Texas Practice Exam 3

An insured owns a set of six drawing pens designed and used by Benjamin Franklin. Each pen is worth $1,000 alone, but the set is worth $12,000. One pen is destroyed by a covered peril. Under the pair or set clause the insurance company will pay a maximum of which of the following amounts? a. $7,000 b. $1,000 c. $12,000 d. $2,000

a. $7,000

If an insured carries Coverage C (contents) under a dwelling (not homeowners) form, how much coverage applies on a worldwide basis? a. 10% of the coverage C limit b. 25% of the coverage C limit c. 40% of the coverage C limit d. 50% of the coverage C limit

a. 10% of the coverage C limit

Coverage for earthquakes and volcanic eruptions may be attached to Commercial Property Insurance. When the Earthquake Cause of Loss Form is attached, a series of earthquakes or volcanic eruptions will be treated as a single event whenever the series of shocks or eruptions occurs within a: a. 168-hour period. b. 24-hour period. c. 48-hour period. d. 96-hour period.

a. 168-hour period.

In case of a loss, how many days notice does the insured have after notification of a claim to submit the claim to the underwriters of the ocean marine coverage? a. 180 days. b. 90 days. c. 60 days. d. 120 days.

a. 180 days.

The liberalization clause of a Businessowners policy automatically applies favorable expansions of coverage, for which a premium is not charged if the changes are made during the policy period or within ______ prior to the effective date of the policy. a. 45 days b. Six months c. Three months d. 30 days

a. 45 days

Which of the following is considered a surety? a. A bond that guarantees the performance of contracts. b. Fidelity insurance. c. Liability insurance. d. Insurance that would indemnify a bank.

a. A bond that guarantees the performance of contracts.

Which of the following is not an "insured" under a Homeowners policy? a. A neighbor moves into the named insured's house with all of his belongings. b. A neighbor who has custody of the named insured's dog while the named insured is on vacation. c. The named insured's sister moves into the named insured's house. d. The new spouse of the named insured who moves all of her furniture into the husband's house.

a. A neighbor moves into the named insured's house with all of his belongings.

Under a standard Homeowners policy, "persons insured" would include all of the following, EXCEPT: a. A non-related tenant living in the insured residence. b. All residents who are related to the named insured. c. A legal representative of a deceased named insured. d. A non-related minor being cared for by the named insured's family.

a. A non-related tenant living in the insured residence.

Under an airport premises policy, all of the following are excluded, EXCEPT: a. A passenger slips on ice on a step. b. Damage to the runway. c. Admitted liability. d. Rental of a replacement aircraft.

a. A passenger slips on ice on a step.

Which of the following would be excluded under the Personal Auto liability coverage? a. A person transports people from the airport to nearby hotels for a fee. b. A person uses his car to transport his workmates once per week in a car pool. c. A person borrows a friend's vehicle to travel to the airport. d. A person gets a speeding ticket in addition to being cited for an accident.

a. A person transports people from the airport to nearby hotels for a fee.

An incorporated insurance company with its capital divided into shares and owned by its shareholders is known as: a. A stock company. b. A mutual company. c. A fraternal benefit society. d. An association group.

a. A stock company.

Brittany is a licensed adjuster in Texas. She failed to renew her license at the specified time, and now her license has been expired for 60 days. Which of the following best describes the next step Brittany should take? a. Brittany can still apply to renew her license, subject to an automatic fine. b. Brittany will be required to apply to the Department for a new license. c. Brittany will be required to take the state licensing exam again. d. Brittany will need to do nothing because Texas Adjuster licenses are perpetual and her renewal will come through within 90 days of her license expiration date.

a. Brittany can still apply to renew her license, subject to an automatic fine.

Which of the following coverages would apply to a rental car used by an insured executive while on vacation? a. Coverage for nonowned autos. b. Drive other car coverage. c. Garagekeepers legal liability. d. Truckers coverage.

a. Coverage for nonowned autos.

