Exam Questions

A policy holder has an equipment breakdown policy with a $200,00 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?

$175,000

An insurer's building has an actual cash value of $200,000 and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss has occurred. How much will the policy pay? A. $0 B. $30,000 C. $32,000 D. $40,000

$30,000

An insured must get advance warning if the premiums will be increased by more than

15%

How many days before a policy is nonrenewed must an insurer deliver or mail written notice to the insured? A. 20 days B. 30 days C. 10 days D. 15 days

30 days

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. 31 days B. 45 days C. 15 days D. 30 days

30 days

Which of the following statements is true regarding the premium computation for workers compensation insurance? A. The premium basis for workers compensation insurance varies by the type of industry in which the insured is involved B. The insured pays a guaranteed premium based on an estimated value of the annual income received C. The premium is set at the beginning of the policy period and will not change D. 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

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

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? A. Insuring agreement B. Additional coverages C. Exclusions D. Declarations

Additional coverages

Which of the following risks would NOT be eligible for coverage under a homeowner's policy? A. An applicant who owns and lives on a commercial farm B. An applicant who lives in a duplex that she does not own C. An applicant who owns and lives in a duplex D. An applicant who owns and lives in a single family dwelling

An applicant who owns and lives on a commercial farm

Which coverage form would provide coverage for all incoming and outgoing shipments? A. Motor truck cargo B. Mail coverage C. Annual transit D. trip transit

Annual transit

When 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? A. Any vehicle while located inside a racing facility B. Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair C. Any vehicle used by the insured without the reasonable belief that the insured is entitled to use such vehicle D. Any auto furnished for the insured's regular use, but not named on the policy

Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer? A. Qualified B. Approved C. Authorized D. Certified

Authorized

An insurer makes a change to broaden coverage in a dwelling policy while it is in effect, the changes will apply

Automatically

Which inland marine form would provide the best protection for a dry cleaning company against loss or damage to their customer's property while in the care, custody, and control of the dry cleaners? A. Vendor's single interest policy B. Bailee's customer policy C. Furrier's block policy D. Personal property coverage part

Bailee's customer policy **Bailee's customer policy does not cover property of the insured but does cover customer property while in the possession of the insured

If an agent advises a policyholder to replace an insurance policy but only does so for the purpose of making commissions, the agent has committed an act of: A. Defamation B. Coercion C. Churning D. Misrepresentation

Churning

A professional who wants coverage for all liability exposures should purchase what form of liability insurance? A. Employee benefits B. Commercial general and professional C. Directors and officers D. Fiduciary and employment practices

Commercial general and professional

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT: A. Conditions B. Consideration C. Legal purpose D. Offer and acceptance

Conditions

An insured's business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this?

Consequential

In regards to a homeowner's policy, which coverage provides for indirect or consequential losses? A. Coverage C B. Coverage D C. Coverage A D. Coverage B

Coverage D

Which of the following is covered under the mail floater of a Commercial Inland Marine policy ONLY if its sent by registered mail? A. Currency and unsold travelers checks B. Postage and revenue stamps C. Money orders, checks, drafts, notes D. Bonds, stocks, certificates, coupons attached to bonds

Currency and unsold travelers checks

All of the following are conditions commonly found in the insurance policy EXCEPT: A. Appraisal B. Insuring agreement C. Cancellation and renewal D. Subrogation

Insuring agreement

How does the mobile home endorsement affect the other coverage of law or ordinance in a homeowners policy?

It removes coverage

Which of the following is the basis for a claim against an insurance policy?

Loss

An agent commingled $500 worth of insurance premiums collected with new applications with his personal funds. The agent could be found guilty of a: A. Misdemeanor B. Felony C. Fiduciary crime D. Breach of contract

Misdemeanor

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? A. No because the claim results from copyright infringement and is not in an advertisement B. No because there's no bodily injure or property damage C. Yes because the claim is a result of Erroneous products and work D. No because this event does not meet the definition of infringement

No because the claim results from copyright infringement and is not in an advertisement

On a participating insurance policy issued by a mutual insurance company, dividends paid to policy holders are

Not taxable since the IRS treats them as a return of a portion of the premium paid

Which professional liability form provides coverage for liability arising out of errors mistakes made in rendering medical services? A. Druggist B. Directors and officers C. Errors and omissions D. Physicians, surgeons, and dentists malpractice

Physicians, surgeons, and dentists malpractice

An insured owns several buildings, each at a different location and insured on a separate policy. Which type of coverage does the insured have? A. Specific B. Blanket C. Schedule D. Special

Specific

Which of the following is NOT the consideration in a policy? A. The premium amount paid at the time of application B. The promise to pay covered losses C. The application given to a prospective insured D. Something of value exchanged between parties

