FINAL EXAM INSURANCE
When transacting business in this state an insurer formed under the laws of another country is known as a/an Alien insurer. Domestic insurer. Foreign insurer. Admitted insurer.
Alien insurer.
Who is legally required to keep records pertaining to insurance transactions? The Commission All licensees Insureds Agencies and insurers only
All licensees
Which of the following could be covered by an HO policy? A sports car kept in an attached garage Property of a tenant not related to the insured An oriental rug in an on-premises apartment Birds, fish, and animals
An oriental rug in an on-premises apartment
Which coverage form would provide coverage for all incoming and outgoing shipments? Motor truck cargo Mail coverage Annual transit Trip transit
Annual transit
The general property policy form is used for other-residential and non-residential structures and their contents such as Commercial structures. Cooperative associations. Apartment buildings. Any of the above would be covered under this form.
Any of the above would be covered under this form.
Which of the following types of agent authority is also called "perceived authority"? Express Implied Fiduciary Apparent
Apparent
The difference in the contents coverage on an HO-3 and HO-5 is which of the following? Contents are covered open peril on HO-3, and named peril on HO-5. Contents are covered for replacement cost on HO-5, and ACV on HO-3. Contents are covered for replacement cost on HO-3, and ACV on HO-5. Contents are covered open peril on HO-5, and named peril on HO-3.
Contents are covered open peril on HO-5, and named peril on HO-3.
All of the following are supplemental payments found in liability policies EXCEPT Reasonable expenses incurred by the insured. Limited amounts for bail bonds and other bonds related to a claim. Costs the insured incurred in hiring an attorney. All expenses and defense costs incurred by the insurer.
Costs the insured incurred in hiring an attorney.
Which of the following property coverages would provide protection to contents damaged by fire? Coverage B Coverage C Coverage D Coverage A
Coverage C
Which of the following coverages will respond if a claim is made or a suit is brought against an insured for damages due to bodily injury or property damage caused by an occurrence to which the coverage applies? Coverage F - Medical Payments to Others Coverage C - Personal Property Coverage D - Loss of Use Coverage E - Personal Liability
Coverage E - Personal Liability
States with monopolistic state workers compensation funds Require all employers in their state to purchase workers compensation insurance regardless of their financial capacity. Sell workers compensation insurance through private insurers that are in the state and receive a kickback for all policies sold on an annual basis. Do not allow private insurers to be licensed to write workers compensation coverage Provide workers compensation insurance through managed risk plans
Do not allow private insurers to be licensed to write workers compensation coverage
The loss ratio compares Losses to interest rates. Premiums to interest rates. Earned premium to company expenses. Earned premium to losses.
Earned premium to losses.
How often must insurance consultants renew their license? Every year Every 2 years Every 5 years Never: licenses are perpetual unless revoked
Every year
With regards to the personal auto policy, in the event of a claim or loss, the insured is required to do all of the following EXCEPT Immediately report to an emergency room for medical examination. Notify the insurer as soon as possible with a description of the accident. Protect the insured auto from further damage. Promptly contact the police if the accident was a hit-and-run.
Immediately report to an emergency room for medical examination.
What type of property would NOT be covered under the dwelling policy special form Coverage A - Dwelling? Materials and supplies on the premises used to alter or repair the dwelling Outdoor equipment located on the premises and used to service the location Attached structures Land on which the dwelling is located
Land on which the dwelling is located
Dwelling coverage includes all of the following EXCEPT Building and outdoor equipment used to service the described location. Land on which the dwelling is located. The dwelling used principally for residential purposes. Materials on the described location used to alter or repair the dwelling. The land is not covered, and nothing that happens to the land would be considered a covered loss.
Land on which the dwelling is located.
Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss? a)Comprehensive coverage b)Collision coverage c)Liability coverage d)Medical payments
Liability coverage
Virginia law mandates that no motor vehicle liability policy may be issued or delivered without U/M coverage being included. The coverage must not be less than 25/50/20 BI/PD; however, if the liability limits are higher than the minimum requirements, the insurer must write Limits equal to the liability limits written in the policy. Whatever limits the insured chooses. Only the minimum limits. Limits equal to the average limit written in the State.
