Claims Adjuster Florida

What kind of managed care plan combines the features of other plans?

POS plan *Point-of-service (POS) plans combine the cost controls of an HMO with the flexibility that a preferred provider organization (PPO) and traditional medical insurance policy have with respect to the selection of health care providers.

Minestra Company produces a defective quantity of mushroom soup which results in the hospitalization of consumers who become ill from eating it. In anticipation of their claims, Minestra instructs retailers to remove its mushroom soup from their stores. Minestra asks its commercial general liability insurer to cover its expenses in removing the product from the market. Minestra's CGL policy will:

cover consumer claims but not recall expenses *The recall of products exclusion in the CGL policy precludes coverage for recall expenses.

The difference between the Pollution Liability Coverage Form (CG 00 39) and the Pollution Liability Limited Coverage Form (CG 00 40) is that the Limited Coverage form:

does not cover cleanup costs *CG 00 40 provides the same bodily injury and property damage liability coverage as CG 00 39 with the exception of coverage for cleanup costs.

Laura owns poisonous snakes on her property, which she uses for venom research purposes. One of the snakes escaped and within hours bit a neighbor who sued Laura. Though Laura was not negligent in her ownership of the snakes, the plaintiff easily won the suit based on the doctrine of:

strict (absolute) liability

Edwina has a standard HO 3 policy with no added endorsements. Her diamond earrings are stolen and she notifies her insurance agent. However, her insurance covers only a portion of the loss because the policy contains a(n):

sublimit for theft of jewelry *The HO 3 covers jewelry, but theft losses to jewelry are limited by a dollar sublimit.

A dump truck collided with a tall oak tree in Marian's front yard. The tree fell onto her house, breaking a glass picture window and knocking a lamp off the table inside it. Sparks from the lamp started a fire that destroyed half the house. What is the proximate cause of the damage to Marian's house?

the collision

Within the body of an insurance policy, what word or phrase refers specifically to the named insured?

"you" *Many policies begin by identifying "you" and "your" as the insured person(s) or organization(s) named in the declarations.

An equipment breakdown policy typically would NOT cover which of these incidents?

Failure of a conveyer belt due to extended use. *An equipment breakdown policy defines breakdown to include pressure or vacuum equipment failure, mechanical failure, and electrical failure. It excludes coverage for equipment parts that are normally subject to periodic replacement or routine maintenance.

When investigating a claim, and adjuster does each of the following tasks EXCEPT: Analyze information Interpret information Obtain information Verify information

Interpret information *An adjuster would not interpret information as this might constitute the unauthorized practice of law.

A tree limb puts a hole in Lesley's roof, so she buys a tarp and hires a handyman to place it over the hole. She then notifies her insurance company that provides her HO 3 policy. What will the insurer do?

It will pay for the tarp and its installation under her reasonable repairs additional coverage.

How do public adjusters primarily differ from staff or independent adjusters?

Public adjusters represent insureds, while other adjusters represent insurers.

Which are typically NOT among the provisions of a typical property and casualty insurance policy? Waivers Declarations Insuring Agreements Conditions

Waivers *Standard policy provisions include declarations, definitions, insuring agreement(s), exclusions, and conditions.

Which of the following best explains why war is generally excluded from coverage in most insurance policies?

War involves the potential for catastrophic loss that simultaneously affects many policyholders. *An insurable risk must not be catastrophic. Insurance companies do not generally cover losses resulting from a war or a nuclear reaction because a single event might affect many policyholders at the same time.

Insuring a new restaurant against business failure is not possible because business success or failure is:

a speculative risk

According to the Securities and Exchange Commission, which of the following allows one to invest in another person's life insurance policy?

a viatical settlement

After buying a DP 1 basic policy, Clement realizes that he has no personal liability coverage. How can he get this coverage?

add the personal liability supplement

Pamela lives in a state with a financial responsibility law. When will she be required to prove she has auto liability insurance?

after it is involved in a serious traffic violation or accident. *Financial responsibility laws require motor vehicle owners to furnish evidence of financial responsibility (usually by providing proof of insurance) after a serious traffic violation or accident.

When an insurance policy provides crime coverage on a loss sustained basis, coverage is triggered by a loss that occurs:

after the retroactive date and is discovered during the policy period *

The collapse additional coverage in a homeowners policy applies only when:

all or part of the building falls or caves in

An insurance agent's E&O policy covers insurance producers against errors and omissions claims brought by:

both clients and insurers *The two major classes of claimants under insurance agents errors and omissions policies are clients and insurers.

Al's farm does not produce enough income to support his family, so he supplements his farming income by working as a carpenter. Which exclusion in Al's farm liability coverage form precludes coverage for any loss resulting from his carpentry activities?

business pursuits *No coverage applies to losses arising out of non-farming business pursuits engaged in by the insured.

License and permit bonds, often required by a municipality or other public body, guarantee that the party seeking the license or permit will:

comply with applicable laws or regulations *Public bodies require license and permit bonds as a condition to granting a license or permit to engage in a certain activity. The bond guarantees that the bonded party will comply with applicable laws or regulations.

Haley's new law office is in a commercial condominium unit she purchased. Which form is suitable for insuring her property?

condominium commercial unit owners coverage form *The condominium commercial unit owners form is designed for businesses that own and occupy commercial condominium units.

Butch's Meat Market loses electrical power during a flood. The business closes for several days, during which time there is no refrigeration and a large quantity of meat spoils. The loss of the meat is what type of loss?

consequential

Which of the following would not be considered an accepted ethical standard in the insurance industry? practicing due diligence in all transactions avoiding all conflicts of interest engaging in advertising practices that are not false, but may be misleading honestly communicating all facts essential to the client's decision-making process

engaging in advertising practices that are not false, but may be misleading

Which of the following is commonly listed as an excluded cause of loss in an open perils property insurance policy? vandalism explosion flood windstorm

flood *An open (special) perils policy typically lists flood as an excluded peril, necessitating the need for flood insurance or a difference-in-conditions (D-I-C) policy to cover that risk.

Unlike an insurance policy, a surety bond:

is a three-party contract *Three parties-the principal, the obligee, and the surety-are involved in a bonding relationship.

If a producer adheres to the legal and professional standards of the insurance industry, what type of behavior is being exhibited?

legal and ethical

In an attempt to reduce her expenses, Mattie sells her car. What must she do to cancel her auto insurance policy?

notify the insurer in writing of her intent to cancel the policy *The named insured can cancel by giving the insurer advance written notice of the intent to cancel the policy.

The Dwelling Property 3-Special Form provides more coverage than the Dwelling Property 2-Broad Form because the DP 3 automatically provides:

open perils coverage rather than named perils coverage on the building

What type of behavior conforms to accepted standards and is characterized by being suitable, right, and appropriate?

proper

Which does NOT restrict the health care coverage that an HMO provides? In an emergency, it may be impossible for a member to get prior approval for treatment. requirement to contact the HMO within one hour of treatment outside the HMO's service area limitations on when, where, and how members receive treatment prior approval of hospital stays and surgeries

requirement to contact the HMO within one hour of treatment outside the HMO's service area *Hospital stays and surgeries must have prior approval from the HMO if it is to cover the cost of the stay or surgery.

What level of government mainly regulates health insurance?

state level *Health insurance is regulated mainly at the state level, but the federal government is becoming increasingly involved.

With respect to property and casualty insurance policies, "subrogation" refers to:

the insurer's right to recover its claim payment from the party that was responsible for the loss

Which of the following is an example of pure risk?

the possibility of a business being flooded

Liability insurance basically involves:

tort law *Liability insurance involves tort law, which protects the rights of individuals from civil wrongs.

Which one of the following is NOT a peril? unlocked car theft fire flood

unlocked car *A peril is a cause of loss. Not locking one's car is a hazard rather than a peril because the likelihood of theft increases when a car is left unlocked.

