State Exam Simulation

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Darlene has experienced a loss for a television set during a fire at her home. When reading her insurance policy to determine how the property would be paid for at the time of the loss she read which of the following that told her how the loss would be paid?

Loss Valuation.

What is the deductible for fire extinguisher recharge in a Businessowners policy?

SCWHUA max limits for commercial are how much? $1 million $2.5 million $5,000,000 $1.3 million

$2.5 million

When Mr. Adam's personal property was damaged by a fire his adjuster told him the formula to be used to calculate the loss payment would be Current Replacement Cost minus Depreciation. Which of the following is the name of the formula used? Replacement value Actual Cash value Market value Agreed value

Actual Cash value

All are 'Your duties if an injury occurs' for workers comp EXCEPT: Assume obligations and spend money without the insurer's okay Notify the insurer at once Promptly give the insurer all notices, demands, and legal papers concerning the claim Provide immediate medical attention required by the law

Assume obligations and spend money without the insurer's okay

A cargo ship owned by Neptune Transportation Company collides with another ship and sinks in a harbor. Although the ship rests in shallow water, the cost to save its cargo exceeds the cargo's value. What kind of loss is this? Salvage loss Particular average loss General average loss Constructive total loss

Constructive total loss

Which of the following coverages is not included in the liability section of the homeowners policy?

Coverage D, Loss of Use

Which of the following is not typically a basic named peril on a property insurance policy? Fire Vehicles Flood Vandalism

Flood

A businessowners policy excludes loss or damage by certain perils, but then adds limited coverage for these perils under its Additional Coverages section. For which of the following exclusions does this section provide limited coverage?

Fungi or bacteria; collapse; increased cost of construction

All the following are reasons why Jonah chose a dwelling policy instead of a homeowners policy EXCEPT:

He does not want to limit the number of families who may occupy the property.

Carol owns a small shop selling novelty items, greeting cards, and souvenirs. She lives in a large city and does not own an automobile, but sometimes borrows her employee's car for business purposes. What businessowners endorsement might be suitable for Carol? Personal auto policy endorsement Excess coverage endorsement Hired auto and nonowned auto liability endorsement Workers compensation endorsement.

Hired auto and nonowned auto liability endorsement

Homeowners policies may insure

Houses with up to 4 individual units

What term on an aviation insurance policy refers to the actual aircraft?

Hull

Can a mobile home be insured on a HO policy?

If secured to the ground on land owned or leased by the insured

The expenses to reduce loss in a Business Income form

Is included and is not an additional amount of insurance.

Business Income Coverage will not pay

Janitorial service

Flo is an insurance agent who suspects her client isn't eligible for insurance with her standard insurers because the client has an unusual exposure. Flo knows that insurers like to have a sizeable pool of exposure units before issuing insurance because it enables them to more accurately predict losses. What mathematical principle is Flo thinking about? Law of large numbers Theory of relativity The actuarial principle The loss principle

Law of large numbers

All of the following could be included in the CPP EXCEPT: Commercial Crime Commercial General Liability Life insurance on company owners Commercial Auto

Life insurance on company owners

SCWHUA deductibles the insured may chose are how much? $1000 or $2000. 2, 3, 4, 5, or 10% of the policy limit 2, 3, 4, 5, or 10% of the damage done $500, $1000, or $1500

2, 3, 4, 5, or 10% of the policy limit

Within what period of time must a license be reinstated without the need to take the state licensing exam?

6 months.

Extended Business Income coverage starts paying on the day operations resume and continue until pre loss income level is reached or __________ days

60 days unless a longer time period is listed on the declarations page

James Woodwork Inc. wants to purchase insurance coverage for all of its commercial property. James has learned that he can purchase insurance for his showroom, his office building and his warehouse with an individual policy. What type of policy would he purchase?

A Blanket Policy.

For adequate coverage for all your customer's furniture in your upholstery shop you need

A Legal Liability coverage form

One of Vincent's business associates has requested a document that shows evidence Vincent has a certain type of insurance coverage in place. The document must show the name of Vincent's insurance company, the type of coverage that is in place, and the limits of liability. What type of document could Vincent use?

A Policy Declarations page

James Woodwork Inc. wants to purchase insurance coverage for some, but not all, of his high value woodworking equipment. His agent told him he needs to have the equipment appraised by an independent appraiser and he will then use that information to write a policy for him. What type of policy will the agent write for James Woodwork's equipment?

A Specific Policy.

Which business would be appropriately insured with a Bailee's Customers Floater form?

A TV repair shop

All are perils on the sea EXCEPT: Jettison Barratry Pirates and assailing thieves A breaching whale capsizes the ship

A breaching whale capsizes the ship

BMW sends cars built in Greer, SC to locations all over the world thru the port of Charleston. What sort of policy do they need to cover the exposure of the cars being lost at sea?

A cargo policy

What type policy covers the products being transported on an ocean-going vessel?

A cargo policy

Wally's Best Freight (WBF) is available to haul cargo for anyone who will pay. WBF is best described as which of the following? Private carrier Contract carrier Motor freight cargo company A common carrier

A common carrier

A piece of cargo on board a ship has been damaged and it is determined that the repair cost will exceed the value once repaired. This would be treated as?

A constructive total loss

Extra Expense coverage would pay all EXCEPT

A cruise to the Bahamas

Extra expense coverage is for all the following EXCEPT:

A cruse to the Bahamas while waiting for a temporary location to be ready

Which of the following would be covered by garage liability? Replacing defective parts sold or installed. A customer's car damaged during a test drive. Redoing a poorly completed repair. Recalling defective parts sold.

A customer's car damaged during a test drive.

Which would not be covered by a Legal Liability coverage form?

A customer's foot injury from stepping on a nail in your cabinet shop

The Reynolds family insures its farm with your agency. Livestock coverage is included and you inform Mr. Reynolds that the animal he just purchased isn't covered by the policy because it doesn't meet the definition of 'livestock' contained in the policy. What animal did Mr. Reynolds buy? A cow A horse A goat A duck

A duck

Neal is shopping for insurance on his new home. He is not sure whether he should have a homeowners policy or a dwelling policy. Which of the following is a principal difference between the two policies

A dwelling policy only covers the dwelling, other structures, personal property, fair rental value, and additional living expenses. It does not cover liability.

In addition to the family, can there be nonrelatives who pay to be on the HO premises?

A maximum of 2 are allowed

Which of the following would be considered an indirect loss?

A person whose house was damaged lives in a hotel while the house is repaired, incurring additional expenses.

In heavy seas a 40-foot shipping container full of Jack Daniels was washed overboard and sank. This would be called what?

A total loss

Which of the following would be eligible for a dwelling policy?

A vacation home in the mountains used primarily for family ski weekend outings

Garage APD losses are based on what? Amount agreed upon by insurer and insured ACV on the date of loss less the deductible Retail value from the NADA book The full ACV; garage has no deductible

ACV on the date of loss less the deductible

A farmer has towed his damaged combine to the insurer's salvage lot so they will have to pay for a total loss. Which condition says this is not allowed? Abandonment Subrogation Appraisal Legal actions

Abandonment

Actual Cash value

When Mr. Huan's piano was damaged by vandals who broke into his house, the insurance company subtracted $200 for depreciation when it made its settlement offer. On what basis did the insurer value Mr. Huan's loss?

Actual cash value

After a business interruption begins, Business Income coverage starts paying

After a 72 hour waiting period

Esther has just bought an expensive painting as an addition to her art collection. Considering the high price she paid for it, she wants to be sure there will be no dispute with the insurer in the event it is damaged or stolen. What type of policy would you recommend Esther purchase?

Agreed Valued policy

Robin has a valuable porcelain collection she wants to insure. It's difficult to assess the collection's value because of the rare nature of the collection. What valuation method have they used?

Agreed value

Ajax Manufacturing Company bought a $1 million building property policy for a premium of $2,500. Two months after the policy went into effect, the building was destroyed by a tornado. For the consideration of a $2,500 premium, the insured will receive $1 million. Clearly, the insured is receiving a benefit that is out of proportion to the consideration it gave in its premium payment. This type of contract is considered a(n)

Aleatory Contract.

Susan is studying insurance and comes across the term 'aleatory contract.' She asks her professor what the term means and he tells her that

Aleatory contracts involve an exchange of unequal amounts.

