P&C Test Review

Insurable interest in a property policy must be proven a) When a claim is paid. b) At the time of application. c) At the time of loss. d) When a policyowner is changed.

at the time of loss

A policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal do not agree on the value of a property loss is known as a) Appraisal. b) Coinsurance. c) Loss valuation. d) Third-party provision.

appraisal

According to the transportation network company regulations, while drivers are logged into the digital network and engaging in a prearranged ride, the driver's primary automobile insurance coverage must be in the amount of at least a) $100,000. b) $175,000. c) $1,000,000. d) $3,000,000.

$1,000,000

The All-industry Placement Facility accepts a commercial property risk on a warehouse valued at $2,500,000. Just 5 months later, a fire completely destroys the warehouse. The property owner will receive a) $2,500,000 b) $1,000,000 c) $200,000 d) A discounted amount based upon multiple factors.

$1,000,000

The pollutant cleanup and removal coverage in the businessowners policy has a limit of a) $5,000 in any 6-month period. b) $20,000 in any 6-month period. c) $10,000 in any 12-month period. d) $2,500 in any 12-month period.

$10,000 in any 12-month period

An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage? a) $15,000 b) $5,000 maximum for the accident c) $5,000 minus the policy deductible d) $14,000

$14,000

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? a) $80,000 b) $120,000 c) $160,000 d) $200,000

$160,000

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? a) $200,000 b) $100,000 c) $175,000 d) $180,000

$175,000

Tom's Truck Service's vehicle is stolen. The policyholder may obtain coverage for transportation expenses subject to which of the following limits? a) $25 per day; $450 maximum b) $20 per day; $600 maximum c) $15 per day; $300 maximum d) $15 per day; $450 maximum

$20 per day; $600 maximum

An auto dealer reported $500,000 worth of automobiles on its lot at the end of May to its insurer. On June 10, it received $200,000 worth of cars. By June 20, the dealership sold $100,000 worth of cars. A hail storm on June 21 caused $50,000 worth of damage to the inventory. Without considering any deductibles, how much will the insurer pay for damages? (Dollar amounts are rounded to the nearest hundred.) a) $35,700 b) $40,000 c) $41,700 d) $50,000

$41,700

According to state law, an employer will pay for the burial of their deceased employee. What is the maximum amount that the employer will have to pay for burial services? a) $7,500 b) They must pay the full amount c) $2,500 d) $5,000

$5,000

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? a) $45 b) $60 c) $75 d) $100

$60

Within the first 60 days of coverage under a dwelling policy, how much notice is required for the cancellation of a policy? a) 5 days b) 10 days c) 15 days d) 20 days

10 days

A licensed life insurance producer in Missouri completed 20 hours of continuing education credits in order to renew her license. How many hours of continuing education credit will this producer need to complete in order to renew her license the next term? a) 0 b) 12 c) 16 d) 10

12

Under the additional living expenses coverage, if a civil authority prohibits the insured from using the dwelling because of direct damage to a neighboring location from a peril covered in the insured's policy, loss would be covered for up to a) 90 days. b) 1 week. c) 2 weeks. d) 1 month.

2 weeks

An uninsured driver had his license suspended. For how long after license reinstatement will the insured have to file proof of reinstatement? a) 3 years b) 1 year c) 5 years d) 10 years

3 years

An employer carrying worker's compensation insurance must notify its employees within a) 7 days. b) 15 days. c) 30 days. d) 45 days.

30 days

How long is the waiting period after the application has been accepted before flood coverage goes into effect? a) 6 months b) 12:01 am the next day c) 5 days d) 30 days

30 days

The removal coverage included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long? a) 5 days b) 15 days c) 30 days d) 60 days

30 days

If the Director receives a report of a motor vehicle accident causing at least $500 in damage, how many days does he or she have to take action against the guilty driver? a) 90 days b) 120 days c) 30 days d) 60 days

90 days

The employee theft crime policy includes a coverage extension that applies to employees temporarily outside the coverage territory for up to a) 30 days. b) 60 days. c) 90 days. d) 120 days.

90 days

With respect to auto insurance, the term owned autos includes all of the following EXCEPT a) A pickup or van titled to and used in the named insured's business. b) Any private passenger auto titled to the named insured. c) A pickup or van acquired by the named insured during the policy period. d) Any private passenger auto leased to the named insured for a period of more than 6 months.

A pickup or van titled to and used in the named insured's business.