All of the following causes of loss are commonly listed as excluded perils in open perils property insurance policies, EXCEPT: wear and tear flood war vandalism

vandalism

While a businessowners policy combines coverages that might otherwise be written on several forms, it does NOT include coverage for:

workers compensation *A single BOP combines coverages that might otherwise be written on separate property, liability, crime, and inland marine forms.

Which coverage cannot be combined with other coverage forms under a single businessowners policy?

workers compensation *A single BOP combines coverages that might otherwise be written on separate property, liability, crime, and inland marine forms. It does not combine workers compensation coverage.

Bert faced two personal liability claims during the past year. His homeowners insurance policy has a $100,000 personal liability limit. The first claim was $125,000 for bodily injury and $50,000 for property damage. The second claim was $2,000 for bodily injury. How much did Bert's insurer pay in damages?

$102,000 *The insurer will pay the $100,000 limit for the first occurrence and $2,000 for the second.

Subject to a $15,000 limit, the identity fraud expense coverage endorsement to the homeowners insurance policy will reimburse or cover the insured for all the following EXCEPT:

$5,000 stolen from the insured's bank account

Britney is responsible for an auto accident involving another car which will cost $15,000 to repair and for which the two injured occupants of that vehicle were awarded damages in the amounts of $30,000 and $20,000, respectively. Britney's split-limits policy has liability limits of $25/$50/$10. How much will her insurer pay?

$55,000 *The insurer will pay the $25,000 per person limit for the first injured occupant's claim, $20,000 for the second injured occupant's claim, and the $10,000 property damage limit for damage to the auto, for a total of $55,000.

Burglars break into Landon's house steal several items. Which of these items is subject to a sublimit under Landon's homeowners insurance policy?

$750 in cash, kept in a cookie jar *A sublimit of $200 applies to money and related items. None of the other items Landon lost is subject to a sublimit for loss by theft or any other covered peril.

Jeff is a licensed insurance agent in both New York and Florida. He is was charged with embezzlement in New York, and pleaded guilty to the charge on March 1. He must notify the Florida Department of Financial Services of the charge within how many days?

30

BBX Insurers terminated Henry's appointment as its adjuster on December 1. How long will Henry remain eligible to be appointed as an adjuster by another insurer?

48 months

Which incident that resulted in a liability claim against Aida did NOT involve "bodily injury" as defined in her homeowners insurance policy?

A neighbor's reputation was harmed by rumors Aida spread. *Homeowners forms define "bodily injury" as bodily harm, sickness, or disease, including death. Damage to reputation is not considered bodily injury.

Which statement does NOT describe the standard Medicare supplement plans? Insurers selling Medicare supplement policies must offer Plan A. Plan A provides the basic core benefits. A plan may be cancelled if the insured's health significantly deteriorates. Plans B through N include Plan A's core benefits.

A plan may be cancelled if the insured's health significantly deteriorates. *A policy cannot be canceled because of the insured's health.

Jake owns one life insurance policy, but has several health insurance policies covering disability, medical expenses, and dental care. Why might he have multiple health insurance policies?

A single health insurance policy cannot cover all health risks. *No one health insurance policy covers all risks. Instead, a single policy or single plan likely covers only a single risk. In some cases, a single policy may cover two or more related risks, such as medical care and dental care.

Beck Company's insurance policies include a crime policy that includes blanket coverage on employee theft. Beck's policy would apply to theft of covered property by any of the following individuals EXCEPT:

Alton, an independent contractor who writes advertising copy for Beck *An independent contractor who is paid to perform a service but is not under the insured's direction and control in performing that service is not considered an employee. Therefore, a crime policy does not cover theft of property by an independent contractor.

Trisha is driving Angelo's car with his permission when she causes an accident in which she sustains minor injuries. Trisha and Angelo have personal auto policies (PAP) with medical payments coverage. From what source(s), if any, will Trisha recover her medical expenses?

Angelo's insurer provides primary coverage. *Primary insurance follows the car, so the owner's insurance provides primary coverage for the borrowing driver's injuries.

When insured property is damaged, what must the insured do with it?

Arrange for its repair or disposal.

When insured property is damaged, what must the insured do with it?

Arrange for its repair or disposal. *Property insurance policies prohibit the insured from abandoning damaged property to the insurer for repair or disposal. Arranging for repair or disposal is the insured's responsibility, unless the insurer elects otherwise.

How much advance notice must an insurance company give its policyholder before it cancels a personal auto policy?

At least 10 days *Before an insurance company cancels a personal auto policy, it is required to give the policyholder at least 10 days' written notice in advance.

During the first six months following the assignment of a claim, how often is an adjuster required to provide claim status reports?

At the 30th, 90th, and 180th day after assignment

Banemore Manufacturing Company's operations involve hazardous materials and processes. Which situation does NOT involve a pollutant as defined in the pollution liability coverage forms?

Banemore's operations interfere with data transmissions in a nearby neighborhood.

Which one of the following losses would most likely be excluded by one of the maintenance or wear-and-tear exclusions in a property insurance policy? Pieces of siding blow off in a windstorm. Heat from a fire in the building next door melts the siding. Bees build a nest under the siding. A hailstorm creates cracks in the siding.

Bees build a nest under the siding. *Maintenance and wear-and-tear exclusions typically exclude coverage for damage by insects. In contrast, nearly all building policies cover the perils of fire, windstorm, and hail.

Which of the following statements about individual disability income policies is correct? Benefits never exceed the insured's income. A flat benefit amount is rare in individual disability income policies. Benefits equal the insured's pre-disability income. Benefits are not related to a flat amount or percentage of the insured's earnings.

Benefits never exceed the insured's income. *Benefits rarely approach the insured's pre-disability income. They never exceed that income. To do so might encourage the insured to prolong the disability.

Which coverages does the standard farm liability coverage form provide?

Bodily injury and prop *The standard farm liability form provides coverage for bodily injury and property damage (Coverage H), personal injury and advertising injury (Coverage I), and medical payments (Coverage J), all on an occurrence basis.

Shawn's ice cream parlor gets most of its customers from the health club next door. What coverage, if any, in Shawn's policy would apply if a fire closes the health club?

Business income from dependent properties additional coverage would apply. *Business income from dependent properties coverage applies to loss of business income resulting from damage from a covered cause to property of another business on which the insured depends.

A mode or standard of personal behavior based on moral or ethical principles defines which of the following?

Conduct is a mode or standard of personal behavior based on moral or ethical principles.

What is the difference between loss-of-use Coverage D-Fair Rental Value and Coverage E-Additional Living Expenses in a dwelling policy?

Coverage D protects premises that the insured rents out, while Coverage E applies to premises the insured occupies. *Both coverages apply when a residence is uninhabitable due to damage by a covered peril. Coverage D covers a landlord's lost rents, while Coverage E covers the insured's additional living expenses.

Dalton rents an unfurnished house. Dalton's dwelling policy is most likely to have Coverage C-Personal Property and:

Coverage E-Additional Living Expense

Which statement about disability income insurance (DI) policies is correct? A flat benefit is paid in group DI policies, while a percentage of earnings is paid in individual DI policies. DI policy benefits usually match the insured's wages. Most DI policies cover both occupational and nonoccupational disabilities. DI benefits are paid if the insured is under the regular care of a physician and gives periodic proof of loss, unless the disability is total and permanent.

DI benefits are paid if the insured is under the regular care of a physician and gives periodic proof of loss, unless the disability is total and permanent. *Because all states require employers to maintain workers' compensation coverage or equivalent protection for employees, most DI policies cover only nonoccupational disabilities.

