P&C Stimulated Exam

An insured and his spouse were traveling down an icy road and hit a sign, accumulating $1,350 damage to their car. They have a $250 deductible. They have already collected on a $1,500 claim. How much will they collect on this claim?

$1,100.

Under Coverage E- Scheduled Farm Personal Property, livestock that is not specifically insured is limited to a coverage limit of?

$2,000 per head.

What is the maximum fine a producer will face for using an unapproved trade name?

$5,000.

Which of the following is the least amount of controlled business that would be considered illegal?

26%

If a licensee changes his or her residence address, within how many days must the Director be notified?

30 days.

Which of the following would NOT be eligible for coverage under a personal auto policy?

A vehicle purchase 90 days ago.

All are legal defenses against the claim of negligence EXCEPT?

Absolute liability.

Which of the following terms describes replacement non-mechanical sheet metal or plastic parts on the exterior of a motor vehicle?

Aftermarket crash parts.

Coverage D, additional living, expenses is intended to?

Allow the family to maintain their normal standard of living.

Who is considered a nonresident agent?

An agent who resides in another state, but his license to write insurance in this state.

A general liability policy will respond to claims against an insured when bodily injury or property damage is caused by?

An insured's negligence.

A driver who has an auto policy with limits of liability lower than required by state laws would be considered?

An uninsured motorist.

In order to get a nonresident license in Louisiana, producers must?

Apply and pay a fee to nonresident state that reciprocates.

Which of the following is most likely an INELIGIBLE for coverage under the business owner policy?

Bank.

In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will?

Be reduced by 10%.

Which commercial property form is used to ensure buildings while under construction?

Builders risk.

How is professional liability policy written?

Claims-made.

What two policy components are part of every commercial package policy?

Common policy declarations and common policy conditions.

Under which legal defense is there an appointment of damages based upon the degree of fault of each of the plantiffs and the defendant?

Comparative negligence.

An insured believes that his insurer is not properly fulfilling its obligations regarding his policy. What section of the policy will give the insured more information about specific duties of the insurer?

Conditions.

Which of the following exclusions would specifically fall under Coverage E?

Contractual liability.

When an agent obtains an insurance license for the primary purpose of writing insurance for himself, his spouse, or his own business, this is called?

Controlled business.

To be valid, an insurance must have all of the following EXCEPT?

Countersignature(ANSWER) Acceptance Consideration Offer

Other than perils, the difference in the three DP forms is in coverage provided. Which of the following coverage options is covered by the DP-2 and the DP-3 but not DP-1?

Coverage E - Additional Living Expense.

Which of the following perils is NOT covered the DP-2?

Damage to pets, birds, or fish.

A schedule personal property endorsement will be used to insure?

Higher limits of coverage for fine arts items.

How does Insurance distribute the financial consequences of individual losses?

It transfers the risk to all persons insured.

All the following are true regarding a producer's fiduciary responsibility EXCEPT?

Producers may commingle personal funds with the company funds.

Time parameters set by statute law that limit the amount of time in which a claimant can bring an action for recovery for certain type of loss is called?

Statue of limitations.

Which of the following best describes how underinsured motorist coverage works?

The coverage pays the difference between the insured's underinsured motorist limit and the other driver's property damage coverage limit.

What information is found in the conditions part of an insurance policy?

The description of the duties and obligations of the insured.

What is the purpose of the Terrorism Risk Act?

To share the risk of loss from terrorist acts with the insurance industry.

Which of the following is NOT part of the section 2 of the boat owners policy?

Watercraft damage.

The Second Injury Fund will pay the benefits in which of the following situations?

An employee with a previous injury suffers a second injury that causes the disability to be more serious.

The broad cause of loss form in the commercial property policy contains three perils in addition to the basic form perils. Which of the following is NOT one of those three perils?

Utility Services.

If a producer's license was revoked for a violation of the insurance code, when can the producer apply for a new license?

After 1 year.

Each of the following may be insured under an HO-3 homeowners policy except?

The owner-occupant of a condominium unit.

An insured has decided to never drive another vehicle and wants to transfer his auto insurance policy to his wife. What does the insurer need to transfer the policy?

