Insurance exam

Describe the difference between a peril and a hazard.

A peril is a cause of loss. A hazard is a condition that increases the likelihood of loss.

What is the primary difference between a staff adjuster and an independent adjuster?

A staff adjuster works for an adjusting company and an independent adjuster works independently for themselves or for adjusting firms who represent many clients.

The Adjusters' Code of Ethics begins with the premise that:

The work of adjusting engages the public trust.

Lightning struck your roof during a heavy thunderstorm and ignited a fire that quickly moved into your attic. Fortunately, the fire department quickly arrived and put out the fire. Unfortunately, water from their hoses damaged your wood floors, walls and furniture. This water damage would be covered because:

There was an unbroken connection between the lightning strike, subsequent fire, and the damage caused by the water used to put out the fire.

Under workers' compensation law, the rule that applies when an injury aggravates a pre-existing condition is:

"You take 'em as you find 'em"...meaning you must pay for the aggravation until the injury returns to its pre-injury state.

A fire started at your insured's home after a circuit panel shorted out. The fire caused damage to the dwelling and personal property. The homeowner submitted a list of damaged and destroyed personal property valued at $6,435. If the insured's $1,000 deductible was fully applied to the dwelling damage, how much would you pay for the personal property?

$1,000 WRONG

Your insured owns a small cabin on a remote lake that he has insured with an HO-3 policy with Coverage A limits of $120,000, Coverage B limits of $12,000, Coverage C limits of $60,000, and a $500 deductible. One day an oak tree fell on the cabin and punctured the roof all the way through the interior ceiling. Before he got home from work, a thunderstorm caused rainwater flow through the roof and damage to the interior. The repair estimate for both exterior and interior damage totaled $24,337.00. How much would you approve for payment of this loss under Coverage A of his homeowner's policy?

$23,337 WRONG

After six (6) years of licensure as an All Lines Adjuster, an adjuster's biannual CE requirement is reduced to how many credit hours?

18 WRONG

You have a house insured for $180,000. The replacement cost value of your home is $165,750. If your home was totally destroyed by a tornado and the adjuster were to pay you $180,000, what rule or law of insurance adjusting would explain this amount of payment?

The Valued Policy Law

Which type of health insurance plan offers the broadest coverage at the lowest cost to the individual?

Group Health Insurance

In today's society, what is the most important factor in the purchase of insurance?

Trust

Which of the following is NOT one of the four critical elements of a contract?

Written evidence of the agreement and its terms.

Under which of the following conditions would Towing & Labor be paid under Mechanical Breakdown insurance?

Your alternator stopped charging, the battery discharged, and the car wouldn't start. WRONG

Florida's Civil Remedy Provision is a law that permits an insured or claimant to:

sue an insurer and its adjuster for not making a good faith attempt to settle a claim when such an opportunity exists.

The basic premise of a General, Homeowners or Personal Liability insuring agreement is that:

the policy will respond if an insured person or entity is legally liable for bodily injury or property damage that occurs within the policy period and is not otherwise excluded from coverage.

To which of the following does Florida's Valued Policy Law apply?

the total loss of any building, structure, mobile or manufactured home resulting from any covered peril

Adjustments under commercial property coverages are initially valued how?

Actual Cash Value

Matt purchased a small house that was in foreclosure, repaired it, and now he intends to rent it. What kind of property policy would be ideally suited for this purpose?

An HO-3 Policy WRONG

A claim in the property/casualty industry is defined as:

An assertion of an alleged legal right of recovery of money for injury or damage sustained.

Which of the following is NOT a true statement concerning auto physical damage coverage under a Personal or Business Auto policy?

Physical Damage coverage applies only when the Insured is not at fault.

The deductible for Florida windshield claims is $______?

$0.00

The minimum limits for automobile insurance in Florida are what?

$10,000 Bodily Injury & Property Damage Liability and $10,000 Personal Injury Protection WRONG

Matt has an auto policy with 50/100/50 policy limits. He hits a car with three (3) occupants, all of whom are hurt. They all sue. The verdicts are $25,000, $60,000, and $37,500 for the injuries the three plaintiffs incur. What is the most that Matt's policy will pay for all of these plaintiffs' injuries? (got this wrong)

$123,000 WRONG ANSWER

Janice was involved in an accident with another vehicle. Both drivers reported the accident to their respective carriers, but each driver claimed that the other was at fault. Janice couldn't afford to wait for resolution of the property damage claim with the other carrier so she filed a collision claim with her own insurance company. Janice's Personal Auto Policy provided Collision and Comprehensive coverage with a $500 deductible on each. The appraisal for damage to her car totaled $4,532.00; however, hidden damage and a supplemental repair invoice of $275.00 was authorized. How much would you pay?

