P&C
The 1980 Act requires FCIC to offer one price election that is not less than what percent of the projected market price for the commodity?
90%
Which of the following statements is NOT true regarding mobile agricultural machinery and equipment coverage? This coverage must be written as part of farm coverage. It relates to devices used in the everyday farm operation. It covers detached parts and accessories of mobile devices. It insures eligible equipment for open perils.
This coverage must be written as part of farm coverage.
What is the basic limit for costs incurred at the place a vehicle is disabled provided by the towing and labor costs endorsement?
$25
In addition to income benefits, how much will a dependent survivor receive as a funeral benefit for a deceased employee covered under Workers Compensation?
$3,000
A covered watercraft was damaged in an accident. The actual cash value of the damaged property was assessed at $10,000. The cost of repairs for the watercraft was assessed at $5,000. The insured's watercraft policy is written with a $25,000 limit. How much will the insurer pay for coverage to damage to the watercraft?
$5,000
Once it has been reasonably proven that a person has knowingly violated the Insurance Code regarding unfair methods of competition, the Department may impose a civil penalty of
$5,000 for each violation.
All of the following are special personal property limits under a homeowners policy EXCEPT $1,500 for trailers not used with watercraft. $2,500 for theft of firearms. $500 for business personal property on the insured premises. $1,500 for securities, accounts, deeds, and evidences of debt.
$500 for business personal property on the insured premises.
An insured hits a deer and crashes his car into a tree. The total damage to the vehicle is $6,000. How will this loss be covered?
$6,000 would be paid under other-than-collision coverage.
An insured has a personal auto policy with both comprehensive (other-than-collision) and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20 per day, how much will his policy pay?
$60
Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to
10 years.
A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy?
175,000
What is the maximum number of boarders per unit that would be allowed in the homeowners policy?
2
If the actual values exceed the limit of insurance, the businessowners policy (BOP) contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by
25%.
When an auto insurance policy is cancelled by the insurer for an allowable reason other than nonpayment of the premium, how much prior notice must be given to the named insured?
30 days
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
What is the maximum length of time that an employee who is partially disabled can receive loss of time benefits under Workers Compensation?
500 weeks
Under Workers Compensation, the employer or insurance company must designate how many health care providers from which an injured employee may seek care?
6
What is the required limit of insurance in the coinsurance clause for Coverage F - Unscheduled Farm Personal Property?
80%
Coverage F - Unscheduled Farm Personal Property is subject to a coinsurance clause of
80%.
The employee theft crime policy includes a coverage extension that applies to employees temporarily outside the coverage territory for up to
90 days.
When Mary decided to sue her neighbor for damages to her yard, she was told to get a bond that would guarantee she would be able to pay court costs and resulting damages if she loses the case. What kind of bond is this?
A cost bond
A tornado that destroys property would be an example of which of the following?
A peril
Which of the following statements is true regarding the premium computation for workers compensation insurance?
A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis.
When other insurance is written on the same basis as a commercial property policy, the obligation of the insurer is to cover
A share of the loss.
An insured owns and operates a ranch. The insured has several vehicles that are used in the ranching operation and for personal use. Which of the following could NOT be insured under a personal auto policy? A station wagon that is used personally A two-ton grain truck with a 6,500-pound capacity A two-wheeled trailer designed to be towed by the station wagon A farm pickup with 1,000-pound capacity
A two-ton grain truck with a 6,500-pound capacity
In a personal auto policy, the medical payments coverage is similar to
Accident insurance, because it pays medical expenses regardless of fault.
Crime insurance is usually written on what basis?
All-risk
If the ocean marine contract pays the ACV of the property just prior to the loss, it is
An indemnity contract.
Which coverage form would provide coverage for all incoming and outgoing shipments?
Annual transit
Ocean marine policies commonly refer to the person covered by the policy as the
Assured.
Business personal property coverage form covers all of the following EXCEPT Automobiles held for sale. Furniture and fixtures. Machinery that is not permanently installed. Stock.
Automobiles held for sale.
An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined?
Benefits will be provided if the state was listed on the policy information page.
