Final Test study
A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss?
$30,000
If a property is covered by company A for $20,000 and company B covers the same property for $40,000, how much will company A pay on a $24,000 loss?
$8,000
The removal coverage 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
A licensed agent must complete how many hours of continuing education in the agent's line of authority every licensing period?
5 years, 24 hours continuing education
#16. Assuming the insurer and the insured agree to the amount payable for a loss covered under a dwelling policy, how soon after the insurer has received proof of loss must it make payment?
60 days
when an insured purchased a health insurance policy, he asked his agent to explain the different between a policy that is guaranteed renewable and policy that is noncancellable. Which of the following would be a correct response to this question?
A guaranteed renewable policy's premium rate may be changed by the insurer for an entire class of policyholders, and under the noncancellable policy, the rates cannot be changed
A business owners policy is
A self-contained prepackaged policy
What is the difference between a fidelity bond and surety bond?
A surety bond guarantees something will happen ; a fidelity bond guarantees something will not happen
A business income coverage form would cover all of the following situations EXCEPT
A union strike of construction workers causes the repair of the insured's building to be delayed for a period of time.
What is a Certificate of Insurance?
A written document showing the types and amounts of insurance that have been issued to the insured
if the insured under a disability income insurance policy changed to a more hazardous occupation after the policy has been issued and claims is filed, the insurance company will do which of the following?
Adjust the benefit in accordance with the increased risk
How can a new physician be added to the PPO's approved list?
Agree to follow the PPO standards and charge the appropriate fees
In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation?
Agreed value
which of the following would be an example of an unfair trade practice of sliding?
An agent is falsely leading an applicant to believe that an additional coverage is required by law.
what is reinsurance?
An agreement between ceding insurer an assuming insurer
which of the following describes the transfer of a legal right or interest in an insurance policy?
Assignment
which of the following best describes liberalization clause policy?
Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium.
which of the following types of healthcare plan allow the insured's subscriber to choose health care from any qualified physician?
Commercial insurance company fee for service plan
An insured intentionally did not disclose a material fact on an application for insurance. This would be considered
Concealment.
An insured's business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this?
Consequential
All of the following are supplemental payments found in liability policies EXCEPT
Costs the insured incurred in hiring an attorney.
In dwelling policies, automatic increase in insurance is
Coverage by endorsement.
Which of the following is NOT true about earthquake coverage?
Coverage is commonly provided through a federally-funded program.
Which of the following is a mandatory part of an insurance policy that varies with each individual policy?
Declarations
which of the following is a mandatory part of an insurance policy that varies with each individual policy?
Declarations
The part of a policy that clarifies terms in the policy is the
Definitions
Employment practices liability insurance EPLI would not cover claims arising from
Deliberate law violation
What term includes damage where the insured peril was the proximate cause of loss?
Direct loss
All of the following are found in the declarations section of a policy EXCEPT the
Exclusions.
All of the following can be described as twisting except
Explaining to client the advantages of permanent insurance over term and suggesting changing policies
which is true regarding HMO coverage?
HMO is divded into geographic territories
In insurance transactions , fiduciary responsibility means
Handling insurer funds in a trust capacity
Events or conditions that increase the chances of an insured loss occurring are referred to as
Hazards.
In liability insurance policies, supplementary payments are made
In addition to the limit of liability
All of the following are conditions commonly found in the insurance policy except
Insurance agreement
A health policy includes the following statement on the first page 'the insurer will over total disability losses resulting from injuries or sickness subject to the policy definitions, exclusions, and other provisions. Loss must begin while this policy is in force" this is an example of
Insuring agreement
All of the following statements describe the concept of strict liability EXCEPT
It is imposed on defendants engaged in hazardous activities.
One advantage of claims-made liability forms from the insurer's point of view is that
It prevents stacking of limits.
An insurance agent proposed an individual health insurance policy that is guaranteed renewable. if the insured accepts this policy the insurer agrees that
It will renew the policy until the insured has reached age 65
Which of the following coverages in dwelling and homeowners policies is for indirect losses?
Loss of use
It is insured for what a willing buyer would paid prior to a loss.
Market value
An insured stated on her application for life insurance that she had never had a heart attack, when in facts he had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim denied?
Material misrepresentation
Which of the following is a common exclusion found in part D: Coverage for Damage to your Auto f PAP?
Mechanical breakdown
which of the following coverage is included in an unendorsed homeowners policy?
Medical Payments to others
Which of the following perils is covered by flood insurance?
Mudslide caused by accumulations of water under the ground
Several insureds have become liable because of a single loss. How will the policy's limit of liability be affected?
No more than the per occurrence limit applies, no matter how many insureds are involved.
Supplemental Extended Reporting Period = SERP
Optional reporting period of unlimited duration that will cover claims arsing from occurrences that took place after the retroactive date and before the end of the policy period subject to the policy aggregate limit for the entire term.
if a health care plan has characteristics of an HMO and PPO, what type of plans is it?
POS point of service. plans are a combination of HMO and PPO
which of the following provisions in accident and sickness policies would be prevent an insurance company from paying reimbursement claim to someone other than the policy owner?
