T. A. L. A. E. Study Guide

Which of the following is not a true statement regarding the use of non-original equipment manufactured replacement parts for vehicles?

Insurers specifying the use of non-original equipment manufacture replacement crash parts shall not be required to pay the cost of any modifications to the parts which may become necessary to affect the repair..

The selling of insurance products through the use of captive agents, independent agents, or insurance company employees in a call center are examples of:

Insurers use one or more of these channels as a way to market and distribute products. Marketing distribution systems

All the following are covered under Section II of a Homeowners policy, EXCEPT:

Intentional bodily injury to others by the insured..

All of the following statements are true regarding an interline endorsement used in a Commercial Package policy (CPP), EXCEPT:

Interline endorsements are used in the CPP to simplify coverages and conditions among many different forms and apply only to two or more coverage parts. It can apply to one or more coverage parts.

Which of the following is most likely to be uninsurable?

Investing in real estate is an example of a speculative risk. The other choices are pure risks. Speculative risks are not uninsurable while many pure risks are insurable. The purchaser of a new home wants to protect herself from a possible drop in housing prices

All of the following statements regarding the Commercial Package Policy are correct, EXCEPT:

Ocean Marine and/or Aviation insurance are "specialty" policies that cannot be packages together with other commercial risks into a package policy. Commercial Package Policies can include Ocean Marine and Aviation Insurance coverage.

Cargo Shippers International is a major shipping company that transports goods both domestically and abroad. The company is looking for a new Ocean Marine insurer to cover its cargo all the way from the point of origin to its final inland destination. What type of coverage is Cargo Shippers looking for?

Ocean Marine insurance is the oldest form of insurance in the world and was originally designed to cover the property from its point of origin to its final destination; otherwise known as "warehouse to warehouse" coverage. Warehouse-to-Warehouse Cargo coverage

An office building is limited in the number of stories it may contain and still be eligible for coverage under a standard Businessowners Policy. This number is:

Office buildings cannot exceed six stories in height and still be eligible for coverage under the standardized BOP policy. Six stories

Which of the following is true about "open peril" coverage?

On a "named peril" cause of loss form, the covered perils are named or specified. If the peril is not listed, then coverage does not apply. Conversely, on an "open peril" cause of loss form, ALL perils are covered unless the peril(s) is/are specifically excluded. "Open peril" cause of loss forms contain more exclusions than named peril forms for obvious reasons. It provides coverage for all perils, unless that peril is specifically excluded

Isaac owns a home with an older furnace in need of repair. He leaves his home for a month to avoid the cold weather. He returns to find that the furnace had stopped working. Water pipes have frozen and burst and his property has been damaged. Since the water ran for almost a month, his water bill is extremely high. What will the adjuster pay?

One could argue that this was caused by neglect, but the damage cannot be tied to the neglect exclusion. This exclusion applies post-loss and not before a loss has occurred. The company would have to prove intent on the part of the insured to damage his own property. Even if the furnace caused a fire, the company would have to prove an intentional act such as arson. Water is not considered covered property so the value of its loss (the water bill) is not covered. The water damage.

Which of the following is the principal in a bond?

There are three parties to a surety or fidelity bond: the principal, whose performance is being guaranteed by the surety; the obligee, to whom the principal makes a promise to perform or to be honest and the surety, which guarantees the principal's performance. If the principal fails, the surety will indemnify the obligee up to the face amount. Contractor doing the work

All of the following are types of package policies that provide several different types of coverage into a bundle, EXCEPT:

A monoline policy provides a single type of coverage. The other choices combine several types of coverage into a bundle. COVERED IN INSURANCE FUNDAMENTALS. Monoline policies

Which of the following describes a moral hazard?

A moral hazard is presented by applicants or insureds who would cheat, lie or commit other crimes to benefit from insurance coverage. Faulty wiring and overuse of electrical outlets are physical hazards. Laziness and apathy are morale hazards. An arsonist applying for property insurance..

All of the following would be considered "uninsured motorists", EXCEPT:

A motorist driving with coverage up to the required state financial responsibility limits for liability, but not high enough to pay the claims for an at-fault accident is an UNDERinsured motorist, not an UNinsured motorist. A motorist driving with coverage up to the required state financial responsibility limits for liability, but not high enough to pay the claims for an at-fault accident.

A non-waiver agreement allows the insurer to:

A non-waiver agreement is a signed agreement in which the policyholder stipulates that the continuance of a loss investigation and adjustment process by the insurer will not be construed as an admission of coverage by the insurer. This form is used when there are substantial questions as to the amount of the claim or whether the policy affords coverage. Investigate a loss without implying that it is covered

Under an airport premises policy, all of the following are excluded, EXCEPT:

A passenger slips on a step in the airport, this would be covered because the coverage applies to premises liability. A passenger slips on ice on a step

Kyle owns a woodworking shop where he makes and sells custom furniture. One night, Kyle's shop is destroyed by a fire, and he files a claim with his insurance company. Which of the following items would be covered under Coverage A - Buildings of the Building and Personal Property Coverage form of Kyle's Commercial Property policy?

"Building" by definition is the structure and anything permanently attached to it. The bandsaw is affixed to the floor. The other choices are all personal property and not part of the buildin A bandsaw affixed to the floor

Texas Workers' Compensation law, the definition of an employee includes: I. A person, other than an independent contractor or the employee of an independent contractor, who is engaged in construction, remodeling, or repair work for the employer on the employer's premises. II. A seaman on a vessel engaged in interstate or foreign commerce. III. A person whose employment is not in the usual course and scope of the employer's business.

"I only" is the correct choice. The other two answer choices are expressly stated in the law as not included in the definition of "employee". I only

All of the following items may be covered by a Commercial Inland Marine policy, EXCEPT:

"Instrumentalities of Transportation or Communication" are acceptable items to be covered under a Commercial Inland Marine policy and this would include a "transport vehicle". The property being transported is also eligible for coverage. The vehicle transporting the items is covered under a Business Auto policy, not Commercial Inland Marine. Transport vehicles

Damages awarded to a plaintiff in a tort action that are in excess of the cash value of the economic loss, as a punishment to the defendant and as a deterrent from similar conduct by others, is known as:

"Punitive damages" are an award made by a judge that is intended to punish the negligent party. "Punitive damages" are also referred to as "exemplary damages".

What type of contract is binding on only one party?

"Unilateral" means "one-sided." An insurance policy is one sided because only the insurance company is legally bound to perform its part of the agreement. Unilateral

Mark is injured at work in a state that provides a TTD benefit at 66 2/3%, the state minimum is $40 and the state maximum is $540. The waiting period is 3 days and the retroactive period is 15 days. Which of the following is Mark's TTD benefit if he earns $20 per hour and usually works a 40-hour week. Mark is injured on July 14th and does not return to work until September 3rd. Which of the following is the amount of TTD benefit he would have received?

$20 X 40 - $800 (This is the average weekly wage). 66 2/3% X $800 = $533.33 (Still lower than the maximum). July 15th to September 2nd = 50 days, which is 7 weeks and one day (7 1/7th) weeks. The waiting period does not apply because the disability exceeded 15 days. 7 1/7 X $533.33 = $3,809.50. $3,809.50

Mr. Kessler has an auto policy with bodily injury limits of $15,000/$30,000. He injures two people in one accident. Mr. Brown receives injuries of $19,000. Mr. Jones receives injuries of $15,000. Legal expenses to defend Mr. Kessler total $10,000. How much is Mr. Kessler liable for after his insurance company makes its payment?

$4000

Which of the following is the amount of additional coverage on the standardized Homeowners forms for a Fire Department Service Charge?

$500 is paid under the standardized Homeowners forms for a Fire Department Service Charge. This is an "additional coverage" and a deductible does not apply to this amount. $500

Which of the following is a type of "voluntary loss" taken to save the property from further loss?

A "General Average Loss" is a partial loss that is "voluntary". This type of loss is taken to save the property from further loss, such as an insured who uses a garden hose to extinguish a fire that has started on her couch. The water damage is "voluntary" but it prevented further loss to the house. General Average Loss

A Commercial Package Policy (CPP) always includes: I. A single Declarations page common to all coverages. II. A single Conditions section common to all coverages. III. A single Exclusions section common to all coverages.

A Commercial Package Policy (CPP) always includes a common Declarations page and Conditions section. It does not include a common Exclusions section, as the items excluded would be specific to the coverage part. I and II only

All of the following statements are true regarding a Personal Umbrella policy, EXCEPT:

A Personal Umbrella policy cannot be written as a monoline policy, Umbrella policies must always be written to broaden and/or extend the coverage of an underlying liability policy. The policy can be written as a monoline policy

Public Official bonds are meant to:

A Public Official bond is meant to guarantee the performance of the official in the job to which they are either elected or appointed. They are usually time required, and the lack of promised performance amounts to a penalty on the bond. Guarantee faithful performance of the elected or appointed public official..

Which of the following would require bailee coverage?

A TV repair shop is acting as a bailee when they have property of others in their care, custody, and control. They could be held legally liable should the property be damaged while in their custody. A TV repair shop

Under the BOP Part III - Conditions section, all of the following would be considered unoccupied, EXCEPT:

A building is considered vacant when 65% or more of the total floor space is not being utilized or rented out. The office building with two empty suites is only 25% vacant. An office building containing two empty units and these two empty suites represent 25% of the total floor space

All of the following perils are covered for collapse under the Commercial Property additional coverage, EXCEPT:

A building that is in danger of collapsing is NOT covered under the additional coverage for "collapse" under a Commercial Property policy. A building that is in danger of collapsing..

Drew's agent is putting together a Commercial Property policy for him. The declarations page, the conditions page and several endorsements have been included. Which of the following must still be included to complete the policy?

A cause of loss form still must be attached. The other answer choices list items that are not "forms" but information that is included on other forms within the policy.A cause of loss form.

All of the following injuries occurring on the job would probably be deemed compensable, EXCEPT:

A cerebral hemorrhage that occurred from years of having high blood pressure is not an injury that arose out of and in the course of employment. This would not be covered under workers compensation. A cerebral hemorrhage occurring at work and caused from years of high blood pressure

A domestic insurer is:

A domestic insurer is one formed and domiciled in your state. One formed in your state.

A bailee customers' policy:

A dry cleaners usually carries this type of coverage. A bailee is not considered an insured under a policy of a customer. Should a loss occur where the bailee is held responsible for the damage, a bailee customers' property policy is needed. Covers damage to customers' property when the insured is liable.

Which of the following alleged cases of negligence is more likely to be valid?

A large oak tree in Wilbur's yard was struck by lightning. A limb was severed and remained suspended across two other limbs. Three months later, it fell and hit a neighbor's car. Wilber was sued for negligence..

All of the following would need a License and Permit Bond, EXCEPT:

A lawyer does not need to have a bond in order to practice law. They should have professional liability insurance. The other three would all need a bond to be licensed to do work in the city, state or other municipality. Lawyers

The liberalization clause of a Businessowners policy automatically applies favorable expansions of coverage, for which a premium is not charged if the changes are made during the policy period or within ______ prior to the effective date of the policy.

A liberalization condition states that the insurer will automatically and immediately apply to the policy any revisions made during the policy period or within 45 days prior to the effective or renewal date if those revisions broaden the coverage without additional premium. 45 days

A Texas adjuster may be subjected to a criminal penalty for all of the following, EXCEPT:

A licensee cannot be subject to a criminal penalty for not paying child support, however, they can be fined and/or jailed for committing any of the other three offenses. Not paying court mandated child support.

The "Part B - Medical Payments" coverage of a personal automobile policy covers injuries for all of the following, EXCEPT:

A passenger who is injured in another vehicle that is struck by the insured's vehicle in an accident is NOT covered by Part B of the Personal Automobile policy. Passengers in other vehicles who are injured in an accident with the insured are covered under Part A of the policy. A passenger who is injured in another vehicle that is struck by the insured's vehicle in an accident..

What type of deductible is applied to partial losses under an Aircraft Hull policy?

A percentage deductible applies to Aircraft Hull policies.

Paolo has an expensive boat and is purchasing insurance to cover it. He is discussing the deductible and his agent suggests a deductible amount that Paolo could pay if the Hull of his boat was severely damaged. Which of the following types of deductibles would be best for Paolo?

A percentage deductible is used with boats that are very expensive. This type of deductible is a percentage of the total amount it would take to repair the hull of the boat if it was severely damaged. A percentage deductible

Patrice has received a reduced payment for her insurance claim and the explanation states that the reduction was due to the "obsolescence" of the damaged property. Which of the following best describes the reason for the reduction in the claims payment?

A reduced claims payment may be made by the insurance company due to the reduced market value of the property because it has become obsolete (no longer used or available). The reason provided by the insurer for the reduced payment would be "obsolescence". The property that was destroyed was obsolete

Which of the following most closely describes a claim reserve?

A reserve represents how much is expected to be ultimately paid on an existing but not yet settled (i.e. open) claim, and acts as a liability on an insurer's financial statement. An amount expected to be ultimately paid on an open claim

After a standard Personal Automobile policy has been in effect for more than 60 days, the insurer may cancel the policy for all of the following reasons, EXCEPT:

A standard Personal Automobile policy cannot be cancelled because a regular operator of the vehicle has received a citation for speeding. The policy CAN be cancelled for the reasons listed in all three of the other answer choices. A regular operator of the vehicle has received a citation for speeding

Coverage under a standard Personal Watercraft policy extends to all of the following, EXCEPT:

A standard Personal Watercraft policy does not provide coverage for watercraft that includes a captain and/or crew. The crew of the boat for medical payments

The type of auto body frame that is most often used in today's automobile and is a single molded unit, is known as:

A unibody frame is a single molded unit to which the other structures of the automobile are welded.

Alternative dispute resolutions (ADRs) are procedures to help settle disputes using all of the following, EXCEPT:

ADRs are used to AVOID litigation, therefore litigation is NOT a part of ADRs. Litigation

What type of liability is imposed by law without regard to fault on those participating in certain activities or owning certain things that are considered especially hazardous?

Absolute or strict liability is liability without fault. It is occasionally imposed by statute on those participating in specified activities that are considered especially hazardous. For example, in some states, ownership of certain dog breeds places strict liability upon the owners in case of any damage or injury to others. Strict/Absolute

Which of the following terms means "to pay in a lump sum" according to Texas Workers Compensation law?

According to the Texas Workers' Compensation code, the word "commute" is used to mean "to pay in a lump sum". Commute

Hannah was working as an employee of Indemnify Insurance, Inc. as an adjuster. She had her adjuster license revoked by the state because she was found to have engaged in the unauthorized practice of law. Which of the following is the activity most likely to have resulted in Hannah having her license revoked?

Adjusters are guilty of engaging in the unauthorized practice of law if they advise their principal as to how a claim should be settled. Hannah advised the company that they should settle a claim for a specific dollar amount that was lower than the policy limit because she felt the insured would take the lower amount

Mr. Jamison owns a summer home in the woods that he rents to others. During his absence, bears enter the home and cause considerable damage. The insured reports the claim to his insurance company. The adjuster advises Mr. Jamison to report the claim as vandalism damage. The claim report is investigated by the state insurance department. How should the Department treat this action on the part of the adjuster?

Advising the insured to misrepresent the facts of the claim would be an unfair claims practice.

John's Texas adjuster license has been expired for 16 months. Which of the following describes the procedure John will need to follow to reinstate his license?

After a Texas adjuster license has been expired for more than one year, anyone who would like to have their license reinstated will need to take the state licensing exam again and submit an application for a new license. John will need to take the state licensing exam again and submit an application for a new license..

Aircraft hull insurance will provide coverage for which of the following?

Aircraft hull insurance indemnifies the policyholder for damage to or loss of the aircraft hull or fuselage. These policies are similar to auto policies in terms of coverage's offered. Damage to or loss of the aircraft hull or fuselage

Inland marine policies can cover all of the following, EXCEPT:

Airplanes are covered under an aviation policy and not inland marine insurance contracts.

Inland marine policies can cover all of the following, EXCEPT:

Airplanes are covered under an aviation policy and not inland marine insurance contracts. Aircraft

Which of the following is the PRIMARY source of information used by insurance companies during the underwriting process?

All of the answer choices are sources used by insurance companies during the underwriting process, but the PRIMARY source of information is the application. The application for insurance

All of the following are included in the definition of "fungus" under the "Limited Coverage for Fungus, Wet Rot, Dry Rot, and Bacteria additional coverage of the Commercial Property cause of loss forms, EXCEPT:

Algae are NOT included in the definition of "fungus" under the additional coverage of the cause of loss forms. Algae

Milton agrees to steal and wreck Albert's car for $4,000, so that Albert can collect $8,000 under his auto insurance policy. Which of the elements of a valid contract are missing in this agreement?

All elements of a valid contract are present except a legal purpose. Legal purpose

All of the following are extended coverage (EC) perils that can be added to the Standard Fire policy by endorsement, EXCEPT:

All of the answer choices are EC perils except "lightning" which is a covered peril under the policy, no endorsement necessary. Lightning.

All of the following statements are true regarding the revocation or modification of a certificate of authority in Texas, EXCEPT:

All of the answer choices are correct, EXCEPT: The reason for the revocation or modification is not required to be stated in the notice to the insurer. The reason for the revocation or modification is not required to be stated in the notice to the insurer.

Which of the following coverage parts would be eligible for inclusion in a Commercial Package policy?

All of the answer choices are excluded from inclusion in a Commercial Package policy except professional liability cover, which would be eligible. Professional liability coverage

Which of the following are essential if a salvage award is to be made?I. The property involved must be in peril from some hazard.II. The salvage service must be voluntary.III. The effort must be successful.

All of these are essential if a salvage award is to be made. I, II and III

Which of the following is the type of policy that is written to cover the insured for occurrences in which they have become legally liable, but only for those exposures covered on their underlying liability policy?

An Excess Liability policy is said to be written on a follow-form basis if the coverage is not defined in the policy, but simply states that the coverage "follows the underlying policy coverages". An excess liability policy that is written on a follow-form basis.

All of the following are part of the "entire contract", EXCEPT:

An agreement made between the insured and the agent stated verbally, that the agent will personally service the insured's policy, and it will not be delegated to a staff member is part of the entire contract.

An aircraft liability policy provides coverage for liability arising from the operation of an aircraft. All the following statements are true about aircraft liability, EXCEPT:

An aircraft liability policy provides coverage for liability arising from the operation of an aircraft. It covers personal injury and property damage, and coverage is provided for the insured or other person who operates the insured's aircraft. Coverage is provided for the owner only

An employee blanket bond covers ____ for dishonest acts.

An employee blanket bond covers all employees. all employees

A Texas employer who chooses NOT to provide workers' compensation coverage: I. Loses civil immunity. II. May be sued for damages when an employee is injured in the of employment. III. Will have to pay a fee of $500.

An employer who chooses not to cover his/her employees with workers' compensation insurance is exposed to lawsuits by injured employees. I and II are referring to this exposure. I and II only

Which of the following losses is NOT excluded under Part D of a standard Personal Auto policy?

An exception is made in the policy to allow coverage while the vehicle is involved in a car pool. Coverage is excluded if the vehicle is used as a livery. The other three choices are excluded. Coverage for the custom furnishings in a van must be added by endorsement. Glass breakage

A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system and the water from the sprinklers, soaks the carpet and shorts-out all the computers, causing thousands of dollars in damage. The office must close for two months during repairs. The cost of renting a temporary office space while the physical damage to the office building is repaired is considered:

An indirect loss is created when a direct loss has created a situation when damaged property cannot be used. The cost of renting temporary office space because the damaged space is unusable, is an indirect loss, sometimes known as a consequential loss. An indirect loss.

Which of the following are NOT required to hold an adjuster license in Texas?

An individual in Texas who is employed by an insurer or an affiliate of an insurer who adjusts losses that do not exceed $500 is not required to hold an adjuster license. A person who works for an insurer and adjusts claims on losses that do not exceed $500

Andrew Daniels has paid a premium to an insurance company for a Homeowners policy, and the policy was issued. Later, a fire occurred, and Andrew's home suffered damage. In this situation, both Andrew and his insurance company are required to perform certain duties because an insurance policy is a(n) ______ contract.

An insurance contract outlines the duties of both the insured and the insurance company, and states that those duties must be performed, before the contract will be fully executed. Executory

Estoppel is best exemplified by which of the following?

An insurance producer is the legal agent of the insurer. Statements made by an appointed producer are legally considered to be made by the party that the agent represents, which is the insurer. Therefore, if an appointed agent says a certain claim is covered, the insurer must cover that claim. The insurer would be prohibited from or estopped from denying it, even if the policy clearly excluded the claim. An insurer is prohibited from denying a claim because its appointed producer advised the insured the claim covered.

Which of the following would be considered an Unfair Claim Settlement Practice?

An insurer must accept or deny coverage of a claim within a reasonable time period after completing an investigation or they will be committing an unfair claim settlement practice. Failing to deny coverage of a claim within a reasonable amount of time after concluding the investigation.

Under a Personal Articles Floater, the total amount that will be paid for loss or damage to an unscheduled coin collection is:

An unscheduled coin collection is limited to $1,000 under a Personal Articles Floater. $1,000

Spencer is covered under a standard Personal Automobile policy with a policy inception date of October 15th. Additionally, the policy will expire on October 15th of the current year. Spencer contacts his agent on October 7th and asks to have an new endorsement added to his policy. The agent agrees, adds the coverage the same day, and informs Spencer that there will be an additional premium of $20 per month charged. When will the adjustment of premium be effective for Spencer?

Any premium adjustment made to the standard Personal Auto policy due to a change to the policy, becomes effective on the date of the change, therefore the correct answer would be October 7th. October 7th

The authority the general public believes an insurance professional possesses based on their actions is known as:

Apparent authority is the authority the public believes the insurance professional has, based on the actions of the agent, producer, or adjuster. Apparent authority

Which statement is FALSE regarding an appointment contract with an insurance company?

Appointment contracts are written contracts, therefore this is the FALSE answer you were looking for. It is generally an oral agreement between the parties.

All of the following are common-law duties of an employer under a workers' Compensation policy, EXCEPT:

Assumption of risk is a common-law defense (not a duty) if a claim is filed. All of the other three answer choices are common-law duties. Assumption of risk.

Which of the following may be included in the Commercial Package Policy? I. Commercial Auto. II. Commercial Inland Marine. III. Equipment Breakdown coverage. IV. Aviation.

Aviation and Ocean Marine are not included in the broad range of coverages that are available under the CPP. I, II, and III only.

The crew of a ship is guilty of fraud with the intention of reaping gains at the expense of the owner. In ocean marine coverage, what is this called?

Barratry means fraud by the master or the crew with the intention of reaping gains at the expense of the owner. Examples include setting the ship on fire, diverting the ship from its course, or embezzlement of the cargo. Barratry

Mr. and Mrs. Smith own a building worth $100,000 and have it insured on the same basis under three separate policies. Carrier A provides $10,000; Carrier B provides $10,000, and Carrier C provides $80,000. If there is a $20,000 fire loss, how will the claim be paid by the policies?

Because more than one insurance policy written on the same basis covers the loss, the "Other Insurance" clause will be invoked. Each carrier will pay its "pro rata" share of the loss. If you missed this question, review how "pro-rata share" is calculated in the Property Insurance Concepts section of the course. Carrier A will pay $2,000, Carrier B will pay $2,000, and Carrier C will pay $16,000.

