Exam FX, VA Property & Casualty Insurance
55. What are the two types of compensatory damages? (Choose from the following options) 1. Special and general 2. Pure and speculative 3. Tort and general 4. Normal and punitive
1. Special and general
38. Which of the following symbols is available to an insured with vehicles subject to no-fault coverage? (Choose from the following options) 1. Symbol 5 2. Symbol 6 3. Symbol 7 4. Symbol 9
1. Symbol 5
Under businessowners policy Section I, if an insurer wants to cancel a policy for any reason except nonpayment of premium, how many days before the effective cancellation date must the insurer notify the mortgageholder?
30 days
Under the additional coverages of a businessowners policy, property removed to protect it from loss will be covered at another location for up to
30 days.
Assuming the insurer and the insured agree to the amount payable for a loss covered under a dwelling policy, how soon after the insurer has received proof of loss must it make payment?
60 days
Criminally negligent
A professional liability policy will provide coverage for loss in all the following cases, except, when the insured doctor was shown to be
Commercial general and professional
A professional who wants coverage for all liability exposures should purchase what form of liability insurance?
A business income coverage form would cover all of the following situations EXCEPT
A union strike of construction workers causes the repair of the insured's building to be delayed for a period of time.
Exposure
A unit of measure used to determine rates charged for insurance coverage.
Which of the following is NOT considered an insured contract under the Commercial General Liability policy? A: A written agreement which indemnifies a person for fire damage to the premises rented to the insured B: an elevator maintenance agreement C: An obligation as required by ordinance to indemnify a municipality, except for a work municipality D: A written lease agreement on the insured premises
A written agreement which indemnifies a person for fire damage to the premises rented to the insured
Rates that are established based on the similarities of the risk with other risk are known as
Manuel rates
What is not a consideration when paying an inland marine claim? A: Cost to repair or restore the property B: Market value when the property was first purchased C: Cost to replace the property D: ACV on date of loss
Market value when the property was first purchased
In which of the following situations would the jewelers block extension cover a loss? A: Diamond store agrees to exhibit a necklace set in a showcase away from the premises. The case is broken into and the set is stolen B: Julie, an employee, is wearing a cameo broach set to display to customers. During the day she discovers it has fallen off and she cant find it C: Maurice's Jewelers fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged D: A jeweler is robbed while displaying bracelets at a public exhibition
Maurice's Jewelers fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged.
A business is using its own trucks to move its own cargo would insure the cargo using A: Motor truck cargo- owners form B: Motor truck cargo- truckers form C: Motor carrier form D: Trip transit coverage
Motor truck cargo - owners form
After a loss, an insured covered by a business property coverage is NOT required to
Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation.
The voluntary compensation endorsement in a workers compensation policy provides that the insurer will pay statutory benefits to the insured person in exchange for what?
The insured person must release the employer and the insurer from further liability.
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?
The insured will need a written consent of the insurer.
Within 45 days
The insured with the claims made commercial general liability policy may request in writing claim an occurrence form from the insurer at anytime up to 60 days after the policy period Ends. The insurer must provide the information
Excess Policy
only pays AFTER the primary policy has paid up to its limit (all other insurance must be exhausted before the policy will apply
Contributory Negligence
the injured party must be completely free of fault any negligence on party that contributed to the injury will defeat the claim
Replacement Cost
the cost to replace with like kind and quality at today's prices
Inception
the date at which the insurance policy goes into effect
homogeneity
the degree to which items are similar
How long is the waiting period after the application has been accepted before flood coverage goes into effect?
30 days
Which of the following is NOT covered by the condominium unit owners endorsement
Furniture in the building
Comparative Negligence
More lenient Awards for damages are reduced by the percentage of negligence of each party
Which of the following watercraft will NOT be covered by business liability insurance?
Owned watercraft 53 feet long
Negligence
the failure to use the care that a reasonable, prudent person would under the same or similar circumstances
What is the limit for the forgery or alteration coverage in the businessowners policy?
$2,500
Per Occurrence
A sublimit in a liability policy that puts a ceiling on the payment for all claims that arise from a single accident/occurrence
A large antenna is damaged when a tree branch hits an insured farm dwelling during a storm. Coverage A of a farm property coverage form would insure damages for this occurrence up to A: $1,000 B: $2,000 C: $3,000 D: $4,000
$1,000
What is the maximum amount an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy? A: $10,000 for all expenses incurred during a 12 month period B: $15,000 for all expenses incurred during a 12 month period C: $20,000 for all expenses incurred during a 12 month period D: $5,000 for all expenses incurred during a 12 month period
$10,000 for all expenses incurred during a 12 month period
What is the maximum amount an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy?
$10,000 for all expenses incurred during a 12-month period
The pollutant cleanup and removal coverage in the businessowners policy has a limit of
$10,000 in any 12-month period.
An insured has a standard HO-4 policy with a $30,000 limit of coverage for personal property. While he was traveling, a fire in his hotel destroys clothes and luggage with a replacement value of $10,000, and jewelry with a replacement value of $10,000. Disregarding any deductible, and assuming a depreciation of 20% has occurred in both properties, what amount is the insurer obligated to pay?
$16,000
A commercial property special form covers property in transit up to A: Full replacement cost B: $5,000 C: ACV D: $500
$5,000
Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings or records? A: $5,000 B: $10,000 C: $25,000 D: $1,000
$5,000
An insured has a special form dwelling policy written for $100,000 on a dwelling. The dwelling's replacement cost is $115,000. Fire causes $75,000 in damage to the dwelling, $15,000 damage to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for the trees?
$5000
Jack and Jill each own a 50% interest in a dwelling that is insured under a standard fire policy issued to Jill to cover her interest in the structure. The amount of insurance is $40,000. Following a $10,000 fire loss to the structure, Jill will receive
$5000
Loss Ratio
(incurred losses + loss adjustment expenses) / premiums earned
Coinsurance
(insurance carried/ Insurance required) x loss amount = loss payment
An organization ceases to exist as an entity eligible to hold a license for all of the following reasons EXCEPT
. Upon continuance of only one person from the previous co-partnership to the new co-partnership.
90. With regards to a homeowners policy, which coverage provides for indirect or consequential losses? (Choose from the following options) 1. Coverage C 2. Coverage D 3. Coverage A 4. Coverage B
1. Coverage C right Answer 2. Coverage D coverage D Provide for loss of use, Which is an indirect loss
The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period?
1 year
64. Following the holiday season, an insured decides to store his decorations in the attic for the summer. While moving the decorations, he accidentally drops a heavy box that crashes through the ceiling and damages a table and lamp in the dining room causing $1,000 of damage to them. His HO 00 03 will pay (Choose from the following options) 1. $1,000 less the deductible. 2. The market value of the damaged property. 3. Nothing. 4. $1,000.
1. $1,000 less the deductible. Right Answer 3. Nothing. The peril falling objests does not include loss to property contained in a building unless the roof or an outside wall of the builddin gis first damaged by a falling object. Damage to the falling object is not included.
9. An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the third passenger. How much will the policy pay under medical payments coverage? (Choose from the following options) 1. $14,000 2. $15,000 3. $5,000 maximum for the accident 4. $5,000 minus the policy deductible
1. $14,000
43. An insured has a standard HO-4 policy with a $30,000 limit of coverage for personal property. While he was traveling, a fire in his hotel destroys clothes and luggage with a replacement value of $10,000, and jewelry with a replacement value of $10,000. Disregarding any deductible, and assuming a depreciation of 20% has occurred in both properties, what amount is the insurer obligated to pay? (Choose from the following options) 1. $16,000 2. $20,000 3. $30,000 4. $11,000
1. $16,000
136. A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy? (Choose from the following options) 1. $175,000 2. $180,000 3. $200,000 4. $100,000
1. $175,000
89. A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss? (Choose from the following options) 1. $20,000 2. $30,000 3. $40,000 4. $60,000
1. $20,000 Right Answer 2. $30,000 For the total amount of partial loss to be paid, a house must be insured for at leat 80%. In dis case, because the house is insurad for only $60k ( 75% of the minimum requiremetn) , the policy will pay only 45% of the loss. or 30k
111. A state-established program that requires insurers who write property insurance to accept risks in economically depressed areas in the same proportion as their other business bears to the total property insurance market is called (Choose from the following options) 1. A fair access to insurance (FAIR) plan. 2. A shared and spread risk (SSR) plan. 3. An equitable risk option (ERO) plan. 4. Fair trades practice plan.
1. A fair access to insurance (FAIR) plan.
46. While an insured's covered auto is in the repair shop following damage caused by a collision, the insured would have coverage for which of the following vehicles under a personal auto policy? (Choose from the following options) 1. Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair 2. Any vehicle used by the insured without the reasonable belief that the insured is entitled to use such vehicle 3. Any auto furnished for the insured's regular use, but not named on the policy 4. Any vehicle while located inside a racing facility for the purpose of racing
1. Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair
128. First aid costs for others injured on the insured's premises (Choose from the following options) 1. Apply only if the insured is legally liable. 2. Also cover injuries to the insured's family members. 3. Are deducted from the liability limit. 4. Are paid in addition to the liability limit.
1. Apply only if the insured is legally liable. Right Answer 4. Are paid in addition to the liability limit. First aid costs for others apply even if you are not legally liable and are in addition to the stated limits, but do not apply to those regularly at the location.
107. Which of the following is a method of claim settlement used when the insured and insurer cannot agree on how to settle a claim? (Choose from the following options) 1. Arbitration 2. Proof of Loss 3. Restoration 4. Appraisal
1. Arbitration
113. The risk management technique that is used to prevent a specific loss by not exposing yourself to that activity is called (Choose from the following options) 1. Avoidance. 2. Transfer. 3. Reduction. 4. Sharing.
1. Avoidance.
80. A liability policy that provides coverage for a claim for injury or damage if the claim is first reported or filed against the insured during the policy period is called (Choose from the following options) 1. Claims-made form. 2. BI/PD form. 3. Occurrence form. 4. Premises coverage.
1. Claims-made form.
96. An insured's house is damaged by a fire and is uninhabitable. As a result, the insured has to rent an apartment until repairs are made. A dwelling insurance policy will pay for the expense of renting the apartment. Which type of broad or special form coverage does the insured have? (Choose from the following options) 1. Coverage D - Fair Rental Value 2. Coverage E - Additional Living Expense 3. Coverage A - Dwelling 4. Coverage B - Other Structures
1. Coverage D - Fair Rental Value Right Answer 2. Coverage E - Additional Living Expense Coverage E is a broad or special form under the DP that pays for additional living expenses while the insured's dwelling is being repaired
146. A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean? (Choose from the following options) 1. Coverage is automatic. 2. There is no coverage. 3. Coverage applies without premium. 4. This must be a misprint on the form.
1. Coverage is automatic. Right Answer 2. There is no coverage.
110. Under the examinations of books and records condition, the insurance company has the right to examine and audit the insured's books and records related to the policy (Choose from the following options) 1. During the policy period and for up to 3 years after the termination of the policy. 2. Only during the policy period. 3. During the policy period and for up to 5 years after the termination of the policy. 4. Only after the policy period.
1. During the policy period and for up to 3 years after the termination of the policy.
41. Which of the following is a cancellation procedure in which the premium returned to the insured is NOT in direct proportion to the number of days remaining in the policy period? (Choose from the following options) 1. Flat rate 2. Proportional 3. Short rate 4. Pro rata
1. Flat rate Right Answer 3. Short rate Meaning of short rate
58. According to the California code, all of the following are TRUE regarding binding authority for excess and surplus lines insurance EXCEPT (Choose from the following options) 1. If more than one person is assuming the obligation, the risk will always be equally shared. 2. If more than one person shall share the risk, the policy shall contain a specification of how the risk is to be shared. 3. No person shall transact any insurance with nonadmitted insurers except through a licensed surplus lines broker. 4. Binding authority for excess risk coverage shall identify all persons assuming the risk.
1. If more than one person is assuming the obligation, the risk will always be equally shared.
126. Which of the following organizations has the primary responsibility forms for the standard market? (Choose from the following options) 1. Insurance Services Office 2. Office of Financial Services 3. National Association of Insurance Commissioners 4. Governor's Office
1. Insurance Services Office
34. A licensed insurance agent overhears a conversation that leads him to believe a person is committing workers compensation claim fraud. If the agent makes a written report to a law enforcement agency and the person is investigated, but it turns out that it was an erroneous accusation, the agent may be sued for (Choose from the following options) 1. Libel, a written untruth. 2. A misrepresentation. 3. Slander. 4. Nothing; the Code gives the agent legal immunity.
1. Libel, a written untruth. Right answer 4. Nothing; the Code gives the agent legal immunity. Every agent has a responsibility to combat fraud, the state grants immunity from lawsuits for an agents good faith report of suspected workers comp fraud. CIC 1877.5
60. In a personal umbrella, the amount paid by the insured for certain losses not covered under the primary coverage is called (Choose from the following options) 1. Self-insured retention. 2. Stop-loss. 3. Coinsurance. 4. Participation requirement.
1. Self-insured retention.
8. Which of the following would NOT be considered a flood? (Choose from the following options) 1. Sewer backup 2. Overflow of tidal waters 3. Mudslides 4. Runoff of surface waters
1. Sewer backup
10. According to California Insurance Code, all licensees must prominently display their individual license numbers on all of the following EXCEPT (Choose from the following options) 1. Motor club advertisements. 2. Marketing materials. 3. Printed advertisements. 4. Business cards.
