Questions Missed on Practice Quizzes for Property & Casualty

In Illinois, a cancellation provision must be included in all of the following types of insurance policies EXCEPT A.) Marine B.) Commerical fire C.) Residential fire D.) Automobile liability

Answer A- Marine

If the actual values exceed the limit of insurance, the business owners policy (BOP) contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by how much?

25%

Ron's application to become an insurance producer has been denied. What is the soonest possible time that he can apply again?

3 years.

What is the minimum comprehensive coverage discount available for having or installing an anti-theft device on an insured device?

5%

What is the maximum an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy?

$10,00 for all expenses incurred.

Any person violating Illinois Premium Finance Laws, if convicted, may be imposed a civil fine up to how much?

$2,000 for each violation.

The minimum amount of reinsurance offered for a residence with mine subsidence coverages is how much?

$200,000

The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to how much?

$250,000

Producers who broker insurance must file a bond along with the application for a license. The bond must be issued in favor of the people of Illinois and must be on continuous form and for an amount equal to 5% of the premium brokered the previous year, NOT to exceed how much money?

$50,000.

In Illinois, the maximum service charge that may be applied to a premium finance agreement at what percent?

10%

The Earthquake and Volcanic Eruption Endorsement added to Commercial Property policies consider all Earthquake shocks as one earthquake if they occur within what maximum time period?

168 hours.

What is the minimum number of study hours required of a candidate for a casualty producer's license?

20 hours.

When a commercial property insurance policy, in effort for more than 60 days is canceled for an allowable reason, other than nonpayment of premium, the insurer must give written notice to the first named insured of at least how many days?

60 days.

If a person applies to become a life insurance producer, what is the minimum number of hours of prelicensing education that must be completed in a classroom?

7.5 hours.

The Employee Theft crime policy form includes a coverage extension that applies to employs temporarily outside the coverage territory for up to how many days?

90 days.

Business personal property coverage form covers all of the following EXCEPT A.) Automobiles held for sale. B.) Furniture and fixtures. C.) Machinery that is not permanently installed. D.) Stock.

Answer A- Automobiles held for sale.

What is the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims that may be made and the number of accidents that occur?

Aggregate Limit.

What type of valuation works best for property whose value does the fluctuate much?

Agreed Value.

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

Annual transit.

All of the following are factors in rating workers compensation insurance EXCEPT A.) Job classification B.) Sales C.) Payroll D.) Loss experience

Answer B- Sales.

Which if the following losses would NOT be covered by the dwelling policy if the dwelling is vacant for over 60 days? A.) Windstorm B.) Internal explosion C.) Vandalism D.) Fire

Answer C- Vandalism.

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? A.) Claims made B.) Occurrence C.) Direct damage D.) Time element

Answer D- Time element.

An installation floater is used to insure...

Appliances intended to become a permanent part of the building.

Insureds over age 55 may qualify for reduced liability rate and premium charges upon successful completion of the National Safety Council's Defense Driving Course of at least how many hours?

At least 8 hours.

Which dwelling policy form primarily ensures a structure on an actual cash value basis?

DP-1.

What covers dwelling and homeowner's policies for indirect losses?

Coverage D- Loss of Use.

The extra expenses coverage form provides what?

Coverage that will permit the insured to continue in business without interruption following a property damage loss.

In property & casualty insurance, what is the term for the amount of a loss that the insured must cover out of pocket, and the insurer will only pay for the additional amount of the loss above the limit?

Deductible.

An insurance card must be provided by the insurer for what?

Each motor vehicle insured.

A Mobile Homeowners Policy is structured the same as a __________ Policy.

Homeowner's Policy.

The policy conditions define what?

How parties to the contract must act following a loss.

The organization that determines the condition of the property submitted to the FAIR Plan for insurance coverage is called what?

Inspection Bureau.

The major portion of the premium for an equipment breakdown policy pays for what?

Inspections and examinations.

If a licensee charges any fee separate from a commission off of the insured's premium, and if the fee exceeds 10% of the premium's value, what must the licensee obtain?

Insured's signature.

A basic dwelling policy automatically provides coverage against fire, lightning, and...

Internal explosion.

How does the mobile home endorsement affect the other coverage of law or ordinance in a homeowner's policy?

It removes the coverage.

How does the mobile home endorsement affect the other coverage of law or ordinance in a homeowners policy?

It removes the coverage.

A producer conducts business ethically and receives high praise from most customers. The producer pays all of the required license renewal fees but receives a notice that its license has been terminated. What is most likely the reason for this?

Lack of continuing education.

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 that protects the insured from what?

Loss.

The primary purpose of a surety bond is to what?

Make sure obligations are filled.

What does the term proximate cause refer to?

