Insurance Exam
All of the following events are considered acts of terrorism except: A. acts of riot and civil commotion B. acts considered dangerous to human life, property or infrastructure C. acts resulting in damage within or outside the united states D. acts committed at the premises of any united states mission
A. Acts of riot and civil commotion are not covered under this act. These perils are covered under most property insurance contracts.
An insurance company that is formed and domiciled under the laws of a particular state is an example of a(n): A. domestic insurer B. foreign insurer C. domiciled insurer D. alien insurer
A. An insurance company domiciled in a state and is licensed in that state under a certificate of authority is called a domestic insurer.
Coverage C of the homeowner policy covers __________ on watercraft, including their trailers, furnishings, equipment and outboard motors. A. $1500 B. $500 C. $5000 D. $250
A. Coverage C (personal property) of the homeowner policy covers $1500 on watercraft, including their trailers, furnishings, equipment and outboard motors.
The personal liability coverage for Mr. Jones' homeowner policy would cover Jones if: A. his dog bit his neighbor on the nose B. his 14 year old son burned down his house C. he negligently bumped into his son while running to work D. all of the above
A. Section II, liability is basically third party coverage. It protects the insured for their legal liability is causing bodily injury or property damage claims. The dog bit the neighbor and therefore the insured would be protected for such claims, including defense costs.
None of the following can be covered by the federal terrorism act insurance program, except: A. most commercial property and casualty risks B. federal crop insurance C. personal insurance policies D. healthy and life insurance policies
A. The act does not apply to federal crop insurance, personal insurance policies or life and health policies.
Jim Cress owns an expensive fine arts collection. He has it appraised and covered under a personal articles floater. He takes his collection to England to have it auctioned. While the collection is in his hotel room, it is stolen. Which of the following is true? A. the loss is not covered B. fine arts are covered for fire only when outside the covered territory C. theft does not apply to fine arts D. property awaiting auction is never covered.
A. The loss is not covered because it is outside the covered territory for fine arts.
Mr. Jones purchased a policy on the dwelling in the amount of $40,000. His wife also purchased a policy in the amount of $20,000 unbeknown to her husband from another company. In case of a $15,000 loss, what will her company pay on the loss? A. $5000 B. $15,000 C. $10,000 D. $7500
A. The other insurance clause deals with this issue. Her company pay one third of the total coverage. Therefore, her company will pay $5,000 or one third of the claim.
The inland marine coverage form which provides open peril insurance for specific classes of personal property on an itemized and scheduled basis is called a: A. personal articles floater B. personal property floater C. personal effects floater D. personal transportation floater
A. The personal articles floater is designed to cover specific items.
The inland marine coverage form which covers clothing cameras and other portable property worn or carried by tourists and travelers is a: A. personal effects floater B. personal articles floater C. camera and musical instrument floater D. theatrical property floater
A. The personal effects floater is designed to cover property of tourists. However, it is seldom used today because of the broad coverages provided by the homeowner policy.
Which of the following is a clause in property and casualty contracts which states that if policy or endorsement forms are broadened and no additional premium is required, then all existing similar policies or endorsements will be construed to include the broadened coverage? A. liberalization B. assignment C. binder D. coinsurance
A. This is called the liberalization clause.
The unethical act of persuading a policyowner to drop a policy solely for the purpose of selling another policy is known as: A. twisting B. rebating C. defamation D. misrepresentation
A. Twisting is a violation of insurance laws. Making unfair or inaccurate comparisons to induce a person to drop their current coverage is an unfair claims practice.
The insurance department has been advised that an agent is guilty of an insurance code violation. The commissioner will: A. call for a hearing B. revoke the license pending a hearing C. revoke the license D. fine the agent's insurance company
A. Usually the insurance commissioner will first call for a hearing to review all sides of the alleged infraction.
If the insured cancels a homeowner policy, unearned premium is returned to the insured on what basis? A. short rate B. pro rata C. discount D. experience
A. When the insured cancels a policy the return is based on a short rate basis and the insured pays a small penalty.
Watercraft excluded from coverage under section II of the homeowner policy includes all of the following, except: A. inboard owned by the insured B. outboard owned by the insured of 25 horsepower C. 30 foot sailboat rented to the insured D. inboard-outboard of 80 HP owned by the insured
B. A 25 HP outboard motor boat is the only one of those listed that would be covered for liability off the insured's premises. Any size boat is covered on the residence premises for liability.