The insured is covered under a personal auto policy and carries liability coverage, other than collision (comprehensive) coverage and collision coverage. He has a large quantity of CDs in the vehicle. The vehicle is broken into and these items are stolen. How will the insurance company handle the claim for the CDs? a. Deny the claim in full. b. Pay the claim in full. c. Pay the claim minus depreciation. d. Pay the claim minus the deductible.

a. Deny the claim in full.

Under an Equipment Breakdown policy, all of the following are supplementary payments, EXCEPT: a. Expediting expenses. b. Defense costs. c. Interest on judgment. d. Premiums on appeal bonds.

a. Expediting expenses.

Texas workers' compensation regulations use the phrase "in the course and scope of employment". This includes: I. An activity conducted on the premises of the employer or at other locations of the employer. II. Transportation to and from the place of employment. III. Business-related travel by the employee that was coupled by personal or private affairs. a. I only b. I and II only c. I and III only d. I, II, and III

a. I only

A print shop is insured under a Businessowners Policy with a separate policy covering the press. If a loss occurs that is covered under both policies, how will the Businessowners Policy respond? a. In this situation, the BOP is considered "excess" coverage. b. The BOP would not respond to this claim at all because other coverage was in effect. c. The BOP will pay a share of the loss in proportion to the other policy. d. The abandonment clause under the BOP policy will allow the insured to abandon the property to the other insurer.

a. In this situation, the BOP is considered "excess" coverage.

A company's promise to pay for damage caused by or resulting from a covered cause of loss would be found in which of the following sections of a Commercial Property policy? a. Insuring Agreement b. Declarations c. Conditions d. Exclusions

a. Insuring Agreement

The failure to act as a reasonably prudent person would under the same circumstances is known as: a. Negligence. b. Liability. c. Hazardous behavior. d. Perilous behavior.

a. Negligence.

The Commercial Building and Personal Property form automatically provides which of the following extensions of coverage? a. Newly acquired property b. Outdoor signs c. Replacement cost d. Rental Value

a. Newly acquired property

A deductible usually applies to which of the following automobile policy coverages? a. Physical Damage b. Bodily Injury Liability c. Property Damage Liability d. Medical Payments

a. Physical Damage

The "medical payments" coverage of a personal automobile policy covers: a. The insured as an occupant of a car, an occupant of the insured vehicle and the insured as a pedestrian when hit by a car. b. The insured as an occupant of a car only. c. An occupant of the insured vehicle only. d. The insured as a pedestrian only.

a. The insured as an occupant of a car, an occupant of the insured vehicle and the insured as a pedestrian when hit by a car.

Under a Commercial Package Policy, how many days does one have to notify the insurance company of a claim? a. The insurer must be notified promptly. The number of days is not specified b. 30 days c. 60 days d. 10 days

a. The insurer must be notified promptly. The number of days is not specified

Surplus Lines companies in Texas have _____ to acknowledge the receipt of a claim. a. 15 days. b. 30 days. c. 10 days. d. 20 days.

b. 30 days.

All of the following are Texas adjusters who are not permitted by law to adjust a loss related to roofing damage on behalf of an insurance company, EXCEPT: a. An adjuster who is also a roofing contractor. b. An adjuster that has taken roofing classes and is capable of repairing a damaged roof. c. An adjuster who sells roofing products and services. d. An adjuster who also holds a controlling interest in a roofing-related business.

b. An adjuster that has taken roofing classes and is capable of repairing a damaged roof.

How can the "property causes of loss" be changed under a BOP policy, from risks of "direct physical loss" to "named perils" coverage? a. State the named perils on the Declarations page of the policy. b. Attach the "named perils" form endorsement to the BOP policy. c. The property "causes of loss" cannot be changed under a BOP policy. d. Change the policy to a different ISO Businessowners Coverage form.

b. Attach the "named perils" form endorsement to the BOP policy.

