Practice Test 6

Under the Emergency Program in all states except Alaska and Hawaii, the NFIP will insure a single family residence for up to: a. $35,000 b. $100,000 c. $150,000 d. $250,000

a. $35,000

If the insured purchases a new aircraft to replace a scheduled aircraft, there is automatic coverage provided the insurance company is notified within ______ days of the purchase and premium payment is made a. 30 b. 45 c. 60 d. 10

a. 30

The liberalization clause of a BOP automatically applies favorable expansions of coverage, for which a premium is not charged if the changes are made during the policy period or within _____ prior to the effective date of the policy a. 45 days b. 6 months c. 3 months d. 30 days

a. 45 days

The most comprehensive coverage provided by the Dwelling forms is found on the: a. DP-3 b. DP-1 c. DP-2 d. DP-4

a. DP-3

Isabelle is covered under a standard HO-6 form and must vacate her condominium because an adjacent unit has suffered extensive fire damage. Isabelle will need to collect additional living expenses from Coverage D of her HO-6 form. How will this amount be calculated? a. Isabelle will receive 50% of the Coverage C limit she selected when she purchased the policy b. Isabelle will receive 30% of the Coverage C limit she selected when she purchased the policy c. the HO-6 specifies a Coverage D limit of $5,000 d. the HO-6 specifies a Coverage D limit of $3,000

a. Isabelle will receive 50% of the Coverage C limit she selected when she purchased the policy

Which of the following coverage symbols would be designated on the Declarations of a Commercial Auto policy to cover a customers auto left with the insured to be serviced? a. Symbol 30 b. Symbol 31 c. Symbol 32 d. Symbol 33

a. Symbol 30

Paolo has an expensive boat and is purchasing insurance to cover it. He is discussing the deductible and his agent suggests a deductible amount that Paolo could pay if the Hull of his boat was severely damaged. Which of the following types of deductibles would be best for Paolo? a. a percentage deductible b. a flat deductible c. a specified deductible d. a stated deductible

a. a percentage deductible

The aircraft physical damage (hull) deductible is normally expressed as: a. a percentage of the value of the aircraft b. a flat deductible selected by the insured at policy inception c. a disappearing deductible that gradually reduces the amount as the aircraft depreciates d. a franchise deductible that applies only when the minimum value of the loss specified in the policy is reached

a. a percentage of the value of the aircraft

The amount it would cost to repair or replace property minus depreciation, is the definition of: a. actual cash value b. replacement cost c. market value d. functional replacement cost

a. actual cash value

An uninsured motor vehicle under a personal auto policy does not include: a. an abandoned car used as a residence b. a hit and run driver c. a vehicle carrying liability insurance in an amount less than required by a state's financial responsibility law d. a car whose bodily injury liability coverage has expired

a. an abandoned car used as a residence

In the event of a catastrophe, the Director may permit nonresident adjusters to handle claims in South Carolina if the nonresident adjuster exhibits: a. evidence of an adjusters license in his/her home state b. a surety bond in the amount of $25,000 c. an ability to handle catastrophic losses d. all of the answer choices are correct

a. evidence of an adjusters license in his/her home state

An insured who is covered under a Commercial Property policy with the Building and Personal Property Coverage form attached, suffers a loss to business personal property. The insurance company has paid the claim, but now the property has been recovered. All of the following statements are TRUE regarding how this situation should be handled according to the form, EXCEPT: a. the insured must incur any expenses to recover the property b. if the insured recovers the property, they must promptly notify the insurer c. the insured has the right to keep the recovered property and return the claim payment d. the insurer can request to keep the recovered property because the claim was already paid

a. the insured must incur any expenses to recover the property

Which of the following losses may not be determined by an adjuster? a. use of rental vehicle b. bodily injury c. medical bills d. loss of income

a. use of rental vehicle

The deductible that may be allowed under uninsured motorist property damage is: a. $250 b. $200 c. $500 d. $100

b. $200

Alternative dispute resolutions (ADRS) are procedures to help settle disputes using all of the following EXCEPT: a. mediation b. arbitration c. litigation d. negotiation

c. litigation

Blake has been planning to quit his job as a clerk in a US Court House and open an antique store. After doing some research and finding that antiques do not sell well, he decides to abandon the plan and stay on at the court house. Blake is practicing: a. risk transference b. risk retention c. risk avoidance d. risk reduction

c. risk avoidance

if the Navigational Limits or Lay-Up period shown on the Declarations page of a standardized Yacht Policy is breached because of something out of the control of the insured? a. no action needs to be taken unless the breach is ongoing for more than 30 days b. no action Is necessary at all c. the insurer must be notified within 10 days after the breach and any additional premium that Is due must be paid d. the insurer must be notified within 10 days after the breach and no additional premium is assessed.

