Property and casualty
What is the standard deductible for the Businessowners policy?
A. $500 B. $1,000 C. $2,500 D. $5,000 A
The insured has two separate dwelling policies that cover the same property: Policy A for 30,000 and policy B for 60,000. The insured has a 12,000 loss. if both policies use the pro rata method to handle other insurance, how much will policy A pay for this loss?
A. 0 B. 4000 [1/3 of loss] C. 8000 D. 12000 B
What is arbitration?
A. A means of convincing a client to cancel already existing insurance and buy another policy to the detriment of the policyholder. B. a means of settling disputes between the insured and the insurer. C. transferring to the insurance company the insureds right to collect from a negligent third party. D. a means of typing a claim by deducting depreciation from replacement cost. B
What is the major difference between the occurrence and claims-made versions of the Commercial General Liability coverage form?
A. Amount of aggregate limits provided B. Coverage trigger C. Policy term permitted D. Exclusions B
Which of the following statements about surplus line brokers is CORRECT?
A. An Alabama resident must be licensed as a property and casualty insurance producer to hold a surplus line broker license. B. An Alabama resident must post a bond of at least $50,000 to be licensed as a surplus line broker. C. To be licensed in Alabama as a non-resident surplus line broker the applicant must be licensed as a surplus line broker in their home state. D. All of the above statements are correct. D
Which would NOT trigger the payment of Business Income in a Commercial Property policy?
A. An explosion at a nearby business which results in all surrounding businesses being closed by civil authority B. A fire at the building owned by the insured which causes the business to close for six months C. A riot which forces the business to close for three months D. An unexpected economic downturn which causes a business to close D
Under insuring agreements #3 of a commercial crime coverage form, coverage is provided for:
A. Arithmetic errors B. damage done to the building resulting from attempted theft C. deception D. vending machines B
In a businessowners policy, which is a correct statement regarding coverage extensions?
A. BOP coverage extensions are not automatic: they have to be earned. B. there is no limit for business personal property off premises. C. there are different limits of coverage for valuable papers and records on premises and off premises. D. there is no coverage extension for outdoor property. C
Which standard form provides coverage for the most perils?
A. Basic cause of loss form. B. broad cause of loss form. C. special cause of loss form. D. all cause of loss forms cover the same perils A
Which one of the following is a prepackaged policy of property and liability coverages designed specifically for certain types of small business?
A. Businessowners policy B. commercial package policy C. difference in conditions policy D. umbrella policy A
How does the policyowner acquire the coverage extensions in a commercial property policy?
A. By accepting a higher deductible. B. earn them by selecting at least 50% coinsurance C. earn them by selecting at least 80% coinsurance. D. earn them by maintaining a clean claim record. C
A commercial Auto policy does NOT provide coverage in
A. Canada B. possessions of the united states. C. Mexico D. Puerto Rico C
Which coverage is NOT available under the Commercial Package Policy?
A. Casualty B. Auto C. Inland Marine D. Workers Compensation D
The insured is seriously injured in a wreck with a driver who carries the minimum liability limits required by law, but whose insurance is not adequate to cover the insured's damages. The other driver is at fault for the accident. Which Personal Auto coverage in the insured's policy would cover the damage not paid by the other driver's policy?
A. Collision coverage B. Liability coverage C. Underinsured Motorists coverage D. Uninsured Motorists coverage C
Which of the following statements about notice of cancellation of an Alabama automobile policy is CORRECT?
A. For reasons other than non-payment of premium, the insurer must provide at least 20 days' notice of cancellation of an automobile policy. B. The insurer must provide at least 15 days' notice of cancellation of an automobile insurance policy for non-payment of premium. C. If the cancellation notice does not specify the reason for the cancellation, the insured must advise the insured that they are entitle to request the reason in writing within 25 days prior to the cancellation. D. all of the above A
An applicant whose business involves hauling both his own goods and the goods of others would be best served by purchasing which of the following Commercial Auto coverage forms?