1. Motor club advertisements.
16. Which rating method provides an insurer with that portion of a rate that does not include provisions of expenses (other than adjusting expense) or profit and is based on historical aggregate loss and loss adjustment expenses projected through development to their ultimate value and through trending to a future point in time? (Choose from the following options) 1. Provision rating 2. Profit rating 3. Components rating 4. Loss costs rating
1. Provision rating Right Answer 4. Loss costs rating
26. Which of the following homeowners endorsements increases its limits each year by a selected percentage? (Choose from the following options) 1. Scheduled personal property 2. Inflation guard 3. Permitted incidental occupancies 4. Personal property replacement cost
1. Scheduled personal property Right Answer 2. Inflation guard endorsement is used to help maintain insurance to value requirements for replacement coase coverage. The Limit increases each year by a selected percentage.
40. Under a dwelling policy, which of the following is NOT a factor in determining a loss? (Choose from the following options) 1. The amount negotiated by the insured 2. The policy limit 3. The amount reflecting the insured's interest in the property at the time of loss 4. The amount necessary to repair or replace the property
1. The amount negotiated by the insured
51. Under which of the following circumstances would an insurer be allowed to cancel a dwelling policy midterm? (Choose from the following options) 1. The insured knowingly lied about the year the property was constructed. 2. The insured's claims have exceeded the amount of coverage. 3. The insured wants to make suspicious increases to his or her coverage. 4. The insured reached his or her limit on the number of claims.
1. The insured knowingly lied about the year the property was constructed.
44. What will happen if a house covered by a standard mortgage clause is a total loss? (Choose from the following options) 1. The insurer pays the mortgagee according to the mortgagee's interest in the property. 2. The mortgagee retains no rights to any contracts involving the policy. 3. The insured receives the full benefit and passes the mortgagee's share to the mortgagee. 4. The mortgagee receives the full benefit and passes the insured's share to the insured.
1. The insurer pays the mortgagee according to the mortgagee's interest in the property.
52. Increased value and excess liability clauses work like which of the following policies? (Choose from the following options) 1. Umbrella 2. Professional liability 3. Cargo 4. Errors and omissions
1. Umbrella
2. Which of the following best describes the amount of loss assessment coverage included under a homeowners policy liability coverage section? (Choose from the following options) 1. Up to $10,000 aggregate for the policy period 2. Up to $5,000 aggregate for the policy period 3. Up to $1,000 per occurrence 4. Up to $2,500 per occurrence
1. Up to $10,000 aggregate for the policy period Right Answer 3. Up to $1,000 per occurrence
49. When a parent is required to pay for damages caused by his or her children, this is an example of (Choose from the following options) 1. Vicarious liability. 2. Strict liability. 3. Intervening cause. 4. Assumption of risk.
1. Vicarious liability.
147. Erroneous Publishing copied all the material from Angels Inc.'s book. The only changes made by Erroneous were to rename the title and chapters, put a different cover on it, and distribute it as its own. Angels Inc. files a claim against Erroneous and seeks damages. Will a commercial general liability policy cover the claim? (Choose from the following options) 1. Yes, because the claim is a result of Erroneous products and work. 2. No, because this event does not meet the definition of infringement. 3. No, because the claim results from copyright infringement and is not in an advertisement. 4. No, because there is no bodily injury or property damage.
1. Yes, because the claim is a result of Erroneous products and work. Right Answer 3. No, because the claim results from copyright infringement and is not in an advertisement.
Under Federal Crop Insurance policies, an insured may select a coverage level that indemnifies the insured should the yield fall below one of the following percentage of the historic yield, EXCEPT
100%
Any person who claims that he or she meets the criteria based on a driver's license and driving experience acquired anywhere other than in the United States or Canada is presumed to be qualified to purchase a Good Driver Discount policy if that person has been licensed to drive in the United States or Canada and meets the criteria for that period for at least the previous
18 months
19. An auto dealer reported $500,000 worth of automobiles on its lot at the end of May to its insurer. On June 10, it received $200,000 worth of cars. By June 20, the dealership sold $100,000 worth of cars. A hail storm on June 21 caused $50,000 worth of damage to the inventory. Without considering any deductibles, how much will the insurer pay for damages? (Dollar amounts are rounded to the nearest hundred.) (Choose from the following options) 1. $35,700 2. $40,000 3. $41,700 4. $50,000
2. $40,000 Right Answer 3. $41,700 Inventory 500k+200k = 700k Less 100k cars sold 700k-100k= 600k 50,000 x5/6 =41,700
65. How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card? (Choose from the following options) 1. $100 2. $500 3. $1,000 4. $5,000
2. $500
37. In the split limit coverage in personal auto policies, which limit indicates the maximum amount the policy will pay for bodily injury per person? (Choose from the following options) 1. 1st limit 2. 2nd limit 3. 3rd limit 4. 4th limit
2. 2nd limit Right answer 1. 1st limit Split limit coverage uses 3 dollar amounts. The First limit indicates the maximum amount the policy will pay for BI for each person
82. According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss? (Choose from the following options) 1. 30 days 2. 60 days 3. 90 days 4. 120 days
2. 60 days
135. Which of the following losses would NOT be covered by a homeowner's policy? (Choose from the following options) 1. A $800 outboard motor destroyed by hail 2. A coin collection valued at $500 lost in a fire 3. A $550 utility trailer blown away by a tornado 4. A stolen silver tea set worth $2,000
2. A coin collection valued at $500 lost in a fire
7. With respect to auto insurance, the term owned autos includes all of the following EXCEPT (Choose from the following options) 1. Any private passenger auto leased to the named insured for a period of more than 6 months. 2. A pickup or van titled to and used in the named insured's business. 3. Any private passenger auto titled to the named insured. 4. A pickup or van acquired by the named insured during the policy period.
2. A pickup or van titled to and used in the named insured's business.
83. The protection of the insurer from adverse selection is provided in part by (Choose from the following options) 1. A reduction in coverage. 2. A profitable distribution of exposures. 3. Reducing costs. 4. A drop in applicants.
2. A profitable distribution of exposures.
22. If you are called upon to handle the estate of a deceased, the court will require you to post which bond? (Choose from the following options) 1. Guardian 2. Administer 3. Executor 4. Fiduciary
2. Administer Right Answer 4. Fiduciary Fiduciary has the legal right to act as another's personal repsrestatie and are often appointed by the court. A Fiduciary Bond guarantees the fiduciary duties.
87. The inspections and surveys condition in a businessowners policy (Choose from the following options) 1. Guarantees that all working conditions are safe and healthful. 2. Allows the insurer the right to inspect the insured's premises. 3. Validates that the insured is in compliance with state and federal guidelines. 4. Obligates the insurer to make annual safety inspections.
2. Allows the insurer the right to inspect the insured's premises.
150. Even though the Standard Fire Policy is a named peril contract, under which of the following circumstances would the policy provide "all risk of loss" coverage on insured property? (Choose from the following options) 1. When the loss is to insured property that has be removed because of endangerment by a peril insured against under the policy 2. Always 3. Never 4. When the loss is caused by an "act of God"
2. Always Right Answer 1. When the loss is to insured property that has be removed because of endangerment by a peril insured against under the policy Property that has been removed to protect against a possible pending loss by a peril coverage by the policy is coverage for up to 5 days at another location for virtually any type of loss.
63. If an insurer makes a change to broaden coverage in a dwelling policy while it is in effect, the changes will apply (Choose from the following options) 1. Within 60 days. 2. Automatically. 3. When the new policy is written. 4. When the policy is up for renewal.
2. Automatically.
30. An individual was involved in a head-on collision while driving home one day. His injuries were not serious, and he recovered. However, he decided that in order to never be involved in another accident, he would not drive or ride in a car ever again. Which method of risk management does this describe? (Choose from the following options) 1. Retention 2. Avoidance 3. Reduction 4. Sharing
2. Avoidance
66. All of the following are additional liability coverages automatically provided in a homeowners policy, EXCEPT (Choose from the following options) 1. Personal injury protection. 2. Claims expenses. 3. Damage to the property of others. 4. Loss assessment coverage.
2. Claims expenses. right Answer 1. Personal injury protection. Personal injury may be added
74. In a dwelling policy, which of the following provides coverage for additional living expenses incurred by an owner-occupant in the event a covered peril makes the premises uninhabitable due to a covered loss? (Choose from the following options) 1. Coverage C 2. Coverage E 3. Coverage A 4. Coverage B
2. Coverage E
21. In California, the liability for bodily injury or death to one person has a financial responsibility liability limit of (Choose from the following options) 1. $30,000. 2. $20,000. 3. $15,000. 4. $5,000.
3. $15,000.
45. When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of (Choose from the following options) 1. Nothing, unless the remarks were in writing 2. Defamation. 3. Misrepresentation. 4. Discrimination.
2. Defamation.
125. Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will (Choose from the following options) 1. Defend with the hopes of not paying damages. 2. Either pay or defend as it decides. 3. Pay the alleged damages. 4. Proceed according to your request.
2. Either pay or defend as it decides.
54. The Standard Fire Policy would provide coverage in which of these cases? (Choose from the following options) 1. Insured's neglect 2. Fire 3. Acts of war 4. Theft
2. Fire
115. The major portion of the premium for an equipment breakdown policy pays (Choose from the following options) 1. Coverage for BI & PD of others. 2. For replacement parts. 3. For inspections and examinations. 4. Repair to prevent.
2. For replacement parts. Right Answer 3. For inspections and examinations. Inspecting the machinery to be insured is critical to the underwriting of equipment breakdown coverage. Finding flaws that could lead to losses and requiring corrective action is the purpose.
143. The term used to describe the cost and charges associated with the transfer of goods from one location to another is (Choose from the following options) 1. Shipping. 2. Freight. 3. Transfer. 4. Cargo.
2. Freight.
39. Jim and Janet's house is an older home with lath and plaster walls. Following a kitchen fire, the insurance company pays to have the wall replaced with drywall that is just as functional, but costs less than lath and plaster. Which loss valuation allows the insurance company to have plaster replaced with drywall? (Choose from the following options) 1. Actual cash value 2. Functional replacement cost 3. Replacement cost 4. Market value
2. Functional replacement cost
71. What insurance concept is associated with the words "Weiss" and "Fitch"? (Choose from the following options) 1. Index used by stock companies 2. Guides describing company financial integrity 3. Policy dividends 4. Types of mutual companies
2. Guides describing company financial integrity
27. Tim's home is mortgaged by the local bank. Tim is required to carry insurance on the home showing the bank as the mortgagee. Which of the following is true if the home is damaged by a covered peril? (Choose from the following options) 1. The additional premium required for the mortgage endorsement must be paid by the mortgagee. 2. Losses will be paid to the mortgagee and mortgagor as their interest appears. 3. Coverage is suspended if the building is mortgaged and the insurer is not told of this indebtedness. 4. The mortgagee must settle with the mortgagor in the event of a loss.
2. Losses will be paid to the mortgagee and mortgagor as their interest appears.
29. Wilber's house is located 1 mile from the county's new landfill and across the road from the entrance of a rock quarry. To rebuild the house if something happened to it would cost $150,000. But when Wilber tried to sell it, the best offer he received was $80,000. His insurance company will insure the house for only $80,000. How is Wilber's house insured? (Choose from the following options) 1. Functional replacement cost 2. Market value 3. Actual cost value 4. Replacement cost
2. Market value
122. What type of property does a Personal Floaters policy cover? (Choose from the following options) 1. Movable personal property located in the insured's home, only 2. Movable personal property, wherever it may be located 3. Permanently attached property located on the insured's premises 4. None of these
2. Movable personal property, wherever it may be located
69. Which of the following coverages is included in an unendorsed homeowners policy? (Choose from the following options) 1. Medical payment to others 2. Personal property replacement coverage 3. Fungi, wet or dry rot, or bacteria 4. Earthquake
2. Personal property replacement coverage
132. Pete wants to have separate insurance coverage for separate acreages. What kind of insurance should Pete get? (Choose from the following options) 1. Unit Insurance 2. Plot Insurance 3. There is no insurance of this kind. 4. Acre-by-acre Insurance
2. Plot Insurance Right Answer 1. Unit Insurance
95. When may a representation be withdrawn? (Choose from the following options) 1. Within the first 2 years of the policy 2. Prior to the issuance of the policy 3. At any time 4. After the policy is issued
2. Prior to the issuance of the policy
17. Which one of the following is NOT an element of insurability? (Choose from the following options) 1. Loss must be expected 2. Risk of loss is speculative 3. Loss is calculable 4. Risk of loss must represent a financial hardship
2. Risk of loss is speculative
24. Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages? (Choose from the following options) 1. General 2. Special 3. Tort 4. Normal
2. Special
101. Shipbuilders and repairers are covered by (Choose from the following options) 1. U.S. Longshore and Harbor Workers Compensation Act. 2. The Jones Act. 3. States' workers compensation laws 4. Federal Employers Liability Act.
2. The Jones Act. Right Answer 1. U.S. Longshore and Harbor Workers Compensation Act. is a fedral law offering works comp benefits for workers who are injured on navigable water who are normally not covered by state work comp laws.
68. A driver with 10 years of experience driving an automobile has never had a traffic violation or a DUI. He is now applying for a separate motorcycle policy. He has obtained his motorcycle license 2 years ago. Which of the following is true? (Choose from the following options) 1. The Good Driver Discount will not apply to the motorcycle. 2. The driver will have to obtain a separate coverage for motorcycles. 3. The driver will qualify for the Good Driver Discount on a motorcycle. 4. Motorcycles are automatically included in a personal auto policy.
2. The driver will have to obtain a separate coverage for motorcycles. Right Answer The Good Driver Discount will not apply to the motorcycle IN Motorcycle policies or endorsements driving experiance means the years licensed to drive a motorcycle, notan automobile. Specially motorcycle coverage may be offered as a separate policy
25. Personal property coverage under a homeowners policy would cover (Choose from the following options) 1. A pet that the insured is temporarily keeping for a friend. 2. The insured's camera if it is stolen while the insured is on vacation. 3. A neighbor's fence if damaged by the insured. 4. Property moved to a newly acquired residence after 60 days.