Your client, Bob, needs coverage for an unusual type. No admitted insurer will accept it and there is no residual market. You should refer bob to

An Excess and Surplus Lines Broker

When would the 1% deductible apply? If the storm occurred between 1 Nov and 31 May A no-name storm on a commercial policy An afternoon thunderstorm damaging a house with wind or hail Damage done by a category 5 hurricane

An afternoon thunderstorm damaging a house with wind or hail

Auto physical damage deductibles......

Apply to each separate loss

How do you solve a dispute with your insurer over how much they should pay to repair your car?

Appraisers with an umpire

Notification to the insurer after a loss is to be done'..

As soon as possible

A CPP goes into effect At 12:01am Greenwich Mean Time At 12:01am at the address of the named insurer. At 12 noon at the address of the Named Insured At 12:01 am at the Named Insured's address.

At 12:01 am at the Named Insured's address.

Samantha, in a snit, deliberately causes bodily injury to Theresa. When she submits a liability claim under her homeowners policy after Theresa sues her, why does Samantha's insurer deny the claim? Because Samantha deliberately harmed Theresa. Because the homeowners policy doesn't provide coverage for bodily injury liability Because the homeowners policy does not provide a defense when the insured is sued Because the injury generated less than $1,000 of expenses

Because Samantha deliberately harmed Theresa.

A Personal Injury Liability endorsement covers all EXCEPT

Bodily injury

Jim's Auto has garagekeepers liability. Which would not be covered? Bodily injury to a customer slipping on spilled oil Damage to a customer's car caused by a falling ceiling tile. Damage to a customer's car in an after-hours fire Damage to a customer's car caused by spilled paint.

Bodily injury to a customer slipping on spilled oil

No losses are expected in a surety contract so what is paid for a surety bond?

Bond fee

Even though both surety bonds and insurance are methods of transferring risk, they differ in how they treat that risk. All of the following are correct about their characteristics EXCEPT:

Bonds and insurance always involve three parties

Which of these Businessowners coverages has a deductible?

Business income

All are excluded on garage liability EXCEPT: BI to an employee Repairing defective parts sold. Cars rented to customers of the insured who have left their vehicle for service or repair. Autos while used in any professional or organized racing or demolition contest or stunting activity.

Cars rented to customers of the insured who have left their vehicle for service or repair.

Clark sued his insurance company because it didn't pay his claim. He finds the wording in his policy vague and ambiguous. He claims that had he understood the policy, he would have purchased additional coverage and his claim would have been covered. In whose favor did the Court render judgment?

Clark's, because the policy is a contract of adhesion

Coverage under the Extended Non-Owned Coverage endorsement is often used for a

Company car

Mr. Bibeault is furious that his insurance company won't pay his claim. You explain that he must comply with certain provisions of the policy before the insurer must make payment. You tell Mr. Bibeault that his policy is what type of contract?

Conditional

Denzel's insurance policy requires him to notify his insurer of a loss within 30 days of the date of loss and to cooperate with the insurer in settling a loss. This language is a characteristic of a

Conditional contract

Clearwater Rafting has been unable to secure liability insurance and approaches you for assistance. Before you are able to secure coverage in the surplus lines market, what must you do?

Conduct a diligent search of the admitted market

Lou is deciding whether to drive to the Mexican coast or the Canadian Rockies for vacation. As his insurance agent, what advice should you give him about the coverage he has in these countries under his personal auto policy?

Coverage extends to Canada, but not Mexico.

If the Davis brothers are farming for others at a farm that is not an insured location, and the farming operations are directed by the owner of the outside farm, they are engaged in Agricultural enterprises Custom farming Controlled business Professional services

Custom farming

Limitations in an insurance policy apply to certain situations or particular kinds of covered property. Which of the following is not limited under the businessowners policy?

Damage caused by lightning

Before a broker can look for a nonadmitted insurer for their customer, they must

Do a diligent search for an admitted insurer.

Extra expense coverage form has a time deductible of?

Does not have one

Liang and Chan are constructing a home on a vacant lot they own. What type of insurance policy would be most appropriate for them at this time?

Dwelling policy

Norman is the owner of a single-family home that is rented to a tenant. What type of policy is most appropriate for Norman?

Dwelling policy

Part of the building in which Ned has his ice cream parlor collapses. Depending on what caused the collapse, the damage might be covered under Ned's businessowners policy. The loss will not be covered if the peril that caused the damage was

Earth movement

Jackson Hardware has a property policy. The policy covers all perils you can think of except Flood, Earthquake, Nuclear and Neglect. Which of the following perils is not covered under an Open Peril policy? Aircraft Earthquake Smoke Sprinkler leakage

Earthquake

Roberts Credit Union purchased a standard Financial Institution Bond. The fidelity insuring agreement of this bond only provides coverage for dishonest acts relating to what peril? Theft Computer fraud Burglary Embezzlement

Embezzlement

An executive was harmed because of an improperly prepared illustration of the company's early retirement plan. What policy could cover the damages?

Employee benefit liability insurance

Tor, an employee of Ajax Tool Company, is injured while operating a lathe. Tor files a workers compensation claim and also sues Faultless, Inc., which manufactured the lathe. Investigation indicates that Ajax did not properly maintain the machine as instructed by Faultless. Faultless then sues Ajax. What coverage might be available to Ajax to defend it in the suit by Faultless? Employers liability coverage General liability coverage Workers compensation coverage Defective machine liability coverage

Employers liability coverage

You were injured while a passenger in a friend's auto. You both have Med Pay in your auto policies. Which Other Insurance provision will apply?

Excess

You are furnished a company car by your employer. What is required for you to be covered by your personal auto policy when driving this auto?

Extended Non-owned Coverage endorsement added

Jane is a sales representative for a pharmaceutical company and uses a company car for business instead of her family car. What particular type of auto coverage endorsement should Jane consider?

Extended non-owned coverage endorsement

Brewer Insurance Information Service will continue holding classes in Columbia even if their normal location is damaged and can't be used. Which coverage form should they have to pay back money spent to do so?

Extra expense coverage

Your dealership has acquired an auto from someone who did not have a legal title. Which exclusion says your loss is not covered? Trick and device exclusion Inattention to detail exclusion Scam exclusion False pretense exclusion

False pretense exclusion

If you have been convicted of a first offense insurance fraud of $50,000 or more; what is your penalty? Felony, Fine of $2,000 to $10,000 or imprisonment for up to 3 years or both fine and imprisonment. Felony, Fine of $10,000 to $50,000 or imprisonment for up to 5 years or both fine and imprisonment. Felony, Fine of $100 to $500 or imprisonment of up to 30 days. Felony, Fine of $20,000 to $100,000 or imprisonment for up to 10 years or both fine and imprisonment.

Felony, Fine of $20,000 to $100,000 or imprisonment for up to 10 years or both fine and imprisonment.

If after the Director holds a hearing he has determined the producer has been engaged in a method of competition or an act or practice is unfair or deceptive the penalties may include all of the following EXCEPT?

Fine up to $5,000 or if willful 10,000.

An individual bond, name schedule bond, position schedule bond's limit of liability applies how? Aggregate for the year Per occurrence Once a month For each individual involved in a loss

For each individual involved in a loss

Which of the following is not a civil penalty under the South Carolina Omnibus Insurance Fraud and Reporting Immunity Act? For first offense, up to $5,000. For first offense $500. For second offense, $5,000 or more but less than $10,000. For third or subsequent offense, $10,000 or more, but less than $15,000.

For first offense $500.

The South Carolina Omnibus Insurance Fraud and Reporting Act was established to address all of the following problems with insurance fraud EXCEPT? Detecting Insurance Fraud. Sets Penalties for Insurance Fraud. Encourages Reporting with Immunity. Full Retribution for Insurance Fraud.

Full Retribution for Insurance Fraud.

Dillon was in a car accident with his Ford F-150, which required the front fender to be replaced. The insurance company said the policy allowed them to replace the fender with like kind and quality and they buy the part from NAPA, not from Ford because the Ford parts were much more expensive. Which Loss Valuation Method did the company use?

Functional Replacement Cost.

