Practice Exam Questions

A. Completed value form A building under construction could be insured on reporting forms, but the value of the building should only increase during the policy period. To prevent all the administrative work required for reporting forms, most often completed value forms are used.

A builder's risk form is most often written as which of the following? A. Completed value form B. Scheduled form C. Reporting form D. Specific value form

C. Coercion Coercion is the application of physical or mental force to persuade someone to buy insurance

A banker is ready to close on a customer's load. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of A. Defamation B. Twisting C. Coercion D. Loading

B. $5,000 A commercial property special form covers property in transit up to $5,000. This extension of coverage may be added to the special form. It is additional insurance (in addition to the coverage limit), and coinsurance does not apply.

A commercial property special form covers property in transit up to A. Full replacement cost B. $5,000 C. ACV D. $500

C. 90 days The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 90 days.

The employee theft crime policy includes 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

D. 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.

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. Insurance company B. Governor C. Policyholder D. Mortgagee

A. 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.

All of the following are conditions commonly found in the insurance policy EXCEPT A. Insuring agreement B. Cancellation and nonrenewal C. Subrogation D. Appraisal

B. 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.

All of the following statements describe the concept of strict liability EXCEPT A. It is applied in product liability cases. B. It is imposed on defendants engaged in hazardous activities. C. Claimants may need to provide proof that a product defect caused an injury. D. It is imposed regardless of fault.

A. $125,200 The amount of coverage for the other driver's injuries is limited to $100,000. The damage to the other driver's car, $25,000, is covered in full. The damage to the insured's car is covered minus the $1,000 deductible. Thus, the total payment is $125,200

An insured has an automobile policy with limits of 100/300/50 and a deductible of $1,000. He is involved in an auto accident and crashes into another driver's auto. The other driver is awarded $125,000 for his injuries and $25,000 for the damage to his car. The insured's vehicle has damage in the amount of $1,200. The total payment made under the insured's policy is A. $125,200 B. $126,200 C. $100,200 D. $150,200

C. 60 days

Assuming the insurer and the insured agree to the amount payable for a loss covered under a dwelling policy, how soon after the insurer has received proof of loss must it make payment? A. 30 days B. 45 days C. 60 days D. 90 days

C. Apparent

Because an agent is using stationary with the logo of an insurance company, applicants of insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe? A. Implied B. Assumed C. Apparent D. Express

C. Comparative negligence Many states, by statute, require that damages be apportioned based upon the degree of negligence of each party in an accident.

Which of the following is a statutory defense? A. Intervening cause B. Contributory negligence C. Comparative negligence D. Assumption of risk

B. Inadvertent injury to others caused in the course of advertising the insured's product Personal and advertising injury coverage does not apply to professional advertisers or intentional injury, and does not guarantee the product will perform as advertised.

CGL Coverage B (Personal and Advertising Injury) will cover A. An offense committed by an insured whose business is advertising B. Inadvertent injury to others caused in the course of advertising the insured's product C. The failure of goods to conform to advertised quality or performance D. Oral or written publication of material the insured knows is false.

A. Suits alleging infringement of a copyright Coverage B combines both personal injury and advertising injury into a single insuring agreement and limit of liability.

Coverage B - Personal and Advertising Injury Liability responds to claims arising from A. Suits alleging infringement of a copyright B. Scope of patent protection C. Failure of products to perform as advertised D. Premises and operations injury claims

B. No, because the claim results from copyright infringement and is not in an advertisement Advertising injury is defined in the policy as any of the following: libel, slander, defamation, or violation of the privacy of others, misappropriation of advertising, ideas, and infringement of copyright, title, or slogan. However, because the copyright infringement was in a product and not an advertisement, coverage is specifically excluded.

Erroneous Publishing copied all the material form Angels Inc.'s book. The only changes made by Erroneous were to rename the title and chapters, put a difference cover on it, and distribute it has its own. Angels Inc. files a claim against Erroneous and seeks damages. Will a commercial general liability policy cover the claim? A. No, because this event does not meet the definition of infringement B. No, because the claim results from copyright infringement and is not in an advertisement C. No, because there is no bodily injury or property damage D. Yes, because the claim is a result of Erroneous products and work

A. Up to $1,000 A special limit of $1,000 per occurrence applies to such items

Farm policy Coverage B - Structures would pay how much for loss of an outside antenna, tower, or satellite dish? A. Up to $1,000 B. ACV on date of loss C. Full replacement cost D. Not more than $250

A. Yes, freezing exclusion is removed if the car is stolen The exclusion for damage caused by freezing and mechanical breakdown does not apply if the entire car has been stolen.

If a car is stolen and left in a snow bank and the radiator freezes and does a lot of damage, is the damage covered by the auto policy? A. Yes, freezing exclusion is removed if the car is stolen B. Yes, there is no exclusion for freezing C. No, freezing is never covered D. No, theft is never covered

B. It must be added as a supplement or written as a separate policy Unlike the homeowners policy, the dwelling policy does not include any coverage for personal liability. The personal liability supplement can be added to the dwelling policy or written as a separate policy. The coverage for includes two major coverage: personal liability and medical payments to others.

In a dwelling policy, which of the following is true regarding personal liability coverage? A. It is the same as in homeowners policies B. It must be added as a supplement or written as a separate policy C. It does not cover medical payments to others D. It is included in all dwelling policies

A. It must be added as a supplement or written as a separate policy.

In a dwelling policy, which of the following is true regarding personal liability coverage? A. It must be added as a supplement or written as a separate policy. B. It does not cover medical payments to others. C. It is included in all dwelling policies. D. It is the same as in homeowners policies.

B. A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged Property in transit by registered mail is covered under the jewelers block extension.

In which of the following situations would the jewelers block extension cover a loss? A. An employee of a jewelry store is wearing a cameo brooch and ring set to display to customers. During the day, she discovered the brooch has fallen off, and she can't find it. B. A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged C. A jewelry store is robbed while displaying bracelets and necklaces at a public exhibition. D. A jeweler agrees to exhibit a necklace and earrings set in a showcase away from the premises. The case is broken into, and the set is stolen.

B. $500 A Mobile Homeowners Policy will pay up to $500 if the insured moves the mobile home to a safer area to protect it from loss by a covered peril

Insureds covered under a Mobile Homeowners Policy move their mobile home to prevent it from being damaged by a fire. What is the maximum amount the policy will pay for this? A. $350 B. $500 C. $1,000 D. $5,000

B. The FCIC (Federal Crop Insurance Corporation) Private insurance companies conduct all aspects of the business: marketing, loss adjustment, claim payments, and data and information services. These companies receive compensation for their administrative and operating expenses and these companies are reinsured by FCIC.

Pass Insurance sells a lot of crop insurance. Because they sell crop insurance, they are reinsured by who? A. The FCA B. The FCIC C. The NAACP D. The FFA

D. Occurrence

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

B. Misrepresentation Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of A. Rebating B. Misrepresentation C. Concealment D. Unfair claim practice

B. Within 100 feet of the described premises

Personal business property out in the open is covered under commercial property policy only while A. Within 150 feet of the described premises B. Within 100 feet of the described premises C. Located on the described premises

C. Specific coverage One location is insured for a specific amount of insurance on the structure and contents.

Property insurance that provides $100,000 coverage for building and $50,000 coverage for personal property at a single location is called A. Blanket coverage B. Described coverage C. Specific coverage D. Schedule coverage

D. $50,000 Because Roger did not make a timely report as required, the most the policy will pay is the amount of the loss, up to the amount reported in the last timely report

Roger owned a grocery store and had a reporting form policy with a $100,000 limit for the store's inventory. The last report Roger submitted was during a slow period and showed a value of $50,000. The value increased to $75,000, and Roger failed to submit his next report when due. What is the maximum amount of coverage Roger has? A. $75,000 B. $100,000 C. $25,000 D. $50,000

C. Each 30 day period An American Institute Hull Clause (AIHC) standard condition states that the premium will be returned on a pro rata basis for each 30 consecutive day period laid up in port not under repair and not being used for storage or lighting.

