PA Q&A
Lucy has insured her one-family home under a standard HO-3 form with a Coverage A limit of $100,000. If she suffered a $100,000 loss to her covered dwelling, how much coverage would be provided under Coverage B for her unattached garage on the premises?
$10,000.
Leland has two insurance policies covering his home. Indemnify Insurance carries a $120,000 limit of liability on the home, while Binders Keepers, Inc. carries a limit of $80,000. A fire breaks out in Leland's kitchen and causes $40,000 in damage. Remember, when there are two or more policies covering the same risk, the "other insurance clause", determines the method used to calculate each company's share of the claim. Leland's policy states that the pro-rata share method will be used. Which of the following is the correct amount that will be paid by Indemnify Insurance?
$24,000
Which of the following is the additional limit provided by a standard Businessowners policy "Debris Removal" in the event that the policy limit is exhausted in paying the loss?
$25,000.
Isabelle's home in Illinois was damaged by a fire that occurred on April 2nd. Isabelle signed a contract with Ivor, a public adjuster on April 5th. Which of the following dates is the last day Isabelle may cancel her contract with Ivor?
10 days = April 15
Jason has his home covered by a Dwelling policy with Coverage C included. When he transports covered property temporarily off the premises, it is destroyed by fire. How much coverage does Jason have to cover his destroyed property?
10% of the Coverage C amount
Carpeting is calculated on a per yard basis. There are nine feet in a square yard. Determine the square footage of the room by multiplying the width by the length of the room and divide by nine. This will give you the number of square yards of carpet and padding needed to complete the room. NOTE TO STUDENT: You cannot take a calculator into the state licensing exam with you. You will need to calculate this on your own, so practice practice!
12x12 beadroom = 16 yards
Under the 1943 New York Standard Fire Policy, how many days of coverage applies to the removal coverage when the insured property is endangered by the perils insured against?
5 days.
Melinda's insurance policy is cancelled because she has not paid the premium. In this scenario, which of the elements of a valid contract is missing?
A valuable consideration.
In Illinois, "adjusting insurance claims" means all of the following, EXCEPT:
Advising a claimant to sue the insurer for a larger settlement.
Which of the following most closely describes a claim reserve?
An amount expected to be ultimately paid on an open claim.
Under the Personal Articles Floater, a loss is covered when it occurs:
Anywhere in the world, except for fine arts. i
The duties of the insured after a loss are included in insurance policy language to:
Assist in the adjuster's investigation of the claim
All of the following statements are TRUE regarding the Flood Coverage Endorsement to the Commercial Property policy, EXCEPT:
Back-up or overflow of a sewer or drain is covered if that overflow occurs within 48 hours after the flood recedes and the overflow was caused by the flood. (covers for 72 not 48)
Which of the following would NOT be covered by an Equipment Breakdown policy?
Bodily injury.
Before an insured can bring a lawsuit against their insurer to provide coverage under their policy, the insured must:
Fulfill all of their required duties as outlined in the policy.
A method of replacing damaged property with something not exactly like the damaged item, but will perform in a similar fashion is known as:
Functional replacement cost.
An Illinois public adjuster license will contain all of the following information, EXCEPT:
How many years the PA has held his license
The increased cost of compliance coverage on flood insurance provides I. Policy limit coverage for ordinance and law changes. II. Coverage for flood plain management ordinance or law changes. III. $30,000 of coverage per building.
II and III only.
An insured has taken an inventory of his merchandise and discovers a substantial shortage of valuable stock. He submits a claim to his insurance carrier that provides his coverage under a Businessowners Policy. What coverage is provided by the BOP for the missing inventory?
No coverage would apply.(There is no coverage for missing property when there is no physical evidence to show the cause of loss. The only proof of loss is an inventory calculation and that is not enough evidence for coverage to apply under the BOP.)
The NAIC Model Unfair Claim Settlement Practices Act specifies that when a violation of the Act is suspected, a hearing must be held:
Not less than 30 days after notice has been provided to those involved.
All of the following items have a special limit of liability for Coverage C of the Homeowners forms, EXCEPT:
Outdoor furniture.
Aiden is reimbursed by his insurance company for the cost of a new sofa, after a 10-year-old sofa is destroyed by fire. Which of the following best describes the loss settlement method used in this situation?
Replacement cost value.
The principle of indemnity is illustrated by which of the following?
Restores an insured to the same condition enjoyed before a loss
If a shed roof is 10 X 20 feet, how many bundles of shingles would be needed to roof the shed?
Six The shed is 200 square feet. Two squares are needed. One square covers 100 square feet. There are 3 bundles per square so a total of 6 bundles are needed.
Soraya is a company adjuster who is investigating a third-party claim submitted by Chris. Soraya is a new adjuster and wants to be sure she does not waive any of the insurer's rights under the policy so she sends a reservation of rights letter to Chris. Which of the following statements is TRUE in this situation?