Dawn is the only person named in the declarations of her homeowners insurance policy. References to an "insured" in her policy do NOT include:

Dawn's next-door neighbor *When a homeowners insurance policy refers to an "insured," the term includes certain other people in addition to the named insured and spouse. Under certain conditions, other insureds may include household residents and people responsible for the named insured's animals.

Delta Insurers typically affirms or denies claims within 120 days after it receives proof of loss statements. Which statement is correct? Delta is engaged in lawful claims settlement practices. Delta is engaged in unfair claims settlement practices. Delta is legally required to pay its claims within 90 days. Delta has committed insurance fraud.

Delta is engaged in unfair claims settlement practices. *It is an unfair claims settlement practice for insurers to fail to affirm or deny coverage of claims within 30 days after receiving proof of loss statements.

A claims adjuster is obligated to carry out each of the following functions EXCEPT: Determine the final settlement value Determine the grounds to deny a claim. Determine the cause of loss Determine the amount of loss

Determine the grounds to deny a claim. *The adjuster works on the insurer's behalf to help the insured in proving a loss to the insurer.

Nelson is the president of his company and has a company car. He does not have a personal auto policy because he does not own another vehicle. Which endorsement to his company's business auto policy (BAP) will protect him when he uses another vehicle?

Drive Other Car-Broadened Coverage for Named Individuals

Which of the following activities is covered under the basic farm liability coverage form (FL 00 20)?

Farmer operates a mower mounted on his tractor in his own hay field. *Although the farm liability coverage form contains an exclusion for mobile equipment, that applies only to the transportation of mobile equipment by a motor vehicle. No coverage is provided for losses due to custom farming, aircraft discharge (crop dusting), or use of livestock to provide rides for a fee or in connection with a charitable function.

Which of the following must HMO members use to receive covered care? HMO's network of providers and caregivers providers and caregivers selected by the state HMO association any licensed health care practitioner or caregiver the nearest provider or caregiver

HMO's network of providers and caregivers *Members must use the HMO's network of providers and caregivers to receive covered care.

Which ISO homeowners insurance form provides open perils coverage on the dwelling and named perils coverage on personal property?

HO 3

David's job requires him to move from his suburban home to a distant city. He rents it to a couple in his absence. How can he maintain property insurance on the home now that he is leasing it to others?

He should replace the homeowners policy with a dwelling policy.

Which statement about health insurance is correct? Health insurance is available through private insurers and the government. Health insurance is only available through the federal government. Only employers provide health insurance to groups. Health insurance is only available through private carriers.

Health insurance is available through private insurers and the government.

How does health insurance differ from life insurance?

Health insurance protects against risks that may arise more than once in a lifetime. *Unlike the risk of death, a person may face health risks many times during his or her life.

Arturo's business has been burglarized. Which of the following is NOT a duty that is required of Aurelio by his insurance policy?

Hire a private detective to investigate the burglary. *Because a crime has been committed, Arturo must notify the police as well as the insurer, and he must cooperate with the insurer in the investigation. However, he is not required to conduct his own investigation or to hire his own investigator.

Through what source is a person with a family most likely to obtain medical expense coverage?

Individual or group health insurance policy *Individual or group health insurance policies providing medical expense coverage can also cover one person and the family under a single plan.

Which statement about group health insurance is true? Requirements for individual and group plans are the same. Insurers may impose restrictions and exclusions on individual and group policies. The federal government cannot impose requirements on group plans. The federal government dictates the provisions of individual health plans.

Insurers may impose restrictions and exclusions on individual and group policies. *The federal government has imposed requirements on group plans to protect workers and their dependents.

The standard mortgage (mortgagee) clause in a property insurance policy covering real property does which of the following? -It requires the lender to purchase property insurance on the mortgaged property. -It ensures that the mortgage lender is paid if mortgaged property suffers a loss. -It makes the lender the owner of the property if the borrower does not maintain insurance on the mortgaged property. -It requires the lender to pay off the mortgage should a loss occur on the mortgaged property.

It ensures that the mortgage lender is paid if mortgaged property suffers a loss.

What does the limited pollution liability extension endorsement do when added to the CGL insurance policy?

It expands pollution coverage.

A house is struck by lightning during a thunderstorm, which starts a fire. The house stands in a floodplain and the basement fills with water from the storm. The homeowner files a claim on her homeowners insurance policy, which excludes losses from floods. What is true about her coverage?

It will cover the loss. *Under the doctrine of concurrent causation, if a loss involves more than one peril, and at least one of the perils is covered by the policy, then the loss is covered.

Who of the following would be able to buy insurance to cover their potential losses from the activity described? Judith, who has just purchased an automobile Suzanne, who trades stocks online Darryl, who buys land as a speculative investment Jimmy, who places bets on horse races

Judith, who has just purchased an automobile *In general, only pure risks are insurable. Pure risk involves only the chance of a loss. Insuring an automobile against the risk of damage or theft is an example of an insurable pure risk.

Eva bought a single-family home in an adult community that provides amenities that are supported by homeowners' association dues. The association has inadequate property insurance and charges Eva $750 for her share of payment for uninsured windstorm damage to the clubhouse. Which statement is correct about her HO 3 policy coverage for this expense?

Loss assessment additional coverage applies. *The loss assessment additional coverage applies when the association's insurance coverage is inadequate to cover a property loss, and the association assesses its members to pay for the damage.

Which loss would the businessowners policy NOT cover?

Manufacturing error causing defective product *The BOP does not cover manufacturing errors that result in worthless or defective products. This kind of loss arises from a business risk, not a peril that property insurance covers.

Medicare supplement insurance policies supplement coverage of which Medicare Part?

Medicare Parts A and B only *Medicare supplement policies supplement Original Medicare (Parts A and B), but not Part C, which covers many of the gaps that Medigap policies cover.

Even though they offer the same benefits as Medicare supplement policies, why do Medicare SELECT plan's charge a lower premium?

Medicare SELECT plans deliver health care through a network of providers. *Medicare SELECT plans deliver health care through a network of providers, which reduces the cost of care.

Lightning ignites a fire at the Smith Motors garage which damages seven automobiles owned by customers. Smith's garagekeepers coverage has a $1 million limit and a $1,000 deductible. How much of the deductible will be applied to this loss?

None *While the limit of insurance for garagekeepers coverage is set for each insured location and not per auto, the deductible applies to each covered auto. The deductible does not apply for losses caused by fire, lightning, explosion, or other peril covered as a comprehensive loss.

Which one of the following incidents is an example of vicarious liability? Rudy is held responsible for an accident caused by his employee. Dominic is held responsible for food poisoning due to a pizza he delivered. Edie is held responsible for striking a pedestrian with her bicycle. Lilly is held responsible for her cat's injury to Lilly's guest.

Rudy is held responsible for an accident caused by his employee.

Which of the following tools and resources would a producer not find useful when considering ethical dilemmas in insurance transactions? insurance industry standards GBS Codex S & P 500 ethical standards

S & P 500 *Ethical standards, insurance industry standards, and the Global Business Standards Codex (GBS Codex) would all be useful tools and resources for the producer.

Sasha, Kendall, Adam, and Julio are licensed agents in Florida. The Department of Financial Services would NOT be able to suspend or revoke which agent's license for engaging in the following acts? Julio, who used insurance premiums he collected to renovate his business office Sasha, who sold insurance policies to family members and friends this year Kendall, who intentionally violated an order issued by the Office of Insurance Regulation Adam, who offered season football tickets to prospects who purchased policies

Sasha, who sold insurance policies to family members and friends this year

While backing out of her garage, Louise accidentally lowers her garage door. The door strikes her car and is damaged. She learns that her homeowners insurance policy excludes liability coverage for damage to the insured's own property. Where might she find coverage?

