missed exam questions
Under a dwelling policy, which of the following is NOT a factor in determining a loss?
The amount negotiated by the insured
All of the following are characteristics of the dwelling policy EXCEPT
The dwelling must be owner-occupied.
The common policy condition is a modular part combined with other parts to create the contract. The common policy condition section contains provisions that are applicable to all the lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy condition section of the policy?
The first named insured may cancel the policy at any time by giving written notice to the insurer.
Losses that result from the freezing of a plumbing system while the dwelling is vacant would be EXCLUDED under a homeowners policy UNLESS
The insured had drained the plumbing system.
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.
The cancellation provision in a businessowners policy specifies all of the following EXCEPT
The method of transferring the owner's rights.
The Commissioner is empowered to examine the records of any person transacting insurance in the State as an agency, an agent or broker of record. If the Commissioner does examine a person, the expense of that examination will be paid by
The person examined.
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.
For the purpose of insurance, risk is defined as
The uncertainty or chance of loss.
All of the following statements are true regarding fire department service charge additional coverage under the businessowners policy EXCEPT
This coverage limit pays in place of the limit of insurance shown in the declarations. (The fire department service charge covers charges up to $2,500 and is payable in addition to the limit of insurance shown in the declarations and is not subject to any deductible.)
When a licensee is accused of any act, omission, or misconduct that would subject the licensee to a license suspension or revocation, with the approval of the Commissioner, the license may be surrendered for a period of
Time to be set by the Commissioner.
The NC insurance underwriting association has all of the following powers except
To engage in writing policies of insurance for town and county mutual insurance associations.
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has been depreciating at $200 per year and the insured's policy is written on the actual cash value(ACV), how much will the policy pay toward the insured's new roof?
$5,000 ACV is calculated as replacement cost less depreciation.
A commercial property special form covers property in transit up to
$5,000.
What is the minimum amount of coverage that should be carried on an HO-2 on a home that was purchased four years ago for $75,000, which today has a replacement value of $100,000?
$80,000
If the ownership of an insured vessel changes involuntarily, within how many days of the ownership transfer will the hull policy terminate?
15
Within how many years of a loss may an insured bring a lawsuit against an insurer, according to the dwelling policy?
2 years
The appraisal clause of the standard fire policy allows for the process of settling disputes over the ACV of the property or the amount of loss. When disputes arise, each party (insurer and the insured) must select an impartial appraisal within
20 days.
Unless exempt, individuals applying for an insurance agent's license must first complete an approved course of study of
20 hours.
Under the dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it must inform the insured within how many days of receiving proof of loss?
30 days
The Commissioner must examine every domestic insurer at least once every
5 years.
An automobile rate filing made by the North Carolina Rating Bureau is deemed to be approved after
50 days.
To be eligible for businessowners policy (BOP) coverage, an office building CANNOT be higher than
6 stories.
Which of the following losses would NOT be covered by a homeowners policy?
A coin collection valued at $500 lost in a fire
All of the following would be eligible for coverage under the dwelling policy EXCEPT
A house that has 5 residential units. Eligibility requires that the dwelling have not more than 4 family units.
The insured ship has been stranded. The insurer will pay
To sight the bottom even if no damage is found. (The hull policy pays for sighting the bottom after stranding even if no damage is found. The hull policy never pays for scraping and painting the bottom.)
An insured covered under a mobile homeowners policy wants to move the location of the covered mobile home. Which of the following must the insured obtain from the insurer?
Transportation/ permission to move endorsement
A businessowners policy is
A self-contained prepackaged policy.
Licensing fees must be paid annually by
April 1. Annual fees are required to be paid each year before April 1 for licenses issued, renewed, or cancelled.
Which of the following other coverages is NOT included in the basic form dwelling policy?
Breakage of glass
The Business Pursuits endorsement under Section II of a homeowners policy will cover all of the following EXCEPT
Business liability. By endorsement, an insured may extend the Section II liability coverage to certain business pursuits that occur away from the premises. It would cover the activities of the insured, but would not cover the liability of a business owned by an insured.
A builder's risk form is most often written as which of the following?
Completed value form (A building under construction could be insured on reporting forms, but the value of the building should only increase during the policy period. To prevent all the administrative work required for reporting forms, most often completed value forms are used.)
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of
Concealment.
Which of the following is the Fair Rental Value coverage in the dwelling policy?
Coverage D
Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis?
DP-1 insures the structure on an actual cash value basis. DP-2 and DP-3 insure the structure on a replacement cost basis.
Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy?
Damage to the dwelling caused by lava or dust from a volcanic eruption
The commercial property declarations page contains which of the following information?
Description of the property insured
Under the examinations of books and records condition, the insurance company has the right to examine and audit the insured's books and records related to the policy
During the policy period and for up to 3 years after the termination of the policy.
All of the following are exclusions that apply in all three types of Dwelling Policies EXCEPT
Fire or lightning
Maps that indicate which areas in the community are subject to severe flooding are called
Flood Hazard Boundary Maps.
The major portion of the premium for an equipment breakdown policy pays
For inspections and examinations.
When an insurer requires a written proof of loss after notice of such loss has been given by the insured or beneficiary, the company must
Furnish a blank form to be used for that purpose.
In which of the following situations is it legal to limit coverage based on marital status?
It is never legal to limit coverage based on marital status.
Which BEST describes the perils covered under a standard fire policy?