Ira's business sells used cars. What commercial auto policy must he use? Business Auto Policy Truckers Motor Carrier Garage

Garage

Ibey Motors sells used cars. It also repairs cars for its customers. What type of insurance coverage does Ibey Motors need to provide legal liability insurance for vehicles in its care, custody, and control? Business auto liability Garage liability Garagekeepers liability General liability

Garagekeepers liability

After you were involved in an auto crash, you should do all these EXCEPT:

Have repairs made and then contact your insurer

Duties after a loss include all EXCEPT:

Have the damage repaired ASAP; even if not yet okayed by the insurer

Which of the following is an example of risk reduction? Setting up a self-insurance program. Pooling the risk. A homeowner who chooses not to buy flood insurance. Having fire extinguishers in place to limit the extent of a potential fire loss.

Having fire extinguishers in place to limit the extent of a potential fire loss

Joyce notices that her insurance policy contains a disclosure stating it is written by a non-admitted insurance company. She doesn't understand what this means. Her insurance agent tells her it means all of the following EXCEPT:

Her policy was written by a standard insurer that is licensed to do transact insurance in the state.

Mrs. Hancock is driving from the Post Office, where she picked up the mail for her employer, to her place of employment when she's involved in an accident. What endorsement on her employer's BOP will extend liability coverage for the accident? Personal and Advertising Injury Liability Utility Services-Direct Damage Hired and Non-owned Auto Liability Protective Safeguards

Hired and Non-owned Auto Liability

What must the Director do before he can charge an agent with a violation with a Cease and Desist Order?

Hold a hearing.

Malcolm Enterprises sustains a serious fire loss to its factory. Operations are suspended for several weeks while repairs are made. During this time, Malcolm Enterprises cannot produce the goods they sell and lose considerable income. How would you describe the loss of income?

Indirect loss

The CEO of Edison Manufacturing Corp. wants to buy insurance for the company through an agent who will represent Edison, not the insurance company. His best choice would be to obtain insurance that is marketed through a(n)

Insurance broker

Joan, an underwriter with Happy Valley Mutual, makes great efforts to avoid adverse selection in deciding which risks to insure. Which of the following is an example of adverse selection? Insuring all risks at different rates based on the exposure. Insuring only risks where there is little or no chance of loss. Insuring a commercial applicant that had five burglary losses in the past year. Insuring only those individuals or businesses that will accept a very high deductible.

Insuring a commercial applicant that had five burglary losses in the past year.

The garage policy is used to provide insurance to franchised and nonfranchised auto and trailer dealers. When compared to other types of insurance, the garage coverage form has a unique feature. What is it? It has been in use since the late 1800s. Its premium charge is the least expensive of all commercial insurance policies. It combines coverage for general liability, auto liability, auto physical damage, and garagekeepers insurance in a single policy. It offers the simplest terms of coverage.

It combines coverage for general liability, auto liability, auto physical damage, and garagekeepers insurance in a single policy.

Who decides which coverage parts are included in a Commercial Package Policy? It is up to the insured. It is a pre-programmed by ISO. Coverages are dictated by the insurer. State law dictates coverage parts

It is up to the insured.

You have been assessed by your homerowners association to help pay a liability claim against it. What will your HO Liability coverage do for you? Nothing. There is no coverage. It will pay up to $500 on your behalf It will pay on your behalf if you were a witness It will pay up to $1000 for you.

It will pay up to $1000 for you.

Underwriters know that as the number of units of exposure increases, prediction becomes more accurate. This basic insurance principle is known as Pure risk. Speculative risk. Adverse selection. Law of large numbers.

Law of large numbers.

How are other states where the insured's workers comp coverage will apply indicated in their policy? An other state endorsement A check mark on the map in part 3 of the policy Added to the policy conditions Listed on the information page

Listed on the information page

Loss Valuation

Amick's Poultry Farm has a policy that will pay for the loss of the chickens at what the price would be today if they were able to sell them. What type of Loss Valuation Method does Amick's Farm have in their policy?

Market Value.

Masonry would receive a higher premium

Sheila lives in New Mexico in a home constructed of adobe. She has purchased an Earthquake Policy to protect herself from a loss due an earthquake. What is the impact of this type of construction on her policy premium? Wooden frame would receive a higher premium. Steel frame would receive a higher premium. Masonry would receive a higher premium Superior (non-combustible or fire-resistive) would receive a higher premium.

Masonry would receive a higher premium

Ed is injured in a fall on Mona's property. Which homeowners coverage, if any, is most appropriate to cover his claim against Mona? Claim expenses Medical payments to others Liability Damage to property of others

Medical payments to others

Mason owns several vehicles, including a dune buggy and a golf cart. He wants to cover these vehicles under his personal auto policy. What endorsement will his agent likely recommend?

Miscellaneous type vehicle endorsement

If you have been convicted of a first offense insurance fraud of less than $1,000; what is your penalty? Misdemeanor, Fine of $2,000 to $10,000 or imprisonment for up to 3 years or both fine and imprisonment. Misdemeanor, Fine of $20,000 to $100,000 or imprisonment for up to 3 years or both fine and imprisonment. Misdemeanor, Fine of $100 to $500 or imprisonment of up to 30 days. Misdemeanor, Fine of $10,000 to $20,000 or imprisonment for up to 5 years or both fine and imprisonment.

Misdemeanor, Fine of $100 to $500 or imprisonment of up to 30 days.

If you have been convicted of a first offense insurance fraud of more than $1,000, but less than $10,000; what is your penalty? Misdemeanor, Fine of $2,000 to $10,000 or imprisonment for up to 3 years or both fine and imprisonment. Misdemeanor, Fine of $20,000 to $100,000 or imprisonment for up to 3 years or both fine and imprisonment. Misdemeanor, Fine of $100 to $500 or imprisonment of up to 30 days. Misdemeanor, Fine of $10,000 to $20,000 or imprisonment for up to 5 years or both fine and imprisonment.

Misdemeanor, Fine of $2,000 to $10,000 or imprisonment for up to 3 years or both fine and imprisonment.

A typical homeowners policy does not cover Personal liability and medical payments Dwelling, other structures, and personal property Loss of use Motor vehicles

Motor vehicles

What is the method of communication the Director will use to notify a producer to appear before him at a hearing?

Must be in writing, delivered in person or by US Mail return receipt requested to the last known address

Which of the following is not required to be provided in the summons to appear before the Director for a hearing?

Name of the Agent's Legal Representative

After Jackson's Hardware Store is closed for the day, a thief breaks in and steals merchandise and cash that was left in the cash register. Jackson called his agent to see if that type of loss was covered. The agent said he read the policy and it indicated that loss was listed as covered. Which type of policy does Jackson's Hardware have? Open Peril Written Peril Named Peril Excluded Peril

Named Peril

Harry asks his insurance agent about additional property coverage for a small motor boat that he sometimes uses for fishing. Would a Watercraft Endorsement be considered under these circumstances?

No, this endorsement does not apply to property coverage for the boa

Debra would like to operate a franchise for a national cosmetics company out of her home. She plans to employ four assistants. Her gross annual receipts are estimated to be about $225,000. Will this be allowable?

No. Retail and wholesale businesses are not allowed. Allowable types of businesses can have no more than 2 people working at a time.

While a guest in Tanya's home, Mary contracts an infectious disease from Tanya's daughter. Mary files a claim against Tanya for medical expenses and medications. Will Tanya's homeowners policy cover the claim? Yes. The communicable disease exclusion applies only to sexually transmitted diseases. No. The communicable disease exclusion applies to any contagious disease. No. The expected and intended injury exclusion applies. Possibly, as Tanya must decide whether to invoke the liability or medical payments coverage to pay for the claim.

No. The communicable disease exclusion applies to any contagious disease.

Zeke carries physical damage coverage on his car. He goes on vacation and rents a car. While driving the rental car, he loses control and collides with a tree, damaging the vehicle. He did not buy the physical damage coverage offered by the rental agency. Will he have to pay for the damage to the rental car out of his own pocket?

No. The rental vehicle is a 'non-owned auto' and is covered under the collision coverage of his personal auto policy on an excess basis.

Which of your coverages would pay for your car dropped off the lift at an auto repair shop?

None of your coverages

Misty Mountain Laundry receives a charge for services from the fire department of $3000. The owner files a claim under his Businessowners policy for the charge. Is the claim covered?

Only $2500 is covered.

Mr. Davis, of Davis Dairy, is considering the purchase of a commercial property policy. You explain the different causes of loss forms to Mr. Davis and tell him he must select one of them. Which of the following is not one of the causes of loss forms available on the commercial property policy?