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 A. The first 30 days only B. Each 10 day period C. Each 30 day period D. The first 10 days only

C. Up to $2,000

The cost of restoring farm records is an additional coverage offered under a farm policy. How much will the policy pay to restore the records? A. Up to $1,000 B. Up to $1,500 C. Up to $2,000 D. Up to $2,500

A. To obtain coverage for war, strikes, and related risks not covered by the policy Standard American Institute Hull Clauses (AIHC) allow coverage for war, strikes, and related risks not covered by the policy.

The other insurances clause of an ocean marine policy allows coverage for which reasons? A. To obtain coverage for war, strikes, and related risks not covered by the policy B. To replace an existing policy C. To add endorsements D. To expand existing coverages such as earthquake, fire, and hail

A. To obtain coverage for war, strikes, and related risks not covered by the policy Standard American Institute Hull Clauses (AIHC) allow coverage for war, strikes, and related risks not covered by the policy.

The other insurances clause of an ocean marine policy allows coverage for which reasons? A. To obtain coverage for war, strikes, and related risks not covered by the policy B. To replace an existing policy C. To add endorsements D. To expand existing coverages such as earthquake, fire, and hail.

A. $10,000 in any 12 month period The policy limit is $10,000 in any 12 month period if the release was caused by a covered loss during the policy period.

The pollutant cleanup and removal coverage in the business owners policy has a limit of A. $10,000 in any 12 month period B. $2,500 in any 12 month period C. $5,000 in any 6 month period D. $20,000 in any 6 month period

B. 50% of the amount provided as Coverage A Under the HO forms, Coverage C is automatically provided as equal to 50% of the amount provided in Coverage A

Under Coverage C of a homeowners policy, the amount of insurance provided to cover personal property of the insured is A. 50% of the amount provided as Coverage B B. 50% of the amount provided as Coverage A C. Equal to the amount provided as Coverage B D. Equal to the amount provided as Coverage A

D. 2 weeks

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. 1 month B. 90 days C. 1 week D. 2 weeks

A. Up to $1,500 Homeowners policies have special limits for boats and other items that go with the boat: $1,500 for watercraft and their trailers, furnishings, equipment and outboard motors.

What amount of coverage is provided on HO policies for watercraft? A. Up to $1,500 B. Up to $10,000 C. Up to $2,000 D. None

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

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

C. Attachment bond An attachment bond is used to guarantee that if the action to attach property was wrong, any damage suffered will be paid

Which bond is required by a court before allowing one to take the assets of another to satisfy a legal obligation? A. Cost bond B. Injunction bond C. Attachment bond D. Bail bond

B. A salaried employee who advertises and solicits insurance A person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required.

Which of the following would be required to be licensed an an insurance producer? A. An insurance company director who performs executive, administrative and managerial duties B. A salaried employee who advertises and solicits insurance C. A person whose activities are limited to producing insurance advertisements D. A salaried full-time employee who furnished information for group insurance

B. The State States determine the minimum and maximum coverages rates, as well as the types of property that are eligible for coverage.

Which of the following would determine minimum and maximum limits for FAIR plan rates? A. Individual insurers B. The State C. The federal government D. The NAIC

D. Large pleasure boats Large pleasure boats will not be included in inland marine coverage. They would instead be covered in a boatowners policy, or, if large enough, under yacht insurance.

According to the Nationwide Marine definitions, risks that may be subject of inland marine insurance include all of the following EXCEPT A. Property while stored at a warehouse B. Shipments made by freight train C. Cargo transported by truck D. Large pleasure boats

C. Named peril coverage for death of livestock Livestock coverage is named peril coverage resulting in death or destruction of livestock by basic causes of loss except by vehicles.

The livestock coverage form covers which of the following losses? A. A cow died after it ran into a moving tractor B. All risk coverage for death of livestock by any cause except those excluded C. Named peril coverage for death of livestock D. Sheep died after an attack by the family dog

C. Coercion Coercion is the application of physical or mental force to persuade someone to buy insurance

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of A. Defamation B. Twisting C. Coercion D. Loading

A. Discriminating in benefits and coverages based on the insured's habits and lifestyle Discriminating between individuals of the same class, with equal life expectancies, or by reason of rate, 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 an insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.

All else being equal, which of the following will NOT be considered unfair discrimination by insurers? A. Discriminating in benefits and coverages based on the insured's habits and lifestyle B. Charging applicants with similar health histories different premium rates. C. Cancelling individual coverage based on the insured's marital status D. Assigning different risk classifications to applicants based on ethnicity

D. Up to $100 for the cost to secure the release of a vehicle for 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 are supplemental payments included in the liability section of a personal auto policy EXCEPT A. Up to $200 a day for loss of earnings due to attendance at hearings or trials B. Premiums on appeal bonds in any suit the insurer defends C. Up to $250 for bail bonds required because of a covered accident D. Up to $100 for the cost to secure the release of a vehicle for an impoundment lot following a covered accident

B. A third-degree misdemeanor and a $1,000 fine In Pennsylvania, acting as a manager or exclusive general agent without proper licensing is punishable by a third-degree misdemeanor charge and a fine of up to $1,000 for each day of their offense.

An individual was just caught acting as an exclusive general agent - even though he is not properly licensed. Assuming that this occurred in a single day, what is the maximum penalty he faces? A. A second-degree felony and a $10,000 fine B. A third-degree misdemeanor and a $1,000 fine C. A second-degree misdemeanor and a $1,000 fine D. A third-degree felony and a $10,000 fine

C. Fraud According to Title 18, Sections 1033 & 1034 of the US Code, any oral or written statements by any person engaged in the business of insurance that are false or any omissions of material fact are considered unlawful insurance fraud. This includes statements made on an application for insurance, renewal of a policy, claims for payment or benefits, premiums paid, and financial condition of the insurer.

An insurance company assures its new policyholders that their premium costs will not increase for a period of at least 5 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? A. Unfair discrimination B. Errors and omissions C. Fraud D. Defamation

D. Nothing The personal property replacement cost endorsement excludes property such as art and antiques.

An insured has a personal property replacement cost endorsement under her homeowners policy. If an expensive painting and an antique chair are stolen from the insured's home, what will the insured receive on the claim under that endorsement? A. 70% of the replacement cost B. 80% of the replacement cost C. 100% of the actual cash value D. Nothing

B. Higher limits According to the out-of-state coverage provision in the personal auto policy (PAP), if the state or province has a financial responsibility law specifying limits of liability higher than the limits shown in the declarations, the insured's policy will provide the higher specified limits.

