Florida P&C Exam

Which of the following correctly describes the basic purpose of the MCS-90 endorsement?

It amends the truckers auto liability policy to comply with requirements of the Motor Carrier Act of 1980.

A businessowners policy (BOP) is considered a "package policy," which means:

It combines both property and general liability coverages in a single policy.

The garage policy is used to provide insurance to franchised and nonfranchised auto and trailer dealers. When compared to other types of insurance, the garage coverage form has a unique feature. What is it?

It combines coverage for general liability, auto liability, auto physical damage, and garagekeepers insurance in a single policy.

The air conditioning unit at Iggy's Ice Cream Shop failed, causing its frozen inventory to melt. How did Iggy's unendorsed commercial property policy respond to the loss of frozen inventory?

It denied coverage under the Mechanical Breakdown exclusion.

How does the business auto policy (BAP) respond when an employee is driving the employer's delivery truck and is involved in an accident that doesn't hurt the driver but does injure a co-worker who is a passenger in the vehicle?

It denies coverage under the fellow employee exclusion.

Mrs. Emerson sees her husband kissing another woman in the parking lot at the bank. Overcome with rage, she drives her company car into the couple. How does the business auto policy (BAP) of her employer respond to the liability claim filed by Mrs. Emerson's husband and his lady friend?

It denies payment, citing the intentional injury exclusion.

Nelson Contracting is located in New York and has a commercial general liability (CGL) policy. It undertakes a new project at location in Paris, France, and does not buy separate insurance for the new location. Shortly after beginning the new project, the Paris location receives a completed operations liability claim. How does the CGL policy respond?

It denies the claim

Monument Farms Grocery submits a claim under its commercial crime policy because several items of stock are missing. How does the policy respond?

It denies the claim under the Inventory Shortages exclusion.

Norbert Brothers Accounting submits a claim under its commercial crime policy. It seems that one of the owners, Bob Norbert, embezzled company funds and fled to the Caribbean. How does the crime policy respond?

It denies the claim under the exclusion for dishonest acts of the named insured, partners, or members.

What is the purpose of paying deductibles and coinsurance for the HMO point-of-service (POS) option?

It discourages members from going outside the network to receive health care.

How does an excess insurance policy differ from an umbrella insurance policy?

It does not provide broader coverage than the underlying primary policies.

What is another name for Medicare supplement policies?

Medigap policies

Jenny's business auto policy (BAP) will cover accidents and losses that occur while she is driving her auto in all of the following locations EXCEPT:

Mexico City, Mexico

A windstorm damages Tyrone and Belinda's garage and screened-in porch. Their homeowners policy imposes certain duties on them when a loss occurs. Which of the following is NOT one of these duties?

Notify adjacent neighbors of the damage and possible risk to them.

Kate owns a store that sells party goods and costumes. During October, her inventory triples and her commercial property policy needs to be adjusted to reflect the temporary increase in inventory. Which of the following endorsements would best suit her commercial property needs?

Peak season limit of insurance

Dave is seriously injured when his car is struck in the rear by Phil, an uninsured motorist. Depending on the jurisdiction, uninsured motorists coverage may apply to accidents involving any of the following situations EXCEPT:

Phil meets the state's financial responsibility laws and will pay Dave's claim himself.

Jane is self-employed and hires two employees. When she purchases a workers compensation policy for the benefit of her employees, what endorsement would she purchase to provide workers compensation benefits for herself?

Sole-proprietors, Partners, Officers, and Others Coverage endorsement

In which of the following cases would the applicant be eligible for coverage through an insurer in the residual insurance market?

The applicant is entitled to insurance but cannot buy it through the voluntary market.

Business losses resulting from an interruption of electricity would be covered under which of the following causes of loss?

A tree fell on the insured building, taking down the utility pole and interrupting power.

Conditions and restrictions on crime coverage under the Extortion--Commercial Entities (CR 04 03) endorsement include all of the following EXCEPT:

The captivity giving rise to the extortion threat must occur only within the U.S.

During an accident at sea, all of the cargo that Isla Co. shipped was destroyed but none of the other cargo was damaged. If the law of particular average is applied, who will pay for Isla's loss?

The cargo owner (Isla) bears the entire loss.

Mercury Manufacturing is insured under an ISO pollution liability coverage form. The insurer will not renew the policy when it expires. The form provides coverage on a claims-made basis. Mercury is concerned about claims that might be made against it after the policy expires. What might Mercury do to cover that exposure?

Buy an extended reporting period endorsement

Ava lives on a large estate and has many employees who work at the estate. Which of the following would NOT be considered a "residence employee" under her homeowners policy?

Elena, a physical therapist who provides treatments in Ava's home

Although open perils commercial property policies typically cover theft of covered property, most businesses need crime insurance to cover two key exposures not typically covered by commercial property open or named perils policies. What are these two exposures?

Employee dishonesty and loss of money and securities

The very fact of owning wolves in captivity makes the owner responsible for injuries that may occur to others from the wolves even if the owner has not been negligent, due to the doctrine of:

absolute (strict) liability

With respect to the commercial inland marine transportation coverages, common carriers are not liable for losses resulting from two causes of loss: fault of the shipper and:

acts of God

Damage to a swimming pool will be settled on what basis under an unendorsed homeowners policy?

actual cash value

In an unendorsed homeowners policy, losses to personal property are settled on what basis?

actual cash value

Harriet's auto mechanic tells her state law requires him to use generic parts when repairing the collision damage her car sustained in a recent accident, despite the fact she wants him to use original equipment manufacturer (OEM) parts. What type of parts will the mechanic use to repair Harriet's car?

aftermarket parts

Which of the following businesses is generally NOT eligible for a businessowners policy (BOP)?

auto body shop

Ryan operates an appliance repair shop. He usually has a dozen appliances from customers in the shop. What type of commercial inland marine policy should his agent recommend for him to be covered in the event he damages any of these appliances?