Open causes of loss form

Liability coverage in Section II of a Garage Coverage Form has what two parts? Bodily Injury and Property Damage Owned Auto and Non-owned Autos Hired Autos and Owned Autos Other Than Covered Autos and Covered Autos

Other Than Covered Autos and Covered Autos

Who is eligible to purchase a Homeowners policy?

Owner occupants and tenant occupants

A producer who has a license that has lapsed may reinstate the license by doing all of the following EXCEPT:

Pass the state exam for the licensed lines.

Workers compensation premiums are based on which of the following exposures?

Payroll of the employees

A cause of loss is called a(n) Hazard Exposure Peril Risk

Peril

Bob and Ann were at a neighborhood party and during a discussion with James they said they had heard that Cindy had been arrested for embezzlement at her company. James told Cindy about the conversation with Bob and Ann. Cindy was furious because this was not true. What endorsement would Bob and Ann need on their homeowners policy to protect them from the lawsuit Cindy brought against them for defamation of character?

Personal Injury Liability

If an agent wanted to add liability coverage for invasion of privacy to a homeowners policy, he or she might do so by adding which homeowners policy endorsement?

Personal Injury Liability Endorsement

Which of the following endorsements would an individual need to protect themselves from non-physical injury against another person?

Personal Injury Liability.

Which of the following is not a valid Loss Valuation Method?

Personal Property Replacement Cost.

Ed cannot transfer his property and casualty policy to Jim without his insurer's consent because a property and casualty policy is a(n)

Personal contract

The HO Watercraft endorsement is

Personal liability and medical payments for watercraft used for personal uses

When must a producer notify the Director of Insurance should they want to use a name other than their legal name?

Prior to using the Assumed Name.

If other auto physical damage coverage applies at the same time as your policy for the car you own, what is the other insurance condition?

Pro rata

When another policy covers the same loss as the DP, which other insurance condition is used? Pro rata Primary or excess Contribution by equal shares Both policies pay the full covered amount of loss

Pro rata

Sevigny Enterprises lost its building to a fire. Which of the following statements BEST describes the loss valuation provision in the BOP with respect to the required limit of insurance?

Property must be insured to at least 80 percent of its replacement value

Your insured, Candy Land, is insured by a BOP. When it installs an automatic sprinkler system in its building, what endorsement do you add to the policy? Identity Fraud Expense Coverage Protective Safeguards Hired Auto Utility Services Direct Damage

Protective Safeguards

Mrs. Grant's home suffered a fire. The contractor tells Mrs. Grant it will cost $10,000 to repair the damage and restore her home so it's exactly the same as it was before the fire. What valuation basis did the contractor explain to Mrs. Grant?

Replacement Cost value

The personal auto policy (PAP) provides loss settlement at the lesser of the actual cash value of the vehicle or the amount necessary to repair or replace the damaged property. How is 'actual cash value' defined?

Replacement cost minus depreciation

When Mr. Lincoln's property was damaged by a fire his adjuster told him the formula to be used to calculate the loss payment would be Current Replacement Cost without a deduction for Depreciation. Which of the following is the formulas used?

Replacement value

William's parked vehicle was struck by a hit-and-run driver. What is William obligated to do in addition to notifying the insurer that issued his personal auto policy if he wants his uninsured motorist claim paid?

Report the hit-and-run accident to the police

Many large organizations self-insure up to a specific limit but buy insurance to cover losses beyond that limit. Setting up a self-insurance program is an example of which method of handling risk? Risk retention. Risk avoidance. Risk transfer. Risky business.

Risk retention.

If a total loss has been paid but some of the involved property still exists, the left over property is considered what?

Salvage

Gregory purchased several guns, fishing equipment and some high value jewelry for his wife. He asked his agent the best way to insure these items on a piece by piece basis. The agent told him to get all of the property appraised, provide a list of all the property with a description and the values of each and he would write a Stated Amount policy. Which of the following is a stated amount type of policy?

Scheduled Personal Property Endorsement.

When a group is formed because they have a common exposure to loss to protect themselves against a loss this is known as what? Transfer. Avoidance. Retaining. Sharing.

Sharing.

Why must the Amendment of policy provisions ' South Carolina be added?

So as to comply with the financial responsibility law and to state the SC cancelation and nonrenewal rules

What is the purpose of the Voluntary Compensation endorsement?

So those exempt can voluntary agree to be bound by the law

Trudy is driving her car when it is struck in the rear by Harry. Trudy's insurer pays for the damage to her car, but then files a claim against Harry to recover the amount it paid to Trudy. What provision in Trudy's personal auto policy gives the insurer the right to pursue Harry to recover this amount?

Subrogation

Which of the following is not an available covered peril under garagekeepers liability coverage? Collision Specified Causes of Loss Comprehensive Substitute Transportation

Substitute Transportation

You have committed to perform something for someone. You may be required to guarantee your performance with which type bond?

Surety

Stuart is involved in a relationship whereby he arranges for ABC Insurance Company to guarantee his performance to Timothy. What term describes Stuart's relationship with ABC and Timothy?

Suretyship

Unusual Enterprise cannot obtain property and liability insurance through standard markets because it is considered a high risk business whose products are untested and unproven. Which of the following represents the best option for Unusual Enterprise to obtain insurance?

Surplus lines broker

The South Carolina Omnibus Insurance Fraud and Reporting Act establishes the Insurance Fraud Division in which state agency? The Adjutant General's Office. The Attorney General's Office. The Office of the General Attorney. The District Attorney's Office.

The Attorney General's Office

What part of a CPP personalizes it by telling who bought it, who sold it, what's covered for how much for how long, and where it is located? The Common Policy Declarations page. The Interline Endorsement. The Common Policy Conditions. The Special Coverage form.

The Common Policy Declarations page.

Gordon was driving his car on vacation in Mexico when a utility pole landed on his auto. Which of the following is true about the coverage provided by his auto policy?

The accident is not covered

Which of the following is a 'hired auto' under the Hired and Non-owned Liability endorsement that may be added to Gateway Motel's BOP? The company car owned by Gateway and used by an employee The car owned by the owner of Gateway Motel The car owned by an employee of Gateway Motel The car rented by Gateway Motel

The car rented by Gateway Motel

Which of the following best describes a Direct Loss?

The damage done by a covered peril directly to the property insured

Which of the following best describes a Direct Loss? The damage done by a covered peril directly to the property insured. The damage done by any peril directly to the property insured. Any damage done to the insured property. Any damage done by a covered peril to the insured property.

The damage done by a covered peril directly to the property insured.

Jane's insurance policy contains a stated amount valuation provision. This provision states that she will receive how much if her covered property is stolen or destroyed?

The dollar amount of insurance specified in the policy schedule

Which is true about the workers comp experience modification?

The frequency of claims paid is most important

Mrs. Anderson's insurance policy is a unilateral contract. Only one party to the contract makes enforceable promises. Once the policy premium is paid and the policy is issued, which party must keep its promises?

The insurance company

When is the compliance deadline for Continuing Education for each producer in South Carolina?

The last day of the birth month on an even or odd year basis.

What is the limit of coverage for loss or damage to your covered auto?

The lesser of the ACV or the amount necessary to repair or replace with like kind and quality

Three businesses; a men's clothing store, a ladies' clothing store, and a logger have annual payrolls within $100 of each other. Are their workers comp premiums about the same?

The logger pays more since it is a more risky business

Two of the same type businesses with the same size annual payroll operate side by side. One has not filed any workers comp claims for years. The other has filed several a year for several years. How do their workers comp premiums compare?

The one with the claims pays more.

What commercial coverage form covers a copier leased by a small business?

The owner's legal liability coverage form

Vanessa borrowed her friend's pickup and crashed it into a brick wall, totaling it. When she submits a claim under her personal auto policy for the destroyed pickup, her insurer says it won't make payment until a condition is met. What is that condition?

The pickup truck owner's policy must pay

Tiny Town Hardware Store has a power surge which results in a fire on the premises. Which statement is correct about the loss with respect to Tiny Town's businessowners policy?

The power surge is not covered, but damage caused by the fire is covered.

Allison works in a boutique in South Carolina, which is the company's principal business location and home state. She occasionally works in a branch store in North Carolina for several weeks at a time. During one of her visits to NC, she is injured on the job. Under which state's law is she entitled to collect workers compensation benefits? The state with the higher benefits Only North Carolina, the state in which the injury occurred Only South Carolina, the company's home state Both SC and NC.