A. Garage Coverage form B. Garagekeepers Coverage form C. Business Auto Coverage form D. Motor Carrier Coverage form D
Which endorsement to a Commercial Auto Coverage form extends bodily injury and property damage liability coverage for personal use to vehicles not owned, hired or borrowed by the insured business?
A. Lessor - Additional Insured and Loss Payee B. Drive Other Car Coverage C. Individual Named Insured D. Employee as Insured B
Which of the following coverages are included in a business auto coverage form with no endorsements?
A. Liability coverage and physical damage coverage B. uninsured motorists coverage C. medical payments coverage D. drive other car coverage A
Garagekeepers Liability coverage provides which of the following coverages to a garage business?
A. Liability for bodily injury or property damage arising from use of covered autos B. Physical damage to the insured's covered autos C. Liability for property damage to a customer's auto while in the insured's custody D. Products liability coverage C
The definition of "casualty" insurance includes
A. Liability insurance B. property insurance C. life and health insurance. D. title insurance. A
An insured is notified the insurance company is unwilling to provide coverage after the present policy expires, this is.
A. Nonrenewal. B. flat cancellation. C. permitted only if the insured agrees. D. permitted unless the insured is unable to obtain coverage elsewhere. A
Which of the businesses below would NOT be eligible for a Business Auto coverage form?
A. Pat Wilson's Auto Sales B. Grant County Library C. Acme Plumbing Supply D. Buy-Rite Department Store A
Coverage A under a Commercial general liability policy provides all the follow EXCEPT
A. Premises B. operations C. Personal injury D. completed operations C
Which of the following is NOT correct regarding the liability coverage provided under the Businessowners policy?
A. The BOP is "occurrence-triggered" only. B. The only liability limit under the BOP per occurrence is $100,000. C. Premise Medical Payment limits under the BOP are $5,000 per person. D. The BOP Fire Legal limit is $50,000 per occurrence. B
Historically, which of the following statements regarding Ocean Marine Insurance is correct?
A. The rates used for marine insurance are subject to strict approval regulation in most jurisdictions. B. Most marine policies are written on a manuscripted basis. C. Most marine policies are written on a standard form basis. D. The forms used for marine insurance are required to be approved in most jurisdictions. B
Which statement is FALSE concerning Personal Auto policy Endorsements?
A. They can extend coverage to non-traditional vehicles such as motorcycles B. They generally require the payment of additional premium C. They never cover you while driving a car that does not belong to you D. They can provide coverage for towing and labor C
Which statement below best expresses the purpose of the Appraisal clause in a typical Property policy?
A. To determine the amount of any insurance settlement B. To provide a second opinion to the amount of loss determined by an appraiser C. To negotiate between the insurance company and a negligent third party D. To determine the amount of loss when the insured and the insurance company cannot agree D
Under a homeowner policy, which of the following perils is NOT covered?
A. Volcanic Action B. explosion C. animals, birds and fish D. weight of ice and snow C
A consequential loss can also be described as
A. a hazard B. a peril C. a direct loss D. an indirect loss D
Under the law of agency, in an insurance transaction the insurance producer is considered the
A. agent B. principal C. broker D. participant A
Which one of the following businesses would probably NOT be a likely prospect for a bailees customer policy?
A. clothing alterations shop B. dry cleaner C. fur storage D. retail men's clothing store D
You learned that one of the elements of a valid contract is that it involves consideration, in an insurance contract, the consideration that the applicant gives is the
A. commission B. deductible C. premium payment D. promise to pay for covered losses C
Loss by which one of the following would NOT be covered by the specified causes of loss coverage of the business auto coverage form?
