Colorado Property - Certificate Exam
Which of the following policy components specifies the maximum amount an insured may collect for a loss? A) Declarations B) Loss estimation C) Conditions D) Policy limits
D) Policy limits
Which of the following is NOT considered a rebate? A) Any inducement to buy that is not stated in the policy B) Giving protective insureds $100 gift cards in return for buying a policy C) Offering a protective insured a multi-policy discount D) Returning part of a premium to the insured
D) Returning part of a premium to the insured
Which of the following commercial property condition form ensures that adjustments to coverages by an insurer must apply to all existing policies? A) Other insurance B) Subrogation C) Legal action against an insurer D) Liberalization
D) Liberalization
Which of the following statements concerning clerical and administration personnel who do not solicit insurance or get commission is true? A) Must be licensed within 1 year of hire date B) Need not be licensed C) Must be licensed D) Only need to be licensed after they have been employed as a customer service representative for over 6 months
B) Need not be licensed
Which of the following lists specific perils covered under an insurance policy? A) Specified perils B) Named perils C) Indexed perils D) Open perils
B) Named perils
Which of the following coverages in the dwelling policy is for indirect losses? A) Dwelling B) Additional Living Expenses C) Other Structures D) Personal Property
B) Additional Living Expenses
How much is covered for debris removal under the HO property additional coverages? A) Nothing, unless coverage is added by an endorsement B) All reasonable costs C) 90% of the total cost of cleanup D) Everything after a $200 deductible
B) All reasonable costs
Under the businessowners property coverage form, which common policy condition addresses what will happen if the insured and the insurer do not agree on the amount of damage? A) Subrogation B) Arbitration C) Loss payment D) Appraisal
B) Arbitration
All of the following are essential elements of a contract EXCEPT A) Competent parties B) Counteroffer C) Legal purpose D) Consideration
B) Counteroffer
Which of the following is the Fair Rental Value coverage in the dwelling policy? A) Coverage C B) Coverage D C) Coverage E D) Coverage F
B) Coverage D
The builders risk coverage form includes up to how much coverage for a fire department service charge? A) $500 B) $750 C) $1,000 D) $1,500
C) $1,000
After receiving proof of loss from an insured, an insurer must notify the insured of its intent to repair or replace damaged or lost property within A) 10 days B) 20 days C) 30 days D) 60 days
C) 30 days
Under which of the following circumstances would coverage under the builders risk form end? A) 45 days after the building is put to its intended use B) 60 days after the construction has ended C) 60 days after the constructed building is occupied D) When construction stops for the winter
C) 60 days after the constructed building is occupied
Under a commercial property special form, furs and fur garments are covered up to A) $1,000 B) $1,500 C) $2,000 D) $2,500
D) $2,500
Which of the following would NOT be covered under a dwelling property policy? A) A vacation rental that is unoccupied for 3 or more months a year B) Residences occupied by both an owner and a tenant C) Residence undergoing construction D) A farm used to raise and sell cattle
D) A farm used to raise and sell cattle
Statements made by an applicant for an insurance policy that are true to the best of the applicant's knowledge are referred to as A) Material information B) Indemnity C) Warranties D) Representations
D) Representations
The principle of negligence is defined as A) A wrongful act or the violation of someone's rights that leads to legal liability B) The failure to use the care that a reasonable person would have taken under the similar circumstance C) Lessening the possibility or severity of a loss D) A method of dealing with risk by deliberately keeping away from it
B) The failure to use the care that a reasonable person would have taken under the similar circumstance
A couple has just purchased a condominium. Which of the following policies would they use to insure their dwelling? A) HO-2 B) HO-4 C) HO-5 D) HO-6
D) HO-6
Which types of government is primarily concerned with regulating insurance? A) County B) City C) State D) Federal
C) State
Which of the following principles describes restoring the insured to his or her original financial status after a loss? A) Indemnity B) Warranty C) Utmost good faith D) Resonable expectations
A) Indemnity
A basic dwelling policy automatically provides coverage against fire, lightning, and A) Internal explosion B) Riot C) Smoke D) Windstorm
A) Internal explosion
