Pratice Test
a woman has scheduled her tanzanite ring for $2000 on an inland marine endorsement to her homeowner's policy. In the event of a covered loss, how will the claim be paid disregarding any deductible?
$2000 from homeowners
A BOP is written with an occurrence limit of $300,000 and an aggregate limit of $600,000. Following a $50,000 loss, what are the remaining limits?
$300,000 occurrence and $550,000 aggregate
If an HO-3 has a coverage limit of $100,000 on the dwelling, how much coverage would automatically apply to cover the insured's personal property in Coverage C?
$50,000
A building owner purchases a property policy in the amount of $60,000 on his $100,000 building. The contract contains an 80% coinsurance clause. If he suffers a covered loss of $10,000 he will receive a settlement in the amount of ______ disregarding the deductible.
$7,500
What is the equivalent single limit of liability to split limits of 50/100/50?
150,000
Tom is driving with auto limits of 100/300/100 when he causes an accident injuring two people in the amounts of $60,000 and $125,000. What is the maximum his policy will pay for the accident?
160,000
a flood policy becomes effective at what time?
30 days following the date of application
The minimum flood deductible is
500
Under a personal articles floater, a pair of antique bookends is scheduled for $1000. When one of the bookends is destroyed by a covered peril, the remaining bookend is worth only $250. Assuming that the destroyed bookend cannot be replaced and disregarding any deductible, how much will the insured receive for the loss?
750
All of the following are true about a businessowners policy except The BOP is a package policy for small, low-risk businesses. The basic BOP deductible is $500. A BOP can be written on an open perils basis. Both the additional coverages and the extensions of coverage are earned under a BOP by maintaining 80% insurance to value.
A BOP can be written on an open perils basis.
Which is not covered under a personal auto policy? The insured's trailer A temporary substitute auto A new auto acquired 3 days ago A company car provided the insured
A company car provided the insured
Which vehicle is excluded from coverage under your personal auto policy? An auto you are provided by the repair shop when yours is in for repair Your neighbor's car that you borrow infrequently A company vehicle provided for your regular use A new car that you take for a test drive
A company vehicle provided for your regular use
Personal auto policy collision coverage will not pay in which situation: An insured flips his auto into a ditch A thief steals the car and then wrecks it A friend borrows the car and smashes into a mailbox An insured sustains a collision in a temporary substitute vehicle
A thief steals the car and then wrecks it
Without endorsement, a commercial property policy pays losses on what basis?
Actual cash value
A borrows B's car and has an at-fault accident injuring C. Both A and B have a personal auto policy. How is the claim paid?
B's policy is primary and A's policy is excess
A laundry offers pick-up and delivery service to its patrons. Which of the following inland marine endorsements would the laundry need to protect against the off-premises damage done to its patrons clothing?
Bailees liability
All of the following are true concerning the medical payments section of a commercial general liability policy except: Benefit limits are expressed on a per/person basis Benefits are paid without regards to fault Both direct and indirect losses are covered Only premises and operations losses are covered
Both direct and indirect losses are covered
Which is covered by a personal auto policy? Carpooling Injuries sustained by an employee on the job Carrying passengers for a fee Custom equipment
Carpooling
Which Federal works compensation law covers postal workers?
Federal Employee Liability Act
An insurance agency's commercial general liability policy would provide which of the following coverages? Host liquor liability automobile liability professional liability employee injury liability
Host liquor liability
Your personal auto med pay would not cover which of the following? an uninsured friend injured in your car Injuries you sustain riding in a neighbor's car Injuries suffered by your 8-year-old when struck by a vehicle while crossing the street Injuries suffered by a pedestrian whom you bump with your car
Injuries suffered by a pedestrian whom you bump with your car
All of the following are true concerning a personal umbrella policy except: It provides extra limits of coverage It indemnifies the insured for a variety of liability losses It is the only liability coverage an individual needs It provides coverage for exposures not covered by other policies owned by the insured
It is the only liability coverage an individual needs
What is true concerning a special form homeowners HO-3 without endorsement?
