KY Study
Which of the following people would be considered as family members under a personal umbrella liability policy?
A foster child who lives with the insured.
All of the following would be considered an "insured" on a Homeowners policy, EXCEPT:
A tenant would be considered an "insured" under their own HO-4 policy that covers their personal property. However, a non-relative who is a tenant living in the insured's residence, is not considered an "insured" under the policy.
Which of the following statements best describes a "third-party-over action" in workers' compensation insurance?
A third-party-over action occurs when an injured worker sues a third party for injuries sustained on the job, then the third party sues the employer to recoup the damages paid to the injured worker.
The insured carries a standard Yacht policy on his vessel registered in Florida. One of the crew members is injured while performing a work-related task on the yacht while sailing off the coast of Italy. What coverage would respond to the crew member's injuries?
Crew coverage under the Jones Act would provide the coverage for the captain and crew. This is a provision under the Jones Act.
The medical payments coverage of a Farm policy can be claimed for up to:
Medical payment claims can be made up to three years from the date of the injury under the Farm liability coverage.
All of the following would need a License and Permit Bond, EXCEPT:
Lawyers
Part D of the personal auto policy does NOT cover:
Mechanical and electrical breakdown, and leaving your car out in the bitter weather to freeze, is not covered under a Personal Auto policy. The other three perils are covered under the "other than collision" coverage if purchased.
Which of the following statements is TRUE regarding Coverage F - Medical Payments to Others on the Homeowners policies?
Medical Payments Coverage pays without regard to legal liability on the part of the insured. Coverage does not apply to any resident of the insured's household or a tenant.
Which of the following liability policies requires the insured's consent before the insurance company settles and pays a loss?
Medical Professional: Settling the suit could cause damage to the reputation of the professional, therefore they are required to provide consent before the insurance company settles the claim. This is in contrast with the other answer choices because in most liability policies, the insured's consent to settle is NOT required.
An employer's workers' compensation policy will pay the medical expenses of injured workers:
Until maximum medical recovery is reached
The term "time-element" is another way of saying:
ndirect loss
Which of the following would be covered by the "advertising injury" coverage of the Farm insurance forms?
"Advertising injury" would cover a farmer who unknowingly disparages the crops grown by another farmer when advertising his own crops. Intentional acts, advertising incorrect prices or descriptions are not covered.
Which of the following refers to "any individual or organization, or an attorney or individual authorized to act on their behalf, who asserts a right of recovery under an insurance policy or surety bond through administrative means"?
"Any individual or organization, or an attorney or individual authorized to act on their behalf, who asserts a right of recovery under an insurance policy or surety bond through administrative means" is known as a claimant. "Administrative means" refers to filing a claim.
Which of the following workers' compensation reserves will be used to pay the expenses associated with IMEs?
"Expense reserves" cover the cost of IMEs. Medical expense reserves cover the costs related to treating the injury.
A claim is made on an excess liability policy. It is discovered during the claims investigation, that the underlying liability policy and the excess liability policy have different inception and expiration dates. The adjuster finds that the different dates has created a situation where the underlying policy was not in effect at the time of the occurrence, and therefore cannot trigger the excess liability policy to pay the claim. This situation is known as:
"Nonconcurrency" is a situation where an underlying policy and an excess liability policy, have different inception and expiration dates, creating a situation where the underlying policy is not in force to trigger coverage under the excess liability policy.
Which of the following is a health condition usually developing over a period of time and caused by an exposure to a hazard in the workplace?
"Occupational disease" is defined as a condition caused by an exposure to a hazard in the workplace and usually develops over a period of time. The most common occupational disease in Kentucky is coal workers pneumoconiosis (CWP), often called black lung.
The "Pollution Clean-Up and Removal" coverage under the Building and Personal Property coverage form of a CPP:
"Pollution Cleanup and Removal" is an additional coverage under the Building and Personal Property coverage form (one of several Commercial Property coverage forms that can be added to a Commercial Package Policy).
Under the ISO standard BOP form, how much would be paid for any one tree, shrub, or plant in case of a covered cause of loss?
$1000 total limit $2500
Mark is injured at work in a state that provides a TTD benefit at 66 2/3%, the state minimum is $40 and the state maximum is $540. The waiting period is 3 days and the retroactive period is 15 day. Mark earns $15 per hour and usually works 20 hours per week. He was injured on December 4th and returned to work on December 12th. Which of the following is the amount of TTD benefit he would have received?
$15 X 20 = $300 (average weekly wage). 66 2/3% X $300 = $200 (lower than the maximum). December 5th to December 11th = 7 days = 1 week. The 3-day waiting period applies, and only 4 days (4/7th of a week) is compensable. 4/7 X $200 = $114.29.
The bond required for a resident public adjuster license is:
$20,000
The minimum liability amount per occurrence for bodily injury and property damage claims available under the BOP is:
$300,000 of liability per occurrence is automatically included on the BOP. Higher limits are available at the request of the insured and at the discretion of the company.
When a covered loss disables the insured watercraft, the standard Watercraft policy provides coverage for "towing and assistance" in the amount of:
$500 for a single event and $1,000 for the entire policy period is available under the standard policy for "towing and assistance".
The additional coverage for debris removal under the Building & Personal Property Coverage form of a CPP, will pay to clean up the debris of others on the insured premises even if the insured has no damage to their own property. The maximum payable to remove this debris of others is:
$5000
Under a personal articles floater, a pair of antique salt and pepper shakers are insured for $1,000. When one of the shakers is broken, the remaining shaker is worth only $200. How much will the insured receive for the loss?
$800
Coverage D - Loss of Use on a farm policy will include coverage for: I. Additional living expenses incurred by the resident family. II. Loss of rental income of the owner for tenants who cannot live there due to a covered loss.
1 & 2
Which of the following damages would be covered under a Commercial General Liability policy for a customer who was injured when her defective microwave oven exploded and was destroyed? I. The customer's injuries. II. Damage to the microwave.
1 only
Which of the following is true? I. The staff adjuster license is limited to individuals. II. Business entities may not be licensed as staff adjuster. III. To be licensed as an independent adjuster or public adjuster, the business entity applicant must have each individual who will act under the business entity license licensed as an individual adjuster for the same type of license (independent or public).
1,2,3
An apprentice adjuster license is good for a period up to _____ only.
12
An apprentice adjuster license is good for a period up to _____ only.
12 months
An applicant for an adjuster license in Kentucky has ____ from the date of the license application to pass the exam.
120 Days
The insured carries a personal auto policy providing a bodily injury limit of $50,000 each person with a per accident injury limit of $100,000. He injures two occupants in another vehicle. Their injuries total $60,000 for Mr. Jones and $50,000 for Mrs. Jones. The insurance company spent $40,000 in defense and investigation costs. How much will the insured's policy pay?
140000
Income benefit payments to a dependent child of a deceased worker will terminate when the child, who remains out of school, reaches what age?
18
Which of the following is subsidized by the federal government? I. Crop Hail Insurance II. Multi-peril Crop Insurance
2
The increased cost of compliance coverage on flood insurance provides: I. Policy limit coverage for ordinance and law changes. II. Coverage for flood plain management ordinance or law changes. III. $30,000 of coverage per building.
2 & 3
Which of the following dwelling forms provides broad perils coverage for personal property?
2&3 The DP-1 includes only the perils of fire, lightning, and internal explosion. A DP-1 policyholder can add the extended coverage and vandalism perils by indicating this choice on the declarations page, but the broad perils (damage by burglars, etc) is NOT available. Both the DP-2 and the DP-3 forms automatically provide fire, lightning, EC, vandalism, and the broad perils for personal property.
A personal watercraft policy would pay for which of the following losses? I. A boat's motor is stolen on the 25th day after the insured acquired it, and before the insured reported its acquisition to the insurance company. II. A boat that sank in 40 feet of water is refloated at a cost of $700.
2, This additional coverage pays for reasonable costs to remove or dispose of the insured watercraft if it is wrecked or sunk. Generally, coverage applies if the loss is caused by an insured peril. Additionally, the motor would have been covered for 14 days after the acquisition even if the insured had not reported it to the insurer, but the question says that the theft occurred on the 25th day after the motor was acquired and the insured had still not reported the motor to the insurer. In that instance, the motor would not be covered.
Under Coverage F - Unscheduled Farm Personal Property, the most that will be paid for a "head" of livestock (an adult animal, one year of age or older) is:
2000
A Kentucky licensee must satisfactorily complete a minimum of ____ hours of continuing education courses during each continuing education biennium.
24 hours of approved continuing education is required, of which 3 hours must include an approved course of ethics.
The "Part B - Medical Payments" section of the standard Watercraft or Boatowners policy covers all necessary medical expenses if they are claimed:
3 years
If the insured purchases a new aircraft to replace a scheduled aircraft, there is automatic coverage provided the insurance company is notified within ____ days of the purchase and premium payment is made.
30
Every licensee must notify the Department of Insurance in writing within ____ of initiation of any disciplinary action taken by any jurisdiction against the license or any other professional license.
30 Days
Under the Additional Coverages of the Businessowners Property forms, property removed to protect it from loss will be covered at another location for up to:
30 Days
A Commercial Property Policy includes a protective safeguard endorsement indicating there are protective safeguards installed in the risk such as a sprinkler system. Should the system become inoperative, how long does the insured have to report this fact to the insurer?
48 Hours
The deductible on a standard Businessowners policy for property coverage is:
500
A leased vehicle is considered to be a covered auto under the personal auto policy (PAP) if it is a private passenger auto leased for at least:
6 Consecutive Months
Which of the following time periods is ordinary payroll coverage limited to in case of a business income loss under the BOP?
60
Under the livestock coverage form, how must livestock be covered?
80%
In the event of a declared common catastrophe, an unlicensed adjuster is permitted to adjust claims in Kentucky for up to:
90 days
With a "full release settlement" of an insurance claim:
A "full release settlement" is also known as a "final release" and all sums due have been paid and the file is closed.
Homeowners policies cover all of the following, EXCEPT:
A 2-family dwelling occupied by tenants who are renting the covered premises from the named insured
No insurer may refuse to renew a property or casualty insurance policy unless at least ___ days before the end of the policy period, the insurer must mail or deliver to the named insured, at the last known address of the named insured, written notice of the insurer's intention not to renew the policy.
A 75 day advance notice of nonrenewal is required.
A typical directors and officers liability policy covers each of the following, EXCEPT:
A D&O policy protects corporate officers and directors. Typically, no coverage is provided for the entity itself, apart from its obligation to reimburse the officers and directors for expenses and damages paid in legal proceedings that are allowed by its bylaws.
Public Official bonds are meant to:
A Public Official bond is meant to guarantee the performance of the official in the job to which they are either elected or appointed. They are usually time required, and the lack of promised performance amounts to a penalty on the bond.
All of the following statements are TRUE regarding BOP Property Coverages, EXCEPT:
A business owner who rents the premises to conduct business is not required to purchase Coverage A which covers the building owned by her landlord.
Drew's agent is putting together a Commercial Property policy for him. The declarations page, the conditions page and several endorsements have been included. Which of the following must still be included to complete the policy?
A cause of loss form still must be attached. The other answer choices list items that are not "forms" but information that is included on other forms within the polic
A non-residential building in Iowa in a community that was admitted to the NFIP Emergency Program would be provided _______ of coverage for the building.
A commercial building in Iowa that is located in a community that was admitted to the NFIP Emergency Program would be provided $100,000 of coverage for the building.
Contractor Joe has borrowed funds from a bank in order to finance a construction project. A surety bond which guarantees the lender that the contractor will use the borrowed funds to finish the contract free and clear of liens is known as a:
A completion bond guarantees the lending party of the funds that the borrowed funds will be used only for this work or project, and the work will be delivered free and clear of liens.
All of the following are considered a "community" under the NFIP, EXCEPT:
A county is not considered a "community" by the NFIP.
Other "private" structures on a farm policy are defined as:
A detached garage separated by a clear space from the dwelling and not for business purposes would be considered a "private" structure.
Who is an insured under the liability section of a Farm insurance policy?
A farm employee is covered while acting within the scope of their duties. Farming includes the incidental operation of roadside stands where farm products principally produced by the insured are sold.
Under the Multi-Peril Crop Insurance program, the policy providing the lowest amount of protection available is:
A farmer purchasing MPCI has a number of coverage options. A Catastrophe (CAT) policy provides the lowest amount of protection available.
Which of the following is NOT considered "your covered auto" under a Personal Auto policy?
A large truck used to manufactured goods for a corporation would not be covered under a Personal Auto policy.
Flood Insurance Rate Map
A map that shows exact boundaries for special flood hazard areas, the various flood zones, and base flood elevations.
All of the following are types of package policies that provide several different types of coverage into a bundle, EXCEPT:
A monoline policy provides a single type of coverage. The other choices combine several types of coverage into a bundle. COVERED IN INSURANCE FUNDAMENTALS.
Which of the following describes a moral hazard?
A moral hazard is presented by applicants or insureds who would cheat, lie or commit other crimes to benefit from insurance coverage. Faulty wiring and overuse of electrical outlets are physical hazards. Laziness and apathy are morale hazards.
All of the following would be considered "uninsured motorists", EXCEPT:
A motorist driving with coverage up to the required state financial responsibility limits for liability, but not high enough to pay the claims for an at-fault accident is an UNDERinsured motorist, not an UNinsured motorist.
After property or casualty coverage has been in effect more than 60 days in Kentucky, a notice of cancellation may not be issued unless it is based on which of the following reasons? I. A violation of any local fire, health-safety, building, or construction regulation or ordinance II. Nonpayment of premium III. Discovery of fraud or material misrepresentation made by or with the named insured's knowledge in obtaining the policy IV. Discovery of willful or reckless acts or omissions by the named insured which increase any hazard insured against
A notice of cancellation may be issued by an insurer after 60 days for any of these reasons.
Under an airport premises policy, all of the following are excluded, EXCEPT:
A passenger slips on a step in the airport, this would be covered because the coverage applies to premises liability.
The "Part B - Medical Payments" coverage of a personal automobile policy covers injuries for all of the following, EXCEPT:
A passenger who is injured in another vehicle that is struck by the insured's vehicle in an accident is NOT covered by Part B of the Personal Automobile policy. Passengers in other vehicles who are injured in an accident with the insured are covered under Part A of the policy.
Max lives in a large apartment complex where there is no guard station or gate. Several hundred people live in the complex so its very easy to determine the schedules of the neighbors living around him. One morning Max leaves for work at 6:30 AM as he usually does, but he forgets to lock the front door. Later that morning someone comes into the apartment and steals Max's computer. What was the peril in this situation?
A peril is a cause of loss. The cause of loss in this situation is the "theft".
All of the following would be covered under a Builders Risk Policy, EXCEPT:
A prospective buyer could not be added to the policy as an insured. They would not have an insurable interest in the property.
Patrice has received a reduced payment for her insurance claim and the explanation states that the reduction was due to the "obsolescence" of the damaged property. Which of the following best describes the reason for the reduction in the claims payment?
A reduced claims payment may be made by the insurance company due to the reduced market value of the property because it has become obsolete (no longer used or available). The reason provided by the insurer for the reduced payment would be "obsolescence".
A requirement that a plaintiff file a lawsuit within a specific period of time after the cause of the lawsuit has occurred, which is oftentimes when the injury occurred or was discovered is known as:
A requirement that a plaintiff file a lawsuit within a specific period of time after the cause of the lawsuit has occurred, which is oftentimes when the injury occurred or was discovered is known as the statute of limitations.
Which of the following watercraft would be covered for liability under "Section II - Liability" of the Homeowners policy?
A sailboat must be less than 26 feet in length, the rented jet ski must be less than 50 HP and an outboard motor boat must be less than 25 HP.
A statement of fact given by the insured at the inception of a policy is a:
A statement of fact is usually considered to be a warranty. In some types of insurance, coverage is voided if the statement of fact is not true. Ocean marine insurance is an example.
Indemnify Insurance has been using a specific ISO Homeowners forms for several years in all the states where they are an admitted insurer. Indemnify Insurance has recently been admitted to an additional state, but the laws of that state contradict a few of the provisions in the ISO form. How is this situation likely to be handled?
A statutory form will be drawn up and attached to each Homeowners policy Indemnify Insurance sells in the state.
The type of auto body frame that is most often used in today's automobile and is a single molded unit, is known as:
A unibody frame is a single molded unit to which the other structures of the automobile are welded.
Which of the following watercraft would be covered under Section II - Liability of the Homeowners forms?
A watercraft is storage is an exception to the exclusion for watercraft and is, therefore covered.
On occasion a work-related injury goes unreported for a long time. What is the time limit for filing a claim for benefits with the Kentucky Department for Workers Claims for physical injuries?
A written claim for workers compensation benefits due to physical injuries must be filed with the DWC within two years of the date of injury or last voluntary payment of disability income benefits, whichever is later. In case of death resulting from an injury, the claim must be made within two years after the death.
Which of the following would be found in a yacht policy?
A yacht policy is an ocean marine type policy which covers the main risks associated with watercraft. It also covers use on fresh water rivers and lakes. Yacht policies contain liability insurance. These policies also offer hull, medical payments and Longshore and Harbor Worker coverage to cover work related injuries to the captain and crew.
Under Kentucky workers compensation, what measure is used to calculate an employee's disability payment?
AWW
Which of the following is covered under the broad form farmowners policy that is not covered under the basic form farmowners policy?
Accidental shooting of livestock, as well as electrocution of covered livestock, drowning of livestock and accidents involving livestock while loading and unloading are covered by the broad form and not covered by the basic form.
Which common exclusion is intended to prevent duplicate coverage for a loss under a Commercial General Liability policy?
Accidents causing bodily injury and/or property damage involving licensed automobiles, are excluded under the CGL policy because the coverage is intended to be on the policy for the automobile. This exclusion prevents the claimant from collecting on the CGL and trying to collect on the auto policy as well, for the damages sustained in the accident.
How are crop insurance premiums calculated?
Acres
Which type of Crop Insurance Policy covers the entire farm instead of an individual crop?
Adjusted Gross Revenue. AGR insures the revenue of a producer's entire farm, rather than an individual crop, by guaranteeing a percentage of gross farm revenue.