The written consent of the insurer.

What was the purpose of the Motor Carrier Act of 1980?

To establish financial responsibility requirements for interstate motor carriers.

The extended nonowned coverage provides protection to?

Only the persons named on the policy.

An injured has a personal umbrella with a $2,000 self-insured retention (SIR). Assuming no other policy is involved, how much would the umbrella pay after a $12,000 personal injury liability claim?

$10,000.

The association's obligation for payment of unearned premium resulting from the insolvency of a member insured is the amount of the unearned premium or?

$10,000.

What type of policy, which may be added by endorsement or purchased separately, may an insured purchasing an order to provide coverage for the types of contracts?

A contractual liability policy.

When an employee got her new job, she was told that the local government required her to get a bond to guarantee that she would follow the city laws and regulations associated with her job. What kind of bond does employee need?

A license and permit bond.

After a covered loss on a homeowner's policy, the insured must do all the following EXCEPT?

Abandon the property involve to the insurer.

List all of the following company's location of Incorporation?

Alien, domestic, & Foreign.

Under a commercial general liability policy, which of the following is NOT considered mobile equipment?

An automobile use as a company car by a real estate company.

A lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lender may be guilty of?

Coercion.

During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sound worse than it is. This is an example of?

Defamation.

All of these types of property may be covered on Farm property coverage form EXCEPT?

Growing crops.

Which form ensures both building and personal property on an open peril basis?

HO-5

Which of the following is NOT found in the common policy declarations of a commercial package policy?

Insuring agreement.

What are the two sources for worker Compensation Insurance?

Monopolistic state-funded competitive market.

Among people in the same class and life expectancy, which of the following factors can be used to influence premium rates?

Occupation.

What terms include loss is caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected?

Occurrence.

What does HO personal property coverage NOT cover?

Personal Property of roomers not related to the insured.

When an insurer pays the cost to exchange damaged property with the new property of similar kind of quality, it is called?

Replacement Cost.

Which of the following actions does NOT constitute false advertising?

Requiring applications more quickly than is reasonable.

What does the application of contract of adhesion mean?

Since the insured does not participate in preparing the contract, any ambiguities will be resolved in favor of the insured.

Under the property casualty conditions of a homeowners policy, what may happen if it is discovered that the policy committed concealment or fraud?

The policy may be voided.

Which of the following statements regarding Surety bonds is true?

The purpose of surety bonds is to guarantee that specific duties or obligations will be fulfilled.

An agent tells an insurer that if he replaces his current insurance policy with the newer one, his dividends will be higher and his premiums will be slightly lower. The policy, however, would not offer either one of these things. What type of misrepresentation is being committed?

Twisting.

Chris, who is unlicensed, works part time in her father's insurance agency. She may perform all of the following activities EXCEPT?

Collect premium for in-force policies and explain coverages to clients that have existing policies written by her father.

Which of the following dwelling policies require insurance equal to at least 80% of the replacement value of the dwelling at the time of loss in order to provide replacement cost coverage?

DP-2 and DP-3.

An important fact about the financial status of the insurer was deliberately withheld. Which of the following terms best describes this action?

False financial statement.

Which of the following is NOT true regarding the automatic increase in insurance endorsement in dwelling policies?

It does not require additional premium.

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of Interest, so the agent guarantees how are dividends than he knows will be possible. Which term describes what the agent has done?

Misrepresentation.

The other states' insurance section of a workers compensation policy provides coverage?

Only for those other states listed in the policy.

Which provision defines how the policy will respond if there is other valid insurance written on the same risk?

Other insurance.

What sublimit in a liability policy sets the maximum amount that will be paid for claims arising from a single accident?

Per occurrence.

The declarations section in a homeowners policy provides all of the following information EXCEPT?

Policy exclusions.

What is the purpose of acquiring licenses for persons who transact insurance?

Protect the general public.

Which of the following types of property is NOT moveable?

Real property.

For an additional premium, the extended coverage is written on the basis from dwelling policy will cover which of the following?

Riot.

