Person lines FLORIDA
Which of the following types of private flood insurance provides coverage equivalent to that provided by the National Flood Insurance Program (NFIP)? a)Supplemental flood insurance b)Standard flood insurance c)Flexible flood insurance d)Preferred flood insurance
b)Standard flood insurance Standard flood insurance provides private coverage that is equal to that under the NFIP.
Al, permanently injured by Jim in an accident, has total damages of $60,000. Al has PIP and Uninsured Motorist coverage of $100,000. Jim has the minimum limit of liability required by Florida. How much would Al collect under U/M? a)$50,000 b)$40,000 c)$20,000 d)$60,000
b)$40,000 U/M is not intended to duplicate payments otherwise available. Al could recover $10,000 from PIP, $10,000 (the per person limit under Jim's policy), and $40,000 from his U/M coverage.
According to the standard mortgage clause, who has the right to bring a suit in their own name to recover damages, pay policy premiums, and submit a proof of loss? a)Policyholder b)Mortgagee c)Insurance company d)Governor
b)Mortgagee The standard mortgage clause, a basis provision of all property policies for real property, also ensures that mortgagees have the right to receive prior notice if an insurance policy is to be cancelled.
A licensed agent must complete how many hours of continuing education specific to ethics and regulatory updates? a)2 b)3 c)5 d)10
c)5 Out of the 24 CE hours, agents are required to complete a 5-hour update course, which covers ethics, regulatory updates and trends.
Which of the following would NOT be classified as personal property for insurance purposes? a)A vehicle b)Equipment c)Furniture d)A house
d)A house Personal property is property that is moveable; real property is nonmoveable.
which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damage property from further loss, or defense expenses? A. Additional Coverage B. Exclusion C. Declaration D. Insuring Agreement
A. Additional coverage The additional coverage portion of a policy provides an additional amount of coverage for a specific loss expense, at no additional premium.
while an insured covered auto is in the repair shop following damage by a collision, the insured would have coverage for which of the following vehicles under a personal auto policy? A. Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair B. Any vehicle use by the insured without the reasonable belief that the insured is entitled to use such vehicle C. Any auto furnished for the insured's regular use, but not named on the policy D. Any vehicle while located inside a racing facility for the purpose of racing
A. Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair
The Federal Fair Credit Reporting Act a)Prevents money laundering. b)Regulates consumer reports. c)Protects customer privacy. d)Regulates telemarketing.
B) regulates consumer reports
An applicant is purchasing a homeowners policy. A producer comes to her home, fills out the paperwork, and tells the applicant that her home will be covered as soon she signs all of the paperwork, and that she will receive a new policy in the mail in 5 business days. Even though the policy is not issued, the applicant's home is temporarily covered until then. Which of the following makes that possible? a)Notice of claim b)Binder c)Loss settlement provision d)Mortgagee clause
B. Binder A binder is a temporary agreement issued, usually in writing, but may be oral, by a producer or insurer providing temporary coverage until a policy can be issued.
Rental Reimbursement is only available if the policy includes which coverage? A. named nonowner coverage B. Other than Collision coverage C. Extended Nonowned Coverage for Named Insured D. Towing and Labor Costs
B. Other than Collision Coverage This endorsement is only available in the policy includes other than collision coverage. This endorsement will reimburse the insured for a rental charges incurred because the covered auto is out of use because of a covered loss.
A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called? A. Binder B. Proof of lose C. Notice of Claim D. Claim Report
B. Proof of lose Proof of loss is a sworn statement that must usually be furnished by the insured to an insurer before any loss under a policy can be paid. Proof of loss must be in writing.
what type of information would be found in a policy's insuring agreement? A. Insurers' address B. Renewal Dates C. Location of premises D. Policy limts
B. Renewal Dates The insuring agreement lists the parties to the contract, effective and renewal dates, the description of coverage provided, and perils (among other things). Location of premises, policy limits, supplemental representations, and insurer's name and address can all be found in the Declarations.