Which of the following is NOT a factor in determining negligence on the part of the insured? A. legal duty is owed B. there is a breach of protection C. proximate clause D. damage
B. A breach of protection (failure to carry insurance) is not a factor in determining negligence.
An insurance contract that is contingent on an uncertain event is referred to as? A. executory B. aleatory C. contract of adhesion D. conditional
B. An insurance contract is referred to as being aleatory, which means it is contingent on an uncertain event (a loss). An insurance contract is one of unequal value in that the insured pays a premium which is considerably less than the obligation of the insurer.
The responsibility of the federal government in regulating the insurance industry is limited to: A. monitoring the ethical conduct of individual insurance adjusters B. fair labor standards and anti-trust matters C. monitoring the financial solvency of insurance companies D. reviewing and approving insurance rates, policies, and forms
B. As mentioned above, the federal government regulates in certain other areas as opposed to state regulation.
The pair and set clause in property insurance contracts notes that the loss to one item in a pair or set: A. constitutes a total loss B. pays the difference between ACV of the property before and after the loss C. does not constitute a total loss D. does not constitute a partial loss
B. Assume the insured owns a set of antique salt and pepper shakers. The value of the set is $3000 and one is destroyed. This is the value before the loss. The remaining one is worth only $1000. The policy would pay the difference of $2000.
An insurer that refuses to pay claims without conducting a reasonable investigation based upon all available information is guilty of: A. twisting B. unfair claim settlement practices C. a felony D. misrepresentation
B. Conducting a prompt, reasonable and thorough investigation is a requirement. If not conducted in this manner it is considered a violation of the unfair claim practices.
All of the following are considered acts of rebating, except: A. an agent provides an all-expenses paid cruise to a client and his wife in exchange for writing the coverage on his national chain of restaurants B. an agent send holiday greeting cards to all the clients on his mailing list C. an adjuster receives a monthly check from an auto body repair shop for recommending the repair shop to clients who have a claim D. all these situations are considered acts of rebating
B. Greeting cards do not constitute a form of rebating. They are not something of commercial value.
An insurer that distributes a statement that misrepresents the benefits, advantages, conditions, or terms of any insurance policy would be guilty of: A. unfair claim settlement practices B. misrepresentation and false advertising C. defamation D. coercion
B. Obviously, misrepresentation and false advertising is a violation and is considered an unfair trade practice act.
The insured is covered under a DP-3 with contents coverage. He has a hunting rifle stolen by forcible entry into the dwelling. The front door is severely damaged and must be replaced. Which of the following is a true statement regarding this loss? A. the entire claim will be denied B. only the damage caused by the burglars will be paid C. the theft of the gun is covered under personal property D. both the damage to the door and the theft of the gun will be covered
B. Only the damage to the door will be covered under the burglar damage peril. Theft is not a covered peril under the dwelling program unless endorsed on the policy.
In liability insurance, policy limits that apply one limit to each person injured, another for bodily injury claims of all persons injured in a single accident, and a separate limit for all property damage arising out of a single accident is: A. aggregate limits B. split limits C. single limit D. total limits
B. Split limits provide separate bodily limits and separate property damage limits. For example: An auto policy may provide limits of $25/50/10. This means the most that will be paid per person for bodily injury is $25,000. If more than one person is injured the policy would pay $50,000. In case of property damage to another party's property, the policy would pay $10,000.
The federal law enacted to control the ways financial institutions and insurance companies deal with the private information of individuals is: A. The FAIR Plan B. The Gramm-Leach-Bliley C. The CAN-Spam-Act D. The Fair Credit Reporting Act
B. The Gramm-Leach-Bliley Act, also known as the financial modernization act of 1999, is a federal law enacted in the united states to control the ways that financial institutions deal with the private information of individuals.
The type of coverage on contents provided by the HO-3 is: A. open perils B. named perils C. basic form D. comprehensive.
