Insurance Exam 13

An insured with auto limits of 10/20/10 causes bodily injuries to a third party of $8,000. After losing in court he has defense costs of $5,000. What is the insurance company's responsibility to pay? Answer Choices: $8,000 $5,000 $13,000 $10,000

$13,000

In connection with the bonding business which of the following statements is NOT true? Answer Choices: A surety bond protects the principal from sustaining a loss. Ideally, underwritten surety bonds should not produce any loss. Court bonds are prescribed by the individual courts and not by the insurance companies. A surety bond protects the obligee from sustaining a loss.

A surety bond protects the principal from sustaining a loss. The purpose of a surety bond is to protect the obligee from sustaining a loss. A contractor provides the bond, which is issued by the surety for the benefit of the obligee who would be the party contracting with the contractor to perform under a contract.

Which of the following property would be excluded from coverage for loss under Coverage C of the Homeowners policies? Answer Choices: A valuable baseball card collection owned by the named insured's son that is covered under a separate personal articles floater. A suitcase full of clothes while the named insured is vacationing in Russia. A suitcase, belonging to a guest, that is full of personal items located in the insured's residence. A valuable baseball card collection that the named insured's young son owns, but the insurer is not aware it exists.

A valuable baseball card collection owned by the named insured's son that is covered under a separate personal articles floater

All of the following are exclusions from the standard workers compensation policy, EXCEPT: Answer Choices: Any bodily injury or aggravation of that injury that is unintentionally caused by the insured. Liability assumed under a contract. Bodily injury to an illegal worker knowingly hired by the insured. Bodily injury that occurs outside the coverage territory.

Any bodily injury or aggravation of that injury that is unintentionally caused by the insured.

With a Commercial Package Policy (CPP), "interline endorsements" are endorsements that: Answer Choices: Apply to more than one coverage part of the package policy. Are attached to the common declarations page. Apply only to the common policy conditions within the package policy. Apply only to the Commercial Property coverage part within the package policy.

Apply to more than one coverage part of the package policy.

What does the Leasehold Interest endorsement to a Commercial Property form provide? Answer Choices: Covers a building tenant, when a favorable lease is cancelled because of loss or damage. Covers the landlord for their loss of rents under a lease when the structure is destroyed by an insured peril. Guarantees the continuation of a favorable lease to the tenant when premises are damaged by an insured peril. Provides moving and relocation expenses of a tenant when the lease is cancelled because of damage to the building caused by an insured peril.

Covers a building tenant, when a favorable lease is cancelled because of loss or damage

Virtually all inland marine named perils forms include coverage for: Answer Choices: Theft. Gradual deterioration. Fire and lightening. Dampness and extremes of temperature.

Fire and lightening.

A method of replacing damaged property with something not exactly like the damaged item, but will perform in a similar fashion is known as: Answer Choices: Agreed replacement value. Stated amount value. Functional replacement cost. Replacement cost.

Functional replacement cost.

The insured is operating his boat on a fresh water lake and runs over a water skier. What coverage would apply to this claim under the boatowners policy? Answer Choices: The claim is not covered The hull insurance Liability coverage Medical payments

Liability coverage

All of the following statements are true of liability insurance, EXCEPT: Answer Choices: Legal liability does not have to be determined by a court of law before an insurer will pay. Liability insurance only indemnifies third parties. Liability insurance protects the policyholder against damages he/she causes a third party. Liability insurance provides indemnification for the insured.

Liability insurance provides indemnification for the insured.

What is the term used to describe the circumstance when a state requires its employers to buy coverage from a state-designated Workers Compensation program? Answer Choices: Compulsory Elective Competitive Monopolistic

Monopolistic

All of the following statements are true regarding the revocation or modification of a certificate of authority in Texas, EXCEPT: Answer Choices: The reason for the revocation or modification must be specifically stated in the notice to the insurer. The Commissioner must notify the insurer in writing of the intent to revoke or modify the certificate of authority not later than the 10th day before the date the change will be effective. The reason for the revocation or modification is not required to be stated in the notice to the insurer. The Commissioner may revoke or modify a certificate of authority if a condition or requirement for granting a certificate is no longer satisfied.

The reason for the revocation or modification is not required to be stated in the notice to the insurer.