An insured is involved in an auto accident in another state. The state has a financial responsibility law that specifies limits of liability higher than the limits shown in the declarations. What amount will the insured's policy pay? A. Only the limits specified in the policy B. Higher limits C. Lower limits D. The insurer will not pay for out-of-state accidents

D. All of the expense up to the Coverage D limit Coverage D will pay the expenses incurred to maintain the same lifestyle as before the loss

An insured works outside the home. The insured's sister lives with him and cares for his four children. When the insured's home is severely damaged by fire, the family moves into an apartment while repairs are being made. The largest apartment available in the area has two bedrooms, so the insured's sister has to stay in a motel. How much will the HO-3 form pay for these additional living expense? A. The cost of renting an apartment, but not the cost of the motel room B. The cost of renting an apartment, and 50% of the cost of the motel C. Nothing D. All of the expense up to the Coverage D limit

D. Uninsured motorist coverage Trailers, while being towed by an insured auto, are covered automatically for bodily injury (BI), property damage (PD), and uninsured motorist (UIM)

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

B. Open peril coverage on the dwelling and broad form coverage on personal property The open peril coverage applies to property insured under Coverage A and B only.

The HO-3 homeowners policy provides A. All-risk coverage for both the dwelling and personal property B. Open peril coverage on the dwelling and broad form coverage on personal property C. Open peril coverage on the dwelling and basic form coverage on personal property D. Basic coverage for the dwelling and broad form coverage for personal property

B. United States and its territories, Canada, or worldwide for private passenger hired autos The defined coverage territory for both business auto policies and personal auto policies is the United States, its territories and possessions, and Canada, or worldwide for private passenger hired autos.

What is the business auto coverage territory for A. United States and Mexico B. United States and its territories, Canada, or worldwide for private passenger hired autos C. Only for the specific location of the business D. United States only

C. 75% The levels of coverage under Federal Crop Insurance is not higher than 75% of the historic yield.

What is the highest level of protection available under a Federal Crop Insurance policy? A. 50% B. 100% C. 75% D. 65%

A. A special provisions endorsement A special provisions endorsement is added when necessary to make the policy conform to a particular state's renewal and cancellation provisions. These forms are also called "mandatory provisions endorsements"

When an insurance company uses a policy form that has been developed by an organization, such as ISO, what is usually required to be added to the form so that the policy will conform to the state's insurance regulation? A. A special provisions endorsement B. A disclaimer C. Nothing D. A waiver

B. Send or deliver a "Notice of Cancellation" at least 60 days prior to the effective date of cancellation and state the reason for the cancellation

When an insurer cancels, midterm, a commercial property or casualty insurance policy for an allowable reason, they must A. Send or deliver a "Notice of Nonrenewal" 30 days prior to the effective date of cancellation B. Send or deliver a "Notice of Cancellation" at least 60 days prior to the effective date of cancellation and state the reason for the cancellation C. Refund unearned premiums prior to the effective date of cancellation.

C. Only if the insured does not have commercial auto coverage This endorsement can be added to the BOP only if the insured does not have commercial auto insurance. This coverage is excess over any primary insurance coverage on the hired or non-owned auto.

When is a hired and non-owned auto liability endorsement available in a business owners policy (BOP)? A. Only if the insured has 4 or more employees B. Never C. Only if the insured does not have commercial auto coverage D. Only in addition to commercial auto coverage

D. A share of the loss The commercial property other insurance provision states that the insurer will be responsible for only a proportional share of an insured loss when the insured also has other insurance written according to the terms and conditions.

When other insurance is written on the same basis as a commercial property policy, the obligation of the insurer is to cover A. All of the loss B. The loss on an excess basis C. The loss on a primary basis D. A share of the loss

D. Transfer of rights and duties under the policy Under the transfer of rights and duties under the policy condition, the insured cannot transfer any rights or duties under the policy to any other person or organization without the written consent of the insurance company.

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. Subrogation B. Reassignment and modification C. Changes D. Transfer of rights and duties under the policy

B. Issuing sales material with exaggerated statements about policy benefits Misrepresentation is issuing, publishing, or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This includes oral statements.

Which of the following best describes a misrepresentation? A. Discriminating among individuals of the same insuring class B. Issuing sales material with exaggerated statements about policy benefits C. Making a deceptive or untrue statement about a person engaged in the insurance business D. Making a maliciously critical statement that is intended to injure another person.

D. Make voluntary payments for treatment of the worker's injury The insured's duties are to notify the insurer at once, provide immediate medical care required by the law, provide the names and addresses of the injured worker and any witnesses, promptly send any notices or other legal papers, cooperate with the insurer, and to not make any voluntary payments or assume any obligations.

Which of the following is NOT a duty of the employer/insured if an injury occurs at the workplace? A. Provide immediate medical care required by the law B. Notify the insurer at once C. Provide the name and address of the injured worker and any witnesses to the injury D. Make voluntary payments for treatment of the worker's injury

A. Damage to the insured's property caused by utility service disruption Utility services - time element covers business income or additional expense losses arising from disruption of service caused by a covered peril

Which of the following is NOT covered under the Utility Services - Time Element endorsement? A. Damage to the insured's property caused by utility service disruption B. Loss of business income arising from loss of utility service caused by an insured peril C. Extra expense incurred to remain open for business following the loss of utility service caused by a covered peril D. None of the above

B. It must be valued at an amount under the maximum value amount set by the state Property eligible for FAIR plan coverage must be located in a specific area defined by the state, must be considered insurable based on reasonable underwriting standards, and must not have been able to purchase coverage through the normal insurance market.

Which of the following is NOT one of the 3 requirements for property to be eligible for FAIR plan coverage? A. Coverage could not be purchased through the normal insurance market B. It must be valued at an amount under the maximum value amount set by the state C. It must be located in a specific area defined by the state D. It must be considered insurable based on reasonable underwriting standards

C. It must be valued at an amount under the maximum value amount set by the state Property eligible for FAIR plan coverage must be located in a specific area defined by the state, must be considered insurable based on reasonable underwriting standards, and must not have been able to purchase coverage through the normal insurance market

Which of the following is NOT one of the 3 requirements for property to be eligible for FAIR plan coverage? A. It must be considered insurable based on reasonable underwriting standards B. Coverage could not be purchased through the normal insurance market. C. It must be valued at an amount under the maximum value amount set by the state D. It must be located in a specific area defined by the state

A. Symbol 5 Symbol 5 covers owned autos subject to no-fault coverage

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

D. Intervening cause An intervening cause breaks the required uninterrupted chain of events necessary to establish negligent liability.

Which of the following terms describes the concept of disrupting the chain of events? A. Last clear cause B. Pro rata cause C. Proximate cause D. Intervening cause

C. Apparent Also known as perceived authority, is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created

Which of the following types of agent authority is also called "perceived authority"? A. Implied B. Fiduciary C. Apparent D. Express

B. Commercial general and professional Commercial general liability excludes professional liability, and professional liability does not cover premises liability.

A professional who wants coverage for all liability exposures should purchase what form of liability insurance? A. Employee benefits B. Commercial general and professional C. Directors and officers D. Fiduciary and employment practices

A. Homeowners he farm-owner or ranch-owner policy is a package policy designed for family-owned farming or ranching operations. This design of this policy is patterned after the homeowners policy

A ranch-owners policy is most similar to which of the following? A. Homeowners B. Commercial Property C. Business-owners D. Dwelling

B. The golfer's homeowners liability coverage The insured's homeowners liability coverage is worldwide and covers damages for bodily injury or property damage to others that occur while the insured is engaged in a personal activity

A golfer slices a tee shot and the ball goes through the window of a house beside the fairway. The broken glass is paid for by A. The property coverage of the golf course B. The golfer's homeowners liability coverage C. The homeowner's property coverage on the house D. The liability policy of the golf course

C. 90 Nonresident producers may become resident producers if they submit a completed application within 90 days of establishing residence in Pennsylvania with proof of licensing from their prior home state

A licensed producer moving to Pennsylvania may become licensed as a resident if the producer submits a completed application within how many days of establishing residence in Pennsylvania with proof of licensing from their prior home state? A. 30 B. 60 C. 90 D. 180

C. Prepaid freight insurance that will attach to the cargo policy Freight charges can be prepaid, as in this case, and coverage will be attached to the cargo policy purchased by the cargo owner, Ajax Shipping. Freight charges also can be paid on delivery, in which case the ship owner could have been purchased overage to be attached to the hull policy.