A. contact with an animal B. fire C. theft D. vandalism A
A customer was injured when a furnace exploded following its faulty installation by a heating and cooling business. under the commercial general liability policy of the heating and cooling business. this is an example of
A. contingent liability B. completed operations liability C. products liability D. contractual liability B
The farm liability coverage form provides all of the following coverages EXCEPT
A. coverage for bodily injury or property damage arising out of farming operations. B. coverage for B.I. or P.D. arising out of personal activities C. crop dust liability D. personal and advertising injury C
under a fidelity bond, the employer is known as the
A. guarantor B. obligee C. principal D. surety B
A mutual insurance company
A. has officers elected by its agents B. is owned and controlled by its policyholders and managed by directors chosen by the policyholders. C. writes nonparticipating policies only D. insures only risks in the state in which it is incorporated. B
To have an insurable interest, an individual must
A. have a chance of suffering a financial loss. B. own the property. C. enter into an insurance contract. D. agree to subrogate recovery rights. A
under Alabama law an insurer can cancel an automobile insurance policy for any of the following EXCEPT
A. lying on the application for insurance B. paying the insurance premium on time C. filing a false claim for insurance D. the insured vehicle is unsafe B
Purposely planning a loss to collect on an insurance policy is an example of a
A. moral hazard B. morale hazard C. physical hazard D. all of the above A
To file a claim for coverage under Part B (med pay) of the personal auto policy, the claimant
A. must prove that the driver was negligent B. suffer extreme bodily injury to recover for pain and suffering. C. must incur expenses within three years of the accident. D. suffer an injury while covered by workers comp. C
Which of the following is CORRECT concerning the payments of commissions for insurance in alabama?
A. no insurer may pay a commission to relatives of a deceased insurance producer. B. no insurer may pay a person holding only a temporary producer license. C. an insurer who violates the Alabama rules on commission payments may be fined up to three times the amount of the commission paid. D. an individual producer may share commissions with other persons, even if they are not licensed for the same lines of insurance. C
Under the builders risk coverage form of a commercial property policy, what else is covered in addition to the building under contraction?
A. nothing, only the building under construction is covered. B. only the building under construction and the foundation. C. the building under construction and any supplies or equipment which will become part of the building, but not the foundation. D. the building under construction, along with the foundation and any supplies or equipment which will become part of the building. D
Under the personal auto policy, a temporary substitute for a vehicle owned by the named insured that is out of normal use because of its breakdown, repair, servicing, or loss
A. will be considered a covered auto under the insureds personal auto policy. B. will be considered a non owned auto under the insureds personal auto policy. C. is never insured under the insureds personal auto policy. D. will be insured if there is a named nonowner endorsement attached to the insureds personal auto policy. A
What are the maximum limits of coverage provided under the regular NFIP policy for homeowners?
A. 100,000 for the dwelling, 50,000 for contents. B. 200,000 for the dwelling, 100,000 for contents. C. 250,000 for the dwelling, 100,000 for contents. D. 250,000 for the dwelling, 125,000 for contents. C
The minimum limits in Alabama for automobile liability are
A. 20/40/20 B. 20/50/20 C. 25/50/25 D. 30/60/30 C
The motor carrier act of 1980 requires Trucking companies to certify financial responsibility to meet legal liability obligations for the interstate transport of nonhazardous property in what minimum amount?
A. 250,000 B. 500,000 C. 750,000 D. 1,000,000 C
which of the following would generally NOT be grounds for disciplinary action by the Alabama commissioner of insurance against a licensed insurance producer?
A. Knowingly accepting insurance business from an individual who is not licensed. B. forging another's name to an application for insurance or to any document related to an insurance transaction. C. failing to pay state income tax.' D. having been convicted of a misdemeanor offense. D
Which of the following would be paid under Part C (Uninsured and Underinsured Motorists) of Mary's auto insurance policy after an auto accident?
A. Mary's medical expenses. B. The medical expenses of the other driver after it is determined Mary was at fault. C. The property damage to the other car. D. The damages for bodily injury suffered by Mary after it is determined the other driver was at fault and had no insurance. D
Under what conditions would a person driving someone else's uninsured auto be covered under his or her own personal auto policy?
