Sim XIV

An employer that qualifies for a self-insured workers compensation plan may wish to further limit his liability against catastrophic losses by purchasing excess insurance coverage called a)Aggregate excess coverage. b)Catastrophic excess coverage. c)Self-insurance liability coverage. d)Extreme liability coverage.

a) Aggregate excess coverage

What are the two causes of loss covered under the Glass Coverage Form? a)Breakage and accidentally or maliciously applied chemicals b)Fire and freezing c)Vandalism and aircraft d)Wind and hail

a) Breakage and accidentally or maliciously applied chemicals

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? a)Indemnity b)Reasonable expectations c)Cease and desist d)Nonforfeiture

b) Reasonable expectations

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? a)Fraternal b)Stock c)Mutual d)Reciprocal

b) Stock

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes a)Defamation. b)Twisting. c)Coercion. d)Misrepresentation.

d) Misrepresentation

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.

d) The coinsurance formula will also be applied to total losses

The Department of Insurance requires a license for anyone engaged in insurance transactions so they can have control over a)The insurers' financial records and profits. b)Those who are insured. c)The names of the insured for homeland security reasons. d)Those selling insurance or advising the public.

d) Those selling insurance or advising the public

An employee drives a company auto, but does not own a vehicle herself. What endorsement could be added to the insurance policy covering the company auto that would provide coverage to the employee when she drives someone else's car for her personal use? a)Drive other car coverage b)Bobtail coverage c)Rental car coverage d)Personal injury protection

a) Drive other car coverage

Which of the following is defined as the cost to replace damaged property with less expensive and more modern construction or equipment? a)Functional replacement cost b)Market value c)Actual cash value d)Replacement cost

a) Functional replacement cost

Which coverage would a business owner need in a crime policy to cover money that may be stolen from a messenger? a)Outside the premises b)Fidelity bond c)Commercial general liability d)Safe burglary

a) Outside the premises

All are true if a contractor defaults on a performance contract EXCEPT a)The principal's obligations end. b)The surety will attempt to seek reimbursement from the contractor for any amounts it pays. c)The surety may cancel the bond so as to avoid having to pay losses and expenses. d)The obligee may hire another contractor to complete the job and have the surety repay the obligee.

c) The surety may cancel the bond as to avoid having to pay losses and expenses

Which of the following dwelling coverage forms would pay replacement cost for the dwelling? a)DP-3 only b)All dwelling property coverage forms c)DP-1 d)DP-2 and DP-3

d) DP-2 and DP-3

The limited theft endorsement is intended for which type of property? a)An apartment building in which the owner does not reside b)A building used for commercial purposes in which the owner operates a business c)A building used for commercial purposes which the owner rents to a business d)A house in which the owner resides

a) An apartment building in which the owner does not reside

Theft coverage under an HO-8 is restricted to a)The actual cash value of what was stolen, with limits for certain classes of property. b)The larger of 10% of the personal property limit or $1,000. c)There is no theft coverage under an HO-8. d)$250.

a) The actual cash value of what was stolen, with limits for certain classes of property

All of the following are examples of risk retention EXCEPT a)Self-insurance. b)Premiums. c)Deductibles. d)Copayments.

b) Premiums

Which of the following is NOT one of the four primary elements considered in establishing negligence? a)Legal duty b)Standard of care c)Proof of carelessness d)Proximate cause

c) Proof of carelessness

An insured's business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this? a)Additional b)Consequential c)Direct d)Special

b) Consequential

Which of the following is NOT true concerning the fair rental value coverage provided in a dwelling policy? a)Loss or expense caused by the cancellation of a lease is covered. b)It pays for the loss of rent you would have collected less any expenses that would not have continued. c)Coverage continues until repairs are completed. d)The period of time to repair or replace is not limited by the expiration date of the policy.

a) Loss or expense caused by the cancellation of a lease is covered

When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement? a)Rebating b)False financial statement c)Defamation d)Twisting

b) False financial statement

Which of the following would NOT be covered by HO liability insurance? a)Property damage b)Intentional tort c)Bodily injury d)First aid expenses

b) Intentional tort

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes a)Coercion. b)Misrepresentation. c)Defamation. d)Twisting.

b) Misrepresentation

When a regular bill of lading is issued, who will be responsible for the invoice cost of any damaged property? a)The driver of the truck b)The carrier c)The person to whom the goods are being shipped d)The shipper

b) The carrier

The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss? a)$80,000 b)$120,000 c)$160,000 d)$200,000

c) $160,000

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a)10 days b)3 days c)5 days d)7 days

c) 5 days

An agent wants to represent MAIF. In order to do so what else must this agent do? a)Be a member of the Insurance Agents of America Association. b)Be appointed by the MAIF. c)Be appointed by at least one insurance company. d)Have a year of prior experience working in the insurance industry.

c) Be appointed by at least one insurance company

Which of the following is NOT a government health insurance program? a)Medicare b)Medicaid c)Federal Deposit Insurance Corporation (FDIC) d)Old-age, Survivors and Disability Insurance (Social Security)

c) Federal Deposit Insurance Corporation (FDIC)

Which of the following best describes a misrepresentation? a)Making a maliciously critical statement that is intended to injure another person b)Discriminating among individuals of the same insuring class c)Issuing sales material with exaggerated statements about policy benefits d)Making a deceptive or untrue statement about a person engaged in the insurance business

c) Issuing sales material with exaggerated statements about policy benefits

Which of the following homeowners endorsements covers liability exposures arising from an incidental business conducted within a building on the residence premises? a)Professional liability b)Business income - report of values c)Permitted incidental occupancies d)Special limit of liability

c) Permitted incidental occupancies

Which of the following is an example of an add-on coverage in a policy written through the Maryland Auto Insurance Fund? a)PIP b)Bodily Injury Liability Insurance c)Rental reimbursement d)Uninsured Motorists Insurance

c) Rental reimbursement

Upon the discharge of Ben's bail bond, his surety insurer still held some collateral. Ben had not yet paid the last premium due on the bail bond. How will the premium be paid? a)The surety agent is responsible for the remaining premium due b)Ben must pay the premium before the collateral will be returned c)The surety insurer will deduct the premium due from the collateral being returned d)The surety insurer will waive any premium still due

c) The surety insurer will deduct the premium due from the collateral being returned

According to the doctrine of contributory negligence, when an individual is found to have contributed to his or her own loss in any way, another party a)May be held liable, but to a reduced extent. b)May be held liable for full damages despite the other party's negligence. c)May be held liable only in the case of vicarious liability. d)May not be held liable.

d) May not be held liable