Ajax Shipping has contracted to transport 10 crates of computer equipment from Washington state to Tijuana, Mexico, for a fee of $3,800. Ajax has arranged for Calamity Ship Lines to pick up the crates at the dock in Puget Sound and to deliver the crates to the dock in Tijuana. To cover the possible loss associated with the crates being damaged or loss, Ajax should purchase A. Computer loss and destruction policy as part of the BOP plan B. Commercial general liability policy which covers loss liability C. Prepaid freight insurance that will attach to the cargo policy D. Cargo delivery insurance that is attached to the hull policy by the shipping line

A. The limit of liability is the greater of the actual cash value of the vehicle at the time of loss of 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.

All of the following are true regarding physical damage coverage EXCEPT A. The limit of liability is the greater of the actual cash value of the vehicle at the time of loss of the amount necessary to repair or replace the vehicle. B. Losses to non owned autos will be covered the same as the broadest coverage available for any covered auto, except non owned trailers are limited to $1,500. C. The policy will pay up to $20 per day up to a maximum of $600 for rental transportation D. The insurer will pay for direct and accidental loss to a covered auto minus any applicable deductible

B. Explaining to client the advantages of permanent insurance over term and suggesting changing policies Twisting is misrepresenting for the purpose of inducing the lapse, forfeiture, exchange, conversion or surrender of any insurance policy so the insured will buy a new policy / making incomplete comparisons between policies

All of the following can be described as twisting EXCEPT A. Making an incomplete comparison between the existing and proposed policies B. Explaining to client the advantages of permanent insurance over term and suggesting changing policies C. Misrepresenting the terms and conditions of the existing policy to make the new one more attractive. D. Embellishing the terms of the proposed policy in order to convince the insured to switch

B. Twisting This is the definition of twisting, which is an unfair trade practice.

An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as A. Misrepresentation B. Twisting C. Fraud D. Concealment

D. Misrepresentation Misrepresentation is the act of portraying sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This refers to all forms of communication.

An insurance agents visits a potential client that explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done? A. Rebating B. Twisting C. Defamation D. Misrepresentation

A. Property damage coverage The last number in the coverage limits represents the maximum limit for property damage coverage per accident, in this case $25,000.

An insured has a personal auto policy with the following limits: 50/100/25. The number 25 refers to A. Property damage coverage B. Collision coverage C. Medical payment coverage D. Bodily injury liability coverage

C. $1,000 It is important to pay particular attention to coverages that have a maximum amount of coverage and an additional sublimit for one particular item. The most the policy will pay for this loss is $1,000

An insured suffers a windstorm loss in which the insured's driveway is blocked by two of the insured trees and two of the neighbor's trees. The total amount of the removal adds up to the following: three trees at $300 per tree, and one tree at $600. How much will the insurer pay for the loss? A. $1,500 B. $1,400 C. $1,000 D. $900

C. $1,000 It is important to pay particular attention to coverages that have a maximum amount of coverage and an additional sublimit for one particular item. The most the policy will pay for this loss is $1,000.

An insured suffers a windstorm loss in which the insured's driveway is blocked by two of the insured's trees and two of the neighbor's trees. The total amount of the removal adds up to the following: three trees at $300 per tree, and one tree at $600. How much will the insurer pay for the loss? A. $1,500 B. $1,400 C. $1,000 D. $900

C. Consideration

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. Representation B. Adhesion C. Consideration D. Good faith

C. 10 years Anyone engaged in the business of insurance whose activities affect interstate commerce, and knowingly makes false material statements may be fined, imprisoned for up to 10 years or both. If the activity jeopardized the security of the accompanied insurer, the punishment can be up to 15 years.

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 A. 3 years B. 5 years C. 10 years D. 12 years

A. Misrepresentation It is considered to be misrepresentation to make any false or misleading statements regarding the dividends to be received on any insurance policy

Guaranteeing future dividends in considered to be an unfair or deceptive act known as A. Misrepresentation B. Twisting C. False financial statements D. Rebating

B. $500 $500 is provided automatically, and may be increased by endorsement

How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card? A. $100 B. $500 C. $1,000 D. $5,000

D. 5 days Consumers must be advised that they have a right to request additional information concerning investigative consumer reports, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A. 7 days B. 10 days C. 3 days D. 5 days

A. 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.

If a person is using an 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. Physical damage B. Uninsured motorist C. No-fault medical payments D. Liability

C. A van in the delivery business If used primarily for deliveries, a PAP cannot insure the vehicle

In a personal auto policy (PAP), a covered auto includes all of the following EXCEPT A. A farm implement being towed behind the insured's pickup B. A nonowned temporary substitute vehicle C. A van in the delivery business D. A trailer owned by the insured

D. If the policy is cancelled by the insured If the policyholder cancels, a short rate refund is due.

In accordance with American Institute Hull Clauses, a pro rata return of premium will be given for all the following reasons EXCEPT A. For each period of 30 consecutive days the vessel may be laid up in port not under repairs B. In event of termination under the change of ownership clause. C. If policy is cancelled by the underwriters D. If the policy is cancelled by the insured

B. Coverage by endorsement

In dwelling policies, automatic increase in insurance is A. Coverage for newly acquired property B. Coverage by endorsement C. Automatic coverage D. Coverage without additional premium

C. The insured must be legally liable for the loss

In order for a Protection and Indemnity policy to cover a loss, which of the following must be TRUE? A. The insurer must conduct an investigation into the loss B. The loss must be total C. The insured must be legally liable for the loss D. The insured must have been the person operating the vessel

B. 10 working days After receiving notification of a claim, insurers must provide the necessary claim forms within 10 working days

Once an insurer receives a claim, within how many days must the insurer provide claim forms to the insured? A. 3 calendar days B. 10 working days C. 15 working days D. 30 calendar days

C. 90 days The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 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

B. Physical damage coverage Physical damage coverage is also extended to the insured's family members for owned private passenger vehicles and nonowned autos.

The individual named insured endorsement offers liability coverage to the sole proprietor of a business and his or her family members. Which coverage is also provided under the individual named insured endorsement of a commercial auto policy for owned passenger vehicles and nonowned autos? A. Mobile equipment coverage B. Physical damage coverage C. Medical payments coverage D. Broadened coverage

C. The actual cash value of what was stolen, with limits for certain classes of property Since HO-8 policies are for older homes, they insure dwellings at actual cash value, not replacement cost because the cost of rebuilding with the materials and details of the original home would make replacement cost coverage prohibitively expensive. Theft is the actual cash value of what was stolen, with limits for certain classes of property.

Theft coverage under and HO-8 is restricted to A. There is no theft coverage under an HO-8 B. $250 C. The actual cash value of what was stolen, with limits for certain classes of property D. The larger of 10% of the personal property limit or $1,000.

D. 30 days If an insurer is cancelling a policy for any reason except nonpayment of funds, the insurer must give the mortgage holder at least 30 days' notice, following business owners policy Section I.

