HARD TEST QUESTIONS

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A producer feels that the commisoner was not justified in suspending his license and decides to request a hearing within how many days must a hearing be held

30 days

The following coverages are included in the Maryland Auto Insurance Fund, and are not considered "add ons" Except for

Emergency living expense coverage

Which of the following is not a duty of the commissioner

setting insurance rates

In contrasting stock insueres with mutual insurers, which statement is true?

stock insurers are owned by the shareholders and issue nonparticipating policies

Business auto coverages apply only to those autos that are identified as covered autos in the declarations by entry of the appropriate numerical symbol. Which symbol affords the broadest coverage?

1

The personal property off- premises extension of dwelling forms provides limits of coverage up to

10% of Coverage C anywhere in the world

The business owners policy extension coverage form for personal property off premises is limited to

10,000

An employer that fails to comply with Workers Compensation laws can be found guilty of a misdemeanor and subject to a maximum fine of

1000

How many days from the termination of a producers appointment must the insurer notify the commissioner?

15 days

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 injuried. The insureds medical expenses are 8000. Passenger 1 total was 4000. Passenger 2 6500. Passenger 3 was 1200. How much will the policy pay under the medical payments provisions

15200

What type of policy, which may be added by endorsement or purchased separately, may an insured purchase in order to provide coverage for other types of contracts?

A contractual liability policy

Which of the following risks would be eligible for coverage under a dwelling policy form?

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

Which of the following would be legible for coverage F in the event of injury at the insureds premises

A full time maid

When insurance is written on a dwelling form, which of the following types of property would be insured under coverage B (other structures)

A garage separated from the dwelling

The term "Functional replacement cost" refers to

A loss valuation method

HO polices permit all of the following incidental occupancies EXCEPT:

A retail sales operation run by the insured from his garage

After a covered loss on a homeowners policy, the insured must do all of the following except

Abandon the property involved to the insurer

Who acts on behalf of the principal?

Agent

A house insured with a homeowners policy has been blown off foundation from a tornado. It must be demolished and removed so a replacement house can be built. Which of the following is true about debris removal?

An additional 5% of the policy limit may be paid for debris removal

A general liability policy will respond to claims against an insured when bodily injury or property damage is caused by

An insureds negligence

For negligent liability to exist, which is not a requirement

An intervening cause

In DP-1, if the insured elects to apply coverage B to a detached garage, Coverage A will

Be reduced by 10%

How is a professional liability policy written

Claims- made

When an individual applies for an insurance policy, he intentionally forgets to mention details about his medical history. This is called

Concealment

An insureds home catches fire. As a result, the insureds family must stay in a motel until the home is repaired. The cost of the motel stay would be considered

Consequential loss

Which of the following exclusions would specifically fall under the coverage E in homeowners insurance

Contractual liability

Rental reimbursement will pay for which of the following in the event the insureds vehicle has been damage?

Cost of renting a vehicle

All of the following statements about mutual insurance companies are correct except

Dividends allow policyholders to share in mutual companies divisible surplus

Max limits available for residential properties are

Dwelling 455,00 and 228,000 contents

An insured intentionally drives his automobile into a tree. As a result, he suffers injuries. In all likelihood the insurer would

Exclude coverage for this loss

The federal act that provided more favorable benefits for interstate railroad workers by allowing the injured worker to sue the employer for negligence is the

Federal Employers Liability Act (FELA)

The requirement that producers must account for all insurance funds collected and refrain from commingling is referred to as

Fiduciary responsibility

To have insurable interest in the person or property covered by a property insurance policy, which of the following potential risks must the policyowner face?

Financial loss

Which of the following is covered under a dwelling policy?

Fire caused by an earthquake

Which homeowners policy form insures both buildings and personal property on an open peril basis

HO-5

A scheduled personal property endorsement will be used to insure

Higher limits of coverage for fine arts items

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 are stated

In the state workers compensation law itself

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?

Insuring agreement

Which of the following is not found in the common policy declarations of a commercial package policy?

Insuring agreement

Which of the following is NOT true regarding the automatic increase in insurance endorsement in dwelling policies

It does not required additional premium

Which of the following describes an insurers responsibility for payment under a policy, as stated in the common policy provisions

Limits of liability

Fair rental value coverage in the dwelling policy is similar to which homeowners policy form?

Loss of use

What entity was created to provide a resource to obtain auto liability insurance for those unable to purchase insurance from private insurers

Maryland Auto Insurance Fund (MAIF)

Guaranteeing future dividends is considered to be an unfair or deceptive act known as

Misrepresentation

Virtually all employers with one or more employees (full or part time) are required to provide workers compensation coverage. Which of the following is an example of employees that would be covered by the law?

Prisoners (if working for municipality)

Which of the following would NOT be covered under the directors and officers liability coverage?

Reimbursement for fines and penalties

For an additional premium, the extended coverages written on a basic form dwelling policy would cover

Riot

An insured's child ran into a neighbors planter on his bike and broke the planter and ruined the plants. The cost to replace the planter was 400 and the cost to replace the plants was 100. Which section of the insureds homeowners policy would pay?

Section II with no deductible

Coverage B - Personal and Advertising Injury Liability responds to claims arising from

Suits alleging infringement of a copyright

All of the following statements concerning surplus lines brokers are true EXCEPT

Surplus lines brokers are not permitted to be license as an insurance agent

Which of the following is a federal act that covers crews of ships the same as railroad workers?

