New York State General Adjuster 17-70
If an insured conceals a material fact, makes false statements or engages in a fraudulent act, he or she is guilty of: 1 Concealment. 2 Estoppel. 3 Representation. 4 Misrepresentation.
1 Concealment This is a definition of concealment. An act such as this will void coverage.
What is the purpose of an adjuster's interim report? 1 Reports on the ongoing status of the claim 2 Renders a final opinion on the claim 3 Provides the status on all releases 4 Contains final estimates of damages claimed
1 Reports on the ongoing status of the claim.
An insurance broker is a person who represents: 1 An insured or prospective insured. 2 An insurance company. 3 More than one insurance company. 4 Both the insured and the insurer.
1 An insured or prospective insured The broker represents an insured or prospective insured.
When a homeowners policy has been in effect for 60 days in New York, an insurer can cancel at anytime for any of the following reasons, EXCEPT: 1 A large loss has occurred. 2 Acts that increase the risk. 3 Physical changes in the insured property that make it uninsurable. 4 Non payment of premium.
1 A large loss has occurred The homeowners policy was purchased to indemnify against the occurrence of a large loss, therefore, this would not represent a reason for policy cancellation.
A valid contract must contain all of the following, EXCEPT: 1 Be a written instrument. 2 Competent parties. 3 Legal purpose. 4 Valuable consideration.
1 Be a written instrument. Contracts do not have to be written or documented to be valid and enforceable; oral contracts are perfectly acceptable if they are between competent parties, have a legal purpose, represent an offer and acceptance, and some valuable consideration.
In the ocean marine insurance, which of the following is considered to be the most important implied warranty? I. Seaworthiness. II. Condition of the cargo. III. Legality. 1 I only. 2 I and II only. 3 II and III only. 4 I and III only.
1 I only. All of the responses are implied warranties in ocean marine insurance. The most important is considered to be the seaworthiness of the vessel.
Producer's responsibility to the insurer:
1) Fiduciary duty to the insurer in all respects, especially when handling premium funds. 2) Must keep premium funds in a trust account separate from other funds and forward to insurer promptly. 3) Must report any material facts that may affect underwriting. 4) Responsible for soliciting, negotiating, selling, and cancelling the insurance policies with the insurer. 5) Duty to only recommend the purchase of only suitable policies.
If a crop insurance policy does not cover loss of the first 10% of a crop's value, but does cover a fixed percentage of any additional loss, the policy is said to be written:
On an excess over basis The term "excess over" means that the coverage applies as excess, and that the insurer has no liability until the loss exceeds a particular threshold.
Joann Larson, an adjuster, has had administrative action taken against her in another jurisdiction. What must she do?
Report the final disposition of the matter to the Insurance Superintendent within 30 days
The policy does not cover the structure or materials supporting the equipment.
Tornado Flood, earthquake, and mudslides are excluded perils. Coverage for flood and mudslides can be covered by purchasing a separate flood policy. Earthquake coverage can be purchased separately. Tornado is covered by the wind peril.
Adult Day Care
A program for impaired adults that attempts to meet their health, social, and functional needs in a setting away from their homes.
Binder (Binding Receipt)
A temporary contract that puts an insurance policy into force before the premium has been paid.
Nonrenewal
A termination of a policy by an insurer on the anniversary or renewal date.
Motels insured under the BOP may not exceed how many stories?
Motels not exceeding three stories may be insured. There is no floor area restriction. Motels closed for more than 30 days are not eligible.
What endorsement should an insured add to his or her homeowner policy to cover the replacement cost of personal property?
Personal Property Replacement Cost Endorsement The Personal Property Replacement Cost Endorsement should be added to provide replacement cost coverage on covered personal property.
Fraud
Intentional misrepresentation or deceit with the intent to induce a person to part with something of value.
Replacement cost coverage is best defined as:
Replacement without deduction for depreciation.With replacement cost coverage, the insured is permitted to replace old with new at today's cost without a deduction for depreciation.
What symbol is used for a hired auto in a commercial automobile policy? Symbol 8. Symbol 2. Symbol 5. Symbol 4.
Symbol 8. Symbol 8 is used to provide hired auto coverage in a commercial automobile policy. It also includes leased, rented or borrowed.
What does the term "unvalued basis" mean as it relates to ocean marine hull insurance?
This is a policy where the value of the property is not declared until after the loss. Some forms of ocean marine hull coverage are written on this basis.
Reciprocal Insurance Company
This is an aggregate who under a common name engage in business of inter insurance which means they Insure themselves and each other. (Ex: Physicians Reciprocal Insurance)
The Terrorism Act of 2002 has been extended and is an agreement between:
This is an agreement between the Federal Government and insurance companies to provide coverage for acts of terrorism.
Admitted (Authorized) Insurer
An insurance company authorized and licensed to transact business in a particular state.
Authorized (Admitted) Insurer
An insurance company authorized and licensed to transact business in a particular state.
Which of the following types crops would a "small grain" crop policy cover? 1 Barley 2 Corn 3 Sorghum 4 Potatoes
1 Barley Small grain consists of wheat, barley, as well as oats.
Pure Death protection
(Term/temporary protection) if the insured dies during this term, the beneficiary receives the pay out; if policy is cancelled/expires prior to insured death, there is nothing payable at the end; NO cash value; maximum age that coverage is not offered is 80
The workers compensation plan covering land based maritime workers is called: 1 US Long Shore and Harbor Workers Compensation Act 2 The Jones Act 3 The Federal Employers Liability Act 4 The Federal Employees Compensation Act
1 US Long Shore and Harbor Workers Compensation Act Those that load, unload, build and repair ships are covered by the US Long Shore and Harbor Workers Act. The key word in the question was "land based." Maritime workers out at sea would be covered by the Jones Act.
All of the following are true regarding the coverages usually provided under dental insurance, EXCEPT: 1 Provides preventive care for up to two visits per year. 2 Places limits on such procedures as braces and appliances. 3 Is typically written in conjunction with group insurance. 4 Provides coverage for routine cosmetic work.
4 Provides coverage for routine cosmetic work. Cosmetic dentistry is always a common exclusion.
How are workers compensation benefits determined for an injured employee in New York? 1 Federal guidelines. 2 National council on Compensation Insurance. 3 National Association of Insurance Commissioners. 4 State statutes.
4 State statutes. The state enacts statutes for the benefits payable under workers compensation benefits.
The term "open-ended" release pertains to:
A conditional or partial release An example would be where the insurance company agrees to pay some additional bills when they become available. These additional bills are viewed as part of the settlement agreement. Open-ended releases are generally subject to specific time and monetary limits.
Annuity
A contract that provides income for a specified period of years, or for life.
Executory Contract
A contract which has not yet been fulfilled by one or both parties that promises action in the event of a specified future occurrence.
Binder
A binder of coverage creates temporary coverage and usually will include such items as the insureds name and address, any additional insureds or mortgagees, property description, amount of coverage, effective date of coverage, and identity of the insurer
Schedule Rating
A method of rating property and liability risk by using charges and credits to modify a class rate based on the nature of the particular risk being rated.
Under the farm property form with replacement cost coverage, after the first $1,000 how is the claim paid?
ACV until repairs are completed and then the full replacement cost is paid Like most property forms that provide replacement cost coverage, the insurer will not pay replacement cost until the repairs have actually been made.
What is covered under the broad form farmowner's policy, that is not covered under the basic form?
Accidental shooting of livestock, as well as electrocution of covered livestock, drowning of livestock and accidents involving livestock while loading and unloading are things covered by the broad form and not covered by the basic form.
Common carriers are responsible for damage to customer goods they transport except for damage resulting from:
Acts of God
Under a surety bond, the "principal" is the party that:
Agrees to fulfill an obligation
An insurer whose place of incorporation is Toronto, Canada would be identified as a/an?
Alien insurer.
The plumbing in Mrs. Jones' home suddenly burst and the ceilings were damaged by water. All of the following Homeowners forms would cover the loss, EXCEPT an:
All current HO forms (except the HO-and HO-8) cover "Accidental Discharge or Overflow of Water or Steam" from a plumbing, heating, air conditioning, or fire protective sprinkler system or from within a household appliance.
loss reserve
An estimate of the value of a claim or group of claims not yet paid. A case reserve is an estimate of the amount for which a particular claim will ultimately be settled or adjudicated. Insurers will also set reserves for their entire books of business to estimate their future liabilities.
Insurance Agent define...
An individual appointed by an insurance company to solicit applications for a policy of insurance or to negotiate a policy on its behalf
In most states, which of the following most accurately describes an "admitted" insurer?
An insurer which can transact insurance in the state under its Certificate of Authority. Admitted insurers are those which are authorized to sell insurance in the state according to its Certificate of Authority issued by the state insurance department.
Adverse selection occurs when:
Applicants are accepted by the insurer with little or no attention given to underwriting. When insurers accept all applicants, ultimately the applicants choose their insurer, which is against normal industry practice. Typically insurers carefully choose applicants, not the other way around.
When medical personal prepare medical reports, abbreviations of medical procedures are often used. The abbreviation "ABG" refers to:
Arterial Blood Gases
Which of the following types crops would a "small grain" crop policy cover?
Barley Small grain consists of wheat, barley, as well as oats.
The insured has several locations and desires to insure his contents coverage. His agent advises him to complete a statement of values form and issues a policy with one limit to cover all locations. This is an example of:
Blanket coverage. This is an example of "blanket" coverage where all locations are covered under one limit.
Watercraft liability, medical expenses and uninsured boater are coverages provided under?
Boatowners
A major difference between surety bonds and insurance contract is:
Bond underwriters expect few, if any, losses
Custodial Care
Care that is rendered to help an insured complete his/her activities of daily living.
There are two versions of the commercial general liability policy. They are known as:
Claims-made and Occurrence
All of the following are exclusions under Section I - Forms HO-2 and HO-3, EXCEPT:
Collapse The HO-8 form does not include the peril of collapse. However, the broader forms HO-2 and HO-3 include collapse. The other 3 answers are excluded under all of the HO forms.
Which of the following perils is not covered under the Commercial Property Basic Cause of Loss form:
Collapse (other than sinkhole collapse). The Basic Form does not cover collapse except sinkhole collapse.
All of the following are true regarding the Mobile Agricultural Machinery and Equipment form, EXCEPT:
Combines and cotton pickers are eligible for coverage. Combines and cotton pickers must be specifically scheduled and are not covered under the blanket coverage of this form
None of the following can be covered by the Federal Terrorism Act insurance program, EXCEPT:
Commercial property and casualty risk are eligible. Personal insurance, crop insurance and life and health insurance are not eligible for the program.
The Terrorism Risk Insurance Act excludes all of the following EXCEPT:
Commercial property losses would be covered by TRIA whereas the other three would be excluded.
The Terrorism Risk Insurance Act excludes all of the following, EXCEPT:
Commercial property losses would be covered by TRIA whereas the other three would be excluded.
All of the following items have a built in limit (maximum) of coverage if the cause of loss is theft, EXCEPT Patterns Furs Jewelry Computers
Computers Although computers may have limitations of coverage if the cause of loss is electrical, viruses or hacking, there is no built in THEFT limit for these items. The other three have a built in $2,500 limit for theft losses.
In commercial property insurance, what does the Ordinance or Law coverage endorsement provide?
Covers the additional costs of rebuilding/repairing/upgrading, after a covered loss, to comply with a law or ordinance. An unendorsed commercial property policy would deny coverage for items the insured did not have before the loss, in order to uphold the principle of indemnity. Sometimes, however, a local law or ordinance will require an insured who has suffered a property loss to rebuild/repair to new standards and require items (such as an extra exit, guardrail, sprinkler, etc) that were not required before the loss. The Ordinance or Law endorsement pays for these extras up to its limit.
Which of the following dwelling forms provides broad form coverage for personal property?
DP-2 and DP-3 only
The most comprehensive coverage provided by the dwelling property program is found in the:
DP-3. The DP-3 form provides "open-peril" (all risk of loss) for the dwelling and other structures. The other forms provide named peril coverage.
Additional Coverages" in a Homeowner Policy would cover:
Debris removal
Debris removal
Debris removal is included as an extension of coverage. It is not an additional amount of coverage. However, if the combined loss and debris removal exceed the policy limit for damaged property, an additional 5% of the property coverage limit will be allowed for debris removal.
To cover lawn mowing equipment under a HO form an insured must:
Do nothing since it is already covered. Personal property is covered under a single limit. All personal property with some specific limitations is covered.
A person acting in a catastrophe or emergency situation and registered with the insurance commissioner for that purpose:
Does not have to obtain an adjuster's license. No regular adjuster's license is required for a person acting in a catastrophe or emergency situation.
A blanket employee dishonesty bond will:
Does not name the individuals.
Which of the following endorsemetns can be used under the BAP to extend coverage to individuals such as the owner of the business who do not carry personal auto insurance
Drive other car coverage.
What workers compensation coverage would apply if the injured employee's spouse brings a wrongful death suit against the employer?
Employers liability coverage provides legal liability coverage for suits brought against the employer for gross negligence.
An employee has been asked to use his own personal vehicle to perform certain tasks on behalf of his employer. What coverage is used under the Business Auto policy to protect the employer for lawsuits when the employee has an accident that causes legal action against the employer?
Employers non-ownership coverage
The "period of restoration" that applies to business income coverage:
Ends on the date when the property should be repaired within reason. The "period of restoration" is a defined term in the form. The form states: "Ends on the date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality." This period starts after a 72-hour waiting period.
Non-medical professional lability Insurance is known as:
Errors and Omissions Insurance
A print shop is insured under a Businessowners Policy with a separate policy covering the press. If a loss occurs that is covered under both policies, how will the Businessowners Policy respond?
Excess coverage The other insurance clause in the BOP is somewhat different than in other policies. The policy states that other coverage is considered primary (whether collectible or not) and that any coverage for the loss under the BOP will be considered EXCESS.
The National Flood Insurance program provide coverage for losses caused by Water-main breakage. True or False
False
Which of the following is not eligible for coverage under a homeowner policy form?
Farm property is not eligible for the homeowner program. Separate farm programs are 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.
What is the definition of "Custom farming"?
Farming for others
NFIP National Flood Insurance
Federal program for flood insurance.
Which of the following is not an endorsement under a homeowner policy?
Flood coverage Flood insurance is not a homeowner endorsement
Garage Policy
Garage coverage applies only to those auto that are identified as "covered autos" in the Declarations of the form. The "covered Auto" symbols in the Garage policy are similar to those used for the Business Auto policy.
What coverage is used to cover damage to a customer's vehicle in the care and custody of a repair garage
Garagekeepers legal liability
In ocean marine insurance, each of the following is considered to be an "implied warranty" EXCEPT:
General Average.
An apartment dweller would need which of the following homeowner forms?
HO-4. All of the other forms (HO-2, HO-8, HO-6) cover buildings. The HO-4 form is designed to cover the property of tenants.
All of the following statements about HO-8 are correct, EXCEPT:
HO-8 covers the same named perils as the HO-2. The HO-8 Form provides named perils coverage in Section I. The perils are the basic perils. The HO-2 includes broad form perils which makes the HO-2 Form broader than the HO-8 Form.
A ship has suffered damage and sunk. Which of the following would respond to cover the loss of the ship?
Hull Insurance Hull insurance would cover the loss
Aviation Physical Damage coverage is called
Hull insurance
A ship has negligently collided with another ship and caused severe damage. What coverage would apply to cover this claim?
Hull insurance with the "running down clause". Hull insurance with the "running down clause" would respond to cover this claim.
In case of a total loss in an automobile accident, the adjuster can do the insured which of the following? I. Pay cost to replace the vehicle with like kind and quality if the vehicle is a current year model. II. Use the most recent publication of an "Official Used Car Guide." III. If not listed in the "Guide," obtain quotations from local automobile dealers.
I, II and III depending on the circumstances All the responses listed can be options in settling a total loss claim.
An insurance adjuster is allowed to enter a privately owned building when:
If the adjuster has the consent of the owner The adjuster should have the consent of the owner of the property before entering the building.
If a building insured under a BOP has been vacant or unoccupied beyond ____ the insurer can send the insured a notice of cancellation
If the risk has been vacant or unoccupied beyond 60 consecutive days, the insurer can send the insured a notice of cancellation. Buildings with 69 percent or more of their rental units or floor area remain vacant or unoccupied are considered unoccupied under this provision.
When may an adjuster obtain a non-waiver agreement?
In dealing with a potential coverage dispute In coverage dispute situations, an adjuster may want to make clear that a known right is NOT being waived by any party.
A crew member has been injured on a ship. When his medical expenses are paid, this is known as:
In ocean marine insurance this is called 'cure' and is paid under the Protection and Indemnity coverage.
Under a commercial auto policy, which of the following endorsements can be used to family members
Individual named insured.
Under the Federal Insurance Fraud and False Statements Act, if someone is prohibited from doing business in a state, approval to resume transacting business must be granted by:
Insurance Regulatory Official.. Only an insurance regulatory official, such as the Insurance Commissioner, can grant permission to resume business.
Mutual Companies
Insurance organizations that have no capital stock, but are owned by the policyholders.
Excess Insurance
Insurance that pays over and above or in addition to basic policy limits.
A non-waiver agreement would allow the insurance company to do which of the following?
Investigate the loss without verifying that the loss is covered Insurers can use a non-waiver agreement when there is a question about coverage or limits. In such a signed agreement, the claimant/policyholder stipulates and acknowledges that the insurer's continued investigation into and the adjustment of the loss is not to be construed as an admission of coverage by the insurer.
Under homeowner policies personal property used for business purposes:
Is covered up to $2,500 on the premises and up to $1,500 off premises.
Misrepresentation is:
Leading a client to believe that an insurance policy provides benefits that it does not provide Leading a client to believe that an insurance policy provides benefits that it does not provide is an example of misrepresentation.
Which of the following would be found in a yacht policy?
Liability coverage
The insured is operating his boat on a fresh water lake and runs over a water skier. What coverage would apply to this claim under the boatowners policy?
Liability coverage The liability portion of the boatowners policy would pay the claim if the insured is held legally liable.
What is "break-bulk" cargo as respects ocean marine cargo coverage?
Loose cargo, such as cartons. Break bulk cargo refers to loose cargo, such as cartons or boxes, that are stowed directly (or placed on pallets) in the ship's hold, as opposed to containerized cargo or bulk shipments.
Under a business auto policy, which of the following types of physical damage loss is not covered?
Loss to radar detection equipment
The DP-3 dwelling form provides:
Open peril coverage on structures and broad form peril coverage on contents. The other forms are named peril forms and are not as broad as the open peril form
hull coverage
Marine or aviation insurance covering damage sustained to an insured vessel or airplane.
Which of the following would be considered "economic" losses? Disfigurement Loss of consortium Pain and suffering Medical expense and lost wages
Medical expense and lost wages
The root word "stomat" refers to:
Mouth.
An insured's television set is damaged while at a repair shop. The interest of the repair shop is not covered because of which of the following clauses?
No Benefit to Bailee The intent of the policy is to only cover the insurable interest of the insured. Bailees such as, a TV repair shop or a dry cleaners would not be an insured under the insured's policy. They must provide their own coverage.
Surplus lines insurance
Non-admitted insurers selling coverage in New York are known as surplus lines insurers and can only sell products through licensed surplus lines agents
Salvage
Once the insurer has paid a total loss on an auto the salvage belongs to the insurer.
For the insured dwelling and other detached structures the DP-3 provides:
Open peril coverage. The DP-3 provides open perils protection for the Dwelling and Other Structures, and named perils protection for Personal Property. The DP-1 and DP-2 forms provide named peril protection only, for the Dwelling, Other Structures, and Personal Property.
Which of the following is not a claim settlement option in a property loss?
Pay only market value for the loss Offering market value only is not a claim settlement option. If the insured carries replacement cost coverage then the adjuster needs to address the payment of the claim accordingly
A primary obligation of an insurance company is to:
Pay the claims covered under the policy. This statement is self-explanatory. The insured has paid a premium and now the insurance must act on its promise in the future.
The 2 basic Aviation coverages are
Physical damage and liability
Which of the following is not a duty of an adjuster in a property loss?
Prepare an appraisal of the loss The insured is obligated to obtain estimates of the loss and present them to the adjuster
Under farm liability coverage, which of the following would be covered?
Products liability for the insured's products Products liability for the insured's products would be covered. The others are specifically excluded.
Cause of loss forms refer to what type of coverage under a farm policy?
Property There are three causes of loss provisions in the property coverage under a farm policy: basic, broad and special. The insured chooses which provision is to apply and pays the premium accordingly. Obviously, the special is the broadest coverage.
Homeowners Coverage C (personal property) excludes all of the following types of property, EXCEPT:
Property belonging to the insured's 13-year-old son while he is away at summer camp. The Homeowners forms exclude certain types of property. Animals/birds/fish, property of tenants, and property that is more specifically insured are not covered.
A ship owner wanting coverage in case crew members bring liability suits for injuries sustained while working would purchase:
Protection and Indemnity
What does the property insurance term "improvements and betterment" apply to?
Real Property 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 they must be left. The monies spent on improvements and betterments can be covered in property insurance.
A producer who offers a prospect one-half of the commissions as an inducement to purchase insurance is guilty of:
Rebating.
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.
Under Coverage C (personal property) of the homeowners program all of the following categories of property are limited, EXCEPT:
Recreational furniture All of the HO forms contain a list of property subject to limitations. Recreational furniture is not included within this list.
In a property loss the insured is required to do all of the following, EXCEPT:
Repair the property within 20 days of notifying the insurer The insured should not repair the property until agreed upon by the insurer.
In a property loss the insured is required to do all of the following, EXCEPT:
Repair the property within 20 days of notifying the insurer. The insured should not repair the property until agreed upon by the insurer.
In a policy with replacement cost to damaged carpet and countertops, if replacement will not match up in quality and appearance with the undamaged property, what must the adjuster do?
Replace the damaged carpet and countertops and some of the undamaged property within reasonable site lines.
A homeowner desires to have his personal property covered for losses not subject to depreciation. The insured would need:
Replacement cost endorsement.
A communication sent to an insured stating that the insurer will NOT give up a right is called:
Reservation of Rights Letter The key word in the question is a communication sent to the insured. A Non-Waiver is agreed to by the insured and usually signed by the insured.
The ___ clause covers collision damage to another vessel.
Running-Down The running-down clause covers collision damage to another vessel. It does not cover docks or injury to passengers.
After an auto collision loss an insurance company may elect to pay the insured's claim and take possession of the vehicle. This practice is referred to as:
Salvage.
If an insured desires broader coverage than provided under the homeowners program for camera equipment this coverage can be obtained through:
Scheduled Personal Property Endorsement. In order to provide specific coverage for specified personal property the scheduled Personal Property Endorsement should be used. This provides "all risk" coverage that is broader than the coverage under the HO forms and has less exclusions.
The adjuster has uncovered some discrepancies in matters pertaining to the claim. He is unable to contact the insured to discuss these matters. What should the adjuster do?
Send a reservation of rights letter to the insured's last known address.
A policy's appraisal clause is used to:
Settle disputes concerning the amount of loss. The appraisal clause is used where the insured and the insurer do not agree on the value of the loss. Either party can demand an appraisal of the loss
All of the following would not be eligible for coverage under a businessowners policy, EXCEPT:
Small retail store The BOP is intended for small, owner-operated light businesses. Bars and taverns and auto body and repair shops are almost always excluded. The branch bank would not meet the general criteria.
A dry cleaner wants to insure the pressure boilers used in the business. They also would like to cover some equipment and accessories that can be used in the boilers but have not yet been installed. Which of the following, if any, can be used to cover this exposure?