Negligence- leads to an injury.

What is the penalty for knowingly providing a fraudulent address on an application for an automobile policy?

Not less than $1,001 and not more than $1,200.

During renovations to a home, a roof opening is left exposed. A heavy rainstorm causes $20,000 of damage to the interior of the home. How much would the HO-2 policy pay for damages?

Nothing. Rain is not a covered peril in this instance.

The cancellation method used for determining the return premium when the insurer cancels the insurance policy is called what?

Pro rata cancellation.

If an actuary would like to sell life insurance policies, what licensure is needed?

Producer's license for life insurance.

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

Rebating.

For insurance purposes, when an insured loses property to another because the person used violence or threat of violence to gain the property, this is defined as what?

Robbery.

An insurance company owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have?

Specific.

When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as what?

Stated Amount.

When the amount of insurance written in a property policy is not subject to any coinsurance provision, and that amount is paid in the event of a covered loss, the coverage is said to be written as a...

Stated Amount.

What law protects consumers from the circulation of inaccurate or obsolete information?

The Fair Credit Reporting Act.

The part of the insurance contract that describes the covered pearls and the nature of coverage of the contractual agreement between the insurer and the insured is called what?

The Insuring Agreement.

After having his auto registration suspended for 60 days for not maintaining auto insurance, the owner of the vehicle is required to file a certificate of insurance with that state to provide financial responsibility. What is the maximum amount that the insurer can charge for making this filing on the owner's behalf?

The insurer cannot charge for making a filing.

A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean?

There is no coverage.

Why was the Gramm-Leach-Bliley Act passed?

To protect private customer information that is filed through a financial institution.

A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint, the building is considered what?

Vacant.

When a parent is required to pay for damages caused by his or her children, this is an example of what?

Vicarious Liability.

Coverage under a Floor Plan Merchandise form is written on a reporting form basis that requires the insured to file reports with the insurer. What is the time frame for those reports?

Within 30 days after the end of each month.

Before each license renewal, an insurance producer must complete at least how many hours of continuing education?

24 hours.

A personal lines policy that is not being renewed for a reason other than nonpayment of premium requires _______ advance notice of non-renewal.

30 days

An insured with a homeowner's policy has removed property from the insured location to protect it from a loss that could be caused by a covered peril. The removal coverage applies for how many days?

30 days.

How long is the waiting period upon purchase of flood coverage through NFIP?

30 days.

For commercial property and casualty insurance policies, other than Ocean marine, advance written notice of at least 60 days must be provided to the first named insured whenever the renewal premium will increase by ______ or more.

30% or more.

An insurance financing company must provide to the insured, full and complete disclosure of the terms and conditions of the finance agreement no later than when?

48 hours.

According to the last payment condition in HO policies, losses must be paid within how many days of the insurer receiving the proof of loss?

60 days.

Duties of the insurer found in property policy conditions include all of the following EXCEPT A.) Notify the insured in the event of financial difficulty. B.) Pay covered losses. C.) Provide advance notice of cancellation. D.) Return any premiums to the insured.

Answer A- Notify the insured in the event of financial difficulty.

Insureds with approved anti-theft devices installed on the insured vehicle qualify for premium discounts on...? A.) Other than collision (comprehensive) coverage. B.) All coverages that apply to the policy. C.) Collision coverage. D.) Bodily injury and property damage coverage.

Answer A- Other than collision (comprehensive) coverage.

The Federal Fair Credit Reporting Act... A.) Regulates consumer reports. B.) Protects consumer privacy. C.) Regulates telemarketing. D.) Prevents money laundering.

Answer A- Regulates consumer reports.

All of the following are correct concerning the defensive driving discount EXCEPT A.) The discount must be applicable for the following 5 years. B.) The discount does not apply to a policy of group auto. C.) The discount must be applicable for the 3 years following completion of the course. D.) The discount must be made available to drivers age 55 and older who have completed the National Safety Council's Defense Driving Course or similar course.

Answer A- The discount must be applicable for the following 5 years.

Which of the following would be considered an uninsured vehicle? A.) A vehicle operated by an insured's family member. B.) A vehicle feeling a hit-and-run accident. C.) A vehicle owned by a self-insurer. D.) A government-owned vehicle.

Answer B- A vehicle feeling a hit-and-run accident.

Which insurance companies must participate in the Illinois Automobile Insurance Plan? A.) Only insurance companies that apply to the Director for inclusion into the Plan. B.) All admitted insurers that write auto insurance in the state. C.) Only insurance companies that are domiciled in Illinois. D.) All insurance companies admitted to write any type of insurance in the state.

Answer B- All admitted insurers that write auto insurance in the state.

