Exam 3

An insurer doing business in Idaho has failed to report a suspected fraudulent claim. This insurer is subject to a penalty of up to: $2,500. $1,000. $5,000. $10,000.

$5,000.

Which of the following is a statement that is guaranteed to be the truth throughout the duration of the policy? A representation. A warranty. A waiver. A condition.

A waiver.

Calvin has a Business Automobile policy covering the automobiles he uses in his business. He acquires a new trailer with a load capacity of 1,000 pounds and he plans to attach it to a van he already owns. The van is scheduled on the policy with Symbol 7 listed beside it. Based on this information, how long does Calvin have to report his new trailer to the insurance company? Calvin will not be covered for the trailer because it exceeds the load capacity of a trailer that will be covered under a Business Auto policy. Calvin is required to report newly acquired vehicles to the insurance company within 7 days of making the purchase. Calvin is not required to report newly acquired vehicles under Symbol 7. Calvin is required to report newly acquired vehicles to the insurance company within 30 days.

Calvin is required to report newly acquired vehicles to the insurance company within 30 days.

Under the "Inside the Premises - Theft of Money and Securities" insuring agreement of a crime policy, which of the following situations would NOT be covered: Cash that is taken by employees. Cash in the register is destroyed in a fire. Travelers checks that have turned up missing. A casino suffers a theft of slot machine tokens.

Cash that is taken by employees.

Mike's Moonshine, Inc. is located in a state that permits Mike to decide whether he would like to provide workers' compensation coverage to his employees or not. Mike lives is a(n): Pro-choice state. Elective state. Obligatory state. Compulsory state.

Elective state.

In order for a contract to be binding in a court of law, it must be designed for: Two parties. Legal purposes. Res ipsa loquitor. Easy interpretation.

Legal purposes.

Under the "Discovery Condition" of the Loss Sustained form of a Crime insurance policy, how long is a loss covered when the loss occurred during the policy period, but was discovered after the policy expired? One year Two years Anytime, provided the loss occurred during the policy period Sixty days

One year

An "other insurance" clause is included in insurance policies to deal with the problem of: Overinsurance. Excess insurance coverage. Inadequate coverage. Conditional coverage.

Overinsurance.

Investment consultants should purchase which of the following policies to protect themselves from errors and omissions? Professional Liability Owners and Contractors Protective Liability Premises and Operations Liability Products and Completed Operations Liability

Professional Liability

Damages awarded to a plaintiff in a tort action that are in excess of the cash value of the economic loss, as a punishment to the defendant and as a deterrent from similar conduct by others, is known as: Compensatory damages. General damages. Punitive damages. Special damages.

Punitive damages.

The per occurrence liability limit is ____________ for each claim submitted. Reduced Restored Unlimited Excess

Restored

Which of the following bonds are used by financial institutions? Appeal Bond Fidelity Bond Public Official bond Standard Form 24 Bond

Standard Form 24 Bond

An auto insurer may send a proper notice of cancellation as soon as the named insured has been convicted of or forfeited bail for _____or more violations. Three Two Four Five

Three

In insurance terms, the party who has been wronged is known as the _____ party, and the person causing the injury is the _____ party. third / first first / third second / first first / second

third / first

In Idaho a licensee has committed fraud and also violated other insurance regulations. What is the monetary penalty? $5,000 $4,000 $3,000 $1,000

$1,000

What is the minimum limit for Coverage L of the Personal Liability Supplement that can be attached to a Dwelling Property policy? $100,000 $1,000 There is no limit. $10,000

$100,000

Mark is injured at work in a state that provides a TTD benefit at 66 2/3%, the state minimum is $40 and the state maximum is $540. The waiting period is 3 days and the retroactive period is 15 day. Mark earns $15 per hour and usually works 20 hours per week. He was injured on December 4th and returned to work on December 12th. Which of the following is the amount of TTD benefit he would have received? $172.00 $200.00 $114.29 $166.29

$114.29

Cars driven by Sue Trent and Jim Higgins were involved in an automobile accident where Mr. Higgins was at fault. Sue Trent's car was a total loss and valued at $6,000, plus she sustained bodily injuries totaling $25,000. Scott Finley, Ms. Trent's passenger, was injured and incurred $6,000 in medical expenses. Mr. Higgins, the responsible party, carries bodily injury coverage with limits of $15,000 per person and $30,000 per accident, and property damage coverage of $5,000. His policy will pay a maximum of: $26,000 $29,000 $35,000 $39,000

