Personal Lines (PA) Practice Exam Study Set
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?
Special
An insured owns several buildings , each at a different location and insured on a separate policy . What type of coverage does the insured have?
Specific
What insurers are owned by stockholders?
Stock
The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third-party that was responsible for the loss is known as
Subrogation
The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called
Subrogation
What is the term for the insurer's legal right to seek damages from third parties, after it has reimbursed the insured for the loss?
Subrogation
A producer has successfully completed 52 hours of continuing education (CE). How many hours can the producer apply to her current reporting period, and how many hours can she carry toward the next reporting period?
24 hours will be applied to the current reporting period, and 24 can be applied to the period immediately following.
How long is a waiting period upon purchase of flood coverage through NFIP?
30 days
If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for
30 days
In the event of theft of a covered vehicle, transportation expenses coverage in a personal auto policy will cover the expenses starting how many hours after theft?
48 hours
According to the loss payment condition, in HO policies, losses must be paid within how many days of the insurer receiving proof of loss?
60 days.
An insured owns a building that is valued at $400,000. To comply with the 80% coinsurance provision of his insurance policy, how much should he insure the property for?
80% of the property's replacement cost or more
A licensed producer moving to Pennsylvania, may become licensed as a resident if the producer submits a completed application within how many days of establishing residency in Pennsylvania with proof of licensing from their prior home state?
90 days.
How does a higher deductible affect the premium of property policy?
A higher deductible lowers the premium.
Who is the first name insured?
A person whose name appears first on the policy declarations
What is a binder?
A temporary contract of insurance that places insurance in effect prior to the policy being issued.
In Pennsylvania, acting as a manager or exclusive general agent without proper licensing is punishable by
A third degree misdemeanor charge and a fine of up to $1,000 for each day of their offense.
All of the following would be eligible for coverage under the dwelling policy EXCEPT A. A house that has 5 residential units B. A tenant-occupied dwelling C. A dwelling in the course of construction D. A duplex with one primary owner
A. A house that has 5 residential units
When an insurance policy does not offer a continuation or replacement at its expiration date, it is considered a
Nonrenewal
During renovations to a home, a roof opening is left exposed. A heavy rain storm causes $20,000 of damage to the interior of the home. How much would the HO-2 policy pay for damages?
Nothing
When does an excess policy pay for a loss?
Only after the primary policy has paid up to its limits.
A policy that covers all causes of loss, except for those specifically excluded is known as what type of policy?
Open peril (or special) form
What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident?
Per occurrence
In property and casualty insurance, what is required to make policy assignments valid?
Prior written consent of the insurer
When an insured purchases a private passenger automobile insurance policy with a $500 deductible for collision coverage, how will that affect the rate for collision coverage?
It will be reduced.
Extended nonowned coverage endorsement in PAP broadens what coverage?
Liability and medical payments
What provision in a property policy applies when the insured broadens coverage, but does not increase the premium?
Liberalization
What determines an insurer's responsibility for payment, as stated in an insurance policy?
Limits of liability
Combination benefit is a combination of what coverages?
Medical benefit, income loss benefit, accidental, death benefit, and funeral benefit.
Several insureds have become liable because of a single loss. How will the policy's limit of liability be affected?
No more than the per occurrence limit applies, no matter how many insureds are involved.
What term refers to other insurance that is written on the same risk, but not the same coverage basis?
Nonconcurrency
Damage to insured property caused by earth movement or earthquake is covered under which of the following homeowners forms?
None
Damage to insured property caused by earth movement or earthquake is covered under what homeowners form?
None of them
When an insurer cancels an auto policy for an allowable reason, they must give notice to the named insured of possible eligibility for coverage through the Pennsylvania Auto Insurance Plan, unless the reason for cancellation is
Nonpayment of premium
What is the maximum amount of protection available to insureds under the Pennsylvania Property and Casualty Insurance Guaranty Association?
The amount of loss up to the amount of coverage in the original policy, not to exceed $300,000 (per claimant)
How much is the premium for the dwelling under construction endorsement under the dwelling policy?
The average amount of insurance during construction.
According to the privacy of consumer financial information regulation, if a consumer decides to opt out, this means
The consumer directs the licensee not to disclose the consumer's nonpublic personal financial information to a third party.
An insured must maintain the underlying insurance at
The full limits stated in the declarations with no change to more restrictive conditions during the term of the policy
What does the conditions section of the policy define?
The general rules or procedures, that the insurer and insured agreed to follow under the terms of the policy.
Medical payments coverage only provides coverage to
The insured and any passengers in the insured's vehicle
In order for broad theft coverage to be added as an endorsement to a dwelling policy, what must the insured be?
The insured is owner-occupant of the dwelling
What happens if the insured fails to maintain underlying insurance?