bailees' customer floater

Bridget reported the theft of her Rolex watch to her insurance company. The insurance company says it will replace the watch instead of making a loss payment. An insurer has this option:

because Bridget's homeowners policy has a repair or replace option

Meerbaum Retail Outlet carries employee theft coverage in its crime policy. Its employee theft insurance covers all employees in the retail operation. What type of employee theft coverage does Meerbaum carry?

blanket coverage

Mrs. Innes broke her arm when the car she was driving slid on ice and smashed into a tree after being rear-ended. What definition in the personal auto policy is used to describe her broken arm?

bodily injury

The personal auto policy (PAP) defines many terms used in the policy, such as "your covered auto." Which of the following autos is NOT included in the meaning of that term?

borrowed autos

Who is the typical candidate for the hired auto and nonowned auto liability endorsement under a businessowners policy (BOP)?

businessowner who does not own a car

Jeremy owns and manages a small two-story motel on a main street in the city. After the local college football team wins a game, celebrating fans break the motel's front plate glass window and glass in the front door. The additional coverage for glass under Jeremy's businessowners policy (BOP) will cover all of the following expenses EXCEPT:

loss of income to the motel while repair work is underway

The businessowners policy provides liability coverage for all of the following EXCEPT:

loss of professional services

The ordinance or law endorsement provides all the following coverages EXCEPT:

loss of revenue while repair work is underway

When considering depreciation in adjusting a claim, an adjuster considers all of the following factors EXCEPT:

loss of value for accounting purposes

A vessel owned by Del Mar Shipping was damaged during a storm. Adjusters have determined that the cost of salvaging the cargo is more than the value of the cargo. What type of loss did Del Mar Shipping suffer?

constructive total loss

Dale was driving his car when he was involved in a head-on collision. Though he only suffered minor bruises, his car was damaged extensively. The repairs are estimated to cost $13,500. The actual cash value of his auto before the collision was $16,000. His insurer will most likely treat his claim as a:

constructive total loss

Which of the following activities is NOT recognized as "farming" on the farm liability coverage form?

maintaining a mechanized vegetable canning operation

Mrs. Goldman's car was parked in her driveway when another vehicle crashed into it. The adjuster claims the cost to repair Mrs. Goldman's vehicle is 90 percent of the vehicle's actual cash value. What term is used to apply to the loss?

constructive total loss

Sheila lives in New Mexico in a home constructed of adobe. What basic type of construction is her home?

masonry

An accident that happens during the policy period and results in bodily injury or property damage, and losses arising from continuous or repeated exposure to the same harmful conditions, are defined as what in a homeowners policy?

occurrence

Which form of the commercial general liability (CGL) policy covers the insured for injuries or damages that occur during the policy period even if that policy is no longer in force when the claim arises?

occurrence form

The truckers policy insures motor carriers that operate:

only on a "for-hire" basis

Campbell Construction Company builds foundations for a variety of building structures. It uses heavy equipment to move earth and mix and transport cement. Aside from commercial auto insurance, what type of inland marine coverage would cover the equipment?

contractors equipment floater

Most property and casualty insurance policies are:

contracts of indemnity

An insured is covered by both his employer's group health insurance plan and by his wife's group plan. Which provision ensures that any benefits paid to him will not exceed his expenses?

coordination of benefits

Patrick has a commercial property insurance policy that does not cover damage caused by an earthquake. He is interested in obtaining earthquake coverage. He read that it is possible to obtain a separate policy insuring against this specific peril and it was referred to as a(n):

difference-in-conditions policy

The Securities Deposited with Others endorsement covers which of the following losses?

disappearance of securities deposited with others

Which of the following persons is NOT an insured on a business auto policy (BAP)?

driver without the permission of the vehicle's owner

Which of the following causes of a mechanical breakdown of equipment would be covered?

electrical arching

The fidelity insuring agreement of a standard Financial Institution Bond provides coverage for dishonest acts relating to what peril?

embezzlement

The federal Motor Carrier Act (MCA) of 1980 requires certain motor vehicles to carry minimum limits of insurance for public liability and:

environmental restoration claims

What term is used to describe a workers compensation law provision that bars employees injured on the job from making a tort liability claim against their employers if they elect to receive workers compensation benefits?

exclusive remedy

Jane is a sales representative for a pharmaceutical company and uses a company car for business instead of her family car. What particular type of auto coverage endorsement should Jane consider?

extended non-owned coverage endorsement

The Department cannot suspend or revoke an adjuster's license for which of the following reasons?

failing to meet projected sales goals

Which of the following is NOT an unfair claims settlement practice if committed by an insurance company in Florida?

failing to promptly settle a claim for which liability is uncertain

In a commercial property policy, fire is a named peril that may be designated as "friendly" or "hostile." All of the following would be considered a hostile fire EXCEPT:

fire that burns a kettle hanging in a fireplace

The dwelling policy DP 3 Special Form excludes coverage for loss due to water damage by all the following means EXCEPT:

fire that results from water damage

Insurers must keep records of their insurance transactions for how many years after the transaction was completed?

five

Which method of determining the amount of benefits payable every month is most common in individual disability income policies?

flat approach

What unfair trade practice has a person committed if he knowingly and with intent to defraud files an insurance claim that is false?

fraud

Sandy takes her car to an auto dealer to have the oil changed. After changing the oil, the mechanic fails to tighten the lug nut to the oil pan. By the time Sandy arrives home with the car, the oil has leaked out and the engine is damaged. Which coverage of the dealer's garage policy will cover that damage to Sandy's engine?

garage operations - other than covered autos

All of the following are a form of government-based health insurance program EXCEPT:

group medical expense insurance

What term on an aviation insurance policy refers to the aircraft's structure?

