Practice Test #4
A company may write insurance in excess of its retention limits: a. By insuring the excess with other companies through a reinsurance agreement or treaty agreement. b. Under no circumstances. c. When its annual premium volume has exceeded the amount specified by the Insurance Commissioner of the jurisdiction in which it's domiciled. d. If it is a fraternal benefit society.
A
A company's promise to "pay for damage caused by or resulting from any covered cause of loss" would be found in which of the following sections of an insurance policy? a. Insuring Agreement b. Declarations c. Conditions d. Exclusions
A
A domestic insurer is: a. One formed in your state b. One formed in another state c. One formed in another country d. A foreign farm bureau company
A
A prospective insured wishes to protect her firm against criminals taking money from a messenger going from the firm to a bank. In this situation, the prospect should purchase coverage for: a. Robbery b. Fidelity c. Assault d. Burglary
A
A risk where both profit and loss are possible is known as: a. Speculative b. Fundamental c. Pure d. Dynamic
A
A tenant leases space in a building. The tenant's space is damaged by fire. When will the commercial Property Policy pay for the damage? a. When the owner of the building submits proof of loss for the damage b. If the Tenant pays for the damage c. Will only pay if the lease agreement charges the tenant with the repairs d. Will not pay
A
All of the following are unfair claims settlement practices, EXCEPT: a. Denying a claim not covered under the policy. b. Not responding promptly when a claim is submitted. c. Forcing the insured to sue by offering less than the claim is worth. d. Telling the insured that the company appeals arbitration awards.
A
All of the following statements are false regarding an insured's right to cancel an automobile policy, EXCEPT: a. The named insured may cancel an auto policy at any time. b. No partial or full premium refund is made if the named insured cancels the auto policy. c. The named insured may cancel the auto policy by giving 45 days written notice to the company. d. The named insured may not cancel the policy once it has been in force for two consecutive years with the insurance company.
A
An adjuster has just completed taking the statement of a witness. Which of the following must be done? a. The witness must sign each page and have his or her signature witnessed. b. Initial each page and have the adjuster witness each page. c. Sign the last page and have the attorney witness the signature. d. Have the adjuster and the attorney attest to the statement.
A
An insured with an HO-3 policy suffers a covered loss to a dwelling. If, at the time of the loss, the amount of insurance carried is 80% or more of the full replacement cost of the dwelling, the insurance company may settle the loss for not more than the least of the following amounts, EXCEPT: a. The actual cash value of that part of the building that has been damaged b. The limit of coverage under the policy that applies to the building c. The replacement cost of that part of the building that has been damaged d. The amount actually spent to repair or replace the damaged building
A
An insurer whose place of incorporation is Toronto, Canada would be identified as a/an: a. Alien insurer b. Non-admitted insurer c. Foreign insurer d. Domestic insurer
A
Brian Hendricks is adequately insured with a homeowner policy containing a requirement to carry at least 80% of replacement cost value. If he suffered a partial loss to his dwelling structure he would be able to collect which of the following percentages of loss? a. 100% b. 75% c. 80% d. 90%
A
Entering into any agreement to commit, or by any concerted action committing, any act resulting in or tending to result in unreasonable restraint of the business of insurance is an example of: a. Coercion b. Rebating c. Misrepresentation d. Defamation
A
Garagekeeper's coverage excludes all of the following losses, except: a. Loss to a high-value stereo system permanently installed in a covered auto. b. Loss to CDs from a covered auto. c. Faulty work performed by a mechanic. d. Theft of equipment from a covered auto by a garage employee.
A
If building coverage is provided under the BOP, the coverage will automatically increase each renewal by what percentage? a. 25% b. The current rate of inflation c. 8% d. 15% unless a different percentage limit is shown on the declarations page 2. In the event of a loss under a personal auto policy, an insured is required to submit to the insurance company all of the following information, EXCEPT: a. An appraisal of the damaged property. b. A list of any known witnesses. c. A notice of claim. d. Proof of loss statement if requested.