All of the following actions could be grounds for the Director to suspend or revoke an insurance license EXCEPT a) A producer demonstrates a lack of trustworthiness or competence. b) A producer uses poor judgment in binding a risk. c) A producer is convicted of a felony. d) A producer has their license suspended or revoked in another state.

A producer uses poor judgment in binding a risk.

What is a Certificate of Insurance? a) A written document obligating the insurer to the person to which the insurance was issued b) A written document naming the insured's beneficiary c) A written document allowing the insurer to inspect the insured's books d) A written document showing the types and amounts of insurance that have been issued to the insured

A written document showing the types and amounts of insurance that have been issued to the insured

Which of the following is NOT covered under accounts receivable coverage form? a) Expenses to reestablish the records, if possible, and collection expenses that are in excess of normal costs b) Any loans required to offset uncollectible amounts c) Interest on loans required to offset uncollectible amounts pending payment of the insurance proceeds d) Sums due the insured that are uncollectible due to a covered loss

Any loans required to offset uncollectible amounts

Before the Director will issue a license, a person must meet all of the following qualifications EXCEPT a) Pass an examination for each line for which a license is sought. b) Be appointed to represent at least one authorized insurance company. c) Be at least 18 years of age. d) File an application with the Director.

Be appointed to represent at least one authorized insurance company.

The Director can revoke an insurance producer license for any of the following causes, EXCEPT a) Pass an examination for each line for which a license is sought. b) Be appointed to represent at least one authorized insurance company. c) Be at least 18 years of age. d) File an application with the Director.

Be appointed to represent at least one authorized insurance company.

An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined? a) The legal system will determine which state's benefits apply to this particular loss. b) The state's benefits that pay the lowest amount will be selected by the insurance company. c) The employee may elect to receive benefits from both the home state and the state in which the injury occurred. d) Benefits will be provided if the state was listed on the policy information page.

Benefits will be provided if the state was listed on the policy information page.

The ABC Corporation has $100,000 of coverage on its building through insurance Company A, and $50,000 of identical coverage on the same building through insurance Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs and the pro rata method is used, how much will each insurer pay? a) Company A will pay $20,000; Company B will pay $4,000. b) Company A will pay $12,000; Company B will pay $12,000. c) Company A will pay $24,000; Company B will pay $0. d) Company A will pay $16,000; Company B will pay $8,000.

D) Company A will pay $16,000; Company B will pay $8,000.

An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay? a) The first policy written will pay $75,000, and the other three policies will contribute proportionately to pay for the remaining $25,000. b) The policy with the earliest effective date will pay the entire loss, and the other policies will pay nothing. c) Each policy will pay $25,000 of the loss. d) Each policy will pay the total policy limits of $100,000.

Each policy will pay $25,000 of the loss

Replacement cost is defined as a) The market value of property of like kind and quality. b) Full replacement of property with like kind and quality, less an allowance for physical deterioration and depreciation. c) Payment of the full policy limits in the event of a total loss. d) Full replacement of property at its current cost, new and without reduction for depreciation.

Full replacement of property at its current cost, new and without reduction for depreciation.

If an insured needs protection on property other than money and securities inside the premises from losses caused by breaking and entering after business hours, which of the following Crime Coverage forms should be purchased? a) Robbery and Safe Burglary b) Extortion c) Theft, Disappearance and Destruction d) Inside Premises - Robbery or Burglary of Other Property

Inside Premises - Robbery or Burglary of Other Property

The Director can revoke an insurance producer license for any of the following causes, EXCEPT a) Licensee is charged with bank robbery. b) Violation of any insurance law in another state. c) Licensee fails to comply with an administrative or court order imposing a child support obligation. d) Licensee providing materially incorrect or untrue information in the license application.

Licensee is charged with bank robbery.

Under the dwelling policy, Coverage C - Personal Property is a) A prohibited coverage in the dwelling form. b) Limited to 50% of the amount of insurance that is written as Coverage A. c) Limited to covering a servant's property while at the insured location. d) Automatically provided as 50% of Coverage A.

Limited to covering a servant's property while at the insured location.

Individuals who are entitled to purchase auto liability insurance but unable to obtain it in the normal market a) May apply for coverage from the Missouri Automobile Insurance Plan. b) Must make a cash deposit with the state or secure a surety bond proving financial responsibility. c) May apply to the Basic Property Insurance Placement Program. d) Must turn in their drivers' licenses.

May apply for coverage from the Missouri Automobile Insurance Plan.