Limits equal to the liability limits written in the policy.
Rates that are established based on the similarities of the risk with other risks are known as Experience rates. "A" rates. Merit rates. Manual rates.
Manual rates.
ABC trucking company recently purchased XYZ manufacturing company. ABC wants to transport the new company's freight with their trucking division. The company also wants to continue to haul freight for the clients it has served for many years. In regard to coverage, which of the following is true? The company must choose between being a private carrier and a common or contract carrier. Truckers coverage form is needed. A truckers coverage form is needed along with the business auto coverage form. Motor carrier coverage is needed.
Motor carrier coverage is needed.
The livestock coverage form covers which of the following losses? Sheep died after an attack by the family dog A cow died after it ran into a moving tractor All risk coverage for death of livestock by any cause except those excluded Named peril coverage for death of livestock
Named peril coverage for death of livestock
A boatowners policy does NOT cover Nuclear hazards Damage to the boat and trailer. Liability. Medical payments.
Nuclear hazards.
What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? a)Binder policy b)Named peril policy c)Open peril policy d)Specified peril policy
Open peril policy
The causes of loss insured against in an insurance policy are known as Perils Losses Risks Hazards
Perils
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 Uninsured motorist. No-fault medical payments. Liability. Physical damage.
Physical damage.
Which of the following liability exposures is most likely for a small specialty clothing retail boutique? Completed operations liability exposure Premises liability exposure Operations liability exposure Product liability exposure
Premises liability exposure
The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property is called Proportionate. Excess. Pro rata liability. Contributing.
Pro rata liability.
After a loss, an insured covered by a business property coverage is NOT required to Send the insurer a sworn proof of loss within 60 days. Take all reasonable steps to protect property from further damage. Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation. Resume business operations as soon as possible.
Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation.
Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? Retention Reduction Transfer Avoidance
Reduction
Installing deadbolt locks on the doors of a home is an example of which method of handling risk? Avoidance Transfer Self-insurance Reduction
Reduction
The Federal Fair Credit Reporting Act Regulates consumer reports Protects customer privacy. Regulates telemarketing. Prevents money laundering.
Regulates consumer reports
Which inland marine coverage condition states that payment of any claim will not reduce the limit of insurance, except in case of a total loss on a scheduled item? Reinstatement of limit Legal action against the insurer Privilege to adjust with the owner Transfer of rights of recovery
Reinstatement of limit
All of the following statements regarding a boatowners policy are true EXCEPT Perils are insured on an open-peril basis, providing that the insurer will pay for direct and accidental loss to the property insured. Replacements for the boat listed in the Declarations are automatically covered, if the insured notifies the insurer within 60 days and pays the additional premium. Watercraft liability protects up to specified limits for claims against a "covered person" for damages due to bodily injury caused by a watercraft. Physical damage coverage is provided on an actual cash value (ACV) basis.
Replacements for the boat listed in the Declarations are automatically covered, if the insured notifies the insurer within 60 days and pays the additional premium.
Which of the following is covered under the physical damage coverage of a personal auto policy? A covered auto seized and destroyed by a government authority A cellular phone in a locked vehicle Custom furnishings or equipment in a pick up or van Sound reproduction equipment permanently installed in the covered auto
Sound reproduction equipment permanently installed in the covered auto
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? General Special Tort Normal
Special
Which of the following perils is covered by the HO-2 and HO-3? Flood War Sudden and accidental rupture of a heating system Loss due to power interruption that occurs off the premises Off-premises power failure, flood, and war are excluded from all DP and HO policies.
