OK License Exam
A person or entity that makes a claim for payment after a loss occurs is a/an: A. claimant. B. liable party. C. adjuster. D. tortfeasor.
A. claimant.
A typical homeowners policy without a Home Business endorsement has how much coverage available for business personal property? A. $1,500 B. $2,500 C. Coverage C limit D. $0
B. $2,500
Which ISO form is known as the "Condominium Form"? A. Homeowners 5 B. Homeowners 6 C. Homeowners 8 D. Homeowners 4
B. Homeowners 6
In an insurance contract, the policyholder gives the insurer _____, and the insurer gives the policyholder ______. A. covered property; a risk pool B. premium payments; peace of mind C. peace of mind; risk D. a surety; premium payments
B. premium payments; peace of mind
Which of these statements about the Standard Flood Insurance Policy is FALSE? A. Coverage B covers Personal Property. B. Coverage A covers Dwelling. C. Coverage C covers Attached Additions. D. Coverage D covers Increased Cost of Compliance.
C. Coverage C covers Attached Additions.
When Nancy was pulling into her driveway, she accidently hit the gas and plowed through the front wall of her house and into her living room, causing $22,000 in damages to her home. Unfortunately for Nancy, the adjuster denies her claim because the cause of loss is excluded from coverage. Nancy tries to negotiate with the adjuster, but she is unsuccessful. This is because: A. adjusters do not have the authority to negotiate with claimants. B. the difference in dollar amounts is too great. C. coverage is not negotiable. D. the adjuster is trying to save the insurer from paying any claims.
C. coverage is not negotiable.
Under Business Interruption Coverage, "Extra Expenses" may be covered if: A. the extra money spent on debris removal exceeds policy limits. B. the extra measure expands the company's product mix. C. the extra measure reduces the amount of income lost due to the covered peril. D. the lost income exceeds the limit of the commercial insurance policy limits.
C. the extra measure reduces the amount of income lost due to the covered peril.
Jerry has a $125,000 DP-2 policy on a house he's currently renting to Stephanie for $1,700 a month. Jerry pays $200 in utilities each month out of the $1,700 he receives from Stephanie. One winter day, a heavy snowfall causes part of Jerry's roof to cave in, causing $12,000 in damage to the dwelling. During the two months it takes to repair the damage, Jerry suspends utility services to the house and Stephanie goes to stay with her sister. How much can Jerry receive under Coverage D - Loss of Use? A. $8,600 B. $12,000 C. $3,400 That is incorrect. Because of the covered loss, Jerry loses $1,700 of rental income per month. This means a total of $3,400. However, Coverage D - Loss of Use only pays the insured's net losses, so Jerry must subtract the amount he saves on his utility bills while Stephanie is gone, which is $200 per month. $3,400 - $400 = $3,000. D. $3,000
D. $3,000 This means a total of $3,400. However, Coverage D - Loss of Use only pays the insured's net losses, so Jerry must subtract the amount he saves on his utility bills while Stephanie is gone, which is $200 per month. $3,400 - $400 = $3,000.
This Ocean Marine insurance coverage protects the vessel owner in the event that cargo shipping costs are not paid. A. Protection and Indemnity B. Hull coverage C. Cargo coverage D. Freight insurance
D. Freight insurance
One night, Sally sets fire to Jimmy's restaurant. Thankfully, Jimmy has commercial property insurance, and it covers the damages to the restaurant. Which condition makes it possible for the insurance company to go after Sally to get back what they paid out to Jimmy? A. Misrepresentation B. Vandalism C. Legal Action Against the Insurer D. Subrogation
D. Subrogation
Competitive estimates can vary widely for all of the following reasons EXCEPT: A. the area in which the repair shop operates. B. labor costs. C. estimated time to repair the vehicle. D. estimated cost of replacement parts.
unk
Which of the following would NOT be considered an "occurrence" according to a CGL policy? A. A child chokes on a piece of a toy purchased from an online retail store. B. A man is injured by a shopping cart while shopping at a grocery store. C. An employee is mopping the floor of a grocery store while numerous people are present. D. A woman gets a back injury from a loose steel frame in a showroom couch.
unk
In a Commercial Auto Policy, which coverage symbol indicates that a car is subject to mandatory no-fault insurance? A. 5 B. 2 C. 7 D. 9
A. 5
Which of the following statements about the Business Owners Policy is FALSE? A. A BOP can include workers comp coverage for eligible small businesses. B. A BOP would cover business personal property in a vehicle sitting 80 feet away from the insured structure. C. A BOP bundles property, liability, and income protection coverages in a single package. D. A BOP typically provides coverage for businesses on an open-peril basis.