An insured is at fault in an auto accident, damage to the insured's own car. The damage to the car is covered by?

The insured's Collision coverage.

Supplementary payments under the personal auto policy include all the following EXCEPT?

Unlimited cost of bail bonds.

Which of the following would NOT be covered as a loss under Coverage D of a homeowners policy?

An insured leased a dwelling for 5 years. Two years later, the property owner died, and the new property owners wanted to make the property their principal residence, so the lease was canceled.

Two men are Partners in a moving company. They have two trucks used to move property of others. They should ensure their trucks under a?

Business auto policy.

All of the following are optional endorsements that may be added to the standard equipment breakdown coverage form EXCEPT?

Debris removal.

If an agent follows the rules and terms of his agent contract, he is exercising his?

Express Authority.

Which of the following duties is NOT required of the insured in the event of a loss?

Immediately notify the insurer when the insured has filed for bankruptcy.

Fair rental value coverage in the dwelling policy is similar to which homeowners policy form?

Loss of use.

And insured has $5,000 of medical coverage under a personal auto policy at the time of a covered accident. The insured and 3 passengers are injured. The insured's medical expenses are $8,000. The first passenger's total $4,000; the second passenger's total $6,500; and the third passenger's total $1,200. How much will the policy pay under the medical payments coverage?

$15,200.

Within how many days of the final disposition of the matter must a producer report administrative actions taken against him or her to the Commissioner?

30 days.

Which of the following persons is required to hold a producer license in this state?

A salaried employee who advertises and solicits insurance.

In order to receive Transportation expenses under the personal auto policy following damages to you Auto caused by Collision, you must have?

Collision coverage.

When a named insured files a form with the application selecting a different level of absence of Uninsured Motorist Coverage, this election is valid?

For the life of the policy.

Which of the following is FALSE concerning liability coverage of a business auto policy?

The company will reimburse the insured for all loss of earnings.

An insured carried underinsured motorist limits of $100,000. She is involved in an accident with a driver whose Part A limits are only $25,000/$50,000/$25,000. The insurance offered $90,000 worth of bodily injury. If the other driver is 100% negligent, how much would the insurance policy pay toward those medical expenses

$65,000.

All the following are additional coverages under a homeowner's policy?

Coverage for trees, shrubs, and other plants. Payment for reasonable repairs and debris removal following a covered loss. Fire department service charge.

Business auto coverages apply only to those autos that are identified as covered autos in the declarations by entry of the appropriate numerical symbol. Which symbol for the broadest coverage?

1.

An insured was told to leave his home because of endangerment by a brush fire that was out of control. The insured was able to have his personal property move to storage away from the endangered area. For how long will the homeowners policy provide coverage for the stored property?

30 days.

Which of the following would be added for coverage under a property policy by endorsement?

Additional Insureds.

The purpose of the Fair Credit Reporting Act is to?

Protect consumers against the circulation of inaccurate or obsolete personal or financial information.

The basis of insurance is sharing which of the following among the members of a large homogeneous group with similar exposure to loss?

Risk.

In the event of a loss, the most insurer will pay is?

The amount of the loss or the limit as stated in the policy, whichever is less.

A small appliance manufacturer in this state provides product around the globe. A customer in Switzerland is injured using one of its products. If the appliance manufacturer is found liable for the damages, why would its commercial general liability policy cover the customer's claim for bodily injury?

The appliance was manufactured in the United States.

If an insurance policy has the additional coverage provision, how does it affect the policy premium?

There is no additional premium.

The owner of a rental dwelling, insured under a DP-2, turns off the heat in the insured dwelling during the winter months because the dwelling is not occupied. The builder's water pipes freeze and break, causing damage. How would the policy react to his loss?

This loss is excluded from coverage.

Under the workers compensation act, what percentage of the employee's wages will the surviving spouse with two children receive in the event of the employee's death?

65%

When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity?

As a fiduciary.

What policy would a business owner whose business fills scuba tanks most likely need to insure unfired pressure vessels and compressors?

Equipment breakdown.

Which of the following would be considered peril?

Fire.