The insured is liable for $500,000 in damages for a personal injury claim that is covered under the insured's primary liability policy. The primary liability policy has a $300,000 limit per occurrence. The insured also has a $1 million Umbrella policy with a $3,000 self-insured retention limit. How would this claim likely be settled?

Because the claim is covered with the underlying liability coverage policy, the Umbrella policy picks up and pays the remaining portion of the claim, without the application of the self-insured retention. If the Umbrella policy was required to pay first, the self-insured retention would apply. The primary policy would pay $300,000 and the Umbrella policy would pay $200,000.

A blanket employee dishonesty bond will:

Blanket employee bonds do not list the names of the employees. They are all covered under the form. Does not name the individuals

Part One of the standard workers' compensation policy covers all of the following, EXCEPT:

Bodily injury by negligence of the insured employer would be addressed by Part Two of the policy, not Part One

Brittany is a licensed adjuster in Texas. She failed to renew her license at the specified time, and now her license has been expired for 60 days. Which of the following best describes the next step Brittany should take?

Brittany can still apply to renew her license, subject to an automatic fine, but only because her license has been expired for less than 90 days. Brittany can still apply to renew her license, subject to an automatic fine.

Coverage under the Builders' Risk form is written for:

Builders' Risk coverage is written for a period of one year.

Section I of the Businessowners policy places limitations on coverage for certain losses if they are not caused by a specified cause of loss. All of the following are specified causes of loss under the policy, EXCEPT:

Building glass breakage is not a specified cause of loss as listed by the Businessowners policy. All the other answers: Fire or lightning; Sinkhole collapse; and Water damage are all listed on the specified causes of loss. Building glass breakage

What type of cargo consists of "bulk shipments" in reference to ocean marine cargo coverage?

Bulk shipments consists of ores, coal, iron and grain shipments. They are loaded directly into the ships hold. Ores, coal, iron, grain etc.

The insured has sustained a loss of income from a covered peril under his Businessowners policy. What deductible applies to "loss of income" coverage?

Business income coverage is triggered by direct physical loss or damage, from a covered cause of loss, to property at the described premises. This loss must result in a suspension of the businesses operations and activities during the period of restoration. The period of restoration begins 72 hours after the time of the direct physical loss or damage. Thus, there is a time deductible. A "time deductible" of 72-hours.

Sarah is shopping at a grocery store and wants to purchase a bottle of juice. The aisle is marked off with a rope awaiting the clerk to clean up a previously broken bottle and spill on the floor. Sarah moves the rope to get the item and slips and falls on the floor, cutting her face on the scattered glass. Which of the following would be the defense that the insurance company would most likely use in this situation?

Business owners are only liable for negligence if a failure to carry out their duty caused the accident. For strict liability cases against manufacturers or sellers of defective products, the injury must result from a defect. In this case the grocery store attempted to keep the premises safe and was not negligent and no breach of duty occurred. The customer assumed the risk which contributed to the injuries. Assumption of risk and contributory negligence on the part of the customer..

Which of the following protects against legal liability for loss or damage to baggage?

Cargo liability protects against legal liability for loss or damage to cargo or baggage. Cargo Liability

Whose responsibility is it to complete a "proof of loss"?

Claimant

Claims filed with the insurance company by the insured are known as:

Claims filed against the insurance company by the insured are known as first-party claims.

Indemnify Insurance and Mega Mortgage have struck a deal where Mega Mortgage requires mortgage clients to purchase Homeowners insurance through Indemnify Insurance. In return, Indemnify Insurance pays Mega Mortgage $500 for each new policy they refer. These two companies are practicing ______ with their clients.

Coercion is a process whereby the purchaser does not have a choice and is being forced into a certain buying decision. Coercion

An insured carries property insurance with a limit of $25,000 and an 80% coinsurance requirement. The covered building, however, is worth $40,000. How much would she collect in the event of a total loss?

Coinsurance only affects partial losses and not a total loss. In the event of a total loss when the limit of insurance is less than 80% of the value of the building, the insured will receive a claim payment equal to the policy limit. $25,000

Collin suffered a work-related injury on the morning of June 2nd and was off work completely until he returned to work on full duty on June 20th. Collin had worked for his employer for four years and was paid $55,650 per year. Collin's state sets the TTD rate at 70% percent of the average weekly wage. The state sets the maximum compensation rate at $580 per week and the waiting period at 5 days retroactive after 7 days. Collin was not paid for working on February 5th. Collin's average weekly wage is approximately ____ and the amount of compensation benefits he will receive per week while off work is approximately ____.

Collins average weekly wage is $1,070 ($55,650 divided by 52 weeks). Then, we calculate 70% of $1,070 to determine 70% of Collins' AWW would be, which is $749. However, Collin's state sets TTD payment rates to a maximum limit of $580, therefore, Collin's compensation payments will be $580. $1,070 / $580

An insured may purchase a Commercial Umbrella policy to broaden and extend all of the following types of commercial lines liability policies, EXCEPT:

Commercial Automobile Physical Damage coverage is a PROPERTY coverage. Umbrella policies are used to broaden and extend LIABILITY policies. Commercial Automobile Physical Damage

A standard commercial inland marine form is not available for which of the following?

Commercial inland marine offers many different coverage forms for specific needs of policyholders, including equipment, accounts receivable, and valuable papers. Release bill of lading

Which of the following is a not a common exclusion in inland marine insurance?

Common exclusions in commercial inland marine include government action, nuclear hazard, war, loss of use and loss of market, dishonest acts by an insured or its employees, voluntary parting of property by false pretense, and unauthorized instructions to transfer property. Earth movement

Elias is employed in Texas for 3 different employers. He is injured while at work for Company A, he submits a claim for payment of benefits, and he is now recuperating. Companies B & C have paid their shares of the claim through their workers' compensation insurance carriers. Which of the following best describes the next step the insurer's for Companies B & C may take because the compensable injury did not occur while the employee was working at Company B or C?

Companies B & C will submit an application to the Texas Subsequent Injury Fund to receive reimbursement for the amount of income and death benefits they paid to a worker whose injuries were received at another employer. Companies B & C will submit an application to the Texas Subsequent Injury Fund to receive reimbursement for the amount of income and death benefits they paid to a worker whose injuries were received at another employer. .

Which of the following would be considered "compensatory" or "special damages" paid to an injured party when the insured is negligent and causes the injury?

Compensatory or "special damages" are awarded to an injured party for the economic losses caused by a negligent party. These damages include such items as medical expenses and lost wages. Lost wages

On a standard BOP policy, all of the following items have a limitation on the coverage amount if the cause of loss is theft, EXCEPT:

Computers are not included in the list of property with a $2,500 limit of liability for theft. Computers

Which part of an insurance policy sets the rules of conduct, duties, and obligations of the insured and insurer under the terms of the insurance contract?

Conditions

In a contract, something of value exchanged between the parties is referred to as:

Consideration is something of value exchanged between the parties. The insured pays a premium, known as consideration and the insurer promises a larger amount in the event of a claim. Consideration

George Wilson is covered under a standard Personal Auto policy. Which of the following policy coverages would apply when a deer leaps onto Mr. Wilson's car and causes extensive damage?

Contact with a bird or animal is considered to be an "other than collision" loss. Part D - Other Than Collision (Comprehensive).

Which of the following statements is true regarding controlled forms?

Controlled forms and their rates are filed for approval with the state insurance departments. They are usually issued according to published rules and rates. A jewelers block policy is an example. These forms are usually issued according to published rules and rates.

A new home that cost $500,000 to build, would need which of the following coverage amounts under a Homeowners policy for the insured to receive full replacement cost coverage in the event of a $50,000 fire loss?

Coverage A of the Homeowners policies require an insured to carry 80% of the replacement cost value (RCV) of the dwelling to be eligible to receive full replacement value in case of a loss. $400,000

Which of the following would cover "unattached structures" under a Homeowners policy?

Coverage B - Other Structures covers structures that are unattached to the covered dwelling.

Jack rents a home to Tanya and maintains a DP-3 policy on the dwelling. Tanya accidentally leaves the oven on all day while she is out, her Lasagna catches fire, burning Jack's house to the ground, along with all the contents located inside. Which of the following items would be covered under Coverage C of Jack's DP-3 policy?

Coverage C is for personal property (contents). Since this is Jack's policy, it will cover his appliances but nothing belonging to Tanya (her renters insurance would cover it). The damage to the structure would be covered under Coverage A of Jack's policy. Jack's appliances

What is the standard minimum limit of liability for Coverage E -- Personal Liability coverage on Homeowners policies?

Coverage E -- Personal Liability coverage of the Homeowner policies, has a standard minimum limit of $100,000 per occurrence. An insured can request a higher limit if desired.

Coverage E -- Personal Liability of the standard Homeowners policies covers the insured for all of the following, EXCEPT:

Coverage E -- Personal Liability coverage under a Homeowners policy does not apply to business activities. Certain business activities can be covered by endorsement.

Sally's home is covered under an HO-3 policy. Coverage F of that policy will pay medical expenses for which of the following?

Coverage F -- Medical Payments to Others under a Homeowners policy provides coverage for an injury occurring on the insured premises, to a non-resident invitee. Anyone who is invited onto Sally's property and is injured while there.

The basic limit for Coverage F -- Medical Payments of the standard Homeowners forms is:

Coverage F -- Medical Payments to Others under the standardized forms has a limit of $1,000 per person, per occurrence. $1,000 per person.

A typical boatowners policy includes all of the following coverages EXCEPT:

Coverage does not apply when transporting cargo belonging to others "for hire". When used to carry cargo for others for a fee

Pete's business is covered by a standard Businessowners policy. He has been accused by a customer of displaying inaccurate pricing on his website. Which of the following statements best describes how this claim would be handled by the BOP?

Coverage for any claim caused by a wrong description of the price of goods, products or services is excluded by the personal and advertising injury coverage of the BOP. Coverage for any claim caused by a wrong description of the price of goods, products or services is excluded by the personal and advertising injury coverage of the BOP.

All of the following would be covered under Part B - Medical Payments of the Personal Auto policy, EXCEPT:

Coverage while using the vehicle as a public or livery service is excluded. This does not apply to share-the-expense car pooling. Injuries sustained by an elderly man riding in the insured vehicle after having paid the insured to take him to the grocery store

The insured is moving to a new primary residence. Coverage under a Homeowners policy for the personal property being moved between the old and new location is:

Coverage would apply at both locations on a pro-rata basis for 30 days. Provided on a pro-rata basis

A liability policy written on an "occurrence" form:

Covers a liability claim when the occurrence took place during the policy period, regardless of when the claim is filed. .

The insured carries a standard Yacht policy on his vessel registered in Florida. One of the crew members is injured while performing a work-related task on the yacht while sailing off the coast of Italy. What coverage would respond to the crew member's injuries?

Crew coverage under the Jones Act would provide the coverage for the captain and crew. This is a provision under the Jones Act. The Jones Act

Michelle is insured under the basic dwelling form DP-1 with the EC perils. She is driving her car on her driveway and causes damage to a fence on her property. The loss to the fence is $200. The Dwelling policy will:

Deny the claim because damage by vehicles is excluded if the insured caused the damage

Which of the following best describes the term "disappearance" under the definitions of an aircraft policy?

Disappearance means missing and not reported for 60 days after a flight begins.

An adjuster has procured a photograph of the scene of an accident on a claim that he/she is adjusting. This photograph is placed into the claims file as which of the following types of evidence?

Documentary evidence is any evidence that is produced in the form of a "document". Most people think of written documentation, however a photograph or a video can be preserved therefore, they are considered to be documentary evidence. Documentary

All of the following would be included on the proof of loss statement of a property loss claim, EXCEPT:

Documentation of the pain and suffering the insured has experienced is NOT information that would be included on a proof of loss statement. All of the other answer choices are examples of information that WOULD be included. Documentation of the pain and suffering the insured has experienced due to the property loss

Adjusters in Texas are required to keep records of the continuing education courses they have taken to meet the license renewal requirement. How long are licensees required to keep these records?

Each licensee must maintain evidence of each course completed for a period of four years from the date of completion of the course for the purpose of investigation or audit. 4 years

Earthquake insurance would be an example of:

Earthquake insurance is a PROPERTY insurance coverage. It covers damage caused to property by earthquake. Property insurance.

Which of the following would be considered "economic losses" that could result in compensatory damages being awarded in a negligence case?

Economic losses are those that include out-of-pocket damages, such as incurred medical expenses or lost wages. It does not include disfigurement, pain and suffering or loss of consortium, as those would be considered "general damages". Medical expense and lost wages

Which of the following would be covered under employee dishonesty?

Embezzlement is a dishonest act by an employee, and whatever property that would be stolen (money, tangible goods) would be covered by employee dishonesty. The other answer choices are excluded or are not dishonest acts of employees. Embezzlement

Which of the following is used to bring a standardized insurance form into compliance with state laws?

Endorsements to the standardized forms are used to change the coverage, bringing it into compliance with state laws. COVERED IN INSURANCE FUNDAMENTALS. Endorsements

Which of the following is required to calculate the estimated annual premium in a workers' compensation policy?

Estimated annual premiums are made up of work classification (each with its own rate per $100 of annual payroll), estimated annual payroll for each classification, and other factors including the experience modification factor and premium discounts, if applicable. Estimated annual payroll and work classification(s).

Coverage B of an unendorsed standard BOP policy provides how much coverage for theft of money & securities?

Even though the special BOP is "open peril" coverage which includes theft, the loss of money and securities is listed in the "property not covered" section of the policy. $0

The "Business Income" additional coverage under the standard Businessowners policy includes all of the following in its definition of "ordinary payroll expenses", EXCEPT:

Executive payroll is not considered part of the "ordinary payroll expenses".

Which of the following is NOT covered by the Extra Expense coverage of the standardized Commercial Property insurance policy?

Extra Expense Coverage is a form of Business Interruption Coverage. It covers all reasonable extra expenses incurred by the insured in order to continue as nearly as practical the normal operation of a business that has been damaged by an insured peril. It does not cover the loss of income a business may suffer. Other forms like the "loss of income" forms would cover the loss of income. Loss of income.

The Extended Business Income additional coverage of the Business Income form covers the first 60 days after the loss for reimbursement of earnings for the insured business:

Extended Business Income pays for any additional loss of business after the property is actually repaired and operations are resumed, with reasonable speed, until the operation generates the business income amount that would have existed had no loss occurred. This coverage is usually limited to 60 days. An endorsement can be used to extend the period of time and an additional premium is charged. After the repairs have been made to the insured property

Under Coverage B of the BOP, how are exterior signs covered?

Exterior signs are listed as "property not covered" under Coverage B of the BOP, but they can be covered if they are scheduled on the policy. They are listed as "property not covered" but they can be covered if they are scheduled on the policy.

All of the following statements are true regarding the Federal Employers Liability Act (FELA), EXCEPT:

FELA is similar to workers' compensation but is not actually a workers' compensation coverage, and it was not created to provide coverage for employees working in federal government buildings. It provides workers' compensation coverage for employees working in federal government buildings.

An insured submits a claim to the insurer and their adjuster acknowledges receipt of the claim. The insured then hears nothing more after making repeated attempts to contact the adjuster. This is considered:

Failing to acknowledge with reasonable promptness pertinent communications with respect to a claim is considered an unfair claims practice. An unfair claims settlement practice

Which of the following is not eligible for coverage under any of the Homeowners forms?

Farm dwellings and personal property are not eligible for coverage under a Homeowners form. Separate Farm insurance coverage is available.

Which of the following is not eligible for coverage under any of the Homeowners forms?

Farm dwellings and personal property are not eligible for coverage under a Homeowners form. Separate Farm insurance coverage is available. A residence on a farm

Dwelling forms may be used to cover all of the following, EXCEPT:

Farm houses are not eligible for coverage under the Dwelling forms. All of the other answer choices ARE eligible for coverage.

The insuring agreements of an Equipment Breakdown policy, provides coverage for:

First party coverages and property damage to property of others

Mason has suffered a $42,000 loss to his commercial building due to fire. The building is covered under the Building & Personal Property coverage form and had been vacant for 74 days. The insurer would have paid the entire loss if the building had been occupied, but what will they pay because the insured building was considered vacant?

For a loss that would otherwise be covered for the full amount, a reduction of 15% is taken off the claims payment because the building was considered vacant. 15% of $42,000 is $6,300. If $6,300 is subtracted from $42,000, the insured would receive $35,700. $35,700

Jerry is fishing from his 22-foot boat on Lake Norman when he is caught in a sudden hail storm. His boat suffers extensive hail damage. When he files a claim against his Homeowners policy, the most likely reason his claim is denied because:

For the size boat Jerry owns, the boat must have been enclosed inside a building when the hail storm hit or the Homeowners policy would not provide coverage. The boat was not fully enclosed inside a building during the hail storm

The Ocean Marine coverage that insures either prepaid shipping charges, or the income to be earned for moving cargo is known as:

Freight insurance covers only the shipping fees. Damage to the cargo is covered under a cargo form. Some coverage is also included under the protection and indemnity coverage legal liability. Freight insurance

This Ocean Marine insurance coverage protects the vessel owner in the event that cargo shipping costs are not paid.

Freight insurance in Ocean Marine coverage pays for shipping costs.

All of the following are excluded under the Commercial Building and Personal Property form, EXCEPT:

Furniture and fixtures are covered property. Animals (except those held for sale), autos and money are excluded types of property Furniture and fixtures

Which of the following contractors would be eligible for a Businessowners policy?

General contractors and contractors with annual payroll in excess of $300,000 are ineligible for coverage under the BOP. Contractors working above four stories in height are also not eligible. A specialized contractor performing carpentry work who does not have a payroll of more than $300,000 annually would be eligible. A carpenter doing all of his own work building kitchen cabinets in people's homes and earns $75,000 per year.

Which of the following would be considered "general damages" that could be awarded to a plaintiff in a negligence case?

General damages reimburse an injured party for intangible, non-economic items such as pain and suffering.

Helena has not paid her insurance premium for a significant amount of time. Which of the following is likely to happen in this scenario?

Helena's policy will be cancelled for "nonpayment of premium".

Herb is a licensed Texas adjuster. He has been very busy and forgot to take the continuing education courses required for him to renew his license. How long does Herb have after the date his license expires to complete the required continuing education courses? What is the fine that he will have to pay?

Herb has 90 days to complete the continuing education credit hours required, and he will pay a fine of $50 per deficient credit hour. 90 days / $50 per deficient CE credit hour

What feature is common to most property insured under a commercial inland marine policy?

Historically speaking, inland marine policies involved movement of goods over land. While some inland marine policies cover property at a fixed location (like fine art or maps and drawings), the common thread to most IM policies is transit risk, or property being off of an insured's main premises - like cargo on trucks or contractor's equipment. Usually in transit

Holden is a staff adjuster for Binders Keepers, Inc., an insurance company. He has been engaged in an investigation of a third-party claim against an insured. Holden has advised his principal, Binders Keepers, Inc. that while performing the investigation, he found that it is very likely that the insured was not negligent and probably would not be found liable for the claim if the third-party decided to bring a lawsuit. Holden:

Holden is engaged in the unauthorized practice of law by providing an opinion that the insured would likely not be found liable for the claim. Holden would be permitted to show the company the factual data of the claim and allow the counsel (attorney) for the company to formulate an opinion as to the liability of the insured. Is engaging in the unauthorized practice of law

Which "conditions" form in a complete Commercial Property policy specifies how a disagreement on the value of damaged property is handled?

How a disagreement on the value of damaged property is handled is known as the "appraisal clause" and this is located in the conditions section of the Building and Personal Property coverage form. The Building and Personal Property Conditions form

A ship has suffered damage and sunk. Which of the following would respond to cover the loss of the ship?

Hull insurance would cover the loss.

Conrad is a contractor with Builders' Risk coverage written on a reported value basis on his current construction job. He started clearing the land on May 1st, digging the basement on May 13th, pouring the foundation on May 31st, blocking the basement walls on June 5th, flooring the first floor above the basement on June 15th, and constructing the walls of the first floor on June 30th. When did Conrad's Builders' Risk policy begin providing coverage?

If a Builders' Risk form is written on a reported value basis and the building includes a basement, coverage begins on the date construction begins on the lowest floor that will be located above the basement. In this scenario, this would be on June 15th. June 15th

If a dwelling or commercial building has been without occupants for a significant period of time, but personal property still exists within the dwelling or building, it is considered:

If a dwelling or building has had no occupants for a period of time specified by state law, but still has personal property within its walls, the dwelling or building is said to be "unoccupied". Unoccupied

Mike's Moonshine, Inc. is located in a state that permits Mike to decide whether he would like to provide workers' compensation coverage to his employees or not. Mike lives is a(n):

If a state allows an employer to choose not to provide workers' compensation coverage for its employees, it is known as an "elective" state. Elective state

A Texas adjuster has adjusted a claim under a policy type for which he is not licensed. This is considered a:

If an adjuster in Texas acts without a license, or adjusts claims under a policy that is not covered by that adjuster's license, he/she will be guilty of a misdemeanor which is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both. Misdemeanor and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both..

If the "other insurance" clause in a policy specifies that more than one policy will share equally in the loss until the lowest policy limit is exhausted and continue in that fashion until all policy limits are exhausted. This is known as:

If more than one policy is involved in a liability situation, "contribution by equal shares" will require each policy to share in the loss up to the lowest limit of insurance which at that point, that lowest limit policy is exhausted and excused. The remaining companies continue to share the loss equally until each policy is exhausted. Contribution by equal shares.

In aircraft coverage, when does a flight begin involving a helicopter?

If the aircraft is a helicopter, a flight begins when the rotors start to revolve and ends when they stop revolving. A helicopter is considered to be "in motion" any time the rotors are rotating. When the rotors start to revolve

Under an equipment dealer's form, which of the following would not be covered?

Inland marine forms provide coverage for the insured's goods as well as property of others, but they do not cover automobiles. Vehicles for highway use

Julius has selected the "Maximum Period of Indemnity" optional coverage of the Business Income form. Which of the following statements is TRUE regarding how a loss will be paid if this option is selected?

If the insured selected the Maximum Period of Indemnity option, the most the insurer will pay for the total loss of business income and extra expense, is the amount of the loss sustained during the 120 days immediately following the period of restoration, or the limit scheduled on the declarations page, whichever is less. The most the insurer will pay for the total loss of business income and extra expense is the amount of the loss sustained during the 120 days immediately following the period of restoration or the limit scheduled on the declarations page, whichever is less

Which of the following vehicles is considered " your covered auto" under a standardized Personal Auto policy?

If the insured trades vehicles the newly acquired vehicle is automatically covered. Liability coverage is continuous until the end of the policy period. To continue physical damage coverage certain restrictions and limitations apply. The other choices are NOT covered vehicles under a personal automobile policy. A replacement car purchased by the insured a week ago, but not yet reported to the insurance company

The penalty for failure to satisfy a coinsurance requirement of a property insurance policy is:

If the insured's policy contains a coinsurance clause and the insured carries less than 80% of the value of the property, a penalty will occur in case of partial losses. Only a portion of a partial loss will be paid.

Under what circumstances does an insurer allow the transfer of an insured's rights and duties under a Commercial Package Policy without the permission of the insurer?

If the named insured dies his or her rights and duties are transferred to the deceased's legal representative. This occurs automatically, the insurer's permission is not required. When the named insured dies

If an employee is eligible to receive impairment income benefits, what is payment based on?