A. A BOP can include workers comp coverage for eligible small businesses.
When an insured signs a document acknowledging that he gives up his right to a certain coverage, such as uninsured motorist coverage in an auto policy, this is called: A. an express waiver. B. an implied waiver. C. a warranty. D. an estoppel.
A. an express waiver.
According to the Assignment condition in an insurance policy: A. insurance coverage may transfer to an insured's legal representative when the insured dies. B. an insured may transfer a policy to a spouse or dependent, but only if all terms, conditions, and declaration page remain the same. C. an insurer may reassign a policy to another insurance company, but only with the policyholder's notarized written permission. D. an insurer may reassign a policy to another policyholder, as long as it provides all named insureds with 5 days' advanced notice.
A. insurance coverage may transfer to an insured's legal representative when the insured dies.
Which Inland Marine Business Floater would cover a slab of marble that the insured business has sold if it gets dropped and destroyed while being delivered to the buyer? A. Valuable Stones and Metals coverage B. Installation coverage C. Delivery coverage D. Dealer's coverage
B. Installation coverage
Carol wants to purchase a homeowners policy that includes coverage for hail damage. Before writing a policy for Carol, the insurance company may analyze the history of hail claims in her area to determine their: A. peril. B. exposure. C. speculative risk. D. risk.
B. exposure.
The law of large numbers states that: A. insuring a greater number of units increases the likelihood of loss for the insurer. B. insuring a greater number of units increases the accuracy of the insurer's loss predictions. C. insuring a greater number of units increases the effect of statistical outliers on loss predictions. D. insuring a greater number of units makes the insurer's losses less predictable.
B. insuring a greater number of units increases the accuracy of the insurer's loss predictions.
Which of the following is excluded from liability insurance coverage? A. vicarious liability B. intentional acts of tort or wrongdoing C. carelessness D. unintentional acts of negligence
B. intentional acts of tort or wrongdoing
Which of the following is FALSE about Extra Expense coverage in a Business Owner's Policy? A. It pays to keep the business going after a loss to insured property. B. It provides up to 12 months of coverage. C. It begins 72 hours after the damage occurred. D. It's provided at no extra charge to the insured.
C. It begins 72 hours after the damage occurred.
Which of the following is FALSE regarding the Fine Arts Personal Articles Floater of Inland Marine Insurance? A. The "Pair and Set" condition includes the payment of the full scheduled amount and the surrender of any remaining pieces of the set to the insurer. B. Newly acquired pieces of fine art get automatic coverage for 90 days at a reduced percentage. C. Newly acquired pieces of fine art get automatic coverage at 50% of the total limit of scheduled items. D. Unlike other types of property, fine art gets agreed value coverage.
C. Newly acquired pieces of fine art get automatic coverage at 50% of the total limit of scheduled items.
Which of the following is NOT one of the four types of Ocean Marine Insurance? A. Cargo Coverage B. Hull Coverage C. Prevention & Insurance D. Freight Insurance
C. Prevention & Insurance
Which of the following is NOT one of the requirements that a "Specialty Contractor" must meet in order to qualify for a Businessowners Policy? A. Annual sales of $3,000,000 or less B. Work on buildings of no more than three stories C. Subcontracted work makes up 30% or less of sales D. Annual payroll of $300,000 or less
C. Subcontracted work makes up 30% or less of sales
An adjuster's preliminary claim report should: A. update the insurer every 30 days with any new or important information. B. list the disposition of the claim. C. establish a claim reserve. D. list all of the evidence of the claim.
C. establish a claim reserve.
An insurance policy's declarations page contains all of the following, EXCEPT: A. the deductible. B. the dates of the policy term. C. the perils insured against. D. the coverage limit.
C. the perils insured against.
XYZ Shipping is sending a cargo ship across the Pacific and wants an Ocean Marine policy that will pay the full amount of the policy in the event of a total loss. XYZ Shipping needs their policy written on a/an __________ basis. A. actual cash value B. unvalued C. valued D. freight value
C. valued
_______ authority is directly granted to an agent in writing via the agent's contract. A. Contract B. Implied C. Apparent D. Express
D. Express
Which of the following statements about flood insurance is FALSE? A. Flood insurance policies are often sold as "write your own" policies B. Flood insurance rates are based on the location of the insured property. C. Flood insurance is sold through private insurers. D. Flood insurance rates are determined by private insurers.
D. Flood insurance rates are determined by private insurers.
Tom has two commercial property policies covering his warehouse. Policy A is the primary policy and has a $200,000 limit, and Policy B is an excess policy with a $100,000 limit. After a fire causes $140,000 in damage to his warehouse, how will each of Tom's policies respond (ignoring any deductible)? A. Policy A will pay $70,000 and Policy B will pay $70,000. B. Policy A will pay $93,333 and Policy B will pay $46,667. C. Policy A will pay $40,000 and Policy B will pay $100,000. D. Policy A will pay $140,000 and Policy B will pay $0.