A
If coverage for towing and labor costs is included in a Personal Auto Policy, labor costs will be covered only if the labor is performed: a. At the place of disablement. b. Within 24 hours of the disablement. c. Within 48 hours of the disablement. d. At a garage by an experienced mechanic.
A
Jim Cress owns an expense fine arts collection. He has it appraised and covered under a personal articles floater. He takes his collection to England to have it auctioned. While the collection is in his hotel room they are stolen. What coverage would apply? a. The loss is not covered b. The fine arts are covered for fire only outside the covered territory c. Theft does not apply to fine arts d. Property awaiting auction is never covered
A
Lawful economic interest in the preservation of the subject of insurance, free from loss or destruction or monetary impairment is the definition of: a. Insurable Interest b. Right of Ownership c. An Amendatory Endorsement d. Contractual Obligation
A
Mary has insured her one-family home under an HO-3 form with a limit of $100,000. What limit is she automatically entitled to for damage to her unattached garage on the premises? a. $10,000 b. $5,000 c. $7,500 d. $15,000
A
Minimum coverage provided by the basic dwelling form (DP-1) includes coverage against loss by: a. Fire, lightning and internal explosion. b. Fire and lightning only. c. Fire, lightning, and extended coverages (EC). d. Fire, lightning, extended coverages (EC), and vandalism and malicious mischief (VMM).
A
Policies issued under the National Flood Insurance Program provide removal coverage for property which is moved to another location to protect it from a flood. This coverage applies for up to: a. 45 days b. 10 days c. 30 days d. 60 days
A
Some policies will pay full current cost for new property when there is a loss that is insured on: a. A replacement cost basis. b. A valued policy basis. c. A market value basis. d. An actual cash value (ACV) basis
A
The "when more than one coverage applies" condition in crime insurance is designed to: a. Specifies how a claim would be allocated among the different insurers. b. Allow the insured to choose the company that will pay the claim. c. Provide for subrogation of a claim. d. Avoid overpayment of a claim.
A
The Commercial Building and Personal Property Coverage form applies to all of the following, EXCEPT: a. Personally-owned residences. b. Commercial buildings. c. Business personal property. d. Personal property of others.
A
The West Virginia Essential Insurance Coverage Act (FAIR Plan) helps make coverage available to persons those insurance companies in the voluntary market will not insure. What is the maximum limit that can be provided for residential risks? a. $100,000 b. $50,000 c. $150,000 d. $25,000
A
The principle of indemnity is best illustrated by which of the following insurance policy clauses? a. Other Insurance b. Liberalization c. Inspection and Audit d. Cancellation
A
Under a dwelling broad or special form, what is the maximum that would be paid for "loss of use" if coverage A was $60,000? a. $12,000 b. $2,500 c. $6,000 d. $5,000
A
Under a surety bond, the owner of the project is called the: a. Obligee b. Surety c. Principal d. Administrator
A
What is the difference between a witness and an expert witness? a. An expert witness can draw conclusions from observations. b. A witness can testify as to his or her observations. c. In the eyes of the court there is no difference. d. An expert witness can deviate from his or her field of expertise.
A
What is the purpose of reinsurance? a. It is insurance for insurance companies, to reduce the risk of catastrophic losses. b. It can cover unusual risks which standard carriers are unwilling to insure. c. It is special coverage for reinvestment trusts. d. It is insurance for past claims that were inadequately covered.
A
When an insurer cancels a dwelling policy for non-payment of premium, it must give the insured advance notice of at least: a. 10 days b. 20 days c. 30 days d. 60 days
A
Which of the following are also insureds in connection with conducting the insured's business under a commercial umbrella policy? a. Employees in connection with bodily injury to third parties b. Employees in connection with bodily injury to another employee c. Employees participating in a recreational athletic event not sponsored by the employer d. None of the responses are correct
A
Which of the following best describes the concept of risk? a. Uncertainty of Loss b. Result of Loss c. Amount of Loss d. Cause of Loss
A
Which of the following crime endorsements affects employee theft coverage? I. Name or position schedule. II. Client's property. III. Forgery IV. Safe depository. a. I and II only b. I, II, III, and IV c. I, II, and IV only d. I, II, and III only
A
Which of the following inland marine policies most closely resembles the scheduled personal property endorsement? a. Personal articles floater b. Personal property floater c. Personal insurance floater d. Personal effects floater
A
Which of the following is NOT covered under most commercial crime policies? a. Legal expenses b. Employee Theft c. Computer Fraud d. Forgery and Alteration
A
Which of the following is not a common risk management technique? a. Multiply the risk by engaging in hazardous activities. b. Avoid the risk by avoiding the activity or selling the property which created the risk. c. Assume the risk through deductibles or self-insurance. d. Share the risk with others.
