Louisiana Personal Lines *See Desc*

The standard limit of insurance for medical payments provided by the Personal Liability Supplement attached to a DP-2 is: A) $500 per person B) $1,000 per person C) $2,500 per occurrence D) $5,000 per occurrence

$1,000 per person Reasoning: The standard limit for Coverage M of the Personal Liability Supplement is $1,000 per person. Coverage is provided for necessary medical expenses incurred within 3 years from the date of the accident that caused bodily injury.

Q's liability policy has the following limits: $25,000 per person, $100,000 per occurrence, and $2,000,000 aggregate. This year, five separate claimants each file $25,000 for injuries suffered in a single accident. How much will the policy pay? A) $100,000 B) $25,000 C) $50,000 D) $125,000

$100,000 Reasoning: Because all five injuries arose from a single accident, the per occurrence limit will cap the compensation at $100,000.

Under Dwelling policies, household and personal property, including property in transit between the insured's old and new residences, are covered under: A) Coverage C B) Coverage A C) Coverage D D) Coverage B

Coverage C Reasoning: Coverage C is the coverage for personal property. 10% of the Coverage C limit applies to the insured's personal property away from the premises, while it is anywhere in the world.

Homeowners policies define the insured location to include all of the following, except: A) Vacant land rented to the insured B) Other premises rented to an insured for business use C) Hotel rooms D) Cemetery plots or burial vaults

Other premises rented to an insured for business use Reasoning: The insured location would not include other premises rented to an insured for business use, like a commercial location the insured rents. However, if that kind of premises is used for non-business purposes, that can be considered part of the insured location. Vacant land is included in the definition, though vacant farmland is specifically excluded.

Which of the following statements about continuing education requirements in Louisiana is not correct? A) Licensees may not be granted credit for a program more than once during a single renewal period B) A producer may not sell auto policies unless they possess a casualty license, and has completed an initial training course and an ongoing training C) Failing to meet continuing education requirements will result in lapse of license D) Producers who hold any combination of insurance licenses may not receive credit applied to all license types

Producers who hold any combination of insurance licenses may not receive credit applied to all license types Reasoning: Producers who hold any combination of insurance licenses may receive credit applied to all license types with an approval from the Commissioner.

Under a Broad Form Dwelling policy, losses to an unattached garage are paid on which basis? A) Actual cash value B) Agreed value C) Functional replacement cost D) Replacement cost

Replacement cost Reasoning: The DP-2 values losses to the dwelling and other structures on a replacement cost basis. Losses to personal property are valued at their actual cash value.

An intruder breaks into a home, threatens the homeowner, and takes the homeowner's money. This is an example of: A) Mysterious disappearance B) Inherent vice C) Burglary D) Robbery

Robbery Reasoning: Robbery is an act of theft from a person who is either harmed or threatened with harm.

Regarding examinations in Louisiana, which of the following statements is not correct? A) Every insurer being examined must produce and make freely accessible the accounts or records relating to the subject of the examination to the Commissioner B) If the Commissioner determines that an examination should be conducted C) The expense of examination of an insurer or of any person is paid by the Department D) The Commissioner may examine, as often as the Commissioner deems advisable, the records of any insurance agent, solicitor, broker, general agent, adjuster, or insurer representative

The expense of examination of an insurer or of any person is paid by the Department Reasoning: The expense of an examination of an insurer or of any person is paid by the insurer or person being examined. Although the Commissioner is required to examine every insurer licensed in Louisiana every 5 years, they may also be examined at any other time the Commissioner deems necessary.

Under which of the following circumstances would the Limited Theft Coverage Endorsement be used with a Dwelling policy? A) The insured dwelling is owner-occupied B) Coverage against vandalism is needed for a dwelling vacant more than 60 consecutive days C) The insured dwelling is tenant occupied D) Theft coverage is desired for off-premises property

The insured dwelling is tenant occupied Reasoning: The Limited Theft Coverage Endorsement must be used if the dwelling is tenant occupied. No VMM coverage applies if the dwelling was vacant for more than 60 consecutive days immediately before the loss. There is no off-premises coverage under this endorsement.

A Personal Auto policy's liability coverage would protect the insured in the event that: A) The named insured's resident family member injures someone in an accident while using a covered auto without the insured's permission B) A neighbor loses control of their car and damages the insured's house C) The named insured backs into their own mailbox at the end of the driveway D) A passenger in the insured's auto is hurt after another driver runs a red light

The named insured's resident family member injures someone in an accident while using a covered auto without the insured's permission Reasoning: Part A - Liability Coverage provides third-party insurance in the event an insured owes damages to a third party due to bodily injury or property damage. Because family members always have a reasonable belief of entitlement to use the covered auto, the injury resulting from the accident caused by the named insured's resident family member would be covered by Part A. The injured passenger would be covered by Part B - Medical Payments Coverage.

Which statement regarding liability insurance coverage is incorrect? A) Casualty policies must defend the insured against liability claims made against them, but only if the claim is relevant to the policy's coverage B) The per occurrence limit is the maximum amount recoverable during the policy period C) Pro rata liability is the proportionate distribution of liability among insurers that have policies on the same risk D) If the policy is written as primary coverage, it pays first with respect to other policies

The per occurrence limit is the maximum amount recoverable during the policy period Reasoning: The occurrence limit is the most that will be paid for any one occurrence. The aggregate limit is the most that will be paid within the policy period. Pro rata liability refers to the policy's Other Insurance clause and indicates that when two policies both cover a loss, they coordinate coverage by paying proportionate amounts compared to the total amount of insurance available for the loss.

Special Form Homeowners policies would cover which of the following theft losses? A) Theft to a dwelling under construction B) Theft of personal property after the dwelling was damaged by an earthquake C) Theft of personal effects from the insured's motor vehicle, which was left unlocked in the driveway D) A tenant's theft of the insured's furniture located in a rental unit on the residence premises

Theft of personal property after the dwelling was damaged by an earthquake Reasoning: If damage or loss by a fire, explosion, or theft results from the damage caused by earth movement, those ensuing losses are covered by the policy. This is an exception to the Earth Movement exclusion.

The insurance provided by a liability policies applies: A) To all insureds as a collective, except for policy limits B) To each insured separately, including policy limits C) To all insureds as a collective, including policy limits D) To each insured separately, except for policy limits

To each insured separately, except for policy limits Reasoning: Under the Severability condition, the insurance provided by a liability policy applies to each insured separately (severally), except for the limits of liability.

Under the Dwelling Program, which Other Coverage is not included on the Basic Form? A) Trees, Shrubs, and Other Plants B) Worldwide Coverage C) Property Removed D) Improvements, Alterations, and Additions

Trees, Shrubs, and Other Plants Reasoning: The Trees, Shrubs, and Other Plants Other Coverage is only included on the Broad Form and Special Form. The other Other Coverages are all included on the form, though the DP-1 has more restrictions to how those coverages apply.

Dwelling and Homeowners policies define earth movement to include all of the following perils, except: A) Mudslide B) Volcanic eruption C) Sinkhole D) Land shock waves

Volcanic eruption Reasoning: Earth movement, which is an excluded peril, includes earthquake, landslide, mudflow, mudslide, subsidence, and sinkhole. It also includes any earth sinking, rising, or shifting, as well as land shock waves and tremors before, during, or after a volcanic eruption. The volcanic eruption itself is covered as one of the Extended Coverage perils.

The insurer's duty to defend the insured, as provided by Section II of a Homeowners policy, ends: A) When the insured admits they were negligent B) When the damages awarded against the insured exhaust the personal liability limit C) If the insured becomes bankrupt or insolvent D) If the claim is groundless

When the damages awarded against the insured exhaust the personal liability limit Reasoning: Once the Coverage E limit is exhausted by the payment of damages for bodily injury or property damage awarded against the insured, the insurer's duty to defend ends. Under the Bankruptcy condition, bankruptcy or insolvency of the insured does not relieve the insurer of its obligations under the policy.

Under Louisiana's standard fire policy, written proof of loss must be delivered to the insurer: A) Within 15 days B) Within 60 days C) Within 10 days D) Within 30 days

Within 60 days Reasoning: Proof of loss forms, which include a detailed inventory of damaged property, must be delivered to the insurer within 60 days. Prior to submitting proof of loss forms, an initial notice that a loss has happened must be provided to the insurer immediately after the loss.

P insures a home for $100,000 on a Special Form Homeowners policy with standard coverages. After a fire, the dwelling suffers a $60,000 loss, a detached garage has $15,000 worth of damage, and the home's contents sustain $20,000 in damage. P also incurs $35,000 in additional living expenses and loss of rental income while the dwelling is repaired. How much would the insurer pay? A) $100,000 B) $130,000 C) $95,000 D) $120,000

$120,000 Reasoning: The insurer would pay $120,000. The Coverage A limit for the dwelling is $100,000. The Coverage B limit for other structures is equal to 10% of the Coverage A limit, equaling $10,000. The Coverage C limit for personal property is equal to 50% of the Coverage A limit, equaling $50,000. The Coverage D limit for loss of use is equal to 30% of the Coverage A limit, equaling $30,000. The losses covered by Coverages B, C, and D do not reduce the Coverage A limit of insurance. The full $60,000 dwelling loss is covered under Coverage A. Since the damage to the detached garage exceeds the Coverage B limit, the policy only pays up to the $10,000 limit. The full $20,000 loss to personal property is covered. Since indirect losses exceed the Coverage D limit, the policy only pays up to the $30,000 limit. $60,000 + $10,000 + $20,000 + $30,000 = $120,000.