Impairment income benefits are equal to 70% of the employee's average weekly wage. 70% of the employee's average weekly wage.

Agent Rice informs the insured that he needs to secure motor vehicle records on all of the drivers in the household based on company requirements. This is an example of Agent Rice's:

Implied authority is the authority the agent believes he has in order to do his job properly. In order to write auto insurance, the agent needs to know what is on the motor vehicle driving record of all the drivers in the household. Implied Authority

Each of the following is considered to be an "implied warranty" in an Ocean Marine insurance policy, EXCEPT:

Implied warranties consist of seaworthiness, condition of cargo, legality and no deviation in voyage. A violation of any of these could void coverage. General Average.

Max was injured on the job in Texas. Max has reached MMI but will have a permanent limp while walking that was due to the compensable injury. Which of the following terms as defined by the Texas Workers Compensation code best describes how Max's injury will be classified?

In Texas, "impairment" means any anatomic or functional abnormality or loss that still exists after maximum medical improvement and that resulting from a compensable injury and is reasonably presumed to be permanent. Max's injury is now classified as an "impairment".

Dana lives in a state that has passed a valued policy law (VPL). This means that all insurers issuing policies in the state must pay the ______ of the policy in the event of a total loss.

In VPL states, insurers must pay the full agreed value of the policy Full agreed value

Third-party provisions allow for an entity that lends money to an insured to purchase property, to be named on the insurance for that property. In property insurance, this is known as a "standard mortgage clause." In auto insurance, it is known as:

In auto insurance, the lender's insurable interest in the property is covered under a "loss payable clause." Loss payable clause

The limit of a bond is known as its:

In bonding, the limit of the bond is called the bond penalty or penal limit. Bond penalty

In case of a loss, how many days notice does the insured have after notification of a claim to submit the claim to the underwriters of the ocean marine coverage?

In case of a loss, the insured must notify the lead insurance company before it takes any action. There is no coverage for the loss unless the notification is made within 180 days after the loss occurs, unless the insurance company has agreed to a different notification period. 180 days

When a liability policy is contested, which of the following entities ultimately determines legal liability? I. The insurance company. II. A court of law. III. The claimant.

In cases of litigation it is the court/jury/judge that determines legal liability. II only

Which of the following statements best describes the process of mediation?

In mediation, both opposing parties present their dispute to an objective and neutral (impartial) third party who helps the parties analyze their dispute and devise a compromise. No decision reached in mediation is binding on either party, unless they come to an agreement and sign documents agreeing to the decision. Both parties present their dispute to a neutral third party, but no decision reached by the mediator is legally binding.

Convenience stores selling gasoline must have a minimum of ______ square feet in total floor area in order to qualify for the BOP?

In the newer edition of the BOP, restaurants or convenience stores selling gasoline must have a minimum of 3,000 square feet of total floor space in order to qualify as an acceptable risk. 3,000

An insured has reported a claim late that occurred over one year ago and now seeks defense representation and coverage under his automobile policy. What should the adjuster do?

In this case since the facts are not clear and probably no witnesses or police reports and a lack of physical evidence, the adjuster should issue a "reservation of rights" letter to the insured. Issue a reservation of rights letter to the insured

Roger accidentally hits a tree in his owned vehicle and it is a total loss. His car was three years old and in pristine condition with an actual cash value of $12,250. To replace the car with a new one of the same make and model, it would cost $19,400. To purchase a used car of the same make and model that is also 3 years old with similar mileage, it would cost $11,200. Disregarding any deductible, how would Roger's claim be settled under Part D of his standard Personal Auto policy?

In this case, Roger will receive a check for $11,200 to purchase a used car of like kind and quality to the vehicle that was wrecked. The Part D limit of liability under the policy is the LESSER of the ACV or the amount necessary to repair or replace the property with like kind and quality. Roger will receive a check for $11,200 to purchase a used car of like kind and quality to the vehicle that was wrecked..

Catherine suffered a covered cause of loss that resulted in water in her basement along with other damage. Alan, an adjuster for Binders Keepers Insurance, tells Catherine to immediately have the water damaged carpeting and wall paneling removed from her basement, so that mold will not cause further damage. Alan then begins the process of identifying coverage under the policy and finds that the water damage is not covered. Which of the following statements is TRUE regarding this claim?

In this situation, Alan waived the right of Binders Keepers to deny the claim because he told Catherine to remove the water-damaged carpeting and paneling from the basement without informing her that he did not yet know if the damaged carpet and paneling would be covered under the policy. Because Alan told Catherine to remove the carpeting and paneling before he checked the coverage, he waived the right of Binders Keepers to deny the claim.

Ocean marine coverage for losses to the insured vessel caused by bursting boilers, latent defects in the vessel and negligence of the master or crew members are addressed by which of the following?

Inchmaree was a steam ship that suffered a machinery loss that was not covered. A lawsuit followed, and future policies offered this coverage under what is commonly referred to as the Inchmaree clause. The Inchmaree clause.

Which of the following would be considered an "incidental occupancy" under a Homeowners policy?

Incidental business occupancies are covered under an unendorsed Homeowners policy for home offices, professional or private schools, or studios. Businesses where clients visit the premises is usually not covered without endorsement. An art studio located in the named insured's home, where she also holds occasional painting classes.

Which of the following best characterizes the difference between captive agents and independent agents?

Independent agents are free to represent as many insurers as they can get appointments with. Captive agents represent only one insurer and may be employed by that insurer. Independent agents can represent more than one insurer, whereas captive agents represent only one insurer

When a state requires that all property policies within the state provide coverage equivalent or greater to the SFP with the EC perils attached, ______________ policies are exempt from this requirement.

Inland marine policies are exempt from providing coverage that is equivalent or greater to the SFP.

An insurance agent/producer represents the interests of

Insurance agents or producers are appointed to act as representatives of insurance companies. Brokers represent the insured. The insurance company

An insurance agent/producer represents the interests of:

Insurance agents or producers are appointed to act as representatives of insurance companies. Brokers represent the insured. The insurance company

Texas insurance licensees must complete _____ hours of continuing education each reporting period.

Insurance agents, producers, and adjusters in Texas must complete 24 hours of continuing education every reporting period 24

An insurer doing business in the United States, whose place of incorporation is Toronto, Canada would be identified as a(an):

Insurance companies domiciled/incorporated outside the borders of the United States are known as alien insurance companies to insurance professionals within the United States. Topic covered in the "Insurance Companies chapter" -- Module A in the Virtual Classroom. Alien insurer.

Risk is best defined as:

Insurance companies insure against the uncertainty of loss. Risk is the uncertainty that a loss might occur and is the reason why people buy insurance. An uncertainty of loss

Which of the following statements is TRUE concerning the Part D coverage of a standardized Personal Auto policy?

It can cover owned and nonowned automobilesThe PAP covers both owned and non-owned vehicles driven by an "insured" under the policy. The other three choices are all false statements.

The principle of indemnity is illustrated by which of the following?

It is not intended for a claimant to profit from insurance. The purpose of insurance is to attempt to restore the person to the status enjoyed prior to the loss. Restores an insured to the same condition enjoyed before a loss.

Samantha, who is covered under a Standard Fire policy, has suffered a loss and submitted a claim. After the claim was paid, Samantha's insurance company has decided to take possession of the damaged property to sell it for its salvage value. The insurance company must provide Samantha with _______ notice.

It is specified in the SFP that the insurer must provide the insured 30 days notice if they intend to take possession of the salvage after the claim is paid. 30 days' notice

In ocean marine insurance, each of the following is true about the term "general average" EXCEPT:

It means partial loss (as opposed to total loss) of ship and cargo which has resulted from a voluntary and deliberate sacrifice made for the benefit of all concerned. All parties must share in the loss. In "particular average" only one party shares in the loss. Only the party having an interest in the lost property suffers a loss.

All of the following "personal effects" would be covered by the Part D -- Additional Coverage of the Personal Watercraft, EXCEPT:

Jewelry is the only item listed in the answer choices that is NOT covered by the Personal Effects additional coverage of Part D of the Personal Watercraft policy. Jewelry

A fire in Josh's factory causes him to shut the doors for 45 days. While repairs take place, Josh spends $190,000 renting another building and equipment, to keep production going. Even though Josh's Commercial Property policy doesn't cover his lost business income, he does have Extra Expense Coverage with a $200,000 limit and Limits of Loss Payment set at 40% / 80% / 100%. How much indemnification can Josh recover from his insurer in this case?

Josh can collect 40% of the limit or $80.000 in the first month. (40% X 200,000=80,000) He can collect up to 80% of the limit in the second month (80% X 200,000=160,000) He has suffered a 190,000 loss in 45 days so 160,000 is payable as that is the most he can collect in the first 60 days. $160,000

The Builders' Risk coverage form includes an additional coverage that provides a limited amount of coverage for lawns, trees, shrubs, or plants when located outside of buildings. This limit is:

Lawns, trees, shrubs, or plants when outside of buildings are excluded under the Builders' Risk form, but a small amount of coverage is added back into coverage (as an additional coverage) for $1,000 but not more than $250 for any one tree, shrub, or plant.

A Personal Automobile policy provides liability coverage on a single limit basis for $100,000. A covered accident caused by Mr. Jones involves a $75,000 liability judgment to Mr. Allen for his injuries and $25,000 liability judgment for the damage to his car. In addition, $20,000 in legal bills are incurred defending the insured. The company will pay:

Legal expenses are in addition to the limit of liability. The single limit covers both bodily injury and property damage liability. Therefore, the policy will pay the $100,000 in damages and the cost to defend the insured in the lawsuit for a total of $120,000. $120,000

Aircraft liability coverage is very similar to auto insurance coverage with which of following exceptions?

Liability to passengers is treated as a separate exposure. Coverage can be written to include or exclude passenger liability. Liability to passengers is treated as a separate exposure

Which of the following are the Texas Workers' Compensation benefits that are increased by a cost-of-living adjustment (COLAs)?

Lifetime Income Benefits are the only benefits increased by COLAs. Lifetime Income Benefits (LIBs) only. .

All of the following are included under the HO-3 "additional coverages" section of a Homeowners policy, EXCEPT:

Loss of a good renter or a favorable lease agreement is not included in the HO-3 additional coverage section of the form. Loss of a good renter or a favorable lease arrangement

All of the following are excluded from coverage under the Personal Effects Floater, EXCEPT:

Luggage is not excluded, all of the other answer choices are excluded.

All of the following are examples of unfair claim practices, EXCEPT:

Making claim payments and stating the coverage under which payment is made is not considered an unfair claim practice.

A legal term describing an intentional act that is illegal or morally wrong, and contributes to the injury of another person is:

Malfeasance is a legal term describing an intentional act that is illegal or morally wrong, that contributes to the injury of another person.

What coverage under the BOP automatically applies if a customer slips and falls on the named insured's premises, regardless of legal liability?

Medical expense coverage pays regardless of the insured's legal liability. It is a "good will" type of coverage where negligence is not a factor in the claim. Medical expense coverage

The insured carries a yacht policy and is pulling a water skier. The skier is a family member and is injured. What coverage might apply to this accident?

Medical payments coverage under the yacht policy would cover this loss up to its specified limit. Medical payments coverage.

Meg has been in very good health in the past 3 years. She has been exercising, her blood pressure is at a perfect level and her cholesterol is the envy of all her friends. Because Meg is feeling so healthy, she decides to cancel her health insurance policy. This is an example of which of the following risk management methods?

Meg is retaining the risk that she may experience a major health issue and would have to pay the medical bills herself. Risk retention.

All of the following are included in the Businessowners policy coverage territory, EXCEPT:

Mexico is NOT included in the BOP coverage territory.

A personal auto policy provides coverage for all of the following drivers of an insured car, EXCEPT:

Obviously, the thief did not have permission to drive the car. He or she would never be considered an insured. A thief who steals the car.

Miranda has been work part-time in Texas for two different companies for over a year. She is injured on the job and submits a claim for benefits. Using the following information, calculate Miranda's average weekly wage. Then, select the answer choice that is rounded to the closest amount that will be used as Miranda's average weekly wage on the claim. Miranda's wages for the 13 weeks immediately preceding the injury: Weeks 1 - 4 at Company A: $240 and Company B: $200 Weeks 5 - 8 at Company A: $262 and Company B: $222 Weeks 9 - 11 at Company A: $247 and Company B: $198 Weeks 12 - 13 at Company A: $282 and Company B: $249

Miranda's wages for the 13 weeks immediately preceding the injury:Weeks 1 - 4 at Company A: $240 and Company B: $200 = $440 X 4 weeks = $1,760Weeks 5 - 8 at Company A: $262 and Company B: $222 = $484 X 4 weeks = $1,936Weeks 9 - 11 at Company A: $247 and Company B: $198 = $445 X 3 weeks = $1,335Weeks 12 - 13 at Company A: $282 and Company B: $249 = $531 X 2 weeks = $1,062All the wages over the 13 weeks immediately preceding the injury added together comes to: $6,093 and if we divide this by 13, the average weekly wage comes to $468.69.

All of the following statements are true regarding the coverage of mobile or trailer homes under a Dwelling insurance policy, EXCEPT:

Mobile or trailer homes can only be covered if they are owner-occupied. All of the other answer choices are correct. Mobile or trailer homes can be owner or tenant occupied

Which of the following types of property may not be insured under the valuable papers and records coverage form?

Money and securities is crime coverage and these items are not covered by the valuable papers and records coverage form. Money and securities

Monique lives in Texas and is covered under a standard Personal Automobile policy. Her policy was issued by Binders Keepers Insurance, a company that is domiciled in North Carolina and also transacts insurance in Texas, New Mexico, California, and Arizona. Binders Keepers has broadened their coverage under the policy without additional premium, as of April 1st. They are rolling out the change in coverage as follows: North Carolina - April 1st Texas - April 15th New Mexico - April 20th California - April 30th When can Monique expect her coverage to be broadened?

Monique's broadened coverage will become effective on April 15th, because when a company broadens their coverage with no additional premium charge, it takes effect on the date the coverage is implemented in an insured's state of residence. April 15th, because when a company broadens their coverage with no additional premium charge, it takes effect on the date it is implemented in an insured's state of residence.

Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim is negotiated?

Most adjusters are given the authority to make advance payments when liability is clear. This relieves the financial burden on the claimant when funds are needed immediately. The remainder of the claim is negotiated and settled at a later date. Advance Payment

Mr. Thompson carries the minimum auto limits in his state. He drives his car to New York which requires bodily injury limits of $25/50 and a wrongful death limit of $50/100 and no-fault coverage. If he has an accident in New York what coverage would he have?

Most insurance companies would automatically modify the coverage to comply with the requirements of the other state. No additional premium is required, nor does permission have to be obtained. The coverage will automatically be modified to comply with the New York requirements.

Motels insured under an ISO Businessowners may not exceed how many stories?

Motels not exceeding three stories may be insured. There is no floor area restriction. Motels closed for more than 30 days are not eligible. 3 stories

Common and Contract Carriers Liability that covers damage to cargo, may be insured under:

Motor truck cargo forms are used to cover common and contract carriers against damage to the property being transported.

Under a motor truck cargo policy, which of the following would be covered?

Motor truck cargo policies cover the liability exposure for damaage to the "shipper's" goods while those goods are in transit. Damage to the shipper's goods during the course of transit

Adele Sullivan's car is hit from the rear by Clarence Brown's car. Mrs. Sullivan's insurance company pays her claim under her physical damage coverage and makes a claim against Mr. Brown's insurance company for the same amount. This process is called:

Mr. Brown was at fault. Mrs. Sullivan's insurer paid the loss and is entitled to seek reimbursement from Mr. Brown or Mr. Brown's insurance company via subrogation. Subrogation

Which of the following is not a common risk management technique?

Multiplying a risk is not a risk management technique as it would increase the risk. Multiply the risk by engaging in hazardous activities.

Which of the following is not essential in determining if a salvage award is to be made?

No salvage award is involved solely for life-saving efforts. Life-saving efforts

A type of insurance that permits an insured to collect from his/her own insurance company, without proving the negligence of a third-party, is known as:

No-fault insurance allows an insured to collect from his or her own insurance policy without the need to prove the negligence of a third-party. No-Fault Automobile policies and Workers Compensation coverage fall into the "No-Fault" category. No-fault.

Which of the following would be considered a non-pecuniary wage in Texas?

Non-pecuniary wages are not paid in "money", but they are still considered as "wages". The health insurance premium paid by a workers employer

A common carrier has signed a contract to deliver goods of the seller. The goods are to be shipped "Free on Board Destination". When does the responsibility of the seller end?

Not until the goods are delivered to the buyer in accordance with the contract terms

The insured's business is covered under a jewelers block policy. The owner's wife decides to wear an expensive piece of jewelry to a party that is for sale by the business. In case of a loss, what will the insurer do?

One of the exclusions in the form is to exclude coverage while stock is being worn by the insured, an employee or a family member of either. Deny the claim because of an exclusion

Aircraft hull coverage covers which of the following losses?

Only the vandalism damage would be covered. Vandalism, while "not in- motion".

When an HO-3 is issued with a $75,000 Coverage A limit on a one-family dwelling, what is the automatic amount of insurance for Coverage B?

Other Structures (Coverage B) are automatically covered for 10% of the limit that applies to the dwelling. Insureds can request higher limits if the other structures on their premises are worth more than 10% of the dwelling limit. $7500

The Building & Personal Property coverage form provides:

Outdoor signs, whether attached to the building or not, are covered for up to $2,500 if damaged by a peril insured against. Outdoor signs, whether attached to the building or not, for up to $2,500 if damaged by a peril insured against

All of the following would be advantages to an insured or an insurer for purchasing or writing a Commercial Package policy, EXCEPT:

Packaging monoline policies together does NOT create a policy that provides broader coverage. The coverage parts would provide the exact same coverage whether they are included in a package policy or a monoline policy. Packaging monoline policies together can provide broader coverage under each coverage part than purchasing the policies separately..

Under a standardized Personal Automobile policy, the definition of a "covered auto" for Part A - Liability includes: I. Private passenger autos the named insured acquires during the policy period. II. Trailers owned by the named insured. III. Autos or trailers not owned by the named insured that are being used as a temporary substitute. IV. Farm wagons or implements.

Part A - Liability includes coverage for those vehicles shown in the declaration page of the policy. It also includes coverage for non-owned vehicles. Trailers, whether owned or non-owned are covered provided they are designed to be pulled by a private passenger type vehicle, pickup truck or van. Usually the policy excludes "business use" but farming and ranching are two types of businesses that can be covered under Part A of the policy. Newly acquired vehicles are covered, with restrictions for informing the insurer. Temporary substitute vehicles are insured when the covered auto is being serviced or repaired. I, II, III, and IV.

Marty has full coverage under a standard Personal Auto policy for the three cars he owns. He and the members of his household are covered as insureds under the policy. Marty's 16-year-old son Gordy, spends the weekend at his friend Steve's home and during the visit, drives one of Steve's family's cars with permission. Gordy has an accident and he is at-fault for bodily injury to others. Which of the following statements best describes how this claim will be paid?

Part A - Liability of Marty's policy will pay the claim because Gordy is an "insured" under this section of Marty's policy "while using ANY vehicle". Part A - Liability of Steve's parents policy will be primary and the Part A - Liability section of Marty's policy will be excess to pay the claim

Gavin, the named insured under a Personal Auto policy, his daughter Tabitha, and two of her friends are riding in the covered auto when Gavin accidentally runs a stop sign, striking another vehicle. Everyone in Gavin's vehicle was injured as well as the driver and two passengers in the other car. Who would be covered for their injuries under Part A of Gavin's policy?

Part A - Liability of the personal auto policy would cover the driver and passengers in the other car. The driver and passengers in the other car.

The Part A - Liability section of the Personal Auto policy will cover all of the following, EXCEPT:

Part A - Liability pays:Only damages caused by those who are considered "insureds" under the policy;Only damages that the insured is legally liable to pay;Only damages for bodily injury and property damage that result from an automobile accident. Only the damages to the insured's automobile in the accident

Which insuring agreement of the Personal Auto policy would provide coverage for the damage caused to the other driver's car, when the insured was at fault in an accident?

Part A - Liability would provide coverage for the "property damage" caused by the insured.

Which of the following coverages is included as "no-fault" coverage on the standardized Personal Auto policy?

Part B - Medical Payments and Part D - Physical Damage coverage are both "no-fault" coverages provided by the standardized Personal Automobile policies. Medical Payments and Physical Damage

The insured and her 18-year-old son, who lives in the insured's household, are crossing the street when both of them are struck by a drunk driver. The Part B - Medical Payments coverage of the insured's personal auto policy will:

Part B - Medical Payments of the insured's personal auto policy would cover the insured and her son for treatment for the injuries they sustained. Provide coverage for both the insured and her son.

Philip has several vehicles that are all covered under Personal Automobile policies. He has several acres of land with a barn and chicken coup on the property. To drive around on the acreage, Philip has a very old truck that is not licensed or insured. One afternoon, Philip is driving out to check on his cows when he hits a rut and his head slams down on the steering wheel, injuring him severely. How will Part B - Medical Payments provide coverage for Philip's injuries?

Part B would not cover Philip's injuries because bodily injury sustained while occupying an uninsured auto owned by the insured is excluded under Part B. Bodily injury sustained while occupying an uninsured auto owned by the insured is excluded under Part B, therefore no coverage would apply

The part of a standard workers' compensation policy that contains the cancellation procedures is:

Part Six - Conditions spells out the cancellation procedures.

Parmelia is covered under two separate standardized Personal Automobile policies, with Part C limits under both policies set at $200,000. Parmelia is involved in an accident with an uninsured motorist and she sustains bodily injury damages for $262,320. How much will Parmelia receive when she submits a claim for these damages?

Permelia will receive $200,000, because Part C does not permit the stacking of limits. She will only collect the highest limit of a single policy for uninsured motorists coverage. $200,000

The Part B - Medical Payments coverage under a standard Personal Auto policy will cover the insured if he/she is injured while a passenger on a:

Personal auto medical coverage is available to the policyholder or a family member (resident relative) injured while occupying, or as a pedestrian, struck by a motor vehicle or trailer designed for use on public roads. It also covers any other persons while they are occupying your motor vehicle. It does not cover injuries sustained while riding in vehicles not intended for use on public roads such as trains, subways and airplanes. Bus

The insured is wearing a diamond ring while on vacation in Europe. Her ring is valued at $1,500 is stolen. What coverage would apply under her Homeowners policy?

Personal property is covered anywhere in the world. The theft limit for jewelry is $1,500. The amount of the loss, less the deductible is covered. The policy will pay the loss less the deductible.

Which of the following is covered property under the HO-3 form? I. Belongings of the insured's daughter, while she is away at college. II. The insured's pool table stored in the garage located under the bonus room of the insured dwelling. III. The insured's prize-winning show dog. IV. The personal property of a tenant who is renting the insured's bonus room.

Pets, no matter how valuable, are excluded under Coverage C, as is the property of boarders or renters. I and II only.

Which of the following serves as a deterrent for an insured to cancel an insurance policy before its expiration date?

Policies that specify that UEP will be returned on a short-rate basis do so in order to discourage mid-term cancellations. A short-rate penalty deducted from the unearned premium.

