Test Five

The designation symbols used in commercial auto policies can be found in which policy section?

Covered auto

The legal process that gives the insurer, after payments of a loss, the right to seek recovery from a third party that was responsible for the loss is known as?

Subrogation

When an employee benefit plan pays the premium for a fiduciary liability policy, what provision must be included in that policy?

Subrogation

Replacement cost coverage is provided in both the broad and special form dwelling polices when?

The amount of insurance on the dwelling is at least 80% of its replacement cost at the time of loss

If a producer changes his residential address who must he/she notify?

The change will need to be reported to the commissioner

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is?

Conditional

The broad theft coverage endorsement on the dwelling form specifies all of the following limitations except?

$1,000 on silverware

When other insurance is written on the same basis as a Commercial Property policy, what is the insurer obligated to cover?

A share of the loss

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 the closest term to an authorized insurer?

Admitted

The commercial general liability coverage form excludes bodily injury or property damage that the insured has assumed under any contract or agreement. However, the exclusion does not apply to certain types of contracts, as long as the injury or damage occurs?

After the execution of the contract

Which of the following options is available for eligible person who cannot obtain automobile coverage through the voluntary market?

Alabama Automobile Insurance Plan

Under a personal auto policy, in which of the following locations would a vehicle primarily garaged in California be covered?

Any other state

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 named insured

How often must the commissioner or an examiner designated by the commissioner examine domestic insurance companies?

As often as the commissioner deems necessary, but not less frequently than once every five years

Ocean marine policies commonly refer to the person covered by the policy as the?

Assured

Insurable interest in the property covered in a policy must be proven?

At time of loss

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized

Under the HO-4 and HO-6 homeowners policy forms, property is insured against?

Broad form perils

The business pursuits endorsement under section II of a homeowners policy will cover all of the following except?

Business liability

The liability coverage of the business owners policy is written on a?

Businessowners liability coverage form

Which employee fidelity bond pays no more than its limit of liability for each separate occurrence no matter that several separately identifiable employees were involved in a single loss?

Commercial Blanket Position

Professional photographers and musicians may insure their equipment with?

Commercial articles floater

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?

Conditional

The part of the policy that sets forth the rules of conducts, duties, and obligations of the parties is called the?

Conditions

Which of the following risks is eligible for coverage under a business owners policy?

Condominiums

All of the following are lines of insurance that may be transacted under a life and accident/health producer license except?

Consequential loss insurance

An insured's house is damaged by a fire and is uninhabitable. As a result, the insured has to rent an apartment until repairs are made. A dwelling insurance policy will pay for the expense of renting the apartment. Which type of broad or special form coverage does the insured have?

Coverage E- Additional living expenses

The commercial property declarations page contains which of the following information?

Description of the property insured

Which commercial crime form would provide coverage for a loss that did not necessarily happen during the policy period but was revealed during the policy period?

Discovery form

Which of the following best describes an insurance company that has been formed under the laws of this state?

Domestic

All of the following are found in the declarations section of a policy except the?

Exclusions

Which of the following statements would be an example of a product liability claim?

Faulty packaging of a cereal caused spoilage that resulted in someone getting sick

Persons covered under an insurance policy, whether named or not, are known as the?

Insured

All of the following are conditions commonly found in the insurance policy except?

Insuring agreement

All of the following statements describe the concept of strict liability except?

It is imposed on defendants engaged in hazardous activities

Applicants for which type of insurance license are exempt from Alabama prelicensing education requirements?

Limited license

Employee fidelity may be written in all the following ways EXCEPT?

Location schedule

Which of the following is the basis for a claim against an insurance policy?

Loss

An insured is driving her automobile and strikes a large pothole that causes a flat tire. Which coverage of the insured's personal auto policy will pay for the repair?

Loss is not covered

A shipload of cement has been damaged by water and has become concrete. According to general cargo insurance terms in ocean marine policies, this is considered?

Loss of specie

In addition to obtaining an insurance producer license, a business entity, in order to transact insurance must have at least?

One individual licensed insurance producer

In Alabama, an insurance company certificate of authority is issued for what period of time?

Perpetual

Under the personal auto policy, liability for bodily injury resulting from the insured's use of a nonowned automobile is?

Provided by the insured's policy on an excess basis

A situation in which a person can only lose or have no change represents?