c. the insurer must be notified within 10 days after the breach and any additional premium that Is due must be paid

Which of the following watercraft would be covered under Section II- Liability of the Homeowners forms? a. watercraft with a 40 horsepower outboard motor b. a 28 ft sailboat c. watercraft with a 100 horsepower inboard motor d. a watercraft in storage

d. a watercraft in storage

Which of the following vehicles is NOT mobile equipment according to the CGL definitions? a. a self-propelled snow plow b. a bulldozer c. a roller used for road resurfacing d. a forklift

a. a self-propelled snow plow

Uninsured motorist coverage in South Carolina; a. may not be rejected by the insured b. is not required c. must at least be offered d. may be rejected by the insured

a. may not be rejected by the insured

Sam and Dan are working to clean out the gutters around the roof on Sam's house. Sam and Dan are standing at the top of separate ladders that are propped against the side of Sam's house, when Dan's ladder begins to wobble and ultimately falls into Sam's ladder. Both men and their ladders crash to the ground. Whose injuries will be covered by Sam's Homeowners policy under Coverage E- Personal liability? a. only dan's injuries would be covered b. neither sam's nor dan's injuries would be covered c. both sam and dan's injuries would be covered d. only sam's injuries would be covered

a. only dan's injuries would be covered

Under a directors and officers policy, when can the insurance company reimburse the corporation for reimbursement to directors and officers for defense and damages paid in legal proceedings? a. when allowed by its bylaws b. when approved by the board of directors c. never, because these expenses are excluded d. anytime there is a claim

a. when allowed by its bylaws

How long are benefits paid to the surviving spouse of an employee who has died in a work related accident? a. 400 weeks b. 500 weeks c. for life d. until retirement age or remarriage

b. 500 weeks

Heathers house is fully insured with a DP-3 with a limit of $85,000. One day, the house is struck by lightning, and despite the fire departments efforts, burns to the ground. She still had a balance of $20,000 left on her mortgage at the time of the fire. What is the maximum indemnification that would go to Heather, the fire department, and her mortgage lender respectively? a. $64,500; $500; $20,000 b. $84,500; $1,000; $20,000 c. $65,000; $500; $20,000 d. $85,000; $1000; $85,000

c. $65,000; $500; $20,000

The Terrorism Risk Insurance Program Reauthorization Act of 2015 excludes all acts of terrorism if the act is committed as part of the course of a war declared by Congress with the exception of one line of insurance. Which of the following lines of insurance is the only one that would still be covered for loss or damage due to acts of war? a. commercial property b. excess lines coverage c. directors and officers liability d. workers compensation

d. workers compensation

Under the additional coverages of the standardized BOP, how much is the limit for "Pollutant Clean Up and Removal" if caused by a covered loss? a. $10,000 in any 12 month period b. an additional $25,000 if the policy limits are exhausted when paying for the actual loss c. 25% of the loss as long as it does not exhaust the policy limits d. $10,000 during the entire policy period

a. $10,000 in any 12 month period

What is the standard minimum limit of liability for Coverage E- Personal Liability coverage on Homeowners policies? a. $100,000 per occurrence b. $50,000 per occurrence c. $1,000 per person d. $1,000,000 per occurrence

a. $100,000 per occurrence

What symbol is used for non-owned auto under a Business Auto Policy? a. Symbol 9 b. Symbol 1 c. Symbol 5 d. Symbol 8

a. Symbol 9

An insured's car is damaged in an auto accident. While it is being repaired, the body shop loans the insured a replacement. From a coverage standpoint, this replacement vehicle is known as: a. a temporary substitute b. a non-owned auto c. a newly acquired auto d. a replacement vehicle