The state with the higher benefits

Who can veto a proposed repair facility? The underwriter the master of the crew The assured The surveyor

The underwriter

Which would be covered by a Bailee's Customers Floater coverage form?

The upholstery shop had a fire which damaged the customer's sofa

Which of the following coverages is only provided by endorsement on a dwelling policy?

Theft

When an insurance contract is formed, only the insurer makes a legally enforceable promise to pay covered claims. After the premium is paid and the policy is in force, the policyholder has no further promises to keep. What characteristic of insurance contracts is described?

They are unilateral

Trang is on her way to a job interview when her car breaks down. A tow truck driver is able to fix her car and send her on her way. She pays the bill for roadside labor and submits it to her auto insurer for reimbursement. What coverage on Trang's PAP, if any, makes payment?

Towing and Labor Costs endorsement

Which endorsement to a personal auto policy would pay a mechanic to fix your car in a parking lot where it broke down?

Towing and Labor Costs endorsement

Dawn has a personal auto policy with a Towing and Labor Costs endorsement. The endorsement covers which of the following?

Towing and labor charges incurred where a covered auto is disabled

Edwin has decided not to retain the risk of home ownership himself. What method of risk does he choose when he purchases homeowners insurance? Control Reduction Transfer Avoidance

Transfer

Tom bought a tractor-trailer and operates as a carrier-for-hire. He transports cargo for several companies and is paid a fee for his services. Which type of commercial auto form would be most appropriate for his business? Truckers policy or Motor Carrier policy Truckers policy only Motor Carrier policy only Neither a Truckers policy nor a Motor Carrier policy

Truckers policy or Motor Carrier policy

In what type of contract is only one party required to make an enforceable promise?

Unilateral contract

The standard penalties available to the Director for an insurer are in the amounts of?

Up to $15,000, or $30,000, if willful, suspend or revoke the license or both.

Which endorsement to the standard workers compensation policy offers benefits to employees who would otherwise be exempt from statutory workers compensation benefits?

Voluntary Compensation and Employers Liability Coverage endorsement

Brody has purchased a homeowners policy and an endorsement to protect his home from losses due to water or waterborne material that originates from sewers or drains. Which endorsement did he purchase?

Water Back-up and Sump Discharge or Overflow Endorsement

Sean's house was built on the bottom of the hill in the neighborhood. He is concerned that should the city sewer line malfunction and cause the sewer to backup into his home he would have no coverage. Which endorsement should his agent to recommend to provide coverage for a loss of this type?

Water Back-up and Sump Discharge or Overflow Endorsement

The Water Back-up and Sump Overflow endorsement covers all EXCEPT

Water, or waterborne material, which backs up through sewers or drains because of an area-wide flood

Which of the following endorsements would Ramona choose to provide only liability coverage for her boat, which she uses for family fun and recreation at the lake and also in the harbor of Charleston?

Watercraft Liability Endorsement.

Under the Consumer Privacy Regulation, the consumer is allowed to prevent the insurer or producer from sharing non-public personal health or non-public personal financial information with affiliates or nonaffiliated third parties, Which of the following is not an exception the Opt-Out requirements? Comply with Federal Law. Prevention of insurance fraud. Resolving Customer disputes. When buying a new policy or service from the company.

When buying a new policy or service from the company.

Which two types of coverage are considered goodwill coverage and do not require the legal liability of an insured? Medical Payments to Others and Liability Coverage Liability Coverage and Damage to Property of Others Medical Payments to Others and Damage to Property of Others Loss Assessment and Claim Expenses

Medical Payments to Others and Damage to Property of Others

John calls you and says he wants to add a motorcycle to his personal auto policy. What endorsement do you recommend?

Miscellaneous Type Vehicle endorsement

Marilyn is shopping for a property policy and must decide whether to buy a named perils or an open perils policy. What statement is correct about the advantages of either policy? A long list of perils covered under a named perils policy makes it better than an open perils policy. With an open perils policy, the insurer has the burden of proving that the loss is excluded. Named peril policies facilitate claim handling because they specify the cause of loss. Open peril policies are less expensive than named peril policies.

With an open perils policy, the insurer has the burden of proving that the loss is excluded.

If Jane Adams, a licensed insurance producer in South Carolina gets married and assumes the name of her husband when must she report her new last name to the Department of Insurance?

Within 30 days of the change.

Within what period of time must a licensed producer report a change of address?

Within 30 days of the change.

Wooden frame would receive a higher premium

Darlene is purchasing an insurance policy to protect her house made of wood, sheetrock and vinyl siding against any losses due to fire. What is the impact of this type of construction on her policy premium? Wooden frame would receive a higher premium Steel frame would receive a higher premium Masonry would receive a higher premium Superior (non-combustible or fire-resistive) would get a higher premium.

Wooden frame would receive a higher premium

Cecil has completed his Continuing Education requirements and when reviewing his courses he realizes he has really over achieved this year. He has completed 44 hours. Has he wasted any of his time and money?

Yes, because he is only allowed to carry over 18 hours to the next biennial period, so the maximum allowable hours is 42.

Darryl borrows formal dinnerware and glasses from his neighbor, Tanya, to use at a large party at his home. While Darryl and his guests participate in an enthusiastic line dance, he accidentally smashes several of Tanya's plates. Will Darryl's homeowners policy cover this loss to Tanya's property? Yes, because the provision for Damage to Property of Others covers such loss. No, because Darryl doesn't own the property. Yes, as long as Darryl is legally responsible for the loss. No, because Darryl intentionally participated in the act that caused the damage.

Yes, because the provision for Damage to Property of Others covers such loss.

Jack is selling his home to Sue and wants to transfer his homeowners policy to her. Can Jack transfer his policy?

Yes, but only with the written consent of the insurer.

Yes, the water damage is also considered direct damage because the proximate cause of the loss was the covered peril of fire.

All are true of false pretense coverage EXCEPT: Your acquiring an "auto" from a seller who did not have legal title is a covered loss You had legal title to, or consignment papers for, the covered "auto" prior to "loss" You, or someone on your behalf, must take all reasonable steps to cause a warrant to be issued, as soon as practicable, for the arrest of anyone causing a "loss" defined within the False Pretense Coverage You need not make every effort to recover the covered "auto" when it is located

You need not make every effort to recover the covered "auto" when it is located

KLM, Inc. wishes to bond 6 individual employees by name. Which bond would work? Commercial blanket bond Position schedule bond Name schedule bond Position schedule bond

Name schedule bond

Three of your business auto are damaged by the same hail storm. Which is true? Your deductible applies to each car The deductible applies to all cars damaged at the same time, same cause Deductibles do not apply to hail losses You must pay the deductible for no more than 2 cars damaged at the same time

Your deductible applies to each car

Which part of a workers comp policy says the insurer will not reimburse any expenses of the insured's made without the insurer's consent? Conditions Your duties if an injury occurs Employers liability Exclusions

Your duties if an injury occurs

All are covered by Part I of Garage Operations-Other Than Covered Autos EXCEPT: Your parts delivery driver runs over a someone on the sidewalk A customer's leg broken when slipping on a wet floor Proximate cause of customer's crash was your defective part Proximate cause of customer's crash was your badly done job

Your parts delivery driver runs over a someone on the sidewalk

National Bank's counterfeit money insuring agreement covered the loss resulting from its unknowing acceptance of counterfeit money from Guatemala. This fact means that National Bank has worldwide coverage coverage that extends to Central America coverage that extends to South America a branch office in Guatemala

a branch office in Guatemala

Someone who has had a fidelity bond pay in their behalf is considered to be? No longer bondable On probation On the DOI watch list A Thieving skunk

No longer bondable

Could a dwelling policy be used for insuring a 6-unit condominium building?

No, too many individual units

According to the common policy conditions of a Commercial Package Policy, is the insurer required to inspect and survey the insured's location? No. Always for underwriting purposes Yes, at least once a year Yes, on a biennial basis

No.

Surety bonds, once written, are generally

Noncancellable

Licensed producers must have 24 hours of Continuing Education to maintain their license. How are the hours distributed?

a minimum of 8 hours in each licensed line(s), a minimum of 3 hours in ethics and the remainder in any approved category (LA&H, P&C, Ethics).

