insurance casualty prep

4. In Fidelity bonds, the party to whom the promise is made and for whose protection the bond is written is the: A. Obligee B. Surety C. Principle D. Bonder

A

20. The required policy limits for a motor vehicle liability policy in North Carolina are: A. $30,000/$60,000/$25,000 B. $10,000/$25,000/$30,000 C. $25,000/$50,000/$75,000 D. $50,000/$75,000/$30,000

A

33. The Business Owner's policy is designed for: A. Small risks B. Large apartment houses in excess of 10 stories C. Medium-sized manufacturing plants D. All the above

A

35. All of the following statements are advantages of a package policies EXCEPT that package policies: A. Require additional management personnel B. Have reduced administrative expensive C. Have increased premium volume D. Help to avoid coverage gaps

A

1. In Crime insurance, the term "theft" usually includes all the following EXCEPT: A. Mysterious disappearance B. Burglary C. Robbery D. Employee dishonesty

A

1. The Commercial General Liability part can be used to insure against all of the following exposures EXCEPT: A. Auto liability B. Premises liability C. Products liability D. contractual

A

1. The Commissioner of Insurance is: A. Elected to office for a term of four years B. Elected to office for a term of two years C. Appointed to office by the Governor for a term of four years D. Appointed to office by the Governor for a term of two years

A

10. Individuals who are entrusted with the care, control or management of others' property might require what kind of bond? A. Fiduciary bond B. Fidelity bond C. Contract bond D. Performance bond

A

10. Q carries a Personal Auto Policy without the Extended Non-Owned coverage endorsement. Q has furnished an employer-owned car for regular use. If Q has an accident while using the company car, Q's Personal Auto Policy will: A. not apply at all B. apply as excess coverage over the employers insurance C. apply as primary coverage under the employer's insurance D. apply on a pro rata basis with the employer's insurance

A

11) A sudden wind blows an insured's front door open, knocking the insured's small child into a lamp. The lamp breaks and cuts the child's leg. Which of the following events is considered the proximate cause of the injury? a. The sudden wind b. The slamming door c. The child falling d. The lamp breaking

A

12. Under the Commercial Package Policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer? A. First named insured B. Last named insured C. Any named insured D. Any insured

A

13) When applying for insurance to cover insurable exposures, the owner of a restaurant guaranteed that a burglar alarm system has been installed in the building. This is an example of a: a. Warranty b. Concealment c. Binder d. Misrepresentation

A

2) Sally carried Comprehensive, Collision, and Liability on their personal automobile. They traded their vehicle for another car. Their Personal Automobile Policy would provide the same coverages as the replaced vehicle: a. If they reported the change within 30 days b. If they reported the change within 45 days c. If they reported the change within 60 days d. If they reported the change within 90 days

A

2. Employee Dishonesty coverage: A. Is available under an employee Dishonesty coverage form B. Is not available to purchase C. Is generally not available D. Is included in the insured's Commercial Property policy

A

20. The person whose name is listed first in the Declarations and who is assigned certain responsibilities and obligations is the ____ insured. A. First named B. Additional C. Named insured D. None of the above

A

5. An insurance agent who wants coverage for his or her professional liability should purchase: A. An Errors and Omissions policy B. A CGL with a Professional Liability endorsement C. The standard CGL, which includes coverage for professional lability D. A Business Owner's policy

A

5. Professional crooks use dynamite to break into an isolated electronics warehouse after the building has closed for the day. This is an example of: A. Burglary B. Robbery C. Safe burglary D. Theft

A

6. Under the Claims- Made Commercial General Liability coverage form, the first date that a loss may occur and still be covered under the policy is the: A. Retroactive date B. Policy expiration date C. Extended Reporting Period inception date D. Policy inception date

A

6. Which of the following types of benefits is not generally provided by a state's Workers' Comp law? A. Pain and suffering B. Rehabilitation C. Disability/loss of income D. Medical

