Guarantee ExamFX

Which section of an insurance policy contains basic underwriting information, such as the insured's name, address, amount of coverage and premiums, and a description of insured locations? a) Endorsements b) Declarations c) Conditions d) Insuring agreement

Declarations

The amount of loss the insured is willing to absorb without insurance protection is known as 1. Self-insured retention. 2. Maximum deductible. 3. Stop loss. 4. Limit of liability.

Self-insured retention.

Loss Payee Clause

simililar to morgatgee clause

*A trucking company has a $1 million umbrella policy in place. The businessowner 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 is the total amount the umbrella policy will pay? 1. $100,000 2. $50,000 3. $200,000 4. $300,000

$100,000

An insured has $5,000 of medical coverage under a personal auto policy at the time of a covered accident. The insured and 3 passengers are injured. The insured's medical expenses are $8,000. The first passenger's total $4,000; the second passenger's total $6,500; and the third passenger's total $1,200. How much will the policy pay under the medical payments coverage? 1. $5,000 2. $8,000 3. $15,200 4. $19,700

$15,200

IDAHO Financial responsibility must be proven for bodily injury or death to an individual in an accident in which of the following amounts? 1. $15,000 2. $25,000 3. $50,000 4.$75,000

$25,000

Which of the following risks would be eligible for coverage under a dwelling policy form? 1. A single-family dwelling that is located on farm premises 2. A duplex that is occupied by two families, each of which have a bedroom rented to a boarder 3. A single-family dwelling occupied by a single person who operates a business of buying and selling firearms in the basement 4. A single-family dwelling that contains a beauty shop that employs three full-time operators

A duplex that is occupied by two families, each of which have a bedroom rented to a boarder

When insurance is written on a dwelling form, which of the following types of property would be insured under Coverage B (Other Structures)? 1. Building equipment and outdoor equipment 2. A garage separated from the dwelling 3. Materials and supplies used for construction or repair of the dwelling 4. A laundry room attached to the dwelling

A garage separated from the dwelling

IDAHO All are true regarding producer appointments EXCEPT (Choose from the following options) 1. A producer may only hold an appointment with one insurer. O2. Insurers may appoint either individual producers or agencies. 03. A producer must hold at least one appointment. O4. A producer must be appointed at the time business is placed with an insurer.

A producer may only hold an appointment with one insurer.

59. Which of the following best describes a rebate? (Choose from the following options) 01. A producer returning part of her commission to her client, as an inducement to buy 2. A producer misrepresenting policy provisions or coverages at issue 3. A producer requiring an insured to buy insurance from her as a condition to a loan O4. A producer selling insurance primarily to himself, his family and his friends

A producer returning part of her commission to her client, as an inducement to buy

Which of the following would NOT be covered as a loss under Coverage D of a homeowners policy? 1. An insured has an apartment in his home. The tenant's negligence started a fire, and the apartment was not fit to live in for 4 months while repairs were being completed. 2. After a fire in a building next to the insured's home, the insured could not occupy his home, and had to stay at a motel for one week. 3. An insured's home is damaged by fire. The insured incurs expenses for living in a motel and having meals in a restaurant while repairs are made. 4. An insured leased a dwelling for 5 years. Two years later, the property owner died, and the new property owners wanted to make the property their principal residence, so the lease was canceled.

An insured leased a dwelling for 5 years. Two years later, the property owner died, and the new property owners wanted to make the property their principal residence, so the lease was canceled.

With respect to the business of insurance, a hazard is a) The basic reason for an insured to purchase insurance. b) Any condition or exposure that increases the possibility of loss. c) The risk taken when performing something dangerous. d) The tendency of poorer risks to seek insurance more often than better risks

Any condition or exposure that increases the possibility of loss.

A personal umbrella policy may act as excess over any of the following insurance coverage policies EXCEPT 1. Homeowners Section Il coverage. 2. Auto liability coverage. 3. Comprehensive personal liability. 4. Auto collision coverage.

Auto collision coverage.

*In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will 1. Only be applicable if the insured pays a higher deductible. 2. Only be applicable if the insured pays an additional premium. 3. Be increased by 10%. 4. Be reduced by 10%.

Be reduced by 10%.

An insured believes that his insurer is not properly fulfilling its obligations regarding his policy. What section of the policy will give the insured more information about specific duties of the insurer? 1. Obligations 2. Conditions 3. Endorsements 4. Definitions

Conditions

Because an insurance policy is a legal contract, it must conform to the laws governing contracts which require all of the following elements EXCEPT a) Offer and acceptance. b) Conditions. c) Legal purpose. d) Consideration.