a. a temporary substitute

Many stationary objects, such as bridges, tunnels and power lines fall within the nationwide marine definition because they are considered to be: a. instrumentalities of transportation and communication b. of substantially high values c. capable of being transported d. exposed to the same perils as vessels at sea

a. instrumentalities of transportation and communication

Which of the following would be paid under the Business Income form of a standardized Commercial Property policy? a. coverage for repairing the physical damage to the property b. coverage for continuing operating expenses while damaged property is being repaired c. coverage for planned upgrades to damaged property d. coverage for the cost of goods sold while the damaged property is being repaired

b. coverage for continuing operating expenses while damaged property is being repaired

Which of the following property insurance cause of loss forms provides coverage for all risks of loss? a. the broad form b. the special form c. the reporting form d. the basic form

b. the special form

The insured carries an unendorsed DP-3 dwelling policy on his home and personal contents. While traveling abroad someone broke into the home and stole $200 in cash, a shotgun valued at $1,000 and other household items valued at $2,000. Damage caused by the burglars is $1,500. Assuming no deductible applies to their coverage how much would be paid? a. $3,200 b. $4,500 c. $1,500 d. $2,000

c. $1,500

A formal request to an insurance company requesting a payment according to the terms of an insurance contract is known as: a. a notice of lawsuit b. a declaratory judgement request c. an insurance claim d. a service of process

c. an insurance claim

Which of the following would NOT be covered under a CGL policy? a. personal injury b. advertising injury c. bodily injury caused by owned autos, off insured premises d. property damage liability

c. bodily injury caused by owned autos, off insured premises

Under a loss sustained Commercial Crime form, coverage applies: a. while the policy is in force and for up to one year after the policy expires b. while the policy is in force and for up to 60 days after the policy expires c. Only while the policy is in force d. while the policy is in force and for up to 90 days after the policy expires

a. while the policy is in force and for up to one year after the policy expires

Under a Flood Insurance RCBAP will settle claims on what basis? a. functional replacement cost b. replacement cost c. actual cash value d. market value

b. replacement cost

Which of the following would NOT be covered under the specified cause of loss physical damage coverage under a Business Auto policy? a. fire b. lightning c. glass breakage d. flood

c. glass breakage

If an insurance company covered an excluded claim it may have to continue paying other such claims because of: a. estoppel b. indemnity rule c. comparative payment d. policy language

a. estoppel

An agent with a surplus/excess lines license, will place insurance business with an unauthorized insurer when: a. the coverage cannot be obtained from insurers authorized within the state b. the coverage can be obtained from an unauthorized insurer at a lower premium c. the coverage can be obtained from an unauthorized insurer with fewer coverage exclusions d. the unauthorized insurer has a better reputation than authorized insurers offering the same coverage

a. the coverage cannot be obtained from insurers authorized within the state

The standard Personal Auto policy provisions state that the insurance company has subrogation rights against any person permitted to use a covered auto, under all coverages, EXCEPT: a. Part C b. Part A c. Part D d. Part B

c. Part D

Which of the following would be covered under the personal property (contents) coverage of an NFIP policy? a. the foundation of the insured building b. permanently installed carpeting c. the insureds riding lawn mower kept inside an attached garage d. window blinds

c. the insureds riding lawn mower kept inside an attached garage

When an insured is fulfilling the duty of proving a loss by taking an inventory of the damaged property, who pays the expenses incurred by the insured? a. the insured b. the insurer c. the adjuster will provide funds to pay for these expenses d. who pays these expenses will be negotiated at the settlement of the claim

a. the insured

Which of the following coverages is included as "no fault" coverage on the standardized Personal Auto policy? a. uninsured motorists coverage b. medical payments and physical damage c. a state mandated no fault coverage plan d. liability coverage

b. medical payments and physical damage

A claim reserve is set "statistically" by using which of the following reserving techniques? a. the roundtable method b. the formula method c. the individual case method d. the claim committee method

b. the formula method

A public adjusters fiduciary responsibility is to: a. the attorney handling the claim on behalf of the principal b. the insured c. the state Department of Insurance d. the insurer

b. the insured

Whose responsibility is it to complete a proof of loss? a. the insurers adjuster b. the agent or producer c. the insurer d. the claimant

d. the claimant

Other private structures on a farm policy are defined as: a. another private structure on the property separated from the dwelling by a clear space b. any other structures on the farm property c. barns, sheds, silos, etc. d. none of the responses listed are correct

a. another private structure on the property separated from the dwelling by a clear space

