Simulate your exam
A producer licensed in Pennsylvania must notify the insurance department of any change of address in his or her residence or business address within how many days
30
Bob's neighbor will not stop parking his motorcycle in Bob's Rose garden no matter how many times he has been asked to quit parking there. Bob finally gets a court order requiring the neighbor to refrain from parking there. It turns out it was his neighbors property all along. What bond was Bob required to post guaranteeing his neighbors damages in his wrongful action will be paid?
Attachment
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Authorized or admitted
What is the NAIC?
The "National Associates of Insurance Commissioners" which assists in administration of uniformed stat insurance laws and regulations by promoting efficiency to protect the interests of the policyholders.
Which item would not be covered under building coverage in a building and personal property policy?
The bulldozer being used as part of a business addition under construction that is parked 500 feet from the building
Which of the following circumstances would be excluded under medical payments coverage of a personal auto policy?
The insured is injured while driving his motorcycle on his resident premises
Which of the following is a statutory defense
comparative negligence
When a producer holding a certificate or a broker's license has a change in his/her residence or business address, he/her must notify the department of insurance and any company for which the producer holds an appointment within
15?
For how long after the death of the named insured must basic property insurance continue coverage?
180 days
In the split limit coverage and personal auto policies, which limit indicates the maximum amount the policy will pay for bodily injury per person
1st limit
If an insurer terminates a producer's appointment, the Commissioner must be notified within how many days?
30
Which of the following is not considered a misrepresentation as it pertains to unfair trade practices?
Making comparisons between different policies
Which coverage would a business owner need in a crime policy to cover money that may be stolen from a messenger?
Outside the premises
Which of the following types of agent authority is also called perceived authority
apparent
Transportation expenses are covered under a personal auto policy for
$20 per day, for a maximum of $600
An insured's building Has an actual cash value of $200,000 and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?
$32,000
What is the maximum length of time that an employee who is partially disabled can receive loss of time benefits under Worker's Compensation?
156 weeks
Coverage for medical payments under a personal auto policy applies to expenses following a covered accident that are incurred and services rendered within what maximum time period?
3 years
What documentation grants express authority to an agent?
Agent's contract with the principal
How much is covered for debris removal under the HO property additional coverages?
All reasonable costs
Crime insurance is usually written on what basis?
All-risk or open peril
Which of the following risks would not be eligible for coverage under a homeowners policy?
An applicant who owns and lives on a commercial farm
Which of the following describes contributory negligence
Any degree of negligence by the injured party may bar recovery
In a personal auto policy, where is the insureds auto covered?
Any other state
A producers license must be renewed
Biennially every two years
Which of the following would be included in the farm liability coverage forms?
Bodily injury to a residence employee (just like HO liability, Farm liability forms will not pay for injuries of anyone normally at the insured location except residence employees not covered by workers comp
Which of the following statements regarding coverage for the flood and earthquake perils is true?
Both flood and earthquake are excluded perils in all property policies.
Which of the following would not be considered an exception to the national do not call list?
Calls based from outside of the United States
Which of the following best describes liberalization clause in a policy?
Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium.
The ABC corporation has $100,000 of coverage on it's building through insurance company A, and $50,000 of identical coverage on the same building through insurance company b. Assuming coinsurance is not an issue, when a $24,000 loss occurs and the pro rata method is used, how much will each insurer pay?
Company will pay $24,000 Company B will pay zero dollars
Farm fences (except field and pasture fences) are covered by which farm coverage form?
Coverage G damage to property to others
The designation symbols used in commercial auto policies can be found in which policy section?
Covered Auto
Which of the following is an example of unfair claims settlement practice? A. Making claims payments which clearly indicate under which coverage payment has been made B. Using arbitration when the Insured and Insurer cannot reach agreement C. Failure to promptly settle a claim when liability has been clearly established D. Denying coverage after a reasonable investigation has been conducted
D?
Which of the following terms describes making false advertisements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?
Dafamation
Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy?
Damage to the dwelling caused by ash or dust from a volcanic eruption
Which of the following is considered to be a morale hazard?
Driving recklessly
Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will
Either pay or defend as it decides
The Subsequent Injury Fund was established to
Encourage employers to hire workers who had suffered prior compensable injuries.
