EXAMFX - P&C GUARANTEE EXAM
NFIP flood insurance policies have a term period of
1 year
Which of the following is NOT an indicator of a competent party?
Business profession
A performance bond is an example of which of the following types of bonds?
Contract
How often must organizations consult the National Do Not Call Registry?
Every 31 days
Section III of the business auto policy provides physical damage coverage. All of the following are physical damages that may be selected coverages EXCEPT
Limited peril coverage
An insurance policy form that lists specific covered perils provides
Named peril coverage
Which of the following perils will be EXCLUDED from coverage under HO-4 Tenant Broad Form of a homeowners policy?
Sewer water backup
Wagering on a sporting event is an example of what type of risk?
Speculative
Which of the following actions does NOT constitute false advertising?
Stating that dividends are not guaranteed
which of the following is a federal act that covers crews of ships the same as railroad workers?
The Jones Act
In the event of a loss, the most the insurer will pay is
The amount of the loss or the limits as stated in the policy, whichever is less.
What types of injuries could incur additional penalties and/or increased benefits paid by the employer?
The employer's willful failure to provide required safety googles
An aleatory contract is based on what kind of exchange?
Unequal exchange of values
Medical benefits under workers compensation statutes are provided
Without limit
During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of
Defamation
Which provision defines how the policy will respond if there is other valid insurance written on the same risk?
Other insurance
An insured has the scheduled personal property endorsement attached to his homeowners policy. If the insured acquires new works of art, when must the insurer be notified for the new works of art to be covered under the endorsement?
Within 90 days
An agents suspects that his insurer is committing insurance fraud. Within how many days of that discovery must the agent the fraud to the Department of Insurance?
60 days
According to homeowners Coverage A, how much of a house's value must be insured in order to qualify for replacement coverage?
80%
Coverage for loss by some perils under a building and personal property form is suspended if
The insured building is vacant for over 60 days
You open your locked safe this morning and find $4,000 worth of property is missing with no signs of forced entry. How much does your safe burglary policy pay?
$0
An insured rents out a bedroom in his residence for $50 per week. The residence is badly damaged by fire. During the three weeks required to repair the fire damage, the insured pays $900 in rent for a short-term apartment, and the renter is forced to find other accommodations. Disregarding any extra expense for meals, how much would an HO-3 will pay under Coverage D?
$1,050
Under Coverage E - Scheduled Farm Personal Property, livestock that is not specifically insured is limited to a coverage limit of
$2,000 per head
Within how many days of the final disposition of the matter must a producer report administrative actions taken against him or her to the Commissioner?
30 days
What type of policy, which may be added by endorsement or purchase separately, may an insured purchase in order to provide coverage for other types of contracts?
A contractual liability policy
Which of the following risks would be eligible for coverage under a dwelling policy form?
A duplex that is occupied by two families, each of which have a bedroom rented to a boarder.
The term "functional replacement cost" refers to
A loss valuation method
With regard to homeowners Section II, which of the following does NOT meet the definition of insured location?
A plot of farmland owned or rented by the insured
All are legal defenses against a claim of negligence EXCEPT
Absolute liability
A house insured with a homeowners policy has been blown off its foundation by a tornado. It must be demolished and removed so a replacement house can be built. Which of the following is true about debris removal?
An additional 5% of the policy limit may be paid for debris removal.
In order to get a nonresident license in Louisiana, producers must
Apply and pay a fee to a nonresident state that reciprocates
Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination?
Charging the insured higher premiums based on her race
The commercial crime coverage that would cover losses resulting from the theft of money, securities and other property by employees is
Employee theft
The federal act that provided more favorable benefits for interstate railroad workers by allowing the injured worker to sue the employer for negligence is the
Federal Employers Liability Act (FELA)
What part of the insurance contract describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured?
Insuring agreement
Which of the following is NOT found in the common policy declarations of a commercial package policy?
Insuring agreement
A structure may be eligible for coverage under the National Flood Insurance Program if it meets all of the following requirements EXCEPT
Is entirely over water
The property policy condition that automatically provides broader coverage when an insurer makes revisions to a current policy edition without charging the insured additional premium is called the
Liberalization clause
Lost Treasures has a guard dog in a fenced lot to protect the salvage yard. The dog scared a passerby, who now claims that it was a traumatic experience and that he now suffers from recurring nightmares. A claim for personal injury of $5,000 is filed against Lost Treasures. Why will the personal and advertising injury liability section (Coverage B) of the CGL policy cover this claim?
