Insurance Exam

Coverage for medical payments under a Personal Auto Policy applies to expenses following a covered accident that are incurred and services rendered within what time period? a) 90 days b) 1 year c) 3 years d) 5 years

3 years

Under the dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it must inform the insured within how many days of receiving proof of loss? a) 10 days b) 30 days c) 45 days d) 60 days

30 days

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of a) fraud b) breach of warranty c) concealment d) waiver

concealment

The following agents have been accused of violating the Insurance Code as it applies to false, deceptive, or unfair trade practices. Based on the information below, which one is innocent? a) Agent Tulane insists that all employees of the agency buy their Homeowners policies from the agency or face termination b) Agent Wilson shows customers a make-believe article from a newspaper that states his policies pay more for claims than his competitors' policies c) Agent Snark warns people not to buy insurance from a competitor because he is an abusive father d) Agent Newsome routinely recommends his brother, a carpenter, to insureds who have had a property loss

Agent Newsome routinely recommends his brother, a carpenter, to insureds who have had a property loss

When transacting business in this state an insurer formed under the laws of another country is known as a/an a) alien insurer b) domestic insurer c) foreign insurer d) admitted insurer

alien insurer

Most insurance policies exclude losses by a) theft b) burglary c) robbery d) mysterious disappearance

mysterious disappearance

Which of the following is NOT the consideration in a policy? a) the premium amount paid at the time of application b) the promise to pay covered losses c) the application given to a prospective insured d) something of value exchanged between parties

the application given to a prospective insured

The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT a) the insured's child sustains injuries when the car she is in accidentally rolls down a hill b) a friend is injured while driving the insured's vehicle with permission c) the insured is injured while exiting a friend's mobile home d) the insured is injured by a motor vehicle while crossing the street

the insured is injured while exiting a friend's mobile home

Which of the following is most likely to occur if it is determined by the audit that the deposit premium was too high? a) additional premium will be collected b) the insurer will have to apy a fine c) nothing: the premium cannot be adjusted d) the insured will receive a return premium

the insured will receive a return premium

For the purpose of insurance, risk is defined as a) an event that increases the amount of loss b) the uncertainty or chance of loss c) the certainty of loss d) the cause of loss

the uncertainty or chance of loss

All of the following are perils covered under the broad dwelling policy EXCEPT a) lightning b) collapse c) theft d) fire

theft

Which of the following is a requirement for an adjuster's license? a) they must pass a written examination b) the applicant must be at least 21 years old c) they must have interned in insurance adjusting for at least three years d) the applicant must provide at least five references attesting to his/ her good behavior

they must pass a written examination

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay? a) $0 b) $30,000 c) $32,000 d) $40,000

$30,000

An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has been depreciating at $200 per year and his policy is ACV, how much will it pay toward the insured's new roof? a) $1,000 b) $4,000 c) $5,000 d) $6,000

$5,000

If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to a) $350 b) $500 c) $750 d) $1,000

$500

For reasons other than nonpayment of premium, how many days' notice must an insurer give a policyowner before canceling a homeowner's policy? a) 10 days b) 20 days c) 30 days d) 60 days

20 days

Terrorism risk Insurance Program Reauthorization Act of 2015 has extended TRIA to the year a) 2015 b) 2017 c) 2020 d) 2030

2020

Arburton Insurance Agency has four agents working for it. Which one of them would be guilty of violating the Insurance Code regarding deceptive or unfair practices? a) Agent Dunson tells a prospect that a competing agency has only been in business for five years b) Agent Warsill falsely tells a prospect that a competing agent had his license revoked in another state c) Agent Barstow falsely tells a prospect that he will be on vacation the following week d) Agent Baker tells a prospect that his

Agent Warsill falsely tells a prospect that a competing agent had his license revoked in another state

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? a) Estoppel b) Material misrepresentation c) Waiver d) Utmost Good Faith

Material misrepresentaion

If a producer, broker, or solicitor has a change of business address, who should be notified? a) The Guaranty Association b) the Comissioner c) the NAIC d) Policyowners