hull

Jack, who owns a hardware store, applies for a loan to expand the premises. His loan application is denied. He learns that someone got his credit card number and used it to make purchases that exceeded his credit limit. Jack hires an attorney to help him repair his credit and loses time from work. What coverage might pay for some or all of these expenses?

identity fraud expense coverage

The ordinance or law coverage endorsement covers all of the following losses EXCEPT:

income lost during reconstruction or repairs

An automatic increase in insurance endorsement is sometimes referred to as a(n):

inflation guard endorsement

A commercial umbrella liability policy issued to a small business provides excess limits of coverage over and above the liability limits provided by all the following policies EXCEPT:

inland marine

Which of the following would NOT be excluded under the maintenance or wear and tear exclusion common with property insurance policies?

lightning

To control the outbreak of general liability mold claims, insurers introduced endorsements that limited coverage for mold. Which of the following is such an endorsement?

limited fungi or bacteria coverage endorsement

To avoid the appearance of practicing law, a claims adjuster's communications with an insured should always be

limited to the wording of the policy

Under the DP 3 Special Form of the dwelling policy, all of the following property are covered on an actual cash value basis EXCEPT:

living room interior walls

Although the direct damage to a building caused by an explosion may be covered under a property insurance policy, what exclusion might rule out coverage for costs that are necessary to comply with current building codes?

ordinance or law exclusion

An adjuster's license can be suspended or revoked for all of the following reasons EXCEPT:

paying commissions to a licensed agency

Which commercial property insurance policy endorsement is designed to cover high inventory values at certain times of year?

peak season limit of insurance

Mrs. and Mrs. Urquhart hired Vozzella Construction to add an addition to their home and each party signed a contract. They required Vozzella Construction to obtain what kind of bond to protect them in the event the company fails to meet its contractual obligations?

performance bond

Ugly Dog Books is being sued by a customer who claims the store owner slandered her. Which of the following liability coverages under a businessowners policy (BOP), if any, would cover this?

personal and advertising injury liability

By what means, if at all, is personal liability coverage provided under a dwelling policy?

personal liability supplement

When considering depreciation in adjusting a claim, an adjuster considers all of the following factors:

physical deterioration, functional obsolescence, future life expectancy

A container of gasoline stored in the basement next to the furnace is an example of a:

physical hazard

A business that wants its commercial general liability policy to provide pollution coverage that includes cleanup costs would want the:

pollution liability coverage form

All of the following statements regarding accident coverage under the Limited Mexico Coverage endorsement are correct EXCEPT:

To be covered, an accident must occur more than 25 miles from the U.S. border.

A liability adjuster has each of the following duties EXCEPT:

to prosecute the party that caused the loss

With the business auto policy (BAP), symbol 7 (specifically described autos) covers newly acquired autos only if the insured informs the insurer of the new auto:

within 30 days after acquiring it

Employers liability coverage for those who employ interstate railroad workers is provided through the:

Federal Employers Liability Act Coverage endorsement

Timmy is licensed in Florida an all-line insurance adjuster. To maintain his license, how many hours of continuing education must he complete every two years?

24

Anna discovered that a clerk in her leather goods shop accepted twelve $100 counterfeit bills. Will any of this $1,200 loss be covered by Anna's businessowners policy (BOP)?

$1,000

Kim was stopped at a red light when she was rear-ended by Paige, who didn't have auto liability insurance. Kim's car sustained $3,000 in damages and she suffered $1,000 of bodily injury. Her uninsured motorists limits of liability are $15,000 per person for bodily injury and $30,000 per accident for bodily injury. How much will her UM coverage pay for her loss?

$1,000

Todd has a large gun collection and his wife, Tina, has several items of valuable jewelry. How does the homeowners policy limit coverage for these types of property?

$1,500 for jewelry; $2,500 for theft of firearms

The amount of Molly's outstanding mortgage was $100,000 at the time her house was destroyed in an explosion. Molly's claim for damages under Coverage A of her policy was $200,000 and her claim for damages under Coverage C was $150,000. How much did Molly's insurance company pay to the mortgagee?

$100,000

Florist has a business auto policy with a $300,000 limit, and a commercial umbrella policy with a $1 million limit and a $10,000 self-insured retention. While driving the company van, Florist's driver rear-ended a school bus. The injured bus passengers' claims and damage to the bus result in a $500,000 judgment against Florist. How much will be paid by the insurer that issued the umbrella policy?

$190,000

A rare gun worth $30,000 was stolen from it Samuel's home. How much, if anything, will Samuel's homeowners policy pay for this loss?

$2,500

Transportation Expenses coverage provides up to what daily limit of coverage for temporary transportation expenses if a private passenger vehicle is stolen?

$20

Abby is an actress but can no longer perform onstage after being injured in a car accident. She now works as an acting coach and earns $40,000 a year, $20,000 less than she did while acting. What benefit will her income replacement disability policy will pay?

$20,000

Mark bought a small private airplane for $30,000. The aircraft was damaged by a severe windstorm while parked outside the hangar and is a total loss. Mark's hull coverage was written on an actual cash value basis and the limit of liability on the policy is $20,000. The actual cash value at the time of loss was $25,000. How much will the insurer pay Mark?

$20,000

What sublimits, if any, apply to stolen cash and securities under a homeowners policy?

$200 for money, $1,500 for securities

If a state's minimum limit for auto liability is expressed as 15/30/5, that means that it requires drivers to have a minimum of how much coverage for bodily injury to all people in the other car in the event of an accident?

$30,000

Abbey's station wagon was stolen on July 6 and she immediately reported the theft to her insurer. Her business auto policy's physical damage coverage will pay for transportation expenses. She immediately rents a replacement auto for $25 a day and keeps it until July 29, when her stolen auto is returned to her. What is the maximum amount her insurer will pay for this transportation expense?