Mental anguish is a covered injury
An example of an alien insurer doing business in this state is one formed under the laws of
Mexico
Policy limits are the maximum amount an insured may collect, or for which an insured is protected under the terms of the
Policy
What type of insurer uses a formal sharing agreement?
Reciprocal insurers
Time parameters set by statute law that limit the amount of time in which a claimant can bring an action for recovery for certain types of losses is called
Statute of limitations
Upon payment for a loss, the insured is obligated to surrender to the insurer the right to sue a negligent third party. This is called
Subrogation
An automobile policy has limits of 100/300/50. The number 100 means
The maximum limit for bodily injury claims that can be paid for one person.
What is the purpose of the ordinance or law coverage endorsement?
To remove the exclusion of losses resulting from ordinances or laws
What is the purpose of the Terrorism Risk Insurance Act?
To share the risk of loss form terrorist attacks with the insurance industry
Under Coverage C, and at the request of an insured, personal property of a guest or residence employee is covered
While it is in any residence premises occupied by an insured
Which of the following conditions is NOT included for farm liability in addition to the common policy conditions?
Arbitration
Which of the following terms means termination of an insurance policy at its expiration date by not offering a policy continuation or replacement?
Nonrenewal
The purpose of the Fair Credit Reporting Act is to
Protect consumers against the circulation of inaccurate or obsolete personal or financial information.
When does the insurer's duty to defend a suit or claim end in a commercial general liability policy?
When loss payments equal the applicable limit of insurance
If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?
$2,500
A man taking care of his wife's insurance agency while she's on activity duty in the military has a temporary license for 100 days. How many more days can pass before the license expires?
80
How is a professional liability policy written?
Claims-made
Which of the following would be covered under a building and personal property coverage form?
Outdoor sign
An insured was judged at fault in an automobile accident. He has the 100/300 bodily injury liability. Three other individual were injured in the vehicle hit by the insured. They were awarded damages of $150,000, $75,000, and $75,000. What amount, if any, was not covered by his insurance policy?
$50,000
An insured carried underinsured motorist limits of $100,000. She is involved in an accident with a driver whose Part A limits are only $25,000/$50,000/$25,000. The insured suffered $90,000 worth of bodily injury. If the other driver is found 100% negligent, how much would the insured's policy pay toward this medical expenses?
$65,000
In a personal auto policy (PAP), a covered auto includes all of the following EXCEPT
A van used in the delivery business
An insured has a maximum limit of coverage available under her liability policy during a policy year regardless of the number of claims made or the number of accidents. Her limits are restored at the policy anniversary. What type of limit does this insured have?
Aggregate
Under which legal defenses is there an apportionment of damages based upon the degree of fault of each of the plaintiffs and the defendant?
Comparative negligence
An insured's home catches fire. As a result, the insured's family must stay in a motel until the home is repaired. The cost of the motel stay would be considered a
Consequential loss
When an agent obtains an insurance license for the primary purpose of writing insurance for himself, his spouse, or his own business, this is called?
Controlled business
The supplementary payments section of the commercial general liability policy would cover
Court costs assessed against the insured in a suit.
All of the following statements are TRUE about earthquake coverage in property policies EXCEPT
Coverage is commonly provided through a federally-funded program
Other-than-collision would cover financial losses due to
Damage to an insured's car caused by wind or hail
The purpose of purchasing an umbrella liability policy is to provide
Excess insurance over the primary liability policy.
Which of the following statements is true concerning a workers compensation and employers liability policy?
Exposures in states listed on the information page are covered
Which of the following would be considered a peril?
Fire
When reviewing a standard workers compensation and employers liability policy, the limits of coverage are described in Part One of the policy. The dollar limits of the benefits provided are stated
In the state workers compensation law itself
Agents may be found guilt of defamation if they make false statements that are intended to
Maliciously criticize another insurance company
Which of the following exposures is NOT covered under a homeowners policy?
Medical payments to an insured
What sublimit in a liability policy sets the maximum amount that will be paid for all claims arising from a single accident?
Per occurrence
If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true?
The insurer will be reimbursed for the excess costs by the NFIP.
Which of the following is NOT part of Section II of the boatowners policy?
Watercraft damage
Homeowners policies permit all of the following incidental occupancies EXCEPT
A retail sales operation run by the insured from his garage.