It will pay the actual cash value of personal property losses
Which of the following policy provisions does not limit the risk of the insuror? Right of salvage Abandonment No benefit to bailee Liberalization
Liberalization
All of the following are indirect loss coverages available under the equipment breakdown coverage form except: spoilage medical payments business income expediting expenses
Medical payments
The insuror is not responsible for defense costs for which type of loss? Bodily injury Medical payments Property damage Personal injury
Medical payments
Workers compensation pays secondary to which of the following? CGL Commercial auto Equipment breakdown None of the above
None of the above
To penalize an offender, a court might award ____ damages.
Punitive
Which is not a source for workers compensation coverage? Private insurance companies Reinsurance companies Monopolistic state funds Competitive state funds
Reinsurance companies
Which statement is not true concerning a businessowners policy? Business income and extra expense coverage is provided for 12 months. Buildings insured at least 80% to value would have losses settled on a replacement cost basis. The BOP does not have a coinsurance requirement. The BOP can be written on a named peril or open perils basis.
The BOP can be written on a named peril or open perils basis.
under the national flood program, which is true? The deductible can be applied twice, once to the building and again to the contents. If your community fails to participate in the flood program, you can still buy flood insurance. Building losses are settled ACV and contents are settled as replacement cost. You must live in a flood plain to buy a flood policy.
The deductible can be applied twice, once to the building and again to the contents.
All of the following are true about the personal liability coverage of a homeowners contract except: It is generally written as a single, occurrence limit It covers an insured's legal liability arising from nonbusiness activities The insurance company is not required to defend a nuisance suit. The basic limit of coverage is $100,000
The insurance company is not required to defend a nuisance suit
Which of the following would not be covered by Section I of an HO-3 contract? The insured $2000 cocker spaniel Personal property of the insured's son away at college The insured's patio if hit by a meteor Sudden leakage of a water heater
The insured $2000 cocker spaniel
Which of the following is not true concerning commercial umbrella policies? They can cover losses not covered by the underlying coverages They usually have a self-insured retention feature They provide excess coverage They are identical to Excess Liability contracts
They are identical to Excess Liability contracts
What is the primary objective of the med pay to others coverage in section II of a homeowners policy?
To avoid negligence claims
Fire legal liability coverage protects against negligent fire damage that you do to
a building that you occupy as a tenant
An unforeseen and unintended event that happens at a known time in a known place is defined as a(n)
accident
Replacement cost less depreciation defines
actual cash value
the collision coverage of a personal auto policy pays claims on what basis?
actual cash value
The maximum that a commercial general liability will pay in any one policy period is known as the
aggregate limit
What are common methods of settling P&C losses?
agreed value, actual cash value, replacement cost
Which of the following businesses if not eligible for a businessowners policy? Condominium association auto repair shop coffee shop jewelry repair shop
auto repair shop
A short-term proof of insurance coverage provided to an insured until a policy can be delivered is known as a(n)
binder
A 26 foot, 200 horsepower ski boat is best covered under a
boatowners policy
Uninsured motorists coverage provides coverage for
bodily injury to an insured
A house insured under a homeowners special form HO-3 suffers damage to the house and the personal property inside by a Kodiak bear. What property is covered under the HO-3 contract?
both the house and the personal property
In a homeowners policy, wall-to-wall carpeting would be covered as
building
Which additional coverage is found in the Homeowners Broad Form HO-2? Flood volcanic eruption theft collapse
collapse
Knowingly withholding material information on an applicant is
concealment
The rules which govern the actions of the company and the policyowner within an insurance contract can be found in the policy ______
conditions
A personal auto policy will provide supplementary payments to cover
costs of investigating the accident, the premium for a bail bond, the premium for an appeal bond
Which homeowners coverage provides for indirect loss coverage?