$420 (21 days × $20)

The business auto policy (BAP) uses how many different numerical "symbols" to represent the different types of autos that may be covered?

10

Liam is shipping cargo internationally and buys ocean marine cargo insurance. Applying the law of general average, if a total of $10,000 cargo is in transit and Liam's cargo is valued at $1,000, he would be responsible for what percentage of any cargo loss that is subject to the law of general average?

10 percent

Mortgage lenders require flood insurance on property that is located within a community's floodplain, which is an area that is at risk of flooding on average once every how many years?

100 years

An adjuster typically completes his or her initial investigation of a claim within how many days of being assigned the claim?

15

Jane has an older car that is insured, although the policy does not cover physical damage. She buys a new car and wants to include collision and other than collision coverages on the new car. To have her insurer add these coverages, she must ask the insurer to provide this coverage within:

4 days

BBX Insurers terminated Henry's appointment as its adjuster on December 1. How long will Henry remain eligible to be appointed as an adjuster by another insurer?

48 months

A claims-made commercial general liability (CGL) policy that is canceled by the insured automatically gets a basic extended reporting period (BERP), at no additional period, for how long after the policy is cancelled?

5 years

Robert is having a home built, which is 50 percent completed. He protects it with a dwelling policy that includes the Dwelling Under Construction endorsement. If lightning were to strike and destroy it, what (if anything) would the policy pay?

50 percent of the coverage A limit

A flat benefit amount in a disability income policy is usually what percent of the full disability benefit?

50%

A leased auto may be listed in the declarations in a personal auto policy (PAP) if it is leased to the named insured under a written contract for at least:

6 months

What auto symbol is shown on the declarations page of a business auto policy to indicate that only specifically described autos are insured for that coverage?

7

With respect to the business auto policy, what is the difference between hired autos (symbol 8) and non-owned autos (symbol 9)?

A rental car is a hired auto; an employee's pickup truck used in the business would be a non-owned auto.

Which statement about residual benefit payments for partial disability is NOT correct?

Almost all insurers require that the insured sustain a loss of at least 35 percent of income as a result of the partial disability before paying any benefits.

When insured property is damaged, what must the insured do with it?

Arrange for its repair or disposal.

Uninsured motorists coverage applies to the named insured and family members who are injured by an uninsured motorist. Although Beverly has uninsured motorists coverage, it will NOT apply to:

Beverly, who rear-ends an uninsured motorist

Jack and Jill are vacationing at a golf resort when a thief enters their room and steals a laptop computer, golf clubs, cash, and clothing. Jack and Jill contact their homeowners insurer and ask the claim representative whether they are covered for this loss. What does the representative tell them?

Coverage applies just as it would if were stored at the insured's home.

Which of the following correctly describes the sublimits (if any) to losses of business equipment under a homeowners policy?

Coverage for business property on the premises is limited to $2,500; away from the premises the limit is $1,500.

Of the three dwelling policies, which would cover loss by falling objects; weight of ice, snow, or sleet; and accidental discharge from a plumbing system?

DP 2 and DP 3

What commercial crime endorsement provides coverage when an employee is held captive and forced to surrender money because of an immediate threat to his physical safety?

Extortion--Commercial Entities

Andrew works for the interstate rail system and is injured on a train while repairing mechanical equipment. The conductor was operating the train at excessive speed, which contributed to Andrew's injury. Which federal workers compensation law applies to this situation?

Federal Employers Liability Act

Regarding the commercial general liability (CGL) policy, which of the following correctly describes the primary difference between the Pollution Liability Coverage Form Designated Sites (CG 00 39) and the Pollution Liability Limited Coverage Form Designated Sites (CG 00 40) endorsements?

Form CG 00 39 provides coverage for pollution cleanup costs whereas form CG 00 40 provides no coverage for cleanup costs.

Marilyn and Dan rent in an apartment. They want to buy insurance to cover their personal property and protect them against liability claims from third parties. Which homeowners insurance form is appropriate for Marilyn and Dan?

HO 4 Contents Broad Form

Which of the following would NOT be covered under Coverage B - Other Structures in a homeowners policy?

detached shed from which a tool repair business is operated

The manager at Don's Diner shut off the fire and burglar alarm after arriving at work because it developed a short and kept beeping. When the manager left for the night, he forgot to put the alarm back on. How did the Protective Safeguards endorsement on Don's Diner's BOP respond when the building was destroyed by a fire that night?

It excluded coverage for the fire loss.

What is the purpose of the assignment provision in standard property insurance policies?

It prevents the assignment of the policy to another without the insurer's written consent.

Volume Hair Stylists is insured under a BOP with policy dates of January 1 of this year to January 1 of next year. How will the policy respond to a liability claim the insured reports on March 3 this year for an injury that occurred on September 21 last year?

It will not pay it because the loss did not occur within the policy period.

Which of the following structures is NOT eligible for flood insurance?

Jed's home, located on a pier, built in 1995

Which of the following federal workers compensation laws would apply to pay for medical expenses incurred by a seaman who is injured on a freighter when high winds and turbulent seas almost sink the ship?

Jones Act

Uninsured motorists coverage (UM) broadly covers the named insured and family members injured by an uninsured motorist. In which of the following situations would UM coverage NOT apply to Josephine and her family?

Josephine's daughter is injured while a passenger in Josephine's uninsured car.

Last year, the board of directors of Laurence Corporation voted to sell one of its subsidiaries, Eloy, Inc., which had been operating at a loss, to a competitor. Soon after the sale, Eloy's past research and development succeeded in launching a very profitable new product. Which of the following is most likely to happen?

Laurence Corporation shareholders might sue the directors and officers alleging a lack of due care in making the decision to sell the now-profitable subsidiary.