A blanket employee dishonesty bond will: a. Name the individuals b. Does not name the individuals c. Excludes certain individuals d. Excludes certain types of occupations

b. Does not name the individuals

The Texas Labor Code lists specific items that may not be used to discriminate against injured workers in providing impairment benefits. All of the following are specifically listed in the code, EXCEPT: a. Race. b. Ethnicity. c. National origin. d. Religion.

b. Ethnicity.

An insurance policy is a contract. If any part of the policy language is ambiguous, the court will generally rule: a. In favor of the insurer since the forms were filed and approved by the insurance department. b. In favor of the insured. c. That the policy can be rewritten. d. To refund the premium back to the insured.

b. In favor of the insured.

How is a combined deductible applied in an Equipment Breakdown policy? a. It applies per piece of covered equipment damaged as a result of a breakdown b. It is first deducted from the aggregate amount of any loss to which it applies c. The insurer will not be liable for any loss that occurs during the specified time period immediately following a breakdown d. It is based on a percentage of the breakdown loss

b. It is first deducted from the aggregate amount of any loss to which it applies

Which of the following is the correct description of the medical expenses limit in the liability section of the Businessowners policy? a. Per accident b. Per person, per occurrence c. Per incident d. Per location, per occurrence

b. Per person, per occurrence

Cargo Shippers International is a major shipping company that transports goods both domestically and abroad. The company is looking for a new Ocean Marine insurer to cover its cargo all the way from the point of origin to its final inland destination. What type of coverage is Cargo Shippers looking for? a. Floating, Open or Long Term Cargo coverage. b. Warehouse-to-Warehouse Cargo coverage. c. Single-Risk Form coverage. d. Hull coverage.

b. Warehouse-to-Warehouse Cargo coverage.

What is generally excluded on the Condominium commercial unit-owners form? a. The improvements and betterments of the unit owner b. Hostile Fire damage c. Building coverage d. Inside appliances and fixtures

c. Building coverage

Which one of the following is not an example of an unfair claim settlement practice? a. Knowingly misrepresenting pertinent facts to claimants b. Failing to acknowledge communication within a reasonably prompt period c. Failing to examine a claimant under oath d. Not attempting in good faith to promptly settle a claim when liability is clear

c. Failing to examine a claimant under oath

An apartment dweller would need which of the following homeowner forms? a. HO-2. b. HO-6. c. HO-4. d. HO-8.

c. HO-4.

A non-waiver agreement would allow the insurance company to do which of the following? a. Hire an attorney to protect its rights b. Decline to investigate the claim due to policy exclusions c. Investigate the loss without verifying that the loss is covered d. Hire a public adjuster to provide a second opinion

c. Investigate the loss without verifying that the loss is covered

Does an aircraft policy cover a loss involving an unapproved pilot operating an insured aircraft? a. Yes, if operating in the covered territory b. Yes, if operating in the state in which the aircraft is registered c. No, a loss involving an unapproved pilot is excluded d. Yes, in flight under any conditions requiring special permit or waiver from the FAA

c. No, a loss involving an unapproved pilot is excluded

Which commercial property form provides the broadest coverage? a. Basic form b. Broad form c. Special form d. Deluxe form

c. Special form

After completing an inspection of an insured's pressure equipment and fire suppression systems, the inspector determines that the pressure equipment needs to be repaired and the suppression systems have not been cleaned and inspected in the time frame required by the policy. The insurer will: a. Give notice to the insured to make the repairs within 24 hours b. Require the insured to send copies of the cleaning and repairs to the underwriter c. Suspend coverage immediately by red tagging the items until they are repaired, cleaned and pass reinspection d. Reduce coverage in case of loss by 25%

c. Suspend coverage immediately by red tagging the items until they are repaired, cleaned and pass reinspection

In order to proceed with subrogation, the insurance company generally: a. Verifies equity if not established in contract b. Has the right to request a motion in replevin c. Takes a subrogation assignment from the insured d. Verifies that the claim is of the sort contractually allowed by the subrogation clause

c. Takes a subrogation assignment from the insured

An insured is covered under a BOP policy. He insures a piece of equipment separately under a floater policy. In case of a loss what coverage will apply under the BOP policy? a. The loss is completely covered under the BOP. b. The policy will pay its fair percentage of the loss. c. The BOP will be excess over the floater policy. d. The loss is not covered under the BOP because it is separately insured.

c. The BOP will be excess over the floater policy.