The Commissioner has to report the insolvency of an insurer to the Louisiana Insurance Guaranty Association within how many days? A) 3 days B) 10 days C) 5 days D) Immediately

3 days Reasoning: The Commissioner must notify the Association of the existence of an insolvent insurer within 3 days after receiving notice of insolvency.

Medical payments under Coverage F of a Homeowners policy may be provided to all of the following people, without needing to establish negligence, except: A) A boarder B) A residence employee C) A family friend D) A guest

A boarder Reasoning: Homeowners policies will exclude roommates, tenants, boarders, and other regular residents of the household from receiving medical payments, except for residence employees.

Which of the following is not an example of personal injury? A) Infringement of copyright B) A broken leg C) Misappropriation of a title or slogan D) False arrest

A broken leg Reasoning: A broken leg is an example of bodily injury, not personal injury.

On the DP-2, a loss to which of the following could be valued at its replacement cost? A) Interior carpeting B) A swimming pool C) A detached garage D) Household appliances

A detached garage Reasoning: The Broad Form provides replacement cost coverage for the dwelling and other structures that are buildings, like a detached garage. Carpeting, appliances, nonbuilding structures (like a swimming pool), outdoor antennas and equipment, awnings, and personal property are all valued at their actual cash value.

J has a Homeowners policy written on the HO-3 form. Which of the following people would not be considered an insured on J's policy? A) A friend who is renting a bedroom in J's house since it is only three blocks away from work B) J's resident uncle C) J's daughter away at college in another state D) A friend's 16-year-old daughter who is staying with J's family while going to school

A friend who is renting a bedroom in J's house since it is only three blocks away from work Reasoning: The definition of insured included in the policy does not include tenants, so the friend would not be covered under J's policy. The friend would need their own insurance for personal property and liability. Unrelated people in the insured's care are considered insureds up to age 21

Under a Personal Auto policy, Part A would provide coverage to all of the following people as insureds, except: A) A neighbor borrowing the auto to deliver food to a relative B) A nonresident relative using the named insured's auto with permission C) The named insured's unlicensed child D) A mechanic servicing the auto

A mechanic servicing the auto Reasoning: Generally, Part A - Liability Coverage will exclude coverage for those who are employed or engaged in the business of selling, repairing, servicing, storing, road testing, or parking motor vehicles.

A Basic Form Dwelling policy with Extended Coverage would cover all of the following losses, except: A) Windstorm damage to a roof B) Dwelling damage caused by a volcanic eruption C) A roof buckling due to the weight of snow D) Damage to the garage after a family friend accidentally drives into the garage door

A roof buckling due to the weight of snow Reasoning: The weight of ice, snow, or sleet is not a covered peril on the DP-1, even with Extended Coverages, and the Collapse Other Coverage is only available on the DP-2 and DP-3. Windstorm and hail, vehicles, and volcanic eruption are all EC covered perils.

The definition of an uninsured motor vehicle under a standard Personal Auto policy does not include: A) A hit-and-run vehicle that cannot be identified B) A vehicle newly acquired by the named insured that has not been reported to the insurer C) A vehicle that has no applicable liability insurance policy D) A pickup insured by an insolvent company

A vehicle newly acquired by the named insured that has not been reported to the insurer Reasoning: A vehicle owned by the insured would not fit the definition of an uninsured vehicle.

Which of the following is a legal liability imposed without demonstrated negligence? A) Contingent liability B) Absolute liability C) Direct liability D) Proximate liability

Absolute liability Reasoning: Because of the high degree of hazard associated with some risks, no degree of care is sufficient to fulfill the responsible party's duty to the public. In such cases, the responsible party is legally liable even when no negligent act is committed. The principle conferring this liability is known as absolute or strict liability.

Coverage D of a Dwelling policy covers which of the following losses? A) Damage to a swimming pool B) Loss of rental income due to the cancellation of a lease C) Access prevented by a civil authority because of a neighboring location's direct loss by a peril covered under the insured's policy D) Additional living expenses after a covered loss

Access prevented by a civil authority because of a neighboring location's direct loss by a peril covered under the insured's policy Reasoning: Coverage D - Fair Rental Value includes coverage for the indirect loss of access prevented by a civil authority due to the direct physical loss of a neighboring property by a covered peril. Coverage D will not provide coverage for lease cancellation. Additional living expenses are provided by Coverage E.

In Louisiana, a producer includes all of the following, except: A) Agent B) Adjuster C) Solicitor D) Broker

Adjuster Reasoning: An insurance producer is a person required under Louisiana laws to be licensed to sell, solicit, or negotiate insurance. This includes all persons or business entities referred to as an insurance agent, insurance broker, insurance solicitor, or surplus lines broker. An adjuster is not considered to be a producer.

Which term describes the maximum amount payable for loss from all occurrences within a policy period? A) Split limit B) Per occurrence limit C) Aggregate limit D) Single limit

Aggregate limit Reasoning: The aggregate limit is the most the policy will pay for all losses in the policy period.

On the Scheduled Personal Property Endorsement on a Homeowners policy, fine arts are typically valued at their: A) Actual cash value B) Replacement cost C) Agreed value D) Fair market value

Agreed value Reasoning: Though most scheduled property is valued at its actual cash value, fine arts are typically valued at their agreed value. Agreed valuation for all scheduled property is available as a separate version of the endorsement. Fine arts are never valued at their replacement cost.

All of the following are covered under a Homeowners policy, except: A) Equipment, used to maintain the property, that is damaged by an explosion B) All living expenses incurred when a dwelling becomes uninhabitable after a fire C) Vandalism to a dwelling that has been vacant for 25 days D) Property of guests, when requested by the insured, that is damaged by lightning

All living expenses incurred when a dwelling becomes uninhabitable after a fire Reasoning: The policy does not cover all living expenses, only necessary additional living expenses that are incurred when a dwelling becomes unfit to live in after a covered loss. The personal property of guests and domestic employees are insured, at the insured's request, under Coverage C. Vandalism losses are excluded for dwellings that have been vacant for more than 60 consecutive days immediately before the loss.

Which of the following correctly describes the role of agents under the Louisiana Citizens Property Insurance Corporation? A) There are no special requirements for an agent licensed for property and casualty to sell policies issued by the Corporation B) An agent must have adequate Errors and Omissions insurance to sell insurance issued by the Corporation C) Every agent licensed to sell property and casualty insurance must sell insurance policies issued by the Louisiana Citizens Property Insurance Corporation through its FAIR and Coastal plans D) Agents do not have binding authority

An agent must have adequate Errors and Omissions insurance to sell insurance issued by the Corporation Reasoning: An agent is required to have adequate Errors and Omissions insurance if they want to sell insurance issued by the Corporation. Every agent licensed to sell property and casualty insurance may sell, not a requirement, insurance policies issued by the Corporation through its FAIR and Coastal plans. Agents do have binding authority through the Corporation. An agent's binding authority may be withdrawn by the Corporation for failure to comply with underwriting guidelines.

Amounts necessary to pay claims covered by the Louisiana Insurance Guaranty Association come from: A) The Commissioner B) The NAIC C) Assessments of the member insurers D) Premiums collected from insureds

Assessments of the member insurers Reasoning: The Guaranty Association collects funds for claims through assessments of member insurers for the amounts necessary to pay covered claims, proportional to the net direct written premiums of the previous year.

Which Dwelling form does not cover losses resulting from frozen plumbing? A) Special Form B) Broad Form C) None of the Dwelling policies cover frozen systems or appliances D) Basic Form

Basic Form Reasoning: Freezing of plumbing systems or household appliances is covered only in the Broad Form (DP-2) and Special Form (DP-3).

Of the Dwelling policy forms, which one does not cover a loss caused by accidental discharge of water from a refrigerator located in a covered dwelling? A) None of the Dwelling policies cover water damage B) Special Form (DP-3) C) Basic Form (DP-1) D) Broad Form (DP-2)

Basic Form (DP-1) Reasoning: Accidental discharge or overflow of water or steam is covered only by the Broad and Special forms. Other kinds of water damage, such as flood or sump pump backup, are excluded on all Dwelling forms.

All of the following statements regarding liability losses are correct, except: A) Advertising injury includes defamation and copyright infringement B) Bodily injury includes personal injury, sickness, and disease C) Property damage includes physical damage to tangible property, including loss of use of that property D) Loss of consortium means the loss of companionship of a spouse

Bodily injury includes personal injury, sickness, and disease Reasoning: Bodily injury does not include personal injury, which are injuries that affect a person's reputation or emotional well-being.