Jackson is a harbor worker who has been injured in the course of his employment. He does not qualify as a seaman under the Jones Act and has been denied state workers compensation benefits. Under what federal law can he obtain workers compensation benefits?

Longshore and Harbor Workers' Compensation Act (LHWCA)

Dispatch Management, a warehousing operation, employs a large crew, some of whom are occasionally assigned to the docks at seaports along the northeast coast to load and unload ship cargo. What endorsement must Dispatch add to its workers compensation insurance to ensure that the crew occasionally working the docks is eligible to receive medical and lost wage benefits if injured on the job?

Longshore and Harbor Workers' Compensation Act Coverage endorsement

All of the following are examples of businesses that might need a spoilage coverage endorsement on their property policies EXCEPT:

Loretta's sewing supplies shop

Clive, a crew member on a seagoing vessel, is injured in an accident while at sea. For this bodily injury to be covered, what endorsement must be added to his employer's workers compensation policy?

Maritime Coverage endorsement

Which of the following statements regarding the Patient Protection and Affordable Care Act (PPACA) is correct?

Medical expense insurance is available on a guaranteed issue basis to all persons regardless of pre-existing conditions.

All of the following statements regarding the identity theft or identity fraud expense coverage endorsement under a businessowners policy (BOP) are true EXCEPT:

No deductible applies to this coverage.

In order to be eligible for coverage on an inland marine policy, property must be in transit or bear some other relationship to transportation or communication, as stipulated in the:

Nationwide Inland Marine Definition

Tony's farm policy includes farm liability coverage. He decides to earn a little extra money on the weekends by renting out his horses for riding purposes. He only lets people ride on his farm property. When a rider is injured and submits a claim under Tony's farm policy, how does the insurer respond?

No coverage applies for the use of livestock in exchange for a fee.

Ryan owns a summer home on the lake and lives there in June, July, and August. The home is fully furnished and he keeps his summer clothing and sporting goods there. When Ryan arrived in June this year, he found the home had been vandalized and some of his belongings had been stolen. Will his property insurance policy fully cover his loss?

No, because his policy reduces coverage if the building is vacant or unoccupied for at least 60 days

Carol buys a policy in her name to insure a neighbor's home because he is unable to afford the coverage. The home is destroyed by a fire and Carol tries to collect the insurance proceeds. Will she be able to collect them?

No, because she did not have an insurable interest in the home.

Eamon's Clothing Store has commercial crime coverage in the form of inside premises -- theft of money and securities. The manager hires Russell who was fired from a previous job for stealing merchandise. Nevertheless, the manager trusts that Russell has changed his ways. A month later, Russell is found to have stolen cash from the register and is fired. Eamon's files a claim with the store's insurer. Is the loss covered?

No, because the manager knew of Russell's criminal background.

Adam suffers an on-the-job injury while serving as an employee of an interstate railroad. However, he is partially responsible for his injury due to his own negligence. Is Adam barred from recovery under the Federal Employers Liability Act?

No, but his recovery is reduced by the percentage of negligence attributed to him.

Jane is going to rent a room in her home to a local college student. Would the student's personal belongings be covered under Jane's homeowners policy?

No, personal property of roomers or boarders is excluded under the homeowners policy.

Bill and Ben are employees of Norton's Appliances. Bill usually drives the company van on deliveries and Ben helps Bill unload and deliver the appliance. While they are taking a refrigerator to a customer, they collide with a large truck. Ben is injured and files a claim against Bill and Norton's Appliances. Is Ben's claim covered under Norton's business auto policy?

No, the fellow employee exclusion would apply.

Jack is selling his home to Sue and wants to transfer his homeowners policy to her. Can Jack transfer his policy?

No, unless the insurer gives written consent to do so.

An employee slips and falls off a faulty ladder in the business's warehouse, incurring medical expenses and lost wages from time away from work. Will the company's businessowners policy (BOP) cover this employee's losses, and why or why not?

No. These claims are covered under workers compensation insurance.

With respect to the commercial crime policy, all of the following are considered to be covered employees EXCEPT:

Noah, whose employment with the insured company ended 45 days ago

Which of the following statements correctly describes coverage for mold damage under the businessowners policy (BOP)?

Only damage from mold resulting from water used to extinguish a fire is covered.

Which of the following statements regarding the concept of insurable risk is true?

Only pure (not speculative) risks are insurable, but not all pure risks are insurable.

All the following statements regarding the commercial inland marine policy commercial articles floater are correct, EXCEPT:

Open perils coverage applies only if the insured property is stored at the insured's premises.

How do public adjusters primarily differ from staff or independent adjusters?

Public adjusters represent insureds, while other adjusters represent insurers.

Which of the following is a requirement to operate as an insurance agency in Florida?

obtaining a license or registration from the state

Which of the following endorsements expands coverage for certain items of personal property such as jewelry, fine arts, and musical instruments and also broadens coverage?

Scheduled Personal Property Endorsement

Josephine, a saleswoman for Massachusetts-based Concrete Forms, Inc., is injured while visiting one of the company's independent suppliers in Illinois. Even though the supplier is not part of Concrete Forms, Josephine's injury might be covered for workers compensation benefits under which of the following situations, if any?

She would be covered only if Illinois was listed on the Other States Insurance section of Concrete Forms' workers compensation policy.

Trudy is driving her car when it is struck in the rear by Harry. Trudy's insurer pays for the damage to her car, but then files a claim against Harry to recover the amount it paid to Trudy. What provision in Trudy's personal auto policy gives the insurer the right to pursue Harry to recover this amount?

Subrogation

All of the following are federal workers compensation laws that protect employees injured on the job EXCEPT:

Sue and Labor Clause

With respect to workers compensation, if a farm worker falls from a grain silo and is injured, what remedies, if any, are available to the injured worker?

Sue the employer since they are not eligible for workers compensation benefits.

Which covered auto symbol is used to designate owned autos on the business auto policy?