coverage D--Loss of Use
Which if covered by a Commercial property policy? cash crops debris removal explosions of a boiler
debris removal
A fire at Smith's house which spread from Brown's house is a(n)
direct loss
A company domiciled in this state is best described as a ______ company.
domestic
All are necessary elements in establishing negligence
duty, breach of duty, damages
Which Business Auto coverage form is designed to protect the employer when employees drive their own personal autos on company business?
employers nonownership liability
In crime insurance, the term burglary refers to the taking of property
from within a locked premise leaving visible marks of force and violence at the point of entry or exit
Which is NOT considered an insurable loss? Gambling losses Income losses due to a business' inability to remain open following a covered loss Fire losses following a lightening strike Medical costs following a woman's fall on a wet drugstore floor
gambling losses
Which of the following businesses is not eligible for a businessowners policy? shoe repair shop general contractor fast food restaurant convenience store with 30% of its revenue coming from gas sales
general contractor
Which of the following is a peril? Improper storage of flammables Hail Wet floors Icy roads
hail
A condition creating or increasing the chance for a loss is a
hazard
All of the following are reasons to purchase Med Pay limits higher than the minimum except: Your medical expense coverage may exclude auto accident injuries Your passengers may not have adequate med pay coverage of their own higher med pay limits would discourage a lawsuit contemplated by a pedestrian that you negligently injure Minimum med pay limits are extremely low
higher med pay limits would discourage a lawsuit contemplated by a pedestrian that you negligently injure
For which of the following losses would you have coverage under a DP-3? A thief steals your tools from the garage Your dog bites your neighbor Ice blocks your gutters and water seeps into your home A visitor trips in your living room and breaks his leg
ice blocks your gutters and water seeps into your home
A consequential loss can also be called a(n)
indirect loss
An insurance company's promise to pay a loss can be found in which policy section?
insuring agreement
In determining coverage under an Open Perils policy, the burden of proof is on the
insuror
Negligence is not attributable to which of the following intentional acts carelessness inaction ignorance
intentional acts
Insurance binders are
interim insuring agreements
personal injury includes...
libel, slander, false search and seizure
A family that regularly leaves their house unlocked would be considered to be a
morale hazard
which type of insurance company is designed to pay dividends to policyowners?
mutual
Crops damaged by the toxic fumes escaping continuously from a nearby factory is a(n)
occurrence
An auto that you lease on a 3 year contract should be insured as a(n)
owned auto
Which of the following is an additional coverage in a commercial property contract pollution clean up and removal underground flues, pipes and drains foundations piling, piers and docks
pollution clean up and removal
A man becomes ill after eating a meal in a restaurant. The cost of treatment at a local hospital is $1700. Which coverage section of the restaurant's commercial general liability policy will respond to the claim?
products
A dwelling policy sold without endorsement will cover
property
The nationwide marine definition specifically includes all of the following except: imports exports domestic shipments ships and barges
ships and barges
Which of the following would be a boatowners policy not cover? Hull outboard motors trailer skis
skis
In an insurance contract, consideration is best defined as
something of value
Theft coverage is provided by a commercial property policy under which cause of loss form?
special
The business auto coverage form allows an alternative to other than collision coverage known as
specified perils coverage
The felonious taking of property is best defined in crime insurance as
theft
Property policies provide coverage only if there is insurable interest at the _____
time of loss
What best defines risk?
uncertainty of loss
If minimum auto limits of liability are 25/50/10 a driver with limits of 15/30/10 is considered
uninsured motorist
Personal auto med pay coverage will pay medical bills for
up to 3 years from the date of the accident
A home is covered under a homeowners comprehensive form HO-5 for $150,000. The cost of replacing the home is $200,000. Following a total loss, the insured would receive settlement of ____ disregarding any deductible.
up to the actual cash value
You are held responsible when your 11-year old vandalizes a neighbor's automobile under the doctrine of
vicarious liability
Which statements must represent the absolute truth?
warranties
