Test 2
What monetary penalty may be imposed if a producer is transacting insurance business and is not licensed to do so?
$1,000 per violation
Todd has a large gun collection and his wife, Tina, has several items of valuable jewelry. How does the homeowners policy limit coverage for these types of property?
$1,500 for jewelry; $2,500 for theft of firearms
Business property is covered under the homeowners policy, subject to a limit of ___________ on the premises and ________ away from the premises
$2,500; $1,500
Coverage for money is typically limited to __________ and ______________ for securities on homeowners policy.
$200 and $1,500
BOP 3 sections:
1 - property 2- liability 3- common conditions
Businesses not eligible for BOP are
Banks, self-storage facilities that store motorized vehicles outdoors, and places of amusement
Of the three dwelling policies, which would cover loss by falling objects; weight of ice, snow, or sleet; and accidental discharge from a plumbing system?
DP 2 and DP 3
Endorsements to the BOP usually does not
Eliminate coverage
The state legislature writes the insurance laws for Iowa where the commissioner
Enforces them
A farm policy defines livestock as
cattle, sheep, swine, goats, horses, mules, and donkeys.
As a business, the maximum available limits under the NFIP are:
$500,000 for the structure and $500,000 on the contents. Single family house limits would be $250,000 for the structure and $100,000 for the contents
What pollution-related claim would an ISO businessowners policy cover?
carbon-monoxide fumes from a detective furnace that make motel guests ill
An insurer may not refuse to renew a personal lines insurance policy unless written notice of nonrenewal is given to the insured within how many days before the end of the policy period?
30 days
A commercial line insurance policy or contract, which has not been previously renewed, may be canceled by the insurer if it has been in effect for less than how many days at the time notice of cancellation is mailed?
60 days
Who regulates all insurers and producers conducting insurance business in Iowa?
Commissioner of Insurance
A person who administers an employee benefits program for his or her employer
Does not need a producer license
may not enforce a right it has voluntarily waived by its past conduct, due to the legal principale known as
Estoppel
Due to the catastrophic nature of a major flood, standard residential and commercial property policies typically exclude coverage for flood losses you would need to purchase
Flood Insurance
How the value of property is determined after a loss is found in the
Policy's valuation provision
What is the basic principle underlying the law of large numbers?
Prediction becomes more accurate as the number of exposure units increases.
Who is primarily responsible for ensuring that applicants receive the appropriate notices about their rights under the Fair Credit Reporting Act?
Producer
What is the term used in a property insurance policy to describe damaged property?
Salvage
Which of the following types of liability holds an insured legally responsible if another party is injured or damaged because its operations, or other conditions pertaining to the insured, are considered inherently dangerous?
Strict Liability
Approximately what percentage of flood losses occurs in moderate-to-low-risk flood zones?
about 20 percent
The abandonment condition states that the insurer is not required to
accept abandoned property
Lightning is one of the basic perils covered in the DP 1 form, along with fire and internal explosion. The loss for all damaged property is adjusted on an
actual cash value basis, with a deduction for depreciation
Aleatory contracts involve:
an exchange of unequal amounts, and in an insurance contract, one party may receiver a benefit that is entirely out of proportion to the premium they are giving.
Assignment provision states:
any assignment of the policy will be invalid unless the insurer provides its written consent.
What must an insurance company do to make a producer its agent?
appoint the producer as its agent
Office buildings are eligible for BOP coverage if they
are not over six stories tall or exceed 100,000sq ft.
The homeowners insurance policy provides no liability coverage for
bodily injury or property damage arising out of sexual molestation
the fact that insurance policy language is written by an insurance company and is nonnegotiable makes insurance policies:
contracts of adhesion
Coverage of $1,000 is provided for loss due to the insured having accepted
counterfeit money
Bailees' customers insurance is typically bought by a bailee to cover
customer property
An invitee is an example of
driver for a parcel delivery service; they are invited onto the premises for the owner's benefit
In a DP3 form
dwelling property is covered on an open peril's basis, and it's valued on a replacement cost basis.