Which of the following entities is responsible for assisting applicants in securing basic property insurance and issuing policies under the Missouri Basic Property Insurance and Placement Program? a) The program itself b) The Department of Insurance c) The All-industry Placement Facility d) The Inspection Bureau

The All-industry Placement Facility

An insured's accounts receivable records have been damaged. The loss may be covered with a) Commercial property insurance. b) The commercial articles coverage form. c) The valuable papers coverage form. d) The accounts receivable coverage form.

The accounts receivable coverage form.

If a company has transacted insurance in this state without a Certificate of Authority, which of the following is true of its obligations for the policies sold? a) The company can still be liable for its policies in any court of this state. b) The company's financial obligations will be transferred to the Guaranty Association. c) The company cannot be sued in this state. d) The company is only liable for policies sold within the scope of the Certificate of Authority.

The company can still be liable for its policies in any court of this state.

Which of the following statements is true regarding the commercial general liability policy's Coverage C - Medical Payments? a) The coverage is considered good will because payments are made without regard to fault. b) The coverage applies to bodily injury to the named insured. c) The coverage is liability insurance because it pays only if the insured is legally liable. d) The coverage provides high limits of insurance for bodily injury losses.

The coverage is considered good will because payments are made without regard to fault.

Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy? a) The insured is injured while driving his motorcycle on his resident premises. b) The insured's friend is injured in an accident while riding as a passenger in the insured's car. c) The insured's mother is injured while exiting from the insured vehicle. d) The insured is struck by another vehicle while crossing the street.

The insured is injured while driving his motorcycle on his resident premises.

Under the limits of insurance provision found in the Physical Damage Coverage Form in a Commercial Auto policy, how much will an insurer pay to repair or replace a covered auto? a) The greater of the replacement cost value or the cost to repair or replace a covered auto b) The lesser of the actual cash value or the cost to repair or replace a covered auto c) The greater of the actual cash value or the cost to repair or replace a covered auto d) The lesser of the replacement cost value or the cost to repair or replace a covered auto

The lesser of the actual cash value or the cost to repair or replace a covered auto

Missouri law requires that the records of insurance transactions kept by producers must be orderly. What does that mean? a) The records must be ready for examination at the producer's home office. b) The records must be retrievable within 5 days upon request. c) The records must be kept in storage. d) The records must be properly alphabetized.

The records must be retrievable within 5 days upon request.

Which common policy condition prohibits the insured from changing the rights or duties as defined under the policy to any other person or entity without the written consent of the insurance company? a) Reassignment and modification b) Changes c) Transfer of rights and duties under the policy d) Subrogation

Transfer of rights and duties under the policy

In forming an insurance contract, when does acceptance usually occur? a) When an insurer delivers the policy b) When an insurer receives an application c) When an insured submits an application d) When an insurer's underwriter approves coverage

When an insurer's underwriter approves coverage

A claim is considered to have been made a) When notice is received and recorded by any insured or the insurer, whichever comes first. b) When received in writing or telephonically by the insurer. c) When notice is received by any insured. d) When notice is received and recorded by the insurer.

When notice is received and recorded by any insured or the insurer, whichever comes first.

Coverage under a Floor Plan Merchandise form is written on a reporting form basis that requires the insured to file reports with the insurer. What is the time frame for those reports? a) By the 15th of each month b) 20 days after the report is due c) Within 30 days after the end of each month d) Within the first 10 days of each month

Within 30 days after the end of each month

A binder is issued to an applicant, but it is never replaced by a policy because of information discovered about the applicant. What action must be taken on the part of the insurer? a) The applicant must be provided a contact in the Medical Information Bureau. b) The insurer must provide a Binder Expiration Notice. c) A binder premium charge must be made. d) No action must be taken.

a binder premium charge must be made

Which of the following would be covered by the broad theft endorsement on a dwelling policy? a) A camera the insured has with him on vacation b) A pedigreed show dog c) Fabric and patterns in a clothing designer's studio at her home d) An antique car

a camera the insured has with him on vacation

Professional photographers and musicians may insure their equipment with a) An installation floater. b) A commercial articles floater. c) A theatrical property coverage form. d) A contractors equipment floater.

a commercial articles floater

An uninsured motor vehicle includes all of the following EXCEPT a) A vehicle being used for public livery. b) The accident was a hit-and-run. c) The insurance company denies coverage. d) The vehicle has no liability bond or insurance in force.