The Commissioner

A rural area is defined by the insurance code as a community with a) fewer than 10,000 people b) no commercial businesses c) at least 10 private farms d) a class 9 or 10 fire protection grade

a class 9 or 10 fire protection grade

This state provided for a temporary license for all of the following EXCEPT a) a producer's disability b) a producer's time in the military service c) a producer's retirement d) the death of a producer

a producer's retirement

If an insurance producer's or consultant's license has lapsed a) a reinstatment fee is double the renewal fee b) a new written examination is required c) it can be reinstated within 36 months d) it cannot be reinstated

a reinstatement fee is double the renewal fee

In the event of a loss covered by the policy, if the insurer requests a signed sworn proof of loss, the named insured is required to submit it within a) a specified time b) 1 year c) 5 business days d) 30 days

a specified time

The declarations page of the homeowners policy provides all of the following information EXCEPT a) what deductible amount applies to each loss covered by the policy b) a statement that earthquake damage is not covered c) the amount of premium charged for each coverage d) the insured's address

a statement that earthquake damage is not covered

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an a) certified insurer b) self-insurer c) authorized insurer d) local insurer

authorized insurer

The proof of loss statement must be a) an oral statement b) in writing c) both oral and in writing d) in a videotape format

in writing

An additional loss that results from a direct loss of property is called a/an a) punitive loss b) indirect loss c) proximate loss d) liability loss

indirect loss

What do individuals use to transfer their risk of loss to a larger group? a) indemnity b) insurance c) insurable interest d) exposure

insurance

Persons covered under an insurance policy, whether named or not, are known as the a) named insureds b) first named insureds c) additional insureds d) insureds

insureds

All of the following are conditions commonly found in the insurance policy EXCEPT a) subrogation b) appraisal c) insuring agreement d) cancellation and nonrenewal

insuring agreement

The causes of loss insured against in an insurance policy are known as a) perils b) losses c) risks d) hazards

perils

A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called a) notice of claim b) claim report c) binder d) proof of loss

proof of loss

Before an insurer will pay any loss under a policy, what is usually required from the insured? a) notice of claim b) a binder c) a claims-made form d) proof of loss

proof of loss

While an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of the insured's auto policy would pay for the damage to the store? a) property damage liability b) collision coverage c) other-than-collision coverage d) this loss would not be covered

property damage liability

All of the following are considered parts of the policy structure EXCEPT a) insuring clause b) conditions c) provisions d) exclusions

provisions

In terms of parties to a contract, which of the following does NOT describe a competent party? a) the person mush be mentally competent to understand the contract b) the person must have at least completed secondary education c) the person must not be under the influence of drugs or alcohol d) the person must be of legal age

the person must have at least completed secondary education

Which of the following losses would NOT be covered by the dwelling policy if the dwelling is vacant for over 60 days? a) windstorm b) internal explosion c) vandalism d) fire

vandalism

In forming an insurance contract, when does acceptance usually occur? a) when an insured submits an application b) when an insurer's underwriter approves coverage c) when an insurer delivers the policy d) when an insurer receives an application

when an insurer's underwriter approves coverage

When would uninsured motorist coverage apply? a) when the other party is legally liable but has no insurance b) when the insured drives an uninsured car c) when the insured is legally liable, but does not have sufficient coverage d) when the insured is legally liable

when the other party is legally liable but has no insurance

Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called a) blanket coverage b) described coverage c) specific coverage d) schedule coverage

specific coverage

Events in which a person has both the chance of winning or losing are classified as a) retained risk b) speculative risk c) insurable d) pure risk

speculative risk

When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written a) replacement cost b) actual cash value c) specific insurance d) state amount

stated amount

What is material misrepresentation? a) any misstatement made by an applicant for insurance b) any misstatement by the producer c) concealment d) a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance group

A person who is not named as an insured on the declarations page of a policy but is protected by the policy is known as the a) first named insured b) additional insured c) policyowner d) named insured

additional insured

In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation a) market value b) agreed value c) replacement cost d) stated amount

agreed value

Which of the following types of valuation works best for property whose value does not fluctuate much? a) market value b) stated amount c) inflation guard d) agreed value

agreed value

In return for premium, an insurance company must a) provide the insured with coverage adequate for all potential losses b) use standardized tables of coverage for specific risks to be excluded from coverage c) give the insurer valuable consideration d) be fair in underwriting and pay covered losses

be fair in underwriting and pay covered losses

An insured was involved in an automobile accident for which the insured was at fault. Which of the following coverages would pay for damage to the insured's automobile? a) other-than-collision b) property damage liability coverage c) comprehensive coverage d) collision

collision

When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of a) concealment b) misrepresentation c) fraud d) warranty

concealment

The at fault driver in an insured's auto crash had the state required minimums for auto liability coverage, but not enough to pay for all the damage done to the insured. This driver is a) considered underinsured b) not liable for the damages in excess of his limits c) required to post a bond for the amount of damages above his limits d) considered uninsured

considered underinsured

Which of the following is a mandatory part of an insurance policy that varies with each individual policy a) exclusions b) insuring agreement c) declarations d) conditions

