Insurance
The ten animals on Pat's farm have blanket coverage under a farm livestock coverage form with a total limit of $25000. An animal with an actual cash value of $1,500 died when it was struck by lightning-a covered peril. What is the most Pat's insurer will pay for this loss?
$1,500
Workers compensation insurance rates apply to what monetary increment of payroll?
$100
When Maryanne's furnace malfunctioned her five house guests were treated for carbon monoxide poisoning. Maryanne's homeowners policy has a medical payments to others limit of $5,000. The guests' medical bills were for $6,000, $4,000, $3,000, $2,000, and $1,000. How much will her insurer pay?
$15,000
What is the minimum amount required under the South Carolina Motor Vehicle Financial Responsibility Act to respond to damages to the property of others due to an automobile accident?
$25,000
Subject to a $15000 limit, the identity fraud expense coverage endorsement to the homeowners insurance policy will reimburse or cover the insured for all the following EXCEPT:
$5,000 stolen from the insured's bank account
Burglars break into Landon's house steal several items. Which of these items is subject to a sublimit under Landon's homeowners insurance policy?
$750 in cash, kept in a cookie jar
An insurer in South Carolina must provide a notice of cancellation or nonrenewal of an automobile insurance policy to the named insured. The cancellation or nonrenewal can become effective within how many days after the mailing or delivery date?
15 days
Anthony is now a producer for Acme Insurance Company although Acme has not yet filed a notice of appointment with the Director. Within how many days must it do so?
15 days
Once issued in South Carolina a producer's license is valid for:
2 years
An insurer that does not wish to renew a PAP must give advance notice to the insured of at least
20 days.
Approximately what percentage of flood losses occurs in moderate- to low-risk flood zones?
20%
Terry is a licensed insurance producer in South Carolina. To maintain his license how many hours of continuing education must he complete every two years?
24 hours
For at least how many years must an insurer keep copies of cancellation or nonrenewal notices?
3 years
HO 01 39 modifies a homeowner's policy to allow the insured to bring an action against the insurer for up to how many years after the loss?
3 years
Jeff is a licensed insurance producer in both North Carolina and South Carolina. He is charged with embezzlement in North Carolina and his first pretrial hearing is set for March 1. He must notify the South Carolina Director of Insurance of this charge within how many days of the hearing?
30 days
How many types of coverage are provided in the property section of a homeowners policy?
4 coverages
Producers must keep records of every insurance transaction for at least how many years?
5 years
The Director of Insurance can examine the business transactions accounts, and records of insurers and producers as often as necessary, but must do so at least once in how many years?
5 years
An insurer must notify the Director that it intends to cancel a policy at least how many days before canceling the policy?
60 days
An automobile insurance policy which has not been previously renewed, may be canceled by the insurer without cause if it has been in effect for not more than how many days?
90 days
Compensation for an employee's injury will be allowed only if the employer knew about the injury or was notified of it within how many days after the injury occurred?
90 days
Tasha runs a business in a state where she can buy workers compensation insurance from either private insurers or an insurance facility established and funded by the state that competes with private insurers. How would this state be categorized?
A having a competitive state fund.
Coverage for seamen protected by the Jones Act can be obtained under a standard workers compensation policy by adding what kind of endorsement?
A maritime coverage endorsement
Based only on the facts presented which of the following is an example of adverse selection?
A person applying to buy insurance on his retail business in a crime-ridden neighborhood.
Avery works as an intermediary between retail insurance agents and insurers to obtain unusual or hard-to-place insurance for the agents' insureds. However Avery has no underwriting or binding authority. Based on this information, what does Avery appear to be?
A surplus lines broker
Before workers compensation statutes were enacted employers could defend themselves against negligence claims by injured workers by employing certain common-law defenses. Which is NOT one of those defenses?
Act of God
"Replacement cost minus physical depreciation" describes which type of loss valuation method?
Actual cash value
Upon learning that his HO 3 policy covers personal property for only its actual cash value Jamal wants to get replacement cost coverage instead. How can he do this?