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 A. Rebating B. Twisting C. Defamation D. Misrepresentation
B. Twisting Twisting is a misrepresentation that persuades an insured or policyowner, to his or her detriment, to cancel, lapse, or switch policies
If a person is using auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT A. no fault medical payments B. Liability C. Physical Damage D. Uninsured Motorist
C. Physical Damage Subrogation rights do NOT apply to physical damage coverage if the damage is caused by a person using the auto with a reasonable belief that they were entitled to do so.
Who is responsible for filing a notice of claim form? A. Adjuster B. Agent C. Insurer D. Insured
D. Insured
All of the following are true regarding deposit premium EXCEPT a)It could be adjusted by the audit. b)It must be paid in advance. c)It is an estimated premium paid at the policy issue. d)It is 50% of the actual premium.
D.)It is 50% of the actual premium. Deposit premium is an estimated premium paid in advance at the time the policy is issued that may be adjusted by the audit based on actual exposures.
Which of the following would be named on the declarations page of a property or liability policy? a)First named insured b)Beneficiaries c)All insureds d)Additional insureds
a)First named insured First named insured is the individual whose name appears first on the policy's declaration.
All of the following are conditions commonly found in the insurance policy EXCEPT a)Subrogation. b)Appraisal. c)Insuring agreement. d)Cancellation and nonrenewal.
b)Appraisal. The insuring agreement provides information on the policy's coverages. Conditions state the legal obligations and duties of the parties to the contract.
A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as a)Benefit schedule. b)Gatekeepers. c)Usual, customary and reasonable. d)Relative-value schedule.
c)Usual, customary and reasonable. The usual, customary and reasonable approach for determining insurance benefits is based upon the fees normally charged for specific procedures in the geographic location where the services are provided.
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? a)Medical payments b)Comprehensive coverage c)Collision coverage d)Liability coverage
d)Liability coverage Supplementary payments, found in Part A - Liability, include expenses incurred by the insured at the insurer's request, including $200 per day for attending trials or hearings.
What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk? a)Valid insurance b)Nonconcurrency c)Primary and excess d)Other insurance
d)Other insurance Other insurance is a provision in an insurance policy that defines how the policy will respond if there is other valid insurance written on the same risk.
In Florida, the Financial Responsibility Law is administered by a)State Attorney General. b)The Department of Insurance. c)Department of Highway Safety and Motor Vehicles. d)Florida No-Fault Motor Vehicle Commission.
c)Department of Highway Safety and Motor Vehicles. The Department of Highway Safety and Motor Vehicles has established specific financial requirement as a condition for registering and operating a motor vehicle in the state.
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT a)Premiums on appeal bonds in any suit the insurer defends. b)Up to $250 for bail bonds required because of a covered accident. c)Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. d)Up to $200 a day for loss of earnings due to attendance at hearings or trials.
c)Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. A personal auto policy does not pay the cost of the release of a vehicle impounded by a law enforcement agency.
All of the following statements concerning coinsurance are true EXCEPT a)It is used to help adequacy and equity in rates. b)The insured agrees to maintain insurance equal to some specified percentage of the value of the property. c)If the insurance carried is less than required, the insurance may not cover the whole loss. d)The coinsurance formula will also be applied to total losses.
d) The coinsurance formula will also be applied to total losses. In the event of a total loss, the coinsurance clause does not operate and the face amount of the policy is paid.
All of the following are true regarding physical damage coverage EXCEPT a)Losses to nonowned autos will be covered the same as the broadest coverage available for any covered auto, except nonowned trailers are limited to $1,500. b)The policy will pay up to $20 per day up to a maximum of $600 for rental transportation. c)The insurer will pay for direct and accidental loss to a covered auto minus any applicable deductible. d)The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle.
d)The limit of liability is the GREATER of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle. The limit of liability is the LESSER of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle.