B. The HO-3 provides broad perils coverage on the contents and open peril coverage on the structures.
The insured is covered under a watercraft policy and asks the agent about a "lay-up" period credit to get a reduction in the premium. The dates of the lay-up period are specified in the policy. There is an emergency and the insured must use his boat in a life saving event. The boat is damaged and sinks. Under what circumstances would coverage apply? A. the loss would not be covered because the insured operated the boat during the "lay-up" period B. only if the insurance company is notified within 10-days of the emergency use C. only the salvage of the boat is covered when required under maritime law D. when an additional premium is received by the insurer when the limitation is removed
B. The company must be given notice within 10 days of the emergency to justify the need to violate the terms of the provision.
Which of the following is the section of an insurance contract that contains the provisions, rules of conduct, duties, and obligations of the parties? A. the insuring agreement B. the conditions C. the exclusions D. the limitations
B. The conditions clause stipulates the duties of the insured and the insurer. For example: The insured is required to report a claim in a timely fashion.
Coverage D - loss of use provides which of the following percentages of coverage A under the HO-2? A. 10 B. 30 C. 40 D. 50
B. The coverage provides 30% of coverage A for additional living expense and rental value.
Mr. Jones, a pedestrian, was injured by Mr. Smith while driving his vehicle. Mr. Smith is insured by I Am Bogus Insurance Company. The insurance company would be which party to the claim? A. first party since it is the one that has to pay B. the second party C. the third party D. guarantor
B. The insurance company is the second party to the contract.
An insured has suffered a fire loss to his or her dwelling. This insured is which party to the claim? A. third party B. first party C. second party D. lost payee
B. The insured is the first party to an insurance contract. The insurer is the second party.
An insured owns an expensive rare painting. He has it appraised by an art dealer and has it insured for $50,000 under a personal articles floater. There is a market decline for this item. It is destroyed in a fire at his office. The company offers him $40,000 which is the current market value. Which of the following is true regarding this loss? A. it will not be covered since it is away from the insured's residence B. it will be covered for the full $50,000 amount C. the company is correct in offering fair market value at the time of the loss D. the company will ask for a reevaluation of the item based records and documentation of his cost, the current market value and the appraised value
B. There is an exception in the loss settlement clause for fine arts. Usually, unless indicated, the agreed amount clause does not apply to other scheduled property and losses are settled on an ACV basis. For fine arts the agreed amount clause does apply and the insured is entitled to $50,000 for the loss.
A church has hired a painting contractor to stain and varnish the woodwork in the building. He leaves the rags and brushes used to apply the painting materials in a small storage area. This is an example of: A. a peril B. a hazard C. assumption of risk D. direct loss
B. This is an example of a hazard. Hazards increase the likelihood that a loss may occur such as a fire from spontaneous combustion.
Which of the following is a basis for insuring property that allows the insured to report the value of the building contents to the insurance company on a monthly basis? A. blanket basis B. reporting form C. specific basis D. agreed value
B. This is called the reporting form basis. It requires the insured to carry 100% to value. The insured reports either monthly or quarterly and pays a premium based on actual inventory values. In most cases insureds save money when they have inventories that fluctuate greatly.
The insured is covered under a DP-1 dwelling policy with coverage on the dwelling in the amount of $100,000. He has a detached garage valued at $10,000. Both structures are destroyed by a fire. What is the total amount recoverable under the policy? A. $110,000 B. $100,000 C. $95,000 D. $105,000
B. Under the DP-1 form the 10% of coverage A for other detached structures is NOT additional coverage. It is part of the dwelling limit. The policy cannot pay more than the total dwelling limit of $100,000.
If the insurer cancels a homeowner policy, unearned premium is returned to the insured on what basis? A. short rate B. pro rata C. discount D. experience
B. When an insurer cancels a policy the return premium is based on a pro-rata basis. The insured in not penalized.
Which of the following provides written evidence of coverage pending the issuance of a policy? A. cause of loss form B. assignment C. binder D. blanket coverage
C. A binder is a form of temporary insurance that is provided as evidence of coverage until the policy has been received. Once the policy is received the binder is voided.