Add the personal property replacement cost loss settlement endorsement to his current policy
What should business partners who want to be covered under a workers compensation policy covering their employees do if they want to also be protected for job-related injuries?
Add the sole proprietors, partners, officers, and other coverage endorsement to their workers compensation policy.
Pamela lives in a state with a financial responsibility law. When will she be required to prove she has auto liability insurance?
After it is involved in a serious traffic violation or accident.
Coverage under the Insurance Services Office Inc. (ISO) pollution liability forms is written subject to which two policy limits?
Aggregate limit & "each pollution incident" limit
Joseph has a DP 3 policy to cover the unfurnished single-family home he rents to tenants. He has no intent to insure tenants' property. However he sees that the policy form includes Coverage C-Personal Property. What effect does this have on the coverage?
Although personal property coverage is printed in the form, coverage is only provided when the declarations show a limit and a premium for that coverage.
The property insurance policy with a $500,000 limit that covers Logan's store is a contract of indemnity. If Logan's store is partially damaged by a covered peril, what is Logan's insurer obligated to pay?
An amount that is related to the value of the loss, not to exceed $500,000
Annette is beginning to sell some of her handmade furniture online. She wants an insurance policy that will cover her interest in any property that she ships during the coming year. Given these facts what does Annette need?
An annual transit policy
Who is eligible to apply to the South Carolina Wind and Hail Underwriting Association (SCWHUA) for insurance coverage?
Any person with an insurable interest in insurable property in a SC coastal area
Dianne a radio talk show host, loses her hearing as a result of job-related exposure to noise. The hearing loss is irreversible. How is Dianne's condition categorized?
As a permanent partial disability
Bernard's homeowners insurance policy refers to an "insured location." Which one of the following locations would NOT qualify as an insured location?
Bernard's office in a downtown building owned by his employer.
In connection with an upcoming construction project in which it hopes to participate a construction firm is required to furnish a contract bond guaranteeing that it will do the job at the quoted price if the contract is awarded to it. What kind of bond is this?
Bid bond
When a grease fire destroyed the kitchen of his Crispy Crunch fried chicken restaurant Sterling made a claim under his businessowners policy's business income coverage to cover losses during the period required to repair the damage. However, the repairs are delayed when animal rights activists picket outside the restraint to protest the treatment of chickens. How will this delay affect Sterling's insurance recovery?
Business income coverage will not cover a delay caused by protestors.
Which of the following is not a type of coverage provided in the property section of a homeowners policy?
Business pursuits coverage
Stan lives in a small town 50 miles from his employer's office and often works at home. He sometimes takes delivery of merchandise and equipment on behalf of his employer. Which endorsement extends the liability portion of the HO-3 policy to allow him to conduct business from home?
Business pursuits endorsements
Which of the following coverages is not included in the liability section of the homeowners policy?
Coverage D, Loss of Use
Dalton rents an unfurnished house. Dalton's dwelling policy is most likely to have Coverage C-Personal Property and:
Coverage E-Additional Living Expense
Which is NOT a typical part of a complete personal auto policy?
Coverage audit
Evangelina wants to insure the contents of her apartment under Coverage C of a DP 2 broad form rather than the cheaper DP 1 basic form. Which loss will this broad form cover?
Damage burglars caused when they broke into her apartment.
Which of the following losses could be covered by the utility services-direct damage endorsement of the businessowners policy?
Damage to inventory held for sale
Which expense is NOT covered as property damage by a business auto policy (BAP)?
Damage to property transported in a covered auto.
Jill is an insurance agent who represents XYZ Insurance Company. With what authority does Jill's agency agreement with XYZ explicitly permit her to perform certain functions?
Express authority
Which of the following is not an unfair claims settlement practice if committed by an insurance company in South Carolina?
Failing to promptly settle a claim for which liability is uncertain.
Frederick Jewelers' crime policy includes an extortion-commercial entities endorsement which would cover losses in all the following situations EXCEPT:
Frederick makes no attempt to notify authorities before giving in to an extortionist's demands to surrender his diamonds
Excalibur Insurance Company sends periodic privacy notices to all customers to comply with which of the following federal laws?