D. Policy A will pay $140,000 and Policy B will pay $0.
The limit of liability for Coverage B - Other Structures is typically: A. chosen by the insured. B. 10% of Coverage A. C. 50% of Coverage A. D. 20% of Coverage A.
B. 10% of Coverage A.
Which of the following would NOT be covered under a Personal Watercraft Policy? A. Roman's outboard motor boat that he is using on Lake Michigan B. Angela's speedboat while she is cruising about 18 miles off the coast of Florida C. Robert's fishing boat that he is using to deep sea fish about 10 miles off the coast of Puerto Rico D. Pierre's pontoon that he floats throughout the Canadian lakes
B. Angela's speedboat while she is cruising about 18 miles off the coast of Florida
Chrystal and Craig were renting an apartment from Sandra. However, they skipped out on three month's rent and moved out, leaving behind $1,200 in damage to the apartment. Altogether they owe Sandra $3,300; so Sandra files a civil suit against them. In this case, Chrystal and Craig are: A. a tortfeasor. B. a joint tortfeasor. C. an intentional tort. D. the plaintiffs.
B. a joint tortfeasor.
Processing and service businesses, such as beauty shops and dry cleaners, must meet which qualifications to be eligible for a Business Owner's Policy? A. 7,500 square feet or less of retail floor space and maximum occupancy does not exceed 75 customers B. Maximum of two stories and annual sales under $3 million C. Annual sales under $3 million and no more than 25% of sales occurring off-premises D. Annual sales under $2 million and no more than 25% of floor space is open to the general public
C. Annual sales under $3 million and no more than 25% of sales occurring off-premises
What is the minimum limit for Coverage L of the Personal Liability Supplement in a dwelling policy? A. None B. $1,000 C. $10,000 D. $100,000
D. $100,000
Company Q has a BOP with a Protective Safeguards endorsement that lists a sprinkler system. What does this endorsement do? A. It adds coverage for indirect losses that Company Q sustains because of the activation of their sprinkler system. B. It schedules the sprinkler system with its own coverage limit. C. It adds coverage for water damage caused by a leaking sprinkler system. D. It requires that Company Q have an operational sprinkler system in order for coverage to apply.
D. It requires that Company Q have an operational sprinkler system in order for coverage to apply.
Which of the following statements about insurance is NOT true? A. The insured pays for peace of mind provided by the insurer. B. The insurer takes on the insured's risk of financial loss for a premium. C. The insurer promises to pay for any covered losses that may occur. D. The insurer will only pay up to the amount already collected in premiums from each insured.
D. The insurer will only pay up to the amount already collected in premiums from each insured.
_________________ covers losses to ships and their cargo. A. Ocean Marine insurance B. Inland Marine insurance C. Commercial Property insurance D. Boiler and Machinery insurance
A. Ocean Marine insurance
Which of the following would not be covered by Coverage C - Personal Property in a homeowners policy? A. Pets B. Furniture C. Clothes D. Food
A. Pets
A windstorm causes damage on a property covered by a DP-2 form. There is downed fencing, some furniture in the dwelling gets water damage from rainwater that entered through a hole in the wind-damaged roof, and a tree is blown down. Aside from the damaged roof, what, if anything, is covered? A. The fencing and the furniture B. The fencing, the furniture, and the tree That is incorrect. The fence is covered under Coverage B and the furniture is covered under Coverage C. Trees and plants are not covered for wind damage. C. There is no coverage for a wind loss under a DP-2 D. The fencing only
A. The fencing and the furniture
Deana has Personal Injury Protection coverage in her PAP. Which of these injuries would NOT be covered by Deana's PIP? A. Tom suffers neck injuries when Deana rear-ends him at a stop sign. B. Deana's son is injured when his school bus collides with another vehicle. C. Deana's teenaged daughter is injured in a car accident while riding as a passenger in her friend's car. D. Deana's friend, Linda, gets hurt in an accident while borrowing Deana's car to pick up her kids from school.
A. Tom suffers neck injuries when Deana rear-ends him at a stop sign.
Carrie is a member of the Benevolent and Protective Order of the Elks. As such, she receives discounts on things like hotels, bike tours, online shopping, and insurance. She decides to purchase a $20,000 whole life insurance policy through the Order of the Elks. This is possible because the Elks are: A. a fraternal benefit society. B. a mutual insurance company. C. a stock insurance company. D. a reciprocal insurance group.
