Mastery Exam

umbrella liability insurance policies do all of the following except a. provide coverage only to individuals b. provide higher limits of liability c. provide coverage above the limits of underlying policies d. cover slander and libel

a. provides coverage only to individuals

An Insurance company may examine and audit an insured's books and records for up to... a. 5 years b. 3 years c. 4 years d. 8 years

b. 3 years

which part of the dwelling property policy would cover lost rental revenue if the dwelling was being used as a rental property? a. coverage b b. coverage d c. coverage c d. coverage e

b. coverage e

assume the following items were stolen from the insured's home. which of these losses would be fully covered under Coverage C of the homeowners policy, assuming the loss was for the value of the property described? a. 1 $2000 ruby ring b. a $2000 laptop used for business c. gun for $5000 $3000 mink

b. laptop used for business

Restaurants and bars present a risk exposure for bodily injury and property damage for which the insured may become liable as a result of contributing to a person's intoxication. The coverage these businesses require is... a. commercial general liability b. liquor liability insurance c. premises liability insurance d. products liability insurance

b. liquor liability insurance

in property insurance, an insurable interest... a. is not necessary at the time the policy is written b. must be present at the time the policy is written and also at the time of loss c. is not necessary at the time the policy is written or when the loss occurs d. must be present at the time the policy is written, but not when the loss occurs

b. must be present at the time the policy is written and also at the time the loss occurs

The golf shop, located at the golf course, is open all year. However, the highest levels of inventory are carried between May and September. What is the best way to insure the increase in coverage for those months? a. value reporting form b. peak season endorsement blanket policy business income and extra expense endorsement

b. peak season endorsement

the commissioner (director of superintendent) examines a domestic insurer to accomplish all of the following except... a. to investigate alleged violations of insurance law b. to approve the location of the insurer's office c. to conduct periodic examinations of an insurer's books and records d. to determine whether a company will be granted a certificate of authority

b. to approve the location of the insurer's office

commercial umbrella liability policies provide coverage... a. when the underlying contract has been nonrenewed b. when a loss is excluded under the underlying policy but not excluded under the umbrella c. only for a commercial auto liability d. for usual and everyday types of exposures

b. when a loss is excluded in the underlying policy but not excluded under the umbrella

If an HO-3 policy has a coverage limit of $100,000 on the dwelling, how much coverage would automatically apply to cover the insured's personal property under Coverage C? a. $20,000 b. $25,000 c. $50,000 d. $100,000

c. $50,000

the terrorism risk insurance program reauthorization act provides federal compensation for insured losses resulting from acts of terrorism. all of the following would qualify except... a. acts committed to influence us policy b. an act that causes damage to a us mission c. an act that affects us citizens aboard an aircraft d. acts causing property damage and loss of life in foreign countries

c. an act that affects us citizens aboard an aircraft

under the commercial property broad form, which of the following losses or damages would not be covered? a. glass breakage b. weight of snow or ice c. earth movement d. falling objects

c. earth movementun

all of the following are duties of the insured following a loss except... a. protect property from additional damage b. promptly notify insurer or agent c. notify the police about all losses d. inventory lost property

c. notify the police about all losses (only if theft)

which part of an insurance policy describes the covered perils or risks assumed by the insurer? a. exclusions b. declarations c. endorsements d. insuring agreement

d.

