Insurance Final Exam Review
Equipment breakdown coverage is written with a single limit of insurance per accident. What is the sublimit for hazardous substance cleanup or repair or replacement of contaminated property? a) $15,000 b) $20,000 c) $25,000 d) $50,000
$25,000 Equipment breakdown coverage is written with a single limit of insurance per accident. However, within this limit, the policy has the following sublimits: $25,000 for expediting expenses; $25,000 for hazardous substance cleanup, repair or replacement of contaminated property; $25,000 for ammonia contamination damage; $25,000 for water damage.
Which commercial crime form would provide coverage for a loss that did not necessarily happen during the policy period but was revealed during the policy period? Retro form Reporting form Loss sustained form Discovery form
Discovery form
The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period? a) 90 days b) 120 days c) 1 year d) 3 years
1 year Medical payments coverage of a businessowners policy (BOP) will pay medical, dental, hospital, and funeral services incurred within one year from the date of an accident to a person who suffers bodily injury by accident on or next to the insured's premises, or because of the insured's operations.
If an insurer chooses to cancel an automobile insurance policy for an allowable reason, the named insured must receive written notice at least a)45 days for any reason. b)15 days in advance if the reason is nonpayment; 45 days for any other reason. c)10 days in advance if the reason is for nonpayment; 30 days for any other reason. d)10 days for any reason.
15 days in advance if the reason is nonpayment; 45 days for any other reason. As established by the Insurance Code, an automobile insurance policy cancellation for non-payment of premium requires 15 days advance notice. If a policy is cancelled for any other reason, a 45-day advance notice is required.
An agent is convicted of a felony in another jurisdiction. Within what period of time must the agent report the felony charge to the Commission? Immediately 5 days 10 days 30 days
30 days
If the Commission determines the agent's appointment is invalid, within how many days will the Commission notify the insurer? a) 5 business days b) 10 business days c) 21 calendar days d) 30 calendar days
5 business days
The employee theft crime policy includes a coverage extension that applies to employees temporarily outside the coverage territory for up to a)30 days. b)60 days. c)90 days. d)120 days.
90 days. The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 90 days.
An insured owns and operates a ranch. The insured has several vehicles that are used in the ranching operation and for personal use. Which of the following could NOT be insured under a personal auto policy? a) A two-ton grain truck with a 6,500-pound capacity b) A two-wheeled trailer designed to be towed by the station wagon c) A farm pickup with 1,000-pound capacity d) A station wagon that is used personally
A two-ton grain truck with a 6,500-pound capacity A two-ton truck weighs 4,000 pounds. With its cargo weight of 6,500 pounds, it exceeds the 10,000-pound gross vehicle weight (GVW) limit and would not be eligible. The GVW is the maximum recommended weight, including the weight of the vehicle, fuel and fluids, passengers, and all cargo.
What type of liability would a person who owns wild animals have? a)Vicarious b)Implied c)Direct d)Absolute
Absolute Any conduct that is inherently dangerous, such as using explosives or keeping wild animals, imposes absolute liability. The claimant does not have to prove anything.
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) More active. b) Larger. c) Smaller. d) Older.
According to the law of large numbers, the larger a group becomes, the easier it is to predict losses. Insurers use this law in order to predict certain types of losses and set appropriate premiums.
What documentation grants express authority to an agent? a) Fiduciary contract b) State provisions c) Agent's contract with the principal d) Agent's insurance license
Agent's contract with the principal The principal grants authority to an agent through the agent's contract.
Which of the following types of valuation works best for property whose value does not fluctuate much? a) Inflation guard b) Agreed value c) Market value d) Stated amount
Agreed value works best for items whose value does not fluctuate much. When a loss occurs, the policy pays the agreed value as specified on the policy schedule, regardless of the insured item's appreciation or depreciation.
Who is legally required to keep records pertaining to insurance transactions? A) All licensees B) Insureds C) Agencies and insurer only D) The Commission
All licensees All licensees, including agents and brokers, are required to keep records of all their insurance transactions. These must be maintained for 3 years following a completed transaction.