Property with no occupants or contents is considered to be _____ whereas property with no occupants but with contents is considered: a. Occupied/Unoccupied b. Rented/Unrented c. Vacant/Unoccupied d. Unrestricted/Restricted

c. Vacant/Unoccupied

Which of the following is true regarding personal property floaters? a. It is blanket coverage for personal property by category. b. Coverage is written on an all risk basis. c. It cannot be purchased to insure golf carts. d. All of the responses are correct

d. All of the responses are correct

All of the following bonds guarantee the payment of certain taxes, EXCEPT: a. Hunting and fishing license bonds b. Fuel bonds c. Liquor and tobacco d. Contract surety bonds

d. Contract surety bonds

All of the following are duties that a Texas insurer must perform within 15 days after receipt of the claim, EXCEPT: a. Acknowledge receipt of the claim. b. Commence an investigation of the claim. c. Request from the claimant all items, statements, and forms that the insurer reasonably believes, at the time, will be required from the claimant. d. Schedule a hearing to dispute the claim, if necessary.

d. Schedule a hearing to dispute the claim, if necessary.

Which of the following is not a duty of an insurer in case of a loss? a. Conduct a thorough investigation b. Establish claim procedures and methods of documentation c. Acknowledge receipt of a claim in a timely fashion d. Separate the damaged property from the undamaged property and protect the property from further loss

d. Separate the damaged property from the undamaged property and protect the property from further loss

A Texas adjuster may be subjected to a criminal penalty for all of the following, EXCEPT: 1. Acting as an adjuster without a license. 2. Not paying court mandated child support. 3. Adjusting a claim for workers' compensation when holding a Property & Casualty adjuster license. 4. Adjusting a Homeowners claim when holding only a Workers' Compensation adjuster license.

2. Not paying court mandated child support.

Which of the following Commercial Inland Marine coverage forms covers payments that are due to the insured from customers when these payments cannot be collected due to loss or damage of records? a. Accounts Receivable b. Equipment Dealers c. Electronic Data Processing d. Valuable Papers and Records

a. Accounts Receivable

The amount it would cost to repair or replace property minus depreciation is the definition of: a. Actual cash value. b. Replacement cost. c. Market value. d. Functional replacement cost.

a. Actual cash value.

In the insurance industry, which of the following terms refers to continuous or repeated exposure to conditions that may result in bodily injury or property damage neither expected nor intended? a. An occurrence b. An accident c. An event d. A condition

a. An occurrence

The coinsurance clause in commercial property policies encourages the insured to carry insurance: a. At the full value, or at least 80% to value of the property. b. At 70% of the full value of the property. c. At 60% of the full value of the property. d. At one-half the full value of the property.

a. At the full value, or at least 80% to value of the property.

Adjusters in Texas must complete at least _____ of the continuing education required to renew their license in a classroom or classroom equivalent setting. a. 10 hours. b. 12% c. 50% d. 14 hours.

c. 50%

Which of the following statements is true regarding the purpose of Umbrella policies? a. All of these statements are correct b. To provide higher limits of liability c. To expand coverage beyond primary policies d. To provide coverage when primary limits are exhausted

a. All of these statements are correct

The insured carries a Workers Compensation policy which includes Part II - Employer's Liability coverage. Which of the following is not covered by employer's liability coverage? a. Statutory benefits b. Suits brought by injured employees, in case of employer's gross negligence c. Suits brought by spouses or dependent of injured workers d. Legal defense costs

a. Statutory benefits

Ocean marine coverage for losses to the insured vessel caused by bursting boilers, latent defects in the vessel and negligence of the master or crew members are addressed by which of the following? a. The Inchmaree clause. b. Protection and indemnity coverage. c. Hull coverage d. Barratry

a. The Inchmaree clause.