Claims adjusters have a close relationship to the legal profession, but must be careful not to become involved in the unauthorized practice of law. Which of the following would be an example of an adjuster who is engaged in the unauthorized practice of law?
Adjuster are not permitted to draft any document that is intended to have a legally binding effect.
Which of the following results in immediate payment when the claimant signs a release relinquishing his or her right to sue?
After a claimant signs a "full release settlement" he or she waives the right to sue.
The claimant relinquishes his or her right to sue by settling the claim under which of the following?
After a claimant signs a Full Release Settlement, he or she waives the right to sue.
Aircraft hull insurance will provide coverage for which of the following?
Aircraft hull insurance indemnifies the policyholder for damage to or loss of the aircraft hull or fuselage. These policies are similar to auto policies in terms of coverage's offered.
Which of the following is true regarding Kentucky Workers' Compensation benefits?
All compensation benefits and claims made for benefits, except child support obligations, are exempt from claims of creditors.
Milton agrees to steal and wreck Albert's car for $4,000, so that Albert can collect $8,000 under his auto insurance policy. Which of the elements of a valid contract are missing in this agreement?
All elements of a valid contract are present except a legal purpose.
The Forgery and Alteration Coverage Form protects the insured from losses resulting from forgery or alteration of: I. Outgoing checks. II. Drafts. III. Promissory notes. IV. Instruments drawn against the insured.
All four of the instruments listed above are covered. This form is meant to protect the insured from loss through theft by these instruments drawn against them.
All of the following are EXCLUDED under the Earthquake Endorsement to a Homeowners policy, EXCEPT:
All of the items listed are excluded under the Earthquake Endorsement to a Homeowners policy, EXCEPT: Land shock waves, they are covered.
In order for coverage to trigger in an employment-related Practices Liability Policy, the insured must inform the carrier of which of the following?
All of the responses are correct and required to be reported by the insured to the carrier as a potential claim as a result of a wrongful act.
The declination or termination of property or casualty insurance is prohibited if based solely upon: I. The marital status of the insured II. The age of the property or insured III. The location of the property
All of the responses are correct.
Any aircraft physical damage is subject to deductibles that differ according to circumstances surrounding a given loss. The applicable amounts are:
All of the responses are correct. Typically the required in-flight deductible is the greatest amount, while the not-in-motion deductible is the least. The deductibles apply independently based on the actual loss.
Don Davis seeks coverage for his manufacturing company to include Premises Liability, Products Liability, Insured Contracts, and Completed Operations. Which of the following policies would cover all of these loss exposures?
All of these exposures can be included in the Commercial General Liability contract. Products Liability and Completed Operations coverages are optional.
A homeowner who moves into a new house and discovers that it has several major defects, may seek a claim against the contractor's: I. Products and completed liability coverage. II. Owner's and contractor's protective liability coverage
Although the homeowner may have a valid claim against the contractor, neither liability coverage applies because the damages do not involve either bodily injury and/or property damage.
Which of the following is the type of policy that is written to cover the insured for occurrences in which they have become legally liable, but only for those exposures covered on their underlying liability policy?
An Excess Liability policy is said to be written on a follow-form basis if the coverage is not defined in the policy, but simply states that the coverage "follows the underlying policy coverages".
Which of the following is true regarding Independent Medical Examinations (IMEs) requested by an insurer while adjusting a workers compensation claim?
An Independent Medical Examination (IME) does not create a doctor-patient relationship, therefore the findings of the IME are not confidential and can be shared with the adjuster and insurance company.
Which type of Crop insurance policy insures the entire acreage rather than an individual crop?
An adjusted gross revenue policy insures the revenue of a producer's entire farm, rather than an individual crop, by guaranteeing a percentage of gross farm revenue.
In most states, which of the following most accurately describes an "admitted insurer"?
An admitted insurer is one that is authorized by a state insurance department to conduct business in that state. A license, known as a certificate of authority is issued to admitted insurers.
Who signs the Declarations page on an Equipment Breakdown policy?
An authorized representative of the company signs the policy Declarations page. This would be the agent.
A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system and the water from the sprinklers, soaks the carpet and shorts-out all the computers, causing thousands of dollars in damage. The office must close for two months during repairs. The cost of renting a temporary office space while the physical damage to the office building is repaired is considered:
An indirect loss is created when a direct loss has created a situation when damaged property cannot be used. The cost of renting temporary office space because the damaged space is unusable, is an indirect loss, sometimes known as a consequential loss.
Which of the following represents an indirect loss?
An indirect loss is the temporary loss of use caused by a direct property loss. A kitchen fire is a direct loss. If that loss is severe enough to make the house unfit to be used, the insured will need to temporarily find an alternative place to live in until repairs to the house are completed. The cost of that temporary replacement - the hotel charge - is the indirect loss.
If an adjuster license is about to be renewed in an even numbered year, notification is required by the licensee's birth month based on:
An individual licensee whose birth date is in an even-numbered year must submit the renewal request, continuing education course completion documentation, and fees to the Commissioner by the last day of the licensee's birth month in the next even-numbered year after the date the license is issued, and each subsequent even-numbered year thereafter.
Which of the following is the BEST explanation as to the reason insurance policies are called "unilateral contracts"?
An insurance policy is unilateral because only one party is legally-bound to perform its part of the agreement.
Estoppel is best exemplified by which of the following?
An insurance producer is the legal agent of the insurer. Statements made by an appointed producer are legally considered to be made by the party that the agent represents, which is the insurer. Therefore, if an appointed agent says a certain claim is covered, the insurer must cover that claim. The insurer would be prohibited from or estopped from denying it, even if the policy clearly excluded the claim.
All of the following are reasons an IME may be requested by a workers' compensation insurer, EXCEPT:
An insurer would not request an IME due to a primary care physician's rates being higher than expected, as an IME would only add to the costs.
Which of the following is true? I. A license as an adjuster is not required of an individual who is employed to investigate suspected fraudulent insurance claims II. In the event of a declared common catastrophe, an unlicensed adjuster is permitted to adjust claims for up to 180 days III. Staff adjusters investigate, negotiate, and settle claims solely on behalf of insurers.
An unlicensed adjuster is permitted to adjust claims for up to 90 days in the event of a declared common catastrophe.
Under Part A of a Personal Automobile policy, "supplementary payments" refer to which of the following?
Any expense the insurance company incurs in the processing of a claim is outside the limits of coverage. The insured is not penalized by a reduction in the limits of liability by these expenses incurred by the insurer.
Failing or refusing to hire or discriminating against an individual diagnosed as having CWP (Coal Workers Pneumoconiosis) is not allowed in Kentucky. An individual damaged by such action may do which of the following?
Any individual injured by any act in violation of these provisions will have a civil cause of action in Circuit Court to enjoin further violations, and to recover the actual damages sustained, together with the costs of the law suit, including a reasonable fee for the attorney of record.
Damage caused by volcanic eruptions is covered by the Broad Cause of Loss form for Commercial Property. Volcanic eruptions are treated as a single occurrence when they happen within a:
Any occurrences of volcanic eruptions are treated as a single occurrence under a Commercial Property Broad form if they take place within a 168-hour period.
Spencer is covered under a standard Personal Automobile policy with a policy inception date of October 15th. Additionally, the policy will expire on October 15th of the current year. Spencer contacts his agent on October 7th and asks to have an new endorsement added to his policy. The agent agrees, adds the coverage the same day, and informs Spencer that there will be an additional premium of $20 per month charged. When will the adjustment of premium be effective for Spencer?
Any premium adjustment made to the standard Personal Auto policy due to a change to the policy, becomes effective on the date of the change, therefore the correct answer would be October 7th.
Sally's home is covered under an HO-3 policy. Coverage F of that policy will pay medical expenses for which of the following?
Anyone invited and injured
Which of the following professional liability policies would also cover bodily injury damages?
Architects and Engineers Errors and Omissions would cover the financial damages as well as any bodily injury caused by an error or omission in the construction or design of a building or part of building which collapses.
A shopper in the supermarket drops a bottle of salad oil and it breaks open on the floor in the aisle. An employee begins to clean up the spill. Halfway through the clean up he realizes that it is time for his break and he proceeds to the break room, intending to finish the clean up after his break. During his absence a customer slips on the oil that has not yet been cleaned up and is injured. Is the store liable?
As soon as the employee becomes aware of the spilled oil the store has notice. The store is directly responsible for any accidents that subsequently occur because the hazard has not been removed.
The insured has a commercial umbrella liability policy with $1 million limit of insurance. Claims were filed against the insured's umbrella policy three times during one policy period for three different occurrences. The claims are: for $75,000 on February 5; for $800,000 on May 4; and for $500,000 on July 10. Which of these claims will be paid?
Assuming these claims came from three different occurrences, all three would be paid. Keep in mind that the umbrella policy has two limits. One is the occurrence limit and the other is the aggregate limit that limits the total claim payment amounts during the policy year. The aggregate limit does not apply under most umbrella policies to automobile claims.
All of the following statements regarding the Commercial Package Policy are correct, EXCEPT:
Commercial Package Policies can include Ocean Marine and Aviation Insurance coverage.
The Now Company carries a special BOP policy with a liability limit of $500,000. The company is involved in an accident causing $200,000 bodily injury damage and $200,000 property damage. The total amount collectible under the policy is:
BOP policies provide a single limit of liability. Both bodily injury and property damage coverage is provided. Since the amounts for bodily injury and property damage combined do not exceed the 500,000 occurrence limit, the total amount of the claim would be covered.
Some items covered under the ISO standardized Businessowners policy have a theft limit. Which of the following items does NOT have a specific theft limitation?
Baccy
Which of the following fit the category of court or litigation bond, which are sometimes called financial guarantee bonds?
Bail bonds, are considered a court bond because they are required to guarantee a person's appearance in court as required by the court. Failure to appear in court represents a default under the bond.
Catherine suffered a covered cause of loss that resulted in water in her basement along with other damage. Alan, an adjuster for Binders Keepers Insurance, tells Catherine to immediately have the water damaged carpeting and wall paneling removed from her basement, so that mold will not cause further damage. At the same time, Alan discloses to Catherine that he is not sure yet if the carpeting or wall paneling will be covered and has her sign a nonwaiver agreement stating that he is not waiving the insurer's right to deny the claim. When Alan begins the process of identifying coverage under the policy, he finds that the water damage to the carpeting and wall paneling is not covered. Which of the following statements is TRUE regarding this claim?
Because Alan told Catherine that he didn't know if the water damage was covered and had her sign a nonwaiver agreement, Binders Keepers' right to deny the claim was not waived, and coverage will be denied because water damage was not covered by the policy.
Mr. and Mrs. Smith own a building worth $100,000 and have it insured on the same basis under three separate policies. Carrier A provides $10,000; Carrier B provides $10,000, and Carrier C provides $80,000. If there is a $20,000 fire loss, how will the claim be paid by the policies?
Because more than one insurance policy written on the same basis covers the loss, the "Other Insurance" clause will be invoked. Each carrier will pay its "pro rata" share of the loss. If you missed this question, review how "pro-rata share" is calculated in the Property Insurance Concepts section of the course.
The insured is liable for $500,000 in damages for a personal injury claim that is covered under the insured's primary liability policy. The primary liability policy has a $300,000 limit per occurrence. The insured also has a $1 million Umbrella policy with a $3,000 self-insured retention limit. How would this claim likely be settled?
Because the claim is covered with the underlying liability coverage policy, the Umbrella policy picks up and pays the remaining portion of the claim, without the application of the self-insured retention. If the Umbrella policy was required to pay first, the self-insured retention would apply.
Lara is moving to Europe for two years in order to take advantage of a promotion at her job. She will not take her 4-seat propeller plane with her. What type of Aviation policy would be best for Lara to purchase for coverage on her plane while it is in storage and she is in Europe?
Because the plane will not be in motion, the best insurance to purchase would be the "Not in Motion" coverage.
Before interviewing the injured worker who has filed a claim, the adjuster should:
Before actually interviewing an injured worker, the adjuster must determine if the injured worker is represented by an attorney. If so, the adjuster needs to contact that attorney and arrange an interview.
Which of the following is NOT true regarding insurance binders in Kentucky?
Binders or other contracts for temporary insurance may be made orally or in writing, and will be deemed to include all the usual terms of the policy. No binder will be valid beyond the issuance of the policy with respect to which it was given, or beyond 90 days from its effective date, whichever period is shorter. Binders can be extended or renewed beyond 90 days with the written approval of the Insurance Commissioner.
Part One of the standard workers' compensation policy covers all of the following, EXCEPT:
Bodily injury by negligence of the insured employer would be addressed by Part Two of the policy, not Part One.
Gottfried, an insurance agent, has posted information online in an forum for insurance professionals. This information stated that Greta's insurance agency has been engaging in rebating and her appointing insurer is about to file for bankruptcy. Gottfried knows this information is untrue, but he is angry that some of his clients have recently left his agency to place business with Greta. Which of the following statements is true of Gottfried's actions?
Both companies and individuals can be victims of defamation. An insurance professional defaming another individual insurance professional or an insurance company is both illegal and unethical.
Which of the following is not considered a "breakdown" under Equipment Breakdown coverage?
Breakdown is direct physical loss that causes damage to covered equipment requiring it to be repaired or replaced. It must be caused by a failure of pressure or vacuum equipment, a mechanical failure, including rupture or bursting caused by centrifugal force, or an electrical failure, including arcing, provided the loss or damage is not excluded elsewhere in the coverage form. The lack of power, light, heat, steam or refrigeration is specifically excluded.
Due to an inflation guard percentage, the building coverage under a Businessowners policy will:
Building coverage under a BOP increase by 8% per year, unless another amount is shown in the declarations.
The Part B - Medical Payments coverage under a standard Personal Auto policy will cover the insured if he/she is injured while a passenger on a:
Bus
Which of the following coverages may be added by endorsement to an Equipment Breakdown policy?
Business income coverage can be added to the Equipment Breakdown policy.
Sarah is shopping at a grocery store and wants to purchase a bottle of juice. The aisle is marked off with a rope awaiting the clerk to clean up a previously broken bottle and spill on the floor. Sarah moves the rope to get the item and slips and falls on the floor, cutting her face on the scattered glass. Which of the following would be the defense that the insurance company would most likely use in this situation?
Business owners are only liable for negligence if a failure to carry out their duty caused the accident. For strict liability cases against manufacturers or sellers of defective products, the injury must result from a defect. In this case the grocery store attempted to keep the premises safe and was not negligent and no breach of duty occurred. The customer assumed the risk which contributed to the injuries.
Which of the following would be excluded under Personal and Advertising Injury Liability Coverage of a CGL policy? I. Breach of contract. II. Incorrect price descriptions of goods, products or services. III. Failure of goods, products or services to perform as advertised. IV. Any offense committed by an insured who is in the business of advertising or publishing.
CGL Coverage B-Personal and Advertising Injury Liability excludes coverage for anyone in the advertising business and excludes claims for breach of contract, incorrect prices on goods, and failure of goods to perform as advertised.
Inland marine insurance is commonly used to insure all of the following, EXCEPT:
Cars
Chuck's home is covered under a DP-1 policy, when his dwelling suffers significant damage due to a tornado. His Coverage A limit is $100,000 and this satisfies his coinsurance requirement. His policy does not have a deductible form attached. His dwelling is severely damaged and he submits a claim for $96,520 for the dwelling. How much coverage does Chuck have remaining on his policy to cover an appurtenant structure on his property that was also severely damaged.
Chuck will have $3,480 of coverage remaining for his "other structure", because under the DP-1, the 10% of Coverage that is available for appurtenant structures is deducted from the entire Coverage A amount, under the DP-1, it is not an additional amount of insurance.
All of the following are true of the liability coverage in a Businessowners policy, EXCEPT:
Claims Made: The question is asking which answer choice is not true about the liability coverage under a Businessowners policy. The liability on a BOP is provided on an occurrence form, not a claims made form.
An insured has purchased a "claims-made" CGL policy to replace an "occurrence" policy that was previously carried. The new "claims-made" policy contains a retroactive date of 01/01/14. A claim that occurred 12/15/13 would be denied under the "claims-made" form for which of the following reasons?
Claims-made coverage applies only to those claims that occur after the retroactive date and are "made" during the policy period. The previous "occurrence" form should provide the coverage if the type of claim presented is covered by the policy, however, this would not be a correct answer because the question asks "why the "claims-made" policy would not cover the claim.
Collin suffered a work-related injury on the morning of February 5th and was off work completely until he returned to work on full duty on February 19th. Collin had worked for his employer for four years and was paid $42,125 per year. Collin's state sets the TTD rate at 66 2/3rd percent of the average weekly wage. The state sets the maximum compensation rate at $420 per week and the waiting period at 3 days retroactive after 10 days. Collin was not paid for working on February 5th, so how many days of TTD compensation is Collin entitled to receive?
Collin is entitled to 14 days of TTD compensation payments. February 5th would be a day he was paid by compensation, but the 19th he would be paid his regular wages because he returned to work that day. 19 minus 5 days is 14 days.
All of the following are true regarding the "mobile agricultural machinery and equipment" form, EXCEPT:
Combines and cotton pickers must be specifically scheduled and are not covered under the blanket coverage of this form.
All of the following are covered by the Terrorism Risk Insurance Program Reauthorization Act of 2015, EXCEPT:
Commercial Automobile was covered under the TRIA of 2002, however, with the reauthorization in 2015, it is now excluded. Commercial property, commercial casualty, and workers compensation coverage have been covered since 2002 and are still covered under the 2015 reauthorization.
Which of the following statements is TRUE regarding Commercial Property coverage?
Commercial property coverage can be written as both a monoline policy and as part of a package policy. There is no requirement that commercial property coverage must be written with a separate liability policy attached, however an insured would want to make sure there was coverage for that exposure.
Which of the following losses would be paid under the Part D - Other Than Collision coverage of the Personal Auto policy?
Comprehensive coverage provides theft coverage including damages that occur as a result of the theft. The corrosion is excluded as "wear and tear" and the other two choices are "collision" losses.
All of the following are duties of a workers' compensation adjuster, EXCEPT:
Conducting arbitration proceedings is not a role of the workers' compensation adjuster.