Soraya should not have taken this action because a third-party claimant has no rights or obligations under the policy.
The "control of property" condition of the Commercial Property policy
States that a negligent act of someone beyond the insured's direction or control will not affect the coverage.
The "Common Policy Conditions" of a Commercial Package Policy:
States that to properly rate the policy, the insurer has the right to examine the books and records of the insured company
A 100-year flood is an example of which of the following types of risk?
Static risk
Which of the following statements is TRUE concerning the Businessowners policy?
The BOP is a type of package policy that prepackages a group of coverage desirable to small businesses.
Which of the following Dwelling Insurance forms is also referred to as the "Dwelling Fire" form?
The DP-1 form.
Which of the following Dwelling forms provides "open peril" coverage for dwellings and other structures?
The DP-3 special form.
Carol is covered under a Commercial Property policy with an Earthquake & Volcanic Eruption -- Sprinkler Leakage Only Endorsement attached. Which of the following statements is correct regarding Carol's deductible under the endorsement?
The flat dollar deductible for fire applies.
A claim reserve is set "statistically" by using which of the following reserving techniques?
The formula method
Manny is purchasing a Commercial Property policy with a Business Income form included. Manny can select from any of the following as a method to provide coverage, while avoiding the coinsurance requirement, EXCEPT:
The maximum monthly limit of indemnity optional coverage.
Joan is covered for $10,000 under a personal articles floater for her jewelry. She acquires another piece of jewelry valued at $2,500. Under the automatic coverage provision for newly acquired property within the policy, how much coverage would apply to the newly acquired jewelry for 30 days?
The policy provides for 25% of the limit of insurance to apply to newly acquired jewelry of the same class for a period of 30 days. SO $2500
Illinois public adjuster contracts must contain all the following, EXCEPT:
The social security number or federal ID number of the public adjuster.
The "additional coverages" of the Homeowners forms pay for all of the following losses, EXCEPT:
The sudden cracking of a hot water heating system within the insured dwelling. ( Bc this one isn't additional coverge. it comes already with it
Sam has shoplifted a gift basket from Gina's Gifts to give to his girlfriend for her birthday. Sam has committed:
Theft
Which of the following is NOT TRUE regarding surety bonds?
They are an agreement that in exchange for a premium, the surety will indemnify the obligee.
Which of the following statements is TRUE regarding non-waiver agreements and reservation of rights letters?
They are used only with first-party claimants to protect the rights of insureds and insurers
What is the purpose of an Insurance Guaranty Association?
To pay covered claims of admitted insolvent insurers.
A FAIR Plan is created in a state:
To provide property policies for purchase in the residual insurance markets to those whose properties are located in "high risk" areas preventing them from obtaining insurance in the usual markets.
Which inland marine form covers single shipments of property?
Trip transit policy.
Under "pollution cleanup and removal" coverage under the standard ISO BOP form, when must a loss be reported?
Within 180 days.
Illinois insurance companies must offer to pay claims within ______ after the affirmation of liability.
Within 30 calendar days.
An Illinois public adjuster licensee has moved his business address. He must notify the Director:
Within 30 days
The Illinois Director of Insurance may suspend, revoke, deny, or refuse to issue a public adjuster license and/or impose a civil penalty for all of the following acts, EXCEPT:
Working as an independent adjuster, even if appointed by the insurer to act in that capacity.
Which of the following zones is not expected to flood during the "base flood"?
X zones
Nina has the "Preservation of Property" additional coverage included in her standard Businessowners policy. How long does coverage apply while the property is being stored at another location?
30 days from the day the property was first moved.
If an Illinois insurer pays the policy limit on a claim within _______ after the loss is reported, the public adjuster hired by the claimant cannot collect a commission consisting of a percentage of the claims payment.
5 days
Under the Standard Fire Policy, how many days advance notice does the insurer have to give before cancelling a policy?
5 days.
The "Common Policy Conditions" apply to which coverage parts of a Commercial Package Policy?
: All coverage parts of the policy.
In order to lawfully write insurance business in a state, an insurance company must hold:
A certificate of authority
In Illinois, a "pertinent communication" made to an insurance company or their adjuster regarding a claim means
A communication that is materially related to the handling of the claim
Any intentional misinformation provided by an applicant for an insurance policy that would have kept the insurance company from issuing the policy had that information been known is:
A material misrepresentation.
Lightning strikes a 50-foot oak tree in an insured's yard splitting the tree in half. The tree falls hitting several small trees causing extensive damage to the trees and scattering debris in the yard. The HO-2 Homeowners Policy will pay:
A maximum of $500 per tree.
Which of the following statements best describes the term "fiduciary".