Symbol 2

With a business auto policy (BAP), what symbol needs to appear on the declarations page to provide coverage for the rental cars used by the business?

Symbol 8 - Hired Autos Only

Mr. Cooper requires his office manager to use her car to visit the bank and post office on a daily basis. What symbol appears on the declarations page of his business auto policy to provide liability coverage for him when his office manager's car is used for his business?

Symbol 9 - Non-owned Autos only

James is a licensed adjuster who lives in Florida. He moves to Georgia. When must he notify the Department of Financial Services of his move?

within 30 days

Which of the following statements correctly describes the difference between an HO 2 Broad Form homeowners policy and an HO 3 Special Form policy?

The HO 2 insures all property on a named perils basis while the HO 3 insures real property on an open perils basis and personal property on a named perils basis.

Which of the following statements correctly describes the BOP coverage extension, Newly Acquired Property, that applies to the purchase of a second building by the insured?

The coverage extension provides $250,000 of building coverage and $100,000 of business personal property coverage.

Which of the following statements correctly describes how a commercial general liability (CGL) policy that includes the limited pollution liability extension endorsement will respond to a leak of gasoline from a service station's underground storage tank?

The endorsed policy would cover a leak from an above-ground storage tank but it does not cover leaks from underground storage tanks.

The errors and omissions coverage in an equipment breakdown policy is most likely to apply in which of the following situations?

The insured made a mistake in describing the property location on the application.

Some states require that if an applicant for auto insurance is not a resident of that state, he or she must meet another requirement. What is that requirement?

The insured vehicle must be principally garaged in the state.

Manuel has a DP 1 basic form dwelling policy on his residence. During a storm, the residence is struck by lightning, causing damage to the dwelling and personal property within it. Which statement is correct about the policy's coverage in this situation?

The loss is adjusted on an actual cash value basis for both the dwelling and the personal property.

All of the following statements regarding property insurance policy endorsements are correct EXCEPT:

The wording in an insurance policy takes precedence over the wording in an endorsement attached to that policy.

Which statement correctly describes managed care plans such as HMOs?

They connect the financing and delivery of health care.

How are umbrella and excess insurance policies alike?

They extend coverage provided by underlying primary policies.

Which statement is correct about HMO plans that offer a POS option?

They offer more health care provider options.

Which of the following correctly describes the difference between uninsured motorists coverage (UM) and underinsured motorists coverage (UIM)?

UM applies when the at-fault motorist does not have auto insurance; UIM responds when the at-fault motorist is insured with a liability limit less than the insured's UM/UIM limit.

Arbitration is the submission of a dispute to one or more impartial persons for a final and binding decision. With regard to auto insurance, arbitration can be used to resolve disputes involving which coverage?

UM/UIM

Lloyd's Electronics never knows in advance what its inventory is going to be. Lloyd is hesitant to name a specific amount of coverage on his commercial property policy for fear that it will be too high or too low. What endorsement do you recommend to Lloyd?

Value Reporting Form

What endorsement would an employer add to its workers compensation policy if it wants to provide statutory benefits to an employee who is otherwise exempt from workers compensation coverage?

Voluntary Compensation and Employers Liability Coverage endorsement

Which endorsement to the standard workers compensation policy offers benefits to employees who would otherwise be exempt from statutory workers compensation benefits?

Voluntary Compensation and Employers Liability Coverage endorsement

First Street Supply Company has a good business relationship with its main customer, Alliance Metals, which it wants to maintain even if a First Street employee were to get injured while visiting Alliance's factory. Which of the following endorsements might First Street add to its workers compensation policy to minimize potential disputes should that ever happen?

Waiver of Our Right to Recover from Others endorsement

Kendall Construction needs an endorsement added to its workers compensation policy that stipulates the insurer will not bring an action against Kendall Construction's general contractor if the general contractor negligently causes an injury to one of Kendall's employees. What endorsement do you recommend?

Waiver of Right to Recover from Others endorsement

All of the following are treated as uninsured motor vehicles for purposes of the personal auto policy EXCEPT:

a vehicle that does not carry uninsured motorist coverage

Personal Injury Protection (PIP) covers the insured owner of a motor vehicle under what conditions?

Without regard to fault in an accident with a motor vehicle

Nancy's car is damaged in a collision. While the car is being repaired, she uses a car provided by the dealership where she is having the car repaired. Is the loaned vehicle a covered auto under her personal auto policy (PAP)?

Yes, as a temporary substitute auto, it is within the meaning of "your covered auto."

Daisy and Fred have a homeowners policy that identifies their son Lex as an "insured." Lex is going away to college and will be living in a dorm. Is Lex still an "insured" under his parents' policy once he moves into the dorm?

Yes, the definition of "insured" includes students away at school.

Mutual Insurance Co. initially approves auto insurance for Ralph, who admitted on the application to a speeding ticket two years ago. Three months later, Mutual discovers that Ralph got seven speeding tickets in the past two years. Mutual cancels Ralph's insurance. Can it legitimately do so?

Yes, the insurer may cancel at any time if the policy was obtained through material misrepresentation

Joan and Chris live in an apartment with four units. Would their living situation comply with the definition of "residence premises" and be eligible for a homeowners policy?

Yes. A one-, two-, three-, or four-family dwelling where the insured resides is eligible, if the insured lives in at least one of the units.