2. The insured's camera if it is stolen while the insured is on vacation.
120. All of the following statements are true regarding fire department service charge additional coverage under the businessowners policy EXCEPT (Choose from the following options) 1. This coverage provides an additional $2,500 amount of insurance. 2. This coverage limit pays in place of the limit of insurance shown in the declarations. 3. This coverage limit is payable in addition to the limit of insurance shown in the declarations. 4. This coverage is not subject to any deductible.
2. This coverage limit pays in place of the limit of insurance shown in the declarations.
106. What is the purpose of increased value and excess liability (IVEL) clauses? (Choose from the following options) 1. To protect the master and crew of a vessel from being sued 2. To provide extra coverage for the same losses covered by an underlining policy 3. To protect an assured from the errors and omissions of his or her insurance agent 4. To protect the insurer from inflation
2. To provide extra coverage for the same losses covered by an underlining policy
116. What is the name for the type of property damage coverage that protects the insured or the covered auto in an accident with someone who does not have coverage? (Choose from the following options) 1. Underinsured motorist 2. Uninsured motorist 3. Disaster coverage 4. Calamity motor coverage
2. Uninsured motorist
All of the following people would be considered insureds under the liability section of a homeowners policy, EXCEPT
22 year old niece who is visiting
If the actual values exceed the limit of insurance, the businessowners policy (BOP) contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by
25%.
129. If a liability policy had split limits of 100/300/100, what is the maximum amount that would be payable in the event of injury to a single person? (Choose from the following options) 1. $300,000 2. $500,000 3. $100,000 4. $200,000
3. $100,000
33. Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective? (Choose from the following options) 1. 12:01 pm on the 5th day after the endorsement request has been mailed 2. 5 days after the application and premium payment are mailed 3. 12:01 am the day after the application and premium payment are mailed 4. 30 days after the application has been accepted
3. 12:01 am the day after the application and premium payment are mailed
50. In addition to penalties, fines, and possible imprisonment for violating the provision relating to misrepresentation, the Commissioner may suspend the license of such person for a period up to (Choose from the following options) 1. 6 months. 2. 1 year. 3. 3 years. 4. 5 years.
3. 3 years.
67. Losses caused by vandalism and malicious mischief are excluded under a homeowners policy if the dwelling had been vacant for more than (Choose from the following options) 1. 30 days. 2. 45 days. 3. 60 days. 4. 90 days.
3. 60 days.
75. L's insurer has made all of the decisions regarding the provisions included in her policy. L finds an objectionable provision and wants to negotiate it with the insurer but is not allowed to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe? (Choose from the following options) 1. Conditional 2. Personal 3. Adhesion 4. Unilateral
3. Adhesion
142. Which of the following types of valuation works best for property whose value does not fluctuate much? (Choose from the following options) 1. Stated amount 2. Inflation guard 3. Agreed value 4. Market value
3. Agreed value
79. In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? (Choose from the following options) 1. Unilateral 2. Unidirectional 3. Aleatory 4. Conditional
3. Aleatory Right Answer 1. Unilateral Meaning of Unilater
42. All of the following are insurable events as defined in the Insurance Code EXCEPT (Choose from the following options) 1. An insured goes to the hospital for a broken arm. 2. An insured is sued for libel and slander. 3. An insured loses a large sum in a poker game. 4. A guest trips and breaks his leg in the insured's house.
3. An insured loses a large sum in a poker game.
62. What type of liability would a person who owns a swimming pool have? (Choose from the following options) 1. Vicarious 2. Implied 3. Direct 4. Absolute
3. Direct Right Answer 4. Absolute Any conduct that is inherently dangerous imposes absolute liability. The claimant does not have to prove anything
57. All of the following are eligibility criteria for applicants in the CAARP EXCEPT (Choose from the following options) 1. Can state (via Eligibility Certification Statement on back of application) that they attempted to secure insurance through the voluntary market and were denied coverage is eligible for participation in the program. 2. The vehicle to be insured must be registered in the state of California. 3. Anyone who has a valid driver's license. 4. Anyone who does not owe money on any automobile insurance policy within the last 18 months.
3. Anyone who has a valid driver's license. Right Answer 4. Anyone who does not owe money on any automobile insurance policy within the last 18 months.
121. The insured's mother-in-law broke her leg falling down the front steps of the insured's premises. The insured's homeowners medical payments coverage will (Choose from the following options) 1. Pay only if the mother-in-law has no health insurance of her own. 2. Share equally in the cost with the mother-in-law's health insurance. 3. Apply to injuries of any guests or visitors. 4. Pay as excess over the mother-in-law's health insurance.
3. Apply to injuries of any guests or visitors.
108. Which of the following would be included in the farm liability coverage forms? (Choose from the following options) 1. Bodily injury to a residence employee 2. Any obligation of the insured under a workers compensation law 3. Bodily injury to any person who is an insured 4. Bodily injury to an employed farmhand
3. Bodily injury to any person who is an insured Right Answer 1. Bodily injury to a residence employee
5. In order to become an admitted, authorized insurer, what is the primary body of law about which an applicant company must be concerned? (Choose from the following options) 1. California Penal Code 2. California Constitution 3. California Insurance Code 4. California Business Code
3. California Insurance Code
137. Additional coverages in the liability section of a homeowners policy cover all the following EXCEPT (Choose from the following options) 1. Damage to the property of others. 2. Damage to a third party property for which the insured is legally liable. 3. Claims expense. 4. Expenses the insured incurs rendering first aid for bodily injury to third parties.
3. Claims expense. Right Answer 2. Damage to a third party property for which the insured is legally liable.
81. Which of the following property coverages would provide protection to contents damaged by fire? (Choose from the following options) 1. Coverage C 2. Coverage D 3. Coverage A 4. Coverage B
3. Coverage A Right Answer 1. Coverage C Personal property provides coverage for the content of an insured dwelling
148. A person who is responsible for the administration of a decedent's estate would have a need for a(n) (Choose from the following options) 1. Fiduciary bond. 2. Attachment bond. 3. Decedent bond. 4. Bid bond
3. Decedent bond. Right Answer 1. Fiduciary bond.
118. All of the following are other coverages under the dwelling policy EXCEPT (Choose from the following options) 1. Debris removal. 2. Improvements, alterations, and additions. 3. Earth movement. 4. Other structures.
3. Earth movement.
84. A common extension of property insurance coverage that goes beyond the coverage for fire and lightning is known as (Choose from the following options) 1. Basic coverage. 2. Seasonal increases. 3. Extended coverage. 4. Vandalism and malicious mischief coverage.
3. Extended coverage.
93. Leo, an employee of the local "Shop A Lot" grocery store, suspects Betty of shoplifting. Leo escorts Betty through the crowded store to the back office and calls the local police. It is later determined that the Betty has not stolen any merchandise. Leo is guilty of (Choose from the following options) 1. Assault. 2. Battery. 3. False Arrest. 4. Invasion of Privacy.
3. False Arrest.
119. Elaborate homes and those with detailed designs or decorative architecture with replacement costs greater than ACV or market value are insured on (Choose from the following options) 1. HO-3 with an HO-15 endorsement. 2. HO-8. 3. HO-8 with an inflation guard endorsement. 4. HO-3.
3. HO-8 with an inflation guard endorsement. Right Answer 2. HO-8. HO is used to insure houses with replacement cost more that market value and those built with irreplaceable materials . It is a modified HO1 and provides ACV coverage for Coverage A
31. The homeowners policy covers collapse caused by all of the following EXCEPT (Choose from the following options) 1. Foundation cracks. 2. Weight of snow. 3. Hidden insect or vermin damage. 4. Weight of too many people attending en event hosted in the house.
3. Hidden insect or vermin damage. Right Answer Foundation Cracks Collapse must be caused by some sudden unexpected reason. The foundation cracks would take years to cause collapse, meaning there would be plenty of time to find and repair them.
131. Factual statements about the insured or the risk in an insurance policy are considered (Choose from the following options) 1. Express warranty. 2. Representations. 3. Implied warranty. 4. Material representations.
3. Implied warranty. Right Answer 1. Express warranty. Statements in a policy are considered express warranty.. It is part of the insurance contract. Implied warranty is the unwritten or unspoken guarantee presumen to be made based on the circumstance of a transaction
97. All of the following are characteristics of the dwelling policy EXCEPT (Choose from the following options) 1. The dwelling must be owner-occupied. 2. Coverage includes the dwelling only, contents only, or both. 3. Incidental occupancy of limited service-type exposure is permitted. 4. Dwellings up to four family units are eligible.
3. Incidental occupancy of limited service-type exposure is permitted. Right Answer 1. The dwelling must be owner-occupied. Dwelling policies insure residential exposure with only limited service type business exposure allowed. The Dwelling can be completed or under construction and can be owner or tenant occupied. The dwelling policy can insure the dwelling only , content only or both.
77. While cutting grass in your yard with your brother's borrowed lawnmower, the fuel line ruptures and the lawnmower is destroyed in the fire. How will your HO liability react? (Choose from the following options) 1. It will pay your brother's property insurance deductible. 2. Your HO liability and your brother's property coverage will share on a prorated basis. 3. It will cover the damage. 4. It will not cover the damage because you are not liable.
3. It will cover the damage.
20. What losses are considered when computing individual FMHA emergency loan eligibility? (Choose from the following options) 1. Losses on any crop will be considered 2. Losses on crops that are not insurable will be considered 3. Losses on crops which the farmer chose to insure will be considered 4. Losses on all insurable crops will be considered
3. Losses on crops which the farmer chose to insure will be considered
70. Which of the following liability coverages must be added by endorsement to a homeowners policy in order to apply? (Choose from the following options) 1. Bodily injury 2. Property damage liability 3. Medical payments to others 4. Personal injury
3. Medical payments to others Right Answer 4. Personal injury applies only if added by endorsement and an additional premium is paid
36. Several insureds have become liable because of a single loss. How will the policy's limit of liability be affected? (Choose from the following options) 1. A homeowners policy can have no more than one insured. 2. The full limit applies to each insured individually. 3. No more than the per occurrence limit applies, no matter how many insureds are involved. 4. Pro rata liability applies.
3. No more than the per occurrence limit applies, no matter how many insureds are involved.
100. The party to a surety or fidelity bond who promises to fulfill the obligation is the (Choose from the following options) 1. Custodian. 2. Surety. 3. Obligee. 4. Principal.
3. Obligee. Right Answer 4. Principal.
134. Under a dwelling policy, which of the following clauses applies if an insured has lost one of two matching silver candlesticks? (Choose from the following options) 1. Fractional loss 2. Portion loss 3. Pair or set 4. Sets coverage
3. Pair or set
139. All of the following statements regarding a Boatowners policy are true EXCEPT (Choose from the following options) 1. Automatic coverage is provided on replacements for the boat listed in the declarations provided the insured notifies the insurer within 60 days of purchase and pays any additional premium required. 2. Watercraft liability coverage provides protection up to specified limits, for claims against a "covered person" for damages because of bodily injury caused by a watercraft occurrence. 3. Physical damage coverage is provided on an actual cash value (ACV) basis. 4. The perils insured against is on an open-peril basis, providing that the insurer will pay for direct and accidental loss to the property insured.
3. Physical damage coverage is provided on an actual cash value (ACV) basis. Right Ansswer 1. Automatic coverage is provided on replacements for the boat listed in the declarations provided the insured notifies the insurer within 60 days of purchase and pays any additional premium required.
144. Under the coverage of which of the following liability policies may an insured require the insurer to defend a claim? (Choose from the following options) 1. General liability 2. Personal liability 3. Professional liability 4. Auto liability
3. Professional liability
53. All of the following are additional causes of loss included in the broad form of a commercial property policy EXCEPT (Choose from the following options) 1. Weight of ice, snow, or sleet. 2. Water damage. 3. Replacement cost. 4. Falling objects.
3. Replacement cost.
130. The reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against is known as (Choose from the following options) 1. Exposure. 2. Hazard. 3. Risk. 4. Loss
3. Risk. Right Answer 4. Loss Loss is the Reduction , decrease.....
127. The termination of an insurance contract with the premium charge being adjusted in proportion to the exact time the protection has been in force is considered a (Choose from the following options) 1. Pro rata cancellation. 2. Refund cancellation. 3. Short rate cancellation. 4. Flat rate cancellation.
3. Short rate cancellation. Right Answer 1. Pro rata cancellation.
13. Business personal property coverage form covers all of the following EXCEPT (Choose from the following options) 1. Furniture and fixtures. 2. Machinery that is not permanently installed. 3. Stock. 4. Automobiles held for sale.
3. Stock. Right Answer 4. Automobiles held for sale.
59. Which of the following perils is covered by the HO-2 and HO-3? (Choose from the following options) 1. Flood 2. War 3. Sudden and accidental rupture of a heating system 4. Loss due to power interruption that occurs off the premises
3. Sudden and accidental rupture of a heating system
48. Replacement cost coverage is provided in both the broad and special form dwelling policies when (Choose from the following options) 1. The amount of insurance on the dwelling is at least 90% of its replacement cost when the policy is written. 2. The dwelling is insured for 100% of its replacement cost at the time of a loss. 3. The amount of insurance on the dwelling is at least 80% of its replacement cost at the time of loss. 4. The amount of insurance on both the dwelling and personal property is at least 80% of its replacement cost when the policy is written.
3. The amount of insurance on the dwelling is at least 80% of its replacement cost at the time of loss.
105. In which of the following examples would a contract between an insurer and prospective insured be legal? (Choose from the following options) 1. The applicant is a 12-year-old student. 2. The applicant is under the influence of medication at the time of application. 3. The applicant has a prior felony conviction. 4. The applicant is intoxicated at the time of application.