if there is a total theft of a personal auto, transportation expenses will be paid after a. the insured has notified her agent b. 24 hour waiting period c. a police report is filed d. 48 hours waiting period

d. 48 hour waiting period

which of the following situations would most likely be covered by a commercial general liability policy? a. manufacturing exhaust kills a crop of tomatoes in a nearby field b. an office worker's finger is injured in an electrical pencil sharpener c. an employee drives his auto into his employer's garage door d. a surfboard falls off a shelf and injures a customer

d. a surfboard falls off a shelf and injures a customer

which of the following statements regarding workers compensation laws is correct? a. an injured worker must prove negligence on the part of the employer b. workers comp is governed at the federal level c. workers comp pays the first party d. benefits are paid to workers injured on the job regardless of who is at fault

d. benefits are paid to workers injured on the job regardless of who is at fault

which of the following marine risks is eligible to be written as commercial inland marine insurance? a. imports b. personal property floaters c. exports d. commercial property floaters

d. commercial property floaters

which of the following would not be covered under part one of the workers compensation policy? a. the employee was not observing company safety protocols and suffered an accidental injury b. the employee works outside on a regular basis. in the winter, the employee caught a cold that worsened to pneumonia. c. the employee was not observing company safety protocols and suffered an illness d. while making deliveries, the employee stopped on a person errand. while getting back in the truck, she fell and broke her arm

d. while making deliveries, the employee stopped on a personal errand, broke arm

the definition of robbery includes all of the following except... a. threating a person with a gun b. committing an unlawful act that is witnessed by the person being robbed c. unlawfully taking property from the care and custody of another person by stealth d. causing bodily harm to a person

c.

Under the building and personal property coverage form, the duties in the event of loss condition states that after a loss, the insured must send a signed, sworn statement to the insurance company within... a. 90 days b. 60 days c. 30 days d. 45 days

c. 30 days

loss due to vandalism, water damage, theft, or building glass breakage are not covered if a building has been vacant for more than how many days? a. 45 b. 90 c. 60 d. 30

c. 60 days

An insured item is destroyed by a covered cause of loss. The insurer and the insured have determined the value of the loss in advance, the type of valuation clause is known as the a. stated amount b. market value c. agreed value d. replacement cost

c. agreed value

all of the following are excluded from the liability portion of commercial auto coverage except... a. expected injury b. contractual liability c. all defense costs incurred by the insurer d. pollution liability

c. all defense costs incurred by insurer

an individual who owns and lives in a condominium can obtain broad coverage for personal property in the condo under which homeowners form? a. ho-3 b. ho-4 c. ho-6 d. ho-2

ho-6 (condominium owners)

what is the purpose of the ordinance or law coverage?

provides an additional amount of insurance for the increased costs to repair due to zoning laws

which of the following statements is true regarding policy cancellation? a. an insured must provide 30 days notice b. an insured can cancel a policy at any time c. the insurer can cancel at any time d. the insurer can cancel a policy only for nonpayment of premium

b. an insured can cancel at any time

If an insurer violates any section of the insurance code, what can the Commissioner issue to stop the insurer from committing the violation? a. notice of a hearing b. cease and desist order c. suspension order d. notice of violation

b. cease and desist

which of the following is a defense against negligence? a. absolute liability b. comparative negligence c. collateral source rule d. vicarious negligence

b. comparative negligence

what topic is generally included in the total number of continuing education hours required as a condition of license renewal? a. suitability b. compliance c. insurance basics d. ethics

b. compliance

which of the following policy provisions allows the insured to immediately benefit from any changes to coverage during the policy period made that would broaden coverag? a. additional coverages b. liberalization c. replacement cost d. concurrency

b. liberalization

the extra expense coverage form provides a. payments for unforeseen expenses an insured may incur while the business is shut down following a property loss b. additional money to pay for property damage losses at a covered location c. extra money for an insured who accounts receivable records have been damaged d. coverage the will permit the insured to continue business without interruption following a property damage loss

d.

which of the following would be covered property by the commercial property policy building and personal property form except a. office equipment b. store shelving c. inventory d. bailee property

d.

Circulation of a maliciously critical statement about any insurer's financial condition to injure the insurer is called:

defamation

in which type of contract are only one party's promises enforced?

unilateral

auto liability limits expressed as 25/50/15 mean the policy will cover...