A. a fraternal benefit society.
When a flood inundates Peter's property, it causes $150,000 in damage to his home and $20,000 in damage to his detached garage, which includes an apartment that he rents to his friend Jim. Peter has a Dwelling Form flood policy with a $200,000 limit. If he decides to apply the maximum amount of coverage possible to his garage, how much of the repairs will be covered? A. $2,000 B. $20,000 C. $0 D. $15,000
C. $0
In order to be considered "fully insured" at 80% or more, Richard must carry at least $240,000 in insurance coverage on his home. What is the value of Richard's home? A. $192,000 B. $240,000 C. $300,000 D. $216,000
C. $300,000
Which of the following is NOT an exclusion commonly found in the Standard Fire Policy? A. Ordinance or law B. Earthquake C. Lightning D. Flood and water damage
C. Lightning
Common law is based upon: A. written laws promulgated by the federal government. B. state law. C. court decisions and customs. D. tort law.
C. court decisions and customs.
In a Commercial Auto Policy, Symbol #8 represents: A. owned private passenger autos. B. non-owned autos. C. hired autos. D. specifically described autos.
C. hired autos.
After wrecking her car on an icy road, Lilly filed a claim with her insurer, ABM Insurance, who dispatched Richard to investigate her claim. Who is the principal in this scenario? A. ABM Insurance B. This information is not provided in the scenario. C. Lilly D. Richard
A. ABM Insurance
After being rear-ended by Kacy, Alicia filed a claim against Kacy's insurer, NED Insurance. NED dispatched their adjuster, Ulric, to investigate the claim. Who is the claimant in this scenario? A. Alicia B. Ulric C. Kacy D. NED Insurance
A. Alicia
Which of the following will be covered under Harry's DP-3 policy? A. Janice swerves off the road and plows through Harry's kitchen wall with her car. B. A large bird flies into Harry's living room window and cracks it. C. Wind blows down a $400 tree in Harry's front yard. D. Harry's neighbor Bob puts smudge pots all over his orchard to protect the trees from frost, and the smoke seeps into Harry's house and causes tremendous smoke damage.
A. Janice swerves off the road and plows through Harry's kitchen wall with her car.
Every insurance policy will have at least four sections. Which of the following is NOT one of them? A. Subrogation B. Declarations Page C. Conditions D. Exclusions
A. Subrogation
A reservation of rights: A. lets the insurer begin to investigate a claim, without later being forced to pay it if it turns out not to be covered. B. is a letter that needs to be signed by the policyholder. C. informs the policyholder that his claim has been denied. D. means that the insurer does not need to defend a policyholder in court.
A. lets the insurer begin to investigate a claim, without later being forced to pay it if it turns out not to be covered.
An umbrella liability policy: A. may cover risks not covered in an underlying policy. B. can't act as a primary policy. C. won't cover professional liability. D. only covers what the base policy covers.
A. may cover risks not covered in an underlying policy.
Jill was forced to close her convenience store and evacuate because of a strong hurricane that hit her town. Jill was not allowed to reopen her store for two weeks, so she lost two full weeks of income. Which additional coverage would indemnify Jill for this loss? A. Law and Ordinance Coverage B. Business Interruption Insurance C. Business Owners Liability Insurance D. Extra Expenses Coverage
B. Business Interruption Insurance
Lucille owns her own pottery business, making custom items such as bowls, vases, and artwork. A fire destroys her entire operation and Lucille files a claim with her insurer. Which of the following would be covered under Coverage C of the Building and Personal Property Coverage Form in her commercial property policy? A. A potter's wheel, permanently attached to the floor B. Lucille's employee's personal belongings stored in her locker C. Lucille's handtools that she uses to decorate her pottery D. Raw clay and finished pottery pieces
B. Lucille's employee's personal belongings stored in her locker
Under the Earthquake endorsement in a homeowners policy, one or more earthquake shocks that take place within a _____ period are considered one earthquake. A. 12-hour B. 36-hour C. 72-hour D. 120-hour
C. 72-hour
Laura has just found out that she is being sued for malpractice because she accidently left a surgical sponge inside a patient before stitching him up 18 months ago. Four months ago, she purchased a Claims Made Medical Professional Liability insurance policy with a $2,000,000 limit and a retroactive date set at two years. Which of the following statements is true? A. This claim would not be covered because the surgery took place before Laura purchased the policy. B. If she loses the case and the amount of damages awarded is less than $2,000,000, her insurer will pay the entire amount plus all legal fees, regardless of the amount. C. Laura is not covered because she caused bodily injury to the patient. D. The insurer cannot settle the case without Laura's permission.