Which of the following would be included in the farm liability coverage forms? Bodily injury to any person who is an insured Bodily injury to an employed farmhand Bodily injury to a residence employee Any obligation of the insured under a workers compensation law
Bodily injury to a residence employee
Under farm liability, Coverage H includes
Bodily injury.
A professional who wants coverage for all liability exposures should purchase what form of liability insurance?
Commercial general and professional
Which of the following risks is eligible for coverage under a businessowners policy?
Condominiums
Which of the following statements is true concerning the special form dwelling policy?
Coverage A is for all-risk perils, and Coverage C is for the broad form perils.
In a farm policy, which of the following coverages would reimburse the insured for loss of rental income following damage to the insured dwelling by an insured peril?
Coverage D
Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy?
Damage to the dwelling caused by lava or dust from a volcanic eruption
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?
Defamation
States with monopolistic state workers compensation funds
Do not allow private insurers to be licensed to write workers compensation coverage
The American Institute's Hull Clause for the Return of Premium will apply if a vessel has been laid up in port not under repair, and not used for storage. The premium will be returned for
Each 30-day period.
Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will
Either pay or defend as it decides.
How often must the Commissioner examine rating organizations?
Every 5 years
What type of coverage do umbrella policies provide?
Excess coverage over an underlying or primary policy
All of the following are excluded in the equipment breakdown basic policy EXCEPT Ordinance or law coverage. Business interruption. Loss of power, lights, heat, steam, or refrigeration. Explosion of steam boilers.
Explosion of steam boilers.
Which of the following is an example of an unfair claims settlement practice?
Failure to promptly settle a claim when liability has been clearly established
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair Credit Reporting Act
Which of the following statements would be an example of a product liability claim?
Faulty packaging of a cereal caused spoilage that resulted in someone getting sick.
If an insurer changes a form that it uses to transact insurance, it must do which of the following?
File the form with the Commissioner for approval
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act?
Fraud
Elaborate homes and those with detailed designs or decorative architecture with replacement costs greater than ACV or market value are insured on
HO-8.
Under which of the following circumstances can financial institutions share insurance coverage information with third parties, for the purpose of soliciting the purchase of insurance? Whenever it is requested by the Commissioner Under no circumstances; nonpublic personal financial information cannot be shared with third parties If a consumer decides to opt out If a consumer does not sign and return the notice of disclosure within 30 days
If a consumer does not sign and return the notice of disclosure within 30 days
If a farm building or structure is vacant or unoccupied, which is true?
If for 120 consecutive days, the limits applicable to the building and its contents are reduced by 50%.
All of the following are conditions commonly found in the insurance policy EXCEPT Subrogation. Appraisal. Insuring agreement. Cancellation and nonrenewal.
Insuring agreement.
The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the
Insuring agreement.
Which of the following is defined as a covered cause of loss in businessowners property coverage?
Leakage from fire-extinguishing equipment
Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss?
Liability coverage
Which of the following is the basis for a claim against an insurance policy?
Loss
Which rating method provides an insurer with that portion of a rate that does not include provisions of expenses (other than adjusting expense) or profit and is based on historical aggregate loss and loss adjustment expenses projected through development to their ultimate value and through trending to a future point in time?
Loss costs rating
All of the following are exclusions under farm property coverage EXCEPT Flood. Loss of use. Earth movement. Ordinance or law.
Loss of use.
Which of the following is NOT true concerning the fair rental value coverage provided in a dwelling policy? Loss or expense caused by the cancellation of a lease is covered. It pays for the loss of rent you would have collected less any expenses that would not have continued. Coverage continues until repairs are completed. The period of time to repair or replace is not limited by the expiration date of the policy.
Loss or expense caused by the cancellation of a lease is covered.
Coverage A - Bodily Injury and Property Damage in the commercial general liability policy will cover
Losses due to the insured's negligence.
An insured purchases a Difference in Conditions policy. It may contain all of the following characteristics EXCEPT No coinsurance clause. Flood and earthquake coverage. Exclusion for named perils. Low deductible.
Low deductible.
To comply with requirements for insurance for public liability under the Motor Carrier Act of 1980, which endorsement is added to motor carrier coverage form?
MCS-90
Which of the following is the term used when a person in a fiduciary position has used assets in manner for which they were not intended such as the wrongful taking or use of money belonging to another?
