quiz questions

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 (For the total amount of a partial loss to be paid, a house must be insured for at least 80% of its value on the date of loss. In this case, because the house is insured for only $60,000 (75% of the minimum requirement), the policy will pay only 75% of the loss, or $30,000.)

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 (the policy will pay $20 per day after 48 hours, not to exceed 30 days in total)

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

an insurer cannot cancel a homeowners policy solely because the insured filed a first claim if the policy has been in effect for at least how many days?

45 days

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

an insured owns and operates a ranch. the insured has several vehicles that are used in the ranching operation and for personal use. which of the following could NOT be insured under a personal auto policy?

a two - ton grain truck with a 6,500 pound capacity (a two - ton truck weighs 4,000 pounds. with its cargo weight of 6,500 pounds, it exceeds the 10,000 - pound gross vehicle weight (GVW) limit and would not be eligible.

which of the following could be covered by an HO policy?

an oriental rug in an on premises apartment

which of the following would be considered an insured under a business auto coverage form?

anyone while using, with permission, a covered auto owned by the name insured

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

appraisal

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

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

arbitration through the court *arbitration is a low - cost alternative to a full - blown lawsuit*

in return for a premium, an insurance company must

be fair in underwriting and pay covered losses

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

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

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

bodily injury is caused by the insured's negligence while driving a three - wheel all - terrain vehicle *vehicles with fewer than four wheels are not eligible for coverage under a PAP (personal auto policy*

the part of a property policy that shows the amount of insurance, premium, and policy term is

declarations *who, what, when, where, and how much insurance and premium all are stated in the policy Declerations*

a beauty parlor burns to the ground. what type of loss is this to the owner?

direct

two individuals are in the same risk and age class; yet they are charged different rates for their insurance policies due to an insignificant factor. what is this called?

discrimination

which of the following provisions requires that the insured protected the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer singed proof of loss within a special period of time?

duties after loss

what type of coverage do umbrella policies provide?

excess coverage over an underlying or primary policy

which of the following homeowners endorsements increases its limits each year by a selected percentage?

inflation guard

an insurance producer failed to obtain automobile insurance for a client after agreeing to do so. the client is involved in an automobile accident after running a red light and is found to be at fault. the damage to the other vehicle totals $5,000. which statement regarding the producer's errors and omissions liability policy is true?

it will provide coverage because the damage to the client resulted from the producers negligence

according to the Nationwide Marine definitions, risks that may be the subject of inland marine insurance include all of the following EXCEPT

large pleasure boats

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

legal and not against public policy

the type of professional liability coverage a medical doctor needs is

malpractice coverage

what covers a carrier for liability for loss to cargo while it is being transported in a truck?

motor truck cargo policy - truckers form

which of the following does the term proximate cause refer to?

negligence that leads to an injury

A plant worker for a chemicals manufacturer was recently diagnosed with a rare blood disease. She told her doctor that her job required her to handle industrial waste chemicals. Which of the following types of injuries is covered under the workers compensation policy?

occupational disease caused or aggravated by a condition of employment (occupational disease, like bodily injury, that arises out of or during employment is covered under workers compensation insurance)

workers compensation benefits are provided for an employee injury or death that arises out of the course of normal employment in all of the following situations EXCEPT

on his evening stroll, an employee of an advertising company is injured while watching a competitor's billboard sign being removed from an advertising site

which coverage would a business owner need in a crime policy to cover money that may be stolen from a messenger?

outside the premises

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

all of the following are considered parts of the policy structure EXCEPT

provisions

what type of information would be found in a policy's insuring agreement?

renewal dates

events in which a person has both the chance of winning or losing are classified as

speculative risk

how are surety bonds different from insurance?

surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses

which of the following is most likely to occur if it is determined by the audit that the deposit premium was too high?

the audit will receive a return premium *If the audit shows that the initial (deposit) premium to the insured was too high (the exposures were over-estimated), the insured will receive a return premium.*

who is entitled to the salvage of property after a loss has been paid under the terms of an insurance policy?

the insurer

in terms of parties to a contract, which of the following does NOT describe a competent party?

the person must have at least completed secondary education

for the purpose of insurance, risk is defined as

the uncertainty or chance of loss

which of the following best expresses the purpose of a stated value contract?

to pre - establish the amount of coverage available for property items that are difficult to value

prior to state - directed workers compensation statues being enacted, employees had

to sue an employer for the "loss" and prove that the employer was at fault

the process of an insurer uses to evaluate applications and detainee if a policy should be issued on what terms, conditions, and rate is known as

underwriting

in the personal auto policy, owned trailers being towed by an insured auto are automatically covered for

uninsured motorist coverage

all of the following are categories of a limited insurance license EXCEPT

variable life insurance *variable life insurance require's an agent's license; all the other categories can be solicited by a limited insurance representative*

if forming an insurance contract, when does acceptance usually occur?

when an insurer's underwriter approves coverage

all of the following are factors in the determination of actual cash value EXCEPT

insurance premium paid

the part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called

insuring agreement

all of the following are conditions commonly found in the insurance policy EXCEPT

insuring argument *insuring argument provides information on the policy's coverages.*

a property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method?

stated amount

the policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called

subrogation

johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. when would her coverage be effective?

12:01 am the day after the application and premium payment are mailed

all of the following statements concerning coinsurance are true EXCEPT

the coinsurance formula will also be applies to the total losses *in the event of a total loss, the coinsurance clause does not operate and the face amount of the policy is paid*

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 the insured's policy is written on the actual cash value(ACV), how much will the policy pay toward the insured's new roof?

$5,000 *ACV is calculated as replacement cost less depreciation.*

in which of the following situations would the jewelers block extension cover a loss?

a jeweler fixes a necklace and sends it by registered mail to the owner. when the necklace arrives, it has been damaged

which of the following individuals would be exempt from the Workers Compensation Act?

a salesperson

with respect to the business of insurance, a hazard is

any condition or exposure that increases the possibility of loss *hazards are generally classified as either physical, moral, or morale.*

which of the following limits, shown in the declarations of a policy, applies to medical expenses?

per person

a customer was injured in a super market parking lot when a grocery cart collided with the customer's leg. coverage for this claim would be provided under

premises and operations

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

30 days

if a consumer requests additional information concerning a investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

which federal act provides benefits to injured civilians who are employed by the federal government?

Federal Employees Compensation Act

in a personal auto policy, the medical payments coverage is similar to

accident insurance, because it pays medical expenses regardless of fault

which of the following is NOT an essential element of an insurance contract?

counteroffer

the part of a policy that clarifies terms in the policy is the

definitions