declarations

An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay? a) each policy will pay $25,000 of the loss b) each policy will pay the total policy limits of $100,000 c) the first policy written will pay $75,000, and the other three policies will contribute proportionately to pay for the remaining $25,000 d) the policy with the earliest effective date will pay the entire loss, and the other policies will pay nothing

each policy will pay $25,000 of the loss

Which of the following would modify the original insurance contract by either adding or removing coverage? 1) flexible policy 2) endorsements 3) additional coverage form conditions 4)

endorsements

What type of coverage do umbrella policies provide? a) property coverage for the basic perils of fire, wind, and hail b) primary coverage for risks that are difficult to insure c) excess coverage over an underlying or primary policy d) property coverage for those who do not qualify for homeowners insurance

excess coverage over an underlying or primary policy

A situation in which a person can only lose or have no change represents a) pure risk b) speculative risk c) adverse selection d) hazard

pure risk

The risk of loss may be classified as a) named risk and un-named risk b) high risk and low risk c) pure risk and speculative risk d) certain risk and uncertain risk

pure risk and speculative risk

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of a) rebating b) coercion c) twisting d) controlled business

rebating

Which method of loss valuation is contrary to the basic concept of indemnity? a) functional replacement cost b) market value c) agreed value d) replacement cost

replacement cost

Which of the following is used in the formula for calculating the actual cash value of a property? a) replacement cost b) stated value c) fair market value d) agreed value

replacement cost

When a producer changes address of his/her residence, the Insurance Department must be notified within a) 10 days b) 15 days c) 30 days d) 60 days

30 days

Which of the following definitions best defines the term "accident"? a) a sudden, unplanned, and unexpected event, not under the control of the insured, resulting in injury or damage neither expected nor intended b) injury to the character of another person caused by libel, slander, false arrest, invasion of privacy and other acts c) physical damage to tangible property of others caused by the negligence of an insured d) the negligent or purposeful act or omission by an insured that results in physical trauma or death to a person

a sudden, unplanned, and unexpected event, not under the control of the insured, resulting in injury or damage neither expected nor intended

An insured motor vehicle includes all of the following EXCEPT a) the insurance company denies coverage b) the vehicle has no liability bond or insurance in force c) a vehicle being used for public livery d) the accident was a hit-and-run

a vehicle being used for public livery

Concerning insurance, the definition of a fiduciary is a) a retail clerk b) a producer/broker who handles insurer funds in a trust capacity c) a person who handles assets or money belonging to others d) all of the above

all of the above

A person who negotiates the settlement of insurance claims on behalf of the insurer is known as a) an agent b) an adjuster c) a special agent d) a broker

an adjuster

In insurance, an offer is usually made when a) an applicant submits an application to the insurer b) the insurer approves the application and receives the initial premium c) the agent hands the policy to the policyholder d) an agent explains a policy to a potential applicant

an applicant submits an application to the insurer

Under a personal auto policy, in which of the following locations would a vehicle primarily garaged in California be covered? a) only in California b) any other state c) anywhere in the world d) mexico

any other state

Bob insists that the insurer owes him $10,000 for liability damages, while his insurer asserts that they owe him no more than $7,000. Which of the following would most likely describe the type of claim settlement that they might pursue? a) independent audit b) appraisal hearing c) arbitration d) small claims court

arbitration

If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy? a) umbrella policy b) excess policy c) general liability policy d) auto policy

auto policy

Which of the following other coverages in NOT included in the basic form dwelling policy? a) personal property temporarily away from the insured premises b) tenant's improvements, alterations, and additions c) breakage of glass d) removal coverage

breakage of glass

The difference in the contents of coverage on a HO-3 and HO-5 is which of the following? a) contents are covered open peril on HO-3, and named peril on HO-5 b) contents are covered for replacement cost on HO-5, and ACV on HO-3 c) contents are covered for replacement cost on HO-3, and ACV on HO-5 d) contents are covered open peril on HO-5, and named peril on HO-3

contents are covered open peril on HO-5, and named peril on HO-3

All of the following are found in the declarations section of a policy EXCEPT the a) limits of insurance b) exclusions c) policy premiums d) name of the insured

exclusions

The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the a) conditions b) exclusions c) declarations d) endorsements

exclusions

Which of the following is true of dwelling policy coverage? a) exclusions only apply to broad policy forms b) there are no exclusions in basic forms c) special forms only have special exclusions d) exclusions apply to all three policy forms

exclusions apply to all three policy forms

What type of compensatory damages will pay for pain and suffering and disfigurement? a) normal b) general c) special d) tort

general

Events or conditions that increase the chances of an insured loss occurring are referred to as a) hazards b) exposures c) risks d) perils