A. Never, since the personal auto policy covered the insured only while driving their own auto. B. only if the insured is using the auto to drive to work C. when the insured is using the uninsured auto without permission D. always, since the personal auto policy covers the insured while driving any auto
In a competitive state, an employer purchases workers compensation insurance from
A. a state fund only. B. a private insurance company only. C. either a state fund or a private insurance company. D. the federal government. C
Under workers compensation, which of the following people are considered dependents?
A. a surviving spouse. B. an 18 year old child with a physical handicap. C. both of the above. D. neither of the above. C
All of the following are common exclusions to commercial crime coverage forms EXCEPT
A. acts of a named insured. B. War. C. theft by an employee D. fire damage to the insured premises. C
Under the commercial package policy, the person whose name is listed first in the declarations and is assigned certain responsibilities and obligations is the
A. additional insured. B. first named insured C. named insured D. primary insured B
An insurance contract is "one-sided" because the insurance company is the only party that is legally bound to perform its part of the contract. This means that an insurance contract is a/an
A. adhesion contract B. contract of utmost good faith C. personal contract D. unilateral contract D
Heavy weather, collision, stranding, and piracy are examples of
A. barratry B. perils of the sea C. jettison D. ocean marine coverages provided by endorsement B
Trailer Interchange Coverage is a part of the
A. Business Auto Coverage form. B. Garage Coverage form. C. Garagekeepers Coverage form. D. Truckers Coverage form. D
What Homeowner's form is also known as the Condominium Owner's form?
A. HO-2 B. HO-4 C. HO-5 D. HO-6 D
Which of the following correctly identifies the three general classes of Fidelity Bonds?
A. Individual, Scheduled, and Blanket. B. Individual, Blanket, and Group. C. Individual, Group, and Mixed. D. Official, License, and Contract. A
Who of the following would NOT have Liability coverage under Karen Wilson's Personal Auto policy in case of an accident?
A. Karen's neighbor while driving Karen's auto, which he borrowed for the evening B. Karen's husband while driving a neighbor's car C. Karen while driving a friend's small pickup truck D. A teenaged neighbor who takes Karen's car for a joyride without permission D
Which is NOT automatically covered by a Commercial General Liability policy?
A. Premises Liability B. Products Liability C. Personal Injury Liability D. Professional Liability D
A fire that was caused by the insured's negligence burns a neighboring building. The owner of the building sues the insured. From the insured's standpoint, this is an example of a/an
A. advertising injury loss. B. first-party property loss. C. liability loss. D. personal injury loss. C
Insurance contracts that predetermine the amount that will be paid in the event the covered property is destroyed are called
A. agreed value contracts B. floaters C. fixed policies D. blanket contracts. A
A document attached to an insurance policy that amends the original contract is called
A. an exclusion. B. a specific exception. C. an endorsement. D. a benefit provision. C
Under a personal auto policy, if a driver runs off the road and the car is damaged when it hits a stop sign, the loss to the care is
A. an other than Collison loss. B. a Collison loss. C. either A or B D. neither A or B B
The common policy conditions of the commercial package policy state that the company can examine and audit the insureds books at
A. any time during the policy period B. any time during the policy period and for up to three years afterward. C. any time during the policy period and for up to ten years afterward. D. any time following a loss. B
One defense to a negligence claim is that a claimant who understood the dangers inherent in the activity cannot recover in the event of injury from the activity. this defense is known as
A. assumption of the risk. B. comparative negligence C. fellow servant doctrine D. intervening cause doctrine A
A Homeowner policy provides Personal Property coverage
A. at the residence premises. B. anywhere within the United States. C. anywhere within the United States, Canada and Puerto Rico. D. worldwide. D
What feature of the claims-made CGL provides an unlimited extension for making claims for loses that occurred during the policy period?