$25,000 BI per person/$50,000 BI per accident/$15,000 PD

a basic dwelling policy automatically includes coverage for a. fire, lightning, and internal explosion b. f, l, & extended coverage perils c. f, l, extended, and liability d. f, l, vandalism,

a.

the business owners policy will pay covered medical expenses incurred within... a. 1 years \ b. 5 years c. 2 years d. 10 years

a. 1 year after the accident

a wet floor in a restaurant is... a. a morale hazard b. a moral hazard c. a physical hazard d. a business hazard

a. a physical hazard

who are the three parties to a surety bond? a. principal, obligee, and surety b. insurance company, agent, and policyholder c. agent, principal, and obligee d. principal, agent, and surety

a. principal, obligee, and surety

The owner of an old building buys insurance to protect himself from a possible lawsuit. This is an example of risk.. a. transfer b. retention c. avoidance d. sharing

a. transfer

a business income policy covers all of the following except... a. extra expenses b. non-continuing expenses c. continuing expenses d. lost profits

b.

which of the following actions is considered rebating? a. persuading a client to drop existing b. offering a client anything of value for purchasing c. sharing commission with another agent d. leading someone to believe that coverage exists when it doesn't

b. offering the client anything of value

what type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? a. broad peril c. named peril b. open peril d. special peril

b. open peril policy

who are the owners of a mutual insurance company? a. directors b. policyowners c. investors d. stockholders

b. policyowners

the insured of a commercial property policy will incur one deductible under the earthquake endorsement for protection against aftershocks for how many hours after the original earthquake? a. 124 hours b. 168 hours c. 72 hours d. 96 hours

c. 72 hours

under the homeowners policy, in order to receive replacement cost on a partial loss, the amount of insurance carries must be at least... a. 80% of ACV b. 100% of replacement cost c. 80% of replacement cost d. 100% ACV

c. 80% of replacement cost

an individual who occupies a position of trust when handling the financial affairs of another is a. a grantor b. a trustee c. a fiduciary d. an agent

c. a fiduciary

what type of cause protects a lender when an insured purchases a new car? a. an endorsement b. a standard mortgage clause c. a loss payable cause d. a rider

c. a loss payable clause

a difference in conditions contract is.. a. an endorsement used to modify the covered perils in a surety bond b. a modification of the "duties of the insured" condition in inland marine insurance c. a policy issued to cover what is normally excluded in other property insurance d. an exclusion that applies when there has been an increase in a hazard that is under the insured's control

c. a policy issued to cover what is normally excluded in other property insurance

most commercial autos acquired during a policy period are automatically covered, except for specifically described autos. what symbol is used to represent autos that are expressly listed in the declarations?

Symbol 7

an insurer's license to transact insurance is called

a certificate of authority

smoke losses caused by fireplace smoke are covered under which form for homeowners insurance? a. broad form only b. broad and special perils c. basic perils form only d. basic, broad, and special perils

b.

which of the following could be eligible for a BOP? a. family fun amusement park b. rest easy bed and break c. joes bar d. city bank

b.

according to insrance law, an agent a. acts as a representative of the commissioner b. solicits, negotiates, procures, or effects insurance on behalf of an insurer c. procures insurance on behalf of another person d. investifates and negotiates settlements of claims

a. acts as a rep

which of the following activities is an example of misrepresentation? a. an agent describes the guaranteed policy dividend to the prospect that they'll receive over the next 5 years b. an agent gives a prospect a written A.M. best rating comparison of the insurer she represents and an insurer her competitor sells c. an agent tells a prospect the amount of dividends paid for a particular policy over the past 5 years d. an agent only provides the prospect insurance quotes from the companies he represents

a. an agent describes the GUARANTEED policy dividend to the prospect that they'll receive over the next 5 years

which of the following best illustrates vicarious liability a. an employer is sued after his employee physically assaulted a customer b. a homeowner is sued for failing to secure an exotic animal that attacked a neighbor c. an auto owner is sued after colliding with a parked car d. a manufacturer is sued for a dangerous product