The insurer will not be liable under the policy for more than it would have been liable if that underlying insurance was in effect.
What is the purpose of the miscellaneous type vehicle endorsement in personal auto policies?
To expand the definition of a covered auto to include various motorized vehicles.
What is a wrongful act or the violation of someone's rights of that leads to legal liability called?
Tort
True or False. An insurance entity or licensee cannot pay a commission or fee to a person if the person's license is suspended or revoked.
True.
What is the process that insurers use to determine whether a policy should be issued and on what terms and conditions?
Underwriting
A teenager's who has not purchased coverage for his car, one insured by a company who has become insolvent, a hit and run when driver can't be found are all considered to be
Uninsured Motorists
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
What year did congress create the NFIP?
1968
Which authority is not stated in an agents contract, but is required for the agent to conduct business?
Implied
What is the liability limit for injury to any one person in a single accident in personal auto insurance policies in Pennsylvania?
$15,000
The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to
$250,000
What is the civil penalty for the first violation of the Pennsylvania Insurance Fraud Prevention Act?
$5,000
What is the minimum required deductible that a private passenger automobile insurance policy providing collision coverage must offer in the state?
$500
An insured has a personal auto policy with both comprehensive and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20 per day, how much will his policy pay?
$60
Within the first 60 days of coverage under a dwelling policy, how much notice is required for the cancellation of a policy?
10 days
If a personal auto policy is being canceled by the insurer for nonpayment of premium, how much notice must the insurer provide to the policyowner?
15 Days
For how long after the death of the name insured must basic property insurance continue coverage?
180 days.
If a loss occurs, the insured with a homeowners policy is required to do the following, except A. Arrange for an appraisal by an unbiased third party. B. Provide the insurer with prompt notice of loss. C. Notify the police if a loss is caused by theft. D. Protect the property from further damage, and keep records of any repair expenses.
A. Arrange for an appraisal by an unbiased third party.
All of the following are condition, commonly found in the insurance policy, except A. Insuring agreement. B. Cancellation and non-renewal. C. Subrogation. D. Appraisal.
A. Insuring agreement.
Which of the following statements is NOT true regarding a personal umbrella liability policy? A. It provides errors and omissions coverage for an agency. B. It may cover certain exposures not provided under the primary layer. C. It may require the payment of a self-insured retention. D. It provides excess liability coverage over underlying personal liability.
A. It provides errors and omissions coverage for an agency.
In a dwelling policy, personal liability coverage must be
Added as a supplement, or written as a separate policy
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?
Additional coverage
A producer sold an insurance policy. Subsequently, his license was suspended. In this case, how much of the commission will the producer receive?
All.
How long does a company have to maintain a complete file of all advertisements used?
At least 4 years.
Which of the following would NOT be classified as personal property for insurance purposes? A. Furniture B. A house C. A vehicle D. Equipment
B. A House
The state insurance code identifies all of the following as prohibited acts that can cause suspension, revocation or denial of an insurance producer license, except A. Committing a felony or its equivalent. B. Committing any misdemeanor. C. Failing to pay state income taxes. D. Failing to pay child support obligation.
B. Committing any misdemeanor.
All of the following are other coverages under the dwelling policy, except A. Improvements, alterations, and additions B. Earth movement C. Other structures D. Debris removal
B. Earth movement
An insured is involved in an auto accident in another state. The state has a financial responsibility law that specifies limits of liability higher than the limits shown in the declarations. What amount will the insured's policy pay? A. Only the limits specified in the policy B. Higher limits C. Lower limits D. The insurer will not pay for out-of- state accidents
B. Higher limits
In a dwelling policy, which of the following is true regarding personal liability coverage? A. It is the same as in homeowners policies. B. It must be added as a supplement or written as a separate policy. C. It does not cover medical payments to others. D. It is included in all dwelling policies.
B. It must be added as a supplement or written as a separate policy.
Which of the following would not be considered causes for flood conditions covered by the National Flood Insurance Program? A. Mudflow and collapse. B. Landslides. C. Overflow of inland or tidal waters. D. Unusual in rapid accumulation or runoff of surface waters from any source.
B. Landslides
An insured purchases a Difference in Conditions policy. It may contain all of the following characteristics EXCEPT A. Exclusion for named perils. B. Low deductible. C. No coinsurance clause. D. Flood and earthquake coverage
B. Low deductible
When an insured makes truthful statements on the application for insurance, and pays the required premium, it is known as
Consideration
Which of the following would be considered an uninsured vehicle? A. A government owned vehicle B. A vehicle operated by an insured's family member C. A vehicle fleeing a fit-and-run accident D. A vehicle owned by a self-insurer
C. A vehicle fleeing a fit-and-run accident
Which of the following statements is true concerning the special form dwelling policy? A. Both Coverage A and Coverage C are provided for the broad form perils. B. Coverage A is for all - risk perils, and Coverage C is for basic perils only. C. Coverage A is for all - risk perils , and Coverage C is for the broad form perils. D. Both Coverage A and Coverage Care provided on an all - risk basis.