Section I of the policy *The homeowners insurance policy provides no liability coverage for property damage to property owned by an insured because first-party property coverage is covered by Section I of the policy.

Which activity would fall outside the definition of "farming" in the standard farm liability coverage form? -Field irrigation -Selling tee shirts at a farmer's market in the city -Crop dusting -Selling farm produce from a roadside stand

Selling tee shirts at a farmer's market in the city *The farm liability coverage form defines "farming" as the operation of an agricultural or aquacultural enterprise, including the operation of roadside stands, on the farm premises, maintained for the sale of farm products produced primarily by the named insured. Farming usually does not include mechanized processing operations or retail activity other than that described.

Which is NOT necessary for Ellen to qualify for a Medicare supplement policy? She must be at least 65 years old. She must apply for a Medicare supplement policy within six months of enrolling in Part B. She must apply for Medicare Part B. She must meet the minimum health standards required of Medicare beneficiaries.

She must meet the minimum health standards required of Medicare beneficiaries. *She must be at least 65 years old and apply for a Medicare supplement policy within six months of enrolling in Medicare Part B. Insurers cannot deny or condition the issue of the policy because of her medical history, health status, or claims experience.

Overland Express Company is insured under a motor carrier policy. Which person is NOT insured under the policy's liability coverage?

Sunshine Fruit Farms, whose products are transported by Overland Express *The named insured, permissive users, and the owner of a borrowed trailer connected to a covered power unit are covered as insureds.

Which of the following is an example of risk transfer? Derek decides not to buy a motorcycle. Sybil buys an auto insurance policy. Leslie shovels her sidewalk immediately after every snowstorm. Lucia has a burglar alarm installed in her home.

Sybil buys an auto insurance policy. *By buying insurance, Sybil transfers certain risks to an insurance company in exchange for paying a premium.

Which of the following employees of the Seaside Marina is subject to the Longshore and Harbor Workers' Compensation Act?

Sydney, an employee of a company that repairs ships *Unlike the others, Sydney's job involves repairing ships, which is within the scope of the LHWCA.

In which of the following cases would the applicant be eligible for coverage through an insurer in the residual insurance market? The applicant is a business entity. The applicant is entitled to insurance but cannot buy it through the voluntary market. The applicant wants the most affordable premium available. The applicant has been rejected by an insurer.

The applicant is entitled to insurance but cannot buy it through the voluntary market. *The residual market is a source of coverage of last resort for individuals and businesses that have been rejected by insurers in the voluntary market. These individuals and businesses are otherwise in good faith entitled to buy insurance from these insurers but are prevented from doing so.

Corinne purchased her home with a 10 percent down payment and a 90 percent mortgage from Sidney Bank. Why does Sidney Bank have an insurable interest in Corinne's house?

The bank faces the possibility of a loss if Corinne's house is damaged or destroyed.

Marty drives to Ritzy Restaurant. After parking in a nearby lot, he slips on the icy pavement and breaks his ankle. Two months later, he submits his $1,000 medical bill to Ritzy Restaurant for payment. Why might Ritzy's commercial general liability insurer refuse to pay this claim under Coverage C-medical payments?

The injury occurred off the insured premises. *Medical payments coverage is no-fault coverage that protects members of the public while on the insured's premises or exposed to the insured's operations. It applies without regard to the insured's legal liability.

For the past four years, Cheryl has insured her business with four different commercial general liability (CGL) insurance policies, each with an occurrence trigger. For a claim to be covered by Cheryl's current policy:

The injury or damage must have occurred during the current policy period. *With an occurrence trigger, the date of the injury or damage-not the date of the event that results in bodily injury or property damage-triggers coverage.

The errors and omissions coverage in an equipment breakdown policy is most likely to apply in which of the following situations?

The insured made a mistake in describing the property location on the application. *Errors and omissions coverage insures a loss when the form would not otherwise provide coverage due to an unintentional error by the applicant/insured such as incorrectly describing the property owner or the location where coverage was intended to apply.

When an independent contractor discovered he had asbestosis, he submitted a workers compensation claim to Iva Builders, the contractor that employed him. Iva's risk manager submitted the claim to its insurer, but asserted that the contractor got the disease elsewhere and told the insurer to refuse the claim. Which of the following statements is true? -The insurer can settle this claim only with Iva's consent, so it must refuse to investigate or pay the claim. -The insurer has no right to consider a defense and is obligated to pay the claim. -The insurer has a right to investigate and settle the claim regardless of Iva's consent. -The insurer has a contractual obligation to investigate the case, but must refuse to settle the claim.

The insurer has the right to investigate and settle workers compensation claims or suits without the insured employer's consent.

Vinson Used Autos has an inventory valued at $500,000 at two locations. However, its garage policy has a physical damage coverage limit of $350,000. Why should Vinson increase this coverage limit to match the value of its inventory?

The policy requires Vinson to have full insurance to value on all covered autos. *The policy requires the insured to carry full insurance to value on all covered autos at any of its locations or in transit. Coverage is limited to the lesser of actual cash value at the time of loss or the cost to repair or replace the property with like kind and quality, and this coverage is subject to a limit for each covered location. Even if a loss is below the maximum amount shown on the schedule, the insured may recover only a portion of the loss if actual values exceed the limit of insurance.

Which statement is NOT correct about utilization reviews? They determine whether treatment is appropriate. The review can only take place after a medical service is provided. They determine coverage for medical issues arising in the future. They determine whether a managed care provider will cover services or treatment.

The review can only take place after a medical service is provided. *The review can take place before (prospective review), during (concurrent review), or after (retrospective review) a medical service is provided.

Lorraine was parking her car when her brakes failed, and she struck the car next to her, which was owned by Marty. In this case, all the following statements are correct EXCEPT: The rolling of Lorraine's car into Marty's car was the proximate cause of the damage. The costs to repair Marty's car represent compensable damages. The accident was a breach of duty on Lorraine's part. Lorraine had a duty to keep her car from striking Marty's car.

The rolling of Lorraine's car into Marty's car was the proximate cause of the damage.

In most states, what workers compensation coverage is available for sole proprietors and partners?

They are not covered as employees under the state workers compensation act but may voluntarily choose to purchase coverage. *Under most states' workers compensation acts, sole proprietors and partners are not covered employees, but they may voluntarily choose to buy coverage.

Which statement is correct about managed care plans? An insured who is unhappy with the services of a health care provider may choose another. Insureds may choose any health care provider. They coordinate the financing and the delivery of health care. They are indemnity plans.

They coordinate the financing and the delivery of health care. *It is with a medical expense policy, not a managed care policy, that an insured unhappy with the services of a health care provider may choose another.

Ida's boutique at a shopping mall escapes damage when a portion of the atrium roof caves in. However, her business came to a sudden halt when the debris blocks access to her store. Does Ida's businessowners policy cover the resulting loss of income?

Yes, because the BOP's business income and extra expense coverage applies when a business interruption is caused by damage to any area used to gain access to the insured's premises. *overage applies to cessation of the insured's business activities due to uninhabitability of described premises. This includes any area used to gain access to the insured's premises.

The chlorinated water that splashes out of Amber's backyard swimming pool eventually kills expensive trees that her neighbor Jeffrey planted at the edge of his property. He wants Amber to pay for the damage. Her homeowners policy may cover this liability claim if it involves an occurrence. Is it an occurrence?

Yes, because the damage can arise from continuous or repeated exposure to the same harmful conditions. *An occurrence can include not only sudden accidents but also losses arising from continuous or repeated exposure to the same harmful conditions.

In negotiating the settlement of claims, an adjuster would not normally deal with

a beneficiary *The adjuster may negotiate with the policyholder/insured in first-party claims. The adjuster may negotiate with third-party claimants in liability claims. Alternatively, the adjuster may negotiate with an attorney who represents either a policyholder or a third-party claimant.