Gramm-Leach-Bliley (GLB) Act
Which of the following is not among the recognized approaches to handling risk?
Ignoring it
Ray's mortgage is more than the value of his house. He hires someone to set the house on fire and the house is destroyed. Which exclusion in Ray's DP 3 policy will his insurance company cite when it denies his claim? ,
Intentional loss
Damien moves to another state so his insurer issues a different personal auto policy. Damien notices that it has a personal injury protection endorsement that his former policy did not have. What is the purpose of this endorsement?
It adds no-fault coverage that is available or required in the new home state.
Don a repairman employed by Brady HVAC, accidently cut off his finger while repairing Jeannine's furnace ductwork. Brady carries liability and workers compensation insurance. How will Jeannine's homeowners insurance policy address the loss?
It does not cover Don;s injury because he is eligible for workers compensation benefits.
What is the maximum amount the South Carolina Property and Casualty Insurance Guaranty Association can be liable for on a covered claim?
Less than $300,000
The swimming pool in the atrium of the Highland Court Apartment Building creates a humid environment that encourages mold growth. To limit exposure to mold-related claims what kind of endorsement should be added to the building's CGL policy? ,
Limited fungi or bacteria coverage
What type of policy does the South Carolina Wind and Hail Underwriting Association offer?
Limited peril policy
Most of Leo's business building is destroyed by a tornado. Local ordinances require him to tear down the remainder of the building. If he builds a new one it must comply with current codes. The ordinance or law coverage endorsement of Leo's commercial property coverage form will NOT cover the:
Loss of income or increased expense resulting from compliance with the ordinance.
Who administers South Carolina's assigned risk plan?
National Council on Compensation Insurance, Inc.
How many joint underwriting associations may South Carolina have?
No specified maximum number
Jack plans to renew his automobile insurance policy but he is concerned that his insurer may refuse to renew the policy based on an automobile accident in which he was involved approximately four years ago. May the insurer consider the accident as a sole basis for refusing to renew Jack's policy?
No, because the accident occurred more than 36 months ago.
Bill failed to satisfy the continuing education requirements to keep his producer's license active in South Carolina. One year later he decides to renew his license. Can he do so?
No, he must apply for a new license.
Harriet's dental office sustained serious water damage when a pipe broke sometime over the weekend. Which one of the following is NOT a duty required of Harriet by her property insurance policy?
Notify the police
What is the term of a policy issued by the South Carolina Wind and Hail Underwriting Association?
One year
Last year PDQ Insurance Company had a combined ratio of 105 percent, which means:
PDQ had an underwriting loss last year.
Which term refers to the particular risks that can cause loss or damage to property?
Peril
Tiffany gives piano lessons to several young students who come to her home after school. Which homeowner's endorsement provides property and liability coverage for this business exposure?
Permitted incidental occupancies endorsement
Amendment of Policy Provisions - South Carolina (PP 01 78) is used to modify what type of insurance policy?
Personal auto policy
Which document of the South Carolina Wind and Hail Underwriting Association provides for the association's limits of liability?
Plan of operation
Which provision is NOT found in the common policy conditions section of a businessowners policy?
Property loss settlement
If requested by a property owner an insurer may exempt what type of property from the South Carolina Valued Policy Law?
Property used principally for manufacturing purposes.
Which of the following is NOT a requirement in recommending the most suitable insurance product to a potential customer?
Propose the least expensive policies
Which of the following is beyond the scope of authority held by the South Carolina Department of Insurance?
Recommending insurance products of reputable insurers
Genevieve wants to renew her South Carolina insurance producer's license. Which of the following is not a condition for renewal?
Report of insurance sales made in last two years
Jason's driver's license and registration have been suspended in South Carolina. What must he now immediately do?
Return his license and registration to the DMV
Which South Carolina insurance entity protects policyowners and claimants if an insurer cannot perform its contractual obligations because of insolvency?
