Practice Exam questions

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.

Which of the following 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.

What are common carriers required to issue to every shipper that it transports goods for?

A uniform bill of lading

An uninsured motor vehicle includes all of the following EXCEPT

A vehicle being used for public livery.

With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto?

A vehicle that is titled to another person, but is being used with permission by an insured

An installation floater is used to insure

Appliances intended to become a permanent part of the building

A policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal not agree on the value of the property loss is known as

Appraisal

When a disagreement occurs as to how to settle a loss in a "fender bender" between two cars, what procedure is followed?

Arbitration through the court

Which of the following describes the transfer of legal right or interest in an insurance policy?

Assignment

Insurable Interest in a property policy must be proven

At the time of a loss

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be

Authorized.

Representations are written or oral statements made by the applicant that are

Considered true to the best of the applicant knowledge.

The at-fault driver in an insured auto crash had the state required minimums for auto liability coverage. but not enough to pay for all the damage done to the insured. The driver is

Considering underinsured

In property insurance, what is actual cash value?

Replacement cost at the time of loss, less depreciation

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

Under the commercial property coverage program, the basic causes of loss form insures against loss caused by

Sprinkler leakage

Which of the following insurers are owned by stockholders?

Stock

Which of the following would qualify as a competent party in a insurance contract

The applicant has prior felony conviction

The Commissioner of Insurance is

The chief officer of the Department of Insurance

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.

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 which of the following circumstances would an insurer be allowed to cancel a dwelling policy midterm?

The insured knowingly lied about the year the property was constructed.

Which of the following losses would most likely NOT be covered under Coverage A in the dwelling policy?

Theft of a renter's lawnmower used to service the premises

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.

All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT

Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident.

If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to

$500.

How long is the waiting period after the application has been accepted before flood coverage goes into effect?

30 days

If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person?

50,000

Which of the following statements is true regarding the premium computation for workers compensation insurance?

A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis.

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance.

Which party of the insurance policy covers claims related to expenses, reasonable expenses incurred by an insured to protect damage property from further loss or defense expenses.

Additional Coverage.

Which of the following is the closest term to an authorized insurer?

Admitted

What is a foreign Insurer?

An insurer with a home office in another state

Which coverage form would provide coverage for all incoming and outgoing shipments?

Annual Transit

Which inland marine form would provide the best protection for a dry cleaning company against loss or damage to their customer's property while in the care, custody, and control of the dry cleaners?

Bailee's customer policy

An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined?

Benefits will be provided if the state was listed on the policy information page.

Which of the following would NOT be covered under the liability section of a personal auto policy?

Bodily injury caused by the insured's negligence while driving a three-wheel all-terrain vehicle

The crime of forced entry onto the premises of another person or persons with felonious intent is defined as

Burglary

The liability coverage of the business owners policy is written on

Business liability coverage form

Which of the following entitles has the power to issue certificates of authority.

Commissioner of Insurance.

When applying for an individual life insurance policy. an applicant states that he went to the doctor for nausea. but fails to mention that he was also having severe chest pains. This an example of

Concealment

The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the

Conditions.

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

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

The difference in the contents coverage on an HO-3 and HO-5 is which of the following?

Contents are covered open peril on HO-5, and named peril on HO-3.

An insurance producer just sold an insurance policy to his sister. What kind of business is this ?

Controlled

Which of the following is not essential element of an insurance contract?

Counteroffer

Which of the following is covered under the Mail floater of a Commercial Inland Marine policy ONLY if is sent by registered mail?

Currency and unsold travelers checks

An insured is applying for a casualty insurance policy. One of the conditions of the policy allows the insurance company to inspect the insured's books at the end of the policy term to make sure sufficient premium has been collected for the exposure she plans to insure. Which condition is part of the insured's policy?

Deposit premium audit

Which of the following would modify insurance contract by either adding or removing coverage.

Endorsements

Individuals in the business of selling construction equipment and mobile equipment should insure with a/an

Equipment dealers coverage form.

All of the following are found in the declarations section of a policy except

Exclusions

What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?

Experience modification factor

Events and conditions that increase the chances of an insured loss occurring are referred to as

Hazards

When would a misrepresentation on an insurance application be considered fraud?

If its intentional and material

For a contract to be enforceable by law, the purpose of the contract must be

Legal and not against public policy.

Insurance is a contract by which one seeks to protect another from

Loss

The reduction, decrease or disappearance of value of the person or property insured in a policy by a peril insured against is know as

Loss

Which of the following coverages in dwelling and homeowners policies is for indirect losses?

Loss of use

The process of determining the premium charged and how much insurance is required for a particular loss is called

Loss valuation.

The primary purpose of a surety bond is to

Make sure obligations are fulfilled.

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

Mutual

A worker received a concussion after getting hit on the head at work and missed work for 5 days. At what point will the worker receive workers compensation benefits for the missed work.

Never, benefits start once a worker has been unable to work more than 7 days

Which of the following would be covered under the Film Coverage Form? a)Deterioration of a film b)Exposure of a negative film to light c)Electrical erasure of a tape

None of these are covered.

Losses caused by continuous or repeated exposure to conditions resulting in injury persons or damage to property that is neither intended nor expected is the definition of which of the following terms?

Occurence

Rental Reimbursement is only available if the policy includes which coverage?

Other Than Collision Coverage

All of the following are examples of transacting insurance in Georgia except

Placing advertisements for an insurer

Which of the following liability exposures is most likely for a small specialty clothing retail boutique?

Premises liability exposure

The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount fo the insurer bears to all the insurance covering the property is called

Pro Rate liability

What types of damages may be awarded by the court to create disincentives that discourage behavior that is deemed highly undesirable?

Punitive

Which method of loss valuation is contrary to the basic concept of indemnity?

Replacement cost

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 know as

Subrogation

Which one of the following symbols used in business auto coverage is correctly described?

Symbol 9 - nonowned autos only

Robbery

Taking of property by use of force, violence, or fear

Which of the following is an example of a producer being involved in an unfair trade practice of rebating?

Telling a client that his first premium will be waived if he purchases the insurance policy today

Who is covered by an HO-4 policy

Tenants

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?

The Fair Credit Reporting Act

An insurance company could purchase an errors or omission Insurance policy which would provide protection in the event of any of the following events except

The agency loses commission income from polices that were not issued by the insurer.

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 self insured retention.

Negligence may be defined as

The failure to use reasonable and prudent care

Which of the following claims does not fall under the scope of liability coverage of sections 2 of a homeowners policy

The named insured is borrowing a friends jacket which is later damaged.

All the following types of property are covered by a standard builders risk from except

Tools 50 feet away from the building.

The type of insurance used to cover goods for one specific trip is called

Trip transit.

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

Twisting

Which of the following losses would NOT be covered by the dwelling policy if the dwelling is vacant for over 60 days?

Vandalism

Insurance is the transfer of

risk

The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information

within 45 days

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?

False advertising

When doing business in this state, an insurance that is formed under the laws of another state is know as which insurer

Foreign

Which of the following homeowners forms is designed for individuals that own and reside in a condominium?

HO-6

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.

Replacement cost is defined as

Full replacement of property at its current cost, new and without reduction for depreciation.

Undwr the professional liability loss settlement provision, what must an insurer do before offering to pay a claimant to settle a claim?

Get the insured's consent

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?

Illegal under any circumstances

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.

In liability insurance polices, supplementary payments are made.

In addition to the limit of liability.

The proof of loss statement must be

In writing

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

What do individuals use to transfer their risk of loss to a larger group?

Insurance