D. The insurer cannot settle the case without Laura's permission.
Paul and his wife have three separate insurance policies covering their home: Policy X with a limit of $100,000, Policy Y with $50,000, and Policy Z with $25,000. These policies are set up to pay covered claims by contribution of equal shares. After a fire causes $125,000 in damage to their home, how much will each policy pay (ignoring any deductibles)? A. Policy X pays $50,000; Policy Y pays $50,000; and Policy Z pays $25,000 B. Policy X pays $71,250; Policy Y pays $36,250; and Policy Z pays $17,500 C. Each policy pays $41,667 D. Policy X pays $100,000; Policy Y pays $12,500; and Policy Z pays $12,500
A. Policy X pays $50,000; Policy Y pays $50,000; and Policy Z pays $25,000
Jared is fishing from his 22-foot sailboat when he is caught in a sudden hailstorm. His boat suffers extensive hail damage. When he files a claim against his homeowners policy, he is upset to learn that his claim is denied because: A. the boat was not fully enclosed inside a building during the hailstorm. B. damage to sail boats is not covered by a homeowners policy. C. a homeowners policy will only cover watercraft smaller than 20 feet. D. damage to sail boats is only covered by endorsement.
A. the boat was not fully enclosed inside a building during the hailstorm.
Quincy is in court attempting to convince the jury through a preponderance of evidence that his insurer is deliberately withholding his rightful indemnification for his property claim. In which type of legal proceeding are Quincy and his insurer currently involved? A. Criminal trial B. Civil trial C. Contributory negligence hearing D. Comparative negligence hearing
B. Civil trial
Caitlin works as a driver for a local oil company. She picks up the field workers and drops them at the wellsite. Then, once their shift is completed she brings them home again using the company van. Which endorsement provides the best coverage for Caitlin? A. Customized Equipment B. Extended Non-Owner C. Miscellaneous Vehicle D. Non-Owner
B. Extended Non-Owner
Gary accidentally tripped over his own feet while shopping at Acme Hardware, breaking his arm and knocking out two teeth in the process. Which of the following statements is TRUE? A. Acme Hardware's CGL will not cover Gary's expenses because Gary's injuries were his own fault, not that of Acme Hardware. B. Medical Payments coverage in Acme Hardware's CGL will pay for both Gary's medical and dental expenses. C. Medical Payments coverage in Acme Hardware's CGL will pay for Gary's medical expenses, but not his dental expenses. D. Operations liability coverage in Acme Hardware's CGL will pay for Gary's medical expenses, but not his dental expenses.
B. Medical Payments coverage in Acme Hardware's CGL will pay for both Gary's medical and dental expenses
A garage policy is almost identical to a BAP, but it covers which two additional hazards? A. Products & Completed Operations and Freezing B. Premises & Operations and Products & Completed Operations C. Mechanical Breakdown and Premises & Operations D. Mechanical Breakdown and Freezing
B. Premises & Operations and Products & Completed Operations
Skip's Convenience Store must agree to install and maintain an emergency shutoff system for its gas pumps in order to qualify for insurance coverage. Which of the following statements is true? A. This requirement is a binder found in the conditions section of the policy. B. This requirement is a warranty found in the conditions section of the policy. C. This requirement is a warranty found in the declarations section of the policy. D. This requirement is a representation found in the declarations section of the policy.
B. This requirement is a warranty found in the conditions section of the policy.
Tom works for Home Improvement Corporation. One day Tom reports to work and is told to deliver a load of lumber to a customer in his truck. Tom loads up the lumber and heads off to the client's house. On the way, he runs a red light and causes an accident. Why might Tom's PAP liability insurance deny coverage to Tom? A. Tom broke the law when he ran the red light, making him at fault for the accident. B. Tom's accident occurred during employment related activities, so it would be covered by the employer's liability. C. Tom needed a commercial license to use his truck for work purposes. D. Tom's accident occurred when using his truck for "transport" purposes, which excludes it from coverage.
B. Tom's accident occurred during employment related activities, so it would be covered by the employer's liability.
Jackie recently inherited a life-sized marble statue of her great-grandfather. It is an irreplaceable antique, and it is nearly impossible to determine the ACV. Which type of policy would best indemnify Jackie in the event that the statue was ever damaged? A. Replacement cost policy B. Actual cash value policy C. Agreed value policy D. Franchise deductible policy
C. Agreed value policy
William owns a construction business and is insured with a Commercial General Liability policy. After three weeks of work, William finally completes the porch he has been building for a client. A week later, the stairs to the porch collapse and the client is injured. Which hazard coverage would help William with the porch liability claim? A. Product Liability B. Operations Liability C. Completed Operations Liability D. Premises Liability
C. Completed Operations Liability
When a fire breaks out in Bill's small woodworking business, it quickly builds momentum by igniting the scrap wood and other building materials. The fire department manages to contain and extinguish the fire, but the inside of the shop needs some serious repair. During these repairs, Bill cannot fill his orders and loses vital income. Which additional coverage could help replace Bill's lost income? A. Electronic Data Processing Insurance B. Valuable Papers Business Insurance C. Time Element Insurance D. Fire Insurance
C. Time Element Insurance
When ABC Shipping's vessel comes into port too quickly, it crashes into the docks, mangling the bow and throwing the ship's contents all over the place. The crash triggered a fire in the engine room, which spread to the rest of the ship, destroying it completely. Even though it is possible to rebuild the ship, there are so many structural problems it will cost more to repair than the total value of the vessel. Therefore, the insurer would consider the ship a/an: A. particular average loss. B. actual total loss. C. constructive total loss. D. general average loss.