SC Property & Casualty Insurance Guaranty Association
Which one of the following situations would trigger coverage under a firm's computer fraud insuring agreement?
Shannon hacks into a merchant's computer & redirects merchandise ordered by the merchant's customer to be shipped to her house.
Abby lives in North Carolina where she is licensed as an insurance producer. She wants to apply for a nonresident license in South Carolina. Which of the following conditions must she satisfy?
She must show her NC license is in good standing.
Pierre does not want collision coverage on the older vehicles in his fleet so his business auto policy (BAP) lets him choose the vehicles that will have this coverage. Which symbol indicates this?
Symbol 7
Which of the following statements about an underinsured motor vehicle is not correct?
The amount of liability insurance does not meet statutory required limits.
A dump truck collided with a tall oak tree in Marian's front yard. The tree fell onto her house breaking a glass picture window and knocking a lamp off the table inside it. Sparks from the lamp started a fire that destroyed half the house. What is the proximate cause of the damage to Marian's house?
The collision
Curt age 40, has purchased a property insurance policy to cover an international shipment of firearms. The shipment is accidentally destroyed in transit, and during its investigation the insurer learns that the firearms were stolen. Which of the following correctly explains why the insurer would refuse to cover the loss?
The contract is unenforceable because it served an illegal purpose.
Which is NOT a reason for a homeowner to buy a dwelling policy instead of a homeowners policy?
The dwelling policy provides more comprehensive coverage for less premium.
The errors and omissions coverage in an equipment breakdown policy is most likely to apply in which of the following situations?
The insured made a mistake in describing the property location on the application.
What is the purpose of endorsements in a property and/or liability insurance policy?
They modify the provisions in the policy form.
Phil currently buys insurance from another agent but Connie, a new agent, convinces Phil that he will save money by moving his insurance to a policy she recommends. She does not tell him that the recommended policy's premium is lower because the policy provides much less coverage than his current policy. What duty did Connie violate?
To disclose all pertinent information concerning a proposed policy.
Jessica is issued an insurance producer's license. Unless she submits a renewal application and renewal fee in a timely manner when will Jessica's license expire?
Two years
Which peril covered by the DP 2 broad form is NOT also covered by the DP 1 basic form?
Weight of ice, snow, or sleet
When does the South Carolina Department of Insurance activate a joint underwriting association?
When professional liability insurance becomes unavailable
Will is employed as a roofer for Shingle-Minded Roofing. While working one day Will falls from a roof and is injured. When he seeks to file a workers compensation claim, he discovers that Shingle-Minded failed to secure workers compensation insurance which is a violation of state law. In most states, what should Will do?
Will should seek statutory workers compensation benefits and sue his employer for negligence if allowed by statue.
James is a licensed producer who lives in Georgia. He moves to South Carolina. When must he notify the South Carolina Department of Insurance of his move?
Within 30 days
Which of the following is not a power granted to the South Carolina Director of Insurance?
Writing insurance laws
Mary's personal auto policy (PAP) provides uninsured motorists coverage that does NOT apply to injuries suffered by:
a friend in whose car Mary is a passenger when it is struck by an uninsured motorist
Matt a parcel delivery driver, delivers a package to Christa's front porch where he is attacked by Christa's bulldog. In determining the degree of care that Christa owed to Matt, how would the courts probably classify Matt? ,
a parcel delivery driver, delivers a package to Christa's front porch where he is attacked by ChAs an invitee
Emil
a producer licensed in South Carolina, moves to Georgia on April 30. By what date is he is required to notify the South Carolina Department of Insurance? ,May 30th
Nola's hardware store is insured by a businessowners policy that covers her building and business personal property. Her liability coverage will NOT cover a claim that arises when:
a window display falls and breaks the plate-glass window
A reciprocal insurer is:
an unincorporated group of members that exchange indemnity contracts.