A

7) Uninsured motorist coverage in North Carolina provides payment of damages to the insured when the insured is free of negligence and the: a. Insured is injured by a vehicle driven by an individual with no insurance b. Insured and other driver both at fault c. At-fault driver who does not carry adequate liability insurance d. At-fault driver has no operator's license

A

7. Before being issued a license as a broker, an applicant may need to furnish a bond of at least: A. $15,000 B. $25,000 C. $50,000 D. $75,000

A

7. Which of the following losses would be paid under the Business Auto coverage form's Comprehensive coverage? A. A covered auto that was stolen and never recovered B. The grillwork on a covered auto that gradually corroded due to continuous exposure to salt air C. A covered auto that was damaged when hit by a car that ran a stop sign D. A covered auto that skidded on icy pavement and overturned

A

8. Theft generally refers to A. Any act of stealing B. Any act of stealing other than burglary or robbery C. Burglary and robbery only D. Employee dishonesty only

A

8. Which of the following lines of insurance CANNOT be included in the Commercial Package policy? A. Aviation B. Crime C. Boiler Machinery D. Inland Marine

A

9) A provision is an insurance policy that allows the insured the benefit of any change in the policy that occurs after the policy is written and does not result in a premium increase called: a. Liberalization clause b. Pro-rata distribution clause c. Coinsurance clause d. Mortgage clause

A

19. Which of the following are contained in the Common Policy Declarations? A. Conditions specifying the insured's duties following a loss B. The policy period and the name and mailing address of the insured C. Exclusions D. A list of perils insured against

B

1. Workers' Compensation coverage is mandatory for all employers EXCEPT: A. Restaurant employers B. Employers who have fewer than three employees C. Employers who hire only clerical workers D. Employers who are involved in law enforcement

B

10) Which of the following terms would be used to describe the sudden freezing of pipes? a. Hazard b. Accident c. Negligence d. Liability

B

11. Making misrepresentations about an insurance policy for the purpose of inducing a policyholder to terminate or exchange a policy is known as: A. Defamation B. Twisting C. Rebating D. Boycotting

B

14. An Automobile Liability Policy is North Carolina protects an insured against: A. Damage to the insured's own car B. The insured's legal responsibility for negligence C. The insured's medical expense D. The insured's car rental expense

B

14. Making a false statement that is calculated to injure a person engaged in the business of insurance is known as: A. Twisting B. Defamation C. Boycotting D. Rebating

B

15. J runs a red light, striking B's auto. B's pet poodle sustains a fractured leg. Which coverage under J's Auto Liability Policy will pay the claim? A. Bodily injury B. Property Damage C. Medical Payments D. Comprehensive Coverage

B

17. If a building in North Caroline is totally destroyed by fire and insured for more than its actual cash value, which of the following statements is true? A. The insurer has no liability for the loss B. The insurer is not liable beyond the property's actual cash value, but may have to reimburse a portion of premium plus 6% interest C. The insurer is liable for the total amount of the loss D. None of the above

B

2. All of the following are ways of funding Workers' Comp benefits EXCEPT: A. Private insurance B. An employee tax C. A monopolistic or competitive state fund D. Self-insurance

B

2. Under the Personal Auto Policy, which of the following entities would be consider an insured? A. An auto repair employee returning a car to its owner B. A sixteen-year-old living at home C. A neighbor who borrow the auto without permission D. A firm furnishing an auto to an employee for the employee's regular use

B

29. Under the Commercial Package Policy, a policy containing ____ or more coverage parts qualify as a package A. 1 B. 2 C. 3 D. 5

B

3) Mark's car is involved with an accident with Sally's car, in North Carolina. Mark sues Sally for $1,000 damage to Mark's car, Sally files a countersuit against mark for the $500 damage to Sally's car. The judge hearing the case determines Mark was 80% responsible for the accident and Sally was 20% responsible. However the judge awards no money to either. This is an example of: a. Comparative negligence b. Contributory negligence c. Facility coverage d. No fault