Conditions

Which section of an insurance policy indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy? a) Conditions b) Insuring agreement c) Declarations d) Endorsements

Conditions

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a) Consideration b) Legal purpose c) Warranty d) Contract of adhesion

Consideration

* If a fire erupts in the kitchen and spreads to the upstairs bedroom, resulting in the destruction of furniture, what type of loss has occurred? 1. Direct 2. Indirect 3. Consequential 4. Proximate

Direct loss refers to any direct physical damage to buildings and personal property. Considering the fire was the initial cause of loss and spread to the bedroom, damages would be considered a direct loss of the fire.

Officers who manage stock insurance companies are 1. Appointed by the Department of Insurance. 2. Elected by the stockholders. 3. Hired through an application process. 4. Appointed by other company officials.

Elected by the stockholders.

Which of the following is covered under a dwelling policy? 1. Structures used for commercial manufacturing 2. Fire caused by an earthquake 3. Freezing plumbing systems 4. Flood or surface water

Fire caused by an earthquake

*Insurance rates developed by the underwriter based on his skill and experience instead of actuarial analysis are known as 1. Experience rates. 2. Manual rates. 3. Judgment rates. 4. Merit rates.

Judgment rates. Underwriters develop judgment rates based on their skill and experience.

IDAHO Which line of insurance restricts the authority of a license compared to those associated with major lines? 01. Personal lines 2. Single lines 3. Defined lines 4. Limited lines

Limited lines

The term "functional replacement cost" refers to a) Deductibles. b) Loss valuation. c) Endorsements. d) Property provisions.

Loss valuation.

* IDAHO An example of an alien insurer doing business in this state is one formed under the laws of 1. Arizona. 2. Puerto Rico. 3. Mexico. 4. District of Columbia.

Mexico. An alien insurer is a company chartered outside the United States. Insurance companies incorporated in territorial possessions, such as Puerto Rico, are considered foreign.

An insurance policy form that lists specific covered perils provides 1. Special peril coverage. 2. Blanket coverage. 3. Named peril coverage. 4. Open peril coverage.

Named peril coverage.

Which of the following lists specific perils covered under an insurance policy? a) Open perils b) Specified perils c) Named perils d) Indexed perils

Named perils

All of the following are additional coverages under a homeowners policy EXCEPT 1. Payment for reasonable repairs and debris removal following a covered loss. 2. Outbuildings. 3. Fire department service charge. 4. Coverage for trees, shrubs, and other plants.

Outbuildings.

The causes of loss insured against in an insurance policy are known a) Losses b) Risks c) Hazards d) Perils

Perils

IDAHO If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true? (Choose from the following options) 01. The insurer must cover the loss out of its surplus. 2. The insurer must apply for disaster relief funds. O 3. Federal Insurance Administration will remove the insurer from the NFIP. 4. The insurer will be reimbursed for the excess costs by the NFIP.

The insurer will be reimbursed for the excess costs by the NFIP.

Each of the following may be insured under an HO-3 homeowners policy EXCEPT 1. The owner-occupant of a condominium unit. 2. An occupant of a dwelling under a life estate arrangement when dwelling coverage is at least 80% of the current replacement cost. 3. One co-owner when each distinct portion of a two-family dwelling is occupied by co-owners. 4. The intended owner-occupant of a dwelling under construction.

The owner-occupant of a condominium unit.

An insured has decided to never drive another vehicle and wants to transfer his auto insurance policy to his wife. What does the insured need to transfer the policy? 1. The written consent of all other insureds covered by the policy 2. The written consent of the insurer 3. An auto policy cannot be transferred. 4. Nothing, because the wife is automatically included as an insured

The written consent of the insurer

If an insurance policy has the additional coverage provision, how does it affect the policy premium? 1. Premium will be calculated on a pro rata basis based on the amount of additional coverage. 2. There is no additional premium. 3. Premium will be recalculated when a specific loss covered by this provision occurs. 4. Additional premium will be assessed.

There is no additional premium.

Which of the following would be a proper choice of policy for a company that transports goods that are irreplaceable in nature? 1. Excess liabilities floater 2. Replacement cost rider 3. Lloyd's policy 4. Valued policy

Valued policy

Which would not be covered by an insureds uninsured motorist coverage? A-The insureds car is hit by someone whose auto insurer is insolvent B-the insureds son is struck by a hit and run driver C-the insured causes a head on collision with the car of an uninsured D-insureds neighbor borrowed the insureds car and was hit by an uninsured motorist

the insured causes a head on collision with the car of an uninsured

IDAHO What is the minimum required per-occurrence limit for auto insurance policies issued in this state? 1. $15,000 2.$25,000 3. $50,000 4. $100,000

$50,000

A home is insured for $200,000 under an HO-3. Last week, the owner purchased a new home and began to move his personal property to the new residence. Last night, vandals did $8,000 of damage to the property that had been moved to his new residence. Disregarding any deductible, how much will the HO-3 pay? 1. $0 2. $1,000 3. $4,000 4. $8,000