Misappropriation of funds
Ro/ro ships are used to transport
Motor vehicles.
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report
Must be informed of the source of the report.
Which of the following terms refers to other insurance that is written on the same risk, but not on the same coverage basis?
Nonconcurrency
The HO-3 homeowners policy provides
Open peril coverage on the dwelling and broad form coverage on personal property.
Which coverage would a business owner need in a crime policy to cover money that may be stolen from a messenger?
Outside the premises
The party to a surety or fidelity bond who promises to fulfill the obligation is the
Principal.
Which inland marine coverage condition says that an insurer will settle with the actual owners of property involved in a loss?
Privilege to adjust with the owner
A situation in which a person can only lose or have no change represents
Pure risk.
All of the following are penalties a producer may face for violating the insurance laws of this state EXCEPT Re-examination. A monetary fine. Imprisonment. License revocation.
Re-examination.
If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?
Reasonable expectations
What method do insurers use to protect themselves against catastrophic losses?
Reinsurance
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
Respond to the consumer's complaint.
Jim owns and operates the "No-tell Motel". He wishes to purchase a crime coverage that will pay for the loss of a customer's property left in the motel's safe for safe-keeping, whether or not the motel is legally responsible for such loss. He should purchase
Safe Depository or Direct Loss.
Under the commercial property coverage program, the basic causes of loss form insures against loss caused by
Sprinkler leakage.
All of the following are unfair claims settlement practices EXCEPT Failing to acknowledge pertinent communication pertaining to a claim. Suggesting negotiations in settling the claim. Refusing to pay claims without conducting a reasonable investigation. Failing to adopt and implement reasonable standards for settling claims.
Suggesting negotiations in settling the claim.
All of the following are unfair claims settlement practices EXCEPT Suggesting negotiations in settling the claim. Refusing to pay claims without conducting a reasonable investigation. Failing to adopt and implement reasonable standards for settling claims. Failing to acknowledge pertinent communication pertaining to a claim.
Suggesting negotiations in settling the claim.
Which of the following symbols is available to an insured with vehicles subject to no-fault coverage?
Symbol 5
Who is NOT considered an employee in a commercial general liability (CGL) policy?
Temporary worker
Which of the following may NOT be included in an insurance company's advertisement? An identification of a limited policy as a limited policy That its policies are covered by a state Guaranty Association The policies' limitations or exclusions The name of a specific agent
That its policies are covered by a state Guaranty Association
Which of the following entities established the Do-Not-Call Registry?
The Federal Trade Commission
The amount an insurer will pay under Coverage D (Loss of Use) depends on
The amount of coverage on the dwelling.
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
The customer's associates, friends, and neighbors provide the report's data.
Which of the following losses would be covered under the property damage liability coverage of a personal auto policy?
The insured damages a rented garage when he failed to stop in time.
Personal property coverage under a homeowners policy would cover
The insured's camera if it is stolen while the insured is on vacation.
If another governmental agency takes legal action against a licensee, whose responsibility is it to report the action?
The licensee
An agent tries to sell insurance over the phone to an applicant who appears to be confused, but is eventually able to give enough information for the application to be completed. After the policy was issued, the agent talked to the insured's family, and they explained that the insured was recovering from a surgery and might have been under the influence of medication at the time of application. Which of the following is true?
The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of application.
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of
Twisting.
Uncle Billy's Burger Bar was forced to close for 10 days in August when the power company's transformer was destroyed by lightning, and Uncle Billy was without electricity. Which of the following endorsements could be added to Billy's businessowners policy that would provide protection against loss of income from such events?
Utility services - time element endorsement
Which of the following would NOT be considered part of the insured location under the liability section of a homeowners policy? A residence where an insured is temporarily residing A family cemetery plot A lakeside cabin rented by the insured for vacation Vacant farmland owned by the insured
Vacant farmland owned by the insured
Under the business auto coverage form, mobile equipment is covered for liability insurance
When being carried or towed by a covered auto.
A claim is considered to have been made
When notice is received and recorded by any insured or the insurer, whichever comes first.
When would uninsured motorist coverage apply?