Under business owners policy Section I, if an insurer wants to cancel a policy for any reason except nonpayment of premium, how many days before the effective cancellation date must the insurer notify the mortgage holder? A. 10 days B. 15 days C. 20 days D. 30 days

A. 10 days If an insurer will not be renewing a policy for nonpayment of premium, according to the businessowners policy Section I, it must notify the mortgageholder at least 10 days before the policy expires

Under business owners policy Section I, if an insurer wants to nonrenew a policy for nonpayment of premium, how many days before the expiration date must the insurer notify the mortgageholder? A. 10 days B. 15 days C. 20 days D. 30 days

A. The injuries fall within the definition of "serious injury" Limited tort insurance option limits recovery to medical expenses and other out-of-pocket expenses unless the injury falls within the definition of "serious injury"

Under the "limited tort insurance" option, an insured may not seek recovery for pain and suffering or other nonmonetary damages UNLESS A. The injuries fall within the definition of "serious injury" B. The injuries result in the insured being unable to work for at least 7 days C. The insured is the at fault driver D. The other party was found to be 100% at fault for the injuries.

C. Injury incurred while the person was under the influence of drugs or alcohol First Party Benefits cannot be denied solely because the person was under the influence of drugs or alcohol.

Under the Motor Vehicles Financial Responsibility Law, First Party Benefits would NOT be denied for which of the following injuries? A. Injury incurred during the commission of a felony B. Injury that was intentionally self-inflicted C. Injury incurred while the person was under the influence of drugs or alcohol D. Injury incurred while attempting to elude apprehension by a law enforcement official

A. If a consumer does not sign and return the notice of disclosure within 30 days Financial institutions are prohibited from sharing insurance coverage information with a third party for the purpose of selling or soliciting the purchase of insurance. However, if notice is given, and the customer does not sign and return such a form within 30 days, such information may be shared

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? A. If a consumer does not sign and return the notice of disclosure within 30 days B. Whenever it is requested by the Commissioner C. Under no circumstances; nonpublic personal financial information cannot be shared with third parties D. If a consumer decides to opt out

D. A share of the loss The commercial property other insurance provision states that the insurer will be responsible for only a proportional share of an insured loss when the insured also has other insurance written according to the terms and conditions

When other insurance is written on the same basis as a commercial property policy, the obligation of the insurer is to cover A. All of the loss B. The loss on an excess basis C. The loss on a primary basis D. A share of the loss

B. In the state workers compensation law itself The workers compensation and employers liability (WC&EL) policy itself does not contain dollar limits of benefits covered by the policy. The state workers compensation law directs amounts of coverage benefits provided by all policies written for employers of that state. Policy Part One also contains no exclusions of coverage

When reviewing a standard workers compensation and employers liability policy, the limits of coverage are described in Part One of the policy. The dollar limit of the benefits provided are stated A. In paragraph 1 of Part One as directed by law B. In the state workers compensation law itself C. On the face of the policy declarations page D. In Line Item 3(A) of the policy information page

A. Transfer of rights and duties under the policy Under the transfer of rights and duties under the policy condition, the insured cannot transfer any rights or duties under the policy to any other person or organization without the written consent of the insurance company.

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. Transfer of rights and duties under the policy B. Subrogation C. Reassignment and modification D. Changes

C. Medical payment benefits are limited Workers compensation medical payments are unlimited

Which is NOT true of workers compensations coverage? A. It offers death benefits B. It offers rehabilitation benefits C. Medical payment benefits are limited D. Medical payment benefits are unlimited

C. Limits of liability Limits of liability are the insurer's liability for payment as stated in an insurance policy

Which of the following describes an insurer's responsibility for payment under a policy, as stated in the common policy provisions? A. Utmost good faith B. Premiums C. Limits of liability D. Consideration

C. Permitted incidental occupancies A permitted incidental occupancies endorsement covers liability exposures arising from an incidental business conducted within a building on the residence premises.

Which of the following homeowners endorsements covers liability exposures arising from an incidental business conducted within a building on the residence premises? A. Professional liability B. Business income - report of values C. Permitted incidental occupancies D. Special limit of liability

A. To minimize the insured's level of liability in the event of loss

Which of the following is NOT a goal of risk retention? A. To minimize the insured's level of liability in the event of loss B. To reduce expenses and improve cash flow C. To increase control of claim reserving and claims settlements D. To fund losses that cannot be insured

A. Making comparisons between different policies Making accurate comparisons of policies is not illegal

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? A. Making comparisons between different policies B. Stating that the insurance policy is a share of stock C. Exaggerating the benefits provided in the policy D. Stating that the competitors will arbitrarily increase their premiums each year

D. This coverage must be written as part of farm coverage Mobile agriculture machinery and equipment coverage may also be written on a separate stand-alone policy

Which of the following statements is NOT true regarding mobile agricultural machinery and equipment coverage? A. It relates to devices used in the everyday farm operation B. It covers detached parts and accessories of mobile devices. C. It insures eligible equipment for open perils D. This coverage must be written as part of farm coverage

A. This coverage must be written as part of farm coverage Mobile agriculture machinery and equipment coverage may also be written on a separate stand alone policy

Which of the following statements is NOT true regarding mobile agricultural machinery and equipment coverage? A. This coverage must be written as part of farm coverage B. It relates to devices used in the everyday farm operation C. It covers detached parts and accessories of mobile devices D. It insures eligible equipment for open perils

D. Temporary total disability Temporary total disability refers to a person's total inability to work for a temporary amount of time

Which of the following terms refers to a person's total inability to work for a temporary amount of time? A. Temporary partial disability B. Permanent partial disability C. Permanent total disability D. Temporary total disability

A. The appointing insurer A fee of $15 will be billed to the insurer annually for each producer appointed during the previous year

Who is responsible for paying producer appointment fees? A. The appointing insurer B. The Commissioner's office C. The Department of Insurance D. The producer

C. The Commissioner sets all insurance premium rates used in Pennsylvania. All premium rates must be filed with the Commissioner. The insurer must wait 30 days before using the filed rate, or until the approval is received. If, after 30 days, the filing has not been disapproved, the insurer may use the filed rate

With regards to premium rates, which of the following statements is NOT true? A. After a premium rate is filed, the insurer must wait 30 days or until approval is received from the Commissioner before using the new rate. B. If a premium rate is disapproved, the Commissioner must hold a hearing if requested by the insurer C. The Commissioner sets all insurance premium rates used in Pennsylvania. D. Pennsylvania is a "prior approval" state in that premiums rates must be filed with the Insurance Department and approved by the Commissioner

C. $5,000

A premium discount is the term that describes when an insured owes a total standard premium greater than A. $15,000 B. $1,000 C. $5,000 D. $10,000

C. $5,000 A premium discount is when an insured owes a total standard premium greater than $5,000.

A premium discount is the term that describes when an insured owes a total standard premium greater than A. $15,000 B. $1,000 C. $5,000 D. $10,000

C. All An insurance entity or licensee cannot pay a commission or fee to a person if the person's license is suspended or revoked. However, a commission may be paid if the person was licensed at the time of the sale.

A producer sold an insurance policy. Subsequently, his license was suspended. In this case, how much of the commission will the producer receive? A. Quarter B. None C. All D. Half

A. Motor carrier coverage is needed The motor carrier coverage form can cover anyone who transports goods. Because the truckers coverage form does not cover private carriers, the motor carrier coverage will cover both private and common or contract carriers.

