Practice Exam
Which of the following is defined as a covered cause of loss in businessowners property coverage?
leakage from fire-extinguishing equipment
Which of the following policy provisions would automatically broaden coverage under a policy without requiring additional premium?
liberalization
Which of the following coverages in dwelling and homeowners policies is for indirect losses?
loss of use
According to the standard mortgage clause, who has the right to bring a suit in their own name to recover damages, pay policy premiums, and submit a proof of loss?
mortgagee
Which of the following terms refers to other insurance that is written on the same risk, but not on the same coverage basis?
nonconcurrency
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?
only written statements can considered fraud
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 liability coverages must be added by endorsement to a homeowners policy in order to apply?
personal injury
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
physical damage
Section I of a boatowners policy covers
physical damage
While an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of the insured's auto policy would pay for the damage to the store?
property damage liability
What type of information would be found in a policy's insuring agreement?
renewal dates
All of the following are additional causes of loss included in the broad form of a commercial property policy EXCEPT
replacement cost
Who decided which property is "on the coast" and may be insured by the SCWHUA?
sc general assembly
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
A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method?
stated amount
All of the following businesses would need a financial institution bond, except:
stock broker
An insurance producer has not been appointed to an insurance company. Who is the producer considered to represent?
the client
A parking garage owner completed major renovations to a parking garage just prior to selling it to another company. Three months later, overhead concrete fell onto cars in the second floor level. Under the garage coverage policy conditions, which of the following is true?
the damage occurred when the concrete fell
Under the workers compensation system, who is responsible for the expenses resulting from work-related injuries and occupational diseases?
the employer, regardless of whether it was at fault for the injury or disease
All of the following statements concerning liability coverage are true EXCEPT
the policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met.
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 forms
When a vehicle travels from one state to another, what happens to the limits of policy liability in a personal auto policy?
they do not change
In order to be eligible for coverage by the Workers Compensation Assigned Risk Pool in South Carolina, how many times must an applicant have been turned down in the voluntary market?
twice
In South Carolina, which of the following coverages would be considered an optional coverage with regards to a personal auto policy?
underinsured motorist coverage
In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for
uninsured coverage
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 $1000
Once the Director issues a cease and desist order, how soon must an insurer comply with the order?
within 30 days
An insured suffers a windstorm loss in which the insured's driveway is blocked by two of the insured's trees and two of the neighbor's trees. The total amount of the removal adds up to the following: three trees at $300 per tree, and one tree at $600. How much will the insurer pay for the loss?
$1000
Which loss listed below would be fully covered by a homeowners policy?
$2,000 silver tea set stolen
What is the basic limit for costs incurred at the place a vehicle is disabled provided by the towing and labor costs endorsement?
$25
The insured's home is covered by an HO-3. Two years ago, the insured bought the home for $58,000. Today, its replacement value is $60,000. How much Coverage A does the insured need to qualify for replacement cost coverage?
$48,000 A house must be insured for at least 80% of its value on the date of loss to qualify for replacement coverage. In this example, 80% of $60,000 is $48,000.
Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?
$5,000
A large antenna is damaged when a tree branch hits an insured farm dwelling during a storm. Coverage A of a farm property coverage form would insure damages for this occurrence up to
1,000
The broad theft coverage endorsement on the dwelling form specifies all of the following limitations EXCEPT
1,000 on silverware.
If a company turns you down for automobile insurance, how many days do you have to file to have the action reviewed by the Director of Insurance?
15 days
A producer was issued a temporary license 30 days ago. How much longer can the license remain in effect?
150 days
Equipment breakdown coverage is written with a single limit of insurance per accident. What is the sublimit for hazardous substance cleanup or repair or replacement of contaminated property?
25,000
In South Carolina, every automobile insurance policy must include liability coverage with limits not less than
25,000/$50,000/$25,000
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
A commercial property special form covers property in transit up to
5,000
Losses caused by vandalism and malicious mischief are excluded under a homeowners policy if the dwelling had been vacant for more than
60 days
In earthquake coverage provided by endorsement in a homeowners form, one or more earthquake shocks would be considered a single earthquake if they occur within what maximum time period?
72 hours
If the insurer nonrenews a homeowners policy during the hurricane season, how many days' notice must the insurer provide to the policyowner?
90 days
Which of the following is eligible for a businessowners policy?
A 6-story office building with less than 100,000 square feet total area
Which of the following would NOT be considered an insured under a homeowners policy?
A divorced spouse living in another state
With respect to auto insurance, the term owned autos includes all of the following EXCEPT
A pickup or van titled to and used in the named insured's business.
Which of the following definitions best defines the term "accident"?
A sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage neither expected nor intended
An uninsured motor vehicle includes all of the following EXCEPT
A vehicle being used for public livery.
The insured with a homeowners policy has had damage to his property caused by a volcano. Which of the following is true?
All volcanic eruptions within a 72-hour period will be considered one occurrence.
While an insured's covered auto is in the repair shop following damage caused by a collision, the insured would have coverage for which of the following vehicles under a personal auto policy?
Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair
All of the following are classes of inland marine risks EXCEPT
Common carrier cargo liability.
In which of the following sections of a commercial auto policy will you find specific information about the policy period?
Conditions
Which of the following risks is eligible for coverage under a businessowners policy?
Condos
What type of insurance can be obtained through a surplus lines insurer?
Coverage that is unavailable through authorized insurers
Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis?
DP-1
Which of the following is NOT covered under the Utility Services - Time Element endorsement?