B

3. A Commercial Package policy must include: A. Commercial Causes of Loss form, Common Policy Conditions B. Common Policy Declarations, Common Policy Conditions, two or more Coverage forms C. Common Policy Conditions, Commercial Property Coverage part D. Common Policy Declarations, Common Policy Conditions, Special Commercial Conditions

B

3. A Surety bond is a ___-party contract A. 2 B. 3 C. 4 D. 1

B

3. Armed thieves tie up a struggling store clerk and customer and locks them in a backroom. Then they load several appliances from the showroom into their waiting truck. This is an example of: A. Burglary B. Armed Robbery C. Safe burglary D. Theft

B

3. If the Commissioner finds that a person has committed a violation for which an insurance license may be suspended or revoked, he or she may impose a penalty of up to: A. $1,000 B. $5,000 C. $7,500 D. $10,000

B

3. The Commercial General Liability Claims- Made form covers A. Liability for occurrences during the policy period B. Liability claims made during the policy period C. Both A and B D. Neither A nor B

B

4. All statements in an application for an insurance policy are considered to be: A. Warranties and not representations B. Representations and not warranties C. Both representations and warranties D. Neither representations and warranties

B

5. Individuals appointed by the court to manage someone else's property might require what kind of bond? A. Court bond B. Fiduciary bond C. Performance bond D. License and Permit bond

B

5. Under a personal Auto policy, after having damage caused by a tree limb breaking the windshield, an insured MUST notify: A. The local police B. The insured's insurance company C. The owner of the tree D. The North Carolina Department of Insurance

B

5. Which of the following businesses would be eligible for a Business Owner's policy? A. Hometown Bank and Trust B. Hill and Morton Funeral Home C. Family Fun Time Amusement Park D. Joe's Bar and Grill

B

6. An applicant for a Life, Health, Property or Casualty license must successfully complete at least ___ hours of pre-licensing educations per license type: A. 10 B. 20 C. 40 D. 60

B

6. Under the Business Auto coverage form, the insured's liability arising from which of the following situations would be covered? A. Bodily injury due to the insured's operation of mobile equipment B. Bodily injury resulting from loading or unloading a covered auto C. Damage to property in the insured's custody D. Injury to an employee of the insured while the employee is working for the insured

B

7. Which common law negligence concept has been adopted by North Carolina? A. No fault B. Contributory negligence C. Comparative negligence (modified, not as great as or 49% rule) D. Comparative negligence (modified, no greater than or 50% rule)

B

8) In the event of loss, the Insured is required to take all of the following actions except: a. Notify the insurer b. Obtain an appraiser c. Protect the property d. Prepare an inventory

B

8. An applicant for a resident insurance producer license must be at least __ years old A. 16 B. 18 C. 21 D. 25

B

8. An example of the doctrine of contributory negligence is when the: A. Driver of the vehicle purchases insurance B. Operator of the vehicle is partially at fault C. Vehicle is operated without permission of owner D. Injury resulting from the accident is not caused by the negligence of the driver

B

8. Payment bonds, Labor and Material bonds, Performance bonds and Bid bonds are all examples of: A. Fiduciary bonds B. Contract bonds C. Fidelity bonds D. Supply bonds

B

8. Which part of the Workers' Compensation and Employer's Liability policy pays all compensation and other benefits as required by the state's Workers' Compensation law? A. Part II- Employer's Liability B. Part I- Workers Compensation C. Part IV- Your duties if Injury Occurs D. Either Part I or Part II, depending on the type of loss

B

9. A licensee who ceases to maintain residency in North Carolina must deliver his or her license(s) to the Commissioner within ___ days after terminating residency A. 10 B. 30 C. 45 D. 60

B

9. Covered perils are described in which of the following sections of an Auto-Insurance Policy A. Declarations B. Insuring Agreement C. Conditions D. Exclusions

B

9. Which of the following list all the parties to a Surety bond? A. Principal and obligee B. Principal, obligee, and surety C. Surety and oblige D. Principal, obligor, surety

