Insurance Test SF - Property Insurance Basics
An insured owns a large dog. The first day he has to leave the dog home alone to go to work, the insured comes back to find his $400 couch torn apart, his $100 coffee table chewed up, his $50 window curtain shredded, and a $200 window pane shattered where his dog jumped through. The insured has personal property coverage under a special form dwelling policy. How much of this loss will the policy cover?
$0. Damage that results from domestic animals is excluded under the special form dwelling policy.
The broad theft coverage endorsement on the dwelling form specifies the limitations
$200 on money / $1,500 on securities / $1,500 on jewelry / $2,500 on silverware
A DP-2 policy covers all of the following EXCEPT 1. damage to awnings from weight of snow. 2. damage to property caused by burglars. 3. freezing of automatic fire sprinkler systems. 4. accidental discharge of steam from a plumbing system.
1
A building insured with commercial property insurance has been vacant 90 days. Which of the following is NOT true? 1. Payment for unnamed perils is reduced by 25% 2. The insured has no coverage for losses cause by theft. 3. The insured has no coverage for losses caused by glass breakage. 4. Payment for unnamed perils is reduced by 15%.
1
A dwelling policy has a standard deductible that applies to all property coverage, with some exceptions. How much is this deductible? 1. $250 2. $100 3. $1,000 4. $500
1
A producer has completed 40 hours of continuing education this licensing period. Hoe many credit hours may be carried over to the next licensing period? 1. 10 hours 2. 5 hours 3. 0 hours; carry overs are not allowed 4. 16 hours
1
A woman slips on icy steps and breaks her leg. Which of the following is the peril in this situation? 1. the fall 2. the icy steps 3. the broken leg 4. the season of the year
1
All of the following are examples of direct loss EXCEPT 1. after a car crash you have to rent a replacement vehicle. 2. a fire destroys your personal property in your rental apartment. 3. a thief takes your computer from your locker. 4. a truck throws a stone and cracks your windshield.
1
An insurance policy is a legal contract, and as such, it must include all of the following elements EXCEPT 1. conditions 2. legal purpose 3. offer and acceptance 4. consideration
1
An insured with split liability limits of 100/300/100 is at fault in an automobile accident and the other vehicle sustains $6,500 in property damages as well as two occupants have bodily injury and are claiming $150,000 each. What is the most insurance will pay to each occupant? 1. $100,000 2. $150,000 3. $200.000 4. $300,000
1
Employers liability coverage under a workers compensation policy includes 1. third-party liability claims 2. claims from a spouse injured by an employee 3. intentionally caused injuries 4. punitive damages
1
FAIR (Fair Access to Insurance Requirements) plans are provided by 1. private insurers 2. the federal government 3. the guaranty association 4. the state
1
Frank's grocery owns a 4,000 sq. ft. building you insure on a Building & Personal Property Coverage Form. Frank wants to know how he can insure fixtures that he plans to attach permanently to the building. What do you tell him? 1. coverage is provided under Building Property coverage 2. He can't insure permanently installed fixtures on the BPPC form 3. He must buy a separate policy 4. Coverage is provided under Personal Property of Others coverage
1
If a commercial policy, in effect for less than 60 days, is to be canceled for nonpayment of premium, how much prior notice must the insurer give to the first named insured? 1. 10 days 2. 15 days 3. 60 days 4. 30 days
1
If the actual values exceed the limit of insurance, the BOP contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by 1. 25% 2. 30% 3. 50% 4. 10%
1
Liability arising out of any of the following is excluded from the personal and advertising injury liability coverage EXCEPT 1. unknowingly inflicting injury that violates the rights of another. 2. oral or written publication of material that the insured knows is false. 3. criminal acts committed by or at the direction of the insured. 4. failure of goods or products to conform with advertised quality.
1
Mobile homes can be insured in all of the following ways EXCEPT 1. with a HO-8 Modified Coverage form. 2. on a separate mobile homeowners package policy. 3. with a DP-1 if the mobile home is on a foundation. 4. on a mobile homeowners endorsement to a HO-3 form.
1
The declarations section of a PAP identifies all of the following except 1. definition of covered auto 2. named insured 3. mailing address 4. loss payees
1
The designation symbols used in commercial auto policies can be found in which policy section? 1. covered auto 2. liability coverage 3. definitions 4. conditions
1
The equipment breakdown coverage form provides coverage for all of the following EXCEPT 1. bodily injury and property damage 2. damage to the insured's property 3. damage to property of others in the insured's care and custody 4. expediting expenses following a covered loss
1
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? 1. unfair discrimination 2. law of large numbers 3. adverse selection 4. underwriting
1
Under a dwelling policy, within how many years of a loss may an insured bring a lawsuit against an insurer? 1. 2 years 2. 1 year 3. 4 years 4. 3 years
1
Under the commercial general liability which one of the following is covered under supplementary payments? 1. cost of bail bonds 2. defense costs for the plaintiff 3. court costs taxed against a third party 4. loss of earnings expense of over $250 a day
1
Underwriters are permitted to use all of the following when underwriting an application for insurance EXCEPT 1. disability. 2. inspection services. 3. credit reports. 4. claim history.