A
Which of the following is not covered by homeowners liability coverage? a. A snowmobile in a park b. A golf cart on a golf course c. Runaway lawnmower d. Motorized wheelchair
A
Which of the following losses would be covered under a "Robbery and Safe Burglary" coverage? a. Rare manuscripts are stolen from a locked safe that shows signs of forced entry b. Valuables kept in a locked safe are destroyed by fire c. Cash disappears from a locked safe, with no explanation d. Jewelry is stolen from a locked safe that shows no signs of forced entry
A
Which of the following losses would be covered under garagekeeper's legal liability coverage? a. Theft of a customer's AM/FM stereo radio permanently installed. b. Theft of equipment from a covered auto. The theft was committed by a garage employee. c. Faulty work performed by the named insured. d. Loss to CD's from a covered auto.
A
Which of the following sections of an insurance policy states who may be considered an insured in addition to the named insured? a. Definitions b. Declarations c. Insuring Agreements d. Conditions
A
Which of the following statements best describes a representation in an insurance application? a. A representation is a statement made by the applicant that he believes to be true when made, but which might prove to be false. b. A representation is a promise by the applicant that certain conditions will continue to exist throughout the policy term. c. A representation explains the promise made by the insurance company. d. Another name for a representation is a warranty.
A
Which of the following statements is correct? I. Both DP-2 and DP-3 settle losses to covered personal property at actual cash value (ACV). II. Both DP-2 and DP-3 settle partial losses to covered dwellings at replacement value in all situations. a. I only b. II only c. Both I and II d. Neither I nor II
A
Which of the following types of losses will not be excluded by Thomas Drug Company's CGL policy? a. Bodily injury to a customer arising out of a forklift being used by the insured b. Damage to a forklift owned by others which was in the custody of the insured c. Property damage caused to the insured's water system when a forklift dropped a drum of caustic chemicals owned by the insured d. Bodily injury to an employee driving a forklift
A
Which statement is false regarding an agent's contract with an insurance company? a. It is generally an oral agreement between the parties. b. It specifies the types of policies the agent may sell. c. It specifies the commissions and other remuneration that the agent will be paid. d. It can be terminated by either party under certain specified situations.
A
While stopped in traffic at a red light your car is hit in the rear by Mr. Jones. The damage to your car would be addressed by which of the following coverages? a. Mr. Jones property damage liability and your collision insurance. b. Your collision insurance only. c. Mr. Jones property damage liability only. d. Your comprehensive only.