$4,307.00

Your insured ran a red light and hit another vehicle. The damage to the other vehicle was $5,750 and claimant incurred $657.00 in rental car charges during the 3 weeks it took to repair his vehicle. How much would you pay for this 3rd party property damage claim?

$5,750 WRONG

Randy has a Towing and Labor endorsement on his Personal Auto Policy, with a maximum benefit of $50.00 and Mechanical Breakdown coverage with a $100 deductible. One day Randy's engine stopped and would not start again. His mechanic found that the engine had no oil in it and that the engine had frozen up. He could find no oil leak. It simply appeared that no one had checked the oil in a long time, indicating a serious lack of maintenance. The engine block had to be replaced at a total repair cost of $2,370.00. John got a bill from the garage for $65.00 for towing and $35 for the inspection/diagnosis. How much can you pay Randy?

$50.00

Jim's car was stolen. He reported the theft to the police and to his insurance company. Jim had a PAP with Collision coverage with a $1,000 deductible. He also had "Other than Collision" coverage with no deductible. Four days later Jim's car was found...wrecked...and a total loss valued at $7,485.00. The adjuster called Jim and agreed to pay him the full total loss amount. How much should the adjuster pay to Jim?

$7,485.00

Under Florida automobile law, a vehicle is considered a "total loss" when the cost of repair is equal to or more than ___% of the value of one of like kind and quality (or the value of the auto itself).

80%

Which of the following is NOT an example of "compensatory damages":

A jury verdict of $1,000,000 to punish a defendant for causing a loss.

If your insured was totally at fault in an auto accident and the third party's insurance carrier repaired the damage to their policyholder's vehicle, what you would expect to receive from that carrier?

A letter denying liability for your insured's damages. WRONG

According to the Personal Auto Policy, "Your Covered Auto" includes all of the following EXCEPT:

A temporary substitute while the owned vehicle is being repaired WRONG

Which of the following would be excluded under a Personal Articles Floater that provides "all risk" coverage?

A woman's valuable mink coat worth $5,000 is virtually destroyed by moths after it was stored with a furrier for a year.

Chung Gee's Oriental Restaurant had its commercial property insurance policy with your company. One day a vehicle slammed through the plate glass window and caused extensive damage to the building. The restaurant was forced to close for a month while repairs were completed. Mr. Gee asked you how he should go about making a claim for the revenue he lost while his business was closed. For what kind of coverage would you look to see if you could reimburse him for his business's lost income?

Business Income coverage

An insured's employee was injured in an automobile accident. A claim for the employee's injuries was submitted to the General Liability carrier. How would they respond and why?

Coverage would be denied by the GL carrier. Employee injuries are excluded under the GL because they are covered under the employer's Workers' Compensation policy.

Which of the following is NOT a fundamental part of an insurance policy:

Endorsement

Negligence is described as:

Fault that arises from doing something you shouldn't have done, or not doing something you should have done.

For which of the following does a Homeowners policy provide coverage?

Fire, lightning, windstorm, and explosion

In general, an employee who suffers an occupational injury and collects workers' compensation benefits during recuperation:

Forfeits the right to sue the employer for personal injury, lost wages, or pain and suffering.

Which of the following is one of the duties of an Insured following a loss?

Giving prompt notice of loss to the insurer

Breach of contract by a carrier or its adjuster, through non-payment or non-compliance with policy requirements, could have which of the following consequences for the carrier (select only one answer)?

If found guilty of a breach of contract, the carrier could be punished with a "bad faith" verdict that could cost it millions of dollars.

A ship loaded with lumber encountered "the perfect storm". Some of the lumber was thrown overboard to save the ship. This action is called:

Jettison

One of your dinner guests fell while stepping off the front porch of your house. She suffered a minor ankle fracture and incurred medical expenses of $1,430.00 for ER treatment, medications and follow-up doctor visits. Where would you find coverage to pay the claim?

Liability coverage is the only coverage that would respond to the loss and it would provide reimbursement of 100% of the guest's medical expenses, regardless of fault. WRONG

Symbol #2 in a Business Auto indicates that coverage is provided for:

Owned autos only

What are you buying when you purchase insurance?

