Property & Casualty Insurance Exam
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
Which of the following would NOT be considered a source of insurability information by an insurer?
The applicant's marital status
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 is true concerning a bonded contractor who defaults on a construction performance contract?
The obligee may engage another contractor and then seek reimbursement from the surety
According to the common policy conditions for a commercial package policy, if the insured dies, the policy rights and duties
Automatically transfer to a legal representative
A professional who wants coverage for all liability exposures should purchase what form of liability insurance?
Commercial general and professional
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 is an example of?
Concealment
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer
All of the following are factors in the determination of actual cash value EXCEPT
Insurance premium paid
All of the following are conditions commonly found in the insurance policy EXCEPT
Insuring agreement
A health care provider wants to provide medical professional liability insurance for its employees. Unfortunately, the provider has searched unsuccessfully for an insurance carrier that can provide this insurance. Which of the following will most likely be able to provide the insurance>
Joint Underwriting Association
A managing General Agent must complete the continuing education requirements that are set for
Local Recording Agent
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?
$1,000
The dwelling insured on HO-2, HO-3, or HO-5 forms is covered for replacement, provided that it is insured for at least what percentage of replacement cost on the date of loss?
80%
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
Which part of the insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?
Additional coverage
In a dwelling policy, which of the following provides coverage for additional living expenses incurred by an owner-occupied in the event a covered peril makes the premises uninhabitable due to a covered loss?
Coverage E
A professional liability policy will provide coverage for loss in all of the following cases, except, when the insured doctor was shown to be
Criminally negligent
Directors and officers liability insurance defends actions against a corporation or its officers and directors alleging wrongful acts. With regard to the coverage provided, wrongful acts include any of the following EXCEPT
Embezzlement
All of the following statements describe the concept of strict liability EXCEPT
It is imposed on defendants engaged in hazardous activities
In which of the following situations is it legal to limit coverage based on marital status?
It is never legal to limit coverage based on marital status.
Which of the following statements is NOT true regarding a personal umbrella liability policy?
It provides errors and omissions coverage for an agency.
How does the mobilehome endorsement affect the other covers of law or ordinance in a homeowners policy?
It removes the coverage
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
Which of the following coverages is included in an unendorsed homeowners policy?
Medical payments to others
Which of the following limits, shown in the declarations of a policy, applies to medical expenses?
Per person
Which of the following statements in INCORRECT with regard to surplus lines insurance?
Policies written by a surplus lines insurer typically contain standard coverages and forms
Who are the parties to a bond?
Principle - obligee - surety
Surety bonds are written for a definite limit called
The bond penalty
When a regular bill of lading is issued, who will be responsible for the invoice cost of any damaged property?
The carrier
All of the following statements concerning coinsurance are true EXCEPT
The coinsurance formula will also be applied to total losses.
An employee is entitled to impairment income benefits beginning
The day after the employee reaches maximum medical improvement
Negligence is defined as
The failure to do what a reasonable prudent person would do under given circumstances.
When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be
The proximate cause
An agent explains the details of a life insurance policy to a client. The agent does not realize, however, that the state has recently rewritten two of the provisions. As a result, the agent inadvertently misrepresents the policy, making it more attractive than it really is. What best describes this situation?
There is no misconduct
A business-owners policy is
a self contained prepackaged policy
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of
concealment
Representations are written or oral statements made by the applicant that are
considered true to the best of the applicant's knowledge
An insured has a policy with an insurance company that became insolvent. The policy has $1,600 of unearned premium. How much of this premium will the insured be able to recover from the Texas Property and Casualty Insurance Guaranty Association?
$1,600
The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to
$250,000
A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage, the owner has a policy with $60,000 coverage. How much can the owner collect for his loss?
$30,000
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has been depreciating at $200 per year and his policy is ACV, how much will it pay toward the insured's new roof?
$5,000
An employee's average weekly wage is computed according to the sum of wages paid in what period of time immediately preceding the date of the injury?
13 consecutive weeks
An insurer must acknowledge receipt of a Notice of Claim within how many days?
15
The Mail Coverage Form is always written on a reporting form basis; after the end of each reporting period shown in the declarations, reports are due within
30 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?