How often must domestic insurance companies be examined by the Chief Financial Officer in Florida? a)Every 2 years b)Not more frequently than every 3 years c)Annually d)At least every 5 years
d)At least every 5 years Examinations must be conducted at least once every 5 years, or as frequently as deemed appropriate by the Office.
An insured is a member of the neighborhood association, and has become liable for damage to a third party. Each member of the association has been assessed a portion of the loss equal to $2,000. How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay? a)$2,000 b)Nothing c)Up to $500 d)Up to $1,000
d)Up to $1,000 The policy will pay up to $1,000 per occurrence for the insured's share of loss assessment charged against them as owner or tenant of the residence premises during the policy period by a corporation or association of property owners.
How can an agent determine if an insurer is authorized to transact insurance in the state of Florida? a)Ask the insurer to provide documentation b)Review the company's annual report c)Obtain a copy of the company's business plan d)Visit the OIR website and conduct a company search
d)Visit the OIR website and conduct a company search
The insured's home is covered by an HO-3. Two years ago, the insured bought the home for $58,000. Today, its replacement value is $60,000. How much Coverage A does the insured need to qualify for replacement cost coverage? a)$46,400 b)$48,000 c)$58,000 d)$60,000
b)$48,000
Which of the following would be an example of an unfair claims settlement practice? a)Failing to acknowledge a claim within 30 days b)Offering a quick settlement of a claim c)Suggesting negotiations in settling the claim d)Denying a claim within 10 day of receipt of proof of loss
a)Failing to acknowledge a claim within 30 days Insurers must either affirm or deny a claim within a reasonable amount of time, but no later than 30 days.
All of following are the general qualifications for an agent's license EXCEPT a)Have a high school diploma. b)Be found competent and trustworthy. c)Be a state resident. d)Pass a criminal background check.
a)Have a high school diploma.
All of the following are factors in the determination of actual cash value EXCEPT a)Insurance premium paid. b)Type and quality of property. c)Age of the property. d)Replacement cost.
a)Insurance premium paid.
Several insureds have become liable because of a single loss. How will the policy's limit of liability be affected? a)No more than the per occurrence limit applies, no matter how many insureds are involved. b)Pro rata liability applies. c)A homeowners policy can have no more than one insured. d)The full limit applies to each insured individually.
a)No more than the per occurrence limit applies, no matter how many insureds are involved. The insurance applies separately to each insured. This condition does not increase the insurer's liability for any one occurrence.
Which of the following is NOT a responsibility of the Office of Insurance Regulation? a)Instituting legal proceedings b)Enacting new insurance laws c)Enforcing the Insurance Code d)Issuing certificates of authority
b)Enacting new insurance laws New laws are enacted by the state legislature.
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays a)A percentage of the loss as described on the declarations. b)The excess over the self-insured retention. c)The amount specified in the policy under the additional coverage provisions. d)The amount in excess of the policy's limits of liability.
b)The excess over the self-insured retention. Retention is the equivalent of a deductible in property insurance.
The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to a)$150,000. b)$200,000. c)$250,000. d)$100,000.
c)$250,000. It is written for the value of the dwelling up to $250,000 on a replacement cost basis.
All of the following are considered parts of the policy structure EXCEPT a)Insuring clause. b)Conditions. c)Provisions. d)Exclusions.
c)Provisions. Provisions is a broad term used to refer to the sections or clauses of an insurance policy that communicate the policy's benefits, conditions, etc. The essential parts of the policy are declarations, insuring clause, conditions and exclusions.
Following the Christmas season, an insured decides to store his decorations in the attic for the summer. While moving the decorations, he accidentally drops a heavy box that crashes through the ceiling, causing $1,000 of damage. His HO-3 will pay a)$500. b)Nothing. c)$1,000. d)$1,000 less the deductible.
d)$1,000 less the deductible. Because the HO-3 covers structures on an open-peril basis, the insurance company would pay $1,000 minus any deductible the insured must pay.