B

1. Garage keeper's coverage insures against: A. Physical damage to the insured's own autos B. Liability for bodily injury to customers while on the premises C. Liability for damage to other people's autos while in the care, custody or control of the insured D. Medical expenses

C

1. In Surety bonding, which party seeks and pays for the bond? A. The obligee B. The surety C. The principle D. The fiduciary

C

11. When the insured is operation a non-owned automobile, the insured's Personal Auto Policy liability coverage applies: A. As primary coverage B. Equally with the policy covering the non-owned automobile C. On an excess basis D. Only if the non-owned automobile is not covered under another policy

C

12) Under a named peril policy, who determines the covered perils? a. The insured b. The insured's attorney c. The insurance company d. The agent

C

12. An insured with a Personal Auto Policy operates a covered vehicle in another state. The policy's liability coverage limit applies: A. In the amount stated in the policy even if a higher financial responsibility limit is required by the other state B. For no more than the financial responsibility limit required by the other state even if the limit stated in the policy is higher C. Automatically, at no additional premium, to meet the other state's required financial responsibility limit is higher than the limit stated in the policy D. Automatically, with an additional premium, to meet the other state's financial responsibility limit if higher than the limit stated in the policy

C

14) What is the maximum amount of the Post-Assessment Insurance Guaranty Association fund will pay to cover a property or auto claim? a. $30,000/$60,000/$25,000 b. $100,000 c. $300,000 d. $1,000,000

C

19. The maximum liability of the North Carolina Insurance Guaranty Association for a single covered claim (other than a claim for Workers' Compensation insurance) is: A. $100,000 B. $250,000 C. $300,000 D. $500,000

C

2. A licensee must notify the Commissioner in writing of any change in his or her residential address within ___ business days after moving A. 3 B. 5 C. 10 D. 2

C

21. An insurer must keep a record of the termination of a motor vehicle policy for: A. 3 years B. 4 years C. 5 years D. 6 years

C

21. Which of the following buildings could be covered under a Business Owner's policy (BOP)? A. A 12-story office building B. A business with five million sales C. A two-story office building occupied by a print shop and a photography studio D. A gas station with a car wash and propane fill up

C

3. In most states, Worker's Comp laws are: A. Elective B. Monopolistic C. Compulsory (mandatory) D. None of the above

C

4. In states with competitive Workers' Comp funds: A. The employer must purchase insurance form a private insurer B. The employer must purchase insurance from the state C. The employer must purchase insurance from either the state or a private insurer D. The employer is expected to self-insure

C

4. The Garage coverage form covers liability arising from: A. Ownership, maintenance or use of covered autos only B. Garage operations only C. Ownership, maintenance, or use of covered autos and garage operations D. None of the above

C

4. Without an endorsement, the Personal Automobile Policy provides liability coverage for: A. Boats B. Go carts C. Trailers D. Bicycles

C

5) In an unendorsed Personal Automobile Policy, what kind of loss will permit paying transportation expenses? a. Collision b. Comprehensive c. Total theft of the vehicle d. Vandalism and malicious mischief

C

5. A person who acts without a required insurance license in North Carolina is guilty of what? A. Nothing B. A Felony C. A Misdemeanor D. A Trust Violation

C

6) Which of the following autos covered under a Personal Automobile Policy would be described as an underinsured motor vehicle? a. An auto that is insured by a company which, at the time of an accident, is delaying payment of another claim under the policy b. An auto that is involved in an accident resulting in damages that exceeds the State's accident reporting threshold c. An auto whose applicable limits of bodily injury liability are less than the underinsured limit of the insured driver d. An auto that is involved in a hit and run

C

6. The party to a Surety bond who promises to do or not do a specific thing is the: A. Obligee B. Surety C. Principle D. Custodian

C

7. Coverage for sums an employer becomes legally obligated to pay under common law as the result of a work-related injury to an employee is provided by: A. The Commercial General Liability policy B. The Part I-Worker's Compensation section of the Worker's Compensation policy C. The Part II- Employer's Liability section of the Workers Compensation policy D. The Business Owner's policy