A person who is entrusted with the assets of another.
A formal request to an insurance company requesting a payment according to the terms of an insurance contract is known as:
An insurance claim.
The NAIC Unfair Claim Settlement Practices Act is intended to cover all of the following types of insurance claims, EXCEPT:
Boiler & Machinery (Equipment Breakdown) insurance claims
\.The NAIC Unfair Claim Settlement Practices Act is intended to cover all of the following types of insurance claims, EXCEPT:
Boiler & Machinery (Equipment Breakdown) insurance claims
Which of the following would be ineligible for coverage under an NFIP policy?
Buildings with 60% of their actual cash value underground.
Which of the following is a TRUE statement regarding how bullion and manuscripts are covered under the 1943 New York Standard Fire policy?
Bullion or manuscripts may be covered, but only if they are specifically named in the policy
Which of the following is a TRUE statement regarding how bullion and manuscripts are covered under the 1943 New York Standard Fire policy?
Bullion or manuscripts may be covered, but only if they are specifically named in the policy.
The endorsement used to report the insured's actual and estimated business income under an Equipment Breakdown policy is called:
Business income—Report of Values form.
Coverage B of Section I of the Businessowners policy provides coverage for:
Business personal property.
Which of the following is NOT an "other coverage" of the DP-1 form?
Collapse (The "other coverage" for collapse is included on the DP-2 and DP-3 forms but not the DP-1.)
Which of the following statements is TRUE regarding Commercial Property coverage?
Commercial property coverage can be written as both a monoline policy and as part of a package policy
An applicant fails to disclose known facts when completing an application for insurance. This act is known as:
Concealment
Which of the following would be paid under the Business Income form of a standardized Commercial Property policy?
Coverage for continuing operating expenses while damaged property is being repaired
With a Commercial Package Policy, a combination of forms and endorsements that provide a particular line of coverage is referred to as a:
Coverage part
After a blizzard, the roof on the insured's home collapsed because the ice and snow was so heavy. This damage would be covered under which of the following forms?
DP-2 form.
How do you calculate the number of square yards of carpeting and padding needed for a room
Determine the square footage of the room and divide by nine
Which of the following would be covered by a Commercial Inland Marine policy?
Domestic shipments.
The NAIC Model Unfair Claim Settlement Practice Act DOES NOT apply to any of the following types of coverage, EXCEPT
Dwelling insurance
The NAIC Model Unfair Claim Settlement Practice Act DOES NOT apply to any of the following types of coverage, EXCEPT
Dwelling insurance.
All of the following are types of "agent authority" bestowed upon an adjuster with an appointment, EXCEPT:
Evident authority.
The broad coverages described in the insuring agreements contained within an insurance policy are narrowed by:
Exclusions
The authority that is specifically provided to an adjuster (orally or in writing) by the insurance company who has appointed that adjuster is known as:
Express authority.
An insured has intentionally deceived his insurer in order to a higher settlement amount on a claim. Such an act is known as:
Fraud
The Illinois Director has made the decision to revoke the license of a public adjuster after it was determined that she violated several Illinois insurance codes. In addition to revoking the license, the Director can:
Impose a civil penalty of up to $10,000 for each violation, not to exceed a total of $100,000
Which of the following additional coverages provided by the Building and Personal Property coverage form applies only to buildings to which the replacement cost optional coverage applies?
Increased Cost of Construction (The "Increased Cost of Construction" additional coverage only applies when the replacement cost optional coverage has been selected and purchased by the insured.)
A non-waiver agreement is taken more seriously in a court of law because:
It is signed by the insured.
All of the following are general exclusions of all the Dwelling forms for Coverages A & B, EXCEPT:
Loss caused by the explosion of a water heater in the insured dwelling
What is the main difference between arbitration and mediation in dealing with coverage disputes in the claims adjusting process?
Mediation is not binding on the parties involved, but with arbitration the decision is final and binding.
Dana lives in a state that has passed a Valued Policy Law (VPL). This means that insurers issuing property policies in the state:
Must pay the full limit of the policy, stated on the Declarations page, in the event of a total loss.
Which of the following is NOT a coverage extension on the Building and Personal Property coverage form?
Outdoor property up to a maximum of $500.(The coverage extension for outdoor property provides coverage up to a maximum of $1,000, not $500.)
Which of the following is NOT eligible for a coverage under a Homeowners insurance policy?
Owner-occupants of a 5 to 6-family dwelling.
The Building & Personal Property Coverage form of the Commercial Property program includes some optional coverages. Which of the following is the optional coverage that changes the standard valuation condition of the form, but keeps the coinsurance provision in place?
The Replacement Cost Valuation optional coverage
Which of the following statements best describes the "Efficient Proximate Cause Doctrine"?
Two or more perils that are dependent on each other because one peril instigated the other perils
