Property and Casualty Insurance missed questions

In contrasting stock insurers with mutual insurers, which statement is true? a) Stock insurers are owned by the shareholders and issue nonparticipating policies. b) Stock dividends are tax free while policy dividends are taxable. c) Nonparticipating policies can pay out dividends to the policyholders. d) Mutual insurers are owned by the shareholders and issue participating policies.

a) Stock insurers are owned by the shareholders and issue nonparticipating policies.

All authorized property and casualty insurers must be members of all of these organizations EXCEPT a) Texas Department of Insurance. b) Texas Automobile Insurance Plan Association. c) Property and Casualty Insurance Guaranty Association. d) FAIR Plan Association.

a) Texas Department of Insurance.

If an insurance policy has the additional coverage provision, how does it affect the policy premium? a) There is no additional premium. b) Premium will be recalculated when a specific loss covered by this provision occurs. c) Additional premium will be assessed d) Premium willbe calculated on a pro rata basis based on the amount of additional coverage.

a) There is no additional premium.

The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to a) $200,000. b) $250,000. c) $100,000 d) $150.000.

b) $250,000.

According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss? a) 30 days b) 60 days c) 90 davs d) 120 days

b) 60 days

What two policy components are part of every commercial package policy? a Property coverage and liability coverage b) Common policy declarations and common policy conditions c) Common policy exclusions and agreement d) Consideration and agreement

b) Common policy declarations and common policy conditions

The commercial crime coverage that would cover losses resulting from the theft of money, securities and other property by employees is a) Inside the premises - theft of money and securities. b) Employee theft. c) Funds transfer fraud. d) Forgery or alteration.

b) Employee theft.

Which of the following would NOT be considered a flood? a) Overflow of tidal waters b) Mudslides c) Runoff of surface waters d) Sewer backup

b) Mudslides

Among the applicants in the same class and life expectancy, which of the following factors can be used to determine premium rates? a) Race b) Occupation c) Ancestry d) Marital status

b) Occupation

Which of the following is consideration on the part of an insurer? a) Underwriting b) Paying a claim c) Decreasing premium amounts d) Paving the premium

b) Paying a claim

The commercial general liability Coverage Part A - Bodily Injury and Property Damage provides coverage for which of the following? a) Machinery b) Premises c) Hired autos d) Employers

b) Premises

Which of the following would NOT be covered by commercial inland marine policies? a) Bridges and tunnels b) Property lost due to a military action c) Commercial property floater risks g) Loss caused by weather conditions

b) Property lost due to a military action

The businessowners policy (BOP) extension coverage form for personal property off-premises is limited to a) $2,500 b) $5,000 c) $10,000 d) $15,000

c) $10,000

How many people must sustain death or serious physical injury before the War or Terrorism Exclusion in a Businessowners policy applies? a) 500 b) 1,000 c) 50 d) 100

c) 50

When does the federal emergency flood insurance program go into effect? a) Annually for the flood season b) When mandated by the president of the United States c) When a community applies for the program d) As soon as the flooding occurs

c) When a community applies for the program

In Workers Compensation insurance, what is the maximum medical improvement period? a) 90 days b) 26 weeks c) 1 year d) 104 weeks

d) 104 weeks

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

d) 30 days

Multiple incidents of terrorism would be deemed one incident if they occurred within a) 24 hours. b) 36 hours. c) 48 hours. d) 72 hours.

d) 72 hours.

What is the maximum portion of the state average weekly wage that workers compensation will pay for impairment income benefits? a) 35% b) 50% c) 70% d) 75%

d) 75%

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

d) At the time of loss.

An insurance contract must contain all of the following to be considered legally binding EXCEPT a) Offer and acceptance. b) Consideration. c) Competent parties. d) Beneficiary's consent.

d) Beneficiary's consent.

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

d) Insureds.

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) Rebating. b) Twisting. c) False advertising. d) Coercion.

a) Rebating.