A payment bond is what type of instrument? a. financial guarantee bond b. performance bond c. bid bond d. fidelity bond

a. financial guarantee bond

Under Coverage E- Scheduled Farm Property, how is the property covered? a. for the limit scheduled in the Declarations b. value Basis c. blanket coverage d. replacement cost basis

a. for the limit scheduled in the Declarations

An insured with auto limits of 10/20/10 causes bodily injuries to a third party of $8,000. After losing in court he has defense costs of $5,000. What is the insurance company's responsibility to pay? a. $8,000 b. $5,000 c. $13,000 d. $10,000

c. $13,000

The insured owns a one-family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the detached garage? a. $10,000 b. $15,000 c. $20,000 d. $0

c. $20,000

At the time of fire damage to a covered auto under a business auto policy, the auto's actual cash value is $9,200. The cost to fully repair the damage would be $11,500. If the policy has a $250 comprehensive deductible, what amount will the insurer pay for the loss? a. $11,500 b. $9,200 c. $8,950 d. $11,750

c. $8,950

Which of the following most closely describes a claim reserve? a. an estimate of all losses paid to date on claims b. an expectation of losses incurred but not yet reported c. an amount expected to be ultimately paid of an open claim d. an amount set aside to pay a claimants attorney

c. an amount expected to be ultimately paid of an open claim

Which of the following is the basis for insuring property under Section I of the Businessowners policy? a. coverage is written on a named peril basis b. coverage is written on a broad peril basis c. coverage is written on an open peril basis d. coverage is written on a basic peril basis

c. coverage is written on an open peril basis

In which of the following situations should an adjuster consider obtaining a non-waiver agreement? a. when requested by an insurer b. when subrogation may be involved c. in dealing with a potential coverage dispute d. when directed by the court

c. in dealing with a potential coverage dispute

Which of the following is NOT a reason to purchase a Dwelling policy instead of a Homeowners policy? a. the limits of liability under a Dwelling policy are lower than under a Homeowners policy, permitting the insured to purchased coverage for a low value dwelling b. the dwelling policy does not require the dwelling to be owner-occupied and the Homeowners policy does required the covered dwelling to be owner-occupied c. the dwelling policy provides higher limits of liability than the Homeowners policy d. Dwelling that may not meet the Homeowners policys strict underwriting requirements can be insured under a Dwelling policy

c. the dwelling policy provides higher limits of liability than the Homeowners policy

Insurance companies often outsource a large percentage of their processes to Third Party Administrators. All of the following facts about TPAs are true, EXCEPT: a. TPAs can collect premiums from insureds b. TPAs must be licensed and renew their licenses annually c. TPAs can adjust and process claims d. TPAs assume the risk on the policies they handle

d. TPAs assume the risk on the policies they handle

The penalty for acting as an adjuster without a license is: a. a fine of not more than $5,000 and six months in jail b. a fine of not more than $10,000 and six months in jail c. a fine of not more than $10,000 and one year in jail d. a fine of not more than $10,000 and/or two years in jail or both

d. a fine of not more than $10,000 and/or two years in jail or both

The type of auto body frame that is most often used in today's automobile and is a single molded unit is known as: a. a universal frame b. a subframe c. a conventional frame d. a unibody frame

d. a unibody frame

When is a nonresident of South Carolina permitted to hold an adjuster license in the state? a. at the direction of the Director of Insurance b. if South Carolina has a reciprocal agreement with the adjusters home state c. if the adjusters home state will allow licensees of South Carolina to hold a nonresident license in that state d. all of the choices are correct

d. all of the choices are correct

Which of the following is the provision in a liability policy that allows an insured to report incidents or circumstances that result in claims being filed in the future? a. defense within limits b. other insurance c. supplementary payments d. discovery provision

d. discovery provision

A physicians, surgeons, and dentists professional liability policy would cover which of the following? a. premises liability only b. negligence of the professionals and criminal acts c. negligence of the professionals and premises liability d. negligent acts of a staff nurse or aide