$26,000

A death benefit will be payable to a spouse (without dependent children) of an employee who has suffered a work related fatality based on ____ of the state's average weekly wage. 66 2/3% 50% 75% 45%

45%

Under a Commercial Auto policy, which coverage symbol indicates that a car is subject to mandatory no-fault insurance? 5 9 7 2

5

The maximum period for income payments for death to a widow or widower until death or remarriage is: 250 weeks. 500 weeks. 100 weeks. 52 weeks.

500 weeks.

Sierra's home is located in a flood zone. In insurance terms, the location of Sierra's home is considered: A peril. A hazard. A risk. A proximate cause.

A hazard.

Sam the shopkeeper mops the floor of his store and forgets to set the "Caution Wet Floor" sign in the area to warn his customers. Sarah walks through the store a few moments later, slips on the floor and injures her arm and leg. This is an example of: An intentional tort. Vicarious liability. Absolute liability. A negligent tort.

A negligent tort.

Which of these statements best describes "the law of agency?" The activities of any party who receives a percentage of the profits from a business transaction. A relationship in which someone is authorized by contract to represent another party. The duties of a professional who is trained and licensed to prepare legal documents. The activities of any licensed insurance professional.

A relationship in which someone is authorized by contract to represent another party.

Supplementary payments on the CGL would provide which of the following? Accrued interest on unpaid judgments Loss of earnings up to $200 per day 10% excess coverage if the policy limits are exhausted None of the answer choices are correct

Accrued interest on unpaid judgments

A Personal Umbrella policy will cover and insured for an "occurrence" or "offense" that occurs: Anywhere in the world. In the policy territory that is listed on the Declarations page of the policy. In the United States, its territories, Canada and Mexico. In the United States and its territories.

Anywhere in the world.

All of the following are common-law duties of an employer under a workers' Compensation policy, EXCEPT: Warn workers of inherent dangers. Provide a safe working environment. Assumption of risk. Provide an adequate number of competent fellow workers.

Assumption of risk.

Which of the following best describes a sidetrack agreement which is an insured contract under the CGL? Rock-N-Jocks enters into a lease agreement to open a store at the mall. ABC General Contracting has "hold harmless" wording in their contract with XYZ Plumbing for worked performed on behalf of ABC. B&O railroad builds an extension track off of their main line and runs the track right behind the loading dock of the Ford Motor Company. Otis Elevator Company installs the elevators in the new office tower.

B&O railroad builds an extension track off of their main line and runs the track right behind the loading dock of the Ford Motor Company.

Which of the following losses does not fall within the Garage policy coverage territory? Physical damage to a covered auto that occurs in Toronto, Canada. Bodily injury resulting from a product of the named insured bought and installed in a customer's car in Texas. The injury occurred while the vehicle was being used in Mexico and suit was filed against the named insured in Texas. Bodily injury to a pedestrian struck by a covered auto. The accident occurred in Mexico. Physical damage to a covered auto being transported by ship from Florida to the U.S. Virgin Islands.

Bodily injury to a pedestrian struck by a covered auto. The accident occurred in Mexico.

Which type of liability coverage responds to claims that are made against an insured during the policy period or during any extended reporting period, for an accident that occurred after the retroactive date? Occurrence form Claims-made form Aggregate limits Umbrella form

Claims-made form

Fidelity bonds which apply coverage to an employee or employees acting in collusion with others are called: Commercial blanket bonds. Scheduled bonds. Position bonds. Blanket position bonds.

Commercial blanket bonds.

Which of the following is a necessary part of a complete commercial general liability policy? Extended reporting period endorsement Common policy conditions Exclusion of specific accidents endorsements All of the responses are correct

Common policy conditions

Owners and contractors protective liability protects against which of the following? Contingent Liability Fire Excess Liability Theft

Contingent Liability

All of the following defines claims covered under the CGL policy for products/completed operations, EXCEPT: Includes claims caused by faulty products that occur away from the premises owned or operated by the insured. Covers claims for products manufactured on the insured's premises. Covers products consumed on or off the insured's premises. Covers operations while being currently performed by the insured.