According to the businessowners policy (BOP) definitions, which of the following does NOT mean valuable papers and records? a) Inscribed Deeds b) Securities c) Manuscripts d) Drawings and maps

b) Securities

Under Business Personal Property Limit - Seasonal Increase, if no percentage is specified in the declarations, seasonal fluctuations will automatically increase the limit for business personal property by a) 10%. b) 15%. c) 25%. d) 50%.

c) 25%.

Coverage C in homeowners policy forms offers all of the following EXCEPT a) Coverage for property of others. b) Coverage for property located at another residence premises. c) Coverage for loss of use d) Worldwide coverage

c) Coverage for loss of use

The Texas Property and Casualty Insurance Guaranty Association will cover all other claims arising from the same occurrence, except Workers Compensation claims, up to what limit? a) $300,000 b) The full amount of any covered claim c) $10.000 d) $1,000

a) $300,000

Business auto coverages apply only to those autos that are identified as covered autos in the declarations by entry of the appropriate numerical symbol. Which symbol affords the broadest coverage? a) 1 b) 2 c) 7 d) 9

a) 1

How many continuing education hours must be completed on the subject of ethics every license renewal period? a) 3 b) 4 c) 5 d) 10

a) 3

Which of the following is covered under the Camera and Musical Instruments Dealers floater? a) A customer's camera left at a camera shop for repair b) A musical instrument sold and delivered to a customer c) Furniture, fixtures and office supplies in a music store d) Money kept on premises of a camera shop

a) A customer's camera left at a camera shop for repair

Texas resident agent seeking to sell insurance to customers in another state needs a) A nonresident license in that state. b) A foreign agent's license in that state. c) A resident license in that state. d) A Certificate of Authority in that state.

a) A nonresident license in that state.

What part of the insurance contract describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured? a) Insuring agreement b) Exclusions c) Declarations d) Conditions

a) Insuring agreement

Guaranteeing future dividends is considered to be an unfair or deceptive act known as a) Misrepresentation b) Twisting. c) False financial statements d) Rebating.

a) Misrepresentation

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) Occurrence b) Peril c) Hazard d) Accident

a) Occurrence

How is the premium paid for the businessowners policy? a) One indivisible premium b) Itemized premium c) Pro rataliability premium d) Separate premium for property and for liability

a) One indivisible premium

According to the Section I - Property of the Businessowners policy definitions, what is the term for insured's business activities occurring at the described premises? a) Operations b) Covered territory c) Enterprise d) Controlled business

a) Operations

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

a) Owned or leased by the resident of the mobilehome.

What is a bailee responsible for? a) Property of others in his custody b) Rental property c) His own personal property d) Completed operations

a) Property of others in his custody

An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. Their answer is considered to be a a) Representation. b) Warranty. c) Concealment. d) Fraudulent answer.

a) Representation.

A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss? a) $20,000 b) $30,000 c) $40,000 d) $60,000

b) $30,000

Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records? a) $1,000 b) $5,000 c) $10,000 d) $25.000

b) $5,000

The transfer of a legal right or interest in an insurance policy is called a) Liability. b) Assignment. c) Rescission. d) Subrogation.

b) Assignment.

Which of the following statements is INCORRECT with regard to surplus lines insurance? a) Business placed with a surplus lines insurer is subject to a premium tax that must be collected by the broker. b) Policies written by a surplus lines insurer typically contain standard coverages and forms. c) To sell surplus lines insurance. the licensee must obtain a surplus lines broker's license. d) Before coverage is placed with a surplus lines company, diligent effort must be made to place the risk with admitted insurers.

b) Policies written by a surplus lines insurer typically contain standard coverages and forms.

An insured's child ran into a neighbor's planter on his bicycle and broke the planter and ruined the plants. The cost to replace the planter was $400, and the cost to replace the plants was $100. Which section of the insured's homeowners policy would pay? a) Section II, subject to the deductible b) Section II with no deductible c) Section I with no deductible d) Section I, subject to the deductible

b) Section II with no deductible

An insured was having a new home built. While digging the footings for the foundation, the contractor struck a solid rock formation and found that was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbor's home several blocks awav. Who Davs for this damage? a) The insured's insurer, regardless of negligence b) The contractor c) The neighbors insurer. d) The insured's insurer, if the neighbor proves that the insured was negligent

b) The contractor

If a mortgagee is named in a mortgagee clause, how would a property policy pay claims on a home damaged in a fire? a) The mortgagee may only receive loss reimbursement if the mortgagee brings an action against the insured. b) The mortgagee would receive loss reimbursement. c) The insured is considered a co-claimant and receives loss reimbursement from the mortgagee d) Only the insured would receive loss reimbursement

b) The mortgagee would receive loss reimbursement.