1
What is the term for the entity that an agent represents regarding contractual agreements with third parties? 1. principal 2. client 3. designee 4. insured
1
Which characteristic of an insurance contract states that when a loss occurs the insured should be restored to the financial condition he was in before the loss? 1. contract of indemnity 2. personal contract 3. contract of adhesion 4. unilateral contract
1
Which document would a lender ask an insured for as evidence that a policy has been written? 1. Certificate 2. Declarations 3. Endorsement 4. Policy
1
Which method of loss valuation is contrary to the basic concept of indemnity? 1. replacement cost 2. actual cash value 3. market value 4. agreed value
1
Which of the following is NOT an optional coverage built into the condominium association coverage form? 1. Real estate tax liability 2. Agreed value 3. Inflation guard 4. Replacement cost
1
Which of the following is the party who agrees to be responsible for loss in the case of a fidelity bond? 1. the surety 2. the oblige 3. the principal 4. the bondholder
1
Which of the following is true regarding the difference in conditions policies? 1. each DIC policy is an individually written contract that contains provisions unique to the particular risk that it covers. 2. the DIC policy is a stand alone contract; all perils are covered within it, and no further policies are needed. 3. they must conform to the NAIC model 4. All DIC policies from a particular compant must be identical to prevent unfair discrimination
1
Which of the following makes use of market value in determining loss valuation? 1. Property is evaluated for what it sells for at the time of the loss. 2. Assessment of the accumulated cash value is considered before the loss. 3. Depreciation gets deducted from the replacement cost for the property at the time of loss. 4. Reimbursement is assessed from the repair costs less the actual value of the item after the loss.
1
Which of the following other coverages is NOT included in the basic form dwelling policy? 1. Breakage of glass 2. Tenant's alterations and additions 3. Personal property temporarily away from the insured premises 4. Removal coverage
1
Which of the following perils is covered by the HO-2 and HO-3 policies? 1. sudden and accidental rupture of a heating system 2. flood 3. war or military action 4. loss due to power interruption that occurs off the premises
1
Which of the following professionals would purchase Errors And Omissions insurance to manage the liability risk associated with their business endeavors? 1. attorney 2. caregiver 3. doctor 4. fireman
1
Which of the following provides insurance for employers when workers not covered by workers' compensation insurance are injured on the job and sue for compensation? 1. employer liability 2. no fault insurance 3. worker insurance 4. employee indemnity
1
Which of the following symbols used in business auto coverage is correctly described? 1. symbol 9 - non-owned autos only 2. symbol 7 - hired autos only 3. symbol 2 - owned autos subject to no-fault 4. symbol 1 - owned autos only
1
Which of the following would NOT be considered an unfair and deceptive practice? 1. controlled business 2. misrepresentation 3. rebating 4. defamation
1
Which of the following would NOT be covered by HO liability insurance? 1. intentional tort 2. first aid expenses 3. property damages 4. bodily injury
1
Which policy condition is invoked when parties to an insured loss cannot agree? 1. Arbitration 2. Assignment 3. Liberalization 4. Subrogation
1
illegal use pf narcotics would be an example of 1. moral hazard 2. physical hazard 3. pure hazard 4. morale hazard
1
what is the fine for using an unapproved assumed name by a producer? 1. $250 2. $500 3. $1,000 4. $5,000
1
which of the following symbols is available to an insured with vehicles subject to no-fault coverage? 1. symbol 5 2. symbol 6 3. symbol 7 4. symbol 9
1
which of the following would be covered under the garage liability coverage form? 1. insured's business premises 2. product recalls 3. fellow employees 4. loss of use
1
A builders risk firm is most often written as which of the following? 1. Specific value form 2. Completed value form 3. Scheduled form 4. Reporting form
2
A cable company uses employees to install equipment in customers' homes. The company purchases a bond from an insurance company to protect itself from potential dishonest acts of the employees. Which of the following types of bond does the cable company purchase? 1. blanket bond 2. fidelity bond 3. schedule bond 4. surety bond
2
A mobile homeowners policy is structures the same as 1. commercial package policy 2. homeowners policy 3. PAP 4. dwilling policy
2
A policy that provides coverage for an injury or damage only if it is first reported during the policy period is called 1. BI/PD form 2. Claims-made form 3. Occurence form 4. Premises coverage
2
According to the Nationwide Definition of marine insurance, which category is an eligible marine risk? 1. condominium buildings 2. imported goods 3. office building of more than two stories 4. public park playground equipment
2
All of the following are other coverages under the dwelling policy EXCEPT 1. Improvements, alterations, and additions 2. Earth movement 3. Other structures 4. Debris removal
2
An insureds place of business is broken in to and merchandise unlawfully taken during the night, the insured is the victim of which type of crime? 1. robbery 2. burglary 3. breaking and entering 4. safe cracking
2
An ocean marine loss that occurs through the voluntary sacrifice of a part of the vessel or cargo to save the ship, crew, or other cargo is known as 1. sue and labor 2. a general average 3. a salvage loss 4. a particular average
2
As a general rule, commercial inland marine insurance covers all of following EXCEPT 1. domestic shipments of goods. 2. merchandise while it is being manufactured. 3. musical instruments for professional use. 4. contractor tools used on a job site.
2
Assessable insurers participaste in the FAIR plan and Costal plan in porportion to 1. their branch offices 2. their premiums 3. their policies 4. their agents
2
Bodily injury means injury arising out of all the following EXCEPT 1. injury. 2. slander. 3. disease. 4. sickness.