Which one of the following entities is most likely to purchase a crime policy with the safe depository endorsement?

a hotel *The endorsement is designed for businesses other than financial institutions that provide safe deposit boxes for their customers.

Which one of the following legally qualifies as an attractive nuisance? a swimming pool in a homeowner's backyard that neighborhood children use, without the owner's permission, while the owner is at work an artfully painted garbage can behind a neighbor's garage that attracts flies an ornate Christmas display in a neighbor's front yard that attracts spectators a billboard with a pretty picture on the side of the highway

a swimming pool in a homeowner's backyard that neighborhood children use, without the owner's permission, while the owner is at work *An attractive nuisance is attractive to curious children who could be injured by it, even if the children are technically trespassers.

Because Leanne's personal auto policy (PAP) provides liability coverage on temporary substitute autos, it will protect her if she is driving:

a truck she borrows from a friend while Leanne's car undergoes repairs The truck is a temporary substitute auto because Leanne is using it while her car is temporarily out of operation while it undergoes repairs.

Darnell manufactures building components at a constant rate. When sales are slow, the finished-goods inventory increases, and vice versa. Sales depend on the current construction market. Therefore, the policy covering Darnell's fluctuating inventory should include:

a value reporting form *The reporting form coverage available with the value reporting form can be useful to a business with unpredictable, fluctuating property values at risk.

Which of the following correctly identifies three elements that must be present to create an enforceable contract?

acceptance, consideration, and offer

Which health insurance policy pays a benefit if the insured dies or is dismembered because of an accident?

accidental death and dismemberment (AD&D) policy *Accidental death and dismemberment policies provide a benefit if the insured dies or is severely injured because of an accident.

Before workers compensation statutes were enacted, employers could defend themselves against negligence claims by injured workers by employing certain common-law defenses. Which is NOT one of those defenses? act of God assumption of risk contributory negligence negligence of a fellow employee

act of God *The common-law defenses available to employers were assumption of risk, contributory negligence, and negligence of a fellow employee.

"Replacement cost minus physical depreciation" describes which type of loss valuation method?

actual cash value

Randi's professional liability policy has a one-year term and a $500,000 aggregate limit. This means that the insurer will pay no more than $500,000 for:

all claims during the one-year policy period *An aggregate limit is the maximum amount the insurer will pay for all applicable claims during the policy period.

The property insurance policy with a $500,000 limit that covers Logan's store is a contract of indemnity. If Logan's store is partially damaged by a covered peril, what is Logan's insurer obligated to pay?

an amount that is related to the value of the loss, not to exceed $500,000 *When a covered loss occurs under a contract of indemnity, the benefit payable is related to the amount of the loss.

In the context of a property or casualty insurance policy, which of the following is personal property? a house a patio trees an automobile

an automobile *Real property includes land, buildings, and other structures attached to the land (including trees, shrubs and patios). All other tangible items, including automobiles, are considered personal property.

If a producer is in a situation that requires the producer to make a choice-and the two or more options he or she faces are equally unpleasant or undesirable and involve an ethical conflict-what type of situation does the producer face?

an ethical dilemma

As defined in a homeowners insurance policy, the broad term "motor vehicle" includes the following EXCEPT: a self-propelled walk-behind lawn mower an outboard motorboat a motorized wheelchair a motorcycle

an outboard motorboat *"Motor vehicle" is defined as a self-propelled land or amphibious vehicle or any trailer connected with it. This definition is broad enough to include motorcycles, self-propelled lawn mowers, and even motorized wheelchairs.

For purposes of insurance, a "loss" is best defined as:

an unwelcomed, unplanned reduction in economic value

Disability income insurance policies sold to those in blue-collar occupations typically use which definition of total disability?

any occupation *Disability policies sold to blue-collar employees usually use the any occupation definition of total disability.

Which business would be eligible for coverage under a businessowners policy? -apartment building seven stories tall -motel four stories tall -office building 20 stories tall -construction contractor that works on buildings up to ten stories tall

apartment building seven stories tall *Apartment buildings are eligible for BOP coverage. Also eligible are construction contractors doing work at heights up to three stories, mercantile risks, motels up to three stories tall, and office buildings up to six stories tall.

Sharron had a large saltwater aquarium in her living room. Vandals entered her house and broke the aquarium. This led to the death of her fish and the warping of the hardwood floor beneath the aquarium. Coverage C-Personal Property of her homeowners insurance policy will cover the loss or damage to the:

aquarium *The aquarium is covered personal property. Water and fish are not covered property, and the floor is part of the dwelling rather than personal property.

Residual markets systems provide a source of insurance coverage for individuals and businesses that

are entitled to it but cannot buy it through the voluntary market.

Where do the definitions appear in an ISO businessowners policy?

at the end of the property section and at the end of the liability section *Definitions of terms used in each coverage section of the policy appear at the end of their respective section.

For an insurer to pay a property insurance claim, when must the policyholder have an insurable interest in the insured property?

at the time of the loss

Bill's children have grown up and moved away, but the tree house that he built for them now draws other neighborhood children despite his handmade "No Trespassing" sign. If a neighbor's child is injured by falling from the tree house, Bill might be held liable for the child's injuries under what legal doctrine or principle?

attractive nuisance

Many endorsements are attached to Bettie's policy. If she examines them closely, she will probably find one or more endorsements that do all the following EXCEPT: expand coverage to cover a specific exposure add exclusions eliminate an exclusion cancel the policy

cancel the policy

The Motor Carrier Act of 1980 requires some motor carriers to:

carry liability insurance with minimum coverage limits that depend on their cargo *Motor carriers subject to the Motor Carrier Act of 1980 must have insurance coverage of $750,000 to $5 million, depending on the cargo they transport.

Dixie's business personal property coverage of her building and personal property commercial property form covers almost everything in her barbershop, but NOT:

cash in the cash register *Money is on the list of property not covered.

All the following are standard exclusions in the employers liability insurance section of the workers compensation policy EXCEPT: -claims by a covered worker's spouse for loss of consortium -claims of bodily injury to an employee employed in violation of the law -claims arising out of harassment, discrimination, or employment-related practices -fines or penalties imposed for violation of federal or state law

claims by a covered worker's spouse for loss of consortium *Claims for loss of consortium are not excluded from employers liability coverage.

When obtaining information about a claim, an adjuster is interested in

collecting information about the claim that is needed to resolve it *The adjuster collects information, facts, documents, etc., that the adjuster believes are essential to bringing the claim to resolution.

Which is least likely to be considered a "covered auto" in a personal auto policy (PAP)? owned private trailer temporary substitute passenger auto newly acquired passenger auto commercial tractor-trailer combination

commercial tractor-trailer combination *The PAP provides only limited coverage for trucks with a GVW of 10,000 pounds or more. These types of vehicles should be insured on a commercial automobile policy if they are principally used to carry or deliver goods as part of a commercial operation.

In the insurance industry, placing an insured's funds into any type of bank account other than a trust account is considered

commingling *Producers who do not meet the standards of competency are a threat to the well-being of not only the consumer, but the professionals within the insurance industry, as well.

Producers who do not meet the standards of which of the following are a threat to the well-being of not only the consumer, but professionals within the insurance industry?

competency *Producers who do not meet the standards of competency are a threat to the well-being of not only the consumer, but the professionals within the insurance industry, as well.

Rhonda's parents bought her a car for her sixteenth birthday and made her responsible for maintaining and insuring it. However, when Rhonda applied for auto insurance after getting her driver's license, she was told that she could not enter into a binding insurance contract because, according to the law in her state, a 16-year-old does not qualify as a(n):

competent party

The fact that insurance policy language is written by an insurance company and is nonnegotiable makes insurance policies:

contracts of adhesion

If the courts find an ambiguity in an insurance policy, they will interpret it in the policyholder's favor because insurance policies are:

contracts of adhesion *Insurance contracts are contracts of adhesion, and if the courts find that a contract of adhesion is ambiguous, they will interpret it in favor of the party that did not write the contract.