Who is responsible for filling out a notice of claim form? a)Adjuster b)Agent c)Insurer d)Insured
d)Insured Notice of claim is a form or statement from an insured to an insurer, informing the insurer that events leading to a possible claim have occurred.
Which of the following losses would NOT be covered by a homeowners policy? a)A coin collection valued at $500 lost in a fire b)A $550 utility trailer blown away by a tornado c)A stolen silver tea set worth $2,000 d)A $800 outboard motor destroyed by hail
a)A coin collection valued at $500 lost in a fire An HO policy will pay up to $2,500 for silverware by theft, $1,500 for boats, motors, trailers, $1,500 for loss of trailers not used with boats, but no more than $200 for coins.
Which of the following is a method of claim settlement used in casualty insurance when the insured and insurer cannot agree on how to settle a claim? a)It provides excess liability coverage over underlying personal liability. b)It provides errors and omissions coverage for an agency. c)It may cover certain exposures not provided under the primary layer. d)It may require the payment of a self-insured retention.
b)It provides errors and omissions coverage for an agency. Personal umbrella policies cover the personal exposure of the insured. Errors and omissions coverage is provided only in a professional liability policy.
Liability imposed on one party as a result of the actions of another person is known as a)Absolute liability. b)Vicarious liability. c)Comparative negligence. d)Strict liability.
b)Vicarious liability. Vicarious liability is liability imposed on one party as a result of the actions of another person; i.e., parent/child or employer/employee.
Under special circumstances, continuing education requirements may be extended beyond the 2-year period for a maximum period of a)6 months. b)9 months. c)12 months. d)3 months.
c)12 months. Excess classroom hours accumulated during any 2-year period may be carried forward to the next 2-year period. If good cause is shown, the department may grant an extension not to exceed 1 year.
Which of the following would NOT be classified as a result of catastrophic ground cover collapse? a)Condemned structures b)Structural damages c)Damage to property contents d)Visible depressions
c)Damage to property contents Catastrophic ground cover collapse refers to any geological activity that results in an abrupt collapse of ground cover, a clearly visible depression in the ground cover, structural damage to a building or foundation, and any structure condemned or ordered to be vacated by a government agency.
The main difference between an HO-4 and an HO-6 is a)HO-6 does not cover additional living expenses. b)HO-4 provides limited dwelling coverage as well as contents coverage. c)HO-6 provides limited dwelling coverage as well as contents coverage. d)HO-4 does not cover additional living expenses.
c)HO-6 provides limited dwelling coverage as well as contents coverage.
Which of the following entities has the authority to make changes to an insurance policy? a)Agent b)Insured c)Insurance company's executive officer d)Either agent or insurance company's executive officer.
c)Insurance company's executive officer Only an executive officer of the company, not an agent, has authority to make any changes to the policy.
Which of the following coverages in dwelling and homeowners policies is for indirect losses? a)Structures b)Contents c)Loss of use d)Dwelling
c)Loss of use Loss of use coverage applies only after a direct loss caused by a covered peril has occurred.
Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective? a)30 days after the application has been accepted b)12:01 pm on the 5th day after the endorsement request has been mailed c)5 days after the application and premium payment are mailed d)12:01 am the day after the application and premium payment are mailed
d)12:01 am the day after the application and premium payment are mailed During the first 30 days after a community enters the emergency or normal programs, coverage on a flood policy begins at 12:01 a.m. the day after application and premium payment have been mailed.
With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto? a)A vehicle leased to the named insured for 12 months by a leasing company b)A vehicle that is titled and insured by the named insured, but is driven principally by the named insured's son, who is resident of the household c)A vehicle rented for the insured's personal use d)A vehicle that is titled to another person, but is being used with permission by an insured
d)A vehicle that is titled to another person, but is being used with permission by an insured. Because the personal auto policy provides coverage on both owned and nonowned autos, situations will exist in which two or more policies will apply in a given situation. If the auto is owned and insured by someone other than the operator, then that policy will be primary coverage for that auto, and the operator's insurance would act as excess.
