PNC Focused Exam
Which of the folliowing statements does NOT describe endorsements?
Endorsements may only add coverage to a current policy, not remove
If an agent follows the rules and terms of his agent contract, he is exercising his
Express authority
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?
Higher limits
Which of the following licensees is classified as a representative of the insurance company and not allowed to represent an insured or claimant?
Producer
Pertaining to insurance, which of the following is an example of a producer's fiduciary responsibility?
Promptly forwarding premiums to the insurance company
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information
The Fair Credit Reporting Act
The amount an insurer will pay under Coverage D (Loss of Use) depends on
The amount of coverage on the dwelling.
If another governmental agency takes legal action against a licensee, whose responsibility is it to report the action?
The licensee
The most the insurer will pay for a loss under a businessowners policy is
The limit of insurance after the deductible is paid
All of the following are true regarding physical damage coverage EXCEPT:
The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle
A mortgage company is named as a loss payee on the insured's homeowners policy, under the standard's mortgage clause. If the insured suffers a loss due to a fire, which of the following is true?
The loss is payable to the insured and the mortgagee
Which of the following is NOT a goal of risk retention?
To minimize the insured's level of liability in the event of loss
Which of the following authorities monitors the financial strength of insurers?
Department of Insurance
When does the coverage begin under the builders risk form?
On the date construction starts
in which of the following situations would a common carrier be legally liable for damage to property being transported?
Property is stolen as a result of a driver leaving a vehicle unlocked
The commercial property declarations page contains which of the following information
Description of the property insured
All of the following may serve as proof of financial responsibility required for all registered motor vehicles EXCEPT
Medical Insurance
Which of the following coverages is included in an unendorsed homeowners policy?
Medical payment to others
Who is NOT considered an employee in a commercial general liability (CGL) policy?
Temporary worker
An insured recently had a new home built and insisted on having smoke detectors installed in multiple places in the house. What method of handling risk is the insured using?
Reduction
For an additional premium, the extended coverages written on the basic form dwelling policy would cover which of the following?
Riot
All of the following are supplemental payments found in liability policies EXCEPT
Sharing commissions
Which of the following is NOT a cause of loss form for commercial property coverage?
Specific
Upon payment for a loss, the insured is obligated to surrender to the insurer the right to sue a negligent third party. This is called
Subrogation
Which of the following is a federal act that covers crew of ships the same as railroad workers?
The Jones Act
The extended nonowned coverage provides protection to
Only the person(s) named on the policy
Businessowners liability coverage automatically includes all of the following liability coverages EXCEPT
Pollution
Which of the following liability exposures is most likely for a small specialty clothing retail boutique?
Premises liability exposure
A structure may be eligible for coverage under the National Flood Insurance Program if it meets all of the following requirements EXCEPT
Is entirely over water
Which of the following covers the interest of a secured lender in personal property?
Loss payable clause
What is a bailee responsible for?
Property of others in his custody
The insureds guest cottage, which is insured under his farm policy, is being rented by a young couple. When one of the renters is injured in the rented property, the insured files a claim under his farm liability coverage. How will the coverage respond?
The claim will not be covered
Due to appreciation, the amount of insurance on a business is less than 80% of its actual value on the date of the loss. Which of the following is true?
The coinsurance penalty applies
Which of the following is FALSE concering liability coverage of a business auto policy?
The company will reimburse the insured for all loss of earnings
Which of the following would NOT be covered by uninsured motorist coverage?
The insured causes a head-on collsion with the car of an uninsured motorist
What is the amount of coverage that would be available for a detached garage under the Coverage B - Other Structures of a homeowners policy
10% of Coverage A
Under Federal Crop Insurance policies, an insured may select a coverage level that indemnifies the insured should the yield fall below one of the following percentage of the historic yield except:
100%
If a personal auto policy is being cancelled by the insurer for nonpayment of premium, how much notice provide to the policyowner?
15 days
Within how many years of a loss may an insured bring a lawsuit against an insurer, according to the dwelling policy?
2 years
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.
Within how many days of requesting an investigation consumer report must an insurer notify the consumer in writings that the report will be obtained?
3 days
A contract for the transport of goods between the shipper and the carrier is called
A bill of lading
If the ocean marine contract pays the ACV of the property just prior to the loss, it is
An indemnity contract
Which of the following is NOT covered under accounts receivable coverage form?
Any loans required to offset uncollectible amounts
Which of the following types of agent authority is also called "perceived authority"
Apparent
Which of the following describes the transfer of a legal right or interest in an insurance policy
Assignment
To legally transact insurance in this state, an insurer must obtain which of the following?
Certificate of Authority
Containerships are used to transport
Containerized cargo
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.
What is the major differences between a stock company and a mutual company
Ownership
B&B Market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be the meter reader. Which coverage would apply to this suit?