a. an employer is sued

the method used to determine the value of a loss, should the adjuster and the insured disagree is... a. appraisal b. arbitration c. actual cost value d. umpire method

a. appraisal

the utility services (time element endorsement) for the BOP provides coverage for a. consequential losses resulting from utility failure b. direct damage to insured property caused by utility failure c. damage to the property of others caused by utility failure d. liability resulting from failure of utility services

a. consequential losses resulting from utility failure

claire tells a client that her homeowners policy covers earthquake, when it does not. what unfair practice has she committed? a, rebating b. twisting c. misrepresentation d. false advertising

c.

condominium association coverage forms insure all of the following against direct physical loss or damage except... a. outdoor fixtures b. personal property owned, used, or controlled by the association c. personal property owned, used, or controlled by the condo unit owners d. personal property of others on the premises in the care, custody, or control of the association

c. personal property owned, used, or controlled by the condo unit owner

a person is injured after slipping on a wet floor in a grocery store. commercial general liability would provide coverage under which of the following? a. absolute liability b. operations liability c. premises liability d. completed operations liability

c. premises liability

which of the following is not covered under building coverage in the commercial property policy? a. fire extinguishers b. outdoor fixtures c. satellite dishes d. floor coverings

c. satellite dish

An insured rents a car while on vacation in Canada and causes an accident. is there coverage under the personal auto policy? a. the loss is covered if the insured purchased an extraterritorial endorsement b. the loss is covered only if the insured has purchased a rental car endorsement c. the loss is covered under an unendorsed personal auto policy d. the loss is not covered because it occurs outside of the policy territory

c. the loss is covered under an unendorsed personal auto policy

the law of large numbers states the larger the number of risks combined into on group, a. the larger the loss to any one individual .b. the higher the loss severity will be c. the more accurate the prediction of the amount of the loss in any given period d. the higher the loss frequency

c. the more accurate

shoplifting would be classified under crime insurance as a. burglary b. robbery c. theft d. mysterious disappearance

c. theft

To receive a resident insurance agent's license, the applicant must satisfy all of the following requirements except. a. 21 b. pass exams c. pay fees d. not have committed any act

d.

what is the basic difference between the dwelling dp-2 and dp-3? a. the dp-3 provides open peril coverages on the dwelling and other structures b. the dp-2 settles all losses on a replacement cost basis c. the dp-3 settles all losses on an ACV basis d. the dp-2 provides ordinance or law coverage

d. dp-2 provides ordinance or law coverage

a business owners policy provides which of the following crime coverage parts? a. mercantile open stock storage b. mysterious disappearance c. innkeepers coverage d. employee theft

d. employee theft

an individual who rents a condo would cover his property with which of the following ho policies?

ho-6

surplus lines insurances is insurance written with ______________ insurers

nonadmitted

the commissioner gives approval to an insurer to do business in that state if given what certificate

of authority

in an insurance transaction, who does a licensed agent legally represent?

the insurer (aka insurance company)

all of the following perils are covered under the basic commercial property causes of loss form except... a. falling objects b. vandalism c. fire d. sprinkler leakage

a. falling objects

which of the following would NOT be considered a personal injury loss under the CGL policy? a. fraud b. false arrest c. slander d. libel

a. fraud

the building and personal property form covers all the following except... a. highway billboards b. outdoor fixtures c. furniture d. stock

a. highway billboards

which of the following would be considered special damages? a. medical expenses b. defense costs c. pain and suffering d. punitive damages

a. medical expenses

all statements and descriptions in any application for an insurance policy by an insured are,,, a. representations and not warranties b. neither warranties nor representations c. warranties and not representations d. both warranties and representations

a. representations and not warranties

The transfer to the insurance company of the insured's right to collect damages from another party is _____. a. subrogation b. liberalization c. comparative negligence d. contributory negligence