Individuals in the business of selling construction equipment and mobile equipment should insure with a/an
Equipment dealers coverage form
The section of an insurance policy that details what perils are not included against and what persons are not insured is known as the
Exclusions
Pass Insurance sells a lot of crop insurance. Because they sell crop insurance, they are reinsured by who?
FCIC
Which of the following regulatory authorities participated in creating the national do not call registry?
FTC
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair Credit Reporting Act
Which of the following statements would be an example of a product liability claim?
Faulty packaging of a cereal caused spoilage that resulted in someone getting sick.
Which of the following criminal activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance producers a license?
Forgery Upon conviction of a felony, a producer's license will be revoked by the Commissioner.
The insured owns an older farm with lath and plaster walls. Following a kitchen fire, the insurance company pays to have the wall replaced with drywall that is just as functional, but costs less than lath and plaster. Which loss valuation allows the insurance company to have plaster replaced with drywall?
Functional replacement cost
Which of the following endorsements is used by individual business owners who use company vehicles for personal use rather than purchasing a personal vehicle
Individual named insured
What is the FAIR plan?
Insure high risk homes ?
Which of the following statements concerning the builders risk coverage form is correct
It may be written on a reporting form for the completed value of the structure
In the dwelling policy which of the following is true regarding personal liability coverage?
It must be added as a supplement or written as a separate policy
An insurance producer fails to obtain automobile insurance for a client after agreeing to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. The damage to the other vehicle totals $5000. Which statement regarding the producers errors and omissions liability policy is true?
It will provide coverage because the damage to the client resulted for the producers Negligence
If an employer in a state with elective workers compensation laws chooses not to be subject to those laws, what does the employer lose?
Its common law defenses against liability suits
Crews of Ships are covered by the
Jones Act
Dwelling Coverage includes all of the following except
Land on which the dwelling is located
What type of property would not be covered under the dwelling policy special form coverage a dwelling
Land on which the dwelling is located
Which of the following types of property would be covered in homeowners coverage forms?
Landlord furnishings in an on-premises apartment
According to the nationwide marine Definitions, risks that may be the subject of inland marine insurance include all of the following except
Large pleasure boats
Which of the following is defined as a covered cause of loss in business owners property coverage?
Leakage from fire-extinguishing equipment
Which of the following best describes the unfair trade practices of dafamation
Making derogatory oral statements about another insurers financial condition
The livestock coverage form covers which of the following losses?
Named peril coverage for death of livestock
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are
Not taxable since the IRS treats them as a return of a portion of the premium paid
A property insurance policy that insures A commercial building on a replacement cost basis includes the ordinance or law Coverage Endorsement. This endorsement will cover all of the following expenses except
Ordinance with which the insured was required to comply prior to the loss
Which of the following terms of refers to such disabilities as a loss of a limb, hearing, or eyesight
Permanent Partial disability
Who might receive dividends from a mutual insurer?
Policyholders A mutual insurer has no stock, and is owned by the policyholders. Since they may receive a dividend (not guaranteed), such policies are known as participating policies. Dividends received by policyholders of a mutual insurer are not taxable.
What method do insurers use to protect themselves against catastrophic losses?
Reinsurance. Insurers use reinsurance to protect themselves from catastrophic losses. This is a method where the reinsurer indemnifies the ceding insurer for part or all of the losses it sustains related to a policy issued previously.
In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called
Self-insured retention
The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as
Subrogation
Which of the following symbols is available to an insured with vehicle subject to no-fault coverage
Symbol five
How much is the premium for the dwelling under construction Endorsement under the dwelling policy
The average amount of insurance during construction
Functional Replacement Cost
The cost to replace damaged property with less expensive and more modern construction or equipment.
Which of the following losses would be covered under the property damage liability coverage of a personal auto policy?
The insured damages a rented garage when he failed to stop in time.
All of the following are valid reasons for an insurer to cancel an auto Insurance policy, except
The name insured obtains a divorce
Who is NOT an insured for liability on a BAP?
The owner of a car the insured borrows
If another governmental agency takes real action against a licensee, who's responsibility is it to report the action?
The person/entity requesting the action
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?