hazards

An insured is involved in an auto accident in another state. The state has a financial responsibility law that specifies limits of liability higher than the limits shown in the declarations. What amount will the insured's policy pay? a) only the limits specified in the policy b) higher limits c) lower limits d) the insurer will not pay for out-of-state accidents

higher limits

With regards to the personal auto policy, in the event of a claim or loss, the insured is required to do all of the following EXCEPT a) protect the insured auto from further damage b) promptly contact the police if the accident was a hit-and-run c) immediately report to an emergency room for medical examination d) notify the insurer as soon as possible with a description of the accident

immediately report to an emergency room for medical examination

The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the a) insuring agreement b) conditions c) exclusions d) declarations

insuring agreement

Which of the following best describes a misrepresentation? a) making a deceptive or untrue statement about a person engaged in the insurance business b) making a maliciously critical statement that is intended to injure another person c) discriminating among the individuals of the same insuring class d) issuing sales material with exaggerated statements about policy benefits

issuing sales material with exaggerated statements about policy benefits

Which of the following is NOT true regarding a Certificate of Authority? a) it is issued to group insurance participants b) it may be necessary for transacting business in a specific state c) it is equivalent to an insurance license d) it is issued by the state department of insurance

it is issued to group insurance participants

Which of the following statements is NOT true regarding a personal umbrella liability policy? a) it provides excess liability coverage over underlying personal liability b) it provides errors and omissions coverage for an agency c) it may cover certain exposures not provided under the primary layer d) it may require the payment of a self-insured retention

it provides errors and omissions coverage for an agency

Replacement cost is defined as a) payment of the full policy limits in the event of a total loss b) full replacement of property at its current cost, new and without reduction for depreciation c) the market value of property of like kind and quality d) full replacement of property with the kind and quality, less an allowance for physical deterioration and depreciation

its current cost, new and without reduction for depreciation

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become a) smaller b) older c) more active d) larger

larger

Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated? a) law of group evaluation b) law of large numbers c) law of masses d) law of averages

law of large numbers

Under the dwelling policy, Coverage C - Personal Property is a) limited to covering a servant's property while at the insured location b) automatically provides as 50% of Coverage A c) a prohibited coverage in the dwelling form d) limited to 50% of the amount of insurance that is written as Coverage A

limited to covering a servant's property while at the insured location

A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the following statements is true? a) glass breakage as a result of vandalism is covered b) damage to glass building blocks is not covered c) loss by theft is covered d) loss by vandalism and malicious mischief is excluded

loss by vandalism and malicious mischief is excluded

Which of the following coverages in dwelling and homeowners policies is for indirect losses? a) structures b) contents c) loss of use d) dwelling

loss of use

The process of determining the premium charged and how much insurance is required for a particular loss is called a) coinsurance b) loss valuation c) agreed value d) loss payment

loss valuation

What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? a) open peril policy b) specified peril policy c) binder policy d) named peril policy

open peril policy

All of the following are additional liability coverages automatically provided in a homeowners policy EXCEPT a) loss assessment coverage b) personal injury c) claims expenses d) damage to the property of others

personal injury

Insurance is the transfer of a) loss b) hazard c) peril d) risk

risk

An insurance agent cannot ask about which of the following information about an applicant? a) gender b) address c) sexual orientation d) age

sexual orientation

An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have? a) special b) specific c) schedule d) blanket

specific

The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as a) subrogation b) adverse selection c) right of rescission d) principle of indemnity

subrogation

The amount an insurer will pay under Coverage D (Loss of Use) depends on a) if the dwelling is owner-occupied or rented out b) the length of time the dwelling is uninhabitable c) the amount of coverage on the dwelling d) how long a dwelling has been occupied

the amount of coverage on the dwelling

Which of the following would NOT be considered a source of insurability information by an insurer? a) motor vehicle records b) insurance history c) the applicant's marital status d) interviews with the applicant's neighbors and friends

the applicant's marital status

Peril is most easily defined as a) something that increases the chance of loss b) the cause of loss insured against c) an unhealthy attitude about safety d) the chance of a loss occurring

the cause of loss insured against

All of the following statements concerning coinsurance are true EXCEPT a) the coinsurance formula will also be applied to total losses b) it is used to help adequacy and equity in rates c) the insured agrees to maintain insurance equal to some specified percentage of the value of the property d) if the insurance carried is less than required, the insurance may not cover the whole loss

the coinsurance formula will also be applied to total losses

Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? a) the insured would have to pay the self-insured retention limit b) the insured would be responsible for the amount required as underlying limits in the event of a claim c) it would have no effect on the umbrella policy d) the policy would be cancelled

the insured would be responsible for the amount required as underlying limits in the event of a claim