An individual decides that since he is going to die someday anyway, and since he will be covered by insurance until then, he might as well drink and smoke. From the underwriter's perspective, this is an example of A) Morale hazard B) Exposure C) Physical hazard D) Peril
A) Morale hazard
In insurance, the uncertainty of an individual sustaining a loss in the future is classified as a/an A) Risk B) Hazard C) Peril D) Unknown event
A) Risk
Which of the following would be considered a peril? A) Gambling B) Fire C) Smoking D) Driving too fast
B) Fire
The maximum amount of money the insurance company will pay for a particular loss, or for loss during a period of time is known as what? A) Liberalization B) Limits of liability C) Estoppel D) Indemnity
B) Limits of liability
The chance of loss without any possibility for gain is known as a/an A) Uninsurable risk B) Prue risk C) Insurable interest D) Speculative risk
B) Prue risk
Who is responsible for covering the expenses associated with the examination of domestic insurers? A) The policyowners B) The insurer being examined C) The Department of Insurance D) The Insurance Guaranty Association
B) The insurer being examined
Which of the following is defined as an absolutely true statement upon which the validity of the insurance policy depends? A) Disclosure B) Warranty C) Endorsement D) Representation
B) Warranty
Which of the following causes of loss is covered under a commercial property basic form? A) Nuclear hazard B) Dry rot C) Volcanic eruption D) Earth movement
C) Volcanic eruption
How are premiums affected if an insurance policy has the additional or supplementary coverage provision? A) The premium is split between the policy coverage and the additional coverage B) The premium decreases C) The premium increases D) The premium is not affected
D) The premium is not affected
Which of the following homeowners forms would be best for a person renting half a duplex? A) Contents broad (HO-4) B) Unit-owners form (HO-6) C) Broad form (HO-2) D) Special form (HO-3)
A) Contents broad (HO-4)
Under an Earthquake and Volcanic Eruption Endorsement on a commercial property policy, multiple earthquakes are consolidated into one single event if they occur within a span of A) 7 days B) 10 days C) 15 days D) 30 days
A) 7 days
Which of the following principles describes creating or increasing the chance of loss? A) Hazard B) Indemnity C) Warranty D) Risk
A) Hazard
Liability imposed on a parent as a result of the actions of a child would be considered A) Vicarious liability B) Absolute C) Comparative negligence D) Strict liability
A) Vicarious liability
In insurance, the principle of subrogation is defined as A) When an insurer may deny paying a claim because of fraud on the part of an insured B) The required amount to pay for property loss that is calculated based on the property's current replacement value minus depreciation C) A unit of measure used to determine rates charged for insurance coverage D) When an insurer who pays a claim can seek damages to recover the loss from a third party
D) When an insurer who pays a claim can seek damages to recover the loss from a third party
Which of the following dwelling policies insures a structure on an actual cash value basis? A) DP-1 B) DP-2 C) DP-3 D) DP-6
A) DP-1
All of the following are perils covered under the broad form dwelling policy EXCEPT A) Theft B) Fire C) Lightning D) Collapse
A) Theft
Which of the following is an example of an indirect loss? A) Bedroom furniture lost in a fire originating in the kitchen B) An insured not being able to stay in the home and having to stay in a hotel because of the fire damage to the home C) Property being taken from inside a home from a burglary D) A tornado taking the roof off of a home
B) An insured not being able to stay in the home and having to stay in a hotel because of the fire damage to the home
Which of the following statements concerning clerical and administration personnel who do not solicit insurance or get commissions is true? A) Must be licensed within 1 year of hire date B) Need not be licensed C) Must be licensed D) Only need to be licensed after they have been employed as a customer service representative for over 6 months
B) Need not be licensed
Which of the following refers to the upper limit a liability policy will pay out for all claims that arise from a single accident? A) Per person B) Per occurrence C) Combined single limits D) Split limits
B) Per occurrence
What insurance principle means something of value that each party gives to the other? A) Indemnity B) Offer C) Consideration D) Assignment
C) Consideration
Which of the following coverage parts would be in a commercial package policy? A) Workers Compensation B) Homeowners C) General Liability D) Dwelling
C) General Liability
Once a commercial policy ends, how long does the insurer have to audit the insured's books and records relating to the policy? A) 6 months B) 12 months C) 2 years D) 3 years
D) 3 years
