Texas P&C Adjuster Untimed Test #1

Indemnify Insurance, Inc. is a Texas insurer has violated the regulations with regard to the timely payment of claims. Indemnify will now be required to pay interest on the amount of the claim at a rate of:

18% per year..

Part B of the personal automobile policy provides coverage, regardless of fault, for necessary medical and funeral expenses incurred within how many years of the date of the injury?

3

What is NOT considered "your covered auto" under a standard Personal Auto policy?

A large truck used to transport manufactured goods for a corporation (commercially used vehicles)

What is not a covered peril under the Standard Fire Policy?

Actions of war

The common policy conditions apply to which coverage parts of a Commercial Package Policy?

All coverage parts of the policy.

The "coverage territory" of umbrella liability policies is usually:

Anywhere in the world.

Which of the following is the BEST explanation as to the reason insurance policies are called "unilateral contracts"?

Because the insurance company is the only party to the contract that can be sued if they do not meet the terms..

Brian owns a home that is covered by a DP-3 form. He rents this home to Taylor. Joe, the neighbor who lives next door to Brian's rental home, has been cooking methamphetamine for quite some time and selling it out of his house. One afternoon, Joe's "meth lab" exploded, spreading dangerous chemical to the houses around his. It also caused a fire that rendered the house unstable until it can be demolished. The civil authorities in the area have required that Taylor vacate her rental home, until the area next door can be cleaned up. Which of the following statements is true regarding how Brian will be compensated under his Dwelling policy for the loss of Taylor's rent during the time she must live elsewhere?

Brian will receive 20% of the Coverage A limit, for a maximum of 2 weeks.

Inland Marine insurance was developed to provide coverage for:

Cargo traveling over land.

What coverage would cover "unattached structures" under a home owners policy?

Coverage B - Other Structures covers structures that are unattached to the covered dwelling

Pete is adding Commercial Property coverage to his Commercial Package policy. Which of the following coverages CANNOT be added to a package policy using Commercial Property coverage forms?

Coverage for the negligence of the insured

When pertaining to Equipment Breakdown insurance, the term "breakdown" doesnt include?

Damage to any vacuum tube, glass tube, or brush

Which of the following best characterizes the difference between captive agents and independent agents?

Independent agents can represent more than one insurer, whereas captive agents represent only one insurer. .

A loss reserving method that establishes aggregate reserves for all claims for a single line of insurance is known as:

Loss ratio method..

an intentional act that is illegal or morally wrong, and contributes to the injury of another person is

Malfeasance.

What is the main difference between arbitration and mediation in dealing with coverage disputes in the claims adjusting process?

Mediation is not binding on the parties involved, but with arbitration the decision is final and binding

Scott lives in Texas and has submitted a claim to his insurance company. He has received notice from the insurer that the claim is covered under the policy and they will be paying the claim. How long does the insurer have to pay Scott's claim according to Texas law?

Not later than the fifth business day after the notice was made. .

The importance of an "Insured or Witness Investigation" is that:

Obtaining their statements is very important in determining who is liable..

Which of the following types of bonds guarantees that all project materials will be paid in full by the contractor upon completion of the project?

Payment bond..

A person, firm, or corporation that, for compensation, acts on behalf of an insured in negotiating the settlement of certain claims for loss or damage to property is known as a/an:

Public Adjuster

Which type of damages is not intended to indemnify the plaintiff?

Punitive damages.

An adjuster has uncovered a potential coverage issue in matters pertaining to a claim and is unable to contact the insured to discuss these matters. What should the adjuster do in this situation?

Send a reservation of rights letter to the insured's last known address.

QUESTION: Ted holds a property & casualty adjuster's license as well as a workers' compensation adjuster's license in Texas. Which of the following statements best describes how the mandatory continuing education requirements will apply to Ted?

Ted will be required to complete a total of 24 hours of continuing education to meet the requirement for BOTH licenses.

The broad evidence rule is used when:

The actual cash value of property is being determined..

Who signs a non-waiver agreement?

The insured and insurer Non-waiver agreements are signed by both the insured and the insurer. Therefore, the correct answer is: "It is signed only by the insurer." because you were looking for the answer that was NOT true. All of the other answer choices are correct.

If an insured is covered under an HO-2 policy, damage caused by wind to his/her personal property would be covered if:

The wind created an opening in the structure, allowing the wind to damage the personal property inside.

Mary left an expensive ring on her bedroom dresser before leaving on a business trip. When she returned, nothing seemed disturbed in her home, but her ring was gone. Under the terms of her HO-3 policy, this loss would be considered:

Theft

An insured has a $1,000 insurance claim and is able to prove his loss and its value. The insurer's adjuster offers $500, knowing that the claimant would probably take the offer to avoid incurring the cost of an attorney to sue for the actual amount of the claim. The offer made by the adjuster is considered:

To be an unfair claims settlement practice.