3. The applicant has a prior felony conviction.
92. The Occurrence form trigger is based on which of the following? (Choose from the following options) 1. The amount of the insured's deductible 2. The amount of claims made during the policy period 3. The date when injury or damage occurs 4. The place where the injury or damage occurs
3. The date when injury or damage occurs
112. Which of the following is NOT a limitation under Mexico Coverage? (Choose from the following options) 1. It applies only if the insured is in Mexico for a trip of 10 days or less. 2. Suits may be brought by either U.S or Mexican citizens. 3. The insured must purchase separate coverage if they plan on driving in Mexico. 4. It applies only to accidents which occur within 25 miles of the U.S. border.
3. The insured must purchase separate coverage if they plan on driving in Mexico. Right answer 2. Suits may be brought by either U.S or Mexican citizens. Suits must be brought in the U.S. , but only by a US Citizen
94. With respect to commercial auto policies, the Garage Coverage Form provides liability protection for all of the following EXCEPT (Choose from the following options) 1. The insured's business products and work performed. 2. The insured's business income losses due to personal injury. 3. The insured's business premises. 4. The insured's business autos.
3. The insured's business premises. Right Answer 2. The insured's business income losses due to personal injury. The Garage Coverage Form does NOT cover personal injury and loss of wages from those injuries. Such Coverage would be provided by a CGL policy
14. If more than one person has an insurable interest in the property covered under a dwelling policy, (Choose from the following options) 1. All involved insurers must decide which one will be liable for the loss. 2. All insureds must decide which one will be liable for the loss. 3. The insurer will be liable for only the insured's interest in the damaged property. 4. Liability will be split evenly among all people who have insurable interest.
3. The insurer will be liable for only the insured's interest in the damaged property.
28. Which of the following statements is true regarding the premium computation for workers compensation insurance? (Choose from the following options) 1. The premium base for workers compensation insurance varies by the type of industry in which the insured is involved. 2. The insured pays a guaranteed premium based on an estimated value of the annual income received. 3. The premium is set at the beginning of the policy period and will not change. 4. A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis.
3. The premium is set at the beginning of the policy period and will not change. Right Answer 4. A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis.
85. When a vehicle travels from one state to another, what happens to the limits of policy liability in a personal auto policy? (Choose from the following options) 1. They do not change. 2. They do not apply. 3. They increase based on the state law. 4. They decrease based on the state law.
3. They increase based on the state law. Right Answer 1. They do not change. The minimum liability limits do not change when a vehicle travels from state to state, and remain the same regardless o the state the vehicle is in.
47. A premium discount is the term that describes when an insured owes a total standard premium greater than (Choose from the following options) 1. $15,000. 2. $1,000. 3. $5,000. 4. $10,000.
4. $10,000. Right Answer 3. $5,000. Premium discount is when an insured owes a total standard premium greater than 5,000
72. The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to (Choose from the following options) 1. $200,000. 2. $250,000. 3. $100,000. 4. $150,000.
4. $150,000. Right Answer 2. $250,000.
32. Which of the following would NOT be considered an insured under a homeowners policy? (Choose from the following options) 1. Residents of the household that are blood relatives of the insured 2. An individual, under 21, in the care of but not related to the insured 3. Individuals named in the policy declarations 4. A divorced spouse living in another state
4. A divorced spouse living in another state
15. A businessowners policy is (Choose from the following options) 1. A special policy designed for large and small retail operations. 2. Part of a commercial package policy. 3. A monoline policy. 4. A self-contained prepackaged policy.
4. A self-contained prepackaged policy.
56. Which of the following would NOT be considered a form of direct response marketing? (Choose from the following options) 1. An ad in a newspaper 2. A circular mailed to a city's residents 3. An insurance company's TV commercial 4. A sign in an insurer's office
4. A sign in an insurer's office
4. Which of the following departments is responsible for developing mortality and morbidity tables? (Choose from the following options) 1. Marketing 2. Underwriting 3. Secretarial 4. Actuarial
4. Actuarial
91. Which of the following dwelling policy forms insures a structure on an actual cash value basis? (Choose from the following options) 1. DP-1 2. DP-2 3. DP-3 4. All DP forms
4. All DP forms Right answer 1. DP-1 DP1 insured the Structure on an ACV basis, DP2 and DP3 insure the structure on a replacement cost basis
99. Which would be considered a single accident in equipment breakdown coverage? (Choose from the following options) 1. All accidents at all insured locations at same time by same cause 2. All accidents at same location within a 24-hour period 3. All accidents at same location within a 48-hour period 4. All accidents at single location at same time by same cause
4. All accidents at single location at same time by same cause
23. Loss of yield cause by any of the following events would be covered under a Federal Crop Insurance policy, except: (Choose from the following options) 1. Mismanagement by the insured 2. Theft of crops by the insured 3. Loss of yield because of failure by the insured to use approved farming practices for the area 4. All are exceptions to coverage
4. All are exceptions to coverage
12. A Boatowners policy covers (Choose from the following options) 1. Damage to the boat and trailer. 2. Liability. 3. Medical payments. 4. All of these.
4. All of these.
138. Which of the following describes the transfer of a legal right or interest in an insurance policy? (Choose from the following options) 1. Abandonment 2. Obligation 3. Legal purpose 4. Assignment
4. Assignment
149. All of the following statements are FALSE regarding garage physical damage coverage EXCEPT (Choose from the following options) 1. Specific causes-of-loss coverage is not available for physical damage coverage. 2. No coverage is provided for any auto stored for more than forty-five days at a location not shown in the declarations. 3. Collision coverage is provided only for dealers. 4. Autos held for sale by a dealer are listed individually in the policy.
4. Autos held for sale by a dealer are listed individually in the policy. Right Answer 2. No coverage is provided for any auto stored for more than forty-five days at a location not shown in the declarations. collision coverage is not for any specific risk. Autos held for sale are covered when auto designation symbol 31 is shown on the declaration page. The Specific causes of loss coverage is available for physical damage coverage
17. Which of the following is NOT an element of negligence? (Choose from the following options) 1. Unbroken chain 2. Libel 3. Duty 4. Breach
4. Breach Right Answer 2. Libel There are four essential elements of negligent, Duty, Breach, injury and unbroken change. LIber is a type of Intentional tort
104. What list contains the names of all eligible surplus lines insurers? (Choose from the following options) 1. SLiAC (Surplus Lines insurers Approved by Commissioner) 2. SIL (Surplus Insurers List) 3. LESLI (List of Eligible Surplus Lines Insurers) 4. CLSLI (Commissioner's List of Surplus Lines Insurers)
4. CLSLI (Commissioner's List of Surplus Lines Insurers) Right Answer 3. LESLI (List of Eligible Surplus Lines Insurers) includes all insurere eligible to supply surplus lines of insurance and the date they became approved.
11. The at-fault driver in an insured's auto crash had the state required minimums for auto liability coverage, but not enough to pay for all the damage done to the insured. This driver is (Choose from the following options) 1. Not liable for the damages in excess of his limits. 2. Required to post a bond for the amount of damages above his limits. 3. Considered uninsured. 4. Considered underinsured.
4. Considered underinsured.
1. A professional liability policy will provide coverage for loss in all of the following cases, except, when the insured doctor was shown to be (Choose from the following options) 1. Criminally negligent. 2. Incompetent. 3. Negligent. 4. Improperly trained.
4. Improperly trained. Right answer 1. Criminally negligent.
88. Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy? (Choose from the following options) 1. Damage to the dwelling caused by ash or dust from a volcanic eruption 2. Damage to the dwelling caused by the insured when moving furniture 3. Accidental scorching caused when a hot iron is placed upon a built-in counter top 4. Interior damage caused by water seeping under the shingles on the roof
4. Interior damage caused by water seeping under the shingles on the roof Right Answer 1. Damage to the dwelling caused by ash or dust from a volcanic eruption HO 3 cover losses on a open peril basis. An HO2 covers losses on a named peril basis. Both forms cover damage to the dwelling cause by ash or dust from a volcanic eruption
3. Using an air-cooled engine, a proposed insured has developed a new, experimental aircraft. If the inventor applies for liability insurance, what rating type will the insurer most likely use? (Choose from the following options) 1. Class 2. Schedule 3. Merit 4. Judgment
4. Judgment
78. A property with which of the following deficiencies would be eligible for the California FAIR Plan? (Choose from the following options) 1. Faulty wiring 2. Windows poorly installed 3. Heating system in poor condition 4. Located in a designated hazardous brush area
4. Located in a designated hazardous brush area
18. How many vehicles per person can be covered by the California low-cost auto insurance program? (Choose from the following options) 1. All the vehicles in the household 2. Unlimited amount 3. Only one 4. No more than 2
4. No more than 2
86. Annual transit policies are written on a(n) (Choose from the following options) 1. Automatic basis. 2. Named peril basis. 3. Temporary basis. 4. Open-peril basis.
4. Open-peril basis. Right Answer 2. Named peril basis. Annual Transit policies are used by business that ship goods on a regular basis. Coverage can be written for various types of shipments. These policies are written on name peril basis
103. All of the following are exclusions under farm property coverage EXCEPT (Choose from the following options) 1. Flood. 2. Loss of use. 3. Earth movement. 4. Ordinance or law.
4. Ordinance or law. Right Answer 2. Loss of use. Loss of use is provided under Coverage D of a Farm policy , the rest are exclusions
141. Which of the following losses would most likely NOT be covered under Coverage A in the dwelling policy? (Choose from the following options) 1. Supplies used for repair of the dwelling 2. Theft of a renter's lawnmower used to service the premises 3. Fire damage to building material on the premises 4. Outdoor personal property of the insured
4. Outdoor personal property of the insured Right Answer 2. Theft of a renter's lawnmower used to service the premises
61. A situation in which a person can only lose or have no change represents (Choose from the following options) 1. Speculative risk. 2. Adverse selection. 3. Hazard. 4. Pure risk.
4. Pure risk.
114. The endorsement that provides coverage for losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formations is a/an (Choose from the following options) 1. Mine subsidence endorsement. 2. Earthquake endorsement. 3. Earth subsidence endorsement. 4. Sinkhole collapse endorsement.
4. Sinkhole collapse endorsement.
133. In order to be covered by the U.S. Longshore and Harbor Workers Compensation Act, a worker must meet the requirements of the (Choose from the following options) 1. Maritime and navigable waters test 2. Wharf and pier test 3. Loading and unloading test 4. Situs and status test
4. Situs and status test
35. How are surety bonds different from insurance? (Choose from the following options) 1. Insurance guarantees specific duties or obligations will be fulfilled; surety bonds pay for losses. 2. Surety bonds guarantee that losses will be paid; insurance pays for obligations to be fulfilled. 3. Surety bonds are issued by the government; insurance is issued by private companies. 4. Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses.
4. Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses.
123. Your accounts receivable records have been destroyed or damaged. Your loss may be covered with (Choose from the following options) 1. Commercial property insurance. 2. The commercial articles coverage form. 3. The valuable papers coverage form. 4. The accounts receivable coverage form.
4. The accounts receivable coverage form.
6. All of the following statements concerning coinsurance are true, EXCEPT (Choose from the following options) 1. It is used to help adequacy and equity in rates. 2. The insured agrees to maintain insurance equal to some specified percentage of the value of the property. 3. If the insurance carried is less than required, the insurance may not cover the whole loss. 4. The coinsurance formula also will be applied to total losses.
4. The coinsurance formula also will be applied to total losses.
145. An insured works outside the home. The insured's sister lives with him and cares for his 4 children. When his home is severely damaged by fire, they move into an apartment while repairs are being made. The largest apartment available in the area has 2 bedrooms, so the insured's sister stays at a motel while the repairs are made. How much will the HO-3 pay for their additional living expense? (Choose from the following options) 1. The cost of renting an apartment, and 50% of the cost of the motel 2. Nothing 3. All of the expense up to the Coverage D limit 4. The cost of renting an apartment, but not the cost of the motel room
4. The cost of renting an apartment, but not the cost of the motel room Right Answer 3. All of the expense up to the Coverage D limit
140. The conditions of the Standard Fire Policy addressing the rules, duties, and provisions of the insured and the insurer are found in (Choose from the following options) 1. The 165 lines of conditions. 2. The exclusions. 3. An endorsement. 4. The declarations.
4. The declarations. Right Answer 1. The 165 lines of conditions.
76. In order for a Protection and Indemnity policy to cover a loss which of the following must be TRUE? (Choose from the following options) 1. The insured must have been the person operating the vessel 2. The insurer must conduct an investigation into the loss. 3. The loss must total. 4. The insured must be legally liable for the loss.
4. The insured must be legally liable for the loss.
109. Which of the following information would NOT be included in property insurance policies? (Choose from the following options) 1. A list of policy provisions 2. A list of coverages 3. The insured's name 4. The insured's address
4. The insured's address
102. A dealership loans a car to its customer to use while the dealership is repairing the customer's car. If the dealership has business auto physical damage coverage and a customer's automobile insurance does not cover damages to loaner cars, which of the following is true? (Choose from the following options) 1. No coverage is provided. 2. Only coverage for damage to a third party's vehicle is provided. 3. The customer is personally liable. 4. The loaner vehicle is covered by the business auto policy.
4. The loaner vehicle is covered by the business auto policy.
124. A neighbor's tree has fallen into the insured's. The insured's homeowners policy will NOT pay to remove the tree UNLESS (Choose from the following options) 1. The damage is more than $1,000. 2. The neighbor has no homeowners insurance. 3. The tree has caused damage to the house. 4. The tree is blocking the driveway.