The inspections and surveys condition in a businessowners policy a)Validates that the insured is in compliance with state and federal guidelines. b)Obligates the insurer to make annual safety inspections. c)Guarantees that all working conditions are safe and healthful. d)Allows the insurer the right to inspect the insured's premises.
Allows the insurer the right to inspect the insured's premises. The inspections and surveys condition gives the insurance company the right to inspect the insured's premises and operations at any reasonable time during the policy period. Inspections and surveys are not required. This condition does not make safety inspections, nor does it guarantee that the conditions are safe, healthful, or meet safety regulations.
In insurance, an offer is usually made when a) The insurer approves the application and receives the initial premium. b) The agent hands the policy to the policyholder. c) An agent explains a policy to a potential applicant. d) An applicant submits an application to the insurer.
An applicant submits an application to the insurer. In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.
Individuals in the business of selling construction equipment and mobile equipment should insure with a/an a) Contractors equipment floater. b) Installation floater. c) Personal property floater. d) Equipment dealers coverage form.
An equipment dealer's coverage form covers a dealer's stock in trade consisting primarily of mobile agricultural equipment and construction equipment. It also covers property of others in the dealer's care, custody, or control. It excludes coverage for autos, motorcycles, aircraft, and watercraft.
If the premium charged for a particular insured is increased or decreased for a future period based on that insured's loss experience for a period in the recent past, the policy uses a/an Experience rating plan. Judgment rating plan. Manual rating plan. Retrospective rating plan.
An experience rating plan adjusts the premiums charges based on the claims history, positive or negative, of the individual insured.
Business personal property coverage form covers all of the following EXCEPT a) Furniture and fixtures. b) Machinery that is not permanently installed. c) Stock. d) Automobiles held for sale.
Automobiles held for sale are among the exclusions in the BPP form. The rest are covered types of property
Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as Cancellation. Rescission. Nonrenewal. Cessation.
Cancellation is the termination of an in-force insurance policy by either the insured or the insurer prior to the expiration date shown in the policy. Termination may be voluntary, involuntary, or in mutual accordance with provisions contained in the policy.
An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have? a) Split b) Aggregate c) Per occurrence d) Combined single
Combined Single Combined single is a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined resulting from one accident or occurrence.
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a) Consideration b) Good faith c) Representation d) Adhesion
Consideration The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a)10 days b)3 days c)5 days d)7 days
Consumers must be advised that they have a right to request additional information concerning investigative consumer reports, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.
Under which type of coverage does the insurer agree to pay for bodily injury or property damage liability which the insured has agreed to assume under a written contractual agreement? a) Contractual liability policy b) Personal liability policy c) Property damage liability policy d) Bodily injury liability policy
Contractual liability policy
Which of the following statements is true concerning Underinsured Motorists Coverage under a Family Auto Policy? a) Limits must equal the bodily injury limits of the policy. b)Limits may differ from the limits for Uninsured Motorists Coverage. c)Coverage applies only to the extent that the Underinsured Motorists limits exceed the bodily injury limits carried by the operator of the other vehicle. d)It will pay up to the limits of insurance for any loss which involves an underinsured driver.
Coverage applies only to the extent that the Underinsured Motorists limits exceed the bodily injury limits carried by the operator of the other vehicle. Underinsured Motorist Coverage will act as excess over the at fault motorist's Bodily Injury coverage.
A unique feature in a bailee form is that it covers Fire and theft losses to the insured's stock held for sale without any deductibles. All loss and has no exclusions. The building occupied by the insured whether it is owned or leased. Customers' property whether or not the insured has been negligent.
Customers' property whether or not the insured has been negligent.
Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis? DP-1 DP-2 DP-3 All DP forms
DP-1 DP-1 insures the structure on an actual cash value basis. DP-2 and DP-3 insure the structure on a replacement cost basis.
Which of the following dwelling coverage forms would pay replacement cost for the dwelling? a) DP-2 and DP-3 b) DP-3 only c) All dwelling property coverage forms d) DP-1
DP-2 and DP-3 pay replacement cost as long as the house is insured for at least 80% of its value on the date of loss.
Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy? a) Damage to the dwelling caused by the insured when moving furniture b) Accidental scorching caused when a hot iron is placed upon a built-in counter top c) Interior damage caused by water seeping under the shingles on the roof d) Damage to the dwelling caused by ash or dust from a volcanic eruption
Damage to the dwelling caused by ash or dust from a volcanic eruption An HO-3 covers losses on an open peril basis. An HO-2 covers losses on a named peril basis. Both forms cover damage to the dwelling caused by ash or dust from a volcanic eruption.
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a)Undercutting b)Twisting c)Slandering d)Defamation
Defamation Defamation is making statements that are false as to the financial condition of any insurer and which are calculated to injure any person engaged in the business of insurance.
Which of the following will NOT be considered unfair discrimination by insurers? a) Assigning different risk classifications to applicants based on gender identity b) Discriminating in benefits and coverages based on the insured's habits and lifestyle c) Charging applicants with similar health histories different premiums based on their ethnicity d) Cancelling individual coverage based on the insured's marital status
Discriminating in benefits and coverages based on the insured's habits and lifestyle Discriminating between individuals of the same class with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.
Which of the following provisions requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time? a)Proof of loss b)Duties after loss c)Legal action d)Loss settlement
Duties after loss Duties after loss provision requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time.
Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will Either pay or defend as it decides. Pay the alleged damages. Proceed according to your request. Defend with the hopes of not paying damages.
Either pay or defend as it decides
Which of the following is NOT a duty of the Commission of Insurance? Examining each domestic insurer at least once a year Appointing the Commissioner of Insurance Enforcing the Insurance Code Suspending or revoking licenses of Insurance Code violators
Examining each domestic insurer at least once a year The Commission is required to examine every insurer licensed in Virginia at least once in every 5 years.
If the premium charged for a particular insured is increased or decreased for a future period based on that insured's loss experience for a period in the recent past, the policy uses a/an a) Experience rating plan. b) Judgment rating plan. c) Manual rating plan. d) Retrospective rating plan.
Experience rating plan.
Which of the following would NOT be considered a flood? a) Sewer backup b) Overflow of tidal waters c) Mudslides d) Runoff of surface waters
Flood is defined by the National Flood Insurance Program. It does not include sewer backup.
The State Corporate Commission (SCC) has the authority to do all of the following EXCEPT a) Impose fines or other penalties for violations of insurance laws. b) Have interest in insurance companies regulated by the Commission. c) Issue cease and desist orders. d) Issue licenses and certificates of authority.
Have interest in insurance companies regulated by the Commission. The Commission may not have ownership of, interest in, or any transactions in any capacity with any financial institution or insurance company licensed or regulated by the SCC.
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? Higher limits Lower limits The insurer will not pay for out-of-state accidents Only the limits specified in the policy
Higher limits
If an agent's appointment is terminated, suspended or revoked, the agent must cease selling or soliciting on behalf of the insurer within a)30 calendar days. b)5 calendar days. c)10 calendar days. d)15 calendar days.
If an agent's appointment is terminated, suspended or revoked, the agent must cease selling or soliciting on behalf of the insurer within 10 calendar days. If the agent does not cease selling or soliciting, he or she may be subject to penalty.
An agent has moved from Virginia to another state. When will his license authority be terminated? a)Within 10 business days b)Immediately c)30 days after the Commission receives the notification of the move d)30 days after the change of residence
Immediately If an agent has moved the place of residence from this Commonwealth, the license authority terminates immediately, whether or not the Commission has been notified.
Which of the following lists all the required elements for establishing a charge of negligence? a)Legal duty owed, proximate cause, intervening cause, damages b)Legal duty owed, deliberate attempt to cause harm, damages c)Breach of reasonable person rule and proximate degree of care d)Legal duty owed, breach of legal duty owed, proximate cause, damages
Legal duty owed, breach of legal duty owed, proximate cause, damages Negligence is failure to do what a reasonable and prudent person would do under the same circumstances. Four elements must be present for negligent liability to exist.