True or False, an adjuster shouldnt keep detailed notes to support a fraudulent denial of claims?

True

An insured's boat is struck by another boat. He and his family are injured. His boat sinks because of the damage. An investigation determines that the party that caused the accident is not insured. If the insured carries a watercraft policy, what coverages would apply?

Uninsured boater's coverage and hull insurance

Commercial inland marine policies require the insured to submit a signed, sworn statement of loss

Within 60 days of the insurer requesting it

Elyse was injured by a hit-and-run driver while driving her car on a work-related task. If Elyse carries $100,000 limit for Part C of her personal auto policy, how much of her $125,000 medical bills will be covered?

$0

Chuck's home is covered under a DP-1 policy with the EC perils attached, when his dwelling suffers significant damage due to a tornado. His Coverage A limit is $100,000 and this satisfies his coinsurance requirement. His policy does not have a deductible form attached. His dwelling is severely damaged and he submits a claim for $96,520 for the dwelling. How much coverage does Chuck have remaining on his policy to cover an appurtenant structure on his property that was also severely damaged.

$3,480

An insured is covered under a DP-2 broad form Dwelling policy. A water pipe has frozen and burst and the insured has suffered floor and ceiling damage in his two-story home. The cost to remove and replace the walls to get to the pipe is $300. The cost to repair the floor is $400. The pipe that burst must now be replaced with a more expensive option to meet newer building codes. The cost to replace the pipe is $200. How much will the insurer pay?

$700..

Under the Businessowners policy, for up to how many years can the insurer request to examine the books and records of an insured after the policy has expired?

3 years

Convenience stores selling gasoline must have a minimum of ______ square feet in total floor area in order to qualify for the BOP?

3,000

If the insured purchases a new aircraft to replace a scheduled aircraft, there is automatic coverage provided the insurance company is notified within ______ days of the purchase and premium payment is made

30

Surplus Lines companies in Texas have _____ to acknowledge the receipt of a claim.

30 days

When the "Extended Period of Indemnity" option is selected by the insured on their Business Income form, the additional coverage "Extended Business Income" is extended from 60 days up to a maximum of _____ days.

360 days

The standardized personal automobile policy considers a newly acquired auto:

A covered auto for the first 14 days

What is the "retained limit" of a Personal Umbrella policy that must be paid when the umbrella policy covers a claim that was excluded by the underlying policy?

A deductible that the insured must pay when the Personal Umbrella policy covers a claim that was excluded by the underlying liability policy.

Which of the following types of investigations would an adjuster undertake to determine if the medical treatment a claimant is receiving is appropriate for the injuries claimed?

A medical investigation

The aircraft physical damage (hull) deductible is normally expressed as:

A percentage of the value of the aircraft.. The deductible for aircraft physical damage is usually expressed as a percentage of the value of the aircraft.

A slippery floor is an example of:

A physical hazard.

Binders Keepers Insurance Company has a policy of closing claims within 30 days. Brian, a claims representative for the company, has been investigating a claim for 32 days and he will probably need a few more days to complete the claim. What report Brian should submit to the company?

A status report.

In situations where the insured and the insurer could disagree on the value of an item, it would be best to insure that item on a(n) __________ basis.

Agreed Value.

Indemnify Insurance, Inc. writes Ocean Marine policies using a deductible amount that is stated on the form and applies to any loss covered by the policy. This is known as:

An average deductible..

When an insurer takes no action upon realizing material changes in a contract, this is called:

An implied waiver

The provision in an insurance contract that outlines the process of bringing a contract dispute before an objective third party for resolution is known as:

Arbitration..

When an insured has two or more Standard Fire policies covering the same property and a claim occurs, how will that claim be paid?

Each policy is required to contribute pro-rata to the payment of either the whole or partial loss..

Coverage for all reasonable expenses incurred by an insured in order to continue as nearly as practicable the normal operation of his/her business after a loss is:

Extra Expense coverage..

Are nonwaiver agreements and reservation of rights letters between first parties, third parties or both?

First-party claimants

Uninsured Motorist (UM) coverage claims are first or third party claims?

First-party claims.

The "removal coverage" of the Standard Fire policy is:

Is extremely broad and will cover the removal expense for five days and beyond if an extension is arranged with the insurance company.

A Texas adjuster has adjusted a claim under a policy type for which he is not licensed. This is considered a:

Misdemeanor and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both.

For a liability policy to pay a claim, the person who is legally liable:

Must be an "insured" under the policy

Does the insurance commissioner set insurance rates?

NO

Can marine vehicles be covered under the Garage Coverage Form?