Spare Parts and Equipment Coverage Endorsement EB 99 58, Spare Parts and Equipment can be used to schedule the values of this extra equipment and accessories.
To establish insurance laws.
State laws are made by the New York legislature and the Superintendent is responsible for their enforcement.
Representation
Statements made by the applicant on the application that are believed to be true to the best of the knowledge and belief of the applicant; may be withdrawn prior to policy issuance.
A non-admitted company sells insurance in the state of New York. This is known as:
Surplus lines insurance
An HO-2 form sets special coverage limits on all of the following items, EXCEPT:
Television sets Furniture is not subject to the special limit provisions of the policy.
The Federal Terrorism Act covers all of the following, EXCEPT
The Act does not apply to crop insurance.
Countersignature
The act of signing an insurance policy by a licensed resident agent.
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.
Who makes a declaratory judgement?
The court
Dwelling forms provide what amount of coverage for grave markers and mausoleums?
The dwelling forms do not provide any coverage for these items. The homeowners forms provide a limit of $5,000.
The retroactive date which can be used in the Claims-made version of the CGL policy:
The earliest date an injury can occur for coverage to apply.
Face
The first page of a policy.
The $1,000 for reasonable expenses incurred to remove property to another location to protect it from flood damage is available on flood insurance:
The policy will provide up to $1,000 of expenses incurred to remove property from the premises to protect it from damage for each flood loss occurrence.
How is personal property of a dwelling covered under a farmowner policy?
The property is covered on an actual cash value basis. Like a homeowners policy, the replacement cost endorsement may be attached for an additional premium.
All of the following are elements of insurability, EXCEPT:
The risk must be unpredictable. Insurance risks must be unexpected, but calculable for large groups of persons in similar circumstances, to be transferred to a third party. This element is the application of the law of large numbers.
Bob is purchasing a commercial property policy to cover contents of a building valued at $100,000. The policy includes an 80 percent coinsurance clause. To avoid a coinsurance penalty in the event of a partial loss, Bob should purchase a policy with minimum limits of at least:
The value of the covered property is ($100,000) times 80% = $80,000.
Concealment
The withholding of known facts which, if material, can void a contract.
Under the DP-2 and DP-3 dwelling forms, coverage for damage caused by vandals will be suspended, if at the time of loss the dwelling has been vacant for more than:
Vacant property creates a hazard for vandalism. The number of days was recently increased from 30 days to 60 days in practically all of the states. Coverage for vandalism and malicious mischief coverage must be added specifically to the DP-1 form. New York still uses 30 days.
All of the following are claim settlement options for property, EXCEPT
Value as established by the insurer.
What is the maximum period of time that coverage applies under civil authority business income coverage under the BOP?
What is the maximum period of time that coverage applies under civil authority business income coverage under the BOP? The newer edition of the form of the BOP (2010) has extended the time for loss of income under an act of a civil authority to four weeks. Previously it was three weeks. Refer to the outline published by the testing vendor for the edition date they are using
When can two insurance companies arbitrate a subrogation question?
When both companies consent to arbitration
When can two insurance companies arbitrate a subrogation question?
When both companies consent to the arbitration Both companies must consent to the arbitration.
A release becomes "good" when:
When the settlement check is cashed This is based upon the premise that a release is essentially a contract and to be effective it must be supported by valuable consideration which only occurs when the check is cashed
A constructive total loss.
a building is not a total loss but the cost to repair the building is greater than the value of the building This is an example of a constructive total loss. The loss is too great to rebuild the structure.
agency contract
a contract that is held between insurer and an agent/producer containing the expressed authority given to the agent/producer, and the duties/responsibilities to the principal, any agent in violation of the agency contract may be held personally liable to the insurer
Non Resident
an individual who is a non resident of NY and who is licensed or authorized to act as an insurance agent in the state in which he resides. If a licenced non residnent moves to NY, he has 90 days to apply for his license w/o taking exam
PIP, UM and Medical payments
are not standard in the garage policy but may be added by endorsement
Aviation Liability Insurance for owners of aircraft includes coverage for:
bodily injury liability to persons other than passengers bodily injury to passengers property damage liability medical payments(payable for injuries to passengers, regardless of whether the insured is liable for their injuries)
risk
risk is the uncertainty or chance of loss occurring only two types of risks exist which are speculative and pure and only one is insurable
An inland marine coverage which covers the insured's merchandise held for sale, the insured's property while off premises for trial and approval, customers' property in the care and custody of the insured, and property being transported to or from the inured, is a
dealer's policy
The insured is covered under a jeweler's block policy. The owner's wife decides to wear an expensive piece of jewelry to a party that is for sale by the business. In case of a loss what will the insurer do
deny the claim because of an exclusion
Coverage can be provided while the aircraft is:
in the air or on the ground on the ground only not in motion under its own power
Occupying a vehicle
in, upon, getting in, on, out or off
PA Trailer
means a vehicle designed to be pulled by a private passenger auto or pickup or van
Hull insurance does not cover
personal effects
Level Term Insurance
refers to most common type of temporary protection in which death benefit does not change throughout duration of policy
Material misrepresentation
which is deliberately withholding an important fact that would have a bearing on the acceptability and/or pricing of the risk. If a policy is issued and a claim occurs as a result of material misrepresentation within the first 2 years of issue, the insurer can deny payment of the claim under incontestability clause of the policy.
death benefit
the amount paid when a claim is issued against policy of insurance
Hull insurance covers
the complete aircraft including its airframe engines controls electronic navigation and communications equipment
The "custom farming" endorsement is usually attached to a farmowners policy when receipts are at least $_______ for farming for others.
$5,000
A homeowner moves into a new house built by a contractor. Shortly after moving in, the roof leaks and damages the contents. What coverage might the contractor carry that could respond to cover some of this claim? 1 Completed operations coverage 2 Operations Coverage 3 Contractual Coverage 4 Personal Injury Coverage
1 Completed operations coverage The damages for part of this claim could be covered under the contractors completed operations coverage. It provides coverage after the work has been completed and put to its intended use. If the contractor installed the roof it is not covered because it is the contractors "work" which is excluded.
Automobile Medical Payments covers: 1 The insured as an occupant of a car, an occupant of the insured vehicle and the insured as a pedestrian when hit by a car. 2 The insured as an occupant of a car only. 3 An occupant of the insured vehicle only. 4 The insured as a pedestrian only.
1 The insured as an occupant of a car, an occupant of the insured vehicle and the insured as a pedestrian when hit by a car. It also covers any family member. In addition, any other person while occupying the insured's covered auto.
Producer's responsibilities to the insured:
1) Forward premiums to insurer on a timely basis. 2) Seek and gain knowledge of the applicants insurance needs. 3) Review and evaluate the applicant's current insurance coverage, limits and risks. 4) Serve the best interests of the applicant or insured, although producers represent the insurer. 5) Recommend coverage from the perspective of the producer.
To protect a businessowner, the elimination period for disability buyout insurance normally is;
1-2 years Disability buyout insurance is used to fund a buy-sell agreement when one owner to the agreement becomes disabled. The longer elimination period is used to avoid conflict for relatively short disabilities like 60-90 days, and some case 180 days. Generally, when a businessowner is disabled for a period of up to one year, that owner will not return to active participation in the business.
Coverage for earthquakes and volcanic eruptions may be attached to Commercial Property insurance. When the Earthquake Causes of Loss is attached, a series of earthquakes or volcanic eruptions will be treated as a single even whenever the series of shocks or eruptions occurs within a:
168 hour period
Under the commercial property condominium association form, coverage is based on: 1 The commercial property form 2 The association agreement and bylaws 3 The special cause of loss form 4 State and local ordinances
2 The association agreement and bylaws The coverage provided by the form will be based on the condominium association agreement and by laws.
A person asserting a right to payment under an insurance policy is referred to as:
A first party claimant
Insuring Clause
A general statement that identifies the basic agreement between the insurance company and the insured, usually located on the first page of the policy.
Which of the following is the amount of coverage provided on an attached garage of a home insured under an HO-3 for $100,000?
A garage attached to a dwelling is considered to be one structure therefore, no additional coverage over and above the $100,000 is provided. If the structure were a separate structure it would be covered for an additional $10,000.
Convertible
A policy that may be exchanged for another type of policy by contractual provision, at the option of the policyowner, and without evidence of insurability (i.e. term life changed to a form of permanent life).
A licensee must report to the Superintendent of Insurance any administrative action taken against the licensee in another jurisdiction or by another governmental agency in this state within _____ of the final disposition of the matter.
A report of any administrative action must be made within 30 days of the final disposition of the matter.
Which of the following statements best describes a representation in an insurance application?
A representation is a statement made by the insured that he believes to be true when made, but which might prove to be false. A representation the truth to the best of the person's knowledge and belief. It is an honest statement of supposed fact. A misrepresentation is a knowingly false statement. A warranty is a statement guaranteed as factual.
Adjuster
A representative of an insurance company who investigates and acts on the behalf of the company to obtain agreements for the amount of the insurance claim.
Where is covered property listed and described on the BOP?
Covered property is listed and described on the declarations page.
In a Homeowner Policy under the additional coverage of glass breakage, building glass is:
Covered unless the insured premises has been vacant for 60 consecutive days immediately before a loss
Coverage G under a farmowner policy covers which of the following?
Covers barns, silos, fences Coverage G covers barns, outbuildings such as silos, fences, radio equipment and other farm structures that are not related to the dwelling
An insured is covered under a Businessowners Policy. A fire has occurred to a business a block away and the civil authorities have blocked off the street. The insured's customers cannot gain entrance to his business location. What coverages would apply to the insured's loss of income?
After a waiting period of 72 hours the policy would pay for loss of income of up to three weeks.
Which type of Crop Insurance Policy insures the entire acreage rather than an individual crop?
Adjusted Gross Revenue Adjusted Gross Revenue policy which insures the revenue of a producer's entire farm, rather than an individual crop, by guaranteeing a percentage of gross farm revenue.
A farmer has accidentally libeled a neighboring farmer by stating that his dairy products are inferior to his. This is an example of:
Advertising/personal injury
What is the purpose of freight insurance?
Covers shipper fees. Freight insurance is designed to cover the shipper's fees charged to the shipper. It is the indirect loss/business interruption coverage which comes into play after a direct loss to the vessel.
Deposit premium
An initial premium charged the insured under a reporting form This is called a "deposit" premium which is usually 75% of the estimated annual premium. The insured reports either monthly or quarterly their values of inventory and a final adjustment is made at the end of the policy period.
An individual appointed by an insurance company to solicit applications for a policy of insurance or to negotiate a policy on its behalf is known as:
An insurance adviser This statement is the definition of an insurance agent.
General Damages -
Casualty policies cover compensatory damages which include bodily injury and property damage caused by the insured as a result of his or her negligence. Compensatory damages are broken down into two categories; special and general. General damages are types of compensatory damages that reimburse the injured party for such things as pain and suffering and disfigurement, and life-altering issues such as loss of mobility and loss of consortium not readily defined by actual incurred expenses. These damages pay for so-called "non-economic losses."
Traditionally, the most common type of crop insurance sold prior to the creation of the Multi-Peril Crop Insurance Program was
Coverage for hail damage. Hail damage to crops was the most popular form of crop insurance. Currently, the Multi-Peril Crop Insurance Program has surpassed Crop-Hail Insurance because of the broader coverage.
Under an HO-4 which of the following are covered in Section I?
Personal property used by the insured in Switzerland The HO-4 is designed for tenants. Section I of an HO-4 covers direct damage to personal property owned or used by an insured while it is anywhere in the world. It does not include dwellings or other structures. Some types of property are specifically excluded, such as animals.
If one is found guilty of federal insurance fraud, who can permit the guilty individual to return to the insurance business?
Only an insurance regulatory official. Only an insurance regulatory official, such as the Superintendent of Insurance, can allow the individual to return to the insurance business.
Coverage under the National Insurance program may be written:
Only in participating communities
Under the medical payments coverage included in an aviation policy, when are the passengers covered?
Passengers are covered while in, entering into, or exiting from the aircraft.
Which of the following is not considered to be a consequential loss coverage?
Replacement Cost Coverage A consequential loss occurs as the result of a direct loss to the insured property. Replacement cost coverage is used to determine the amount of the loss. If replacement cost coverage is not selected then actual cash value applies.
Which of the following dwelling forms provides coverage for loss of rental income?
The Basic, Broad and Special Form All of the forms provide for rental value coverage. In the DP-2 and DP-3, it is 20% of the Coverage A limit and is additional coverage. With the DP-1, the 20% coverage reduces the available Coverage A amount on the dwelling. (Note: in North Carolina the percentage is 10%.)
"Sinkhole collapse" is a peril covered under which of the following Commercial property Cause of Loss forms?
The Basic, Broad and Special forms. Even the Basic Form provides this coverage.
Which of the following dwelling forms provides removal coverage for 30 days?
The Broad and Special Forms only All of the dwelling forms provide removal coverage when the covered property is endangered by the perils insured against. Under the DP-1 form, the coverage is limited to only 5 days. The two broader forms provide 30 days coverage.
For the insured dwelling and other detached structures, the DP-3 provides:
The DP-3 provides open perils protection for the dwelling and other structures, and named perils protection for personal property. The DP-1 and DP-2 forms provide named peril protection only for the dwelling, other structures, and personal property.
The Excess & Surplus Lines Market
The Excess & Surplus lines markets are privately run insurers who usually write the risks that the standard market does not want. It is not an example of goverment issurers
Under the Federal Terrorism Risk Insurance Act of 2002 (extended in 2007 to now expire 12/31/14), who determines that an act of terrorism has occurred that would be covered under the Act?
The Secretary of the Treasury in concurrence with the Secretary of State, and the Attorney General.
On what date must an adjuster license be renewed?
The adjuster license expires December 31 of even numbered years and may be renewed for the ensuing two calendar years.
A building valued at $500,000 is insured at $300,000 on a policy containing an 80% coinsurance clause. How much would be paid on a covered $200,000 loss?
The answer is $150,000. Per the coinsurance clause, the required amount of insurance is 80% of $500,000, which equals $400,000. However, the insured's limit of $300,000 is only ¾ of the insurance required. That same fraction, ¾, is applied to the loss amount. ¾ of $200,000 is $150,000. Thus there is a "coinsurance penalty" of ¼ of the loss, or $50,000.
Consideration
The binding force in a contract that requires something of value to be exchanged for the transfer of risk. The consideration on the part of the insured is the representations made in the application and the payment of premium; the consideration on the part of the insurer is the promise to pay in the event of loss.
All of the following are covered under the Equipment Breakdown coverage form, except:
The breakdown of any structure or materials supporting the equipment. The policy does not cover the structure or materials supporting the equipment.
A fire starts in the rear of Paws & Such Veterinary Care. Four cats belonging to clients as well as the owner's dog are treated for smoke inhalation. What if any is covered by the BOP for the clinic?
The cats belonging to clients are covered but not the owner's dog Although animals are excluded from coverage on the BOP, the exception is any animal that is considered stock for sale or animals that belong to others that the insured is boarding. So in this case the cats belonging to clients would be covered but not the injury to the owner's dog.
Under the DP-1, dwelling form, which of the following is true
The extended coverage (EC) perils can be added by endorsement. EC perils can be added by endorsement without adding the V&MM endorsement. Money and the like are excluded under Coverage C. The Broad Form DP-2 can be used instead of the Basic Form DP-1 but the broad form perils cannot be added by endorsement to the DP-1. There is no such endorsement.
The insured's dwelling has been vacant for 62 days. Vandals enter the home and do considerable damage. To cover up their act and to avoid detection, they set fire to the dwelling. The insurer will:
The entire loss will be denied because of the new changes in the coverage. Previously, fire would have been treated separately from V&MM. Now if the fire is caused by vandals when the dwelling has been vacant for more than 60 days the loss will be denied.
All of the following are examples of insurable interest, EXCEPT:
The interest an individual has in the property her parents will someday leave to her. In property and casualty insurance the insurable interest must exist at the time of the loss. Insurable interests that may be created in the future or based on certain events are not currently insurable interests.
Under a dwelling policy (DP-2 or DP-3), what is the maximum that would be paid for additional living expenses if coverage A was $60,000?
he form provides 20% for additional living expenses and fair rental value. Therefore the policy would pay up to $12,000.
A car's cowl
is the front part of the automobile's frame that supports the rear of the hood, windshield, dashboard, pedals and instrument panel. The cowl separates the passenger compartment from the engine
Which of the following coverages may be added by endorsement to an Equipment Breakdown Policy? 1Business Income 2 Expediting Expenses 3 Property Damage Liability 4 Damage to property of the insured
1Business Income Business income coverage can be added to the Equipment Breakdown policy.
The insured is covered under a Businessowners Policy. He owns a hardware store that suffers a loss from a covered peril. His loss of income is $50,000. How will the loss be paid under the BOP?
On an actual loss sustained basis ($50,000) The policy pays for the actual loss of Business Income sustained due to the necessary suspension of "operations" during the "period of restoration." The suspension must be caused by direct physical loss of or damage to property at the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss. With respect to loss of or damage to personal property in the open or personal property in a vehicle, the described premises include the area within 100 feet of the site at which the described premises are located.
Actual Cash Value (ACV)
The required amount to pay damages or for property loss. This amount is calculated based on the property's current replacement value minus depreciation.
With long-term care insurance, the ability to transfer from a bed to a chair without assistance or from a chair to a bed is considered:
A normal activity of daily living. Transference is one of six activities of daily living (ADLs)that trigger benefits in LTC policies. The others are mobility, eating, dressing, bathing and continence.
Living Benefits Rider
A rider attached to a life insurance policy that provides LTC benefits or benefits for the terminally ill by using available life insurance benefits.
warranty
A warranty is a statement guaranteed as factual.
The Businessowners policy provides loss of income on an "actual loss" sustained bases for up to _____ months.
12 months
The deductible under the regular flood program for building and contents is:
$1,000
Temporary License
120 days
A non-wavier issued by an insurance company is:
A coverage issue
Exceptions on PA fewer than four wheels
used in a medical emergency trailer golf cart
Dan insures a home for adequate limits under a DP-2. If a flood causes $1,000 in damage, what is the maximum the insurer will pay, disregarding deductibles?
$0 Flood is an excluded peril under all the dwelling forms unless fire ensues and then only the loss caused by fire is covered.
Under the farm forms, the maximum amount payable for a loss to a satellite dish is:
$1,000 The pre-2000 policy forms provided $250 for a satellite dish. Under the newer forms, the limit has been increased to $1,000.
In a farmowner's policy, the maximum amount payable for a loss to a satellite dish is:
$1,000.00 The pre-2000 policy forms provided $250 for a satellite dish. Under the newer forms, the limit hsa been increased to $1,000.
Which of the following amounts would be paid on a covered auto suffering a total loss? The retail value is $1,250.00 and the average trade in value is $1,000.00.
$1,250.00 plus applicable taxes 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.
The Federal Terrorism Act covers property and casualty losses that exceed ______in the aggregate.
$100,000,000 The Act covers losses from a certified terrorism act that exceed $100,000,000 (the trigger) in the aggregate. The Federal Terrorism Act was amended in 2007 to this limit. The Act has was further amended and extended 2015. The trigger remains the same, but will increase each year by $20 million starting in 2016. Please refer to your testing vendor outline to determine if it is testing on the prevous amendment or if it is testing on the 2015 extension of the Act. The answer to this question is correct for either year.
Under a dwelling policy (DP-2 or DP-3), what is the maximum that would be paid for additional living expenses if coverage A was $60,000? $12,000 $6,000 $7,000 $9,500
$12,000 The form provides 20% for additional living expenses and fair rental value. Therefore the policy would pay up to $12,000. (Note: In North Carolina the percentage is 10%.)
John has commercial property coverage written on a value reporting form. The maximum limit of coverage for inventory values is $150,000. The insured has reported an inventory value of $75,000 when the actual value was $100,000. A $20,000 loss occurs. The insurer will pay:
$15,000.00 The insured is required to carry a 100% coinsurance clause when the reporting form method is used. The insured is also required to report 100% of the actual inventory values. This insured reported less than the actual inventory by 25% and will only receive 75% of a partial loss or $15,000.
A house has a market value of $180,000, an actual cash value of $150,000 and a replacement cost of $200,000. To be certain that the 80% provision of the HO-3 form is met, the minimum amount for which the house must be insured is:
$160,000 The insured should carry at least $160,000 to be in compliance with the 80% requirement.
What is the additional penalty an employer could pay for failure to report a serious work related injury to the Board and insurer within 10 days of the incident?
$2,500.. Failure to report within 10 days of an injury is a misdemeanor and punishable by a fine. In addition, the Board may impose a penalty of up to $2,500.
Substitute services will provide:
$25 per day for one year. Basic economic loss benefits will provide up to $25 per day for substitute services for a maximum of one year if the injured party is not gainfully employed.
The insured has a building worth $500,000 and insures it for $300,000. The policy contains an 80% coinsurance clause. In case of a total loss, what will the insured receive? $240,000 $500,000 $300,000 Nothing because the insured was not in compliance with the coinsurance clause.
$300,000 The coinsurance clause is an agreement between the insured and the insured. In exchange for a lower rate the insured must carry at least 80% of the value of the property to be insured. In case of a total loss to the covered property the coinsurance clause is not a factor. The insured receives payment up to the limit of the policy. In this case the insured would receive $300,000.
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:
$400,000
A brand new house costing $500,000 to build would need to be covered for what minimum limit according to the "insurance to value" clause, in order for the insured to receive full replacement cost coverage in the event of a $50,000 fire loss?
$400,000 The "insurance to value" clause requires a home to be covered with a limit of at least 80% of the home's full replacement value.
A person who violates a cease and desist order issued by the Superintendent of Insurance is subject to a penalty of up to _____ for each violation.
$5,000 This person is subject to a penalty of up to $5,000 for each violation. A willful violation must be taken into consideration in determining the amount of the penalty.
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
At the time of fire damage to a covered auto under a business auto policy, the auto's actual cash value is $9,200. The cost to repair the damage fully would be $11,500. If the policy has a $250 comprehensive deductible, what amount will the insurer pay for the loss?
$9,200 The deductible that applies to comprehensive does not apply to losses caused by fire or lightning under the business auto policy. Therefore the insurer would pay the ACV of the vehicle or $9,200.
Under the "basic economic loss" coverage required in auto insurance in New York, the maximum limit for loss of wages is: 1 80% of claimants wages, subject to a maximum of $2,000 per month. 2 $5,000 per month. 3 $2,500 per month. 4 $10,000 per month.
1 80% of claimants wages, subject to a maximum of $2,000 per month. The 80% of wages considers tax deductions from gross wages, and the maximum eligible sum of $2,000 per month will not be paid for more than 3 years.
Inland marine insurance is commonly used to insure all of the following, EXCEPT: 1 Automobiles. 2 Stamps. 3 Camera equipment. 4 Jewelry.
1 Automobiles.
If an employer does not qualify to obtain workers compensation coverage by self insuring or purchasing coverage from a private insurer, where can coverage be obtained? 1 The State Insurance Fund (SIF) 2 Assigned risk plan 3 Employers Mutual Risk Pool 4 Surplus lines market
1 The State Insurance Fund (SIF) The State Insurance Fund (SIF) provides a market for those unable to obtain coverage in the standard workers compensation markets.
Mr. Vickers lives close to a river that has, on occasion, flooded. On Friday morning he is watching the weather station and notes that there is a flood warning in his area. He calls his agent and asks the agent to bind flood coverage immediately. Which of the following is true? 1 The application for coverage requires a 30-day waiting period before coverage applies. 2 The agent can bind the coverage immediately. 3 There is a seven-day waiting period before the agent can bind coverage. 4 The agent can bind the coverage in 14 days.
