series 17-54

An insured loses $2,500 worth of precious stones in a burglary. How much will the insured's homeowners policy cover? Nothing $1,250 $1,500 $2,500

$1,500 Homeowners policies limit coverage for theft of jewelry, watches, furs, precious, and semiprecious stones to $1,500.

What is the maximum amount an employers liability insurable policy would pay for the bodily injury of an employee in any one accident? $10,000 $50,000 $100,000 $500,000

$100,000 Unlike workers compensation, employer liability insurance contain specific coverage limits. These include $100,000 for bodily injury per accident, $100,000 for disease of one employee, and $500,000 for all disease claims in a policy term.

Records pertaining to a transportation network company's trips must be maintained for a period of at least 3 years. 5 years. 6 years. 10 years.

6 years. All records related to TNC trips must be maintained by the company for a period of at least 6 years.

Under a personal auto liability coverage, damages to a vehicle may be covered if the person driving the insured vehicle is An individual causing intentional damage to a vehicle. A person using an insured vehicle without permission. An individual who uses the vehicle as public or livery services. A family member in the same household.

A family member in the same household. Multiple exclusions apply to personal auto policies. These include, but are not limited to, individuals using an auto without permission, autos used in public or livery capacities, autos insured under a nuclear energy policy, and persons using a vehicle with the intent to cause injury or damages.

The ISO form defines an insured under a CGL policy to be any of the following EXCEPT A partnership. A tenant. A trustee. A sole proprietor.

A tenant. Designated insureds under a CGL policy include, but are not limited to, sole proprietors, partnership or joint ventures, limited liability companies (LLCs), executive officers, directors, stockholders, trustees, insured's employees, and volunteers.

Which of the following must be provided to every insured for each excess line policy? An affidavit An export list An outline of coverage A total cost form

A total cost form A copy of the Total Cost Form must be provided to every insured for each excess line policy and will be provided by the surplus lines broker prior to binding coverage for a given risk. The form will give an accounting of all fees, commissions, and taxes associated with the policy.

The point at which an insurer issues a policy is known as Counteroffer. Consideration. Offer. Acceptance.

Acceptance. In insurance, the applicant usually makes the offer when submitting the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.

Which of the following would be covered under a voluntary compensation endorsement to a workers compensation policy? A factory worker A police officer An in-house domestic worker An elementary teacher

An in-house domestic worker This endorsement added to a workers compensation policy provides statutory coverage for employees who do not fall under a state's workers compensation act, such as farmworkers or domestic employees.

Which of the following best describes a proximate cause? The proportional negligence of two or more parties Cause of loss based on an individual's intent An unbroken chain of events resulting in a loss Injury or property damages resulting from an actual cause

An unbroken chain of events resulting in a loss Proximate cause is an act or event that is the natural and reasonably foreseeable cause of damage or an event that occurs and damages property or causes bodily injury.

Under the businessowners property coverage form, which common policy condition addresses what will happen if the insured and the insurer do not agree on the amount of damage? Subrogation Arbitration Loss payment Appraisal

Appraisal Appraisal is the method of valuing property following a loss when the insured and the insurer fail to agree upon the amount of damage.

Which of the following would be covered under a commercial crime policy? Burglary Crime committed by the insured Crime committed by representatives of the insured Legal fees

Burglary Both the discovery and loss sustained forms of a commercial crime policy exclude coverage for indirect losses, confidential information, legal fees, nuclear hazards, pollution, war, government action, and criminal acts committed by the insured, an employee, representative, trustee, or manager.

Which of the following would NOT be used by an insurer when determining the premium rate of a workers compensation policy? Employment types Claims experience Risk exposure Payroll

Claims experience Workers compensation premiums are determined by remuneration and classification, which have corresponding rates. The higher the risk exposure or hazard, the higher the rate.

In an HMO policy, one of the main responsibilities of the primary care physician (PCP) as a gatekeeper is to do which of the following? Keep regular office hours Seek alternative treatments for patients Help run the HMO Help control costs

Help control costs

Which of the following sections of a contract contains the insurer's promise to pay in the event of a loss? Declarations Insuring Agreement Endorsements Conditions

Insuring Agreement The insuring agreement section of a policy lists the parties to the contract, effective and renewal dates, a description of coverage provided, and a promise on the part of the insurer to pay in the event of a loss.

Which of the following is NOT a feature of broad theft coverage under a dwelling policy? It covers stolen personal property. It covers property in premises considered vacant for fewer than 60 days. It is automatically covered under DP-3 - Special Form. It must be added by endorsement.

It is automatically covered under DP-3 - Special Form. Theft of personal property may only be covered under a dwelling policy if added by endorsement.

Which of the following refers to the upper limit a liability policy will pay out for all claims that arise from a single accident? Combined single limits Split limits Per person Per occurrence

Per occurrence In liability insurance, the per occurrence limit is the maximum amount the insurer will pay for all claims resulting from a single occurrence.

