will be liable only for the amount of the limit.
Which of the following terms refers to such disabilities as the loss of a limb, hearing, or eye sight?
Permanent partial disability Permanent partial disabilities refer to such disabilities as the loss of a limb, hearing, or eye sight.
All of the following statements regarding a boatowners policy are true EXCEPT
Replacements for the boat listed in the Declarations are automatically covered, if the insured notifies the insurer within 60 days and pays the additional premium. Automatic coverage is provided on replacements for the boat listed in the declarations provided the insured notifies the insurer within 45 days of purchase and pays any additional premium required.
In order to get a nonresident license in North Carolina an agent must
Submit the request for licensure in the form prescribed by the Commissioner and pay the applicable fees. An agent may apply for a nonresidential license by showing that they are in good standing as an agent in their home state and by paying a fee, if the two states reciprocate.
Which of the following symbols is available to an insured with vehicles subject to no-fault coverage?
Symbol 5 Symbol 5 covers owned autos subject to no-fault coverage.
In North Carolina, workers compensation laws are administered by
The North Carolina Industrial Commission. The NCIC is a division of the Department of Commerce and is given jurisdiction by state statutes.