1 The application for coverage requires a 30-day waiting period before coverage applies Flood insurance requires a 30-day waiting period. The exception to this rule is when the insured is required to provide coverage required by a mortgagee.
The optional provision which automatically amends an existing policy to conform with changes in state law is called: 1 The conformity to state statute provision. 2 The illegal law provision. 3 The legal amendment provision. 4 The state law amendment provision
1 The conformity to state statute provision This provision keeps existing policies in compliance with state law without compelling insurers to constantly refilling and reissuing contracts as state laws change.
Surety bonds deal with which of the following? 1 The performance by another party of an obligation or undertaking 2 (On Premises) employee dishonesty 3 The theft of a third parties goods by an employee 4 Burglary of a night watchman
1 The performance by another party of an obligation or undertaking
What is the percentage that the insured can apply to coverage A of the DP-2 and DP-3 dwelling forms for ordinance or law coverage?
10%. This change adds coverage to all the dwelling forms except the DP-1. The percentage is 10% of coverage A, dwelling.
Not all disabilities are covered by Social Security disability benefits. To be covered, a disability must be serious enough to be expected to be fatal OR to last at least:
12 months. . In addition, the disability must be total - meaning the claimant cannot work in any occupation whatsoever. There is also a 5-month waiting period before benefits can be paid once a total disability has been established.
The Superintendent of Insurance may issue a _____ temporary permit to an individual to adjust claims while an adjuster's application is pending. 6-month 30-day 1-year 120-day
120-day
License Term for Agent
2 years; can be suspended or revoked by superintendent, terminated by insurer, fails to file a renewal application, it can be terminated; Must be able to be furnished on request, the head agent must display in the office; if no certificate of appointment is filed, the license is inactive
Additional living expenses are paid at...
20% of the policy coverage A i.e. the maximum that would be paid for additional living expenses if coverage A was $100,000 would be up to 20,000
A suit against an insurance company must be commenced within ____ after the claim.
24 months No suit or action on a policy for the recovery of any claim will be sustainable in any court of law or equity unless all the requirements of the policy have been complied with, unless commenced within 24 months next after inception of the loss.
In New York, no suit or action against the insurer for the recovery of any claim shall be sustainable in any court of law unless all of the requirements of the policy have been complied with, unless commenced within ______ months after inception of the loss.
24 months The suit must be brought within 24 months next after the inception of the loss.
What commercial auto form is used to cover taxis and bus companies? 1 Business auto form 2 Garage liability form 3 Trucker's auto form 4 Motor carrier form
4 Motor carrier form The Motor Carrier form would be used to cover these types of vehicles. This form is used for a risk carrying persons or property.
Which of the following basic workers compensation benefits compensates a widow or other dependent family members of an employee whose death results from a work-related injury? 1 Disability income benefits 2 Medical benefits 3 Survivor benefits 4 Rehabilitation benefits
3 Survivor benefits Survivor benefits compensate a widow or other dependent family members.
The maximum payable for damage or loss to signs attached to the building covered under a BOP is: 1 $2500 2 The building limit since it's attached to the building 3 $1000 4 $5000
3 The correct answer is: $1000. Damage or loss to a sign attached to the building is limited to $1000 even though it is attached to the building and considered part of the building.
Under the additonal coverages of the businessowners property forms, property removed to protect it from loss will be covered at another location for up to:
30 days
Businessowners policies provide "Preservation of Property" coverage when property is removed from the premises to protect it from a covered cause of loss. The coverage will apply at other locations for up to: 1 60 days 2 30 days 3 10 days 4 20 days
30 days If an insured moves property from a covered location in order to preserve it from a loss by a covered peril, that property will be covered for ANY direct loss while it is being moved or is temporarily stored at another location for the next 30 days.
Under the HO-3, what percentage of Coverage A is written as the Coverage D limit (loss of use)?
30 percent The HO-2, HO-3 and the HO-5 provides for 30% for Coverage D (additional living expense/fair rental value) under the HO Forms.
Under the BOP, the building limit of insurance is $100,000 and the deductible is $1,000. The building loss amount is $110,000. Which of the following is the correct loss payment? 1 $89,000 2 $110,000 3 $99,000 4 $100,000
4 $100,000 The deductible is subtracted from the loss and not the limit of coverage. The loss exceeded the limit of coverage. Had the loss been less than the limit of the policy the deductible would still be deducted from the loss amount.
A New York licensee subject to an administrative action in another jurisdiction or governmental agency must report such action to the Superintendent within: 1 6 months. 2 10 days. 3 90 days. 4 30 days.
4 30 days The Superintendent must be notified within 30 days of the final disposition of the matter.
A contract between a public adjuster and an insured must be: 1 Must be in written form. 2 May be either written or oral. 3 Are noncancellable. 4 Must be made orally.
4 Must be in written form All contracts between the public adjuster and the insured must be in writing.
Which of the following is not covered under personal injury coverage provided by the commercial general liability policy? 1 Slander 2 False Arrest 3 Libel 4 Premises and Operations
4 Premises and Operations Injury caused on the premises or due to the operations of the insured is considered to be bodily injury.
Under the Commercial Property Liberalization Clause, if the insurer makes any coverage revision which broadens the coverage without an additional premium charge, it will automatically apply to existing policies if the revision is adopted during the policy term or within:
45 days prior to the effective date. This is standard in Commercial Property Insurance.
The insured carries a BOP policy with protective systems such as a sprinkler system. If the system becomes inoperative, the insured must advise the insurance company of the problem within ______ hours if the system cannot be restored.
48
The insured carries a BOP policy with a sprinkler system. If the system becomes inoperative the insured must advise the insurance company of the problem within ______ if the system cannot be restored
48 hours The insured must advise the insurance company within 48 hours of a protective device becoming inoperable.
The dwelling property program is designed to cover all of the following properties, EXCEPT:
A 1-story apartment house with eight roomers Most states will not allow for more than five roomers and boarders.
Which of the following phrases best defines a hazard?
A condition that increases the chances of a loss
Which of the following policies do not include flood coverage?
A homeowner policy specifically excludes flood coverage.
Law of Large Numbers
A principle stating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss.
Which of the following watercraft would be covered for liability under Section II (liability)of the homeowner 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.
What constitutes an "agreement" to enter into a valid contract?
A specific offer by one party and acceptance by the other. It is the insured that makes the offer by submitting an application with the premium. The insurer can either accept or reject the offer. If the offer is accepted then a policy is issued which becomes a valid contract between the parties.
An incorporated insurance company with its capital divided into shares and owned by its shareholders is known as
A stock company. The shareholders own a stock insurance company. Mutual insurance companies are owned by policyholders.
An individual who is needed to provide testimony for either the plaintiff or defendant in a court proceeding is served with a:
A subpoena directs the individual to whom it is served serves to appear before the court and provide to the court testimony regarding the matter at hand.
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.
Ancillary
Additional, miscellaneous services provided by a hospital, such as x-rays, anesthesia, and lab work, but not hospital room and board expenses.
partial dwelling losses at replacement value only if adequate insurance to value is in force.
Adequate insurance to value must be 80 percent or more of the replacement cost value of the structures
Which of the following most accurately describes an indirect loss?
After a loss, an insured homeowner sustains a hotel bill while the house is being repaired.. Indirect losses are the result of direct, physical losses as with the hotel bill after a loss. The other answer choices describe consequential situations, but still direct losses.
Who signs the declaration page on the Equipment Breakdown policy?
An authorized representative of the company signs the policy Declarations page. This would be the agent.
indemnity
An indemnity is an obligation by a person (indemnitor) to provide compensation for a particular loss suffered by another person An indemnity is an obligation by a person (indemnitor) to provide compensation for a particular loss suffered by another person (indemnitee). Indemnities form the basis of many insurance contracts; for example, a car owner may purchase different kinds of insurance as an indemnity for various kinds of loss arising from operation of the car, such as damage to the car itself, or medical expenses following an accident. In an agency context, a principal may be obligated to indemnify their agent for liabilities incurred while carrying out responsibilities under the relationship. While the events giving rise to an indemnity may be specified by contract, the actions that must be taken to compensate the injured party are largely unpredictable, and the maximum compensation is often expressly limited.
Broker
An individual who represents an insured in the process of purchasing and negotiating a contract of insurance.
Other private structures on a farm policy are defined as:
Another private structure on the property separated from the dwelling by a clear space. The key word is "private." Barns sheds, silos and such are covered under "other farm structures." A detached garage separated by a clear space from the dwelling and used as a "private" structure and not for business purposes would be covered by this section of the policy
How do you change the property causes of loss from risks of direct physical loss to named perils coverage under the BOP?
Attach the Named Perils form The named peril endorsement must be attached to the policy
Apparent Authority
Authority created when the producer exceeds the authority expressed in the agency contract. This occurs when insurer does nothing to counter the public impression that such authority exist.(Ex: company supplied signs, business cards and letter head.)
Implied Authority
Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.
Uninsured Motorist coverage includes the named insured's: I. Medical bills and pain and suffering. II. Lost wages.
Both I and II is correct. Coverage C (Uninsured Motorists) provides for payments to or on behalf of the named insured for injuries sustained through the negligence of an uninsured driver.
Which of the following would be covered under Coverage C of form HO-3? I. Property normally kept at the insured residence but in transit to a new principal residence II. Personal Property in Switzerland while the insured is on vacation
Both I and II. Coverage C provides protection for personal property owned or used by the insured anywhere in the world - with some exceptions. One is personal property normally stored off the premises - although this can be added by endorsement. (Property of away-from-home students is not "stored".)
Insurers must maintain a complaint record for ______ after all elements of the complaint are resolved and the file is closed.
Insurers are required to maintain complaint records for six calendar years.
How is property covered under an unendorsed BOP form?
Coverage is written on an open peril basis. The forms were revised to provide open peril coverage on buildings and contents. Coverage can be amended to named peril basic coverage by endorsement.
Commercial Property Insurance usually imposes a penalty if, at the time of loss, the insured failed to maintain a minimum amount of coverage. This penalty may apply because of the:
Coinsurance clause Commercial property forms contain an 80% coinsurance clause. This means the insured must insure the property for 80% of its value or risk a penalty in case of a partial loss.
A Pro Rata Liability Clause is included in an insurance policy to deal with the problem of:
Conditional coverages. The purpose of this clause is to illustrate the method to determine each insurer's liability in case of a loss. Each insurer pays its fair share determined by the percentage that the carrier's limit bears to the total coverage carried.
An adjuster has a relationship with the legal profession. What can the adjuster NOT do with respects to this relationship in the adjusting of a claim?
Contact the claimant without the consent of the attorney. Once the claimant has hired an attorney to represent the claimant in a claim, the adjuster may not contact the claimant directly without the consent of the attorney.
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.
Extra expense under the Business Interruption coverage is:
Coverage to pay all of the insured's reasonable expenses incurred in continuing normal operations as a result of a covered direct loss In case of a covered claim it covers basically any expense incurred by the insured to enable the insured to continue normal operations.
A baliee customers policy
Covers damage to customers property when the insured is liable
How are crop insurance premiums calculated?
Crop insurance is based on acreage for each crop
Which of the following is covered under the personal auto policy?
Damage to a private garage rented by the insured.. The Personal Auto policy makes an exception in the exclusions to cover damage to a private residence and garage rented by the insured. The other three answers are excluded.
Under the broad peril dwelling form, which of the following losses would not be covered?
Damage to the dwelling that is suddenly caused by wild animals. The broad form is a named peril form and does not list damage caused by wild animals as a covered peril.
An initial premium charged the insured under a reporting form type of policy is called the:
Deposit premium This is called a "deposit" premium which is usually 75% of the estimated annual premium. The insured reports either monthly or quarterly their values of inventory and a final adjustment is made at the end of the policy period.
Under the HO-3 policy which of the following would not be covered?
Earthquake Earthquake can be added by endorsement and is not automatically included in the unendorsed HO-3.
The Businessowners Policy provides coverage on the buildings and contents. How is the coverage provided?
Either on an actual cash value basis or replacement cost basis The BOP offers the option of covering the property on a "replacement cost" basis or "actual cash value" basis.
Each of the following is true about the National Flood Insurance Program, EXCEPT
Eligibility requirements are set by private insurance carriers. The Federal Emergency Management Agency (FEMA) sets the eligibility requirements for the communities.
The BOP has limitations on the square footage in regard to eligible risks. What is the maximum square footage a building can contain and still be eligible for the policy?
Eligible risks cannot exceed 35,000 square feet in total floor area, or exceed $6,000,000 in annual gross sales at each location. Incidental storage buildings not exceeding 35,000 square feet and occupied by the insured may be included.
The following losses would be covered under the HO-2 and the HO-3 homeowners forms, EXCEPT:
Flood damage to a home Flood is not covered under any of the homeowners forms.
Property and Casualty Insurance can be utilized to handle: I. Pure risks. II. Speculative risks.
I only Insurance can only be utilized to handle or transfer pure risks, those in which there can only be a loss or indemnification (but no potential for gain).
The New York Superintendent of Insurance may refuse to renew, suspend or revoke a license as a result of which of the following? I. A violation of any provision of the New York Insurance Code. II. An adjuster making a material misstatement in application for license. III. An adjuster being found guilty of fraud or dishonest practices.
I, II and III. The violations illustrated reflect character, ethics and morality that are not wanted in the insurance industry.
Which of the following Commercial Forms would cover sinkhole collapse? I. Basic. II. Broad. III. Special. IV. Extraordinary.
I, II, and III only.
The Superintendent of Insurance may approve the employment, appointment or participation of any person whose license has been revoked. Karen Jones had her license revoked and filed an application for relicensing and has waited over 120 days without a response from the Insurance Department. What should or can she do?
If the application for a license has not been approved or disapproved within the 120 days the relicensing is considered approved.
Out of State Coverage
If the insured is out of state and involved in an accident and their liablity coverage limit meets the financial responsibility requirements of their home state, the policy will automatically provide whatever liability limits are required by the state they are driving in.
In settling a claim on a dwelling fire policy with a $10,000 loss, the following companies are involved, Company A - 50%; Company B - 45% and Company C - 5%. What will Company C pay?
In this situation, Company C will pay $500.
Medical payments coverage under the farmowners policy covers which of the following?
Injuries sustained by an invitee Medical payments would pay for the injuries sustained by an invitee or guest. Coverage does not apply to members of the insured's family, roomers or boarders or tenants of the dwelling, or to farm employees
Coverage for goods in transit is usually provided by which of the following types of insurance? Inland Marine Casualty Surety Automobile
Inland Marine
Coverage of goods in transit is usually provided by which of the following types of insurance
Inland Marine
What is the purpose of hired car coverage under the BAP policy?
It protects the employer for the use of hired, leased, rented, or borrowed autos.
Which of the following is true regarding the Fair Credit Reporting Act?
It requires the insurance companies to notify an applicant in advance that an inspection report may be ordered The Fair Credit Reporting Act was created by the wave of consumerism type laws. The applicant must be advised in writing prior to an insurer ordering a report since this report is used in the underwriting process. Often times, the report contains inaccurate or misleading information that could adversely affect the insured and the insured has the right to contact the reporting agency to correct or dispute that information.
John does not own a vehicle and borrows a friend's car and has an accident. John carries named non-owned auto coverage. Which of the following applies to the accident?
John's coverage is excess. The named non-owned auto coverage is excess coverage.
As used in the phrase property and casualty insurance, casualty refers to
Liability loss or exposure Casualty involves a liability loss or exposure creating a legal liability situation based on negligence.
Which of the following would be covered under a multi-peril crop policy?
Low yields The multi-peril crop insurance program provides protection against low yields and poor quality crops as well as prevented planting, late planting and replanting costs for most crops subject to the perils insured against. The coverage applies to income protection. Crop revenue insurance goes a step further than multi-peril crop insurance by guaranteeing farms a certain income, which allows them to manage both yield and price risk.
Managing Risk
Minimize the possibility of a loss. Ways to manage risk: STARR- Sharing, Transfer, Avoidance, Reduction, Retention
what crop coverage is subsidized by the federal government?
Multi-peril coverage
Mutual Insurance companies are owned by
Mutual insurance companies are owned by policyholders.
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?
Negotiate the settlement of the property of others directly with the owners of that property and pay the defense costs incurred in the suit against the insured 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.
Before revoking or suspending a license, the Superintendent must first send _____ notice and give the accused an opportunity for a hearing.
New York state law mandates a 10 day advance notice to an accused licensee of a hearing. The hearing is held to enable any evidence or testimony to be presented to the hearing officer that will either prove laws were violated or prove the accused is innocent of any wrongdoing.
Operations Liability Coverage
Normally applies to a contractor.
A steam boiler insured under an Equipment Breakdown policy explodes and causes severe damage to the building and the contents. If a fire ensues as a result of the explosion, what coverage will the policy pay?
Only the damage caused by the explosion The Equipment Breakdown policy would only pay for the damages caused by the explosion. A commercial property policy would pay for the resultant fire damage.
Lloyd's Associations
Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk.
The principle of indemnity is best illustrated by which of the following insurance policy clauses? Other Insurance Liberalization Inspection and Audit Cancellation
Other Insurance This clause is designed to prevent the insured from collecting from more than one insurer on the same claim. The insured is not supposed to profit from a loss.
A mutual insurance company is:
Owned by its policyholders.
An insured can assign the policy to another only if the insurer agrees. In most cases, the insurer will not agree because an insurance policy is considered to be a:
Personal contract An insurance policy is a personal contract and does not automatically pass to the new owner of the policy even if the insured would like it to.
A monetary award to a plaintiff in a tort action in excess of the cash value of the economic loss as a punishment to the wrongdoer and as a deterrent to similar conduct by others is called:
Punitive damages
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
The insured has an HO-3 homeowner policy. During the night the water line in the wall to the upstairs bath room burst and water ruined the walls, floor and other furniture. In this situation all of the damaged will be covered except:
Replace the pipe that broke The policy will not pay for the part of the pipe that broke. All of the other damage is covered.
An insured has purchased a Businessowners Policy. He insures both the real and personal property under the policy. Assuming no endorsements apply, will losses be adjusted on an actual cash value basis or on a replacement cost basis?
Replacement Cost Basis
Under a Homeowner Policy (HO-5), if the insured carries 80% to value, what does Replacement Cost Coverage NOT apply to?
Replacement Cost Coverage does not apply to contents unless the replacement cost for contents coverage is purchased by endorsement. Without endorsement, replacement cost coverage only applies to covered structures.
A homeowner desires to have his personal property covered for losses not subject to depreciation. The insured would need
Replacement cost endorsement. The insured would need the contents Replacement Cost Endorsement.
The CAN-SPAM act of 2003 requires which of the following
Senders of commercial electronic mail should not mislead recipients as to the source or content of such mail and recipients of commercial electronic mail have a right to decline to receive additional commercial electronic mail from the same source.
Water damage caused by a sprinkler system is covered by which form?
Special cause of loss form
Agent's Authority
Special powers granted to an agent by his or her agency contract.
The Federal Terrorism Act covers property and casualty losses that exceed ______in the aggregate.
The Act covers losses from a certified terrorism act that exceed $100,000,000 in the aggregate. This limit was amended in 2007. Previously the limit was $50,000,000. This is called the program "trigger".
If an employer does not qualify to obtain workers compensation coverage by self insuring or purchasing coverage from a private insurer, where can coverage be obtained? The State Insurance Fund (SIF) Assigned risk plan Employers Mutual Risk Pool Surplus lines market
The State Insurance Fund (SIF) provides a market for those unable to obtain coverage in the standard workers compensation markets.
A New York licensee subject to an administrative action in another jurisdiction or governmental agency must report such action to the Superintendent within:
The Superintendent must be notified within 30 days of the final disposition of the matter.
An applicant for an adjuster's license must be approved by five reputable citizens of the community where the adjuster resides. This documentation must be:
The application for the license must be approved by at least five reputable citizens of the community where the applicant resides. They must certify that they have known the applicant for at least five years and that they believe the statements in the application are true. The statements must be included with the application for the license.
If a loss is valued using functional replacement cost, which of the following would apply?
The coinsurance clause is not applicable The coinsurance clause is not applicable because the coverage limit is based on the market value of the property which is probably below the 80% cost to replace it. This has been agreed to in the contract when functional replacement cost is the basis for loss settlement. Used particularly in losses involving antique, ornate or custom construction with less expensive, but functionally equivalent materials.
Coverage under the livestock coverage form may be written on either a blanket or scheduled basis. When coverage is blanketed, a limit of liability is indicated for each applicable livestock class such as cattle, sheep, swine, goats, horses, mules or donkeys. A per animal limit is assigned. This coverage is subject to a/an ____ coinsurance clause.
The coverage is subject to the 80% coinsurance clause.
Business Income Extra Expense
The coverage starts after a 72 hour waiting period which is also when the period of restoration begins
Aleatory Contract
The exchange of value is unequal. Insured's premium payment is less than the potential benefit to be received in the event of a loss. The insured's payment in the event of a loss may be much greater, or much less (Ex: $0 in the event a loss doesn't occur), than the insured's premium payment.
The unfair claim settlement laws and regulations in New York provide that a violation in each instance will be treated as a separate violation. A fine in the amount of _____ will be imposed against the insurance company for each violation.
The fine is $500 for each violation in the violation of an unfair claim practice law.
The insured is covered under a Businessowners Policy. He operates a pharmacy. The building is destroyed by fire. After he re-opens, his business still has not returned to the pre-fire level. The BOP provides for "extended business" income coverage for:
The form would provide extended business income coverage for 30 days
Automobile Medical Payments coverage
The insured as an occupant of a car, an occupant of the insured vehicle and the insured as a pedestrian when hit by a car.
In order to receive full replacement cost recovery on a covered loss under a BOP, the named insured must maintain insurance limits equal to at least what percentage of the covered property's full replacement value?
The insured must maintain at least 80% of the value of the covered property.
A public adjuster represents the interests of:
The insured. Public adjusters are retained by and paid by an insured and therefore, represent the insured in negotiating claim settlements.
Under the BOP, up to how many years can the insurer request to examine the books and records of an insured?
The insurer has the right to examine the books and records of the insured for up to three years.
Pair and Set Clause
The insurer is not liable for the entire set when only part of it is damaged.
Be affirmed under penalty of perjury
The list of eligible risks for the BOP is rather narrow. Gas stations, garages and repair shops would not qualify.
All of the following are exclusions under the standard BOP form, EXCEPT:
Transportation Transportation is a covered peril in the BOP.
What deductible applies to Additional Coverage-Fire Department Service Charg
The policy deductible does not apply
A Property Policy is issued to an insured with the Standard Mortgagee Clause. Which of the following is not true?
The property suffers a fire loss due to an increase in hazard known to the mortgagee but the mortgagee is still paid up to the amount of their insurable interest. If the mortgagee knew of an increased hazard and failed to report this to the insurer, coverage could be voided for the mortgagee. Even if the insured sets fire to their own property intentionally, the mortgagee is still covered.
Adverse Selection
The tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability.
The first effort to provide insurance for land transportation risks involved an extension of ocean marine coverage known as the:
This is called the "warehouse to warehouse" clause. Coverage applies from the warehouse from which the goods are shipped to the warehouse of the recipient.
When the insurer makes a change that broadens coverage under an existing policy without additional premium, this is called the:
This is called the Liberalization Clause. Under the Dwelling forms this implementation date must fall within 45 days prior to, or during the policy period stated in the Declarations.
While traveling in a rented car in Spain Mr. Brown has his personal property stolen. What kind of coverage should he have to cover this loss?
This is covered under a homeowner policy. Personal property is covered on a worldwide basis. If a HO policy is not in force then a Personal Property Floater could be written.