An insured operates a photography studio in an outbuilding in the backyard of the insured's house. What endorsement would be added to the homeowners policy to cover this business? Mortgage holders clause Permitted incidental occupancies Scheduled personal property Dwelling replacement cost

Permitted incidental occupancies A separate permitted incidental occupancies endorsement would cover other structures used for business activity, remove the special limit of liability for business property and the personal liability and medical payments coverage.

In which of the following situations would a property be considered unoccupied? The insured moved out and removed all the furniture from the house 3 months ago. A new apartment building has been insured, but no dwellers have moved in yet. A building has been condemned and emptied of all property. The insured went on vacation for a month while the house remained empty.

The insured went on vacation for a month while the house remained empty. Vacancy refers to an insured structure in which no people have been living or working, and no property has been stored for the period of time required as stated in the policy (usually 60 days). Unoccupancy (nonoccupancy) refers to an insured structure in which no people have been living or working within the required period of time, but some property is stored.

Under a workers compensation policy, premiums will be determined when The policy period ends. The application is accepted. The policy is delivered. The first claim is filed.

The policy period ends. Under a workers compensation policy, premiums are based on payroll. Because the final payroll will not be known before the policy is issued, the initial premium is considered a deposit and is subject to an adjustment at the end of the policy period.

How are premiums handled on a prepackage businessowners policy? Only property coverage requires premium payments. Premiums may vary between property and liability coverage. Property premiums are set at a fixed rate, while liability premiums increase over time. There is one premium for property and liability coverage.

There is one premium for property and liability coverage. Businessowners prepackage policies contain one premium for property and liability coverage, which is more favorable to the insured than purchasing individual coverages.

What is the purpose of requiring licenses for persons who transact insurance? Protect insurers from liability and lawsuits Be able to collect commissions Protect the general public Generate income for the insurance regulatory entities

Protect the general public The primary objective of insurance regulation and producer licensing is to protect the public from unfair trade practices.

Which of the following is NOT required of an insured after a loss in a homeowners policy? Protect property from continued damage Allow insurers to inspect the property Replace lost property within 30 days Notify police if the loss is caused by theft

Replace lost property within 30 days There are no requirements regarding the replacement of lost property under homeowners policies.

Statements made by an applicant for an insurance policy that are true to the best of the applicant's knowledge are referred to as Representations. Material information. Indemnity. Warranties.

Representations. Representations are statements that the applicant believes to be true but that are not guaranteed.

Which of the following lists specific perils covered under an insurance policy? Specified perils Named perils Indexed perils Open perils

Named perils Named perils are described as the breadth of coverage provided under an insurance policy form that list specific covered perils. Unlisted perils are not covered.

If an insurer terminates an insurance policy at the end of the policy period, the action is referred to as Cancellation. Revocation. Abandonment. Nonrenewal.

Nonrenewal. Unlike cancellation, which can occur at any time during the policy period, nonrenewal occurs upon the expiration date of a policy.

A workers compensation policy cannot be cancelled prior to its expiration date unless a notice of policy cancellation has been sent to the insured at least how many days in advance? 10 days 15 days 20 days 30 days

10 days A workers compensation policy cannot be cancelled prior to its expiration date unless at least a 10 days' notice of policy cancellation has been sent to the insured (employer).

What is the required minimum notice to the producer for a hearing regarding a violation of the rules of unfair methods of competition? 7 days 10 days 15 days 20 days

10 days The hearing will be held at least 10 days after notice is served.

To be eligible for coverage under a BOP, an office building cannot exceed how much in square footage? 3,000 square feet 50,000 square feet 100,000 square feet 300,000 square feet

100,000 square feet. Underwriting criteria for businessowners policies typically exclude office buildings which are higher than 6 stories and larger than 100,000 square feet.

For how long are producers required to keep records of producer compensation disclosures provided to the purchasers of insurance? 1 year 2 years 3 years 5 years

3 years Producers are required to keep a copy of all written disclosures provided to the purchasers for at least 3 years.

In the event an insurer intends not to renew a commercial general liability policy, the insurer must notify the insured within 10 days. 20 days. 30 days. 60 days.

30 days. An insurer must provide notice to an insured of its intent not to renew a CGL policy at least 30 days before the effective day.

Which of the following would NOT be covered under a dwelling property policy? A farm used to raise and sell cattle A vacation rental that is unoccupied for 3 or more months a year Residences occupied by both an owner and a tenant Residences undergoing construction

A farm used to raise and sell cattle Dwelling property insurance policies cover residences which have up to 5 roomers or boarders, up to 4 residential units, property under construction, residences occupied by renters, tenants, or both, mobile homes located in an insured location, and seasonal dwellings unoccupied for more than 3 months a year. Properties designed as farm properties are excluded.