Workers Compensation policies also include Part II - Employer's Liability coverage. Which of the following claims would be covered under Part II? a. The employer fails to maintain the equipment and an employee is injured. b. A worker falls from a ladder and sustains injuries. c. A fellow worker accidentally injuries another employee. d. A worker dies from an occupational disease.

a. The employer fails to maintain the equipment and an employee is injured.

Who must be notified when a commercial property policy is cancelled? a. The first named insured b. Any insured c. A representative of the insured d. The Insurance Department

a. The first named insured

Oliver Dogwood was in an auto accident which destroyed his car. While investigating the accident, Adjuster Doright found that Mr. Dogwood paid $1,000 for the vehicle. After checking with others he found the same vehicle with an asking price of $1,700, a retail price of $2,150 and a dealer price of $1,750. What amount will Mr. Dogwood receive? a. $1,950 b. $2,150 c. $1,000 d. $1,700

b. $2,150

Which of the following would be considered a personal automobile comprehensive ("other than collision") claim? a. A shopping cart hitting the vehicle. b. A load of bricks falling from an apartment building onto the car. c. A hit and run driver striking the vehicle. d. An uninsured motorist colliding with the vehicle.

b. A load of bricks falling from an apartment building onto the car.

Which of the following correctly describes "Included Operations" as it relates to Automobile Physical Damage claims? a. The separate sections of the unibody frame that needed to be repaired, and the repair costs for each. b. The separate tasks that are included as part of a repair procedure, and the labor cost to perform these procedures. c. The separate tasks to repair an automobile are grouped into "included operations" and the labor costs for each group of tasks is listed on the repair estimate. d. The number of bolted parts that must be removed from a conventional body frame in order for repairs to be made, and the labor costs to remove them.

b. The separate tasks that are included as part of a repair procedure, and the labor cost to perform these procedures.

A commercial building worth $400,000 is insured under a Commercial Property policy for $240,000, and an 80% coinsurance clause applies. A $20,000 loss to the building has occurred. How much will the insured receive when a claim is filed? a. $14,000 b. $10,000 c. $12,000 d. $15,000

d. $15,000 The insured should have carried $320,000 to be in compliance with the 80% coinsurance clause, therefore the building is 25% underinsured, penalizing the insured. $240,000 (the amount carried) divided by $320,000 (the amount required) multiplied by $20,000 loss, equals $15,000.

The type of auto body frame that is most often used in today's automobile and is a single molded unit, is known as: a. A universal frame. b. A subframe. c. A conventional frame. d. A unibody frame.

d. A unibody frame.

Which of the following is NOT excluded under Section II - Liability of the Businessowners policy? a. Aircraft, auto or watercraft bodily injury b. Professional services bodily injury c. Pollution property damage d. Valet services bodily injury

d. Valet services bodily injury

The liability coverage of a personal auto policy does not apply to persons who: a. Are engaged in work for the insured as an employee of a business. b. Unintentionally cause bodily injury and property damage. c. Engage in car pools. d. Damage to a residence garage not owned by the insured.

a. Are engaged in work for the insured as an employee of a business.

All of the following statements regarding the Commercial Package Policy are correct, EXCEPT: a. Commercial Package Policies can include Ocean Marine and Aviation Insurance coverage. b. Almost all commercial risks are eligible for coverage under the Commercial Package Policy. c. The insured can choose a variety of eligible commercial coverages to tailor the package to specific business insurance needs. d. A complete Commercial Package Policy (CPP) includes a common policy Declarations page, a common policy Conditions sections, and two or more coverage parts.

a. Commercial Package Policies can include Ocean Marine and Aviation Insurance coverage.