No

Does the insured have to pay all premiums up front before construction can begin with builders risk coverage?

No

Steve and his insurance company are embroiled in a dispute regarding the amount of the property loss that Steve has incurred. Both Steve and his insurance company have selected an appraiser, but they cannot agree on the amount. The appraisers attempt to select an umpire, but cannot agree on one. What is the next course of action that must be taken?

Steve and/or his insurance company can request that the umpire be selected by a court of law..

Symbol 23 is designated on the insured's Garage Coverage form. This indicates that:

That owned private passenger autos only are covered.

Which policy provisions or clauses is designed to prevent the violation of the principle of indemnity?

The "Other Insurance" provision

Which of the following Commercial Property conditions could be referred to as the "subrogation clause"?

The "Transfer of Rights of Recovery Against Other to Us" condition..

Which "conditions" form in a complete Commercial Property policy specifies the coverage territory?

The Commercial Property Conditions form..

The insured carries a Personal Auto policy and a Personal Umbrella policy. In case of a loss, how would the policies respond to pay a covered claim?

The Personal Auto policy would be the primary and would pay up to the policy limits, then the Umbrella policy would be excess to pay up to its policy limits. i

Example of implied authority

The authority given by a principal to an agent that is not formally expressed or communicated. .

Which cause of loss forms provides named peril coverage?

The basic and broad forms only..

Under a property insurance broad cause of loss form, who has to prove that a named peril caused the loss?

The burden of proof lies with Kathryn to prove that a named peril in her policy caused her loss.

All of the following statements are TRUE regarding the standard Businessowners policy coverage extension for "Business Personal Property Temporarily in Portable Storage Units", EXCEPT:

The coverage is provided for rented storage units away from the insured premises.

An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2,000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $500,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary underlying liability policy or the Umbrella policy. How will this loss likely be settled?

The insured will be liable for the full $100,000 loss..

An insured does not carry enough insurance to comply with the coinsurance clause of his Homeowners policy. If this insured would have a loss to his covered home, how will the insurer settle the loss?

The insurer will either settle the loss at ACV, or pay the proportion of the cost to repair or replace the part of the building that was damaged, based on the amount of insurance the insured carried.

Ocean marine insurance contracts rely heavily on the principle of utmost good faith because:

The insurer's underwriters are not usually in a position to thoroughly investigate the risk..

The record of complaints that all insurers in Texas must maintain must indicate all of the following, EXCEPT:

The license number of the person within the insurance company that generated the complaint from the client..

Mrs. Vincent is covered under a standard PAP that covers her 2016 Ford SUV. She carries liability and full physical damage coverage. Her neighbor owns a 2002 Chevrolet pick-up truck with liability coverage only. Mrs. Vincent borrows the truck to pick up lawn furniture, parks the truck at the store, and leaves the keys in the ignition. The truck is stolen and later found wrecked. How would coverage apply?

The loss is covered under Mrs. Vincent's "other than collision" coverage.

One of the Unfair Claim Settlement Practices is "failing to affirm or deny coverage of claims within a reasonable time after having completed its investigation related to such claim or claims". How is the length of time that is considered "reasonable" decided?

The state legislatures set the reasonable time period by statute..

how are controlled commercial inland marine forms issued?

These forms are usually issued according to published rules and rates. Controlled forms and their rates are filed for approval with the state insurance departments. They are usually issued according to published rules and rates. A jewelers block policy is an example.

All of the following are "Duties of the Insured" in case of a loss under the 1943 New York Standard Fire policy, EXCEPT:

Within 30 days submit a signed proof of loss stating the time and origin of the loss..

The standardized Building and Personal Property Coverage form requires the insured to submit a signed, sworn proof of loss statement:

Within 60 days of the insurance company's request..

What term refers to continuous or repeated exposure to conditions that may result in bodily injury or property damage neither expected nor intended

an occurrence

The type of claims investigation that looks at the possibility of a third-party being responsible for the loss is known as:

A subrogation investigation

An agent, insured or claimant has intentionally deceived an insurer for financial gain.

Fraud

Which sections of the Standard Fire policy are found on the first page of the policy?

The Declarations page and the Insuring Agreement.

Adjusters in Texas must complete at least _____ of the continuing education required to renew their license in a classroom or classroom equivalent setting.

50%

Which of the following best describes the purpose of the "insuring agreement" contained in an insurance policy? To the insurer's promise to pay in case of a loss. To identify the named insured who is bound by the contract. To explain the duties of the named insured in case of a loss. To set forth the conditions and exclusions.

To the insurer's promise to pay in case of a loss.

A coverage extension included on the Building and Personal Property coverage form provides coverage for business personal property temporarily stored in a detached trailer within 100 feet of the insured building for:

A limit of $10,000 unless higher limits are purchased.