Which of the following policy provisions would automatically broaden coverage under a policy without requiring additional premium? a) Assignment b) Liberalization c) Other insurance d) Subrogation
Liberalization The liberalization clause states that if an insurer changes a policy form to the benefit of the policyholder, all policies issued within a certain time before the change will be interpreted as if they had been changed, provided the change does not require additional premium.
An insured is driving her automobile and strikes a large pothole that causes a flat tire. Which coverage of the insured's personal auto policy will pay for the repair? a)Comprehensive b)Collision c)Transportation expenses d)Loss is not covered.
Loss is not covered. A flat tire that occurs from a cause other than vandalism is considered a road hazard and is specifically excluded from coverage in the policy.
A business using its own trucks to move its own cargo would insure the cargo using a) Motor carrier form. b) Trip transit coverage. c) Motor truck cargo - owners form. d) Motor truck cargo - truckers form.
Motor truck cargo - owners form. A business using its own trucks to move its own cargo would insure the cargo using the owners form.
Which of the following terms refers to other insurance that is written on the same risk, but not on the same coverage basis? Pro rata Contribution by equal shares Nonconcurrency Primary and excess
Nonconcurrency
Notice of a hearing for a cease and desist order must be given at least how many days in advance? a) 30 b) 90 c) 7 d) 10
Notice of a hearing for a cease and desist order must be given at least 10 days in advance of the hearing and include the time and place of the hearing.
How many hours of continuing education must be completed on the subject of ethics biennially? a) 3 b) 5 c) 10 d) 12
Of the total required CE hours, 3 credit hours must be in ethics, which may include insurance law and regulations applicable in Virginia.
What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? a)Specified peril policy b)Binder policy c)Named peril policy d)Open peril policy
Open peril policy Open peril (special) policies cover everything except what they say they don't. Named peril policies cover only perils named in them.
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.
Perils are the causes of loss insured against in an insurance policy.
If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for a)60 days. b)90 days. c)5 days. d)30 days.
Personal property being moved to a new location can be covered for up to 30 days without notice to the insurer.
If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT Uninsured motorist. No-fault medical payments. Liability. Physical damage.
Physical damage
What are the disclosure requirements if an insurance producer wishes to charge a fee? a) Obtaining a signature on a schedule of fees, issuing premium fee receipts to the client, providing copies of deposit statements to client. b) Posting a schedule of fees in the producer's office, disclosing the fees to the client in writing, and obtaining a signature on the disclosure from the client c) At least verbally disclosing the fees to the client, issuing a fee receipt to the client d) Issuing a conditional premium fee receipt, giving written notice of the premium, obtaining a signature of the insurer
Posting a schedule of fees in the producer's office, disclosing the fees to the client in writing, and obtaining a signature on the disclosure from the client All fees and charges for insurance must be stated in the premium. Agents are permitted to charge certain administrative fees provided the agent posts a schedule of the fees in the office, discloses the fees to the client in writing and the client signs the disclosure.
All of the following are examples of risk retention EXCEPT Self-insurance. Premiums. Deductibles. Copayments.
Premiums
A contractor who builds homes has never made a claim on his business insurance policy. His agent discovers that his policy is written on a scheduled rating. If the contractor changes to an experience rating policy, which is most likely? a) Premiums would go down. b) Premiums would go up. c) Premiums would be unchanged. d) Coinsurance would be necessary.
Premiums would go down In an experience rating, the insured's past experience helps determine the premium. Because it is unlikely that the rest of the industry would have zero claims, a contractor with no claims is likely to pay a lower premium than a company that is on a scheduled rating.
All of the following are considered parts of the policy structure EXCEPT a) Conditions. b) Provisions. c) Exclusions. d) Insuring clause.
Provisions is a broad term used to refer to the sections or clauses of an insurance policy that communicate the policy's benefits, conditions, etc. The essential parts of the policy are declarations, insuring clause, conditions and exclusions.