A truck crashes into an insured's house. Before repairs can begin, the truck and damaged portions of the house must be removed. The additional coverage for debris removal in the homeowners insurance policy will:

cover only the expense of removing damaged portions of the house

Colin hires Sal, a retired farmer, to help him with the harvest. Sal is seriously injured when he falls off the tractor he was operating in Colin's field. Colin's farm liability coverage form:

covers Sal's injuries as long as the loss is not subject to the state's workers compensation laws *The workers compensation exclusion precludes coverage if state law requires Colin to provide Sal with workers compensation benefits, which is usually done by purchasing workers compensation insurance.

Which expense is NOT covered as property damage by a business auto policy (BAP)?

damage to property transported in a covered auto *The BAP excludes damage to property owned or transported by the insured or in the insured's care, custody, or control.

Gertrude's will specifies that, upon her death, her son Dirk will be the executor of her estate. Coverage for Dirk's actions as the executor are described under what policy condition of the homeowners policy?

death

Which is NOT one of the three major parts of a personal auto policy (PAP)? declarations page applicable endorsements personal auto coverage form definitions

definitions Although the PAP definitions are important to the policy, they are not one of its three major parts

A contractor hires 15-year-old Kevin as a part-time employee to cut lumber, knowing the law does not permit Kevin to work near power tools because of his age. Kevin accidentally cuts his finger off while using a power saw. The liability coverage of the contractor's workers compensation and employers liability insurance policy:

does not cover this claim because the contractor knew it employed Kevin in violation of the law *Employers liability coverage is excluded for bodily injury to an employee whom the employer knew was illegally employed.

Angelina has a cottage that she wants to insure. Its value is less than $25,000. Angelina is likely to get suitable coverage through a:

dwelling policy *Dwelling policies are frequently used for residences that are ineligible for a homeowners policy due to an insurer's minimum property limits (e.g., $25,000) or other underwriting requirements.

Which forms are attached to a commercial property policy to broaden or narrow coverage?

endorsements *Endorsements broaden or narrow the coverage of a property or casualty policy. They may also modify it to comply with state requirements.

Sandy requires her employees to use their personal autos when calling on customers. If she adds the Employees as Insureds endorsement to her company's business auto policy (BAP), employees who use their personal cars for business calls will have:

excess coverage under the BAP for losses that exceed their personal auto liability limits *The endorsed BAP will provide excess coverage over the employee's personal auto policy if an employee is liable for a loss involving the business use of his or her personal vehicle

The insurance company (principal) grants authority to its agent, the producer. Which of the following types of authority is usually granted via the agent/company contract?

expressed The expressed authority granted to an agent is usually contained in an agent-company contract.

An "ordinance or law" exclusion in a property insurance policy deals with:

extra expenses required to comply with current building codes when repairing damaged property *An ordinance or law exclusion eliminates coverage for the extra expenses, over and above the cost of repairing damaged property that might be necessary to comply with current building codes or other ordinances.

Physicians professional liability insurance is designed to cover all the following exposures a medical practitioner faces EXCEPT:

failing to meet continuing education requirements *Failing to meet continuing education requirements may create other problems for the doctor, but it is not likely to be the grounds for a professional liability claim.

Jordan converts her home's attached garage into an apartment that students rent year-round for $300 each month. A tenant accidentally starts a fire in the apartment, making it uninhabitable for three months while the damage is repaired. Which coverage in Jordan's homeowners insurance policy covers her rental income loss?

fair rental value *If a covered property loss makes it impossible to live in a portion of the residence premises that is rented out, the insurer covers the fair rental value of such residence premises.

Producers owe duties to their insurers per industry accepted concepts and practices. If a producer provides a compensation disclosure to an insured, which of the following practices is the producer observing?

fair sales practice

Which peril covered under the Dwelling Property 2-Broad Form cannot be covered by the Dwelling Property 1-Basic Form?

falling objects *The broad form includes the DP 1 perils plus seven additional perils, such as falling objects.

Zenith Insurance Company issues a policy to Best Manufacturing Company. A dispute arises between Zenith and Best on the meaning of an ambiguous clause in their contract. The matter goes to court, which can be expected to interpret the clause in a manner that:

favors Best Manufacturing

Although the DP 3 excludes water damage caused by a flood, the exclusion does NOT apply when the damage arises from a flood caused by:

fire The DP 3 covers any type of direct loss by fire that results from water damage.

What unfair trade practice has a person committed if he knowingly and with intent to defraud files an insurance claim that is false?

fraud

Antoinette's Antiques is the named insured under an ISO pollution liability form. The form's extended reporting period option allows Antoinette to:

get an endorsement to cover claims reported within one year after the policy period ends

Which of the following activities, if located on the farm premises, would NOT be considered a farming operation covered by the farm liability coverage form? harvesting of shellfish cultivation of aquatic plants roadside produce stand gift shop

gift shop *The form defines "farming" as an agricultural or aquacultural enterprise, including the operation of roadside stands, on the farm premises. It typically does not include retail activity.

Melinda buys specified causes of loss coverage with the business auto policy (BAP) insuring the trucks in her fleet. She will NOT be covered for losses to the trucks caused by:

glass breakage *Glass breakage is not among the list of perils covered by specified causes of loss coverage under the BAP.

A fiduciary responsibility requires the utmost in care and the highest standards of conduct with respect to the law or ethics. All of the following are qualities required by a fiduciary EXCEPT: honesty good faith good communication skills loyalty

good communication skills *A fiduciary is not required to have good communications skills.

An insured would be prudent to rely upon health insurance to cover injuries sustained in an auto accident because medical payments coverage under a personal auto policy (PAP):

has relatively low limits *Medical payments coverage pays for relatively small amounts of medical expenses.

The motivation of stakeholders in an ethical dilemma involves all of the following EXCEPT: justice versus mercy individual versus community truth versus loyalty honesty versus propriety

honesty versus propriety

Senior clients are more at risk than any other sector of the population in this country. Which of the following is not a practice to which seniors are vulnerable?

honesty, no matter how unpleasant the truth *Senior clients may be vulnerable to scams, high-pressure tactics, and fears about a medical condition or longevity. Honesty is a behavior and not something that creates vulnerability.

Most policies require the insured to do all of the following EXCEPT: notify the insurer promptly identify the cause of a loss protect the property from further damage notify the police if the law has been violated

identify the cause of a loss

Understanding practices that are considered unethical is the first step in

identifying, preventing, and resolving ethical dilemmas *The first step in identifying, preventing, and resolving ethical dilemmas is to fully understand practices that are considered unethical.

Which of the following is not among the recognized approaches to handling risk? sharing it avoiding it ignoring it transferring it

ignoring it *Risk is managed by avoiding, controlling, sharing, retaining, or transferring it. Even if one attempts to avoid risk by doing nothing to manage it, he or she is actually retaining it.

A fire severely damages Carl's home, making it uninhabitable. He moves his family to a hotel while the house is repaired. The additional expenses incurs in housing the family are considered what type of loss?

indirect

Protected health information includes all of the following EXCEPT: information about financial status information that is submitted or recorded in any form information that might help identify an individual information about mental or physical health

information about financial status

Which one of the following is NOT a type of provision found in property and casualty insurance policies? declarations insertions definitions conditions

insertions

Who has the authority to determine insurance coverage or to settle insurance claims?

insurance companies *Only insurance companies and its claims representatives have the authority to determine coverage and settle claims. Producers should understand and explain to consumers that producers do not have such authority.