All of the following are covered under coverage A of a homeowner policy, except: A. attached garage B. construction materials used in building an additional to the dwelling C. detached garage D. a central air conditioning system
C. A detached garage is covered under coverage B. The structure is not part of the dwelling.
An incorporated insurance company owned by its policyholders is: A. a stock company B. a reciprocal insurer C. a mutual company D. a self insurer
C. A mutual insurer is owned by its policyholders.
An incorporated insurance company with its capital divided into shares is the definition of: A. a mutual company B. a domestic company C. a stock company D. a foreign company
C. A stock company is owned by its stockholders.
An apartment dweller would be in the market for a: A. HO-2 B. HO-3 C. HO-4 D. HO-6
C. An apartment dweller would need an HO-4 form. The tenant does not own the structure so contents coverage, additional living expense and liability coverage would be needed.
One characteristic of an insurance contract is that both parties must perform certain acts to make the contract legally enforceable. This is called: A. personal aspect B. aleatory C. executory D. utmost good faith
C. An executory contract is one in which both parties must perform certain acts to make the contract valid and enforceable.
A homeowner policy may be cancelled by the insured: A. for any reason B. at any time C. both A and B D. neither A nor B
C. An insured can cancel the policy at any time and for any reason. The insurer must have legal reasons to cancel the policy and must provide the insured with a notice of any action canceling or non-renewing a policy.
The insured has purchased a DP-3 form to cover his dwelling that is valued at a replacement cost of $100,000. He insures it for $60,000 and has a $30,000 fire loss. What can he expect to be paid? A. $30,000 B. $25,000 C. $22,500 D. $15,000
C. An insured has not complied with the 80% requirement for replacement cost coverage. He is underinsured by 25% He should have carried $80,000 and instead carried only $60,000. The policy will pay 75% of the $30,000 or $22,500. The company can also pay the ACV of the loss.
The responsibility to regulate the insurance industry belongs to: I. The state government II. The federal government III. The state insurance department A. I only B. III only C. I and II only D. I, II, and III
C. Both the federal and state governments regulate insurance. In most cases the responsibility rests with the individual states to regulate insurance matters. The federal government regulates in the areas of fair labor standards and anti-trust matters as well as the fair credit reporting act.
Under the HO-3, what percentage of the amount insurance written for coverage A applies to coverage C for a one or two family dwelling? A. 10 B. 25 C. 50 D. 100
C. Contents are covered for 50% of coverage A for a one or two family dwelling/
John and Susan have a homeowner policy with a $5000 deductible. John has purchased some expensive camera equipment to take on a cruise for recording their trip. Special scuba gear and sportswear have also been purchased for both. They are concerned about fire and theft. What coverage would you recommend? A. personal articles floater B. personal property floater C. personal effects floater D. reduce the homeowner deductible temporarily
C. Due to the high deductible under their homeowner policy the personal effects floater could be used. One could compare the cost of the deductible reduction versus the cost of the personal effects floater as well.
An insured lived close to mount st. helens and carried a DP-2 policy. When the volcano erupted, the movement of the earth caused his home to collapse. He reported the claim as a volcanic eruption loss. What do you feel would be the result of this claim? A. the claim would be covered under the peril of volcanic eruption B. a portion of the claim based on a deductible percentage would be paid C. the claim would be denied D. the claim would be paid for ACV only under these circumstances
C. Earth movement is not covered under the volcanic eruption peril. The insured would need earthquake coverage.
An insured's home is covered by the DP-3 form. The policy provides $20,000 in coverage on a home that would cost $50,000 to replace. When high winds destroy the roof it is determined that it will cost $2,000 to replace it. Assuming the actual cash value of the roof is $750, how much will the insured collect for this loss? A. $2000 B. $1600 C. $1000 D. $1750
C. In order to receive replacement cost coverage under the DP-3 form for structures, an insured must carry at least 80% of the dwelling replacement value. The value of the dwelling is $50,000 so the insured should have carried at least $40,000. Since this insured carried only $20,000, he is 50% underinsured. The policy will pay 50% of the $2,000 loss or $1,000.
Which of the following is an example of a Loss Evaluation Method? A. libaralization B. cause of loss form C. stated amount D. conditions
C. Some types of property are insured for a stated amount. This is a value agreed to by the parties of the contract.
Sue Strokers owns an expensive collection of jewelry. She is worried about the fluctuating values of gold, silver and diamonds. She has the collection appraised. Her agent suggests a personal articles floater to insure these items. If she wants to avoid a decrease in her coverage due to a decrease in market value, which of the following clauses should she have included in her policy? A. functional replacement cost B. actual cash value C. agreed amount D. diminished value
C. The agreed amount clause will protect her against decrease in value. However, it will not insure her for an increase in value.