30 days
Under Coverage C of a homeowners policy, the amount of insurance provided to cover personal property of the insured is
50% of the amount provided as Coverage A
Which of the following is covered under the Camera and Musical Instruments Dealers floater?
A customer's camera left at a camera shop for repair
In which of the following types of property damage valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured's property's appreciation or depreciation?
Agreed value
Which of the following would NOT qualify as a hired auto?
An auto borrowed from an employee
With respect to the business of insurance, a hazard, is
Any condition or exposure that increases the possibility loss
Events or conditions that increase the chances of an insured loss occurring are referred to as
Hazards
To purchase insurance, the policyowner must have financial interest in the property being insured. This is known as
Insurable Interest
Insurance is a contract by which one seeks to protect another from
Loss
The type of professional liability coverage a medical doctor needs is
Malpractice coverage
Which of the following covers a carrier for liability for loss to cargo while it s being transported in a truck?
Motor truck cargo policy - truckers form
To perform work on a customer's car, a mechanic in an auto shop had to put the vehicle on a service hoist. The hoist collapsed, damaging the vehicle and injuring the mechanic. In regard to the garage coverage form, which of the following statements is true?
No coverage applicable
Which of the following liability exposures is most likely for a small specialty clothing retail boutique?
Premises liability exposure
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
What type of damages may be awarded by the court to create disincentives that discourage behavior that is deemed highly undesirable by society?
Punitive
A situation in which a person can only lose or have no change represents
Pure risk
Federal Fair Credit Reporting Act
Regulates consumer reports
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
Prior to state-directed workers compensation statutes being enacted, employees had
To sue an employer for the "loss" and prove that the employer was at fault
Which common policy condition prohibits the insured from changing the rights or duties as defined under the policy to any other person or entity without the written consent of the insurance company?
Transfer of rights and duties under the policy
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriter approves coverage
Coverage under a Floor Plan Merchandise form is written on a reporting form basis that requires to file reports with the insurer. What is the time frame for those reports?
Within 30 days after the end of each month
An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage?
$14,000
What is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating?
$25
Under businessowners policy Section 1, if an insurer wants to non-renew a policy for non-payment of premium, how many days before the expiration date must the insurer notify the mortgagholder?
10 days
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 owner by the insured, but furnished for use while the covered auto is out of normal use because of repair
Which of the following is a method of claim settlement used in casualty insurance when the insured and insurer cannot agree on how to settle a claim?
Arbitration
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT
Conditions
The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the
Conditions
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
Which of the following terms best describes a trembling or shaking of the earth that is volcanic or seismic in origin?
Earthquake
Which of the following statements would be an example if a product liability claim?
Faulty packaging of a cereal caused spoilage that resulted in someone getting sick
The homeowners policy covers collapse caused by all of the following EXCEPT
Foundation cracks
Replacement cost is defined as
Full replacement of property at its current cost, new and without reduction for depreciation.
What type of compensatory damages will pay for pain and suffering and disfigurement?
General
Which of the following would NOT be considered rebating?
Giving a client a $25 pen with the insurer's logo during the insurance application process
If an insured needs protection on a property other than money and securities inside the premises from losses caused by breaking and entering after business hours, which of the Crime Coverage forms should be purchased?
Inside premises - Robbery or Burglary of Other Property
A producer who fails to segregate premium monies from his own personal funds is guilty of
Larceny
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
What type of information would not be found in a policy's insuring agreement?
Renewal Dates
The commission will refer to an employee who is receiving supplemental income benefits to the Rehabilitation Commission if it determines that rehabilitation and training will
Return the employee to work earlier
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
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
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
An insured under a homeowners policy who has filed two or more claims in the preceding policy year may be
Surcharged on the premium amount
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?
The Fair Credit Reporting Act
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 losses would NOT be covered by a homeowners policy?
A coin collection valued at $500 lost in a fire
What is a Certificate of Insurance
A written document showing the types and amounts of insurance that have been issued to the insured
The proof of loss statement must be
in writing
The party to a surety or fidelity bond who promises to fulfill the obligation is the
principal
All of the following are considered parts of the policy structure EXCEPT
provisions
What are the two types of compensatory damages?
special and general
An insurer can cancel a personal auto policy by giving the named insured 10 days prior written notice for any of the following EXCEPT if
the cancellation is to take effect on the 12-month anniversary of the policy.