Full Arkansas P&C Exam Review
The HO=3 homeowners policy provides
Open peril coverage on the dwelling and broad form coverage on a personal property
What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?
Other Insurance
Rental reimbursement endorsement is available only if an auto policy has what type of coverage?
Other than Collision
In a watercraft policy, which coverage part respond to a claim for damages for BI and PD for which the insured becomes legally liable because of a watercraft accident ?
Part A Because it is Liability Coverage
An insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. Which type of limit of liability does this insured's policy have?
Per occurrence sets amount for all claims that arise from a single incident
The causes of loss insured against in an insurance policy are known as
Perils
What type of coverage is Coverage E in homeowners policies?
Personal Liability
Which of the following liability exposures is most likely for a small space specialty clothing retail boutique ?
Premises liability exposure
Who would participate in a Write Your Own (WYO) flood insurance program?
Private insurers that wish to write and service National Flood Insurance policies on a no risk bearing basis
All of the following are true regarding rebates EXCEPT
Rebates are allowed if it is in the best interest of the client
According to the Insured Duties after Loss provision in HO policies, if the insured requires a signed, sworn proof of loss, the insured must provide within how many days ?
60 days
An insured owns a building that is valued at $400,000. To comply with the 80% coinsurance clause of his insurance policy, How much should he insure the property for ?
80% or more of the property's replacement cost or more
Which loss listed below would be fully covered by a homeowners policy ?
A $2,000 tea set
A tornado that destroys property would be an example of which of the following?
A Peril
Professional photographers and musicians can insure their equipment with
A commercial articles floater
Which of the following statements is true regarding coverage for flood and earthquake perils ?
Both flood and earthquake insurance are excluded in all property policies
The homeowners policy covers collapse caused by all of the following except
Foundation cracks
Under the professional liability loss settlement provision, what must an insurer do before offering to pay a claimant to settle a claim?
Get the insured's consent
The mechanism used to pay covered claims and prevent financial losses to claimants and policyowners when an insurer becomes insolvent is a
Guaranty Association
Which of the following homeowners forms is designed for individuals that own and reside in a condominium ?
HO-6
Elaborate homes with detailed designs or architecture with replacement costs higher than the actual cash value or market value are insured on
HO-8
A mobile Homeowners policy is structured the same as a
Homeowners Policy
Although the commissioner must examine the affairs, transactions, records, and assets of each authorized insurer as often as deemed advisable, each authorized insurer must be examined at least once every
5 years
What is the maximum dollar amount an insurer will pay for loss to sound equipment permanently installed in a vehicle insured under a BAP
$1,000
An insured has a homeowners policy and is required to be a member of the homeowners association. The associations community house burned down, and the insured has been assessed $1200 for her share of the rebuilding cost. How much of the assessment will her homeowner's policy pay ?
$1,000 As an additional coverage, homeowners policy will pay up to $1,000 of a loss assessment
What is the maximum fine for a single violation of the Insurance Code if a person knew or should have known that an act would result in a violation ?
$5,000
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has been depreciating at $200 per year and his policy is ACV, how much will it pay toward the insured's new roof?
$5,000 Actual Cash value is calculated as replacement cost less depreciation
Once a claim is processed, and all claim investigations are completed, within how many days must an insurer mail or deliver a claims check
10 working days
Which of the following auto insurance coverages meets the state minimum requirements ?
25/50/25 per person/per accident/property damage
Coverage for medical payments under a Personal Auto Policy applies to expenses following a covered accident that are incurred and services rendered within what time period?
3 years
How long is a waiting period upon purchase of flood coverage through NFIP?
30 days
When a producer changes his or her address of their residence, the Insurance Department must be notified within
30 days
a producer moves to a new house. Within how many days must the producer notify the commissioner of change of address
30 days
a producer moves to a new house. within how many days must the producer notify the commissioner of change of address
30 days
A business owner has a building and personal property policy that covers a shed in which he stores extra parts. IF he buys a second shed for the same purpose, this will automatically be covered for how long ?
30 days Because it is a newly acquired building/personal property that is similar in use to the property insured
When other insurance is written on the same basis as a Commercial Property policy, what is the insurer obligated to cover?
A share of the loss
What is a material misrepresentation ?
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
The declarations page of the homeowner's policy provision provides all of the following information EXCEPT
A statement that earthquake damage is not covered
Which of the following defines the term "accident" ?
A sudden, unplanned, or unexpected event, not under the control of the insured resulting in injury or damage neither expected nor intended
What type of liability would a person who owns wild animals have?
Absolute Liability
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's preparty's appreciation or depreciation
Agreed Value
The insured with a homeowners policy has had damage to the property caused by a volcano. Which of the following is true ?
All volcanic eruptions within a 72 hour period will be considered one occurrence
In insurance an offer is usually made when
An applicant submits an application to the insurer
Which of the following would NOT qualify as a hired auto
An auto borrowed from an employee
Which coverage form would provide coverage for all incoming and outgoing shipments?