All of the following are duties of the New York Superintendent of Insurance EXCEPT:
To establish insurance laws.
The purpose of expediting expenses under the Equipment Breakdown policy is:s provide adequate limits of coverage.
To pay for repairs or replacement in a timely manner
A common element that links inland marine and ocean marine risks is:
Transportation. Ships transport the cargo over water. When unloaded, the transportation of the cargo continues inland. Hence the link of transportation.
The insured has a communication failure at his premises due to a lightning strike at the phone company. The insured's phone system is damaged and he is out of business for four days. Which endorsement is necessary to provide coverage for the loss of business income?
Utility Services - Time Element The Utility Services - Time Element endorsement would cover the loss of business income in this example if the phone system was listed on the endorsement and the cause of the loss was covered by the policy.
Which of the following words would be closely associated with estoppel?
Waiver Under estoppel, a principal waives the right to assert a fact that is inconsistent with a fact asserted by its agent. Retroactive is part of the term "retroactive date" found in claims-made liability policies. Subrogation is more closely associated with substitution than estoppel. Release is not relevant to estoppel.
Under the livestock coverage form, within how many days must newly acquired livestock be added to the policy?
Within 30 days of purchase Additional 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 36 foot ocean sailing vessel with auxiliary power would best be covered under what type of policy?
Yacht Policy Since the watercraft is used for ocean travel, the yacht policy would be the best choice.
Which of the following commercial inland marine coverage forms covers sums due the insured from customers which are uncollectible due to loss or damage of records
accounts receivable
Adjuster License
acts on behalf of th insurer to investigate and adjust claims arising under insurance contracts issued by the insurer
All of the following are required provisions of accident and health insurance policies, EXCEPT: cancellation. time limit on certain defenses. reinstatement. change of beneficiary.
cancellation..
Certificate of appointment
if a license is granted to an corporation, , only the officers and directors named on the license can act as agents, but they can sub license agents. Every time a new agent comes on boad, they need a certificate of appointment from the state
Personal Articles Form PAF
is virtually identical to the scheduled personal property endorsement. It covers the same nine categories: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamps and coins. Requires an appraisal
agent
legal representative of a an insurance company that acts for another person or entity known as the principal with regard to contractual arrangements
STARR
managing risk: Sharing- Investments of a large number of people may be pooled by use of a corporation or partnership. Transfer- Transferring the risk from one party to another, such as from consumer to insurance company. Avoidance- Elimination of risk, avoid the activity that gives rise to the chance of loss. Reduction- Minimizing the chance of loss, but not preventing the risk. Retention- Assume the responsibility for loss, self insure the entire loss or a portion of the loss by choosing deductibles is a method of retention.
Alien Insurer
means an insurer formed under the laws of a country other than the United States.
Foreign Insurer
means an insurer formed under the laws of the United States or of another state of the United States.
Property Damage
means physical injury to, destruction of or loss of use of tangible property.
Reporting of Action
must report to dept of insurance w in 30 days of any administrative action
The HO-4 provides ____ coverage on the dwelling and ____ peril coverage on personal property.
no / broad The HO-4 (Tenants form) insures tenants - people who do not own the building where they reside. It provides no coverage for the dwelling and broad peril coverage on the personal property.
Professional Liability Insurance
protects the insured against legal liability resulting from negligence, errors and omissions, poor workmanship and other aspects of rendering or filing to render professional services. Most professional liability polices are triggered by a claim made against the insured, alleging a "wrongful act" as defined by the policy.
To terminate a license, a superintendent must
provide a written notice to the licensee of a hearing before the license can be suspended. For a broker, its not less than 10 days after notice is provided for the hearing. If there's an action against the producer, he must notify the super within 30 days. You cant go into another state and start practicing either
speculative
the type that may either lead to loss or gain. example gambling. these are NOT insurable
exposure
the unit of measure used to determine the premiums for insurance coverage
Which of the following would be eligible for a BOP?
A dental laboratory
Misrepresentation
A false statement or lie that can render the contract void.
Rebating.
Offering a financial inducement to a consumer to buy insurance defines rebating.
Peril
The cause of loss
What is the percentage of coverage for the "loss of use" under HO-3, homeowner form?
The percentage of Coverage A for this coverage is 30%.
A farmer purchases crop-hail coverage with a $5,000 limit on 5000 acres of crops. He sustains a loss of 30%. His loss exceeds the 5% minimum and therefore he would receive?
$1,500
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?
$1,500.00 The DP-3 only provides damage to the covered property caused by the burglars. Theft is excluded under the DP-3 unless endorsed with the theft endorsement.
If the insured carries a DP-2 dwelling form and insures the dwelling for 80% of its replacement cost value, what will he be paid if his 30 year old roof sustains $10,000 in damages(disregarding any deductible)?
$10,000 If the insured carries 80% to value he would be entitled to full replacement cost coverage for his damaged roof.
When a homeowner policy is issued with $200,000 coverage on a dwelling, what is the automatic amount of insurance on personal property?
$100,000 Personal property is automatically covered for 50% of the amount of the dwelling limit. If replacement cost coverage is purchased on the personal property, the limit of insurance will be increased. The insured can always increase the contents limit for an additional premium.
The Federal Terrorism Act covers property and casualty losses that exceed ______in the aggregate.
$100,000,000 The Act covers losses from a certified terrorism act that exceed $100,000,000 (the trigger) in the aggregate. The Federal Terrorism Act was amended in 2007 to this limit. The Act has was further amended and extended 2015. The trigger remains the same, but will increase each year by $20 million starting in 2016. Please refer to your testing vendor outline to determine if it is testing on the prevous amendment or if it is testing on the 2015 extension of the Act. The answer to this question is correct for either year.
Richard Lanham has been advised by the superintendent of Insurance to cease and desist in the performance of certain infractions of the insurance code. He has had a hearing and been issued a cease and desist order. He continues to violate the cease and desist order. He can be fined a penalty of up to:
$5,000 per violation.
In settling a claim on a dwelling fire policy with a $10,000 loss, the following companies are involved, Company A - 50%; Company B - 45% and Company C - 5%. What will Company C pay
$500
Under and Equipment Breakdown Protection Policy with $50,000 in coverage, a covered "accident" resulted int he following: $50,000 worth of damage to the object. $10,000 damage to the property of another in the insured's care. $5,000 in legal fees to defend the insured in this case. The policy will pay a total of:
$55,000
A building with an actual cash value of $240,000 is insured for $200,000. The policy has an 80% coinsurance requirement. If there are no deductibles, how much would be paid for a $60,000 loss?
$60,000 The insured needs to be covered for at least 80% x $240,000 or $192,000 to avoid a penalty in case of a partial loss. In this case, the insured carries more than is required, and therefore, all the loss is covered.
Coinsurance Clause
A provision that states that the insurer and the insured will share the losses covered by the policy in a proportion agreed upon in advance.
The deductible under the "regular" flood insurance program for each coverage (building and contents) is: 1 $1,000 2 $5,000. 3 $2,000. 4 $750.
1 $1,000 The flood program deductibles have recently been revised. It should also be noted that the deductibles apply separately to each coverage per loss.
In order for a contract to be binding in a court of law, it must be designed for: 1 Two parties. 2 Legal purposes. 3 Res ipsa loquitor. 4 Easy interpretation.
2 Legal purposes In order to be binding, contracts must be for a legal purpose
Cars driven by Sue Trent and Jim Higgins were involved in an automobile accident where Mr. Higgins was at fault. Sue Trent's car was a total loss and valued at $6,000, plus she sustained bodily injuries totaling $25,000. Scott Finley, Ms. Trent's passenger, was injured and incurred $6,000 in medical expenses. Mr. Higgins, the responsible party, carries Bodily Injury coverage with limits of $15,000 per person and $30,000 per accident, and Property Damage coverage of $5,000. His policy will pay a maximum of: 1 $26,000 2 $29,000 3 $35,000 4 $39,000
1 $26,000 Mr. Higgins' policy will pay a maximum of $26,000. The maximum per person limit that can be paid to anyone person as a result of Mr. Higgin's negligence is $15,000. Therefore, Sue Trent will receive only $15,000 and Scott Finley will receive $6,000. This amounts to $21,000 in bodily injury payments. The property damage limit carried by Mr. Higgins is only $5,000. Therefore, the most that can be paid for the total loss to Sue Trent's vehicle is $5,000 even though her vehicle is worth $6,000. The total of $21,000 plus the $5,000 is $26,000.
All of the following would be considered "bodily injury" under liability coverage, EXCEPT: 1 A dog owned by a customer is injured in the parking lot of the a store. 2 A caterer's customer is hospitalized with food poisoning. 3 A shopper trips over an exposed cable at a mall. 4 A clerk demonstrating a barbell drops it on a customer's foot.
1 A dog owned by a customer is injured in the parking lot of the a store
Which of the following physical damage losses would be covered by a Personal Auto Policy providing Comprehensive (other than collision) and Collision Coverage? 1 A front tire blows out in a high-speed head-on collision, which also causes extensive damage to the vehicle. 2 An insured did not add antifreeze to his radiator and the engine is damaged when the cooling system freezes. 3 A radar detector is destroyed when an insured hits a tree after skidding on a patch of ice. 4 The bearings in a rear wheel burn out after 85,000 miles of use.
1 A front tire blows out in a high-speed head-on collision, which also causes extensive damage to the vehicle. Road damage to tires is specifically excluded. However, this claim involves a collision and the entire claim would be covered less the deductible.
Under the discovery clause in the loss sustained policy, which of the following is covered? 1 A loss discovered up to one year after the policy expired but that occurred during the policy period 2 A loss that is discovered two years after the policy has expired 3 A loss that occurred prior to the inception date of the policy 4 A loss that occurred during the policy period but was not discovered until five years after the expiration date
1 A loss discovered up to one year after the policy expired but that occurred during the policy period. The discovery clause in the loss sustained form states that losses that occur during the policy period, but are not discovered for up to one year after the policy has expired, can be covered under the expired policy. The discovery clause in the discovery form provides coverage during the policy period or within 60 days after the policy expires for coverage to apply.
Hired car liability under the business auto policy will cover all of the following for liability, except: 1 A new SUV owned by an employee, that he is using until the insured company can make a purchase of an SUV to be used in the department of the employee. 2 A pick-up truck leased to the Service Department for use in making service calls. 3 A rental car that the named insured rents at the airport when he arrives in Any City for a sales seminar. 4 A service van that the named insured rents for two months while waiting for delivery of a new van, which is on backorder from the manufacturer.
1 A new SUV owned by an employee, that he is using until the insured company can make a purchase of an SUV to be used in the department of the employee. Hired car coverage does not apply to employees using their own vehicles on company business. This would be an employers non-owned auto coverage and would only protect the employer in case the employee had an at-fault accident while using the vehicle for company business.
Under the physical examination and autopsy provision of an accident and health contract, the insurance company may request all of the following after a claim is filed, EXCEPT: 1 A re-rating of the insured due to examination findings. 2 An autopsy in the event of death. 3 An examination of the insured. 4 An examination of any insured family member covered under the contract.
1 A re-rating of the insured due to examination findings This is a part of the optional health insurance provisions that are designed to protect the insurer against anti-selection and malingering.
Some policies will pay full current cost for new property when there is a loss that is insured on: 1 A replacement cost basis. 2 A valued policy basis. 3 A market value basis. 4 An actual cash value (ACV) basis.
1 A replacement cost basis Replacement cost coverage pays to replace the property at today's cost without regard to depreciation. The insured would have to carry coverage based on replacement cost instead of actual cash value (ACV).
In the event that a worker dies from an on-the-job injury, the New York workers compensation law provides for payment of income benefits to a surviving spouse for life, but if the spouse remarries: 1 A two-year lump sum benefit will be paid. 2 Benefits cease immediately. 3 Monthly benefits will continue to be paid for six months. 4 Future benefit amounts will be reduced by 50%.
1 A two-year lump sum benefit will be paid. Financial responsibility on workers compensation is relieved as a result of remarriage and the 2 year award provides settlement and closure of the claim.
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: 1 Advertising/personal injury. 2 Bodily injury. 3 Contractual liability. 4 Vicarious liability.
1 Advertising/personal injury This is an example of personal/advertising injury. No bodily injury or property damage occurred
Under farmowners liability coverage, which of the following is covered under advertising injury coverage? 1 An insured farmer who unknowingly disparaged the crops grown by another farm. 2 Advertising the wrong price of the goods 3 Advertising the wrong description of the goods 4 Intentionally making disparaging remarks about another's farm products.
1 An insured farmer who unknowingly disparaged the crops grown by another farm.
If the insured is killed in an airplane accident, the accidental death benefit: 1 Applies if the plane is a regularly scheduled airline. 2 Does not apply under any circumstances. 3 Applies only if the aircraft is being flown by the insured. 4 Increases to triple indemnity.
1 Applies if the plane is a regularly scheduled airline.. Accidental Death Benefits usually exclude payment if the insured was a pilot or crew member of a private aircraft.
The Superintendent of Insurance in New York is: 1 Appointed by the Governor with the consent of the New York state Senate. 2 An elected official. 3 Appointed by the Senate. 4 Nominated by the National Association of Insurance 4 Commissioners (NAIC).
1 Appointed by the Governor with the consent of the New York state Senate. The New York state legislature empowers the governor to appoint the Superintendent making this position a cabinet position in the governor's administration.
The prefix "hypo" means: 1 Below. 2 Inside. 3 Insert. 4 Above.
1 Below. The prefix "hypo" means "below", as an example in the condition hypoglycemia. This condition suggests an abnormally low level of glucose in the blood depriving the body cells of glucose. The low level is below the normal body level, therefore it is referred to as "hypoglycemic".
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. 1 Both I and II 2 I only 3 II only 4 Neither I nor II
1 Both I and II 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.
Smoke damage to the insured premises caused by the sudden faulty operation of the insured's fireplace is covered under the: 1 Both the DP-2 and the DP-3. 2 DP-1. 3 Both the DP-1 and the DP-2. 4 Both the DP-1 and the DP-3.
1 Both the DP-2 and the DP-3. The DP-2 and DP-3 forms cover this type of loss. The DP-1 form does not.
Fidelity bonds are typically written to be effective for a 1 Continuous term without an expiration date. 2 Term of one year. 3 Term of two years. 4 Term of three years.
1 Continuous term without an expiration date The bond remains in effect until cancelled
Which of the following dwelling forms provides broad form coverage for personal property? 1 DP-2 and DP-3 only 2 DP-1, DP-2, and DP-3 3 DP-1 and DP-2 only 4 DP-3 only
1 DP-2 and DP-3 only The DP-1 provides very limited coverage for personal property. Both the broad form (DP-2) and the special form (DP-3) provide broad form coverage for personal property.
Which of the following events, arising out of the use of a covered auto, is covered under the Personal Auto Policy? 1 Damage to a private garage rented by the insured. 2 Intentional acts of an insured. 3 Damage to insured's property in the vehicle. 4 Damage to property of others in the vehicle.
1 Damage to a private garage rented by the insured PAP liability coverage excludes property damage to property owned or being transported by that insured, or to property rented to, used by, or in the care of that insured. The exclusion does not apply, however, to property damage to a residence or private garage. Intentional acts are always excluded.
Which of the following is covered under the personal auto policy? 1 Damage to a private garage rented by the insured. 2 Intentional Acts 3 Damage to insured's property in the vehicle. 4 Damage to property of others in the vehicle.
1 Damage to a private garage rented by the insured. The Personal Auto policy makes an exception in the exclusions to cover damage to a private residence and garage rented by the insured. The other three answers are excluded.
All of the following perils are covered under a building and personal property coverage form with a basic cause of loss form, EXCEPT: 1 Earth movement. 2 Smoke. 3 Sprinkler leakage. 4 Sinkhole collapse.
1 Earth movement. The earthquake endorsement would be required.
What legal principle states that an insurer would be prohibited from denying a claim that one of its adjusters said was covered? 1 Estoppel-A legal bar to changing or denying a fact because of one's own previous actions or words to the contrary 2 Indemnity rule-to compensate or reimburse. 3 Comparative payment-compare rates 4 Policy language-
1 Estoppel-A legal bar to changing or denying a fact because of one's own previous actions or words to the contrary In legal terms, agents speak and act for the principals they represent. Since a company or staff adjuster is, legally speaking, an agent of the insurer, the statements, promises, and acts of the adjuster are considered to be the statements, promises, and acts of the insurer. Claimants rely on the statements made by adjusters. Estoppel would prohibit a principal (in this case the insurer) from denying the validity or truthfulness of statements made by its agent (in this case the adjuster). If a company or staff adjuster states that a claim is covered, the insurer would in all likelihood be prohibited (that is, be estopped) from denying the claim.
A commercial umbrella policy would, in most cases, provide which of the following coverages? 1 Excess coverage over an insured auto liability claim 2 Primary coverage for liability claims 3 Underlying coverage for liability claims 4 Primary liability coverage for auto claims
1 Excess coverage over an insured auto liability claim The main purpose of the commercial umbrella policy is to provide excess coverage over the primary or underlying liability coverages. In the rare event that an umbrella policy covered a claim that the underlying policies did not, the umbrella would provide its limits over $0 of primary coverage (and may impose a self-insured retention, sometimes called a deductible, on the insured).
Under an Equipment Breakdown policy, all of the following are supplementary payments, except: 1 Expediting expenses. 2 Defense costs. 3 Interest on judgment. 4 Premiums on appeal bonds.
1 Expediting expenses. Expediting expenses are covered in the limit of the coverage. The other items are part of the supplementary payments, which are in addition to the policy limit.
The DP-2 broadens which of the following extended coverage (EC) perils? 1 Explosion, Smoke and Vehicles 2 Explosion and Smoke Only 3 Smoke and Vehicles Only 4 Vehicles Only
1 Explosion, Smoke and Vehicles. When the extended coverage (EC) endorsement is attached to the DP-1 form, explosion, smoke and vehicular damages are included. The DP-2 form broadens these perils.
Which of the following would be covered under the mobile equipment endorsement? 1 Fork lift. 2 A motorcycle. 3 A company car. 4 A company truck with a snow removal plow attached.
1 Fork lift Some types of mobile equipment that operates in a given state must be licensed, and evidence of liability insurance provided. Sometimes these are added to the commercial auto policy by using the mobile equipment endorsement.
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: 1 Full Report. 2 Field Report. 3 Interim Report. 4 Settlement Report.
1 Full Report The "full report" is the third and final report containing all the information gathered. The final report containing all facts, evidence and disposition of the claim
Which of the following would not be covered under the specified cause of loss physical damage coverage under the commercial auto form? 1 Glass breakage 2 Fire 3 Lightning 4 Flood
1 Glass breakage The specified cause of loss form covers the following perils: fire, lighting, explosion, theft, windstorm, hail, earthquake, flood, vandalism or mischief, transportation by a conveyance. The coverage does not include glass breakage, hitting a bird or animal nor falling objects or missiles.
Which of the following would not be covered under the specified cause of loss physical damage coverage under the commercial auto form? 1 Glass breakage 2 Fire 3 Lightning 4 Flood
1 Glass breakage The specified cause of loss form covers the following perils: fire, lighting, explosion, theft, windstorm, hail, earthquake, flood, vandalism or mischief, transportation by a conveyance. The coverage does not include glass breakage, hitting a bird or animal nor falling objects or missiles.
Upon discovering that an agent may have violated an insurance law, the state insurance department is required to take which of the following actions? 1 Hold a hearing on the infraction 2 Place the licensee on probation immediately 3 Publish notice of the violation 4 Revoke the agent's license
1 Hold a hearing on the infraction In most states, the head of the state's insurance department will hold a hearing and subpoena witnesses regarding a possible violation of insurance law. The agent would have the opportunity to present his or her side of the case at that the hearing. After the hearing is completed, the department head will issue an order/conclusion (similar to a verdict in a criminal case).
Which of the following would be considered fraud and grounds for voiding an automobile policy? I. The named insured intentionally answers "no" when asked on the application if he has had any speeding tickets in the past year. II. The named insured intentionally reports that all covered vehicles have a clear title when they are owned by others. III. The named insured submits a claim for fire damage that has been back-dated to a period before the policy's expiration date. IV. The named insured submits a claim for a total loss for a covered auto that he sold to an illegal auto chop shop. 1 I, II, III and IV 2 I and III only 3 II and IV only 4 I, II, and IV only
1 I, II, III and IV All four actions are fraudulent. Each is an example of deliberate misrepresentation or concealment of a material fact for purposes of improper gain. Insurers typically retain the right to void ANY insurance policy if an insured commits fraud relating to a policy.
Medical payments coverage under the farmowners policy covers which of the following? 1 Injuries sustained by an invitee 2 Injuries sustained by a farm employee 3 Injuries sustained by the insured 4 Injuries sustained by a tenant living in the insured's dwelling
1 Injuries sustained by an invitee Medical payments would pay for the injuries sustained by an invitee or guest. Coverage does not apply to members of the insured's family, roomers or boarders or tenants of the dwelling, or to farm employees.
Lawful economic interest in the preservation of the subject of insurance, free from loss or destruction or monetary impairment is the definition of: 1 Insurable Interest 2 Right of Ownership 3 An Amendatory Endorsement 4 Contractual Obligation
1 Insurable Interest This is the definition of insurable interest. In property and casualty insurance, insurable interest must exist at the time of the loss.
Under a Personal Auto Policy newly acquired additional vehicles are covered automatically for a limited period of time. This automatic coverage: 1 Is as broad as the broadest coverage for any vehicle shown in the declarations. 2 Only includes liability coverage. 3 Only includes liability and uninsured motorists coverage. 4 Is limited to the narrowest coverage for any vehicle shown in the policy.
1 Is as broad as the broadest coverage for any vehicle shown in the declarations. Liability coverage is continuous until the end of the policy period. To continue physical damage coverage certain restrictions and limitations apply as to the number of days the insured has in the reporting of the vehicle to the insurer. In North Carolina it is 30 days. For most other states it is 14 days.
What kind of health insurance policy would be issued to indemnify the owner when a critical employee of a business becomes disabled due to injury or illness? 1 Key man disability. 2 Limited accident. 3 Occupational health. 4 Workers compensation.
1 Key man disability. Key man (or key person) disability insurance indemnifies a business against the additional expenses incurred when an important employee is not able to work.
The deductible under a homeowner policy does not apply to which of the following? 1 Liability coverage 2 Theft coverage 3 Glass coverage 4 Vandalism coverage
1 Liability coverage Liability coverage as well as medical payments coverage are not subject to a deductible.
The "outside the premises" policy insuring agreement covers: 1 Theft of money and securities while outside the premises. 2 Loss of other property by robbery outside the premises. 3 Loss of money and securities and other property outside the premises. 4 Loss of money and other property off the premises caused by employee dishonesty.
1 Loss of money and securities and other property outside the premises.. The outside the premises insuring agreement covers the loss of both money as well as other property when outside the premises. Sometimes a messenger is taking deposits to the bank and sometimes they have other property outside the premises which is exposed to loss.
Which of the following policies would be used to cover imports and exports? 1 Ocean marine 2 Personal Property 3 General Liability 4 Businessowners policy
1 Ocean marine Ocean marine pertains to import and export risk, including the cargo being shipped as well as the vessel transporting goods or people.
When an insurance company broadens coverage under a homeowners policy, that change automatically applies to those policies currently in effect under what provision? 1 Waiver of Change of Policy Provisions 2 Liberalization Clause 3 Severability of Insurance 4 Insurable Interest and Limit of Liability
2 Liberalization Clause
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: 1 Similar coverage is sold by private insurers and the federal government. 2 Multi-peril crop insurance is sold only by private carriers. 3 Multi-peril crop insurance is sold only by the federal government. 4 All risks are shared equally by private insurers and the government.