ABC trucking company recently purchased XYZ manufacturing company. ABC wants to transport the new company's freight with their trucking division. The company also wants to continue to haul freight for the clients it has served for many years. In regard to coverage, which of the following is true? A. Motor carrier coverage is needed B. The company must choose between being a private carrier and a common or contract carrier C. Truckers coverage form is needed D. A truckers coverage form is needed along with the business auto coverage form

C. Consequential Consequential loss, also known as indirect loss, is a second financial loss caused by a covered direct loss.

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. Special B. Additional C. Consequential D. Direct

C. Rebating Rebating is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer and acceptance of a rebate are illegal.

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as A. False advertising B. Coercion C. Rebating D. Twisting

D. All-risk Crime insurance is usually written on an all-risk, or open peril basis

Crime insurance is usually written on what basis? A. Specific risk B. Named peril C. Closed risk D. All-risk

B. $500 $500 is provided automatically, and may be increased by endorsement.

How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card? A. $100 B. $500 C. $1,000 D. $5,000

B. All reasonable costs If the debris was caused by a peril that is insured against, the reasonable cost of debris removal is paid by the insurer.

How much is covered for debris removal under the HO property additional coverages? A. Nothing, unless added by an endorsement B. All reasonable costs C. 90% of the total cost of clean-up D. Everything after a $200 deductible

D. Every 5 years The Commissioner will examine each rating organization as often as deemed necessary, but at least once every 5 years.

How often must the Commissioner examine rating organizations? A. Annually B. Every 2 years C. Every 3 years D. Every 5 years

B. 30 days Personal property being moved to a new location can be covered for up to 30 days without notice to the insurer

If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for A. 5 days B. 30 days C. 60 days D. 90 days

D. It must be added as a supplement or written as a separate policy Unlike the homeowners policy, the dwelling policy does not include any coverage for personal liability. The personal liability supplement can be added to the dwelling policy or written as a separate policy. The coverage form includes two major coverages: personal liability and medical payments to others.

In a dwelling policy, which of the following is true regarding personal liability coverage? A. It does not cover medical payments to others. B. It is included in all dwelling policies. C. It is the same as in homeowners policies. D. It must be added as a supplement or written as a separate policy

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.

In a personal auto policy, the medical payments coverage is similar to A. Bodily injury coverage, because it pays the insured's doctors 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

D. In addition to the limit of liability Supplementary payments are the insurer's claim-related expenses and are made in addition to the limits of liability.

In liability insurance policies, supplementary payments are made A. As part of the limit of liability B. At the option of the insured C. At the option of the insurer D. In addition to the limit of liability

A. Utmost good faith.

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as A. Utmost good faith. B. Reasonable expectations. C. A warranty. D. Implied warranty.

A. 10 days Insurers must acknowledge the receipt of a claim or any other pertinent communication within 10 working days.

To avoid violations of unfair claims settlement regulations, insurers are required to acknowledge the receipt of a claim within how many days? A. 10 days B. 15 days C. 30 days D. 45 days

D. 30 days Licensees are required to provide a written response to a Department's inquiry within 30 days.

Within how many days must a producer respond to an inquiry from the Commissioner? A. 3 days B. 10 days C. 15 days D. 30 days

A. 3 days Investigative consumer reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested.

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? A. 3 days B. 5 days C. 10 days D. 14 days

D. Loss of use Loss of use is provided under Coverage D of a Farm policy; the rest are exclusions.

All of the following are exclusions under farm property coverage EXCEPT A. Earth movement B. Ordinance or law C. Flood D. Loss of use

B. 80%

What is the required limit of insurance in the coinsurance clause for Coverage F - Unscheduled Farm Personal Property? A. 75% B. 80% C. 85% D. 90%

D. Break-bulk cargo General cargo ships are generally used to carry break-bulk cargo. Break-bulk cargo is cargo that is too large to be carrier in a container or boxed goods, or too small to justify use of a full container.

General-cargo ships are used to transport A. Motor vehicles B. Containerized cargo C. Coal, grain, phosphates, and other loose cargo D. Break-bulk cargo

C. Symbol 9 - non owned autos only

Which of the following symbols used in business auto coverage is correctly described? A. Symbol 2 - owned autos subject to no-fault B. Symbol 7 - hired autos only C. Symbol 9 - non owned autos only D. Symbol 1 - owned auto only

B. Costs the insured incurred in hiring an attorney Supplemental payments the insurance company's expenses and will not pay expenses incurred by the insured unless incurred at the insurer's request.

All of the following are supplemental payments found in liability policies EXCEPT A. Limited amounts for bails bonds and other bonds related to a claim. B. Costs the insured incurred in hiring an attorney C. All expenses and defense costs incurred by the insurer. D. Reasonable expenses incurred by the insured.

A. Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction While the agents are required to notify the department about any administrative action or criminal prosecution taken against them, that act alone will not result in imprisonment. All the others are violations that may be punished by imprisonment.

All of the following violations may result in an agent's imprisonment EXCEPT A. Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction B. Embezzling funds from the insurer C. Knowingly obtaining information about the consumer under false pretenses D. Engaging in the business of insurance after being convicted of breach of trust

A. Appliance intended to become a permanent part of the building The installation floater covers the interest of the owner, seller, or contractor of refrigeration systems, elevators, or other pieces of large equipment intended to become a permanent part of the building on location awaiting or in the process of being installed or tested.

An installation floater is used to insure A. Appliance intended to become a permanent part of the building B. Buildings under construction C. All types of for-sale merchandise D. Dams, power plants, water plants, and other such installations

B. The insured must be legally liable for the loss For the P&I policy to cover a loss, the insured must be legally liable for the loss. The vessel owner may be held liable for the actions of the master, officers, and crew of their ship

In order for a Protection and Indemnity policy to cover a loss which of the following must be TRUE? A. The loss must be total B. The insured must be legally liable for the loss C. The insured must have been the person operating the vessel D. The insurer must conduct an investigation into the loss

A. The actual cash value of what was stolen, with limits for certain classes of property. Since HO-8 policies are for older homes, they insure dwellings at actual cash value, not replacement cost because the cost of rebuilding with the materials and details of the original home would make replacement cost coverage prohibitively expensive. Theft is the actual cash value of what was stolen, with limits for certain classes of property.

Theft coverage under an HO-8 is restricted to A. The actual cash value of what was stolen, with limits for certain classes of property. B. The larger of 10% of the personal property limit or $1,000. C. There is no theft coverage under an HO-8. D. $250.

D. The amount negotiated by the insured The value of a loss is decided according to the actual cash value of the property, the policy limit, the amount needed to repair or replace the property, or the amount reflective of the insured's interest in the property.

Under a dwelling policy, which of the following is NOT a factor in determining a loss? A. The policy limit B. The amount reflecting the insured's interest in the property at the time of loss C. The amount necessary to repair or replace the property D. The amount negotiated by the insured

B. Annual transit Annual transit policies provide coverage for a shipper's or receiver's incoming and outgoing shipments during the year.

Which coverage form would provide coverage for all incoming and outgoing shipments? A. Mail coverage B. Annual transit C. Trip transit D. Motor truck cargo

C. Department of Insurance The Commissioner and the Department of Insurance are charged with monitoring the financial strength and integrity of insurers authorized to conduct business in Pennsylvania in order to determine whether the continued operation of any insurer might be financially hazardous to policyholders, creditors, or the the public in general.