Which of the following correctly describes controlled business? A.) A producer obtaining a license for the purpose of selling 20% of his or herself and his or her spouse, 80% to the public. B.) Any time more than 50% of the total premiums collected by a producer comes from themselves, his or her spouse, an employer, or own business. C.) A producer obtaining a license and never selling insurance. D.) A producer obtaining a license for the purpose of selling to the general public.

Answer B- Any time more than 50% of the total premiums collected by a producer comes from themselves, his or her spouse, an employer, or own business.

Basic property coverage available under the FAIR Plan includes all of the following EXCEPT A.) Homeowners. B.) Auto Physical Damage C.) Fire Coverage D.) Extended Coverage Perils.

Answer B- Auto Physical Damage

If an insurer makes a change to broaden coverage in a dwelling policy while it is in effect, the changes will apply... A.) Within 60 days. B.) Automatically. C.) When the new policy is written. D.) When the policy is up for renewal.

Answer B- Automatically.

An insured neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insured violated? A.) Adhesion B.) Consideration C.) Good faith D.) Representation

Answer B- Consideration

All of the following are conditions commonly found in the insurance policy EXCEPT A.) Appraisal. B.) Insuring Agreement. C.) Cancellation and Nonrenewal. D.) Subrogation.

Answer B- Insuring Agreement.

Duties of the insurer found in property policy conditions include all of the following EXCEPT A.) Return of any premiums to the insured. B.) Notify the insured in the event of financial difficulty. C.) Pay covered losses. D.) Provide advance notice of cancellation.

Answer B- Notify the insured in the event of financial difficulty.

Personal lines insurance policies that have been in force for 60 days or more may be canceled for one or more of the following reasons A.) Loss of reinsurance by the company that issued the policy. B.) The writing producer no longer represents the insurance company that issued the policy. C.) Nonpayment of premium when due. D.) Violation of the policy terms.

Answer B- The writing producer no longer represents the insurance company that issued the policy.

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A.) Concealment B.) Warranty C.) Indemnity D.) Representation

Answer B- Warranty.

Which of the following is an example of a producer's fiduciary responsibilities? A.) A producer helping their clients file claims. B.) A producer doing a review of his/her client's coverage. C.) A producer offering additional coverages to his client. D.) A producer promptly forwarding premiums to the insurance company.

Answer C- A producer offering additional coverages to his client.

A premium finance agreement is deemed to be accepted by the finance company (or the producer licensed to finance premiums) when... A.) A policy or binder number is provided for each policy premium listed on the agreement B.) A premium book or first notice of premium payment is sent to the insured. C.) Both of the above. D.) None of the above.

Answer C- Both of the above.

Homeowner's policies provide coverage for A.) The land under the residence. B.) Property of tenants, roomers, or boarders not related to any insured. C.) Business property while on the residence's premises. D.) Losses caused by off-premises power failure.

Answer C- Business property while on the residence's premises.

Which of the following is true concerning Uninsured Motorist Property Damage Coverage written in Illinois? A.) It must be offered on all policies insuring any vehicle garaged in Illinois. B.) It must be offered on all policies that include a lienholder. C.) It must be offered on all policies insuring private passenger and recreational vehicles which are not covered for collision damage under the policy. D.) It is mandatory on all vehicles.

Answer C- It must be offered on all policies insuring private passenger and recreational vehicles which are not covered for collision damage under the policy.

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? A.) Exaggerating the benefits provided in the policy. B.) Stating that the competition will arbitrarily increase their premiums each year. C.) Making comparisons between different policies. D.) Stating that the insurance policy is a share of stock.

Answer C- Making comparisons between different policies.

A nonresident license producer moves to Illinois and wants to obtain a license in this state. Which of the following is true regarding the licensing examination? A.) The producer will need to take a uniform secondary licensing examination to satisfy the Illinois requirements. B.) If the producer has been licensed for over 10 years in his home state, the examination requirement will be waived. C.) No examination will be required. D.) The producer will be required to take the Illinois licensing examination.

Answer C- No examination will be required.

If an insured under a premium finance agreement is in default for more than 5 days on a premium installment, the finance company may apply a delinquency charge of A.) Not less than $10 nor more than 10% of any installment in default. B.) Not less than 10% of any installment in default. C.) Not less than $1 nor more than 5% of any installment in default. D.) Not less than $5 nor more than 5% of any installment in default.

Answer C- Not less than $1 nor more than 5% of any installment in default.

Which of the following are correct concerning the Worker's Compensation Assigned Risk Pool EXCEPT A.) The Assigned Risk Pool allows employers to obtain Worker's Compensation coverage who cannot obtain it through ordinary methods. B.) The rates charged by the Assigned Risk Pool may not be unfair, excessive or inadequate. C.) Participation in the Assigned Risk Pool is optional. D.) Participation in the Assigned Risk Pool is mandatory.

