CASUALTY INSURANCE Qz
An agency wants to obtain license statistics on one of its new producers. It requests a document that the insurance department can produce, which lists the producers license status, lines of license that the producer can transact and other information. This report is called a ; A) license statistics report. B) certification of license status C) confirmation of insurance licensure D) producers report
B) certification of license status
which of the following is TRUE regarding inspection and surveys as a common policy condition? A) it doesnt allow findings to be used to establishing premium charges. B) it grants the insurer the right to make inspections regarding issued insurance C) it doesnt allow the insurers to make recommendations D) it requires the insurer to conduct an inspection at least once during the policy period.
B) it grants the insurer the right to make inspections regarding issued insurance
there are 2 rating plans available for use to adjust the premium for workers comp. They are ... A) negligence rating and non negligence rating. B) retrospective rating and experience rating C) positive rating and negative rating. D) retroactive rating and active rating
B) retrospective rating and experience rating
Coverage B - Personal and Advertising injury liability responds to claims arising from: A) premises and operations injury claims B) suits alleging infringement of copyright C) Score of patent protecting D) Failure of products to perform as advertised
B) suits alleging infringement of copyright
rates for NJ personal auto insurance plan are set by adjusting _________ upwards by a specific % for insureds having 1 or more moving violations, 4 or more points, or an at-fault accident within the preceding 3 years. A) regional average rates B) territorial base rates C) state base rates D) national average rates
B) territorial base rates
What is the required limit of liability for property damage in auto policies in NEW JERSEY? A) $500 B) $5,000 C) $30,000 D) $15,000
B) $5,000
The commissioner believes that an insurance regulation has been violated by a licensee and decides to conduct a heating. The licensee must get written notice of the hearings date and time... A) 31 days before. B) 10 days before. C) 14 days before D) 20 days before.
B) 10 days before.
a lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lender may be guilty of; A) illegal inducement B) coercion C) misrepresentation D) unfair discrimination
B) coercion
An applicant for property insurance owns a building in which combustible materials are stored in the furnace room. From an underwriting standpoint, this risk would likely be considered a ; A) physical hazard B) morale hazard C) speculative risk D) moral hazard
B) morale hazard This careless attitude is an example of B) morale hazard
Which of the following is NOT considered part of an insured? A) premium payments B) promise to submit timely claims C) representations on the application D) submitting a statement of good health
B) promise to submit timely claims the binding force in any contract is consideration. Consideration on part of the insured = payment of premiums and health representations made on application. Consideration for the insurer is the promise to pay claims in event of loss.
Which of the following would NOT generally be included in the supplementary payments portion of a liability policy? A) cost of first aid to others at the time of an accident B) expenses the insured incurs as part of defense at the company's request C) Loss of earning due to the accident D) Damage to property owned by the insured
D) Damage to property owned by the insured Property insurance would be needed to cover this loss.
Which method of loss valuation is contrary to the basic concept of indemnity? A) Functional replacement cost B) Market value C) Agreed value D) Replacement cost
D) Replacement cost it may provide the insured with a settlement in excess of the property's actual cash value. (usually it's ACV - Depreciation = settlement)
For a contract to be enforceable by law, the purpose of the contract must be: A) for financial gain B) for benefit of the general public C) of pure intent D) legal and not against public policy.
D) legal and not against public policy.
a licensee is charged (at a hearing) with knowingly violating an insurance regulation. Along with a cease and desist order, what will the licensee most likely be fined PER charge? A) $5000 B) $1000 C) $2000 D) $3000
A) $5000 after the hearing the commissioner will decide if the violation occurred. if so he will issue a cease and desist order and may levy fine of up to $1000 for each charge. If he determines that the person knew or should have known that they were violating the law, the fine CAN be increased to $5000 per charge.