Which policy would be best for a prospective insured who wants coverage against liability assumed by him under specific written agreements?
Contractual liability coverage is the only coverage that covers the insured's liability assumed under a defined "insured" contract.
Under a CGL policy, "your product" does not include:
Costs to recall defective products are excluded by the policy.
When a liability policy is contested, which of the following entities ultimately determines legal liability? I. The insurance company. II. A court of law. III. The claimant.
Court
Coverage B covered by the general liability policy provides coverage for:
Coverage B in the CGL policy covers personal and advertising injury liability. Normally these claims do not involve bodily injury. The forms provide coverage for consequential bodily injury when an injury occurs when a person such as a shoplifter has been detained, and a scuffle occurs.
Jack rents a home to Tanya and maintains a DP-3 policy on the dwelling. Tanya accidentally leaves the oven on all day while she is out, her Lasagna catches fire, burning Jack's house to the ground, along with all the contents located inside. Which of the following items would be covered under Coverage C of Jack's DP-3 policy?
Coverage C is for personal property (contents). Since this is Jack's policy, it will cover his appliances but nothing belonging to Tanya (her renters insurance would cover it). The damage to the structure would be covered under Coverage A of Jack's policy.
An insured suffers a partial fire loss to his residence. Under an HO-3 policy what insuring agreement is available to pay for temporary, alternate living quarters?
Coverage D
What is the standard minimum limit of liability for Coverage E -- Personal Liability coverage on Homeowners policies?
Coverage E -- Personal Liability coverage of the Homeowner policies, has a standard minimum limit of $100,000 per occurrence. An insured can request a higher limit if desired.
Coverage F under the farm forms covers which of the following?
Coverage F covers unscheduled personal property on a blanket basis. One limit for all business personal property is stated. The items are not scheduled as they are under Coverage E.
A typical boatowners policy includes all of the following coverages EXCEPT:
Coverage does not apply when transporting cargo belonging to others "for hire".
What type of injury is usually not covered by commercial umbrella liability policies if the insured's business is advertising, publishing, broadcasting or telecasting?
Coverage for advertising injury is not covered if the insured is in the business of advertising, publishing or telecasting.
An unendorsed blanket fidelity bond:
Coverage for employee theft of money, securities, or property, written with a per loss limit rather than a per employee or per position limit. A blanket fidelity bond is a type of fidelity bond covering an employer for dishonest acts by employees. The bond grants blanket coverage to all employees in the service of the employer during the term of the bond. Employee names do not need to be listed on the bond.
Under the provisions of the standard BOP policy, what happens when an insured fails to advise the insurance company that the insured's sprinkler system is inoperative beyond a 48 hour period?
Coverage for fire losses will be excluded if the insurer is not advised that a sprinkler system is not working within 48 hours of the system becoming inoperative. Once advised that the system is inoperable, the insurer may possibly remove the premium credit for the system until it is back up and running.
Each of the following is true about the Multi-Peril Crop Insurance (MPCI) program, EXCEPT:
Coverage is available in all states, not just the larger agricultural ones.
Which of the following is NOT true concerning the Terrorism Risk Insurance Program Reauthorization Act of 2015?
Coverage is mandatory
The insured is moving to a new primary residence. Coverage under a Homeowners policy for the personal property being moved between the old and new location is:
Coverage would apply at both locations on a pro-rata basis for 30 days.
Where is Covered Property listed and described on the BOP?
Covered Property is listed and described on the declarations page.
Coverage G under the Farm forms covers which of the following?
Covers barns, silos, fences.
All of the following defines claims covered under the CGL policy for products/completed operations, EXCEPT:
Covers operations while being currently performed by the insured..
With crop insurance policies, the coverage period is usually:
Crops have different growing periods. The policies may be written on an annual policy form, a three season form or a five season form. Regardless of the policy terms, the coverage period is almost always limited to the growing season.
In crime insurance, a custodian is described as which one of the following?
Custodian means the named insured, any of the insured's partners, or any employee, while having care and custody of the insured property inside the premises. It does not include a watchperson or a janitor.
All of the following statements are true regarding Difference in Conditions insurance (DIC), EXCEPT:
DIC insurance covers any cause of loss that leaves the property in a different condition than it was prior to the loss, up to the limit specified in the policy. This type of insurance does not cover fire or any of the extended coverage perils. Therefore, the UNTRUE statement is: "Covers losses due to windstorm". As you know, "windstorm" is an extended coverage (EC) peril.
The CGL policy excludes coverage for damage done to the property of others if at the time of the loss that property was in the care, custody and control of the insured. However, the exclusion does not apply if the damage is caused by:
Damage done to the property of others, that was in the care, custody and control of the insured, caused by fire, smoke or explosion would be covered by the CGL. The other three choices are all specifically excluded from coverage.
The maximum payable for damage or loss to signs attached to the building covered under an ISO standardized Businessowners policy is:
Damage or loss to a sign attached to the building is limited to $1,000 even though it is attached to the building and considered part of the building. Some students confuse this with the additional coverage that is optional and coverage may be added for signs NOT attached to the building for $2,500.
If a covered Kentucky employee is disabled for 15 working days, how many days' income will he or she be entitled to?
Disability income benefits will not be payable for the first 7 days of disability unless disability continues for a period of more than 2 weeks, in which case income benefits will be allowed from the first day of disability.
Under Kentucky workers compensation coverage, what is the waiting period for disability benefits?
Disability income benefits will not be payable for the first seven days of disability unless disability continues for a period of more than two weeks, in which case income benefits will be allowed from the first day of disability.
An adjuster has procured a photograph of the scene of an accident on a claim that he/she is adjusting. This photograph is placed into the claims file as which of the following types of evidence?
Documentary evidence is any evidence that is produced in the form of a "document". Most people think of written documentation, however a photograph or a video can be preserved therefore, they are considered to be documentary evidence.
The Personal Inland Marine coverage form that covers clothing, cameras and other portable property worn or carried by tourists and travelers is known as a:
Due to the fact that Homeowners forms are written on such a broad basis, it is seldom necessary to write the Personal Effects floater. However, you will see questions on this form covered on your state licensing exam, so you need to understand that items under a Personal Effects floater are not scheduled and the coverage limits for particular types of personal property are contained in the form.
Employment practices liability insurance: I. Covers claims generally excluded by workers compensation, such as wrongful discharge or sexual harassment. II. Can be added as an endorsement to a directors and officers policy.
EPL covers employment claims not arising out of workers compensation, including wrongful discharge, sexual harassment and discrimination. It can be sold as an endorsement to D&O or a stand-alone policy.
Which of the following would be considered "economic losses" that could result in compensatory damages being awarded in a negligence case?
Economic losses are those that include out-of-pocket damages, such as incurred medical expenses or lost wages. It does not include disfigurement, pain and suffering or loss of consortium, as those would be considered "general damages".
Which of the following would be an example of a moral hazard?
Embezzlement
Rusty is opening a business in his state of residence and he will hire a staff of 25 employees. He is preparing to purchase workers' compensation insurance and finds that his state is "elective". All of the following statements describe an "elective" state law, EXCEPT:
Employer's in elective states can still be sued by the injured employees, even if they choose to provide workers' compensation coverage
Which of the following is required to calculate the estimated annual premium in a workers' compensation policy?
Estimated annual premiums are made up of work classification (each with its own rate per $100 of annual payroll), estimated annual payroll for each classification, and other factors including the experience modification factor and premium discounts, if applicable.
Under the Terrorism Risk Insurance Program Reauthorization Act of 2015, the maximum limit for the Act for total claims paid under the Act by either private insurers or the government is still limited to:
Even though the Act was amended and extended, the maximum limit for all claims paid by either private insurers or the government is still $100 billion dollars in any one year.
Which of the following is not true regarding an adjuster license in Kentucky?
Every licensee must notify the Department of any change in residence address, business address, or legal name within 30 days of the change.
When an employer self-insures their workers' compensation risks, but would like to purchase insurance to cover claims that may exhaust their self-insured limits, what coverage should be purchased?
Excess coverage should be purchased by a self-insured workers compensation plan to cover claims in excess of the self-insured limits of coverage.
A distinguishing difference between Umbrella policies and Excess policies is:
Excess liability and Umbrella liability insurance both provide "excess" coverage by increasing the limit of liability of the underlying policy. However, an Umbrella policy can also "broaden" coverage by including coverage for items that were excluded in the underlying policy.
Which of the following is not a subject for supplementary payments under a CGL policy?
Expenses for first aid are not found under the supplementary coverages. The others are.
Coverage for all reasonable expenses incurred by an insured in order to continue as nearly as practicable the normal operation of his/her business after a loss is:
Extra expenses include those incurred as a result of a covered loss that is required in order to continue the normal operation of the business. Example: Temporary re-location expenses, overtime expenses etc.
All of the following illustrations could be expected on a FIRM, EXCEPT:
FIRMs are used to set rates, but the map would not display those rates as there are other factors that can influence the premium amount.
Which of the following is NOT an example of an unfair claim settlement practice?
Failing to examine a claimant under oath is not an unfair claim settlement practice.
If an insured fails to report a claim in a timely fashion, the adjuster will immediately:
Failure to report a claim in a timely fashion denies the insurer of the opportunity to promptly investigate the circumstances of the claim. Valuable information from witness could be lost, as well as other physical evidence. When this occurs, the insurer will normally send the insured a reservation letter to protect the rights of the insurer.
Which of the following is not eligible for coverage under any of the Homeowners forms?
Farm dwellings and personal property are not eligible for coverage under a Homeowners form. Separate Farm insurance coverage is available.
What is the definition of custom farming?
Farming for Others Custom farming is farming for others for a fee under a contract or agreement. A special endorsement is required if the receipts are in excess of $5,000 per year.
In 2011 Ace Agency writes a fidelity bond for Doe Carpeting. Two months later a claim for theft by one of Doe's employees that occurred back in 2008 is brought against Doe Carpeting. Doe should submit this claim to:
Fidelity bonds contain a superseded suretyship clause. This clause states in essence that the new (current) bond will pay all losses that would have been recoverable under the prior bond if the discovery period under the prior bond had expired.
What type of bond might an executor of an estate be required to purchase?
Fiduciary Bonds: These are sometimes referred to as court bonds. They are filed in conjunction with court proceedings and are usually required. Some court bonds are referred to as fiduciary bonds and include: 1. Administrators - appointed by the court when a person dies and does not leave a will with an appointed executor. 2. Executors - executes the provisions of a will. 3. Guardians - when parents are deceased, a person is usually appointed by the court to manage and care for the minors and the estate. Sometimes a guardian is appointed for an adult who is incapacitated through mental illness or physical problems. An executor bond guarantees that the will is to be fulfilled in accordance with the desires of the deceased. All funds and other assets must be accounted for and if improperly handled the court will ask that the bond be forfeited.
Jerry is fishing from his 22-foot boat on Lake Norman when he is caught in a sudden hail storm. His boat suffers extensive hail damage. When he files a claim against his Homeowners policy, the most likely reason his claim is denied because:
For the size boat Jerry owns, the boat must have been enclosed inside a building when the hail storm hit or the Homeowners policy would not provide coverage.
An adjuster's report that contains all the facts, evidence and disposition of the claim and is considered to be the final report is known as the:
Full Report
Which of the following would be considered "general damages" that could be awarded to a plaintiff in a negligence case?
General damages reimburse an injured party for intangible, non-economic items such as pain and suffering.
Which of the following businesses would be eligible for a Businessowners policy? I. Donut shop. II. Wholesale florist. III. Barber shop. IV. Taxidermist.
Generally, Businessowners policies are written to cover light businesses with limited locations and size. Most insurers would cover all of the ones in this question. The Donut shop will probably be required to install the proper fire extinguishing equipment if the donuts are made on the premises.
Which of the following Homeowners forms is intended to cover the possessions of the insured who is leasing an apartment?
HO-4
All of the following are advantages of purchasing workers' compensation insurance from a private carrier, EXCEPT:
High Deductible
The right to request an appraisal belongs to: I. The insured. II. The insurer. III. The salvage company.
I and II only.
Which of the following NFIP policies is required to include the Increased Cost of Compliance (ICC) coverage?
ICC coverage is mandatory coverage that must be included on all NFIP policies, except those in the Emergency Program, or those policies insuring contents only. Therefore, an NFIP Dwelling policy under the Regular Program would be the only policy listed that be required to include ICC coverage.
The type of Commercial General Liability policy that will cover an insured years after the policy expires is known as:
If a claim occurred during the policy period, that policy will provide coverage, no matter when the claim is reported.
Blake has been planning to quit his job as a clerk in a United States Court House and open an antique store. After doing some research and finding that antiques do not sell well, he decides to abandon the plan and stay on at the court house. Blake is practicing:
If a risk is unacceptable or not advisable, the proper action may be to avoid the risk entirely.
A lump-sum death benefit is payable to a deceased employee's estate if death results within how long of a work-related injury?
If death occurs within four years of a work-related injury, a lump sum of $50,000 is paid to the employee's estate.
In Kentucky, a person who commits insurance fraud is guilty of a misdemeanor if the claim involved in the illegal activity is:
If the amount involved is $300 or less, it is considered a misdemeanor.
A customer deposits items in a safe deposit box at the bank. These items are missing the next time the customer opens the box. What crime coverage is necessary to cover this loss?
If the bank is legally liable for the loss, the "Safe Depository" coverage form will cover the loss.
Which of the following vehicles is considered " your covered auto" under a Personal Auto policy?
If the insured trades vehicles the newly acquired vehicle is automatically covered. Liability coverage is continuous until the end of the policy period. To continue physical damage coverage certain restrictions and limitations apply. The other choices are NOT covered vehicles under a personal automobile policy
Under a Mobile Homeowners package policy, how is the mobile home itself covered in case of a total loss?
If the mobile home is insured for at least 80% to value, the insured is entitled to replacement cost coverage up to the limit of the policy.
Under what circumstances does an insurer allow the transfer of an insured's rights and duties under a Commercial Package Policy without the permission of the insurer?
If the named insured dies his or her rights and duties are transferred to the deceased's legal representative. This occurs automatically, the insurer's permission is not required.
In Kentucky, how does an employer using leased or loaned workers fulfill its responsibility for such workers for Workers' Compensation under the law?
In Kentucky a lessee must fulfill its statutory responsibility to secure benefits for leased employees by purchasing and maintaining a standard Workers' Compensation policy approved by the Department of Insurance. An employer may fulfill that responsibility by contracting with an employee leasing company to purchase and maintain the required insurance policy.
The limit of a bond is known as its:
In bonding, the limit of the bond is called the bond penalty or penal limit.
Which of the following amounts would be paid on a covered auto suffering a total loss? The retail value is $1,250 and the average trade in value is $1,000.
In case of a total loss to a covered vehicle the insurer is required to pay the retail value of the vehicle plus any applicable sales taxes.
In cases of comparative negligence, the proportional share of the tortfeasor (wrongdoer) in the entire liability will be based upon:
In comparative negligence, the person's liability will be based on his or her relative degree of fault or responsibility.
Which of the following would be considered vacant on an unendorsed Commercial Property policy?
In the Building and Personal Property Coverage form, under Loss Conditions, the Vacancy Clause states that when the policy is issued to the owner or general lessee of a building, such building is vacant unless at least 31% of its total square footage is either (a) rented to and in use by a lessee or sub-lessee, or (b) used by the owner to conduct normal operations.
An insured has reported a claim late that occurred over one year ago and now seeks defense representation and coverage under his automobile policy. What should the adjuster do?
In this case since the facts are not clear and probably no witnesses or police reports and a lack of physical evidence, the adjuster should issue a "reservation of rights" letter to the insured.
An adjuster has uncovered some discrepancies in matters pertaining to a claim, and is unable to contact the insured to discuss these matters. What should the adjuster do in this situation?
In this case the adjuster should send a reservation of rights letter to the insured's last known address to preserve the rights of the insurer.
Robert is retired and lives in an older home in Maine. He has an old floor furnace to heat his home that is in need of repair and he forgets to have it checked. In the winter he stays in Florida for a month with his daughter. While Robert is away, the furnace malfunctions, allowing the temperature in the house to drop so low that all his water pipes freeze and burst, causing massive water damage. His house is covered under a Homeowners broad cause of loss form, that includes water damage from a heating or plumbing system. How will the adjuster handle this claim?
In this case, most insurers would pay for all damage except the destroyed furnace. The policy does not pay for the wear and tear of a heating or air conditioning system. Even though the insured was neglectful, the ensuing damage resulting from the frozen pipes would be covered. If the insured had been advised by a contractor that the furnace needed immediate repairs and the insured failed to make them, most adjusters would deny the entire claim. This would then be considered an increased hazard not known to the insurer and intentional neglect on the part of the insured.
Income benefits for Coal Workers Pneumoconiosis (CWP) are not payable unless the employee has been exposed to its hazards in Kentucky over a continuous period of not less than:
Income benefits CWP will not be payable unless the employee has been exposed to its hazards in Kentucky over a continuous period of not less than two years during the 10 years immediately preceding the date of his or her last exposure to the hazard, or for any five of the 15 years immediately preceding the date of the last exposure.
Risk is best defined as:
Insurance companies insure against the uncertainty of loss. Risk is the uncertainty that a loss might occur and is the reason why people buy insurance.
A person found guilty of insurance fraud in Kentucky where the claim or benefit exceeds $500 can face imprisonment and/or be fined how much?
Insurance fraud in Kentucky involving more than $500 constitutes a felony and is punished by imprisonment of one to five years, a fine per occurrence of up to $10,000, or both.
Which of the following is generally not considered to be a legal defense against claims of negligence?
Intentional acts are excluded by all policies.
George went out for target practice one day with his handgun. He has practiced many times with the same target located in the woods behind his house. Unbeknownst to George, a neighbor was walking in the woods behind the target one day and was shot in the leg by George. Intentional acts are never covered by insurance, however, the claim filed by the injured neighbor may be covered under George's liability coverage. Which of the following is the most likely reason why?
Intentional acts may be covered if the consequences of the act was not intended. Shooting the gun was an intentional act committed by George, but the consequences of act (his neighbor being shot) was not intended.