A
A house has a market value of $180,000, an actual cash value of $150,000 and a replacement cost of $200,000. To be certain that the 80% provision of the HO-3 form is met, the minimum amount for which the house must be insured is: a. $150,000 b. $160,000 c. $180,000 d. $200,000
B
Coverage provided under the West Virginia FAIR Plan may not exceed ____ for any one habitational risk or ____ for any one commercial risk. a. $150,000/$300,000 b. $100,000/$300,000 c. $200,000/$400,000 d. $100,000/$250,000
B
If the insurance company has paid a claim, what is known as the right of recovery? a. Arbitration b. Subrogation c. Reservation of rights d. Salvage
B
In the newest edition of the Commercial Property form, which of the following is now considered part of the building? a. Signs permanently attached b. Vegetated Roofs c. Outdoor Property d. Detached Signs
B
Section 2 of the homeowners policy provides coverage for which of the following? a. Dwelling & Other Structures Coverage b. Personal Liability & Medical Payments to Others Coverage c. Personal Property & Loss of Use Coverage d. General Liability & Garagekeeper's Coverage
B
The National Flood Insurance Program will pay which of the following amounts to assist with moving of property to safety when there is imminent flood danger? a. $500 b. $1,000 c. $1,500 d. $2,000
B
The _____ states that insurers issuing fire insurance policies on real property in West Virginia are liable for the whole amount of insurance on the property in case of total loss by fire or as otherwise stated in the policy. a. Comparative negligence principle b. Valued policy law c. Principle of insurable interest d. Assigned risk principle
B
The claimant and insurer have agreed on a settlement of a claim. What is the time limit on the payment of the claim? a. Not later than 15 days of the settlement agreement b. No later than 15 working days of the receipt of such agreement c. Not later than 10 days of the agreement d. No longer than 10 working days of the agreement amount
B
The insured has sustained a serious loss to his property from a fire. He hauls away the debris at the request of the fire department. The insurer did not ask for an opportunity to inspect the damaged property and now has denied the claim. Which of the following would be a correct statement? a. The insurer must always inspect the damaged property to protect it's interest b. The insurer did not ask to inspect the damage and therefore must pay c. The fire department is at fault for preventing an inspection d. The insured should have checked with the insurer and gotten permission to have the damaged property removed
B
The responsibility to prove a loss belongs to: a. The insurance company b. The insured c. The agent d. The adjuster
B
What is the limit of coverage provided under a mobile home policy for detached structures? a. $2,000 b. 10% of Coverage A limit or $2,000 whichever is greater c. $5,000 per structure d. Coverage must be added by endorsement
B
Which of the following could be covered under a BOP? a. Bank b. Hardware Store c. Bar d. Amusement Park
B
Which of the following would NOT be covered by a flood insurance policy? a. Overflow of water from a pond on the insured property b. Mudslides from recent heavy rain. c. Collapse of land along the shore of a body of water d. Inundation and overflow of surface waters
B
Which of the following would be an "uninsured motor vehicle?" a. Auto 1, which has no liability insurance under any policy. It is operated by a self-insurer. b. Auto 2, a hit-and-run vehicle. Neither the owner nor the driver can be identified. c. Auto 3, with a liability limit of insurance of $100,000. The insured's state requires a liability limit of $25,000 and the insured has Uninsured Motorists coverage in the amount of $50,000. d. None of the above is an "uninsured motor vehicle".
B
A franchised auto dealership would need: a. Business auto coverage b. Common carrier coverage c. Garage liability coverage d. General liability coverage
C
An unendorsed blanket fidelity bond: a. Names each covered employee specifically b. Names the positions to be covered c. Does not list the names of the employees d. Covers specified employees by job description and position
C
Each adjuster must file with the Commissioner all of the following information, except: a. Home address b. A post office box number of the business if street address is not numbered c. Phone number d. Business street address
C
How is property covered under an unendorsed BOP form? a. Coverage is written on a named peril basis b. Coverage is written on a broad peril form c. Coverage is written on an open peril basis d. Coverage is written on a basic peril bases
C
If building coverage is provided under the BOP, the coverage will automatically increase each renewal by what percentage? a. 25% b. The current rate of inflation c. 8% d. 15% unless a different percentage limit is shown on the declarations page
C
In which of the following situations has actual damage been sustained? a. A national convention was delayed for one hour because Sidney, the main speaker, was late to arrive. The convention chairperson charged Sidney for damages. b. Mary was a passenger in a bus when the driver swerved the bus off the road and into a field to avoid a collision with a deer that had darted across the road. Although Mary sustained no bodily injury, she made a claim against the bus company for inconvenience as a result of the incident. c. Gertrude lost her husband through the negligence of a worker on her husband's construction crew. Although Gertrude is employed and her income exceeds that of her deceased husband, she sued for damages. d. Mary and Gertrude both have suffered actual damage.
