P&C 1

Insurance companies incorporated under the laws of foreign countries are called: A)Domestic companies. B)Foreign companies. C)Alien companies. D)None of the above.

C)Alien companies.

When property is insured under two standard fire insurance policies, payment of a loss is: A)Shared proportionately according to the total amount of insurance. B)Paid first by the initial policy and then any excess by the second policy. C)Paid independently according to the limits of each policy .D)Shared equally until the limit of the lower policy is exhausted, then the other policy pays the remainder up to its face amount.

A)Shared proportionately according to the total amount of insurance

After a loss has occurred, proof of loss must be filed with the company within: A)30 days.B)45 days.C)60 days.D)No time limit.

C)60 days.

What procedure is prescribed by a fire policy when the insured and company fail to agree upon the amount of a loss? A)The disagreement must be settled by a court of law. B)The loss must be submitted to an independent adjusting firm. C)Each party selects an appraiser, who in turn, selects an umpire, and any two determine the amount of loss. D)The agent shall act as intermediary and arbitrate the loss.

C)Each party selects an appraiser, who in turn, selects an umpire, and any two determine the amount of loss.

With property insurance, an insurable interest: A)Must be present at the time the policy is taken out and also at the time of the loss. B)Must be present at the time the policy is written but is not necessary at the time of the loss. C)It is not necessary at the time the policy is written but is necessary at the time of the loss. D)Is not necessary at the time the policy is written or when the loss occurs.

C)It is not necessary at the time the policy is written but is necessary at the time of the loss.

How many days will a fire policy provide coverage on property moved to another location to protect it from further damage? A)5 days.B)10 days.C)15 days.D)30 days.

A)5 days

Which of the following is the correct term when a contract is prepared by one party and submitted to the other party on a take-it or leave-it basis and where there is no bargaining power on the wording of the contract? A)Adhesion.B)Aleatory.C)Conditional.D)Valued contract.

A)Adhesion.

All of the following procedures would reduce the risk of adverse selection EXCEPT: A)Inclusion of a deductible. B)Rating-up substandard risks. C)Common policy exclusions. D)Endorsements waiving a specific condition from the coverage.

A)Inclusion of a deductible

Under the Insurance Information and Privacy Protection Act, an authorization for information disclosure in property and casualty insurance is in effect for: A)One year.B)Two years.C)Three years.D)Four years.

A)One year.

An insurance contract is a unilateral contract which means that: A)Only the insurer makes an enforceable promise. B)Both parties must give up something of value. C)Contract provisions are not required. D)Both parties must perform with utmost good faith.

A)Only the insurer makes an enforceable promise.

The clause in the standard fire policy that specifies the amount of recovery when more than one policy exists on the same property is called: A)Pro-rata liability. B)Co-insurance. C)Actual cash value. D)Pro-rata distribution

A)Pro-rata liability.

All of the following are methods of handling risk EXCEPT: A)Risk elimination.B)Risk transfer.C)Risk retention.D)Risk reduction.

A)Risk elimination

When the Commissioner intends to hold a hearing concerning an agent's trade practices, notice of the hearing must be given at least: A)5 days in advance. B)10 days in advance. C)20 days in advance. D)30 days in advance.

B)10 days in advance.

Which of the following practices are considered unfairly discriminatory? A)Refusal to issue property coverage due to the occupancy (use) of the structure. B)Adding a surcharge on automobile liability insurance due to the age of the operator. C)Placing coverage in a residual market due to information supplied by a consumer reporting service. D)Reducing rates for a specific class of insureds without reducing rates for all insureds.

B)Adding a surcharge on automobile liability insurance due to the age of the operator.

Which of the following terms means that the purchaser of insurance must be in a position to lose money or something of value if the contingency insured against should happen? A)Adhesion.B)Insurable interest.C)Indemnification.D)Indirect loss

B)Insurable interest.

Which of the following parts of an insurance contract would identify the nature of the coverage provided by the insurer? A)Endorsements. B)Insuring agreements. C)Conditions. D)Exclusions.

B)Insuring agreements.

Obtaining information through a personal interview where the agent does not accurately identify themselves is known as a(n): A)Consumer report. B)Pretext interview. C)Survey scam. D)Investigative consumer report

B)Pretext interview.

Obtaining information through a personal interview where the agent does not accurately identify themselves is known as a(n): A)Consumer report. B)Pretext interview. C)Survey scam. D)Investigative consumer report.

B)Pretext interview.