The means by which insurers can encourage insureds to maintain insurance to value is known as: A) Agreed valuation B) Subrogation C) Coinsurance D) Deductible

Coinsurance Reasoning: Coinsurance is the condition on a property policy that encourages insureds to maintain insurance to value, at least to a specified percentage of the building's full replacement cost.

Under a Dwelling policy, which is correct regarding coverage of trees, shrubs, or plants? A) Damage by wind or hail is not covered B) Theft of shrubs and plants is covered C) The limit of liability is $1,000 for any one tree, shrub, or plant D) All vehicle damage to trees, shrubs, or plants is covered

Damage by wind or hail is not covered Reasoning: Damage to outdoor plants by forces of nature other than lightning are so common that such damage is considered uninsurable. Trees, shrubs, and other plants are protected only against limited named perils: fire, lightning, explosion, riot, aircraft, vehicles, and vandalism or malicious mischief. A limit of $500 is provided for any one tree, shrub, or plant.

All of the following are duties of an insured after a loss, except: A) Giving prompt notice to the insurer B) Determining the valuation method the insurer will use to pay the loss C) Protecting property from further damage D) Forwarding any demands to the insurance company

Determining the valuation method the insurer will use to pay the loss Reasoning: The valuation method of the insurer applies to property losses and will be stated in its own condition, based on the policy form selected at the time insurance was purchased.

Water damage caused by which of the following could be a covered loss under a Dwelling policy? A) Overflow of water from a sump pump B) Discharge of water caused by a plumbing failure C) Leaks through a driveway D) Water below the surface of the ground seeping through the dwelling

Discharge of water caused by a plumbing failure Reasoning: Accidental overflow or discharge of water from a plumbing system, other similar household system, or a household appliance is a covered peril under the Broad and Special forms. The Water exclusion includes losses resulting from flood or tidal water, water that backs up or overflows from a sump pump or drain, and water underground that seeps through a building or driveway.

Which of the following statements is false with respect to the Louisiana Insurance Guaranty Association? A) The Association will pay the full amount for Workers' Compensation B) The purpose of the Association is to establish a method to pay claims that are unpaid as a result of the insolvency of a member insurer C) Member insurers are assessed the amounts necessary to administer the program and pay covered claims D) Every insurer admitted to transact property and casualty insurance in Louisiana has the option of being a member of the Association

Every insurer admitted to transact property and casualty insurance in Louisiana has the option of being a member of the Association Reasoning: Every insurer admitted to transact property and casualty insurance in Louisiana must be a member of the Association. It is not optional.

Coverage D of the Dwelling Policy provides coverage for: A) Additional living expenses B) Other structures C) Fair rental value D) Trees, shrubs, and other plants

Fair rental value Reasoning: Loss of rental income is an indirect loss sustained by the insured when the dwelling is rendered uninhabitable by a direct loss. Coverage D provides protection for this indirect loss.

Coverage D of the Dwelling Policy provides coverage for: A) Additional living expenses B) Other structures C) Trees, shrubs, and other plants D) Fair rental value

Fair rental value Reasoning: Loss of rental income is an indirect loss sustained by the insured when the dwelling is rendered uninhabitable by a direct loss. Coverage D provides protection for this indirect loss.

All of the following perils are covered by the DP-1 with Extended Coverage, except: A) Volcanic eruption B) Falling objects C) Vehicles D) Windstorm

Falling objects Reasoning: The Falling Objects peril is not part of the basic or EC perils. Vehicles is one of the EC covered perils. This does not refer to damage to a vehicle, but rather damage to covered property that is caused by a vehicle.

The DP-3 would exclude coverage for partial damage to the dwelling resulting from all of the following perils, except: A) Falling objects B) Termite infestation C) Deterioration D) Settling foundation

Falling objects Reasoning: The Special Form provides open perils coverage for the dwelling and other structures, meaning all perils are covered except for those that are specifically excluded. Deterioration, insects, and settling foundations are all named exclusions. Falling objects is not an excluded peril, so coverage would be provided.

A Broad Form Dwelling policy would cover all of the following losses, except: A) Floor damage caused by accidental discharge of water from a household appliance B) Fence that is damaged by a fallen tree branch C) Building damage caused by burglars D) Glass on a storm door that is broken during a riot

Fence that is damaged by a fallen tree branch Reasoning: Outdoor awnings, antennas, and fences are not protected against falling objects because those losses are uninsurable. Accidental discharge or overflow of water or steam from a household system or appliance is a peril named on the Broad Form, as is damage by burglars. The breakage of glass or safety glazing material is provided by the Glass or Safety Glazing Material Other Coverage.

Losses that cannot be calculated objectively, such as pain and suffering or mental anguish, are considered: A) Special damages B) General damages C) Physical damages D) Punitive damages

General damages Reasoning: General damages are awarded to an injured party for pain, suffering, mental anguish, disfigurement, and similar losses. These losses cannot be calculated objectively and are assigned a dollar value based on the circumstances of the injury or loss.

Payments for mental anguish or loss of consortium are known as: A) Strict liability B) Specific damages C) General damages D) Punitive damages

General damages Reasoning: General damages are paid for noneconomic losses that are difficult to calculate objectively and that may be experienced by anyone in similar circumstances. Examples include payments for pain, suffering, disfigurement, mental anguish, and loss of consortium.

The following are all Additional Coverages provided by Homeowners policies, except: A) Collapse B) Governmental Action C) Credit Cards, Electronic Fund Transfer Card or Access Device, Forgery, and Counterfeit Money D) Loss Assessment

Governmental Action Reasoning: Governmental action is an exclusion, not an Additional Coverage.

A Dwelling policy written using the Special Form would exclude which of the following perils? A) Power surge resulting from an artificially generated electrical current B) Vehicles C) Wild animal D) Governmental action

Governmental action Reasoning: Governmental action is a General Exclusion that applies to all Dwelling forms. The DP-3 offers open perils coverage, meaning coverage is provided for all perils except those specifically excluded. Vehicles, wild animals, and damage from an artificially generated electrical current are not excluded by the form, so coverage is provided.

A deer chews a hole in an insured's shed sitting next to a pond. Which of the following forms could cover this damage? A) DP-1 B) HO-3 C) HO-8 D) HO-2

HO-3 Reasoning: The HO-3 Special Form covers everything except what is excluded, known as open perils coverage. A deer is not a peril that is listed as an exclusion. However, the HO-3 will exclude losses caused by birds, rodents, insects, and any animal owned or kept by an insured.

All of the following statements about liability are true, except: A) The burden of proof is on the injured party to prove that the other party was negligent B) Liability policies pay costs incurred by an insured to sue negligent third parties C) Breach of contract is not considered an act of negligence D) An insured may be liable for damages to an injured party, even if they are not deemed negligent

Liability policies pay costs incurred by an insured to sue negligent third parties Reasoning: Liability policies pay the cost to defend the insured against suits by third parties. They do not cover the costs of lawsuits initiated by the insured against negligent third parties. When a claim of negligence is brought, the injured party must prove that all four elements of negligence were present. In some circumstances, a party may be liable for damages to an injured party without having to be found negligent, such as when the insured has absolute liability.

The maximum amount a policy will pay in the event of a loss, regardless of the number of insureds, claims made, lawsuits filed, or parties making claims is the: A) Premium B) Limit of liability C) Split limit D) Deductible

Limit of liability Reasoning: The limits of liability, or limits of insurance, are shown on the policy's Declarations page and are the most paid by the policy regardless of the number of insureds, claims made, lawsuits filed, or parties making claims or filing lawsuits.

Which of the following Additional Coverages is NOT included on the Personal Liability Supplement attached to a Dwelling policy? A) Loss Assessment B) Damage to Property of Others C) First-Aid Expenses D) Claim Expenses

Loss Assessment Reasoning: The Personal Liability Supplement includes the Claim Expenses, First-Aid Expenses, and Damage to Property of Others Additional Coverages. The Loss Assessment Additional Coverage is not provided on the Personal Liability Supplement, though it is included in Section II of a Homeowners policy.

Bodily injury coverage may include payments for which of the following? A) Loss of earnings B) False arrest C) Invasion of privacy D) Slander

Loss of earnings Reasoning: Bodily injury refers to physical injury, sickness, disease, or death. Coverage for an insured's bodily injury liability includes payments for medical expenses, lost wages, mental anguish, death, and disfigurement. Slander, false arrest, and invasion of privacy are all personal injuries.

An insured's medical payments coverage would provide payment to an injured party for: A) Loss of consortium B) Necessary dental expenses C) Defamation D) Mental anguish

Necessary dental expenses Reasoning: Medical payments coverage provides payments for necessary medical expenses, including surgical, hospital, dental, and professional nursing expenses.