Personal and Advertising injury liability
Which of the following terms describes a reduced or limited amount of coverages, other than the combined single limit, that is available to pay claims resulting from passenger bodily injury?
Sublimit
In Ocean Marine Insurance, who pays all reasonable expenses if sue and labor is required to lessen a loss?
The insurer
All of the following are essential elements of a commercial package policy (CPP) EXCEPT:
Valuations and/or settlement provisions
Which of the following is NOT one of the available additional coverages in the builders risk form?
Vandalism
Under the business auto coverage form, mobile equipment is covered for liability insurance
When being carried or towed by a covered auto
Personal business property out in the open is covered under commercial property policy only while
Within 100 feet of the described premises
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of:
Coercion
Which of the following authorities is authorized to issue a temporary insurance producers license
Commissioner
The state of Insurance Code identifies all of the following as prohibited acts that can cause suspension, revocation or denial of an insurance producer license EXCEPT:
Committing any misdemeanor
A builders risk form is most often written as which of the following
Completed value form
Which of the following statements is true concerning the special form dwelling policy?
Coverage A is for all-risk perils, and Coverage C is for the broad form perils.
Which of the following would be covered under a business liability insurance policy?
Damage to a watercraft while on shore at the insured's premises
The part of a property policy that shows the amount of insurance, premium, and policy terms is the
Declarations
Which of the following endorsements is used by individual business owners who use company vehicles for personal use rather than purchasing a personal vehicle?
Individual named insured
Persons covered under an insurance policy, whether named or not, are known as the
Insureds
The insurer may suspect that a moral hazard exists if the policy holder
Is not honest about his health on an application for insurance
Which of the following statements concerning the builders risk coverage form is correct?
It may be written on a reporting form for the completed value of the structure
All of the following statements are true regarding employee dishonesty optional coverage under the business owner policy (BOP) EXCEPT:
It provides coverage for all employees, even those employees who were terminated in the past 90 days
Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss?
Liability coverage
Bulk carriers are used to transport
Loose Cargo
An insured is driving her automobile and strikes a large pothole that causes a flat tire. Which coverage of the insured's personal auto policy will pay for the repair
Loss is not covered
Which of the following coverages in dwelling and homeowners policies is for indirect losses?
Loss of use
Who might receive dividends from a mutual insurer?
Policyholders
The party to a surety or fidelity bond who promises to fulfill the obligation is the
Principal
The Federal Fair Credit Reporting Act
Regulates consumer reports
Insurance producers that do not have company appointments are considered a/an
Representative of the consumer
In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called
Self-insured retention
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
In the event of a claim under a commercial general liability policy, the insured has all of the following duties to the insurer EXCEPT
Submitting to a medical exam when requested
Which of the following acts created a federal program that would share the risk of loss from potential terrorist attacks with the insurance industry?
TRIA
The claims-made trigger is based on which of the following
The date the claim is first made
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays
The excess over the self-insured retention
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
Under business owners, policy section one, if an insurer wants to nonrenew a policy for nonpayment of premium how many days before the expiration date must the insurer notify the mortgage holder?
10 days
Under businessowners policy Section I, if an insurer wants to nonrenew a policy, how many days before the expiration date must the insurer notify the mortgageholder?
10 days
When an auto insurance policy is cancelled by the insurer for an allowable reason other than nonpayment of the premium, how much prior notice must be given to the named insured?
30 days
A policy that insures all property at multiple locations for a single amount is referred to as
Blanket
Under farm liability, Coverage H includes
Bodily injury
General-cargo ships are used to transport
Break-bulk cargo
Which of the following other coverages is NOT included in the basic form dwelling policy
Breakage of Glass
The crime of forced entry into the premises of another by a person or persons with felonious intent is defined as a
Burglary
When a producer holding a certificate or broker's license has a change in his/her residence or business address, he/she must notify the Department of Insurance and any company for which the producer holds an appointment within
30 days
When other insurance is written on the same basis as a Commercial Property policy, what is the insurer obligated to cover?
A share of the loss
The declarations page of the homeowners policy provides all of the following EXCEPT
A statement that Earthquake damage is not covered
Which of the following would be considered an unfair claims settlement practice
Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered
Coverage under the Builders Risk form will end in all of the following situations EXCEPT:
60 days after the construction has ended
When Mary decided to sue her neighbor for damages to her yard, she was told to get a bond that would guarantee she would be able to pay court costs and resulting damages if she loses the case. What kind of bond is this?
A cost bond
When must application for coverage be made for Federal Crop Insurance?