Up to $2,000
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?
additional coverage
A policy that insures all property at multiple locations for a single amount is referred to as
blanket
General-cargo ships are used to transport
break-bulk cargo
The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the
conditions
An additional loss that results from a direct loss of property is called a/an
indirect loss
A deliberate act that causes harm to another person, regardless of whether the harm is intended is called a
intentional tort
Which of the following lists all the required elements for establishing a charge of negligence?
legal duty owed, breach of legal duty owed, proximate cause, damages
Which of the following liability coverages must be added by endorsement to a homeowners policy in order to apply
personal injury
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
If the insured owns a watch valued at $10,000, full coverage can be provided on a homeowners policy by purchasing the
scheduled personal property endorsement
Which of the following is a formal program developed by an employer to fund its losses as an alternative to the purchase of insurance
self-insurance
Who is not considered an employee in a commercial general liability policy?
temporary worker
robbery is
the taking of property from a person's possession by using force or threats
All of the following are other coverages included in both the broad and special form dwelling policy except
theft of personal property
A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint, the building is considered
vacant
What is the civil penalty for violating a cease and desist order of the commissioner
$10,000
Tom's truck service's vehicle is stolen. The policyholder may obtain coverage for transportation expenses subject to which of the following limits?
$20 per day $600 maximum
A premium discount is the term that describes when an insured owes a total standard premium greater than
$5,000
An insured hit a deer and crashes his car into a tree. The total damage to the vehicle is $6000. How will this loss be covered?
$6000 would be paid under other than collision coverage
To avoid violations of unfair claims settlement regulations, insurers are required to acknowledge the receipt of a claim within how many days?
10 days
How long does a temporary producers license last for the surviving spouse of a deceased producer?
180 days
Twisting
A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.
Which of the following statements is incorrect?
A licensee is barred from charging a fee in addition to a commission to a person for the sale, solicitation or negotiation of a contract of insurance for commercial business.
A business owners policy is
A self-contained prepackaged policy.
What is a binder?
A temporary insurance contract that goes in effect prior to the policy issue
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 third degree misdemeanor and a $1,000 fine
Defamation
Act of harming or ruining another's reputation
A recent college graduate bought a 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 talk to an agent who can get them coverage. His agent called him a residual market risk. From which type of automobile insurance plan can the applicant purchase insurance?
Assigned risk
Which of the following is a mandatory part of insurance policy that varies with each individual policy?
Declarations
When a direct chain of events resulting from a negligent act causes injury or damage, the act is considered to be
Direct direct cause
All of the following actions can be described as twisting except
Explaining to client the advantages of permanent insurance over term and suggesting changing policies
A producer sold an insurance policy. Subsequently, the license was suspended. In this case, how much of the commission will the producer receive?
All
Which of the following entities establish the Do-Not-Call Registry?
FTC Federal trade commission
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?
Fair Credit Reporting Act
In insurance transactions, fiduciary responsibility means
Handling insurer funds in a trust capacity
In order to satisfy the Pennsylvania Motor Vehicle Financial Responsibility Law, an auto liability policy issued for delivery in the state must have bodily injury and property damage limits not less than
$15,000/$30,000/$5,000 . (comment -The Financial Responsibility Law requires minimum limits of $15,000 of bodily injury liability for one person injured in an accident; $30,000 of bodily injury liability for two or more people injured in a single accident; and $5,000 of liability for damage to property of others in a single accident.)
A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy?
$175,000
In the computer fraud crime coverage form, what limit is placed on each occurrence of the loss of manuscripts, drawings, or records?
$5,000
A covered watercraft was damaged in an accident. The actual cash value of the damaged property was assessed at $10,000. The cost of repairs for the watercraft was assessed at $5000. The insured's watercraft policy is written with a $25,000 limit. How much will the insurer pay for coverage for damage to the watercraft?
$5000
A grave marker was damaged by vandals. It would cost $3,000 to have the damage repaired. Under these circumstances, how much would a homeowners policy pay?
($3,000) Homeowners 2000 policy will pay up to $5,000 for grave markers, including mausoleums, on or away from the premises for loss caused by a peril insured against under Coverage C.
Which surety bond guarantees that bills for labor and materials will be paid by the contractor as they are due?
Payment Bond
What is a certificate of insurance a) A written document obligating the insurer to the person to which the insurance was issued b) A written document naming the insured's beneficiary c) A written document allowing the insurer to inspect the insured's books d) A written document showing the types and amounts of insurance that have been issued to the insured
A written document showing the types in amounts of insurance that have been issued to the insured
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
A builder's risk form is most often written as which of the following?