a. subrogation

personal auto liability insurance would cover an accident resulting from all of the following except a. when the insured uses the auto as a taxi b. 12 year old takes it c. without permission but same household d. carpooling

a. taxi

which of the following is necessary for establishing negligence? a. the proximate cause of an occurrence is not voluntary b. an actual injury to another person or damages to property c. there is no legal duty of the insured to act or not act d. the act must be intentional

b. an actual injury or damage

physical damage coverage under the business auto coverage form includes collision, comprehensive coverage, and specified causes of loss. if a covered auto accident collides with a deer, this will be covered under... a. specified perils coverage b. comprehensive coverage c. collision coverage d. comprehensive coverage

b. comprehensive coverage

an example of a foreign insurer is... a. an admitted insurer doing business in Canada but incorporated in Texas b. doing business in Texas but incorporated in Nevada c. Canadian insurer doing business in at least one state d. doing business in Texas but incorporated in Canada

b. doing business in Texas but incorporated in Nevada

all of the following must be included in a commercial property policy written under the commercial package policy program except... a. causes of loss form b. value reporting form c. one or more commercial property coverage forms d. commercial property conditions form

b. value reporting form

which one of the following is NOT considered a form of unfair discrimination? a. charging one person a higher premium than someone else who represents an equal risk to the insurer b. refusing to sell to someone because of their race c. charging one person a higher premium than someone else of the same age and sex because of a higher risk represented by that person d. refusing to service policy needs of a person because of where she lives

c. charging someone a higher premium than someone else of the same age and sex because of a higher risk represented by that person

which of the following commercial general liability coverages would protect a policyholder from assumed liability under a construction contract to install water lines for a city? a. completed operations b. premises liability c. contractual liability d. independent contractors

c. contractual liability

the difference between additional and optional coverages on a business owners policy is... a. optional coverages do not need to be designated in the declarations b. additional coverages generally require an additional premium c. optional coverages usually require an additional premium d. additional coverages are considered coverage extensions

c. optional = additional premium

which of the following is not included in the nationwide marine definition? a. personal floaters b. commercial floaters c. personal shipments d. exports

c. personal shipments

an agents license can be terminated for which of the following reasons a. agent's nonresident license in another state lapsed b. the agent had to retake the certification exam multiple times c. found to have sold a significantly greater amount of non-controlled d. after receiving verbal permission, agent signed for the insured

d.

during the first 60 days of a homeowners policy term, the insurance company may cancel for any reason with a. 30 days written notice to the insured b. 20 days written notice to the insured c. 45 days written notice to the insured d. 10 days written notice to the insured

d. 10 days written notice to the inusred

issues arising from wrongful termination or discrimination are covered by... a. workers' compensation b. directors and officers liability c. commercial general liability d. employment practices liability

d. employment practices liability

a licensed producer may share commission with... a. the underwriting personnel who accepted the risk b. a producer licensed in another state c. a large customer d. her highest performing licensed employee

d. her highest performing licensed employee

flood insurance covers all of the following except a. unusual accumulation and run-off of surface waters b. overflow of inland or tidal waters c. mud flows d. leaking of pipes

d. leaking of pipes

which of the following coverages is included in the homeowners policy but is not included in an unendorsed dwelling policy? a. other structures b. dwelling c. personal property d. liability

d. liability

which of the following could be scheduled under a miscellaneous type vehicles endorsement to the personal auto policy? a. taxi b. company van c. trailer d. motorcycle

d. motorcycle

the commercial building and personal property form covers.. a. the insured's merchandise anywhere in the world b. underground foundations and pipes c. guard dogs d. personal property within 100 feet of the building

d. personal property within 100 feet

the farm covered causes of loss-broad form includes all of the following risks except... a. attacks on livestock - dogs or other animals b. accidental shooting of livestock c. drowning of covered livestock d. voluntary parting with covered livestock

d. voluntary parting with covered livestock