Guarantee (KY)
When an agent changes address of their residence or office, the insurance department must be notified within A. 15 days. B. 30 days. C. 60 days. D. 10 days.
B. 30 days
Homeowners policies limit the amount of property and liability coverage available for boatowners. How much coverage is provided in the homeowners policy for damage to watercraft, accessories, and trailers? A. $2000. B. $2500. C. $1000. D. $1500.
D. $1500.
Homeowners policies limit the amount of property and liability coverage available for boatowners. How much coverage is provided in the homeowners policy for damage to watercraft, accessories, equipment, and trailers? A. $2000. B. $2500. C. $1000. D. $1500.
D. $1500.
According to the agency law, the agent always represents the: A. Client. B. Public. C. State insurance department. D. Insurance company.
D. Insurance company
According to the law of agency, insurance producers represent: A. Insureds. B. The public. C. The state. D. Insurers.
D. Insurers
The statutory law defense that reduces injury and awards for damages proportionately when the plaintiff and defendant are both responsible is called: A. Intervening cause. B. Contributory negligence. C. Comparative negligence. D. Assumption of risk.
C. Comparative negligence.
An applicant for disability insurance policy has a heart condition of which they are unaware and therefore the answer no to the question pertaining to heart problems on their application. Their answer is considered to be a A. Concealment. B. Fraudulent answer. C. Representation. D. Warranty.
C. Representation.
An insurance agent who represents multiple companies on a non-exclusive basis and earn commissions on personal sales is working and what kind of marketing system? A. Exclusive agency system. B. General agency system. C. Managerial system. D. Independent agency system.
D. Independent agency system.
To have insurable interest, what risk must the policy owner face in the event of a loss? A. Physical injury. B. Property damage. C. Illness. D. Financial loss.
D. Financial loss.
All the following are covered peril's in a standard fire policy except A. Hostile fire. B. Removal from premises. C. Lightning. D. Friendly fire.
D. Friendly fire.
In order for an insurer to be authorized to transact insurance, it must obtain which of the following? A. Authorization of power. B. Certificate of authority. C. Power of authority. D. Commissioner's letter of approval.
B. Certificate of authority
Which method of dealing with risk is applied when insurance is purchased? A. reduction. B. Transfer. C. Sharing. D. Avoidance.
B. Transfer.
When insurance is written on a dwelling form, which of the following types of property would be insured under Coverage B - Other structures? A. A garage separated from the dwelling. B. Materials and supplies used for construction or repair on the dwelling. C. A laundry room attached to the dwelling. D. Building equipment and outdoor equipment.
A. A garage separated from the dwelling.
Which of the following would not be eligible for coverage under a personal auto policy? A. A vehicle purchased 90 days ago. B. A vehicle listed on the declarations page. C. A nonowned temporary substitute vehicle. D. A trailer owner by the insured.
A. A vehicle purchased 90 days ago.
The obligation to compensate injured workers without regard to fault or negligence is known as: A. Absolute liability. B. Employers liability. C. Elective liability. D. Compulsory liability.
A. Absolute liability.
All the following are statements about mutual insurance companies are correct except: A. Policy dividends issued by mutual companies are guaranteed to not taxable. B. Dividends allow policyholders to share in a mutual company's divisible surplus. C. Dividends are a return of unused premium. D. Mutual companies issue policies referred to as participating.
A. Policy dividends issued by mutual companies are guaranteed to not taxable.
The exact, direct, uninterrupted cause of loss is the: A. Proximate cause. B. Actual cause. C. Intervening cause. D. Absolute cause.
A. Proximate cause.
Which of the following types of property would be covered under Coverage C -Personal Property in a dwelling policy? A. Rowboats. B. Two passenger aircraft. C. Any personal watercraft. D. Motor vehicles.
A. Rowboats
The amount of loss the insured is willing to absorb without insurance protection is known as A. Self-insured retention. B. Maximum deductible. C. Stop loss. D. Limit of liability.
A. Self-insured retention.
The amount of loss the insured is willing to absorb without insurance protection is known as A. Self-insured retention. B. Maximum deductible. C. Stop loss. D. Limit of liability
A. Self-insured retention.
Upon payment for loss, the insured is obligated to surrender to the insurance for the right to sue a negligent third-party. This is called A. Subrogation. B. Indemnity. C. Insurable interest. D. Entirety.
A. Subrogation.
Which of the following is most likely ineligible for coverage under the business owners policy? A. An office with total floor area of 5000 ft.². B. A bank. C. A fast food restaurant. D. A retail with gross annual sales of $100,000.