Sudden and accidental rupture of a heating system
Which of the following symbols is available to an insured with vehicles subject to no-fault coverage? Symbol 5 Symbol 6 Symbol 7 Symbol 9
Symbol 5
An apartment occupant's personal property would be insured under which homeowners form? Comprehensive form (HO-5) Broad form (HO-2) Unit-owners form (HO-6) Tenant broad form (HO-4)
Tenant broad form (HO-4)
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 A percentage of the loss as described on the declarations. The excess over the self-insured retention. The amount specified in the policy under the additional coverage provisions. The amount in excess of the policy's limits of liability.
The excess over the self-insured retention.
According to a state regulation, a notice of information practices that insurers provide to applicants and policyowners must include all of the following EXCEPT That the information may be disclosed to other parties. The type and source of investigative techniques used. A description of the rights of the party being investigated. The information gathered in the course of the investigation.
The information gathered in the course of the investigation.
The abandonment provision in property insurance policies states that The insurance is for the benefit of the insured, and not for someone else who has temporary custody of the insured property. The insurer may take all or any part of lost or damaged property at an agreed or appraised value. The legal rights in the insured property may be transferred. The insured may not relinquish ownership of damaged property to claim a total loss, but must protect damaged property from further loss.
The insured may not relinquish ownership of damaged property to claim a total loss, but must protect damaged property from further loss.
All of the following are perils covered under the broad form dwelling policy EXCEPT Lightning. Collapse. Theft. Fire.
Theft.
All of the following statements are true regarding fire department service coverage under the businessowners policy EXCEPT This coverage limit pays in place of the limit of insurance shown in the declarations. This coverage limit is payable in addition to the limit of insurance shown in the declarations. This coverage is not subject to any deductible. This coverage provides an additional amount of insurance.
This coverage limit pays in place of the limit of insurance shown in the declarations.
All of the following are essential elements of a commercial package policy (CPP) EXCEPT Policy conditions Valuations and/or settlement provisions Interline endorsements Declarations page
Valuations and/or settlement provisions
An insured decides to store some heavy boxes in the attic. While moving them around, he accidentally drops a heavy box that crashes through the ceiling, causing $1,000 of damage. The insured's HO-3 policy form will pay $500. $1,000. $500 minus the deductible. $1,000 minus the deductible.
$1,000 minus the deductible.
Virginia's financial responsibility law, if satisfied by insurance, requires minimum limits of $25,000 bodily injury per person; $50,000 bodily injury per accident; $25,000 property damage $20,000 bodily injury per person; $40,000 bodily injury per accident; $25,000 property damage. $100,000 bodily injury per person; $200,000 bodily injury per accident; $50,000 property damage $25,000 bodily injury per person; $50,000 bodily injury per accident; $20,000 property damage per accident
$25,000 bodily injury per person; $50,000 bodily injury per accident; $20,000 property damage per accident
How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card? $100 $500 $1,000 $5,000
$500
If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to a)$350. b)$500. c)$750. d)$1,000.
$500.
A new set of continuing education hours must be completed every a)2 years. b)3 years. c)5 years. d)1 year.
2 years
An agent is licensed for life and property insurance. How many hours of CE is the agent required to earn every 2 years? 10 16 24 40
24
Losses caused by vandalism and malicious mischief are excluded under a homeowners policy if the dwelling had been vacant for more than 30 days. 45 days. 60 days. 90 days.
60 days.
The employee theft crime policy includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 30 days. 60 days. 90 days. 120 days.
90 days.
In which of the following situations would the jewelers block extension cover a loss? A jeweler agrees to exhibit a necklace and earrings set in a showcase away from the premises. The case is broken into, and the set is stolen. An employee of a jewelry store is wearing a cameo brooch and ring set to display to customers. During the day, she discovered the brooch has fallen off, and she can't find it. A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged. A jewelry store is robbed while displaying bracelets and necklaces at a public exhibition.
A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged.