A. basic extended reporting period B. coverage Trigger C. retroactive date. D. supplemental extended reporting period D
In the workers compensation policy, part one (workers compensation) pays for sums the insured
A. becomes legally obligated to pay under the common law. B. is required to pay to improve safety conditions at the business location. C. is required to pay under state workers compensation law due to work-related injuries. D. is required to pay under the master- servant doctrine. C
Each of the following is a primary coverage provided under the commercial general liability policy EXCEPT
A. bodily injury and property damage liability B. liquor liability C. medical payments D. personal and advertising injury B
Which of the following cannot be included in the commercial package policy?
A. boiler and machinery coverage B. commercial inland marine coverage C. commercial property coverage D. ocean marine coverage D
A thief hides in a store until it closes. he then takes insured property and breaks out of the store. in the commercial crime policy this would be called
A. breaking and entering B. Burglary C. robbery. D. vandalism B
The "Occupational Disease" coverage under a Workers Compensation policy is designed to cover all of the following EXCEPT
A. cancer in a chemical industry worker. B. carpal tunnel syndrome in a secretary. C. the cold one employee caught from a co-worker. D. health disorders caused by occupational hazards. C
The executives of a large corporation blocked an acquisition attempt by a larger company. When the stockholders learned they could have made larger profits had the acquisition not been blocked, they filed a lawsuit against the executives. What type of liability insurance protects the executives of the organization against such suits?
A. dram shop liability insurance B. directors and officers liability insurance C. employers liability insurance D. fiduciary liability B
Which of the following is covered by the equipment breakdown coverage policy?
A. failure as a consequence of cleaning or adjustment B. defects in computer equipment or software, including viruses. C. arcing in electrical equipment D. damage to supporting structure. D
In the context of a surety bond, the party who agrees to perform certain acts or fulfill certain requirements is called the
A. fidelity B. obligee C. principal D. surety C
The main additional peril added to commercial property policies by the special cause of loss form is
A. fire B. explosion C. theft D. vandalism C
Under the Vacancy provision of the Building and Business Personal Property coverage form, certain types of losses will NOT be paid if the building where the damage occurred was vacant
A. for more than 30 consecutive days before the loss. B. for more than 60 consecutive days before the loss. C. for more than 90 consecutive days before the loss. D. unless the insured had previously notified the insurance company of the vacancy. B
The Alabama insurance guaranty association is able to pay claims for insolvent property and casualty insurers by
A. funding from the legislature through the state general fund. B. funding from the legislature through the insurance department fund. C. assessments against all other insurers writing the same type coverage as the insolvent insurer. D. the state lottery. C
The coverage for Damage to Property of Others provided under Section II (Liability) of a Homeowner's policy pays
A. on the basis of actual cash value, for the property of others damaged by an insured. B. on the basis of replacement cost, for the property of others damaged by an insured. C. for property damage intentionally caused by the insured's 16 year old son. D. for property damage arising out of a business engaged in by an insured. B
In the loss sustained version of the commercial crime policy, the discovery period permits payment for losses discovered?
A. only during the policy period. B. during the policy period and for up to only one year after the policy expires. C. during the policy period and for one year after the policy expires, and even thereafter provided no other policy covers the same loss. D. during any period selected by the insured even if not specified in the declarations. B
Under a commercial General Liability policy, supplementary payments coverage is paid
A. over and above the limits of the policy. B. against the limits of the policy. C. up to the specific limits shown on the declarations page. D. subject to the coinsurance penalty. B
In the commercial liability policy, invasion of privacy is considered what type of injury?
A. personal injury B. contractual injury C. incidental injury D. bodily injury A
Which homeowners endorsements is used to schedule separate coverage for one or more of nine categories of personal property?
A. personal property B. personal property replacement cost C. Scheduled personal property D. special personal property coverage C
Which of the following property is covered under the building and business personal property coverage form?