A Texas insurer has notified a claimant that all or part of a claim will be paid. The claim must be paid not later than the ____ business day after the date notice is made. a. 10th b. 15th c. 5th d. 7th

c. 5th

Payment for a covered loss under the Standard Fire policy must be made within ____ days after a satisfactory proof of loss has been received by the insurer. a. 30 b. 90 c. 60 d. 45

c. 60

The liability section of a standardized personal auto policy will provide coverage for only one of the following vehicles. Which one is it? a. A taxi cab. b. His pick-up truck when it is rented to a neighbor. c. His family car while being used in car pool. d. A limousine he rents out for weddings and special occasions.

c. His family car while being used in car pool.

Mr. York had his pickup truck stolen while it was parked in a "no parking" zone outside his office. The value of the truck was $18,500. In addition, tools valued at $200, extra tires and hubcaps for the truck valued at $550 and a tarp worth $50 were in the truck. Mr. York has a collision deductible of $500 and a comprehensive deductible of $250. The insurance company will pay what amount? a. $18,000 b. $18,250 c. $19,050 d. $18,800

d. $18,800 The loss of the truck plus the extra tires and hubcaps would be considered in this claim. These total $19,050 less the deductible of $250 equals $18,800.

Which of the following represents an indirect loss? a. A tree fell on a house, causing a hole in the roof, which later allowed rain to enter b. Rain entered a house after a tree fell onto it, later causing mold to develop c. Mold developed in a house, later causing the occupants to become very ill d. A kitchen fire made a house untenable, causing the occupants to incur hotel charges

d. A kitchen fire made a house untenable, causing the occupants to incur hotel charges

Inland marine policies can cover all of the following, EXCEPT: a. Property of a moveable nature b. Bridges, Piers and Decks c. Radio and TV Towers d. Aircraft

d. Aircraft

An employee who was injured on the job in Texas would be considered "intoxicated" at the time of the injury in all of the following circumstances, EXCEPT: a. The injured workers was under the influence of alcohol. b. The injured worker was under the influence of a drug that was taken in accordance with a prescription written by a physician. c. The injured worker had been abusing glue or aerosol paint. d. The injured worker was under the influence of a controlled substance that was not a prescription.

b. The injured worker was under the influence of a drug that was taken in accordance with a prescription written by a physician.

Which of the following would not be covered under the personal effects form? a. Tickets b. Money c. Passports d. All of the responses listed are correct.

d. All of the responses listed are correct.

A commercial umbrella liability policy with a supplemental reporting period extends the period for reporting claims to: a. A period specified in the policy. b. 60 days following expiration of the policy. c. Five years or inception of a new policy, whichever comes first. d. An unlimited period following expiration of the policy.

d. An unlimited period following expiration of the policy.

Which of the following can be covered under a commercial inland marine policy? a. A tenant occupied building b. Contents in a super market c. All financial institutions d. Bridges

d. Bridges

Which of the following is the provision in a liability policy that allows an insured to report incidents or circumstances that result in claims being filed in the future? a. Defense Within Limits provision. b. Other Insurance provision. c. Supplementary Payments provision. d. Discovery provision.

d. Discovery provision.