All of the following are considered parts of the policy structure EXCEPT a)Conditions. b)Provisions. c)Exclusions. d)Insuring clause.
Provisions. Provisions is a broad term used to refer to the sections or clauses of an insurance policy that communicate the policy's benefits, conditions, etc. The essential parts of the policy are declarations, insuring clause, conditions and exclusions.
Which of the following is NOT an optional coverage built into the condominium association coverage form? a)Real estate tax liability b)Agreed value c)Inflation guard d)Replacement cost
Real estate tax liability Agreed value, inflation guard, and replacement cost coverages are built into the condominium association coverage form and may be activated by an entry on the declarations page.
Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as a) Unlawful distribution of dividends. b) Coercion. c) Rebating. d) Twisting.
Rebating is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer and acceptance of a rebate are illegal.
How long is an insurer required to maintain records in Virginia? a) 10 years b) Permanently c) 3 years d) 5 years
Records must be kept for at least 3 years.
An insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for a) 5 days. b) 30 days. c) 60 days. d) 90 days.
Removal coverage applies for 30 days when the property has been removed to be protected.
Which of the following risks would NOT be eligible for coverage under a homeowners policy? a) An applicant who lives in a duplex that she does not own b) An applicant who owns and lives in a duplex c) An applicant who owns and lives in a single-family dwelling that also contains incidental business activities d) An applicant who owns and lives on a commercial farm
Risks that contain a farming exposure are not eligible for homeowners insurance.
The designation symbols used in commercial auto policies can be found in which policy section? a) Liability Coverage b) Definitions c) Conditions d) Covered Auto
Section I - Covered Auto of a commercial auto policy explains the designation symbols used in that coverage.
Under the commercial property coverage program, the basic causes of loss form insures against loss caused by a) Earth movement. b) Nuclear hazard. c) Power failure off the premises. d) Sprinkler leakage.
Sprinkler leakage, once a specialty coverage, is now included in the basic causes of loss.
Which of the following establishes rate classifications, rating schedules, rates, and related rules for carriers issuing assigned risk workers compensation policies? a) The Federal Trade Commission b) The State Insurance Guaranty Association c) The National Association of Insurance Commissioners (NAIC) d) The State Corporation Commission
The State Corporation Commission Rating schedules, rates and classifications, and related rules are established by the State Corporate Commission.
An insured has a Homeowners policy with an insurance company that declares bankruptcy about the time the insured's home burns down. The insurance policy limit was $375,000 and the property was declared a total loss. What will be the result of the insured's claim? a)The insured will have to sue the insurance company and hope the bankruptcy court awards him the money. b)The insured is entitled to $300,000 from the Virginia Property and Casualty Insurance Guaranty Association. c)The insured will collect nothing. d)The insured is entitled to $375,000 from the Virginia Property and Casualty Insurance Guaranty Association.
The Virginia Property and Casualty Insurance Guaranty Association covers claims for bankrupt admitted insurers up to a maximum of $300,000 for other than Workers Compensation claims.
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? Additional coverage Exclusions Declarations Insuring agreement
The additional coverage
An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it? Builders risk form General property form Contractors equipment floater Bailee's customers form
The contractors equipment floater covers equipment left unattended on a job site until the project is finished.
The contents coverage on a homeowners policy would pay how much after the loss of one of a pair of golden candlesticks? a) Nothing b) The difference in the actual cash value as a pair and as a single c) The replacement cost of the pair d) The actual cash value of the pair
The difference in the actual cash value as a pair and as a single
Which of the following would the livestock coverage form NOT insure against? a)Death of livestock caused by accidental drowning b)Death of livestock caused by a tornado c)The euthanasia of livestock after being hit by a vehicle d)The euthanasia of livestock suspected of carrying mad cow disease
The euthanasia of livestock after being hit by a vehicle The livestock coverage form covers the death or necessary destruction of livestock caused by basic causes of loss (except vehicles). Coverage may be extended to include death or necessary destruction by accidental shooting, drowning, electrocution, attack by dogs or wild animals, loading or unloading accidents, and building collapse.