What is the basic limit for costs incurred at the place a vehicle is disabled provided by the towing and labor costs endorsement? a)$25 b)$50 c)$75 d)$100
a)$25 This endorsement provides a basic limit of $25 for towing and labor costs incurred at the place a vehicle is disabled. Higher limits are available for an additional premium.
Which of the following would NOT be a violation of state insurance regulations? a)Agent C uses her license to write only business other than controlled. b)Agent D collects premiums due on policies and deposits the funds in his own personal account. c)Agent A uses her license to write only insurance for herself and her immediate family. d)Agent B charges his clients a consulting fee, in addition to the premium for placing a policy.
a)Agent C uses her license to write only business other than controlled. The purpose of a license is to primarily write business other than controlled business.
Which of the following does the term proximate cause refer to? a)Reason for filing a lawsuit b)Negligence that leads to an injury c)Injury that leads to monetary compensation d)Duty of the defendant to act
b)Negligence that leads to an injury Proximate cause is the reasonably foreseeable act or event that results in an injury or damage. Negligence may often be the proximate cause of the damage; without it, the accident would not have happened. This is also called direct liability.
The Florida automobile joint underwriting association (FAJUA) is a market source for person unable to purchase auto insurance thought the standard markets. All of the following statements concerning (FAJUA) are TRUE, EXCEPT A. Agents do not have binding Authority B. Coverage is available to military nonresident stationed in Florida. C. Private passenger auto are eligible for liability coverage with limits up to 100/300/50, PIP, U/M. D. Each licensed agent in Florida is assigned to one of the servicing carries with which the agent places all risks to be insured in FAJUA
A. Agents do not have binding Authority Agents have authority to immediately bind coverage upon securing a completed and signed application upon payment of the require premium deposit by the applicant.
The endorsement that provides coverage for losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formations is a/an a)Mine subsidence endorsement. b)Earthquake endorsement. c)Earth subsidence endorsement. d)Sinkhole collapse endorsement.
d)Sinkhole collapse endorsement. The sinkhole collapse endorsement will provide coverage for sinkhole collapse, which means a sudden settlement or collapse of the earth supporting the property resulting from an underground hole caused by water on limestone or other rock formations.
A neighbor's tree has fallen into the insured's yard. The insured's homeowners policy will only pay to remove the tree if a)The damage is more than $1,000. b)The neighbor has no homeowners insurance. c)The tree has caused damage to the insured's vehicle. d)The tree is blocking the driveway.
d)The tree is blocking the driveway. An insured's homeowners policy will pay up to $1,000 to remove from premises if a neighbor's tree fell by a covered peril, or if the tree blocks a driveway or handicapped ramp, even if no damage to a covered structure has occurred.
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)To extend coverage to motorized vehicles rented for recreation b)To expand the definition of a covered auto to include various motorized vehicles c)To limit coverage to various motorized vehicles only d)To provide coverage for hit-and-run accidents The miscellaneous type vehicle endorsement is used to
B.) to expand the definition of a covered auto to a include various motorized vehicles The miscellaneous type vehicle endorsement is used to expand the definition of a covered auto to include motorized vehicles such as motorcycles, motor homes, golf carts, dune buggies, and other recreational vehicles.
Who would participate in a Write Your Own (WYO) Flood insurance Program? A. Government insurance companies that write and service National Flood Insurance Policies B. Businesses requiring National Flood insurance policies C. Private Insurers that wish to write and service National Flood Policies on a no-risk-bearing basis D. Lloyd's associations
C. Private Insurers that wish to write and service National Flood Policies on a no-risk-bearing basis a WYO program made up of private insurers that write and service National Flood Insurance policies on a no risk bearing basis through a special arrangement with the Federal Insurance Administration. WYO program retains part of the flood insurance premium to pay for commissions and administrative costs. The Remaining premiums, pluss investment, are used to cover losses.