Under the appraisal clause in a commercial inland form, which of the following is true? a. The insurer still retains its right to deny the claim entirely b. It is not binding on all parties c. The insurer is not bound by the decision of the appraisers and/or umpire d. The insurer must seek legal action under the appraisal clause to enforce the terms and conditions

a. The insurer still retains its right to deny the claim entirely

The HO-3 provides coverage against how many perils on covered structures? a. 17 perils b. 18 perils c. 24 perils d. None of the responses are correct

d. None of the responses are correct

What is a Reporting Form policy? a. The form that must be filled out to report a loss of personal property to the insurer b. A policy that requires the insured to report the value of the property insured at certain time intervals c. The same as a personal articles floater in that it specifically lists each jewelry item d. None of the responses are correct

b. A policy that requires the insured to report the value of the property insured at certain time intervals

Linda has received an inquiry from the Texas Commissioner. She realizes that she is required by law to respond to the inquiry, however her response contains information that is confidential and privileged. Which of the following is true of Linda's response to the Commissioner's inquiry? a. The information must be provided to the Commissioner and when Linda sends her response in writing, the information is no longer considered privileged or confidential. b. The information will remain confidential and privileged until it is introduced as evidence in an administrative hearing or in a court of law. c. The portion of Linda's response that is privileged and confidential will be redacted after the Commissioner reviews her response. d. Linda is prohibited by law from including privileged or confidential information in her response.

b. The information will remain confidential and privileged until it is introduced as evidence in an administrative hearing or in a court of law.

When Todd, an adjuster, shows up to a claimant's property to adjust a claim, he finds that the claimant has an attorney with him. From this point on: a. Todd should deal directly with the attorney, not the claimant. b. Todd should hire an attorney of his own. c. Todd knows negotiations will be difficult, and should try to circumvent the attorney. d. Todd should deal with both the attorney, and the claimant, depending on the topics being discussed.

a. Todd should deal directly with the attorney, not the claimant.

Which of the following is not an implied warranty under an ocean marine policy? a. Seaworthiness of the vessel b. Legality c. No deviation in the voyage d. Protection and indemnity

d. Protection and indemnity

If both the Condominium Association form and the Condominium Unit-Owners form cover the same property, how would a covered loss be handled? a. Each policy will pay on a pro-rata basis. b. Association policy will be excess over the Unit-Owner's policy. c. Each policy will share equally in the loss. d. The Unit-Owner's policy will be excess over the Association policy.

d. The Unit-Owner's policy will be excess over the Association policy.

When is abandonment of insured property to an insurer permitted under a commercial property policy? a. When written prior notice is lawfully delivered to the insurer b. When the insured desires immediate settlement c. When the property is certain to be a total loss d. Never

d. Never

Trenton has just landed his plane and it is still moving very quickly down the runway when another plane crashes into the side of his plane and causes extensive damage. For the purposes of Aviation coverage, this occurrence took place while Trenton's plane was: a. In flight. b. Not in motion. c. In transition. d. Not in flight.

d. Not in flight.

Estoppel is best exemplified by which of the following? a. An insurer is prohibited from denying a claim that its appointed producer advised the insured was covered. b. An insurance producer is prohibited from selling insurance with unauthorized insurers. c. An insurer is prohibited from appointing persons without a valid producer's license. d. An insured is prohibited from suing its insurer if the policy was cancelled for non-payment of premium.

a. An insurer is prohibited from denying a claim that its appointed producer advised the insured was covered.

Which of the following property is excluded under homeowner personal property coverages? a. A valuable baseball card collection owned by the named insured's son that is covered under a separate personal articles floater. b. A suitcase full of clothes while the named insured is vacationing in Russia. c. A suitcase full of clothes while the named insured is vacationing in Mexico. d. A valuable baseball card collection that the named insured's young son owns, but the agent is unaware of.

a. A valuable baseball card collection owned by the named insured's son that is covered under a separate personal articles floater.

In which of the following cases of alleged negligence is there no legal duty owed? a. Bill was restoring an antique auto at his auto store's garage when Jeff drove by the garage. Jeff slowed his car and looked over his shoulder to admire the antique car. Suddenly his car struck a telephone pole. He charged Bill for damages. b. Jack was having a walkway at his business replaced. There were still several large spaces to be filled when a mail carrier, whose back was broken from the fall, charged jack for damages. c. Irene purchased several jars of crabapple jam from a gourmet jam and jelly company. She suffered severe gastric disturbance as a result of eating the jam and claimed damages from the jam and jelly company. d. Susan accidentally dropped a bowling ball on the foot of another bowler.

a. Bill was restoring an antique auto at his auto store's garage when Jeff drove by the garage. Jeff slowed his car and looked over his shoulder to admire the antique car. Suddenly his car struck a telephone pole. He charged Bill for damages.