The application given to a prospective insured

When a regular bill of lading is issued, who will be responsible for the invoice cost of any damaged property? A. The carrier B. The person to whom the good are being shipped C. The shipper D. The driver of the truck

The carrier

The commissioner of insurance is

The chief officer of the Department of Insurance

Which of the following best expresses the purpose of a stated value contract?: A. To establish the value of the property subject to loss by theft or robbery B. To provide a maximum limit for which the insurance company may become liable in casualty losses C. To pre-establish the amount of coverage available for property items that are difficult to value D. To ensure tat the principle of indemnification applies

To pre-establish the amount of coverage available for property items that are difficult to value

Which of the following statement is guaranteed to be true, and if untrue, may breach an insurance contract? A. Representation B. Warranty C. Concealment D. Indemnity

Warranty

a unique feature in a bailee form is that it covers

customers property whether or not the insured has been negligent

A basic dwelling policy automatically provides coverage against what?

internal explosion

All of the following statements describe the concept of strict liability EXCEPT

it is imposed on defendants engaged in hazardous activities

A premium discount is the term that describes when an insured owes a total standard premium greater than: A. $15,000 B. $1,000 C. $5,000 D. $10,000

$5,000

Expenses that an organization would not have incurred if business interruption had not existed are known as: A. Additional expenses B. All inclusive expenses C. Extra expenses D. Continuing expenses

Extra expenses

Replacement cost is defined as: A. Payment of the full policy limits in the event of a total loss B. Full replacement of property at its current cost, new and without reduction for depreciation C. The market value

Full replacement of property at its current cost, new and without reduction for depreciation

All of the following are examples of a transacting insurance in Georgia EXCEPT: A. Preliminary insurance negotiations B. Making an insurance contract go into effect C. Placing advertisements for an insured D. Insurance solicitation

Placing advertisements for an insured

Who would participate in a WYO program?

Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing 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? A. Delivering a claim to the insurer in person B. Initiating the investigation of a claim C. Promptly notifying the insurer of a claim by phone D. Providing specific details regarding an occurrence

Providing specific details regarding an occurrence

The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as: A. Adverse selection B. Right of recission C. Principle of indemnity D. Subrogation

Subrogation

Which of the following symbols is available to an insured with vehicles subject to no-fault coverage? A. Symbol 5 B. Symbol 6 C. Symbol 7 D. Symbol 9

Symbol 5

According to the standard workers compensation and employer liability policy form, a state should be listed in Part Three- other states' insurance of the workers compensation and employers liability policy when: A. The insurer is not licensed to write workers compensation in that state B. The state has a monopolistic workers compensation fund C. The insured expects to extend operations to that state D. The insured has operations in the state where the policy is written

The insured expects to extend operations to that state

All of the following are true statements regarding the supplementary payments of a commercial general liability policy EXCEPT: A. They pay all reasonable costs incurred by the insured in helping to investigate or defend a claim B. They pay defense costs even after the aggregate limit has been reached C. They pay all expenses incurred by the insurer D. They pay pre-judgement and post-judgement interest

They pay defense costs even after the aggregate limit has been reached

An insured is applying for a casualty insurance policy. One of the conditions of the policy allows the insurance company to inspect the insured's books at the end of the policy term to make sure sufficient premium has been collected for the exposure she plans to insure. Which condition is part of the insured's policy? A. Deposit premium audit B. Excess liability coverage C. Contract bond D. Errors & omissions insurance

deposit premium audit

Which of the following is a common exclusion found in Part D: Coverage to Your Auto of a PAP? A. Riot or civil commotion B. Towing and labor C. Mechanical breakdown D. Glass breakage

mechanical breakdown

in a dwelling policy, which of the following other structures would be covered?

rented to a neighbor for use as a private garage

An insured owns and operates a ranch. The insured has several vehicles that are used in the ranching operation and for personal use. Which of the following could NOT be insured under a personal auto policy? A. A station wagon that is used personally B. A two-ton grain truck with a 6,500 pound capacity C. A two-wheeled trailer designed to be towed by the station wagon D. A farm pickup with 1,000 pound capacity

A two-ton grain truck with a 6,500 pound capacity

Which of the following would modify the original insurance contract by either adding or removing coverage? A. Flexible policy B. Endorsements C. Additional coverage form D. Conditions

Endorsements

What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations? A. Experience modification factor B. Workers classification factor C. Merit rating plan D. Arbitration plan

Experience modification factor

Which of the following liability exposures is most likely for a small specialty clothing retail boutique ? A. Product liability exposure B. Completed operations liability exposure C. Premises liability exposure D. Operations liability exposure

Premises liability exposure

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