Which of the following injuries may be covered under Coverage C - Medical Payments of a commercial general liability policy?

Injuries to a member of the general public that occurs on premises.

Due to appreciation, the amount of insurance on the business is less than 80% of its actual value on the date of loss. Which of the following is true?

The coinsurance penalty applies.

Which of the following best describes a rebate?

A producer returning part of her commission to her client, as an inducement to buy.

Two individuals of the same age, health status, and the life expectancy apply for individual insurance coverage. When the policy are issued by the same insurer, the premium rates are different based on the insured's race. Which practice does this describe?

Unfair discrimination.

All advertisements, regardless of their source of creation, are the responsibilities of the?

Insurer.

Which of the following is the cause of loss?

Peril.

According to homeowners Coverage A, how much of the house's value must be insured in order to qualify for replacement coverage?

80%.

All the following persons will be covered under a business auto policy EXCEPT?

An employee of the named insured operating an auto that is owned by the employees spouse.

An agent delivers a policy to the applicant, who pays the initial premium but refuses to submit a statement of good health. Which of the following terms best describes what the applicant has violated?

Consideration.

Under which legal defense may a claimant's recovery be defeated if the defendant can show that claimant contributed, no matter how slightly, to the injury or damage?

Contributory negligence.

All the following are ways to handle risk except?

Elimination.

An insured was involved in an accident that was caused by a tire blowing out. The insured was severely injured and incurred medical expenses of $100,000. The insured brought a recovery action against the manufacturers of the auto and the tires. The court held that the tire was the cause of the accident. Who is required for the pay for the loss?

Manufacturer of the tire.

With respect to the commercial package policy, an interline endorsement is one that?

May apple to more than one line of insurance that is included in the package.

Does the HO-3 policy cover the mysterious disappearance of personal property?

No.

How is the premium paid for the businessowners policy?

One-indivisible premium.

A pharmacy offers a delivery service to its customers. When the delivery driver parks his truck in front of a customer's home, someone broke into the delivery truck and stole the money inside the vehicle. Which crime coverage will the loss of the money?

Outside the premises (theft, disappearance or destruction).

Policy limits are the maximum amount of insured May collect, or for which and insured is protected under the terms of the?

Policy.

If the commissioner issues a cease-and-desist order, that means the insurer must?

Stop committing a particular violation.

A trucking company has a $1 million umbrella policy in place. The business owner agrees to maintain a 200/500/100 limit on auto liability, and a personal liability of $400,000. After a car accident, the business is sued. Injuries are awarded to a single injured party in the amount of $300,000. It turned out that the business actually carried only 100/250/50 auto liability limits. What is the total amount the umbrella policy will pay?

$100,000.

An insured has an automobile policy with limits of 100/300/50 and a deductible of $1,000. He is involved in an auto accident and crashes into another driver's auto. The other driver is awarded $125,000 for his injuries and $25,000 for the damage to his car. The insured's vehicle has damage in the amount of $1,200. The total payment made under the insured's policy is?

$125,200.

A home is insured for $200,000 under an HO-3. Last week, the owner purchased a new home and began to move his personal property to the new residence. Last night, vandals did $8,000 of damage to the property that had been moved to the new residence. Disregarding any deductible, how much will the HO-3 pay?

$8,000.

The personal property off-premises extension of dwelling forms provides limits of coverage up to?

10% of covered see anywhere in the world.

If a producer allows his license to lapse, within what time period made the producer reinstate the same license?

2 years.

Which of the following would NOT generally be included in the supplementary payments portion of a liability policy?

Damage to property owned by the insured.

Which of the following losses would be excluded from coverage under the Farm property special form?

Fire caused by curing tobacco.

An insurer Incorporated under the laws of another state but doing business in this state is considered?

Foreign.

The property policy condition that automatically provides broader coverage when an insurer makes revisions to a current policy edition without charging the insured additional premium is called the?

Liberalization clause.

Which of the following clauses excludes assignment or granting of policy provisions to any person who repairs property for a fee?

No benefit to bailee clause.

Which of the following best defines the unfair trade practice of rebating?