Which of the following would be required to be licensed as an insurance producer? An insurance company director who performs executive, administrative and managerial duties A salaried employee who advertises and solicits insurance A person whose activities are limited to producing insurance advertisements A salaried full-time employee who furnishes information for group insurance
A salaried employee who advertises and solicits insurance
An agent who collects a premium payment from a client must hold such funds in which of the following types of accounts? As long as records are kept, any federally insured account An equity indexed account A business account A separate account from the agent's personal or business account
A separate account from the agent's personal or business account
Which of the following produces evaluations of insurers' financial status often used by state departments of insurance? AM Best NAIC Consumer's guide SEC
AM Best
The property condition that precludes the insured from simply turning over damaged property to the insurer and claiming a total loss is called Abandonment. Assignment. Appraisal. Arbitration.
Abandonment
Which of the following businessowners policy (BOP) endorsements provides coverage for the inability to collect monies due from customers as the result of a covered cause of loss? Valuable papers and records Accounts receivable Money and security Extortion
Accounts receivable
What documentation grants express authority to an agent? Agent's insurance license Fiduciary contract State provisions Agent's contract with the principal
Agent's contract with the principal
Which of the following would NOT qualify as a hired auto? An auto rented for personal use An auto borrowed from an employee An auto hired by an employer An auto leased from a commercial rental company
An auto borrowed from an employee
An installation floater is used to insure All types of for-sale merchandise. Dams, power plants, water plants, and other such installations. Appliances intended to become a permanent part of the building. Buildings under construction.
Appliances intended to become a permanent part of the building.
First aid costs for others injured on the insured's premises Are paid in addition to the liability limit. Apply only if the insured is legally liable. Also cover injuries to the insured's family members. Are deducted from the liability limit.
Are paid in addition to the liability limit.
How often will the Commissioner examine an insurer's books and records? Annually Only upon a request from the insurer or a complaint from a customer At least once every 5 years Every 3 years
At least once every 5 years
An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined? Benefits will be provided if the state was listed on the policy information page. The legal system will determine which state's benefits apply to this particular loss. The state's benefits that pay the lowest amount will be selected by the insurance company. The employee may elect to receive benefits from both the home state and the state in which the injury occurred.
Benefits will be provided if the state was listed on the policy information page.
How are state Insurance Guaranty Associations funded? a)By NAIC b)By the Government c)By their members - authorized insurers d)By the Department of Insurance
By their members - authorized insurers
When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of Warranty. Concealment. Misrepresentation. Fraud.
Concealment.
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? Adhesion Consideration Good faith Representation
Consideration
Which of the following is licensed solely to advise insureds about their policies? Agent Broker Actuary Consultant
Consultant
Additional coverages in the liability section of a homeowners policy cover all of the following EXCEPT Damage to a third-party property for which the insured is legally liable Claims expense. Expenses the insured incurs rendering first aid for bodily injury to third parties. Damage to the property of others.
Damage to a third-party property for which the insured is legally liable.
Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy? Interior damage caused by water seeping under the shingles on the roof Damage to the dwelling caused by ash or dust from a volcanic eruption Damage to the dwelling caused by the insured when moving furniture Accidental scorching caused when a hot iron is placed upon a built-in counter top
Damage to the dwelling caused by ash or dust from a volcanic eruption
In addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT Bankruptcy. Employers liability. Separation of insured. Legal action against insurer.
Employers liability.
Which of the following losses would be covered by an unendorsed homeowners policy? Collapse caused by earthquake Fire or lightning Faulty or defective zoning Theft in a structure under construction
Fire or lightning
Which of the following homeowners policies covers those who rent their dwelling? HO-4 HO-6 HO-1 HO-2
HO-4
Which of the following homeowners forms is designed for individuals that own and reside in a condominium? HO-6 HO-2 HO-3 HO-4
HO-6
Events or conditions that increase the chances of an insured loss occurring are referred to as Hazards. Exposures. Risks. Perils.
Hazards.
Which of the following would NOT be covered by HO liability insurance? First aid expenses Property damage Intentional tort Bodily injury Insurance will not cover losses caused by intentional acts of the insured.