Peace of mind that the insurance company will keep its promises

Which of the following is NOT one of the supplementary payments provided by the CGL?

Pre- and post-judgment interest on verdicts rendered by the courts. WRONG

Boiler and Machinery insurance provides protection against:

Repair or replacement of a company's heavy machinery such as boilers, refrigeration or air conditioning equipment, and other machinery arising from the sudden failure of such equipment.

Which of the following benefits is NOT provided under Personal Injury Protection (PIP) insurance?

Replacement Services WRONG

One who guarantees the performance or payment of one party who is obligated by contract to another is called a:

Surety

Your insured is involved in an automobile accident. Her "duties after an accident" as outlined in the PAP include all of the following EXCEPT: (got this wrong)

Take reasonable measures to protect the covered auto from further damage or loss WRONG ANSWER

Which of the following is NOT a true statement regarding the licensing of adjusters in Florida?WRONG

The Florida Department of Financial Services must be notified of an adjuster's change of name or address within 30 days of such change. WRONG

An adjuster's responsibility as a fiduciary means:

The adjuster represents, and controls, the property and financial interests of the client, to whom he/she owes a high degree of loyalty and good faith.

Charles and Lisa took a 3-day Caribbean cruise. After they returned home, they found that their large screen television, computer equipment, some jewelry, a valuable gun collection, and some fishing equipment were stolen. How would their HO-3 policy respond to this loss?

The entire theft loss would be covered within the Coverage C limits of their HO-3 policy.

Which of the following would NOT be covered under Coverage C, Personal Property?

The injury must occur while an employee is working, and as a result of the work performed, regardless of who is at fault.

The ABC Laundry Service has a commercial property policy with your company. An employee dropped a cigarette into a waste basket without putting it completely out and a fire destroyed half the store before it was extinguished. The local fire department sent the laundry a bill for $626.00 for their response to put out the fire. Will the policy cover this expense and how much?

Yes. Fire Department Service Charge is an additional coverage that will pay up to $1,000 for such charges.

The period of time between purchase and acceptance of a health insurance policy and the time when benefits begin is known as what?

retroactive period WRONGGG

An insurance policy is often referred to as a contract of adhesion. This means:

vague or ambiguous policy language shall be in favor of the party who did not control its terms...the policyholder.

Which of the following describes Replacement Cost Value:

The cost to replace a damaged or destroyed property with that of like kind and quality at today's prices.

Jack got into an accident with another vehicle. His PAP provided Collision coverage with a $500 deductible, Other than Collision coverage with a $250 deductible, and up to 30 days in rental reimbursement expense at a maximum daily rate of $20. Repairs to Jack's car totaled $8,312.00 and the car was not driveable. Jack rented a Lincoln at the high rate of $65.00/day and kept the rental vehicle until his car was ready to be picked up for a total of 22 days and a total rental cost of $1,430.00. Jack presented the bill to his adjuster and insisted that the insurance company pay it. How much should the adjuster pay for rental of the temporary substitute vehicle?

$7,812.00 for repairs to the car and $440.00 in rental reimbursement.

An adjuster must notify the Department of Financial Services/Bureau of Licensing of any change in contact information, i.e. address, email address, etc. within how many days?

14 WRONG

An insured's son was honorably discharged from the Army after being injured in Afghanistan. He now lives in a guest suite with his parents. One evening a thief broke into his parents (your insured's) house one day while everyone was gone. He stole the son's laptop computer and a rifle, both of which were valued at $4,250.00. Your insured has a standard HO-3 policy with Replacement Cost coverage. The policy will:

Cover the entire loss under the Contents coverage of the HO-3 policy, subject only to the deductible

A detached 10' x 20' work shed located in the backyard of your insured's property was destroyed by fire after a gas can exploded due to extreme heat. Under what part of the insured's HO-3 policy would this damage be covered?

Coverage B - Other Structures

homeowner's detached garage was totally destroyed by a tornado that left the main residence untouched. Under what part of his homeowner's HO-3 policy is this damage covered?

Coverage B - Other Structures

Which of the following statements are NOT true of Florida's residual markets?

Florida businesses who are turned down for workers' compensation insurance by at least two carriers, and who have no unpaid W/C premium debt, can secure workers' compensation insurance through the FWCJUA. WRONGGGGG

The primary mission of a claims professional in the insurance industry today is:

Help people recover from financial loss while also minimizing loss for the insured party and/or carrier.