If the cancellation of a property or casualty policy is for nonpayment of premium, how many days' written notice of cancellation must be given to the policyowner? a)At least 10 days b)At least 20 days c)At least 45 days d)At least 90 days
a)At least 10 days If the cancellation is for nonpayment of premium, at least 10 days' written notice of cancellation accompanied by the reason shall be given.
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)Consideration b)Legal purpose c)Contract of adhesion d)Acceptance
a)Consideration Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application.
Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis? a)DP-1 b)DP-2 c)DP-3 d)All DP forms
a)DP-1 DP-1 insures the structure on an actual cash value basis. DP-2 and DP-3 insure the structure on a replacement cost basis.
Additional coverages in the liability section of a homeowners policy cover all of the following EXCEPT a)Damage to a third-party property for which the insured is legally liable. b)Claims expense. c)Expenses the insured incurs rendering first aid for bodily injury to third parties. d)Damage to the property of others.
a)Damage to a third-party property for which the insured is legally liable. Legal liability coverage is a primary liability coverage, not an additional coverage.
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)Special b)Tort c)Normal d)General
a)Special The two classes of compensatory damages that may be awarded are special and general damages. Special damages are tangible damages that can be specifically measured in dollar amounts (such as out-of-pocket expenses for medical, miscellaneous expenses, and loss of wages).
An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have? a)Specific b)Schedule c)Blanket d)Special
a)Specific Specific insurance provides a specific amount of coverage for each property. A blanket insurance policy provides coverage for more than one property with a single limit of coverage.
In forming an insurance contract, when does acceptance usually occur? a)When an insurer's underwriter approves coverage b)When an insurer delivers the policy c)When an insurer receives an application d)When an insured submits an application
a)When an insurer's underwriter approves coverage In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.
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)$5,000 minus the policy deductible b)$14,000 c)$15,000 d)$5,000 maximum for the accident
b)$14,000 The limit is not more than $5,000 per person, per accident.
For cancellation of a commercial property policy during the first 90 days, for a reason other than nonpayment of premium, the insurer must give the insured advance written notice of at least how many days? a)10 days b)20 days c)30 days d)45 days
b)20 days Cancellation of a policy by the insurer during the first 90 days requires that it gives the insured advance written notice of 20 days and state the reason(s) for the cancellation.
Within how many days must a property insurer pay on a claim after the settlement is reached? a)10 days b)20 days c)30 days d)60 days
b)20 days Whenever an insurer in this state agrees in writing to a settlement of a claim, the insurer is required to pay according to the terms of the agreement no later than 20 days after the settlement is reached.
What level of authority is given to the Office of Insurance Regulation with respect to examination of insurer's activities to determine compliance Unfair Trade Practice laws? a)Civil b)Absolute c)Voluntary d)Limited
b)Absolute Florida statutes provide the Office of Insurance Regulation with an absolute right to examine the affairs of every person (insurers and licensees) involved in the business of insurance to see if they are engaged in any unfair trade practices.
Which of the following is a method of claim settlement used in casualty insurance when the insured and insurer cannot agree on how to settle a claim? a)Appraisal b)Arbitration c)Proof of loss d)Restoration
b)Arbitration Arbitration is a method of casualty claim settlement used when the insured and insurer cannot agree on how to settle a claim. The arbitrator's decision is binding to both parties.
Bob insists that the insurer owes him $10,000 for liability damages, while his insurer asserts that they owe him no more than $7,000. Which of the following would most likely describe the type of claim settlement that they might pursue? a)Appraisal hearing b)Arbitration c)Small claims court d)Independent audit
b)Arbitration When an insured and insurer cannot agree on how to settle a claim, arbitration is often used. The settlement is submitted to an arbitrator(s) whose decision may or may not be binding on both parties dependent on state law.