Completed value form
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?
Consideration The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.
Representations are written or oral statements made by the applicant that are
Considered true to the best of the applicant's knowledge
When an insured has multiple autos insured, what effect does the stacking of UM and UIM coverage have in terms of the benefits available?
Increases the limit of bodily injury coverage available to an insured to a total equal to the sum of the bodily injury available on all autos insured
The Pennsylvania property and casualty insurance guaranty Association provides protection to insurance in the event of
Insurance company insolvency
Which of the following does a producer not have the authority to do?
Issue policies
Extended nonowned coverage endorsement in a PAP broadens which of the following coverages?
Liability and medical payments
A policy condition that states if a policy is broadened with No additional premium, then the expanded coverage will be automatically applied to all policies of the same type is known as
Liberalization clause
Which of the following terms describes a reduced or Limited amount of coverages, other than the combined single limit, that is available to play claims resulting from passenger bodily injury? Lower limit Limited liability Sub limit Smooth limit
Limited liability
Coverage A - Bodily Injury and Property Damage in the commercial general liability policy will cover
Losses due to the insured's negligence
An insured unintentionally accepted forged currency during the course of regular business. Which of the following crime coverages protects against such a loss?
Money orders and counterfeit paper currency
B&B Market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be the meter reader. Which coverage would apply to this suit?
Personal and advertising injury liability
When ABC Appliance's marketing stated that its mowing machine was the only safe mower available for purchase in town, ABC was sued by XYZ Lawn and Garden. ABC's coverage would come from which part of its general liability coverage?
Personal and advertising injury liability
Who would participate in a Write Your Own flood insurance program?
Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis
Crunchy Flakes Cereal Company shipped some of its product in faulty containers that caused spoilage. This resulted in some consumers becoming ill. If the company is sued for this event, it would be an example of a
Product liability claim
Pertaining to insurance, what is the definition of a fiduciary responsibility?
Promptly forwarding premiums to the insurance company
While an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of the insured's auto policy would pay for the damage to the store?
Property damage Liability
If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?
Reasonable expectations
Installing deadbolt locks on the doors of the home is an example of which method of handling risk?
Reduction. Steps taken to prevent losses from occurring are called risk reduction.
The Federal Fair Credit Reporting Act
Regulates consumer reports
All of the following statements concerning liability coverage are true except
The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met.
All of the following are essential elements of a commercial package policy except
Valuations and/or settlement provisions
How is Worker's Compensation insurance premium determined?
Varies by job classifications Employers payroll size Claim history
Which authority is not stated in an agents contract But is required for the agent to conduct business
implied-it exists because not every single detail of an agent's authority can be written in a contract
A home is insured under an HO-2 policy. The homeowner decides to replace the roof on the house. He wasn't able to complete the roof in one day and left a portion of it unfinished overnight. A heavy rainstorm caused $20,000 of damage to the interior of the house and some furniture. In this situation, the policy will pay
nothing
Which of the following losses would not be covered by the dwelling policy if the dwelling is vacant for over 60 days
vandalism
Under the business auto coverage form, mobile equipment is covered for liability insurance
when being carried or towed by a covered auto
Which of the following would be considered causes for flood conditions covered by the national flood insurance program?
*Overflow of inland or tidal waters *Unusual and rapid accumulation or runoff of surface waters from any source *A mudflow All of the above
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
When an insurer cancels an auto policy For an allowable reason, they must give notice to the named insured Of possible eligibility for coverage through the Pennsylvania auto insurance plan, unless the reason for cancellation is
Nonpayment of premium
Where is the policy period stated?
On the declarations page of the policy
A producer has successfully completed 52 hours of continuing education. How many hours can the producer apply to her current reporting period, and how many hours can be carried toward the next reporting period?
Only 24 hours of the 50 to earned may apply to this reporting period
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
All of the following may be covered by the miscellaneous type Vehicle and Endorsement except
Rented recreational vehicles
If a licensee wants to transact insurance under a different name than that listed on his or her producers license, which of the following must occur?
The change must be reported to the Commissioner.
Under the limited tort insurance option, an insured may not seek recovery for pain and suffering or other non-monetary damages unless
The injuries fall within the definition of serious injury