An insured carries a DP-2 with $10,000 contents coverage. He owns a canoe and stores it at a lake in a private non-owned garage. Fire destroys the garage and the boat. How much coverage will his policy provide? A. Up to $1000 B. Up to $500 C. Nothing D. $1500
C. The answer is the policy will pay nothing. The extension of coverage that applies to personal property off the premises of 10% does not extend to cover rowboats and canoes.
The insured has forgotten to close an upstairs window. A strong storm blows through and wind and water severely damages the contents and floors of the dwelling. The insured carries a DP-2 dwelling form. What will be the outcome of this loss? A. the loss will be paid under the peril of wind B. the loss will be paid on an actual cash value for the contents damage C. the claim will be denied D. the dwelling damage is covered on a replacement cost basis if the insured carried 80%
C. The claim will be denied because the peril of wind did not create an opening in the structure. The insured was negligent in leaving the window open.
Which of the following is NOT included in the declarations section of an insurance contract? A. the identity of the named insured B. the policy period C. the covered perils D. the policy premium
C. The covered perils are contained in the insuring agreement and do not appear on the declarations page.
The insured is transporting his yacht on its trailer and pulling it with his truck. The trailer separates from the truck hitch and the boat strikes another vehicle. There is property damage and bodily injury to a third party. The yachts and trailer are a total loss. What coverage would apply under the yacht policy? A. all the damages would be covered B. only the third party damages would be covered C. only the damage to the yacht and trailer D. none of the damages are covered
C. The damage to the yacht and trailer would be covered. The bodily injury and property damage to a third party would be covered under an auto policy.
An insured has her fur coast specifically covered under a personal articles floater. It has been stored in a plastic garment bad in her closet during the good weather months. She decides to take the coast out and hang it outside to freshen up. The next door neighbor's dog sees the coat and attacks it and ruins the garment. The insurer will: A. decline the claim because damage by domestic animals is excluded B. decline the claim because damage by any animal is excluded C. pay the claim because the loss is not excluded D. deny the claim because of neglect on the part of the insured
C. The form is an "open peril form" and would cover this type of loss whether caused by a domestic animal or a wild animal.
The daughter of an insured is attending college and her family carries a tenant's homeowner policy HO-4 with $50,000 contents coverage. The daughter has about $15,000 of personal belongings consisting of clothing, musical instruments and electronic equipment, some appliances and other personal items. Which form would be used to cover her property exposures? A. personal effects floater B. personal articles floater C. personal property floater D. the homeowner form
C. The homeowner policy limit extensions would not provide the coverage she would need. The best inland marine form for her would be the personal property floater.
A water pip has burst and the insured has suffered floor and ceiling damage in his two-story home. The cost to remove and replace the walls to get to the pipe is $200. The cost to repair the damaged floor is $400. The pipe that burst must now be replaced according to new building codes. The cost to replace the pipe is $200. How much will the insured's policy pay? A. $300 B. $400 C. $700 D. $900
C. The insurance company is not responsible for the pipe that burst; only the other damages. Therefore, the policy will pay $700.
The insurance company is the author of the insurance policy. The insured buys what is offered by the company and accepts it as it. This is called: A. executory B. conditional C. contract of adhesion D. aleatory
C. The insurer and not the insured writes the policy language. The insured must accept the policy as is. In cases where the policy contains ambiguous (vague) language, the court normally rules in favor of the insured.
Should an agent or adjuster have a change of address, the obligation to notify the insurance department lies with: I. the company that employs the adjuster or company that appoints the agent II. the licensee III the licensee's supervisor A. I and II B. I only C. II only D. I, II, and III
C. The person who holds the license is responsible to report the change of address to the insurance department.
An insured has an extensive gun collection. Which of the following would not cover his collection in case of a flood? A. the personal articles floater B. the personal effects floater C. the personal effects floater D. none of the forms would cover flood
C. The personal property floater exclusions are similar to the HO-5 exclusions. Flood is specifically excluded.
The inland marine coverage form which provides open perils insurance on a world-wide basis for unscheduled personal property is a: A. personal effects floater B. personal articles floater C. personal property floater D. personal transportation floater
C. The personal property floater is not used to schedule individual items. The policy provides a blanket maximum limit for categories of property. Furniture, clothing, appliances are some examples. The personal articles floater is used to schedule specific items like jewelry and guns for specific limits.