A trucking company has $1 million umbrella policy in place. The owner agrees to maintain a 200/500/100 limit on auto liability, and a personal liability of $400,000. After a car accident, the business is sued. Injuries are awarded to a single injured party in the amount of $300,000. It turned out that the business actually carried only 100/250/50 auto liability limits. What's the total amount the umbrella policy will pay? A) $50,000 B) $100,000 C) $200,000 D) $300,000
B) $100,000 The umbrella policy pays as if the underlying limits were in effect. The business itself would be responsible for the difference.
Provided that it is a first offense, what is the maximum penalty for failing to respond to a subpoena? A) $500 B) $100 C) $10,000 D) $5,000
D) $5,000 Any person violating an insurance law or regulation, penalty is no more than $5,000 for first offense and no more than $10,000 for each subsequent offense.
A licensee violated an insurance regulation. A hearing is held and person is found guilty. If this is the persons first offense the penalty is no more than: A) $5,000 B) $1,000 C) $1,500 D) 3,000
A) $5,000 The first offense penalty is NO MORE than 5,000. Following violations are NO MORE than 10,000.
Space Rockets Inc makes rockets and has 12 employees. The company is in Atlanta GA. Georgia has compulsory workers compensation laws. Space Rockets owner thinks his company is too small and unprofitable to carry the workers comp plan mandated by the state. Possible consequences of non compliance include ALL of the following EXCEPT; A) Forced payment of billing for services rendered by any private insurer that binds coverage based on an employee's request for coverage. B) Closure of the business as a public nuisance by state officials. C) payment for injuries in monetary amounts stipulated by the state with respect to workers comp plans. D) payment of fines and penalties as dictated by state compliance authorities
A) Forced payment of billing for services rendered by any private insurer that binds coverage based on an employee's request for coverage. An employee cannot contract for workers comp coverage for an employer without the express authority of that employer.
Which would NOT be covered by an insured's uninsured motorist coverage? A) The insured causes a head-on collision with the car of an uninsured motorist. B) The insured's neighbor borrowed the insureds car and was hit by an uninsured motorist. C) The insured's car is hit by someone whose auto insurer is insolvent D) The insured's son is struck by a hit and run driver.
A) The insured causes a head-on collision with the car of an uninsured motorist. Uninsured motorist coverage applies to the insured, resident relatives, and those occupying the covered vehicle/car.
The commissioner conducts an investigation regarding a possible misconduct. At a hearing the licensee is found guilty for knowingly violation a cease and desist order. What is the likely penalty? A) 15,000 each violation B) 20,000 each violation C) 5,000 each violation D) 10,000 each violation
B) 5,000 each violation If a person violates a cease and desist order the commissioner can turn the matter over the the new jersey superior court for further legal action and can assess a fine of up to 5000 for each violation.
Its the job of what authority to appoint and remove officers and other personnel employed within the department? A) Department of Insurance B) Commissioner C) Governor D) Insurance Officer regulation board
B) Commissioner he appoints and removes officers+personnel in the department, as well as upholding insurance laws of the state.
Which of the following is correct regarding domestic coverage in a Homeowners Policy? A) Household employees in NJ are required to have liability on their person and dependents under the domestic coverage act of 1984. B) Every homeowner insurance policy issued in NJ must provide coverage against liability from any injured domestic servant or household employee and dependents. C) Every H.O. policy purchased before 1984 when renewed in NJ is not required to provide liability coverage from any injured domestic service or household employee
B) Every homeowner insurance policy issued in NJ must provide coverage against liability from any injured domestic servant or household employee and dependents.
Which of the following is eligible for a business owners policy? A) a mercantile risk with gross sales of $4 million B) a 5-story office building with less than 100,000 sq ft total area. C) an 8 story office building D) a convenience store with gas pumps with 60% gross sales from gasoline sales
B) a 5-story office building with less than 100,000 sq ft total area. Maximum eligibility requirements for a BOP (business owners policy) are: 6 stories high; 25,000 sq ft mercantile space in apartment building; 100,000 sq ft for the office building; $3 million gross sales
Which of the following is the closest term to an "authorized" insurer? A) licensed B) legal C) admitted D) certified
C) admitted Insurers who meet the states financial requirements and are approved to transact business in the state are considered authorized or "ADMITTED" into the state as a legal insurer.