Intentional tort
Which of the following additional perils is covered under both the basic form and broad form dwelling policies? a)Freezing of plumbing, heating, or air conditioning systems b)Internal explosion c)Falling objects d)Weight of ice, snow, or sleet
Internal explosion
All of the following would be covered under the medical expense coverage of a businessowners policy EXCEPT First aid when the accident occurred. Mental health counseling. Ambulance services. X-ray services.
Mental health counseling.
Which of the following may NOT be included in an insurance company's advertisement? That its policies are covered by a state Guaranty Association The policies' limitations or exclusions The name of a specific agent An identification of a limited policy as a limited policy
That its policies are covered by a state Guaranty Association
All of the following people would be considered insureds under the liability section of a homeowners policy EXCEPT The legal representative of a deceased insured. The 22-year-old niece of the insured who is visiting. A 15-year-old foster child residing in the premises. The mother of the insured who is residing in the household.
The 22-year-old niece of the insured who is visiting.
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? They provide additional information from an outside source about a particular risk. They provide information about a customer's character and reputation. The customer has no knowledge of this action. The customer's associates, friends, and neighbors provide the report's data.
The customer's associates, friends, and neighbors provide the report's data.
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 The insurer is not licensed to write workers compensation in that state. The state has a monopolistic workers compensation fund. The insured expects to extend operations to that state. 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 statements concerning liability coverage are true EXCEPT Liability policies normally include supplementary payment provisions. Liability policies defend the insured against claims, real or alleged . The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met. The insurer cannot refuse to pay a claim even if the insured is bankrupt.
The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met.
The cost of restoring farm records is an additional coverage offered under a farm policy. How much will the policy pay to restore the records? Up to $1,000 Up to $1,500 Up to $2,000 Up to $2,500
Up to $2,000
In forming an insurance contract, when does acceptance usually occur? When an insurer's underwriter approves coverage When an insurer delivers the policy When an insurer receives an application When an insured submits an application
When an insurer's underwriter approves coverage
When would UM coverage apply? Any time the insured is involved in an accident with an uninsured driver Only when the insured is legally liable When the other party is legally liable but has no insurance Only when the insured drives an uninsured car
When the other party is legally liable but has no insurance
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a)3 days b)5 days c)10 days d)14 days
3 days
What is the required limit of insurance in the coinsurance clause for Coverage F - Unscheduled Farm Personal Property? 75% 80% 85% 90%
80%
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? Any vehicle while located inside a racing facility for the purpose of racing Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair Any vehicle used by the insured without the reasonable belief that the insured is entitled to use such vehicle 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
Which of the following describes the transfer of a legal right or interest in an insurance policy? Assignment Abandonment Obligation Legal purpose
Assignment
The designation symbols used in commercial auto policies can be found in which policy section? Conditions Covered Auto Liability Coverage Definitions
Covered Auto
The part of a property policy that shows the amount of insurance, premium, and policy term is the Endorsements. Declarations. Insuring clause. Conditions.
Declarations. Who, what, when, where, and how much insurance and premium all are stated in the policy Declarations.
An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act? Direct response marketing Independent agency marketing Illegal Insurance telemarketing
Direct response marketing
Which commercial crime form would provide coverage for a loss that did not necessarily happen during the policy period but was revealed during the policy period? Retro form Reporting form Loss sustained form Discovery form
Discovery form
What is the purpose of the coinsurance clause found in property insurance policies? Prevent insureds from profiting from a loss Encourage the insured to insure the property closer to its full value Encourage higher standards of care by requiring the insured to pay a portion of every loss Ensure that insureds do not overinsure their property
Encourage the insured to insure the property closer to its full value
How often must continuing education requirements be met? Every year Every 2 years Every 3 years Every year for the first 5 years, then every 3 years
Every 2 years
Which of the following is NOT a duty of the Commission of Insurance? Examining each domestic insurer at least once a year Appointing the Commissioner of Insurance Enforcing the Insurance Code Suspending or revoking licenses of Insurance Code violators
Examining each domestic insurer at least once a year
When injured employees are not allowed to seek damages outside the workers compensation law, this is known as which of the following? Law of large numbers A FAIR Plan A Second Injury Fund Exclusive remedy principle
Exclusive remedy principle
All of the following actions can be described as twisting EXCEPT Misrepresenting the terms and conditions of the existing policy to make the new one more attractive Embellishing the terms of the proposed policy in order to convince the insured to switch Making an incomplete comparison between the existing and proposed policies Explaining to client the advantages of permanent insurance over term and suggesting changing policies
Explaining to client the advantages of permanent insurance over term and suggesting changing policies
In insurance transactions, fiduciary responsibility means Handling insurer funds in a trust capacity. Maintaining a good credit record. Being liable with respect to payment of claims. Commingling premiums with agent's personal funds.