a vehicle being used for public livery

What type of liability would a person who owns wild animals have? a) Implied b) Direct c) Absolute d) Vicarious

absolute

Liability imposed on one party as a result of the actions of another person is known as a) Vicarious liability. b) Comparative negligence. c) Strict liability. d) Absolute liability.

absolute liability

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? a) Exclusions b) Declarations c) Insuring agreement d) Additional coverage

additional coverage

Which of the following is the closest term to an authorized insurer? a) Legal b) Admitted c) Certified d) Licensed

admitted

Which of the following types of valuation works best for property whose value does not fluctuate much? a) Stated amount b) Inflation guard c) Agreed value d) Market value

agreed value

An individual who is a resident of another state may obtain a Missouri nonresident license without testing provided a) He is currently licensed in the state where he is domiciled. b) He obtained that license by passing a test suitable to the Missouri Department. c) The state where he lives affords the same privilege to residents of Missouri. d) All of these requirements are met.

all of these requirements are met

Crime insurance is usually written on what basis? a) Specific risk b) Named peril c) Closed risk d) All-risk

all-risk

All of the following are requirements to obtain an insurance producer license in Missouri EXCEPT a) Attend an approved prelicensing course. b) Be at least 18 years of age. c) Be of good moral character. d) Pass a written examination on the line(s) of insurance for which a license is sought.

attend an approved prelicensing course

Which of the following would NOT be considered basic property insurance? a) Personal property loss b) Builders' risk c) Vandalism endorsement d) Automobile risk

automobile risk

A policy that insures all property at multiple locations for a single amount is referred to as a) Reporting. b) Special. c) Specific. d) Blanket.

blanket

An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have? a) Aggregate b) Per occurrence c) Combined single d) Split

combined single

An insured's business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this? a) Consequential b) Direct c) Special d) Additional

consequential

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a) Adhesion b) Consideration c) Good faith d) Representation

consideration

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a) Contract of adhesion b) Acceptance c) Consideration d) Legal purpose

consideration

An auto policy issued in Missouri may a) Contain a named driver exclusion. b) Be cancelled at any time for any reason. c) Restrict limits or reduce coverage based on age. d) Restrict coverage based on a legal, but hazardous occupation.

contain a named driver exclusion

An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it? a) Contractors equipment floater b)Bailee's customers form c) Builders risk form d) General property form

contractor's equipment floater

A professional liability policy will provide coverage for loss in all of the following cases, except, when the insured doctor was shown to be a) Improperly trained. b) Criminally negligent. c) Incompetent. d) Negligent.

criminally negligent

Which of the following would be named on the declarations page of a property or liability policy? a) Additional insureds b) First named insured c) Beneficiaries d) All insureds

first named insured

The part of a policy that clarifies terms in the policy is the a) Definitions. b) Insuring agreement. c) Conditions. d) Exclusions.

definitions

All of the following are other coverages under the dwelling policy EXCEPT a) Debris removal. b) Improvements, alterations, and additions. c) Earth movement. d) Other structures.

earth movement

What type of compensatory damages will pay for pain and suffering and disfigurement? a) Special (specific) b) Tort c) Normal d) General

general

Under the professional liability loss settlement provision, what must an insurer do before offering to pay a claimant to settle a claim? a) Refuse new business b) Get the insured's consent c) Sue the claimant d) Cancel the insured's policy

get the insured's consent

Which of the following is NOT among the lines of authority for which an insurance producer may qualify in the state of Missouri? a) Group health insurance b) Surplus lines c) Variable life and annuities d) Personal lines

group health insurance

If a driver who has a record of reckless driving, what will be an acceptable proof of financial responsibility? a) A driver's education course completion certificate b) High-risk auto insurance c) Full coverage insurance d) Rated-up policy

high-risk auto insurance

Persons covered under an insurance policy, whether named or not, are known as the a) First named insureds. b) Additional insureds. c) Insureds. d) Named insureds.

insureds

All of the following are conditions commonly found in the insurance policy EXCEPT a) Insuring agreement. b) Cancellation and nonrenewal. c) Subrogation. d) Appraisal.