C

7. In the event of a burglary, which of the following must be true? A. The burglary must involve confrontation B. The burglary does not have to involve unlawful entry or exit from the premises C. There must be visible evidence of forcible entry or exit from the premises D. There must be no signs of visible evidence of forcible entry or exit from the premise

C

8. The owner of a parking lot wants coverage for her liability for damage to vehicles left in her custody. She needs: A. Business Auto coverage B. Garage Liability coverage C. Garage keeper's coverage D. Both B and

C

9. The Business Owner's policy: A. Provides the insured great flexibility in picking coverages to include in the policy B. Can be written for almost any commercial insured C. Provides a prepackaged policy of Property and Liability coverages for certain types of small businesses D. Provides only Property coverages

C

1) When an insured is involved in an at-fault accident in which the insured is convicted of a moving traffic violation, the Safe Driver Incentive Plan (SDIP) permits a surcharge for: a. The accident only b. The violation only c. Both the accident and the violation d. Whichever carries the higher premium charge

D

1. A claimant cannot recover for injuries caused by another's negligence if their own negligence has contributed to the injury. This is a definition of what concept? A. Comparative negligence (pure) B. Comparative negligence (modified "no greater than" or 50% rule) C. No fault D. Contributory negligence

D

10. Generally, the maximum period for which a temporary insurance producer license may remain in effect is ___ days A. 30 B. 60 C. 90 D. 180

D

11. Which one of the following is NOT one of the components of a commercial Package policy? A. Coverage parts B. Common Policy Conditions C. Common Policy Declarations D. General Conditions For

D

12. Which of the following is an adverse underwriting decision under the Insurance Information and Privacy Protection Act? A. A declination of insurance coverage B. A termination of insurance coverage C. An agent's failure to apply for coverage with a specific company that he or she represents and that is requested by an applicant D. All the above

D

13. Which of the following penalties may be imposed on an agent who violates a cease and desist order under the Insurance Information and Privacy Protection Act? A. Suspension or revocation of the agent's license B. A fine of up to $10,000 per violation C. A fine of up to $50,000 if the violations constitute a general business practice D. All the above

D

13. Which of the following vehicles is considered a temporary substitute auto under a Personal Auto Policy? A. A neighbor's pickup truck borrowed by an insured to run an errand B. An auto purchased by an insured to replace a previously owned vehicle C. An auto rented by an insured when the insured is on vacation D. An auto loaned to the insured by the garage when the insured's car is in for repairs

D

15. An insurance producer must obtain ___ credits of continuing education (CE) during each 2-year period. A. 6 B. 8 C. 12 D. 24

D

16. The longest permissible term for a standard fire policy on property in North Carolina is: A. 1 year B. 2 years C. 5 years D. 7 years

D

16. Which of the following are included in the Commercial Package Policy (CPP)? A. Common Policy Conditions B. Common Policy Declarations C. Two or more coverage parts D. All the above

D

17. Which of following statements concerning the Commercial Package Policy are correct? A. Almost all commercial risks are eligible for coverage B. The insured can choose a variety of eligible Commercial coverages to tailor to the package to fit his or her specific business insurance needs C. A complete CPP includes Common Policy Declarations, Common Policy Conditions and two or more coverage parts D. All the above

D

18. Which of the following is NOT a purpose of the North Carolina FAIR Plan? A. To make adequate basic Property insurance available to property owners B. To encourage the improvement of properties located in North Carolina C. To create an insurable market of last resort with the JUA D. To ensure that all drivers have adequate automobile insurance

D

2. Bid bonds, Payment bonds and Performance bonds are all examples of: A. Fiduciary bonds B. Judicial bonds C. Labor bonds D. Surety Bonds

D

2. Under the Business Auto coverage form, the non-owned auto category represents: A. Autos owned by the insured but furnished to employees B. Autos hired by the insured C. Autos that belong to customers D. Auto owned by employees but driven in the insured's business