All of the following statements are true regarding an interline endorsement used in a Commercial Package policy (CPP), EXCEPT:
Interline endorsements are used in the CPP to simplify coverages and conditions among many different forms and apply only to two or more coverage parts.
Which of the following is most likely to be uninsurable?
Investing in real estate is an example of a speculative risk. The other choices are pure risks. Speculative risks are not uninsurable while many pure risks are insurable.
Medical payments coverage under the Farmowners policy covers which of the following?
Invitee
All of the following statements are TRUE regarding Part D - Other Than Collision coverage, EXCEPT:
It covers property damage the insured causes to others
The inception and expiration dates of an insured's underlying commercial liability polices and commercial umbrella liability policy should be the same in order to:
It is better to have the policies issued with the same inception and expiration dates to avoid gaps in coverage.
Which of the following statements BEST describes the reason it was necessary to create a federal flood insurance program in 1968?
It was necessary to create a federal flood insurance program because other property policies routinely exclude flood from coverage. Many citizens were losing everything because they could not purchase insurance to cover their home and their belongings in case of flood.
Kentucky's Workers' Compensation law provides retraining and/or education benefits for injured workers who are unable to perform work for which they have previous training or experience. How long do these benefits last?
Kentucky law provides that 52 weeks of vocational retraining and/or education benefits are available for injured workers who are unable to perform work for which they have previous training or experience.
Which of the following is true regarding the cancellation or nonrenewal of a property or casualty insurance policy in Kentucky?
Kentucky state law stipulates that a clearly defined reason for a cancellation must be given by the insurer as a part of the disclosure regulation. The reason given to an insured for declination, cancellation or nonrenewal of a policy must be stated clearly on the notice.
Pete is adding Commercial Property coverage to his Commercial Package policy. Which of the following coverages CANNOT be added to a package policy using Commercial Property coverage forms?
Liability coverage (insurance that covers the insured's negligence) cannot be added to a Commercial Package policy using Commercial Property coverage forms. A specific liability coverage part would need to be added to the Commercial Package policy.
Which of the following is NOT one of the three main (general) coverages of the Building & Personal Property coverage form?
Liability coverage is not provided under the Building & Personal Property coverage form of a Commercial Property policy. The other three answer choices represent the three general coverages of the form. Coverage A - Building; Coverage B - Business Personal Property; and Coverage C - Personal Property of Others.
Mr. Smith's bicycle shop enters into many written and oral agreements with customers. Mr. Smith's agent informs him that the liability on his BOP contains:
Like the CGL policy, the liability section of the BOP contains coverage for the written and oral agreements for "insured contracts" in which the insured enters. This coverage is known as "Contractual Liability".
Which of the following is not covered under aircraft hull insurance?
Like the coverage under personal auto physical damage coverage, personal effects are not covered.
All of the following are included under the HO-3 "additional coverages" section of a Homeowners policy, EXCEPT:
Loss of a good renter or a favorable lease agreement is not included in the HO-3 additional coverage section of the form.
Under the "Discovery Condition" of the Loss Sustained form of a Crime insurance policy, how long is a loss covered when the loss occurred during the policy period, but was discovered after the policy expired?
Losses that are discovered after the policy has expired but that occurred during the policy period, are covered for up to one year. Keep in mind that the loss must have occurred during the policy period, but the discovery can happen for up to one year after policy expiration.
A legal term describing an intentional act that is illegal or morally wrong, and contributes to the injury of another person is:
Malfeasance is a legal term describing an intentional act that is illegal or morally wrong, that contributes to the injury of another person.
The insured carries crime coverage Insuring Agreement 6 "Computer Fraud." Funds have been secretly transferred from his checking and savings account to a bank account in Switzerland. The insured reports the loss of funds. What will the insurance company do?
Many movies and books today show money being transferred by computer from a bank or a company headquarters to a bank or an individual in the Bahamas or in Switzerland. If these computer transfers are fraudulent and cause the insured to suffer a loss of money, securities, or other property, coverage is provided in these policies. The coverage does not apply to funds that have been transferred off the premises to a messenger.
A customer is injured on the insured's premises and the insured is not found legally liable. The insured carries a Commercial General Liability policy. Which of the following CGL coverages would apply to cover the customer's injuries?
Medical payments coverage under the CGL policy pays regardless of legal liability on the part of the insured. Damages for the other three answer choices require proof of legal liability.
Making false or misleading statements about dividends or shares of surplus previously paid on an insurance policy is known as:
Misrepresentation
Making false or misleading statements about dividends or shares of surplus previously paid on an insurance policy is known as:
Misrepresentation is intentionally making false statements designed to mislead another party.
Which of the following is true about a mobile home endorsement in terms of eligibility?
Mobile homes may be covered by an HO-2 or HO-3 form by attaching the mobile home endorsement. To be eligible, a mobile home must be designed for year-round living and be at least 10 feet wide and 40 feet long.
Who pays into the "Special Fund" created to pay half the costs of CWP claims?
Monies are deposited into the special fund from mandatory assessments on self-insured employers, self-insured groups, and Workers Compensation insurance policy premiums
The federal crop insurance program is called:
Multi-Peril Crop Insurance is subsidized by the Federal Crop Insurance Corporation.
An insured has submitted a claim for payment under her Homeowners policy for damage caused to her home due to flood. She has received a notice from the insurance company regarding her claim. Which of the following is the notice the insured most likely received?
NOT THE ROR, MOST LIKELY DISCLAIMER OF COVERAGE
Under Kentucky law, "injury" includes which of the following?
Natural aging and claims caused by conditions outside of the workplace are not compensable under workers compensation. However, work-related injuries are compensable, without regard to the cause or who is at fault.
The elements of negligence include: I. A duty of care existed. II. A duty of care was breached. III. Injury or damage resulted. IV. Criminal conduct.
Negligence is established as a tort - a civil wrong. It occurs when one party, either through action or inaction, fails to exhibit a reasonable care that causes another party to be subject to unnecessary harm. The negligent party is presumed to have an obligation or duty to protect against the negligent act.
Under the livestock coverage form, within how many days must newly acquired livestock be added to the policy?
Newly acquired livestock must be reported to the insurance company within 30 days of acquisition, at which time an additional premium will be charged the insured.
A Commercial General Liability form provides automatic coverage for newly acquired organizations for up to:
Newly acquired organizations are covered for up to 90 days.
Mr. Cato carries a watercraft policy covering his 25 foot pontoon boat. The boat is powered by a 150 h.p. motor. He transports it to the Florida Keys and operates the craft 20 miles out to sea. The boat capsizes and is destroyed. What coverage would apply to the boat?
No coverage would apply to the boat because the insured went outside the territorial limit of 12 miles.
While in England an insured has her purse stolen and files a claim for $500 of cash, $1,000 in airline tickets, $250 for miscellaneous items and $50 for the value of the purse. How much of this loss would be covered under a DP-1 dwelling form?
None of the dwelling forms provide theft coverage of personal property unless the theft coverage endorsement is purchased.
A personal auto policy provides coverage for all of the following drivers of an insured car, EXCEPT:
Obviously, the thief did not have permission to drive the car. He or she would never be considered an insured.
What is the time limit for filing diagnosed occupational disease claims with the Kentucky Department of Worker Claims?
Occupational disease claims must be filed within three years after diagnosis or after symptoms first appear which are sufficient to inform the employee of the disease, whichever is earlier. A claim may also be filed within three years after death caused by an occupational disease. For cases where there was no diagnosis, or there were other reasonable circumstances that prevented the claim from being filed within the three-year limit, the ultimate maximum period to file most occupational disease claims is five years after the employee was last exposed to the occupational hazard responsible for causing the disease, regardless of when the individual was diagnosed.
The type of Commercial General Liability policy that will cover an insured years after the policy expires is known as:
Occurrence form
When Todd, an adjuster, shows up to a claimant's property to adjust a claim, he finds that the claimant has an attorney with him. From this point on:
Once the claimant has hired an attorney, all future communications between the adjuster and the claimant, must be handled through the attorney.
All of the following are examples of the types of exclusions found in professional liability insurance policies, EXCEPT:
One of the purposes of this coverage is to provide protection for compensatory damages.
Which of the following people would be considered as family members under a personal umbrella liability policy?
Only the foster child would be considered a family member since the child resides with the insured.
Which of the following would be covered under the building coverage of an NFIP policy?
Only the plumbing system of the building would be covered under the "building" section of the NFIP policy. The other three answer choices would be covered under the contents (personal property) section of the policy.
Which of the following policy provisions or clauses is designed to prevent the violation of the principle of indemnity?
Other Insurance:This clause is designed to prevent the insured from collecting from more than one insurer on the same claim until they have violated the principle of indemnity. The insured is not supposed to profit from a loss.
When preparing an auto body repair estimate to submit to an adjuster, the included operations that may be performed simultaneously are known as:
Overlap areas are included operations that may be performed simultaneously, and cannot be charged for separately.
Marty has full coverage under a standard Personal Auto policy for the three cars he owns. He and the members of his household are covered as insureds under the policy. Marty's 16-year-old son Gordy, spends the weekend at his friend Steve's home and during the visit, drives one of Steve's family's cars with permission. Gordy has an accident and he is at-fault for bodily injury to others. Which of the following statements best describes how this claim will be paid?
Part A - Liability of Marty's policy will pay the claim because Gordy is an "insured" under this section of Marty's policy "while using ANY vehicle".
Which of the following statements is TRUE concerning Part A - Liability coverage on a standard Personal Automobile policy?
Part A of the policy provides third-party coverage for those who are injured in an accident or property damage caused by an "insured" under the policy.
The insured and her 18-year-old son, who lives in the insured's household, are crossing the street when both of them are struck by a drunk driver. The Part B - Medical Payments coverage of the insured's personal auto policy will:
Part B - Medical Payments of the insured's personal auto policy would cover the insured and her son for treatment for the injuries they sustained.
A large tree has fallen into Paul's yard caused by wind. The claims service representative (CSR) advises Paul to call a contractor to remove the tree and send the bill to the insurance company. The bill is $1,200. However, the policy coverage for the debris removal of a tree that has fallen by wind, is only $500 unless the tree hits the house, which was not the case. What should the adjuster do?
Pay the $1,200
A surety that provides a bid bond to a contractor might also provide another bond if the contractor is awarded the contract. The bond that is purchased after a contract is awarded is:
Performance Bond
According to Kentucky Workers' Compensation regulations, which of the following best describes a permanent partial disability?
Permanent partial disability benefits are payable when an employee has an established permanent disability, but retains the ability to work.
Parmelia is covered under two separate standardized Personal Automobile policies, with Part C limits under both policies set at $200,000. Parmelia is involved in an accident with an uninsured motorist and she sustains bodily injury damages for $262,320. How much will Parmelia receive when she submits a claim for these damages?
Permelia will receive $200,000, because Part C does not permit the stacking of limits. She will only collect the highest limit of a single policy for uninsured motorists coverage.
Personal article floaters provide coverage on what basis?
Personal article floaters are written on an "all risk" basis. However, there are the usual property exclusions such as flood, war, marring, wear and tear, deterioration, etc.
A fur coat that is insured by a personal articles floater is damaged by a pet. Coverage for the coat would be provided because the policy is written on:
Personal article floaters insure against the open perils (all risk) method. The form does not list the perils. If not excluded, all losses are covered.
Homeowner policies typically provide coverage for all of the following, EXCEPT:
Personal injury covers libel, slander, wrongful eviction and several other coverages. The standard homeowner policy must be endorsed to provide personal injury coverage.
Homeowners policies provide personal liability coverage that follows an insured anywhere in the world under:
Personal liability coverage for the insured under a Homeowners policy is found in Section II - Coverage E of the Homeowners policy.
A standard ISO Homeowners policy has been issued to cover a one-family structure with a coverage limit of $75,000 on the dwelling. What is the automatic amount of insurance coverage on personal property?
Personal property is automatically covered for 50% of the amount of the dwelling limit for one or two-family dwellings.
Under the farm policy, which of the following is not considered livestock?
Poultry
Under the Farm insurance liability coverage, which of the following would be covered?
Products liability for the insured's products would be covered. The others are specifically excluded.
The Commercial Building & Personal Property coverage form includes an Additional Coverage for property removed from the premises because of being endangered by an insured peril. The coverage lasts for:
Property removed is covered for up to 30 days after being removed to another location. Removed property is covered for any direct physical loss.
A professional liability policy can be:
Purchased separately for an additional premium. The professional liability policy is a "stand alone" separate policy that can be purchased for an additional premium
Under a Mobile Homeowners package policy, how is the mobile home itself covered in case of a total loss?
RCV
In terms of fidelity bonds, what does "position scheduled" refer to?
Rather than schedule the individuals by name to be covered under the bond, their positions are scheduled.
Gavin, the named insured under a Personal Auto policy, his daughter Tabitha, and two of her friends are riding in the covered auto when Gavin accidentally runs a stop sign, striking another vehicle. Everyone in Gavin's vehicle was injured as well as the driver and two passengers in the other car. How long do Tabitha's friends have to submit their medical expense claims for coverage under Part B of Gavin's standardized Personal Auto policy?
Reasonable medical and funeral expenses will be paid under Part B - Medical Payments if they are submitted within three years of the date of the accident.
Policies issued under the National Flood Insurance Program provide removal coverage for property which is moved to another location to protect it from a flood. This coverage applies for up to:
Removal coverage is designed to avoid loss if the property can be moved elsewhere for protection against flood damage. This coverage is provided for up to 45 days.
Which of the following is considered an Unfair Claim Settlement Practice?
Requiring a claimant to submit a preliminary claim report before moving forward on the claim is an Unfair Claim Settlement practice according to the NAIC.
Which of the following losses would be covered by Part D of a standard Personal Auto policy providing both "Other Than Collision" (Comprehensive) and "Collision" coverage?
Road damage to tires is specifically excluded under the PAP, however the claim described in the correct answer involves a collision, therefore the entire claim would be covered minus the deductible. The policy does not cover losses due to freezing or any radar equipment designed to help the drive avoid police. The damage to the bearings is due to wear and tear which is also excluded.
A prospective insured wishes to protect her firm against criminals taking money from a messenger going from the firm to a bank. In this situation, the prospect should purchase coverage for:
Robbery is defined as the taking of property by force with the threat of violence or injury.
Robbery involves all of the following, EXCEPT:
Robbery is generally theft or attempted theft from an individual, while burglary is theft from premises with signs of forcible entry or exit. But under the commercial crime form, theft from a watchman on premises (or a janitor by endorsement) is considered burglary. Robbery always involves the threat of violence or injury otherwise it would fit more aptly in the definition of burglary or theft.
To qualify as an individual self-insured employer for workers compensation in Kentucky, which of the following is required?
Self-insured employers pay their own workers compensation claims directly and do not carry primary insurance coverage. The DWC commissioner shall require the deposit of an acceptable security, indemnity, or bond to secure, to the extent the commissioner directs, the payment of compensation liabilities as they are incurred.
Which of the following would not be considered a "Special Defense" in denying or reducing a Workers' Compensation claim in Kentucky?
Since 1987, it has been the law in Kentucky that no employee may be harassed, coerced, discharged, or discriminated against in any manner whatsoever for filing and pursuing a lawful CWP (Coal Workers Pneumoconiosis) claim under the Act.
Which of the following would NOT be excluded under the Liquor Liability Exclusion of the CGL?
Since Mary is not charging for the alcohol and is not in the business of selling, serving or manufacturing liquor, the exclusion for Liquor Liability would not apply in this situation.
After paying a claim an insurance company may have the right to pursue legal action against the negligent party. This is known as:
Subro
Sue Green has a commercial crime policy on her restaurant, but she only chose the insuring agreement "Inside the Premises - Robbery or Safe Burglary of Other Property". If an employee steals some equipment by breaking into the premises during the daytime on a holiday, the policy would:
Sue would need to add the insuring agreement "Employee Theft" to her crime policy to cover the dishonest acts of her employees. Even though this fits the definition of burglary due to a forced entry, theft by an employee is not covered on the form. Sue would need employee theft coverage.
Which of the following coverages does not have a limit of insurance listed in the CGL Declarations page?
Supplementary payments pay in addition to the limits of liability. While some do have their own individual limits such as the payment of bail bond premiums, the insurer can spend whatever it wants for certain other expenses.
Under the "Coverage C - Personal Property" section of the Homeowners policy, how much coverage is provided on watercraft, including their trailers, furnishings, equipment and outboard motors.
The "Coverage C - Personal Property" of the Homeowners policy covers $1,500 on watercraft, including their trailers, furnishings, equipment and outboard motors.
If the named insured's employees use their own vehicles to run errands, and the named insured does not have commercial auto coverage, what coverage should be added to the insured's Businessowners policy?
The "Hired Auto and Non-Owned Auto Liability" endorsement would be attached to the BOP policy to protect the insured from liability exposures resulting from an auto accident that occurs when an automobile that is not owned by the business, is used for business purposes.
Which of the following flood zones show a "flood depth" instead of a "base flood elevation" on a FIRM?
The AO zones are subject to only shallow flooding during the base flood, therefore "flood depths" are shown in these zones.
Which of the following losses may not be determined by an adjuster?
The adjuster usually advises the claimant to rent a vehicle similar to that which is damaged and submit the bills at a later date after the claim has been negotiated.
If the Agreed Value option of the Business Income form is selected by the insured, the coinsurance requirement is:
The Agreed Value option removes the coinsurance requirement from the covered property for which it is designated and substitutes an agreement to cover any loss in the same proportion as limit bears to stated Agreed Value. The Agreed Value condition extends until the Agreed Value expiration date marked on the declarations or the actual expiration date of the policy, whichever occurs first. After expiration, if the provision is not renewed by the company, the coinsurance condition is reinstated.
The BOP provides liability coverages. Which of the following is a correct statement regarding the limits of coverage?
The BOP contains both a Per Occurrence Limit and Aggregate Limits for Premises/Operations and Products/Completed Operations.
The Businessowners Policy provides coverage on the buildings and contents. How is the coverage provided?
The BOP offers the option of covering the property on a "replacement cost" basis or "actual cash value" basis.