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a)An offer to share in commissions generated by the sale. b)Dividends from a mutual insurer. c)An offer of employment. d)Stocks, securities, or bonds.
b)Dividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.
Replacement cost is defined as a)Payment of the full policy limits in the event of a total loss. b)Full replacement of property at its current cost, new and without reduction for depreciation. c)The market value of property of like kind and quality. d)Full replacement of property with like kind and quality, less an allowance for physical deterioration and depreciation.
b)Full replacement of property at its current cost, new and without reduction for depreciation.
The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land. a)Leased by the owner of the land. b)Owned or leased by the resident of the mobilehome. c)Owned or leased by a landlord who does not reside on the premises. d)Owned by a landlord who does not use the mobilehome located on it.
b)Owned or leased by the resident of the mobilehome. The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land owned or leased by the resident of the mobilehome.
If an agent is in the military, which of the following is true? a)The agent cannot sell policies while on active duty. b)The agent cannot sell a policy to another active military person who is of a lower rank. c)The agent cannot sell a policy to someone outside of the military base. d)The agent cannot sell any policies during times of war or conflict.
b)The agent cannot sell a policy to another active military person who is of a lower rank. Agents are not allowed to sell insurance policies, contracts, or certificates to any active duty military person or their families if the buyer or proposed insured is of a lower rank or pay grade.
Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value? a)They are subject to a $1,000 deductible. b)They are automatically provided with replacement cost coverage. c)They qualify for maximum compensation under the flood insurance program. d)They are excluded from the flood insurance policy.
b)They are automatically provided with replacement cost coverage. Single-family dwellings are automatically provided with replacement cost coverage if insured to at least 80% of the replacement value, or the maximum allowed under the regular flood insurance program.
Which of the following would be covered by the broad theft endorsement on a dwelling policy? a)Fabric and patterns in a clothing designer's studio at her home b)An antique car c)A camera the insured has with him on vacation d)A pedigreed show dog
c)A camera the insured has with him on vacation All of these examples except the camera are types of property specifically excluded from coverage under the broad theft endorsement.
In a personal auto policy, the medical payments coverage is similar to a)Bodily injury coverage, because it pays the insured's doctor bills. b)Bodily injury coverage, because it provides legal protection if the insured causes injuries to others. c)Accident insurance, because it pays medical expenses regardless of fault. d)Accident insurance, because it has the same limits.
c)Accident insurance, because it pays medical expenses regardless of fault. Medical payments will pay for accidental bodily injury of an insured, regardless of fault or auto. It will pay medical expenses of others occupying the insured auto.
Which of the following is true regarding branch agency licensing? a)The branch must secure an agency license. b)There are no special licensing requirements. c)Agent in charge must be licensed. d)All its agents must be licensed.
c)Agent in charge must be licensed. Each branch location established by an agent, agency, firm, corporation, or association must be in the active full-time charge of a licensed general lines, or life and/or health agent who is appointed to represent one or more insurers.
The insured's mother-in-law broke her leg falling down the front steps of the insured's premises. The insured's homeowners medical payments coverage will a)Pay only if the mother-in-law has no health insurance of her own. b)Share equally in the cost with the mother-in-law's health insurance. c)Apply to injuries of any guests or visitors. d)Pay as excess over the mother-in-law's health insurance.
c)Apply to injuries of any guests or visitors. Homeowners medical payments coverage applies to injury of any guests or visitors of the insured who are on the insured's premises with the insured's permission.
Failure of a licensee to maintain an appointment with an insurance company within 48 months after the date the license became effective will result in a)A monetary fine by the Department of Insurance. b)A penalty of up to 6 months in jail. c)Expiration of the license. d)A monetary fine by the insurance company.
c)Expiration of the license.