Covers operations while being currently performed by the insured.

Personal Excess Liability coverage provides all of the following, EXCEPT: Injuries sustained by a third party on the insured's property. Personal injury or property damage sustained by a third party due to an at-fault accident by the insured. Damage to an insured's property due to fire. Injuries to a neighbor while riding in the insured's covered boat.

Damage to an insured's property due to fire.

Which of the following would NOT be a prospect for errors and omissions insurance? Dentists Insurance Agents Real Estates Agents Lawyers

Dentists

The Forgery and Alteration Coverage Form protects the insured from losses resulting from forgery or alteration of: I. Outgoing checks. II. Drafts. III. Promissory notes. IV. Instruments drawn against the insured. I, II, III and IV I and II only I and III only I, II, and III only

I, II, III and IV

All of the following methods of providing workers compensation coverage in Idaho, EXCEPT: Individual health or disability income coverage. State Workers Compensation fund. Self insurance. Private insurance companies.

Individual health or disability income coverage.

Torts that can be covered by insurance policies include all of the following, EXCEPT: Intentional torts committed with intent, but the results of the act had unintended consequences that caused harm to another. A negligent tort in which a failure to act, caused harm to another. Vicarious liability due to an employee causing harm to another and the negligence is imputed to the employer. Intentional torts purposely committed to cause harm to another.

Intentional torts purposely committed to cause harm to another.

It has been reported to the Insurance Department in a given state that Callie, a licensee in that state, has violated an insurance law. The Insurance Commissioner will hold a hearing to determine the nature of Callie's behavior. After the hearing, the Commissioner is convinced that Callie has engaged in behavior that violates insurance law. Which of the following is the next step the Commissioner will take? Imposing a fine on Callie according to the insurance laws of the state. Revoking or suspending Callie's license. Issuing a cease and desist order. Referring Callie's case to the state attorney general for prosecution.

Issuing a cease and desist order.

All of the following statements regarding the Motor Carrier Act of 1980 are correct, EXCEPT: It requires truckers to certify that they are able to meet financial obligations arising from physical damage to their vehicle as a result of their trucking operations. It requires truckers to certify that they are able to meet financial obligations arising from liabilities of their trucking operations. Commercial Inland Marine Motor Truck Cargo insurance is used to cover the liability for hauled cargo. The MCS-90 endorsement must be attached to a truckers policy to show that insurance is being used as proof of financial responsibility.

It requires truckers to certify that they are able to meet financial obligations arising from physical damage to their vehicle as a result of their trucking operations.

Tort Law applies to all of the following, EXCEPT: Liability arising from the commission of an unintentional tort. Liability arising from negligence. Liability arising from a breach of duty. Liability arising from breach of contract.

Liability arising from breach of contract.

All of the following statements are true of liability insurance, EXCEPT: Legal liability does not have to be determined by a court of law before an insurer will pay. Liability insurance only indemnifies third parties. Liability insurance protects the policyholder against damages he/she causes a third party. Liability insurance provides indemnification for the insured.

Liability insurance provides indemnification for the insured.

The limits of the Employers' Liability section of a standard workers' compensation policy are: Listed in the Conditions section of the policy. Listed on the Information page. Set by state law. Set low enough that the employer will pay a significant portion of a claim.

Listed on the Information page.

The "impaired property" exclusion of a CGL policy's Coverage A deals mainly with: Loss of use claims due to "impaired property". Physical injury due to the "impaired property of others". Property damage due to "impaired products". Liability due to "impaired property".

Loss of use claims due to "impaired property".

Which of the following liability policies requires the insured's consent before the insurance company settles and pays a loss? Medical professional liability. Automobile liability. Products liability. Contractual liability.

Medical professional liability.

A large super market is covered under crime coverage Insuring Agreement 5 "Outside the Premises" coverage. The insured has a relative take to the bank money, securities and a diamond ring that is going to be a prize for a lucky customer in a contest. He reaches the bank and is getting out of the vehicle when he is robbed. What will the insurance carrier do? Deny the claim because a relative cannot be a messenger Deny the claim for the ring Pay the entire loss Deny the entire loss

Pay the entire loss

When a state is "monopolistic" with workers' compensation coverage, employers in that state are: Permitted to purchase coverage through a private insurer or through the state-funded plan. Required to purchase their workers' compensation coverage from the state-funded plan. Required to self-insure their workers' compensation coverage. Not required to provide workers' compensation coverage for their employees.