An insurer is NOT required to accept any property that an insured has:

abandoned

The Medical Payments Coverage under a businessowners policy (BOP) will pay for which of the following injuries?

a broken leg sustained by a customer who fell in the parking lot

What does the Federal Aviation Administration issue to grant authority for an airline to operate an aircraft in flight?

a certificate of airworthiness

Besides serving as a stand-alone policy, business auto insurance can be included in which of the following?

a commercial package policy

Fire is a named peril that may be designated as "friendly" or "hostile." All of the following would be considered a friendly fire EXCEPT:

a fire in a forest

Coverage B - Other Structures of the homeowners policy covers which of the following detached structures?

a garage rented to a non-tenant who uses it as a private garage

Which of the following types of business would be eligible for a businessowners policy?

a grocery store that sells gasoline

Which of the following would be covered under the property section of a homeowners policy?

a motorized wheelchair

In determining the degree of care that is required by a property owner for the safety of people on his or her property, which of the following would be considered a trespasser?

a neighbor who "crashes" a party at the property owner's home

Which of the following incidents would be covered by the equipment insurance breakdown policy?

a surge in electricity damages a company's mainframe computer

An ISO liquor liability coverage form includes two limits of insurance, called:

an aggregate limit and an each common cause limit

Through the Scheduled Personal Property Endorsement (HO 04 61) to a homeowners policy, the insurer agrees to pay the lowest of the following values, for most types of property insured on the endorsement, EXCEPT:

an amount agreed upon between the insured and the insurer

Bernice's Bakery has a business auto policy (BAP). The policy shows a symbol 1 designation on the declarations page next to liability coverage. What vehicles are covered for liability insurance on Bernice's Bakery's BAP?

any auto

Atlas Company has a business auto policy with symbol 1 designated for liability coverage. Which of the following types of vehicles would be covered under this symbol?

any auto, including owned, non-owned, or hired autos

All of the following are commercial property conditions in a commercial property insurance policy EXCEPT:

arbitration

All of the following are benefits provided by the Loss of Use coverage (Coverage D) in a homeowners policy EXCEPT:

car rental expense

A company that transports cargo belonging to others for a fee is known as what type of carrier?

carrier for hire

In ocean marine insurance, the term "freight" refers to which of the following?

charges assessed for carrying cargo

Which form of the commercial general liability (CGL) policy covers the insured for injuries or damages only if the policy is in force when the claim arises?

claims-made form

Which type of managed health care plan exercises the most control over health-care costs?

closed panel HMO

When obtaining information about a claim, an adjuster is interested in

collecting information about the claim that is needed to resolve it

Coverage under the Extended Non-Owned Coverage endorsement is most often used for a:

company car

When she applied for auto insurance, Delphia did not mention that she is awaiting trial on a charge of hit-and-run, knowing that to do so would likely result in her application being declined. The insurer would likely consider this to be:

concealment

If the Davis brothers are farming for others at a farm that is NOT an insured location, and the farming operations are directed by the owner of the outside farm, they are engaged in:

custom farming

In a typical aviation insurance policy, all of the following perils are excluded from coverage EXCEPT:

damage to tires caused by vandalism

What term refers to monetary compensation paid to someone who has suffered a loss?

damages

Which part of a personal auto policy (PAP) describes the limit of liability in uninsured motorists (UM) coverage?

declarations

What term is used to refer to the portion of the claim for which the insured is responsible for paying?

deductible

Vacant land owned by the insured is considered which of the following under the liability section of a homeowners policy?

insured location

Property coverage under a dwelling policy is excluded for all the following causes of loss EXCEPT:

internal explosion

Calvert Enterprises submits an application and initial premium for commercial insurance to Mutual Insurance Company, requesting a property insurance limit of $10 million. Mutual tells Calvert that it can only insure it for $5 million, which means:

it made a counteroffer

To comply with the terms of a protective safeguards endorsement under a businessowners policy (BOP), the insured must do which of the following?

keep the protective safeguards in working order

Which of the following does NOT qualify as covered equipment under the equipment breakdown coverage form?

laboratory beakers

Which of the following is identical in all six homeowners policy forms?

liability coverage

What endorsement to the personal auto policy (PAP) would extend coverage to a dune buggy and a golf cart owned by the insured?

miscellaneous type vehicle endorsement

Kevin stated on his homeowners insurance application that the roof of his home had been recently replaced. In fact, the replacement occurred 18 years ago. Kevin made a false statement of a material fact, which is also known as a:

misrepresentation

On a business auto policy (BAP), what is symbol 19 used to indicate?

mobile equipment subject to compulsory insurance

Maurice does not take seriously the responsibility to maintain the burglar alarm system in his variety store because he has insurance which would cover any loss due to burglary. This is an example of a:

morale hazard

Manny wants to establish a business that transports the goods of others for a fee. If he only wants to insure his legal liability for damage to his customers' property, what type of commercial inland marine insurance would be most suitable?

motor truck cargo policy

Andrea's son was recently convicted of driving under the influence of alcohol. What endorsement does her auto insurance carrier want to add to her PAP in order to exclude coverage for her son when he's driving?

named driver exclusion

While the liability section of a businessowners policy (BOP) generally does not cover liability that the insured assumes through a contract, coverage is provided for which of the following types of contracts?

premises lease with the insured business's landlord

A company that only provides truck transportation for its own cargo is known as what type of carrier?

private carrier

A general liability policy covers all the following exposures EXCEPT:

professional liability

The sale of a Medicare supplement policy that results in the insured having coverage already provided under Medicare is:

prohibited in all cases

The declarations page of Julius's equipment breakdown policy lists a number of coverages, such as property damage, expediting expenses, business income and extra expense, and utility interruption. The word "INCLUDED" is shown next to "property damage," but it does not appear elsewhere in the declarations, nor are there any dollar limits listed on the page. Julius's policy provides coverage for:

property damage only

Which of the following correctly describes the type of property covered by inland marine insurance, as defined in the Nationwide Inland Marine Definition?

property in transit with some other relationship to transportation or communication

The basic purpose of trailer interchange insurance is to:

provide liability coverage for an insured carrier who has possession of a trailer owned by a different carrier

What type of property are buildings, land, and structures attached to land?