C
Jones Manufacturing produces a product for resale. They sell all of the items during the 2006 calendar year. During the year 2006 they are insured by ABC Insurance Company. In 2007 they change coverage to XYZ Insurance Company. Late 2007, a consumer is injured because of a defect in the insured's product. Which insurer is responsible for the claim? a. The consumer under "Let the Buyer Beware" doctrine b. The ABC Insurance Company as Jones' liability carrier c. The XYZ Insurance Company as Jones's liability carrier d. A pro-rata agreement will have to be reached between the ABC and XYZ insurance companies
C
Liability coverage always excludes: a. Breakage of glass belonging to a third party b. Injuries requiring no hospitalization c. Damage or injury caused intentionally by the insured d. Damage to motorcycles
C
Mr. Owens owns 50% of a building that is worth $600,000 and is insured for $500,000. What is the maximum that Mr. Ownes can collect in case of a total loss to the building? a. $300,000 b. $500,000 c. $250,000 d. $240,000
C
Mr. Smith and Mr. Jones are named insured's under a property insurance policy. Mr. Smith is not listed on the deed of trust filed with the county court, but he does have a financial interest in the property. They have a tenant in their building. In case of a covered loss who would not be entitled to receive coverage? a. Mr. Smith b. Mr. Jones c. The tenant d. Neither Mr. Smith nor the tenant
C
Once the insured and insurer have reached an agreement on damage to a vehicle, how many days does the insurer have to either pay the claim or tender its proof of loss? a. 5 days b. 7 working days c. 10 working days d. 11 working days
C
Telemarketers who transmit pre-recorded messages to consumers who have not agreed to accept such messages will be fined up to: a. $10,000 aggregate b. $10,000 per call c. $16,000 per call d. $16,000 aggregate
C
The insured has a barn on his premises. The dwelling is insured for $200,000 under a DP-2 dwelling policy. How much coverage applies to the barn? a. $20,000 b. $10,000 c. Nothing d. $5,000
C
The insured places a bid on a dwelling being auctioned at an estate sale. He is successful in purchasing the property for $50,000. The market value is $75,000. He insures the property for $100,000. Six months later the property is a total loss from a fire caused by lightning. How much will the insurer have to pay? a. $80,000 b. $50,000 c. $100,000 d. $75,000
C
The law recognizes two types of waivers. They are: a. Estoppel/indemnity b. Apparent/implied c. Express/implied d. Specific/contractual
C
What is "express" authority under the law of agency? a. Allows the agent to perform all of the usual tasks required to sell and service an insurance contract b. The authority the general public assumes the agent has c. The authority given to the agent by the company in a written contract or orally d. The authority granted by the insurance department in the issuance of an insurance license
C
What is the Business Income Limit of Insurance under the Businessowners Coverage Form? a. $100,000 b. Actual loss sustained for up to six months c. Actual loss sustained for up to 12 months after the loss d. The actual loss of income from the date of the damage to the end of the policy period
C
What is the maximum obligation of the West Virginia Insurance Guaranty Association? a. $50,000 b. $100,000 c. $300,000 d. $500,000
C
When do all licenses of adjusters expire in West Virginia? a. On the date of issuance every year b. On the licensee's date of birth every other year c. Midnight on May 31 and annually thereafter d. The license is continuous if the fees are paid
C
Where is Covered Property listed and described on the BOP? a. In the coverage form b. Under the conditions c. On the declarations page d. Under the extensions of coverage
C
Which commercial property form provides the broadest coverage? a. Basic Form b. Broad Form c. Special Form d. Deluxe Form
C
Which of the following would NOT be found in the "conditions" section of an insurance policy? a. Subrogation rights b. Duties of the Insured c. Insurance Premium d. Mortgage Clause
C
A binder is good for how many days? a. 10 days b. 30 days c. 60 days d. 90 days
D
An insured's homeowner policy has a $50,000 personal property limit. Disregarding any deductibles, what is the most the insured can collect if a boat valued at $1,500 is stolen from the premises? a. $500 b. $1,000 c. $1,400 d. $1,500
D
An unendorsed claims made form CGL policy wil respond to claims reported during the policy period and up to _____days after the policy expires. a. 90 b. 120 c. 365 d. 60
D
If an insurer fails to perform its own inspection of a damaged vehicle within seven days, what will occur if the insured proceeds to have the vehicle repaired by a repair shop of his choice? a. The insurer may deny the claim b. The insurer may pay only a portion of the claim c. The insurer may request the application of the appraisal clause to dispute the value of the loss d. The insurer must follow the policy provisions and the regulations and pay the claim.