B. A bank
The purpose of purchasing an umbrella liability policy is to provide: A. Coverage that usually may only be added by endorsement. B. Access insurance over the primary liability policy. C. Coverage to those who cannot obtain it on a regular market. D. Coverage that is not readily available through on authorized ensure in the state.
B. Access insurance over the primary liability policy.
Which of the following exclusions apply to both personal injury and advertising injury and business owners policy? A. The wrong description of the price of goods, products, or services. B. Willful violation of a penal statute or ordinance committed by the insured. C. Breach of contract under an implied contract. D. An offense committed by an insured whose business is advertising.
B. Willful violation of a penile statute or ordinance committed by the insured.
The owner of a rental dwelling, insured under a DP2, turns off the heat and the insured dwelling during the winter months because the dwelling was not occupied. The buildings water pipes freeze and break, Causing damage. How will the policy react to this loss? A. The DP policy will pay for the pipes, but not the labor. B. The DP policy will pay for the labor, but not the pipes. C. This loss is excluded from coverage. D. This loss is covered.
C. This loss is excluded from the coverage.
Which of the following is not part of section 2 of the boat owners policy? A. Medical payments. B. Uninsured boaters. C. Watercraft damage. D. Waterproof liability.
C. Watercraft damage.
Which of the following is not part of section 2 of the boat owners policy? A. Medical payments. B. Uninsured motors. C. Watercraft damage. D. Watercraft liability.
C. Watercraft damage.
If a car is stolen and left in the snowbank in the radiator freezes and does a lot of damage, is the damage covered by the auto policy? A. No, freezing is never covered. B. No, First is never covered. C. Yes, freezing exclusion is removed his car stolen. D. Yes, there is no exclusion for freezing.
C. Yes, freezing exclusion is removed at the car stolen
If a car is stolen and left in a snowbank, causing the radiator to freeze and sustain heavy damage, is the damage covered by the auto policy? A. No, freezing is never covered. B. No, theft is never covered. C. Yes, freezing exclusion is removed if the car stolen. D. Yes there is no exclusion for freezing.
C. Yes, freezing exclusion is removed if the car stolen
An insured is the owner of a clothing boutique. She has a floorplan merchandise floater to cover the property that is financed until it is sold. At closing time a month ago, she noticed that three very expensive dresses had been stolen. However, she did not file a report to her insurance company until recently. How much will her insurer pay for this loss? A. 100% of the limit written. B. Nothing. C. 50% of the limit written. D. 90% of the limit written.
D. 90% of the limit written.
A homeowner has missed placed some of her insured personal property and has no idea what may have happened to it. Which HO policy form would cover such loss? A. HO-2. B. HO-3. C. HO-4. D. HO-5.
D. HO-5
The boiler and machinery coverage form provides coverage for all the following except A. Damage to property of others in the insured's care and custody. B. Bodily injury liability. C. Expediting expenses following a covered loss. D. Damage to the insured's property.
B. Bodily injury liability.
What term is defined as a loss of company money, securities and other property caused by employee theft, burglary, and robbery? A. Employee robbery. B. Crime insurance. C. Employee dishonesty. D. Safe burglary.
C. Employee dishonesty.
Under the employee theft coverage, when a covered employee is found to have participated in a dishonest act, the coverage for that employee will A. Terminate on the anniversary of the bond. B. Continue unless the employees were convicted of a crime. C. Terminate immediately. D. Terminate in 30 days.
C. Terminate immediately.
You open your locked safe this morning and find that $4000 worth of property is missing with no signs of forced entry. How much does your Safe burglary policy pay? A. $0. B. $4000. C. $4000 minus any deductible. D. Replacement value.
A. $0.
Which of the following is not an indicator of a competent party? A. Business profession. B. Legal age. C. Mental proficiency. D. Comprehension of contract.
A. Business profession.
In order to receive transportation expenses under the Personal Auto Policy following damage to your auto caused by collision, you must have: A. collision coverage. B. Uninsured motorist property damage. C. Supplementary payments. D. Other than collision coverage.
A. Collision coverage.
The statutory law defense that reduces injury and awards for damages proportionately when the plaintiff and defendant are both responsible is called: A. Comparative negligence. B. Assumption of risk. C. Intervening cause. D. Contributory negligence.
A. Comparative negligence.
Coverage C in homeowners policy forms over all the following except A. Coverage for loss of use. B. Worldwide coverage. C. Coverage for property of others. D. Coverage for property located at another residence premises.
A. Coverage for loss of use.
All the following are ways to handle risk except A. Elimination. B. Avoidance. C. Reduction. D. Transfer.