A casualty policy offering medical payments coverage would pay for all of the following expenses, except: A) Necessary medical expenses and lost wages incurred because of a physical injury sustained because of the insured's inaction B) Funeral expenses after a guest on the insured premises dies after sustaining bodily injuries C) Expenses for X-rays and prosthetic devices after an injury accidentally caused by an insured D) Necessary ambulance and hospital expenses following an injury in an accident on the insured premises

Necessary medical expenses and lost wages incurred because of a physical injury sustained because of the insured's inaction Reasoning: Medical payments coverage offers payment for necessary medical, surgical, X-ray, dental, ambulance, hospital, professional nursing, and funeral expenses. However, this coverage would not provide payment for lost wages. Damages for lost wages would have to come from the insured's bodily injury liability coverage.

W has a Basic Form Dwelling policy with Extended Coverage that insures a rental property for $80,000. Vandals attack a tree on the property, causing it to fall and severely damage the dwelling. The tree is worth $500, and the dwelling sustained $25,000 of damage. How does W's policy provide coverage? A) The policy covers the loss to the tree, but not the loss to the dwelling B) The policy covers the loss to the tree and the dwelling C) The policy covers the loss to the dwelling, but not the loss to the tree D) No coverage is provided

No coverage is provided Reasoning: Vandalism is the proximate cause of loss that caused the tree to fall and damage the dwelling. W's policy only has the basic perils and the EC perils, which do not include coverage for vandalism or malicious mischief, so coverage is not provided. The DP-1 also excludes coverage for losses to trees, shrubs, and other plants, so the loss to the tree itself is also not covered. If W had a DP-2 or DP-3 policy, both losses would be covered.

The Broad Theft Coverage endorsement added to a Dwelling policy provides: A) On-premises and off-premises theft coverage for owner-occupied dwellings B) Only off-premises theft coverage for owner-occupied dwellings C) On-premises theft coverage for tenant-occupied dwellings D) Only theft coverage for property stolen from a bank or safe deposit company

On-premises and off-premises theft coverage for owner-occupied dwellings Reasoning: The Broad Theft Coverage Endorsement is available for Dwelling policies insuring owner-occupied locations, and provides both on-premises and off-premises coverage. The insured may choose to only have on-premises coverage. If the insured wants off-premises coverage, on-premises coverage must be purchased as well.

All of the following are true regarding the Broad Theft Endorsement on a Dwelling policy, except: A) It is available only to policies that insure owner-occupied structures B) It includes coverage for vandalism resulting from theft or attempted theft C) Only on-premises coverage is available D) It may be added to any of the Dwelling forms

Only on-premises coverage is available Reasoning: The Broad Theft Endorsement can be attached to any Dwelling policy insuring owner-occupied locations to provide theft coverage for the owner-occupant's personal property. On-premises and off-premises coverage is available.

On a Special Form Homeowners policy, which of the following coverages is provided under the Property Removed Additional Coverage? A) Named perils coverage for 15 days B) Open perils coverage for 10 days C) Open perils coverage for 30 days D) Named perils coverage for 30 days

Open perils coverage for 30 days Reasoning: This Additional Coverage will cover property that is removed in order to prevent loss when the dwelling is threatened by a covered peril. As long as the dwelling was threatened by a peril that the policy covers, removed property will be covered for loss by any peril, for no more than 30 days.

For property, casualty, or personal lines producers in Louisiana, how many hours of continuing education do they need to complete? A) 24 hours on any insurance subject B) 24 hours, plus at least 3 additional hours dedicated to ethics C) 24 hours, with at least 3 hours dedicated to ethics and 3 hours dedicated to flood insurance D) 27 hours, with at least 3 hours dedicated to ethics

24 hours, with at least 3 hours dedicated to ethics and 3 hours dedicated to flood insurance

Generally, most binders will be issued for no longer than: A) 60 days B) 6 months C) 10 days D) 3 months

60 days

All of the following are eligible for coverage under the Dwelling Program, except: A) A beauty shop with a small bedroom attached B) A vacation home used as a secondary residence C) A duplex occupied by tenants D) A single-family home in the suburbs

A beauty shop with a small bedroom attached Reasoning: A dwelling used primarily for business is not eligible.

A Homeowners policy that has been in effect for 3 continuous years in Louisiana cannot be cancelled for: A) Fraud or material misrepresentation B) A material change in the risk C) Change in location of the insured's property D) Nonpayment of premium

Change in location of the insured's property Reasoning: A Homeowners policy that has been in effect for 3 continuous years may not be cancelled solely due to a change in location of the insured's property. A Homeowners policy can be cancelled for nonpayment of premium, fraud or material misrepresentation, material change of the risk, or preventing the insurer's insolvency.

An insured has a Personal Auto policy with comprehensive coverage. After a tree falls on the insured's vehicle during a windstorm, the auto is unusable and must be repaired. If the insured incurs any transportation expenses, Part D of the policy will: A) Cover transportation expenses incurred beginning 24 hours after the loss B) Deny coverage for transportation expenses and physical damage C) Cover transportation expenses incurred immediately following the loss D) Cover transportation expenses incurred beginning 48 hours after the loss

Cover transportation expenses incurred beginning 24 hours after the loss Reasoning: Windstorms and falling objects are covered perils under OTC coverage, so coverage is provided. Coverage for transportation expenses begins 24 hours after the loss, except when the loss is a total theft, in which case coverage begins 48 hours after the loss.

Which of the following will the Louisiana Standard Fire Insurance policy not cover? A) Personal property B) Currency C) A residential dwelling D) A commercial building

Currency Reasoning: The Standard Fire policy does not provide coverage to currency, bills, deeds, or securities.

Which of the following relationships involves vicarious liability? A) Employer and employee B) Husband and wife C) Wholesaler and retailer D) Teacher and student

Employer and employee Reasoning: Employers are assigned liability for the acts of their employees.

Which form is designed for the unit-owner of a condominium? A) HO-2 B) HO-8 C) HO-6 D) HO-4

HO-6

Under a Broad Form Dwelling policy (DP-2), which peril is not included for coverage without an endorsement? A) Falling objects B) Theft C) Damage to appliances by artificially generated electricity D) Volcanic eruption

Theft Reasoning: Theft coverage for the DP-2 is available only through attachment of the Limited Theft Endorsement or the Broad Theft Endorsement.

An HO-3 policy will pay how much for a tree damaged in a windstorm? A) $250 B) $1,000 C) $500 D) $0

$0 Reasoning: The most paid for a covered tree is $500, but coverage is not provided for windstorm or hail losses.

H's liability policy has the following limits: $35,000 per person, $350,000 per occurrence, and $2,000,000 aggregate. This year, three claimants file in the amounts of $15,000, $30,000, and $45,000. How much will the policy pay? A) $90,000 B) $80,000 C) $35,000 D) $350,000

$80,000 Reasoning: The per person limit prevents the policy from paying any more than $35,000 per person. Therefore, the $15,000 and $30,000 claims will be paid in full, but the $45,000 claim will only be paid up to the per person limit of $35,000. $15,000 + $30,000 + $35,000 = $80,000.

An insurer must file a notice of appointment with the Commissioner within: A) 30 days after the date that the first insurance application is submitted B) 20 days after the date the agency contract is executed, or the first insurance application is submitted, whichever is earlier C) 30 days after the date that the agency contract is executed D) 15 days after the date that the agency contract is executed

15 days after the date that the agency contract is executed Reasoning: An insurer must file a notice of appointment with the Commissioner within 15 days after the date the agency contract is executed. The 30-day time period applies to the Commissioner's verification of the producer's eligibility for appointment.

All of the following may be listed as an insured on a property policy, except: A) A mortgagee listed as an additional insured B) A named insured's legal representative C) The policyowner D) A business with temporary custody of the insured property

A business with temporary custody of the insured property Reasoning: Under the No Benefit to Bailee condition, a person or organization with care, custody, or control of an insured's property may not benefit from claim payments and, therefore, cannot be named as an insured on the policy. Mortgagees and loss payees can be included on the policy to receive claim payments, and may be added as an additional insured. Legal representatives may also be named as insureds, in which case they are granted rights and duties under the policy in the event of the insured's death.

All of the following may be listed as an insured on a property policy, except: A) A named insured's legal representative B) A business with temporary custody of the insured property C) A mortgagee listed as an additional insured D) The policyowner

A business with temporary custody of the insured property Reasoning: Under the No Benefit to Bailee condition, a person or organization with care, custody, or control of an insured's property may not benefit from claim payments and, therefore, cannot be named as an insured on the policy. Mortgagees and loss payees can be included on the policy to receive claim payments, and may be added as an additional insured. Legal representatives may also be named as insureds, in which case they are granted rights and duties under the policy in the event of the insured's death.

In Louisiana, which of the following statements regarding certificate of insurance is correct? A) A certificate of insurance gives an insurer the authority to transact insurance in Louisiana B) A certificate of insurance is the same as a certificate of authority, but for property and casualty insurers C) A certificate of insurance is a document provided by the insurer, as evidence of property and casualty coverage D) A property or casualty insurer may issue a certificate of insurance that will affirmatively or negatively alter the coverage provided by a policy

A certificate of insurance is a document provided by the insurer, as evidence of property and casualty coverage Reasoning: A certificate of insurance is a document provided by the insurer to a third person, the certificate holder, who is not a party to the insurance contract, as evidence of property and casualty coverage. It only provides evidence that coverage is in place and cannot be issued to alter any part of the policy. A certificate of authority gives insurers authority to transact insurance in the state.