C. constructive total loss.
"Non-quantifiable risks" and "intentional losses" are examples of ________ commonly found in the Standard Fire Policy. A. insurable risks B. conditions C. exclusions D. covered perils
C. exclusions
Larry accidentally left a candle burning when he went to sleep one night, and his house caught fire. Larry disagrees with the amount of the adjuster's estimate to repair the damage, so he and his insurer have each chosen a representative, and the two representatives have also mutually decided upon an umpire. These three individuals will attempt to reach a settlement amount, and if at least two of them agree, the decision will be legally binding. What type of negotiation technique are Larry and his insurer using? A. Mediation B. Arbitration C. Litigation. D. Appraisal
D. Appraisal
Which of the following adjusters is acting improperly as a fiduciary agent? A. Brenda investigates a claim and decides the losses are covered. She issues a settlement check to the claimant and closes the claim. B. Tony is assigned to adjust a claim submitted by his brother. He decides to give the case to a co-worker to avoid a biased decision. C. John calculates that the property damage he is investigating could easily bankrupt the claimant, but he denies the claim because the peril that caused the loss is excluded by the policy. D. Marjorie is trying to calm a claimant who is very upset, so she tells him that she is sure the loss is covered, even though she has not yet determined the cause of loss.
D. Marjorie is trying to calm a claimant who is very upset, so she tells him that she is sure the loss is covered, even though she has not yet determined the cause of loss.
Scott is visiting his insurance agent's office and applying for auto insurance on his new car. The auto policy that the agent drafts will be based on Scott's___________. A. warranties B. promises C. subrogation D. representations
D. representations
A Reservation of Rights letter is sent by: A. the policyholder to the insurance company. B. by the claimant to his legal counsel. C. a third party to the responsible first party. D. the insurer to the claimant.
D. the insurer to the claimant.
Which of the following parts of a vehicle would NOT be covered under a Mechanical Breakdown insurance policy? A. Body panels B. Electronics system C. Transmission D. Air conditioning system
A. Body panels
In the context of Inland Marine Insurance, a "bailee" is: A. an individual who leaves property in the care, custody, and control of another. B. an individual or company who receives the property of another for a special purpose. C. another name for a policyholder under a Personal Articles Floater. D. an individual or company that ships goods by truck, train, boat, or plane.
B. an individual or company who receives the property of another for a special purpose.
In a personal auto policy, Collision coverage: A. pays for physical damage to the vehicle caused by a rollover. B. excludes coverage for damage caused by the insured. C. excludes coverage for damage to any non-owned vehicle the insured may be driving. D. is a mandatory coverage.
A. pays for physical damage to the vehicle caused by a rollover.
In a Business Owners Policy, Business Income coverage: A. provides coverage from 72 hours after a loss occurs, up to a maximum of 180 days. B. provides coverage immediately after a loss occurs, up to a maximum of 180 days. C. provides coverage from 72 hours after a loss occurs, up to a maximum of 12 months. D. provides coverage immediately after a loss occurs, until the business can return to normal operations.
C. provides coverage from 72 hours after a loss occurs, up to a maximum of 12 months.
As a fiduciary agent, an adjuster has the power to bind the insurer. Therefore, which of the following statements is FALSE? A. Only an adjuster's written statements can legally bind an insurer. B. When adjusting a claim, an adjuster's actions are legally considered those of the insurer itself. C. The insurer grants this power to the adjuster in a written contract. D. Even if an adjuster made a mistake in determining the value of the loss, the insurer must pay that amount.
A. Only an adjuster's written statements can legally bind an insurer.
Which of the following statements is true? A. Replacement cost valuations are usually beneficial to the policyholder. B. A valued policy will always indemnify a policyholder utilizing actual cash value valuation. C. In determining how much to indemnify a policyholder in a replacement cost policy, an insurer must analyze how long the policyholder has owned the insured item. D. Actual cash value generally reflects what it would cost to replace an item at current prices
A. Replacement cost valuations are usually beneficial to the policyholder.
Which of the following items is NOT one of the loss conditions of inland marine insurance? A. Unless the item is considered salvaged, the insured must abandon the property to the insurer. B. Recovery or salvage from a loss will be payable to the insurer, up to the sum the insurer paid out on the claim. C. Rights of recovery from any loss paid by the insurer transfer to the insurer. D. The appraisal condition applies if the insurer and insured don't agree on the value of the loss.