What is the financial penalty the Director may impose on an agent who violates a Cease and Desist Order?

a penalty not to exceed $50.00 per day, or $100 per day, if willful.

The homeowners policy contains which of the following types of insurance coverage?

Property and liability

Jason installs a smoke detector in his home so that it is less likely his house will be destroyed by a fire or damaged due to smoke. What measure has he taken to manage this risk? Reduction Prevention Avoidance Sharing

Reduction

What are the Sections of a homeowners policy?

Section I ' Property and Section II - Liability

Unique characteristics and requirements of a particular risk sometimes make it unacceptable to insurance companies in the standard insurance market. These characteristics do not include

Strict adherence to rate and form regulations

Ted, the insurance representative for Malone Company, does not understand the difference between insurance written on a stated amount basis or on an agreed value basis. How would you explain the difference to Ted?

Ted would recover the same amount with both approaches.

Should a producer fail to comply with the Continuing Education requirements of the state what action will the Director of Insurance take?

The Director will suspend his license.

Hector has his car regularly serviced by the dealership that sold it to him. While his car is being serviced, a mechanic accidentally drops a heavy wrench on the car's hood and dents it. Whose coverage will apply in this case? Hector's collision coverage The dealer's general liability coverage The dealer's auto liability coverage The dealer's garagekeepers coverage

The dealer's garagekeepers coverage

All of the following are eligibility requirements for a homeowners policy EXCEPT:

The insured must own the house

All of the following are advantages of a dwelling policy EXCEPT:

They provide more comprehensive coverage.

You've had a loss covered by your SCWHUA policy. All your direct damage has been covered but your policy limit was not reached. What can you do? Use the rest of your limit for consequential loss Pay a smaller deductible for future losses Receive a premium refund Pay a smaller renewal premium

Use the rest of your limit for consequential loss

When would the insurer pay for wages and maintenance for officers and crew? Never; always the assured's responsibility When the ship is in route to a different port for repairs While ship is in dry dock for repairs If the vessel is laid up in port for 30 consecutive days

When the ship is in route to a different port for repairs

Warren has a boatowners policy on the Bon Vivant, his cabin cruiser. His late-arriving guest, Althea, sees the boat leaving the dock and jumps onto the boat, fracturing her ankle. Warren knows his boatowners policy covers medical payments but is not sure if it applies when the injured party is responsible for the accident. Will Althea's medical expenses be covered under Warren's policy? No, because Althea caused the accident by her negligent behavior. No, because injuries to guests of the boat owner are not covered. Yes, because Warren is legally liable for causing the injury when he left the dock. Yes, because medical payments coverage applies 'no-fault' to boating-related accidents

Yes, because medical payments coverage applies 'no-fault' to boating-related accidents

If an insurer wants to modify a personal auto policy, it might do so through a(n)

endorsement

Agnes had a fire at her home insured by a Dwelling Policy. When she was taking the inventory of the damaged property she realized that only one of a matched pair lamps in the den was destroyed. She had the lamp that survived the fire appraised and it was worth $650.00. She had a receipt from where she bought the lamps a year earlier for $1,700.00. How much would she get paid for the destroyed lamp? $850.00 $650.00 $1,050.00 $1,700.00

$1,050.00

Toby rents a trailer to use on the family vacation. Toby checks the limit of liability provision in his personal auto policy and discovers that the most an insurer will pay for any loss to the rented trailer is

$1,500

Maximum SCWHUA limits for a residential risk are? $1 million $2.5 million $250,000 $1.3 million

$1.3 million

Frankie has two Dwelling Policies that provide coverage for her home which is valued at $100,000. The Allfarm Company insures her home for $40,000 and the Acme Insurance company her home for $60,000. She has a fire that causes $25,000 in damage to her home. How much will the Allfarm Company pay? $15,000 $25,000 $40,000 $10,000

$10,000

What is the basic limit for HO Personal Liability coverage? $100,000 per occurrence with a $500 deductible $100,000 per occurrence with no deductible $1000 per person per occurrence with no deductible 100/300/50

$100,000 per occurrence with no deductible

It will cost $1500 to repair the damaged car. How much will the insurer pay? Up to the limits listed on the Declarations page less the deductible Book value on the date of loss plus the deductible NADA value minus the deductible $1500 minus the deductible

$1500 minus the deductible

The standard property deductible for BOP is?

$500 per occurrence

Gertrude's television set was stolen from her home. She bought it five years ago. The life span of the TV was expected to be ten years. A similar TV costs $1,200 today. Based on the actual cash value of the TV, how much can Gertrude recover for this loss?

$600 less deductible

The protective safeguards endorsement in a BOP makes an exception for automatic sprinkler systems shut off as a result of breakage, leakage, freezing conditions, or the opening of sprinkler heads. The insured is not required to notify the insurer of the impairment if full protection is restored within how many hours? 72 48 36 24

A Blanket Policy.

Which of these is covered by Garage Liability coverage? An owned but leased to another Auto owned by a rental auto company when rented to another A car rented to a customer while their car is in the shop for service or repair The garage owner in their privately owned auto

A car rented to a customer while their car is in the shop for service or repair

Which of the following would be considered an indirect loss? A home is damaged by fire and smoke. A person whose house was damaged lives in a hotel while the house is repaired, incurring additional expenses. Torrential rains cause flooding in a basement. A motorist loses control and crashes into a garage.

A person whose house was damaged lives in a hotel while the house is repaired, incurring additional expenses.

What method is used to indicate a coverage is part of a Commercial Package Policy? Symbols on the declarations page. A premium amount listed beside the coverage part on the declarations page will mean that part is included. It will be listed in bold face type. Every part listed on the declarations page is included in the CPP.

A premium amount listed beside the coverage part on the declarations page will mean that part is included.

Which of the following is not a reason for a person to be granted immunity from liability for insurance fraud? Acting in Good Faith. Providing information to Law enforcement. Acting in Bad Faith. Cooperating with law enforcement with truthful testimony.

Acting in Bad Faith.

Actual cash value

Harry borrows his next door neighbor Bill's lawnmower while his is being repaired. Harry is mowing his lawn when he accidentally runs over a tree stump and breaks the mower's blades. Which coverage in Harry's homeowners policy will cover the damage to Bill's lawnmower? Loss Assessment First Aid Expenses Damage to Property of Others Claim Expenses

Damage to Property of Others

The garagekeepers exclusions preclude coverage for contractually assumed liability for all of the following EXCEPT: Improper brake replacement performed by an auto repair shop Scratches on a customer's car caused by an employee of an auto detailing business Repainting of a customer's car by a body shop after it applied the wrong color Damage to customer's car caused by a fire while it was stored in a garage awaiting repairs

Damage to customer's car caused by a fire while it was stored in a garage awaiting repairs

Martin's Music Shoppe submitted a claim to the insurance company that provides insurance on its building that provides coverage for Fire, Wind, Lightning, Hail, Smoke, Aircraft and other perils. If the insurance company denies the claim, what is the peril that caused the loss? Lightning Hail Aircraft Flood

Flood

The manager at Don's Diner shut off the fire and burglar alarm after arriving at work because it developed a short and kept beeping. When the manager left for the night, he forgot to put the alarm back on. How did the Protective Safeguards endorsement on Don's Diner's BOP respond when the building was destroyed by a fire that night? It excluded coverage for the fire loss It required a loss penalty when the claim was paid It limited coverage to $50,000 It doesn't apply to fire losses

It excluded coverage for the fire loss

Conditions applying to all the coverage forms in a CPP are found where? Included with each form. In Part III of the CPP. On the Duties and Requirements form. On the Common Policy Conditions form.

On the Common Policy Conditions form.

Larry submitted a claim under his homeowners insurance policy. The insurance company has the burden of proof to show that the loss is excluded; otherwise, it must pay Larry's claim. What causes of loss are contained on Larry's policy? Named perils Open perils Basic perils Crime perils

Open perils

To identify what perils they cover, property insurance policies use either the named perils approach or the Specified perils approach Unspecified perils approach Open perils approach Closed perils approach

Open perils approach

Amber had an auto accident and was notified her claim was denied because she had not complied with one of her duties after a loss. Which one of the following was the reason her claim was denied? She called them 2 weeks after the accident. She placed her car in garage so it not would rain in the cars broken windows. While the car was in the garage she allowed the insurer to examine the car. She provided them a proof of loss as requested and when requested.