The limit of liability of any property insurance contract in a given loss is the: A. ACV settlement B. RC settlement C. policy limits D. market value
C. The policy limit is the most the insurer can pay for a covered loss. With homeowner policies, the building losses are paid on a replacement cost basis (except the HO-8) provided he insured carries 80% to value. Contents under all of the forms are covered on an actual cash value basis. Mobile homes that are covered under a homeowner policy by endorsement are also covered on a replacement cost basis for the structure if the insured carries 80% to value.
The insured owns a 20 foot fishing boat with a 50 horse power motor. Which of the following policies would be suited to cover a theft loss on a lake? A. homeowner policy B. personal article floater C. watercraft policy D. yacht policy
C. The watercraft policy would be the better product to cover a fresh water boat of this size and horsepower. The homeowner policy has a limitation for physical damage coverage and does not cover the theft of a boat off the insured's premises. Also, the HO policy would not cover the liability of an outboard mother of more than 25 horsepower.
Although their liability is clear, BB&S insurance company routinely delays all claim payments for 90 days, and in doing so: A. avoids a lot of little nuisance claims B. substantially eliminates fraudulent claims C. is guilty of an unfair claim settlement practice D. avoids any acts of illegal discrimination between claimants
C. This is an unfair claims practice. Most states have enacted laws or regulations that specify the time lines for the investigation and either payment or denial of claims.
The insured owns a filling station and an employee causes bodily injury to a third party. The insured is held liable for the employee's acts. This is called: A. contributory negligence B. joint and several C. contingent liability D. vicarious liability
C. This is called comparative negligence. Most states use this as a defense in determining negligence on the part of the parties involved in a claim to determine damages.
In order to be certified as an act of terrorism under the federal terrorism act, property and casualty losses must exceed ___________ for any one event: A. $500,000 B. $1,000,000 C. $3,000,000 D. $5,000,000
D. $5,000,000 in damages is the threshold for the act to apply.
A loss that is a direct consequence of a particular peril is called a(n): A. indirect loss B. peril C. hazard D. direct loss
D. A loss to property caused directly from an insured peril would be a direct loss. For example, an explosion causes building and contents damage. The loss of use or loss of income would be considered an indirect loss.
Which of the following would be considered unfair or deceptive acts by an adjuster? A. requesting that a first party claimant signs a release that extends beyond the subject matter which gave rise to the claim payment B. advising the claimant that their rights may be impaired if a form of release is not completed within a specified period of time unless for the purpose of notification of statute of limitations C. issuing a check or draft, in partial settlement of a loss or claim under specific coverage that contains language that releases the insurer or insured from total liability D. all of the above
D. All of these are considered to be unfair claim practices.
Under section II - additional coverages of the homeowner policy, the insurer agrees to pay: A. the cost of a legal defense B. premiums on bonds connected with liability suits C. investigation cost D. all of the above
D. All of these are included in Section II liability. They are in addition to the liability limit.
Methods of risk management include: A. transfer B. sharing C. avoidance D. all of the above
D. All of these are methods of avoiding risk.
Coverage E of the homeowner policy involves: A. premises liability B. personal activities C. acts of residence employees D. all of the above
D. All of these exposures are covered under the coverage E, personal liability section of the HO policy.
Under coverage C of the homeowner policy, which of the following categories of property receive limited dollar coverage? A. boats B. trailers C. furs D. all of the above
D. All of these items receive a limited dollar amount for coverage. Boats and trailers are limited to $1,500 each. Furs have a dollar amount theft limit of $1,500
A homeowner policy can be purchased by: A. a person buying a home under the installment plan B. an individual who owns a home under the course of construction C. the owner of a seasonal dwelling who is insured under a homeowner policy for her primary dwelling D. all of the above