1 Similar coverage is sold by private insurers and the federal government. A dual marketing system has been developed, but it is the intent that the policy writing and servicing functions be almost entirely shifted to the private sector.
In terms of fidelity bonds, what does "position scheduled" refer to? 1 The bond covers anyone who works in a "scheduled position." 2 Employees listed as working in certain positions are not covered by the bond. 3 The bond only provides coverage during "scheduled" work hours. 4 The bond only provides coverage at "scheduled" locations.
1 The bond covers anyone who works in a "scheduled position." Rather than schedule the individuals by name to be covered under the bond, their positions are scheduled.
Which of the following statements regarding aircraft insurance is incorrect? 1 The physical damage coverage is written with a flat deductible 2 Coverage for passengers can be excluded 3 Special coverage must be arranged for Air Meet liability coverage 4 Wear and tear is excluded.
1 The physical damage coverage is written with a flat deductible The physical damage deductible is usually expressed as a percentage of the value of the aircraft.
Each of the following is true about commercial property floaters filed by the Insurance Service Office (ISO), EXCEPT: 1 The rates for these coverages are unregulated. 2 Individual insurers are not required to use the ISO forms. 3 The coverages may be written as a monoline or part of a package policy. 4 The coverages are usually written on an open perils basis.
1 The rates for these coverages are unregulated. Rates for Commercial Property Floaters filed with ISO are regulated. Each type of form requires a rating formula. These are audited by ISO. There are many forms, not filed with ISO, where the rates are not regulated. These are called "non-controlled" lines of insurance.
The reason to purchase an umbrella liability policy is: 1 To provide higher liability limits and broader coverage. 2 To provide coverage to cover everything that the underlying coverage might exclude. 3 To avoid deductibles on liability claims. 4 To reduce insurance costs.
1 To provide higher liability limits and broader coverage. Umbrella policies provide excess limits over primary coverages and provides broader coverage than underlying policies.
Which of the following best describes the concept of risk? 1 Uncertainty of Loss 2 Result of Loss 3 Amount of Loss 4 Cause of Loss
1 Uncertainty of Loss Risk is the chance that a loss might occur. It is not the cause of the loss.
Equipment Breakdown coverage does not apply to which of the following losses? 1 Vandals have destroyed a boiler 2 A boiler safety relief valve has malfunctioned and caused the boiler to crack 3 A boiler has exploded due to a water flow problem 4 An electric motor has self destructed as a result of a broken part
1 Vandals have destroyed a boiler Coverage does not apply to loss outside the equipment (often referred to as the insured object or objects). An explosion outside the equipment is not covered whereas an explosion inside the equipment is covered.
Which of the following is NOT considered an "accident?" 1 Vandals spray grafitti over the siding on a home. 2 A pedestrian is killed when struck by a power crane excavating at a street construction site. 3 An employee is injured when his hand is caught in a power press. 4 A home is damaged by flying rocks from a dynamite blast.
1 Vandals spray grafitti over the siding on a home Damage by vandals is not considered an "accident" according to the policy definition.
Which of the following would be considered a "supplementary payment" coverage under a business auto policy? 1)All post-judgment interest in a suit defended by the insurer 2)Payment for an insured employee's truck being used by the employee on a business-related trip 3)Costs for a private investigator hired by an employee to prove he was not involved in a hit and run accident of which he has been accused 4)Up to $2,000 for the cost of bail bonds for an employee involved in an accident while he was on a trip to Mexico that he won for exceeding sales goals set by the company
1) All post-judgment interest in a suit defended by the insurer. Supplementary payments do not include physical damages, nor personal expenses of employees. The bail bonds would be covered except that Mexico is outside the coverage area.
4 Elements of a legal Contract
1) Competent parties- Insurer and insured must have legal capacity to enter into a contract. Those without legal capacity include: A. Minors *Exceptions do exist such as for the purchase of auto insurance. B. The mentally incompetent or incapacitated. C. Persons under the influence of drugs or alcohol. 2) Legal Purpose- All parties must enter in good faith and all parties to a contract must enter it for a legal purpose; public policy cannot be violated by a legal contract. 3) Agreement- One party must make and communicate an offer to the party and the second party must accept that offer. A. offer- the offer for entering an insurance contract is the application submitted by the applicant. B. Acceptance- The acceptance of an insurance contract takes place when the insurance company agrees to issue insurance. A counteroffer by the insurance company is not acceptance until the applicant accepts the counteroffer. 4) Consideration- something of value is exchanged the exchange of an act for a promise. (Ex: The consideration made by the applicant is the premium and the consideration made from the insurer is its promise to pay for covered losses.)
The Terrorism Risk Insurance Act excludes all of the following, EXCEPT 1 Commercial Auto 2 Farmowners 3 Commercial Property 4 Flood
3 Commercial Property Commercial property losses would be covered by TRIA whereas the other three would be excluded.
Policy Territory
1. USA, its territories or possessions 2. Puerto Rico 3. Canada
Insurers conducting business in New York must be examined at least once every: 1 6 months. 2 3 years. 3 4 years. 4 5 years.
4 5 years Each insurer conducting business in New York must be examined in detail at least once every five years. Any company under investigation is responsible for all expenses involved in the examination.
If an insured carries Coverage C under a dwelling form, how much coverage applies on a worldwide basis?
10% of the Coverage C limit Whereas homeowners forms provide the FULL limit of personal property coverage anywhere in the world, dwelling forms cover only 10% of the personal property limit on a worldwide basis. The remainder of the personal property is covered only while on the designated premises.
How many days does the liberalization clause provide for under the BOP prior to or during the policy?
45 days The policy reads, "If we adopt any revision that would broaden the coverage under this policy without additional premium within forty-five days prior to or during the policy period, the broadened coverage will immediately apply to this policy."
Under the farm forms, the maximum amount payable for a loss to a satellite dish is: 1 $250. 2 $1,000. 3 $500. 4 $750.
2 $1,000.
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: 1 $500,000 2 $400,000 3 $200,000 4 $100,000
2 $400,000 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.
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: 1 $500,000 2 $400,000 3 $200,000 4 $100,000
2 $400,000 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.
What is the limit of coverage provided under a mobile home policy for detached structures? 1 $2,000 2 10% of the Coverage A limit or $2,000 whichever is greater 3 $5,000 per structure 4 Coverage must be added by endorsement
2 10% of the Coverage A limit or $2,000 whichever is greater The limit is $2,000 or 10% of the Coverage A (dwelling limit), whichever is greater
A long term care insurance policy must include a provision that provides for reinstatement of coverage in the event of lapse if the insurer is provided proof of cognitive impairment or the loss of functional capacity. This provision must be available for_______, and must allow for the collection of any past due premiums. 1 3 months after termination 2 5 months after termination 3 6 months after termination 4 12 months after termination
2 5 months after termination
Payment may be made if which of the following procedures has been executed? 1 A partial signed release 2 A Walk-Away release 3 A prima-facia signed release 4 None of the answer choices is correct.
2 A Walk-Away release The walk-away release indicates the final disposition of the matter and relinquishes the claimant's right to sue so payment may be issued. In some states the signing of the payment check indicates a walk-away release.
The Superintendent may refuse to renew, revoke, or suspend the license of any adjuster, if after notice and hearing, if it is determined that the adjuster has: 1 Violated any provision of the insurance laws of New York. 2 All of the responses listed are correct. 3 Made a material misstatement in the application for the adjuster license. 4 Demonstrated his/her incompetence or untrustworthiness to act as an adjuster in New York.
2 All of the reasons listed are cause for nonrenewal, revocation or suspension of an adjuster license.
How is the property causes of loss changed from risks of "direct physical loss" to "named perils" coverage under the BOP? 1 State it on the declarations 2 Attach the Named Perils form endorsement 3 It cannot be done 4 Use a different ISO Businessowners Coverage Form
2 Attach the Named Perils form endorsement The named peril endorsement must be attached to the policy
In New York, continuing education requirements for agents must be satisfied: 1 Annually 2 Biannually 3 Every three years 4 Every four years
2 Biannually Licensees(agents)must complete 15 credits of continuing education (CE) during each two year licensing period. All courses must be completed through a Provider Organization (Provider) approved by the New York State Insurance Department. Independent adjusters (resident or nonresident) are not subject to the continuing education requirements of New York.
Which of the following statement is true of the jewelers block coverage form? 1 The form insures a package of property and liability coverage. 2 Coverage may be written for the stock for retail jewelers or the jewelry stock of department and discount stores. 3 Coverage may be written for pawnbrokers dealing in jewelry. 4 Customers' property is not covered under the form.
2 Coverage may be written for the stock for retail jewelers or the jewelry stock of department and discount stores.. This form is used for retail jewelers or the jewelry of department and discount stores. The commercial property forms as well as the BOP contain a theft limitation for jewelry and therefore create the need for the jewelers block policy. Inland marine insurance designed to provide coverage for loss of or damage to jewelry that is the stock of jewelry retailers, wholesalers, manufacturers, and pawnbrokers.
An award for pain and suffering to a claimant who was burned when a tractor engine malfunctioned and spewed boiling water would be considered what kind of damages? 1 Special Damages 2 General Damages 3 Punitive Damages 4 Other Damages
2 General Damages
Which of the following could be covered under a BOP? 1 Bank 2 Hardware store 3 Bar 4 Amusement park
2 Hardware store The BOP policy is designed for the small to medium types of risks with basically average insurable exposures. A bank has unique coverage needs as does a savings and loan company. A bar or amusement park has exposures that are not average and therefore do not qualify for the BOP. The only one of the choices would be the hardware store that is an acceptable risk under the businessowners policy.
An unendorsed Homeowner Policy provides no coverage for liability arising out of business related exposures, other than for permitted incidental occupancies. The ______Endorsement provides liability coverage for a business conducted away from or on the residence premises. 1 Home Day Care 2 Home Business Pursuits 3 Personal Injury 4 Permitted Incidental Occupancies
2 Home Business Pursuits The "business pursuits" endorsement should be added to the homeowner policy to cover "on or off premises" liability exposures as permitted by the insurance carrier.
Mr. Jones is sitting on his front porch swing. Mr. Smith runs his automobile into the porch injuring Mr. Jones. All the following would cover Mr. Jones medical bills, EXCEPT: 1 Mr. Jones medical payments from his automobile policy. 2 Mr. Jones medical payments from his homeowner policy. 3 The liability from Mr. Smith's automobile policy. 4 Mr. Jones Medicare coverage.
2 Mr. Jones medical payments from his homeowner policy. Medical payments under a homeowner policy cover only invitees and not any occupant of the residence. If the owner's pet bites his son, then coverage would not apply since he is a resident of the household. The same is true of a tenant or boarder that sustains bodily injury on the premises. The only exception is coverage for a residence employee who is not covered under workers compensation coverage
The prefix "neo" refers to: 1 Old. 2 New. 3 Flat. 4 After.
2 New "Neo" refers to something that is new. neo-: new or recent, or in a modern form:
The insured has his home insured on a HO-2 policy. Lightning has struck the home and causes a fire. The insured takes as much property out of the house as possible awaiting arrival of the fire department that assists him. Some of the property is damaged by the fire department and some friends while moving the property into a pickup truck not owned by the insured. What coverage and under what clause could the insured pursue coverage for his damage? 1 Debris Removal Clause 2 Removal Clause 3 Impaired Property Clause 4 Reasonable Repair Property Clause.
2 Removal Clause This damage is covered under the removal clause. It is designed to cover the property that is damaged during the course of attempting to protect it from the perils insured against.
The claims made form of the CGL is designed to cover losses that are reported during the policy period. In order to limit the insurer's exposure to events that happened prior to the inception of the current policy, a ________is used to excldue coverage for anything that occurred prior to that point. 1 Pre-existing condition clause 2 Retro active date 3 Prior acts exclusion clause 4 None of the choices are correct
2 Retro active date A retro active date is negotiated at the inception of the policy and would deny coverage for anything that occurred prior to that date even if the incident was reported during the current policy period.
Personal umbrella liability policies usually cover liability as a result of: 1 Performing a professional service. 2 Serving as an officer or director of a nonprofit corporation or association. 3 For a work related activity 4 None of the activities are covered
2 Serving as an officer or director of a nonprofit corporation or association.. Coverage is included while serving as an officer or director of a nonprofit corporation or association.
A non-admitted company sells insurance in the state of New York. This is known as: 1 Certificate of authority 2 Surplus lines insurance 3 An illegal act 4 A limited lines company
2 Surplus lines insurance Non-admitted insurers selling coverage in New York are known as surplus lines insurers and can only sell products through licensed surplus lines agents.
Diane is fined by the Superintendent for a violation of the insurance law of New York. The fine is not paid within 20 days. What action may the Superintendent take? 1 Put Diane in prison 2 Suspend or revoke her license 3 Add an additional fine 4 Ask her to reapply for a license and double the fees
2 Suspend or revoke her license If the fine has not been paid within 20 days the Superintendent will suspend or revoke the license.
A tram, tape and centering gauges are being used to quick reference a unibody vehicle. Technician A says the tram gauge is used to determine vehicle centerline. Technician B says that centering gauges should be used to determine vehicle centerline. Who is right? 1 Technician A only 2 Technician B only 3 Both technicians are correct 4 Neither technician is correct
2 Technician B only Technician B is correct. Centering gauges use centering pins to locate centerline. A tram is used to make point-to-point measurements.
If the insured sues an uninsured motorist and then obtains a judgment: 1 The company is bound by the decision of the court. 2 The company is not bound by the decision of the court, unless the company has given the insured written consent to sue. 3 The company is bound by the decision of the court only if it falls within the limits of the policy. 4 None of the responses are correct.
2 The company is not bound by the decision of the court, unless the company has given the insured written consent to sue. . The policy stipulates and excludes the following: "If that "insured" or the legal representative settles the "bodily injury" claim without our (the insurer) consent.
What is the name of the computer component that controls, monitors, and is the most powerful computer on most cars? 1 The engine microprocessor (EM) 2 The engine control unit (ECU) 3 The catalytic converter processor (CCP) 4 The digital-to-analog converters (DAC)
2 The engine control unit (ECU) Controlling the engine is the most processor-intensive job on your car, and the engine control unit (ECU) is the most powerful computer on most cars. The ECU uses closed-loop control, a control scheme that monitors outputs of a system to control the inputs to a system, managing the emissions and fuel economy of the engine (as well as a host of other parameters). Gathering data from dozens of different sensors, the ECU knows everything from the coolant temperature to the amount of oxygen in the exhaust. With this data, it performs millions of calculations each second, including looking up values in tables, calculating the results of long equations to decide on the best spark timing and determining how long the fuel injector is open. The ECU does all of this to ensure the lowest emissions and best mileage.
Which of the following losses would be paid under the "other than collision" coverage of the Personal Auto Policy? 1 Gradual corrosion of the grillwork on the insured automobile due to continuous exposure to salty air 2 The insured automobile was stolen and never recovered. 3 The insured automobile skidded on icy pavement and overturned. 4 The insured automobile was damaged when it hit by another car failing to stop at a red traffic light.
2 The insured automobile was stolen and never recovered. Comprehensive coverage provides theft coverage including damages that occur as a result of the theft.
With Commercial Property Insurance, replacement cost coverage may be written for: 1 Buildings and personal property of the insured. 2 Buildings only. 3 Buildings, personal property of the insured, and property of others. 4 Any property which may be insured.
3 Buildings, personal property of the insured, and property of others. Replacement cost coverage for building, contents and personal property of others is optional. However, if the insured chooses this option, coverage equal to at least 80% of the replacement cost value must be carried.
What is the main difference between a DP-1 and a DP-2? 1 The property covered 2 The perils insured against 3 The coverage territory 4 The eligibility requirements
2 The perils insured against DP-1 and DP-2 are similar forms, both designed to provide property insurance for personally-owned residential buildings containing up to four living units without requiring the insured to reside there. These two forms are different in the "perils insured against" section. The DP-2 broad form covers all the perils included in the DP-1 plus several "broad" perils including burglary damage, ice or snow damage, falling objects, freezing of plumbing, heating, or air conditioning systems or household appliances, accidental discharge of water from a plumbing, heating, or air conditioning systems, and breakage of glass.
What is the main difference between a DP-1 and a DP-2? 1 The property covered 2 The perils insured against 3 The coverage territory 4 The eligibility requirements
2 The perils insured against DP-1 and DP-2 are similar forms, both designed to provide property insurance for personally-owned residential buildings containing up to four living units without requiring the insured to reside there. These two forms are different in the "perils insured against" section. The DP-2 broad form covers all the perils included in the DP-1 plus several "broad" perils including burglary damage, ice or snow damage, falling objects, freezing of plumbing, heating, or air conditioning systems or household appliances, accidental discharge of water from a plumbing, heating, or air conditioning systems, and breakage of glass.
Under accident and sickness policies providing family coverage, newborn children are covered beginning: 1 30 days after birth. 2 at the moment of birth. 3 7 days after birth. 4 14 days after birth.
2 at the moment of birth. A policy providing family coverage must cover newborn children from the moment of birth
The Uniform Policy Provisions law requires "notice of claim" to be made by the policyholder to the insurer or its agent within: 20 days of a loss, or as soon as reasonably possible. 30 days of a loss, or as soon as reasonably possible. 60 days of a loss, or as soon as reasonably possible. 90 days of a loss, or as soon as reasonably possible.
20 days of a loss, or as soon as reasonably possible. Obviously, insurance companies have no way of knowing when an insured has incurred a claim unless they are notified. The Uniform Policy Provisions Law brings order to the process of claim payments, requiring the insured to notify the insurer or its agent within 20 days, or as soon as reasonably possible, that acclaim has occurred.
Under the "Additional Coverages" of the liability section of HO policies, damage to property of others (whether or not in the insured's custody and regardless of fault) is covered up to: 1 $1,500 per occurrence 2 $5,000 per occurrence 3 $1,000 per occurrence 4 $2,500 per occurrence
3 $1,000 per occurrence The limit is $1,000. This pays regardless of legal liability. The form says, "if caused by the insured."
Anyone who threatens, forces or corruptly influences, obstructs or impedes the due and proper administration of the fraud law relating to the insurance business may be fined and/or imprisoned up to: 1 5 years. 2 15 years. 3 20 years. 4 10 years.
3 20 years Under the Federal Insurance Fraud and False Statements Act, if a person impedes a fraud investigation relating to insurance, they may be fined and/or jailed up to 10 years.
No long-term care (LTC) policy may define preexisting conditions more restrictively than a condition for which medical advice or treatment was recommended by, or received from a provider of health services within _____ months before the effective date of coverage. 1 12 2 5 3 6 4 24
3 6 This is a part of the NAIC Model Bill adopted by all states Pre-existing Condition Limitation. A long-term care insurance policy may not define a pre-existing condition more restrictively than a condition for which medical advice was given or treatment was recommended by, or received from, a physician within six months before the effective date of coverage. Many companies will sell a policy to someone with a pre-existing condition; however, treatment for that condition will not be covered for the first six months after the effective date of coverage. For example, if treatment for a pre-existing condition begins within the first six months of coverage, the company may deny the claim during the six-month period after the effective date but then must begin to cover that expense at the end of the pre-existing period. Some companies have shorter pre-existing periods and others have none.
When is it allowed for a telemarketer to call to a person's home? 1 10:00 pm and 11:00 pm. 2 7:00 am and 7:45 am. 3 8:00 am and 9:00 pm. 4 7:00 am and 10:00 pm.
3 8:00 am and 9:00 pm Unless a telemarketer has a person's consent to do otherwise, it is a violation to make outbound telemarketing calls to a person's home outside the hours of 8:00 am and 9:00 pm.
The definition of collapse under the Homeowners program includes: 1 A gradual falling down of the structure. 2 Damage caused by vermin known to exist by the insured when the structure collapsed. 3 An abrupt falling down or caving in of the structure or a part of the structure. 4 A gradual caving in of the structure.
3 An abrupt falling down or caving in of the structure or a part of the structure. The definition defines collapse as an "abrupt falling down or caving in of the structure or a part of the structure."
What is an insurance producer's "implied authority"? 1 The authority that the public reasonably believes the producer has. 2 The authority that the producer believes it has. 3 Authority given by the principal to the agent that is not formally expressed or communicated. 4 Those specified in a contract with the insurer.
3 Authority given by the principal to the agent that is not formally expressed or communicated. Implied authority is an element of the law of agency that is not formally expressed or communicated. This allows the agent to perform all the usual tasks required to sell and service the insurance policies.
Which of the following losses does not fall within the garage policy coverage territory? 1 Physical damage to a covered auto that occurs in Toronto, Canada. 2 Bodily injury resulting form a product of the named insured bought in Texas. The injury occurred while the product was being used in Mexico and suit was filed against the named insured in Texas. 3 Bodily injury to a pedestrian struck by a covered auto. The accident occurred in Mexico. 4 Physical damage to a covered auto being transported by ship from Florida to the U.S. Virgin Islands.
3 Bodily injury to a pedestrian struck by a covered auto. The accident occurred in Mexico. The accident with the pedestrian would not be covered since it occurred outside the policy's coverage territory. The territory is the United States, its territories, Canada, and Puerto Rico. Mexico is not in the covered territory.
Which of the following incidents of property damage would be covered by BAP liability coverage? 1 Damage to a computer that was in a covered auto at the time of a collision. The computer was being returned by the named insured, who rented it. 2 Damage to the named insured's building when a covered auto ran into it. 3 Damage to a neighbor's auto parked on the street. A covered auto hit the parked auto. 4 Damage to a radar detector caused by theft.
3 Damage to a neighbor's auto parked on the street. A covered auto hit the parked auto.. Damage to a neighbor's auto parked on the street. A covered auto hit the parked auto..
An unendorsed blanket fidelity bond: 1 Names each covered employee specifically 2 Names the positions to be covered 3 Does not list the names of the employees 4 Covers specified employees by job description and position
3 Does not list the names of the employees 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.
The Businessowners Policy provides coverage on the buildings and contents. How is the coverage provided? 1 Actual Cash Value Basis 2 Replacement Cost Basis 3 Either on an actual cash value basis or replacement cost basis 4 Only on an agreed amount basis
3 Either on an actual cash value basis or replacement cost basis The BOP offers the option of covering the property on a "replacement cost" basis or "actual cash value" basis.
The maid neglects to lock a guest's hotel room door after cleaning it. Thieves enter the room and steal the guests clothing and laptop. What commercial crime coverage does the hotel need to cover the loss? 1 Kidnap/ransom Extortion 2 Employee theft 3 Guests Property 4 Computer Fraud
3 Guests Property The crime form Guests Property would cover the loss to guests property inside the premises of the hotel.
Under a homeowner policy an insured is required to take all of the following actions when a covered loss occurs, EXCEPT: 1 Give prompt notice to the insurance company or it's agent. 2 Protect the property from further loss. 3 Hire an appraiser to determine the amount of the loss. 4 Notify the police if the loss is the result of theft.
3 Hire an appraiser to determine the amount of the loss. The insured is required to prove the value of the loss. Hiring an appraiser may be helpful, but is not required. The insurer may hire appraiser(s) for certain types of losses.
The Fit and Trim Fitness Center wants to reduce its carbon footprint. A covered loss destroys some treadmills, damages the roof and most of the interior walls. Fit and Trim finds replacement treadmills that generate and actually return energy to the power grid. The cost is 15% higher than standard equipment. Which of the following, if any, would pay the increase? 1 Ordinance and Law Coverage 2 Fungi, Wet and Dry Rot 3 Increased cost of loss and related expenses for "green" updates 4 Consequential Loss Coverage
3 Increased cost of loss and related expenses for "green" updates The increased cost of loss and related expenses for green updates will pay an extra 25% of the property loss for the increased cost to "go green" up to $100,000 maximum.