C. Coverage A is for all - risk perils , and Coverage C is for the broad form perils.
Which of the following best describes the unfair trade practice of defamation ? A. Issuing false advertising material. B. Refusing to deal with other insurers. C. Making derogatory oral statements about another insurer's financial condition. D. Assuming the name and identity of another person.
C. Making derogatory oral statements about another insurer's financial condition.
Any degree of negligence by the injured party may bar recovery - this describes
Contributory negligence
The Pennsylvania Property and Casualty Insurance Guaranty Association provides protection to insureds in the event of
Insurance company insolvency
If a person is using an auto with the belief that he is entitled to do so , subrogation rights under a personal auto policy would apply to all coverages EXCEPT A. No-fault medical payments B. Liability C. Physical damage D. Uninsured motorist
C. Physical Damage
All of the following are requirements for producer license renewal EXCEPT A. Renewal Fees B. Record of fingerprints C. Renewal examination D Up to date continuing education
C. Renewal examination
All of the following may be covered by the miscellaneous type vehicle endorsement EXCEPT A. Dune buggies B. Motorcycles C. Rented recreational vehicles D. Golf carts
C. Rented recreational vehicles
All of the following statements concerning coinsurance are true EXCEPT A. The insured agrees to maintain insurance equal to some specified percentage of the value of the property. B. If the insurance carried is less than required, the insurance may not cover the whole loss. C. The coinsurance formula will also be applied to total losses. D. It is used to help adequacy and equity in rates
C. The coinsurance formula will also be applied to total losses.
Which of the following is not a characteristic of an insurable risk? A. The loss must be measurable. B. The loss exposure must be large. C. The loss must be catastrophic. D. The loss must be due to chance.
C. The loss must be catastrophic.
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT A. Premiums on appeal bonds in any suit the insurer defends. B. Up to $250 for bail bonds required because of a covered accident. C. Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. D. Up to $200 a day for loss of earnings due to attendance at hearings or trials.
C. Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident.
What is the difference between cancellation and non-renewal?
Cancellation is the termination of an insurance policy by either party prior to the policiy's expiration date. Nonrenewal is the termination of a policy at its expiration date by not offering a continuation of the existing policy.
What term best describes the act of withholding material information that would be crucial to an underwriting decision?
Concealment
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
In dwelling policies, automatic increase in insurance is
Coverage by endorsement.
What is the calculation for the actual cash value ( ACV ) method of valuation?
Current replacement cost minus depreciation
Which of the following risks would not be eligible for coverage under a homeowners policy? A. An applicant who lives in a duplex, that she does not on. B. An applicant who owns and lives in a duplex. C. An applicant who owns and lives in a single-family dwelling, and also contains incidental business activity. D. And applicant who owns and lives on a commercial farm.
D. An applicant who owns and lives on a commercial farm.
All of the following are factors in the determination of actual cash value EXCEPT A. Type and quality of property. B. Age of the property. C. Replacement cost. D. Insurance premium paid.
D. Insurance premium paid.
All of the following insurance policies must contain , at a minimum , policy language equal to the Standard Fire Policy EXCEPT A. Homeowners policy B. Dwelling policy C. Commercial property policy D. Workers compensation
D. Workers Compensation
Which of the following is a mandatory part of an insurance policy that varies with each individual policy?
Declarations
When a producer was reviewing a potential customer's coverage, written by another company, the producer made several remarks that we're maliciously critical of that other insurer. The producer could be found guilty of
Defamation
What are the two types of property losses that individuals and businesses are exposed to?
Direct & Indirect
How are direct and indirect losses related?
Direct losses can cause indirect losses.
What types of losses may be covered by property insurance?
Direct losses only.
What is the name for printed addendums to a contract that are used to change the policy's original terms, conditions, or coverages?
Endorsements
Which of the following would modify the original insurance contract by either adding or removing coverage? A. Endorsements B. Additional coverage form C. Conditions D. Flexible policy
Endorsements
The authority granted to an agent through the agents contract is referred to as
Express Authority
The homeowners policy covers collapse caused by all of the following, except
Foundation cracks
Limited Fungi, Wet or Dry Rot, or Bacteria Coverage may be added to which HO policies?
Ho 3 and 5
Under which circumstance can financial institutions share insurance coverage information with third parties, for the purpose of soliciting the purchase of insurance?
If a consumer does not sign and return the notice of disclosure within 30 days.