$8,000 under coverage c any property left at another premises is limited to 10% of the 8,000. but in the process of moving its fully covered

Which of the following is the correct formula for computing a loss ratio? a) Incurred expenses + loss adjusting expenses/interest rate b) Incurred losses + loss adjusting expense/earned premium c) Loss adjusting expenses - incurred expenses d) Incurred losses - loss adjusting expense/earned premium

(Incurred losses + loss adjusting expense)/earned premium (loss adjusting expense is how much it cost them to pay the claims, overhead, payroll, etc.) it's output/input you need an adjuster to figure out the loss adjusting expense

*An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request? 1. 3 days 2. 5 days 3. 10 days 4.30 days

3 days If a consumer report is requested, the insurer must notify the consumer at least 3 days following the initial request.

IDAHO Domestic insurers must be examined at least once every (Choose from the following options) 01.2 years. 02.3 years. 3.4 years. 4.5 years.

5 years.

* IDAHO 81. Generally, policies of property and casualty insurance covering a risk in a particular state may not be issued unless they are countersigned by (Choose from the following options) 1. An executive officer of the insurer. 2. A resident producer. 3. An adjuster. 4. The insured.

A resident producer. Most state have countersignature laws that apply primarily to standard types of property and casualty coverages. These laws do not apply to life, ocean marine, travel or health insurance.

In a personal auto policy (PAP), a covered auto includes all of the following EXCEPT 1. A trailer owned by the insured. 2. A farm implement being towed behind the insured's pickup. 3. A nonowned temporary substitute vehicle. 4. A van used in the delivery business.

A van used in the delivery business.

*Which of the following would be added for coverage under a property policy by an endorsement? 1. First named insured 2. Additional insureds 3. All insureds 4. Named insured

Additional insureds Additional insureds are individuals or businesses that are not named as insureds on the declaration page, but are protected by the policy, usually in regard to a specific interest. Additional insureds usually are added to the policy by an endorsement.

* Under Coverage B - Other Structures, a homeowners policy provides coverage for other structures on the residence premises. Which of the following statements is NOT true of this coverage? 1. A detached garage may be covered if rented to others as a private garage. 2. Other structures may not be used to store business property of others, even though business is not conducted from the structure. 3. Any loss paid under Coverage B reduces the Coverage A limit of liability. 4. Other structures covered under Coverage B must be set apart from the dwelling by clear space.

Any loss paid under Coverage B reduces the Coverage A limit of liability. The automatic limit for Coverage B is 10% of the limit of liability that applies to Coverage A. Use of this coverage does not reduce the Coverage A limit of liability.

Which of the following best describes the aleatory nature of an contract a) Ambiguities are interpreted in favor of the insured b) Exchange of unequal values b) Only one of the parties being legally bound by the contract c) Policies are submitted to the insurer on a "take it or leave it" basis

Exchange of unequal values

Negligence is defined as a) Conduct which is so hazardous that the individual engaging in it will be held fully responsible for any resulting injury or damage. b) Failure to do what a reasonable prudent person would do under given circumstances. c) An intentional act which results in bodily injury to another person or property damage. d) An unbroken chain of events which results in bodily injury or property damage.

Failure to do what a reasonable prudent person would do under given circumstances.

IDAHO 72. An important fact about the financial status of an insurer was deliberately withheld. Which of the following terms best describes this action? (Choose from the following options) 01. Defamation O2. Twisting 3. Loading 4. False financial statement

False financial statement

Which of the following would be named on the Declarations page of a property or liability policy? a) All insureds b) Additional insureds c) First named insured d) Beneficiaries

First named insured

*Which homeowners form provides open peril coverage for dwelling (Coverage A) and contents (Coverage C)? 1. HO-2 2. HO-3 3. HO-5 4. HO-8

HO-5 HO-2 form is named peril (broad form perils) coverage for both dwelling and contents. HO-3 form is open peril for dwelling and named peril for contents. HO-5 is open peril for both dwelling and contents. HO-8 is named peril (basic perils) coverage for both.

functional replacement cost is only used on

HO-8

* IDAHO To obtain an Idaho producer's license as a nonresident, an individual must 1. Pass the Idaho exam. 2. Have a part-time residence in this state. 3. Agree to complete Idaho's continuing education requirements every 2 years. 4. Have a similar license in his or her home state.

Have a similar license in his or her home state. Although producers may have only one resident license, they may have as many as 49 nonresident licenses that allow them to transact business in states where they not reside or have a principal office. Idaho nonresident licenses are issued without exam, based upon reciprocal agreements between states. Nonresident producers must comply with the CE requirements of their home state.