2
Employees are barred from suing employers in court to obtain compensation for injuries covered by workers' compensation because of which of the following doctrines? 1. employer liability 2. exclusive remedy 3. workman liability 4. no fault insurance
2
Homeowners policies permit all of the following incidental occupancies EXCEPT 1. a two chair barbershop 2. a retail sales operation run by the insured from his garage 3. a bookkeeping service with one accountant 4. knitting lessons taught to 3 students on premises
2
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 1. $350 2. $500 3. $750 4. $1,000
2
If the LA Citz corp denies an application, the applicant may appeal to the 1. LA dept of insurance 2. LA insurance rating commission 3. LA Citz property insurance corp 4. commissioner
2
In a Commercial Package Policy (CPP), the business owner may select from all of the following types of coverage EXCEPT 1. General liability coverage 2. Workers compensation 3. Crime 4. Equipment breakdown
2
In a dwelling policy, other structures would be covered if used 1. as part of a farming operation 2. by the insured's neighbor as a private garage 3. by the insured to house a manufacturing operation 4. by the insured to operate a retail business
2
In insurance, modifying the original contract in done through a(n) 1. condition 2. endorsement 3. additional coverage 4. amendments
2
Medical payments coverage pays for necessary medical and funeral expenses so long as the expenses were incurred within how many years from the accident date> 1. 2 years 2. 3 years 3. 4 years 4. 1 year
2
The LA automobile insurance plan was established to 1. subsidize losses of insured who are insured under the plan 2. provide a method of insuring licensed drivers who are unable to purchase auto liability insurance in the voluntary market 3. approve rates to be changed of high risk auto insureds 4. all of the above
2
The claims-made liability form provides coverage from a date that precedes the policy effective date. Which of the following defines that date? 1. anniversary date 2. retroactive date 3. occurrence date 4. claims date
2
The crime of forced entry into the premises of another with felonious intent is defined as 1. theft 2. burglary 3. robbery 4. breaking and entering
2
The insured carries underinsured motorists coverage limits of 250/500/250 on his automobile policy and his vehicle is struck by an at fault motorist who insures with the State minimum for liability of 20/40/10. If the insured brings suit for bodily injury damages to himself of $500,000, how much will he recover from at fault driver's policy? 1. none 2. $20,000 3. $250,000 4. $270,000
2
The members of a limited liability company (LLC) are insured under a BOP if 1. A single individual member of the LLC is listed as the named insured. 2. The LLC is designated as the named insured. 3. Members of a LLC cannot be insured under a BOP. 4. Each individual is listed as a named insured.
2
The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the 1. definitions 2. conditions 3. insuring agreement 4. declarations
2
The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called 1. indemnity 2. subrogation 3. assignment 4. surety
2
Under the PAP, liability for bodily injury resulting from the insured's use of a non-owned auto is 1. provided by the insured's policy on a primary basis 2. provided by the insured's policy on an excess basis 3. shared on a pro rata basis 4. not covered
2
Which of the following created The National Flood Insurance Program? 1. an association of mortgage banks 2. the United States Congress 3. governors of flood prone states 4. a consortium of insurance companies
2
Which of the following describes the insurer's responsibility for payment under a policy, as stated in the common policy provisions? 1. premiums 2. limits of liability 3. utmost good faith 4. consideration
2
Which of the following forms trigger coverage for a loss under the commercial general liability policy if a loss happens during the policy period? 1. claims made form 2. occurrence form 3. period certain form 4. static form
2
Which of the following is NOT true about earthquake coverage? 1. coverage may be written in a DIC policy 2. coverage is commonly provided through a federally funded program. 3. coverage is excluded by most property forms 4. coverage may be added to property policies by endorsement
2
Which of the following is TRUE when the insured's limits of insurance apply per occurrence? 1. The insured pays one deductible for grocery cart damage to a car occurring on different days. 2. Coverage is triggered for smoke damage to siding caused by repeated acts by insured's neighbor. 3. The insured's claim for damage to his basement walls caused by settling is approved. 4. Liability is NOT covered in a second crash because limits were exceeded in a previous crash
2
Which of the following is the special limit of coverage on the homeowners policy form for property damage to personal watercraft? 1. $1,000 2. $1,500 3. $2,000 4. $2,500
2
Which of the following is the standard amount of Coverage A-dwelling provided by the HO-6 Unit-Owners Policy? 1. $500 2. $1,000 3. $5,000 4. $10,000
2
Which of the following is true regarding the hire department service charge under the builders risk form? 1. It is a high deductible endorsement 2. It is an additional coverage 3. It is an automatic coverage for $500 4. It is not available in this form
2
Which of the following risks is eligible for coverage under a BOP? 1. bars or taverns 2. condos 3. banks 4. automobile dealers
2
Which part of the commercial general liability designates who is an insured? 1. conditions 2. declarations 3. definitions 4. insuring agreement
2
an insureds accounts receivable records have been damaged. The loss may be covered with 1. The valuable papers coverage form 2. The accounts receivable coverage form 3. Commercial property insurance 4. The commercial articles coverage form
2
under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must 1. send an actual certified copy of the entire report to the consumer 2. respond to the consumers complaint 3. defend the report if the agency feels it is accurate 4. change the report
2
Under the additional living expenses coverages, if a civil authority prohibits the insured from using the dwelling because of direct damage to a neighboring location from a peril covered in the insured's policy, loss would be covered for up to
2 weeks
A basic dwelling policy automatically provides coverage against fire, lightning, and 1. riots 2. windstorm 3. internal explosion 4. smoke
3
A liability policy that covers all claims arising out of incidents occurring during the policy period, regardless of whether the policy is still in effect at the time of the claim, is known as 1. a claims-made policy 2. a limited liability policy 3. an occurrence policy 4. an aggregate policy
3
According to the doctrine of contributory negligence, when an individual is found to have contributed to his or her own loss in any way, another party 1. will be held liable 2. may face jail time 3. may not be held liable 4. may seek legal actions to sue
3
According to the law of agency, the agent always represents the 1. state department of insurance 2. client 3. insurance company 4. public
3
All of the following are classes of inland marine risks EXCEPT 1. Domestic shipments and transportation risks. 2. Bridges, tunnels, and other instrumentalities of transportation and communication. 3. Common carrier cargo liability. 4. Commercial property floaters risks.