At or before a date established by the Federal Crop Insurance Corporation
Business personal property coverage form covers all of the following EXCEPT:
Automobiles held for sale
Which bonds are issued to secure the release of a person from jail pending a courtroom appearance
Bail bonds
How often must the Commissioner examine rating organizations
Every 5 years
All of the following are found in the declarations section of a policy EXCEPT:
Exclusions
All of the following actions can be described as twisting except
Explaining to client the advantages of permanent insurance over term and suggesting changing policies
The authority granted to an agent through the agent's contract is referred to as
Express authority
Which of the following is NOT true regarding a Certificate of Authority
It is issued to group insurance participants
The livestock coverage form covers which of the following losses?
Named peril coverage for death of livestock
When reviewing a standard workers compensation and employers liability policy, the limits of coverage are described in Part One of the policy. The dollar limits of the benefits provided are states
In the state workers compensation law itself
An agent received some inaccurate information, and as a result, he publicly mistated the financial condition of another entity 12 times over a period of 3 months. If this fact is revealed, the agent may face a fine up to
$10,000
What is the maximum amount an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy?
$10,000 for all expenses incurred during a 12-month period
Under Coverage E - Scheduled Personal Property, livestock that is not specifically insured is limited to a coverage limit of
$2,000 per head
Under Coverage B - Other Structures, a homeowners policy provides coverage for other structures on the residence premises. Which of the following statements is NOT true of this coverage?
Any loss paid under Coverage B reduces the Coverage A limit of liability
When an insured's gardener was spraying weeds in his lawn, he failed to notice that the wind was drifting the spray into the neighbor's yard where he damaged their flower bed. The insured was found to be legally liable for this damage. This is an example of
Vicarious liability
When does the insurer's duty to defend a suit or claim end in a commercial general liability policy?
When loss payments equal applicable limit of insurance
Which of the following exclusions applies to both personal liability and advertising injury in the business owners policy?
Willful violation of a penal statute or ordinance committed by the insured
An insured has the scheduled personal property endorsement attached to his homeowners policy. If the insured acquires new works of art, when must the insurer be notified for the new works of art to be covered under the endorsement?
Within 90 days
Your friend's dog that you are keeping while the friend is out of town bit a visitor in your home. Does your homeowners liability coverage apply?
Yes, the coverage would appy for any animal in your care
According to the principles of ocean marine insurance, a total loss may occur in which of the following ways?
actual
If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?
$2,500
What is the max civil penalty per violation of the regulations of the Insurance Code that define acts that are subject to fines, or licensee suspension or revocation?
$5,000
In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will
Be reduced by 10%
Which of the following commercial auto coverages provides protection for most commercial auto exposures except the truckers, garages, and motor carriers?
Business auto coverage
In order to receive transportation expenses under the personal auto policy following damage to your auto caused by collision, you must have
Collision coverage
Other-than-collision would cover financial losses due to
Damage to an insured car caused by wind or hail
The Commissioner of Insurance is appointed by which authority?
Govenor
A homeowner has misplaced some of her insured personal property and has no idea what may have happened to it. Which HO policy form would cover such a loss?
HO-5
Which homeowners form insures both buildings and personal property on an open peril basis?
HO-5
Which homeowners form provides broad coverage for both the dwelling (coverage A) and its contents (Coverage B)?
HO-5
A scheduled personal property endorsement will be used to insure
Higher limits of coverage for fine arts items
Under the employee theft coverage, when a covered employee is found to have participated in a dishonest act, the coverage for that employee will terminate
Immediately
Under the common policy conditions of a policy, all of the following are TRUE about changes in a policy EXCEPT
The insurer must obtain permissions from all named insureds to make a change
All of the following are TRUE regarding the cancellation condition of a policy EXCEPT
The insurer must provide proof that the insured received the notice
The cost bond guarantees
The plaintiff will pay court cost and damages to the defendant if the plaintiff loses the court case
If an applicant submits the initial premium with an application, which action constitutes acceptance?
The underwriters approve the application
If an insurance policy has the additional coverage provision, how does it affect the policy premium?
There is no additional premium
An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as
Twisting
All of the following are first party benefits that must be available for purchase with a motor vehicle insurance EXCEPT
Uninsured motorist benefit
The business income coverage form covers consequential loss of business income that occurs when a business must suspend operations because of a direct loss. Which of the following terms best describes the nature of this type of coverage?
Time element
An insured's 9-year-old son threw a ball, accidentally breaking a neighbor's plate glass window. The insured was found legally liable for the cost of replacing the window. This is an example of
Vicarious liability
Costs to repair, recover, or recondition will exceed the policy limits, so the insurer pays the policy's agreed value. This is called
A constructive total loss
Which of the following would be required to become licensed as an insurance producer?
A customer service representative who solicits no more than one policy a year
Which of the following would be eligible for Homeowners Coverage F - Medical Payments in the event of injury at the insured premises?
A full time maid
Insureds covered under a Mobile Homeowners Policy move their mobile home to prevent it from being damaged by a fire. What is the maximum amount the policy will pay for this?