What part of the insurance contract describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured? 1. Conditions 2. Insuring agreement 3. Exclusions 4. Declarations

Insuring agreement

The part of the insurance contract that describes the covered perils, and the nature of coverage of the contractual agreement between the insurer and the insured is called the a) Exclusions. b) Declarations. c) Insuring agreement. d) Conditions.

Insuring agreement.

* IDAHO 60. A structure may be eligible for coverage under the National Flood Insurance Program if it meets all of the following requirements EXCEPT (Choose from the following options) 01. Is principally above ground. 2. Is entirely over water. 3. Is not located within the Coastal Barrier Resource System. O4. Has 2 solid walls and a roof.

Is entirely over water. An eligible structure must have 2 solid walls and a roof, be principally above ground, and not entirely over water. Certain restrictions also apply to properties if located within areas defined by the federal government as part of the Coastal Barrier Resource System or as an Otherwise Protected Area.

An insured is injured while driving his own car. Which of the following coverages will pay for the loss? 1. Part A-Liability 2. Part B - Medical Payments 3. Part C - Uninsured Motorist 4. Part D-Damage to Your Auto

Part B - Medical Payments

*In reference to insurable interest, which of the following is NOT an element of insurable risk? 1. Personal 2. Blood 3. Financial 4. Business

Personal For any person or property covered under an insurance policy, insurable interest must exist. Insurable interest is broken into three categories which include financial (a monetary interest), blood (a relative), and business (a business partner).

What does HO personal property coverage NOT cover? 1. The resident's son's personal property 2. Personal property of roomers not related to the insured 3. The spouse's personal property 4. The insured's personal property in another country

Personal property of roomers not related to the insured

The declarations section in a homeowners policy provides all of the following information EXCEPT 1. Basic underwriting information. 2. Amount of deductible applied to a loss. 3. Insured locations. 4. Policy exclusions.

Policy exclusions.

An insured has a personal auto policy with the following limits: 50/100/25. The number 25 refers to 1. Property damage coverage. 2. Collision coverage. 3. Medical payment coverage. 4. Bodily injury liability coverage.

Property damage coverage.

The risk of loss may be classified as a) Certain risk and uncertain risk. b) Named risk and un-named risk. c) High risk and low risk. d) Pure risk and speculative risk.

Pure risk and speculative risk.

What type of insurer uses a formal sharing agreement? 1. Stock insurers 2. Mutual insurers 3. Fraternal Benefit Societies 4. Reciprocal insurers

Reciprocal insurers

When the amount of insurance written in a 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 a) Stated amount. b) Replacement cost. c) Actual Cash Value d) Specific insurance.

Stated amount.

IDAHO High-risk drivers who cannot obtain the required auto insurance from a private insurer because of underwriting reasons may be eligible for coverage through 01. The Idaho Property and Casualty Insurance Guaranty Association. 2. The Second Injury Fund. 3. The Idaho Property Insurance Plan. 4. The Idaho Auto Insurance Plan.

The Idaho Auto Insurance Plan.

An insured is at fault in an auto accident, damaging the insured's own car. The damage to the car is covered by 1. The other driver's liability coverage. 2. The insured's comprehensive coverage. 3. Uninsured motorist coverage. 4. The insured's collision coverage.

The insured's collision coverage.

*Under Coverage C, and at the request of an insured, personal property of a guest or residence employee is covered 1. While it is in any residence premises occupied by an insured. 2. While it is in any residence premises occupied by a named insured. 3. Anywhere in the world. 4. Only while on a residence premises.

While it is in any residence premises occupied by an insured. At the request of an insured, personal property of a guest or residence employee may be covered while it is in any residence occupied by an insured.

*What is the main distinction between a hired auto and a nonowned auto? 1. Whether a payment is made for the use of the auto 2. Who owns the auto 3. The length of time the insured uses the auto 4. The amount of premium

Who owns the auto The distinction between hired and nonowned auto does not depend on whether payment is made for the use of the auto, but rather on whether employee.

If a car is stolen and left in a snow bank, causing the radiator to freeze and sustain heavy damage, is the damage covered by the auto policy? 1. Yes, there is no exclusion for freezing. 2. No, freezing is never covered. 3. No, theft is never covered. 4. Yes, freezing exclusion is removed if the car is stolen.

Yes, freezing exclusion is removed if the car is stolen.

Which of the following is NOT an example of the company's location of incorporation? a) Foreign b) Alien c) Authorized d) Domestic

c

In the last 72 hours, there were 3 instances of volcanic eruptions that damaged a property covered by a dwelling policy. How many deductibles will the insured have to pay before the policy covers the damages caused by the eruptions? 1. Zero 2. One 3. Two 4. Three

one