An insured is covered under a BOP policy. He insures a piece of equipment separately under a floater policy. In case of a loss what coverage will apply under the BOP policy?
The BOP will be excess over the floater policy.
What is the time limit provided under the basic extended reporting period under the CGL claims-made form for the reporting of claims that occurred before the expiration date of the policy?
The Basic ERP (Extended Reporting Period) provides coverage for claims made after the policy expiration date. The insured has 60 days following expiration to report the occurrence and then 5 years of extended coverage for the claims reported.
Which of the following would be paid under the Business Income form of a standardized Commercial Property policy?
The Business Income form will pay for loss of business income and extra expenses incurred to keep operating after a loss.
Commercial General Liability coverage provides "medical payments" coverage for accidental injuries, if the expenses are incurred and reported to the insurer within:
The CGL policy imposes a one-year time limit, from the date of the injury, to report medical payments claims to the insurer.
All of the following are true regarding supplementary payments provided by a Commercial General Liability policy, EXCEPT:
The CGL provides up to $250 per day for loss of earnings as a supplementary payment.
What is the penalty for failing to comply with the mandatory Workers' Compensation coverage in Kentucky?
The Commissioner of the DWC may temporarily restrain or temporarily or permanently close down the operation of any employer covered by the Act. Each day without coverage constitutes a separate offense.
The insured carries an unendorsed DP-3 dwelling policy on his home and personal contents. While traveling abroad someone broke into the home and stole $200 in cash, a shotgun valued at $1,000, and other household items valued at $2,000. Damage caused by the burglars is $1,500. Assuming no deductible applies to their coverage how much would be paid?
The DP-3 only provides damage to covered property caused by the burglars. Theft is excluded under the DP-3 unless endorsed with the theft endorsement.
Which of the following is the provision in a liability policy that allows an insured to report incidents or circumstances that result in claims being filed in the future?
The Discovery provision allows an insured to report incidents or circumstances that may result in a claim being filed in the future. This provision is found mainly in liability policies with "claims-made" coverage triggers.
The Dwelling Form Flood policy will cover: I. A single-family residence. II. A three-family residence. III. Manufactured housing.
The Dwelling Form Flood policy will cover residential structures up to four families or manufactured housing.
The requirements of the Employment Retirement Income Security Act compel employers to cover their professional liability exposure for honest errors and omissions regarding employee benefit plans by purchasing:
The ERISA laws would compel an employer to purchase Fiduciary Liability coverage for honest errors and omissions when administering employee benefit plans.
The Earthquake Endorsement will provide coverage to the dwelling and/or personal property with the deductible stated as:
The Earthquake Endorsement has a base deductible is 5% of the limit that applies to all Section I coverages, but never less than $500.
Which of the following "additional coverages" of the Building and Personal Property Coverage form is paid without the application of the policy deductible?
The Fire Department Service Charge is the only additional coverage of the form to which a deductible does not apply.
Which of the following is NOT a true statement regarding the agency relationship?
The agency relationship is defined by the contractual relationship between the agent and the principal, not a relationship with a third party.
A daughter is attending college and her family carries a tenant's homeowner policy HO-4 with $50,000 contents coverage. The daughter has about $15,000 of personal belongings consisting of clothing, musical instruments and electronic equipment, some appliances and other personal items. Which is the form to use to cover her property exposures?
The Homeowner policy limit extensions would not provide the coverage she would need. The best inland marine form for her would be the personal property form.
Which of the following is the limit for "loss assessment" provided by Section II of the Homeowners forms?
The Homeowners policies, under Section II provide $1,000 for loss assessment.
Any person who willfully violates any insurance rule, regulation, subpoena or order of the Kentucky Insurance Commissioner may be subject to any of the following, except:
The Kentucky Insurance Commissioner does not have authority to sentence persons to jail. That action is reserved to the court system. The Insurance Commissioner can impose fines, suspend or revoke insurance licenses or both.
The NAIC Unfair Claim Settlement Practices Act is intended to cover all of the following types of insurance claims, EXCEPT:
The NAIC Model Legislation governing Unfair Claim Settlement Practices does not apply to Equipment Breakdown (Boiler & Machinery) insurance claims.
Which of the following NFIP forms provides replacement cost coverage if the building meets the other eligibility requirements for RCV?
The NFIP Dwelling and RCBAP forms provide loss settlement at replacement cost value only on single-family dwellings.
A 2 to 4-Family Dwelling is covered under the NFIP for incidental occupancies if it occupies less than:
The NFIP provides coverage for incidental occupancies for a 2 to 4-Family Dwelling if it occupies less than 25% of the building's total floor area.
Which of the following is covered under Part A of the Personal Auto policy?
The Personal Auto policy does not cover damage to property of the insured, or property in the care, custody or control of the insured. The PAP makes an exception in the exclusions to cover damage to a private residence and garage rented by the insured. The other three examples are excluded.
Which of the following "additional coverages" under the Building & Personal Property coverage form does not increase the limit of liability of the policy?
The Preservation of Property additional coverage does not increase the limit of insurance.
Under a Flood insurance RCBAP (residential condominium building association policy) will settle claims on what basis?
The RCBAP settles losses on a replacement cost basis.
What costs are paid under an Umbrella policy?
The Umbrella policy, like most liability policies, pays up to the limit of liability for covered claims. In addition, it pays defense costs incurred by the company in the defense of the insured. When the underlying coverage does not cover a claim and the Umbrella policy DOES cover the claim there is usually a retained limit, otherwise known as a deductible, that the insured must pay.
Which endorsement must be attached to a BOP policy for coverage to apply to a freezer that was damaged by the interruption of a power source?
The Utility Services - Direct Damage endorsement would cover the direct damage to the freezer caused by the power interruption, as long as the freezer was specifically listed on the endorsement.
Sue Stokers owns an expensive collection of jewelry. She is worried about the fluctuating values of gold, silver and diamonds. She has the collection appraised. Her agent suggests a Personal Articles Floater to insure these items. If she wants to avoid a decrease in her coverage due to a decrease in market value, what is the best clause she can have included in her policy?
The agreed amount clause will protect her against a decrease in value. It will not insure for an increase in value.
Fred owns two commercial buildings and carries NFIP coverage on them. The area where the buildings are located is a full-risk zone in the Regular Program. Both buildings are 30 years old and when they are damaged by flood, Fred finds that the cost to comply with the new Floodplain Management Ordinance will be quite expensive. What is the total amount of coverage Fred could receive for the Increased Cost of Compliance?
The amount of coverage for ICC under the policy is $30,000 per building and no deductible applies. Therefore, Fred could receive $60,000.
Which of the following statements is true about death benefits covered by a standard workers compensation policy?
The amount of the funeral expense coverage is set by state law. Most states either discontinue the death benefits upon remarriage, but some continue it at a reduced rate, and others continue it at the full rate but only for spouses of deceased first-responders. The death benefit is never set at 100%, but minor children ARE eligible to receive death benefits as a result of their parent's death caused by an on-the-job injury.
Isabelle is covered under a standard HO-6 form and must vacate her condominium because an adjacent unit has suffered extensive fire damage. Isabelle will need to collect additional living expenses from Coverage D of her HO-6 form. How will this amount be calculated?
The amount provided under a standard HO-6 for Coverage D is 50% of the Coverage C limit.
Which of the following statements is NOT TRUE regarding the "period of restoration" for Business Income and Extra Expense coverage?
The answer choice that is NOT TRUE is: "The period of restoration ends when the policy period ends." The period of restoration is not affected by the policy expiration as long as the loss occurred during the policy period.
All of the following statements are correct regarding the insurer's right to "examine under oath" as specified in the Building and Personal Property coverage form, EXCEPT:
The answer choice that is NOT TRUE regarding an "examination under oath" is: "The insurer has the right to examine any insured under oath, but only if the claimant has brought a lawsuit against the insurer." The insurer can request an examination under oath at a time and place that is agreeable to both parties.
In a bond that has been in place and renewed for several years with the same carrier, under the "loss sustained under previous insurance condition" which would respond to a claim that was just discovered but which actually happened two years ago?
The answer is the current bond as per the policy conditions section of the bond.
Which of the following coverage endorsements under commercial crime and bonding would cover an ATM machine?
The automated teller machine endorsement provides coverage for the loss of money except by employees.
Under a surety bond, the "principal" is the party that:
The bond guarantees the performance of the principal. A building contractor would be an example of a principal under a performance bond.
The Main Street Department store carries a bond covering all of its employees. The bond limit is $10,000. Three employees acting in collusion steal $30,000. How much will be paid under the policy?
The bond limit is the most that will be paid regardless of the number of employees acting in collusion. If they were covered under a named schedule basis the limit would apply per employee.
Jordan's Jams purchases a standardized Commercial Property policy on August 15th from Binders Keepers, Inc. On September 20th, Binders Keepers adopted a form revision that provided broader coverage without additional premium, however Jordan's policy was written before the form revision was adopted. Which of the following statements is TRUE regarding how the broadened coverage would apply to Jordan's Jams?
The broadened coverage would apply to Jordan's Jams immediately on September 20th because the revision was adopted during the policy period and did not require an additional premium..
The business personal property limits will be increased by what amount in order to cover seasonal variations in stock in the BOP?
The business personal property will increase by 25% to provide coverage for seasonal variations in stock but only if the insured had insured the property for at least 100% of its monthly average over the last 12 months.
For any violation of the Insurance Code where the Insurance Commissioner has the power to revoke or suspend a certificate of authority, he may in lieu or in addition to such revocation or suspension, impose a civil penalty against an insurer of not more than ____ per violation.
The civil penalty for an insurer is an amount not to exceed $10,000.
In order for a "full release settlement" to become closed, what MUST occur?
The claim check for damages must be cashed by the claimant.
While examining a hand saw at Elmer's Hardware, a customer accidentally cuts her hand. Elmers' liability exposure would be addressed by which of the following coverages?
The claim occurred on the insured's premises and therefore, it is a Premises Liability claim.
Mike purchased a policy several years ago to cover him for liability. Last year, Mike determined that the limits of his liability policy were not high enough to cover him adequately should a loss occur, so he purchases an excess liability policy to provide more coverage. Mike experiences a loss, and discovers that his underlying liability policy had expired before the loss, but his excess liability policy is still in effect. How will this loss be paid
The claim will be denied, due to nonconcurrency. If the underlying liability policy was expired, the excess policy will not be triggered to pay anything on the claim.
Whose responsibility is it to complete a "proof of loss"?
The claimant must complete the proof of loss form and submit it to the insurance company. A PUBLIC adjuster, if hired by the claimant, would assist with filling out the proof of loss.
Jim Cress owns an expensive fine arts collection. He has it appraised and covered under a personal articles floater. He takes his collection to England to have it auctioned. While the collection is in his hotel room it is stolen. What coverage would apply?
The collection has been moved outside the covered territory for fine arts. The coverage is not world-wide and covers them while in the United States, its possessions, Puerto Rico and Canada. The policy would have to be modified to provide this coverage.
Which of the following is NOT covered under most commercial crime policies?
The commercial crime policy does not provide legal defense coverage with one exception. Under the forgery or alteration coverage, legal expense coverage is provided.
The common conditions of a Commercial Package policy:
The common conditions of a Commercial Package policy states that to property rate the policy, the insurer has the right to examine the books and records of the insured company. The information listed in all of the answer choices are found in other sections of the policy.
The insured is covered under a Watercraft policy and asks the agent about a lay-up period credit to get a reduction in the premium. The dates of the lay-up period are specified in the policy. There is an emergency and the insured must use his boat in a life saving event. The boat is damaged and sinks. Under what circumstances would coverage apply?
The company must be given notice within 10 days of the emergency to justify the need to violate the terms of the provision.
The insured has a $1,000,000 personal umbrella policy with a $5,000 retention limit. For a $7,000 liability loss not covered under the insured's personal auto policy, but covered under the umbrella policy, the insurance company would pay:
The company will deduct the $5,000 retention limit and pay on the insured's behalf the sum of $2,000. The retention limit acts a deductible when a loss is covered by the umbrella policy but not under the underlying insurance.
The chief deputy of the county auditor steals $2.5 million from the county and gambles it away. What bond if any would the county need to have in place in order to try and recoup this loss?
The county as the Obligee, would need to make claim to the surety issuing the Public Official Bond on behalf of the auditor, the principal.
Which of the following would not be addressed by a court in the determination of a declaratory judgment?
The court would not determine the fault or monetary judgment in the determination of a declaratory judgment.
Which of the following injuries are covered under the medical payments section of an insured's CGL policy?
The coverage excludes injuries to employees, persons participating in an athletic event on the insured's premises and injuries to tenants. The shopper is the only third party that would be covered.
Which of the following is NOT a coverage extension on the Building and Personal Property coverage form?
The coverage extension for outdoor property provides coverage up to a maximum of $1,000, not $500.
The Valuable Papers and Records (Other Than Electronic Data) coverage extension of the Building and Personal Property coverage form pays:
The coverage extension pays for the research to be performed to restore the lost information on the valuable papers and records, for which there are no duplicates.
No act will be certified by the Secretary of the Treasury, in consultation with the Secretary of Homeland Security, as an act of terrorism under the Terrorism Risk Reauthorization Act of 2015 unless:
The coverage would only apply to losses that relate to commercial property and certain other casualty losses, caused by an act of terrorism as defined by the Act.
The base deductible of 5% under the Earthquake Endorsement can be converted to a specific dollar amount by:
The deductible for an Earthquake Endorsement is converted to a specific dollar amount by multiplying the greater of Coverage A or C limit of liability, by the deductible percentage.
Under the discovery clause in a loss sustained bond, which of the following is covered?
The discovery clause in a loss sustained form states that losses that occur during the policy period, but are not discovered for up to one year after the bond has expired, can be covered under the expired bond. The discovery clause in the discovery form provides coverage during the policy period or within 60 days after the bond expires for coverage to apply.
In crime insurance under the loss sustained form, what is the length of the discovery period after the bond has expired to discover an employee crime?
The discovery period under the loss sustained form is one year. The discovery clause in the discovery form provides for only 60 days after the coverage has expired. This only describes the period of time for discovery of a loss that occurred during the policy period.
The estimated annual premium for a workers' compensation policy will be based on all of the following, EXCEPT:
The estimated annual premium is a secondary calculation based on a premium discount, a schedule rating factor, and the experience modification factor.
Which of the following situations would NOT be considered an unfair claim settlement practice according to the NAIC Model Act?
The fact that Indemnify Insurance failed to meet the time frame for accepting or denying a claim on two of their claims would not result in a charge of an unfair claim settlement practice. The law states that the violation must be committed with such frequency as to indicate that it is a general business practice.
An insured had a $300,000 underlying liability policy and a $1 million umbrella liability policy with a $300,000 retained limit and a $2,000 self-insured retained limit. An occurrence resulted in $400,000 in personal injury damages which are not excluded by either policy. Shortly thereafter the insurer providing the underlying policy became insolvent. How much of the damages would be covered by the umbrella liability policy?
The fact that the underlying insurer became insolvent has no bearing on the retained limit. It would still pay the excess of $100,000 over the retained (underlying) limit of $300,000.
Employee dishonesty protection would be provided under which of the following?
The fidelity bond covers the dishonest acts of employees.
A fidelity bond is designed to protect the employer against:
The fidelity bond is designed to protect the employer from loss stemming from dishonest acts by his employees. The bond may be written to cover specific employees or positions (scheduled) or all employees (blanket).
Under a DP-2 or DP-3 standardized policy what is the maximum that would be paid for one month for additional living expenses if Coverage A was $75,000?
The form provides 20% of Coverage A for additional living expense under the DP-2 and DP-3. Therefore, $75,000 X 20% = $15,000. This amount divided by 12 months = $1,250/month.
How is property covered under an unendorsed BOP form?
The forms were revised to provide open peril coverage on buildings and contents. Coverage can be amended to named peril basic coverage by endorsement.
Gavin, the named insured under a Personal Auto policy, his daughter Tabitha, and two of her friends are riding in the covered auto when Gavin accidentally runs a stop sign, striking another vehicle. Everyone in Gavin's vehicle was injured as well as the driver and two passengers in the other car. Who would be covered for their injuries under Part B of Gavin's policy?
The injuries to Gavin, Tabitha and Tabitha's friends would be the only ones covered by Part B of the Personal Auto policy.
All of the following would be considered "property damage", EXCEPT:
The injury to the pedestrian is considered to be bodily injury. All of the other choices are considered to be property damage.
The insurance company does not pay for certain damaged property under an Equipment Breakdown policy. Identify the property.
The insurance company does not pay for damaged property that is obsolete and useless to the named insured.
The Homeowners policy on Dylan's $110,000 home is voided when he intentionally burns the house to the ground. Consequently, he does not receive the settlement check he was hoping to when he committed the arson, but he still has an outstanding mortgage balance of $76,000. How does this event affect the mortgage lender?
The insured cannot intentionally jeopardize the mortgage lender's rights. Therefore, the insurer will pay the mortgage lender the $76,000 mortgage balance.
Crop insurance usually protects a proportion of the reduced yield following an insured loss. "Reduced yield" refers to:
The insured chooses the reduction in yield percentage. The higher the percentage the more coverage in case of a loss. Most companies prefer the insured share in the loss at least 25%.
Angie has suffered an automobile physical damage loss. All of the following are the insured's duties after a loss under Angie's Personal Automobile policy, EXCEPT:
The insured is not permitted to make repairs on the vehicle until after the vehicle has been inspected and/or appraised and an agreement as to the damages has been reached with the insurer.
The insured has primary bodily injury and property damage liability coverage with a $100,000 limit, and a $1 million umbrella liability policy with a $5,000 self-insured retention limit. In which one of the following situations would the insured's umbrella liability policy typically not provide defense coverage?
The insured was sued for $10,000 in bodily injury damages. .
A covered loss has damaged the property belonging to the owner. Property belonging to a customer is also damaged. The customer brings suit against the insured for this damage. The insurer may do which of the following?
The insurer may negotiate the settlement of the property of others directly with the owner of that property. The will also pay the defense costs incurred in defending the insured in the suit brought by the customer.
Which of the following is not a true statement regarding the use of non-original equipment manufactured replacement parts for vehicles?