Which of the following WOULD be covered under a standard homeowner's policy?

High winds cause a tree to fall on power lines at an intersection 3 blocks away. All power was lost at your home and $350 worth of food was lost due to spoilage. WRONGG

Florida's "threshold" rule under the Personal Injury Protection (PIP) law requires what of an injured person before he or she can make a claim for non-economic injury (i.e. general damages like "pain and suffering")?

In excess of $25,000 in special damages (e.g. medical bills and/or lost wages) WRONG

If lenders have insurable interests in homes, where are their interests protected in HO-3 policies?

In the Mortgage or Mortgagee clause

You received a claim by an insured homeowner whose roof was damaged when a tree fell on it during a thunderstorm. After making initial telephone contact with the homeowner and securing the details surrounding the loss, you told her that you would be out to her house the next day for a full inspection of the damage. She asked if it would be okay if someone were to remove the tree limb that is piercing the roof so that she can cover the hole and stop water from leaking inside. How would you respond?

Tell her that she can remove the tree, but any expense incurred cannot be reimbursed unless you first approve the extent of repairs and amount of expense. WRONG

A shopper hits her head on a low hanging shelf in a grocery store. You've been asked to handle the claim. After talking to both her and your insured on the telephone, you really don't think there is any liability, but you think the best way to handle the case is to pay her medical bills without admitting liability and try a walk-away settlement. How would you do it?

Tell her you'll pay her bills and wish her well. Ask her to call you if she has any questions. When they arrive, pay the bills under the CGL Policy's Medical Payments coverage.

mary's home is valued at $300,000 and she has an HO-3 policy with Coverage A limits of $275,000, Additional Structures limits of $27,500, and $137,500 in Contents coverage. Her deductible is $1,000. Against what perils will Mary's HO-3 policy provide financial protection?

The HO-3 policy provides "All Risk" coverage for Coverages A and B, which includes all perils, including windstorm, unless excluded.

If, after a fire started in your Dwelling or Business to which a fire department responded and extinguished, you received a bill from the fire department for $450.00 representing a Fire Department Service Charge. Would this be paid under your homeowner's policy?

Yes. It is called Fire Department Service Charge and is an Additional Coverage provided under the policy, limited to $500 or $1,000, depending on the type of policy.

Which of the following accurately describes the definition of Actual Cash Value:

The replacement cost of an item less depreciation.

An elderly customer slips on spilled salt that fell from a store shelf and falls, injuring her hip. What kind of claim will be filed under the store's CGL policy?

A Premises Liability claim

A controverted case is:

A claim for which payment of workers' compensation benefits has been denied.

A grease fire started in Joe Green's kitchen while he was frying fish. damage to Joe's kitchen and dining room, including smoke damage through the entire house, was $52,500. Joe has an HO-3 policy with $150,000 Coverage A (Dwelling) limits and Replacement Cost coverage. He has a $1,000 deductible. How much will his policy pay to repair the damage to his home?

$ 52,500 WRONG

Your insured has physical damage insurance with your company with a $250 deductible for Comprehensive and a $500 deductible for Collision. One night someone threw a brick through the driver's-side window and it cost $325.00 to replace. How much would you pay and under what coverage?

$ 75.00

An insured had an HO-3 policy with $150,000 in personal property (contents) replacement cost coverage and a $1,000 deductible. While on a trip to Washington, DC, a thief stole a diamond necklace and ear-rings valued at $8,500 from the insured's hotel room. How much would her homeowner's policy pay?

$0.00, jewelry is not covered for theft while at hotels unless stored in the hotel safe. WRONG

Sam paid $1,200 to get his old car painted. Two weeks later he drove through a severe thunder and hail storm. When he arrived at his destination, he found that the entire surface of his car hood, top and trunk was pitted and scratched. He called his agent to report the damage and file a claim under his automobile insurance. His PAP had Collision coverage with a deductible of $500 and Comprehensive with a deductible of $100. The repair estimate came to $1,755.00. How much would you pay to Sam?