d. negligent acts of a staff nurse or aide

A non-residential building in Iowa in a community that was admitted to the NFIP Emergency Program would be provided _________ of coverage for the building a. $50,000 b. $150,000 c. $100,000 d. $30,000

c. $100,000

Which of the following is not eligible for coverage under any of the Homeowners forms? a. a tenant living in an apartment building b. a condominium unit-owner c. a residence on a farm d. a mobile home used as a permanent residence

c. a residence on a farm

If the insured, covered under a Homeowners policy, suffers the loss of an article that is part of a pair or set. All of the following are options for the insurer to settle the loss, EXCEPT: a. repair any part to restore the pair or set to its value before the loss b. pay the difference between the actual cash value of the property before and after the loss c. pay for the replacement cost of the entire pair or set d. replace any part to restore the pair or set to its value before the loss

c. pay for the replacement cost of the entire pair or set

Workers compensation pays up to ________ as a covered burial expense a. $10,000 b. $5,000 c. usual and customary d. $12,000

d. $12,000

The time period after the policy inception and before the policy expiration is known as: a. the waiting period b. the statute of limitations c. the underwriting period d. the policy period.

d. the policy period.

All of the following are situations where a Commercial Umbrella policy would be triggered to provide coverage, EXCEPT: a. the policy limits of the underlying policy have been exhausted b. to pay a loss that is excluded by the underlying liability policy, but not excluded by the Commercial Umbrella policy c. payment on previous losses by the underlying liability policy has reduced its aggregate limit so that a subsequent loss is not fully covered d. the underlying liability policy limits are sufficient to pay the entire claim

d. the underlying liability policy limits are sufficient to pay the entire claim

Indemnify Insurance has been using a specific ISO Homeowners forms for several years in all states where they are an admitted insurer. Indemnify Insurance has recently been admitted to an additional state, but laws of that state contradict a few of the provisions in the ISO form. How is this situation likely to be handled? a. indemnify insurance will need to change their underwriting practices in order to issue a Homeowners policy that falls in line with state laws b. indemnify insurance can write Homeowners policies as usual because the nationally standardized form supersedes state law c. indemnify insurance will be prohibited to issue Homeowner d. A statutory form will be drawn up and attached to each Homeowners policy Indemnify Insurance writes in the state

A statutory form will be drawn up and attached to each Homeowners policy Indemnify Insurance writes in the state

All of the following are excluded under the Commercial Crime "Inside the Premises- Theft of Money and Securities" insuring agreement, EXCEPT: a. dishonest acts of customers b. fire c. vandalism d. accounting errors

a. dishonest acts of customers

All of the following statements are TRUE regarding the coverage of appurtenant structures covered by the NFIP policy, EXCEPT: a. the dwelling coverage form under the NFIP provides up to 10% of the building coverage limit for appurtenant structures as an additional amount of insurance b. they must be located in an eligible community c. the only appurtenant structure covered under the NFIP is a detached garage d. the dwelling coverage form under the NFIP provides up to 10% of the building coverage limit for appurtenant structures but the coverage reduces the total amount of building coverage available

a. the dwelling coverage form under the NFIP provides up to 10% of the building coverage limit for appurtenant structures as an additional amount of insurance

The purpose of licensing surplus lines brokers in a given state is: a. to allow them to place business with nonadmitted insurers b. to allow them to place business with admitted insurers c. to allow them to place business with domestic insurers d. to allow them to place business with foreign insurers

a. to allow them to place business with nonadmitted insurers

All of the following statements are true regarding the Flood Coverage Endorsement to the Commercial Property policy, EXCEPT: a. there is no coverage for loss caused by a flood that begins before or within 72 hours after the inception date of the endorsement b. back-up or overflow of a sewer or drain is covered if that overflow occurs within 48 hours after the flood recedes and the overflow was caused by the flood c. destabilization of land caused by flooding of subsurface land areas is not covered d. the cost to remove debris of covered property is included in the endorsements limit of liability and it not an additional amount of insurance

b. back-up or overflow of a sewer or drain is covered if that overflow occurs within 48 hours after the flood recedes and the overflow was caused by the flood