The Jones Act

A temporary license may be issued for which of the following reasons?

The agent is seriously injured and their disability keeps them from working

Which of the following statements is correct regarding business coverage under the business owners policy

The business income losses are payable for 12 consecutive months following the occurrence

If a producer wants to use an assumed name instead of his real name while transacting insurance, what authority must the producer notify?

The commissioner

The claims made trigger is based on which of the following?

The date the claim is first made

The owner of a rental dwelling, insured under a DP-2 turns off the heat in the insured dwelling during the winter months because the dwelling is unoccupied. The buildings water pipes freeze and break, causing damage. How will the policy react to this loss?

This loss is excluded from coverage. Freezing and breaking pipes is not covered unless the insured maintains heat in building

Which of the following is true regarding a reinstatement of an expired license in the state of Maryland

To be reinstated, a license cannot be expired for longer than 1 year

What was the purpose of the Motor Carrier Act of 1980?

To establish financial responsibly requirements for interstate carriers

What is the purpose of a separate notice on the collision coverage of private passenger autos?

To inform the insured that waivers or additional coverage is not required on a rented auto

What is the purpose of a premium finance company?

To pay a large premium to an insurer for a in exchange for monthly installments by the client, along with interest

What is the purpose of the ordinance or law coverage endorsement?

To remove the exclusion of losses resulting from ordinances or laws

In a situation where automobile A's at fault drivers bodily injury and property damage coverage is at limits lower than Automobile B's coverage. Automobile A is deemed to be the

Underinsured vehicle

If a person is involved in an accident with a driver who does not have insurance, which type of policy will most likely be referenced?

Uninsured Motorist/ Underinsured motorist coverage

Supplementary payments under the personal auto policy include all of the following EXCEPT:

Unlimited cost of bail bonds

What amount of coverage is provided on HO polices for watercraft?

Up to 1,500

Which of the following would be a proper choice of policy for a company that transports goods that are irreplaceable in nature

Valued Policy

Which of the following is not part of section II of the boatowners policy?

Watercraft damage

When does the insurer's duty to defend a suit or claim end in a commercial general liability policy?

When loss payments equal the applicable limit of insurance

Your friends dog that you're watching bit someone. Does your homeowners liability coverage apply?

Yes, applies for animals in your care

While engaged in a pick up soccer game in the neighborhood park, the insured collides with another player, breaking his nose. Would the insureds homeowners medical payments cover the injury?

Yes, medical payments coverage also applies off the insured premises

The deductible under earthquake coverage is stateed as

a percentage of loss

Loss valuation is best described as the process of

determining the premium charged and the amount of insurance required on a specific property

An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request

3 days

In Maryland, insurers or producers must provide notice of renewal premium at least how many days prior to the policy renewal date

45

Ray is insured with an auto liability policy. His insurer decides, not to renew the policy. How many days prior to the expiration of the policy must Ray be notified

45

How much advance notice is required of an insurer to the insured when cancelling a property policy

45 days

What are two sources for workers compensation insurance

Monopolistic state fund and competitive market

All of the following are additional coverages under a homeowners policy except?

Outbuildings

Which of the following would be covered under a building and personal property coverage form

Outdoor sign on property

What does HO personal property coverage NOT cover?

Personal property of roomers not related to the insured

The garage coverage form is written to cover the insurance needs of an insured in the business of selling, repairing, servicing or storing automobiles. Which of the following coverages are not included in a garage policy?

Physical damage on a customers auto

If an insurance has the additional coverage provision, how does it affect the policy premium

There is no additional premium

Under the property and casualty conditions of a homeowners policy, what may happen if it is discovered that the policyowner committed concealment or fraud

The policy may be voided

Which of the following statements regarding surety bonds are true

The purpose of the surety bond is guarantee that specific duties and obligations will be fulfilled

Under which legal defense may a claimants recovery be defeated if the defendant can show that the claimant contributed in the slightest way?

Contributory negliegence

An audit revealed the administrator for a pension plan has made investments that were not consistent with the risk tolerance set forth in the plan for its members. The earnings for the past year are substantially below the average for comparable funds. The governing board wants to take action against the administrator. What type of commerical liability would the board need to provide for this risk

Fiduciary liability policy paid by the pension fund

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows is possible. Which term describes the agents actions

Misrepresentation

Which of the following benefits under the Marylands Workers Compensation law is subject to limitations

Payments for lost wages

All of the following statements about mutual insurance companies except?

Policy dividends issued by mutual companies are guaranteed and not taxable

Business owners liability coverage automatically includes all of the following liability coverages except:

Pollution

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

The insurer will be reimbursed for the excess cost by the NFIP

What happens if an insured does not sign and return the personal injury protection form?

The policy is issued with full PIP coverage

An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting from one accident which may be used in any combination of amount, not to exceed the single limit. What type of limit does this insured have?

Combined single

The commissioner must examine the transactions and records of each domestic insurer at least every

5 years

How soon does the period of restoration for business income coverage begin after the direct loss?

72 hours

If an individual willfully violates provisions of the fair credit reporting act, what is the maximum civil penalty?

2500

Which of the following symbols in a business auto policy indicates that coverage for newly acquired vehicles applies if the insurer already covers all autos owned by the insured?

Symbol 2

When symbol 7 is provided, which of the following statements is true with regards to newly acquitted autos

They are covered if they are used to replace previously owned autos with that coverage

Insurance rates are regulated to the extent of all of the following EXCEPT

They are in relation to the cost of living


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