D
In West Virginia, in what manner may a person satisfy the automobile financial responsibility law? a. Providing evidence of insurance in compliance with the minimum required limits of coverage. b. By achieving qualified self-insurer status. c. By depositing with the State Treasurer cash or other acceptable securities. d. All of the listed answers are correct.
D
Marsha moves into her new house built by Ace Construction Company. After six weeks, she realizes that the house is poorly constructed and not what she paid for. Her resultant action against Ace would be covered by which of the following? a. Products and Completed Operations liability b. Owners and Contractors Protective liability c. All of the above d. None of the above
D
Mine subsidence in West Virginia must be: a. Offered by the agent in all counties in the state. b. Offered by the agent in all counties in the state, but coverage may be waived by the insured. c. Offered by the agent in specific counties in the state. d. Offered by the agent in specific counties in the state, but coverage may be waived by the insured.
D
Mr. Jones' vehicle has been struck in the rear by Mr. Smith's vehicle. Mr. Jones has collision coverage. The insurer for Mr. Smith requests that Mr. Jones has his insurer pay the loss. This request is: a. Not considered an unfair claims act b. Usual and customary in the insurance business when the first party has coverage c. The purpose of subrogation d. Considered an unfair claims act
D
Other structures are excluded from coverage under the HO-2 when they are: a. Smaller than 100 square feet or larger than 1,000 square feet. b. Smaller than 100 square feet or larger than 500 square feet. c. Used for storage purposes for insured's personal property. d. Used for business purposes (except as provided by the policy exceptions).
D
The "special limits of liability" section of the HO forms provides watercraft coverage up to $1,500 aggregate for which of the following? a. Sailboats b. Sailboards c. Boat trailers d. All of the responses are correct
D
The home day care endorsement will exclude which of the following? a. Corporal Punishment b. Physical Abuse c. Sexual Molestation d. All the responses listed are correct. None of these acts would be covered.
D
The primary purpose of the West Virginia Automobile Insurance Plan is to: a. Pay auto liability claims for insolvent insurers. b. Hear consumer complaints against insurance companies. c. Protect policyholders against insurer impairments. d. Provide auto liability insurance for individuals unable to obtain it in the normal marketplace.
D
Under the Yacht policy, what coverage applies to bodily injuries to the captain and crew? a. Medical payment coverage b. Uninsured/underinsured boater insurance c. Bodily injury liability coverage d. Crew coverage under the Jones Act
D
Upon declaration of an insurance emergency, a licensed insurer may apply for emergency adjuster licenses for persons to act as emergency adjusters. The Commissioner will act on these applications within: a. 72 hours b. 10 days c. 20 days d. 24 hours
D
Upon request made by the consumer, a person who procures an investigative consumer report on the consumer must make a complete and accurate disclosure to the consumer of the nature of the report and investigation within: a. In writing and mailed to the consumer within 30 days of the request. b. In writing and mailed to the consumer within 15 days of the request. c. In writing and mailed to the consumer within 10 days of the request. d. In writing and mailed to the consumer within 5 days of the request.
D
Which of the following are excluded from the loan/lease endorsement: a. Excessive use charges b. Cost of warranties c. Negative equity d. All of the responses apply
D
Which of the following is true regarding the West Virginia "guest passenger" law? a. Coverage can be amended to exclude passengers b. Coverage can be amended to exclude certain guests c. Coverage can be amended to exclude all invitees d. Coverage cannot be amended to exclude any passenger, guest or invitee
D
Which of the following statements is correct regarding pollution caused by smoke released from an industrial operation covered under the Commercial Property Policy? a. Always covered b. Never covered c. Covered on an "excess basis" d. Covered if caused by a covered cause of loss peril
D