Damage to the insured's property caused by utility service disruption
Employers Liability Coverage under a Workers Compensation Policy EXCLUDES all of the following EXCEPT
Damages claimed by third parties
Which of the following will NOT be considered unfair discrimination by insurers?
Discriminating in benefits and coverages based on the insured's habits and lifestyle
What is another name for liquor liability insurance?
Dram shop insurance
All of the following are optional coverages that may be attached to an HO-3 policy EXCEPT
Dwelling replacement cost.
What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?
Experience modification factor
The authority granted to an agent through the agent's contract is referred to as
Express authority
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair crediting reporting act
Which endorsement adds coverage for employee use of automobiles in the insured's business and the insured's use of rented autos if no coverage is provided on a business auto policy?
Hired and nonowned auto liability
With regards to the personal auto policy, in the event of a claim or loss, the insured is required to do all of the following EXCEPT
Immediately report to an emergency room for medical examination.
The pro rata liability clause is designed to protect the principle of
Indemnity
In a dwelling policy, which of the following is true regarding personal liability coverage?
It must be added as a supplement or written as a separate policy.
An insured's home is mortgaged by the local bank. The insured is required to carry insurance on the home, showing the bank as the mortgagee. If the home is damaged by a covered peril, which of the following is true?
Losses will be paid to the mortgagee and mortgagor as their interest appears.
An insured unintentionally accepted forged currency during the course of regular business. Which of the following crime coverages protects against such a loss?
Money orders and counterfeit paper currency
According to the standard mortgage clause, who has the right to bring a suit in their own name to recover damages, pay policy premiums, and submit a proof of loss?
Mortgagee
A business using its own trucks to move its own cargo would insure the cargo using
Motor truck cargo - owners form.
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report
Must be informed of the source of the report.
A loss has occurred before the first report has been filed on a value reporting coverage form. Which is NOT true?
Never more than 75% of the loss is paid.
in order to transact insurance business in this state, an agency must meet all of the following requirements EXCEPT
Obtain an insurance agency license.
A plant worker for a chemicals manufacturer was recently diagnosed with a rare blood disease. She told her doctor that her job required her to handle industrial waste chemicals. Which of the following types of injuries is covered under the workers compensation policy?
Occupational disease caused or aggravated by a condition of employment
Where is the policy period stated?
On the declarations page of the policy
If an insured bakery is sued because its marketing states that the products of another bakery may not be safe, which coverage of a commercial general liability policy will defend the suit?
Personal and advertising injury liability
Which of the following perils is covered by the HO-2 and HO-3?
Sudden and accidental rupture of a heating system
How are surety bonds different from insurance?
Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses.
A producer was issued a temporary license 30 days ago. How much longer can the license remain in effect?
Symbol 9 - nonowned autos only
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
All of the following statements concerning coinsurance are true EXCEPT
The coinsurance formula will also be applied to total losses.
The contents coverage on a homeowners policy would pay how much after the loss of one of a pair of golden candlesticks?
The difference in the actual cash value as a pair and as a single
Negligence is defined as
The failure to do what a reasonable prudent person would do under given circumstances.
All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT
The injury or damage must occur within 90 days after the insured's work is completed.
Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy?
The insured would be responsible for the amount required as underlying limits in the event of a claim.
Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT
The insurer does not have the right to inspect the insured's property and operations.
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.
An insured's fire policy has been in force for over 120 days. For which of the following reasons may the insurer cancel the policy?
The producer photographed the wrong house; the insured's house would not pass underwriting standards.
A neighbor's tree has fallen into the insured's yard. The insured's homeowners policy will only pay to remove the tree if
The tree is blocking the driveway.
What is the business auto coverage territory for?
United States and its territories, Canada, or worldwide for private passenger hired autos
When would uninsured motorist coverage apply?
When the other party is legally liable but has no insurance
When other insurance is written on the same basis as a commercial property policy, the obligation of the insurer is to cover
a share of the loss
According to the Law of Agency, a principal is represented by a/an
agent
Employers liability insurance, Part Two of a standard workers compensation and employers liability (WC&EL) policy form, excludes
an intentional act that is caused by the insured
First aid costs for others injured on the insured's premises
are paid in addition to the liability limit
Which of the following defenses attests that if a person recognizes and understands that there is danger involved in an activity and voluntarily chooses to encounter it, he or she may be barred from seeking recovery for injuries due to negligence?
assumption of risk
If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy?
auto policy
Which bonds are issued to secure the release of a person from jail pending a courtroom appearance?
bail bonds
What types of business are excluded from a BOP?
banks, auto dealers, and bars
Under farm liability, Coverage H includes
bodily injury
Which of the following other coverages is NOT included in the basic form dwelling policy?
breakage of glass
Under the HO-4 and HO-6 homeowners policy forms, property is insured against
broad form perils
In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the
company
An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
conditional
An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it?
contractors equipment floater
Which of the following statements is NOT true regarding the Director of Insurance in this state?
director is elected for the term of 4 years
Which endorsement under the commercial auto policy provides the insured's employees additional protection while using a vehicle not owned, hired, or borrowed for the insured business?
employees as insureds
Expenses that an organization would not have incurred if business interruption had not existed are known as
extra expenses
All of the following are exclusions that apply in all three types of Dwelling Policies EXCEPT
fire or lightning
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act?
fraud
The homeowners policy form that covers condominium unit owners is
ho-6
When would a misrepresentation on the insurance application be considered fraud?
if it is intentional and material
The pro rata liability clause is designed to protect the principle of
indemnity
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?
indemnity
All of the following are factors in the determination of actual cash value EXCEPT
insurance premium paid
Which of the following is true regarding a risk retention group?
it is a liability insurance company owned by its members