Handling insurer funds in a trust capacity.
Which of the following is NOT a characteristic of an insurable risk? The loss must be catastrophic. The loss must be due to chance. The loss must be measurable. The loss exposure must be large.
The loss must be catastrophic.
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 dwelling policy. How much of this loss will the policy cover? $0 $200 $250 $750
$0
An insurance agent changes his residential address. Within what time period must the agent notify the Commission of the change? Immediately 10 business days 30 calendar days There is no requirement for residential addresses.
30 calendar days
Under a personal auto policy, in which of the following locations would a vehicle primarily garaged in California be covered? Any other state Anywhere in the world Mexico Only in California
Any other state
If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy? Umbrella policy Excess policy General liability policy Auto policy
Auto policy
Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? Any federal report Consumer report Inspection report Agent's report
Consumer report
Employment practices liability insurance (EPLI) would NOT cover claims arising from Wrongful termination. Discrimination. Deliberate law violation. Sexual harassment.
Deliberate law violation.
A beauty parlor burns to the ground. What type of loss is this to the owner? Consequential Specific Consecutive Direct
Direct
Which of the following homeowners forms is designed to provide named peril coverage for personal property to individuals who rent an apartment? HO-6 HO-2 HO-3 HO-4
HO-4
Events or conditions that increase the chances of an insured loss occurring are referred to as Hazards. Exposures. Risks. Perils.
Hazards.
In a dwelling policy, which of the following is true regarding personal liability coverage? a)It does not cover medical payments to others b)It is included in all dwelling policies. c)It is the same as in homeowners policies. d)It must be added as a supplement or written as a separate policy.
It must be added as a supplement or written as a separate policy.
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report Are entitled to obtain a copy of the report from the party who ordered it. Must be advised that a copy of the report is available to anyone who requests it. May sue the reporting agency in order to get inaccurate data corrected. Must be informed of the source of the report.
Must be informed of the source of the report.
Why don't Commercial Auto Coverage Forms automatically include medical payment coverage? The business that owns the vehicles must be self-insured for medical payment coverage. Commercial auto coverage is for damage to vehicles, only. Any person occupying a commercial vehicle must have a Personal Auto Policy to cover any medical payments that result out of an accident. Often any person occupying a commercial vehicle would be covered under a workers compensation policy.
Often any person occupying a commercial vehicle would be covered under a workers compensation policy.
Which of the following statements is true regarding the commercial general liability policy's Coverage C - Medical Payments? The coverage is liability insurance because it pays only if the insured is legally liable. The coverage provides high limits of insurance for bodily injury losses. The coverage is considered good will because payments are made without regard to fault. The coverage applies to bodily injury to the named insured.
The coverage is considered good will because payments are made without regard to fault.
Negligence is defined as Conduct that is so hazardous that the individual engaging in it will be held fully responsible for any resulting injury or damage. An intentional act that results in bodily injury or property damage to another person. The failure to do what a reasonable prudent person would do under given circumstances. An unbroken chain of events that results in bodily injury or property damage to another person.
The failure to do what a reasonable prudent person would do under given circumstances.