When the other party is legally liable but has no insurance
The bankruptcy provision found in the personal auto policy states that bankruptcy of the insured
Will not relieve the insurer of its policy obligations.
How soon after the due date should the insurer pay the agent appointment fees?
Within 30 days
The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information
Within 45 days.
What is the civil penalty for violating a cease and desist order of the Commissioner?
$10,000
The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss?
$160,000
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
Terrorism Risk Insurance Program Reauthorization Act of 2015 has extended the TRIA to the year
2020.
A recent college graduate bought a new car and is trying to get automobile insurance on it as required by the lienholder. After being rejected by several insurance companies due to his driving record, he finally talked to an agent who can get him coverage. His agent called him a residual market risk. From which type of automobile insurance plan can the applicant purchase insurance?
Assigned risk
Which of the following describes the transfer of a legal right or interest in an insurance policy?
Assignment
When the Commissioner suspects that a person is violating an insurance law or other regulation, what can be issued that would order the person to stop committing the act of violation?
Cease and Desist Order
Which of the following is an additional coverage that is covered by the broad causes of loss form?
Collapse
Which of the following is NOT covered under the Utility Services - Time Element endorsement? Damage to the insured's property caused by utility service disruption Loss of business income arising from loss of utility service caused by an insured peril Extra expense incurred to remain open for business following the loss of utility service caused by a covered peril None of the above would be covered.
Damage to the insured's property caused by utility service disruption
Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as
For inspections and examinations.
Replacement cost is defined as
Full replacement of property at its current cost, new and without reduction for depreciation.
All of the following are licensing requirements for a business entity, EXCEPT Demonstrating general fitness, competence, and reliability. Maintaining on staff at least 1 licensed person in good standing. Applying for a license in the same lines of authority as held by licensed designees. Having all employees complete continuing education courses once every 2 years.
Having all employees complete continuing education courses once every 2 years.
A BOP (businessowners policy) is most similar to
Homeowners.
Under the Motor Vehicle Financial Responsibility Law, First Party Benefits would NOT be denied for which of the following injuries?
Injury incurred while the person was under the influence of drugs or alcohol
An insurance producer fails to obtain automobile insurance for client after agreeing to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. The damage to the other vehicle totals $5,000. Which statement regarding the producer's errors and omissions liability policy is true?
It will provide coverage because the damage to the client resulted from the producer's negligence.
If an employer in a state with elective workers compensation laws chooses not be to subject to those laws, what does the employer lose?
Its common law defenses against liability suits
Which of the following types of property would be covered in homeowners coverage forms?
Landlord furnishings in an on-premises apartment
What type of coverage does a homeowners policy include that a dwelling policy does not?
Liability
Rates that are established based on the similarities of the risk with other risks are known as
Manual rates.
What is not a consideration when paying an inland marine claim?
Market value when the property was first purchased
A common exclusion found under physical damage to your auto includes
Mechanical breakdown.
When is a hired and nonowned auto liability endorsement available in a businessowners policy (BOP)?
Only if the insured does not have commercial auto coverage
Which of the following homeowners endorsements covers liability exposures arising from an incidental business conducted within a building on the residence premises? Special limit of liability Professional liability Business income - report of values Permitted incidental occupancies
Permitted incidental occupancies
Which of the following licensees is classified as a representative of the insurance company and not allowed to represent an insured or claimant?
Producer
At the time of loss insured against in a property and casualty policy, the insurer's claim settlement options include all of the following EXCEPT Paying the value of the lost or damaged property. Replacing the property with other property of a lesser kind or quality. Paying the cost of repairing or replacing the lost or damaged property. Taking all or part of the property at an agreed or appraised value.
Replacing the property with other property of a lesser kind or quality.
Workers compensation statutes require employers to meet capital reserves requirements sufficient to pay any claims that might arise. Employers can meet such obligations through all of the following EXCEPT Self-insurance plans. Assigned risk plans. Competitive state funds. Second injury funds programs.
Second injury funds programs.
Which of the following is a formal program developed by an employer to fund its losses as an alternative to the purchase of insurance?
Self-insurance
Which of the following entities must approve all continuing education courses in this state?
The Commissioner
Negligence is defined as
The failure to do what a reasonable prudent person would do under given circumstances.