Required to purchase their workers' compensation coverage from the state-funded plan.

Employee dishonesty coverage does NOT include: Money stolen by the employee on the way to the bank Inventory shortage caused by the employee Embezzlement of money by an employee Robbery of an employee

Robbery of an employee

The insured carries a workers compensation policy that includes Part Two - Employer's Liability coverage. Which of the following is not covered by Part Two? Statutory benefits set by state law. Suits brought by injured employees, in case of employer's gross negligence. Suits brought by spouses or dependent of injured workers. Legal defense costs.

Statutory benefits set by state law.

The retroactive date which can be used in the claims-made version of the CGL policy is: The earliest date an injury can occur for coverage to apply. The latest date a claim can be made for coverage to apply. The earliest date a claim can be excluded. The latest date an injury can occur for coverage to apply.

The earliest date an injury can occur for coverage to apply.

Which of the following is the correct description of the "AMA Guide to the Evaluation of Permanent Impairment"? The guide has an extensive listing of the physical requirements of various job functions and the maximum level of impairment a person could have and still perform that function. The guide has a listing of possible job functions that can be performed by individuals with given impairments, listed in a chart. The guide has a set of symptoms that are typically associated with given impairments to assist physicians in determining whether to declare that a person is impaired. The guide lists a set of medical criteria used by physicians to form the basis for established medical ratings of permanent impairment.

The guide lists a set of medical criteria used by physicians to form the basis for established medical ratings of permanent impairment.

If a third party is handed a check from the insured that has been altered and pays the false amount on the check, is such a loss covered? Forgery coverage is carried by the insured. The loss is not covered because it was presented by a third party The insurance is not designed to cover this type of forgery The insurance company will honor the claim The insurance company may send the insured a non-waiver agreement to maintain its rights to conduct a thorough investigation while not admitting liability

The insurance company will honor the claim

The insured is liable for $500,000 in damages for a personal injury claim that is covered under the insured's primary liability policy. The primary liability policy has a $300,000 limit per occurrence. The insured also has a $1 million Umbrella policy with a $3,000 self-insured retention limit. How would this claim likely be settled? The primary policy would pay $300,000 and the insured would pay $200,000. The primary policy would pay $300,000, the insured would pay $3,000, and the Umbrella policy would pay $197,000. The primary policy would pay nothing; the Umbrella policy would pay the full $500,000. The primary policy would pay $300,000 and the Umbrella policy would pay $200,000.

The primary policy would pay $300,000 and the Umbrella policy would pay $200,000.

What is the main purpose of government regulation of the insurance industry? To provide a better understanding to the general public of the importance of insurance. To keep insurance losses from falling to the government for payment. To help insurance companies make a profit. To protect the insurance consuming public.

To protect the insurance consuming public.

With workers' compensation insurance, an experience rating serves all of the following purposes, EXCEPT: To encourage employers to prioritize safety. To reward employers with lower premiums if they have had a good loss experience. To provide a reason that employer's with a poor loss experience can be denied coverage. To provide a financial incentive for employers to control hazards in the workplace.

To provide a reason that employer's with a poor loss experience can be denied coverage.

If an Idaho employee is injured in a job related accident, workers compensation benefits will be retroactive to the date of the injury if the disability lasts more than: Three weeks. Two weeks. Four weeks. The benefits are never retroactive to the date of injury.

Two weeks.

Under the basic extended reporting period of a CGL policy a claim must be reported within ____ to be covered. 30 days 60 days No number of days required 90 days

60 days

If the "other insurance" clause in a policy specifies that more than one policy will share equally in the loss until the lowest policy limit is exhausted and continue in that fashion until all policy limits are exhausted. This is known as: Pro-rata liability. Primary and excess liability. Contribution by equal shares. Other insurance clause.

Contribution by equal shares.