She called them 2 weeks after the accident.

A car for sale on your car lot has been total by a covered peril. You claim will be based on? What you paid for the car What you hoped to sale the car for ACV on the date of loss Kelly Blue book value

What you paid for the car

Who has a right to cancel a Commercial Package Policy at any time for any reason? The insurer. Any named insured. The Director of Insurance. The first named insured.

The first named insured.

The burglar alarm in Dexter's store has been malfunctioning lately so turns it off one weekend to avoid bothering his neighbors when it rings unintentionally. A burglary occurs on Saturday and $25,000 worth of jewelry is taken. Dexter has a protective safeguards endorsement on his BOP. Will the endorsement cover the loss? The insurance company will likely deny the claim because the alarm system was inoperative. The insurance company will likely deny the claim because Dexter should have provided an alternative safeguard. The insurance company may not deny the claim because the alarm system was properly maintained. The insurance company may not deny the claim because the alarm system wasn't in working order.

The insurance company will likely deny the claim because the alarm system was inoperative.

Between the date of doing an improper repair job and a customer's crash because of it, you switched to a different Garage insurer. How is the claim paid? The insurer on the date of the crash pays The insurer at the time of performing the bad job pays Each insurer pays a pro rata share Arbitrators appointed by the court will decide who pays

The insurer on the date of the crash pays

Six weeks after installing a defective part on a customer's car, the part fails resulting in a crash. In the meantime, you switched garage liability insurers. How is the claim paid? The 2 insurers pro rate The one providing coverage on the date of installation covers the loss The insurer on the day of the crash pays The 2 insurers go to arbitration for a decision as to which pays

The insurer on the day of the crash pays

Four of your 8 dining room chairs were destroyed in a fire and cannot be replaced. Your policy will pay For a new set of eight matching chairs For all new dining room furniture For none of the loss The value of the 4 destroyed chairs

The value of the 4 destroyed chairs

After Bertha fell and injured herself in the home of her nephew, Toby, she was unable to deal directly with Toby's insurer. However, she appointed a representative to act on her behalf. In order to expedite payment of her medical payments claim, she instructed her representative to do all of the following EXCEPT: Provide the insurer with written proof of her claim Make relevant medical reports and records available to the insurer notify the insurer she will not submit to a physical exam by a doctor selected by the insurer Provide all information and documentation as soon as practical

notify the insurer she will not submit to a physical exam by a doctor selected by the insurer

The South Carolina Omnibus Insurance Fraud and Reporting Act places the responsibility of the investigation of fraud on what organization? South Carolina State Law Enforcement Division. South Carolina State Law Enforcement Association. South Carolina State Law Education Division. South Carolina State Law Enforcement Department.

South Carolina State Law Enforcement Division.

The insured chose the 4% deductible for their house on a SCWHUA policy. Their house was damaged by an afternoon hail storm. The next month the house was damaged by a tropical storm. What is their deductible for the tropical storm damage? 4% of the policy limit 3% of the actual damage 4% of the damage done 3% of the policy limit

3% of the policy limit

A Specific Policy.

How do a hazard and a peril differ? The terms hazard and peril are synonymous. A peril is a condition that increases the frequency and severity of a loss. A hazard is a condition that increases the frequency and severity of loss while a peril is a cause of loss. A peril is any danger and a hazard is a more severe peril.

A hazard is a condition that increases the frequency and severity of loss while a peril is a cause of loss

What is used in a CPP for a change applying to two or more of the coverage parts? An Interline endorsement A multiline endorsement. An Intraline endorsement. A Crosscut endorsement.

An Interline endorsement

Ned was injured when he slipped on a wet floor while visiting Bill's house. An ambulance took Ned to the emergency room. He sustained a hairline fracture to his right knee. Which statement is correct about whether the liability section of Bill's homeowners policy covers the ambulance charges and medical expenses? Medical expenses but not the ambulance charge are covered. Ned must file a claim on his health insurance policy for his medical expenses. All of these expenses are covered. Medical Payments coverage might apply, but liability coverage will not.

All of these expenses are covered.

ISO had all these objectives when they developed the Commercial Package Policy EXCEPT: Removing the legalese making the forms easier to read and understand Allowing insurers to charge higher premiums and earn more profits. Eliminated duplications in coverages. Eliminated coverage gaps.

Allowing insurers to charge higher premiums and earn more profits.

Patrick has a commercial property insurance policy that his agent told him is an Open Peril policy. He wants to be sure his property is covered by damage caused by an earthquake. Which of the following is not a method of ensuring he has the proper coverage? Purchase an Earthquake policy Assume his policy provides coverage because it is Open Peril Coverage Call his agent to ask if he has coverage Read his policy to see if earthquakes are excluded

Assume his policy provides coverage because it is Open Peril Coverage

Jack's property insurance policy protects his property against loss by several perils. These perils may also be referred to as Physical hazards Moral hazards Causes of loss Morale hazard

Causes of loss

Bryan's homeowners insurance company responds to a claim for bodily injury filed by his neighbor. If the insurance company makes payment without regard to Bryan's legal liability, under what coverage is it paying? Coverage E - Personal Liability Coverage F - Medical Payments to Others Coverage D - Loss of Use Coverage C - Personal Property

Coverage F - Medical Payments to Others

Felicia's homeowners policy contains a limit of liability on the Declarations page that reads '$5,000 per person.' To which of the following coverages does it apply? Coverage A, Dwelling Coverage C, Loss of Use Coverage E, Personal Liability Coverage F, Medical Payments to Others

Coverage F, Medical Payments to Others

If you have been convicted of a first offense insurance fraud of more than $10,000, but less than $50,000; what is your penalty? Felony, Fine of $2,000 to $10,000 or imprisonment for up to 3 years or both fine and imprisonment. Felony, Fine of $10,000 to $50,000 or imprisonment for up to 5 years or both fine and imprisonment. Felony, Fine of $100 to $500 or imprisonment of up to 30 days. Felony, Fine of $10,000 to $20,000 or imprisonment for up to 5 years or both fine and imprisonment.

Felony, Fine of $10,000 to $50,000 or imprisonment for up to 5 years or both fine and imprisonment.

If you have been convicted of a second offense insurance fraud, regardless of the amount involved; what is your penalty? Felony, Fine of $20,000 to $100,000 or imprisonment for up to 10 years or both fine and imprisonment. Felony, Fine of $10,000 to $50,000 or imprisonment for up to 5 years or both fine and imprisonment. Felony, Fine of $100 to $500 or imprisonment of up to 30 days. Felony, Fine of $2,000 to $10,000 or imprisonment for up to 10 years or both fine and imprisonment.

Felony, Fine of $20,000 to $100,000 or imprisonment for up to 10 years or both fine and imprisonment.

Garage form is used to insure: Folks in the automobile business Homeowners with garages Only parking garages Only for auto repair shops

Folks in the automobile business

Sandy takes her car to an auto dealer to have the oil changed. After changing the oil, the mechanic fails to tighten the lug nut to the oil pan. By the time Sandy arrives home with the car, the oil has leaked out and the engine is damaged. Which coverage of the dealer's garage policy will cover that damage to Sandy's engine? Garage operations ' other than covered autos Garagekeepers Auto liability Comprehensive

Garage operations ' other than covered autos

Which coverage added to a Garage form takes away the exclusion that says no coverage for property of others in the insured's care, custody, and control. Customer Auto coverage Garagekeepers Drive Other Car coverage General Auto endorsement

Garagekeepers

Which of the following is not true about Consumer Information Privacy Regulation? Governs the use of non-public Personal Health Information. Governs the use of non-public Personal Financial Information. Provide method for individuals to Opt-Out. Governs Credit Bureau Reporting.

Governs Credit Bureau Reporting

Paula owned a pair of diamond earrings valued at $2,400. While away on vacation one of the earrings was destroyed by a peril her Dwelling policy provides coverage for. How will her policy respond? Her policy will replace both earrings. Her policy will pay for the proportional value that one earring is to the total of both earrings. Her policy will not pay anything because she was on vacation. Her policy will pay whatever she would have to pay to replace the earring today.

