Property and Casualty Insurance Practice

The broad theft coverage endorsement on the dwelling form specifies all of the following limitations EXCEPT

$1,000 on silverware (The limit on silverware is $2,500)

What is the civil penalty for violating a cease and desist order from the Commissioner?

$10,000

An insured has a homeowners policy and is required to be a member of the homeowners association in her neighborhood. The association's community house has burned down, and the insured has been assessed $1200 for her share of the rebuilding cost. How much will her homeowners policy pay?

$1000

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?

$14,000 (5,000 limit per person)

The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80%, and 100% what would be the maximum payable for a 47-day loss?

$160,000 (Extra expense coverage is written with a minimum of 3 applicable percentages that apply to the limit of insurance in the declarations. When the period of restoration is 30 days or less, the first percentage applies; when it is more than 30 days and not more than 60 days, the second percentage applies; when more than 60 days, the third percentage applies. In this case, the calculation should be 80% of $200,000, so $160,000.)

The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to

$250,000

What is the civil penalty for the first violation of the Pennsylvania Insurance Fraud Prevention Act?

$5,000

If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to

$500

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

10 years

If a personal auto policy is being cancelled by the insurer for nonpayment of premium, how much notice must the insurer provide to the policyholder?

15 days

Within how many years of a loss may an insured bring a lawsuit against an insurer, according to the dwelling policy?

2 years

How long is the waiting period after the application has been accepted before flood coverage goes into effect?

30 days

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

What is the maximum length of time that an employee who is partially disabled can receive loss of time benefits under Workers Compensation?

500 weeks

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.

60 days after the construction has ended

In Pennsylvania, all of the following classes of employees may be excluded from the requirement of being covered under Workers Compensation insurance EXCEPT

An employee engaged in seasonal agricultural labor that works 60 days in a calendar year

Which of the following would be considered an insured under a business auto coverage form?

Anyone while using, with permission, a covered auto owned by the named insured

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent Apparent authority (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 would be considered an illegal inducement to purchase insurance?

Confirming future dividends in a life insurance proposal

Because an insured owns a lot of expensive jewelry, her insurance agent has advised her to purchase a scheduled personal property endorsement. If the insured adds this endorsement to her homeowners policy, which of the following statements would be correct?

Coverage C limits will no longer apply to the jewelry insured by the endorsement.

Which of the following dwelling policy forms primarily insured a structure on an actual cash value basis?

DP-1

Which of the following examples of losses paid under an HO-3 would also be paid under an HO-2 homeowners policy?

Damage to the dwelling caused by lava or dust from a volcanic eruption.

Which of the following is a unit of measurement an underwriter uses when determining the premium rates for insurance?

Exposure

Which of the following regulatory authorities participated in creating the National Do Not Call Registry?

FTC

FAIR plans are state insurance pools that provide property insurance to high risk areas, such as neighborhoods that have deteriorated or are in urban decay. What does FAIR stand for?

Fair Access to Insurance Requirements

In farm insurance, Coverage I-Personal and Advertising Injury Liability for suits alleging personal injury is most similar to the coverage found in which coverage form?

General Liability

All of the following are licensing requirements for business entities EXCEPT

Having all employees complete continuing education courses biennially

If a farm building or structure is vacant or unoccupied, which is true?

If for 120 consecutive days, the limits applicable to the building and its contents are reduced by 50%.

When an insured purchases a private passenger automobile insurance policy with a $500 deductible for collision coverage, how will that affect the rate for collision coverage?

It will be reduced

The form of payment bond that protects an owner contracting for work against liens from subcontractors, suppliers, or laborers who are not paid for their services and materials by the general contractor is called

Labor/Material Bond

Rates are established based on the similarities of the risk with other risks are known as

Manual rates

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?

Motor carrier coverage is needed.

A business using its own trucks to move its own cargo would insure the cargo using

Motor truck cargo - owners form. A business using its own trucks to move its own cargo would insure the cargo using the owners form.

The transit clause does which of the following?

Names the points of the voyage

What other term is used to refer to unintentional torts?

Negligence An unintentional tort is the result of acting without proper care. This is generally referred to as negligence.

Symbol 9

Non-owned autos only

During renovations to a home, a roof opening is left exposed. A heavy rainstorm causes $20,000 of damage to the interior of the home. How much would the HO-2 policy pay for the damages?

Nothing. HO-2 is a named peril policy, and rain is not a covered peril. The policy would pay for the damage caused by rain if the hole was caused by a covered peril (wind or hail)

When is a hired and nonowned auto liability endorsement available in a businessowners policy (BOP)?

Only if the insured does not have commercial auto coverage

In property insurance, actual cash value is defined as

Replacement cost at the time of the loss, less depreciation

Workers compensation statutes require employers to meet capital reserve's requirements sufficient to pay any claims that might arise. Employers can meet such obligations through all of the following EXCEPT

Second injury funds programs

When an insurer cancels, midterm, a commercial property or casualty insurance policy for an allowable reason, they must

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

Which of the following insurers are owned by stockholders?

Stock. Only stock insurance companies are owned and controlled by stockholders.

Which of the following symbols is available to an insured with vehicles subject to no-fault coverage?

Symbol 5

Which entity must approve all continuing education courses in this state?

The Commissioner

What is the deductible of a commercial liability umbrella policy called?

The SIR (self insured retention)

Replacement Cost

The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation.

A type of policy that is used to provide a specific amount of replacement cost for a given risk after an insured property has been destroyed is called a(n)

Valued policy

When a parent is required to pay for damages caused by his or her children, this is an example of

Vicarious liability. When one party is held liable for act of another party, it is called vicarious liability. Employers are responsible for employees acting within the scope of their employment. Parents sometimes are held responsible for acts of their children.

Which of the following policies must contain, at a minimum, policy language equal to the Standard Fire Policy?

all of the above

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

physical damage

Under Crime Coverage Form I - Lessees of Safe Deposit Boxes, securities are only covered in the event of

theft