Payment of claims
Which of the following liability exposures is most likely for a small specialty clothing retail boutique?
Premises liability exposure
Under the claims-made CGL the supplemental extended reporting period
Provides an unlimited extension for making claims for losses that occurred during the policy period, but the insured must pay an additional premium.
An agent offers his client free tickets to a sporting event in exchange for the purchase of insurance policy. The agent is guilty of
Rebating
An insurer is preparing to pay disability income benefits to an insured in order to prevent over-insurance, the insurer monitors the income of the insured before submitting payment which rule corresponds to this behavior?
Relation of earnings to insurance
An insured wants to cancel her health insurance policy which portion of her contract can she consult for her cancellation rights?
Renewability clause
which health insurance provision describes the insured's right to cancel coverage?
Renewability clause
Insurance is the transfer of
Risk
What are two types of compensatory damages?
Special and General
when the amount of insurance written in property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as
Stated amount
An insured that plans to cancel his/her claim made insurance policy can protect themselves against potential claims that may arise from an occurrence that happened during the policy period, but is reported after the cancellation by purchasing
Supplemental Extended Reporting Period = SERP
Who is covered by an HO-4 policy?
Tenants
An insurance agency could purchase an errors and omission insurance policy which would provide protection in the event of any of the following except:
The agency loses commission income from policies that were not issued by the insured
Surety bonds are written for a definite limit called
The bond penalty.
which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information.
The fair credit Reporting act
The common policy condition is a modular part combined with other parts to create the contact.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 insured may cancel the policy at any time by giving written notice to the insurer
which of the following is an agreement between and insured and insurer, where the insurer agrees to indemnify the insured for specific losses in exchange for a premium?
The insurance contract
The insured has violated the contract without the knowledge of the mortgage holder. After a loss
The insured cannot collect but the mortgage holder will still be paid
Under which of the following circumstances would an insurer be allowed to cancel a dwelling policy midterm?
The insured knowingly lied about the year the property was constructed
In which of the following situations would off the premises coverage in a broad theft endorsement apply?
The insured's camera is stolen from his vacation home while he is there
which of the following entities is responsible for agent licensing and administrative supervision?
The office of insurance regulation
What is the primary objective of workers compensation?
The payment of benefits to employees for injuries arising out of their employment
A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean?
There is no coverage.
Which of the following best expresses the purpose of a stated valued contract?
To pre-establish the amount of coverage available for property items that are difficult to value.
What is the Business auto coverage territory for?
United states and its territories, Canada, or worldwide for private passenger hired autos
An insured is a member of the neighborhood association, and has become liable for damage to a third party. Each member of the association has been assessed a portion of the loss equal to $2,000. How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay?
Up to $1,000
if a loss occurs, the insured with a homeowners policy is required to do the following except
arrange for an appraisal by an unbiased third party
in return for premium, an insurance company must
be fair underwriting and pay covered losses
Most insurers issue health insurance policies for delivery in many states. because each state regulates and mandates the requirement for policies delivered to their residents,instead of having policy form for each state, the insurer attaches.
conformity with state statutes optional provisions.
Under the businessowners policy, the coverage for the newly acquired property is limited to
d) $100,000.
a waiver of premium provision may be included with which kind of health insurance policy?
disability income
All of the following are factors in the determination of actual cash value except
insurance premium paid
The office of insurance regulation
is responsible for all activities concerning insures, including licensing and certificates of authority, rates, policy forms, claims, solvency, administrative supervision, and any other related provisions of the insurance code.
the office of insurance regulations is responsible for all the following insurer activities except
issue of securities
which of the following best describes a misrepresentation?
issuing sales material whit exaggerated statements about policy benefits
which of the following is not the benefit of a POS plan?
it allows guaranteed acceptance of all applicants
the provision which prevents the insured from bringing a lawsuit against the company for a least 60 days after proof of loss is known as
legal actions
if n applicant wants the cost of health insurance coverage to be lower the elimination period will have to be
longer
B&B market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be a meter reader. Which coverage would apply to this suit?
personal an advertising injury liability
which is true regarding the uniform individual Accident and sickness policy provisions law?
provisions may be reworded by the insurer
The federal reporting act
regulates consumer reports
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called
specific coverage
which of the following is not the consideration in a policy?
the application given to a prospective insured
when an insurer appoints an agent
the insurer is bound by the agent's acts
which of the following will vary the length of grace period in health insurance policies?
the mode of premium payment. The grace period is 7 days weekly premium mode, 10 days monthly premium mode, and 31 days on other premium modes
for the purpose of insurance , risk is defined as
the uncertainty or chance of loss
which provisions states that the insurance company must pay medical expense claims immediately?
time payment of claims
Supplementary payments on a CGL provide all of the following except
up to $500 a day for lost earnings and $2000 for the cost of bail bonds. Supplementary payments will cover only $250 for these.
if a health insurance policy is guaranteed renewable, is the insurer allowed to increase premiums
yes, on a class basis only
Workers compensation rating is developed by applying a rating bureau job classification rate to each
$100 of payroll.
The broad theft coverage endorsement on the dwelling forms specifies all of the following limitations except
$1000 on silverware. The limit on silverware is $2,500