A. Elimination.
All the following are covered perils and standard fire policy except A. Friendly fire. B. Hostile fire. C. Removal from premises. D. Lightning.
A. Friendly fire.
In which of the following scenarios would a producer be allowed to obtain insurance through an unauthorized insurer? A. If there are no authorized insurers for a specific type of coverage in this state. B. If the insurer needs to investigate insurance claims. C. Under no circumstances. D. If the producer had no knowledge that the company is unauthorized.
A. If there is no authorized insurers for a specific type of coverage in this state.
All of the following are factors in the determination of actual cash value except A. Insurance premium paid. B. Age of property. C. Replacement cost. D. Property type.
A. Insurance premium paid.
What part of the insurance contract describes a covered perils and the nature of coverage of the contractual agreement between the insurer and the insured? A. Insuring agreement. B. Exclusions. C. Declarations. D. Conditions.
A. Insuring agreement
When Hansel had to have a tire replaced on his insured auto, he submitted a claim to the insurer. The company denied the claim because they said it was classified as wear and tear and is not covered because: A. It is a certainty. B. It is not calculable. C. It does not affect a large number. D. It is subject to the catastrophic hazards.
A. It is a certainty.
Which of the following is not part of section 2 of the boatowners policy? A. Watercraft damage. B. Watercraft liability. C. Medical payments. D. Uninsured voters.
A. Watercraft damage
Which of the following types of bonds guarantees that a supplier will furnish supplies, materials, products, and equipment as specified in the written contract? A. supply bond. B. labor and materials bond. C. Performance bond. D. Bid bond.
A. supply bond.
Other than perils, the difference in at 3 DP forms is in coverage provided. Which of the following coverage options is covered by the DP-2 and DP-3 but not DP-1? A. Coverage D - fair rental value. B. Coverage E - additional living expense. C. Coverage A - dwelling. D. Coverage B - other structures.
B. Coverage E - additional living expenses
Which of the following agencies administers the national flood insurance program? A. FERC. B. FIA. C. FEMA. D. NAIC.
B. FIA
Coverage provided by the NFIP will not cover A. Personal property incident on to occupancy of the dwelling. B. Fences, outdoor swimming pool, retaining walls, and bulkheads. C. Damage done by sewer back up as a direct result of the flood. D. The damage done by freezing of floodwaters.
B. Fences, outdoor swimming pool, retaining walls, and bulkheads.
To have insurable interest, what risk must the policyowner face in the event of a loss? A. Illness. B. Financial loss. C. Physical injury. D. Property damage.
B. Financial loss.
When reviewing a standard workers compensation and employers liability policy, the limits of coverage are described in part one of the policy. The Dollar limits of the benefits provided or stated: A. In paragraph one of part one as directed by law. B. In the state Worker's Compensation law itself. C. On the face of the policy declarations page. D. In line item 3(A) of the policy information page.
B. In the state Worker's Compensation law itself.
According to the law of agency, insurance producers represent: A. The state. B. Insurers. C. Insureds. D. The public.
B. Insurers.
How does insurance distribute the financial consequences of individual losses? A. It transfers the risk to a small number of persons insured. B. It transfers the risk to all persons insured. C. It retains the financial consequences. D. It transfers the risk to associates of the insured.
B. It transfers the risk to all persons insured.
Insurance rates developed by the underwriter based on his skills and experience instead of actuarial analysis are known as: A. Manual rates. B. Judgment rates. C. Merit rates. D. Experience rates.
B. Judgment rates.
An agreement that is enforceable by law is known as what kind of contract? A. Unilateral. B. Legal. C. Conditional. D. Adhesion.
B. Legal
Fair rental value coverage in the dwelling policy is similar to which homeowners policy form? A. Contents. B. Loss of use. C. Dwelling. D. Structure.
B. Loss of use
Which of the following exposures is not covered under a homeowners policy? A. Personal liability. B. Medical payments to an insured. C. Unscheduled personal property damage. D. Bodily injury to others.
B. Medical payments to an insured
A standard fire policy would best be described as a/an A. Broad perils contract. B. Name perils contract. C. All risks perils contract. D. Basic perils contract.
B. Name perils contract.
The declaration section in a homeowners policy provides all of the following information except A. Insured locations. B. Policy exclusions. C. Basic underwriting information. D. Amount of deductible applied to a loss.
B. Policy exclusions.
An insured recently had a new home built and insisted on having smoke detectors installed in multiple places in the house. What method of handling risk is the insured using? A. Sharing. B. Reduction. C. Retention. D. Avoidance.