Which property is eligible for a Broad Form Dwelling policy? A) A five-unit complex with no roomers or boarders B) A four-family dwelling with three roomers C) A three-family dwelling with six roomers D) A mobile home affixed to a foundation

A four-family dwelling with three roomers Reasoning: The Dwelling Program's eligibility requirements specify that dwellings with up to 4 dwelling units and up to 5 roomers or boarders are eligible for coverage. Five-unit dwellings and dwellings with six roomers or boarders would not qualify. Mobile homes are only eligible for coverage under the Basic Form (DP-1).

Liability coverage provided by a Homeowners policy would provide coverage for bodily injury liability arising out of all of the following, except: A) A neighbor's child is bitten by the insured's pet B) A guest is injured by a recreational vehicle operated on the residence premises C) A residence employee is injured on the residence premises while working D) A guest gets the flu from an insured

A guest gets the flu from an insured Reasoning: Coverage is not provided for bodily injury arising out of the transmission of a communicable disease.

Any person who violates a cease and desist order in Louisiana may be subject to: A) A monetary penalty of up to $10,000 for each act or violation, not to exceed $100,000 B) A monetary penalty of up to $1,000 for each act or violation, not to exceed $10,000 C) A monetary penalty of up to $20,000 for each act or violation, not to exceed $200,000 D) A monetary penalty of up to $25,000 for each act or violation, not to exceed $250,000

A monetary penalty of up to $25,000 for each act or violation, not to exceed $250,000 Reasoning: Any person who violates a cease and desist order of the Commissioner may be subject to a monetary penalty of up to $25,000 for each act or violation, not to exceed a total of $250,000, or the suspension or revocation of the person's license.

A dwelling under construction is protected by a Broad Form Dwelling policy with the Dwelling Under Construction Endorsement. While under construction, the applicable Coverage A limit is: A) A percentage of the finished building's value B) The full replacement cost of the finished building C) Half of the building's value upon completion D) At least 80% of the finished building's full replacement value

A percentage of the finished building's value Reasoning: Under the Dwelling Under Construction Endorsement, the Coverage A limit of insurance is provisional. At any given time prior to completion, the limit that actually applies is a percentage of the stated Coverage A limit, equal to the proportion the actual value bears to the value on the date of completion. The insurer must be notified of completion so coverage may be adjusted.

Coverage B of a Dwelling policy will not apply to a detached garage if which of the following is being stored? A) A broken down farm tractor belonging to the tenant B) A propane tank used for the insured's business C) Ski equipment owned by the insured's 18 year old child D) A tenant's lawn mower with a full tank of gas

A propane tank used for the insured's business Reasoning: Coverage is not provided for other structures used for commercial, manufacturing, or farming purposes. However, an exception to this rule allows coverage to apply if the structure only stores property that is used for those purposes and that is owned by either the insured or a tenant. If this kind of property includes gaseous or liquid fuel, it must be located within a vehicle's fuel tank.

Regarding a temporary license issued in Louisiana, which of the following is correct? A) A temporary license may be issued to the spouse of a disabled or deceased producer B) A temporary license of up to 12 months may be issued at exam completion C) The duration of a temporary license may not exceed 90 days D) A temporary license may not be issued to an employee of a business entity

A temporary license may be issued to the spouse of a disabled or deceased producer Reasoning: A temporary license may be issued to the spouse of a disabled or deceased producer, to the designee of a producer entering the U.S. armed forces, or in any other circumstance that is in the public interest. The duration of a temporary license may be issued for up to 180 days without an examination, and a temporary license may be issued to an employee of a business entity.

Losses under Coverage C of the DP-2 are valued on which loss settlement basis? A) Functional replacement cost B) Actual cash value C) Replacement cost D) Salvage value

Actual cash value Reasoning: Losses to personal property covered by Coverage C are valued on an actual cash value basis on all Dwelling forms. On the Broad Form, the building and other structures are valued on a replacement cost basis.

Property losses covered by a Basic Form Dwelling Policy are settled on which basis? A) Actual cash value B) Salvage value C) Replacement cost D) Functional replacement cost

Actual cash value Reasoning: Under the DP-1, covered property losses are settled based on the ACV at the time of loss, not exceeding the amount required to repair or replace the damaged property.

An unendorsed Homeowners policy may provide liability coverage for the use of all of the following watercraft, except: A) A 10-foot kayak B) A 20-foot sailboat C) An inboard motorboat owned by the insured that is used for business purposes D) A 50-horsepower outboard motorboat the insured rents for personal use

An inboard motorboat owned by the insured that is used for business purposes Reasoning: Liability coverage is excluded for all inboard motorboats owned by the insured. Further, liability coverage is excluded for any watercraft used for business purposes.

Regarding commissions and compensation in Louisiana, which of the following is not correct? A) An insurer or producer may pay commissions to a duly licensed producer for negotiating, soliciting, or effecting insurance contracts B) An insurer may pay a commission to an unlicensed producer who is appointed by the insurer C) Renewal commissions may be paid to a person for selling insurance in Louisiana if the person was required to be licensed at the time of the sale, and was licensed at that time D) An insurer or producer may not pay a commission to a person for selling, soliciting, or negotiating insurance in Louisiana if that person is licensed

An insurer may pay a commission to an unlicensed producer who is appointed by the insurer Reasoning: An insurer may not pay a commission to an unlicensed producer, regardless of any appointment.

Regarding loss payments for Personal Auto claims in Louisiana, all of the following are correct, except: A) An insurer may require that repairs be made at a specific shop as a condition for payment of an auto claim B) When all claim documents have been received by the insurer, it must process the payment within 3 calendar days, except for Saturday, Sunday, and legal holidays C) An insurer must pay a third party's expenses for alternative transportation if the third party is without the use of the vehicle for more than 5 working days D) The amount to be paid for a vehicle of like kind and quality is determined by the actual cash value of the vehicle's pre-loss condition

An insurer may require that repairs be made at a specific shop as a condition for payment of an auto claim Reasoning: An insurer may not condition the payment of an auto claim upon repairs at a particular shop for the payment of an auto claim.

With respect to loss payments for property damage claims, which of the following statements is not correct? A) An insurer must initiate loss adjustment of a claim within 14 days after the claimant notifies the insurer of the loss B) An insurer that fails to pay a claim within 30 days will have their license suspended or revoked C) Insurers must notify the producer after payment has been made for either first-party or third-party claims D) An insurer must pay a claim within 30 days after receiving proof of loss

An insurer that fails to pay a claim within 30 days will have their license suspended or revoked Reasoning: An insurer that fails to pay a claim within 30 days may be penalized the greater of 50% of the amount due or $1,000, payable to the insured, in addition to the amount of loss.

Louisiana insurers may deliver privacy notices in all of the following ways, except: A) Mailing the notice separately from the policy B) An oral description C) Electronically, with the client's consent and acknowledgement of receipt D) Hand delivery

An oral description Reasoning: An oral description is not an acceptable method of delivery for any privacy or opt-out notice.

Proximate cause refers to: A) A second negligent act that interferes with the chain of events leading to a loss B) The fact that a policy restricts the territory to which coverage applies C) The fact that a wrongdoer could not foresee the consequences of their actions D) An unbroken chain of events initiated by a negligent act that leads to a loss

An unbroken chain of events initiated by a negligent act that leads to a loss Reasoning: A proximate cause is any action or inaction leading to a loss in an unbroken chain of events. An intervening cause is a second negligent act that interferes with the chain of events. If a defendant can prove the existence of an intervening cause, they may be able to build a defense against a claim of negligence.

Negligence is what kind of tort? A) A gross tort B) An unintentional tort C) A criminal tort D) An intentional tort

An unintentional tort Reasoning: Negligence is an unintentional tort arising out of failure to use reasonable care.

Which property would be settled for its actual cash value even if the Personal Property Replacement Cost Loss Settlement Endorsement is attached to an HO-3 policy? A) Outdoor equipment B) Antiques C) Carpeting D) Appliances

Antiques Reasoning: Property that cannot be replaced, such as souvenirs, antiques, and paintings, are not eligible for replacement cost coverage. The same is true for articles in bad condition and articles that are obsolete.

In regard to fraudulent insurance acts in Louisiana, which of the following statements is correct? A) Any person who commits a fraudulent act is guilty of a felony B) Any person who receives what is believed to be a fraudulent claim must notify the NAIC C) Any information requested by the Division of Insurance Fraud must be provided within 30 days D) A person will be subject to civil liability for providing information relating to suspected fraudulent insurance transactions

Any person who commits a fraudulent act is guilty of a felony Reasoning: Any person who commits a fraudulent act is guilty of a felony and must be fined up to $5,000, imprisoned up to 5 years, or both. Any person who receives what is believed to be a fraudulent claim must notify the Insurance Fraud Division, not the NAIC. Any information requested by the Division must be provided within 60 days. A person is not subject to civil liability for providing information relating to suspected fraudulent insurance transactions in the absence of malice or bad faith.