Her policy will pay for the proportional value that one earring is to the total of both earrings

Mrs. Chang submits to you the bills she was given by a friend who tripped and fell on her sidewalk. The friend is submitting a claim under the Medical Payments to Others coverage of Mrs. Chang's homeowners policy. Which of the following bills will not be paid? Physician's fee Emergency room fee Ambulance fee Lost wages

Lost wages

While driving his motorboat, Ed accidentally sideswipes a smaller boat causing serious injury to Mark, the driver. Under his boatowners policy, Ed's liability limit is $100,000, just enough to cover Mark's injury claim. The legal fees to defend Ed total $50,000. Must Ed pay these legal fees himself since the limit of liability will be used up to pay the injury claim? Yes. Once the limit of liability is exhausted in paying for Mark's injuries, no coverage remains. No. With most liability policies such as a boatowners policy, defense costs are paid in addition to the limit of liability. not necessarily. Ed can use half of the $100,000 limit to pay for defense costs and only pay half of Mark's injury claim, forcing Mark to file an uninsured watercraft claim. No. Ed can use his loss assessment coverage to pay for the defense costs.

No. With most liability policies such as a boatowners policy, defense costs are paid in addition to the limit of liability.

Which of the following statements BEST describes the transfer of risk via an insurance contract? All risks are transferrable via insurance contracts Only property risks are transferrable via insurance contract The agent determines what risks may be transferred via insurance contracts Not all risks are transferrable via insurance contracts

Not all risks are transferrable via insurance contracts

You have been assessed by your city to help pay a liability claim against it. What will your HO liability do for you? Nothing Pay up to $500 on your behalf Pay on your behalf if you were a witness Pay up to $1000 for you.

Nothing

The Consumer Privacy Regulation requires the licensee to provide an Initial Notice to the consumer. All of the following is true EXCEPT? Notice must be in writing and can be electronic if approved by the consumer. Notice may be provided over the phone or read to the consumer with the approval of the consumer. Describe conditions for the insurer or producer to disclose the information to affiliates and non-affiliated third parties. Provides a method for the consumer to prevent an insurer or producer from disclosing this information (Opt-Out).

Notice may be provided over the phone or read to the consumer with the approval of the consumer.

The Consumer Privacy Regulation requires an Initial Notice governing the use of non-public personal health and non-public financial information. Which of the following is not true about subsequent notices? At least annually. When a new policy is purchased. Only Once a Year. When the notice is revised.

Only Once a Year.

You were tricked into voluntarily giving the keys to a car to someone who never returned it. Is this loss covered? Yes, as a theft Only if you have comprehensive coverage Only with false pretense coverage If properly reported to the police

Only with false pretense coverage

When Lauren filed a claim for a fire loss to her home with her insurance company, she discovered she two Dwelling Policies on the same home. She learned from the claims adjuster that neither policy would pay for the total loss, but they would share the loss. He cited a particular condition in her policy that stated this. What is the name of the condition he cited? Other Insurance Insurable Interest Loss Payment No Benefit to Bailee

Other Insurance

Josephine, a saleswoman for Anderson Buick, Inc., is injured while attending a sales seminar in Chicago, Illinois. Anderson Buick only does business in Indiana and Kentucky. However, Josephine wants to file a workers compensation claim in Illinois because it provides greater benefits. What coverage does Anderson Buick need to ensure that she is eligible for workers compensation benefits in Illinois? Federal workers compensation Employers liability coverage Other states insurance Medical payments insurance

Other states insurance

Which of the following is not considered an insureds duty after a loss? Promptly notify the insurance company within a reasonable amount of time. Take the proper steps to protect the property from further damage. Provide a signed sworn proof of loss when requested by the insurer. Pay for the loss to keep the claims expense low.

Pay for the loss to keep the claims expense low.

Who is not be considered an 'insured' under a Hired Auto and Nonowned Auto Liability Endorsement in a BOP? Leonard, the owner of a small consulting business who's only automobile is a hired auto Perla, Leonard's business partner who drives a hired auto for business purposes Perla, a business owner when conducting personal business while using a nonowned auto Cleo, an employee of the insured business who drives the hired auto to conduct business with permission of both his employer and the hired auto's owner

Perla, a business owner when conducting personal business while using a nonowned auto

Who is the typical candidate for the hired auto and nonowned auto liability endorsement? High risk driver Person who does not own a car Senior citizens Youthful drivers

Person who does not own a car

Which of the following is not a valid Loss Valuation Method? Actual Cash Value. Functional Replacement Cost. Personal Property Replacement Cost. Market Value.

Personal Property Replacement Cost.

After a loss, the insured must do all the following EXCEPT: Report the loss as soon as possible Work to prevent more loss Proceed to the underwriter's chosen repair port Proceed to a repair facility of the assured's choice

Proceed to a repair facility of the assured's choice

The Gramm-Leach Bliley Act, also known as the Consumer Information Privacy Regulation, governs all of the following EXCEPT? Requires the licensee to provide information about sharing of Credit Bureau Reporting information. Requires the licensee to provide Privacy Notices regarding policies and practices for those who seek insurance or insurance services. Requires the licensee to describe the condition licensee may disclose non-public personal health and non-public personal financial information to affiliates and non-affiliated third parties. Provides a method for the individual to prevent the licensee from disclosing non-public personal health and non-public financial health information.

Requires the licensee to provide information about sharing of Credit Bureau Reporting information.

Main Street Corp. owns a shopping center. It buys liability and property insurance to cover losses stemming from its business. This is an example of which method of handling risk? Risk retention. Risk avoidance. Risk Transfer. Risk reduction.

Risk Transfer.

Which of the following activities is not considered 'farming' on the farm liability coverage form? Sale of farm equipment Sale of vegetables from a roadside stand Operation of an agricultural enterprise Farm processing operations

Sale of farm equipment

Sloane purchased a new pontoon boat before realizing that the watercraft coverage provided by his homeowners policy is very limited. His insurance agent suggested he buy a boatowners policy to properly indemnify boat-related losses. With such a policy, Sloane will have covered all of the following EXCEPT: Boats and motors Boat trailers Portable property, such as anchors, life jackets, and tow ropes Sloane's Yellow Lab if injured while on board.

Sloane's Yellow Lab if injured while on board.

Toby's Aunt Bertha trips on a throw rug while visiting his home. She breaks an arm in several places and requires surgery. Toby knows Aunt Bertha's medical expenses will be high and wonders if his homeowners policy will cover her expenses. Where will he find this information? The amount listed on his policy's declarations page for medical payments The amount listed on his policy's declaration page for loss of use The amount listed in his policy's insuring agreement The amount listed in his policy's conditions provision

The amount listed on his policy's declarations page for medical payments

Which of the following is NOT true on a HO form? The coverage territory for HO Personal Liability is the continental US The liability limit is a combined single per occurrence limit Higher limits than $100,000 are available Claims are paid from the very first dollar of loss

The coverage territory for HO Personal Liability is the continental US

All are true about the HO Medical Payments coverage EXECPT It is worldwide coverage The limit is a per person per occurrence limit The insured must be negligent for it to pay It does not cover people covered with workers compensation insurance at the time of injury

The insured must be negligent for it to pay

Kyle owns an eighteen-wheeler and transports property for customers who enter into a contract with him. He charges a fee for these services. What term BEST describes Kyle? Motor carrier Trucker Private carrier Mover

Trucker

The condo association to which Walt belongs assessed him $2,500 for fire damage to a party room collectively owned by the condo's residents. Each of the association members was assessed $2,500 to cover repair costs. Will Walt's homeowners policy pay for his share of the loss assessment charged by the association? Yes, his policy will pay the entire assessment. Yes, his policy will pay, but only up to $1,000. No, his policy will not pay, coverage for loss assessments is excluded. No, his policy will not pay because Walt lives in a condo.

Yes, his policy will pay, but only up to $1,000.

Sara sustains substantial damage when her home is damaged due to a fire caused by a lightning strike. When the fire department was attempting to put the resulting fire out they used massive amounts of water to douse the raging fire. She reports the loss to her agent and says that according to the insuring agreement of her policy, she is insured against risks of direct loss to her property due to fire. Is she covered for any of the water damage caused by the fire department when extinguishing the fire? No, this is considered indirect loss and is not covered under the peril of fire. Yes, the water damage is also considered direct damage because the proximate cause of the loss was the covered peril of fire. No. the massive use of water was determined to be a man-made flood. No, this must be covered with the Fired Department Damage Endorsement.

Yes, the water damage is also considered direct damage because the proximate cause of the loss was the covered peril of fire.

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