B. Reduction.
If an insured purchases an insurance policy with the large deductible, what risk management technique is the insured exercising? A. Sharing. B. Retention. C. Transfer only. D. Avoidance.
B. Retention.
The provision of a property requiring the insured to surrender any property left after payment of a total loss to the insurer is the: A. Subrogation close. B. Right of salvage clause. C. Bailee clause. D. Abandonment clause.
B. Right of salvage clause
Coverage B - personal and advertising injury liability response to claims arising from: A. Premises and operations injury claims. B. Suits alleging infringement of a copyright. C. Scope of patent protection. D. Failure of products to perform as advertised.
B. Suits alleging infringement of a copyright
What information is found in the conditions part of an insurance policy? A. The amount of coverage provided by the policy. B. The description of the duties and obligations of the insured. C. The persons or risks not covered under the policy. D. The identity of the named insured.
B. The description of the duties and obligations of the insured.
A golfer slices a tree shot in the ball goes through the window of a house beside the fairway. The broken glass is paid for by: A. The property coverage of the golf course. B. The golfers home owners liability coverage. C. The homeowners property coverage on the house. D. The liability policy of the golf course.
B. The golfers homeowners liability coverage
Coverage for loss by some perils under a building and personal property form is suspended if A. An uninsured peril causes a partial loss. B. The insured building is vacant for over 60 days. C. A loss occurs while a hazard beyond the insured's control is increased. D. The insured fails to satisfy the coinsurance provision.
B. The insured building is vacant for over 60 days.
One is at fault in an auto accident and damages his or her own car. The damage to his or her car is covered by A. Uninsured motorist coverage. B. Their collision coverage. C. The other drivers liability coverage. D. Their comprehensive coverage.
B. Their collision coverage.
Which of the following is the most effective way to handle risk? A. Avoid it. B. Transfer it. C. Reduce it. D. Share it.
B. Transfer it.
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce: A. Without receiving written consent from a federal judge. B. Without receiving written consent from the insurance regulatory authority. C. Under any circumstances. D. Unless they have served and appropriate prison sentence.
B. Without receiving written consent from an insurance regulatory authority
Mr. and Mrs. Turner were traveling down and icy road and hit a sign doing $1350 damage to their car; they have a $250 deductible. They Already had collected on a $1500 claim. How much will they collect on this claim? A. $1350. B. $1850. C. $1100. D. $250.
C. $1100
While driving, Betty's auto strikes a deer which causes her to lose control of the auto and leave the road striking a tree. The total damage of her auto for $6000. Which coverage would cover this loss and for how much? A. $6000 would be paid under collision coverage. B. This would not be a covered loss. C. $6000 would be paid under the other than collision coverage. D. $3000 will be paid under other than collision, $3000 would be paid under collision coverage.
C. $6000 would be paid under other than collision coverage.
How long does the removal coverage remain in effect under the standard fire policy? A. 15 days. B. 30 days. C. 5 days. D. 10 days.
C. 5 days.
Which of the following is not considered an insurable peril? A. A loss that results from a fire that starts when lightning strikes a barn. B. An injury to a customer who falls on a wet floor of a local grocery store. C. Your loss resulting from gambling. D. Loss of revenue caused by the temporary closing of the business following a covered loss.
C. A loss resulting from gambling
If an insurance policy prohibits the insured from relinquishing ownership of insured property that has been damaged, it is prohibiting: A. Subrogation. B. Selling a property. C. Abandonment. D. Assignment.
C. Abandonment
Who acts on behalf of the principal? A. Insured. B. The state. C. Agent. D. Insurer.
C. Agent.
Which of the following is indicated on a certificate of insurance? A. Cost amount of insurance. B. Times and cost of insurance. C. Amounts and types of insurance. D. Terms and conditions of insurance.
C. Amounts and types of insurance.
A personal umbrella policy may act as excess over any of the following insurance coverage policy is except: A. Auto liability coverage. B. Comprehensive personal liability. C. Auto collision coverage. D. Homeowner section to coverage.
C. Auto collision coverage.
Insurers cannot transact insurance in the state without a A. certificate of insurance. B. Letters of clearance. C. Certificate of authority. D. Brokers license.
C. Certificate of authority.
Agents must be found guilty of defamation if they make false statements that are intended to: A. Misinform perspective clients about policy coverage. B. Misrepresent the benefits payable under policies. C. Maliciously criticize another insurance company. D. Deceive the policyholder.
C. Maliciously criticize another insurance company.
An example of an alien ensure doing business in this state is one formed under the laws of: A. Arizona B. Puerto Rico. C. Mexico. D. District of Columbia.