Which of the following statements best describes a third party over action in workers compensation insurance? a. damages the employer wins in court from a manufacturer due to malfunctioning equipment that injures employees b. damages for which the employer is legally liable to pay, that are won from a third party by an injured worker. Then, the third party sues the employer c. damages sustained by a third party while on the insured location d. damages a manufacturer seeks from an employer for damage to their reputation when an employee misuses their equipment due to an employer not providing proper training

b. damages for which the employer is legally liable to pay, that are won from a third party by an injured worker. Then, the third party sues the employer

The insured has liability coverage with a limit of $300,000 per occurrence. She purchases a $1 million personal Umbrella to extend and broaden her coverage. The Umbrella policy includes a $10,000 retained limit. The insured becomes liable for $800,000 in damages that are excluded by the underlying policy, but is covered by the umbrella policy. How would this case likely by settled? a. the underlying policy would pay nothing, the insured would pay $10,000 and the Umbrella policy would pay $200,000 b. the insured would pay $10,000 and the Umbrella policy would pay $790,000 c. the underlying policy would pay $300,000 and the insured would pay $500,000 d. the underlying policy would pay $300,000 and the Umbrella would pay $500,000

b. the insured would pay $10,000 and the Umbrella policy would pay $790,000

An adjuster license is for a term of: a. 2 years b. 1 year c. An indefinite period of time d. 3 years

c. An indefinite period of time

Which of the following are considered unfair claim settlement practices in South Carolina? I. Provisioning misleading information with respect to the coverages II. Failing to acknowledge with reasonable promptness pertinent communications with respect to a claim III. Attempting in good faith to make prompt, fair and equitable settlements of claims on which liability has become reasonably clear IV. Compelling policyholders or claimants to initiate suits to recover amounts due under a policy a. I, II, and III b. II, III, and IV c. I, II and IV d. I and II only

c. I, II and IV

All of the following are considered a "community" under the NFIP, EXCEPT: a. an incorporated city b. a town c. a county d. a village

c. a county

What does the term "unvalued basis" mean as it relates to ocean marine hull insurance? a. a policy wherein the amount of coverage is stated b. a policy designed to cover open lands c. a policy where the value is not declared until after the loss d. a policy where the value is determined by the exposure

c. a policy where the value is not declared until after the loss

With workers compensation insurance, an experience rating serves all of the following purposes, EXCEPT: a. to encourage employers to prioritize safety b. to reward employers with lower premiums if they have had a good loss experience c. to provide a reason that employers with a poor loss experience can be denied coverage d. to provide a financial incentive for employers to control hazards in the workplace

c. to provide a reason that employers with a poor loss experience can be denied coverage

After a standard Personal Automobile policy has been in effect for more than 60 days, the insurer may cancel the policy for all of the following reasons EXCEPT: a. non payment of premium b. material misrepresentation in obtaining the policy c. a regular operator of the vehicle has had his drivers license suspended or revoked d. a regular operator of the vehicle has received a citation for speeding

d. a regular operator of the vehicle has received a citation for speeding

Willies Widgets has been earning a large portion of their market share for 10 years. During Willie's 11th year in business. Wynonnas Widgets opens and her superior marketing practices leaves Willie unable to continue in business. Which of the following types of risk caused Willie's loss? a. particular risk b. fundamental risk c. static risk d. dynamic risk

d. dynamic risk

Torts that can be covered by insurance policies include all of the following, EXCEPT: a. intentional torts committed with intent, but the results of the act had unintended consequences that caused harm to another b. a negligent tort in which a failure to act, caused harm to another c. vicarious liability due to an employee causing harm to another and the negligence is imputed to the employer d. intentional torts purposely committed to cause harm to another

d. intentional torts purposely committed to cause harm to another

The additional coverage for debris removal under the standardized Building and Personal Property coverage form will only be paid if: a. the insured reports the debris removal expenses to the insurance company in writing within 90 days of the loss b. the debris belongs to someone other than the insured and the property is of a type that would not ordinarily be covered under this coverage form c. the insured reports the debris removal expenses to the insurance company in writing within 180 days of the loss d. the expenses were incurred to remove pollutants from land

c. the insured reports the debris removal expenses to the insurance company in writing within 180 days of the loss