A peril can be defined as: A)The transfer of pure risk. B)The cause of a loss. C)A one-time event definite in time and place. D)A condition increasing the chance of loss.

B)The cause of a loss.

In order for two fire policies to be concurrent, they must cover: A)All real and personal property, as well as liability for an individual. B)The same interest against the same perils. C)All real and personal property of an individual. D)For both direct and indirect losses.

B)The same interest against the same perils.

When the extended coverage endorsement is attached to a standard fire policy: A)It is not written for the same amount as the fire policy. B)It does not apply to all items covered by the fire policy. C)It must apply to all items covered by the fire policy. D)It does not cost additional premium.

C)It must apply to all items covered by the fire policy.

A potential agent must have satisfied all of the following requirements prior to effectuating insurance coverage in this state EXCEPT: A)Received an appointment from an admitted insurer. B)Completed an educational course from an approved school. C)Posted a $50,000 surety bond. D)Received an insurance license from the Department of Insurance.

C)Posted a $50,000 surety bond.

Documentation required by an insurer from an insured to substantiate the specifics of a claim is known as a(n): A)Certificate of authority. B)Endorsement. C)Proof of loss. D)None of the above.

C)Proof of loss.

A deductible in an insurance contract is an example of which means of handling risk? A)Control.B)Avoidance.C)Retention.D)Transfer.

C)Retention

Which of the following acts of an agent would be considered an Unfair Trade Practice? A)Offering to review the applicant's insurance coverages annually. B)Allowing an existing customer to use the agent's season tickets to a sporting event. C)Stating that the marketing activities of another agent are under investigation. D)Informing the applicant that having a pool on the property may increase premiums.

C)Stating that the marketing activities of another agent are under investigation.

A building, insured under a standard fire policy, is damaged by fire for which another person is responsible. From whom will the insured receive payment for the loss? A)The insured has to try to collect from the person responsible. B)The insured can collect from the person responsible and also from the insurance company. C)The company will pay the loss,and will then require the insured to assign to them their right of recovery from the person responsible for the loss, to the extent paid by the company. D)The company will pay the insured the amount of the loss, and will expect the insured to collect from the person responsible, and then reimburse the company.

C)The company will pay the loss,and will then require the insured to assign to them their right of recovery from the person responsible for the loss, to the extent paid by the company.

If an insured cancels a SFP at the end of six months, what proportion of the premium must the company return to him? A)The insured is not entitled to a return of premium. B)The company will return exactly one-half of the annual premium. C)The company will return less than one-half of the annual premium. D)The company will return more than one-half of the annual premium.

C)The company will return less than one-half of the annual premium.

All of the following statements concerning property, casualty and personal lines insurance agents are true EXCEPT: A)They act on behalf of the insurer. B)They are authorized by contract to solicit insurance policies. C)They act on behalf of the insured. D)Their actions and knowledge are binding on the insurance company.

C)They act on behalf of the insured.

All of the following are essential elements in an insurance contract EXCEPT: A)Agreement.B)Consideration.C)Competent parties.D)Counter-offer.

D)Counter-offer.

The standard fire policy insuring agreement covers: I. Lightning. II. Removal of contents from endangered premises. III. Water damage caused by firemen putting out a fire at the insured premises. A)I only.B)II only.C)I and II.D)I, II, III.

D)I, II, III.

8. A mutual insurance company is: I. Controlled by stockholders. II. Owned by policyholders. III. Controlled by trustees and officers. A)I only.B)II only.C)III only.D)II and III.

D)II and III.

10. One of the following is considered to be a misrepresentation and is illegal: A)Circulating any derogatory statement calculated to injure any person engaged in the business of insurance. B)Issuing a true statement about the terms of a policy issued or to be issued. C)Returning a portion of the premium to the insured on a basis not specified in the contract. D)Issuing a statement that is not entirely true about the terms of a policy issued or to be issued.

D)Issuing a statement that is not entirely true about the terms of a policy issued or to be issued.

Which statement concerning the cancellation of a fire policy is true? A)If an insured requests cancellation of a fire policy, the unearned premium calculated on a pro-rated basis will be returned upon return of the policy to the company. B)When a company cancels a fire policy, it must give the insured 45 days notice before cancellation becomes effective. C)When a company cancels a fire policy, the unearned premium will be returned to the insured on a short-rate basis. D)When the company cancels a fire policy, the unearned premium calculated on a pro-rated basis will be returned to the insured.

D)When the company cancels a fire policy, the unearned premium calculated on a pro-rated basis will be returned to the insured.