C. Mexico
A standard for policy would best be described as a/an A. Basic perils contract. B. Broad perils contract. C. Named perils contract. D. All risks perils contract.
C. Named perils contract.
How was the premium paid for the business owners policy? A. Pro rats liability premium. B. Separate premium for property and for liability. C. One indivisible premium. D. Itemized premium.
C. One indivisible premium.
Which statement best describes agreement as it relates to insurance contracts? A. All parties must be capable of entering into a contract. B. Each party must offer something of value. C. One party accepts the exact terms of the other parties offer. D. The intent of the contract must be legally acceptable to both parties
C. One party accept the exact terms of the other parties offer.
The extended nonowned coverage provides protection to: A. The person named and his or her spouse only. B. Anyone who is given permission to drive by the named insured. C. Only the person named on the policy. D. The person named on the policy and all residents family members.
C. Only the person named on the policy.
The deductible under earthquake coverage is stated as what? A. Percentage of the policy premium. B. Half of the policy premium. C. Percentage of loss. D. Flat dollar amount.
C. Percentage of loss.
The garage coverage form is written to cover the insurance needs of an insured and the business of selling, repairing, servicing, or storing automobiles. Which of the following coverages are not included in a garage policy? A premises and operations liability. B. Product liability. C. Physical damage on a customer's auto. D. Auto liability.
C. Physical damage on a customer's auto.
An insured recently had a new home built and insisted on having smoke detectors installed in multiple places in the house. What method of handling risk is the insured using? A. Avoidance. B. Sharing. C. Reduction. D. Retention.
C. Reduction.
Wagering on a sporting event is known as what type of risk? A. Simple. B. Pure. C. Speculative. D. Calculated.
C. Speculative
How long must an insured wait before business income coverage begins? A. 96 hours. B. 24 hours. C. 48 hours. D. 72 hours.
D. 72 hours.
Which of the following risks would be eligible for coverage under a dwelling policy form? A. A single-family dwelling occupied by a single person who operates in business of buying and selling firearms in the basement. B. A single-family dwelling that contains a beauty shop that employs three full-time operators. C. A single-family dwelling that is located on a farm premises. D. A duplex that is occupied by two families, each of which have a bedroom rented to a border.
D. A duplex that is occupied by two families, each of which have a bedroom rented to a border.
All of the following would be considered the insured under part B: medical payments of a personal auto policy except: A. The named insured spouse. B. A person occupying it covered. C. The named insured as a pedestrian struck by a motor vehicle. D. A person using their insurance covered car without permission.
D. A person using the insured's covered car without permission.
Which of the following would not be eligible for coverage under a personal auto policy? A. A trailer owned by the insured. B. A vehicle purchase 90 days ago. C. A vehicle listed on the declarations page. D. A nonowned temporary substitute vehicle.
D. A vehicle purchase 90 days ago.
All of the following person would be covered under a business auto policy except: A. A person operating an auto borrowed by the name insured, with permission. B. A person operating a covered auto with the permission of the insured. C. The owner from whom a trailer is borrowed and connected to an auto owned by the named insured. D. An employee of the named insured operating an auto that is owned by the employee's spouse.
D. An employee of the named insured operating an auto that is owned by the employees spouse
All of the following are specific property not covered and a BOP, except A. Property in the course of illegal trade or transportation. B. Bullion and money. C. Watercraft while afloat. D. Business personal property within 100 feet of premises.
D. Business personal property within 100 feet of the premises.
A lender who conditions approval of a loan on the condition that the borrower purchase insurance from the lender may be guilty of: A. Misrepresentation. B. Unfair discrimination. C. Illegal inducement. D. Coercion
D. Coercion
Under which legal defense made claimants recovery be defeated if the defendant can show that claimant contributed, no matter how slightly, to the injury or damage? A. Pro rata liability. B. Presumed negligence. C. Contributory negligence. D. Comparative negligence.
D. Comparative negligence.
An insured failed to disclose a material fact on an application. The insured is guilty of A. Coercion. B. Twisting. C. Misrepresentation. D. Concealment.
D. Concealment.
Which of the following entities is eligible for a business owner's policy? A. Places of amusement. B. Automobile sales in servicing operations. C. Manufacturing operations. D. Convenient store.
D. Convenient store.
Which of the following dwelling policies require insurance equal to at least 80% of the replacement value of the dwelling at the time of the loss in order to provide replacement cost coverage? A. DP1 only. B. DP2 only. C. DP3 only. D. DP2 and DP3.