What is the purpose of an installation floater? Answer Choices: To cover property belonging to a contractor or others that is intended to become a part of a structure To cover property to be installed at the insured's location To cover property that has been installed when the contractor has completed the job and the work has been accepted To cover the insured's machinery, tools and other equipment used to install property to become a part of a building

To cover property belonging to a contractor or others that is intended to become a part of a structure

What is the minimum limit for Coverage L of the Personal Liability Supplement that can be attached to a Dwelling Property policy? Answer Choices: $100,000 $1,000 There is no limit. $10,000

$100,000

The maximum payable for damage or loss to signs attached to the building covered under a BOP issued to the tenant of a building is: Answer Choices: $2500 The building limit because the sign is attached to the building. $1000 $5000

$1000

What coverage is provided under the BOP for a steam boiler explosion? Answer Choices: The steam boiler itself is covered. The steam boiler and the damage to the building and contents are covered. Steam boiler explosions are excluded under the BOP. A separate limit is provided under the BOP for steam boiler explosions.

Steam boiler explosions are excluded under the BOP.

Which of the following is the policy territory as described in the standard Personal Automobile policy? Answer Choices: The United States, its territories and possessions, Puerto Rico and Canada. The United States, its territories and possessions, Mexico, Puerto Rico and Canada. The United States, its territories and possessions and Canada. The United States, its territories and possessions, Mexico and Canada.

The United States, its territories and possessions, Puerto Rico and Canada.

An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2,000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $100,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary policy or the Umbrella policy. How will this loss likely be settled? Answer Choices: The insured will pay the full $100,000 loss. The umbrella policy will pay the full $100,000 loss. The underlying policy will pay the full $100,000 loss. The insured will pay $2,000, and the umbrella policy will pay the remainder of the loss.

The insured will pay the full $100,000 loss. Because the insured allowed the required underlying policy to expire, he is responsible for the $100,000 loss

James Jackson is a Texas adjuster whose license has been suspended. Which of the following statements is true regarding the reinstatement of the license? Answer Choices: Once a Texas adjuster license has been suspended, reinstatement cannot be requested for 3 years. Reinstatement may be requested after the required one-year waiting period. Reinstatement may be requested after the books and records of the adjuster have been fully examined and the adjuster re-takes the state licensing exam and applies for a new license. The license will not be reinstated until the cause of the suspension no longer exists.

The license will not be reinstated until the cause of the suspension no longer exists.

Tyler has covered his electronics store with a Commercial Property policy. Tyler has invested in a sophisticated video surveillance system, therefore, he chooses to add a Protective Safeguards Endorsement to his policy to save money on his premiums. Which of the following is now TRUE? Answer Choices: Tyler's insurer must reimburse him for the cost of the surveillance system, since it reduces the insurer's risk exposure. Tyler's insurer must lower his premiums every year that he goes without filing a theft claim. Tyler's insurer may suspend or deny coverage, if he fails to notify the insurer of any known problems with the system. This endorsement qualifies Tyler for a higher limit for Legal Liability coverage under his Commercial Property policy.

Tyler's insurer may suspend or deny coverage, if he fails to notify the insurer of any known problems with the system.

How many days does the liberalization clause provide for under the ISO standard BOP policy form prior to, or during the policy period? Answer Choices: 55 days 30 days 45 days 35 days

45 days

Which of the following would be considered an Unfair Claim Settlement Practice? Answer Choices: Offering insureds less than what they request in their loss notice. Refusing to pay a claim after conducting a thorough investigation. Failing to deny coverage of a claim within a reasonable amount of time after concluding the investigation. Raising an insured's premium rates after paying a claim.

Failing to deny coverage of a claim within a reasonable amount of time after concluding the investigation.

Which of the following are additional coverages under a Businessowners policy with the named peril form attached? I. Debris removal. II. Pollutant cleanup and removal. III. Exterior glass. IV. Collapse. Answer Choices: I, II, and III only I and II only III and IV only I, II, III and IV

I, II, and III only

Which of the following best describes a licensed insurance professional's "implied authority"? Answer Choices: The authority the general public would reasonably believe a licensed insurance professional would hold. The authority that a license insurance professional would reasonably believe he or she possesses. The authority given by a principal to an agent that is not formally expressed or communicated. The authority specified in a contract between the insurance professional and an insurer.

The authority given by a principal to an agent that is not formally expressed or communicated.

The 165 numbered lines on page 2 of the Standard Fire policy covers: Answer Choices: The additional coverages included with the policy. The conditions and exclusions of the policy. The insuring agreements of the policy. The declarations page of the policy.

The conditions and exclusions of the policy.