When the triggering event threshold has been met under the Terrorism Risk Insurance Program Reauthorization Act of 2015, the insurers deductible amount: a. is 20% of the total amount of commercial losses paid in the previous calendar year b. Is 10% of the total amount of losses the insurer has paid from the date the insurer entered the program c. the insurers deductible is calculated at 20% of the insurers direct earned premiums for commercial insurance d. The insurers deductible is calculated at 20% of the insurers earned and unearned premiums for all insurance policies delivered

c. the insurers deductible is calculated at 20% of the insurers direct earned premiums for commercial insurance

To qualify as an adjuster, the applicant must comply with all of the following EXCEPT: a. have sufficient knowledge of the business of insurance b. be of good moral character c. has not violated any insurance laws of South Carolina d. be a resident of South Carolina

d. be a resident of South Carolina

The optional coverage for "employee dishonesty" under a standard BOP provides a "discovery period" for the insured to discover the dishonest act and have coverage still apply. Which of the following statements best describes the "discovery period" for this optional coverage? a. the "discovery period" is three years from the end of the policy period b. the "discovery period" is one year from the date the dishonest act took place c. the "discovery period" is two years from the date the dishonest act took place d. the "discovery period" is one year from the end of the policy period

d. the "discovery period" is one year from the end of the policy period

Which of the following is one of the duties of the insured as specified in a Commercial Inland Marine policy? a. submit to an examination under oath if the insurer requests it b. accept responsibility for the loss immediately c. leave damaged property and undamaged property together because moving the property could compromise the claims investigation d. notify law enforcement immediately at the time of the loss, regardless of whether or not the loss involved criminal activity

a. submit to an examination under oath if the insurer requests it

Which of the following would be covered under the mobile equipment endorsement attached to a Commercial Auto policy? a. fork lift b. a motorcycle c. a company car d. a company truck with a removal snow plow attached

a. fork lift

Which of the following vehicles is considered a temporary substitute auto under a personal auto policy? a. an auto loaned by the garage while the vehicle of the insured is being repaired b. a pickup truck owned by a neighbor and borrowed by an insured to run an errand c. an auto purchased by an insured to replace a previously owned vehicle d. an auto rented by an insured when the insured is on vacation

a. an auto loaned by the garage while the vehicle of the insured is being repaired

When an insurer is called upon to defend a suit under a CGL policy, the amount that can be paid for the defense costs is: a. not limited b. subject to the per occurrence limit c. subject to the general aggregate limit c. subject to the same amount as the amount of coverage for damages

a. not limited

What is the purpose of the "sue and labor clause" in ocean marine insurance? a. pertains to protecting the ship and other property from further damage b. affects the benefits payable to injured crew members c. defense costs from suits from passengers d. a clause in a labor contract with the crewmembers

a. pertains to protecting the ship and other property from further damage

Emily is an adjuster for Indemnify Insurance and she has been assigned to a first party claim that was submitted by Harvey. Emily has set up several meetings with Harvey to obtain documents and records relevant to the claim investigation but Harvey has not shown up. Emily has also placed many phone calls to Harvey that he has not answered, nor has he returned the calls when Emily has left a message for him to do so. Which of the following statements is TRUE regarding how this claim will be concluded? a. the insurance company has legitimate grounds to deny the claim based on Harvey's breach of duty to cooperate in the investigation of the claim b. The insurance company does not have grounds to deny the claim simply because Harvey has refused to meet with Emily c. the insurance company has legitimate grounds to deny the claim because of the time and money lost attempting to contact Harvey d. the insurance company is required by state statute to settle the claim using the information available to them when an insured refuses to assist in the investigation of a claim

a. the insurance company has legitimate grounds to deny the claim based on Harvey's breach of duty to cooperate in the investigation of the claim

The Business Auto policy liability exclusion pertaining to pollution removes coverage for each of the following, EXCEPT: a. the cost of governmentally ordered clean-up of pollutants b. the escape of pollutants while being transported by a covered auto c. the escape of pollutants caused by damage to the property containing them when the damage results from the use of the a covered auto d. the escape of pollutants before they are accepted by the insured for movement onto a covered auto

c. the escape of pollutants caused by damage to the property containing them when the damage results from the use of the a covered auto