A. Unless the item is considered salvaged, the insured must abandon the property to the insurer.
Mr. Lee has a disruptive tenant who throws loud parties, trashes the apartment, and leaves trash in the common areas. When she fails to pay rent, Mr. Lee finally begins the lengthy eviction process. One day, after a heated telephone exchange, Mr. Lee decides he has had enough and storms into the tenant's apartment and begins throwing her belongings out on the street. This invasion of privacy is an example of what type of personal injury covered under Mr. Lee's CGL policy? A. Wrongful Entry B. Eviction Protection C. Libel and Slander D. Malicious Prosecution
A. Wrongful Entry
Stephan's insurer denied his claim because the peril was not covered. But, according to Stephan's understanding of the policy, his loss should be covered, so he filed a dispute. During the trial, the jury agreed that the policy language was open to interpretation, so they decided in favor of Stephan. This is because: A. insurance policies are contracts of adhesion. B. insurance policies are conditional contracts. C. insurance policies are contracts of utmost good faith. D. insurance policies are personal contracts.
A. insurance policies are contracts of adhesion.
Oswald can't afford to take his car to a shop, even though it is falling into disrepair. The windshield has been cracked for some time, and two of the lights are broken, not to mention the oil leak he noticed last week. While he is driving on icy roads one day, he loses control and slides into a guardrail, damaging the front bumper. He is upset by the accident, but then sees an opportunity. He files a claim for the accident, stating that the windshield, lights, and oil tank were damaged by the collision. Oswald's actions constitute: A. soft fraud. B. a physical hazard. C. hard fraud. D. a morale hazard.
A. soft fraud.
Roxanne bought her 50" TV four years ago for $2,400. During a storm, her house was struck by lightning and the current fried her TV. The TV depreciates at $400 per year and a similar TV costs $1,200 today. Assuming Roxanne's homeowners policy has a replacement cost endorsement for personal property, how much can she expect to receive in indemnification for her damaged TV? A. $0 B. $1,200 C. $2,400 D. $800
B. $1,200 the TV is four years old and has depreciated $400 per year. This means the total depreciation = $1,600. The replacement cost is $1,800. So, subtract $1,600 from $1,800 and you get $200.
All of the following are true of the liability coverage in a Business Owner's Policy, except: A. Coverage is provided for both bodily injury and property damage from business operations and premises. B. Coverage is provided on a "claims-made" basis. C. Coverage comes with a series of separate aggregate limits. D. Coverage is provided for product and operation liability.
B. Coverage is provided on a "claims-made" basis.
An adjuster has several tasks to complete during the adjusting process. All of the following are examples of the types of tasks an adjuster may be required to perform, EXCEPT: A. Suzanne calls Gary about his hail claim to schedule a time when she can come out and look at his roof. B. During a meeting with Darlene, Mindy collects various pieces of information and writes an auto policy for Darlene to purchase. C. David crawls up into Ian's attic to check for the source of the water damage to his ceiling. D. Matt collects various pieces of information and writes an estimate for the amount of indemnification he believes Sara is due.
B. During a meeting with Darlene, Mindy collects various pieces of information and writes an auto policy for Darlene to purchase.
Missy lives on the top floor at Lakewood Condominiums. One day, a windstorm severely damages the building, including structural damage, broken windows, and interior water damage to most of the units. Part of the roof over Missy's unit is torn off by the high winds, and the rain ruins her furniture and hardwood floors. Which of these losses would be covered by Missy's HO-6 policy? A. Missy would be indemnified for all of the damage to her unit, including the roof, furniture, and hardwood floors. B. Missy would not receive any indemnification because all of the damage would be covered under Lakewood Condominiums' policy. C. Missy would be indemnified for her furniture, but the roof and floors would fall under Lakewood Condominiums' policy. D. Missy would be indemnified for her furniture and floors, but not the roof.
B. Missy would not receive any indemnification because all of the damage would be covered under Lakewood Condominiums' policy.
Linda's home is worth $525,000. She has a homeowners policy with a $500,000 limit and a 1.5% deductible. When Linda's husband sets their kitchen on fire while frying a turkey, he accidentally causes $36,000 in damages. How much can Linda and her husband expect to receive in their settlement? A. $28,125 B. $35,460 C. $28,500 D. $35,125
C. $28,500 That is incorrect. Linda is fully insured with $500,000 in coverage. Her policy has a 1.5% deductible. 1.5% of 500,000 = 7,500. So, when she suffers a $36,000 loss, her settlement will be $36,000 minus $7,500 which equals $28,500.