3
All of the following are common exclusions in a liability policy EXCEPT 1. damage to property owned by the insured. 2. losses covered under workers' compensation laws. 3. damage caused by acts of civil disobedience and riots. 4. damage to property in the insured's care, custody, or control.
3
All of the following are essential parts of the property insurance contract EXCEPT 1. insuring clause 2. conditions 3. provisions 4. exclusions
3
All of the following are examples of insurable interest EXCEPT 1. insuring your home. 2. insuring expensive jewelry. 3. insuring your friend's automobile. 4. insuring business property you own.
3
All of the following perils are specifically listed in the policy as being other than collision losses EXCEPT 1. fire. 2. windstorm. 3. freezing or road damage. 4. malicious mischief or vandalism.
3
All of the following would be considered to be incompetent to enter into a contract EXCEPT 1. a minor. 2. an insane person. 3. someone who is incarcerated. 4. someone who is under the influence of alcohol.
3
All of the following would be found on a declarations page EXCEPT 1. limits of insurance. 2. address of insured. 3. policy exclusions. 4. costs for coverage.
3
Contracts that prepared by one party and submitted to the other party on a take it or leave it basis are classified as 1. unilateral 2. aleatory contracts 3. contracts of adhesion 4. fixed price contacts
3
Coverage for medical payments under a PAP applies to expenses following a covered accident that are incurred and services rendered within what maximum time period? 1. 90 days 2. 1 year 3. 3 years 4. 5 years
3
For the commercial general liability coverages of bodily injury, property damage and medical payments, which of the following limits of insurance apply if the aggregate limit is NOT met? 1. bodily injury 2. medical payments 3. per occurrence 4. property damage
3
Homeowner Form HO-2 provides coverage for loss of appliances, carpeting, and other household furnishings for a maximum of how much? 1. $5,000 2. $3,500 3. $2,500 4. $2,000
3
If an insurer decides to non renew a commercial policy, how much prior notice must be given to the first named insured? 1. 30 days 2. 15 days 3. 60 days 4. 10 days
3
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer? 1. Qualified 2. Resident 3. Admitted 4. Certified
3
The Causes of Loss form for farm property lists which of the following? 1. the type of property insured 2. the amount of insurance provided 3. perils property is insured against 4. exclusions to named insureds
3
The reduction of value of the property insured in a policy by a peril insured against is known as 1. hazard 2. exposure 3. loss 4. risk
3
To be eligible for BOP coverage, an office building CANNOT be higher than 1. 2 stories 2. 3 stories 3. 6 stories 4. 10 stories
3
What is surplus lines? 1. any insurance on items worth more that $25,000 2. insurance in excess of a standard policy's coverage 3. insurance placed with an unauthorized insurer 4. additional insurance placed on itemized risks
3
What is the purpose of the Terrorism Risk Insurance Act of 2002? 1. To provide terrorism insurance for those unable to obtain it on the normal market 2. To provide a uniform exclusion of damage from terrorist attacks 3. To share the risk of loss from terrorist attacks with the insurance industry 4. To protect the insured public against insurer insolvency
3
What is the purpose of the causes of loss form that lists specific exclusions? 1. to inform the insurer what the loss is in a claim 2. to state which properties are covered in a loss 3. to state which perils are insured against 4. to inform the insured whether the loss in a claim is covered
3
What is the purpose of the coinsurance clause in property insurance policies? 1. prevent over-insurance of the property 2. prevent insured from profiting from a loss 3. encourage insurance to value 4. set higher standards of care by requiring the insured to pay a portion of every loss
3
What type of damages may be awarded by the court to create disincentives that discourage behavior that is deemed highly undesirable by society? 1. general 2. compensatory 3. punitive 4. specific
3
When an insured selects Symbol 2 on the automobile declarations, indicating coverage for any auto titled to the insured, which of the following automobile types will be covered? 1. any auto 2. mobile equipment 3. owned autos only 4. temporary substituted
3
Which Homeowner Form covers fixtures, installations, and improvements made or acquired at the insured's expense? 1. HO-6 2. HO-5 3. HO-4 4. HO-2
3
Which applies when an insured is found legally liable for the loss of another and is ordered to pay general damages? 1. Compensation is ordered to set an example. 2. Compensation is ordered to punish insured. 3. Damages compensate for pain and suffering. 4. Insured must pay medical and lost wages expense
3
Which of the following business liability exposures does a slip and fall loss fall under? 1. indirect and contingent 2. medical expense 3. premises and operations 4. retail hazards
3
Which of the following homeowners forms covers tenants? 1. HO-2 2. HO-3 3. HO-4 4. HO-5
3
Which of the following is NOT one of the independent rating services that publishes guides to insurance companies' financial integrity? 1. Fitch 2. Moody's 3. NAIC 4. AM Best
3
Which of the following is a cancellation procedure in which the premium returned to the insured is NOT in direct proportion to the number of days remaining in the policy period? 1. dividend 2. pro rata 3. short rate 4. flat rate
3
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? 1. indemnity 2. representation 3. warranty 4. concealment
3
Which of the following is the federal body that regulates truckers who travel across state lines? 1. Truckers and Trade Commission 2. Motor Carriers Commerce Agency 3. Federal Motor Carrier Safety Administration 4. Federal Trade Commission
3
Which of the following limits of insurance on the dwelling are available and apply to Coverage D-Fair Rental Value? 1. 10% 2. 15% 3. 20% 4. 25%
3
Which of the following policy assignment rights occurs when the named insured dies? 1. The closest relative takes over the policy. 2. A new owner of the property takes over the policy. 3. The insured's legal representative takes over the policy. 4. No-one is permitted to take over the policy.