In terms of parties to a contract, which of the following does NOT describe a competent party? a) The person must be mentally competent to understand the contract. b) The person must have at least completed secondary education. c The person must not be under the influence of drugs or alcohol. g The person must be ot legal age

b) The person must have at least completed secondary education.

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

b) Within 30 days after the end of each month

An insured has $5,000 of medical coverage under a personal auto policy at the time of a covered accident. The insured and 3 passengers are injured. The insured's medical expenses are $8,000. The first passenger's total $4,000; the second passenger's total $6,500; and the third passenger's total $1,200. How much will the policy pay under the medical payments coverage? a) $5,000 b) $8,000 c) $15,200 d) $19,700

c) $15,200

An insured was judged at fault in an automobile accident. He has the 100/300 bodily injury liability coverage. Three other individuals were injured in the vehicle hit by the insured. They were awarded damages of $150,000, $75,000 and $75,000. What amount, if any, was not covered by his insurance policy? a) $150,000 bAll of the damages were covered by his insurance policy. c) $50,000 d) $100,000

c) $50,000

Under a commercial general liability policy, which of the following is NOT considered mobile equipment? a) The Department of Transportation's resurfacing equipment b) The bulldozer used by an excavating company c) An automobile used as a company car by a real estate company d) A combine used on a farm

c) An automobile used as a company car by a real estate company

Which of the following coverages will respond if a claim is made or a suit is brought against an insured for damages due to bodily injury or property damage caused by an occurrence to which the coverage applies? a) Coverage C - Personal Property b) Coverage D - Loss of Use c) Coverage E - Personal Liability d) Coverage F - Medical Payments to Others

c) Coverage E - Personal Liability

A unique feature in a bailee form is that it covers a) All loss and has no exclusions. b) The building occupied by the insured whether it is owned or leased. c) Customers' property whether or not the insured has been negligent. d) Fire and theft losses to the insured's stock held for sale without any deductibles.

c) Customers' property whether or not the insured has been negligent.

An executive is accused of sexual harassment. What type of coverage would respond? a) Hiring practices liability b) Commercial general liability (CGL) c) Employment practices liability d) Workers compensation

c) Employment practices liability

Which of the following provisions is usually found in homeowners policies and provides a replacement cost settlement to policyholders who carry adequate insurance? a) Actual cash value b) Pro rata c) Insurance to value d) Replacement value

c) Insurance to value

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

c) Insuring agreement.

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

c) Issuing sales material with exaggerated statements about policy benefits

Section IlI of the business auto policy provides physical damage coverage. All of the following are physical damages that may be selected coverages EXCEPT a) Comprehensive coverage b) Collision coverage c) Limited peril coverage. d) Specitied causes of loss coverage.

c) Limited peril coverage.

Which of the following covers a carrier for liability for loss to cargo while it is being transported in a truck? a) Trip transit policy b) Truckers coverage form c) Motor truck cargo policy - carriers form d) Motor truck cargo policy - owners form

c) Motor truck cargo policy - carriers form

The insurance company requires that an insured installs a fire alarm and an automatic sprinkler system as a condition for coverage. This is an example of what? a) Business owner common policy rider b) Business liability coverage c) Protective safeguards endorsement g) Utility services direct damage condition

c) Protective safeguards endorsement

An insurer filed a new policy form and endorsements with the Commissioner 60 days ago. The insurer has not heard back from the Commissioner. What can the insurer assume? a) The insurer must send a follow-up request. b) The Commissioner needs a 30-day extensin. c) The form has been approved. d) The form has been rejected.

c) The form has been approved.