The Fit and Trim Fitness Center wants to reduce its carbon footprint. A covered loss destroys some treadmills, damages the roof and most of the interior walls. Fit and Trim finds replacement treadmills that generate and actually return energy to the power grid. 1 The cost is 15% hOrdinance and Law Coverage 2 Fungi, Wet and Dry Rot 3 Increased cost of loss and related expenses for "green" updates 4 Consequential Loss Coverageigher than standard equipment. Which of the following, if any, would pay the increase?
3 Increased cost of loss and related expenses for "green" updates The increased cost of loss and related expenses for green updates will pay an extra 25% of the property loss for the increased cost to "go green" up to $100,000 maximum.
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? 1 Deny the claim 2 Investigate the claim 3 Issue a reservation of rights letter to the insured 4 Advise the insured to seek his own legal counsel
3 Issue a reservation of rights letter to the insured 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.
Which of the following is NOT true regarding the Fair Credit Reporting Act? 1 It requires insurance companies to notify an applicant in advance that an investigative consumer report may be ordered. 2 It permits a consumer report to list adverse information about the consumer, such as lawsuits, arrests and convictions, only if those items occurred within seven years before the report. 3 It permits a consumer report to list information about bankruptcies only if they occurred within 12 years before the report. 4 It permits a consumer reporting agency to furnish a consumer report for employment purposes.
3 It permits a consumer report to list information about bankruptcies only if they occurred within 12 years before the report. The Fair Credit Reporting Act requires that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper use of such information. Bankruptcies may be included in a consumer report if they predate the report by 10 years or less.
What coverage under the BOP automatically applies if a customer slips and falls on the named insured's premises, regardless of legal liability? 1 Business liability coverage 2 Personal injury coverage 3 Medical expense coverage 4 Advertising injury coverage
3 Medical expense coverage Medical expense coverage pays regardless of the insured's legal liability. It is a "good will" type of coverage where negligence is not a factor in the claim.
Which of the following best describes the term "disappearance" under the definitions of an aircraft policy? 1 Disappears from a known location 2 There is the presumption of a crash or a theft after no contact for 24 hours 3 Missing and not reported for sixty days after a flight begins 4 No contact within the last 72 hours
3 Missing and not reported for sixty days after a flight begins Disappearance—missing and not reported for sixty days after a flight begins.
The insured has suffered a covered loss under his DP-3 dwelling form. He fails to protect the property from further loss. The additional loss that occurs as a result of his inactions may be denied because of what clause in the policy? 1 Intentional loss 2 Removal clause 3 Neglect 4 Fraud
3 Neglect The policy contains a "neglect" exclusion. When the insured fails to protect the property from further loss and use all reasonable means to save the property at and after the time of loss the insurer may invoke this exclusion.
Anne has been diagnosed with a disease characterized by degenerative and sometimes hypertrophic changes in the bone and cartilage of the joints and a progressive wearing down of apposing joint surfaces. Anne has been diagnosed with: 1 Tachycardia 2 Atherosclerosis 3 Osteoarthritis 4 Diabetes
3 Osteoarthritis Osteoarthritis is a degenerative joint disease with deep aching paid that is aggravated by exercise.
Though multiple parties may be involved in a lawsuit, the opposing sides are referred to as: 1 Insured and claimant 2 Complaintant and defendant 3 Plaintiff and defendant 4 Counsel and co-counsel
3 Plaintiff and defendant The opposing sides are called the plaintiff and defendant.
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: 1 The insured's work. 2 Completed operations. 3 Property damage. 4 An intentional tort.
3 Property damage. This is an example of a property damage loss which includes "loss of use". For this type of claim to be covered under a CGL policy the insured may have to add the pollution liability endorsement to the policy.
What component forms the rear sides of the automobile? 1 Pillars 2 Fenders 3 Quarter panels 4 Rear quarter wheelhouses
3 Quarter panels The fenders form the left and right front sides of the car. The rear quarter wheelhouses form the housing for the rear wheels. The pillars perform various functions, such as serving as the mounting posts for the door hinges.
There are certain steps a claim representative takes in the evaluation of a liability claim. Which of the following is normally NOT a first option? 1 Review and apply relevant law 2 Determine the legal liability and defenses that might apply in the case 3 Send the claimant a reservation of rights letter 4 Determine what choices, if any, the claimant might have in applying the law
3 Send the claimant a reservation of rights letter The sending of a reservation of rights letter is usually not the first option of an adjuster. Its purpose is to preserve the rights of the insurer and allow time for additional investigation when there could be a problem with the facts of the claim, such as the late reporting of a claim or a suspicion of a wrongful act of the insured. This could include fraud, concealment or material misrepresentation. The reservation of rights letter is not a denial of a claim. The adjuster will review and apply the relevant law to determine the legal liability and possible defenses of the insured if a liability claim. Defenses would include assumption of risk, contributory negligence or comparative negligence, depending on the laws of the state. The adjuster also must consider the defenses posed by the claimant should they seek legal counsel and the costs associated with a lawsuit.
Which of the following statements is true about additional coverages under the homeowner policy? 1 They are automatically included only if medical payments coverage is purchased. 2 They are optional on the part of the insured. 3 They are included at no extra cost. 4 They are included for a minimum premium.
3 They are included at no extra cost. An example would be the collapse hazard included in both the broad and special cause of loss forms at no extra charge.
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? 1 Liability coverage 2 Medical payments 3 Uninsured boater's coverage and hull insurance 4 Uninsured boater's coverage
3 Uninsured boater's coverage and hull insurance 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.
All of the following are true about workers compensation benefits, EXCEPT: 1 The insurance policy takes precedence over the workers compensation laws of the state 2 Rehabilitation benefits may be provided under certain conditions 3 Waiting periods apply to medical and disability benefits 4 Death benefits may include a burial allowance
3 Waiting periods apply to medical and disability benefits Workers compensation laws in most states have waiting periods before disability income benefits are paid. Waiting periods do not apply to medical benefits.
An ECM is: 1 a federal code within the Environmental Protection Agency (EPA). 2 a component of the exhaust system. 3 an electronic control module. 4 a voltage and alternator regulator.
3 an electronic control module. An ECM is an "electronic control module" and can be found throughout a vehicle. They are used to monitor and control everything from engine performance to supplemental restraint systems and even air conditioning.
The commercial building and personal property coverage from includes an additional coverage for property removed from the premisses due to being endangered by an insured peril. The coverage lasts for
30 days
"W" is covered under an employer-sponsored disability income plan. The premium is $100 a month, and "W" pays $20 and the employer pays $80. Assuming "W" becomes disabled and receives monthly disability income benefits of $1200 from this plan, how much, if any, of the monthly income would be income tax free? 1 $1200. 2 All of the monthly benefit is income taxable. 3 $960. 4 $240.
4 $240. "W" is paying 20% of the premium, and therefore 20% of the monthly benefit, $240, is income tax free.
New York has been struck with a catastrophe and adjusters are desperately needed. The Superintendent of Insurance can issue a temporary adjuster permit in an emergency situation such as this for _____ days. 1 30 2 60 3 90 4 120
4 120 The Superintendent can issue a temporary emergency adjuster permit for a period of 120 days to assist in the adjustment of claims arising from a common catastrophe. No fee is involved and the person merely completes the necessary paper work.
A third party can bring a legal action against an employer when the employee was injured on the job and has suffered: 1 A broken leg 2 Loss of an eye 3 A broken back 4 A grave injury
4 A grave injury The injured worker can bring an action as a result of a "grave injury". This is defined as death, permanent and total loss of use or amputation of a limb or member, paraplegia or quadriplegia and several other serious injuries.
If a commercial building has been vacant for more than sixty days, which of the perils are affected as regards coverage? 1 Vandalism 2 Freezing 3 Fire 4 All of the perils are affected
4 All of the perils are affected All of the perils listed are affected as a result of the vacancy. Some of the coverage for certain perils is voided and fire losses are reduced by 15%.
Which of the following coverages are available in the ISO Equipment Breakdown protection 1 Expediting Expenses 2 Business Income and Extra Expense or Extra Expense Only 3 Spoilage Damage 4 All of the responses are correctcoverage form?
4 All of the responses are correctcoverage form? All of the responses are correct. There are ten coverages available under the form. They include: property damage, expediting expenses, business income and extra expense or extra expense only, spoilage damage, utility interruption, newly acquired premises, ordinance or law coverage, errors and omissions coverage, brands and labels and contingent business income and extra expenses or extra expense only.
When securing a recorded statement over the telephone, an adjuster must: 1 Identify him or herself. 2 Advise he or she would like to record the statement and request and receive permission to do so. 3 State the time and date. 4 All responses listed are correct.
4 All responses listed are correct. The adjuster must identify him or herself, state the date and time and get permission to record the statement.
After inspecting an insured fire loss, it is a duty of the adjuster to: 1 Contract a contractor for a repair bid. 2 Assist the insured with the cleanup. 3 Remove the debris. 4 Assist the insured with information on separating the damaged from the undamaged property and how to inventory the damaged property.
4 Assist the insured with information on separating the damaged from the undamaged property and how to inventory the damaged property. It is a duty of the adjuster is to assist the insured in explaining how to separate the damaged property from the undamaged property and how to inventory and determine values.
Which of the following would not be considered an occupational disease? 1 Black lung. 2 Mesothelioma. 3 Pulmonary fibrosis. 4 Bending over to pick up a box and hurting your back.
4 Bending over to pick up a box and hurting your back. Bending over to pick up a box and causing an injury is a work related injury and not a disease.
Under the Commercial Property form, the $1,000 additional coverage for Fire Department Service Charge is the maximum payable per loss to each premise: 1 regardless of the number of fire departments responding. 2 regardless of the number or types of services performed. 3 Neither response is correct. 4 Both responses are correct.
4 Both responses are correct Coverage applies in either situation.
Which of the following is legal for an adjuster to do when adjusting a claim? 1 Advise the claimant not to obtain an attorney. 2 Contact the claimant when it is known that they have legal representation. 3 Withhold one portion of the claim when negotiating another. 4 Contact the claimant with the permission of the attorney.
4 Contact the claimant with the permission of the attorney. When an adjuster knows that the claimant is represented by an attorney, the adjuster may contact the claimant only with the permission of the attorney.
Which of the following is not a part of a Commercial package policy? 1 Declaration page 2 Condition section 3 One or more policy parts 4 Earthquake coverage
4 Earthquake coverage Earthquake coverage must be added by endorsement for coverage to apply.
To minimize adverse selection in dental plans, a company may do all of the following, EXCEPT: 1 Choose not to write contributory coverage. 2 Impose longer probationary periods. 3 Increase the minimum percent of participation to 80% or 85%. 4 Eliminate coverage for original participants.
4 Eliminate coverage for original participants Eliminating coverage for original participants would destroy the plan and invite adverse selection
All the following are the insured's duties after a loss in regards to the physical damage coverage of the policy, EXCEPT: 1 Take reasonable steps after the loss to protect the property from further damage 2 Promptly notify the police if the vehicle is stolen 3 Allow the insurer to inspect and appraise the damaged property 4 Facilitate the repairs to the vehicle and submit the invoice to the insurer.
4 Facilitate the repairs to the vehicle and submit the invoice to the insurer.. 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.
What coverage of the garage policy will pay for physical damage to a garage customer's auto regardless of legal liability? 1 Garage liability coverage (Section II) 2 Garage physical damage coverage (Section IV) 3 Garagekeepers coverage (Section III) 4 Garagekeepers direct coverage endorsement
4 Garagekeepers direct coverage endorsement The garagekeepers direct coverage endorsement pays for damages to a customer's vehicle regardless of legal liability.
How many days does the liberalization clause provide for under the BOP prior to or during the policy? 1 55 days 2 30 days 3 45 days 4 35 days
45 days is correct The policy reads, "If we adopt any revision that would broaden the coverage under this policy without additional premium within forty-five days prior to or during the policy period, the broadened coverage will immediately apply to this policy."
The liberalization clause of a businessowners policy automatically applies favorable expansions of coverage, for which a premium is not charged, if the changes are made during the policy period or within.
45 days prior to the effective date.
Gordon's personal umbrella liability policy will cover which of the following? 1 Vandals wrecked the interior of a house trailer owned by Gordon and parked near a lake for weekend vacations during the summer. 2 Gordon's wife left a candle burning on a counter while she went next door to talk with a neighbor. The candle fell over onto a tea towel, which caught fire. Gordon's home and its attached garage with a boat and car in the garage were destroyed. 3 Gordon rented a backhoe to dig a foundation for a large utility barn he planned to build on his property. The backhoe was severely damaged when Gordon left it in gear, and it rolled down a hill and into a tree. 4 Gordon was informed that a railing on his deck was loose and dangerous. He does nothing to repair the problem and a friend falls from the deck and is severely injured.
4 Gordon was informed that a railing on his deck was loose and dangerous. He does nothing to repair the problem and a friend falls from the deck and is severely injured. None of these damages are covered. The damage to the dwelling caused by the candle is a homeowner policy claim. The backhoe is rented and it must be assumed that the rental company required collision coverage. The umbrella provides broad care, custody, or control coverage. While the ISO homeowners policy precludes coverage for property damage rented to, occupied or used by or in the care of an insured, the umbrella precludes coverage for such property only if the insured is required by contract (which can be either verbal or written) to cover the property. The exclusion does not apply to "property damage" caused by fire, smoke or explosion.
Aircraft policies contain deductibles usually expressed as a percentage of the value of the aircraft. Which of the following losses would have a deductible? 1 Fire, lightning 2 Theft, pilferage 3 The deductible would apply to all of these losses 4 In motion collision
4 In motion collision The deductible does not apply to losses from fire, lightning, explosion, transportation, theft, robbery, or pilferage. However, the "in-motion" deductible does apply to losses from fire or explosion that occurs as a result of the collision of the aircraft.
When someone dies without a will they are said to have died: 1 In Replevin. 2 Testate. 3 Without a Principal. 4 Intestate.
4 Intestate.
Which of the following types of policies sometime contain a "consent to settle" clause? 1 Auto insurance 2 General liability 3 Commercial crime 4 Malpractice insurance
4 Malpractice insurance Some medical malpractice policies contain the "consent to settle" clause on the part of the insured. This is also true of certain types of E&O policies.
What type of coverage would a physician, surgeon, or dentist require? 1 Businessowner's 2 Homeowners endorsement 3 Commercial 4 Professional
4 Professional While a physician, surgeon, or dentist may operate an office and have furniture and premises liability which it can insure under a businessowners or other commercial policy, the type of coverage they would REQUIRE, regardless of office exposure, is professional liability insurance.
Which of the following is not an implied warranty under an ocean marine policy? 1 Seaworthiness of the vessel 2 Legality 3 No deviation in the voyage 4 Protection and indemnity
4 Protection and indemnity -is a form of ocean marine liability coverage and is not an implied warranty.
With an Equipment Breakdown policy, the loss settlement is: 1 ACV all of the time 2 Replacement cost all of the time 3 Replacement cost if the repair or replacement is made within 18 months 4 Replacement cost if the repair or replacement is made within 24 months
4 Replacement cost if the repair or replacement is made within 24 months. The insured must repair or replace the damaged property within 24 months after the date of the breakdown (unless the time period is extended by the insurer in writing), or recovery of the loss is limited to the lesser of the cost it would have taken to repair the damaged property or the actual cash value of the property at the time of the breakdown. Usually coverage is on a replacement cost basis unless the insured or company endorses the policy to cover losses on an Actual Cash value bases. If replacement cost coverage applies, then the 24-month period is a factor if the insured is to receive replacement cost coverage for the loss.
The time period of coverage which is stated on the declarations is known as: 1 The policy territory. 2 The time limit of coverage. 3 The limits of liability. 4 The policy period.
4 The policy period The policy period is stated on the declarations page representing the time limit coverage is in force as long as the premium is paid
The time period of coverage which is stated on the declarations is known as: 1 The policy territory. 2 The time limit of coverage. 3 The limits of liability. 4 The policy period.
4 The policy period. The policy period is stated on the declarations page representing the time limit coverage is in force as long as the premium is paid.
Which of the following is not a purpose of interviewing witnesses in adjusting losses? 1 To assess how the witness will hold up if a formal trial is needed 2 To determine coverage issues 3 To determine the relationship between the witness and the insured 4 To delay payment of a claim
4 To delay payment of a claim Witness interviews are not to be used to delay payment of a claim in any circumstance.
No act will be certified by the Secretary of the Treasury as an act of terrorism under the Federal Terrorism Act unless: 1 the losses relate to life and health insurance. 2 the act is committed as part of the course of war declared by Congress. 3 the act is not one of terrorism as defined by the Act. 4 the losses that occur relate to commercial property and specified casualty risks.
4 the losses that occur relate to commercial property and specified casualty risks.. The coverage would only apply to losses that relate to commercial property and certain casualty losses caused by an act of terrorism as defined by the Act. The Act has been revised and extended and is due to expire on December 31, 2020.
Which of the following professional liability policies would cover a dishonest, fraudulent or criminal act of the manager of a LLC? 1)Fiduciary Liability 2)Malpractice Liability 3)Errors and Omissions 4)None of the policies cover these acts
4) None of the policies cover these acts.
When an insurer intends to non-renew a homeowners policy in New York, at least _____ advance notice of non-renewal must be sent to the insured.
45 days In addition to this specific time of advance notice, specific reasons for the company's decision to not renew must accompany the notice.
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 ______hour waiting period and the policy will then pay for loss of income up to _____weeks.
72/four 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. The previous form provided for three weeks of coverage. The newer forms also require that the business suffering the damage must be located one mile or less from the insured's location.
Coverage under the livestock coverage form may be written on either a blanket or scheduled basis. When coverage is blanketed, a limit of liability is indicated for each applicable livestock class such as cattle, sheep, swine, goats, horses, mules or donkeys. A per animal limit is assigned. This coverage is subject to a/an ____ coinsurance clause.
80% is correct The coverage is subject to the 80% coinsurance clause.
A document that temporarily obligates an insurance company to provide coverage pending issuance of a policy is called:
A binder. A binder of coverage creates temporary coverage and usually will include such items as the insureds name and address, any additional insureds or mortgagees, property description, amount of coverage, effective date of coverage, and identity of the insurer
Which of the following events would require a change on a homeowner policy? 1 A change in mailing address 2 The birth of a child 3 The purchase of a second car 4 A change in occupation
A change in mailing address would have to be reported to the insurer and would require a change in the policy.
Aleatory
A contract in which participating parties exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss.
Adhesion
A contract offered on a "take-it-or leave-it" basis by an insurer, in which the insured's only option is to either accept or reject the contract. Any ambiguities in the contract will be settled in favor of the insured.
Valued Contract
A contract that pays a stated amount in the event of a loss. *Most insurance policies are NOT valued contracts unless they are endorsed.
In New York, if an insured and an insurer cannot agree on the value of a property loss, they each can select an appraiser. If the appraisers cannot agree, an umpire is selected by:
A court of law. The appraisers are given an opportunity to select an umpire within 15 days. Upon failing to do so, the court will appoint one.
Annual Statement
A detailed financial report that an insurance company must submit every year to the insurance department of state(s) in which it conducts business.
A fire in an insured's restaurant burns the kitchen walls and causes smoke damage to the entire interior. Water used to extinguish the fire causes extensive damage to floors and furnishings. The water damage is BEST described as:
A direct loss. The water damage is considered a direct loss to the property as well as other damage the fire fighters may cause to the premises.
Who is an insured under the liability section of a farm policy?
A farm employee is covered while acting within the scope of his duties. Farming includes the incidental operation of roadside stands where farm products principally produced by the "insured" are sold.
Flood, as used under the NFIP
A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of tow or more properties from: -overflow or inland or titdal waters -unusual and rapid accumulation or runoff of surface water from any source -mudflow Collapse or subsidence of land.
Extension of Benefits
A provision that allows coverage to continue beyond the policy's expiration date for employees who are not actively at work due to disability or who have dependents hospitalized on that date. This coverage continues only until the employee returns to work or the dependent leaves the hospital.
A third party can bring a legal action against an employer when the employee was injured on the job and has suffered:
A grave injury The injured worker can bring an action as a result of a "grave injury". This is defined as death, permanent and total loss of use or amputation of a limb or member, paraplegia or quadriplegia and several other serious injuries.
An inland marine coverage which covers a store that sells the "higher end" jewelry would need:
A jeweler's block policy
When a homeowners policy has been in effect for 60 days in New York, an insurer can cancel at anytime for any of the following reasons, EXCEPT:
A large loss has occurred. The homeowners policy was purchased to indemnify against the occurrence of a large loss, therefore, this would not represent a reason for policy cancellation.
What is a Reporting Form policy?
A policy that requires the insured to report the value of the property insured at certain time intervals. A "Reporting Form" policy is one in which the policyholder is required to report the values of insured property to the company at certain intervals. A provisional (deposit) premium is charged initially and the final premium is determined by applying the rate to the average of the values reported. The insured is required to insure the property 100% to value. The insured is also required to report 100% of the value of the insured property.
Estoppel
A legal impediment to denying a fact or restoring a right that has been previously waived.
Estoppel
A legal impediment to denying a fact or restoring a right that has been previously waived. a bar or impediment preventing a party from asserting a fact or a claim inconsistent with a position that party previously took the principle that precludes a person from asserting something contrary to what is implied by a previous action or statement of that person or by a previous pertinent judicial determination. A bar that prevents a person from presenting evidence contradicting a certain established fact.
Intermediate Care
A level of care that is one step down from skilled nursing care; provided under the supervision of physicians or registered nurses.
Which of the following is not covered under the New York Disability Benefits Law? 1 Domestic or personal employees who work 40 or more hours per week for one employer. 2 Employees or recent employees of a "covered" employer, who have worked at least four consecutive weeks. 3 Employees of an employer who elects to provide benefits by filing an application for voluntary coverage. 4 A minor child of the employer.
A minor child of the employer is not covered by the law.
misrepresentation
A misrepresentation is a knowingly false statement.
Punitive damages
A monetary award to a plaintiff in a tort action in excess of the cash value of the economic loss as a punishment to the wrongdoer and as a deterrent to similar conduct by others
Which of the following is not an "insured" under homeowner policies?
A neighbor moves into the named insured's house with all of his belongings. Insureds under a homeowner policy include any person responsible for the named insured's domestic animals as well as the named insured's relatives and spouses who reside with the named insured.
All of the following would have an insurable interest in a home and be insurable under the homeowners program, EXCEPT:
A non-occupant realtor. A non-occupant realtor would not have an insurable interest in the property.
Actuary
A person trained in the technical aspects of insurance and related fields, particularly in the mathematics of insurance; a person who, on behalf of the company, determines the mathematical probability of loss.
Errors and Omissions Policy (E&O)
A professional liability insurance that protects the insurer from claims by the insured for errors or oversights on the part of the insurer.
If an insured desires additional amounts of coverage above the "Special Limits" under the Homeowners program for jewelry or firearms it can be obtained through the use of:
A scheduled personal property endorsement. Standard Homeowners policies have "special limits" on certain types of property like jewelry, firearms, gold and silverware, etc. These special limits are relatively low. If an insured seeks higher limits than the "Special Limits" they can purchase a separate policy OR they can attach the scheduled personal property endorsement to their Homeowners policy.
A bailment is:
A temporary entrustment of the property to another
The New York Superintendent of Insurance can issue a temporary adjuster permit in emergency situations for up to _____ to assist in the adjustment of claims arising from a common catastrophe.
A temporary permit may be issued for 120 days to adjust claims arising from a common catastrophe.