$1,755.00 WRONG

The Tailor-Made Boutique (a clothing store) has a Business Auto policy with Liability limits of $100,000 (Symbol 1), Collision coverage with a $500 deductible and Comprehensive coverage with a $250 deductible (Symbol 2). Last week the owner found that the company's F-150 delivery truck had been stolen. He reported the theft to the police, and three days later it was found in a parking lot on the other side of town with $4,350 of damage, presumably due to vandalism. If you were assigned the claim how much would you pay on the claim?WRONG

$2,850.00 WRONG

An insured has Basic $10,000 PIP coverage with no deductible. After an auto accident, the insured incurs $2,300 in medical expense, $1,300 in lost wages, and $300 for general housekeeping services. How much would you pay in response to the driver's PIP claim?

$2,920

Matt had a "DP-3" policy that insured one of his rental properties with Coverage A limits of $165,000 and a deductible of $1,000. A fire caused by the tenant damaged the house and it took 4 months to be repaired and rented, during which time Matt lost monthly rental income of $6,000. How much, if any, will Joe's policy pay for the lost rents under Fair Rental Value coverage?WRONG

$3,000 WRONG

Marie was taking a shortcut through the countryside to get home from work when a deer jumped out in front of her. The collision of the deer with her car left her car badly damaged. Her Personal Auto Policy had a $500 Collision deductible and no deductible for Other than Collision. The repair estimate was $3,325.00. How much will Marie's policy pay for repair to the car and under what coverage?

$3,325.00 under Marie's Collision coverage WRONGGG

What is Florida's current continuing education (CE) requirement for NEW All Lines Adjusters?

An adjuster must complete 24 hours of continuing education in every two year compliance requirement in the following categories: 10 Law, 2 Ethics and 12 Optional. WRONG

Which of the following would result in a denial of workers' compensation benefits?

An employee intentionally injures himself in order to collect disability benefits.

A lost time case is defined as:

An injury that results in more than seven (7) days off work, or for which indemnity benefits would otherwise be due, such as a medical only claim that results in a permanent impairment.

The principle of indemnity stands for the proposition that:

An insured is not supposed to profit from a loss.

The trigger of coverage defined as "an accident, including continuous and repeated exposure to the same generally harmful conditions" is known as:

An occurrence

Your insured, a roofing contractor, was putting a new flat roof on a building when one of the insured's employees accidentally tipped a bucket of tar off side of the roof. It fell thirty feet onto a car that was parked on the side of the building below. What kind of claim would be filed and under what coverage would it be handled?

An operations claim to be addressed by the insured's General Liability policy.

The doctrine of proximate cause is:

An unbroken chain of events flowing from an initial loss that causes a series of losses.

ABC Company has a Business Auto policy with Liability, Medical Payments, Uninsured Motorists, and Physical Damage coverage under Symbol #1. Which autos are covered under the policy?

Any auto

An insurance company safety engineer is sent out to perform a cursory inspection of an insured's boiler room. When he gets there, he finds the room to be in a general state of disrepair, there is oil and water all over the floors, the machinery is rusted in places, and insulation around wires is frayed and cracked. He recommends immediate suspension of coverage until the room and machinery are cleaned up, repaired and certified to be in proper working order. This policy condition that authorizes this action on the part of the insurance company is known as the:

Breach of contract provision WRONG

A shipper wants to obtain insurance coverage on both outgoing and incoming shipments while in transit. This type of coverage is called:

Cargo coverage

The state-created organization designed to provide coverages such as homeowners, dwelling, and commercial buildings to Florida residents is known as:

Citizens Property Insurance Corporation (Citizens)

Abby accidentally rear-ended the car in front of hers while texting on her cell phone. Identify the coverage provided in Abby's Personal Auto Policy that will pay for the damage incurred to the vehicle she that she rear-ended.

Collision WRONG

There are only two (2) types of adjusters licensed by Florida. They are: WRONG

Company Adjusters and Public Adjusters WRONG

Which of the following would be a violation of Florida's Unfair Insurance Trade Practices Act?

Denying claims without conducting a reasonable investigation

If, over a period of time, one of the insured's cashiers were to steal over $1,500 from cash purchases not processed through the register, which of the following coverages would reimburse the insured for such a loss?

Employee theft or dishonesty

John was struck in the rear by another driver while on the way to work. After repairing John's car, John's insurance carrier made a claim against the insurer of the responsible party. Under what insurance principle is this claim being made?WRONG

Liability WRONG

Which of the following would NOT be a preferred claims practice or behavior under Florida's Unfair Insurance Trade Practices Act?

Not responding to an insured's calls or written attempts at communication.