3
Which of the following would NOT be classified as personal property for insurance purposes? 1. a mobile home 2. a car 3. a house 4. furniture
3
Which of the following would NOT be eligible for coverage under a Personal Auto Policy? 1. A vehicle listed on the declarations page 2. A trailer owned by the insured 3. A vehicle purchased 90 days ago 4. A nonowned temporary substitue vehicle
3
Which of the following would be covered by a commercial package policy? 1. small to medium sized businesses 2. ocean marine 3. loss due to crime 4. injury to worker on the job
3
Which of the following would be covered perils under the DP-1 Basic policy form? 1. falling objects 2. freezing of plumbing 3. riot or civil commotion 4. weight of ice or snow
3
Which of the following would be eligible to collect survivor and death benefits from workers' compensation in the event of the covered injury resulting in the death of an employee? 1. medical provider 2. insured's legal team 3. spouse of employee 4. owner of the business
3
Which part of an insurance contract describes a loss for which the insured will not be indemnified for? 1. conditions 2. declarations 3. exclusions 4. insuring agreement
3
Which type of hazard is an example of a person who increases the chance of loss through carelessness or by irresponsible actions? 1. moral hazard 2. physical hazard 3. morale hazard 4. reckless hazard
3
Who is required to be a member of the LA automobile insurance plan? 1. all insurers domiciled in LA 2. only insurers who apply for membership and are approved by the commissioner 3. all insurers writing motor vehicle insurance in the state 4. none of the above
3
Who is responsible for paying producer appointment fees? 1. the department of insurance 2. the commissioner's office 3. the appointing insurer 4. the producer
3
a common exclusion found under physical damage to your auto includes 1. riot or civil commotion 2. towing and labor 3. mechanical breakdown 4. glass breakage
3
all of the following are examples of risk retention EXCEPT 1. copayments 2. self insurance 3. premiums 4. deductibles
3
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
30 days
A $100k house insured on a policy with an 80% coinsurance requirement has a fire that caused $40k of damage. The owner has a policy with $60k coverage. How much will the owner collect for his loss? 1. $10k 2. $5k 3. $25k 4. $30k
4
A BOP is most similar to 1. Auto 2. Umbrella 3. Cargo 4. Homeowners
4
A farmer is remodelling his 100 year of farmhouse. He is in the process of painting the porch and hnaging shutters. He keeps his ladder, paint, and other materials used to remodel his home under the porch. Which of the following provides coversage for his remodeling materials? 1. Coverage B 2. C 3. D 4. A
4
A special type of insurance that guarantees the faithful performance of a trustee of employee benefit plans is called 1. directors and officers insurance 2. surety bond 3. errors and omissions 4. fiduciary liability insurance
4
A windstorm damages the fence around John's property. He has a dwelling policy and files a claim for the loss. Is the loss covered and, if so, on what basis is the loss adjusted? 1. No. the dwelling policy excludes losses to fences and similar non building structures. 2. No. the fence is not a part of the dwelling nor is it personal property. 3. Yes. A fence is part of the dwelling, and the loss is adjusted on a replacement cost basis. 4. Yes. A fence is a non building structure and is adjusted on an actual cash value basis
4
Absolute liability can be imposed by law and exist in the absense of which of the following? 1. third party liability 2. hazardous operations 3. products liability 4. negligence
4
All of the following are Other Coverages included in both the broad form and special form dwelling policy EXCEPT 1. Lawns, trees, shrubs, and plants 2. Collapse 3. Breakage of storm door glass 4. Theft of personal property
4
All of the following are excluded losses under Part D-damage to an auto of the personal auto policy EXCEPT 1. to radar or laser detection equipment. 2. due to wear and tear, freezing and breakdown. 3. due to destruction or confiscation by civil authorities 4. to caps, covers, or bedliners on pickup trucks.
4
All of the following are responsibilities of the insured listed in the loss provisions for most property insurance contracts EXCEPT 1. to give prompt notice of claim. 2. to submit to examination under oath. 3. to protect property from further damage. 4. to determining adequate indemnification.