The insurer must pay for any modifications necessary to properly install the non-original equipment for a proper fit of the equipment in the vehicle. The other three answer choices are all true statements regarding after-market parts.
An insured has a diamond ring scheduled on a Personal Articles floater for $8,000 under a Personal Inland Marine policy. She also has a Homeowner's policy with the same insurance company. The ring is stolen on vacation and the cost to replace the ring is $9,000. What will be the outcome of this loss?
The insurer will pay the $8,000 policy limit under the Personal Articles floater. Once the ring was insured under the floater, it is no longer considered covered property under the Homeowner's policy.
No insurer may increase the premium for a property or casualty insurance policy more than 25% of the premium for the preceding policy term for like coverage and like risks unless at least a ____ day advance notice is mailed to the insured before the end of the policy period.
The law requires a 75 day advance notice.
The standardized Personal Automobile policies contain all of the following, EXCEPT:
The personal auto policy does not contain a common conditions page. The insuring agreements provide such varied coverages that separate conditions sections are necessary.
Tony is sailing his 28-foot cabin cruiser on the lake. He runs into a neighbor's dock, destroying the structure and damaging Tony's boat. A crew member in the cabin of the boat is injured and a guest riding on the boat is also injured. All of the following policies below would provide coverage in this situation, EXCEPT:
The liability and medical payments coverage under the Yacht policy will pay for the damage to the dock and the injuries sustained by the guest. The Hull coverage under the Yacht policy will cover the damage to the boat. Longshoreman's and Harbor Worker's coverage would pay for the injuries to the crew member. The boat is too large to be eligible for Medical Payments coverage under Tony's Homeowner's policy, therefore this is the only answer selection that is NOT correct and should be the answer you chose.
Samantha has renewed her Commercial Property policy, and it will take effect in 7 days. 14 days prior to Samantha signing the renewal policy, the insurer adopted a form revision that included broadened coverage, with a slight increase in premium. Samantha would like her renewal policy to include this broadened coverage. Which of the following statements is true regarding the required method for Samantha to receive the broader coverage?
The liberalization clause will not require that Samantha's renewal policy include the broadened coverage automatically because there is an additional premium to have the broadened coverage included. The liberalization clause only provides for the broadened coverage to be automatically included if there is NOT an additional premium involved.
The Section II - Additional Coverages of Homeowners policies, damage to the property of others (whether or not in the insured's custody and regardless of fault) is covered up to:
The limit is $1,000. This coverage will pay regardless of legal liability.
What is the limit that is paid for water damage under an Equipment Breakdown policy?
The limit is $25,000.
Mrs. Vincent is covered under a standard PAP that covers her 2016 Ford SUV. She carries liability and full physical damage coverage. Her neighbor owns a 2002 Chevrolet pick-up truck with liability coverage only. Mrs. Vincent borrows the truck to pick up lawn furniture, parks the truck at the store, and leaves the keys in the ignition. The truck is stolen and later found wrecked. Which of the following would apply?
The loss is covered under Mrs. Vincent's policy under the "other than collision" coverage because the damage resulted from the theft. Since the neighbor did not carry physical damage coverage Mrs. Vincent's policy would be primary. If the neighbor carried full physical damage coverage then Mrs. Vincent's policy would be excess.
The insured is conducting business on the premises of his bank. He is depositing checks and money into his account. Before the transaction is completed a thief comes in and holds up the bank and takes the insured's property. The insured is covered under Insuring Agreement 3 "Inside the Premises Theft of Money and Securities." What will the insurance company do?
The loss of money and securities inside the area that the named insured occupies in conducting his or her business is covered whether this loss is by theft, destruction, or some unidentified disappearance. The 2006 forms make a revision to stipulate that loss of money and securities inside the premises is covered when it results from theft by someone present inside the premises. The thief must be inside the premises; theft by remote computer is not covered under this insuring agreement.
Mr. York had his pickup truck stolen while it was parked in a "no parking" zone outside his office. The value of the truck was $18,500. In addition, tools valued at $200, extra tires and hubcaps for the truck valued at $550 and a tarp worth $50 were in the truck. Mr. York has a collision deductible of $500 and a comprehensive deductible of $250. The insurance company will pay what amount?
The loss of the truck plus the extra tires and hubcaps would be considered in this claim. These total $19,050 less the deductible of $250 equals $18,800.
Capital Heating & Air Conditioning installs a central air conditioning system in a newly constructed office building. The system is defective and will not work, delaying the opening of the building and costing the building owner lost rental revenue. Is the owner's claim covered under Capital's CGL policy?
The loss would not be covered under Capital's policy because of the "impaired property" exclusion because they used a deficient product in their work that caused the loss of use of the building for the owner.
Crop insurance provides coverage for losses to:
The marketable portion of growing crops. Most forms exclude damage to the trees, vines, bushes, plants and blossoms that produce the crops. Only the marketable portion of the crop is usually covered.
Manny is purchasing a Commercial Property policy with a Business Income form included. Manny can select from any of the following as a method to provide coverage, while avoiding the coinsurance requirement, EXCEPT:
The maximum monthly limit of indemnity optional coverage does not exist. The other three answer choices are all methods of coverage under a Business Income form that permits an insured to avoid the coinsurance requirement.
Heather's house is fully insured with a DP-3 with a limit of $85,000. One day, the house is struck by lightning, and despite the fire department's efforts, burns to the ground. She still had a balance of $20,000 left on her mortgage at the time of the fire. What is the maximum indemnification that would go to Heather, the fire department, and her mortgage lender respectively?
The maximum payable for the loss is the $85,000 policy limit which would be split at $20,000 for the mortgage lender and a $65,000 check for Heather. The policy also contains an additional coverage of $500 for fire department service charges. This is paid in addition to the policy limits. There is no mention in the question of the deductible amount so you do not assume there is one in answering this question.
Under a personal property floater, a loss is covered when it occurs:
The personal property floater covers covered property on a world-wide basis. There is an exception for fine arts. They are covered in the US, its possessions, Puerto Rico and Canada.
Which of the following is true regarding personal property floaters?
The personal property floater covers personal property on a blanket bases by category. Coverage is written on an "all risk" basis. Golf carts are not covered under this policy.
Nixon Construction Company carries a CGL policy that has a $500,000 per occurrence limit, $1,000,000 general aggregate limit and a per person medical payments limit of $25,000. Employees cause $200,000 property damage and $400,000 bodily injury when persons are injured and property is damaged in connection with a construction project. Two of the employees suffer medical expenses of $15,000 each. How much will the insurer pay on behalf of Nixon Construction?
The most the policy can pay is the occurrence limit of $500,000. The employees are not covered under medical payments. They would collect under workers compensation coverage. Remember that the policy cannot pay more than the per occurrence on any one claim. Therefore, in this question the insured would have to pay the remaining $100,000 of this claim because the insurer will only pay $500,000 of this $600,000 claim.
A named peril aviation policy would cover all of the following, EXCEPT:
The named peril policy would not cover the peril of flood.
In order for coverage to apply under an occurrence commercial umbrella liability policy:
The occurrence causing the injury must take place during the policy period.
Melissa has suffered a loss and is required to complete a proof of loss statement to her insurance company. Which of the following statements is CORRECT concerning the proof of loss statement?
The only CORRECT statement within the three answer choices is: "The insurance policy indicates what information must be included in the proof of loss statement." The other answer choices are not correct statements.
Which of the following statements is NOT correct under Part A of a standardized Personal Automobile policy?
The only answer choice that contains an untrue, incorrect statement is: "The aggregate limit of liability for supplementary payments is $250." All three of the other answer choices are CORRECT statements.
Which of the following is included in the Supplementary Payments under a standardized Personal Automobile policy?
The only answer choice that correctly identifies an item that is covered under the "supplementary payments" of the standard Personal Auto policy is: "Interest accruing after a judgement is entered (post-judgement interest). All of the other answer choices either include an incorrect amount, are covered under a different section of the policy, or both.
Which of the following is NOT TRUE of coverage for Business Personal Property and Personal Property of Others in a Commercial Property policy?
The only answer choice that is NOT TRUE regarding Coverage B and C of a Commercial Property policy is: "Coverage is provided while the property is located within a covered vehicle at any location as long as the vehicle is owned by the insured business."
All of the following statements are true regarding a Personal Liability Supplement, EXCEPT:
The only answer choice that is NOT true is that the Personal Liability Supplement coverage watercraft liability. The policy does NOT cover watercraft liability, but all three of the other answer choices are true.
Chad has his commercial building covered by a Commercial Property policy that includes Coverage A of the Building & Personal Property coverage form. He purchases a new building because he has plans to expand his business. Which of the following statements is TRUE regarding coverage for Chad's new building?
The only answer choice that is a TRUE statement is: "Chad's newly acquired building will be covered for 30 days from the date of acquisition for $250,000."
Which of the following would NOT be excluded under Part A of a standard Personal Automobile policy?
The only scenario described in the answer choices that would NOT be excluded (would be covered) is "The covered auto while being used to transport passengers to work as part of a share-the-expense carpool."
All of the following statements are TRUE regarding the extension of coverage for non-owned detached trailers under the Building & Personal Property coverage form, EXCEPT:
The only statement that is NOT TRUE in the answer choices is: "For coverage to apply, the trailer can only be attached to a vehicle owned by the insured." In actuality, the coverage extension will not cover the non-owned trailer if it is attached to ANY vehicle.
The Coverage C - Uninsured Motorists coverage of a standard, unendorsed Personal Automobile policy applies to all of the following, EXCEPT:
The only types of damages that can be recovered under Part C - Uninsured Motorists coverage is for bodily injury. Property damage is not covered under Coverage C of the standardized Personal Automobile policies, unless an endorsement is attached.
Coverage A of the HO-2 form would cover which of the following items?
The paint used for the building would be covered under the building limit under Coverages A and B (other structures). The mower is personal property covered under Coverage C. A detached fence is considered to be a separate structure and is covered under Coverage B. Grave markers have a separate limit in the policy for $5,000.
General liability policies have basically two limits. One is the aggregate limit and the other is the:
The per occurrence limit is the most the insurance company will pay on any one claim. The aggregate limit is the most the company will pay for all claims presented during the policy period.
The insured carries a personal auto policy providing a bodily injury limit of $50,000 each person with a per accident injury limit of $100,000. He injures two occupants in another vehicle. Their injuries total $60,000 for Mr. Jones and $50,000 for Mrs. Jones. The insurance company spent $40,000 in defense and investigation costs. How much will the insured's policy pay?
The per person limit is $50,000. The most that can be paid for this claim is the $100,000 per accident injury limit plus the $40,000 to defend and investigate the claim. The costs to defend and investigate are supplementary coverages and are in addition to the policy limits.
Jim Johnson has an automobile policy with a combined single limit of $50,000. He is involved in an accident where he is at-fault and incurs the following expenses: $30,000 bodily injury judgment; $30,000 property damage judgment; $5,000 damage to traffic light; $6,000 attorney's fees for his defense; $300 in premiums for appeal bond; and $75 in bail bond premiums for related traffic violations. What is the maximum amount his insurance company will pay?
The policy cannot pay more than its limit of liability. Under supplementary payments in the policy, the policy will pay the defense costs plus the cost of the premiums on appeal bonds and bail bonds.
All of the following are covered under the Equipment Breakdown coverage form, EXCEPT:
The policy does not cover the structure or materials supporting the equipment.
What costs are paid under an Umbrella policy?
The policy limit and any defense costs minus any applicable self-insured retention (deductible).
Under the standardized ISO Businessowners form, how much is paid for pollution clean-up and removal in case of a covered loss?
The policy pays up to $10,000 for pollution clean-up and removal. Do not confuse this with debris removal where the limit is $25,000.
The insured owns a one-family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the detached garage?
The policy provides for 10% of the dwelling (Coverage A) limit. Therefore, the garage is insured for $20,000 for the same perils that apply to the dwelling.
The Businessowners policy provides loss of income on an "actual loss" sustained basis for up to:
The policy provides for loss of income for up to 12-months, even if the policy was set to expire in the meantime. There is a 72-hour period before coverage takes effect.
David has received a cancellation notice in the mail for the standard Personal Automobile policy he purchased 10 days ago. The notice informs David that his policy will be cancelled 10-days from the date the notice was mailed. Which of the following is the most likely reason his policy was cancelled?
The policy was still in the underwriting period (the first 60 days that the policy was in effect) and states that 10-days' notice must be provided for non-payment of premium.
Joe makes a small down payment on a sports car and finances the remainder of the cost of the car with Benevolent Bank, Inc. He also purchases a standard Personal Automobile policy through Binders Keepers Insurance Company to cover the car. Joe makes one car payment before he is caught with $200,000 of drugs in the car on his way to deliver it to addicts for money. Joe is arrested and the car is permanently confiscated by the authorities. How will coverage apply in this situation?
The policy will cover the damage to the body of the automobile on behalf of Benevolent Bank, Inc..
Barry's insured watercraft is disabled while on the lake one Sunday afternoon. His motor completely stopped and will not start again. Barry calls George, a mechanic who rides out to the section of the lake where Barry and his boat are stranded. George brings a new starter for the engine and spends the next hour replacing it. When George is finished installing the new starter, the engine still sputters and will not start. Barry then calls a towing service to tow the boat back to the dock and into storage where George can take a closer look. Barry's Watercraft policy has a $250 deductible. The cost of the starter was $80 and the towing bill was $100. How much will Barry's standard Watercraft policy pay under the "Towing and Assistance Expense" coverage, assuming this is the only occurrence Barry has claimed during the current policy period?
The policy will pay $180 under the "Towing and Assistance Expense" coverage because the deductible does not apply to the coverage and pays up to $500.
Claims expenses covered under Section II -- Personal Liability of the standard Homeowners forms do NOT pay for which of the following?
The policy will pay the loss of the insured's earning for up to $250 per day, not $300.
If an insured takes precautionary measures to protect property from flood damage such as creating a retaining wall of sand bags, how much coverage if any, will be provided by a flood policy?
The policy will provide additional coverage up to $1,000 for preventative measures taken to prevent the property from an imminent flood loss. This $1,000 however will be subtracted from the policy limit covering any property that may be damaged by the imminent flood.
All of the following would be excluded by an unendorsed aircraft policy, EXCEPT:
The policy would cover damage cause by wind. The other items would be excluded unless the policy was endorsed with the war risk coverage endorsement.
Which of the following statements is correct concerning the premiums for a workers' compensation policy?
The premium shown on the information page is the estimated annual premium. Part Five of the standard form contains provisions allowing the insurer three years after the policy period ends to audit the insured's payroll, tax, and other records in order to determine the correct payrolls and work classifications that apply toward the expired policy period. Using that information, the insurer will determine the final premium, and will collect or return any premium difference.
Each of the following is true about Farm insurance coverage, EXCEPT:
The principal residence must be covered under a Farmowners policy. The Homeowners policy is not designed to cover farm property, even the residence.
Most crop insurance in the United States is written by:
The private sector now writes about 85% of the multi-peril crop coverage.
Under Coverage E - Scheduled Farm Property, how is the property covered?
The property is covered for the limit shown on the declarations page of the policy for the property specifically scheduled.
In connection with the bonding business which of the following statements is NOT true?
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.
The Main Street Gazette is interested in protecting against the additional costs of continuing to print the newspaper, at a temporary location in the event its building was destroyed. Which of the following coverages should the Main Street Gazette purchase for this purpose?
The purpose of the "extra expense" coverage is to pay for any increase in expenses incurred by the insured (after a direct property loss which interrupts the business) to decrease the amount of time the business is idle or interrupted, and keep it operating, even at another location.
The "when more than one coverage applies" condition in Commercial Crime insurance is designed to:
The purpose of the clause is to specify how a claim would be allocated among the different insurers.
A Personal Articles Floater (PAF) is designed to protect property owners from damage or losses to personal property while in the process of transport. Which of these statements about a PAF is FALSE?
The question is asking which answer choice is false regarding a Personal Articles Floater. The floater provides world-wide coverage. The other three choices are all correct regarding the coverage on a PAF.
James has purchased a 20-year-old home for $120,000. He covers it with an HO-5 form for $100,000 with a deductible of $500. The roof of the home needs to be replaced and James has this work performed and purchases a service agreement on the roof before moving into the home. The service agreement covers $1,000 for roof damage from any cause that occurs within 5 years of the installation of the new roof. Two years after moving into the home, a heavy thunderstorm hits James' neighborhood and large sections of his roof are damaged, totaling $3,000 in damage. How will this claim be paid?
The service agreement ALWAYS pays first because the Homeowners policies are considered EXCESS when there is a home warranty or service agreement in place. Therefore in the situation posed by the question, the service agreement pays $1,000, leaving the remaining $2,000 minus the deductible ($1,500) for the insurance company to pay.
Which of the following losses to perishable stock would be covered by the commercial property Spoilage Endorsement?
The spoilage endorsement would cover loss to perishable stock caused by all of these situations.
Maci has $500 cash destroyed by fire in her covered home. She files a claim under her standard Homeowners policy. How much will the policy pay on this claim?
The standard Homeowners policies cover money under Coverage C - Personal Property. However, money is subject to a special limit of liability, which is $200.
All of the following are correct statements regarding the limits of liability under Part A of a Personal Auto policy, EXCEPT:
The standard Personal Auto policy states that no person can collect under Part A of the policy and under the Uninsured Motorist coverage.
An insured's boat is struck by another boat. He and his family are injured. His boat sinks because of the damage. An investigation determines that the party that caused the accident is not insured. If the insured carries a watercraft policy, what coverages would apply?
The standard watercraft policy provides uninsured boaters coverage. This coverage only pays for the bodily injuries of the insured and his family. The damage to the insured's boat must be covered under the hull insurance.
One of the Unfair Claim Settlement Practices is "failing to affirm or deny coverage of claims within a reasonable time after having completed its investigation related to such claim or claims". How is the length of time that is considered "reasonable" decided?
The state legislatures set the reasonable time period by statute that becomes a part of the insurance code of the state.
All of the following statements are TRUE regarding coverage for Earthquake under a Homeowners policy, EXCEPT:
The statement that is NOT TRUE is: "Earthquake coverage is provided on a Homeowners form without endorsement, but an additional premium must be paid."