An insurer may decline to renew a Homeowners policy if the insured has filed how many claims under the policy in any 3-year period? a) One b) Two or more c) Three or more d) Five or more

c) Three or more

When an insured's gardener was spraying weeds in his lawn, he failed to notice that the wind was drifting. the spray into the neighbor's yard where he damaged their flower bed. The insured was found to be legally liable for this damage. This is an example of a) Comparative negligence b) Gross negligence. c) Vicarious liability. d) Intervening cause.

c) Vicarious liability.

When does the insurer's duty to defend a suit or claim end in a commercial general liability policy? a) When both loss payments and defense costs equal the applicable policy limit b) When the insured agrees to the settlement c) When loss payments equal the applicable limit of insurance d) When defense costs equal the applicable limit of insurance

c) When loss payments equal the applicable limit of insurance

In order to receive transportation expenses under the personal auto policy following damage to your auto caused by collision, you must have a) Uninsured motorist property damage. D Supplementarv pavments c) Other-than-collision coverage. d) Collision coverage.

d) Collision coverage.

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT a) Consideration. A b) Legal purpose c) Offer and acceptance. d) Conditions.

d) Conditions.

What are the two types of utility services endorsements? a) Direct loss and indirect loss b) Protective safeguards and mechanical breakdown c) Open peril and named peril d) Direct damage and time element

d) Direct damage and time element

Which homeowners form insures both buildings and personal property on an open peril basis? a) HO-2 b) HO-3 c) HO-4 d) HO-5

d) HO-5

Which of the following is NOT true regarding the automatic increase in insurance endorsement in dwelling policies? a) It increases the amount of coverage by an annual percentage b) It is optional. c) It provides protection from inflation d) It does not require additional premium

d) It does not require additional premium

A business using is own trucks to move its own cargo would insure the cargo using a) Motor truck cargo - carriers form. b) Motor carrier form. c) Trip transit coverage d) Motor truck cargo - owners form.

d) Motor truck cargo - owners form.

Which of the following does the term proximate cause refer to? a) Injury that leads to monetary compensation b) Duty of the defendant to act c) Reason for filing a lawsuit d) Negligence that leads to an injury.

d) Negligence that leads to an injury.

The other states' insurance section of a workers compensation policy provides coverage a) For new operations in other states if reported to the insurer within 60 days. b) Only for incidental operations in other states. c) For any other state the insured may have operations in. d) Only for those other states listed in the policy.

d) Only for those other states listed in the policy.

Businessowners liability coverage automatically includes all of the following liability coverages EXCEPT a) Contractual. b) Host liguor. c) Product. d) Pollution.

d) Pollution.

What type of information would be found in a policy's insuring agreement? a) Location of premises b) Policy limits c) Insurer's address d) Renewal dates

d) Renewal dates

Which method of loss valuation is contrary to the basic concept of indemnity? a) Functional replacement cost b) Market value c) Agreed value d) Replacement cost

d) Replacement cost

The equipment breakdown coverage form values loss on a/an a) Valued basis. b) Stated amount basis c) Actua cash value basis d) Replacement cost basis.

d) Replacement cost basis.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? a) Inducing the insufed to drop a policy in favor of another one when it is not in the insured's best interest b) Charging a client a higher premium for the same policy as another client in the same insuring class c) Making deceptive statements about a competitor d) Telling a client that his first premium will be waived if he purchases the insurance policy today

d) Telling a client that his first premium will be waived if he purchases the insurance policy today

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

d) The accounts receivable coverage form.

Although a businessowners policy (BOP) will cover fire damage legal liability, which of the following statements is true? a) Pollution caused by fire will be covered because pollution is covered in a BOP. b) There is a limit of $500 set on fire damage legal liability in all cases. c) The general aggregate applies to fire damage legal liability. d) The general aggregate does not apply to fire damage legal liability.

d) The general aggregate does not apply to fire damage legal liability.

If an applicant submits the initial premium with an application, which action constitutes acceptance? a) The applicant submits a statement of good health. b) The producer delivers the policy. c) The insurance company receives the application and initial premium. d) The underwriters approve the application.

d) The underwriters approve the application.