4. The tree is blocking the driveway.
98. Which of the following would NOT be considered part of the insured location under the liability section of a homeowners policy? (Choose from the following options) 1. A residence where an insured is temporarily residing 2. A family cemetery plot 3. A lakeside cabin rented by the insured for vacation 4. Vacant farmland owned by the insured
4. Vacant farmland owned by the insured
73. When would uninsured motorists coverage apply? (Choose from the following options) 1. When the insured drives an uninsured car 2. When the insured is legally liable, but does not have sufficient coverage 3. When the insured is legally liable 4. When the other party is legally liable but has no insurance
4. When the other party is legally liable but has no insurance
Jean owns a craft store. The protective safeguards endorsement of her BOP requires the store to have a functional automatic sprinkler system. A winter storm freezes the pipes to the sprinkler system, causing the system to shut down. How many hours does Jean have to restore the system before she must notify her insurer?
48 hours
What is the maximum number of roomers or boarders for properties insured under the dwelling policy?
5 Dwelling policies may insure a property that allows up to 5 roomers or boarders
A company has a businessowners policy on a building with an agreed value of $300,000. The company carries $150,000 of insurance. If a loss occurs, how much will the insured company be paid?
50% of actual loss
A business income coverage form would cover all of the following situations EXCEPT... A. A union strike of construction workers causes the repair of the insured's building to be delayed for a period of time B. A hurricane damages the insured's building; a temporary relocation to another building is necessary C. A replacement part for necessary equipment is ordered with overnight delivery charges D. The building next door is damaged during a drug bust, and the area is barred from the public
A
An endorsement is available for hired and nonowned auto on BOP liability... A. Only if the insured does not have commercial auto coverage B. In addition to commercial auto coverage C. Only if the insured has 4 or more employees D. Never
A
An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What would cover this individual to insure it? A. Contractors equipment floater B. Bailee customers form C. Builders risk form D. General property form
A
Coverage under the builders risk form will end in all of the following situations EXCEPT A: The insured has sold the property B: 60 days after the construction has ended C: Construction has been abandoned D: 60 days after the building became occupied
60 days after the construction has ended
In business income additional coverage in a businessowners policy (BOP), the waiting period that must occur before the period of restoration may begin is
72 hours.
Coverage F - Unscheduled Farm Personal Property is subject to a coinsurance clause of A: 50% B: 75% C: 80% D: 90%
80%
What is the minimum amount of coverage that should be carried on an HO-2 on a home that was purchased four years ago for $75,000 which replacement value of $100,000
80% of replacement cost at the time of loss. = $80,000
The employee theft crime policy includes a coverage that applies to employees temporarily outside the coverage territory for up to A: 60 days B: 90 days C: 120 days D: 30 days
90 days
The 1980 Act requires FCIC to offer one price election that is not less than what percent of the projected market price for the commodity
90%
An insured owns a large dog. The first day he has to leave the dog home alone to go to work, the insured comes back to find his $400 couch torn apart, his $100 coffee table chewed up, his $50 window curtain shredded, and a $200 window pane shattered where his dog jumped through. The insured has personal property coverage under a special form of dwelling policy. How much of this loss will the policy cover? A. $0 B. $200 C. $250 D. $750
A
An insured's home is mortgaged by the local bank. The insured us required to carry insurance on the home, showing the bank as the mortgagee. If the home is damaged by a covered peril, which of the following is true? A. Losses will be paid to the mortgagee and the mortgagor as their interest appears B. Coverage is suspended if the building is mortgaged and the insurer is not told of his indebtedness C. The mortgagee must settle with the mortgagor in the even of a loss D. The additional premium required for the mortgage endorsement must be paid by the mortgage
A
An insured's house is damaged by a fire and is uninhabitable. As a result, the insured has to rent an apartment until repairs are made. A dwelling insurance policy will pay for the expense of renting the apartment. Which type of broad or special form coverage does the insured have? A. Coverage E - Additional Living Expense B. Coverage A - Dwelling C. Coverage B - Other Structures D. Coverage D - Fair Rental Value
A
How long is the waiting period after the application has been accepted before flood coverage goes into effect? A. 30 days B. 6 months C. 12:01 am on the next day D. 5 days
A
If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rate basis at both locations for... A. 30 days B. 60 days C. 90 days D. 5 days
A
In which of the following situations would the jewelers block extension cover a loss? A. Maurice's Jewelers fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged B. Jeana's Jewelry Concepts is robbed while displaying bracelets and necklaces at a public exhibition C. Diamond Fire Jewelry store agreed to exhibit a necklace and earring set in a showcase away from the premises. The case is broken into, and the set is stolen D. Julie, an employee of Antique Jewelers, is wearing a cameo brooch and ring to display to customers. During the day, she discovered the brooch has fallen off, and she can't find it
A
The common policy condition is a modular part combined with other parts to create the contract. The "common policy condition" section contains provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy? A. The first named insured may cancel the policy at any time by giving written notice to the insurer B. Prior to the insurer making inspections, surveys, and reports relating to the insurance, approval from the insured must be obtained C. Requests for any change in the policy requested by the insured may be made by the second name insured D. The insurer is granted the right to audit books and records of the insured relating to the policy for a period of up to 5 years after the end of the policy
A
The extension of coverage under the Commercial Fine Arts Floater includes coverage for newly acquired property for a maximum of... A. $10,000 B. $15,000 C. $20,000 D. $5,000
A
The main difference between an HO4 and an HO6 is... A. HO6 provides limited dwelling coverage as well as contents coverage B. HO4 does not cover additional living expenses C. HO6 does not cover additional living expenses D. HO4 provides limited dwelling coverage as well as contents coverage
A
Uncle Billy's Burger Bar was forced to close for 10 days in August when the power company's transformer was destroyed by lightning, and Uncle Billy was without electricity. Which of the following endorsements could be added to Billy's business owners policy that would provide protection against loss of income from such events? A. Utility services - time element endorsement B. Utility services - direct damage endorsement C. Personal injury endorsement D. Protective safeguard endorsement
A
Under business owners policy Section I, if an insurer wants to nonrenew a policy, how many days before the expiration date must the insurer notify the mortgage holder? A. 10 days B. 15 days C. 20 days D. 30 days
A
Under the conditions of a Film Coverage Form, how long must the insured maintain records of each production? A. 3 years after the policy expires B. 5 years after the policy expires C. 7 years after production completion D. 1 year after production completion
A
Vandals do damage to glass that is part of a covered building. Under the broad form of a building and personal property policy, each glass plate will be covered for up to... A. $100 B. $150 C. $250 D. $500
A
Which of the following IS covered under the theatrical floater of an Inland Marine policy? A. Vehicles used on stage B. Admission tickets C. Animals D. Jewelry made with precious stones
A
Which of the following dwelling coverage forms would pay replacement cost for the dwelling? A. DP2 and DP3 B. DP3 only C. All dwelling property coverage forms D. DP1
A
Which of the following is NOT found in a commercial package policy? A. Certificate of authority B. Common policy conditions C. Common policy declarations D. Interline endorsements
A
Which of the following is covered under the Mail floater of a Commercial Inland Marine policy ONLY if is sent by registered mail? A. Currency and unsold travelers checks B. Postage and revenue stamps C. Money orders, checks, drafts, notes D. Bonds, stocks, stock certificates, coupon attached bonds
A
Which of the following other coverages is NOT included in the basic form dwelling policy? A. Breakage of glass B. Removal coverage C. Personal property temporarily away from the insured premises D. Tenant's improvements, alterations, and additions
A
Which of the following statements concerning the builders risk coverage form is correct? A. It may be written on a reporting form or the completed value of the structure B. It usually continues in effect for 1 year after completion of the structure C. It covers the interest of the builder only, and cannot include coverage for the owner D. It may not be written for perils other than fire and extended coerage
A
Which of the following is eligible for a businessowners policy?
A 6-story office building with less than 100,000 square feet total area
Retroactive date
A date stipulated on the declaration page of the claims made by Billy form as a first date on which an incident me a curb I may be covered by the policy is called
When notice is received and recorded by and insured or the insurance which ever comes first
A claim is considered to have been made
Professional photographers and musicians may insure their equipment with A: A PAF B: A commercial articles form C: A theatrical property coverage form D: A block policy
A commercial articles form
Morale Hazard
A condition of carelessness or indifference that increases the frequency or severity of loss.
Reinsurance
A contract under which one insurance company (the reinsurer) indemnifies another insurance company for part or all of its liabilities.
An insured couple owns a pontoon boat. Which situation would NOT be covered by their watercraft endorsement under their homeowners policy?
A friend rents their boat and runs it into a neighbor's dock.
All of the following would be eligible for coverage under the dwelling policy EXCEPT: A) A duplex with one primary owner B) A house that has 5 residential units C) A tenant-occupied dwelling D) A dwelling in the course of construction
A house that has 5 residential units Eligibility requires that the dwelling have not more than 4 family units
homogeneous
A large number of units having the same or similar exposure to loss
Estoppel
A legal impediment to denying a fact or restoring a right that has been previously waived.
Claims made form
A liability policy that provides coverage for a claim for injury or damage if the claim is for sure reported or filed against the insured during the policy period is called
Sharing
A method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss who share the losses that occur within that group.
Basic extended reporting period
A provision found in most claims made liability policy forms that provide a specified period of time following the policy expiration, during which claims arising out of occurrences during the policy. Maybe made against the policy at no extra cost is called
A businessowners policy is
A self-contained prepackaged policy.
What kind of liability would a person who owns a swimming pool have?
Absolute
Actual loss or damage
Actual injury or damage must have been suffered by the party seeking recovery
Additional/Supplementary Coverage
Additional amount of coverage for specific losses
General Form Structure
Agreement definitions deductibles coverage, including other coverage Perils Insured Against General Exclusions Conditions
Cost the insured incurred in hiring an attorney
All of the following are supplemental payments found in liability policies except
They pay defense costs even after the aggregate limit has been reached
All of the following are true statements regarding the supplementary payments of a commercial general liability policy except
The policyholder can see the insurer whether not all conditions and provisions of the policy have been met
All of the following statements concerning liability coverage are true except
The inspections and surveys condition in a businessowners policy
Allows the insurer the right to inspect the insured's premises.
Which of the following risks would NOT be eligible for coverage under a homeowners policy?
An applicant who owns and lives on a commercial farm
Which would NOT be covered by the inside of the premises - robbery or safe burglary of other property coverage? A: A store clerk is forced into the storage room and locked in while the intruder steals high-value merchandise B: An employee is caught stealing cash from the register C: Two men break a window during attempted robbery D: Someone breaks in after business hours, pries open a wall vault and steals several valuable paintings
An employee is caught stealing cash from the register
The agency loses commission income from policies that were not issued by the insurer
An insurance agency could purchase an errors and omission insurance policy which would provide protection in the event of any of the following events except
It will provide coverage because the damage to the client resulting from the producers negligence
An insurance producer fails to obtain automobile insurance for a client after agreed to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. The damage to the other vehicle totals $5000. Which statement regarding the producers errors and omissions liability policy is true?
Supplemental extended reporting period
An insured that plans to cancel his/her clean made insurance policy can protect themselves against potential claims that may arise from an occurrence that happened during the policy period, but is reported after the cancellation by purchasing
A liability policy that covers all claims arising out of incidents occurring during the policy period, regardless of whether the policy is still in effect at the time of the claim is known as A: An occurrence policy B: A claims made policy C: A limited policy D: An aggregate policy
An occurrence policy
In addition to the limit of liability
Any liability insurance policies, supplementary payments are made
The inland marine coverage forms for outdoor signs provides "open peril" coverage and excludes coverage for breakage only during A: Transportation B: Repairing C: Installation and dismantling D: Any of the Above
Any of the above
All of the following are eligibility criteria for CAARP
Anyone who has a driver's license The vehicle must be registered in CA. They attempted to secure insurance through the voluntary market as was denied
Under a businessowners policy, an insured can cancel the policy
At any time by mailing a written notice of cancellation.
Which bond is required by a court before allowing one to take the assets of another to satisfy a legal obligation?
Attachment bonds
Which of the following is an example of a protective safeguard in a businessowners policy?
Automatic sprinkler system
A grave marker was damaged by vandals. It would cost $3000 to have the damage repaired. Under these circumstances, how much would a homeowners policy pay? A. $1000 B. $3000 C. $0 D. $500
B
A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean? A. Coverage is automatic B. There is no coverage C. Coverage applies without premium D. There must be a misprint on the form
B
All of the following statements are true regarding employee dishonest optional coverage under the business owners police (BOP) EXCEPT A. Coverage includes all property, including money and securities owned or held by the insured B. It provides coverage for all employees, even those who were terminated in the past 90 days C. It provides coverage for direct loss or damage to business personal property D. Losses result from dishonest acts of any of the insured's employees
B
An insured couple owns a pontoon boat. Which situation would NOT be covered by their watercraft endorsement under the homeowners policy? A. One of the insureds is taking the boat out and injures her grandson B. A friend rents their boat and runs it into a neighbor's dock C. The insured's granddaughter slips on the boar and needs stitches D. A friend borrows the boat and has an accident with another boat
B
An insured works outside the home. The insured's sister lives with him and cares for his 4 children. When his home was severely damaged by fire, they move into an apartment while repairs are being made. The largest apartment available in the area has 2 bedrooms, so the insured's sister stays in a motel while the repairs are made. How much will the HO3 pay for their additional living expenses? A. Nothing B. All of the expense up to the Coverage D limit C. The cost of renting and apartment, but not the cost of the motel room D. The cost of renting the apartment, and 50% of the cost of the motel
B
Professional photographers and musicians may insure their equipment with... A. A PAF B. A commercial articles form C. A theatrical property coverage form D. A block policy
B
Under dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it must inform the insured within how many days of receiving proof of loss? A. 10 days B. 30 days C. 45 days D. 60 days
B
Under the Commercial Property Coverage program, the Basic Causes of Loss form insures against loss caused by... A. Power failure off the premises B. Sprinkler leakage C. Earth movement D. Nuclear hazard
B
Under the provisions of the business income coverage form, all of the following are true EXCEPT... A. The insured is reimbursed for payroll that continues after the loss begins B. The insured is reimbursed for the loss from the date of loss to date of restoration or policy expiration date, whichever comes first C. If the insured and insurer are unable to come to agreements as to the value of the loss, either party may make a written demand for an appraisal D. The insured agrees to resume all of part of operations as quickly as possible
B
Which of the following endorsements is used to insure Coverage C (personal property) for values beyond the limitations of the homeowners policy? A. Personal property injury endorsement B. Scheduled personal property endorsement C. Personal property replacement cost endorsement D. Blue skies endorsement
B
Which of the following is true regarding single dwellings that are insured at least 80% of the replacement value? A. They are subject to a $1000 deductible B. They are automatically provided with replacement cost coverage C. They qualify for maximum compensation under the flood insurance program D. They are excluded from the flood insurance policy
B
Which of the following is true regarding the fire department service charge under the Builders Risk form? A. It is a high-deductible endorsement B. It is an additional coverage C. It is an automatic coverage for $500 D. It is not available in this form
B
Which policy condition in homeowners policies state that insurance applies separately to each insured? A. Payment of claim B. Severability of insurance C. Appraisal D. Limit of liability
B
Who is covered by an HO4 policy? A. Owners of a home B. Tenants C. Owners of a vehicle D. Owners of a condominium
B
Your accounts receivable records have been destroyed or damaged. Your loss may be covered with... A. The valuable papers coverage form B. The accounts receivable coverage form C. Commercial property insurance D. The commercial articles coverage form
B
A business using its own trucks to move its own cargo would insure the cargo using... A. Motor carrier form B. Trip transit coverage C. Motor truck cargo - owners form D. Motor truck cargo - truckers form
C
An insured is looking over his businessowners policy and wants to know exactly what "coverage territory" and "mobile equipment" mean. He can find the definitions of these terms in the
Business liability coverage form.