Which of the following authorities monitors the financial strength of insurers? A. Financial Industry Regulatory Authority (FINRA) B. Insurance companies C. Department of Insurance D. National Association of Insurance Commissioners (NAIC)

D. 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 losses would NOT be covered by a homeowners policy? A. A $550 utility trailer blown away by a tornado B. A stolen silver tea set worth $2,000 C. A $800 outboard motor destroyed by hail D. A coin collection valued at $500 lost in a fire

B. Second injury funds programs Second injury funds are a method by which employers manage the risks associated with the hiring of previously injured potential employees

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 A. Competitive state funds B. Second injury funds programs C. Self-insurance plans D. Assigned risk plans

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

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

D. Motor carrier coverage is needed The motor carrier coverage form can cover anyone who transports goods. Because the truckers coverage form does not cover private carriers, the motor carrier coverage will cover both private and common or contract carriers

ABC trucking company recently purchased XYZ manufacturing company. ABC wants to transport the new company's freight with their trucking division. The company also wants to continue to haul freight for the clients it has served for many years. In regards to coverage, which of the following is true? A. The company must choose between being a private and a common or contract carrier. B. Truckers coverage form is needed C. A truckers coverage form is needed along with the business auto coverage form D. Motor carrier coverage is needed

B. $14,000 The limit is not more than $5,000 per person, per accident.

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

D. Mutual Funds not paid out after paying claims and other operating costs are returned to the policyowners in the form of a dividend. If all funds are paid out, no dividends are paid.

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? A. Reciprocal B. Nonprofit service organization C. Stock D. Mutual

C. Anyone while using, with permission, a covered auto owned by the named insured The business auto coverage form provides coverage on covered autos while used by the insured or employees of the insured (or others using the covered auto with permission) but does not cover the exposure of other autos not owned, hired, or leased by the named insured.

Which of the following would be considered an insured under a business auto coverage form? A. Anyone using a covered auto while working in a business of selling, servicing, repairing, or parking autos if it is not the named insured's business B. A partner of the named insured for any covered auto owned by that person or a member of his or her household C. Anyone while using, with permission, a covered auto owned by the named insured D. The owner or anyone else from whom the named insured hires or borrows a covered auto

B. Symbol 9 - non-owned autos only Symbol 1 is used for any auto, Symbol 2 is used for owned autos only, and Symbol 7 is used for specifically described autos only.

Which one of the following symbols used in business auto coverage is correctly described? A. Symbol 7 - hired autos only B. Symbol 9 - non-owned autos only C. Symbol 1 - owned auto only D. Symbol 2 - owned autos subject to no-fault

B. Low deductible Although DIC policies are not standardized, most contain no coinsurance clause, cover flood and earthquake perils, but exclude the named perils. These are high deductible policies, with the minimum deductible of $10,000. A difference in conditions policy is written to supplement coverage provided by other commercial property insurance or to fill in gaps in commercial coverage provided by the other property coverage forms.

An insured purchases a Difference in Conditions policy. It may contain all of the following characteristics EXCEPT A. Exclusion for named perils B. Low deductible C. No coinsurance clause D. Flood and earthquake coverage

C. Within 30 days The annual appointment fee must be paid within 30 days of the bill

How soon after the due date should the insurer pay the agent appointment fees? A. Immediately B. Within 10 days C. Within 30 days D. Within 60 days

A. 2 years If an insured wants to bring a suit against an insurer, the insured must comply with all policy conditions to start action against the insurer within 2 years of the loss.

Within how many years of a loss may an insured bring a lawsuit against an insurer, according to the dwelling policy? A. 2 years B. 3 years C. 5 years D. 7 years

D. 60 days after the construction has ended Coverage under the builders risk form ends if it is abandoned without any plans to complete it or if the insured's interest in the property ceases, or 60 days after the building is occupied, or 90 days after construction is completed.

Coverage under the builders risk form will end in all of the following situations EXCEPT A. Construction has been abandoned B. 60 days after the building became occupied C. The insured has sold the property D. 60 days after the construction has ended

B. 60 days after the construction has ended Coverage under the builders risk form ends if it is abandoned without any plans to complete it or if the insured's interest in the property ceases, or 60 days after the building is occupied, or 90 days after construction is completed.

Coverage under the builders risk form will end in all of the following situations EXCEPT A. The insured has sold the property B. 60 days after the construction has ended C. Construction has been abandoned D. 60 days after the building became occupied

C. Prepackaged software Coverage for reconstructing prepackaged software is specifically excluded

Valuable papers and records form provides coverage for the reconstruction of all of the following types of records EXCEPT A. Deeds B. Historical records C. Prepackaged software D. Blueprints

D. Computer fraud

The transfer of money from inside a banking premises to a person other than a messenger outside those premises or to a place outside those premises is covered under which commercial crime coverage? A. Money orders and counterfeit paper currency B. Other crime coverage C. Outside premises D. Computer fraud

A. Rowboats Aircraft designed for flight and carrying people, motor vehicles, and motor-powered boats are excluded. However, rowboats and canoes would be covered

Which of the following types of property would be covered under Coverage C - Personal Property in a dwelling policy? A. Rowboats B. 2-passenger aircraft C. Any personal watercraft D. Motor vehicles

B. A vehicle purchased 90 days ago A covered auto includes automobiles listed in the declarations, owned trailers, newly acquired autos (for 30 days), nonowned temporary substitute vehicles, and additional temporary vehicles due to repair, servicing, breakdown, or loss.

Which of the following would NOT be eligible for coverage under a personal auto policy? A. A trailer owned by the insured B. A vehicle purchased 90 days ago C. A vehicle listed on the declarations page D. A nonowned temporary substitute vehicle

A. Your farm wagon being towed by your pick up truck Agricultural equipment is not insured on auto policies, except farm wagons or farm implements being towed by a covered auto, in which case the rules for trailers apply.

Which of the following would be considered a covered auto on your personal auto policy? A. Your farm wagon being towed by your pick up truck B. Your pickup truck used for deliveries of your retail business C. Your farm tractor D. Your farm wagon being towed by your tractor

D. The euthanasia of livestock after being hit by a vehicle The livestock coverage form covers the death or necessary destruction of livestock caused by basic causes of loss (except vehicles). Coverage may be extended to include death or necessary destruction by accidental shooting, drowning, electrocution, attack by dogs or wild animals, loading or unloading accidents, and building collapse

Which of the following would the livestock coverage form NOT insure against? A. The euthanasia of livestock suspected of carrying mad cow disease B. Death of livestock caused by accidental drowning C. Death of livestock caused by a tornado D. The euthanasia of livestock after being hit by a vehicle

B. The Surf Side Club Waterfront Restaurant is damaged when flood waters rise and seep into the restaurant Damage caused by flood, surface water, mudslide, water that backs up from a sewer drain, or ground surface water that seeps through foundations, basements, door or windows is not covered.

Which situation would NOT be covered by the basic Causes of Loss form under a commercial property policy? A. Gordon's Motorcycle Heaven is damaged by the sudden sinking of land created by the action of water on limestone B. The Surf Side Club Waterfront Restaurant is damaged when flood waters rise and seep into the restaurant C. Piccolo Pete's Café has its door broken by vandals trying to get inside D. The automatic fire protective sprinkler system inside New Realities Book Shop leaks, causing damage to the store.

B. Assigned risk A residual market is an insurance market or facility that assumes risks that are unacceptable to the voluntary insurance companies. Assigned risk plans are part of the residual market. All admitted insurers participate and share proportionately in insuring these higher-risk drivers.