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) Declarations. b) Endorsements. c) Conditions. d) Exclusions.
The exclusions section of an insurance policy details what perils are not insured against and what persons are not insured.
According to the conditions of a workers compensation policy, the insurer has the right to inspect the insured workplace a) With at least 5 days' notice. b) At any time. c) With at least 10 days' notice. d) With the consent of the insured.
The insurer has the right to inspect the insured workplace at any time.
An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage? a) $5,000 minus the policy deductible b) $14,000 c) $15,000 d) $5,000 maximum for the accident
The limit is not more than $5,000 per person, per accident.
An insured has a personal auto policy with both comprehensive (other-than-collision) and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20 per day, how much will his policy pay? a) $45 b) $60 c) $75 d) $100
The policy will pay $20 per day after 48 hours, not to exceed 30 days in total.
Which of the following liability exposures is most likely for a small specialty clothing retail boutique? a) Product liability exposure b) Completed operations liability exposure c) Premises liability exposure d) Operations liability exposure
The premises liability exposure exists when there is use of the premises. Operations liability exposure relates to activities in addition to use. Product liability exposure is the possibility that the public might be injured by the product. Completed operations liability refers to liability for work already performed or completed. For a boutique retail store, the only possible liability would arise from customer injury while on the premises.
Which inland marine coverage condition states that payment of any claim will not reduce the limit of insurance, except in case of a total loss on a scheduled item? a) Reinstatement of limit b) Legal action against the insurer c) Privilege to adjust with the owner d) Transfer of rights of recovery
The reinstatement of limit condition states that payment of any claim will not reduce the limit of insurance, except in case of a total loss on a scheduled item. In this case the insurer will cancel the specific coverage and refund any unearned premium for the coverage on that item.
In which instance may 3 licensees share commissions? a)Sharing of commissions is at the discretion of the insurer. b)When all 3 are licensed for the same line of insurance from which the commission comes c)When at least 2 are licensed for the appropriate line of insurance from which the commission comes d)Three licensees may never share a commission.
When all 3 are licensed for the same line of insurance from which the commission comes No insurer may pay any compensation, fee, or commission for services as agent or broker unless that person was licensed as an agent or broker at the time of the transaction. Licensees may share commission, as long as each license is licensed for the same line of insurance at the time of transaction.
The insured's house is located one mile from the county's new landfill and across the road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received was $80,000. The insurance company will insure the house for only $80,000. What method of valuation is used to insure this property? a) Market value b) Actual cost value c) Replacement cost d) Functional replacement cost
When insured for market value, it is insured for what a willing buyer would pay prior to a loss. This is different from actual cash value or replacement cost.
Because an insured owns a lot of expensive jewelry, her insurance agent has advised her to purchase a scheduled personal property endorsement. If the insured adds this endorsement to her homeowners policy, which of the following statements would be correct? a) Coverage C limits will no longer apply to the jewelry insured by the endorsement. b) The amount of coverage will be doubled. c) The endorsement becomes excess coverage. d) The endorsement becomes primary coverage and the HO contract is secondary.
When items are scheduled, they are excluded from Coverage C as insured items, and are covered only under the scheduled personal property endorsement.
Personal business property out in the open is covered under commercial property policy only while a) Within 150 feet of the described premises. b) Within 100 feet of the described premises. c) Located on the described premises. d) Specifically described on the declarations.
Within 100 feet of the described premises. Business personal property is defined in the policy as property located in the insured structure or within 100 feet of that structure.
Once the agent's appointment with the insurer has been terminated, how soon must the insurer mail a notice of termination to the agent? a) 30 days b) 5 business days c) 10 days d) 15 calendar days
Within 15 calendar days after notifying the Commission of an agent's appointment termination, the insurer must mail a copy of the notification to the agent at his last known address.
Workers compensation rating is developed by applying a rating bureau job classification rate to each a) $500 of payroll .b) $1,000 of payroll. c) $100 of payroll. d) $250 of payroll.
Workers compensation rating is developed by applying a rating bureau job classification rate to each $100 of payroll.