4
All of the following are supplemental payments found in liability policies EXCEPT 1. reasonable expenses incurred by the insured 2. limited amounts for bonds related to a claim 3. all expenses and defense costs incurred by the insurer 4. costs the insured incurred in hiring an attorney
4
All of the following would be considered an insured person under Part A of a personal automobile policy EXCEPT 1. other persons or organizations that use the car to the extent that they share liability with the insured person. 2. anyone using the insured's car with the insured's permission or the reasonable belief that they are entitled to do so. 3. the named insured and members of the insured's family for the ownership, maintenance and use of any auto or trailer. 4. other persons or organizations for their liability from an accident involving an auto or trailer used by the insured but owned by that person or organization.
4
All of these types of property may be covered on a farm property coverage form EXCEPT 1. Farm machinery 2. Barns 3. Silos 4. Growing crops
4
An insured has transportation expenses coverage under Part D of the personal auto policy when involved in a collision. Coverage provides which of the following? 1. immediate coverage for total theft of the covered auto 2. towing for the covered vehicle from the crash site 3. rental reimbursement until a new auto is purchased 4. rental reimbursement until claim is settled by insurance
4
An insurer neglects to pay a legitimate claim covered under the terms of the policy. Which element of the contract has the insurer violated? 1. adhesion 2. representation 3. good faith 4. consideration
4
Cargo is damaged short of its destination. An agent at an immediate port sells the damaged cargo at the best price. Settlement is based on the difference between insured value and the net sales proceeds. This is considered 1. a general average 2. a particular average 3. sue and labor 4. a salvage loss
4
Determining adequate indemnification after a loss is a principle duty of which of the following? 1. agent 2. insured 3. contractor 4. insurance company
4
Exclusions common to liability coverage for both the personal auto policy and the business auto policy include all of the following EXCEPT 1. work related injuries to insured's employees. 2. vehicles used in prearranged racing or speed contests. 3. for bodily injury or property damage caused intentionally by the insured. 4. for liability arising while the insured auto is being used in an auto business.
4
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce 1. under any circumstance 2. unless they have served and appropriate prison sentence 3. without receiving written consent from a federal judge 4. without receiving written consent from an insurance regulatory authority
4
For business income coverage, the waiting period that must occur before the period of restoration may begin is 1. 120 hours 2. 48 hours 3. 24 hours 4. 72 hours
4
For the purpose of workers' compensation insurance all of the following are subject to the workers' compensation laws, either as an employer or employee EXCEPT 1. an insurance agent. 2. a building contractor. 3. the employee of a party store. 4. a crew member of an ocean going vessel.
4
How does the BOP differ from the CPP? 1. The BOP covers property damage only. 2. The BOP is specifically designed for larger companies. 3. The BOP covers small businesses that have multiple locations. 4. The BOP prepackages a group of coverages desirable to small businesses.
4
If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising? 1. sharing 2. reduction 3. avoidance 4. retention
4
If the insured has a loss with a private passenger nonowned temporary substitute vehicle how will the loss be treated by the insured's own policy for physical damage? 1. Insured has excess coverage only. 2. No coverage extends from insured's policy. 3. Liability coverage extends to the owner of the vehicle. 4. The broadest coverage available extends from the insured's policy.
4
In the event of a member insurer's insolvency, the association's obligation to pay a covered claim is the lesser of the amount of the loss, the limits of the insurance coverage, or 1. $100,000 2. $25,000 3. $50,000 4. $300,000
4
Jack is a freelance writer who works from home and often meets with publishers and editors there. If one of them is injured while there to discuss a project, will Jack's homeowners policy cover him for a claim made against him? 1. Yes, but coverage applies only to expenses for first aid. 2. No. The workers compensation exclusion excludes coverage. 3. Yes. There is no exclusion in the policy for such activity by the insured. 4. No. The business exclusion excludes coverage for injury related to a business being conducted from the insured's home.
4
Robert insures his home on a DP-3. Which of the following BEST describes the additional coverage provided by their policy when a local ordinance requires him to upgrade the electrical system in his home after an explosion? 1. No coverage is provided for explosion on DP-3. 2. No coverage is provided for the electrical system on a DP-3. 3. Explosion is an additional coverage on a DP-3. 4. Ordinance or law is an additional coverage on a DP-3.