Under which of the following circumstances would a loss be covered under an HO-2 policy form? An insured drives a car into a wooden plat fence on the insured's property A home that has been vacant for 65 days is damaged when a water heater bursts A hail storm pokes a hole in a roof and a bedroom has hail damage Rain enters a house through an open door, warping the wooden floors

A hail storm pokes a hole in a roof and a bedroom has hail damage Interior damage by weather or falling objects is covered under an HO-2 (broad form) if the exterior of the building is damaged first, allowing the weather or objects inside.

How soon after the aggregate limit have been met on a liability policy would the limit be restored? Immediately upon depletion At the policy anniversary date 1 year later 2 years later

At the policy anniversary date The aggregate limit is the maximum limit of coverage available during a policy year. Aggregate limits are restored at the anniversary of the policy.

What type of law requires employers to provide workers compensation coverage to employees? Compulsory Labor Civil Elective

Compulsory Unlike elective laws, in which an employer may decline to offer workers compensation coverage, compulsory laws require all employers to provide coverage to employees. Compulsory laws exclude employers with certain staff sizes or employment types.

Which of the following commercial coverage forms covers losses to permanent fixtures located in a condominium? Building and personal property coverage form Business income and extra expense coverage form Condominium association coverage form Condominiums unit-owners coverage form

Condominium association coverage form The condominium association coverage form covers permanent fixtures, including building improvements and alterations, refrigeration, ventilation, and other appliances contained in an individual unit. The condominium unit-owners coverage form covers personal property of condominium unit owners.

Which of the following perils is excluded in all dwelling policy forms? Volcanic eruption Freezing Collapse Government action

Government action Losses resulting from government action are excluded on all dwelling policies.

Which of the following types of policies are issued by stock companies? Guaranteed Nonparticipating Self-insured Participating

Nonparticipating Traditionally, stock companies issue nonparticipating policies, in which policyowners do not share in profits or losses.

Section I of a Businessowners policy pertains to what type of coverage? Selected endorsements Property Liability Common policy conditions

Property Section I of a BOP outlines coverage for both the building and business personal property.

Which of the following loss valuation methods is based on the fair valuation of property at the time of policy issue? Replacement cost Agreed value Market value Stated value

Agreed value Agreed value is a property policy with a provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written. When a loss occurs, the policy pays the agreed value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation.

Which of the following would protect an employer from legal action resulting from a work-related sexual harassment claim? Directors and officers liability insurance Fiduciary liability insurance Employee practices liability insurance Errors and omissions liability insurance

Employee practices liability insurance Employment practices liability protects an employer from an legal action resulting from refusal to employ an individual, terminations, demotions, work-related sexual harassment, and any harassment involving an employee's race, gender, sexual orientation, or other personal descriptors.

A building contractor constructs a rental property home using "straw-bale" construction that does not conform to standard building codes. The contractor, who is also the owner, does not want insurance on the building but wants coverage on as many other things as he can get. What coverage plan should a producer recommend? HO-2 HO-4 HO-5 Coverage cannot be extended on this structure.

HO-4 HO-4 covers tenant's personal property in buildings that are not eligible for homeowner's insurance.

Under a broad form dwelling policy, frozen water pipes will be covered If the plumbing had been installed within the past 3 years. If the insured took steps to ensure that the water pipes would not freeze. If the outside temperature reached 20 degrees or colder. Under all circumstances.

If the insured took steps to ensure that the water pipes would not freeze. A broad form dwelling policy covers the freezing of plumbing only if the insured has taken reasonable steps to maintain heat in the building or has shut off the water and drained the pipes and appliances.

Of $10,000 in premiums a producer wrote over the past year, $3,000 came from sales to a business which employs the producer's spouse. This is considered Rebating. A violation of the controlled business regulations. A legal practice. Coercion.

A legal practice. Coercion is known as an unreasonable restraint of trade. Rebating is giving a future insured anything of value as an inducement to purchase. Controlled business is selling policies to the producer's spouse, family members, employees or business partners. Controlled business is allowed as long as more policies are sold to the rest of the public; otherwise, it is considered a violation.

All of the following are exclusions under the business liability and medical payments coverages of a BOP EXCEPT Medical expenses. Liquor liability. Workers compensation. Damage to the insured's product.

Medical expenses. Medical payments coverage of a BOP will pay medical, dental, hospital, and funeral services incurred within 1 year from the date of an accident to a person who suffers bodily injury by accident on or next to the insured's premises, or because of the insured's operations. All the other answer choices are excluded from coverage.

Which of the following is NOT required of an insured after a loss in a homeowners policy? Protect property from continued damage Allow insurers to inspect the property Replace lost property within 30 days Notify police if the loss is caused by theft

Medical expenses. Medical payments coverage of a BOP will pay medical, dental, hospital, and funeral services incurred within 1 year from the date of an accident to a person who suffers bodily injury by accident on or next to the insured's premises, or because of the insured's operations. All the other answer choices are excluded from coverage.