D. All of these situations are eligible for a homeowner policy.
Which of the following would be considered an unfair trade practice? A. twisting B. rebating C. coercion D. all are considered unfair trade practices
D. All these are considered to be a violation of the unfair trade practices law.
Under coverage B - other structures of the homeowner policy, which of the following structures are not covered? A. structures used for business purposes B. structures rented to a non-tenant for other than a private garage C. attached garages D. all of the above
D. An attached garage would be part of the dwelling and therefore covered under coverage A.
The homeowner policy excludes which of the following types of personal property? A. the insured's dog B. the insured's motorbike C. silverware scheduled under another policy D. all of the above
D. Animals are not considered to be covered property for property insurance coverage. A motor bike is not covered nor is items that are more specifically covered by other insurance.
Medical payments coverage of a watercraft policy covers all necessary medical expenses incurred by a covered person up to __________ following a covered accident. A. 1 year B. 6 months C. 5 years D. 3 years
D. Coverage C (medical expense) of the watercraft policy covers all necessary medical expenses incurred by a covered person up to 3 years following a covered accident.
Coverage F of the homeowner policy applies to: A. the named insured B. resident relatives C. tenants of the insured D. social invitees
D. Coverage F - medical payments applies to social invitees. It does not apply to residents of the dwelling including tenants.
Which of the following is NOT considered to be an unfair claims practice? A. misrepresenting pertinent facts or uninsured policy provisions relating to coverages at issue B. refusing to pay claims without conducting a reasonable investigation based upon all available information C. attempting to settle claims on the basis of an application that was altered without notice to or the knowledge of the insured D. failing to honor an uncovered claim
D. Declining to pay a claim that is not covered is not considered to be an unfair claims practice act. However, not responding promptly in the claim investigation is a violation.
Inland marine insurance is commonly used to insure all of the following, except: A. stamps B. camera equipment C. jewelry D. automobiles
D. Inland marine policies are not designed to cover automobiles
Under the damage to property of others coverage of a homeowner policy, section II, property damage caused intentionally by an insured is excluded if the insured is: A. 13 years old B. 18 years old C. 21 years old D. any of the above
D. Intentional acts are usually excluded for anyone. Section II does make an exception and covers and covers intentional acts of children under the age of 13.
No act will be certified by the secretary as an act of terrorism under the federal terrorism insurance act if: A. the act is not committed as part of the course of war declared by congress B. the act is one terrorism as defined by the act C. the losses that occur relate to commercial property risks D. the losses that occur relate to life insurance
D. Life insurance losses are not covered by the act.
Homeowner medical payments coverage does not apply to bodily injury to which of the following? A. the insured's seven year old son who fell down the stairs B. an appliance repairman working on the insured premises C. an insured boarder who trips in her apartment over a rug D. all of the above
D. Medical payments do not cover injuries to residents of the dwelling. A repairman would be covered under worker's compensation.
Which of the following is a method of requiring the insured to insure at least 80% of the value of the covered commercial property? A. cause of loss form B. standard mortgage clause C. loss payable clause D. coinsurance clause
D. Most commercial property insurance policies require the insured to carry 80% to value. This is called the coinsurance clause.
Mr. Cato carries a watercraft policy covering his 25 foot pontoon boat. The boat is powered by a 150 hp motor. He transports it to the florida keys and operates the craft 20 miles out to sea. The boat capsizes and is destroyed. What coverage would apply to the boat? A. the acv value of boat B. the motor and accessories only C. damage to the hull only D. no coverage would apply
D. No coverage would apply to the boat because the insured went outside the territorial limit of 12 miles.
Under the homeowner policy, theft coverage does not cover theft of property A. committed by the insured B. from a dwelling under construction C. from the residence of the insured's tenant D. none of the above are covered
D. Obviously, theft committed by the insured is not covered. The theft of building materials, while a dwelling is under construction is excluded. The property of a tenant should be covered by the tenant's coverage.