A provision found in most claims-made liability policy forms that provide a specified period of time following the policy expiration, during which claims arising out of occurrences during the policy period may be made against the policy at no extra cost, is called
Basic reported extended period
Personal and advertising injury liability
B&B market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be the meter reader. Which coverage would apply to this suit?
The liability coverage of the businessowners policy is written on a
Businessowners liability coverage form.
Which of the following would NOT be covered under the liability section of a personal auto policy?
Bodily injury is caused by the insured's negligence while driving a three-wheel all-terrain vehicle.
Retroactive dates in claims made CGL policies apply to A: BI and PD, PIL and advertising liability and med pay B: PIL and Advertising Liability only C: BI and PD only D: Both BI and PD and PIL and Advertising Liability
Both BI and PD and PIL and Advertising Liability
The standard Businessowners Policy covers all of the following causes of loss EXCEPT
Building ordinance or law
The crime of forced entry onto the premises of another person or persons with felonious intent is defined as A: Robbery B: Burglary C: Breaking and entering D: Theft
Burglary
A home is insured under an HO2 policy. The homeowner decides to replace the roof on the house. He wasn't able to complete the roof in one day and left a portion unfinished overnight. A heavy rainstorm causes $20,000 of damage to the interior of the house and some furniture. In this situation, the policy will pay... A. Replacement cost of the damage B. 80% of replacement cost C. Nothing D. The ACV of the damage
C
All of the following types of property are covered by a standard builders risk form EXCEPT... A. Temporary structures B. Machinery that with be permanently attached to the building C. Tools 50 feet away from the building D. The building itself
C
Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will... A. Proceed according to your request B. Defend with the hopes of not paying damage C. Either pay or defend as he decides D. Pay the alleged damages
C
Business personal property coverage form covers all of the following EXCEPT... A. Machinery that is not permanently installed B. Stock C. Automobiles held for sale D. Furniture and fixtures
C
Coverage under a Floor Plan Merchandise form is written on a reporting form basis that requires the insured to file reports with the insurer. What is the time frame for those reports? A. By the 15th of each month B. 20 days after the report is due C. Within 30 days after the end of each month D. Within the first 10 days of each month
C
Dwelling policy Coverage C - Personal Property will cover all of the following EXCEPT A. Computer software B. Canoes C. Animals and birds D. Hobby aircrafts
C
In a commercial package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer? A. Beneficiary B. Insurer C. First named insured D. Last named insured
C
In a dwelling policy, which of the following provides coverage for additional living expenses incurred by an owner-occupant in the event of a covered peril makes the premises u uninhabitable due to a covered loss? A. Coverage B B. Coverage C C. Coverage E D. Coverage A
C
The Mail Coverage Form is always written on a reporting form basis; after the end of each reporting period shown in the declarations, reports are due within... A. 45 days B. 15 days C. 30 days D. 31 days
C
The Physicians and Surgeons Equipment Floater is NOT intended for which of the following? A. Waiting room furniture in a doctor's office B. Office equipment located in a dentist's office C. Medical supplies located in a hospital D. Surgeon's supplies located in the surgeon's office
C
The most the insurer will pay for a loss under a business owners policy is... A. 80% of the loss B. 20% of the loss C. The limit of insurance after the deductible is paid D. The amount of the loss minus the deductible
C
The removal coverage that is included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long? A. 5 days B. 15 days C. 30 days D. 60 days
C
To be eligible for business owners policy (BOP) coverage, an office building CANNOT be higher than... A. 2 stories B. 3 stories C. 6 stories D. 10 stories
C
Under the HO4 and HO6 homeowners policy forms, property is insured against... A. Special form perils B. Comprehensive form perils C. Broad form perils D. Basic form perils
C
Under the provisions of the business income coverage form, all of the following are true EXCEPT... A. The insured agrees to resume all or part of operations as quickly as possible B. The insured I s reimbursed for payroll that continues after the loss begins C. The insured is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first D. If the insured and insurer are unable to come to agreement as to the value of the loss, either part may make a written demand for an appraisal
C
Which of the following best describes the amount of loss assessment coverage included under a homeowners policy liability coverage section? A. Up to $10,000 aggregate for the policy period B. Up to $5,000 aggregate for the policy period C. Up to $1,000 per occurrence D. Up to $2,500 per occurrence
C
Which of the following is NOT true about earthquake coverage? A. Coverage may be added to property policies by endorsement B. Coverage may be written in a Difference of Conditions policy C. Coverage is commonly provided through a federally-funded program D. Coverage is excluded by most property forms
C
Which of the following is an example of a protective safeguard in a business owner police? A. Recordkeeping B. Professional liability endorsement C. Automatic sprinkler system D. Errors and omissions insurance
C
Which of the following statements regarding coverage for the flood and earthquake perils is true? A. Flood and earthquake coverage us available only through the government B. Flood insurance usually is provided in property policies. However, earthquake insurance is available by endorsement only C. Both are excluded perils in all property policies D. Flood and earthquake coverage is available in all policies
C
Which of the following is NOT found in a commercial policy package? A: Common policy declaration B: Interline endorsements C: Certificate of authority D: Common policy conditions
Certificate of authority
Inadvertent injury to others caused in the course of advertising the insureds product
CGL coverage B (personal and advertising injury) will cover
Dwelling Property Policy
Can be purchased to insure properties solely used for residential purposes.
All of the following are classes of inland marine risks EXCEPT
Common cargo carrier liability
A plasterer has finished a job. What kind of liability would protect him if the plaster falls and hurts someone because he did not do the job correctly? A: Professional E & O B: Completed operations C: Medical payments D: Products
Completed operations
A plasterer has finished a job. What kind of liability coverage would protect him if the plaster falls and hurts someone because he did not do the job correctly
Completed operations pays for negligence
Builder's risk is most often written on which form? A: Specific value form B: Completed value form C: Scheduled form D: Reporting form
Completed value form
The transfer of money from inside a banking premises to a person other than a messenger outside those premises or to a place outside those premises is covered under which commercial crime coverage? A: Money orders and counterfeit paper currency B: Other crime coverage C: Outside premises D: Computer fraud
Computer fraud
Hazards
Conditions or situations that increase the probability of an insured loss occurring.
Which of the following risks is eligible for coverage under a businessowners policy?
Condominiums
An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it? A: Contractors equipment floater B: Bailee customers form C: Builders risk form D: General property form
Contractors equipment floater
Losses due to the insured's negligence
Coverage A - bodily injury and property damage in the commercial general liability policy will cover
Which of the following statements is true concerning the special form dwelling policy?
Coverage A is for all-risk perils, and Coverage C is for the broad form perils.
A BOP (business owners policy) is most similar to... A. Auto B. Umbrella C. Cargo D. Homeowners
D
A contract for the transport of goods between the shipper and the carrier is called... A. A bailment B. A binder C. A bill of sale D. A bill of lading
D
All of the following are essential elements of a commercial package policy (CPP) EXCEPT... A. Interline endorsements B. Declarations page C. Policy conditions D. Valuations and/or settlement provisions
D
All of the following may occur to a person who knowingly and willfully obtains information about an individual from an insurance institution, agent or insurance-support organization under false pretenses, EXCEPT A. The person may be fined $5,000 or be confined in jail for no more than 12 months B. The person may be fined $10,000 C. The person may be punished by confinement in jail for 6 months D. The person may be fined $20,000
D
An insured condominium unit owner wants to purchase fire and extended coverage for personal property and liability coverage for himself and his family members. He should purchase... A. HO-2 B. HO-3 C. HO-4 D. HO-6
D
Builder's risk is most often written on which form? A. Scheduled form B. Reporting form C. Specific value form D. Completed value form
D
How much is the premium for the dwelling under construction endorsement under the dwelling policy? A. 75% of the gross premium B. The full value of the house C. 50% of the actual value premium D. The average amount of insurance during construction
D
In a dwelling policy, which of the following other structures would be covered? A. A structure used as a part of a farming operation B. A structure used by the insured in which to operate a retail business C. A structure used by the insured to house a manufacturing operation D. A structure rented to a neighbor for use as a private garage
D
Individuals in the business of selling construction equipment and mobile equipment should insure with... A. A contractor's equipment floater B. An installation floater C. A PFF D. Equipment dealers coverage form
D
Jean owns a craft store. The protective safeguards endorsement of her BOP requires the store to have a functional automatic sprinkler system. A winter storm freezes the pipes to the sprinkler system, causing the system to shut down. How many hours does Jean have to restore the system before she must notify her insurer? A. 12 hours B. 24 hours C. 36 hours D. 48 hours
D
The extra expense coverage form provides... A. Extra money for an insured whose accounts receivable records have been damaged B. Additional money to pay for property damage losses at a covered location C. Payment for unforeseen expenses an insured may incur while the business is shut down following a property damage loss D. Coverage that will permit the insured to continue in business without interruption following a property damage loss
D
The inland marine coverage form for outdoor signs provides "open peril" coverage and excludes coverage for breakage only during... A. Transportation B. Repairing C. Installation or dismantling D. All of the above
D
The type of insurance used to cover goods for one specific trip is called... A. Commercial property B. Bailee policy C. Motor truck cargo policy D. Trip transit
D
What is the maximum amount an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy? A. $15,000 all expenses incurred during a 12-month period B. $20,000 all expenses incurred during a 12-month period C. $5,000 for all expenses during a 12-month period D. $10,000 for all expenses incurred during a 12-month period
D
What is the minimum amount of coverage that should be carried on an HO2 on a home that was purchased four years ago for $75,000, which today has a replacement value of $100,000? A. $100,000 B. $60,000 C. $75,000 D. $80,000
D
When does the coverage begin under the builders risk form? A. On the date the policy is issued B. On the date the policy is delivered C. On the date the premium is paid D. On the date construction starts
D
Which common policy condition prohibits the insured from changing the rights or duties as defined under the policy to any other person or entity without the written consent of the insurance company? A. Subrogation B. Reassignment and modification C. Changes D. Transfer of rights and duties under the policy
D
Which coverage form would provide coverage for all incoming and outgoing shipments? A. Trip transit B. Motor truck cargo C. Mail coverage D. Annual transit
D
Which of the following is covered under the Camera and Musical Instruments Dealers floater? A. A musical instrument sold and delivered to a customer B. Furniture, fixtures, and office supplies in a music store C. Money kept on premises of a camera shop D. A customer's camera left at a camera shop
D
Which of the following kind of property would be covered under a dwelling policy? A. Motor vehicles B. Aircraft C. Pontoon boats D. Rowboats
D
Which of the following may be covered by Electronic Data Processing coverage from under and Inland Marine policy? A. Computer hardware that is specifically scheduled B. Extra expense the insured incurs to continue the business following a loss C. Data processing media, including magnetic tapes or paper tapes, punch cards, and discs D. All of these are covered
D
Which of the following would NOT be considered a flood? A. Overflow of tidal waves B. Mudslides C. Runoff of surface waters D. Sewer backup
D
Which of the following would NOT be considered an insured under a homeowners policy? A. Residents of the household that are blood relatives of the insured B. An individual, under 21, in the care of but not related to the insured C. Individuals named in the policy declarations D. A divorced spouse living in another state
D
Which of the following would be covered under the Film Coverage Form? A. Deterioration of a film B. Exposure of a negative film to light C. Electrical erasure of a tape D. None of these are covered
D
In addition to the limit of liability
In liability insurance policies, supplementary payments are made
Which endorsement adds coverage for employee use of automobiles in the insured's business and the insured's use of rented autos if no coverage is provided on a business auto policy?
Hired and nonowned auto liability
Additional coverages in the liability section of a homeowners policy cover all the following EXCEPT
Damage to a third party property for which the insured is legally liable.
