Insurance Practice Questions

Under additional coverages for homeowners policies, what is the maximum amount that would be paid for fire department service charge?

$500

Authorized insurance companies are examined by the Commissioner at least once every

5 years.

Which of the following would be required to be licensed as an insurance producer

A salaried employee who advertises and solicits insurance

What type of liability would a person who owns wild animals have?

Absolute

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

Which of the following types of valuation works best for property whose value does not fluctuate much?

Agreed value

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

A man is working on the roof of his house, and his neighbor is watching from the ground. When roof shingles are thrown off the roof, they hit the neighbor in the face, injuring his eye. Which best classifies the homeowner's legal liability?

Bodily injury

Which of the following provisions requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time?

Duties after loss

Who is responsible for filling out a notice of claim form?

Insured

Persons covered under an insurance policy, whether named or not, are known as the

Insureds.

All of the following are conditions commonly found in the insurance policy EXCEPT

Insuring agreement.

How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy?

It removes the coverage.

A worker received a concussion after getting hit on the head at work and missed work for 5 days. At what point will the worker receive workers compensation benefits for the missed work?

Never; benefits start once a worker has been unable to work for more than 7 days.

Duties of the insurer found in property policy conditions include all of the following EXCEPT

Notify the insured in the event of financial difficulty

An insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. Which type of limit of liability does this insured's policy have?

Per occurrence

Which of the following is included under the physical damage coverage of a personal auto policy?

Sound reproduction equipment permanently installed in the covered auto

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

Stated amount

How are surety bonds different from insurance?

Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses

When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be

The proximate cause

An insured must get advance warning if the premiums will be increased by more than

15%

How long is a waiting period upon purchase of flood coverage through NFIP?

30 days

Which of the following statements is true regarding the premium computation for workers compensation insurance?

A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis.

In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation

Agreed value

An installation floater is used to insure

Appliances intended to become a permanent part of the building.

Which of the following coverages is included in an unendorsed homeowners policy?

Medical payment to others

Which of the following types of insurers is owned by stockholders?

Stock

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as

Utmost good faith.

An insured's 9-year-old son threw a ball, accidentally breaking a neighbor's plate glass window. The insured was found legally liable for the cost of replacing the window. This is an example of

Vicarious liability.

To legally transact insurance in this state, an insurer must obtain which of the following?

Certificate of Authority

Which of the following special liability coverages will provide protection to managers of a corporation for claims arising from a wrongful act committed by the manager while in an official capacity?

Directors and officers liability