D

2. Which of the following represents an "insured" contract covered under the Commercial General Liability policy? A. CLM Construction signing a lease for a building B. CLM Construction signing an easement agreement with the local telephone company C. Side Track agreement D. All of the above

D

22. Which of the following would be considered ethical conduct by an agent of an insurer? A. Purchasing salvage from a claimant B. Accepting a gratuity from a provider of services in exchange for recommending that provider to claimants C. Discouraging a claimant from seeking legal advice D. None of the above

D

3. J and M had Other-than-Collision (Comprehensive), Collision, and Liability coverages on their personal automobile. They purchased an additional vehicle. Their Personal Auto Policy would: A. Not cover the new vehicle B. Cover the new vehicle automatically if they notified the insurance company during the policy period C. Cover the new vehicle automatically if they notified the insurance company during the policy period or within 30 days D. Cover the new vehicle automatically if they notified the insurance company within 30 days

D

3. Which of the following is/are excluded under the Business Auto Liability coverage? A. Property in the insured's care, custody or control B. Operation of mobile equipment C. Damage payable under Work's Comp D. All the above

D

30. The Commercial Package Policy may include which form(s)? A. Commercial Building and Personal Property B. Boiler and Machinery C. Commercial General Liability (CGL) D. All the above

D

4) The appraisal section of the Automobile Policy may be invoked by: a. The insured only b. The insurer only c. Immediate in the claims process d. Either the insured or the insurer

D

4. An unassuming, unarmed man walks into a furrier's at noon and walks out with three mink stoles. When an astonished clerk runs after him, she finds that he has disappeared without a trace. This is an example of: A. Burglary B. Robbery C. Safe burglary D. Theft

D

4. The Owner's and Contractor's protective form covers the insured for liability: A. Arising from products or completed operation B. Arising from the insured's premises C. Arising from contractual liability D. Arising from the operations of independent contractors or subcontractors

D

5. For the Business Auto coverage form, employers looking to cover employees' use of their own cars in the employer's business should opt to add Liability coverage to which of the following groups of autos? A. Hired B. Miscellaneous C. Owned D. Non-owned

D

5. What rating method involves modifying the premium based on the insured's loss experience over a specified period of time? A. Merit rating B. Manual rating C. Judgement rating D. Experience rating

D

6. At what time does a Personal Automobile Policy become effective? A. 12:00 p.m. B. 12:01 p.m. C. 12:00 a.m. D. 12:01 a.m

D

6. Six months after a new employee is hired, the insured learns that this employee was fired from a previous job for stealing company property. How will this discovery affect the insured's Crime coverage? A. Coverage for this employee will be cancelled after 30 days B. Coverage for this employee will be cancelled at the end of the policy period C. Coverage for this employee will not be affected because the dishonest act occurred before the employee was hired D. Coverage for this employee will be canceled immediately

D

7. The insured, Lefty's Bar, wants coverage for liability arising from selling and serving alcoholic beverages. They should purchase: A. An unendorsed Commercial General Liability coverage form B. A Commercial General Liability coverage form with the Amendment of Liquor Liability Exclusion endorsement attached C. A Business Owner's policy D. A separate Liquor liability policy

D

7. What is the purpose of a Fidelity bond? A. To guarantee an employee's honest discharge of duty B. To protect the insured from dishonest acts by employees C. To manage someone else's property D. Both A and B

D

8. An agent who needs liability coverage for his or her professional liability exposure can obtain it by purchasing A. An unendorsed Commercial General Liability coverage form B. An unendorsed Homeowner's policy C. An unendorsed Dwelling policy D. An Errors and Omissions policy

D

financial responsibility

Each driver has to prove that he can pay for bodily injury and property damage liability arising out of accidents. A driver normally meets this requirement by purchasing an auto policy with limits of liability required by the state's law.

Out of State Coverage

this provision modifies the personal auto policy to meet other states financial responsibility requirements when the covered auto is being driving in that state.