Which of the following is NOT a goal of risk retention? To minimize the insured's level of liability in the event of loss To reduce expenses and improve cash flow To increase control of claim reserving and claims settlements To fund losses that cannot be insured
To minimize the insured's level of liability in the event of loss
An insured hits a deer and crashes his car into a tree. The total damage to the vehicle is $6,000. How will this loss be covered? This would not be a covered loss. $6,000 would be paid under other-than-collision coverage. $3,000 would be paid under other-than-collision; $3,000 would be paid under collision coverage. $6,000 would be paid under collision coverage.
$6,000 would be paid under other-than-collision coverage.
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 Pay as excess over the mother-in-law's health insurance. Pay only if the mother-in-law has no health insurance of her own. Share equally in the cost with the mother-in-law's health insurance. Apply to injuries of any guests or visitors.
Apply to injuries of any guests or visitors.
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 Considered underinsured. Not liable for the damages in excess of his limits. Required to post a bond for the amount of damages above his limits. Considered uninsured.
Considered underinsured.
All of the following violations may result in an agent's imprisonment EXCEPT Engaging in the business of insurance after being convicted of breach of trust. Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction. Embezzling funds from the insurer. Knowingly obtaining information about a consumer under false pretenses.
Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction.
The State Corporate Commission (SCC) has the authority to do all of the following EXCEPT Have interest in insurance companies regulated by the Commission. Issue cease and desist orders. Issue licenses and certificates of authority. Impose fines or other penalties for violations of insurance laws.
Have interest in insurance companies regulated by the Commission.
With regards to the personal auto policy, in the event of a claim or loss, the insured is required to do all of the following EXCEPT a)Protect the insured auto from further damage. b)Promptly contact the police if the accident was a hit-and-run. c)Immediately report to an emergency room for medical examination. d)Notify the insurer as soon as possible with a description of the accident.
Immediately report to an emergency room for medical examination.
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? It will not cover the damage because you are not liable . It will pay your brother's property insurance deductible. Your HO liability and your brother's property coverage will share on a prorated basis. It will cover the damage.
It will cover the damage.
Coverage A - Bodily Injury and Property Damage in the commercial general liability policy will cover Contractual liability. Damage to the insured's product. Losses due to the insured's negligence. Liquor liability.
Losses due to the insured's negligence.
An insured's home is mortgaged by the local bank. The insured is 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? Losses will be paid to the mortgagee and mortgagor as their interest appears. Coverage is suspended if the building is mortgaged and the insurer is not told of this indebtedness. The mortgagee must settle with the mortgagor in the event of a loss. The additional premium required for the mortgage endorsement must be paid by the mortgagee.
Losses will be paid to the mortgagee and mortgagor as their interest appears.
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance? False statements about financial condition of an insurer are unlawful. Statements made with the intent to deceive are unlawful Only written statements can be considered fraud. Omissions of material fact on insurance application are fraud.
Only written statements can be considered fraud.
The insured's car was hit and damaged by a deer. Under which of the following coverages in a personal auto policy would this loss be paid? Liability Uninsured motorist Collision Other-than-collision
Other-than-collision
All of the following are considered parts of the policy structure EXCEPT Provisions. Exclusions. Insuring clause. Conditions.
Provisions.
What type of damages may be awarded by the court to create disincentives that discourage behavior that is deemed highly undesirable by society? Punitive General Compensatory Specific
Punitive
After a loss, an insured covered by a business property coverage is NOT required to Resume business operations as soon as possible. Send the insurer a sworn proof of loss within 60 days. Take all reasonable steps to protect property from further damage. Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation.
Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation.
At the time of loss insured against in a property and casualty policy, the insurer's claim settlement options include all of the following EXCEPT Paying the value of the lost or damaged property. Replacing the property with other property of a lesser kind or quality Paying the cost of repairing or replacing the lost or damaged property. Taking all or part of the property at an agreed or appraised value.
Replacing the property with other property of a lesser kind or quality.