Annual Transit
When a disagreement occurs as to how to settle a loss in a "fender bender" between two cars, what procedure is followed?
Arbitration through court
Generally speaking, how soon must an employee report an injury to his or her employer ?
As soon as reasonably possible
If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy?
Auto policy
An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined?
Benefits will be provided if the state was listed on the policy info page
Under the HO-4 homeowners policy form, property is insured against
Broad form perils only
A liability policy that provides coverage for a claim for injury or damage if the claim is first reported or filed against the insured during the policy period is called
Claims made form
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of
Concealment
Which of the following is NOT true about earthquake coverage ?
Coverage is commonly provided through a federally funded program
Additional coverages in the liability section of a homeowners policy cover all of the following except
Damage to a third party property for which the insured is legally liable
An insured has four seperate but identical policies written by different insurer's to cover her $100,000 building. Each policy is written for $100,000 dollars, and each has the pro rata liability clause, In the event of total loss to a building, what would each insurer pay ?
Each policy would pay $25,000
Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will
Either pay or defend as it decides
What is the purpose of the coinsurance clause found in property insurance policies
Encourage the insured to insure the policy closer to its full value
All of the following are excluded in the equipment breakdown coverage policy EXCEPT
Explosion of steam boilers
When would a misrepresentation on an insurance application be considered fraud?
If it is intentional and material
How soon after a direct loss does the period of restoration for extra expense coverage under business owners property insurance begin ?
Immediately
The proof of loss statement must be
In writing
The pro rata liability clause is designed to protect the principle of
Indemnity
Which of the following is NOT true regarding a Certificate of Authority
It is issued to group insurance participants
All of the following are true of Coverage B EXCEPT
It must be added by endorsement to a homeowners policy
How does the mobilehome endorsement affect theother coverage of law or ordinance in a homeowners' policy ?
It removes the coverage
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become
Larger
Which of the following is a common exclusion found in Part D: Coverage for your damage to your auto of PAP
Mechanical Breakdown
Which of the following coverages is included in an unendorsed homeowners policy ?
Medical Payments to others
A business using its own trucks to move its own cargo would insure the cargo using
Motor truck cargo - owners' form
All of the following statements are FALSE regarding garage physical damage coverage EXCEPT
No coverage is provided for any auto stored for more than 45 days at a location not shown in the declarations
An insured owns several buildings, each at a different location and insured on a seperate policy. What type of coverage does the insured have ?
Specific Insurance
Events in which a person has both the chance of winning or losing are classified as
Speculative Risk
Which of the following symbols is available to an insured with vehicels subject to no fault coverage ?
Symbol 5
Which one of the following symbols are used in Business Auto Coverage correctly described ?
Symbol 9: nonwoned autos only Symbol 1: any auto, Symbol 2: owned only, Symbol 7: described autos only
To be eligible for the National Flood Insurance Program, an insured must live in which of te following communities
That have met the minimum floodplain management guidelines
An insurance agency could purchase an errors and omission insurance policy which would provide protection in the event of any of the following events EXCEPT
The agency loses commission income from policies that were not issued by the insurer
The amount of insurer will pay under Coverage D (Loss of Use) depends on
The amount of coverage on the dwelling
All of the following statements concerning coinsurance are true except
The coinsurance formula will also be applied to total losses
Which of the following statements is true regarding the commercial general liability policy's Coverage C- Medical Payments
The coverage is considered good because payments are made regardless of fault
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays
The excess over the self insured retention Retention is the equivalent of a deductible in property insurance
According to the standard workers compensation and employers liability policy form, a state should be listed in a Part Three-Other State's insurance of the workers compensation and employers liability policy when
The insured expects to extend operations out of state
Under the provisions of the business income coverage form, all of the following is true except ?
The insured is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first
Which of the following is most to occur if it is determined by the audit that the deposit premium was too high ?
The insured will receive a return premium
All of the following are conditions commonly found in the insurance policy EXCEPT
The insuring agreement
When a mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy
The loss reimbursement is paid to the mortgagee
In terms if parties in a contract, which of the following does NOT describe a competent party
The person must have completed at least a secondary education
All of the following types of property are covered by a standard builder's risk form EXCEPT
Tools that are 50 feet away from the building.
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint, the building is considered
Vacant
Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form
Valuable papers and records
An insured's 9 year old son threw a ball, accidentally breaking the neighbor's window. The insured was found legally liable, this is an example of
Vicarious Liability
When a parent is required to pay for damages caused by their children, this is an example of
Vicarious Liability
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract ?
Warranty
If an auto policy limit splits 30/50/25 how much will the policy pay for property damage ?
Will pay the third amount listed, in this case, $25,000
A stock insurer is defined as an insurer
With its capital divided into shares and owned by its stockholders.
Personal business property out in the open is covered under commercial only while
Within 100 feet of the described premises
The insured with a claims made commercial general liability policy, may request in writing claim and occurrence information from the insurer up to 60 days after the policy period ends. The insurer must provide the information
Within 45 days