An insured has her business automobiles covered under a Business Auto policy with Symbol 7 specified on her Declarations page. She has purchased a trailer with a load capacity of 2,500 pounds and hitched it to a covered van. While she is driving the van, the trailer breaks free and crashes into another vehicle, causing bodily injury. Which of the following statements is true regarding this insured's situation? Liability coverage is extended under Symbol 7 for a trailer with a load capacity of less than 5,000 pounds, therefore coverage will apply. Liability coverage is not extended under Symbol 7 for a trailer with a load capacity of more than 2,000 pounds, therefore coverage will not apply. Liability coverage is excluded for all trailers under the Business Auto Coverage form. Liability coverage will not apply for the trailer, but coverage for the van will pay the damages awarded under the lawsuit.

Liability coverage is not extended under Symbol 7 for a trailer with a load capacity of more than 2,000 pounds, therefore coverage will not apply.

An insured has fabricated a claim that would appear to be legitimate. What kind of hazard would this act represent? Physical hazard Moral hazard Morale hazard It is a peril, not a hazard.

Moral hazard

Which statement is correct under the Commercial General Liability policy? The insured generally has the right to settle a claim for damages. The insurer generally has the right to settle a claim for damages. Both the insured and the company must agree before a claim for damages can be settled. The insurer and the third-party claimant must agree before a claim for damages can be settled.

The insurer generally has the right to settle a claim for damages.

Which of the following is generally not considered to be a legal defense against claims of negligence? The loss to the plaintiff was caused intentionally by the defendant. A state law gives specific immunity from liability to the defendant. An intervening cause was the proximate cause of the plaintiff's injury rather than the defendant's action (or inaction). The relevant statute of limitation for filing a lawsuit has expired.

The loss to the plaintiff was caused intentionally by the defendant.

Which of the following would be covered under Part Two - Employer's Liability of a standard workers' compensation policy? Contractual liability. The employee sues the employer from emotional stress due to termination. The spouse of the injured employee sues the employer for loss of consortium. Injury to an employee working after working too much overtime.

The spouse of the injured employee sues the employer for loss of consortium.

An employer's workers' compensation policy will pay the medical expenses of injured workers: For as long as the injured worker seeks treatment that is related to the injury. Until maximum medical recovery is reached. For the number of days after the injury that is required by state law. Until the policy limit of liability per injured worker, is reached.

Until maximum medical recovery is reached.

Henry is the first named insured on a $1 million Umbrella policy. His wife, Dorothy, is also an insured. Both Henry and Dorothy were sued for $1 million in separate, unrelated suits by separate third parties. Both insureds lost their suits on the same day. In this possible but rare situation, if the Umbrella policy is applicable and the self-insured retention is not applicable: Henry will receive more protection from the policy than Dorothy because he is the first named insured. The policy will pay $500,000 toward each award. The policy will only honor Henry's claim because he is the first-named insured. Henry and Dorothy would receive the same amount of coverage, and the policy could ultimately pay a total of the $2 million amount for the two awards, subject to the "aggregate limit".

Henry and Dorothy would receive the same amount of coverage, and the policy could ultimately pay a total of the $2 million amount for the two awards, subject to the "aggregate limit".

What is the time limit provided under the basic extended reporting period under the CGL claims-made form for the reporting of claims that occurred before the expiration date of the policy? 60 days to report the claim and 5 years of coverage for the reported claims. 60 days to report the claim and 2 years of coverage for the reported claims. 180 days to report the claim and 5 years of coverage for the reported claims. 120 days to report the claim and 3 years of coverage for the reported claims.

60 days to report the claim and 5 years of coverage for the reported claims.

How does surety differ from casualty? Casualty covers legal expenses of the insured and surety does not There are three parties to surety, the principal, obligee and guarantor Casualty covers the named insured and surety covers the obligee in case the principal under the bond defaults All of the responses are correct

All of the responses are correct

Which of the following statements is FALSE concerning coverage under the Business Auto policy? Medical payments coverage is automatically provided. It may be used to cover specifically described autos only. If written to cover "any auto", non-owned and hired autos are automatically covered. Whether newly acquired autos are automatically covered depends upon the applicable coverage symbol.

Medical payments coverage is automatically provided.

The Dye family hosts a party. When the guests arrive, they place their coats in the bedroom. Two days later, Mr. Dye discovers that his ring is missing from the dresser. This loss is referred to as a: Mysterious disappearance. Burglary. Robbery. Theft.

Mysterious disappearance.