Pure risk

All of the following are additional causes of loss included in the broad form of a commercial property policy except?

Replacement cost

In case of a loss, the indemnity provision in insurance policies?

Restores an insured person to the same financial state as before the loss

Which policy condition in HO policies states that insurance applies separately to each insured?

Severability of insurance

In order to be covered by the U.S. Longshore and Harbor Workers Compensation Act, a worker must meet the requirements of the?

Situs and Status Test

Which one of the following symbols used in business auto coverage is correctly described?

Symbol 9- non owned autos only

An insurance agency could purchase an errors and omission insurance policy which would provide protection in the event of any of the following events except?

The agency loses commission income form policies that were not issued by the insurer

Under a dwelling policy, which of the following is NOT a factor in determining a loss?

The amount negotiated by the insured

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

When a regular bill of lading is issued, who will be responsible for the invoice cost of any damaged property?

The carrier

Under the workers compensation system, who is responsible for the expenses resulting from work-related injuries and occupational diseases?

The employer, regardless of whether it was at fault for the injury of disease

Which of the following would the livestock coverage form NOT insure against?

The euthanasia of livestock after being hit by a vehicle

If another governmental agency takes legal action against a licensee, whose responsibility is it to report the action?

The licensee

All of the following are perils covered under the broad form dwelling policy except?

Theft

All of the following are other coverages included in both the broad and special form dwelling policy except?

Theft of personal property

The process an insurer uses to evaluate applications and determine if a policy should be issued and on what terms, conditions, and rates is known as?

Underwriting

Liability imposed on one party as a result of the actions of another person is known as?

Vicarious liability

Workers compensation rating is developed by applying a rating bureau job classification rate to each?

$100 of payroll

In the computer fraud crime coverage form, what limit is placed on each occurrence of the loss of manuscripts, drawings, or records?

$5,000

An insured hits a deer and crashes his car into a tree. The total damage to the vehicle is $6,000. How will this loss be covered?

$6,000 would be paid under other-than-collision coverage

What is the maximum period of time for which an auto insurance policy may be issued in this state?

12 months

In the split limit coverage in personal auto policies, which limit indicates the maximum amount the policy will pay for bodily injury per person?

1st limit

Under the additional living expenses coverage, if a civil authority prohibits the insured from using the dwelling because of direct damage to a neighboring location from a peril covered in the insured's policy, loss would be covered for up to?

2 weeks

What are the minimum liability limits for auto insurance policies issued in this state?

25/50/25

The removal coverage that is included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long?

30 days

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

Crime insurance is usually written on what basis?

All risk

A professional who wants coverage for all liability exposures should purchase what form of liability insurance?

Commercial general and professional

All of the following are classes of inland marine risks except?

Common carrier cargo liability

A plasterer has finished a job. What kind of liability coverage would protect him if the plaster falls and hurts someone because he did not do the job correctly?

Completed operations

Which of the following coverages will respond if a claim is made or a suit is brought against an insured for damages due to bodily injury or property damage caused by an occurrence to which coverage applies?

Coverage E- personal liability

Which of the following is true regarding the commercial general liability policy's Coverage C- Medical payments?

Coverage is considered good will because payments are made without regard to fault

Which of the following would be named on the declarations page of a property or liability policy?

First named insured

Representations are written or oral statements made by the applicant that are?

Guarantee to be true

Which of the following circumstances would be excluded under medical payments coverage of a personal auto policy?

Insured is injured while driving his motorcycle on his resident premises

The additional living expense coverage on homeowners policies?

Is intended to allow the family to maintain its normal standard of living

Which of the following best describes a misrepresentation?

Issuing sales material with exaggerated statements about policy benefits

A common exclusion found under physical damage to your auto includes?

Mechanical breakdown

Coverage territory of the business owners policy (BOP) includes all of the following except?

Mexico

A loss has occurred before the first report has been filed on a value reporting coverage form. Which is NOT true?

Never more than 75% of the loss is paid

Erroneous Publishing copied all the material from Angels Inc.'s book. The only changes made by Erroneous were to rename the title and chapters, put a different cover on it, and distribute it as its own. Angels Inc. files a claim against Erroneous and seeks damages. Will a commercial general liability policy cover the claim?