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? A. Voluntary insurance plan B. Assigned risk C. Fair automobile insurance D. Joint underwriting association

B. The appliance was manufactured in the United States Coverage territory means anywhere in the world if injury or damage results from goods or products manufactured or sold in a coverage territory

A small appliance manufacturer in this state provides products around the globe. A customer in Switzerland is injured using one of its products. If the appliance manufacturer is found liable for the damages, why would its commercial general liability policy cover the customer's claim for bodily injury? A. The appliance manufacturer is negligent B. The appliance was manufactured in the United States C. The commercial general liability policy extends rights to Switzerland D. The appliance manufacturer did not have a permit to sell globally

B. 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

All of the following statements describe the concept of strict liability EXCEPT A. It is applied in product liability cases B. It is imposed on defendants engaged in hazardous activities C. Claimants may need to provide proof that a product defect caused an injury D. It is imposed regardless of fault

D. Inadvertent injury to others caused in the course of advertising the insured's product Personal and advertising injury coverage does not apply to professional advertisers or intentional injury, and does not guarantee the product will perform as advertised.

CGL Coverage B (Personal and Advertising Injury) will cover A. The failure of goods to conform to advertised quality or performance B. Oral or written publication of material the insured knows is false C. An offense committed by an insured whose business is advertising D. Inadvertent injury to others caused in the course of advertising the insured's product

B. $2,500 The penalty for willfully violating the Fair Credit Reporting Act cannot exceed $2,500

If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty? A. $1,000 B. $2,500 C. $5,000 D. $10,000

C. Auto policy The underlying policy is the primary liability policy. In this scenario, it's the insured's personal auto policy

If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy? A. Excess policy B. General liability policy C. Auto policy D. Umbrella policy

A. Issue a cease and desist order If it appears that a person has violated insurance law, the Commissioner would issue a cease and desist order

If it appears that a person has violated an insurance law, the Commissioner would A. Issue a cease and desist order B. Revoke the licensee's license C. Fine the person $10,000 D. Cash in the licensee's surety bond

C. An indemnity contract The insured must not profit from the loss but instead be put back into the same financial condition as before the loss (normally ACV); this is considered an indemnity contract

If the ocean marine contract pays the ACV of the property just prior to the loss, it is A. A demurrage contract B. A valued contract C. An indemnity contract D. A replacement cost contract

D. Open peril coverage on the dwelling and broad form coverage on personal property The open peril coverage applies to property insured under Coverage A and B only.

The HO-3 homeowners policy provides A. Open peril coverage on the dwelling and basic form coverage on personal property B. Basic coverage for the dwelling and broad form coverage for personal property C. All-risk coverage for both the dwelling and personal property D. Open peril coverage on the dwelling and broad form coverage on personal property

B. Coverage that will permit the insured to continue in business without interruption following a property damage loss Extra expense coverage is for money spent to minimize a business interruption after a direct property loss

The extra expense coverage form provides A. Payment for unforeseen expenses an insured may incur while the business is shut down following a property damage loss B. Coverage that will permit the insured to continue in business without interruption following a property damage loss C. Extra money for an insured whose accounts receivable records have been damaged D. Additional money to pay for property damage losses at a covered location

C. Damage to property of others coverage The additional coverage of damage to property of other excludes coverage for borrower farm equipment

The farm liability additional coverage that excludes coverage for borrowed farm equipment is the A. Medical liability coverage B. Bodily injury and property damage coverage C. Damage to property of others coverage D. Supplementary payments coverage

C. Smooth limit A smooth limit is a limit of liability offered as a combined single limit of coverage for all bodily injury to passengers and nonpassengers, and property damage

What do you call a limit of liability offered as a combined single limit of coverage for all bodily injury to passengers and nonpassengers of an aircraft and property damage? A. Continuous limit B. Sleek limit C. Smooth limit D. Sublimit

A. Open peril DP-3 provides open peril coverage for structures insured under Coverages A and B

What kind of coverage does Form DP-3 provide? A. Open peril B. Basic peril C. Named peril D. Broad peril

C. The Safe Depository General Provisions When this coverage is written, the Safe Depository General Provisions must be attached to the policy instead of the general provisions.

When Commercial Crime Coverage Form M - Safe Depository Liability is written, what must be attached to the policy? A. The Robbery and Safe Burglary Provisions B. The General Provisions C. The Safe Depository General Provisions D. The Safe Depository Direct Loss Provisions

B. They are covered if they are used to replace previously owned autos with that coverage If Symbol 7 is used, coverage for newly acquired vehicles applies if the insurer already covers all autos owned by the insured, or if the newly acquired vehicle is replacing a previously owned auto that had that coverage. The insured must inform the insurer that coverage is requested within 30 days of acquiring the vehicle

When Symbol 7 is provided, which of the following statements is true with regards to newly acquired autos? A. They are automatically covered only for 30 days B. They are covered if they are used to replace previously owned autos with that coverage C. They are covered only until the end of the policy term D. They are not covered until the insurer is notified

B. Sue and labor The master and crew are required to sue and labor to prevent further loss. If they do not, the insurer may refuse to pay. The insurer will pay expenses incurred in trying to keep the loss as small as possible.

Which clause of a hull policy says that if the insured does not take immediate steps as soon as possible to minimize the loss and protect the property from further loss, the coverage may be invalidated? A. Protection and indemnity B. Sue and labor C. Pilotage and towage D. War and strikes

B. Stating that dividends are not guaranteed In general, insurance advertisements cannot include an untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts it.

Which of the following actions does NOT constitute false advertising? A. Using names that disguise the true nature of a policy B. Stating that dividends are not guaranteed C. Misrepresenting the terms of a policy D. Representing an insurance policy as a share of stock

A. Any loans required to offset uncollectible amounts Loan principal amounts are not covered under the form. However, other expenses, such as interest on necessary loans, are covered.

Which of the following is NOT covered under accounts receivable coverage form? A. Any loans required to offset uncollectible amounts B. Interest on loans required to offset uncollectible amounts pending payment of the insurance proceeds C. Sums due the insured that are uncollectible due to a covered loss D. 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 Loan principal amounts are not covered under the form. However, other expenses, such as interest on necessary loans, are covered

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

A. It may be written on a reporting form for the completed value of the structure Builders risk insurance is a property insurance form that provides direct damage coverage on structures while they are under construction. Coverage may be written on a completed value form (requires 100% coinsurance) or reporting form (values are reported as completed)

Which of the following statements concerning the builders risk coverage form is correct? A. It may be written on a reporting form for the completed value of the structure B. It usually continues in effect for one year after completion of the structure C. It covers the interest of the builder only and cannot include coverage for the owner D. It may not be written for perils other than fire and extended coverage.

A. The business income losses are payable for 12 consecutive months following occurrence Under the BOP, business income losses are payable for only 12 consecutive months following the occurrence of the direct physical damage

Which of the following statements is CORRECT regarding business income coverage under the businessowners policy (BOP)? A. The business income losses are payable for 12 consecutive months following occurrence B. The business income coverage is subject to coinsurance limitations of 50% C. The business income coverage has an aggregate dollar limit D. The business income coverage has a monthly limitation and a set benefit period

A. Increased value and excess liability clause The increased value and excess liability clause pays for the same loss covered under the underlying policy after its limit is paid in full. In this example, the underlying coverage would pay $800,000, and the increased value and excess liability clause would pay the additional $70,000 it would cost 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? A. Increased value and excess liability clause B. Paid total loss clause C. Constructive total loss D. Excess hull coverage