All of the following persons would be covered under a business auto policy EXCEPT
An employee of the named insured operating an auto that is owned by the employee's spouse
Which of the following components is NOT part of a policy structure?
Benefits
What two policy components are part of every commercial package policy?
Common policy declarations and common policy conditions
An executive is accused of sexual harassment. What type of coverage would respond?
Employment practice liability
How does insurance distribute the financial consequences of individual losses?
It transfers the risk to all persons insured
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation
What kind of coverage does Form DP-3 provide?
Open peril
The commercial general liability Coverage Part A - Bodily Injury and Property Damage provides coverage for which of the following?
Premises
Late one night on his way home from a local bar, a man runs his covered auto into an insured's car. The man was operating his vehicle while under the influence of alcohol. The insured had no personal injuries, but her car had damage. Her insurance policy paid for the damages to her car. The subrogation provision in her policy allows
The insurer to attempt to recover the damages from the man and/or his insurance company.
An insured has decided to never drive another vehicle and wants to transfer his auto insurance policy to his wife. What does the insured need to transfer the policy?
The written consent of the insurer
Which of the following duties is NOT required of the insured in the event of a loss?
Immediately notify the insurer when the insured has filed for bankruptcy.
An insured has a personal umbrella with a $2,000 self-insured retention (SIR). Assuming no other policy is involved, how much would the umbrella pay after a $12,000 personal injury liability claim?
$10,000
How many hours of continuing education credits are required in order for a producer to renew his/her license?
24
Which of the following is the least amount of controlled business that would be considered illegal?
26%
What term is used for insurance companies that have a Certificate of Authority to transact insurance?
Admitted
If a producer's license was revoked for a violation of the Insurance Code, when can the producer apply for a new license?
After 1 year
Which of the following terms describes replacement nonmechanical sheet metal or plastic parts on the exterior of a motor vehicle?
Aftermarket crash parts
Which type of damages is intended as a form of punishment for negligent, willful, or outrageous intent?
Punitive
An insured was having a new home built. While digging the footings for the foundation, the contractor struck a solid rock formation and found that was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbor's home several blocks away. Who pays for this damage?
The contractor
If an insurance policy has the additional coverage provision, how does it affect the policy premium?
There is no additional premium
What is an insured contract?
Those contracts that are automatically covered under the exposure of premises coverage in a general liability insurance contract.
The broad causes of loss form in the commercial property policy contains three perils in addition to the basic form perils. Which of the following is NOT one of those three perils?
Utility services
An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request?
3 days
What amount of coverage is provided on HO policies for watercraft?
Up to $1,500
Which of the following best describes a rebate?
A producer returning part of her commission to her client, as an inducement to buy
Which of the following is NOT an example of the company's location of incorporation?
Authorized
What was the purpose of the Motor Carrier Act of 1980?
To establish financial responsibility requirements for interstate motor carriers
An insured is injured while driving his own car. Which of the following coverages will pay for the loss?
Part B - Medical Payments
A golfer slices a tee shot and the ball goes through the window of a house beside the fairway. The broken glass is paid for by
The golfer's homeowners liability coverage
An individual skilled in the process of selecting risks that will not create adverse selection for an insurance company is called
Underwriter.
An insured owns an automobile liability policy with bodily injury limits of $200,000 and an umbrella liability policy with a limit of $1,000,000. The insured is involved in an automobile accident and is found liable for injuries totaling $900,000. Which of the following examples best describes how the benefits will be paid?
Auto liability policy = $200,000; umbrella liability policy = $700,000
All of these types of property may be covered on a farm property coverage form EXCEPT
Growing crops
A pharmacy offers a delivery service to its customers. When the delivery driver parked his truck in front of a customer's home, someone broke into the delivery truck and stole the money inside the vehicle. Which crime coverage will cover the loss of the money?
Outside the premises (theft, disappearance or destruction)
If a producer allows his license to lapse, within what time period may the producer reinstate the same license?
2 year
Supplementary payments under the personal auto policy include all of the following EXCEPT
Unlimited cost of bail bonds
A producer continues to use an unapproved trade name for 10 days after being notified by the Commissioner to stop using the unapproved name. What is the maximum fine the producer may face?
$5,000
Under a commercial general liability policy, which of the following is NOT considered mobile equipment?
An automobile used as a company car by a real estate company
An agreement that is enforceable by law is known as what kind of contract?
Legal
Coverage B - Personal and Advertising Injury Liability responds to claims arising from
Suits alleging infringement of copyright
Restoring an insured financially after a claim is known as
Indemnity
Which of the following types of property would be covered under Coverage C - Personal Property in a dwelling policy?