The commercial inland marine conditions form:

Policy conditions contain the duties of the insured in case of a loss, as well as the appraisal clause, pair and set clause, no benefit to bailee clause etc. They are included in most controlled inland marine policies. Contains the basic policy conditions that apply to many controlled inland marine coverage.

Which of the following is NOT covered on the Commercial Property basic cause of loss form?

Pollution clean up is NOT covered under the Commercial Property basic cause of loss form Pollution clean up.

Private, unincorporated mutual insurers that consist of associations that agree to equally share risks among its members are known as:

Private, unincorporated mutual insurers that consist of associations that agree to equally share risks among its members are known as reciprocal exchanges. Reciprocal exchanges

Protection and indemnity coverage contained in an ocean marine policy covers:I. Liability against injuries to seamen.II. Injury to stevedores, longshoreman and harbor workers.III. Cargo, if lost or damaged through negligence.

Protection and indemnity coverage would apply to all of these types of losses. I, II and III

Which type of damages is not intended to indemnify the plaintiff?

Punitive damages are awarded in cases of gross negligence for the purpose of punishing the defendant. Special and general damages are types of compensatory damages, which are intended to indemnify the plaintiff. Punitive damages

Jane has purchased a Homeowners policy to cover her new home. Which of the following best describes Jane's actions?

Purchasing insurance is a "Transfer of Risk"

Each of the following is true about commercial property floaters filed by the Insurance Service Office (ISO), EXCEPT:

Rates for Commercial Property Floaters filed with ISO are regulated. Each type of form requires a rating formula. These are audited by ISO. There are many forms, not filed with ISO, where the rates are not regulated. These are called "non-controlled" lines of insurance. The rates for these coverages are unregulated

The traditional definition of actual cash value (ACV) is:

Replacement cost minus depreciation

Which of the following losses would be covered by Part D of a standard Personal Auto policy providing both "Other Than Collision" (Comprehensive) and "Collision" coverage?

Road damage to tires is specifically excluded under the PAP, however the claim described in the correct answer involves a collision, therefore the entire claim would be covered minus the deductible. The policy does not cover losses due to freezing or any radar equipment designed to help the drive avoid police. The damage to the bearings is due to wear and tear which is also excluded. A front tire blows out in a high-speed head-on collision, which also causes extensive damage to the vehicle.

Robert is an adjuster for Indemnify Insurance, Inc. and he has been assigned a claim and acknowledged receipt of the loss notice. Which of the following is the next step Robert will take to process the claim?

Robert must verify the coverage before moving forward with the investigation. Obviously, if the claim is not covered by the policy, no investigation is necessary. Verify coverage for the claim under the policy

Under Section II of a Homeowners policy, a cemetery plot owned by the insured is considered to be:

Section II - Liability of the Homeowners forms includes a cemetery plot as an "insured location". An insured location

Which of the following claims would NOT be covered under Section II -- Liability of a Homeowners policy?

Section II addresses liability coverages for bodily injury or property damage to others. A claim for damage to the named insured's house is covered under Section I of the policy. The named insured files a claim for damage to his house caused by his dog.

Loss to insured property caused by self-propelled missiles is covered under which of the following perils of the Homeowners form?

Self-propelled missiles would be considered aircraft. Aircraft

The HO-3 form insures for direct physical loss to covered property involving collapse of a building caused by all of the following, EXCEPT:

Settling or earth movement is excluded under the policy.

A common element that links inland marine and ocean marine risks is:

Ships transport the cargo over water. When unloaded, the transportation of the cargo continues inland. Hence the link of transportation. Transportation

An insured has a $2 million limit of insurance under a Personal Umbrella policy with a $2,000 self-insured retention limit. The insured is sued for $1 million in personal injury damages and $1.5 million in property damages arising from the same occurrence. The insured's underlying liability policies exclude coverage in this case, but the claim is covered under the Umbrella policy. In this case, the umbrella policy will pay:

Since the underlying coverage does not apply the insured must pay the $2,000 self-insured retention limit and the Umbrella insurer must pay the rest of the claim. $1,998,000 of the damages.

Which of the following is NOT covered under the basic cause of loss form of a Commercial Property policy?

Smoke from industrial operations is NOT covered under the basic cause of loss form attached to a Commercial Property policy. Smoke from industrial operations.

It is essential that operations at some businesses be continued regardless of circumstances. In the event of property damage to the main facilities, arrangements could be made for use of other facilities. What type of coverage would be most appropriate to protect this business against consequential losses?

Some businesses cannot shut down. Hospitals, dairies and banks are a few examples. This coverage will pay for expenses needed to decrease the amount of time the insured's business is interrupted Extra Expense Coverage

A risk where both profit and loss are possible is known as:

Speculative risks involve the possibility of both gain and loss, such as investing in the stock market. Speculative risks are common to business. Speculative

State "financial responsibility" laws determine the amount of coverage that must be purchased and how insureds must prove coverage under which of the following Personal Automobile insuring agreements?

State financial responsibility laws regarding auto insurance determine the amount of coverage that must be purchased and the method used to prove coverage under Part A - Liability. Part A

The insured carries a workers compensation policy that includes Part Two - Employer's Liability coverage. Which of the following is not covered by Part Two?

Statutory coverage is found in the "Part One - Workers Compensation" section of the policy. Part Two - Employer's Liability coverage does not cover those benefits that are set by statute. Statutory benefits set by state law.

What coverage is provided under the BOP for a steam boiler explosion?

Steam boiler explosions are excluded under the Businessowners policy, unless the damage is the result of an explosion of gases or fuels within the object or flues. Steam boiler explosions are excluded unless the damage is a result of an explosion of gases or fuels within the object or flues..

Wyatt is a blasting contractor who set off a blasting charge, damaging several buildings in the area and causing severe bodily injury to several people. Which of the following types of liability apply in this scenario?

Strict (Absolute) liability would be applied here without any need to prove negligence. Strict liability (also known as absolute liability) is imposed by law (statute) on those who participate in especially hazardous activities. Strict liability

What type of liability is specifically imposed by statutory law?

Strict (absolute) liability is specifically imposed by statute. Basically, there is little if any defense on the part of the negligent party because they are involved in activities of inherent danger. Strict liability

An insured has suffered a property loss and reported the claim promptly. Which of the following is NOT an immediate duty of the adjuster who received the claim?

Subrogation of a claim occurs after the claim has been paid. Afterwards, the adjuster may seek subrogation against a third party who may have caused the loss. Immediately seek subrogation rights against a third party

Surety bonds deal with which of the following?

Surety bonds are issued to guarantee the obligee for the performance of the principal under the bond. The performance by another party of an obligation or undertaking..

Which of the following is considered a surety?

Surety means in bonding, the party (often the insurance company) that agrees to be responsible for the loss that may result if the principal does not keep their promise to perform. The surety has recourse against the principal for re-payment. This is different than casualty insurance where recourse against the insured is forbidden. A bond that guarantees the performance of contracts.

Surplus Lines companies in Texas have _____ to acknowledge the receipt of a claim.

Surplus Lines companies are given 30 days to acknowledge the receipt of a claim in Texas.

Which of the following types of insurance companies must charge a premium tax to be remitted to the state each time a policy is sold?

Surplus lines companies, as non-admitted companies, must charge a premium tax to insureds and remit that money to the state. COVERED IN INSURANCE FUNDAMENTALS

Which of the following is the best definition of "fire"?

The definition of "fire" is combustion, accompanied by visible light, sufficient to produce a flame, glow, or incandescence. Combustion, accompanied by visible light.

The "Part B - Medical Payments" section of the standard Watercraft or Boatowners policy covers all necessary medical expenses if they are claimed:

The "Coverage B -- Medical Payments" section of the standard Watercraft or Boatowners policy covers all necessary medical expenses incurred by a covered person up to three years following a covered accident. Within 3 years following a covered accident

Which of the following additional coverages provided by the Building and Personal Property coverage form applies only to buildings to which the replacement cost optional coverage applies?

The "Increased Cost of Construction" additional coverage only applies when the replacement cost optional coverage has been selected and purchased by the insured. Increased Cost of Construction

Which of the following Commercial Property conditions is meant to prevent "over indemnification" of the insured?

The "Insurance Under Two or More Coverages" condition prevents the insurer from paying any more than the total amount of the loss, even if the policy limit has not been met. The "Insurance Under Two or More Coverages" condition..

The insured has his home insured on a HO-2 policy. Lightning has struck the home and causes a fire. The insured takes as much personal property out of the house as possible while waiting for the fire department to arrive and extinguish the fire. The insured and some of his neighbors damage some of the property while moving it to safety in the back of a pickup truck not owned by the insured. What additional coverage would cover this damage to the insured's personal property?

The "Property Removed" additional coverage included on the Homeowners forms would cover the damage to the insured's personal property that was caused when moving the property to protect it from loss.

An insured who is covered under a Commercial Property policy with the Building and Personal Property Coverage form attached, suffers a loss to business personal property. The insurance company has paid the claim, but now the property has been recovered. All of the following statements are TRUE regarding how this situation should be handled according to the form, EXCEPT:

The "insured" does not incur the expenses to recover the property, the "insurer" incurs these expenses. The insured must incur any expenses to recover the property.

A business has its building covered under a standardized Commercial Property policy (Policy A). The business has the same building covered under a separate policy that is written under different terms than the standardized policy (Policy B). When there is a covered loss to the building, which of the following statements indicates how the "other insurance" condition of Policy A will require that the loss be settled?

The "other insurance" clause (two or more insurers) of a standardized Commercial Property policy states that if there is other insurance on the loss that is written with differences in the plan, coverage, conditions or provisions, that other policy becomes primary. Therefore, the correct answer in the scenario provided in the question would be: "Policy B would pay first (primary) and Policy A would pay the remainder (excess) up to the policy limit. If you do not remember how "primary" versus "excess" insurance works, please review again in the Insurance Fundamentals chapter of the course. Policy B will be primary and Policy A will be excess..

Which of the following best describes the "statutory MMI" under a worker's compensation claim in Texas?

The "statutory MMI" is reached when 104 weeks of income benefits have been accrued and the injured worker has not already received MMI status. 104 weeks of income benefits have been accrued and the injured worker has not already received MMI status as determined by the treating physician

The first insurance policy to have its wording standardized by law is:

The 1943 New York Standard Fire policy was the first insurance policy to have its wording standardized by law. The 1943 New York Standard Fire policy

If the Agreed Value option of the Business Income form is selected by the insured, the coinsurance requirement is:

The Agreed Value option removes the coinsurance requirement from the covered property for which it is designated and substitutes an agreement to cover any loss in the same proportion as limit bears to stated Agreed Value. The Agreed Value condition extends until the Agreed Value expiration date marked on the declarations or the actual expiration date of the policy, whichever occurs first. After expiration, if the provision is not renewed by the company, the coinsurance condition is reinstated. Waived

If a Condominium Association policy and a Condominium Unit-Owners policy are in force on the same property, how would the claim be handled?

The Association coverage is primary and the Unit-Owners coverage form is excess. The Condominium Association form is primary

All of the following statements regarding eligibility of self-storage facilities for a standard BOP policy are true, EXCEPT:

The BOP DOES NOT require a self-storage unit to be limited to no more than 500 individual self-storage units to be eligible for coverage. All of the other answer choices are eligibility requirements of the BOP for coverage of self-storage facilities. The facility cannot exceed more than 500 individual self-storage units..

Which of the following statements is TRUE concerning the Businessowners policy?

The BOP is a type of package policy that prepackages a group of coverage desirable to small businesses

Hannah must take time away from work to help assist in the investigation of a claim that was made against her BOP policy. The policy will pay for Hannah's actual loss of earnings up to:

The BOP policy will pay for actual loss of earnings, $250 per day, if the insured is asked by the insurance company to take time away from work to assist in the investigation and/or defense of a claim. $250 per day

Which of the following is the basis for insuring property under Section I of the Businessowners policy?

The BOP provides open peril coverage on buildings and business personal property (Coverages A & B of Section I). Coverage can be amended to named peril coverage by endorsement. Coverage is written on an open peril basis

The insured owns a 20-foot fishing boat with a 50-horsepower motor. Which of the following policies would be best suited to cover the loss of the boat while its on a lake?

The Boatowners/Watercraft policy would be the better product to cover a fresh water boat of this size and horsepower. The Homeowner policy has a limitation for physical damage coverage and does not cover the theft of a boat off the insured's premises. Also, the Homeowners policy would not cover the liability of an outboard motor of more than 25-horsepower. A Boatowners/Watercraft policy

The Building and Personal Property coverage form provides coverage for all of the following types of property, EXCEPT:

The Building and Personal Property coverage Form specifically lists growing crops and lawns as "property not covered". Growing crops and lawns.

Which of the following would be paid under the Business Income form of a standardized Commercial Property policy?

The Business Income form will pay for loss of business income and extra expenses incurred to keep operating after a loss. Coverage for continuing operating expenses while damaged property is being repaired

The Business Income from Dependent Properties -- Broad Form is a variation of the Business Income form as it:

The Business Income from Dependent Properties -- Broad Form provides coverage for loss of income to the insured business when direct physical damage has occurred at another business upon which the insured business depends in some way. Provides coverage for loss of income to the insured business when direct physical damage has occurred at another business upon which the insured business depends in some way

Harvey's Hardware carries a CGL policy with a $2,000,000 "per occurrence" limit and a $4,000,000 "aggregate limit". Harvey's also carries a Commercial Umbrella policy with a $2,000,000 "aggregate limit" and a $300,000 self-insured retention (SIR). The hardware store has 7 bodily injury claims during the policy period, with no single occurrence totaling more than $2,000,000, but the total of the 7 occurrences is $8,000,000. How will this claim be paid?

The CGL policy will pay its "aggregate limit" of $4,000,000, the Umbrella policy will pay its $2,000,000 "aggregate limit", leaving $2,000,000 of the claim uninsured. The SIR has no bearing on this claim. The CGL policy will pay $4,000,000, the Umbrella policy will pay $2,000,000, leaving $2,000,000 of the claim uninsured..

The Commercial Articles Coverage Form is designed to cover:

The Commercial Articles Form covers cameras, projection machines, musical instruments and their related equipment. Musical instruments and related equipment; cameras and related equipment .

The Commercial Property condition known as "Concealment, Misrepresentation, or Fraud" calls for the policy:

The Commercial Property condition known as "Concealment, Misrepresentation, or Fraud" calls for the policy to be voided if the insured intentionally concealed or misrepresented a material fact on the application for insurance. To be voided if the insured intentionally concealed or misrepresented a material fact on the application for insurance.

The Texas Commissioner reasonably believes that a person has violated a cease and desist order. All of the following penalties may be imposed by the Commissioner, EXCEPT:

The Commissioner has the power to impose either one or all of the cited penalties. A jail term of 30 days.

Teri is a Texas adjuster who has had her license suspended by the Commissioner. What is the maximum length of time Teri's license can be suspended according to the Texas insurance code?

The Commissioner may suspend the license of an adjuster who has been found in violation of, or failed to comply with, the Texas insurance laws, rules and regulations. The Texas insurance code specifies that a license can be suspended for a period not to exceed one year. One year

Evergreen Lawn Care has two lawn maintenance crews on separate job sites. Coverage for the lawn maintenance equipment on the way to the site, while at the site and in transit back to the shop can be covered by which of the following forms?

The Contractors equipment Floater will cover the lawn maintenance equipment usually on an open peril basis. The covered territory is the US, its possessions, Puerto Rico and Canada. Contractors Equipment Floater.

Which of the following standardized Dwelling insurance forms provides coverage for loss of rental income?

The DP-1, DP-2, and DP-3 forms..

Jim and Mary are celebrating their 50th wedding anniversary and are on a worldwide cruise. They carry a DP-3 policy with a personal property limit of $50,000. While off the coast of Africa the ship catches fire and their property is completely destroyed. How much, if anything, will they collect?

The DP-3 policy provides for up to 10% of the insured's personal property limit anywhere in the world. Therefore, the policy would pay up to $5,000 on an actual cash basis. $5,000

For the insured dwelling and other structures, the DP-3 provides:

The DP-3 provides open perils protection for the dwelling and other structures, and named perils protection for personal property. The DP-1 and DP-2 forms provide named peril protection only for the dwelling, other structures, and personal property. Open peril coverage.

The insured has suffered a severe storm and some of his trees, shrubs, and plants are heavily damaged by the wind. How much coverage could the insured expect to receive for his claim under his DP-3 Dwelling policy?

The Dwelling policy provides an additional coverage for trees, shrubs, and plants. The limit for this coverage is $500 for any one tree shrub or plant. However, the coverage applies for specified perils and wind is NOT included. The insured will not collect anything for this loss. $0

Which of the following "additional coverages" of the Building and Personal Property Coverage form is paid without the application of the policy deductible?

The Fire Department Service Charge is the only additional coverage of the form to which a deductible does not apply. Fire Department Service Charge

Perry has his home covered under an HO-5 policy. He borrows a friend's expensive camera and takes it on vacation, where it is stolen. Coverage for the stolen camera is:

The Homeowner policy provides coverage for the insured's items of personal property anywhere in the world. The policy covers personal property "owned or used" by the insured. Included anywhere in the world

The Homeowners "additional coverages" includes coverage up to __________ for gravemarkers including mausoleums on or away from the residence premises by a peril insured against.

The Homeowners policies provide as an additional coverage, up to $5,000 for this coverage. The perils insured against are listed in Coverage C. $5,000

Which of the following is the limit for "loss assessment" provided by Section II of the Homeowners forms?

The Homeowners policies, under Section II provide $1,000 for loss assessment. $1,000

A standard Homeowners policy is best described as:

The Homeowners policy provides both property and liability coverage. A package policy that provides both property and liability insurance..

Sam and Dan are working to clean out the gutters around the roof on Sam's house. Sam and Dan are standing at the top of separate ladders that are propped against the side of Sam's house, when Dan's ladder begins to wobble and ultimately falls into Sam's ladder. Both men and their ladders crash to the ground. Whose injuries will be covered by Sam's Homeowners policy under Coverage E - Personal Liability?

The Homeowners policy provides coverage under "Coverage E - Personal Liability" for sums the insured is liable for injuries to "OTHERS", therefore Dan's injuries would be covered. No one with the title of "insured" under a Homeowners policy can collect for injuries under the liability section of the policy, so Sam's injuries are not covered by his Homeowners policy. Only Dan's injuries would be covered

Which of the following is NOT a responsibility of the Insurance Commissioner in any given state?

The Insurance Commissioner does not set insurance rates. He or she APPROVES the rates that the insurance company sets. Setting insurance rates.

Which of the following Commercial Property coverage forms provides coverage when the insured is negligent and causes damage to property that was in their care, custody and control?

The Legal Liability coverage form provides coverage when the insured is negligent and causes damage to property that was in their care, custody and control The Legal Liability form.

Which of the following statements is TRUE regarding the Personal Effects Floater?

The Personal Effects Floater can be purchased either on a permanent basis for frequent travelers or for a single trip. It can be purchased either on a permanent basis for frequent travelers or for a single trip

The NAIC Model Unfair Claim Settlement Practices Act specifies that when a violation of the Act is suspected, a hearing must be held:

The NAIC Model Act provides for a hearing not less than 30 days after notice has been provided to those involved. Many states amend this time frame so pay special attention when you are asked this question. If you are asked within the question what the NAIC Model Act requires, the correct answer will always be 30 days. Not less than 30 days after notice has been provided to those involved

The NAIC Model Unfair Claim Settlement Practice Act provides for a financial penalty of _________ for each violation of the Act.

The NAIC Model Act provides for a penalty of $1,000 per violation. However, the states usually set their own financial penalties and some even set differing penalties for intentional and unintentional acts. $1,000

The NAIC Model Unfair Claim Settlement Practices Act specifies that the insurance company must provide the proper claim forms with a reasonable explanation of how to use them to the claimant within:

The NAIC Model Act requires that insurers provide claim forms with a reasonable explanation to a claimant with 15 calendar days of the request being made. 15 calendar days of the request

The NAIC Model Unfair Claim Settlement Practice Act DOES NOT apply to any of the following types of coverage, EXCEPT:

The NAIC Model Unfair Claim Settlement Practice Act does not apply to workers' compensation, surety bonding, or equipment breakdown insurance, but it does apply to dwelling insurance. Dwelling insurance

The NAIC Model Legislation governing the settling of insurance claims was created:

The NAIC Model Unfair Claim Settlement Practices Act was created to set forth standards for the investigation and disposition of claims arising under policies or certificates of insurance. To set forth standards for the investigation and disposition of claims arising under policies or certificates of insurance

Under the Personal Articles Floater, a loss is covered when it occurs:

The Personal Articles Floater covers covered property on a world-wide basis, except for fine arts, which is only covered in the US, its possessions, Puerto Rico and Canada. Anywhere in the world, except for fine arts.

Which of the following is covered under Part A of the Personal Auto policy?

The Personal Auto policy does not cover damage to property of the insured, or property in the care, custody or control of the insured. The PAP makes an exception in the exclusions to cover damage to a private residence and garage rented by the insured. The other three examples are excluded. Damage to the attached garage of a dwelling rented by the insured..

Pete is covered under a Personal Auto policy with Indemnify Insurance when his car is stolen. Six months pass, Pete's car is never found and the policy period with Indemnify expires. Pete decides to purchase another Personal Auto policy with Fiduciary Insurance, Inc. Pete is covered under the policy with Fiduciary for about three months, when his stolen automobile is found with only minor physical damage. How will this claim be handled?

The Personal Auto policy states that the policy applies only to accidents and losses that occur during the policy period listed on the Declarations page. Therefore, Indemnify Insurance would be responsible for the claim because it was the policy in force at the time of the loss. Indemnify Insurance will pay the claim.

Which of the following "additional coverages" under the Building & Personal Property coverage form does not increase the limit of liability of the policy?

The Preservation of Property additional coverage does not increase the limit of insurance.

Which of the following losses would be covered under the 1943 New York Standard Fire Policy?

The SFP only covers direct losses. Business interruption, ordinance or law, and additional living expenses are all indirect loss coverages. A fire is a direct loss that will be covered if it was caused by a riot, even though damage due to a riot itself is not covered. A fire that is a result of a riot that causes property damage to the insured's property..

A dry cleaner wants to insure the pressure boilers used in the business. They also would like to cover some equipment and accessories that can be used in the boilers but have not yet been installed. Which of the following, if any, can be used to cover this exposure?

The Spare Parts and Equipment Endorsement can be used to schedule the value of this extra equipment and accessories. Spare Parts and Equipment Coverage

Which of the following basic coverages are provided under a Standard Fire policy?

The Standard Fire policy provides coverage for fire, lightning and removal. Damage to property being removed is covered if it is being removed to protect it from the perils insured against. In terms of perils, only fire and lightning are covered. Fire, lightning and removal

Under the Standard Fire policy, how many days of coverage is provided by the policy to cover property moved to another location when the property is endangered by the perils insured against under the policy?

The Standard Fire policy provides only five days of coverage for the removal of property to another location to protect it when endangered by the perils insured against under the policy. 5 days

Which of the following is TRUE regarding coverage for a vegetated roof under the Building & Personal Property coverage form of a Commercial Property policy?

The TRUE statements within the answer choices is: "Damage to a vegetated roof is considered to be part of the building, therefore coverage is provided by Coverage A - Building." Damage to a vegetated roof is considered to be part of the building, therefore coverage is provided by Coverage A - Building.