D. DP2 and DP3
Which is covered by auto Other than Collision (Comprehensive) coverage? A. Radar detector. B. Portable CD player. C. Awning attached to car for camping. D. Electric equipment required for the normal operation of the car.
D. Electric equipment required for the normal operation of the car.
And executive is accused of sexual harassment. What type of coverage would respond? A. Worker's Compensation. B. Hiring practices liability. C. Commercial general liability. D. Employment practices liability.
D. Employment practices liability
Which of the following statements is true concerning at Worker's Compensation and employers liability policy? A. Claims of surviving children are not covered. B. Claims of surviving spouses are not covered. C. Punitive or exemplary damages are covered. D. Exposures and states listed on the information page are covered.
D. Exposures and states listed on the information page are covered.
Which of the following is not a characteristic of a difference in conditions (DIC) policy? A. It is written with a high deductible. B. It provides all-risk coverage. C. It provides flood and earthquake coverage. D. It is a standard policy.
D. It is a standard policy.
Which of the following is consideration on the part of the insurer? A. Decreasing premium amounts. B. Paying the premium. C. Underwriting. D. Paying the claim.
D. Paying the claim.
The purpose of the fair credit reporting act is to: A. Protect the insurer from adverse selection. B. Ensure the consumers receive a copy of investigative consumer reports. C. Ensure coverage for all applicants. D. Protect consumers against the circulation of inaccurate or obsolete personal or financial information.
D. Protect consumers against the circulation of inaccurate or obsolete personal or financial information.
What type of insurer uses a formal sharing agreement? A. Stock insurers. B. Mutual insurance. C. Fraternal benefit society's. D. Reciprocal insurers.
D. Reciprocal insurance.
For an additional premium, the extended coverage is written on the basic form dwelling policy would cover which of the following? A. Vandalism. B. Glass breakage. C. Fire. D. Riot.
D. Riot.
Eligibility requirements for obtaining property coverage in the fair plan includes all the following except A. Risk must be insurable. B. The applicant must have made an unsuccessful effort to obtain coverage in the normal market. C. Risk must be located in a specific area. D. Risk must be owner occupied.
D. Risk must be owner occupied.
What do you call a limit of liability offered as a combined single limit of coverage for all bodily injury to passengers and non-passengers of an aircraft and property damage? A. supplement. B. continuous limit. C. Sleek limit. D. Smooth limit.
D. Smooth limit.
All of the following are true about the cancellation provision of a commercial insurance policy except: A. The insurer is required to give Advance notice of its intended cancellation to the insured. B. The insurer may cancel the policy by mailing or delivering written notice of cancellation to the first named insured. C. The insured may cancel the policy at any time by mailing or delivering written notice of cancellation to the insurer. D. The insurer is required to provide proof that the insured received the cancellation notice prior to canceling the policy.
D. The insured is required to provide proof that the insured received the cancellation notice prior to canceling the policy.
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? A. The insurer must cover the loss out of it surplus. B. The insurer must apply for disaster relief funds. C. Federal Insurance Administration will remove the insurer from the NFIP. D. The insurer will be reimbursed for the excess cost of the NFIP.
D. The insurer will be reimbursed for the excess costs for the NFIP.
Each of the following may be insured under an HO-3 homeowners policy except: A. An occupant of a dwelling under a life estate arrangement when dwelling coverage is at least 80% of the current replacement cost. B. One co-owner when each distinct portion of a two family dwelling is occupied by co-owners. C. The intended owner occupant of a dwelling under construction. D. The owner occupant of the condominium unit.
D. The owner occupant of the condominium unit
Members of the Lloyd's Associations are liable only for which of the following? A. Their individual portion of the risk in addition to 10% of the entire risk assumed by the association. B. They are not liable for any portion of risk assumed by the association. C. The entire risk assumed by the association. D. Their individual portion of the risk.
D. Their individual portion of the risk.
What part of the insurance contract describes the covered perils and the nature of the coverage of the contractual agreement between the insurer and the insured? A. exclusions. B. declarations. C. conditions. D. insuring agreement.
D. insuring agreement.
What doctrine may reduce or bar the recovery from a defendant if an event, beyond the control of the defendant, set in motion a new chain of events causing injury or damage? A. Intervening causes. B. Statute of limitations. C. By carious liability. D. Proximate cause.
A. Intervening cause
Which of the following is the other major coverage provided by the business owners liability coverage form? A. Medical payments. B. Personal liability. C. Liability. D. Employers liability.
A. Medical payments
What does the application of contract of adhesion mean? A. Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured. B. The holder of the contract has the ultimate power of promise. C. The insurer may go to another for representation. D. It makes sure that the insured does not get more than the value of loss.
A. Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured.
An insured owns an automobile liability policy with bodily injury limits up to $200,000 and an umbrella liability policy with a limit of $1,000,000. The insured is involved in an automobile accident and is found liable for injuries totaling $900,000. Which of the following examples best describes how the benefits will be paid? A. Automobile liability policy equals $450,000; umbrella liability policy equals $450,000. B. Auto liability equals $0; umbrella liability policy equals $900,000. C. Auto liability policy equals $200,000; umbrella liability policy equals $700,000. D. Automobile liability policy equals $200,000; umbrella liability policy equals $200,000.
C. Auto liability policy equals $200,000; umbrella liability policy equals $700,000.
In order to get a nonresident license in the state an agent must: A. Pass the nonresident state exam and satisfy their continuing education requirements. B. Represent an agency located in is the state. C. Surrender their license and their state of residence. D. Apply and pay a fee to a non-resident state that reciprocates.
D. Apply and pay a fee to a non-resident state that reciprocates.
The business owners policy (BOP) Standard property coverage form covers which of the following causes of loss? A. Weight of snow, ice, or sleet. B. Water damage. C. Falling objects. D. Transportation.
D. Transportation.
For a contract to be enforceable by law, its purpose must be: A. Legal and not against public policy. B. For financial gain. C. For the benefit of the general public. D. Of pure intent.
A. Legal and not against public policy.
All of the following are considerations in determining which states law applies when a worker is required to travel in another state and is injured while working in the other state except A. The insurers charted location or domicile. B. Place where the accident occurred. C. The normal location where the employee works. D. The state where the employee was hired.
A. The insurers charted location or domicile.
Which of the following best depicts the law of large numbers? A. The larger the pool of risks under study, the more accurate the predictions will be. B. Larger groups produce healthier applicants. C. Larger groups offer less opportunity for loss. D. The larger the group is, the more likely it will be to get a good choice.
A. The larger the pool of risks under study, the more accurate the predictions will be.
An insured was having a new home built. While digging the footings for the foundation, the contractor struck a solid rock formation and found it was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware and the neighbors home several blocks away. Who pays for this damage? A. The insured's insurer, if the neighbor proves that the insured was negligent. B. The insured's insurer, regardless of negligence. C. The contractor. D. The neighbors insurer.
C. The contractor
How long does the removal coverage remain in effect under the standard fire policy? A. 30 days. B. 5 days. C. 10 days. D. 15 days.
B. 5 days.
The business owners liability coverage form would respond to a claim arising from which of the following events? A. An injury rising out of the sale of alcoholic beverages. B. An injury arising out of a customer falling because of a wet floor. C. An injury to an employee while performing his or her job. D. Damages sought by third-party as a result of an accounting error.
B. An injury arising out of a customer falling because of a wet floor.
Which of these would be covered by the medical payments coverage in a personal auto policy? A. An insured trips over the curb while crossing the street and sprains a wrist. B. An insured slams a hand in a car door while getting in, breaking the hand. C. An insured falls down while waterskiing and is run over by a boat. D. A runaway shopping cart in a mall parking lot knocks an insured down, breaking a leg.
B. An insured slams a hand in a car door while getting in, breaking the hand.
Space Age Rockets makes model rocket supplies and has 12 employees. The company is located in Atlanta, GA. Georgia has compulsory workers compensation laws. Space Age's owner thinks that his company is too small and unprofitable to carry the workers comp plan mandated by the state. Possible consequences of noncompliance include all of the following EXCEPT: A. Payment of fines and penalties as dictated by state compliance authorities. B. Forced payment of billing for services rendered by any private insurer that "binds" coverage based on an employee's request for coverage. C. Closure of the business as a public nuisance by state officials. D. Payment for injuries in monetary amounts stipulated by the state with respect to workers compensation plans.
B. Forced payment of billing for services rendered by any private insurer that "binds" coverage based on an employee's request for coverage.
With respect to the commercial package policy, an interline endorsement is one that A. Never applies to all of the lines of insurance that is included in the package. B. Applies to all of the lines of insurance that are included in the package. C. Applies to only one line of insurance that is included in the package. D. May apply to more than one line of insurance that is included in the package.
D. May apply to more than one line of insurance that is included in the package.
Insurance contracts are unilateral in nature. What does this mean? A. The insured must make a promise to pay the premium. B. All parties to the contract exchange something of value. C. A promises made only at the time of the policy application. D. Only one party makes a promise.