If a bond is called upon for payment, which party pays out the face amount of the bond?
The surety (the insurer) pays out the face amount of the bond to the obligee in the event that the bond is called. In that event, the surety will have "right of recourse" against its own principal.
Who is the principal in a bid bond?
The surety is bonding the contractor who is the principal.
Torts that can be covered by insurance policies include all of the following, EXCEPT:
The torts addressed by insurance policies can be classified as intentional and unintentional torts, and liability without fault (strict liability).
Courtney carries two Dwelling policies with a total limit of $20,000 on her home. One policy is with Company A with a limit of $12,000, and the other policy is with Company B in the amount of $8,000. In case of a $10,000 covered loss, which of the following is true regarding the payment of the claim?
The total amount of coverage is $20,000. Company A has 60% of the coverage and Company B has 40% of the coverage. Company A has 60% of the loss and would pay $6,000. Company B has 40% of the loss so it would pay $4,000.
Under the Terrorism Risk Insurance Program Reauthorization Act of 2015, what is the "trigger limit" before claims are paid for the year 2018?
The trigger was $100 million in 2015, $120 million in 2016. The "trigger" will increase by $20 million each year, therefore, it is $140 million in 2017, $160 million in 2018, $180 million in 2019 and $200 million in 2020. To be considered an act of terrorism, there must be at least $5,000,000 in damages caused by terrorism. Before the government pays anything, insurers must absorb the first $120 million in losses. Note: The current Terrorism Risk Insurance Program Reauthorization Act of 2015 is due to expire on December 31, 2020.
On March 4, 2007, five people were injured at a department store. The store was negligent. Four of the people were injured very seriously and subsequently filed claims against the store's primary and umbrella polices. But one man whose leg was injured said his injury wasn't too bad, and he didn't file a claim against the store at that time. However, in April of 2008, the man's leg began to bother him, and he had trouble walking. He then saw a doctor and filed a claim for the injury. Since the department store is covered under an occurrence form of commercial umbrella liability policy, which was renewed in 2007, the claim:
The umbrella is written on the occurrence form and the policy that was in effect at the time of the bodily injury would cover the claim
All of the following statements are TRUE regarding automobile "no-fault" laws, EXCEPT:
The untrue statement in the answer choices is: "Medical payments and physical damage claims are paid by the state without assigning fault to any party in the accident." All of the other answer choices are true statements regarding automobile "no-fault" laws.
What is the minimum limit for Coverage L of the Personal Liability Supplement that can be attached to a Dwelling Property policy?
The usual minimum limit for Coverage L of the Personal Liability Supplement that can be attached to a Dwelling policy is $100,000.
The Equipment Breakdown policy (formerly called Boiler & Machinery) provides for replacement cost coverage in case of a covered claim. Under what conditions would the insurer only pay actual cash value in case of a loss?
The valuation clause provides for replacement cost coverage on all property, except if repair or replacement is not made within 24 months of the date of the accident, actual cash value will be paid. (The 2013 Equipment Breakdown forms increased this time limit from 18 months to 24 months.)
A workers' compensation adjuster works with the treating physician to develop an appropriate treatment plan to restore the injured worker to the best possible outcome, which is know as:
The workers' compensation adjuster works with the treating physician to return the worker to his or her MMI, or Maximum Medical Improvement.
Which of the following best describes the reason for using various work classifications in the calculation of workers' compensation premiums?
There are hundreds of different work classifications which are used in the calculation of Workers Compensation premiums, with a different rate for each one. By classifying an employer's payroll according to work classification, the premiums charged more accurately reflect the actual risk of loss for each employer.
Which of the following would be eligible for coverage under a Businessowners policy?
There are many classes that are not eligible for coverage under a Businessowners policy. Businesses connected with automobiles, such as repair or service stations, dealerships, or parking lots or garages, are not eligible unless one of these is incidental to an eligible business. Bars and pubs are ineligible for coverage, as well as a credit union. A funeral home WOULD BE eligible.
What does an insurer do when the insured has possibly waived his or her rights in a liability claim?
There are situations where the insured has waived the right to coverage under a liability policy. Failure to report a claim in a timely fashion could cause the insured to waive coverage. The insurer will normally issue a reservation of rights letter to the insured advising that it will investigate the claim but will not commit to pay the claim.
Which of the following is the principal in a bond?
There are three parties to a surety or fidelity bond: the principal, whose performance is being guaranteed by the surety; the obligee, to whom the principal makes a promise to perform or to be honest and the surety, which guarantees the principal's performance. If the principal fails, the surety will indemnify the obligee up to the face amount.
Which of the following statements is true regarding Businessowners policy forms?
There are two BOP forms, the standard form that provides named perils coverage and the special form that provides open perils/all risk coverage.
In aviation insurance, which of the following would cover crew members?
There is a provision under medical payments coverage that adds coverage for crew members for an extra charge.
Which of the following would be covered under a Personal Umbrella policy?
There is an exception to the exclusion for "intentional acts" committed by an insured to protect persons or property. Therefore, an insured who commits an intentional act of violence to protect his family would be covered.
All of the following are types of Commercial Property coverage forms that can be included in a Commercial Package policy, EXCEPT:
There is no such form as the "Control of Property" coverage form. Control of Property is a condition of a Commercial Property policy.
Under the standardized Homeowners forms, how much "additional coverage" is provided under Section II - Liability for loss of earnings by the insured to assist the insurer in the investigation or defense of a claim?
This limit is $250 per day to appear at hearings or trials to assist the insurer in the defense of the insured. This is the amount under the ISO standardized form.
A large super market is covered under crime coverage Insuring Agreement 5 "Outside the Premises" coverage. The insured has a relative take to the bank money, securities and a diamond ring that is going to be a prize for a lucky customer in a contest. He reaches the bank and is getting out of the vehicle when he is robbed. What will the insurance carrier do?
This agreement applies to loss of money and securities and other tangible property that has intrinsic value when the loss occurs outside the insured's premises. The property must be in the custody of a messenger who can be the named insured, or a relative, partner, or employee of the named insured. Loss of money and securities is covered if due to theft, disappearance, or destruction; the loss to "other property" has to be from an actual or attempted robbery. Note the difference. Loss of money is covered regardless of the circumstances of the loss; loss of "other property" is covered only under certain circumstances. If an employee is carrying money to be deposited into the insured's bank account and he is robbed, the loss is covered; if the employee somehow loses the money along the way, the loss is covered. Now, if the insured tells his employee to take a diamond ring from the safe to the bank and the employee is held up on the way to the bank by a robber, the policies will respond to the loss.
A main street business has suffered an explosion loss from a hot water heating boiler. The civil authorities have blocked off the street and the insured's customers cannot get to his store. The insured carries a Businessowners policy. He sustains a loss of income. Before his policy will pay any loss of income there is a _____ waiting period and the policy will then pay for loss of income up to _____ .
This coverage is known as "Contingent Business Income" coverage. The policy has a 72-hour waiting period before coverage will pay. It will pay for loss of income for up to four weeks or until the expiration date of the policy whichever is earlier.
Which of the following coverages is NOT provided by the Farm Employers Liability and Farm Employees Medical Payments insurance endorsement?
This endorsement offers farm employers liability coverage and farm employees medical payments insurance. It can be attached to FL 00 20 or to the CGL form. FL 04 65 offers to pay those sums that the insured becomes legally obligated to pay as damages because of BI sustained by a farm employee arising out of and in the course of employment by the insured. And, the endorsement offers to pay to or for each farm employee who sustains BI caused by an accident, all reasonable medical expenses to which the insurance applies. FL 04 65 basically combines the employers liability coverage from a workers comp policy with med pay coverage. This endorsement does not provide statutory workers compensation benefits.
If a third party is handed a check from the insured that has been altered and pays the false amount on the check, is such a loss covered? Forgery coverage is carried by the insured.
This insuring agreement offers the insured protection from forgeries or alterations in several instances. If a forged check is presented to the insured for payment and the insured hands over the money, such a loss is covered. If a third party is handed a check from the insured that has been altered and pays the false amount on the check, such a loss is covered. If an agent of the insured presents a forged draft to a third party and receives a "sum certain in money," such a loss is covered. This insuring agreement also provides defense costs. If the insured is sued for refusing to pay a check or draft or promissory note because he or she thinks the item is forged or altered, this insuring agreement requires the insurer to pay defense costs. The insured has to have the written consent of the insurer to defend against the lawsuit and the legal expenses have to be reasonable. The defense costs are in addition to the stated limit of insurance applicable to the forgery or alteration coverage. However, the insured has to pay the defense costs up front; this is an indemnification agreement.
In a CGL policy, "medical payments" claims MUST be:
This is a requirement under "medical payments" coverage. Claims must be reported within one year of the date of the accident. "Medical payments" claims do not require any proof of negligence on the part of the insured, but the claims ARE required to be submitted to the insurance company within a time limit.
The Dye family hosts a party. When the guests arrive, they place their coats in the bedroom. Two days later, Mr. Dye discovers that his ring is missing from the dresser. This loss is referred to as a:
This is an example of a mysterious disappearance which can be a presumption of theft. Property is missing from a known place where the property should be.
The auto liability limits $100/300/50 are an example of:
This is an example of a split limit. Separate limits apply to bodily injury per person, bodily injury per accident, and property damage per accident.
A farmer has unintentionally libeled a neighboring farmer by stating that the neighbor's dairy products are inferior to his. This is an example of:
This is an example of personal/advertising injury. No bodily injury or property damage occurred.
A surety which provides a Performance Bond to a contractor might also provide another performance bond which guarantees the materials will be provided at the price quoted and the quality and quantity specified. This bond is referred to as a:
This is called a supply bond.
Offering anything of value to a prospective insurance client to induce the client to purchase insurance is called:
This is called rebating and is an illegal act.
Build Right General Contractors hires Dudley Electric who in turn hires Peabody excavation to complete an underground installation of electric lines. If an injury occurs to a worker for Peabody excavation, who could be responsible for the Workers' Compensation claim in Kentucky?
This is known as the Up-the-Ladder Doctrine. In Kentucky, a principal contractor, intermediate contractor, or subcontractor will be liable for compensation to any employee injured while in the employ of any one of his intermediate or subcontractors and engaged upon the subject matter of the contract, to the same extent as the immediate employer, when the injury occurs on, in, or about the premises on which the principal contractor has undertaken to execute performance or which are under his control.
Vehicles which may be insured by a personal auto policy are described in the eligibility rules. Each of the following statements is true about vehicles eligible for personal auto policy (PAP) coverage, EXCEPT:
This question can be tricky and must be read carefully. You are looking for the vehicle that is NOT eligible due to the word EXCEPT in the question. Vehicles with fewer than four wheels are NOT eligible. Therefore, motorcycles and some three wheel all terrain vehicles, are not eligible for the personal auto policy. A few insurance companies MAY make an exception for motorcycles by using an amendatory endorsement.
Which of the following is the type of report indicating the initial results of the investigation of a claim?
This report can also be called the initial report and is the result of the initial investigation.
What is the purpose of an adjuster's interim report?
This report merely provides the status of a claim prior to finalization.
Which of the following losses would be covered under a "Robbery and Safe Burglary" coverage?
To collect on a safe burglary loss, there must be signs of forcible entry. The use of the term burglary in the name of the form automatically indicates the need for signs of forcible entry or exit.
Billy has his commercial interests covered with a Commercial Package policy. He would like to modify one of his coverage parts. This change will be made by:
To make a change to one of the coverages in a Commercial Package policy, a single endorsement would be added to that coverage part. An interline endorsement is used to make changes to two or more of the coverage parts. Changes would not be made to any coverage part by altering the declarations or conditions section of the policy.
The insured owns an aircraft in need of engine replacement. In addition to the aircraft, the "propulsion system and equipment usually installed in the aircraft" are part of the coverage. Which of the following would also be covered?
Todo
Jerry's car is involved in an accident that has left him without a vehicle to drive. How much, if any, can he collect for his transportation expenses under Part D of his policy?
Transportation expenses are an additional coverage if the insured has purchased collision and/or other than collision coverage. $20 per day up to $600 is available. Coverage begins 48 hours after a theft loss and 24 hours for any other covered loss.
"Policy territory" in the CGL includes:
US & Canada
A Personal Umbrella liability policy:
Umbrella liability policies are excess coverage over the primary policy in force. There are some situations where an umbrella may cover a risk that's not covered in an underlying policy.
The insured, who is a chair manufacturer, produced a new line of lift chairs with electric heat and massage for people who are disabled. After the chairs had been on the market for several months, it was discovered that the control panel had been designed with a glitch in it that could be powerful enough to cause injury. The chairs were withdrawn from the market. The retailer who had purchased the chairs lost a great deal of money because of the recall. Under what circumstances, if any, will the insured's commercial umbrella liability policy cover those losses?
Under No Circumstances
Under which of the following claims settlements are the claim invoices presented and paid with no attempt to obtain a separate release?
Under a "walk-away" release, the bills presented are paid with no attempt to obtain a separate release, although the wording on the draft or check may also serve as a form of release. After a certain amount of time has passed with no further contact with the claimant, the file is considered closed.
The "Alterations & New Buildings" coverage of the Business Income form pays for losses to new buildings and their additions being constructed for business operations. Which of the following best describes the "period of restoration" when a loss occurs under this additional coverage?
Under the "Alterations & New Buildings" additional coverage of the Business Income form, the period of restoration only applies under this coverage if the loss delays the start of business operations in the new location. In this case, the period of restoration begins on the date business operations would have begun had the loss not occurred.
Under the standard ISO Farm insurance Special Cause of Loss form, coverage for vandalism or breakage of glass is excluded if the premises has been vacant for _____ days or more.
Under the standard ISO Farm insurance policy, if a property has been vacant for 60 or more days prior to the loss, certain perils become excluded. These exclusions include vandalism and glass breakage. Other perils such as fire and water damage could have limited coverage if the vacancy clause of the policy is violated.
Which of the following is not a prohibited practice as specified in the NAIC Unfair Practices article?
Unfair employment practices are not addressed by the NAIC Unfair Practices article.
Which of the following terms means "liability through another person"?
Vicarious means "through or in place of another person." There are times when a person may be held responsible for the negligent acts of another person. This is known as vicarious or imputed liability.
Which of the following is a covered basic form peril of the Homeowners policies?
Volcanic eruption is a covered basic form peril of Homeowners policies. Earthquake, subsidence, and land shock waves are not covered.
Watercraft liability, medical expenses and uninsured boaters are coverages provided under which of the following policies? I. Watercraft. II. Homeowners. III. Mariners.
Watercraft policies are designed to cover boats used primarily on fresh water streams and lakes. It is a package policy providing several coverages including hull, motor and trailer coverage along with liability coverage.
The property insurance term "improvements and betterment" applies to:
When a tenant occupies a non-owned structure they may make "improvements and betterments" to the real property. While they are occupying the building they have an insurable interest in these items. When they move the improvements and betterments must must remain with the dwelling/building. The monies spent on improvements and betterments can be covered in property insurance.
Crop insurance policy limits are usually written as a:
When an insured loss occurs, the policies will pay the determined percentage reduction in yield times the amount of insurance per acre, regardless of the actual crop value.
An insured purchases a $1 million umbrella policy with a $1,000 self-insured retention (SIR) and agrees to maintain the following underlying limits: auto liability - $100/300/50 and personal liability limits of $300,000. The insured is involved in an at-fault auto accident and the claimant is awarded $200,000 for his bodily injuries. What will the umbrella pay if the insured only carries $50/100/50 auto limits?
When the insured does not maintain underlying limits as stated in the umbrella policy, the umbrella carrier pays as though those limits were in effect. The insured would have to pay $50,000, the underlying carrier would pay $50,000 and the umbrella carrier would pay the remainder.
Under which circumstances would it be legal for an insurer to charge one insured more than another insured for the same coverage?
When the insured is statistically more likely to experience a loss. For example, if an Adeline owns a home that is constructed with more flammable materials than Joe, Adeline would be charged more for the same Homeowners policy than Joe because Adeline is statistically more likely to experience a loss by fire.
Jerry Jones has suffered a property loss to his home. The adjuster, Anthony, has stated that the loss is covered when it actually is not. Jerry is relying on the statement made by Anthony. Therefore, the insurer may be _____ from denying the claim.
When the insured relies on incorrect statements made by an adjuster, the company may be "estopped" from claim denial.
All of the following statements are TRUE of the terms used in the standard workers' compensation policy, EXCEPT:
When the term "state" is used in the standard workers' compensation policy, it means any state of the United States, the District of Columbia. It DOES NOT refer to United States territories and possessions.
For disability claims, how soon after the injury must an insurance carrier or a self-insured employer make the first payment?
Whether the employer is self-insured or has insurance, all income benefits are to commence with the first regular payday after 7 days after the injury or disability resulting from an occupational disease.
Kate is a claims representative who has been involved in adjusting a very complex claim. She has been communicating with all parties involved with the claim and has requested a formal meeting with the claimant and the claimant's attorney. At the formal meeting, Kate requests that the claimant sign a settlement release. Which of the following terms best describes the claims processing stage in which Kate is engaged at the meeting?
While in the meeting, Kate would have still have been involved in negotiations because the claim has not been resolved yet. The evaluation and investigation of the claim would have been complete by the time Kate called the formal meeting.
The common policy conditions apply to which coverage parts of a Commercial Package Policy?
With a Commercial Package Policy, the common policy conditions apply to all of the coverage parts.
In Kentucky, if a worker's injury is considered to be a permanent partial disability with a disability rating of 25%, how long will benefits will be paid?
With a disability rating of 50% or less, benefit payments will extend to 425 weeks. Benefit payments extend to 520 weeks if the disability rating exceeds 50%.
An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a settlement, which is a final binding decision is known as:
With arbitration, the decision by the arbiter is usually final and binding upon the parties.
Which of the following best describes the fundamental trade-off of Workers Compensation insurance?
Workers compensation insurance provides a fundamental trade-off: covered employees who are injured in an accident at work lose their rights to sue their employers, in exchange for being provided certain medical, loss-of-income, rehabilitation, and death benefits, regardless of who is at fault.