James Jackson is a Texas adjuster whose license has been suspended. Which of the following statements is true regarding the reinstatement of the license?

The Texas Commissioner may not reinstate or reissue the license of a license holder or former license holder whose license has been suspended, revoked, or refused renewal until the Commissioner determines that the cause for a suspension, revocation, or refusal of a license issued under this regulation no longer exists. The license will not be reinstated until the cause of the suspension no longer exists.

The Texas Labor Code lists specific items that may not be used to discriminate against injured workers in providing impairment benefits. All of the following are specifically listed in the code, EXCEPT:

The Texas Labor Code does not specifically list "ethnicity" as a form of discrimination that is prohibited. Race is biological, ethnicity is cultural. People can be of the same national origin and not be of the same race or ethnicity. The code does specifically list "religion" as a form of discrimination that is prohibited. Ethnicity

Texas, workers' compensation regulations would consider which of the following a "part-time" employee?

The Texas workers' compensation regulations specify a 40-hour work week as being "full-time" employment. Jane is the only employee working "part-time".

The additional coverage for debris removal under the standardized Building and Personal Property coverage form will only be paid if:

The additional coverage for debris removal under the standardized Building and Personal Property coverage form will only be paid if the insured reports the debris removal expenses to the insurance company in writing within 180 days of the loss. The insured reports the debris removal expenses to the insurance company in writing within 180 days of the loss

Which of the following losses may not be determined by an adjuster?

The adjuster usually advises the claimant to rent a vehicle similar to that which is damaged and submit the bills at a later date after the claim has been negotiated.

Insurance adjusters have the "power to bind". Which of the following statements best describes what this means?

The adjuster's "power to bind" means that the decisions made by the adjuster bind the insurer (the principal). The principal is bound to the decisions of the adjuster

Which of the following statements is NOT TRUE concerning Assigned Risk Plans?

The answer choice that is NOT TRUE is: "These plans were created to randomly assign all auto policies written in a state to admitted insurers, to be sure all insurance companies can write a proportional amount of business." The other answer choices are true concerning Assigned Risk Plans. These plans were created to randomly assign all auto policies written in a state to admitted insurers, to be sure all insurance companies can write a proportional amount of business..

There are three criteria for a Business Income coverage to pay in case of a loss. Which of the following is NOT one of those criteria?

The answer choice that is NOT a criteria for the Business Income coverage to pay on a loss is: "The direct physical loss suffered by the business must have been caused by a third party." The direct physical loss suffered by the business must have been caused by a third party

Which of the following is NOT a type of "fiduciary" bond?

The appeal bond is used when someone loses in court and is made to pay damages. He/she can post an appeal bond and postpone payment pending his/her appeal. The other answers are examples of fiduciary bonds. Appeal bond

The purpose of the appraisal clause in a property insurance policy is to:

The appraisal clause is used when the insured and the insurer cannot agree on the value of the loss. Either party can demand a binding appraisal of the loss. Settle disputes concerning the amount of a loss.

A Texas insurer has notified a claimant that all or part of a claim will be paid. The claim must be paid not later than the ____ business day after the date notice is made.

The claim must be paid no later than the fifth business day.

An insured's car is damaged in an auto accident. While it is being repaired, the body shop loans the insured a replacement. From a coverage standpoint, this replacement vehicle is known as:

The auto policy provides coverage in this example. Since the vehicle owned by the insured is being repaired, a loaner would be covered by the insured's policy as a temporary substitute auto A temporary substitute.

Generally, an employee's average weekly wage is determined in Texas by which of the following computations?

The average weekly wage of an employee is computed by the sum of the wages paid in the 13 consecutive weeks immediately preceding the date of the injury, divided by 13. The employee's wages for the 13 consecutive weeks preceding the injury divided by 13

Which of the following Commercial Property cause of loss forms include the additional coverage for "Fungus, Wet Rot, Dry Rot, and Bacterial"?

The basic, broad, and special cause of loss forms all include the additional coverage for "Fungus, Wet Rot, Dry Rot, and Bacteria".

The Commercial Property broad cause of loss form would cover which of the following types of water damage?

The broad cause of loss form excludes water damage from floods, sewer backup, mudslides, or seepage of ground water. It would, however, cover damage caused by the accidental discharge of water that is a result of the cracking or breaking of a water or steam system or appliance. Water escaping from a cracked water heater

Jordan's Jams purchases a standardized Commercial Property policy on August 15th from Binders Keepers, Inc. On September 20th, Binders Keepers adopted a form revision that provided broader coverage without additional premium, however Jordan's policy was written before the form revision was adopted. Which of the following statements is TRUE regarding how the broadened coverage would apply to Jordan's Jams?

The broadened coverage would apply to Jordan's Jams immediately on September 20th because the revision was adopted during the policy period and did not require an additional premium. This is stipulated in the Liberalization clause located in the Conditions of the Commercial Property form. The broadened coverage would apply to Jordan's Jams immediately on September 20th because the revision was adopted during the policy period and did not require an additional premium..

All of the following are a "cause of loss" form, EXCEPT:

The cause of loss forms used with property insurance are the basic, broad, and special. The comprehensive form does not exist. Comprehensive.

The "Medical Payments" coverage of the standard Yacht policy covers all medical expenses incurred by an insured, family members, invitees, or guests if a claim is submitted:

The claim for the injuries must be submitted within 1 year following a covered accident. This should not be confused with the Watercraft/Boatowners policy that provides for the claim to be submitted within 3 years following the covered accident. Within 1 year following a covered accident

Mike purchased a policy several years ago to cover him for liability. Last year, Mike determined that the limits of his liability policy were not high enough to cover him adequately should a loss occur, so he purchases an excess liability policy to provide more coverage. Mike experiences a loss, and discovers that his underlying liability policy had expired before the loss, but his excess liability policy is still in effect. How will this loss be paid?

The claim will be denied, due to nonconcurrency. If the underlying liability policy was expired, the excess policy will not be triggered to pay anything on the claim. It will be denied, due to nonconcurrency

Jim Cress owns an expensive fine arts collection. He has it appraised and covered under a personal articles floater. He takes his collection to England to have it auctioned. While the collection is in his hotel room it is stolen. What coverage would apply?

The collection has been moved outside the covered territory for fine arts. The coverage is not world-wide and covers them while in the United States, its possessions, Puerto Rico and Canada. The policy would have to be modified to provide this coverage. The loss is not covered

The common conditions of a Commercial Package policy:

The common conditions of a Commercial Package policy states that to property rate the policy, the insurer has the right to examine the books and records of the insured company. The information listed in all of the answer choices are found in other sections of the policy. States that to properly rate the policy, the insurer has the right to examine the books and records of the insured company

An insured owns a set of six drawing pens designed and used by Benjamin Franklin. Each pen is worth $1,000 alone, but the set is worth $12,000. One pen is destroyed by a covered peril. Under the pair or set clause the insurance company will pay a maximum of which of the following amounts?

The company is obligated to repair, replace, or restore the set as one option. Since one pen was totally destroyed, there is no way to repair, replace, or restore the entire set. The second option is to pay the insured the difference between the actual cash value of the full set ($12,000) and the actual cash value of the undamaged part or parts. Each of the remaining pens is worth $1,000 for a total of $5,000 for the remaining five pens. The actual cash value of the full set ($12,000) less $5,000 leaves the insurer owing the insured $7,000. $7,000

The insured has a $1,000,000 personal umbrella policy with a $5,000 retention limit. For a $7,000 liability loss not covered under the insured's personal auto policy, but covered under the umbrella policy, the insurance company would pay:

The company will deduct the $5,000 retention limit and pay on the insured's behalf the sum of $2,000. The retention limit acts a deductible when a loss is covered by the umbrella policy but not under the underlying insurance. $2,000

Compensation payable for the delaying a vessel carrying freight:

The compensation payable for delaying a vessel carrying freight as by failing to load/unload cargo is called demurrage.

Which of the following is NOT a correct statement in determining the cost of a "comparable automobile" when a physical damage loss has a occurred?

The computerized method must use values that are fair market values in the local market area. The cost of a comparable automobile as determined by a computerized automobile valuation service that produces statistically valid fair market values within the United States market

The conditions section of an insurance policy sets forth the:

The conditions section of the policy sets forth the duties and obligations of both the insured and the insurer. Duties of the insured and the insurance company.

A large tree has fallen into Paul's yard caused by wind. The claims service representative (CSR) advises Paul to call a contractor to remove the tree and send the bill to the insurance company. The bill is $1,200. However, the policy coverage for the debris removal of a tree that has fallen by wind, is only $500 unless the tree hits the house, which was not the case. What should the adjuster do?

The consumer relied on the statements of the claims representative so the insurance company would be estopped from denying the claim. The insurer had already waived its right to deny full payment of the claim because of the statements of the claims representative. Therefore, the $1,200 should be paid. Pay the $1,200

The contract between an insurance agent/producer and an insurance company is known as:

The contract between an insurance agent/producer that provides them with the authority to bind insurance coverage on behalf of an insurance company is known as the "appointment contract". The appointment contract.

Which of the following is the term used in the Texas Workers Compensation code to mean: "A doctor appointed by mutual agreement of the parties or by the Workers' Compensation Division, to recommend a resolution of a dispute as to the medical condition of an injured employee"?

The correct term is "designated doctor".

As a condition to gain entrance into Louisiana to conduct insurance business, a Texas domestic insurer makes a deposit with the Texas Comptroller. The amount of the deposit is sufficient to satisfy the Louisiana Department that the insurer can cover the claims submitted by the insureds in Louisiana. Who has jurisdiction to collect taxes on the interest earned on this deposit?

The county and municipality in Texas where the principal business office of the insurer making the deposit is fixed by the insurer's charter will collect the taxes.

A gas line explodes outside of Mindy's Mending Shop, ruining her new landscaping. Which coverage extension of Mindy's Commercial Property policy would cover the cost of replacing the damaged trees and shrubs?

The coverage extension "Outdoor Property" adds coverage for trees and shrubs that were excluded in the "property not covered" section of the policy. "Outdoor Property".

Which of the following is NOT a coverage extension on the Building and Personal Property coverage form?

The coverage extension for outdoor property provides coverage up to a maximum of $1,000, not $500. Outdoor property up to a maximum of $500

Which of the following is NOT a coverage extension on the Building and Personal Property coverage form?

The coverage extension for outdoor property provides coverage up to a maximum of $1,000, not $500. Outdoor property up to a maximum of $500.

Jess owns a computer repair business that is covered under a Commercial Property policy that includes coverages A, B & C of the Business & Personal Property coverage form. One afternoon a fire broke out in the shop and completely destroyed 5 computers belonging to a client. Which of the following statements best describes how the policy coverage extension for Personal Property of Others will apply to the claim for the loss of the computers.

The coverage extension would pay the owner of the computers directly, up to $2,500. The coverage extension would pay the owner of the computers directly, up to $2,500

All of the following statements are TRUE of the coverage extensions on a Building & Personal Property coverage form, EXCEPT:

The coverage extensions apply if the policy meets the coinsurance requirement (80% to value), if the policy includes a value reporting form and that forms symbol is shown on the declarations page of the policy. The coverage extensions apply to any policy that provides 75% or more of the total value of the property in insurance coverage..

The insured is transporting his yacht on its trailer and pulling it with his truck. The trailer separates from the truck hitch and the boat strikes another vehicle. There is property damage and bodily injury to a third party. The yacht and trailer are a total loss. What coverage would apply under the yacht policy?

The damage to the yacht and trailer would be covered. The bodily injury and property damage to a third party would be covered under an auto policy. Only the damage to the yacht and trailer

The hull physical damage deductible, in aircraft coverage, applies to which of the following losses?

The deductible applies to collision coverage although other deductibles can be written if requested by the insured. Collision

In the insurance industry, which of the following terms refers to continuous or repeated exposure to conditions that may result in bodily injury or property damage neither expected nor intended?

The definition of "occurrence" includes accident which is bodily injury and/or property damage that is sudden and unforeseen.

When is a passenger first covered under an aircraft policy?

The definition of "passenger" is anyone in, on, or boarding the aircraft for a flight, or anyone leaving the aircraft after a flight. When Entering the Aircraft

Which of the following statements is FALSE regarding a released bill of lading?

The definition of a released bill of lading is "A bill of lading on which no stated value has been indicated, thereby limiting the carrier's liability to statutory amounts or to the specified rate per pound of merchandise shipped." No stated value is listed on a released bill of lading

Which of the following statements is TRUE regarding how the standard Businessowners policy additional coverage of "Collapse" becomes payable?

The definition of collapse in the policy is the "abrupt falling down or caving in of the structure or part of the structure" and it must render the building as unusable as intended. The collapse must be such that the building cannot be used as intended

Texas issues emergency adjuster licenses in case of an emergency arising out of a disaster. The application must be certified not later than the fifth day after the date on which the person begins works as an adjuster. An emergency license is valid for ______ days.

The emergency license is valid for 90 days and can be extended an additional 90 days. The fee for the emergency license is $20.

An employer in Texas whose workers compensation coverage is terminated or cancelled must notify each employee that the coverage has been terminated or cancelled not later than ____ after the coverage is terminated or cancelled.

The employees must be notified within 15 days.

Employers are responsible to make payments to the injured worker, in excess of the benefits regularly provided by workers' compensation law for all of the following, EXCEPT:

The employer is only required to make payments in excess of the no-fault benefits workers' compensation coverage provides if they have committed serious and willful misconduct. Therefore, the answer choice that would NOT be correct is "If the employer contributed to the injury in any way". If the employer contributed to the injury in any way..

Premiums in a workers' compensation policy include an adjustment, up or down, based upon how the employer's actual loss experience compares to that expected of employers that perform similar work. What is the name of the factor that is used to calculate this adjustment?

The experience modification factor (EMF, or E-mod) is a number calculated each year by the National Council on Compensation Insurance (NCCI) for all Workers Compensation policyholders except small employers. The E-mod is based on how the employer's actual losses (with certain adjustments for fairness) during the "experience period" compare to the expected losses for employers doing the same type(s) of work. An E-mod greater than 1.00 means that actual losses exceeded expected losses, and an E-mod lower than 1.00 means that actual losses were below those expected. The E-mod is multiplied against an employer's standard, or "manual" premium to arrive at the Estimated Annual Premium. The experience modification factor.

The Commercial Property coverage extension "Business Personal Property Temporarily in Portable Storage Units" will provide $10,000 of coverage for up to:

The extension of coverage is for 90 days, but if the portable unit has been used on a regular basis, the 90 days begins from the time when the unit was first put to use and not when certain property was placed there. 90 days

Faulty wiring causes a fire that destroys an insured's home. In insurance terms, the faulty wiring is called a:

The faulty wiring would be called a hazard. A hazard is something that increases the probability of loss. Hazard

Which of the following is NOT a hazard?

The fire in the waste basket is a peril. The other three responses are all hazards A fire started in a waste basket.

Which of the following perils would provide coverage under the accounts receivable coverage floater?

The fire that caused the building to collapse is covered. All of the other answers are exclusions in the policy. A fire that caused a building to collapse.

Which sections of the Standard Fire policy are found on the first page of the policy?

The first page of the SFP includes the Declarations page and the Insuring Agreement. The Declarations page and the Insuring Agreement.

The insured has her fur coat specifically covered under a Personal Articles policy. It has been stored in a plastic garment bag in her closet during the summer months. She decides to take the coat out and hang it outside to freshen up. The next door neighbor's dog sees the coat and attacks it and ruins the garment. The insurer will:

The form is an "open peril form" and would cover this type of loss whether caused by a domestic pet or a wild animal. Pay the claim because the loss is not excluded

An insured is covered under a DP-2 broad form Dwelling policy. A water pipe has frozen and burst and the insured has suffered floor and ceiling damage in his two-story home. The cost to remove and replace the walls to get to the pipe is $300. The cost to repair the floor is $400. The pipe that burst must now be replaced with a more expensive option to meet newer building codes. The cost to replace the pipe is $200. How much will the insurer pay?

The form will not cover the pipe that burst and caused the damage, but will cover the other damages. $700

Which of the following would be covered under a Builders' Risk form?

The foundation of the building under construction is the only item listed in the answer choices that would be covered by the Builders' Risk form. The foundation of the building under construction

Linda has received an inquiry from the Texas Commissioner. She realizes that she is required by law to respond to the inquiry, however her response contains information that is confidential and privileged. Which of the following is true of Linda's response to the Commissioner's inquiry?

The information in Linda's response will remain confidential and privileged until it is introduced as evidence in an administrative hearing or in a court of law. The information will remain confidential and privileged until it is introduced as evidence in an administrative hearing or in a court of law.

Gavin, the named insured under a Personal Auto policy, his daughter Tabitha, and two of her friends are riding in the covered auto when Gavin accidentally runs a stop sign, striking another vehicle. Everyone in Gavin's vehicle was injured as well as the driver and two passengers in the other car. Who would be covered for their injuries under Part B of Gavin's policy?

The injuries to Gavin, Tabitha and Tabitha's friends would be the only ones covered by Part B of the Personal Auto policy. Gavin, Tabitha, and Tabitha's friends.

The insured's $1 million Personal Umbrella policy states that it will pay prejudgment interest when it is awarded. A suit against the insured resulted in a $1.5 million judgment awarded on January 1. On April 1, the insurer paid the full policy limits. On May 24, the insured paid the claimant $500,000. On what amount did the insurance company pay prejudgment interest?

The insurance company must pay, under supplementary payments, the prejudgment interest on that part of the judgment that they will pay. Therefore, they would pay the prejudgment interest on the $1,000,000. For the period from January 1 to April 1, the insurance company paid interest on $1 million.

Insurance companies often outsource a large percentage of their processes to Third Party Administrators (TPAs). All of the following facts about TPAs are true, EXCEPT:

The insurance company still retains the risk on the policies that a TPA may handle. TPAs assume the risk on the policies they handle.

Gerald owns an expensive and rare painting. He has it appraised by an art dealer and insures it for $50,000 under a Personal Articles Floater. A year later, several other rare paintings similar to Gerald's and painted by the same artist are discovered, causing the value of Gerald's painting to be reduced to $40,000. Soon after this development, the painting is destroyed in a fire at Gerald's place of business. After ruling out fraud, how will the insurance company settle the loss?

The insurance company will cover the item for the full $50,000 amount because this was the "agreed value". The insurance company will cover the item for the full $50,000 amount..

Which of the parties to a bond is the insurance company?

The insurance company, which guarantees the principal's performance, is the SURETY. If the principal fails, the surety will indemnify the obligee up to the face amount. The surety

When the "Extended Period of Indemnity" option is selected by the insured on their Business Income form, the additional coverage "Extended Business Income" is extended from 60 days up to a maximum of _____ days.

The insured can select the number of days in increments up to a maximum of 360 days.

An insured has purchased a DP-3 policy to cover his dwelling that is valued at a replacement cost of $100,000. He insures it for $60,000 and later suffers a $30,000 fire loss. Which of the following amounts will be paid by the policy (if no deductible form is attached)?

The insured did not comply with the coinsurance clause (to carry 80% of the replacement cost in insurance) in order to receive replacement cost coverage. To comply, he would have needed to carry $80,000 instead of $60,000. He is underinsured by 25%, therefore, the policy will cover 75% of the $30,000 loss, which is $22,500. The company could also elect to pay ACV. $22,500.

When an insured is fulfilling the duty of proving a loss by taking an inventory of the damaged property, who pays the expenses incurred by the insured?

The insured is instructed to "keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim." Reasonable expenses paid by the insured to protect the property from further loss are the obligation of the insurer. Thus any other expenses incurred by the insured are NOT paid by the insurer and the insurer will only pay the "reasonable expenses" to protect the property if the insured maintains an inventory of expenses paid. Until that time, the insured is responsible for all expenses The insured

When an insured suffers a property loss, he or she is obligated by the terms of the policy to do all of the following, EXCEPT:

The insured is not obligated to employ a 'public adjuster" to assist in the claim against the insurance company. It is an option on the part of the insured. Hire a public adjuster to represent them in the claims process..

An insured has submitted a claim for payment under her Homeowners policy for damage caused to her home due to flood. She has received a notice from the insurance company regarding her claim. Which of the following is the notice the insured most likely received?

The insured would have most likely received a "disclaimer of coverage" because "flood" is not covered under a Homeowners policy. This is a type of notice is sent to inform the insured that payment will not be made because the claim was not covered under the policy. A disclaimer of coverage

Surety bonds guarantee the fulfillment of specific obligations. Each of the following may be the subject of a surety bond, EXCEPT:

The insured would need an employee dishonesty fidelity bond to cover the loss of funds handled by employees as a result of their dishonest acts. The insured would also need other coverages to provide protection for loss of funds from a source other than employees Protection of funds handled by employees

Surety bonds guarantee the fulfillment of specific obligations. Each of the following may be the subject of a surety bond, EXCEPT:

The insured would need an employee dishonesty fidelity bond to cover the loss of funds handled by employees as a result of their dishonest acts. The insured would also need other coverages to provide protection for loss of funds from a source other than employees. Protection of funds handled by employees.

A company that repairs customers' aircraft may need _______to cover the accidental damage to the customers' property.

The insured would need to carry hangarkeeper's liability coverage to provide physical damage coverage for a customer's property in their care custody and control for which they could be held legally liable. Hangarkeeper's Legal Liability

Amelia has suffered a covered collision loss to her vehicle. The insurer requires that her vehicle be repaired at a repair shop of the insurer's choice. The insurer:

The insurer can recommend a repair shop, but cannot require that a particular shop be used. Is guilty of an unfair claims practice act..

A covered loss has damaged the property belonging to the owner. Property belonging to a customer is also damaged. The customer brings suit against the insured for this damage. The insurer may do which of the following?

The insurer may negotiate the settlement of the property of others directly with the owner of that property. The will also pay the defense costs incurred in defending the insured in the suit brought by the customer. Negotiate the settlement of the property of others directly with the owners of that property and pay the defense costs incurred in the suit against the insured

An insured owns very old equipment. Much of it is no longer manufactured but is still functional. The insurer may wish to insure the equipment under an Equipment Breakdown policy by attaching the:

The insurer may wish to cover the equipment on an actual cash value basis. The endorsement that converts the coverage from replacement cost to actual cash value is called the actual cash value endorsement. Actual cash value endorsement

If the Navigational Limits or Lay-Up period shown on the Declarations page of a standardized Yacht policy is breached because of something out of the control of the insured:

The insurer must be notified within 10 days after the breach and any additional premium that is due must be paid. The insurer must be notified within 10 days after the breach and any additional premium that is due must be paid.

Part One of a standard workers' Compensation policy states that the insurer agrees to defend at its expense any claim, proceeding or law suit against the insured employer:

The insurer will defend and incur all expenses associated with that defense for claims, proceedings or law suits against the employed insurer, but only for benefits that the insurer would be obligated to pay under the policy. For benefits payable by the insurer

Which of the following best describes the purpose of the "insuring agreement" contained in an insurance policy?