4
The primary purpose of a surety bond is to 1. eliminate the possibility of loss 2. pay employer losses 3. secure a line of credit of a contract 4. make sure obligations are fulfilled
4
The property coverage of a BOP includes which of the following? 1. motor vehicles 2. outdoor fencing 3. outdoor signs that are not attached to the building 4. carpeting that is permanently installed inside the building
4
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 1. misrepresentation 2. application fraud 3. forgery 4. concealment
4
When does the coverage begin for a builders risk form? 1. The date the policy premium is paid 2. On the date any construction begins 3. On the date construction starts above the highest basement floor if there is a basement 4. On the date construction starts above the lowest basement floor if there is a basement
4
Which HO form provides open peril coverage for Coverage A - Dwelling and Coverage C - Contents? 1. HO-3 2. HO-8 3. HO-2 4. HO-5
4
Which exposure is unique to mobile homes? 1. loss from foreclosure 2. loss from collapse of awnings 3. loss from flood damage 4. loss from collision damage
4
Which of the following causes of loss to a vehicle will trigger collision coverage on the personal auto policy Part D- coverage for damage to your auto? 1. Contact with an animal 2. Explosion or earthquake 3. Missiles or falling objects 4. Vehicle upset
4
Which of the following coverages in NOT included in the DP-1 form? 1. Dwelling 2. Other Structures 3. Loss of fair rental value 4. Additional living expense
4
Which of the following is EXCLUDED as a covered loss under the DP-3 coverage? 1. Freezing of pipes when water is shut off during a vacancy 2. Vandalism in a house vacant for 30 days 3. Sudden seepage from an air conditioning system 4. Damage by ice to outdoor radio and television antennas and aerials
4
Which of the following is NOT a true statement? An insurer may cancel or non-renew a HO policy based on 1. material change in the risk being insured 2. fraud on the part of the insured 3. continuation of the policy endangers the solvency of the insurer 4. upgrades to the home
4
Which of the following is a statutory defense? 1. assumption of risk 2. contributory negligence 3. intervening cause 4. comparative negligence
4
Which of the following is the correct timeframe for earthquake shocks to be considered as single earthquake? 1. 48 2. 72 3. 144 4. 168
4
Which of the following persons is covered for accidental injury on the insureds premises under the commercial general liability medical payments? 1. a tenant of the premises 2. an employee of the insured 3. person injured in warfare 4. a volunteer worker
4
Which of the following protects consumers against the circulation of inaccurate or obsolete information? 1. Unfair Trade Practices Law 2. The Guarantee Association 3. Consumer Privacy Act 4. The Fair Credit Reporting Act
4
Which of the following would be considered causes for flood conditions covered by the NFIP program? 1. overflow of inland or tidal waters 2. unusual and rapid accumulation or runoff of surface waters from any source 3. a mudflow 4. all of the above could be considered flood sources
4
Which of the following would be covered under a Building & Personal Property coverage form? 1. underground pipes 2. personal property while airborne 3. building foundations 4. outdoor sign
4
With respect to commercial auto policies, the Garage Coverage Form provides liability protection for all of the following EXCEPT 1. The insured's business autos 2. The insured's business products and work performed 3. The insured's business premises 4. The insured's business income losses due to personal injury
4
if a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? 1. 7 days 2. 10 days 3. 3 days 4. 5 days
4
What is the maximum number of roomers or boarders for properties insured under the dwelling policy?
5
An insured's house is damaged by a fire and is uninhabitable. As a result, the insured has to rent an apartment until repairs are made. A dwelling insurance policy will pay for the expense of renting the apartment. Which type of broad or special form coverage does the insured have? A. Coverage E - Additional Living Expense B. Coverage A - Dwelling C. Coverage B - Other Structures D. Coverage D - Fair Rental Value
A
Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis? A - DP-1 B - DP-2 C - DP-3 D - All DP forms
A
Which of the following would be covered by the broad theft endorsement on a dwelling policy? A - A camera the insured has with him on vacation B - A pedigree show dog C - Fabric and patterns in a clothing designer's studio at her house D - An antique car
A
The ABC Corporation has $100k of coverage on its building through insurance company A, & $50k of identical coverage on the same building through insurance company B. Assuming coinsurance is not an issue, when a $24k loss occurs and the pro rata method is used, how much will each insurer pay?
A - $16k. B - $8k
What would not be eligible for coverage under the dwelling policy?
A house that has 5 residential units
What documentation grants express authority to an agent?
Agent's contract with the principal
First aid costs for others injured on the insured's premises
Are paid in addition to the liability limit
Under a dwelling policy, which of the following is NOT a factor in determining a loss? A - The amount necessary to repair or replace the property B - The amount negotiated by the insured C - The policy limit D - The amount reflecting the insured's interest in the property at the time of loss
B
Under a dwelling policy, which of the following is NOT a factor in determining a loss? A - The amount necessary to repair or replace the property B - The amount negotiated by the insured C - The policy limit D - The amount reflecting the insured's interest in the property at the time of loss
B
Which of the following is true of dwelling policy coverage? A - Special forms only have special exclusions B - Exclusions apply to all 3 policy forms C - Exclusions only apply to broad policy forms D - There are no exclusions in basic forms
B
Which of the following would be coverages that would provide protection to contents damaged by fire?
Coverage C
Which of the following statements is true concerning underinsured motorist coverage under a personal auto policy?
Coverage applies only to the extent that the underinsured motorist limits exceed the bodily injury limits carried by the operator of the other vehicle.
In dwelling policies, automatic increase in insurance is
Coverage by endorsement
The designation symbols used in commercial auto policies can be found in which policy section?
Covered auto
An employee drives a company auto, but does not own a vehicle herself. What endorsement could be added to the insurance policy covering the company auto that would provide coverage to the employee when she drives someone else's car for her personal use?
Drive other car coverage
What is not an exclusion in all 3 types of dwelling policies?
Fire or lightning
Which of the following would be covered by an unendorsed HO policy?
Fire or lightning
Which of the following coverages would provide protection for the liability of an auto repair garage to owners of vehicles destroyed in the garage by fire?
Garagekeepers
What is controlled business?
Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates
In a dwelling policy, which is true regarding personal liability coverage?
It must be added as a supplement or written as a separate policy
While cutting grass in your yard with your brother's borrowed lawnmower, the fuel line ruptures and the lawnmower is destroyed in the fire. How will your HO liability react?
It will cover the damages
Dwelling coverage does not include
Land in which the the dwelling is located
What question in a property policy applies when the insurer broadens coverages but does not increase the premium?
Liberalization clause
Under the dwelling policy, Coverage C - Personal Property is
Limited to covering a guest's property while at the insured location.