What will offset the payment of Workers' Compensation benefits paid for temporary total or permanent total disability in Kentucky?
Workers' Compensation benefits paid for temporary total and permanent total disability will be reduced if the injured worker is also receiving unemployment insurance payments during the period of disability.
What coverage options are available for providing Workers' Compensation coverage in Kentucky? I. Purchased from private insurance carrier II. Purchased from the Kentucky Employers Mutual Insurance Authority III. Self-insurance approved by the state
Workers' Compensation insurance can be obtained from authorized private insurance companies or from the Kentucky Employers Mutual Insurance Authority. Major employers may qualify to become individually self-insured by demonstrating financial soundness to the Department of Workers' Claims, and meeting its statutory and regulatory requirements.
An employer's workers' compensation policy will pay the medical expenses of injured workers:
Workers' compensation policies pay the medical expenses of injured workers until maximum medical recovery (as defined by state law) has been reached.
The Terrorism Risk Insurance Program Extension Act of 2015 covers all of the following, EXCEPT:
crop
Alternative dispute resolutions (ADRs) are procedures to help settle disputes using all of the following, EXCEPT:
litigation
The focus of Equipment Breakdown coverage is:
prevention of loss
During a tornado, Natalie's house is destroyed when a section of a wall is blown down, knocking over a heater, which sets the house on fire and creates smoke. The proximate cause of this loss is:
the tornado
The hull coverage in an aircraft policy does not cover which of the following?
transporting devices
A Commercial Package Policy (CPP) always includes: I. A single Declarations page common to all coverages. II. A single Conditions section common to all coverages. III. A single Exclusions section common to all coverages.
1 & 2
What coverage options are available for providing Workers' Compensation coverage in Kentucky? I. Purchased from private insurance carrier II. Purchased from the Kentucky Employers Mutual Insurance Authority III. Self-insurance approved by the state
1,2,3
Which of the following may be included in the Commercial Package Policy? I. Commercial Auto. II. Commercial Inland Marine. III. Equipment Breakdown coverage. IV. Aviation.
1,2,3
What is the limit of coverage provided under a Mobile Homeowners policy for detached structures?
10% of the Coverage A limit or $2,000 whichever is greater.
A Personal Automobile policy provides liability coverage on a single limit basis for $100,000. A covered accident caused by Mr. Jones involves a $75,000 liability judgment to Mr. Allen for his injuries and $25,000 liability judgment for the damage to his car. In addition, $20,000 in legal bills are incurred defending the insured. The company will pay:
120,000
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?
13,000
Under the farm forms, theft of certain types of property has a theft coverage limitation. The theft limitation on firearms and other related equipment is:
3000
An insured has an auto accident and sustains bodily injury worth $50,000. The responsible party carries auto liability limits of 15/30/15 which provides $15,000 for bodily injury for any one person per occurrence. The insured carries Underinsured Motorist limits providing $100,000 bodily injury for any one person per occurrence. Therefore, the responsible party's policy will pay its limit of $15,000 and the insured's Underinsured Motorist policy will pay:
35,000
How are Workers' Compensation benefits paid for Coal Workers Pneumoconiosis (CWP) in Kentucky?
50.50
The standardized Dwelling forms consider all eruptions of a volcano within a __________ period to be a single "occurrence".
72 Hours
The broad and special dwelling forms (DP-2 and DP-3) will provide replacement cost coverage for buildings if the amount of insurance written on the building is at least:
80% of the full replacement cost at the time of the loss.
The standardized Personal Automobile policies contain all of the following, EXCEPT:
A common conditions page
An insured has submitted a claim for payment under her Homeowners policy for damage caused to her home due to flood. She has received a notice from the insurance company regarding her claim. Which of the following is the notice the insured most likely received?
A disclaimer of coverage
ABC Office Temps and Clean-Rite Dry Cleaning are both located in a strip mall and share a common party wall. Fire begins in the dry cleaners and damages the party wall. Clean-Rite decides to go out of business. How will the BOP policy of ABC Office Temps respond regarding the party wall?
ABC's policy will repair the party wall and subrogate against Clean-Rite
How is personal property of a dwelling covered under a farm policy?
Actual Cash Value Basis
Which of the following losses to perishable stock would be covered by the commercial property Spoilage Endorsement?
All of the above
The definition of "collapse" as defined in the additional coverage of the Homeowners forms includes:
An abrupt falling down or caving in of the structure or a part of the structure
Under the Terrorism Risk Insurance Program Reauthorization Act of 2015, which of the following would be considered a certified act of terrorism that would be covered?
An act which results in damage within the United States, or outside the United States in the case of United States air carriers, vessels and/or missions that is not committed as an act of a declared war..
Assume a commercial umbrella liability policy is in effect and all conditions are met. Identify the correct statement.
An insured is responsible for damaging a client's million dollar shipment of products. This damage would be covered under the policy's Bodily Injury and Property Damage Liability coverage.
Which of the following is a true statement regarding the "law of large numbers?"
As the number of units increases, the ability to predict total and average losses increases
The form used to report the insured's actual and estimated business income under an Equipment Breakdown policy is called:
Business income—Report of Values
The condition "Legal Action Against Us" in a CGL policy requires the insured to:
Comply with all of the terms of the policy.
How is property covered under an unendorsed Businessowners policy form?
Coverage is written on an open peril basis
Which of the following would cover a farmer for income protection for his farm crops?
Crop Revenue Insurance
A company has been hired to determine the extent of pollution damage and recommend methods of its removal. However, it fails to identify some of the pollutants. What coverage might this company need to cover their liability exposures?
Environmental errors and omissions coverage
The mobile home coverage endorsement can be added to a Homeowner policy to include the perils of transportation. Which is not one of those perils covered during the course of transportation?
Flood
All of the following are excluded under the Commercial Building and Personal Property form, EXCEPT:
Furniture and fixtures
When an insured suffers a property loss, he or she is obligated by the terms of the policy to do all of the following, EXCEPT:
Hire a public adjuster to represent them in the claims process.
The theft of money and securities is automatically covered under which of the coverages listed below?
Inside the Premises - Theft of Money and Securities
The insured carries a yacht policy. One of the crew members is injured while performing a work related task. What coverage must be added under the policy that would respond to cover the crew member's injuries?
Jones Act (crew coverage)
Which of the following is not considered a "breakdown" under Equipment Breakdown coverage?
Lack of power, light, heat, steam or refrigeration
Section I of Homeowners policies cover all of the following, EXCEPT:
Locations owned by the named insured that are not described on the declarations page of the policy.
The "outside the premises" policy insuring agreement covers:
Loss of money and securities and other property outside the premises
A fidelity bond that provides coverage on a scheduled basis, covers:
Named employees or named positions
An adjuster's license is required for which of the following individuals in the state of Kentucky?
Neither
The NAIC Model Unfair Claim Settlement Practices Act specifies that when a violation of the Act is suspected, a hearing must be held:
Not less than 30 days after notice has been provided to those involved
A NFIP policy has a policy period of:
One Year
Driver 1 and Driver 2 are in an accident. Driver 2 has the following damages: Property Damage - $1,000 Rental Car Expense - $500 Emergency Room Expense - $400 Lost Wages - $300 The extent of the bodily injury will not be known for six months. How should the adjuster on this claim pay damages for Driver 2?
Pay the property damage and rental car expense and settle the bodily injury at a later time
Which of the following coverages is NOT provided by the Farm Employers Liability and Farm Employees Medical Payments insurance endorsement?
Pays statutory workers' compensation benefits
The insured's have a homeowner policy with a $5,000 loss deductible. The husband has purchased some expensive camera equipment to take on a cruise for recording their trip. Also special scuba gear and sportswear have been purchased for both. They are concerned about fire and theft. What coverage would you recommend?
Personal effects form
Homeowner policies typically provide coverage for all of the following, EXCEPT:
Personal injury
Farm liability coverages include each of the following, EXCEPT:
Professional
Which of the following is NOT a responsibility of the Insurance Commissioner in any given state?
Setting insurance rates
The Federal Crop Insurance Act of 1980 changed the role of the FCIC in providing crop insurance and established the Multi-Peril Crop Insurance (MPCI) program. Under the MPCI program:
Similar coverage is sold by private insurers and the federal government
Which of the following statements is not true?
The applicant for an adjuster license must complete an approved prelicensing course
Mr. Jones purchases a blender at a discount store. He brings it home, plugs it in and it malfunctions causing the house to catch fire. The fire destroys the blender, the home and its contents. It also causes bodily injury. Which of the following is NOT covered under the Commercial General Liability policy?
The blender
In a trial, the duty of a party to prove that the facts it claims are true is known as:
The burden of proof.
An insurance contract is considered to be an aleatory contract. All of the following are characteristics of an aleatory contract, EXCEPT:
The contract allows the insured to receive a return in claims payments that is nearly equal to the amount paid in premium.
The insured was working with a subcontractor installing wiring in an office building the insured was remodeling for a customer. The insured accidentally caused a fire when he crossed some wires. Two of the offices were damaged, and the wiring had to be replaced. Which of the damages will the insured's commercial umbrella liability policy likely cover if it is needed?
The damages to the two offices only
All of the following describe one of the four elements of a negligent act, EXCEPT:
The defendant entered into a legal contract with the plaintiff
Under the Equipment Breakdown Protection form that covers boilers and machinery, what is considered to be one loss event?
The initial breakdown that causes other breakdowns.
Which of the following would be information an IME physician would require from the workers' compensation adjuster in order to complete the IME report?
The injured workers detailed job description provided by the employer that is now part of the claims file. .
A public adjuster represents the interest of:
The insured
If the Navigational Limits or Lay-Up period shown on the Declarations page of a standardized Yacht policy is breached because of something out of the control of the insured:
The insurer must be notified within 10 days after the breach and any additional premium that is due must be paid.
Which of the following would be covered under Part Two - Employer's Liability of a standard workers' compensation policy?
The spouse of an injured employee sues the employer for loss of consortium.
Which of the following is not a prohibited practice as specified in the NAIC Unfair Practices article?
Unfair employment practices
In the newest edition of the Commercial Property form, which of the following is now considered part of the building?
Vegetated Roofs
To be defined as a burglary, an event must include which of the following conditions?
Visible signs of forced entry or exit
In aircraft coverage, when does a flight begin involving a helicopter?
When the rotors start to revolve
Monique lives in Texas and is covered under a standard Personal Automobile policy. Her policy was issued by Binders Keepers Insurance, a company that is domiciled in North Carolina and also transacts insurance in Texas, New Mexico, California, and Arizona. Binders Keepers has broadened their coverage under the policy without additional premium, as of April 1st. They are rolling out the change in coverage as follows: North Carolina - April 1st Texas - April 15th New Mexico - April 20th California - April 30th When can Monique expect her coverage to be broadened?
Your answer: April 15th, because when a company broadens their coverage with no additional premium charge, it takes effect on the date it is implemented in an insured's state of residence. is correct.
An employee blanket bond covers ____ for dishonest acts.
all
An independent adjuster acts on behalf of his or her principal. Which of the following is the principal for an independent adjuster?
insurer
What coverage under the BOP automatically applies if a customer slips and falls on the named insured's premises, regardless of legal liability?
medical expense
To be eligible for coverage under a standardized Dwelling policy, the insured must not allow more than _______ boarders to live on the premises.
5
After property or casualty coverage has been in force for more than ____ days, it may be cancelled for the approved reasons, with the exception of non-payment of premium, which can occur before that period.
60
No binder will be valid beyond the issuance of the policy with respect to which it was given, or beyond ____ from its effective date, whichever period is the shorter.
90 days
Which of the following methods is specified by the standard NCCI workers' compensation policy to handle claims payments when other insurance, including self-insurance, covers the workers' compensation risk?
Contribution by equal shares
How are household personal property claims settled under the farm policy?
acv
When would the Personal Auto policy respond to a loss with an all-terrain three-wheeled vehicle?
emergenc only
Which of the parties to a bond is the insurance company?
surety
An insured has a $2 million limit of insurance under a Personal Umbrella policy with a $2,000 self-insured retention limit. The insured is sued for $1 million in personal injury damages and $1.5 million in property damages arising from the same occurrence. The insured's underlying liability policies exclude coverage in this case, but the claim is covered under the Umbrella policy. In this case, the umbrella policy will pay:
1,998,000 of the damages
If an insurer receives an inquiry from the Department of Insurance regarding a claim, the insurer must, within ___ days of receipt of the inquiry, furnish the Department of Insurance with an adequate response to the inquiry in duplicate.
15
What is the difference between a Businessowners policy and a Commercial Property policy? I. The Businessowners policy automatically provides earthquake coverage whereas a Commercial Property policy does not. II. The Businessowners policy includes liability coverage, while a Commercial Property policy would not.
2
A Kentucky licensee must satisfactorily complete a minimum of ____ hours of continuing education courses during each continuing education biennium.
24
Which of the following must be licensed to adjust claims in Kentucky? I. An attorney licensed to practice law in this state, when acting in a professional capacity for a specific client only. II. A person employed solely to obtain facts surrounding a claim or to furnish technical assistance to a licensed independent adjuster. III. A person, who for compensation as an employee of an insurer investigates or settles claims arising under insurance contracts on behalf the insurer.
3
Which type of Crop Insurance Policy covers the entire farm instead of an individual crop?
Adjusted Gross Revenue
When Chris' car is stolen from his apartment's parking lot, he heads down to the local dealership and buys a new car. Three months later, Chris decides he may as well report the stolen car to his insurer, so he can get some money for it. What is the most likely reason the insurer might deny his claim?
Chris did not promptly report the stolen vehicle
Sean is covered under a standard, unendorsed Personal Auto policy. He has an external hard drive connected to the manufacturer-installed stereo system of the car, with thousands of digital music files stored there. The vehicle is broken into and the hard drive is stolen. How will the insurance company handle the claim for the hard drive?
Deny the claim in full because this loss is excluded by Part D of the policy..
Which of the following workers' compensation reserves will be used to pay the expenses associated with IMEs?
Expense reserves
he Part B - Medical Payments coverage of Dorinda's personal automobile policy has a limit of $5,000. Three of Dorinda's friends were injured in an accident that occurred while they were riding in Dorinda's car. The amount of medical expenses per person were as follows: Harvey - $1,500 Diane - $4,575 Thomas - $6,250
Harvey would receive $1,500, Diane would receive $4,575, and Thomas would receive $5,000
QUESTION: An adjuster license may be suspended, revoked, or refused for: I. Failing to comply with an administrative or court order imposing a child support obligation II. Having any insurance license, or its equivalent, denied, suspended, or revoked in any other state, province, district, or territory III. Having been convicted of any felony IV. Failing to pay state income tax or to comply with any administrative or court order directing payment of state income tax.
I, II, III and IV
Paul had his roof inspected by a local contractor, after a strong storm with high winds and hail, passed through his neighborhood. The contractor found damage to the roof and gave Paul an estimate of $9,850 to replace it. Paul filed a claim with his insurance company, and the company promptly sent an adjuster to inspect the roof. The adjuster's estimate to repair the roof came to $9,650. How will the adjuster likely attempt to settle this claim?
Negotiate the claim in an attempt to persuade Paul to agree to the lesser amount
A chemical company accidentally released toxic fumes into the air. The fumes reached two other businesses which eventually had to be evacuated for two business days while the air cleared. The evacuation caused loss of income to the businesses due to their inability to open their doors for business. This situation is an example of:
Property damage
The term "undamaged stock", as defined in an Equipment Breakdown policy, applies to which of the following situations?
Refers to the reduction in the value of the stock as a result of damage to other stock.. This term applies to the reduction in value of undamaged stock parts that become unmarketable or obsolete. If an item cannot be sold because of a loss to other stock, it loses value. Therefore, if there is damage as a result of a direct loss, the insurer limits its liability for unmarketable or obsolete stock. The maximum limit payable is $25,000.
What does the term "comparative negligence" refer to?
The percentage of fault is shared by each driver in an accident in which both contribute to causing the accident.
A family takes their 50 horsepower power boat to the lake on a trailer towed behind their personal auto. The pleasure boat is adequately covered under which of the following policies
Watercraft
A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system and the water from the sprinklers, soaks the carpet and shorts-out all the computers, causing thousands of dollars in damage. The office must close for two months during repairs. The cost of renting a temporary office space while the physical damage to the office building is repaired is considered:
an indirect loss
A non-waiver agreement issued by an insurance company is:
coverage issue
Traditionally, the most common type of crop insurance sold prior to the creation of the Multi-Peril Crop Insurance Program was:
hail
Which of the following terms is deemed as the uncertainty of future outcome?
risk
Which of the following statements is TRUE concerning the Part D coverage of a standardized Personal Auto policy?
t can cover owned and nonowned automobiles..
An employee is disabled for nine days after a work-related accident. For how many days, if any, will the employee be entitled to disability benefits?
2
An insured is covered under an HO-2 form with a Coverage A limit of $125,000 and a Coverage C limit of $65,000. What amount will automatically be provided for Coverage D?
37,500, An HO-2 form provides 30% of the Coverage A limit for Coverage D - Loss of Use. 30% of $125,000 is $37,500.
Nathan owns an ice cream shop in a strip mall next door to Eli's Hot Dogs & More restaurant. Eli's restaurant is damaged by fire, and Nathan is denied access to his ice cream shop by the fire department because it is adjacent to the damaged restaurant. If Nathan's Commercial Property policy includes a Business Income coverage form, then the insurance company will cover Nathan's loss of business income for:
4 weeks
Miranda's home is covered under a Homeowners policy with an Earthquake Endorsement attached. She has selected the base deductible of 5% and her limit of liability under Coverage C is greater than Coverage A. Her Coverage C limit of liability is $1,000. What is the deductible that Miranda will have to pay?
500
Typically, how are defense costs handled under an aviation policy?
Handled as a supplementary payment
Sally Roe's vehicle is rear-ended by John Doe. Sally and John are good friends. Sally tells John not to worry about the damage. She says she has insurance and will tell her insurance company to pay for the damage. She will waive her subrogation right so that John won't have to pay anything. Her insurer will:
Proceed with subrogation against John Doe and will not honor the waiver