Which of the following statements regarding insurance fraud in Louisiana is not correct? A) A person acting without malice or fraudulent intent will not be subject to civil liability for giving information to law enforcement officials B) The Commissioner may deny a license or certificate of authority when the applicant or business entity's officer or employee has been convicted of a felony C) Any person who receives what is believed to be a fraudulent claim must notify the Commissioner D) Criminal background information in the Division's possession is confidential and will not be disclosed to others outside of the Division

Any person who receives what is believed to be a fraudulent claim must notify the Commissioner Reasoning: Any person who receives what is believed to be a fraudulent claim must notify the Division of Insurance Fraud, not the Commissioner. Any information requested by the Division must be provided within 60 days.

Which of the following is not an element of negligence? A) Assumption of risk B) Proximate cause C) Duty owed D) Foreseeable consequence

Assumption of risk Reasoning: Negligence must contain four elements: that there was a legal duty of care owed to a party, that there was a breach of that duty, that the wrongful act was the direct cause of loss or damages that were reasonably foreseeable, and that actual loss or damage occurred. Assumption of risk is a defense against negligence, not an element of it.

What is Louisiana's nonrenewal notice requirement if an insurer is nonrenewing a Homeowners policy? A) At least 20 days' advance written notice B) At least 60 days' advance written notice C) At least 30 days' advance written notice D) At least 10 days' advance written notice

At least 30 days' advance written notice Reasoning: When an insurer is not renewing a Homeowners policy, the insurer must provide at least 30 days' written notice for nonrenewal.

Under the HO-4 and HO-6, personal property is covered on which basis? A) Open perils basis B) Broad Form perils basis C) All-risk basis D) Basic Form perils basis

Broad Form perils basis Reasoning: Both the Contents Broad Form and the Unit-Owners Form insure personal property against the Broad Form named perils. The only Homeowners form to offer open perils coverage for personal property is the HO-5. The only Homeowners form to offer coverage against the Basic Form perils is the HO-8.

A Broad Form Homeowners policy would cover which of the following losses? A) All losses caused by earth movement, but only if a fire or explosion ensues B) Tree damage to a detached garage resulting from an earthquake C) Building glass breakage caused by an earthquake D) Collapse of the dwelling caused by a sinkhole

Building glass breakage caused by an earthquake Reasoning: Earth movement is generally an excluded peril, but the Glass or Safety Glazing Material Additional Coverage will cover breakage of building glass or safety glazing material that results from earth movement. If a fire, explosion, or theft results from earth movement and causes a loss, only those ensuing losses are covered.

An insured has a rental property insured on a Broad Form Dwelling policy. A claim for a damaged awning would be covered if the damage was caused by: A) The weight of snow B) Burglars who vandalized the property C) A tree felled by a tornado D) Hail

Burglars who vandalized the property Reasoning: Property policies will exclude losses that are so common that they become uninsurable, such as damage to awnings resulting from falling objects, windstorms, hail, or the weight of ice or snow. If a burglary took place, the policy would cover the damage the burglars caused to the building and personal property (not including the theft loss itself).

Which of the following types of liability limits represents the maximum amount payable for a single occurrence, without regard for the number of claimants? A) Split limits B) Per person limit C) Comprehensive limits D) Combined single limit

Combined single limit Reasoning: Under a combined single limit policy, the policy will pay both bodily injury and property damage claims without regard to the number of claimants. A limit that indicates the maximum amount payable for each claimant is a per person limit.

Which of the following describes the policy liability limits that may be applied to either bodily injury or property damage, in any combination? A) Combined single limits B) Subrogation limits C) Split limits D) Per occurrence limits

Combined single limits Reasoning: Policies with combined single limits have one per occurrence limit of insurance, which may be applied to either bodily injury or property damage, or a combination of the two, as needed.

When a claimant brings a negligence claim against the insured, the court determines that the claimant is partially responsible for the loss, and the damages they are owed is reduced by the amount of their responsibility. This describes which defense against negligence? A) Contributory negligence B) Contributory risk C) Comparative risk D) Comparative negligence

Comparative negligence

When a claimant brings a negligence claim against the insured, the court determines that the claimant is partially responsible for the loss, and the damages they are owed is reduced by the amount of their responsibility. This describes which defense against negligence? A) Comparative negligence B) Contributory negligence C) Comparative risk D) Contributory risk

Comparative negligence Reasoning: Under comparative negligence, the award to the injured party is reduced by the amount of their own negligence.

General damages are those that: A) Are awarded to the general public rather than to a specific party B) Can be documented by objective dollar amounts C) Compensate an injured party for suffering, loss of consortium, and similar types of losses D) Are awarded to the negligent party to punish wrongdoing

Compensate an injured party for suffering, loss of consortium, and similar types of losses Reasoning: General damages are damages for noneconomic losses that are likely to continue into the future, where it is difficult to put a final figure on the losses.

In Louisiana, which of the following statements defines the word negotiate? A) Conferring with or offering advice to any purchaser about the specifics of a particular insurance contract B) Attempting to sell insurance, or urging a person to apply for a particular kind of insurance for a particular insurer C) Exchanging a contract of insurance for money or its equivalent on behalf of an insurer D) Offering any rebate, premium discount, advantage, or valuable consideration not specified in the policy

Conferring with or offering advice to any purchaser about the specifics of a particular insurance contract Reasoning: The official definition of the word negotiate is conferring with or offering any advice to any purchaser about the specifics of a particular insurance contract. Exchanging a contract of insurance for money is the definition for selling, and attempting to sell insurance, or urging a person to apply for a particular kind of insurance is the definition for soliciting.

K has a Broad Form Dwelling policy. Which coverage applies to the building described in the Declarations? A) Coverage A B) Coverage B C) Coverage E D) Coverage C

Coverage A Reasoning: Coverage A applies to the dwelling at the described location. Coverage B applies to other detached structures, Coverage C applies to personal property, Coverage D provides fair rental value coverage, and Coverage E covers additional living expenses.

Which of the following is true regarding Dwelling policy coverages? A) Coverage C includes coverage for personal property of tenants and boarders B) Coverage C applies while insured property is located at the described location C) Coverage D is considered a direct loss coverage D) Coverage B would cover an attached garage

Coverage C applies while insured property is located at the described location Reasoning: Coverage C primarily applies to covered personal property located at the described location, with some coverage provided for personal property being moved to a newly acquired residence and some coverage being provided for coverage worldwide, under the Worldwide Coverage Other Coverage. Coverage C may be extended to cover property of guests and domestic employees, but not that of tenants and boarders, who would need their own insurance. Coverage D - Fair Rental Value is an indirect loss coverage.

Policyholder M insures an owner-occupied, single-family residence under a Special Form Dwelling Policy (DP-3) with a limit of $100,000. If the dwelling is damaged in a fire, what policy coverage will pay for M's extra costs to stay in a motel and board M's pets while the fire damage is being repaired? A) Coverage C B) Coverage D C) Coverage B D) Coverage E

Coverage E Reasoning: Coverage E pays for the necessary increase in living expenses incurred by the insured if the building is rendered unfit for its normal use.

A Basic Form Dwelling policy (DP-1) will use an actual cash value basis to settle which losses? A) Dwelling, other structures, and personal property B) All losses are valued on a replacement cost basis C) Personal property only D) Dwelling and other structures only

Dwelling, other structures, and personal property Reasoning: The DP-1 values losses to the dwelling, other structures, and contents on an actual cash value basis. The other Dwelling forms will value losses to the dwelling and other structures on a replacement cost basis.

Regarding the Louisiana FAIR Plan, which of the following statements is correct? A) Every insurer must be a member of the Plan as a condition of its authority to transact insurance B) Property must be an uninsurable risk C) Losses are paid by the state D) The FAIR Plan is designed to provide a means to purchase basic automobile insurance at reduced rates

Every insurer must be a member of the Plan as a condition of its authority to transact insurance Reasoning: The FAIR Plan requires every insurer to be a member of the Plan as a condition to transact insurance, and is designed to provide an adequate market a means to purchase basic property insurance when it cannot be obtained through standard or regular markets. Losses are paid by the insurance industry in the private sector, and property must be an insurable risk.

When a Homeowners policy provides coverage for medical payments, payments are provided: A) To cover an insured's injuries B) For therapy following personal injuries C) For funeral expenses D) Up to the Coverage E limit

For funeral expenses Reasoning: Medical payments coverage, provided by Coverage F, provides a limited amount of coverage for medical expenses incurred by an injured third party, including surgical, dental, hospital, professional nursing, and funeral expenses. Personal injury damages are not covered by Section II, except by endorsement. Coverage E - Personal Liability provides coverage for damages awarded against the insured for bodily injury or property damage to others.

Which of the following would not be covered under Coverage B of a Broad Form Dwelling policy? A) Shed B) Swimming pool C) Grain silo D) Pole barn connected to the dwelling by a utility line

Grain silo Reasoning: A grain silo is a structure used for farming purposes, so it is not eligible for coverage under the Dwelling Program. Coverage B covers detached structures, including those connected to the dwelling only by a fence, utility line, or similar connection.