All of the following are conditions commonly found in the insurance policy EXCEPT a)Subrogation. b)Appraisal c)Insuring agreement. d)Cancellation and nonrenewal.
c)Insuring agreement. The insuring agreement provides information on the policy's coverages. Conditions state the legal obligations and duties of the parties to the contract.
The Gramm-Leach-Bliley Act was passed to a)Allow consumers access to credit and private consumer reports. b)Allow insurance companies access to medical information for underwriting purposes. c)Protect private customer information filed with a financial institution. d)Define insurance as interstate commerce.
c)Protect private customer information filed with a financial institution. The Gramm-Leach-Bliley Act was passed to protect private customer information that is filed with a financial institution. Customers must be given two disclosure notices (one at the onset of business and one before information is disclosed), as well as a yearly updated disclosure notice.
Insurance procured from an unauthorized insurer is called a)Credit insurance. b)Illegal. c)Surplus lines insurance. d)Unauthorized insurance.
c)Surplus lines insurance. Surplus lines insurance is insurance procured from or renewed with an unauthorized insurance company.
Which of the following is NOT the consideration in a policy? a)The premium amount paid at the time of application b)The promise to pay covered losses c)The application given to a prospective insured d)Something of value exchanged between parties
c)The application given to a prospective insured Consideration is something of value that is transferred between the two parties to form a legal contract.
What organization offers coverage on properties in areas of Florida deemed especially susceptible to windstorm damages? a)Florida Workers Compensation Joint Underwriting Association b)Citizens Liability Insurance Corporation c)Residents Property and Liability Corporation d)Citizens Property Insurance Corporation
d)Citizens Property Insurance Corporation Citizens Property Insurance Corporation (formerly Florida Windstorm Underwriting Association (FWUA)) is an organization created to offer coverage on properties in areas of Florida deemed especially susceptible to windstorm damages. Windstorm and hail are the only perils provided coverage.
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. Each policy pays its pro rata share of the loss based upon each policy's share of the total amount of coverage.
When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of a)Misrepresentation. b)Fraud. c)Warranty. d)Concealment.
d)Concealment. Concealment occurs when a person withholds a material fact that is crucial to making a decision. In insurance, this involves withholding information that would be crucial to underwriting decisions.
All of the following statements describe the concept of strict liability EXCEPT a)Claimants may need to provide proof that a product defect caused an injury. b)It is imposed regardless of fault. c)It is applied in product liability cases. d)It is imposed on defendants engaged in hazardous activities.
d)It is imposed on defendants engaged in hazardous activities. Strict liability is commonly applied in product liability cases. The business is then liable for defective products, regardless of fault or negligence.
When is liability coverage included in a homeowners policy? a)If the insured has forms HO-2 or HO-3 b)If the insured has form HO-4 c)If there is an endorsement d)It is included automatically.
d)It is included automatically. All homeowners policies automatically have liability coverage included in Section II.
Which of the following is NOT true regarding a Certificate of Authority? a)It may be necessary for transacting business in a specific state. b)It is equivalent to an insurance license. c)It is issued by the state department of insurance. d)It is issued to group insurance participants.
d)It is issued to group insurance participants. Before insurers may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state.
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? a)Waiver b)Utmost Good Faith c)Estoppel d)Material misrepresentation
d)Material misrepresentation A material misrepresentation will affect whether or not a policy is issued. If the insured had been truthful, it is very likely that the policy would not be issued.
What is the deductible of a personal liability umbrella policy called? a)The PIL b)The CGL c)The CPP d)The SIR
d)The SIR The self-insured retention (SIR) is an initial part of a loss the insured pays before the umbrella pays if no other policy covers the loss.
An agent transacts business for Insurer A and Insurer B, both selling life insurance, and for Insurer C, selling health insurance. How many appointments must the agent hold? a)No appointments are required. b)Only one - for any of the insurers c)Two - one for life and one for health d)Three - one for each insurer
d)Three - one for each insurer An agent must have a separate appointment for each insurer.