Which of the following statements best describes a "representation" made in an insurance application? a. a representation is a statement made by the applicant that he believes to be true when made, but which might prove to be false b. a representation is a promise by the applicant that certain conditions will continue to exist throughout the policy term c. a representation explains the promise made by the insurance company d. another name for a representation is a warranty

a. a representation is a statement made by the applicant that he believes to be true when made, but which might prove to be false

Willies Widgets has been covered under a Crime policy for several years but has cancelled the policy in favor of purchasing another policy through a different insurer. Which of the following statements is CORRECT regarding the "Extended Period to Discover Loss" condition of the Crime Policy? a. Willie discovers a loss two weeks after the cancellation date of the policy. The effective date of his new policy is not for another month. Willie can expect his cancelled policy to pay for the loss b. Willie discovers embezzlement from his employee benefits plan 2 years after he cancelled his policy. He can expect to have the loss covered by his cancelled policy because the extended period to discover loss with regard to employee benefit plans is still in effect c. Willie discovers a loss two weeks after the cancellation date of the policy. The effective date of his new policy began immediately at the cancellation of his previous policy. Willie can expect to collect under his cancelled policy because he was covered by that policy at the time the loss occurred d. Willie discovers a loss two weeks after the cancellation date of the policy. The effective date of his new policy began immediately at the cancellation of his previous policy. Willie can expect to collect under both his cancelled policy and his new policy

a. Willie discovers a loss two weeks after the cancellation date of the policy. The effective date of his new policy is not for another month. Willie can expect his cancelled policy to pay for the loss

Universal Foods buys the Chewy Cereal Company. After the purchase is completed, a well known actress sues Universal, claiming that her picture was used without her permission in a Chewy advertisement. The advertisement appeared some time before Universal acquired Chewy. Will Universal's Commercial General Liability policy cover this claim? a. Yes. It is a claim for invasion of privacy, which is covered as personal injury. b. No. Personal injury coverage with respect to newly acquired organizations does not apply to offenses committed before the acquisition. c. Yes. Universal is liable for actions of Chewy before the purchase took effect as they are assuming all obligations of the previous owner. d. No. There is no personal injury coverage under the policy with respect to newly acquired organizations before or after.

b. No. Personal injury coverage with respect to newly acquired organizations does not apply to offenses committed before the acquisition.

An insured has her dwelling covered by an HO-3 form, with a $500,000 limit of liability for Coverage A. A fire breaks out and the dwelling is a total loss. The entire $500,000 limit is used to cover the direct physical damage to the dwelling. However, there is a large amount of debris from the burned structure covering the insureds property that will need to be removed. In this situation, how will the cost of the debris removal be paid? a. 5% of the Coverage A limit is set aside to cover debris removal. this means that the insured must pay $25,000 out of pocket to cover the direct physical damage to the dwelling itself. b. when the entire coverage A limit is used to cover the direct physical damage to the dwelling, an additional 5% of the Coverage A limit will be added to cover debris removal. c. the policy will only pay its Coverage A limits and the insured must pay for the debris removal out of pocket d. An unlimited additional amount of insurance is covered on all of the Homeowners forms for debris removal because the insured cannot begin to rebuild until the debris is removed.

b. when the entire coverage A limit is used to cover the direct physical damage to the dwelling, an additional 5% of the Coverage A limit will be added to cover debris removal.

Joe makes a small down payment on a sports car and finances the remainder of the cost of the car with Benevolent Bank Inc. He also purchases a standard Personal Auto policy through Binders Keepers Insurance Company to cover the car. Joe makes one car payment before he is caught with $200,000 of drugs in the car on his way to deliver it to addicts for money. Joe is arrested and the car is permanently confiscated by the authorities. How will coverage apply in this situation? a. the policy Joe purchased through Binders Keepers will not apply, but Benevolent Bank would have purchased coverage on the car and it would apply b. the policy would be voided from inception and no coverage will apply c. the policy will cover the damage to the body of the automobile on behalf of Benevolent Bank, Inc d. the police would have coverage that would pay for the damage

c. the policy will cover the damage to the body of the automobile on behalf of Benevolent Bank, Inc