An insurance agent's E&O policy covers insurance producers against errors and omissions claims brought by:
both clients & insurers
When meeting with a prospect to discuss insurance Agent Tyler makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has Agent Tyler committed?
defamation
The residual market is most often the source of coverage for all of the following lines of insurance EXCEPT:
directors and officers liability insurance
A contractor hires 15-year-old Kevin as a part-time employee to cut lumber knowing the law does not permit Kevin to work near power tools because of his age. Kevin accidentally cuts his finger off while using a power saw. The liability coverage of the contractor's workers compensation and employers liability insurance policy: ,
does not cover this claim because the contractor knew it employed Kevin in violation of the law.
Jason and Henry are licensed insurance producers who want to set up an insurance agency in South Carolina. Their agency must do all of the following EXCEPT
employ only John & Henry
Although dwelling policies do not automatically contain coverage for the perils of theft or personal liability these coverages can be added by:
endorsement
Donna wants to add theft coverage to the dwelling insurance policy on her vacation cabin. She may do so by adding a(n):
endorsement
If an insurer wants to modify a personal auto policy it might do so through a(n):
endorsement
Lila a self-employed accountant, requires emergency medical treatment after choking on a product of the Dulce Candy Company while in her office. A month later, she asks Dulce to pay her medical bills. Dulce's commercial general liability policy with medical payments coverage (Coverage C) will:
exclude coverage for Lila's claim because the incident occurred away from Dulce's premises
While driving Terri ran a red light and broadsided Victor's pickup. Victor was hospitalized for a week and spent another month recovering from injuries he suffered from the accident. In addition to paying his medical bills and reimbursing his lost wages, Terri's insurer was required to pay additional damages for Victor's pain and suffering, which are considered:
general damages
Ivy's personal auto policy provides primary liability coverage with a $100,000 limit, while her personal umbrella policy provides excess coverage with a $1 million limit. If Ivy must pay $55,000 in damages because she is responsible for an auto accident: ,
her personal auto policy will pay $55,000.
Joseph is the newly appointed Director of Insurance for South Carolina. He has a reputation for being strict on law enforcement and is expected to implement regulations that will benefit consumers. As Director he can be expected to do all of the following EXCEPT
impose jail terms upon those who are convicted of violating the law.
Who usually determines which party is legally responsible for an auto accident?
insurers
If an insurance applicant submits an application to an insurer without a premium payment the applicant has:
invited the insurer to make an offer to the applicant
When an insurance policy provides crime coverage on a discovery basis coverage is triggered by a loss that:
is discovered during the policy period or within 60 days after the policy period ends.
When a bank is named as a mortgagee in a customer's homeowners insurance policy the bank
is entitled to advance written notice of any policy cancelation
A notice of policy cancellation will not be effective if it
is made only verbally to the insured.
Arnold's Auto Repair Shop's garage policy does NOT cover it for loss sustained by a vehicle that it:
is painting for a customer
As defined in the farm liability coverage form farming does NOT include:
mechanized processing operations
It is an unfair method of competition for a producer to portray the terms benefits, and dividends paid on an insurance policy inaccurately to a prospective purchaser. This deceptive practice is called:
misrepresentation
Making a false statement in an insurance policy application to obtain a benefit from the insurer is known as:
misrepresentation
Carol has been convicted twice for driving while intoxicated (DWI). Insurers refuse to issue a personal auto policy (PAP) to cover her husband Perry's car unless he is willing to buy a policy with a:
named driver exclusion
Louis was burning leaves in his backyard when the fire got out of control and destroyed his neighbor's fence. For his homeowners insurance to pay the neighbor's property damage liability claim Louis must do all the following EXCEPT:
negotiate an agreeable settlement with the neighbor.
Although it addresses common terms that apply to all commercial policy forms the commercial policy conditions form does NOT include:
no benefit to bailee conditions
When describing the policy's coverage the word "special" on the declarations page means the policy is a(n):
open perils form
The money that a property insurance policyholder pays for insurance covering his building is called a(n):
premium
All of the following are grounds for cancellation of a policy EXCEPT:
previous refusal of insurance by another insurer
When collecting personal financial or health information an insurance company is required to do all of the following EXCEPT
provide individuals with copies of documents disclosed to other parties
Brianna wants to renew her insurance producer's license in South Carolina. She must do all of the following EXCEPT
provide record of her insurance sales.