The insuring agreement section of the policy contains the insurer's promise to pay. This is the section where the "contractual agreement" is located. To the insurer's promise to pay in case of a loss

After completing an inspection of an insured's pressure equipment and fire suppression systems, the inspector determines that the pressure equipment needs to be repaired and the suppression systems have not been cleaned and inspected in the time frame required by the policy. The insurer will:

The items will be immediately suspended from coverage and considered to be "red tagged" until they are reinspected and found to be in correct working order. Suspend coverage immediately by red tagging the items until they are repaired, cleaned and pass reinspection

A named peril aviation policy would cover all of the following, EXCEPT:

The named peril policy would not cover the peril of flood. Flood

Tony is sailing his 28-foot cabin cruiser on the lake. He runs into a neighbor's dock, destroying the structure and damaging Tony's boat. A crew member in the cabin of the boat is injured and a guest riding on the boat is also injured. All of the following policies below would provide coverage in this situation, EXCEPT:

The liability and medical payments coverage under the Yacht policy will pay for the damage to the dock and the injuries sustained by the guest. The Hull coverage under the Yacht policy will cover the damage to the boat. Longshoreman's and Harbor Worker's coverage would pay for the injuries to the crew member. The boat is too large to be eligible for Medical Payments coverage under Tony's Homeowner's policy, therefore this is the only answer selection that is NOT correct and should be the answer you chose. Medical Payments coverage under Tony's Homeowner policy

The insured is operating his boat on a fresh water lake and runs over a water skier. What coverage would apply to this claim under the boatowners policy?

The liability portion of the boatowners policy would pay the claim if the insured is held legally liable.

Samantha has renewed her Commercial Property policy, and it will take effect in 7 days. 14 days prior to Samantha signing the renewal policy, the insurer adopted a form revision that included broadened coverage, with a slight increase in premium. Samantha would like her renewal policy to include this broadened coverage. Which of the following statements is true regarding the required method for Samantha to receive the broader coverage?

The liberalization clause will not require that Samantha's renewal policy include the broadened coverage automatically because there is an additional premium to have the broadened coverage included

The Part B - Medical Payments coverage of Dorinda's personal automobile policy has a limit of $5,000. Three of Dorinda's friends were injured in an accident that occurred while they were riding in Dorinda's car. The amount of medical expenses per person were as follows:

The limit of Part B is $5,000 PER PERSON. However, each person will only receive the amount they spent in medical expenses, up to $5,000. Therefore, Harvey would receive $1,500, Diane would receive $4,575, and Thomas would receive $5,000. Harvey would receive $1,500, Diane would receive $4,575, and Thomas would receive $5,000

The conditions section of an insurance contract specifies which of the following? I. The property location. II. The insurance company's responsibilities. III. The insured's responsibilities. IV. The policy duration.

The location of the property and policy duration is shown on the declarations page of the policy. The responsibilities of both parties are contained in the conditions section of the contract. II and III only

Which of the following losses would NOT be covered by an unendorsed Commercial Property policy with the special cause of loss form attached?

The loss of income due to the shut down of Carolyn's Fine Gifts would not be covered by the Special Cause of Loss form. The cause of the loss and the resulting shut down is FLOOD, which is an excluded peril. Carolyn's Fine Gifts must shut down for a month to repair flood damage.

Mr. York had his pickup truck stolen while it was parked in a "no parking" zone outside his office. The value of the truck was $18,500. In addition, tools valued at $200, extra tires and hubcaps for the truck valued at $550 and a tarp worth $50 were in the truck. Mr. York has a collision deductible of $500 and a comprehensive deductible of $250. The insurance company will pay what amount?

The loss of the truck plus the extra tires and hubcaps would be considered in this claim. These total $19,050 less the deductible of $250 equals $18,800. $18,800

What is the main difference between arbitration and mediation in dealing with coverage disputes in the claims adjusting process?

The main difference between mediation and arbitration is that mediation is not binding on the parties involved, but with arbitration the decision is final and binding. Mediation is not binding on the parties involved, but with arbitration the decision is final and binding..

Heather's house is fully insured with a DP-3 with a limit of $85,000. One day, the house is struck by lightning, and despite the fire department's efforts, burns to the ground. She still had a balance of $20,000 left on her mortgage at the time of the fire. What is the maximum indemnification that would go to Heather, the fire department, and her mortgage lender respectively?

The maximum payable for the loss is the $85,000 policy limit which would be split at $20,000 for the mortgage lender and a $65,000 check for Heather. The policy also contains an additional coverage of $500 for fire department service charges. This is paid in addition to the policy limits. There is no mention in the question of the deductible amount so you do not assume there is one in answering this question. $65,000; $500; $20,000.

When a claims representative is collecting information from a third-party claimant, which of the following is the information that should be obtained first?

The most important information for the claims professional to obtain first when interviewing a third-party claimant is the nature and extent of the injuries or property damage claimed. The nature and extent of the injuries or property damage claimed

Under a liability policy, "supplementary payments" include all of the following, EXCEPT:

The negotiated settlement is considered to be "damages", not supplementary payments. The other three answer choices ARE covered under supplementary payments. The negotiated settlement.

Under a surety bond, the owner of the project is called the:

The obligee would be the owner of the project for whom the work is being performed by the contractor. The contractor purchases the bond from the surety and pays the premium for the bond. Obligee

Which of the following is included in the Supplementary Payments under a standardized Personal Automobile policy?

The only answer choice that correctly identifies an item that is covered under the "supplementary payments" of the standard Personal Auto policy is: "Interest accruing after a judgement is entered (post-judgement interest). All of the other answer choices either include an incorrect amount, are covered under a different section of the policy, or both. Interest accruing after a judgement is entered (post-judgement interest).

All of the following would NOT be covered under any section of the Business and Personal Property coverage form, EXCEPT:

The only answer choice that includes an item that IS covered under the additional coverages section of the policy is: "The cost to restore electronic data that was corrupted by a covered cause of loss." The cost to restore electronic data that was corrupted by a covered cause of loss.

Which of the following is NOT TRUE of coverage for Business Personal Property and Personal Property of Others in a Commercial Property policy?

The only answer choice that is NOT TRUE regarding Coverage B and C of a Commercial Property policy is: "Coverage is provided while the property is located within a covered vehicle at any location as long as the vehicle is owned by the insured business." Coverage is provided while the property is located within a covered vehicle at any location as long as the vehicle is owned by the insured business

All of the following statements are true regarding a Personal Liability Supplement, EXCEPT:

The only answer choice that is NOT true is that the Personal Liability Supplement coverage watercraft liability. The policy does NOT cover watercraft liability, but all three of the other answer choices are true. The policy will cover watercraft liability

Which of the following statements is TRUE regarding the Homeowners "additional coverage" known as Landlord's Furnishings?

The only answer choice that is true is: "The coverage is not additional insurance and does not increase the limits of the policy". The other three answer choices are not true of this additional coverage. The coverage is not additional insurance and does not increase the limits of the policy

Which of the following would be covered under Coverage B of the Business and Personal Property coverage form?

The only answer choice that would be covered under Coverage B of the Business and Personal Property coverage form is: "The stock held for sale by the insured business." The stock held for sale by the insured business.

Which of the following would be covered under Coverage A - Building of the Business and Personal Property coverage form if the damage was caused by a covered cause of loss?

The only item in the answer choices that would be covered under Coverage A of the form is: "Damage to the insured's lawn mower used by the company maintenance crew." Damage to the insured's lawn mower used by the company maintenance crew..

Which of the following would be eligible for coverage under a standard Businessowners policy?

The only item listed in the answer choices that would be eligible for coverage by the BOP is: "A two-story apartment building with 15 units." The other answer choices are listed as specifically ineligible for the BOP. A two-story apartment building with 15 units

The DP-1 basic form peril of "internal explosion" will cover which of the following losses?

The only loss that would be covered by the peril of "internal explosion" under a DP-1 form is the explosion of the furnace that the insured owns, inside the covered dwelling. The explosion of a furnace that the insured owns, inside the covered dwelling

The Part A - Liability section of a standardized personal auto policy will provide coverage for which of the following vehicles?

The only one that would be covered is the family car while being used in a car pool. Using a vehicle as a taxi, livery service or as part of any ride sharing network is excluded. His family car while being used in car pool.

Which of the following losses would be covered under a Commercial Property policy with the special cause of loss form attached?

The only scenario that would be covered is: "A fire that breaks out in an office building and causes damage to two of the offices." All of the other scenarios are excluded by the special cause of loss form. A fire that breaks out in an office building and causes damage to two of the offices.

Which of the following statements is NOT TRUE of the Builders' Risk coverage form?

The only statement in the answer choices that is NOT TRUE is: "The form allows for vacancy of 60 days before coverage will no longer apply." The form does not contain a vacancy clause because buildings under construction are not considered vacant. The form allows for vacancy of 60 days before coverage will no longer apply

All of the following statements are TRUE regarding the extension of coverage for non-owned detached trailers under the Building & Personal Property coverage form, EXCEPT:

The only statement that is NOT TRUE in the answer choices is: "For coverage to apply, the trailer can only be attached to a vehicle owned by the insured." In actuality, the coverage extension will not cover the non-owned trailer if it is attached to ANY vehicle. For coverage to apply, the trailer can only be attached to a vehicle owned by the insured

Henrietta has purchased a Personal Automobile policy and she sees the following under Part A: $25,000/$50,000/$30,000 Which of the following statements is TRUE regarding these numbers?

The only statement that is TRUE is: "$30,000 represents the limit for property damage liability."

An "other insurance" clause is included in insurance policies to deal with the problem of:

The other insurance clause is included in an insurance policy to provide a method of determining how much of a covered claim each insurer will pay when an insured carries more than one insurance policy. Settling a claim on a pro-rata basis is an example wherein each insurer pays its fair share of a loss, as determined by the percentage that the insurer's limit bears to the total coverage carried. Overinsurance

The insured carries a personal auto policy providing a bodily injury limit of $50,000 each person with a per accident injury limit of $100,000. He injures two occupants in another vehicle. Their injuries total $60,000 for Mr. Jones and $50,000 for Mrs. Jones. The insurance company spent $40,000 in defense and investigation costs. How much will the insured's policy pay?

The per person limit is $50,000. The most that can be paid for this claim is the $100,000 per accident injury limit plus the $40,000 to defend and investigate the claim. The costs to defend and investigate are supplementary coverages and are in addition to the policy limits. $140,000

The perils insured against by a Homeowners policy are contained within the:

The perils insured against are contained within the insuring agreements in a Homeowners policy. Insuring Agreements.

All of the following sections are included on the Business and Personal Property coverage form, EXCEPT:

The perils insured against are including on a cause of loss form that is attached to the Building and Personal Property coverage form, it is not included on the form. Perils Insured Against.

The "period of restoration" for the Extra Expense coverage included on the Business Income form is:

The period of restoration for Extra Expense coverage is immediately following the direct physical damage experienced by the insured business. Immediately following the direct physical damage

If an insurer in Texas has received a large number of complaints of unfair claim settlement practices, the Department may subject the insurer to closer supervision. As part of this closer supervision, the Department can request that the insurer submit periodic reports containing claims information for:

The periodic report should contain claims information from the preceding 12 months or from the date of the insurer's last periodic report, whichever is shorter. The preceding 12 months or from the date of the insurer's last periodic report, whichever is shorter

Using the modified comparative negligence standard, a plaintiff in a lawsuit who is 60% at fault for her injuries will receive:

The plaintiff will receive $0. Using the modified comparative negligence standard, if the plaintiff is 50% or more at fault for the injury or damage sustained, damages will not be awarded. No award

Jim Johnson has an automobile policy with a combined single limit of $50,000. He is involved in an accident where he is at-fault and incurs the following expenses: $30,000 bodily injury judgment; $30,000 property damage judgment; $5,000 damage to traffic light; $6,000 attorney's fees for his defense; $300 in premiums for appeal bond; and $75 in bail bond premiums for related traffic violations. What is the maximum amount his insurance company will pay?

The policy cannot pay more than its limit of liability. Under supplementary payments in the policy, the policy will pay the defense costs plus the cost of the premiums on appeal bonds and bail bonds. $56,375

Joe makes a small down payment on a sports car and finances the remainder of the cost of the car with Benevolent Bank, Inc. He also purchases a standard Personal Automobile policy through Binders Keepers Insurance Company to cover the car. Joe makes one car payment before he is caught with $200,000 of drugs in the car on his way to deliver it to addicts for money. Joe is arrested and the car is permanently confiscated by the authorities. How will coverage apply in this situation?

The policy will cover the damage to the body of the automobile on behalf of Benevolent Bank, Inc. because they are a "loss payee". As a "loss payee" they hold the majority interest in the vehicle and the policy does not exclude losses OF A LOSS PAYEE, due to the destruction or confiscation by government or civil authorities. Depending on the criminal laws of the state, the authorities may give the automobile to the loss payee and the policy would pay for an damage that may have resulted from the confiscation. The policy will cover the damage to the body of the automobile on behalf of Benevolent Bank, Inc

The hull coverage in an aircraft policy does not cover which of the following?

The policy does not cover transporting equipment like a trailer. The hull value includes instruments, radios, autopilots, wings, engines, and other equipment attached to or carried on the plane as described in the policy. Transporting devices

Joan is covered for $10,000 under a personal articles floater for her jewelry. She acquires another piece of jewelry valued at $2,500. Under the automatic coverage provision for newly acquired property within the policy, how much coverage would apply to the newly acquired jewelry for 30 days?

The policy provides for 25% of the limit of insurance to apply to newly acquired jewelry of the same class for a period of 30 days. $2,500

Which of the following is the policy territory as described in the standard Personal Automobile policy?

The policy territory for the standard Personal Automobile policies includes the United States, its territories and possessions, Puerto Rico and Canada. Covered automobiles are also insured while being transported between territorial ports. The United States, its territories and possessions, Puerto Rico and Canada

Barry's insured watercraft is disabled while on the lake one Sunday afternoon. His motor completely stopped and will not start again. Barry calls George, a mechanic who rides out to the section of the lake where Barry and his boat are stranded. George brings a new starter for the engine and spends the next hour replacing it. When George is finished installing the new starter, the engine still sputters and will not start. Barry then calls a towing service to tow the boat back to the dock and into storage where George can take a closer look. Barry's Watercraft policy has a $250 deductible. The cost of the starter was $80 and the towing bill was $100. How much will Barry's standard Watercraft policy pay under the "Towing and Assistance Expense" coverage, assuming this is the only occurrence Barry has claimed during the current policy period?

The policy will pay $180 under the "Towing and Assistance Expense" coverage because the deductible does not apply to the coverage and pays up to $500. $180 because the deductible does not apply to the coverage

The insured has suffered roof damage as a result of a tornado. He makes temporary repairs until permanent repairs can be made. He spends $1,500 for this work. How much, if any amount, will the DP-2 Dwelling policy pay on the repairs?

The policy will pay all of the costs due to the "reasonable repairs" clause in the policy. This pays for the cost to make reasonable repairs in order to protect the property from further loss. $1,500

Roxanne has her home covered under a DP-2 policy. She regularly works on her laptop computer at the bar in her kitchen. One day she decided to go out for lunch, leaving her laptop plugged in and turned on. While she was out, the electrical cord attached to her laptop began to short out and create sparks. One of the sparks fell on a dish towel Roxanne had left on the bar and it caught fire. This led to a larger fire that caused extensive damage to Roxanne's kitchen. The damage caused to the kitchen came to $15,000. The laptop was destroyed and it's ACV was $1,800. The policy did not have a deductible form attached. How much will be paid on this claim?

The policy will pay for the damage to the kitchen caused by the fire, but it excludes coverage for the laptop computer under the "Artificially Generated Electrical Current" peril. $15,000

What is covered by a SP-23 protection and indemnity policy?

The protection and indemnity coverage applies to all of the responses. All of the responses are correct.

The purpose of the Expediting Expenses coverage of a standard Equipment Breakdown policy is:

The purpose is to pay those expenses necessary to have repairs to the damaged equipment performed as quickly as possible to get the insured back in business. To pay for the extra expense of having repairs of equipment performed faster to get the insured back in business quickly..

What is the main purpose of government regulation of the insurance industry?

The purpose of government regulation of the insurance industry is to protect insurance consumers. To protect the insurance consuming public

The insured is a CPA and has the accounting tax records of several clients on the premises. If the records were suddenly destroyed by fire, what inland marine form would cover the cost to reproduce them?

The purpose of the valuable papers and records form is to pay for the cost of reproducing destroyed valuable papers and records. Valuable papers and records

Underinsured motorist coverage provides first-party protection to an insured after an accident in which of the following situations?

The purpose of underinsured motorist coverage is to provide protection for the insured when the "at-fault" driver has insurance, but it is insufficient to cover the injuries to the insured. In this case, the insured may collect the "excess" from their own insurer. The other driver has insufficient liability limits and is "at-fault"

Underinsured motorist coverage provides first-party protection to an insured after an accident in which of the following situations?

The purpose of underinsured motorist coverage is to provide protection for the insured when the "at-fault" driver has insurance, but it is insufficient to cover the injuries to the insured. In this case, the insured may collect the "excess" from their own insurer. The other driver has insufficient liability limits and is "at-fault".

An insured has an auto accident and sustains bodily injury worth $50,000. The responsible party carries auto liability limits of 15/30/15 which provides $15,000 for bodily injury for any one person per occurrence. The insured carries Underinsured Motorist limits providing $100,000 bodily injury for any one person per occurrence. Therefore, the responsible party's policy will pay its limit of $15,000 and the insured's Underinsured Motorist policy will pay:

The responsible party's policy will pay its limit of $15,000 and the insured's Underinsured Motorist policy will pay the difference in the amount of $35,000. $35,000

The ___ clause covers collision damage to another vessel.

The running-down clause covers collision damage to another vessel. It does not cover docks or injury to passengers. Running-Down

Which of the following would be covered by Section I of the Businessowners policy?

The seizure of the insured's building by the civil authorities in order to stop the spread of fire..

The standardized Homeowners forms provide coverage for Vandalism & Malicious Mischief only if the structure has not been vacant for:

The standardized Homeowners forms provide V&MM coverage only if the structure has not been vacant for 60 or more consecutive days. Many states amend this provision statutorily, however, you need to know that in the standardized forms, the vacancy limit is 60 days. 60 or more consecutive days when the loss occurs.

The limit of liability for the additional coverage under the standardized Homeowners forms for "Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money" is:

The standardized Homeowners policies provide $500 of additional coverage for "credit card, electronic fund transfer card or access device, forgery and counterfeit money". Some states' statutory forms may increase this coverage, but you are required to know the limits of coverage for both standardized and statutory forms for your state licensing exam. $500

One of the Unfair Claim Settlement Practices is "failing to affirm or deny coverage of claims within a reasonable time after having completed its investigation related to such claim or claims". How is the length of time that is considered "reasonable" decided?

The state legislatures set the reasonable time period by statute that becomes a part of the insurance code of the state The state legislatures set the reasonable time period by statute..

Which of the following statements BEST DESCRIBES the main difference between a Commercial Umbrella policy and an Excess Liability policy?

The statement that best describes the main difference between a Commercial Umbrella policy and an Excess Liability policy is: "Both Excess Lines policies and Commercial Umbrella policies increase the limits of the underlying policy but the Commercial Umbrella policy can also broaden and extend the coverages." Both Excess Lines policies and Commercial Umbrella policies increase the limits of the underlying policy but the Commercial Umbrella policy can also broaden and extend the coverages

Which of the following statements regarding the supplementary payments of Section II of the standard Businessowners policy is NOT correct?

The supplementary payments of Section II of the Businessowners policy actually DO cover expenses that the insurance company incurs. Therefore, the statement: "Supplementary payments do not cover expenses that the insurance company incurs." is NOT correct Supplementary payments do not cover expenses that the insurance company incurs

Which of the following statements regarding the supplementary payments of Section II of the standard Businessowners policy is NOT correct?

The supplementary payments of Section II of the Businessowners policy actually DO cover expenses that the insurance company incurs. Therefore, the statement: "Supplementary payments do not cover expenses that the insurance company incurs." is NOT correct. Supplementary payments do not cover expenses that the insurance company incurs..

If a bond is called upon for payment, which party pays out the face amount of the bond?

The surety (the insurer) pays out the face amount of the bond to the obligee in the event that the bond is called. In that event, the surety will have "right of recourse" against its own principal. Surety

Who is the principal in a bid bond?

The surety is bonding the contractor who is the principal. The Contractor

The Texas Workers Compensation code defines "health care" as including all of the following, EXCEPT:

The term "health care" as defined by the Texas Workers' Compensation code does not include vocational rehabilitation. The term does encompass the other three answer choices.

All of the following are excluded under the 1943 Standard Fire policy, EXCEPT:

The theft of property after it had been removed from the insured premises to protect it from further loss WOULD be covered. The other losses listed as answer choices would be excluded by the policy. The theft of property after it had been removed from the insured premises to protect it from further loss.

Torts that can be covered by insurance policies include all of the following, EXCEPT:

The torts addressed by insurance policies can be classified as intentional and unintentional torts, and liability without fault (strict liability). Intentional torts purposely committed to cause harm to another

An insured is covered under a CGL policy with a "per occurrence" limit of $4 million and an aggregate limit of $8 million. The insured also has a Commercial Umbrella policy with a $5 million aggregate limit and a $100,000 SIR. Two covered claims are submitted, one for $4 million and one for $5 million. What amount is the retained limit that will trigger the Umbrella policy to pay on the claim?

The total claim is for $9, but the CGL policy's aggregate limit is $8, so this is the "retained limit" of the CGL policy that will trigger the Umbrella policy. $8 million

The Section I Additional Coverage of the standard Businessowners policy provides coverage for "Debris Removal". Which of the following statements best describes the limit for this coverage?

The total limit may be up to 25% of the policy limit for the loss payable with the deductible included, plus up to an additional $25,000 if the policy limits are exhausted..

Imogene has purchased a personal auto policy including Parts A through D. She is driving to work one day and rolls through a stop sign, crashing into the car that had the right-of-way in an intersection. Imogene submits a claim for the accident. Which of the following would NOT be included in her claims payment?

The transmission problem Imogene was having prior to the accident would not be covered as it did not occur as a result of the accident. If Imogene was covered under a mechanical breakdown policy, the transmission would most likely be covered under that policy. The transmission problem Imogene was having prior to the accident.

The verdict in a personal injury liability suit was higher than the insured's underlying liability policy's limit of insurance. In this situation

The umbrella insurer has the option to appeal even though the underlying insurer and the insured chooses not to appeal. The insurance company providing the insured's umbrella liability policy can appeal the case at its own expense even if the insured and the company providing the underlying policy do not appeal.

The "coverage territory" of umbrella liability policies is usually:

The umbrella policy expands the coverage territory of the underlying coverages. The coverage is on a "worldwide" basis. Anywhere in the world

An insured purchases a $1 million umbrella policy with a $1,000 self-insured retention (SIR) and agrees to maintain the following underlying limits: auto liability - $100/300/50 and personal liability limits of $300,000. The insured is involved in an at-fault auto accident and the claimant is awarded $200,000 for his bodily injuries. What will the umbrella pay if the insured only carries $50/100/50 auto limits?

The umbrella policy still pays but the insured would have to pay the difference. $100,000

Under an aircraft policy what is NOT a covered territory usually covered (unless endorsed) while the aircraft is in flight?

The usual territorial limits include the United States, Canada and Mexico. Many times, coverage in Mexico is limited to within 100 miles of the United States border. In Florida, it is not uncommon to have the Bahamian Islands included by amendment. Costa Rica

Melinda's insurance policy is cancelled because she has not paid the premium. In this scenario, which of the elements of a valid contract is missing?