real property

The Anniversary Rating Date endorsement on a workers compensation policy informs the insured that all of the following may change on the anniversary rating date EXCEPT:

recovery rights

When settling a property claim, an insurer may offer the insured a choice of each of the following EXCEPT:

reduction in premium to insure the damaged property

With the dwelling policy, the DP 2 Broad Form covers the dwelling on what valuation basis?

replacement cost basis

In an unendorsed homeowners policy, losses to personal property are settled on an actual cash value basis, which is generally equal to:

replacement cost minus depreciation

Bill and Kathy employ a nanny who lives with them during the work week. How would their homeowners policy define the nanny?

residence employee

Julia and her family own a large manufacturing business. She convinced her family to set aside funds for a self-insurance program instead of buying a commercial insurance policy. This would be considered what form of risk management?

risk retention

In ocean marine insurance, what types of charges are paid to third parties who help save property exposed to loss?

salvage

The purpose of the personal property replacement cost loss settlement endorsement to a property insurance policy is to:

settle losses to most types of personal property on a replacement cost basis

Snow Industries violates state law and operates without complying with the state's compulsory workers compensation statute. If an injured worker sues Snow Industries for a work-related injury, how does the statute protect it?

statue provides no protection

Liability that exists simply because an act or situation is inherently dangerous by its very nature, thus making a person responsible for a plaintiff's injuries or damage even when the person has not been careless or negligent, is called:

strict (absolute) liability

Mac bought a new gas grill from a local department store. After cooking dinner, he turns off the gas to the grill. A little later the grill explodes and damages Mac's home. The cause is determined to be a defect in the grill. Mac's homeowners policy pays for the damage to the home and grill. Having paid Mac's claim, the insurer is likely to do what with respect to the grill's manufacturer?

subrogate the claim to seek recovery from the manufacturer

A claims adjuster is required to maintain a complete and accurate claim file for all of the following reasons EXCEPT:

support denial of the claim

Mark has arranged for ABC Insurance Company to financially guarantee that Quality Construction Co. will build an addition to Mark's house in accordance with the construction contract between Mark and Quality. This arrangement is called:

suretyship

Muller's Floral Shop uses vans to deliver flowers and is insured with a business auto policy. It wants auto liability coverage on all autos, but medical payments, UM/ UIM, and physical damage coverage only on owned autos. Which symbols does Muller's insurance agent recommend for these coverages?

symbol 1 for liability coverage on any auto; symbol 2 for medical payments, UM/UIM, and physical damage coverage on owned autos

With the business auto policy, what does an insurer use for a symbol to designate a vehicle that is NOT covered under one of the standard symbols?

symbol 10

Regarding the business auto policy (BAP), in addition to symbol 1, what other auto coverage symbol provides non-ownership liability coverage?

symbol 9

Which of the following activities does not violate the insurance code?

telling clients that an agent holds a chartered financial consultant (ChFC) designation

When business income coverage was to be added to Callie's equipment breakdown policy, the insurer required her to complete an annual report of values form. Among other things, what is this form used to determine?

the amount to be paid to Callie in the event an equipment breakdown causes a loss of income

Hector has his car regularly serviced by the dealership that sold it to him. While his car is being serviced, a mechanic accidentally drops a heavy wrench on the car's hood and dents it. Whose coverage will apply in this case?

the dealer's garagekeepers coverage

To be able to predict the number of future losses occurring among their insureds, insurers rely on which of the following?

the law of large numbers

Which of the following is a "newly acquired auto"?

the named insured's private passenger car

In a dwelling policy, the provision that addresses how the value of a property loss is determined is found in:

the valuation provision

Which of the following would be covered under the property section of an unendorsed businessowners policy (BOP)?

theft of furs

Lombard Trucking is party to a contract with Murphy Motors. Each party agrees to exchange trailers with the other during the normal operations of their businesses. In the contact, each party also agrees to hold the other harmless for damage occurring to the other's trailer when in its possession. What type of contract do Lombard and Murphy have?

trailer interchange agreement

Allied Motor Transport Co. and Brothers Cartage Co. agree to use each other's trailers while transporting cargo. While using one of Brothers' trailers, Alliance has an accident that damages the trailer. What coverage does Alliance need to pay for the damage?

trailer interchange coverage

Frank compares the Medicare supplement policy he offers with one that his customer owns from a competitor. Frank convinces the customer that the competitor's policy will not pay benefits as stated in the contract and offers to sell the customer a new policy. Frank is engaging in:

twisting

In an insurance contract, only the insurer makes a legally enforceable promise (to pay covered claims). The policyholder makes no legally enforceable promise, which means insurance policies are:

unilateral contracts

The property section of a businessowners policy (BOP) provides how much coverage for the cost of replacing or restoring electronic data that has been destroyed or corrupted by a covered cause of loss?

up to $10,000

Daniela's Deli loses its electricity for two weeks after a severe storm. During that time, Daniela cannot conduct business and loses income. What endorsement does she need that will cover her loss of income?

utility services - time element coverage

All the following types of personal property, which are stored inside a fully enclosed building that is insured by an NFIP flood policy, are covered under that policy EXCEPT:

valuable papers

Evelyn's furniture was lost in a fire at her business office. The fire was able to spread before fire personnel were able to respond because the fire alarm system was turned off. The insurance company denies her claim because Evelyn had assured the insurance company in writing that the alarm system would always be in operation and, therefore, she failed to honor her:

warranty

All of the following are recognized as perils of the sea EXCEPT:

wear and tear

In which of the following situations would liability coverage be provided under a businessowners policy (BOP)?

when the insured is a real estate company that hosts a cocktail reception for its employees to celebrate a new office

All of the following are common types of government health insurance plans EXCEPT:

workers' compensation plans

Jonas leased a brand-new Lexus for three years. What definition in his personal auto policy defines the Lexus after Jonas adds it to his policy?

your covered auto