$500
An individual acted as an exclusive general agent even though she was not licensed to do so. Since this offense occured over a period of 60 days, what is the maximum penalty she faces?
$60,000 and a third-degree misdemeanor
Once an insurer receives a claim, within how many days must the insurer provide claim forms to the insured?
10 working days
The personal property off premises extension of dwelling forms provides limits of liability coverage up to
10% of Coverage C anywhere in the world
What is the waiting period for transportation expenses coverage for a loss other than theft of a covered vehicle?
24 hours
A businessowners policy is discontinued. For how long does the insurer have the right to examine and audit the insured's books and records?
3 years
What is the maximum length of time that an employee who is partially disabled can receive loss of time benefits under Workers Compensation?
500 weeks
According to business property coverage form vacancy condition, if a policy is issued to the owner of a building, the building will be considered vacant if what portion of the square footage is unused?
69%
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 residence in Pennsylvania with proof of licensing from their prior home state?
90
In a personal auto policy (PAP), a covered auto includes all of the following EXCEPT
A van used in the delivery business
Which of the following would NOT be eligible for coverage under a personal auto policy?
A vehicle purchased 90 days ago
All are legal defenses against a claim of negligence EXCEPT
Absolute liability
Which of the following would be added for coverage under a property policy by an endorsement?
Additional insured
All of the following qualify as an "insured contract", as defined in commercial auto policies EXCEPT
Agreement for demolition near a railroad
Which of the following is covered by an auto other than collision comprehensive coverage
Electric equipment required for the normal operation of the car
A single property insurance policy that can provide coverage for multiple classes of property at one location, or one or more classes of property at multiple locations, with one total amount of coverage and no single item assigned a specific amount of coverage is called
Blanket insurance
The Business Pursuits endorsement under Section II of a homeowners policy will cover all of the following EXCEPT
Business liability.
An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting from one accident, which may be used in any combination of amounts, not to exceed the single limit. What type of limit does this insured have?
Combined single
The statutory law defense that reduces injury and awards for damages proportionately when the plaintiff and defendant are both responsible is called
Comparative negligence
Coverage C in homeowners policy forms offers all of the following EXCEPT
Coverage for loss of use
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
Employers liability coverage under a workers compensation policy includes
Damages claimed by third parties
Loss valuation is best described as the process of
Determining the premium charged and the amount of insurance required on a specific property
Which of the following statements is true concerning workers compensation and employers liability policy?
Exposures in states listed on the information page are covered
Which of the following is covered under a dwelling policy?
Fire caused by an earthquake
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
If it appears that a person has violated an insurance law, the Commissioner would
Issue a cease and desist order
Using an air-cooled engine, a proposed insured has developed a new, experimental aircraft. If the inventor applies for liability insurance, what rating type will the insurer most likely use?
Judgement
Insurance rates developed by the underwriter based on his skill and experience instead of actuarial analysis are known as
Judgement rates
Extended nonowned coverage endorsement in a PAP broadens which of the following coverages?
Liability and medical payments
Which is NOT true of workers compensation coverage?
Medical payment benefits are limited
An example of an alien insurer doing business in this state is one formed under the laws of
Mexico
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation
An insured was injured while visiting a farm 5 years ago. He discovers today that he has medical problems caused by that injury. Will the insured's new medical expenses be covered by Coverage J - Medical Payments on the farm's policy?
No, all expenses must be incurred and reported to the insurer within 3 years of the accident date.
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.
FAIR plans are provided by
Private insurers
Which of the following types of property is NOT moveable?
Real Property
An insured was having a new home built. While digging the footings for the foundation, the contractor struck a solid rock formation and found that was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbor's home several blocks away. Who pays for this damage?
The contractor
The abandonment provision in property insurance policies states that
The insured may not relinquish ownership of damaged property to claim a total loss, but must protect damaged property from further loss
All of the following are true about the cancellation provision of a commercial insurance policy EXCEPT
The insurer is required to provide proof that the insured received the cancellation notice prior to cancelling the policy
To avoid violations of unfair claims settlement regulations, insurers are required to acknowledge the receipt of a claim within how many days?
10 days
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
An insured hits a deer and crashes his car into a tree. The total damage to the vehicle is $6,000. How will this loss be covered?
$6,000 would be paid under other-than-collision coverage
An insured has a personal auto policy with both comprehensive (other-than-collision) 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
Which of the following property coverages would provide protection for contents damaged by fire
Coverage C
The insured's house is located one mile from the county's new landfill and across the road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received was $80,000. The insurance company will insure the house for only $80,000. What method of valuation is used to insure this property?
Market Value
Who would participate in a Write Your Own (WYO) flood insurance program?
Private insurers that wish to write and service National Flood Insurance policies on a no risk bearing basis