After several violations Napoleon Bar and Grill's liquor license was revoked. Napoleon did not inform its insurer of this fact and continued to serve alcohol to its regular customers, including Brett. After a long night at the bar, Brett was involved in a serious auto accident and sued Napoleon under the applicable dram shop act. Napoleon's liquor liability insurance:
provides no coverage because Napoleon's required license was not in effect.
Ten percent of the uninsured motorists fund is used by the South Carolina Department of Insurance to do all of the following EXCEPT
publish a document rating all insurance companies in SC.
What type of market mechanism is the Associated Auto Insurers Plan of South Carolina?
residual
From a property insurance perspective which of the following is NOT a basic type of construction?
steel
Lamont owns 100 shares of ABC Insurance Company stock and receives dividends from this investment. What type of insurer is ABC?
stock
Laura owns poisonous snakes on her property which she uses for venom research purposes. One of the snakes escaped and within hours bit a neighbor who sued Laura. Though Laura was not negligent in her ownership of the snakes, the plaintiff easily won the suit based on the doctrine of:
strict (absolute) liability
An insurer may not refuse to renew a motor vehicle liability insurance policy based solely on any one of the following factors EXCEPT
submission of a false or fraudulent claim.
Miguel purchased an accounts receivable floater because he allows many of his bar's regular customers to run a tab that they pay at the end of the month. If the book where he keeps track of these tabs is destroyed he expects that the insurer will pay for all the following EXCEPT:
tabs that Miguel inflates to cover unpaid tabs of former customers
In connection with an upcoming construction project in which it hopes to participate a contractor furnishes a performance bond guaranteeing that:,
the contractor will perform the work in accordance with the construction contract.
A flood swept some of Bridgette's flood-damaged property onto a neighbor's land and it swept some of a neighbor's flood-damaged property onto Bridgette's land. The debris removal coverage in Bridgette's National Flood Insurance Policy will pay for removing all the following debris EXCEPT:
the neighbor's property on the neighbor's land
The owner of the Marlon Corporation is surprised when ABS Insurance Company (Marlon's workers compensation insurer) insists on inspecting Marlon's workplace. ABS points out that:
the workers compensation & employer liability insurance policy gives ABS the right to inspect Marlon's workplace
Which of the following would not be considered a personal injury and therefore not be covered by personal injury endorsement HO 24 82?
theft
When comparing her insurance company's policies to those of Zenith Insurance Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buy one from Melanie's company. What has Melanie engaged in?
twisting
How many types of personal auto insurance are required of South Carolina drivers?
two
Olen buys insurance on the inventory in his warehouse which includes a sizable quantity of watches bearing the "Rolex" label, and Olen pays the insurance premium. After Olen reports a theft, the insurer's investigation reveals that the watches it had agreed to insure were illegal counterfeits. Olen's contract with the insurer is:
unenforceable because it was for an illegal purpose.
Sandy and Cindy are homeowners whose new townhomes are adjacent to each other and are similar in every respect. Though they are insured by the same company Sandy's homeowner's insurance premiums are considerably lower Cindy's. This may indicate a case of:
unfair discrimination
Funds collected by the South Carolina Department of Motor Vehicles from the registration of uninsured motor vehicles must be placed in the:
uninsured motorists fund
South Carolina Valued Policy Law states that an insurer doing business in South Carolina may not issue a fire insurance policy for more than the value stated in the policy or the
value of the property to be insured.
All of the following causes of loss are commonly listed as excluded perils in open perils property insurance policies EXCEPT:
vandalism
The right of an employee to benefits under workers compensation laws does not exist if the injury
was intentionally self-inflicted.
The ordinance or law coverage endorsement is normally used to modify property insurance policies that cover buildings that:
would need to be torn down and rebuilt if significantly damaged
An additional premium is required for a watercraft endorsement based on all of the following EXCEPT:
years owned by the insured