Your car is damaged in an auto accident. While it is being repaired, the body shop loans you a replacement. From a coverage standpoint this replacement vehicle is known as: A temporary substitute. A non-owned auto. A newly acquired auto. A replacement vehicle.
A temporary substitute. The auto policy provides coverage in this example. Since the vehicle owned by the insured is being repaired, a loaner would be covered by the insured's policy as a temporary substitute.
Pollution coverage is normally excluded under commercial auto coverage. Under which of the following situations would coverage apply without endorsement
A truck has an accident and gasoline escapes form the gas tank.
Consultant
Allows a person with a license to charge a fee for providing advice - if given to an indivual, it experires every 2 yrs on the birthday - if issued to a business entity, it expires on March 31st for life insurance in an odd yyear and general insurance in an even year - can only recieve a fee if there's a written contract with the person they are providing advice
How are household personal property claims settled under the farm policy?
Actual cash value Claims under farm policies for household personal property will be settled on an actual cash value basis similar to the homeowner policy. An endorsement for replacement cost settlement is available for additional premium.
Under a watercraft or yacht policy how claims are settled
Actual cash value Like physical damage coverage on an auto policy, the watercraft and yacht policies provide for the adjusting of physical damage losses to covered property on an "actual cash value basis".
How are losses evaluated for payment under the Watercraft and Yacht policies?
Actual cash value at the time of the loss Losses are evaluated on an "actual cash" value at the time of the loss.
Under the HO Policy, loss of use would cover which of the following?
Additional Living Expense and Fair Rental Value Coverage D, covers the loss of use of a dwelling. Additional Living Expense is included in this coverage as well as the Fair Rental Value Coverage.
Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim is negotiated?
Advance Payment Most adjusters are given the authority to make advance payments when liability is clear. This relieves the financial burden on the claimant when funds are needed immediately. The remainder of the claim is settled at a later date
Appointment and Termination of Appointment
All insurers must file a certificate of appointment in order to appoint insurance agents. Then you have 15 days to appoint a producer from the date the agency contract is executed. If you've been fired, you have 30 days to tell the super why you were fired and then the super has 15 days to send the info back to you confirming it,
Plumbing under the kitchen sink of an insured's condominium comes loose and leaks water all over the floor. The repair person has to tear out the floor under the sink to repair the hose. The cabinet is also damaged. What would the insured's HO-6 cover?
All of the loss is covered except the hose The HO-6 would cover the water damage to the floor as well as the cost to repair the damaged floor. The repair to the hose is not covered.
A drug store has an ice cream counter and someone drops some of the ice cream on the floor. Both the employee and the store manager are aware of the situation. The store can be held legally liable when:
All of the responses are correct Someone falls while the store employee is mopping the floor. -The floor is mopped but still wet. -No provisions for cleaning up have been made. All of the responses are correct. The store has a legal duty to protect invitees from sustaining injuries if possible.
Disclosure
An act of identifying the name of the producer, representative or firm, limited insurance representative, or temporary insurance producer on any policy solicitation.
Fiduciary
An agent/broker who handles insurer's funds in a trust capacity.
Contract
An agreement between two or more parties enforceable by law.
Indemnity Contract
An agreement to pay on behalf of another party under specified circumstances, such as when a loss occurs.
An insurance policy is issued as a policy having two unequal parts, the liability assumed by the insurer and the premium paid by the insured. Therefore, an insurance policy is referred to as: An aleatory contract. A conditional contract. A contract of adhesion. A contract of estoppel.
An aleatory contract.
In crime insurance, a custodian is described as which one of the following?
An authorized person inside the premises. . 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.
A stock company.
An incorporated insurance company with its capital divided into shares and owned by its shareholders is known as The shareholders own a stock insurance company. Mutual insurance companies are owned by policyholders.
Domestic Insurer
An insurance company that conducts business in the state of incorporation.
In a liability situation, "proximate cause" includes what important feature?
An unbroken chain of events There must be an unbroken link or chain of events between the negligent party's action and bodily injury or property damage to another party.
An insurance company that generally fails to affirm or deny coverage of claims within a reasonable period of time after receiving proof of loss may be found guilty of:
An unfair claims settlement practice.
Defamation
An unfair trade practice in which one agent or insurer makes an injurious statement about another with the intent of harming the person's or company's reputation.
Which of the following is not considered "covered property" under all homeowner forms?
Animals, birds, and fish are listed as "property not covered" in all the homeowner forms.
The crew of a ship is guilty of fraud with the intention of reaping gains at the expense of the owner. In ocean marine coverage, what is this called?
Barratry Barratry means fraud by the master or the crew with the intention of reaping gains at the expense of the owner. Examples include setting the ship on fire, diverting the ship from its course, or embezzlement of the cargo.
The application for an adjuster's license must be submitted with affidavits signed by five reputable citizens of the state. The affidavits must:
Be affirmed under penalty of perjury
Loss Exposure
Condition of being at risk of a loss. Purely by existing, property and people are at risk for loss.
Which of the following statements is correct? I. Unendorsed DP-2 and DP-3 settle all losses to personal property at actual cash value. II. Unendorsed DP-2 and DP-3 settle all partial losses to dwellings at replacement cost if insured 80% to value
Both I and II Both DP-2 and DP-3 settle all personal property losses on an ACV basis. They settle partial dwelling losses at replacement value ONLY if adequate limits are carried. That is, the dwelling limit must be at least 80% of a dwelling's replacement value in order to receive a replacement cost settlement for a partial dwelling loss.
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 This endorsement gives information to the insurer as to the actual values and estimated values of the insured's business income. This enables the insurer to charge a proper premium for the business income exposures that are covered under the boiler and machinery program.
Which of the following is not covered under workers compensation in New York?
Clergy and members of religious orders
Special Damages-
Casualty policies cover compensatory damages which include bodily injury and property damage caused by the insured as a result of his or her negligence. Compensatory damages are broken down into two categories; special and general. Special damages are types of compensatory damages the injured party receives for direct and specific expenses involved in the loss, such as medical expenses and loss of wages. These damages pay for so-called "economic losses."
Coverage E under a farmowner policy covers which of the following?
Coverage E covers scheduled farm personal property. Each item to be covered is listed and an amount of insurance is stated.
Which of the following coverages would apply to a rental car used by an insured exectuive
Coverage for a nonowned auto.
The broad and special dwelling forms (DP-2 and DP-3) provide two additional coverages not found on the basic form. They are:
Coverage for building collapse and coverage for lawns, plants, trees and shrubs The DP-1 form does not provide collapse coverage or coverage for lawns, plants, trees and shrubs. Only the broader forms provide these coverages.
What is the limit under the Businessowners Policy for pollution clean up?
Coverage for clean-up of pollution is limited to $10,000 for all expenses to extract pollutants (a defined term) from land or water if the release of the pollutants is caused by a covered cause of loss and occurs during the policy period. The expenses must be reported in writing to the insurer within one hundred and eighty days of the earlier of the date of the loss or damage, or the end of the policy period. Note that the $10,000 is an aggregate amount for each separate twelve month period. The newer forms add the costs of testing for and the cost for testing performed, when pollutants are extracted. Monitoring, or assessing pollutants are not covered.
Which of the following is not an optional property coverage under a homeowner policy?
Coverage for loss of use of the premises Coverage for loss of use is an included coverage in the homeowner policy without additional premium.
A steam boiler has been inspected and found to be in serious need of repairs. The inspector "red tags" the item. This means:
Coverage is suspended until repairs are made
Crop insurance usually protects a proportion of the reduced yield following an insured loss. "Reduced yield" refers to:
Coverage will pay the determined percentage reduction in yield times the amount of insurance per acre, regardless of the actual crop loss. 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%.
Crop insurance usually protects a proportion of the reduced yield following an insured loss. "Reduced yield" refers to:
Coverage will pay the determined percentage reduction in yield times the amount of insurance per acre, regardless of the actual crop loss. 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%.
Truckers Interchange Insurance
Covers physical damage to a specific trailer when the trucker is liable under a written interchange agreement.
Which of the following cannot be covered under a BOP?
Credit unions, banks and savings and loan companies are not eligible for the BOP.
Value as established by the insurer.
The value of the property must be established per the terms of the policy. Some policies provide for replacement cost coverage and others pay on the basis of actual cash value.
Which of the following dwelling forms provides broad perils coverage for personal property?
DP-2 and DP-3 only 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.
States have adopted statutes regarding claims adjusting. To avoid unfair treatment to a claimant, an adjuster must not:
Deny the claim until a fair and prompt investigation has been completed The adjuster must not deny a claim until a prompt and fair investigation has been completed.
States have adopted statutes regarding claims adjusting. To avoid unfair treatment to a claimant the adjuster must not:
Deny the claim until a fair and prompt investigation has commenced It is an unfair claim practice if the adjuster denies a claim prior to a prompt and comprehensive investigation has been completed
Which of the following is not a violation of the Unfair Trade Practices Act? 1 Not attempting in good faith to settle claims 2 Denying an uncovered claim 3 Failing to promptly settle claims under one portion of coverage in order to influence settlements under other portions of coverage 4 Not setting forth the coverage under which a claim payment is being made
Denying a claim that is not covered is not a violation.
Under a homeowner HO-3, there is no coverage for loss resulting from "earth movement" except when endorsed using which of the following?
Earthquake endorsement. An insured may add earthquake as an insured peril for coverages A, B and C by adding the HO 04 54 endorsement. This endorsement defines as a "single earthquake" all earthquake shocks occurring within a 72-hour period. The peril of earthquake is defined to include land shock waves or tremors accompanying a volcanic eruption.
An employee has been asked to use his own personal vehicle to perform certain tasks on behalf of his employer. What coverage is used under the business auto policy to protect the employer for lawsuits when the employee has an accident that causes legal action against the employer?
Employers non-ownership coverage. This coverage protects the employer and not the employee. The employee is covered under his own PAP policy.
One of the purposes of the coinsurance clause is to:
Encourage insureds to insure property for most if not all of its value. For most property policies, if the insured carries a limit of at least 80% of a property's value, they will receive full settlement for any loss up to that limit, and there will be no coinsurance penalty. Carrying a limit lower than 80%-of-value would involve a penalty to the insured if there were a claim. This serves as an extra incentive for the insured to carry adequate coverage.
An innocent party relies on certain statements made by the adjuster and is damaged as a result. The guilty party may be legally prohibited from asserting that the fact does not exist because of:
Estoppel If an adjuster advises a claimant to have an item repaired, that person relies on the assumption that the adjuster has the apparent authority to bind and obligate the company. If it is determined that the claim is not covered, the insurer is estopped from denying the claim at a later date. Estoppel is intentional or unintentional behavior on the part of one party that misleads another party and creates the impression that a certain fact exists.
Under an Equipment Breakdown policy, all of the following are supplementary payments, except:
Expediting expenses Expediting expenses are covered in the limit of the coverage. The other items are part of the supplementary payments, which are in addition to the policy limit.
The DP-2 broadens which of the following extended coverage (EC) perils?
Explosion, Smoke and Vehicles
On what basis are flood insurance claims usually paid?
Flood insurance pays on an actual cash value basis with one exception. Dwellings that are insured up to 80% of their replacement cost or are insured for the maximum limit allowed under the flood insurance program are paid on a replacement cost basis.
A business adjacent to an insured's business is damaged by fire. Because of the damage to the adjoining property, the insured is denied access to his business by the fire department. The insured's Commercial Property policy contains a Business Income coverage form, the insurance company will cover the loss of business income
For a maximum of four weeks. Coverage is limited to only four weeks, after a waiting period of 72 hours. In some cases, the insurer will extend this provision for an additional premium.
Under Coverage E - Scheduled Farm Property, how is the property covered?
For the limit shown in the policy declarations The property is covered for the limit shown on the declarations page of the policy for the property specifically scheduled.
Which crime coverage would cover embezzlement?
Forgery and alteration. Forgery is defined as any false writing with intent to defraud. The act of signing someone else's name with the intent to deceive is considered forgery. Signing your own name with intent to deceive, in a place where it is not authorized to be or in place of an authorized signature is also considered forgery. For example, an employee signs a company check when he is not authorized to do so with the intent of cashing the check or giving it to someone else to cash.
Choose from the following situations the example of assumption of risk.
Fred was in a hurry to get to work. He took a shortcut over a bridge marked "condemned," which collapsed under his weight. When Fred took the shortcut across a condemned bridge he assumed the risk.
A method of replacing property with something not exactly like the damaged item but will function the same is known as:
Functional Replacement Cost Functional replacement cost will replace the damaged item with something that will function like the damaged property but might not be exactly the same.
An adjuster's license will usually be revoked for which of the following?
Having Been Convicted of a Felony A requirement for licensing is that the applicant must not have been convicted of a felony. If the adjuster commits a felony after he/she has already been licensed, the license will be revoked.
Harry Jones wants to apply for a temporary adjuster's permit to act as an independent adjuster in New York. Which of the following is NOT true?
He must pass an interim examination Harry does not have to take an interim examination to obtain a temporary adjuster's license.
Upon discovering that an agent may have violated an insurance law, the insurance department is required to take which of the following actions?
Hold a hearing on the infraction In most states, the head of the state's insurance department will hold a hearing and subpoena witnesses regarding a possible violation of insurance law. The agent would have the opportunity to present his or her side of the case at that hearing. After the hearing is completed, the department head will issue an order/conclusion (similar to a verdict in a criminal case).
How do eligibility requirements of homeowner and dwelling policies differ?
Homeowner's policies require that the named insured reside at the described premises while dwelling policies do not. The named insured must be a resident of the policy's insured premises under the HO program.
Which of the following is covered property under the HO-3 form? I. Belongings of the insured's daughter while she is away at college II. The insured's garage III. The insured's dog IV. Personal property of a tenant
I and II only Pets, no matter how valuable, are excluded under Coverage C, as is the property of boarders or renters.
Which of the following statements is correct? I. Both DP-2 and DP-3 settle losses to covered personal property at actual cash value (ACV). II. Both DP-2 and DP-3 settle partial losses to covered dwellings at replacement value in all situations.
I only Both DP-2 and DP-3 cover partial dwelling losses at replacement value only if adequate insurance to value is in force. (Adequate insurance to value must be 80 percent or more of the replacement cost value of the structures)
An insured has damaged his vehicle by striking a tree. He can: I. Take the car to a repair garage recommended by the insurer. II. Take the car to a garage of his choice. III. Accept payment based on the adjuster's estimate.
I, II and III The choice belongs to the insured. An insured has fabricated a claim that would appear to be legitimate. What kind of hazard would this act represent?
In case of a total loss in an automobile accident, the adjuster will pay the insured which of the following? I. The cost to replace the vehicle with like kind and quality if the vehicle is a current year model. II. Use the most recent publication of an "Official Used Car Guide". III. If not listed in the "Guide", obtain quotations from automobile dealers.
I, II and III depending on the circumstances Any or all of the responses listed can be options in settling a total loss claim.
Protection and indemnity coverage contained in an ocean marine policy covers:I. Liability against injuries to seamen.II. Injury to stevedores, longshoreman and harbor workers.III. Cargo, if lost or damaged through negligence.
I, II and III. Protection and indemnity coverage would apply to all of these types of losses
The commercial inland marine coverage form known as the jewelers block excludes loss resulting from: I. Earthquake. II. Shortage found upon taking inventory. III. Unexplained disappearance. 1 I, II and III 2 I and II only 3 I and III only 4 II and III only
I, II and III. These are some of the basic exclusions found in the jewelers block policy.
Which of the following losses would be paid under a garage policy with comprehensive and collision coverages for covered autos? I. Hail damage to a 4-door van. II Damage when paint is accidentally spilled on a truck. III. Fender damage when a sports car hits a steel post. IV. Damage to a covered cehicle caused by a customer vehicle
I, II, III, and IV
The commercial inland marine coverage from known as the jewelers block excludes loss resulting from: I. Earthquake. II. Shortage found upon taking inventory. III. Unexplained disappearance
I, II, and III
Which of the following is considered a "garage operation": I. Ownership, maintenance or use of garage premises. II. Sale of products or services in connection with garage operations. II. Ownership or maintenance of covered autos. IV. Production or support of racing or competitive operations.
I, II, and III only.
Which of the following is considered a "garage operation"? I. Ownership, maintenance or use of garage premises. II. Sale of products or services in connection with garage operations. III. Ownership or maintenance of covered autos. IV. Production or support of racing or competitive operations.
I, II, and III only. Garage operations includes auto and business liability for covered autos, the premises and its associated operations, but specifically excludes all forms of racing.
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.
II Only The Businessowners Coverage form automatically provides property and liability coverage. Neither a Businessowners nor a Commercial Property Policy would automatically provide earthquake coverage, although endorsements are available to add it.
James purchases an outboard motor boat. He will have automatic coverage for the boat under his homeowner policy under which of the following circumstances? I. He reports the purchase of the boat to his insurer within 60 days. II. The boat is in storage on his premises. III. He reports the purchase of the boat to his insurer within 45 days.
II and III only The homeowner policy will cover a newly acquired boat as long as the insured reports it to the insurer within 45 days of the purchase or if it is in storage on his premises. However, be aware of the limitations on the hull value, horsepower limitations and size and use of the watercraft. A watercraft or yacht policy may be a better choice.
A boatowners policy would pay for which of the following losses? I. A boat's motor is stolen before the insured reports its acquisition to the insurance company. II. A boat that sank in 40 feet of water is re floated at a cost of $700
II. A boat that sank in 40 feet of water is re floated at a cost of $700
A watercraft policy would pay for which of the following losses? I. A boat's motor is stolen before the insured reports its acquisition to the insurance company. II. A boat that sank in 40 feet of water is refloated at a cost of $700.
II. A boat that sank in 40 feet of water is refloated at a cost of $700. 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.
Diane is fined by the Superintendent for a violation of the insurance law of New York. The fine is not paid within 20 days. What action may the Superintendent take?
If the fine has not been paid within 20 days the Superintendent will suspend or revoke the license.
Other States Insurance
If the insured's information page indicates a state or states in "other states insurance" filed, and the insured does not already have insurance in that state or is self-insured, then the policy will automatically cover workers compensation claims for exposure that develops during the policy period in those states.
When is it appropriate for an adjuster to secure a non-waiver agreement with the insured?
If there is a question of coverage A properly executed non-waiver agreement allows the insurance company to complete a thorough investigation without implying that coverage is available for the loss.
Other Insurance
If there is other insurance covering the same loss or damage, the insurer, (under the BOP) will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance.
Under the Personal Auto policy, the Supplementary Payments coverage is:
In addition to the limit of liability
Under the terrorism risk insurance act of 2002, which of the following would be considered a certified act of terrorism?
In order to be a certified act of terrorism, the act must cause 5 million or more in damages and be committed by a foreign national. The department of the Treasury will make the certification decision, not the Senate or the President
A homeowner with personal property insured for $60,000 had a fire which destroyed everything. The total value of the personal property at the time of the loss was only $50,000. What principle would be violated if her insurer paid her more than $50,000?
Indemnity Under the principle of indemnity insurance should not pay for more than the actual loss sustained by the insured, even if the policy limit is higher than the loss amount or if there is more than one policy applying to the loss.
In New York complaint records of claims must be maintained for ______ calendar years.
Insurers must maintain complaint records for six calendar years after all elements of the complaints are resolved and the file is closed
All of the following are true regarding the "write your own" program under flood insurance, EXCEPT:
Insurers must participate in the program. Insurers voluntarily participate in the program; they are not required to do so.
In the property insurance field, a "friendly fire" is one which:
Is intentionally set and remains within its intended limits. Conversely, an unfriendly fire is one that is not contained within its intended limits. A fire in a fireplace is a friendly fire until it spreads beyond the fireplace. Policies cover unfriendly fires.
With crop insurance policies, the coverage period is usually:
Limited to the growing period for the particular crop being insured. 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.
The insured carries a yacht policy and is pulling a water skier. The skier is a family member and is injured. What coverage might apply to this accident?
Medical payments coverage Medical payments coverage under the yacht policy would cover this loss up to its specified limit.
A business owner who is careless about property left in his care may be guilty of which of the following hazards:
Morale
The Building and Personal Property Coverage Form includes which of the following Coverage Extensions?
Newly Acquired Property There are five Coverage Extensions under this form. They are: Newly acquired or constructed property; personal effects and property of others; valuable papers and records; property off-premises, and outdoor property. Note that these are very limited in scope of coverage.
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.
A coverage issue
Non waiver agreements and reservation of rights letters both serve the following general purposes: 1.To advise the insured that any action taken by the insurance company in investigating the cause of loss or in ascertaining the amount of loss is not intended to waive or invalidate any policy condition. 2.To clarify that the intent of the agreement is to permit an investigation of the claim and that neither the insured nor the insurer will thereby waive any respective rights or obligations.
On an unendorsed special form BOP, how much coverage is there for theft of money & securities?
Nothing Even though the special BOP is "open peril" coverage which includes theft, the loss of money and securities are still not a covered form of property. The endorsement for Money & Securities is necessary to cover this exposure.
he insured has a barn on his premises. The dwelling is insured for $200,000 under a DP-2 dwelling policy. How much coverage applies to the barn?
Nothing Farm property is not eligible under the dwelling policy. The barn is farm property and cannot be covered, however the dwelling can be insured under a DP-2 form.
The insured has a barn on his premises. The dwelling is insured for $200,000 under a DP-2 dwelling policy. How much coverage applies to the barn?
Nothing. Farm property, including farm dwellings are not eligible under the dwelling policy. The barn is farm property and cannot be covered. Farm property forms must be used.
After a fire loss, which of the following is the duty of the adjuster?
Obtain salvage of the damaged property After the loss has been adjusted the adjuster should take possession of the salvage
The insured is moving to a new location. Coverage for contents provided under a Homeowner Policy would be:
On a pro-rata basis between the two locations. Coverage would apply at both locations on a pro-rata basis for 30 days.
Any insurance adjuster whose license has been revoked for cause will not be entitled to apply for any other insurance license in New York until at least:
One year after the revocation. The person must wait for one year to be eligible to reapply. There is no assurance that the Superintendent would consider a reissue of license due to the previous revocation.
A steam boiler insured under an Equipment Breakdown policy explodes and causes severe damage to the building and the contents. If a fire ensues as a result of the explosion, what coverage will the policy pay? 1 Only the damage caused by the explosion 2 The entire loss 3 Business Income loss from the fire 4 Damage to property of the insured and property of others caused by the fire
Only the damage caused by the explosion The Equipment Breakdown policy would only pay for the damages caused by the explosion. A commercial property policy would pay for the resultant fire damage.
The insured is transporting his yacht on its trailer and pulling it with his truck. The trailer separates from the truck hitch and the boat strikes another vehicle. There is property damage and bodily injury to a third party. The yacht and trailer are a total loss. What coverage would apply under the yacht policy?
Only the damage to the yacht and trailer The damage to the yacht and trailer would be covered. The bodily injury and property damage to a third party would be covered under an auto policy
The insured is covered under a HO-5 Policy. What coverage does the insured have for contents coverage?
Open Peril Coverage The HO-5 Form provides Open Peril Coverage on both structures and contents.
An HO-5 form provides which of the following coverages for dwellings and their contents?
Open peril coverage for buildings and personal property. The HO-5 form is the broadest HO form and provides open peril coverage on both covered buildings and the insured's personal property.
A building insured under a Commercial Property policy suffers a fire and it is obvious that the building is underinsured. The policyholder demands payment for the entire loss on a replacement cost basis. The insurance company can:
Pay only the actual cash value of the lost or damaged property or apply the coinsurance clause The insurer can pay the actual cash value of the loss or apply the coinsurance clause because the insured is underinsured.
In automobile insurance, Supplementary payments refer to which of the following?