The valuable consideration, in this case the premium, is missing in this scenario.

A 36-foot ocean sailing vessel with auxiliary power would best be covered under which of the following types of policies?

The watercraft is being used for ocean travel, therefore a Yacht policy would provide the best coverage. A Yacht policy.

The wording of the Standard Fire policy is so vague that many insurers have to rely on __________ to take a position on the acceptance or denial of a claim.

The wording is so vague that many insurers must rely on case law to determine where to accept or deny a claim under the Standard Fire policy. Case law

All of the following are "open-peril" exclusions of the HO-3 and HO-5 form, EXCEPT:

Theft is included under the open perils of Coverage A & B included on both the HO-3 and HO-5 forms. The other three answer choices are excluded by the open peril forms. Theft.

An insured is covered under a standard Businessowners Policy for replacement cost coverage and has sustained a fire loss to his building. Due to changes in the building codes in his town, it's going to cost $20,000 extra just to comply with the new building codes and make the repairs. How much, if any, will the BOP pay for these extra costs?

There is a limited amount of $10,000 for the "Increased Cost of Construction" in order to comply with newer ordinances or laws. However, this coverage applies only to buildings insured on a replacement cost basis. Further, the $10,000 coverage cannot be used to pay any costs after a loss for an ordinance or law, that the insured was required to comply with before the loss, but failed do so. It is important to note that the ordinance or law exclusion is still in place, preventing the insured from assuming that the entire policy limit is available to pay these costs to bring the building up to code after a claim. The policy will then provide "Increased Cost of Construction" coverage through an "additional coverage", but these costs are limited to $10,000. $10,000

An insured has taken an inventory of his merchandise and discovers a substantial shortage of valuable stock. He submits a claim to his insurance carrier that provides his coverage under a Businessowners Policy. What coverage is provided by the BOP for the missing inventory?

There is no coverage for missing property when there is no physical evidence to show the cause of loss. The only proof of loss is an inventory calculation and that is not enough evidence for coverage to apply under the BOP. No coverage would apply

What is the limit for the "Business Income" additional coverage under a standard Businessowners policy?

There is no specific amount listed in the policy as the business income limit of liability. Coverage applies for the actual loss sustained for up to 12 months, even if the policy was set to expire in the meantime. Actual loss sustained for up to 12 months

In a liability policy, the limits of coverage can be expressed as all of the following, EXCEPT:

There is no such limit a restricted limit. Liability limits can be expressed as a split limit for bodily injury and property damage, or a single limit for both bodily injury and property damage per occurrence. The policy may also contain an aggregate limit which is the most the policy will pay for all claims (bodily injury and property damage) submitted for the entire policy period. Restricted

All of the following describe one of the four elements of a negligent act, EXCEPT:

There would be nothing negligent about the defendant and claimant entering into a legal contract.

The law recognizes two types of waivers. They are:

They are express and implied. An express waiver occurs when the insurer or its representative knowingly gives up a known right under the insurance contract. Perhaps the right to request an appraisal of the damaged property is an example. By comparison, an implied waiver may be the result from some act of neglect on the part of the adjuster. Express/implied.

Under a Businessowners policy, the "Hired and Nonowned Auto Liability" endorsement would cover:

This endorsement is used with the BOP when the insured does not carry coverage for liability under a Commercial Auto policy. Vehicles borrowed by the insured..

Which of the following statement is true of the jewelers block coverage form?

This form is used for retail jewelers or the jewelry of department and discount stores. The commercial property forms as well as the BOP contain a theft limitation for jewelry and therefore create the need for the jewelers block policy. Coverage may be written for the stock for retail jewelers or the jewelry stock of department and discount stores

Ellen's automobile is stolen. The theft is properly reported to the police and the insurance company. She rents a car for two months. Which of the following would apply for the rental car?

This is an "other than collision" loss (comprehensive). The coverage applies after a 48-hour waiting period and pays $20 per day up to a total of $600 for transportation expenses. After a waiting period of 48 hours, her policy will pay $20 per day up to a maximum of $600.

The insured has several business locations and would like to insure both the structures, and the inventory (contents). His agent advises him to complete a statement of values form and issues a policy with one limit to cover all locations. This is an example of:

This is an example of "blanket" coverage where all locations are covered under one limit.

Which of the following terms would describe a situation where a building is not a total loss, but the cost to repair the building is greater than the value of the building?

This is an example of a constructive total loss. The loss is too great to rebuild the structure. A constructive total loss

The auto liability limits $100/300/50 are an example of:

This is an example of a split limit. Separate limits apply to bodily injury per person, bodily injury per accident, and property damage per accident. Split limits

An "uninsured motor vehicle" under a personal auto policy does not include:

This is one of the exceptions of eligibility for coverage. The personal auto form states that an "uninsured motor vehicle" does not include any vehicle or equipment while located for use as a residence or premises. An abandoned car used as a residence.

The amount it would cost to repair or replace property minus depreciation, is the definition of:

This is the definition of actual cash value (ACV) - the cost new at the time of the loss, less depreciation equals actual cash value. Actual cash value

Bill may be negligent if he:

This is the most widely accepted definition of negligence. Often times, it is a jury that determines if the acts committed by the defendant were negligent. Fails to do what a reasonably prudent person would do in the same circumstance

An insured has fabricated a claim that would appear to be legitimate. What kind of hazard would this act represent?

This is the type of hazard that exposes the morals of the individual because of the fraudulent act. Moral hazard

Under the standardized Homeowners forms, how much "additional coverage" is provided under Section II - Liability for loss of earnings by the insured to assist the insurer in the investigation or defense of a claim?

This limit is $250 per day to appear at hearings or trials to assist the insurer in the defense of the insured. This is the amount under the ISO standardized form. $250 per day.

In insurance terms, the phrase "severability of insurance" means:

This means that the insurance applies separately to each insured. However, if more than one insured is involved in the same loss the limits are not increased. The insurance applies separately to each insured

The special cause of loss form of a Commercial Property policy imposes a limitation on the amount of coverage for the theft of jewelry of:

This special limit for the theft of jewelry under the Commercial Property special cause of loss form is $2,500. $2,500

For restaurants to be eligible for coverage by the standard BOP policy, they cannot exceed _______ in total floor area.

To be eligible for coverage under a standard BOP policy, restaurants cannot exceed 7,500 square feet in total floor area. 7,500 square feet

To be eligible for a standardized Watercraft policy, the insured watercraft must be used on inland or coastal waters within:

To be eligible for coverage under the standardized ISO Watercraft policy, the watercraft must be used on inland or coastal waters that are within 12 miles of the shore or in the Great Lakes, but only when within the United States and its territories, Puerto Rico, or Canada. 12 miles of the shore or in the Great Lakes, but only when within the United States and its territories, Puerto Rico, or Canada. .

Calculate the Supplemental Income Benefit (SIBs) for Sandra, an injured worker in Texas. Sandra has been given an IR of 20% and has been actively seeking a new job. She has not accepted a lump-sum payment for her injuries and she has returned to work in a modified position. Sandra's AWW before her injury was $522.00. Her weekly wages after the injury in her modified position are $242.00.

To calculate SIBs, take 80% of the injured workers average weekly wage before the injury, and subtract the weekly wages the injured worker made after the work-related injury. Then, 80% of that number is the amount of the Supplemental Income Benefits. $140.48

Miguel was injured at work in Texas and has worked for his employer for more than 13 weeks. Which of the following would be Miguel's average weekly wage given the following information regarding Miguel's wages over the 13 consecutive weeks immediately preceding the date of Miguel's injury. Weeks 1 - 4: $842 per week Weeks 5 - 8: $794 per week Weeks 9 - 11: $827 per week Weeks 12 - 13: $862 per week

To calculate the wages we would first multiply $842 by the first four weeks, which is $3,368. Then, multiply $794 by four weeks to arrive at: $3,176. We multiply $827 by 3 weeks and that answer is: $2,481. Lastly, we multiply $862 by 2 weeks and we get: $1,724. Then, we add all four of these numbers together to arrive at: $10,749 and divide this number by 13 weeks to get an average weekly wage of: $826.85 $826.85

Billy has his commercial interests covered with a Commercial Package policy. He would like to modify one of his coverage parts. This change will be made by:

To make a change to one of the coverages in a Commercial Package policy, a single endorsement would be added to that coverage part. An interline endorsement is used to make changes to two or more of the coverage parts. Changes would not be made to any coverage part by altering the declarations or conditions section of the policy. Adding an endorsement to the coverage part he would like to change

Jerry's car is involved in an accident that has left him without a vehicle to drive. How much, if any, can he collect for his transportation expenses under Part D of his policy?

Transportation expenses are an additional coverage if the insured has purchased collision and/or other than collision coverage. $20 per day up to $600 is available. Coverage begins 48 hours after a theft loss and 24 hours for any other covered loss. $20 per day after a 24 hour waiting period

All Texas adjusters are required to complete 24 hours of continuing education each reporting period. How many of those hours must cover the subject of "ethics"?

Two hours of the 24 hours of continuing education that adjusters must complete in Texas must cover the topic of ethics. 2 hours

An insured has purchased Coverage A and Coverage B of a standard Businessowners policy and the limit of insurance shown in the Declarations is 80% of the replacement cost value, how will losses be settled?

Unless the insured chooses to endorse the BOP to settle on an ACV basis, all Section I losses will be settled on a replacement cost basis. Both Coverage A and Coverage B will be settled on a replacement cost basis

The "Alterations & New Buildings" coverage of the Business Income form pays for losses to new buildings and their additions being constructed for business operations. Which of the following best describes the "period of restoration" when a loss occurs under this additional coverage?

Under the "Alterations & New Buildings" additional coverage of the Business Income form, the period of restoration only applies under this coverage if the loss delays the start of business operations in the new location. In this case, the period of restoration begins on the date business operations would have begun had the loss not occurred. The period of restoration only applies under this additional coverage if the loss delays the start of business operations in the new location and begins on the date business operations would have begun had the loss not occurred.

A business covered by a standard Businessowners policy is shut down due to the acts of a civil authority. Which of the following additional coverages would NOT be subject to a waiting period before coverage would apply?

Under the BOP forms, if the actions of a civil authority render a business inaccessible due to loss of property at "other than" the insured location, any extra expenses incurred are not subject to the normal 72-hour waiting period for business income. Coverage is available for up to 4 weeks, or when the civil authority business income coverage ends, whichever is later. Extra Expense

On the basic dwelling policy all of the following perils are excluded, EXCEPT:

Under the DP-1 basic form, war, earthquake and landslide are not named perils and are, therefore, excluded. Volcanic eruption

Under the provisions of the 1943 New York Standard Fire Policy, an insured may file a suit to recover for a loss, only if all of the required duties have been met and the period of limitation tolled is ________ from the date of the loss.

Under the SFP a lawsuit must be brought within one year of the loss. One year

Payment for a covered loss under the Standard Fire policy must be made within ____ days after a satisfactory proof of loss has been received by the insurer.

Under the Standard Fire policy a claim must be paid within 60 days after a satisfactory proof of loss has been received by the insurance company. 60

Loss settlement for personal property that is covered under Coverage C of a standard unendorsed ISO Homeowners policy is on a(n):

Unless endorsed, Coverage C - Personal Property of the standard Homeowners policies settles losses on an actual cash value basis, but no more than the cost to repair or replace the property. Actual cash value basis

The Declarations section of an insurance policy contains:

Usually the first page of an insurance policy, the Declarations section, also includes other important information including the name of insurer, limits of liability, the policy period, a list of endorsements that have been attached to the policy, deductibles, etc. The name and address of the insured and the duration of the policy.

According to the nationwide marine definition as adopted in this state, which of the following structures may be written under an inland marine insurance form?

Usually we think of inland marine as applying to non-stationary items. Bridges and piers and several others are exceptions to the rule.

Virtually all inland marine named perils forms include coverage for:

Virtually all of the named peril forms provide the perils of fire and lightning. Fire and lightening

Which of the following is a covered basic form peril of the Homeowners policies?

Volcanic eruption is a covered basic form peril of Homeowners policies. Earthquake, subsidence, and land shock waves are not covered.

Most inland marine "all risk" forms exclude loss or damage caused by:

War is a standard exclusion under all of the inland marine forms.

All of the following would be excluded by the basic cause of loss form under a Commercial Property policy, EXCEPT:

Water leaking from an automatic sprinkler system IS COVERED by the basic cause of loss form attached to a Commercial Property policy Water leaks from the sprinkler system in the building, causing wall and floor damage

Which of the following is an example of the "assumption of risk" defense against negligence?

When Fred took the shortcut across a condemned bridge, he assumed the risk. Fred, in a hurry to get to work, takes a shortcut over a bridge marked "condemned," that subsequently collapses under the weight of his car.

Jamie has submitted a claim against Ron's insurance policy for a loss he has legitimately suffered. This claim is a:

When a "claimant" submits a claim against an "insureds" policy, the claim is a third-party liability claim (even if the claimant suffered a "property damage loss"). Third-party liability claim

The property insurance term "improvements and betterment" applies to:

When a tenant occupies a non-owned structure they may make "improvements and betterments" to the real property. While they are occupying the building they have an insurable interest in these items. When they move the improvements and betterments must must remain with the dwelling/building. The monies spent on improvements and betterments can be covered in property insurance. Real property

When someone dies without a will they are said to have died:

When an individual dies intestate, he or she left no will. Intestate.

Which of the following is true regarding admitted aircraft liability?

When an insured has purchased admitted liability for aircraft, negligence does not have to be proved when injuries or death occurs to passengers. The policy merely pays the claim, subject to the limits, without litigation. Negligence is not a factor

An insured has her property covered under an "open peril" cause of loss form. She experiences a loss. The burden of proof that the peril that was the actual cause of loss in the claim, lies with:

When coverage is provided under an open peril (all-risk) form, the burden of proof lies with the insurance company to prove that the cause of loss is excluded. The insurance company

At which step in the adjusting process does the adjuster determine "who" or "what" is insured by the policy under which the claim was submitted?

When the adjuster is verifying the coverage, "who" or "what" is insured by the policy is determined. Verification of coverage

Steve and his insurance company are embroiled in a dispute regarding the amount of the property loss that Steve has incurred. Both Steve and his insurance company have selected an appraiser, but they cannot agree on the amount. The appraisers attempt to select an umpire, but cannot agree on one. What is the next course of action that must be taken?

When the appraisers cannot agree on an umpire, the insured or the insurer can request that the umpire be selected by a court of law. Steve and/or his insurance company can request that the umpire be selected by a court of law..

Under which circumstances would it be legal for an insurer to charge one insured more than another insured for the same coverage?

When the insured is statistically more likely to experience a loss. For example, if an Adeline owns a home that is constructed with more flammable materials than Joe, Adeline would be charged more for the same Homeowners policy than Joe because Adeline is statistically more likely to experience a loss by fire. When the insured is statistically more likely to experience a loss. .

A commercial inland marine condition defining the insurer's subrogation rights:

When the insurer pays a covered claim caused by a third party, the insurer can seek reimbursement for the loss if they can prove negligence or responsibility on the part of the third party. Guarantees the insurer's ability to recover from a third party who is responsible for a covered loss

Charles' wife Mary has a company car furnished to her through her job. One day, Charles runs out of the wax he is using to polish his boat and he decides to go out to the store and get more. Mary's company car is parked behind Charles' car in the driveway, so he grabs Mary's keys and drives her car to the store. On the way back home, Charles has an accident in which he is at fault, and bodily injury and property damage are the result. Which of the following statements is TRUE regarding how this claim will be settled?

When the named insured uses a vehicle that is regularly furnished to a family member, coverage is provided (it is not excluded). However, when the insured is using a non-owned vehicle, the insured's policy will be considered "excess" over the other insurance covering the vehicle. Mary's company policy will pay first, and Charles' policy will also pay, but on an excess basis

When the property covered under an insurance policy is destroyed beyond repair and nothing of value remains, this is known as:

When the property covered under an insurance policy is destroyed beyond repair and nothing of value remains, it is known as an "actual total loss". Actual total loss

In which of the following situations should an adjuster consider obtaining a non-waiver agreement?

When there is a question of coverage that may be disputed, an adjuster would use a non-waiver agreement that is signed by the adjuster and the insured to make clear that a known right is NOT being waived by any party while the claim investigation is performed or before the dispute is litigated. In dealing with a potential coverage dispute

Which of the following types of insurance companies is known as a "nonparticipating company" because they do not pay their policyholders a dividend?

With a stock company, the policyholders do not participate in company profits, therefore they are known as "nonparticipating companies". Topic covered in "Insurance Companies" -- Module A of the Virtual Classroom. A stock insurance company

Replacement cost coverage is best defined as:

With replacement cost coverage, the insured is permitted to replace old with new at today's cost without a deduction for depreciation. Replacement cost without deduction for depreciation.

Which of the following statements is NOT TRUE regarding the "Extended Period of Indemnity" option of the Business Income form?

With the "Extended Period of Indemnity" option, the coverage applies to the entire period it takes to resume operations, it is NOT limited to 120 days. The coverage applies for 120 days following the period of restoration..

Part F of the standard Personal Automobile policy states that the policy can be terminated within the first 60 days for any reason other than non-payment of premium if:

Within the first 60-days, a Personal Automobile policy can be cancelled for any reason other than non-payment of premium if a 20-day notice is provided to the insured. At least 20-days' notice is provided to the insured

Which of the following circumstances would NOT be an injury considered to "arise out of and in the course of" the employment?

Workers Compensation laws are designed to cover employees regardless of the hazards of the occupation, the training provided (or not), or who is at fault. However, an injury must arise "out of and in the course of" employment in order to fall within the scope of these laws. An employee was injured during a lunch break in the factory parking lot..

All of the following statements are TRUE about Workers Compensation benefits, EXCEPT:

Workers Compensation laws in most states have waiting periods before disability income benefits are paid. Waiting periods do not apply to medical benefits. Waiting periods apply to medical and disability benefits

All of the following are types of rehabilitative services provided under a workers' compensation policy, EXCEPT:

Workers' compensation covers physical, mental, and vocational rehabilitation. Substance abuse is not covered. Substance abuse.

When determining if an injury or illness is compensable under a workers' compensation policy, which of the following is the criteria used?

Workers' compensation is no-fault coverage, so the only criteria we want to find when determining if an injury or illness is compensable is that it arose out of and in the course of the employment. And both of those criteria must be present for the injury or illness to be compensable. That the injury or illness arose out of and in the course of the employment..

An employer's workers' compensation policy will pay the medical expenses of injured workers:

Workers' compensation policies pay the medical expenses of injured workers until maximum medical recovery (as defined by state law) has been reached. Until maximum medical recovery is reached

All of the following statements are TRUE regarding Part D - Other Than Collision coverage, EXCEPT:

You are looking for the statement that is NOT TRUE, which is: "It covers property damage the insured causes to others". This is not a true statement because property damage to others is a "liability" coverage under an auto policy, not a "comprehensive" coverage. The three other answer choices are true. Remember that "comprehensive" coverage is a "property" coverage, not a "liability" coverage. It covers property damage the insured causes to others

A fur coat that is insured by a Personal Articles Floater is damaged by a pet. Coverage for the coat would be provided because the policy is written on:

open perils

An insurance binder is best described as:

temporary short-term evidence of coverage

An adjuster license in Texas renews:

Adjuster licenses in Texas renew on the licensee's birthday, every two years. On the licensee's birthday, every two years

All license application and state licensing exam fees in Texas are deposited:

All license application and state licensing exam fees in Texas are deposited into the Texas Department of Insurance operating account Into the Texas Department of Insurance operating account

Under an ocean marine policy, damage to the ship would be covered under what marine coverage?

Damage to the ship is covered under hull insurance with the "running down" clause Hull Insurance

Adjusters in Texas are required to keep records of the continuing education courses they have taken to meet the license renewal requirement. How long are licensees required to keep these records?

Each licensee must maintain evidence of each course completed for a period of four years from the date of completion of the course for the purpose of investigation or audit. 4 years.

In order for a contract to be binding in a court of law, it must be designed for:

In order to be binding, contracts must be for a legal purpose. Legal purposes

Which of the following policies would be used to cover imports and exports?

Ocean marine pertains to import and export risk, including the cargo being shipped as well as the vessel transporting goods or people.

The broad evidence rule is used when:

The broad evidence rule is used when determining the ACV of property. The actual cash value of property is being determined..

The insured is covered under a standard Businessowners policy. She has several computers used in the business and the electronic data stored on them becomes corrupted as a result of lightning. The cost to research and restore this data is $20,000. How much will the policy pay for the electronic data?

The coverage provides up to an annual aggregate of $10,000. The cost to replace or restore electronic data is covered if the data is corrupted or destroyed by a covered cause of loss. $10,000

Under "pollution cleanup and removal" coverage under the standard ISO BOP form, when must a loss be reported?

The expenses will be paid only if they are reported to the insurer within 180 days of the date of the direct loss or by the end of the policy period, whichever is earlier. Within 180 days

Katherine lives in Texas. A third-party claim has been filed against her insurance policy by Joe, for an accident in which Katherine was liable. Joe's attorney contacts Katherine's insurance company and makes an initial offer to settle the claim. The insurance company must notify Katherine of the offer, in writing:

The insurance company must notify Katherine of the initial offer to settle a third-party claim not later than the 10th day after the date the initial offer was made. The notification must be in writing. Not later than the 10th day after the date the initial offer was made

Since the parties to an insurance policy rely on the honesty of the other, an insurance contract is considered to be based on:

Both parties must deal in good faith and rely on the honesty of each other.

Which of the following types of carriers must assume the broadest liability under common law?

Common carriers must assume the broadest liability under common law. They are not responsible for acts of God such as floods, hurricanes or for the negligence of the shipper (poor packing). Common carriers

Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following EXCEPT:

Hull coverage is required to cover the damage to the ship. P&I provides legal liability coverage for injuries and certain types of damages. Damage to another ship is not covered under the P&I coverage. Coverage can be provided under the hull coverage form for this coverage to other vessels. This is called the "running down clause".

Which of the following is NOT a claim settlement option in a property loss?

Offering market value only is not a claim settlement option. If the insured carries replacement cost coverage then the adjuster needs to address the payment of the claim accordingly. Pay market value only

Which insuring agreement of the Personal Auto policy would provide coverage for the damage caused to the other driver's car, when the insured was at fault in an accident?

Part A - Liability would provide coverage for the "property damage" caused by the insured. Part A - Liability

Which of the following is true regarding pure and speculative risks?

Remember that pure risk is insurable because there is only the possibility of loss. Speculative risk is not insurable because either profit or loss is possible. With pure risk there is only the possibility of loss

Which of the following losses would be covered by Part D of a standard Personal Auto policy providing both "Other Than Collision" (Comprehensive) and "Collision" coverage?

Road damage to tires is specifically excluded under the PAP, however the claim described in the correct answer involves a collision, therefore the entire claim would be covered minus the deductible. The policy does not cover losses due to freezing or any radar equipment designed to help the drive avoid police. The damage to the bearings is due to wear and tear which is also excluded. A front tire blows out in a high-speed head-on collision, which also causes extensive damage to the vehicle

An additional coverage provided by Part D of the Personal Watercraft policy includes coverage for "salvage liability". This is best described as:

The additional coverage for "salvage liability" refers to a maritime law requiring watercraft owners to recover items that have gone overboard. A maritime law requiring watercraft owners to recover items that have gone overboard.