Burglary is defined as a)Taking of property from the care of a person in a violent act. b)Any act of stealing. c)Taking of property by use of force, violence, or fear. d)Taking of property from within the premises leaving visible signs of forced entry.
Taking of property from within the premises leaving visible signs of forced entry.
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. The coverage applies to bodily injury to the named insured. The coverage is liability insurance because it pays only if the insured is legally liable. The coverage provides high limits of insurance for bodily injury losses.
The coverage is considered good will because payments are made without regard to fault.
Under the workers compensation system, who is responsible for the expenses resulting from work-related injuries and occupational diseases? The employer, but only if it was at fault for the injury or disease The employee and employer in equal shares The employee The employer, regardless of whether it was at fault for the injury or disease
The employer, regardless of whether it was at fault for the injury or disease
In insurance terms, what are components? The penalties paid for unfair trade practices The prices charged for policies The factors that determine rates The amounts paid out in benefits
The factors that determine rates
All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT The injury or damage must occur away from the insured premises. The injury or damage must arise out of the insured's product or work. The injury or damage must occur after the insured has released physical possession of the product to another. The injury or damage must occur within 90 days after the insured's work is completed.
The injury or damage must occur within 90 days after the insured's work is completed.
Which of the following losses would be covered under the property damage liability coverage of a personal auto policy? A passenger in the insured's vehicle is injured following an accident caused by the insured. The insured damages a rented garage when he failed to stop in time. A temporary substitute vehicle is damaged while the insured is driving it. The insured's vehicle is damaged when it collides with a deer.
The insured damages a rented garage when he failed to stop in time.
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 The insured expects to extend operations to that state. The insured has operations in the state where the policy is written. The insurer is not licensed to write workers compensation in that state. The state has a monopolistic workers compensation fund.
The insured expects to extend operations to that state.
Which of the following is true regarding rejection of higher uninsured/underinsured motorist limits? The rejection of higher limits is only binding upon the named insured. The insurer may reject higher limits within 10 days from the date the policy is issued. Limits established by the insurer cannot be rejected by the insured. The insured has 20 days from the receipt of a notice of raised limits to reject them.
The insured has 20 days from the receipt of a notice of raised limits to reject them.
Which of the following is true regarding rejection of higher uninsured/underinsured motorist limits? Limits established by the insurer cannot be rejected by the insured. The insured has 20 days from the receipt of a notice of raised limits to reject them. The rejection of higher limits is only binding upon the named insured. The insurer may reject higher limits within 10 days from the date the policy is issued.
The insured has 20 days from the receipt of a notice of raised limits to reject them.
Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? The insured would have to pay the self-insured retention limit. The insured would be responsible for the amount required as underlying limits in the event of a claim. It would have no effect on the umbrella policy. The policy will be cancelled.
The insured would be responsible for the amount required as underlying limits in the event of a claim.
Which of the following is true regarding cancellation provision in a fire insurance policy? The insured is entitled to 100% of unearned premiums. The insurer may cancel the policy only at the renewal date. The insured may only cancel the policy on the renewal date. The insurer may impose a short-rate penalty prior to returning the unearned premium.
The insurer may impose a short-rate penalty prior to returning the unearned premium.
If more than one person has an insurable interest in the property covered under a dwelling policy, Liability will be split evenly among all people who have insurable interest. All involved insurers must decide which one will be liable for the loss. All insureds must decide which one will be liable for the loss. The insurer will be liable for only the insured's interest in the damaged property. If more than one person has an insurable interest in a property, the insurer will be liable only for the insured's interest in the loss.
The insurer will be liable for only the insured's interest in the damaged property.
A business hosted an annual holiday party for employees and customers, after which a customer who had too much to drink was involved in an automobile accident. Occupants of the other car involved in the accident sued the business for serving the customer too much alcohol. Will the businessowners policy provide coverage? Yes, employer liability obligates the company to pay. No, accidents outside the company premises are not covered. No, liquor liability is excluded. Yes, none of the exclusions will apply.
Yes, none of the exclusions will apply.