The Legal Liability Coverage Form provides coverage for damages for which the insured is legally liable arising from A: Nuclear event B: Working being preformed by a contractor C: Direct physical damage to property of others in the insured's care D: Earthquake damage
Direct physical damage to property of others in the insured's care
Embezzlement
Directors and officers liability insurance defense actions against a corporation or its officers and directors alleging wrongful acts. With regard to the coverage provided, wrongful acts include any of the following except
Employee Jane drives a company auto, but does not own a vehicle herself. What endorsement could be added to the insurance policy covering the company auto that would provide coverage to Jane when she drives someone else's car for her personal use?
Drive other car coverage
Under the examinations of books and records condition, the insurance company has the right to examine and audit the insured's books and records related to the policy
During the policy period and for up to 3 years after the termination of the policy.
A public official bond guarantees which of the following?
Elected officials will perform their duties honestly
In addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT
Employers liability.
Deliberate law violation
Employment practices liability insurance would not cover claims arising from
Individuals in the business of selling construction equipment and mobile equipment should insure with a/an A: Installation floater B: PPF C: Equipment dealers coverage form D: Contractor's equipment floater
Equipment dealers coverage form
No because the claim results from copyright infringement and is not in an advertisement
Erroneous publishing copied all the material from Angels Inc.'s book. The only changes made were to rename the title and chapters, put a different cover on it, and distribute it as it's own. Angel's Inc. files a claim against erroneous and six damages. Will the commercial general liability policy cover the claim?
All of the following are excluded in the equipment breakdown basic policy EXCEPT A: Explosion of steam boilers B: Ordinance for law coverage C: Business interruption D: Loss of power, lights, heat, steam or refrigeration
Explosion of steam boilers
Which of the following is a unit of measurement an underwriter uses when determining the premium rates for insurance?
Exposure
Agreed Value
Fair valuation based on the amount of insurance agreed upon
Which of the following statements would be an example of a product liability claim? A: The insured's product has to be recalled because of an expiration date B: Faulty packaging of a cereal caused spoilage that resulted in someone getting sick C: An insured, while delivering product to a customer, hits another car with the delivery truck causing bodily injury and property damage D: Someone tampers with the insured's product causing the insured to have to recall all products on the shelf
Faulty packaging of a cereal caused spoilage that resulted in someone getting sick
Stevie purchased her own personal property insurance policy on her newly purchased dream home. This type of insurance coverage that applies to the insured's own property is known as
First party risk protection
In addition to the coverages built into the property coverage form, insurers may offer other endorsements that can further expand the coverage provided in the policy
For an additional premium.
The major portion of the premium for an equipment breakdown policy pays A: Coverage for BI and PD of others B: For replacement parts C: For inspections and examinations D: Repair to prevent
For inspection and examinations
Mutual
Funds not paid out after paying claims and other operating costs are returned to the policy owners in the form of a dividend.
A BOP (businessowners policy) is most similar to
Homeowners.
Which of the following would NOT be classified as personal property for insurance purposes?
House
Personal and advertising injury liability
If an insured bakery is seed because it's marketing states that the products of another bakery may not be safe, which coverage of a commercial policy will defend the suit?
If a farm building or structure is vacant or unoccupied, which is true?
If for 120 consecutive days, the limits applicable to the building and its contents are reduced by 50%.
According to the California code, all of the following are TRUE regarding binding authority for excess and surplus lines insurance EXCEPT
If more than one person is assuming the obligation, the risk will always be equally shared.
In property and casualty insurance, insurable interest is defined as the right of a person or entity to property in that such a loss to that property would cause a direct monetary loss to the person or entity. Which of the following statements is TRUE regarding insurable interest in property and casualty insurance?
If the insured has no insurable interest, the contract is void.
Submitting to a medical exam when requested
In the event of a claim under commercial general liability policy, the insured has all of the following duties to the insurer except
If the ocean marine contract pays the ACV of the property just prior to the loss
Indemnity contract
Which of the following endorsements is used by individual business owners who use company vehicles for personal use rather than purchasing a personal vehicle?
Individual named insured
In a personal auto policy, Coverage C: Uninsured Motorist defines an insured person as any of the following persons EXCEPT
Injured in an auto accident
All of the following are factors in the determination of actual cash value EXCEPT
Insurance premium paid
All of the following are conditions commonly found in the insurance policy EXCEPT
Insuring agreement
A deliberate act that causes harm to another person, regardless of whether the harm is intended is called a(n)
Intentional tort
Which of the following would be covered under the Broad Form (DP-2) policy's falling object peril?
Interior building damage if the exterior was damaged first
Val-U insurance company's main goal is to collect sufficient premiums to pay for the insured losses, to cover the costs of expenses and to make a reasonable profit. Val-U predicts the incurred expenses while still allowing for a margin of error. The ultimate premium charged will be reduced by which of the following
Investment income= earned on the funds being held for future claims payments
Occurrence
Is an accident, including continuous or repeated exposure to the same harmful condition. Coverage exist for cupboard occurrences during the policy period and after the policy. If due to the same circumstances that occurred during the policy period
What is the determining factor in classifying commercial autos as either owned, hired, or nonowned autos?
Ownership of the vehicle
Which of the following statements concerning the builders risk coverage form is correct?
It may be written on a reporting form or the completed value of the structure.
All of the following are true of Coverage B - Other Structures EXCEPT
It must be added by endorsement to a homeowners policy.
All of the following statements are true regarding employee dishonesty optional coverage under the businessowners policy (BOP) EXCEPT
It provides coverage for all employees, even those employees who were terminated in the past 90 days.
Which of the following statements is NOT true regarding a personal umbrella liability policy?
It provides errors and omissions coverage for an agency.
Broad and Special dwelling policy covers
Lawn, tree, shrubs, and plans, collapse, and breakage of glass
Which of the following is defined as a covered cause of loss in businessowners property coverage?
Leakage from fire-extinguishing equipment
Melt Away Diet, circulates a flyer that falsely reports that its competitor, See Food Diet markets a product that causes hair loss and skin rashes... example of
Libel.... written or printed untrue statements that damages a persons reputation
Under the dwelling policy, Coverage C - Personal Property is
Limited to covering a servant's property while at the insured location.
Which of the following would be covered under the crime coverage inside the premises - theft of money and securities? A: Loss or damage to a locked safe, vault or cash register B: Loss resulting from the surrendering of property in any exchange or purchase C: Dishonest acts of employees, directors, trustees or representatives D: Accounting or arithmetic errors or omissions
Loss or damage to a locked safe, vault or cash register
The type of crime policy under which coverage is triggered by a loss that happens during the policy period but is not necessarily covered during the policy period is the A: Reporting form B: Loss sustained form C: Discovery form D: Retro form
Loss sustained form
Undendorsed HO policy covers
Medical payment to others.
Uninsured Motorist
Member of the named insured Member of the insured being struck as a pedestrian Occupying a covered Vehicle
All of the following would be covered under the medical expense coverage of a businessowners policy EXCEPT
Mental health counseling.
One policy type that allows the insured to select the coverage forms that best fits the individual needs of the client is called the
Modular commercial lines
Which of the following covers a carrier for liability for loss to cargo while it is being transported in a truck? A: Trip transit policy B: Truckers coverage form C: Motor truck cargo policy - truckers form D: Motor truck cargo policy - owners form
Motor truck cargo policy - truckers form
Which of the following perils is covered by flood insurance?
Mudslide caused by accumulations of water under the ground
After an insurance contract has been delivered to an insured who is under 60 years of age, if any changes to the coverage are being made, a notice of the changes
Must be in writing, signed by an officer of the insurer, and may be mailed to the insured's last known address.
Livestock coverage form covers which of the following losses
Named peril coverage for death of livestock
The standard fire policy only covers those perils specified in the policy for that reason it is known as a(n):
Named peril property
Which of the following does the term "proximate cause" refer to?
Negligence leads to injury
Proximate cause refers to
Negligence that leads to an injury
The authority to transact insurance under an appointment becomes effective as of the day
Notice is signed by the insurer
In addition to the usual notice requirements of insurance policies, if a loss occurs, the insured must
Notify law enforcement
Vicarious Liability
Old English law Master liable for acts of servants
The Commissioner must file a report to the Governor stating the general condition of the insurance business and other matters concerning insurance
On or before August 1st each year.
When does the coverage begin under the builders risk form? A: On the date the policy is delivered B: On the date the premium is paid C: On the date construction starts D: On the date the policy is issued
On the date construction starts
All of the following are TRUE statements regarding the requirements of an insurer to offer earth movement coverage in California EXCEPT
Only authorized agents which hold an "earth movement certificate" through the department of insurance are able to market residential property insurance which provides coverage for earth movement.
When is a hired and nonowned auto liability endorsement available in a businessowners policy (BOP)?
Only if the insured does not have commercial auto coverage
The purpose of the California residential property disclosure statement includes all of the following EXCEPT
Only when the other party is legally liable but has no insurance
Personal auto coverage would pay for damage to a covered auto due to colliding with a deer
Other than collision (comprehensive coverage)
Which coverage would a business owner need in a crime policy to cover money that may be stolen from a messenger? A: Outside premises B: Fidelity bond C: CGL D: Safe burglary
Outside the premises
A building insured with a commercial property insurance has been vacant for 90 days. Which of the following is NOT true? A: Payment for unnamed perils is reduced by 25% B: The insured has no coverage for losses caused by theft C: The insured has no coverage for losses caused by glass breakage D: Payment for unnamed perils is reduced by 15%
Payment for unnamed perils is reduced by 25%
HMS Toys carries more inventory from October 1 to December 21. Which of these would provide higher coverage limits during those months and lower limits the rest of the year? A: Peak season B: Value reporting C: Spoilage D: Inventory increase
Peak season
A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the
Penalty
Bob is covered under a major medical insurance policy. He has to meet a certain deductible for each claim that is presented to the insurer. What type of deductible arrangement must Bob have?
Per Cause
Which of the following limits, shown in the declarations of a policy, applies to medical expenses?
Per person
Which of the following liability coverages must be added by endorsement to a homeowners policy in order to apply?
Personal injury
An outboard and motor policy covers
Physical damage
If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT
Physical damage
Risk Retention
Planned acceptance of risk by an insured through the use of deductibles, co-payments, or self-insurance
Under a dwelling policy, which of the following is NOT a factor in determining a loss?
Policy limit
Both a and B A: bodily injury or property damage caused by a pollution accident B: cleanup costs after he pollution accident that are mandated by the government
Pollution liability coverage under a general liability policy provides which types of coverage
Which of the following is NOT excluded under farm coverage
Power failure on premises
Adhesion
Prepared by the insurer: the insured's only option is to accept or reject the policy as it is written.
Strict Liability
Product liability liable for defective products regardless of fault or negligence
Errors and omissions
Professional liability coverage protects against legal liability resulting from
Insuring Agreement
Promise to pay
Under personal auto policy, liability for bodily injury resulting from the insured's use of non-owned automobile is
Provided by the insured's policy on an excess basis.
Under the Personal Auto Policy, liability for bodily injury resulting from the insured's use of a non-owned automobile is
Provided by the insured's policy on an excess basis.
Which of the following would be the insured's duty in the event of a loss according to the duties in event of occurrence, claim, or suit condition?
Providing specific details regarding an occurrence
Schedule Rating
Rates are developed by applying a schedule of charges and credits to some base rate to determine the appropriate rate for an individual exposure.
How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy?
Removes the coverage
Which method of loss valuation is contrary to the basic concept of indemnity?
Replacement cost
Statements made by an applicant for a life insurance policy that are true to the best of the applicant's knowledge are referred to as
Representations
Attachment
Required by court before allowing one to take the assets of another to satisfy a legal obligation.
Which of the following persons may be covered under farm Coverage J?
Resident employees
A date stipulated in the claims-made liability form declarations section as the first tae on which an incident may occur and be covered by the policy is known as the A: retroactive date B: Retention date C: Restoration date D: Retainer clause
Retroactive Date
For insurance purposes, when an insured loses property to another because the person used violence or threat of violence to gain the property, this is defined as A: A burglary B: False pretense C: Robbery D: A theft
Robbery
Stated Value
Scheduled amount of insurance and the maximum the insurer will pay
Workers compensation statutes require employers to meet capital reserves requirements sufficient to pay any claims that might arise. Employers can meet such obligations through all of the following EXCEpt
Second injury funds program
According to the businessowners policy (BOP) definitions, which of the following does NOT mean valuable papers and records?
Securities
In a personal umbrella, the amount paid by the insured for certain losses not covered under the primary coverage is called
Self-insured retention
Which policy condition in HO policies states that insurance applies separately to each insured?
Severability of insurance
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?
Special
Under the commercial property coverage program, the basic causes of loss form insures against loss caused by A: Power failure on the premises B: Sprinkler leakage C: Earth movement D: Nuclear hazard
Sprinkler leakage
When an employee benefit plan pays the premium for a fiduciary liability policy, what provision must be included in that policy?
Subrogation
The type of insurance that guarantees the behavior of persons and the performance of contracts other than insurance policies is known as
Surety insurance
Robbery is A: Taking of property without causing property damage or bodily harm B: Any act of stealing C: Taking of property from within the premises leaving visible signs of forced entry D: Taking of property by use of force, violence, or fear
Taking of property by use of force, violence or fear
Moral Hazard
Tendencies towards increased risk, Involve evaluating the character and reputation of the proposed insured. EX: lying on application
Definitions
Terms used in the policy
Earned Premium
That portion of the premium paid in advance that now belongs to the insurer because it applies to the elapsed part of the policy
Under a dwelling policy, which of the following is NOT a factor in determining a loss?
The amount negotiated by the insured
The amount an insurer will pay under Coverage D
The amount of coverage on the dwelling.
How much is the premium for the dwelling under construction endorsement under the dwelling policy?
The average amount of insurance during construction
Which item would NOT be covered under building coverage in a building and personal property policy? A: The building housing a dress shop B: The ice cream case permanently installed in an ice cream shop C: The bulldozer being used as part of a business addition under construction that is parked 500 feet from the building D: The tables and chairs used by a coffee shop as part of its outdoor seating
The bulldozer being used as part of a business addition under construction that is parked 500 feet from the building
Cargo has been insured warehouse to warehouse. Which of the following is true?