Regarding the advertisement of the Louisiana Insurance Guaranty Association, which of the following statements is correct? A) Insurers are not allowed to advertise the existence of the Association to induce prospects to purchase policies B) The Commissioner may advertise the existence of the Association to assist in the sales of certain policies C) Insurers may advertise the existence of the Association if all members have a certificate of authority D) Insurers who advertise the existence of the Association are subject to a penalty of $10,000

Insurers are not allowed to advertise the existence of the Association to induce prospects to purchase policies Reasoning: Insurers and agents are prohibited from using the existence of the Guaranty Association to induce prospects to purchase insurance. Advertisements that include a reference to the coverage or protection by the Association are prohibited. Anyone who advertises the Association is subject to a penalty of $500-1000 for the first offense, and $1000-2000 or license suspension or revocation for a second offense.

The named insured on a personal lines policy issued in Louisiana needs to know their policy's claims history and requests loss information from the insurer. The insurer is required to provide all of the following information, except: A) Amounts paid for all claims during the last 3 years B) Loss reserve information C) Dates of all occurrences for all claims D) Descriptions of all occurrences for all claims

Loss reserve information Reasoning: When providing claims history at the named insured's request, insurers are not required to provide loss reserve information. For personal lines, loss information must be provided for all claims during the previous 3 policy years.

Which of the following is true regarding coverage provided by a flood policy written by the National Flood Insurance Program? A) Coverage is available for crops and livestock for eligible farm properties B) Losses to buildings and losses to personal property are subject to separate deductibles C) Coverage is available only for personal residential buildings D) Policies automatically include loss of use coverages

Losses to buildings and losses to personal property are subject to separate deductibles Reasoning: Separate deductibles apply to flood losses to property, one for building losses and one for personal property losses. If a flood causes losses to both types of property, the insured is liable for two deductibles. Loss of use is an indirect loss, so coverage is not provided.

Which of the following coverages is not provided by the Personal Liability Supplement? A) Defense costs B) Medical payments to an injured residence employee C) First aid expenses D) Medical payments to a regular resident of the dwelling who sustains an injury

Medical payments to a regular resident of the dwelling who sustains an injury Reasoning: Coverage M provides medical payments to others, regardless of fault. This coverage may be provided to residence employees, but it is not intended for expenses incurred by the named insured or regular residents of the named insured's household. Defense costs are included under Coverage L - Personal Liability. The supplement also provides a First Aid Expenses Additional Coverage.

The Broad Theft Coverage Endorsement added to a Dwelling policy insures against theft of which of the following types of property? A) Money and securities B) Animals C) Motor vehicles D) Credit cards

Money and securities Reasoning: The theft coverage endorsements insure against theft of personal property, and will include special limits for certain types of property, like money, securities, passports, watercraft, and jewelry. Vehicles, animals, credit cards, aircraft, and business property are all excluded from coverage.

Regarding the licensing of a business entity in Louisiana, which of the following is not correct? A) Register with the Department all of its officers, directors, and partners, and employees who will be soliciting insurance B) Only the designated producer may transact business on behalf of the business entity C) Any changes of officers or members must be provided to the Department within 30 days D) A business entity must designate a licensed insurance producer who will be responsible for the entity's compliance

Only the designated producer may transact business on behalf of the business entity Reasoning: A licensed business entity is not required to transact business exclusively through the designated producer. The designated licensed insurance producer is responsible for the entity's compliance.

What is the term for the first event in the unbroken chain of events that resulted in a loss? A) Incidental cause B) Efficient cause C) Proximate cause D) Indirect cause

Proximate cause Reasoning: The proximate cause is the primary cause of loss in a sequence of events that causes loss or damage and results in a claim.

The most a policy will pay for a loss arising out of any one accident, regardless of overall policy limits, is known as the: A) Split limit B) Per occurrence limit C) Aggregate limit D) Per person limit

Per occurrence limit Reasoning: The per occurrence limit represents the most the policy will pay for all losses arising out of any one occurrence, regardless of other policy limits. This is distinct from an aggregate limit, which represents the most the policy will pay for all losses submitted during the policy period.

In liability insurance, the most the policy will pay for a loss arising out of any one occurrence, regardless of overall policy limits, is known as the: A) Per occurrence limit B) Per person limit C) Aggregate limit D) Split limit

Per occurrence limit Reasoning: The per occurrence limit specifies the most the policy will pay for a specified type of loss arising out of any one occurrence. If the policy also has an aggregate limit, which is the most the policy will pay for all losses resulting from all occurrences during the policy period, the amount paid under a per occurrence limit will reduce the amount of the aggregate limit available for other losses.

A policyholder has a Special Form Dwelling policy. Which of the following statements about loss settlements is correct? A) Outdoor equipment covered under Coverage A is valued on a replacement cost basis B) Other structures must meet a 50% insurance to value requirement to receive full coverage for partial losses C) Losses to the dwelling are paid on an actual cash value basis D) Personal property is valued on an actual cash value basis

Personal property is valued on an actual cash value basis Reasoning: Personal property protected under Coverage C is valued on an actual cash value basis. The dwelling under Coverage A and buildings under Coverage B are valued on a replacement cost basis, but the insured must meet an 80% insurance to value requirement for replacement cost settlement to apply. Outdoor equipment, awnings, carpeting, and household appliances are always valued at their actual cash value.

A policyholder has a Special Form Dwelling policy. Which of the following statements about loss settlements is correct? A) Losses to the dwelling are paid on an actual cash value basis B) Personal property is valued on an actual cash value basis C) Other structures must meet a 50% insurance to value requirement to receive full coverage for partial losses D) Outdoor equipment covered under Coverage A is valued on a replacement cost basis

Personal property is valued on an actual cash value basis Reasoning: Personal property protected under Coverage C is valued on an actual cash value basis. The dwelling under Coverage A and buildings under Coverage B are valued on a replacement cost basis, but the insured must meet an 80% insurance to value requirement for replacement cost settlement to apply. Outdoor equipment, awnings, carpeting, and household appliances are always valued at their actual cash value.

Which statement concerning coverage provided by Homeowners policies is correct? A) Dwellings under construction are insured against theft losses B) Animals, birds, and fish are considered covered property under Coverage C) Coverage is provided for other structures used to store business property D) Property located in a student dormitory off the residence premises is covered by Coverage C

Property located in a student dormitory off the residence premises is covered by Coverage C Reasoning: Coverage for personal property located at a secondary residence not considered the residence premises is subject to certain limitations, including being subject to a limit of insurance equal to 10% of the Coverage C limit or $1,000, whichever is greater. The Theft peril excludes coverage for theft losses to dwellings under construction.

The Dwelling Program would provide coverage for which of the following windstorm or hail losses? A) Windstorm damage to an awning B) Rain damage to carpet after hail broke a window C) Hail damage to an outdoor television antenna D) Tornado damage to a rowboat sitting outside

Rain damage to carpet after hail broke a window Reasoning: Windstorm and hail coverage will cover losses to the building's interior if wind or hail first caused an exterior loss that led to the interior loss, such as rain damage to the carpet after hail broke a window. Wind and hail damage to awnings, outdoor antennas, canoes and rowboats located outside, trees, and plants are not covered.

Y has a Special Form (DP-3) Dwelling policy on a rental property that has been vacant for 65 consecutive days. In the event of a loss, which of the following losses would the policy cover? A) Rain damage to the interior after hail damaged the roof B) An attempted burglary that left the front door lock broken C) A storm window broken by a falling tree limb D) Vandalism to the dwelling

Rain damage to the interior after hail damaged the roof Reasoning: Property policies may exclude coverage for certain losses when the building has neither personal property nor occupants for a certain time period. The DP-3 will not provide coverage for vandalism, theft or attempted theft, or glass or safety glazing material when the insured dwelling has been vacant for more than 60 consecutive days immediately before the loss.

Which of the following describes the loss settlement basis for a fire damage claim to a dwelling insured under a DP-3 policy? A) Actual cash value of the dwelling up to the Coverage A limit B) Actual cash value of the dwelling up to the Coverage B limit C) Replacement cost up to the Coverage B limit D) Replacement cost up to the Coverage A limit

Replacement cost up to the Coverage A limit Reasoning: The dwelling is covered under Coverage A. On the Special Form, losses to the dwelling and other structures are paid on a replacement cost basis, and losses to personal property are paid on an actual cash value basis.

What method of loss valuation values damaged property at the cost to replace it with property of like kind and quality, at current prices, and without a deduction for depreciation? A) Market value B) Replacement value C) Actual cash value D) Functional replacement cost

Replacement value Reasoning: The cost to replace damaged property with the same material and workmanship, at current prices, and without a deduction for depreciation, is the replacement value. Actual cash value valuation will make a deduction for depreciation. the functional replacement cost will cover the cost of replacing materials with their functional equivalent.