The Hometown Paint store burns down one night, and almost everything is destroyed. Which of the following items would NOT be covered under Coverage B in the store's commercial property policy? A. Computers used for matching paint colors B. A small, portable table top paint mixer C. A large paint mixer permanently affixed to the floor D. Paint and supplies for sale
C. A large paint mixer permanently affixed to the floor
Julio has filed a claim for fire damage to his home, but he is worried that his insurer may not cover the loss. When the insurance adjuster has finished investigating and evaluating the damage, she tells Julio that his loss is covered. However, he remains skeptical and wonders aloud whether the insurer will feel the same way as she does. The adjuster quickly assures Julio that he does not need to worry about that. Why might she be so sure of herself? A. She is wrong to speak with such confidence, because the claim should be reviewed by the insurer before deciding whether the loss is covered. B. As the adjuster, she is responsible for making the claimant happy, regardless of the outcome of the claim. C. As the insurer's fiduciary agent, she has the authority to make decisions on behalf of the insurer. D. As a fiduciary agent, she is only responsible for reporting the outcome of the claim once an executive has made a final decision about it.
C. As the insurer's fiduciary agent, she has the authority to make decisions on behalf of the insurer.
While driving the company car on business, Jack causes an accident with a bus carrying a sports team. Five people were injured in the accident, and the injuries totaled $240,000. Jack's company's business auto policy only covers up to $100,000 in bodily injury per accident. Which of the following would help cover the remaining liability caused by Jack's accident? A. Commercial general liability policy B. Extended liability policy C. Excess liability policy D. Business owners policy
C. Excess liability policy
What is the main difference between a Full Release Settlement and a No Release Settlement? A. In a No Release Settlement, the claimant signs a release form to release the insurer from additional claims; in a Full Release Settlement, the claimant does not sign a release form. B. A No Release Settlement can be used for any type of claim, whereas a Full Release Settlement is generally only used for property damage claims. C. In a Full Release Settlement, the claimant signs a release form giving up the right to additional indemnification; in a No Release Settlement, the claimant does not sign a release form. D. In a Full Release Settlement, the claimant is indemnified at replacement cost; in a No Release Settlement, the claimant receives no indemnification.
C. In a Full Release Settlement, the claimant signs a release form giving up the right to additional indemnification; in a No Release Settlement, the claimant does not sign a release form.
Sharon's SUV has a mechanical breakdown while she was driving to work, so she had it towed to an auto repair shop. The inspection showed that the transmission failed. Sharon files a claim on her MBI policy, but her insurer denied the claim. Which of the following would be a valid reason for this denial? A. The transmission is not covered under an MBI policy. B. The transmission is covered under her regular auto insurance policy. C. Sharon has not had the transmission fluid changed according to the manufacturer's recommendations. D. The vehicle has more than 50,000 miles.
C. Sharon has not had the transmission fluid changed according to the manufacturer's recommendations.
In which situation would Utility Service - Time Element coverage apply? A. An electrical circuit shorts at Bill's Butcher Shop during a tropical storm, causing a power outage. Despite Bill's best effort to preserve his inventory, half of the meat in his freezer goes bad during the outage. B. Elsa's Paper Company burns to the ground when a faulty wire starts a fire. C. Steve's Software Solutions loses power for two days when a bolt of lightning damages the power station. Steve experiences a significant loss of income during the outage. D. After a tornado causes a pipe to burst at Justine's Donut Shop leaving her without water for days, Justine is forced to rent a new space in order to keep her business functioning.
C. Steve's Software Solutions loses power for two days when a bolt of lightning damages the power station. Steve experiences a significant loss of income during the outage.
Marcel's home is valued at $495,000 and he carries a homeowner's policy with a limit of $400,000 and a 2% deductible. During an ice storm, the weight of the ice on a tree in Marcel's front yard causes a large limb to break off and fall on his house, causing $27,200 in damage. How much will Marcel receive in his settlement for this claim? A. $8,000 B. $26,656 C. $27,200 D. $19,200
D. $19,200 (The 2% deductible comes from the policy limit 400,000 X .02 = 8,0000 which you take out of the total damages 27,200 - 8,000= 19,200)
DEC Construction is completely remodeling Randall's department store. DEC Construction is in charge of the project, but hires Mac Electric (an independent contractor) to complete the electrical work, and requires Mac to have Owners & Contractors Protective Liability for the job. Who retains ultimate control over this policy? A. Randall's and Mac Electric B. Mac Electric C. Randall's D. DEC Construction
D. DEC Construction
Tom is an experienced insurance agent looking for a new job where he works for one insurer and has the responsibility of training and supervising other agents. Which of the following would best fit the type of job Tom is looking for? A. Captive Agent B. Independent Agent C. Direct Writer D. General Agent
D. General Agent