The cargo is covered from origin to destination or 60 days after discharge, whichever is first.
The date the claim is first made in writing against an insured for injury or damage that occurred on or after the policies retroactive date
The claims made trigger is based on which of the following?
All of the following statements concerning coinsurance are true, EXCEPT
The coinsurance formula also will be applied to total losses.
A company has a businessowners policy on a building with an estimated replacement cost of $300,000. The company carries $150,000 of insurance. If a loss occurs, how much will the insured company be paid?
The coinsurance formula would apply
After the execution of the contract
The commercial general liability coverage form excludes bodily injury or property damage that the insured has assumed under any contract or agreement. However the exclusion does not apply to certain types of contracts, as long as the injury or damage occurs
Which of the following statements is true regarding the commercial general liability policy's Coverage C - Medical payments? A: The coverage is liability insurance because it pays only if the insured is legally liable B: The coverage provides high limits of insurance for bodily injury losses C: The coverage is considered "good will" because payments are made without regard to fault D: The coverage applies to bodily injury to the named insured
The coverage is considered "good will" because payments are made without regard to fault
Which of the following statements is true regarding the commercial general liability policy's Coverage C - Medical Payments?
The coverage is considered "good will" because payments are made without regard to fault.
All of the following are characteristics of the dwelling policy EXCEPT A) Incidental occupancy of limited service-type exposure is permitted B) Dwellings up to four family units are eligible C) The dwelling must be owner-occupied D) Coverage includes the dwelling only, contents only, or both
The dwelling must be owner-occupied Dwelling policies insure residential exposures with only limited service-type business exposure allowed. the dwelling can be completed or under
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays
The excess over the self-insured retention
A homeowner sells his house to a friend. The friend wants to keep the homeowner's current policy in effect. Under the assignment provision, which of the following is most likely?
The homeowner will need to get written consent from the insurer before the policy can be reassigned.
Which of the following losses would be covered under the property damage liability coverage of a Personal Auto Policy?
The insured damages a rented garage when he failed to stop in time.
Losses that result from the freezing of a plumbing system while the dwelling is vacant would be EXCLUDED under a homeowners policy UNLESS
The insured had drained the plumbing system.
A building insured with commercial property insurance has been vacant 90 days.
The insured has no coverage for losses caused by glass breakage. Payment for unnamed perils is reduced by 15% The insured has no coverage for losses caused by theft.
With respect to commercial auto policies, the Garage Coverage Form provides liability protection for all of the following EXCEPT
The insured's business income losses due to personal injury.
Under the liability section of the Personal Auto Policy, all of the following are considered persons insured, EXCEPT
The insured's employer, if the insured used the employer's vehicle to run an errand for his employer.
Experience Rating
The insured's own past loss experience enters into the determination of the final premium.
Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT
The insurer does not have the right to inspect the insured's property and operations.
The most the insurer will pay for a loss under a businessowners policy is
The limit of insurance after the deductible is paid.
The members of a limited liability company are insureds under a businessowners policy (BOP) if
The limited liability company is designated as the named insured.
Which of the following is NOT a characteristic of an insurable risk?
The loss must be catastrophic
Per person
The maximum amount available for payment of bodily injury to a single person in an accident, regardless of the policy limit stated in the policy for bodily injury claims.
Limits of Liability
The maximum amount of money the insurance company will pay for a particular loss, or for loss during a period of time.
aggregate limit
The maximum limit of coverage available under a liability policy during a policy year regardless of the number of claims that may be made or the number of accidents that may occur.
The cancellation provision in a businessowners policy specifies all of the following EXCEPT
The method of transferring the owner's rights.
According to businessowners policy Section I, which of the following is NOT a condition to be met for the terms of the policy to apply to mortgageholders?
The mortgageholder must petition the state department of insurance for named status.
The date when injury or damage occurs
The occurrence form trigger is based on which of the following?
All of the following statements concerning liability coverage are true EXCEPT A: Liability policies normally include supplementary payment provisions B: Liability policies defend the insured against claims real or alleged C: The policyholder can sue the insurer whether or not conditions and provisions of the policy have been met D: The insurer cannot refuse to pay a claim even if the insured is bankrupt
The policyholder can sue the insurer whether or not conditions and provisions of the policy have been met
Subrogation
The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss.
Underwriting
The process of reviewing applications for insurance and the information on the application.
risk
The uncertainty or chance of a loss occurring.
Who has the rights to veto the repair facility for a vessel?
The underwriter
All of the following are perils covered under the broad form dwelling policy EXCEPT
Theft
All of the following are other coverages included in both the broad and special form dwelling policy EXCEPT
Theft and personal property
John Smith has made application for a life and health insurance license in the state of California. John was charged with, but not convicted of, a felony five years ago in Colorado. The California Commissioner could deny him a license on the grounds that
There are no grounds for which license could be denied based on the information provided.
All of the following statements are true regarding fire department service charge additional coverage under the businessowners policy EXCEPT
This coverage limit pays in place of the limit of insurance shown in the declarations.
implied warranty
a legal term meaning that a product is suitable for its intended purpose and that fits an ordinary buyer's expectations
Which type of insurance guarantees or indemnifies owners of real or personal property or the holders of liens or other interested parties against loss or damage suffered to said property?
Title insurance
Which of the following is NOT a goal of risk retention?
To minimize the insured's level of liability in the event of loss
What is the purpose of the government crime coverage form? A: To provide those who do quality for crime coverage in the normal market with extra crime insurance B: To protect state government buildings from vandalism C: To provide crime coverage to those who do not qualify in the normal market D: To protect the federal government from employee dishonesty
To provide crime coverage to those who do not qualify in the normal market
Which common policy condition prohibits the insured from changing the rights or duties as defined under the policy to any other person or entity without the written consent of the insurance company?
Transfer of rights and duties under the policy
Which of the following is NOT covered under Coverage E - Scheduled Farm Personal Property? A: Fish B: Turkeys C: Portable structures D: Livestock
Turkeys
Provides an unlimited extension for making claims for losses that occur during the policy period, but the insured must pay an additional premium
Under the claims made CGL the supplement extended reporting period
Contractual liability policy
Under which type of coverage does the insurer agreed to pay for bodily injury or property damage liability which the insured has agreed to assume under a written contractual agreement?
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?
Unilateral
In the Personal Auto Policy, owned trailers being towed by an insured auto are automatically covered for
Uninsured motorists
Pete wants to have separate insurance coverage for separate acreages. What kind of insurance should Pete get?
Unit insurance
Farm policy Coverage B - Structures would pay how much for loss of an outside antenna, tower or satellite dish? A: Full replacement cost B: Not more than $250 dollars C: Up to $1,000 dollars D: ACV on date of loss
Up to $1,000
The neighborhood association of which you are a member has become liable for the damage to a third party. Each member of the association has been assessed a portion of the loss. Which is true of the additional coverages of your homeowners liability coverage?
Up to $1,000
Judgement Rating
Used when credible statistics are lacking or when the exposure units are so varied that it is impossible to construct a class.
An endorsement added to a businessowners policy that provides coverage for direct damage caused by utility service disruption stemming from a covered peril is called
Utility Services - Direct Damage.
Frank's Steaks furnishes meat to steakhouses. An accident on the premises causes the building to lose refrigeration for 32 hours. The state inspectors will not allow the meat in the refrigerating units to be sold for human consumption, and Frank loses $18,500 in disposing of the meat. What coverage under Frank's BOP policy will cover the loss?
Utility service - direct damage
Uncle Billy's Burger Bar was forced to close for 10 days in August when the power company's transformer was destroyed by lightning, and Uncle Billy was without electricity. Which of the following endorsements could be added to Billy's businessowners policy that would provide protection against loss of income from such events?
Utility services - time element endorsement
Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form?
Valuable papers and records
All of the following are essential elements of a commercial package policy (CPP) EXCEPT A: Policy conditions B: Valuations and/or settlement provisions C: Interline endorsements D: Declarations page
Valuations and/or settlement provisions
When a parent is required to pay for damages caused by his or her children, this is an example of
Vicarious liability
Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of property, EXCEPT
Watercraft
Exclusions
What or who is not covered
When can broker-agents act as agents?
When appointed by the insurer
A claim is considered to have been 'made' A: When notice is received by any insured B: When notice is received and recorded by the insurer C: When notice is received and recorded by any insured or the insurer, whichever comes first D: When received in writing or telephonically by the insurer
When notice is received and recorded by any insured or the insurer, whichever comes first
A written agreement which indemnifies a person for fire damage to the premises rented to the insured
Which of the following is not insured by uninsured contract under the commercial general liability policy?
Professional liability insurance
Which of the following liability policies is usually written on a claims made form?
Directors and officers liability
Which of the following special liability coverage as will provide protection two managers of a corporation for claims arising from a wrongful act committed by the manager while in an official capacity?
Directors and officers liability
Which of the following special liability coverages will provide protection two managers of a corporation for claims arising from a wrongful act committed by the manager while in an official capacity?
The coverage is not considered good will because payments are made without regard to fault
Which of the following statements is true regarding the commercial general liability policy's coverage C medical payments?
Temporary worker
Who is not considered an employee in a commercial general liability (CGL)policy?
Coverage D
With regards to HO policy, which coverage provides for indirect or consequential lossess
Which of the following is NOT an optional coverage available in a businessowners policy?
Workers compensation
A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT A: Boiler and machinery coverage B: General liability coverage C: Workers compensation coverage D: Crime coverage
Workers compensation coverage
An advertising company has its annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupants of the other car involved in the accident sue the company for serving the customer too much alcohol. Will the company's businessowners policy provide coverage?
Yes, none of the exclusions will apply.
insurance policy
a contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured or beneficiary for loss caused by specific events
ordinance
a law that must be complied with
Agent/Producer
a legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer
Reciprocity/Reciprocal
a mutual interchange of rights and privileges
Applicant or proposed insured
a person applying for insurance
Binder
a temporary contract for insurance and can be either written or oral
statute
a written law passed by a legislative body
endorsements
addendums that change the policy
Proximate Cause
an act or event considered a natural and reasonably foreseeable cause of damage or event that occurs and damages property or injures a plaintiff
Occurrence
an incident or event
Broker
an insurance producer not appointed by an insurer and is deemed to represent the client
Contract law covers
an insured suing the insurer for failure to provide promised benefits.
In insurance, and offer is usually made when
application is submitted
Conditions
are hazards and may increase the chance of loss occuring
Physical Hazard
are individual characteristics that increase the cause of loss.
Vacancy
insured structure in which no people have been living or working, and no property has been stored (usually for 60 days)
Utility services - time element covers
business income or additional expense losses arising from disruption of service caused by a covered peril.
Perils
causes of loss insured against in an insurance policy
Which of the following is a statutory defense?
comparative negligence
indemnify
compensate for loss, damage, or injury; reimburse; repay *not to gain profit
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?
conditional
Functional replacement
cost to replace with modern, less expensive construction or materials
EXtra expense coverage provides
coverage that will permit the insured to continue in business without interruption following a property damage loss
Standard of care
defendant used standard of care that breached legal duty
obsolescence
depreciation in the value of a property due to becoming outdated
Nonoccupancy
insured structure in which no people have been living or working, but some property is stored
Legal Duty
duty to act or not to act
Adverse Selection
insuring of risks that are more prone to losses than the average risk
Deductible
insured of a loss, that is paid before the insurer pays the policy benefits
A basic dwelling policy automatically provides coverage against fire, lightning, and internal explosion
internal explosion
Speculative Risk
involves the opportunity for either loss or gain. (not insurable)
retrospective rating
is a self-rating plan under which the actual losses during the policy period determine the final premium, subject to a minimum and maximum premium
Cancellation
is the termination of an in-force insurance policy, by either the insured or the insurer, prior to the expiration date shown in the policy
Nonrenewal
is the termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or a replacement policy
Incidental occupancy
minor uses that are accessory to or support the predominant occupancy (ex: a piano teacher giving lessons in her home)
Absolute Liability
obviously hazardous activities Injured Party does not need to provide negligence
Which surety bond guarantees that bills for labor and materials will be paid by the contractor as they are due?
payment bond
Primary Policy
pays first (up to its limits ) in the event of a covered loss
Earthquake coverage is NOT
provided through federally-funded program
Depreciation
reduction in value, particularly due to wear and tear
Pure Risk
refers to situations that can only result in a loss or no change. (insurable)
Actual Cash Value
replacement cost minus depreciation
Conditions (Policy Structure)
rules and procedures under the policy
Insurable Interest
something of value that, if lost, would cause you financial harm
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called
specific coverage
Law of Large Numbers
states that the larger the number of people with a similar exposure to loss, the more predictable actual losses will be
Insurer (principal)
the company who issues an insurance policy
Merit Rating
the insured's premium is based not on the actual loss record, but on other factors that indicate the probability that loss will occur
Premium
the money paid to the insurance company for the insurance policy
Insured
the person covered by the insurance policy. This person may not be the policyowner
Policy owner
the person entitled to exercise the rights and privileges in the policy
Loss
the reduction, decrease, or disappearance of value of person or property insured in a policy, caused by a named peril
Debris
the remains of anything broken down or destroyed
Waiver
the voluntary act of relinquishing a legal right, claim or privilege
Assignment
transfer of a legal right or interest in an insurance policy.
proximate cause
unbroken chain of events that caused damage
Exposure Units
used as measure of rating units or the premium base of risk (Exposure units multiplied by the rate results in the premium)
Market Value
what a willing buyer will pay a willing seller
Overinsurance
when a property's insurance coverage exceeds its cash value
Declaration
who, what, how much