The Garage Coverage Form is written to cover the insurance needs of an insured in the business of selling, repairing and servicing or storing automobiles... which of the following coverage is not included in garage policy? A) premises and operations liability B) product liability C) physical damage on a customers auto D) auto liability
C) physical damage on a customers auto The garage policy has a care, custody, and control exclusion which would eliminate coverage for any damages to a customers auto. this exposure would need to be covered under a garage keepers policy
An insurance producer suffers an injury and is permanently disabled. In order to continue his business, his wife establishes an agreement with another producer to continue his business. How long is this authorization valid for? A) 365 days B) 30 days C) 90 days D) 180 days
D) 180 days
If a car is stolen and left in a snow bank, causing the radiator to freeze and sustain heavy damage us the damage covered by the auto policy? A) Yes, there is no exclusion for freezing B) No, freezing is never covered C) No, theft is never covered D) Yes, freezing exclusion is removed if the car is stolen
D) Yes freezing exclusion is removed if car is stolen The exclusion for damage caused by freezing and mechanical breakdown does not apply if the entire car has been stolen.
Which of the following conditions allows the insurer to examine the insured's records at the end of a poliocy term to make sure an adequate fee is being collected for the exposure? A) insurable interest evaluation B) underwriting C) excess liability evaluation D) deposit premium audit
D) deposit premium audit is an estimated premium paid in advance at the time the policy is issued that may be adjusted based on actual exposures. The actual premium can be determined by the audit at the end of the insuring period.
Which of the following does the term PROXIMATE CAUSE refer to? A) injury that leads to a monetary compensation B) duty of the defendant to act C) reason for filing a lawsuit D) negligence that leads to an injury
D) negligence that leads to an injury Proximate cause is a reasonably foreseeable act or event that results in injury or damage. Negligence may often be the proximate cause of the damage; without it, the accident would not have happened. This is also called direct liability.
Refusing to pay claims without conducting a reasonable investigation based upon all available information is an example of: A) An unfair claims practice B) A Fair trade practice C) A typical insurance practice D) A required practice
A) An unfair claims practice Refusing to pay claims without conducting a reasonable investigation based upon all information is an unfair claims practice.
How much is the premium for the "dwelling under construction endorsement" in a dwelling policy? A) The average amount of insurance during construction B) 75% of the gross premium C) the full value of the house D) 50% of the actual value premium
A) The average amount of insurance during construction The premium is based on the average value of the house and building materials from the first day of construction until completion.
The obligation to compensate injured workers without regard to fault or negligence is known as: A) Compulsory liability B) Absolute liability C) Employers liability D) Elective liability
B) Absolute liability
Which act created laws to protect policyholders against the adverse effect of unfair discrimination rates? A) Fair credit reporting act B) commercial insurance deregulation act of 1982 C) commercial insurance deregulation act of 1965 D) Unfair practices act
B) commercial insurance deregulation act of 1982
which of the following is NOT settles on an actual cash value basis while covered under the business property coverage form? A) manuscripts B) works of art or antiques C) valuable papers and records D) property of others
C) valuable papers and records Valuable papers and records are valued at the cost of blank materials for reproduction the records and labor to copy the records.
A couple notice that several items of personal property were missing from their home. There hasn't been any apparent robbery committed, the items are merely missing and have seemingly disappeared mysteriously. The couple will A) need to call the local authorities and report the mysterious disappearance of goods. B) not be able to make a claim for the property since it is considered to have mysteriously disappeared. C) not be able to file a report with authorities without proof of purchase and proof of loss of the goods in question D) need to report the loss to their insurance company so that a claim can be filed and paid.
B) not be able to make a claim for the property since it is considered to have mysteriously disappeared.