H's jewelry is covered under Coverage C of their Broad Form Homeowners policy, but theft of jewelry is subject to a special limit of liability. If H wants better coverage for a $10,000 necklace inherited from their mother, including insurance against more perils and a higher limit of liability, which endorsement might H's agent recommend? A) Increased Limits - Coverage C Endorsement B) Open Peril Personal Property Endorsement C) Scheduled Personal Property Endorsement D) Personal Property Replacement Cost Endorsement

Scheduled Personal Property Endorsement Reasoning: The Scheduled Personal Property Endorsement is used to increase limits of liability for certain categories of personal property and to broaden the perils insured against that apply to that property. This is commonly used for items of personal property that have a high value, such as jewelry, furs, musical instruments, silverware, and fine arts.

Dwelling policies contain all of the following policy conditions, except: A) Liberalization B) Abandonment C) Recovered Property D) Severability

Severability Reasoning: Severability is a casualty insurance condition, and it is not included in the Conditions section of a Dwelling policy.

Medical expenses and loss of earnings awarded to an injured party are considered: A) Physical damages B) Special damages C) General damages D) Punitive damages

Special damages Reasoning: Special damages are awarded to an injured party for actual and known expenses such as medical bills, loss of earnings, and the cost of repairing or replacing damaged property.

A manufacturer is held liable if a product caused an injury whether the product was or was not defective. This describes what type of liability? A) Strict liability B) Operations liability C) Contingent liability D) Vicarious liability

Strict liability Reasoning: The doctrine of strict liability applies to products and their manufacturers. It holds that the manufacturer can be held responsible for an injury caused by a product, even if the product is not defective.

When a claimant can prove that a product caused an injury, the fact that the manufacturer will be held liable regardless of whether the product was defective or not is an example of: A) Contingent liability B) Direct liability C) Strict liability D) Vicarious liability

Strict liability Reasoning: The doctrine of strict liability applies to products and their manufacturers. It holds that the manufacturer can be held responsible for an injury caused by a product, even if the product is not defective.

Regarding examinations in Louisiana, which of the following statements is correct? A) The Commissioner may, but is not required to, examine insurance companies B) The Commissioner is required to examine insurance companies monthly C) The Commissioner can examine a producer if they receive a complaint that they are not acting in conformance with the insurance laws D) The Commissioner must conduct a financial examination of an insurer at least once every 5 years

The Commissioner must conduct a financial examination of an insurer at least once every 5 years Reasoning: The Commissioner must conduct an examination of an insurer at least once every 5 years and at any other time the Commissioner deems necessary. The Commissioner can examine a producer if they have received at least 3 complaints within a 30-day period.

In which of the following circumstances would the insured be required to pay the self-insured retention of a Personal Umbrella Liability policy? A) The limits of the underlying policy have been exhausted B) The insurance carrier is declared insolvent C) There is a substantial change in the risk D) The Umbrella drops down to act as the primary policy

The Umbrella drops down to act as the primary policy Reasoning: The insured is only required to pay a self-insured retention when the Umbrella drops down to serve as the primary policy, which happens when the underlying policy does not cover a loss. If the Umbrella policy is activated after the limits of the underlying policy have been exhausted, the Umbrella policy provides excess liability coverage, and the retention would not apply.

When paying a total vehicle loss in cash to a first party in Louisiana, the amount to be paid for a vehicle of like kind and quality will be determined by one of the following, except: A) A fair market value survey using qualified retail automobile dealers in the local market area B) The actual cash value of the vehicle's pre-loss condition, as determined by a qualified expert appraiser C) The cash value of the car as determined on the policy D) Retail cost determined by a generally recognized used vehicle industry source

The cash value of the car as determined on the policy Reasoning: In Louisiana, the cash value of the car as determined on the policy is not considered when determined how much must be paid in the event of a total vehicle loss.

Which of the following is not essential in determining if an action is due to negligence? A) The injured party must prove the alleged wrongdoer owed a duty to the injured party or to the public B) The injured party must prove the wrongdoer committed a criminal act C) The injured party must prove the wrongdoer failed to act in a reasonable and prudent manner D) The injured party must prove the actual injuries or damages were foreseeable

The injured party must prove the wrongdoer committed a criminal act Reasoning: Negligence is the commission of a civil or private wrong, not a criminal wrong.

Which of the following would not be covered under Coverage C of the Special Dwelling Form? A) Property of guests and domestic employees B) Property of others that the insured is using C) Household and personal property D) The insured's golden retriever

The insured's golden retriever Reasoning: Coverage C covers personal property that the insured owns or uses, personal property the insured's resident family members own or use, and the personal property of a guest or domestic employee. The policy does not cover animals or pets.

In Louisiana, which of the following statements regarding notification of termination of an appointment is not correct? A) The insurer must notify the Commissioner within 60 days if the termination is not grounds for license denial, nonrenewal, probation, suspension or revocation B) The insurer must mail a copy of the notification to the agent within 15 days after notifying the Commissioner C) The agent may file written comments with the Commissioner within 30 days after receiving a copy of termination notification D) The insurer must notify the Commissioner within 15 days if the termination is grounds for license denial, nonrenewal, probation, suspension or revocation

The insurer must notify the Commissioner within 60 days if the termination is not grounds for license denial, nonrenewal, probation, suspension or revocation Reasoning: The insurer must notify the Commissioner within 15 days, not 60, if the termination is grounds for license denial, nonrenewal, probation, suspension, or revocation. For any reason that is not grounds for license denial, nonrenewal, probation, suspension, or revocation, the producer must notify the Commissioner within 30 days of the circumstances for the termination.

The insurer's duty to defend contains all of the following stipulations, except: A) Defense costs the insurer incurs are paid in addition to the policy limit B) The insurer must provide a defense if a suit relevant to the policy is brought against the insured C) The insurer has the right to settle suits when appropriate, unless prevented by a Consent to Settle provision D) The insurer's duty ends at the end of the policy period, even if damages owed by the insured have exceeded policy limits

The insurer's duty ends at the end of the policy period, even if damages owed by the insured have exceeded policy limits Reasoning: The insurer's duty to defend ends when the policy limits have been exhausted by judgments or settlements. Essentially, the duty applies only to the extent that coverage is provided. If the policy limits are exhausted, the insurer cannot provide coverage, so it does not have the duty to defend the insured.

The insurance provided by a liability policies applies: A) To each insured separately, except for policy limits B) To all insureds as a collective, except for policy limits C) To each insured separately, including policy limits D) To all insureds as a collective, including policy limits

To each insured separately, except for policy limits Reasoning: Under the Severability condition, the insurance provided by a liability policy applies to each insured separately (severally), except for the limits of liability.

The Amendment of Policy provisions endorsement attached to Personal Auto policies issued in Louisiana provides all the following, except: A) Under Part A, liability coverage for owned autos is changed from primary to excess coverage B) Under Part B, the insurer will not cover an insured unless they have permission from the auto's owner to use the auto C) Under Part D, the insurer will provide coverage for an insured's or family member's loaner vehicle while a covered auto is serviced or repaired D) Under Part F, the insurer's right to recover payment is subordinate to the insured's right to be fully compensated

Under Part A, liability coverage for owned autos is changed from primary to excess coverage Reasoning: Though coverage on non-owned autos is typically provided as excess insurance, the Amendment of Policy Provisions endorsement indicates that liability coverage is changed to primary insurance for loaner vehicles. This endorsement does not change how the coverage applies to owned autos, so the policy will continue to provide primary insurance.

G owns a two-unit residential dwelling that is used exclusively as a rental property. G can obtain property coverage for their interest in the property through which coverage form? A) HO-6 B) Commercial Unit-Owners Coverage Form C) Unendorsed DP-1 D) DP-3, but only by adding an endorsement

Unendorsed DP-1 Reasoning: Any Dwelling policy can be used to cover G's interest in the rental property without needing any endorsement.

Coverage C on the HO-3 would cover which of the following losses? A) Fire loss to the personal property of a boarder who is not related to the insured B) Vandalism loss to property the insured borrows from a neighbor C) Damage to furniture caused by wild animals D) Lightning damage to a structure held for rental to tenants as a private garage

Vandalism loss to property the insured borrows from a neighbor Reasoning: Coverage C covers personal property (contents) owned or used by the insured. Coverage C can apply to the personal property of others while it is on the residence premises, as long as coverage is requested by the insured after a loss by a covered peril. Property of a boarder, roomer, or tenant who is not related to an insured is not covered, as they would need their own insurance. Coverage C on the HO-3 protects against the Broad Form named perils, which does not include wild animals. Damage to a structure rented or held for rental to tenants as a private garage is covered under Coverage B.

Under the Basic Dwelling Form, when is damage caused by vandalism included as covered peril? A) This coverage is not available on the Basic Form Dwelling policy B) When the VMM Endorsement is added to the DP-1 C) When under the unendorsed DP-1 D) When the Extended Coverage perils are added to the DP-1

When the VMM Endorsement is added to the DP-1 Reasoning: The DP-1 provides coverage against three perils: fire, lightning, and internal explosion. The Vandalism and Malicious Mischief Endorsement adds coverage for damage caused by vandalism.