Under the yacht policy, what coverage must be added to cover bodily injuries to the captain and crew? A. medical payment coverage B. uninsured/underinsured boater insurance C. bodily injury liability coverage D. jones act coverage for the members of the crew
D. Protection and indemnity coverage would apply to obtain coverage under the jones act.
Mr. Simpson owns a dwelling in a rural area close to a small wooded area. He is covered under a DP-3 form. A deer sees it's reflection in a picture window and jumps through and enters the dwelling causing significant wall and floor damage. Some of the furniture is damaged and must be replaced. He is covered for $100,000 on the dwelling and $50,000 on the contents. Which of the following would apply to this loss? A. the entire loss would be denied B. pay replacement cost on the dwelling and ACV for the contents loss C. pay replacement cost on the dwelling and the contents D. deny the contents claim and pay the dwelling loss on a replacement cost basis
D. Since the DP-3 is an open peril form in regards to the dwelling, this type of loss is not excluded, the dwelling damage is covered. The contents coverage is provided on a broad named peril basis. This type of loss would not be covered for the contents damage as it is not a listed peril.
A condominium owner-occupant would be in the market for a: A. HO-2 B. HO-3 C. HO-4 D. HO-6
D. The HO-6 was specifically designed to cover the owner of a condominium.
Which of the following homeowner forms provides the least amount of perils coverage? A. HO-5 B. HO-3 C. HO-2 D. HO-8
D. The HO-8 is the most limited homeowner form. It contains the very basic perils.
Which of the following is a requirement for obtaining an agent's or adjuster's license? A. must be 21 years of ago B. must have completed at least two years of college coursework C. must have an insurance producer's license in the state D. must satisfy the insurance commissioner of trustworthiness
D. The applicant for a license must be trustworthy. If that person has been found guilt of a felony, it would normally prevent the person from being licensed in most states.
The insureds are retried and do not own a home. They live and travel extensively in their motor home. To cover their personal items which of the following would you suggest they purchase? A. personal effects floater B. the personal articles floater C. the personal property floater D. both the personal property floater and the personal articles floater
D. The best form for them would be the personal property floater. However, certain items such as jewelry, fine arts or other collectibles might be better covered under a personal articles floater. Therefore, both forms should be recommended.
The federal government sometimes provides insurance that is not ordinarily available from private insurers. Which of the following is provided by the federal government? A. nuclear energy liability coverage B. federal flood insurance C. federal crop insurance D. all of the above
D. The federal government provides all these types of coverage.
Under the extension of the terrorism risk insurance act the federal government will share in the losses for a certified act of terrorism if: A. total losses for all insurers exceed $100 million dollars B. an insurer is responsible for the first 20% of losses as deductible and then the government will pay 85% of remaining claim amounts C. the total certified acts of terrorism for the program year have not exceeded $100 billion dollars D. all of the above
D. The federal government shares in certified act of terrorism losses if the program trigger requirements are met. The total losses for all insurers for the event have exceeded $100 million; the insurer has met its 20% deductible for existing claims and the total certified act of terrorism losses for the program year have not exceeded $100 billion.
A homeowner has a fire that totally destroys a $200 typewriter before the fire is extinguished. If the fire coverage on contents contains a $250 deductible, the insured will receive: A. $200 B. $50 C. $250 D. $0
D. The loss is less than the deductible. Therefore the insured would not receive payment.
An act of terrorism must be "certified" to be such an act by: A. the president of the united states B. the senate C. the house of representatives D. the secretary of the treasury
D. The secretary of the treasury in concurrence with the secretary of state and the attorney general of the united states certify an act of terrorism.
In addition to any administrative action, a person who violates the federal fraud and false statements regulation will be subject to a civil penalty of up to: A. $5,000 B. $10,000 C. $25,000 D. $50,000
D. The united states attorney general may bring a civil action in the appropriate united states district court against any person who engages in conduct constituting an offense under the insurance fraud and false statements section of the united states code and the person will be subject to a civil penalty of not more then $50,000 or the amount of compensation which the person received or offered for the prohibited conduct, whichever amount is greater.
The cost of replacement minus depreciation is the definition of: A. valued policy B. market value C. replacement cost D. actual cash values
D. This is the definition of actual cash value. If the property is insured on replacement cost the depreciation is no deducted.
All of the following are exclusions under the homeowner policy, except: A. intentional loss B. flood C. earth movement D. volcanic eruption
D. Volcanic eruption is the only thing that would be covered. The others are excluded.