The penalty for failure to satisfy a coinsurance requirement of a property insurance policy is: a. Only a portion of a partial loss will be paid. b. No coverage will be in effect in the event of a total loss. c. There will be no coverage in the event of a partial loss. d. Only a portion of the policy limit will be paid if there is a total loss.

a. Only a portion of a partial loss will be paid.

The three parties to a contract bond are: a. Principal, obligee, surety. b. Obligor, principal, surety. c. Principal, obligee, employee. d. Employee, obligor, principal.

a. Principal, obligee, surety.

A risk where both profit and loss are possible is known as: a. Speculative. b. Fundamental. c. Pure. d. Dynamic.

a. Speculative.

Brian Hendricks is adequately insured with a Homeowner Policy containing a requirement to carry at least 80% of replacement cost value. If he suffered a partial loss to his dwelling structure he would be able to collect which of the following percentages of loss? a. 75% b. 90% c. 100% d. 80%

c. 100% Since the insured is complying with the 80% clause, Brian is entitled to be paid for the entire loss less the deductible.

Personal Liability Coverage of the Homeowners program covers the insured for all of the following, EXCEPT: a. Business activities. b. Personal activities anywhere in the United States. c. Personal activities outside of the United States. d. Personal activities of the insured's young children.

a. Business activities.

Under a Personal Watercraft, Boatowners or Yacht policy, how are physical damage claims settled? a. On an actual cash value (ACV) basis. b. On a replacement cost basis. c. On a functional replacement cost basis. d. On an agreed amount basis.

a. On an actual cash value (ACV) basis.

In a contract of adhesion, how are disputes between the parties generally resolved in court? a. Unclear provisions in the contract will be resolved in favor of the non-writing party's reasonable interpretation of those provisions. b. Both parties must adhere strictly to the contract terms for the contract to be valid. c. The party which most closely adhered to the contract provisions will win the dispute. d. The dispute must be resolved by binding arbitration.

a. Unclear provisions in the contract will be resolved in favor of the non-writing party's reasonable interpretation of those provisions.

Which type of damages is not intended to indemnify the plaintiff? a. Special damages b. Punitive damages c. General damages d. Compensatory damages

b. Punitive damages

Coverage A of the Homeowners policy would provide coverage for all of the following, EXCEPT: a. A storage shed connected to the dwelling by a utility line. b. The residence being insured. c. Structures attached to the dwelling. d. Material and supplies intended for repair or alteration of the dwelling.

a. A storage shed connected to the dwelling by a utility line.

An insurance binder is: a. Evidence of permanent insurance. b. Temporary evidence of insurance coverage. c. A complete policy. d. Proof of insuring agreements and exclusions.

b. Temporary evidence of insurance coverage.

Who is responsible to pay the premiums on a Workers' Compensation policy? a. The employee. b. The employer. c. The employer pays the largest percentage, but the employee pays a portion. d. The state Workers' Compensation fund.

b. The employer.

The insured sets a fire to his home and is found to be guilty of arson. There is a lien on the burned property by a mortgage company in the amount of $150,000. The property is insured for $300,000 and is a total loss. The personal property of the insured, covered separately by a Homeowners policy for $150,000, is also a total loss. How will this claim most likely be paid? a. The insured is paid a total of $300,000. b. The mortgagee is paid $150,000. c. The insured is paid $150,000 for the personal property loss. d. Since the loss is from an intentional act of the insured the entire loss is denied.

b. The mortgagee is paid $150,000.