Which of the following losses may not be determined by an adjuster?

The adjuster usually advises the claimant to rent a vehicle similar to that which is damaged and submit the bills at a later date after the claim has been negotiated. Use of a rental vehicle

Under the discovery clause in a loss sustained bond, which of the following is covered?

The discovery clause in a loss sustained form states that losses that occur during the policy period, but are not discovered for up to one year after the bond has expired, can be covered under the expired bond. The discovery clause in the discovery form provides coverage during the policy period or within 60 days after the bond expires for coverage to apply. A loss discovered up to one year after the policy expired but that occurred during the policy period

The most common method of settling liability insurance claims is through:

The most common method of settling liability insurance claims is through negotiated settlement.

All of the following are exclusions under the Standard Fire policy, EXCEPT:

The only answer choice that is not excluded is: "Fire damage that is the result of a riot". Damages from a riot are not covered, but if a fire is the result of a riot, and that fire causes damage, the fire damage is covered.

An incorporated insurance company with its capital divided into shares and owned by its shareholders is known as:

The shareholders own a stock insurance company. Mutual insurance companies are owned by policyholders. A stock company

All of the following benefits are paid according to a state-mandated schedule of workers compensation benefits, EXCEPT:

There is not a workers' compensation benefit category known as "total partial disability". Total partial disability

If a ship's captain must jettison a disproportionate amount of his policyholder's cargo in order to save the ship, there is a provision in Ocean Marine policies that will spread that lost among all of the insureds involved with the ship. What is this provision called?

A "general average" is a claim that is shared by all the parties involved in the trip because the jettison of the cargo saved the ship from sinking and saved the other cargo. General Average clause

A contractor's bid bond is used:

A bid bond is used as a promise from the surety that if the principal is the low bidder and is awarded the contract for the bid price, the principal will indeed enter into the contract. As a promise from the surety that if the principal is the low bidder and is awarded the contract, the principal will enter into the contract for the bid amount and provide required performance bonds

An aircraft policy is endorsed to cover the "war" risk exposures. Which of the following is also included within this coverage?

All of the responses are correct. Without this endorsement these exposures would not be covered.

Collin suffered a work-related injury on the morning of February 5th and was off work completely until he returned to work on full duty on February 19th. Collin had worked for his employer for four years and was paid $42,125 per year. Collin's state sets the TTD rate at 66 2/3rd percent of the average weekly wage. The state sets the maximum compensation rate at $420 per week and the waiting period at 3 days retroactive after 10 days. Collin was not paid for working on February 5th. Collin's average weekly wage is approximately:

Collins average weekly wage is approximately $810. We arrive at this number by dividing Collin's annual salary of $42,125 by 52 weeks. Question 89 of 100

Which of the following businesses is NOT eligible to be covered by a Businessowners policy?

Credit unions, banks and savings and loan companies are not eligible for the BOP because the crime exposure would be too large for the Businessowners policy to cover. The office building, small gift shop, and apartment building are all acceptable risks for a BOP policy. A credit union

Camilla had an at-fault accident in her car and was sued for damages. Camilla is an executive with a major corporation and earns $2,500 per 5-day work week. Her insurance company has requested her appearance in court to defend herself against some of the damages claimed. She missed 2 days of work and will not be paid for that time. How much will Camilla's personal automobile policy pay her in total for the lost earnings?

Even though Camilla makes $500 a day in earnings, the personal auto supplementary payments will only pay up to $200 per day in lost earnings for attending court. Therefore, Camilla would be paid $200 a day, or $400 total. $400

Tara's hair salon was already having a bad year when a client slipped and broke her arm on a worn out piece of flooring, and sued the salon for $500,000. Tara had recently purchased an Excess Liability policy and she was hoping that she could cover the claim with the new "excess" policy, leaving her CGL policy untouched. This is not possible because:

Excess liability policies are purchased to add coverage to existing liability policies, but those policies are not triggered until the underlying policies have exhausted the benefits payable. The coverage under an Excess Liability policy are only triggered when the underlying policy's limits have been exhausted

Generally, losses that are covered under the "collision" coverage of a Personal Automobile policy are NOT covered under the "other than collision" coverage. Which of the following would be an exception to this general rule, allowing a claim to be paid under EITHER coverage?

Glass breakage is typically covered under the OTC coverage. However, if there is a glass breakage loss due to a collision, the insured can have this loss covered under the "collision" coverage to avoid paying a deductible under the Collision coverage and paying another deductible under the OTC coverage. Glass breakage that is due to an upset or rollover of a covered auto

An orthotic device is a custom-fitted or custom-fabricated medical device that is applied to a part of the human body to: I. Correct a deformity. II. Improve a bodily function. III. Relieve the symptoms of an injury. IV. To wholly or partially replace an arm or a leg.

I, II and III are all part of the definition of an "orthotic device" according to Texas law. A device that is designed to wholly or partially replace an arm or a leg is known as a "prosthetic device". I, II and III only

Which of the following best describes a licensed insurance professional's "implied authority"?

Implied authority is an element of the law of agency that is not formally expressed or communicated. This allows the licensed insurance professional to perform all the usual tasks required to sell and service the insurance policies. The authority given by a principal to an agent that is not formally expressed or communicated.

In an application for marine insurance, a yacht owner states that the yacht will only be sailed on inland waters. If the insured subsequently sails the yacht on the seas, coverage may be denied because the insured has breached:

In marine insurance, and more often in ocean marine, the statement made by the insured may be a guarantee that all the information is correct. Warranties are much more restrictive than representations. Incidentally, Inchmaree was the name of a ship that suffered an uncovered machinery loss. A warranty

A Homeowners policy is a personal package policy. All of the following are advantages of a personal package policy, EXCEPT:

Insureds select their deductible amounts, package policies do not allow for lower deductibles. All of the other answer choices are advantages to package policies. Package policies allow for lower deductibles

Which of the following people are required to be licensed as an adjuster in Texas?

Justin is the only person listed who must hold a Texas adjuster license because he is the only one who is actually adjusting claims. The other people are furnishing technical assistance to licensed adjusters. Justin, who has been working for 2 years as a claims adjuster for an insurance company

Homeowners policies provide personal liability coverage that follows an insured anywhere in the world under:

Personal liability coverage for the insured under a Homeowners policy is found in Section II - Coverage E of the Homeowners policy. Coverage E

Which type of damages is not intended to indemnify the plaintiff?

Punitive damages are awarded in cases of gross negligence for the purpose of punishing the defendant. Special and general damages are types of compensatory damages, which are intended to indemnify the plaintiff.

Coverage C of the Homeowners forms provide which of the following amounts for business personal property?

The "special limits of liability" under Coverage C of the Homeowners forms provides for $2,500 for losses to business personal property on the premises and $1,500 off the premises.

Willie's Widgets has leased a business location for a term of 10 years. In the seventh year of the lease, the location is destroyed by fire. As luck would have it, Willie had purchased "Leasehold Interest" coverage as part of his Commercial Package policy. All of the following would be covered for Willie, EXCEPT:

The Leasehold Interest coverage form would not cover the damage that Willie caused to the parking lot by bringing large, heavy rigs onto the lot, causing the asphalt to buckle. This type of damage would more likely be covered under the Legal Liability coverage form. The damage that Willie caused to the parking lot by bringing large, heavy rigs onto the lot, causing the asphalt to buckle

Under the Equipment Breakdown Protection form that covers boilers and machinery, what is considered to be one loss event?

The breakdown of one covered piece of equipment that causes other breakdowns of covered equipment will be considered one event. The initial breakdown that causes other breakdowns

An employee who was injured on the job in Texas would be considered "intoxicated" at the time of the injury in all of the following circumstances, EXCEPT:

The injured worker would not be considered "intoxicated" if they were under the influence of a drug that was taken in accordance with a prescription written by a physician.

When the "Extended Period of Indemnity" option is selected by the insured on their Business Income form, the additional coverage "Extended Business Income" is extended from 60 days up to a maximum of _____ days.

The insured can select the number of days in increments up to a maximum of 360 days. 360 days.

When a claims representative is collecting information from a third-party claimant, which of the following is the information that should be obtained first?

The most important information for the claims professional to obtain first when interviewing a third-party claimant is the nature and extent of the injuries or property damage claimed. The nature and extent of the injuries or property damage claimed.

Chad has his commercial building covered by a Commercial Property policy that includes Coverage A of the Building & Personal Property coverage form. He purchases a new building because he has plans to expand his business. Which of the following statements is TRUE regarding coverage for Chad's new building?

The only answer choice that is a TRUE statement is: "Chad's newly acquired building will be covered for 30 days from the date of acquisition for $250,000."

All of the following would be excluded by an unendorsed aircraft policy, EXCEPT:

The policy would cover damage cause by wind. The other items would be excluded unless the policy was endorsed with the war risk coverage endorsement. Air turbulence

Which of the following property insurance cause of loss forms provides coverage for all risks of loss?

The special cause of loss form provides open perils, all risks of loss, coverage. The basic and broad forms are named peril cause of loss forms, and the reporting form is not a cause of loss at all.

All of the following statements are TRUE regarding newly acquired property under a Personal Articles Floater, EXCEPT:

The statement that is NOT TRUE is: "Newly acquired property is not required to be of the same class that is already covered by the policy to be covered." This is because the newly acquired property is REQUIRED to be of the same class (category) as the property that is currently covered by the PAF. Newly acquired property is not required to be of the same class that is already covered by the policy to be covered..

Courtney carries two Dwelling policies with a total limit of $20,000 on her home. One policy is with Company A with a limit of $12,000, and the other policy is with Company B in the amount of $8,000. In case of a $10,000 covered loss, which of the following is true regarding the payment of the claim?

The total amount of coverage is $20,000. Company A has 60% of the coverage and Company B has 40% of the coverage. Company A has 60% of the loss and would pay $6,000. Company B has 40% of the loss so it would pay $4,000. Company A will pay $6,000 and Company B will pay $4,000

Physical damage to a contractor's bulldozer is best covered under which of the following?

This form is specifically designed to cover only the physical damage to contractors equipment. The form covers the property wherever it is being used as long as it is within the covered territory. Liability coverage is not provided. A Commercial Inland Marine Contractors Equipment Floater

The Builders' Risk form covers all of the following, EXCEPT:

Unattached signs

Which of the following types of property would be covered by Coverage B of a standard, unendorsed Businessowners policy?

A copy machine that is leased by the covered business is covered by Section I - Coverage B Business Personal Property. The other answer choices are listed as "property not covered". A copy machine that is leased by the covered business

A warranty in insurance is best described as which of the following?

A warranty is a statement made in an insurance contract by the insured when the validity of the insurance contract depends on the literal truth or statement. The parties to the contract mutually intend that the policy will not be binding unless the statement is true. A guarantee that the statements made by the applicant are completely true and untrue statements can void the coverage.

All of the following are duties that a Texas insurer must perform within 15 days after receipt of the claim, EXCEPT:

All Texas insurers are required to acknowledge receipt of the claim, begin a claims investigation, and request all pertinent claims information from the insured within 15 days of receiving notice of the claim. Schedule a hearing to dispute the claim, if necessary

Which of the following best describes an "insurance producer"?

An insurance producer solicits and negotiates insurance contracts on behalf of an insurer.

Alexander has covered a home he has inherited under a DP-1 form with the EC perils included. The home is situated on property that has been passed down in Alexander's family for generations and there is a fairly large family cemetery on the property. How much coverage would Alexander have under Coverage B of his policy, to cover the grave markers and mausoleums in his family cemetery?

Coverage B of the Dwelling forms excludes grave markers and mausoleums. $0

When an employer self-insures their workers' compensation risks, but would like to purchase insurance to cover claims that may exhaust their self-insured limits, what coverage should be purchased?

Excess coverage should be purchased by a self-insured workers compensation plan to cover claims in excess of the self-insured limits of coverage. Excess coverage

Gino owns a pizza restaurant and has hired drivers to deliver pizzas to customer's homes in their own vehicles. His restaurant carries a standard Businessowners policy and a Commercial Automobile policy. One evening, one of Gino's hired drivers has an accident and injures other people. Those who were injured in the accident sue Gino's Pizza for damages. Which of the following statements best indicates how the claim will be handled?

Gino's Commercial Automobile policy will respond to the claim. The Businessowners policy does not cover automobiles and the Hired and Nonowned Auto Liability Endorsement to the Businessowners policy is not permitted to be purchased if the insured is already covered for liability by a Commercial Automobile policy. The Commercial Automobile policy will respond to the claim

Typically, how are defense costs handled under an aviation policy?

Handled as a supplementary payment.

Which of the following would be considered vacant on an unendorsed Commercial Property policy?

In the Building and Personal Property Coverage form, under Loss Conditions, the Vacancy Clause states that when the policy is issued to the owner or general lessee of a building, such building is vacant unless at least 31% of its total square footage is either (a) rented to and in use by a lessee or sub-lessee, or (b) used by the owner to conduct normal operations. A leased building in which less than 31% of the building is occupied

All of the following would be excluded under Part D of a Personal Auto policy, EXCEPT:

Permanently installed electronic equipment such as sound systems and GPS devices are covered, but no custom equipment is covered in a van unless an endorsement for this coverage is attached to the policy and an additional premium is paid. (Remember, radar detectors are excluded.) Permanently-installed GPS systems.

If Commercial Property coverage is written on the Building and Personal Property coverage form and a loss occurs, the insured must furnish a signed statement of loss within:

The form requires that the insured provide a signed proof of loss within 60 days after the request of the insurer. This is standard in the insurance industry. 60 days after the request of the insurer

Which of the following would be covered under Coverage B of the Business and Personal Property coverage form?

The only answer choice that would be covered under Coverage B of the Business and Personal Property coverage form is: "The stock held for sale by the insured business." The stock held for sale by the insured business

Leland has two insurance policies covering his home. Indemnify Insurance carries a $120,000 limit of liability on the home, while Binders Keepers, Inc. carries a limit of $80,000. A fire breaks out in Leland's kitchen and causes $40,000 in damage. Remember, when there are two or more policies covering the same risk, the "other insurance clause", determines the method used to calculate each company's share of the claim. Leland's policy states that the pro-rata share method will be used. Which of the following is the correct amount that will be paid by Indemnify Insurance?

Using the pro-rata share method, where we divide Indemnify Insurance's share of the loss by the total limit of both policies, multiplied by the loss, leaves Indemnify paying 60% of the loss. 60% of the $40,000 loss, is $24,000. $24,000

Common carriers are responsible for damage to customer goods they transport except for damage resulting from:

Common carriers are exempt from legal liability when the goods belonging to others are destroyed by acts of God. Flood and tornados are examples. They are also exempt from losses as a result of poor packing on the part of the owner of the goods. Acts of God

The Medical Expense coverage for a standard Businessowners policy will pay for all of the following, EXCEPT:

The Medical Expense coverage under a standard Businessowners policy does NOT cover any insured. The insured when injured while working in their business

The Texas Insurance Commissioner has the powers and duties vested in the Department by which of the following? I. The Texas insurance code. II. Any insurance laws passed in Texas that are not part of the insurance code. III. The Texas labor code. IV. The Texas occupations code.

The Texas Commissioner has the powers and duties vested in the Department by the insurance code and other insurance laws of Texas and the Texas labor code. I, II and III only

In a bond that has been in place and renewed for several years with the same carrier, under the "loss sustained under previous insurance condition" which would respond to a claim that was just discovered but which actually happened two years ago?

The answer is the current bond as per the policy conditions section of the bond.

Which of the following best describes a competitive state when it comes to workers' compensation coverage?

In a competitive state, private insurance companies write workers' compensation coverage, but the state also writes coverage that competes with the coverage offered by private carriers. Private insurance companies write workers' compensation coverage, but the state also writes coverage that competes with the coverage offered by private carriers.

Which of the following Commercial Property conditions could be referred to as the "subrogation clause"?

The "Transfer of Rights of Recovery Against Other to Us" condition is the name for the subrogation clause in a Commercial Property policy.

Which of the following is an ideal form of protection for the frequent shipper of goods?

The annual transit policy is written to cover the goods shipped by the insured on a regular basis throughout the year. A trip transit policy is designed to cover only a single shipment of goods. Annual Transit Policy

The chief deputy of the county auditor steals $2.5 million from the county and gambles it away. What bond if any would the county need to have in place in order to try and recoup this loss?

The county as the Obligee, would need to make claim to the surety issuing the Public Official Bond on behalf of the auditor, the principal.

Which of the following would NOT be determined by a court when an insurer has filed a declaratory judgment action?

The court would not determine the type and amount of damages that will be paid to a plaintiff for the claim that is being disputed in a declaratory judgement action. The court WOULD make this type of determination if the claim is disputed and goes to trial for litigation. The type and amount of damages that will be paid to a plaintiff for the claim that is being disputed..

Emily is an adjuster for Indemnify Insurance and she has been assigned to a first-party claim that was submitted by Harvey. Emily has set up several meetings with Harvey to obtain documents and records relevant to the claim investigation but Harvey has not shown up. Emily has also placed many phone calls to Harvey that he has not answered, nor has he returned the calls when Emily has left a message for him to do so. Which of the following statements is TRUE regarding how this claim will be concluded?

The insurance company has legitimate grounds to deny the claim based on Harvey's breach of duty to cooperate in the investigation of the claim. A breach of the insured's duties following a loss can be grounds for an insurance company to deny a claim. The insurance company has legitimate grounds to deny the claim based on Harvey's breach of duty to cooperate in the investigation of the claim

On the way to Europe, heavy seas place a cargo ship in danger of sinking. The crew decides that if they dispose of the heavy equipment they are hauling the ship won't sink. They toss overboard 10 tractors owned by John Deere. The cartons of cotton balls owned by Eli Cotton are safe as is the whipped marshmallow cream being shipped for Kraft Foods. When they get to Europe, Eli and Kraft are asked to share in the loss that John Deere sustained. This is an example of:

This would be an example of the use of the general average clause where everyone shares in the loss to save and preserve the ship and its cargo. General Average Clause

Coverage would be provided for trees, shrubs, or other plants under the additional coverages of the standard Homeowners policies in which of the following situations?

Trees, shrubs and other plants will not be covered when the named insured or a resident of the named insured's household destroys them. The only situation that would be covered is when the neighbor, driving his own vehicle, accidentally runs over the insured's holly tree when he runs off his own driveway and into the insured's yard. A neighbor, driving his own vehicle, accidentally runs over the insured's holly tree when he runs off his own driveway and into the insured's yard

A Personal Umbrella liability policy:

Umbrella liability policies are excess coverage over the primary policy in force. There are some situations where an umbrella may cover a risk that's not covered in an underlying policy. May cover risks that are excluded by the underlying policy..

Marcus has two Commercial Property policies covering his warehouse. Policy A is the primary policy and has a $200,000 limit, and Policy B is an excess policy with a $100,000 limit. After a fire causes $140,000 damage to his warehouse, how will each of Marcus' policies respond (disregarding any deductible)?

The question specifies that Marcus has suffered a PROPERTY loss. "Primary" and "Excess" insurance only comes into play with LIABILITY losses. With PROPERTY losses the OTHER INSURANCE clause is triggered. When there are two or more property policies covering the same risk, each policy pays its share of the loss, equal to its share of the total insurance in force. Policy A has 67% of the insurance in force ($200,000 is 67% of the total insurance in force, which is $300,000) and therefore, it will pay 67% of the $140,000 loss, which equals $93,333 and Policy B will pay the difference. Policy A will pay $93,333 and Policy B will pay $46,667..

A gas line explodes outside of Mindy's Mending Shop, ruining her new landscaping. Which coverage extension of Mindy's Commercial Property policy would cover the cost of replacing the damaged trees and shrubs?

The coverage extension "Outdoor Property" adds coverage for trees and shrubs that were excluded in the "property not covered" section of the policy. "Outdoor Property"

Robert is retired and lives in an older home in Maine. He has an old floor furnace to heat his home that is in need of repair and he forgets to have it checked. In the winter he stays in Florida for a month with his daughter. While Robert is away, the furnace malfunctions, allowing the temperature in the house to drop so low that all his water pipes freeze and burst, causing massive water damage. His house is covered under a Homeowners broad cause of loss form, that includes water damage from a heating or plumbing system. How will the adjuster handle this claim?

In this case, most insurers would pay for all damage except the destroyed furnace. The policy does not pay for the wear and tear of a heating or air conditioning system. Even though the insured was neglectful, the ensuing damage resulting from the frozen pipes would be covered. If the insured had been advised by a contractor that the furnace needed immediate repairs and the insured failed to make them, most adjusters would deny the entire claim. This would then be considered an increased hazard not known to the insurer and intentional neglect on the part of the insured. Pay for all damage except the furnace

Calculate the Supplemental Income Benefit (SIBs) for Sandra, an injured worker in Texas. Sandra has been given an IR of 20% and has been actively seeking a new job. She has not accepted a lump-sum payment for her injuries and she has returned to work in a modified position. Sandra's AWW before her injury was $522.00. Her weekly wages after the injury in her modified position are $214.00.

To calculate SIBs in Texas, take 80% of the injured workers average weekly wage before the injury, and subtract the weekly wages the injured worker made after the work-related injury. Then, 80% of that number is the amount of the Supplemental Income Benefits. $162.88

Which of the following is generally intended to cover property that moves from one location to another?

Floaters refer to a form of inland marine insurance. Some, but not all, are designed to cover the property during the course of transportation. Several cover the property wherever it is located. Floaters

Jess owns a computer repair business that is covered under a Commercial Property policy that includes coverages A, B & C of the Business & Personal Property coverage form. One afternoon a fire broke out in the shop and completely destroyed 5 computers belonging to a client. Which of the following statements best describes how the policy coverage extension for Personal Property of Others will apply to the claim for the loss of the computers.

The coverage extension would pay the owner of the computers directly, up to $2,500.

Which of the following terms is used to describe a contract where the insurance company is the only party to the contract that is legally bound to perform its part of the agreement?

An insurance policy is one-sided or unilateral because only the insurance company is legally bound to perform its part of the agreement. If an insured pays a premium and a loss occurs, the insurer is legally bound to pay for the loss under the terms of the policy. However, insureds are not legally obligated to pay premiums. If an insured stop paying premiums, the insurance company can cancel the contract but it cannot sue the insured for breaking the contract. On the other hand, if an insured fails to comply with conditions and duties specified in the contract, the insurance company may deny an insured's claim. Unilateral.

Alex has his SUV covered under a standard Personal Automobile policy. He has borrowed a trailer from his friend Josh, hitched it to his SUV, and begins moving some boxes from his house to a new house he recently purchased. After he has unloaded the trailer, he is driving back to his house and loses control of his vehicle, wrapping Josh's trailer around a tree. There is no other insurance covering Josh's trailer and Alex's Part D deductible for "Collision" is $250. His deductible for "Other Than Collision" is $300. Before the accident, the ACV of the trailer was $2,000. The cost to repair or replace the trailer with like kind and quality is $1,800. How much coverage would Alex's policy provide?

The policy will pay the LESSER of the ACV or the cost to repair or replace with like kind and quality. This would be $1,800 minus the "Collision" deductible of $250, which leaves us with $1,550. However, the Part D limit of liability specifies that no more than $1,500 will be paid for a non-owned trailer, therefore, the correct answer is $1,500. $1,500