If an insurance policy HAS the additional coverage provision, how does it affect the policy premium? A) premium will be calculated on a pro rata basis based on the amount of additional coverage B) there is no additional premium C) premium will be calculated when a specific loss covered by this provision occurs. D) additional premium will be assessed
B) there is no additional premium "additional coverage" is a provision in an insurance policy that provides an additional amount of coverage for specific loss expense at no additional premium.
Which statement is an accurate description of life insurance policy dividends? A) they are guaranteed to be paid and they are taxable as income. B) they are likely to be larger in nonparticipating policies C) they are not taxable and are not guaranteed D they are paid as return of premium to policy owners by stock insurers.
C) they are not taxable and are not guaranteed policy dividends (considered a return of excess premium by a mutual insurer) are not taxable since the original premium was paid with after-tax dollars. future dividends cannot be predicted nor guaranteed.
Within how long of completing an approved pre licensing education course must a candidate submit a license application? A) 3 months B) 6 months C) 1 year D) 2 years
D) 2 years
Licensees must file with the department, a branch office registration form within how many days before the business is first conducted there? A) 10 B) 15 C) 20 D) 30
D) 30 days This certificate expires at the same time as the producer's own license.
In NJ, if the insurer chooses NOT to renew a casualty policy on the anniversary date, the insured must receive notice how many days before the expiration date of coverage? A) 10 B) 30 C) 45 D) 60
D) 60
through which branch(es) of government is insurance currently regulated? A) LEGISLATIVE B) JUDICIAL C) EXECUTIVE D) ALL OF THE ABOVE
D) ALL OF THE ABOVE. insurance is regulated by each state through all three branches of government.
the supplementary payments section of the commercial general liability policy would cover A) up to $500 for the cost of required bail bonds B) court costs assessed against the insured in a suit C) loss of the insureds earnings up to $300 a day D) up to the policy limit for bodily injury or property damage.
B) court costs assessed against the insured in a suit. sup. payments are usually; up to $250 for the cost of required bail bonds; up to $250 a day for loss of income; cost taxed against the insured; pre judgement interest and interest that accrues on any judgement
when an insured purchaed his hime 10 yrs ago for $80,000 it had a replacement cost of $100,000. Today the home has a replacement cost of $200,000 and has depreciated 4% each year. The insureds home has an ACV (actual cash value) of how much? A) $80,000 B) $100,000 C) $120,000 D) $60,000
C) $120,000 ACV is replacement cost - depreciation. (200,000-80,000(4% each year for 10 years)) = 120,000
When an insured gardener was spraying chemicals, he failed to notice the wind drifting the spray onto a neighbors yard where he damaged the flowerbed. The insured was found to be legally liable for this damage. This is an example of: A) Comparative Negligence B) Gross Negligence C) Vicarious liability D) Intervening cause
C) Vicarious liability Vicarious liability may be imposed on one person ads the results of the acts of another person who is acting on their behalf or under their control. Employers often are liable for the acts of employees acting within the scope of their employment. Parents are held liable for the acts of their children who are under their control.
What's the fine for violating the Commissioners cease and desist order? A) $10,000 B) $20,000 C) $1,000 D) $5,000
D) $5,000
Lily is driving her car through a residential area and loses control of her car, crashes into Max's porch. Max is injured. Lily's liability insurance policy has a limit set a $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 Lily have? A) Split B) Aggregate C) Per occurrence D) Combined single
D) Combined single. is a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined resulting from one accident or occurrence.
In which situation would off premises coverage in a broad theft endorsement apply? A) The insureds live in maids quarters is burglarized B) The insureds jewelry is stolen from her vacation home after she returns home. C) The insured vacuum cleaner is stolen from her apartment D) The insured camera is stolen from his vacation home while he is there.
D) The insured camera is stolen from his vacation home while he is there. This endorsement covers property that is either owned or used by the insured when he or she is away from the described premises.
classes of employees exempt from workers comp requirements include which of the following? A) domestic servants and household employees B) relief employment by the state C) casual employees D) all of the above
D) all of the above