Who usually determines which party is legally responsible for an auto accident?

insurers *A court with a judge, jury, or both sometimes determines legal liability, but usually the insurer makes this determination based on its investigation of the accident.

When an insurance policy provides crime coverage on a discovery basis, coverage is triggered by a loss that:

is discovered during the policy period or within 60 days after the policy period ends *Discovery-based coverage applies to loss discovered during the policy period or within 60 days after the policy period ends. Loss sustained coverage applies to loss that occurs during the policy period and is discovered within one year after the policy period ends.

When a bank is named as a mortgagee in a customer's homeowners insurance policy, the bank:

is entitled to advance written notice of any policy cancellation

An insurance policy is different from a surety bond in that an insurance policy:

is issued with the expectation that some insureds will have losses *Although they do not know which insureds will suffer a loss, insurance underwriters anticipate that a certain number of losses will occur; insurance is a mechanism for spreading the financial impact of those losses.

A benefit of the extra expense additional coverage in a businessowners policy is that it

is not subject to the limits of insurance *Extra expense coverage is not subject to the limits of insurance but is provided in addition to those limits.

Section II of an Insurance Services Office, Inc. (ISO) homeowners policy provides:

liability coverages

The swimming pool in the atrium of the Highland Court Apartment Building creates a humid environment that encourages mold growth. To limit exposure to mold-related claims, what kind of endorsement should be added to the building's CGL policy?

limited fungi or bacteria coverage *The limited fungi or bacteria coverage endorsement subjects mold coverage to a separate fungi and bacteria liability aggregate limit.

To avoid the appearance of practicing law, a claims adjuster's communications with an insured should always be

limited to the wording of the policy *To avoid practicing law, a claims adjuster's communications with an insured that deal with coverage issues should be limited to the wording of the policy and the insured's claim.

The farm insurance bodily injury and property damage liability form (Coverage H) contains exclusions for all the following losses EXCEPT:

loss of use *Coverage H includes the other party's loss of use of tangible property that is not physically damaged.

Ken's house has an exterior layer of brick that covers wooden walls supported by wooden 2-by-4 studs. What type of construction does Ken's house have?

masonry veneer

In the insurance workplace, ethical dilemmas occur because differences of opinion and perception exist between clients and producers (and among insurance professionals) with respect to which of the following?

matters of significant value *Ethical dilemmas occur because of differences of opinion concerning matters of significant value (i.e., what's important and what isn't important); the existence, or viability, of available options; and the possible consequences or results of particular actions and behaviors.

As defined in the farm liability coverage form, farming does NOT include:

mechanized processing operations *Unless otherwise indicated on the declarations, farming does not include mechanized processing operations.

If a producer does not properly and thoroughly represent an insurance contract or product, his or her failure to do so may be construed as

misrepresentation *Failure of a producer to properly and thoroughly represent an insurance contract or product may be construed as misrepresentation. Making misrepresentations about an insurance policy or contract is both illegal and unethical.

In the context of a property or casualty insurance policy, which of the following is considered to be personal property? in-ground garden fountain tool shed heating, ventilation, and air-conditioning (HVAC) system moveable gas grill

moveable gas grill *Personal property is anything tangible that is not attached to land or an insured building.

A PPO provides health care services at fees that are determined on what basis?

negotiated, reduced fees *A PPO offers services at negotiated, reduced fees to the sponsoring organization's members or employees.

Which of the following is a requirement to operate as an insurance agency in Florida? having transacted insurance in Florida for at least two years before applying for a license submitting an application and appointing the Office as its agent for service of process obtaining a license or registration from the state appointment of at least two agents to manage the agency

obtaining a license or registration from the state

Which definition of total disability lets the insured qualify for benefits most easily?

own occupation *From an insured's point of view, an own occupation disability income policy is more favorable because it only requires the insured to be unable to work at his or her own occupation to qualify for benefits.

What type of business is ineligible for a BOP regardless of its size?

parking garage Parking lots or garages are ineligible for a BOP regardless of their size.

Two matching gas lampposts stand at the end of Hiram's driveway. A car damages one of the lampposts. The Loss to a Pair or Set condition in Hiram's HO 3 policy will not permit his insurer to:

pay Hiram half the value of the pair of lampposts *The insurer can repair or replace any part of a pair or set to restore it to its value before the loss or pay the difference between the actual cash value of the entire pair or set before and after the loss.

Phoebe rents her home. She loses control of her car on the icy driveway and crashes into the garage door. It will cost $1,000 to repair or replace the door. The property damage liability coverage of Phoebe's personal auto policy will:

pay for the damage *Although the PAP does not cover liability for damage to others' property that the insured possesses, it does cover such property when the insured rents a residence or private garage.

From an insurance perspective, the items inside a house, in a yard, and in a suitcase when the insured travels is considered to be:

personal property *Every kind of property that is not real property is personal property. This includes, but is not limited to, the contents of the insured's house and car.

Insurance companies generally refuse to issue policies to cover losses that are:

potentially catastrophic *Insurers generally refuse to insure losses that are within the insured's control, of immeasurable value, speculative, or catastrophic. An insurable loss is purely accidental; defined by time, cause, and location; measurable; not catastrophic; and common enough so that the insurer can predict future losses with reasonable accuracy.

The complete personal auto policy combines coverage for

property and liability insurance *The ISO personal auto policy combines property and liability insurance in a single policy to protect families and individuals. Property insurance protects the vehicle from loss due to fire or collision. Liability insurance protects the owner or operator if the vehicle is involved in an accident that results in injury or death.

As an attorney, Ben has lawyers professional liability insurance that provides him with liability coverage for clients' claims arising out of all the following, EXCEPT:

property damage liability *Ben should have a commercial general liability policy to cover himself against liability claims for damage to the property of others.

The declarations page of Julius's equipment breakdown policy lists a number of coverages, such as property damage, expediting expenses, business income and extra expense, and utility interruption. The word "INCLUDED" is shown next to "property damage," but it does not appear elsewhere in the declarations, nor are there any dollar limits listed on the page. Julius's policy provides coverage for:

property damage only *For any coverage option to apply, a dollar limit or the word "INCLUDED" must be shown on the policy for that coverage. Since the word is shown only for property damage, Julius has coverage for property damage only.

Which provision is NOT found in the common policy conditions section of a businessowners policy?

property loss settlement *The common conditions section applies to both property and liability sections of the policy. A condition that applies only to property would therefore not appear in the common policy conditions section.

After several violations, Napoleon Bar and Grill's liquor license was revoked. Napoleon did not inform its insurer of this fact and continued to serve alcohol to its regular customers, including Brett. After a long night at the bar, Brett was involved in a serious auto accident and sued Napoleon under the applicable dram shop act. Napoleon's liquor liability insurance:

provides no coverage because Napoleon's required license was not in effect *Liquor liability policies exclude coverage while any required license is not in effect.

Stephanie keeps valuable hobby supplies in a self-storage warehouse. The policy was just renewed, and the new policy imposed new limits for property in a self-storage facility, which Stephanie's agent did not point out to her. If a fire destroys the warehouse, Stephanie might be able to collect in full under what doctrine?

reasonable expectations *Courts sometimes agree to apply the reasonable expectations doctrine to provide protection an insured might reasonably expect in a case where the insured was uninformed that coverage had changed when a policy was renewed.

An automatic sprinkler system in a hotel building is a risk reduction measure because it:

reduces the amount of damage that a fire is likely to do

When settling a property claim, an insurer may offer the insured a choice of each of the following EXCEPT: payment of the insured value of the property replacement of the damaged property reduction in premium to insure the damaged property reparation of the damaged property

reduction in premium to insure the damaged property

More than half of Darryl's home suffers tornado damage. Because the home did not comply with current building codes, Darryl must tear down the undamaged portion and rebuild it with more expensive components. The ordinance or law additional coverage in his HO 3 policy will NOT cover:

replacement cost of repairing the damaged portion of the home

When referring to the subject that is being insured under an insurance policy, the term that is used is:

risk *The term "risk" is sometimes used to refer to the person, property, or activity that is insured under a policy.