Payment of defense and other expenses by the insurance company beyond the limits of liability.
In a Physicians Professional liability policy two separate errors cause several claims. How is the deductible determined?
Per Claim The deductible on a Physicians Professional liability policy is on a per claim basis. It is not based on the error or the individual claimant or the total amount of a claim.
Which of the following is correct regarding HO-3 and an HO-5 coverages?
Personal property under an HO-3 is covered on a named peril basis, while personal property under an HO-5 is covered on an open peril basis. The HO-3 and the HO-5 are the same in terms of dwelling exclusions, valuation on dwelling losses, and the type of personal property insured. They are different in terms of perils insured against for personal property losses.
Hired and Non-OWNED AUTO Liability Endorsement
Provides either or both non-owned or hired auto coverage for the named insured. Non-owned auto liability provides coverage for any auto that is not owned, borrowed or hired by the insured. It does not cover the owner of a non-woned or hired cehicle. Hired auto liability provides coverage for autos leased, hired or borrowed by the insured. This endorsement is not available to insureds who have a policy covering other commercial automobile exposures and does not require a mandatory audit by the insurance company.
A person, firm, or corporation that, for compensation, acts on behalf of an insured in negotiating the settlement of certain claims for loss or damage to property is known as a/an:
Public adjuster.
If an insured fail to report a claim in a timely fashion the adjuster will usually:
Send the insured a reservation of rights letter 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.
Losses caused by all of the following are covered under the National Flood Insurance Program, EXCEPT:
Sewer backup. Most insurance carriers now offer sewer backup coverage. This type of loss is not considered to be a flood loss.
Brian Hendricks is adequately insured with a Homeowner Policy containing a requirement to carry at least 80% of replacement cost value. If he suffered a partial loss to his dwelling structure he would be able to collect which of the following percentages of loss?
Since the insured is complying with the 80% clause, Brian is entitled to be paid for the entire loss less the deductible.
Which of the following would be a cause of loss property coverage under a Farm policy?
Special There are three causes of loss provisions in the property coverage under a Farm policy. They are basic, broad and special. The insured chooses which provision is to apply and pays the premium accordingly. Obviously the special is the broadest coverage.
Mr. Jones has injured a claimant in an auto accident. The claimant has sustained medical expenses, loss of wages, and the loss of use of his vehicle. These types of expenses are called:
Special Damages. These are called Special Damages. These involve expenses where the costs are known or can easily be determined.
What coverage is provided under the BOP for a steam boiler explosion?
Steam boiler explosion is excluded under the BOP
All of the following are exclusions under Equipment Breakdown coverage, except
Sudden and accidental loss The Equipment Breakdown policy covers sudden and accidental loss. It can be modified to cover indirect loss (loss of income) as a result of a direct loss. The commercial property forms would cover a fire loss as a result of a boiler explosion since this would be an ensuing loss.
Technician A says that measurements that are the same on both sides of the vehicle are known as asymmetrical. Technician B says that the dimension manual should be checked to see how asymmetrical dimensions are noted. Who is right?
Technician B is correct. Asymmetrical measurements are different on opposite sides of the vehicle. Symmetrical measurements are the same on both sides.
Lapse
Termination of a policy because the premium has not been paid by the end of the grace period.
What endorsement may be used under the dwelling policy to keep values current with the replacement cost of the buildings?
The Automatic Increase Endorsement is used to keep the coverage current as a result of inflation on construction costs.
What is the limit of insurance that applies to property in transit in the BOP?
The BOP provides a $10,000 limit for property in transit
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 The BOP would be excess subject to the policy limits if the floater does not cover the entire loss.
The HO-3 provides coverage against how many perils on covered structures?
The HO-3 does not list the perils for structures. The form provides open peril coverage. The contents coverage does list the covered perils.
Mary has insured her one-family home under an HO-3 form with a limit of $100,000. What limit is she automatically entitled to for her unattached garage on the premises?
The HO-3 form provides 10% of the dwelling limit that applies to unattached structures. The most the insurance company can pay is $10,000 ($100,000 multiplied by 10%).
Which of the following should be insured by an HO-6? 1 The owners of condominiums and townhouses 2 A tenant who rents an apartment in a high-rise building 3 The owner of a ranch-style house 4 A person who wishes to schedule their valuable jewelry separately on a policy
The HO-6 is for owners of condominiums and townhouses.
Vision care insurance policies most often cover: 1 The cost of lenses and frames. 2 Replacement lenses and/or frames due to breakage. 3 Sunglasses and safety glasses. 4 Eye surgery.
The cost of lenses and frames. Most vision policies cover corrective lenses and frames as well as contact lenses but do not cover replacement lenses, specialty lenses such as sunglasses or surgery. Vision does not cover eye surgeries that is under medical
The Secretary of the Treasury in concurrence with the Secretary of State, and the Attorney General.
The Insured's Contents and Personal Liability The HO-4 is designed for apartment dwellers or those that live in a rented dwelling. Since they don't own the structures, no coverage is needed to cover the real property.
An insurer fails to respond to a letter from a claimant requesting information. This is in violation of:
The Standards for the Acknowledgment of Pertinent Communications. The insurer shall reply within a specified number of working days to all pertinent communications from a claimant that reasonably suggests that a response is expected.
An insurance professional that is accused of dishonesty or breach of trust involving interstate commerce under the Federal Fraud and False Statement Regulation of the United States Code (USC 1033) will be prosecuted by:
The U.S. Attorney general This breach of trust or dishonesty involving interstate commerce is a violation of USC 1033 and therefore prosecuted by the United States Attorney General's office.
An insurance professional that is accused of dishonesty or breach of trust involving interstate commerce under the Federal Fraud and False Statement Regulation of the United States Code (USC 1033) will be prosecuted by:
The U.S. Attorney general. This breach of trust or dishonesty involving interstate commerce is a violation of USC 1033 and therefore prosecuted by the United States Attorney General's office.
Extra expense insurance covers which of the following?
The additional cost of continuing a business after a direct loss Extra expense coverage, if written alone, would not cover loss of income. Its purpose is to cover "any" extra expense necessary to restore the business in order to continue operations.
In New York the workers compensation program is administered by the Workers Compensation Board which establishes guidelines for the program. Notice of injury or death to a worker is required to be submitted to the employer within what period of time?
The employer must be notified within 30 days. .
Apparent Authority
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
The application for an adjuster license must be approved by at least ____ reputable citizen(s) of the community where the applicant resides.
The application for the license must be approved by at least five reputable citizens of the community where the applicant resides. They must certify that they have known the applicant for at least five years and that they believe the statements in the application are true.
appraisal clause
The appraisal clause is used where the insured and the insurer do not agree on the value of the loss. Either party can demand an appraisal of the loss
Express Authority
The authority granted to an agent by means of the agent's written contract.
A new definition of collapse has been included in the commercial property forms that provide this coverage. The main change is:
The collapse must involve an abrupt falling down or caving in of the structure or a part of the structure, rather than a gradual or sequence of damage.
The custom farming endorsement is usually attached to a farmowners policy when receipts are at least:
The custom farming endorsement is used when a farmer is farming for others and the receipts exceed $5,000 per year.
Employers in New York have _____days from the date of the initial penalty for failing to comply with the compliance provisions of workers compensation coverage for eligible employees to appeal the penalty.
The employer has 30 days to appeal the penalty for non-compliance in the providing of workers compensation coverage
Under workers compensation insurance, the insurance company is considered to have notice of an accident when:
The employer has notice
The insured is covered under a BOP policy. Contents coverage is included. If the insured buys a separate piece of machinery and insures it separately, how will the BOP policy respond to a loss to this machinery?
The equipment policy will be primary and the BOP will be excess if the separate policy does provide adequate limits of coverage. The BOP will only pay on an excess basis if the other coverage does not provide adequate limits of coverage
Under pollution clean up and removal coverage under the BOP, when must a loss be reported?
The expenses will be paid only if they are reported to the insurer within 180 days of the date of the direct loss or the end of the policy period.
An insured has a HO-5 Homeowner Policy; they have insured the wife's diamond ring and the husband's guns on a personal articles floater. All of the items are stolen. What policy and deductibles would apply?
The homeowner policy would not pay and the personal articles floater would pay without a deductible. Once coverage is purchased on a more specific basis, the coverage no longer applies under the homeowner policy. The floater would pay the claim. Floaters seldom contain deductibles.
Under the Equipment Breakdown Protection form that covers boilers and machinery, what is considered to be one loss event?
The initial breakdown causes other breakdowns
A New York insurance licensee must advise the insurance department of a change of address within:
The insurance code requires that the licensee advise the insurance department within 30-days of the change.
After a claim has been paid under a policy, any recovery rights applying to the amount paid by the insurance company belong to:
The insurance company. Recovery rights after a claim has been paid belong to the insurance company.
A public adjuster represents the interest of
The insured A public adjuster is an independent contractor representing solely the financial interests of the insured named in the policy.
A Homeowners Form has a $50,000 personal property limit. Disregarding any deductibles, what is the most the insured can collect if a boat valued at $1,500 is stolen from the premises?
The insured can collect up to $1,500 because of the "special limits" that apply to watercraft. An insured could collect this full amount even when the deductible is factored in. For example, if a policyholder had a deductible of $500 and a covered loss to watercraft valued at more than $2000, they could collect a maximum of $1500. Theft of watercraft off the insured's premises is covered only under the HO-5 form.
Which of the following is an obligation of the insured involving a covered property insurance loss?
The insured is obligated to protect the property from further loss or damage.
A first party claimant
The insured is the first party claimant.
The insured carries a Businessowners Policy (BOP). If the premises become 69% or more vacant, what can the insurer do? The insurer can cancel the policy. The insurer can non-renew the policy. The insurer can restrict coverage. The insurer can reduce coverage.
The insurer can cancel the policy. . The insurance company can cancel the policy if the risk is 69% or more vacant.
A company adjuster primarily represents the interests of:
The insurer. A company adjuster is an adjuster representing the interests of the insurer.
An independent adjuster represents the interest of:
The insurer. The independent adjuster adjusts claims on behalf of the insurer and therefore, represents the interest of the insurer.
Following the payment of a claim, the salvaged property becomes the property of:
The insurer. Unless other arrangements are made and agreed upon, after the claim has been paid, the property will belong to the insurer.
An independent adjuster represents the interest of: 1 The insurer. 2 Both the insured and the insurer. 3 The insured. 4 The public.
The insurer. . Independent adjusters operate as independent contractors, typically contracting with adjusting firms. Adjusting firms in turn contract with insurance companies that may require claims support beyond the capabilities of their staff adjusters. Independent adjusters work to settle claims on behalf of the insurance company.
A proof of loss addresses all of the following, EXCEPT:
The insuring agreement in the policy that provides the coverage The proof of loss does not address the insuring agreement in the policy that would provide the coverage in case of a claim.
In New York, insurers must maintain records pertaining to claims, rating, underwriting, marketing and other pertinent information for a period of
The law requires that these records be maintained for inspection and/or review for at least six years.
The limit for the theft of jewelry under the Homeowners policy is:
The limit for the theft of jewelry is $1,500.
Under the livestock coverage form, how must livestock be covered?
The livestock form requires that the livestock must be insured at least 80% to value
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.
If the insured has to take time off work to help assist in the investigation of the claim, the policy will pay for actual loss of earnings up to:
The most the policy will pay for actual loss of earnings is $250 per day if the insured is asked by the company to take time off of work to help assist in the investigation and/or defense of the claim.
Under the basic dwelling form DP-1, which of the following water damages would be covered?
The only water damage covered under the basic dwelling form would be from water used to extinguish a fire
The clause in an ocean marine policy that refers to "particular average" means:
The particular average clause means only one party shares in the loss.
What is the main difference between a DP 1 and a DP 2?
The perils insured against DP 1 and DP 2 are similar forms, both designed to provide property insurance for personally-owned residential buildings containing up to four living units without requiring the insured to reside there. These two forms are different in the "Perils Insured Against" section. The DP 2 Broad Form covers all the perils included in the DP 1 plus several "broad" perils including burglar damage, ice or snow damage, falling objects, freezing of plumbing, heating, or A/C systems or household appliances, accidental discharge of water from a plumbing, heating, or A/C system, and breakage of glass.
The insured carries an auto policy and a personal umbrella policy. In case of a loss, how would the policies respond to pay a covered claim?
The personal auto policy would be the primary and would pay up to the policy limits, then the umbrella policy would be excess to pay up to its policy limits The personal auto policy is the underlying coverage that would be required by the insurance company writing the umbrella policy. If a covered claim should occur, the personal auto policy would be primary and the umbrella policy would be excess.
A boat damaged out of the water and at a lake would be covered under the Homeowners Policy for:
The policy limits physical damage to only $1,500. Also, theft that occurs off the insured's premises is not covered. Watercraft is covered for the perils of wind and hail only while in a fully enclosed building.
How much is covered under a Homeowner Policy for charges made as a result of a stolen credit card?
The policy provides a limit of $500 for credit card forgery and counterfeit currency.
The insured has a one family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the garage?
The policy provides for 10% of the dwelling limit. Therefore the garage is insured for $20,000 for the same perils that apply to the dwelling.
An insured is covered under a homeowner policy with the HO-3 form and $500,000 for coverage A. The dwelling is a total fire loss. What is the extra coverage provided by the policy for debris removal if needed?
The policy will pay an additional 5% of the coverage A limit for debris removal.
An insured's wife is wearing a diamond ring while on vacation in Europe. The ring valued at $1,500 is stolen. What coverage would apply under their Homeowner Policy?
The policy will pay the loss less the deductible. Personal property is covered anywhere in the world. The theft limit for jewelry is $1,500. The loss less the deductible is covered.
The insured is insured under a DP-3 dwelling form and is remodeling the dwelling. He does not have a place to store the materials. His next door neighbor permits the insured to store the materials in his garage. The garage is destroyed by fire and the materials are also destroyed. Which of the following applies?
The policy would respond to pay the loss because the policy covers building materials located on or next to the insured's premises.
An adjuster should refrain from using derogatory remarks and abbreviations in a report because
The report is part of the discovery process from the plaintiff's attorney If the first or third party claimant brings suit against the insurer, all claim reports and supporting documentation is part of the discovery process.
The suffix "somatic" refers to:
The suffix somatic refers to the body.
The insured owns a 50 HP fishing boat covered under a watercraft policy for hull insurance. He also carries a homeowner policy. He ties his boat to a tree and goes ashore to camp. The next morning he discovers that his boat is stolen. Which policy would pay the claim?
The watercraft policy would pay the claim. The homeowner policy excludes property more specifically insured and also excludes any boat off the insured's premises for the peril of theft.
Concealment
The willful holding back or secretion of material facts pertinent to the issuance of insurance (or claim). Concealment results in denial of coverage and may void the policy.
An adjuster has just completed taking the statement of a witness. Which of the following must be done?
The witness must sign each page and have his or her signature witnessed.
Under the Homeowners Policy, "theft" does not include:
Theft of building materials from a dwelling under construction is excluded. An inland marine form can be purchased to cover this exposure.
Theft of watercraft off the insured's premises is covered only under what form?
Theft of watercraft off the insured's premises is covered only under the HO-5 form.
Under the commercial building and personal property coverage form, which of the following is correct regarding the appraisal clause?
There are no stipulated time requirements in any policy in regards to the appraisal clause.
An adjuster commits an act of insurance fraud addressed by the Federal Insurance Fraud Act. The fraud does not affect the financial stability of the company. What is the maximum time the adjuster may be confined to prison?
This type of offense carries up to a 10 year sentence. The sentence is increased to 15 years if it affects the financial stability of the insurer.
How many years must a business be operational in New York before it can qualify as a self-insurer for workers compensation? 1 Three years. 2 Four years. 3 Five years. 4 Two years.
Three years A company must be in business for at least three years before it can make application with the state to become a qualified self-insurer.
Phil Smith, in helping his friend Tim Jones apply for a New York Casualty Insurance license, attests to Tim's honesty on the application and competence to handle the duties of the license. Phil's statement must:
Tim must provide statements from at least 5 members of his community attesting to his honesty on the application and to his abilities. This must be filed with the application for the license and any required supporting documentation.
All Homeowner policies provide "Property Removed" coverage for up to how many days?
These 30 days are standard for all homeowner forms. There are differences in the dwelling forms. For example, the basic dwelling form DP-1 provides only 5 days to cover property removed to protect it from the perils insured against.
Public adjusters in New York must maintain books, files and records for at least ____ years from the completion of the services rendered.
These records must be maintained for at least 3 years from the completion of the services rendered
Which of the following statements is true about additional coverages under the homeowner policy?
They are included at no extra cost. An example would be the collapse hazard included in both the broad and special cause of loss forms at no extra charge.
Farm Employers Liability and Farm Employees Medical Payments Insurance
This endorsement adds coverage for farm employee's medical coverage where workers compensation may not apply.
Custom Farming Liability Coverage
This form adds coverage for custom farming, which is generally excluded if receipts exceed $5,000 in the previous
A grave injury
This is defined as death, permanent and total loss of use or amputation of a limb or member, paraplegia or quadriplegia and several other serious injuries. A third party can bring a legal action against an employer when the employee was injured on the job and has suffered a grave injury
A person who violates a cease and desist order issued by the Superintendent of Insurance is subject to a penalty of up to _____ for each violation.
This person is subject to a penalty of up to $5,000 for each violation. A willful violation must be taken into consideration in determining the amount of the penalty.
What is the purpose of establishing loss reserves?
To establish an estimate of the total amount the insurer expects to pay on a claim. When a loss occurs the insurance company establishes reserves representing what the adjuster estimates will be the total amount that will be paid on the claim. Reserves are constantly reviewed as the claim progresses. Under-reserving of a claim could put the insurance company in financial jeopardy if the practice is routine.
A commercial property policy specifies which of the following responsibilities as a duty of the insured?
To provide a proof of loss statement following a loss if requested by the company. If the insured reports a covered loss, the insurer may request the insured to complete a proof of loss statement. If this request is made, the insured must complete the proof of loss relatively quickly. Some policies give the insured only 60 days to complete the proof of loss after the insurer makes its request.
Indemnify
To restore the insured to the same condition as prior to loss with no intent of loss or gain.
Standard Homeowners policies have "special limits" on certain types of property like jewelry, firearms, gold and silverware, etc. These special limits are relatively low. If an insured seeks higher limits than the "Special Limits" they can purchase a separate policy OR they can attach the scheduled personal property endorsement to their Homeowners policy.
Unless a telemarketer has a person's consent to do otherwise, it is a violation to make outbound telemarketing calls to a person's home outside the hours of 8 a.m. and 9 p.m.
Coverage F under the farm forms covers which of the following?
Unscheduled personal property 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.
If a dwelling insured under an HO-3 is destroyed by fire, what amount should the insured expect to be paid for their loss?
Up to the policy limits. An insurance company cannot pay in excess of the policy limits. There are 22 states that have a valued policy law in which the company is required to pay the full limit in case of a total loss. For partial losses the insurance company can only pay up to the limits of the policy. The insured would have to prove their loss for the contents damage
The insured has a communication failure at his premises due to a lightning strike at the phone company. The insured's phone system is damaged and he is out of business for four days. Which endorsement is necessary to provide coverage for the loss of business income? Non owned and Hired Auto Earthquake Utility Services - Time Element Utility Services - Direct Damage
Utility Services - Time Element The Utility Services - Time Element endorsement would cover the loss of business income in this example if the phone system was listed on the endorsement and the cause of the loss was covered by the policy.
Equipment Breakdown coverage does not apply to which of the following losses?
Vandals have destroyed a boiler Coverage does not apply to loss outside the equipment (often referred to as the insured object or objects). An explosion outside the equipment is not covered whereas an explosion inside the equipment is covered.
Which one of the following is considered part of the cowl? Vent panel Quarter panel Grille Fender
Vent panel The fender and grille are part of the front end. The quarter panels form the rear sides of the auto. The vent panel is part of the cowl.
On the basic dwelling policy all of the following perils are excluded EXCEPT:
Volcano The question is about the DP-1 Basic form. War, earthquake and landslide are not named perils and are therefore excluded.
A statement of fact given by an applicant at the inception of a policy is a: Guarantee Stipulation Warranty Resolution
Warranty 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.
All of the following are exclusions under the "Special Cause of Loss" form, EXCEPT:
Water damage caused by a sprinkler system Water damage from a sprinkler system or accidental discharge from a plumbing or heating system is covered.
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. The boat is in transit and if physical damage should occur to the boat, the watercraft policy would provide the best coverage. A yacht policy would also provide this coverage
In casualty insurance, the other insurance clause would be applicable:
When two or more policies are in force covering the same claim, the other insurance clause is in place.
Would Injury or damage arising out of a fishing boat the named insured stored in his garage by covered under a garage liability policy?
Yes
Change of Address time frame
a licensee has 30 days to inform dept of insurance
The HO-6 provides ________ peril coverage on personal property.
broad The HO-6 (Condominium form) provides broad peril coverage on the personal property of condominium owners.
hazards
broken into 2 subtypes (physical, moral, morale); conditions that increase the probability of the insured to experience a loss
The number of platelets is an important measure of the blood's protective mechanisms for: the production of glucose. bleeding. clotting. the production of plasma.
clotting The platelets measure the blood's ability to clot. A person who bleeds or bruises easily may have too few platelets. The number of platelets is an important measure of the blood's protective mechanisms for stopping bleeding
Businessowners Policy BOP
commercial package policy containing property and liability
An aleatory contract is most accurately described as a
contract in which the performance of one party is contingent upon the occurrence of a fortuitous (accidental) event. Examples of aleatory contracts include insurance policies and product warranties.Note: "Contingent" means dependent on the occurrence of something not yet certain (conditional).
what is written on an acreage basis?
crop-hail coverage
Flood Insurance Regular Program
goes into effect after the land use control requirements are met and rate study of the community has been made. Rates are no longer subsidized and the following limits.
Flood Insurance Emergency Program
goes into effect as soon as a community has met its land use control requirements stipulated by the federal law. Rates are subsidized by the federal government under the Emergency program.
Surety bond
guarantees that ceratin acts will happen, that someone will faithfully perform the act that they have agreed to perfom
Loss of consortium
is a claim for damages suffered by the spouse or family member of a person who has been injured or killed as a result of the defendant's negligent or intentional, or otherwise wrongful acts.
Economic loss
is a term of art which refers to financial loss and damage suffered by a person such as can be seen only on a balance sheet rather than as physical injury to the person or destruction of property.
Drive other car coverage
is an endorsement that is commonly attached to the policy to cover the liability of an owner of the business and the family members when driving a non owned vehicle. Often times the owner does not own a vehicle but routinely drives a vehicle held for sale with a dealers tag
The claims made form
is commonly written on hospitals for professional liability, on doctors and lawyers for their professional liability and on insurance agents for errors and omissions coverage. Most professional liability and on inusrance agents for errors and omissions coverage. Most professional liability policies are issued on a claims-made basis. With claims made insurance, we are interested in the fact that the insurance was in place when the claim occurred.
loss
is defined as the reduction , decrease, or disappearance of value of property or person insured in the policy caused by a name peril
crop hail insurance
is rated on an acreage basis.
The occurrence Form
is the most popular form because of the issues that can arise when a claims-made form is non-renewed. This form is triggered by bodily injury or property damage that occurs during the policy period.
pure risk
is the the certainty that loss or no change will occur with no financial gain to be sought only this type of risk is insurable
IS A Janitor a custodian?
no
Annually Renewal Term -ART
the purest form of term insurance, in which death benefit remains level and the policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to attained age , as the probability of death increases
On the basic dwelling policy all of the following perils are excluded, EXCEPT:
volcanic eruption