A. property being illegally traded B. paper stock on a loading dock at the insureds premises awaiting pickup. C. cash contained in a cash register inside the insureds business. D. the insureds pet mynah bird, which occupies a cage in the insureds office. B
Which of the following is NOT a supplementary payment under the personal auto policy?
A. reasonable expenses incurred by the insured at the company's request B. premiums on any bonds required C. up to 200 per day for the insured loss of wage while attending any hearings or trials at the company's request D. court-awarded legal damages D
Providing misleading comparisons of the terms and benefits of an insurance policy for the purpose of inducing the policy holder to change to another policy is known as
A. rebating B. twisting C. embezzlement D. coercion B
If an insurance carrier decides to cancel a producers appointments, each of the following is true EXCEPT:
A. the company must notify the producer within 15 days. B. the company must notify the commissioner within 30 Days. C. if the company terminates a producer for cause (wrong doing), the producer has 30 days to file a response to the allegations of wrong doing. D. the commissioner ca immediately cancel the producers license based upon the company's allegations of wrong doing by the producer. D
Coverage A under a standard Homeowner's policy contains coverage for
A. the dwelling and all permanent attachments. B. other structures on the insured premises. C. personal property. D. additional living expenses. A
Coverage C under a standard Homeowner's policy contains coverage for
A. the dwelling and all permanent attachments. B. other structures on the insured premises. C. personal property. D. loss of use C
Which is FALSE concerning the suspension provision in an equipment breakdown policy?
A. the insurance company has the right to inspect any covered machine with notice. B. the insurance company will immediately reinstate coverage once a poorly maintained machine has been repaired. C. the insurance company can suspend coverage for and unsafe machine with written notice. D. suspended coverage can be reinstated by endorsement. A
Who of the following can cancel an insurance policy at any time without advance notice, and for any reason?
A. the insured. B. the insurance company. C. either the insured or the insurance company. D. neither party may cancel. A
Which is the correct statement regarding the effect of bankruptcy on an insured under a commercial policy?
A. the insurer is no longer obligated under the policy. B. the insurers obligation is reduced by the deficiency shown in the bankruptcy. C. the insurer remains obligated under the policy. D. the policy will always be canceled by the bankruptcy. C
The head of the state Department of Insurance has all of the following powers EXCEPT:
A. the power to promulgate insurance laws. B. the power to hire employees and examiners and delegate any power, duty or function to such persons. C. to issue insurance licenses and Certificates of Authority. D. to conduct investigations and examinations. A
An unendorsed Dwelling policy contains coverage for
A. theft. B. property. C. liability. D. medical payments. B
Which of the following is a correct statement regarding the business income and extra expense coverage available under the equipment breakdown coverage policy?
A. this coverage provides substantially different benefits than those found in the commercial property policy. B. this coverage provides identical benefits to those in the commercial property policy but is triggered only by equipment breakdown. C. this coverage is always expressed with a dollar deductible. D. this coverage is always expressed with a loss of time deductible. B
Which is FALSE concerning the purpose of the extortion endorsement to the crime form?
A. to provide coverage for property given as a result of a threat to an employee of the insured. B. to provide coverage when there is a direct threat made to the property of the insured. C. to provide coverage for property surrendered as a result to a threat to do bodily harm to the of the insured D. to provide coverage for property surrendered as a result to a threat to a family member of the insured A
Workers compensation laws address
A. ways to determine liability for work-related injuries B. minimum wage levels. C. compensation for work-related injuries without regard to fault. D. adequate retirement benefits. C
with regard to Alabama continuing education requirements, which of the following statements is NOT true?
A. you must complete 24 hours of continuing education. B. if you have multiple licenses, the requirement is still 24 hours total. C. three of the 24 hours must be on the topic of ethics and/or business practices. D. if you complete more than 24 hours, you can carryover the extra hours to your next license renewal. D