Answer C- Participation in the Assigned Risk Pool is optional.

What type of information would be found in a policy's insuring agreement? A.) Policy limits. B.) Insured's address. C.) Renewal dates. D.) Location of premises.

Answer C- Renewal dates.

Which of the following is used in the formula for calculating the actual cash value of a property? A.) Fair market value. B.) Agreed value. C.) Replacement cost. D.) Stated value.

Answer C- Replacement cost.

Which of the following correctly explains the equipment exclusion in auto policies? A.) The insured can be asked to exclude by endorsement television systems permanently installed in the console opening specified by the manufacturer of the motor vehicle. B.) Standard or optional equipment is only covered in an auto policy if it is added by endorsement. C.) Standard and optional equipment is covered on an auto policy unless an endorsement excluding coverage for specifically named equipment has been signed and dated by the insured. D.) Asking the insured to sign an endorsement excluding coverage for specifically named equipment is against the law.

Answer C- Standard and optional equipment is covered on an auto policy unless an endorsement excluding coverage for specifically named equipment has been signed and dated by the insured.

The broad theft coverage endorsement on the dwelling farms specifies all of the following limitations EXCEPT A.) $1,000 on silverware. B.) $200 on money. C.) $1,500 on securities. D.) $1,500 on jewelry.

Answer D- $1,500 on jewelry (should be $2,500, not $1,500)

Alan has a Personal Auto Policy with Part C limits of $100/$300 Uninsured/Underinsured Motorist. Alan is injured by Ben who has Part A limits of $50/$100. The police determine that Ben is at fault for the accident and Alan's $125,000 of medical expenses. How much will Alan's Part C pay? A.) $25,000 B.) $125,000 C.) $75,000 D.) $50,000

Answer D- $50,000

A person disclosing personal or privileged factual information to the Director concerning an investigation of suspected fraud or arson shall be free from a cause of action in the nature of... A.) Defamation B.) Invasion of Privacy C.) Negligence D.) All of the above

Answer D- All of the above.

The Director issued a written notice about a hearing for a business entity. The hearing is scheduled for May 1st. The affected business entity should receive a notice no later than... A.) April 1st B.) 3 business days before the hearing C.) 2 weeks in advance D.) April 20th

Answer D- April 20th (no later than 10 days prior to the hearing).

Which of the following is an additional coverage that is covered by the broad causes of loss form? A.) Lightning B.) Ordinance or law C.) Settling D.) Collapse

Answer D- Collapse.

All of the following are prohibited practices EXCEPT A.) Permitting rate distinctions based on an applicant's disability. B.) Discrimination based on national origin. C.) Refusing to insure an applicant solely because of military status. D.) Denying a claim after an investigation.

Answer D- Denying a claim after an investigation.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A.) An offer of employment. B.) Stocks, securities, or bonds. C.) An offer to share in commissions generated by the sale. D.) Dividends from a mutual insurer.

Answer D- Dividends from a mutual insurer.

The Auto Insurance Plan policy must cover all of the following EXCEPT A.) Bodily injury liability B.) Uninsured motorist coverage C.) Property damage liability D.) Personal injury liability

Answer D- Personal injury liability.

Which of the following would NOT be considered a flood? A.) Overflow of tidal waters. B.) Mudslides. C.) Runoff of surface waters. D.) Sewer backup.

Answer D- Sewer backup.

Which of the following is INCORRECT concerning the purpose of the Fraud Prevention Act? A.) The Act is intended to permit the Director and Department to utilize their expertise and discover insurance frauds. B.) The Act is intended to permit the Director and Department to utilize their expertise to investigate insurance frauds. C.) The Act helps to stop fraudulent acts more effectively. D.) The Act will help insurers not sell policies to those who are high risks.

Answer D- The Act will help insurers not sell policies to those who are high risks.

All of the following statements concerning coinsurance are true EXCEPT A.) It is used to help adequacy and equity in rates. B.) The insured agrees to maintain insurance equal to some specified percentage of the value of the property. C.) If the insurance carried is less than required, the insurance may not cover the whole loss. D.) The coinsurance formula will also be applied to total losses.

Answer D- The coinsurance formula will also be applied to total losses.

In order for electronic entertainment devices to be covered for physical damage under an automobile insurance policy, which of the following must be true? A.) Electronic devices are never covered. B.) The device must be removed from the vehicle when the vehicle is not occupied. C.) The insured auto must be protected by an anti-theft device. D.) The device must be permanently installed in the dash or console opening intended for that device.

Answer D- The device must be permanently installed in the dash or console opening intended for that device.

The causes of loss insured against in an insurance policy are known as what?

Perils.