Under Coverage C of a homeowners policy, the amount of insurance provided to cover personal property of the insured is A) Equal to the amount provided as Coverage B B) Equal to the amount provided as Coverage A C) 50% of the amount provided as Coverage B D) 50% of the amount provided as Coverage A
D) 50% of the amount provided as Coverage A
In order for a dwelling to be covered on a replacement cost basis, the dwelling must be insured up to at least A) 20% of the replacement cost B) 40% of the replacement cost C) 60% of the replacement cost D) 80% of the replacement cost
D) 80% of the replacement cost
A company has a businessowners policy on a building with estimated replacement cost $300,000. The company carries $150,000 of insurance. If a loss occurs, how much will the insured company be paid? A) Nothing because the company failed to carry the required insurance amount B) Up tp $300,000 for the loss C) Up to $150,000 for the loss D) The coinsurance formula would apply
D) The coinsurance formula would apply
In insurance contracts, consideration on the part of the insured is A) Warranties made in the application B) The submission of proof of loss C) Transferring policy rights to another person D) The payment of premiums and representations made in the application
D) The payment of premiums and representations made in the application
A single insurance policy that covers multiple classes of property at a single location is called A) Broad insurance B) Umbrella insurance C) Specific insurance D) Blanket insurance
D) Blanket insurance
What is the main purpose of the Gramm-Leach-Bliley Act? A) Protection of consumers against insolvent insurers B) Prevention of terrorism actives C) Consumer privacy protection D) Fraud prevention
D) Fraud prevention
A BOP (businessowners policy) is most similar to A) Auto B) Umbrella C) Cargo D) Homeowners
D) Homeowners
Limits of liability for a covered dwelling under construction are based on the A) Estimated value of the structure, prior to construction B) Current value of the structure C) Completed value of the structure D) Completed value of the structure minus the repair costs
C) Completed value of the structure
Which of the following homeowners policy forms covers condominium unit owners? A) HO-2 B) HO-4 C) HO-6 D) HO-8
C) HO-6
If an insured changes his or her name, the change may be reflected on the insurance policy by attaching what to the policy? A) An additional coverage form B) A notarized authorization C) An additional insuring agreement D) A signed endorsement
D) A signed endorsement
Which of the following coverage forms insures a building under construction? A) Commercial general liability B) Businessowners C) Business income D) Builders risk
D) Builders risk
Colorado's Insurance Continuing Education law requires A) 24 credit hours every 2 years regardless of the number of licenses held B) Exemptions for those holding professional designations C) 24 credit hours 2 years for each license held D) New licenses to obtain 24 hours prior to their first renewal date
A) 24 credit hours every 2 years regardless of the number of licenses held
Which of the following actions would be considered an offer? A) An applicant submitting the application B) An insurer issuing a policy C) An insurer's underwriter approving the application D) An agent explaining a policy to a potential applicant
C) An insurer's underwriter approving the application
The Commissioner has issued an emergency cease and desist order. How must it be communicated to the agent? A) Via Commissioner's employee or representative B) By first class mail C) By certified mail D) Via courier
C) By certified mail
All of the following are penalties for violating provisions of the Insurance Code EXCEPT A) Imprisonment B) Payment of contractual obligation C) License revocation D) Monetary fines
A) Imprisonment
If an insurer terminates an insurance policy at the end of the policy period, the action is referred to as A) Revocation B) Abandonment C) Nonrenewal D) Cancelation
C) Nonrenewal
Commercial property policies written together into a single contract are referred to as A) Combined policies B) General liability policies C) Package policies D) Monoline policies
C) Package policies
A property is insured against damages from hail. Hail would be considered A) Condition B) Loss C) Peril D) Hazard
C) Peril
Which of the following insurance principles states that the larger the number of people with a similar exposure to loss, the more predictable actual losses will be? A) Exposure units B) Underwriting C) The law of large numbers D) Adverse selection
C) The law of large numbers
In homeowners policies, indirect losses are covered by A) Coverage A B) Coverage B C) Coverage C D) Coverage D
D) Coverage D
Which of the following are printed addendums to a contract that are used to change the policy's original terms, conditions, or coverages? A) Prospectuses D) Declarations C) Conditions D) Endorsements
D) Endorsements