Gina was the only employee in OK Convenience Store at 3 a.m. when a gunman entered the store and made her give him all the money in the cash register. Which of the following correctly describes the cause of loss? mysterious disappearance robbery burglary kidnapping

robbery *Robbery is a theft during which force is used or threatened.

Whose insurance needs are businessowners policies specifically designed to meet?

small to medium-sized businesses with typical exposures *The businessowners policy is designed to meet the insurance needs of a typical small to medium-sized business with exposures and coverage needs common to other businesses of the same type.

Which of the following is a coverage option that is available in a standard equipment breakdown policy?

spoilage damage *As long as the insured is legally responsible for the damaged property, spoilage damage is a covered peril. Dry rot, corrosion, and smoke damage are not coverage options.

A society, community, or business industry determines the collective standards of acceptable ethical conduct. An individual, however, approaches ethical decisions from a personal perspective of life experiences along with other factors. Which of the following is not one of the factors from which an individual makes an ethical decision?

state insurance regulations *State insurance regulations are not personal perspectives or life experiences.

From a property insurance perspective, which of the following is NOT a basic type of construction?

steel

Aimee thought she was correctly following the cooking instructions when she put a frozen turkey into the turkey fryer, but the resulting fire destroyed her neighbor's wooden deck. After paying for the deck, the neighbor's insurer attempts to recover from Aimee by exercising its right of:

subrogation *Subrogation is the insurer's right to recover its claim payment from a party that was responsible for the loss. The neighbor's insurance policy no doubt includes a subrogation provision that permits the neighbor's insurer, after paying the claim, to seek recovery from Aimee.

Newton, a garbage truck driver, breaks a hip when he falls from the cab. Doctors expect a full recovery, but Newton must remain in bed with the hip immobilized until the cast is removed. Newton's condition would be categorized as a:

temporary total disability *Newton is expected to recover from the injury and return to employment, but he is unable to do any type of work while he is recovering because he is temporarily totally disabled.

All of the following are perils EXCEPT: texting while driving theft lightning windstorm

texting while driving

A workers compensation insurance policy with an Outer Continental Shelf Lands Act Coverage endorsement excludes coverage for workers subject to all the following legislation EXCEPT: the Longshore and Harbor Workers' Compensation Act the Defense Base Act the Jones Act the Outer Continental Shelf Lands Act

the Outer Continental Shelf Lands Act *The endorsement provides workers compensation and employers liability coverage for workers subject to the Outer Continental Shelf Lands Act and specifically excludes coverage for other Acts that can be addressed with other endorsement

Which of the following is most likely to be an insurable risk? the chance that a gambler will lose a bet the chance that the value of land will change the chance that a fire will destroy a building the chance that a stock's value will change

the chance that a fire will destroy a building *In general, only pure risks are insurable. Pure risk involves only the chance of a loss. Gain is not possible. In contrast, speculative risks can result in gain or loss. They are generally not insurable. The destruction of a building due to fire results only in a loss to the owner, so it is an insurable risk.

Which of the following is a peril? theft dented fender home ownership icy sidewalk

theft *A peril is a cause of loss. An icy sidewalk is a hazard.

How may an HMO member get covered medical care from a provider who is outside the provider network, without a reduction in coverage?

through a point-of-service (POS) plan *HMO members cannot get covered health care services outside the HMO's provider network without buying a point-of-service (POS) option, which allows the HMO member to get treatment from an out-of-network provider.

When the front fenders of Bobbie's coupe were damaged in an auto accident, his insurer arranged to replace them with non-original equipment manufacturer (non-OEM) parts. Why does the insurer use non-OEM parts?

to help minimize the cost of repairs and the cost of insurance Insurers' use of aftermarket parts from non-original equipment manufacturers helps minimize the cost of repairs and the cost of insurance.

Why do insurance policies use quotation marks with certain words and phrases?

to identify words and phrases that are defined in the policy

A claims adjuster is required to maintain a complete and accurate claim file for all of the following reasons EXCEPT: to support denial of the claim to record the activities that occurred during the adjustment of the claim to facilitate examination by insurance regulators to permit others to service the claim if the adjuster is unavailable

to support denial of the claim

Harding Paint Store mixed a gallon of paint with the custom color Meghan requested. However, the store clerk failed to tighten the lid on the paint can, which came open while Megan was driving home with the can in her car. Under which type of law was Harding required to pay for the expensive damage to Megan's car that resulted from the paint spill?

tort law *Meghan had a right to freedom from damage to her property. Tort law protects the rights of individuals like Meghan from civil wrongs and provides for the payment of money damages as a remedy.

What type of bank accounts are obtained, maintained, and held separate and apart from other funds for a specific purpose?

trust accounts *Trust accounts are bank accounts that are obtained, maintained, and held separate and apart from other funds for a specific purpose.

While working at his service station, Bert mistakenly fueled a customer's truck with gasoline rather than diesel fuel, damaging the truck's engine. In responding to the trucker's liability claim for damages, Bert's insurance policy requires him to perform all the following duties EXCEPT:

try to settle the claim on his own

Olen buys insurance on the inventory in his warehouse, which includes a sizable quantity of watches bearing the "Rolex" label, and Olen pays the insurance premium. After Olen reports a theft, the insurer's investigation reveals that the watches it had agreed to insure were illegal counterfeits. Olen's contract with the insurer is:

unenforceable because it was for an illegal purpose *For a contracting party to be able to enforce the terms of the contract, the contract must be for a legal purpose, and counterfeit merchandise is illegal.

When choosing a health care provider from a PPO and managing out-of-pocket expenses, the insured can:

use a network provider for the lowest cost, or use a non-network provider for more flexibility. *Using a network provider may incur only a copayment, but for more flexibility, the insured can use a non-network provider and pay a deductible in addition to the copayment.

An insured's health insurance policy pays a flat rate of $200 a month if she becomes disabled, regardless of her actual income. What kind of policy does she have?

valued policy *Valued policies pay a fixed sum that is stipulated in the contract. A policy that pays a flat rate of $200 a month in case of disability is a valued contract.

While a homeowner is out of town, a group of teenagers break into her house, throw a beer party, and damage the interior without stealing anything. Connie's resulting property insurance claim will be covered if her policy covers what peril(s)?

vandalism

John let his 17-year-old daughter Ashley use his motorboat, knowing she was normally a responsible operator. On this evening, while fooling around, she collided with another boat causing injuries and property damage. Though John was not in the boat, he was found to be responsible for damages based on the doctrine of:

vicarious liability *Vicarious liability arises when one person is legally responsibility for the acts of another. For example, a parent who has not personally committed any negligent act may still be held responsible for a tort committed by his or her minor child.

The gradually expanding brown spot on the ceiling of his barbershop suggests that Edmond might have a plumbing leak, but he ignores it because any drips from the ceiling fall into a sink. When the ceiling collapses because of water damage, Edmond finally submits an insurance claim that the insurer denies because his policy has an exclusion for:

water leakage or seepage

Linwood requires each of its public officials to furnish a public officials bond. These bonds will normally terminate:

when the bonded public official leaves office *Public officials bonds usually terminate only when successors have been elected or appointed or the current official leaves office for any reason .

When does a false statement constitute fraud in the insurance industry?

when the false statement was about a material fact by a person intending to deceive *A false statement is not necessarily fraudulent. Fraud exists only when the intent of the person making the false statement is to deceive and secure unfair or illegal advantage and it is a false statement of material fact.