The common policy condition is a modular part combined with other parts to create the contract. The common policy condition section contains provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy?
The first named insured may cancel the policy at any time by giving written notice to the insurer.
Under the "limited tort insurance" option, an insured may not seek recovery for pain and suffering or other nonmonetary damages UNLESS
The injuries fall within the definition of "serious injury."
If more than one person has an insurable interest in the property covered under a dwelling policy,
The insurer will be liable for only the insured's interest in the damaged property.
On a DP-3 Dwelling Property Special Form policy, the coverage provided for personal property is
The same as provided on the DP-2 Broad Form.
A trucking business swaps trailers with other carriers. What coverage is necessary to cover loss to the other's trailer while in the borrower's possession?
Trailer interchange coverage
In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for
Uninsured motorist coverage.
Frank's Steaks furnishes meat to steakhouses. An accident on the premises causes the building to lose refrigeration for 32 hours. The state inspectors will not allow the meat in the refrigerating units to be sold for human consumption, and Frank loses $18,500 in disposing of the meat. What coverage under Frank's BOP policy will cover the loss?
Utility service - direct damage
Which of the following is an example of an unfair claims settlement practice? Making claims payments which clearly indicate under which coverage payment has been made Using arbitration when the insured and insurer cannot reach agreement Failure to promptly settle a claim when liability has been clearly established Denying coverage after a reasonable investigation has been conducted After a claim has been adjusted and is found to be covered under the policy, the insurer must pay the claim upon receipt of a signed proof of loss.
Failure to promptly settle a claim when liability has been clearly established
A shipping company has a fleet of small cargo ships. One of its ships ran aground and was seriously damaged. The insurance agreed the value of the ship was $800,000, but it would cost $870,000 to replace the ship. The insurer paid $800,000 for the ship. What coverage would be needed to pay this claim for the full amount needed to replace the ship?A shipping company has a fleet of small cargo ships. One of its ships ran aground and was seriously damaged. The insurance agreed the value of the ship was $800,000, but it would cost $870,000 to replace the ship. The insurer paid $800,000 for the ship. What coverage would be needed to pay this claim for the full amount needed to replace the ship?
Increased value and excess liability clause
In a dwelling policy, which of the following is true regarding personal liability coverage?
It must be added as a supplement or written as a separate policy.
Extended nonowned coverage endorsement in a PAP broadens which of the following coverages?
Liability and medical payments
Which of the following is NOT true concerning the fair rental value coverage provided in a dwelling policy? Loss or expense caused by the cancellation of a lease is covered. It pays for the loss of rent you would have collected less any expenses that would not have continued. Coverage continues until repairs are completed. The period of time to repair or replace is not limited by the expiration date of the policy.
Loss or expense caused by the cancellation of a lease is covered.
A business uses its own trucks to deliver their own products to the customer. Which commercial auto coverage form should the business buy to insure the trucks?
Motor carrier coverage
A loss has occurred before the first report has been filed on a value reporting coverage form. Which is NOT true? Full amount of loss up to the policy limit is paid if the loss occurs before the first report due date. 75% of the loss is paid if the loss occurred after the first report due date. Never more than 75% of the loss is paid. Provisional premium is based on 75% of the full amount of coverage.
Never more than 75% of the loss is paid.
When an insurer cancels an auto policy for an allowable reason, they must give notice to the named insured of possible eligibility for coverage through the Pennsylvania Auto Insurance Plan, unless the reason for cancellation is
Nonpayment of premium.
All of the following are parts of a personal auto policy EXCEPT Duties after an accident or loss. Liability coverage. Physical damage coverage. Medical payments coverage.
Physical damage coverage.
What are the two types of compensatory damages?
Special and general
For the purpose of insurance, risk is defined as
The uncertainty or chance of loss.
Which of the following will NOT be considered unfair discrimination by insurers? Assigning different risk classifications to applicants based on gender identity Discriminating in benefits and coverages based on the insured's habits and lifestyle Charging applicants with similar health histories different premiums based on their ethnicity Cancelling individual coverage based on the insured's marital status Discriminating between individuals of the same class with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.
Discriminating in benefits and coverages based on the insured's habits and lifestyle