Property insurance policies contain an earthquake exclusion and only offer coverage by
endorsement
What may be used with the standard fire policy to insure against property perils other than fire and lightning?
endorsements
contractors equipment floater covers
equipment and tools from earth movers and tunneling equipment wrenches to hammers
Tim, an insurance producer, tells you his is concerned about liability that may arise if he fails to fulfill his duties to his insurers or customers. What kind of insurance would you suggest he buy to protect him from this liability?
errors and omissions insurance
If a covered property loss makes it impossible to live in a portion of te residence premises that is rented out, the insurer covers the
fair rental value
The DP 3 excludes coverage for water damage due to flood, sewer backup, or underground seepage, but does cover loss by
fire or explosion that results from water damage
Limited property insurance coverage is available with the DP 1 because
fire, lightning, and internal explosions are the only standard perils under this form
Common property insurance exclusions
flood, earthquake, and nuclear hazard
Livestock is not covered property when
in the custody of a common or contract carrier, public stockyards and sales barns or yards, slaughterhouses, and packing plants
The permitted incidental occupancies endorsement is used for
incidental types of businesses that are conducted on the residence premises
The state legislature writes the
insurance laws
To be able to predict the number of future losses occurring among their insureds, insurers rely on which of the following?
law of large numbers
An insured with a combined ration greater than 100 percent has a underwriting
loss
commercial property insurance excludes coverage for
loss caused by mechanical or electrical breakdown. Would need to purchase equipment breakdown
The three components of an insurance rate are
loss costs expenses allowance for profits
in the event of a covered loss to a building; ordinance or law endorsement provides three separate coverages
loss to the undamaged portion of the building (Coverage A), the cost of demolishing the undamaged portion of the building (Coverage B), and the increased cost of reconstruction or repairs to comply with current ordinances or laws (Coverage C)
For a business to be eligible for a BOP,
none of its locations can exceed 35,000 square feet and $6 million in annual gross sales
Many commercial earthquake policies are written on a difference in conditions (DIC) form that covers the exposures
not covered under the underlying commercial property policy.
"Farming"
operation of an agricultural or aquacultural enterprise, including the operation of roadside stands on the farm premises that sell products produced by the farm and farm processing operations. "Farming" does not include mechanized canning operations or retail activity
What type of business is ineligible for a BOP regardless of its size?
parking garage
the loos costs reflect
past claims and estimated future claims
A reinsurance company accepts risks that:
primary insurers cede to it
Nationwide Inland Marine Definition states that
property qualifying for inland marine insurance must be in transit or bear some relationship to transportation or communication.
The businessowners policy is a package policy that combines coverage for
property, liability, crime, and inland marine risks.
false advertising
publication of untrue, deceptive, or misleading statement
The Insurance Services Office (ISO) is not a
rating organization. It provides information, products, and Servies to insurance companies
Under a DP 3 form, coverage for the dwelling (including walls) and other structures is provided on
replacement cost basis
Surplus lines brokers work with
retail agents and nonadmitted insurers to procure insurance for the retail agents' clients. The do not have underwriting or binding authority
The term ___________ is sometimes to refer to the person, property, or activity that is insured under a policy
risk
"Motor vehicle" is defined as
self-propelled land or amphibious vehicle or any trailer connected with it. Broad enough to include motorcycles, self-propelled lawn mowers and motorized wheelchairs
An insured has the right to cancel an insurance policy if he or she pays the
short rates and any costs of action
Most Insurance regulation is conducted by the:
state government agencies
adverse selection is the:
tendency of persons who are more likely to have a claim to buy and maintain insurance.
Actions by the insured that change or increase the risk insured is only a valid reason for cancellation if
the insured's actions substantially change or insure the risk insured.
While no coverage applies to most motor vehicles, including their equipment and parts, vehicles are covered under property of homeowners policy when:
they do not need to be registered for use on public roads.
Which of the following causes of loss would typically be covered under a standard property insurance policy?
tornado
Who has the authority to act on behalf of members of the FAIR Plan to cause insurance policies to be issued?
underwriting association of the FAIR Plan
Most business-related exposures are excluded or limited under an
unendorsed homeowners form
A nonresident person can obtain a nonresident producer's license if he or she has a
valid producer's license in the home state and has paid the application fees, and if the home state grants nonresident producer licenses to Iowa residents on the same basis
Esther has just bought an expensive painting. She wants to be sure there will be no dispute with the insurer in the event it is damaged or stolen. What type of policy would you recommend Esther purchase?
valued contract
Vicarious liability
when one party is legally responsible for the acts of another
A commercial articles floater is designed to insure either camera equipment or musical instruments used commercially or by nonprofit organizations. Open perils coverage, which includes theft, applies
wherever the property is located; there are no limitations on the coverage territory.
A business entity does not need to file its articles of incorporation
with the Insurance Commissioner