Gloria's Garment Gallery is sued, and found to be liable for damages equal to Gloria's Commercial General Liability policy limits. In addition to the policy limit, the insurer will pay each of the following, EXCEPT: New safety equipment for Gloria's Garment Gallery, costing $500, to avoid a future loss. Court costs of $1,000. $500 in interest which accrues from the time of judgment until payment is made. $2,000 paid to an investigator to investigate the case.

New safety equipment for Gloria's Garment Gallery, costing $500, to avoid a future loss.

Employment practices liability insurance: I. Covers claims generally excluded by workers compensation, such as wrongful discharge or sexual harassment. II. Can be added as an endorsement to a directors and officers policy. Both I and II I only II only Neither I nor II

Both I and II

A customer in a restaurant becomes ill after they return home after eating. Which policy would respond to handle the claim? General Liability policy that is unendorsed Professional Liability policy General Liability policy with Products coverage specifically added by endorsement Errors and Omissions

General Liability policy that is unendorsed

Cameron has his home covered under a Homeowners policy and his limit for bodily injury is $100,000. He also purchased a Personal Umbrella policy with a $1,000,000 limit of liability. Cameron is sued and a judgement was made against him for $500,000. To trigger his Umbrella policy, his Homeowners policy must pay $100,000, but he finds that the insurance company from which he purchased his Homeowners policy has become insolvent. How will the Umbrella insurer pay the claim (disregarding any retention limit)? The Umbrella policy will become primary when the underlying insurer becomes insolvent, and will pay the $100,000, plus the remaining $400,000 due under the Umbrella policy. The Umbrella policy will pay nothing. The underlying insurance must be kept in place for the Umbrella policy to pay any amount. The Umbrella policy will not become primary when the underlying insurance when that insurer becomes insolvent, but will pay the $400,000 as if the underlying insurer had paid its $100,000 limit of liability. The Umbrella policy will become primary when the underlying insurer becomes insolvent, but will only pay the underlying policies limit of $100,000, and only $300,000 of the remaining judgement, for a total of $400,000.

The Umbrella policy will not become primary when the underlying insurance when that insurer becomes insolvent, but will pay the $400,000 as if the underlying insurer had paid its $100,000 limit of liability.

Ellie's Engineering, Inc. has several warehouses and it is necessary for employees to transport different items between the warehouses, depending on what products are being manufactured at any given time. One day Bill, Karen, and Josh were required to load several containers of an explosive chemical onto a truck to transport it across town to another warehouse. Karen knew that the chemical must be handled carefully to prevent it from exploding, but she did not refuse to move the containers nor did she indicate to Bill and Josh that the chemical was dangerous. After loading the containers, Josh is moving the truck out of the loading zone and negligently backs it into a brick wall, causing an explosion, injuring all three workers. Bill died from the injuries several days after the accident. Which of the following statements most accurately describes the common law defense(s) that Ellie's Engineering might use to defend themselves against a lawsuit filed by Karen? The contributory negligence doctrine only. The assumption of risk, contributory negligence, and fellow worker doctrine. The assumption of risk and the fellow worker doctrine only. The assumption of risk only.

The assumption of risk and the fellow worker doctrine only.

Which of the following would not be a covered workers compensation injury in Idaho? The employee is intoxicated and injures himself. The employee assumes the risk of a dangerous task. The employee is injured while performing a job for which he is not properly trained. The employee is injured while performing a job without permission from their supervisor.

The employee is intoxicated and injures himself.

On March 4, 2007, five people were injured at a department store. The store was negligent. Four of the people were injured very seriously and subsequently filed claims against the store's primary and umbrella polices. But one man whose leg was injured said his injury wasn't too bad, and he didn't file a claim against the store at that time. However, in April of 2008, the man's leg began to bother him, and he had trouble walking. He then saw a doctor and filed a claim for the injury. Since the department store is covered under an occurrence form of commercial umbrella liability policy, which was renewed in 2007, the claim: Will be covered by the 2007 Commercial Umbrella Liability policy. Will be covered by the 2008 Commercial Umbrella Liability policy. Will not be covered under either the 2007 or 2008 policies. Will be covered by both the 2007 and 2008 polices.

Will be covered by the 2007 Commercial Umbrella Liability policy.