insuring agreement

Which of the following coverages in dwelling and homeowners policies is for indirect losses? a) Loss of use b) Dwelling c) Structures d) Contents

loss of use

The Physicians and Surgeons Equipment Floater is NOT intended for which of the following? a) Medical supplies located in a hospital b) Surgeon's supplies located in the surgeon's office c) Waiting room furniture in a doctor's office d) Office equipment located in a dentist's office

medical supplies located in a hospital

Losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected is the definition of which of the following terms? a) Peril b) Hazard c) Accident d) Occurrence

occurrence

When does the coverage begin under the builders risk form? a) On the date the premium is paid b) On the date construction starts c) On the date the policy is issued d) On the date the policy is delivered

on the date construction starts

The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land a) Owned or leased by a landlord who does not reside on the premises. b) Owned by a landlord who does not use the mobilehome located on it. c) Leased by the owner of the land. d) Owned or leased by the resident of the mobilehome.

owner or leased by the resident of the mobile home

A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the a) Limit of liability. b) Penalty. c) Face value. d) Stated amount.

penalty

Which professional liability form provides form coverage for liability arising out of malpractice, error, or mistakes made in rendering professional services? a) Medical malpractice b) Physicians, surgeons and dentists malpractice c) Lawyers professional liability d) Directors and officers liability

physicians, surgeons, and dentists malpractice

Valuable papers and records form provides coverage for the reconstruction of all of the following types of records EXCEPT a) Historical records. b) Prepackaged software. c) Blueprints. d) Deeds.

prepackaged software

Which of the following will be minimum sufficient proof that a policy cancellation notice has been sent by the insurer? a) Proof of returned premium b) Proof of mailing c) The policyowner's signature upon notice delivery d) Proof of delivery by certified mail

proof of mailing

What type of damages may be awarded by the court to create disincentives that discourage behavior that is deemed highly undesirable by society? a) General b) Compensatory c) Specific d) Punitive

punitive

The Federal Fair Credit Reporting Act a) Prevents money laundering. b) Regulates consumer reports. c) Protects customer privacy. d) Regulates telemarketing.

regulates consumer reports

Which of the following actions is prohibited by the state regulations on producer commissions and compensation? a) Profit sharing b) Retrospective commissions c) Sharing commissions d) Compensation from surplus lines producers

retrospective commissions

In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called a) Stop-loss. b) Coinsurance. c) Participation requirement. d) Self-insured retention.

self-insured retention

Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages? a) General b) Special c) Tort d) Normal

special

In the event of a claim under a commercial general liability policy, the insured has all of the following duties to the insurer EXCEPT a) Assisting the insurer upon request in the enforcement of any right against any person or organization that may be liable to the insured. b) Submitting to a medical exam when requested. c) Providing prompt written notice of any claim or suit actually filed against the insured. d) Furnishing the insurer with copies of any demands, notices, or other legal papers received in connection with a claim or suit.

submitting to a medical exam when requested

A nonadmitted insurer who provides insurance coverages that are not available from an admitted insurer is called a) Capitol stock insurer. b) Reciprocal insurer. c) Surplus lines insurer. d) Assessment mutual insurer.

surplus lines insurer

Which of the following symbols is available to an insured with vehicles subject to no-fault coverage? a) Symbol 5 b) Symbol 6 c) Symbol 7 d) Symbol 9

symbol 5

When a regular bill of lading is issued, who will be responsible for the invoice cost of any damaged property? a) The carrier b) The person to whom the goods are being shipped c) The shipper d) The driver of the truck

the carrier

All of the following statements concerning coinsurance are true EXCEPT a) The insured agrees to maintain insurance equal to some specified percentage of the value of the property. b) If the insurance carried is less than required, the insurance may not cover the whole loss. c) The coinsurance formula will also be applied to total losses. d) It is used to help adequacy and equity in rates.

the coinsurance formula will also be applied to total losses

When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be a) The proximate cause. b) The direct cause. c) Strict liability. d) An intervening cause.

the proximate cause

In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for a) Towing coverage. b) Comprehensive (other-than-collision) coverage. c) Collision coverage. d) Uninsured motorist coverage.

uninsured motorist coverage

An insured's 9-year-old son threw a ball, accidentally breaking a neighbor's plate glass window. The insured was found legally liable for the cost of replacing the window. This is an example of a) Vicarious liability. b) Intervening cause. c) Juvenile delinquency. d) Absolute liability.

vicarious liability

The owner of a standard fire insurance policy suffers a total loss due to fire. The insurer receives the insured's Proof of Loss statement along with evidence of arson. How soon may the insurer cancel the policy? a) Within 10 days b) Within 30 days c) Immediately d) Within 5 days

within 10 days

What is a requirement for notifying the Director of any change of address? a) Within 30 days, in writing b) Within 15 days, in writing c) Within 45 days, by any means of communication d) Within 10 days, by any means of communication

within 30 days, in writing