What is not true concerning the fair rental value coverage provided in a dwelling policy?
Loss or expense caused by the cancellation of a lease is covered.
All of the following are parts of a personal auto policy
Medical payments / Duties after an accident or loss / Liability coverage
What is the term for the entity that an agent represents regarding contractual agreements with third parties?
Principal
Limited fungi, wet or dry rot, or bacteria endorsement in HO policies applies to
Property and liability losses
Which of the following is covered under the physical damage coverage of a personal auto policy?
Sound reproduction equipment permanently installed in the covered auto
The abandonment provision in property insurance policies states that
The insured may not relinquish ownership of damaged property to claim a total loss, but must protect damaged property from further loss.
In which situation would off premises coverage in broad theft endorsement of the insured's dwelling policy apply?
The insured's camera is stolen from his suitcase while he is on vacation
What will happen if a house covered by a standard mtg clause is a total loss?
The insurer pays the mtgee according to the mtgee's interest in the property.
If more than one person has an insurable interest in the property covered under a dwelling policy,
The insurer will be liable for only the insured's interest in the damaged property.
Which loss would most likely NOT be covered under Coverage A in the dwelling policy?
Theft of a renter's lawnmower used to service the premises.
What is an other coverage not included in both the broad and special form dwelling policy?
Theft of personal property (can be by endorsement)
What is the purpose of the regulation on aftermarket crash parts?
To provide disclosure to consumers regarding the use and costs of those parts.
What is the business auto coverage territory for?
United States and it's territories, Canada, or worldwide for private passenger hired autos
Homeowner Form HO-2 provides coverage for loss of appliances, carpeting, and other household furnishings for a maximum of how much?
Your answer: $4,000 Correct answer: $2,500
Which of the following represents the primary amount of insurance for the HO-4?
Your answer: Coverage B Correct answer: Coverage C
Which type of coverage would be appropriate for a detached garage in a DP-1 policy?
Your answer: Coverage D Correct answer: Coverage B
Which of the following describes why the insuring agreement is the heart of an insurance policy?
Your answer: It states the ground rules for the policy. Correct answer: It describes property covered and perils insured.
Which of the following does a binder of coverage guarantee?
Your answer: a policy will be issued Correct answer: coverage is in place immediately
Which of the following is an example of replacement cost valuation?
Your answer: actual cash value of item at time of loss Correct answer: cost new without depreciation at the time of loss
All of the following activities are subject to the imposition of strict liability EXCEPT
Your answer: chemical processing. Correct answer: in home child care.
Bodily injury includes all of the following EXCEPT
Your answer: disease. Correct answer: comprehensive.
Workers' compensation coverage is rated on the basis of which of the following?
Your answer: employee's earnings Correct answer: employer's payroll
Exclusions common to liability coverage for both the personal auto policy and the business auto policy include all of the following EXCEPT
Your answer: for bodily injury or property damage caused intentionally by the insured. Correct answer: for liability arising while the insured auto is being used in an auto business.
The Terrorism Risk Insurance Act and the National Flood Insurance Program are similar by providing which of the following?
Your answer: government oversight of specialized insurance Correct answer: subsidies, loss sharing or excess coverage
The State highway department is rebuilding a roadway and the general contractor winning the bid will be required to purchase a bond guaranteeing the work will be completed according to specifications and on time. Which of the following types of bonds will the general contractor need to purchase?
Your answer: indemnity bond Correct answer: surety bond
All of the following are considered compensatory special damages when an insured is found legally liable for the loss of another EXCEPT
Your answer: lost wages. Correct answer: mental anguish.
Which of the following types of policy BEST describes the DP-2 Broad form policy?
Your answer: open perils Correct answer: named perils
The property coverage of a BOP includes which of the following?
Your answer: outdoor signs that are not attached to the building Correct answer: carpeting that is permanently installed inside the building
Which of the following situations under dwelling policy conditions describe how the insurance company will settle a loss?
Your answer: pay the full value of a pair of earrings when only one is lost Correct answer: company has the option to repair to pre-loss condition
Which one of the following is an example of pure risk?
Your answer: placing a bet on your favorite sports team Correct answer: storing your new motorcycle outside
All of the following are used by the courts to establish negligence EXCEPT
Your answer: proximate cause. Correct answer: policy exclusions.
When an employer sends employees out of state on work related business, which of the following must he do to ensure the appropriate workers' compensation coverage?
Your answer: purchase a separate policy for the state in question Correct answer: list the state on the information page for other states' coverag
All of the following are methods of limiting liability EXCEPT
Your answer: singe limit. Correct answer: collective limit.
The following are all types of disability categories under workers' compensation insurance EXCEPT
Your answer: temporary total. Correct answer: temporary permanent.
Federal Crop Insurance is a type of insurance sometimes called which one of the following?
Your answer: voluntary private insurance Correct answer: residual market insurance
Additional coverages in the liability section of a HO policy cover do not cover
damage to a third party property for which the insured is legally liable
Even though an insured maintains a valid drivers license and has paid the premium when due, an insurer may modify the deductible of a auto policy after
payment of a third physical damage claim in 5 years.
If an insurer fails to pay a claim within the required period after receiving a satisfactory proof of loss, the insurer will be penalized
the amount of the loss plus 50% of the amount or $1,000 - whichever is greater.
On a DP-3 dwelling property special form policy, the coverage provided for personal property is
the same as provided on the DP-2 broad form.