Rowboats
Which of the following symbols in a business auto policy indicates that coverage for newly acquired vehicles applies if the insurer already covers all autos owned by the insured?
Symbol 7
The owner of a rental dwelling, insured under a DP-2, turns off the heat in the insured dwelling during the winter months because the dwelling is not occupied. The building's water pipes freeze and break, causing damage. How will the policy react to this loss?
This loss is excluded from coverage
All of the following qualify as an "insured contract," as defined in commercial auto policies EXCEPT
Agreement for demolition near a railroad
An important fact about the financial status of an insurer was deliberately withheld. Which of the following terms best describes this action?
False financial statement
All of the following statements regarding personal property coverage in the homeowners program are correct EXCEPT
The HO-3 policy covers the mysterious disappearance of personal property
How long is the period of time in which a licensee must renew his or her license?
90 days prior to expiration
Chris, who is unlicensed, works part-time in her father's insurance agency. She may perform all of the following activities EXCEPT
Collect premium for in-force policies and explain coverages to clients that have existing polices written by her father.
An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting from one accident, which may be used in any combination of amounts, not to exceed the single limit. What type of limit does this insured have?
Combined single
The statutory law defense that reduces injury and awards for damages proportionately when the plaintiff and defendant are both responsible is called
Comparative negligence
While engaged in a pick-up soccer game in the neighborhood park, the insured collides with another player, breaking his nose. Would the insured's homeowners medical payments cover the injury?
Yes, medical payments coverage also applies off the insured premises.
A liability policy that provides increased limits and expanded coverage over underlying casualty coverages is called
Umbrella liability
When a named insured files a form with the application selecting a different level or absence of Uninsured Motorist coverage, this selection is valid
For the life of that policy
Space Age Rockets makes model rocket supplies and has 12 employees. The company is located in Atlanta, GA. Georgia has compulsory workers compensation laws. Space Age's owner thinks that his company is too small and unprofitable to carry the workers comp plan mandated by the state. Possible consequences of noncompliance include all of the following EXCEPT
Forced payment of bulling for services rendered by any private insurer that "binds" coverage based on an employee's request for coverage.
Which of the following is NOT a characteristic of a difference in conditions (DIC) policy?
It is a standard policy.
An agent's license may be suspended or revoked for all of the following reasons EXCEPT
Sharing commissions with another agent
Which of the following covers the interest of a secured lender in personal property?
Loss payable clause
Under an HO-2 policy, the insurer will pay no more than the actual cash value of the property damage until
The property repair or replacement is complete
In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will
Be reduced by 10%
An applicant may challenge information discovered as a result of an investigative consumer report under which of the following Acts?
Fair Credit Reporting Act
Which of the following is covered under a dwelling policy?
Fire caused by an earthquake
According to the Fair Credit Reporting Act, all of the following statements are true EXCEPT
If an applicant is declined for an insurance policy, he or she has no right to known what was in the report.
Which commercial property form provides coverage for the insured's legal liability for property in his or her care, custody or control?
Legal liability
All of the following are true regarding a producer's fiduciary responsibilities EXCEPT
Producers may commingle personal funds with company funds
Which of the following persons is required to hold a producer license in this state?
A salaried employee who advertises and solicits insurance
An agent tells an insured that if he replaces his current insurance policy with a newer one, his dividends will be higher and his premiums will be slightly lower. The policy, however, would not offer either one of these things. What type of misrepresentations is being committed?
Twisting
What is the main distinction between a hired auto and a nonowned auto?
Who owns the auto
Which of the following injuries may be covered under Coverage C - Medical Payments of a commercial general liability policy?
Injuries to a member of the general public that occurs on premises
What are the two source for workers compensation insurance?
Monopolistic state fund and competitive market
A driver who has an auto policy with limits of liability lower than required by state law would be considered
Underinsured motorist
Two individual of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same insurer, the premium rates are different based on the insured's race. What practice does this describe?
Unfair discrimination
A small appliance manufacturer in this state provides products around the globe. A customer in Switzerland is injured using one of its products. If the appliance manufacturer is found liable for the damages, why would its commercial general liability policy cover the customer's claim for bodily injury?
The appliance was manufactured in the United States
Which of the following would NOT be covered by uninsured motorist coverage?
The insured causes a head-on collision with the car of an uninsured motorist.