D. Only one party makes a promise.
Which of the following is not found in the common policy declarations of a commercial package policy? A. Amount of premium for each coverage part. B. Policy number. C. Insuring agreement. D. Schedule of coverage parts.
C. Insuring agreement.
The primary purpose of the business income coverage form is to reimburse the insured for A. Damage to accounts receivable records. B. The costs of debris removal following loss from a covered peril. C. Loss of income resulting from property damage at the insureds property. D. Lost due to employees work related injuries.
C. Loss of income resulting from property damage at the insured's property.
In a DP - 1, if the insured elects to apply Coverage B to a detached garage, Coverage A will A. be reduced by 10%. B. only be applicable if the insured pays a higher deductible. C. Only be applicable if the insured pays an additional premium. D. Be increased by 10%.
A. Be reduced by 10%.
How does insurance distribute the financial consequences of individual losses? A. It transfers the risk to all persons insured. B. It retains the financial consequences. C. It transfers the risk to associates of the insured. D. It transfers the risk to a small number of persons insured.
A. It transfers the risk to all persons insured.
Which of the following best defines the unfair trade practices of rebating? A. Making false statements that are maliciously critical and intended to injury another person in the business of insurance. B. Offering an inducement of something of value not specified in the policy. C. Making statements that misrepresent an insurance policy in order to induce an insured to replace the policy. D. Charging premium amounts in excess of amount stated in the policy.
B. Offering an inducement of something about you not specified in the policy.
According to the principles of ocean marine insurance, a total loss may occur in which of the following ways? A. Labor. B. Sue. C. Collision. D. Actual
D. Actual.
What two policy components are part of every commercial package policy? A. Consideration and agreement. B. Property coverage and liability coverage. C. Common policy declarations and common policy conditions. D. Common policy exclusions and agreements.
C. Common policy declarations and Common policy conditions.
Which of the following is not considered an insurable payroll? A. An injury to a customer who falls on a wet floor of a local grocery store. B. A loss resulting from gambling. C. Loss of revenue caused by the temporary closing of the building following a covered loss. D. A loss that results from a fire that starts when lightning strikes a barn.
B. A loss resulting from gambling.
Which of the following is not an example of the companies location of incorporation? A. Alien. B. Authorized. C. Domestic. D. Foreign.
B. Authorized.
The extended non owned coverage provides protection to A. Anyone who is given permission to drive by the named insured. B. Only the person named on the policy. C. The person named on the policy and all residents family members. D. The person named and his or her spouse only.
B. Only the person named on the policy.
An insured has $5000 of medical coverage under a personal auto policy at the time of a covered accident. The insured and three passengers are injured. The insured's medical expenses are $8000. The first passengers total $4000; the second passengers totals $6500; and the third passengers totals $1200. How much will the policy pay under the medical payment coverage? A. $5000. B. $8000. C. $15,200. D. $19,700.
C. $15,200
Under coverage E - scheduled farm personal property, livestock that is not specifically insured is limited to a coverage limit of A. $500 per head. B. $1000 per head. C. $2000 per hood. D. $2500 per head.
C. $2000 per head.
To be valid, an insurance policy must have all the following except: A. Consideration. B. Offer. C. Countersignature. D. Acceptance.
C. Countersignature
Which of the following losses would be excluded from coverage under the farm property special form? A. Theft of property from the insured's residence. B. Drowning of livestock. C. Fire caused by curing tobacco. D. Loss of livestock caused by attack by dogs or wild animals.
C. Fire caused by curing tobacco.
A corporation is insured under a commercial general liability (CGL) policy and is named in a lawsuit to recover expenses for bodily injury and property damage from a claim. The insurance company is obligated to provide coverage for all of the following named in the suit except A. Stockholders. B. Employees of the corporation. C. Spouses of officers and stockholders. D. Officers of the corporation.
C. Spouses of officers and stockholders
You are at fault in an auto wreck out of state. How does your company adjust? A. The limit of your policy no matter what the other states minimum. B. By the other states highest form. C. Will not pay at all. D. At least to the minimum requirement by that state.
D. At least to the minimum requirement by that state.
Which of the following is not an example of the companies location of incorporation? A. Domestic. B. Foreign. C. Alien. D. Authorized.
D. Authorized.
Which of the following is most likely ineligible for coverage under the business owners policy? A . A fast food restaurant. B. A retailer with gross annual sales of $100,000. C. An office with total for area of 5000 ft.². D. A bank.
D. Bank.
Two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same and sure, the premium rates are different based on the insured's race. What practice does this describe? A. Defamation. B. Negligent underwriting. C. Misrepresentation. D. Unfair discrimination.
D. Unfair discrimination.