Offering an inducement of something of value not specified in the policy.

An insured has a personal auto policy with the following limits 50/100/25. The number 25 refers to?

Property damage coverage.

A corporation is insured under a commercial general liability (CGL) policy and is named in a lawsuit to recover expenses for bodily injury and property damages from a claim. The insurance company is obligated to provide coverage for all the following named in the suit EXCEPT?

Spouses of officers and stockholders.

Who has the authority to issue cease and desist orders?

The commissioner.

An insured owns an automobile liability policy with bodily injury limits of $200,000 and an umbrella liability policy with a limit of $1,000,000. The insured is involved in an automobile accident is found liable for injuries totaling $900,000. Which of the following examples best describes how the benefit will be paid?

Auto liability policy = $200,000; umbrella liability policy equals $700,000.

Garage keepers Insurance provides coverage for the insured's liability for?

Damage to Autos left inside the insured's care for repair.

All the following statements about Mutual insurance companies are correct EXCEPT?

Policy dividends issued by Mutual companies are guaranteed and not taxable.

A man taking care of his wife's Insurance Agency while she's on an active duty in the military has had a temporary license for a 100 days. How many more days can pass before the license expires?

80.

According to the Fair Credit Reporting Act, all the following statements are true EXCEPT?

If an applicant is declined for an insurance policy, he or she has no right to know what is in the report.

An insured's diner suffer a fire loss. In addition to the damage caused by the fire, the floor covering had to be replaced because of the water damage. It took 4 weeks for the repairs to be complete.The insured was without income for that period of time. The insured's policy includes both direct and indirect loss coverage. What part of the loss would be paid as indirect loss?

The loss of income for the diner was closed.

Employers liability coverage under a workers compensation policy includes?

Damages claimed by third parties.

Coverage B- Personal and Advertising Injury Liability responds to claims arising from?

Suits alleging infringement of a copyright.

Which of the following is a federal act that covers crews of ships the same as railroad workers?

The Jones Act.

The insured's product under a commercial general liability policy does NOT include which of the following?

Vending machines rented to others.

An agent who knowingly misrepresents material information for the purpose of inducing an insurance to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as?

Twisting.

How often must organizations consult the National Do Not Call Registry?

Every 31 days.

The transfer of legal right or interest in an insurance policy is called?

Assignment.

Which of the following Commercial Auto coverages provides protection for the most commercial Auto exposure except truckers, garages, and motor carriers?

Buisness auto coverage

Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination?

Charging the insured higher premiums based on her race.

Space-age Rockets makes model rocket supplies and has 12 employees. The company is located Atlanta, GA. Georgia has compulsory workers compensation laws. Space ages owner thinks that his company is too small and unprofitable to carry the workers comp plan mandated by the state. Possible consequences of non-compliance including all the following EXCEPT?

Forced payment of billing for services rendered by any private insurer that "binds" coverage based on an employee's request for coverage.

Which of the following terms means termination of an insurance policy at its expiration date by not offering a policy continuation or replacement?

Nonrenewal.

Which of the following would NOT be covered by a commercial inland marine policy?

Property loss due to a military action.

How many hours of continuing education credits are required in order for a producer to renew his/her license?

24.

The supplementary payments section of the commercial general liability policy will cover?

Court costs assessed against the insured in a suit.

The commercial crime coverage that would cover losses resulting from theft of money, securities and other property by employees is?

Employee theft.

If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true?

The insurer will be reimbursed for the excess caused by the NFIP.

What is an insured contract?

Those contracts that are automatically covered under the exposure of premises coverage in a general liability insurance contract.

Agents may be found guilty of defamation if they make false statements that are intended to?

Maliciously criticize another insurance company.

List the following statements that are true in a commercial umbrella liability policy?

It can be issued with a professional liability policy. It would provide access insurance over an existing general liability policy. It provides protection is primary coverage where there is no other existing coverage.

What type of injuries could incur additional penalties and/or increased benefits paid by the employer?

The employer's willful failure to provide required safety goggles.

Which of the following would be a proper choice of policy for a company that transports goods that are irreplaceable in nature?

Value Policy