Named perils contract
An insured has a personal property replacement cost endorsement under her homeowners policy. If an expensive painting and an antique chair are stolen from the insured's home, what will the insured receive on the claim under that endorsement?
Nothing. The personal property replacement cost endorsement excludes property such as art and antiques.
Under a dwelling policy, which of the following clauses applies if an insured has lost one of two matching silver candlesticks?
Pair or set
All of the following are options of the insurer in the loss settlement of a standard fire policy EXCEPT
Pay replacement cost value.
An insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. Which type of limit of liability does this insured's policy have?
Per Occurrence
Which of the following limits, shown in the declarations of a policy, applies to medical expenses?
Per person
An insured is a member of the neighborhood association, and has become liable for damage to a third party. Each member of the association has been assessed a portion of the loss equal to $2,000. How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay?
Up to $1,000
Which of the following best describes the amount of loss assessment coverage included under a homeowners policy liability coverage section?
Up to $1000 per occurance
Which of the following is NOT one of the available additional coverages in the builders risk form?
Vandalism
A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT
Workers compensation coverage
An advertising company has its annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupants of the other car involved in the accident sue the company for serving the customer too much alcohol. Will the company's businessowners policy provide coverage?
Yes, none of the exclusions will apply.
All of the following are true regarding rebates (rebates are only allowed if specifically stated in the policy, rebating can be anything of economic value given as an inducement to buy, dividends are not considered to be rebates) EXCEPT
____ are allowed if it's in the best interest of the client
All of the following are conditions commonly found in the insurance policy EXCEPT a)Subrogation .b)Appraisal .c)Insuring agreement .d)Cancellation and nonrenewal.
c)Insuring agreement.
all of the following are exclusions that apply in all 3 types of dwelling policies (water damage, earth movement, government action) except...
fire and lightning
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration
Harold's building has standard fire coverage, but Harold has purchased separate policies from three different companies. Each of the three companies' policy limit is $100,000. According to the pro rata liability clause, in the event of a loss how much will each company pay for the loss?
33 1/3% Pro rata prevents an insured from collecting overinsurance from multiple policies. Pro rata liability clause limits the liability of the insurer to a portion of the loss no greater than the amount the insured bears to the whole insurance covering the property whether collected or not.
An agent receives a cash premium payment from one of his clients. He deposits the cash into his own personal business account and subsequently drafts a premium check from the business account and forwards that on the insurer. The agent is guilty of
Commingling. (Mixing client funds with your own is considered commingling and is illegal.)
Which of the following dwelling coverage forms would pay replacement cost for the dwelling?
DP-2 and DP-3 pay replacement cost as long as the house is insured for at least 80% of its value on the date of loss.
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?
Defamation
Which types of losses are covered by the standard fire policy?
Direct losses only
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
Discrimination. Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.
The term "essential insurance coverage" as defined by the North Carolina Insurance Association refers to
Insurance against direct loss to property as defined in the standard statutory fire policy and extended coverage, vandalism and malicious mischief endorsements.
Anyone covered under an insurance policy, whether named or not, is known as the
Insureds.
An agent represents the
Insurer. An agent is a person licensed to solicit insurance applications or negotiate an insurance policy. Agents represent the insurance company, not the insureds.
Prior to approving the application for resident insurance license, the Commissioner shall find that the individual meets all of the following requirements EXCEPT
Is at least 21 years of age.
Which of the following is true regarding the fire department service charge under the builders risk form?
It is an additional coverage.
All of the following statements are true regarding employee dishonesty optional coverage under the businessowners policy (BOP) EXCEPT
It provides coverage for all employees, even those employees who were terminated in the past 90 days.
A property insurance policy that insures a commercial building on a replacement cost basis includes the ordinance or law coverage endorsement. This endorsement will cover all of the following expenses EXCEPT
Ordinance with which the insured was required to comply prior to the loss.
An agent in Ohio wants to become an agent in North Carolina. The Commissioner will waive certain examination requirements, provided that Ohio would waive these same requirements if a North Carolina agent sought licensure in Ohio. What term does this describe?
Reciprocity
In order for an insurer to deviate from the rates set by the Bureau, the deviation must be approved by the Commissioner and be based on
Sound actuarial principles. (An insurer may deviate from the rates promulgated by the Bureau if the insurer has filed the proposed deviation with the Bureau and the Commissioner, if the proposed deviation is based on sound actuarial principles, and if the proposed deviation is approved by the Commissioner.)
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called
Specific coverage.
Which of the following is an example of a producer being involved in an unfair trade practice of rebating?
Telling a client that his first premium will be waived if he purchases the insurance policy today Rebating is defined as offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both the offer and acceptance of a rebate are illegal.
To be eligible for coverage under the National Flood Insurance Program, an insured must live in which of the following communities?
That has met the minimum floodplain management guidelines
All of the following people would be considered insureds under the liability section of a homeowners policy EXCEPT
The 22-year-old niece of the insured who is visiting. (Relatives of the insured of any age are considered insureds only if they are residents of the household)
Which of the following losses would most likely not be covered under Coverage A in the dwelling policy?
Theft of a renter's lawnmower used to service the premises
All of the following are other coverages included in both the broad and special form dwelling policy EXCEPT
Theft of personal property.
A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean?
There is no coverage.
All of the following are essential elements of a commercial package policy (CPP) EXCEPT
Valuations and/or settlement provisions