No, because the claim results from copyright infringement and is not in an advertisement

B&B Market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be the meter reader. Which coverage would apply to this suit?

Personal and advertising injury liability

If an insured bakery is sued because its marketing states that the products of another bakery may not be safe, which coverage of a commercial general liability policy will defend the suit?

Personal and advertising injury liability

Valuable papers and records form provides coverage for the reconstruction of all of the following types of records except?

Prepackaged software

Which of the following is covered under the physical damage coverage of a personal auto policy?

Sound reproduction equipment permanently installed in the covered auto

Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location os called?

Specific coverage

Under the commercial property coverage program, the basic causes of loss form insures against loss caused by?

Sprinkler leakage

Which situation would NOT be covered by the basic causes of loss form under a commercial property policy?

The Surfside Club Waterfront restaurant is damaged when flood waters rise and seep into the restaurant

The contents coverage on a homeowners policy would pay how much after the loss of one of a pair of golden candlesticks?

The difference in the actual cash value as a pair and as a single

A passenger in a friend's car is injured while getting into the car. Which of the following statements would apply if both the passengers and the driver had medical payments coverage under a personal auto policy?

The driver's policy would be primary

An insured invites his neighbors out for a day on the water in his boat powered with a 150 hp outboard motor. While attempting to tie the boat to dock, his neighbor's hand is broken when caught between the boat and dock. What coverage would apply to the broken hand?

The insured's boat owners policy

With respect to commercial auto policies, the garage coverage form provides liability protection for all of the following except?

The insured's business products and work performed

Who is NOT an insured for liability on a BAP?

The owner of a car the insured borrows

An insured has a homeowners policy and is required to be a member of the homeowners association in her neighborhood. The association's community house has burned down, and the insured has been assessed $1,200 for her share of the rebuilding cost. How much of the assessment will her homeowners policy pay?

$1,000

An insured has $5,000 of medical coverage on a personal auto policy at the time if a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage?

$14,000

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?

$160,000

A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy?

$175,000

Whenever a commissioner receives a demand for a hearing, a hearing shall be scheduled to be held within?

30 days

The employee theft crime policy includes a coverage extension that applies to employees temporarily outside the coverage territory for up to?

90 days

What is the maximum period of time for a binder?

90 days

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

To perform work on a customer's car, a mechanic in an auto shop had to put the vehicle on a service hoist. The hoist collapsed, damaging the vehicle and injuring the mechanic. In regard to the garage coverage form, which of the following statements is true?

No coverage is applicable

Which of the following liability exposures is most likely for a small specialty clothing retail boutique?

Premises liability exposure

All of the following are examples of risk retention except?

Premiums

The common policy condition is a modular part combined with other parts to create the contract. The common policy condition section contains provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy?

The first named insurer may cancel the policy at any time by giving written notice to the insurer

All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy except?

The injury or damage must occur within 90 days after the insured's work is completed

When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be?

The proximate cause

The individual named insured endorsement under a commercial auto policy provides coverage for which of the following?

The sole proprietor of the business and his or her family members

Producers will be deemed to be using their license primarily to write controlled business if, during any 12-month period?

The total premiums on controlled business exceeds the total premiums on all other business written

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

Which type of insurance is based on mutual agreements among subscribers?

Reciprocal insurance

An apartment occupant's personal property would be insured under which homeowners form?

Tenant Broad Form (HO-4)

What is the purpose of Alabama Automobile Insurance Plan?

To provide auto insurance to eligible person who are unable to obtain coverage through private insurers

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

Twisting

An insurance producer who by contract is bound to write insurance for only one company or group of companies is classified as a/an?

Captive agent

An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have?

Combined single

In a commercial package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer?

First named insured

In insurance, an offer is usually made when?

The completed application is submitted

All of the following situations would be covered under a professional liability policy except?

The failure on an attorney to properly defend a client due to his personal dislike of the client

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory

An individual construction company leaves mobile equipment and construction on machinery on the job site until the project is completed. What could this individual use to insure it?

Contractors equipment floater

Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will?

Either pay or defend as it decides

In addition to the common policy conditions, all of the following conditions apply to liability coverage except?

Employers liability

All of the following would be exempt from the workers compensation laws of this state except?

Employers who only employ 5 workers

Professional liability coverage protects the insured against legal liability resulting from?

Errors and Omissions