Texas Adjuster Exam 2

The Commercial Building & Personal Property coverage form includes an Additional Coverage for property removed from the premises bc of being endangered by an insured peril. The coverage applies for

30 days after the property is first moved.

A Personal Umbrella policy will cover an insured for an "occurrence" or "offense" that occurs:

Anywhere in the world

Willie's Widgets has been earning a large portion of their market share for 10 years. During Willie's 11th year in business, Wynonna's Widgets opens and her superior marketing practices leaves Willie unable to continue in business. Which of the following types of risk caused Willie's loss?

Dynamic risk A dynamic risk caused Willie's loss, as dynamic risks are associated with change. Having Wynonna as a competitor was a change that caused Willie to go out of business.

Which of the following coverages of an Equipment Breakdown policy will pay for the costs necessary to make temporary repairs to covered objects?

Expediting expenses to get up and running on a temporary basis while waiting on actual repairs.

All of the following are examples of forms used to cover cargo in Ocean Marine insurance, EXCEPT

Load form. Single risk, Broad peril and Named Peril are forms used.

All of the following situations involve misrepresentation, EXCEPT:

Michael manages an insurance agency and posts the sales numbers of all agents publicly each month, to promote competition Posting sales numbers to promote competition among sales personnel is not misrepresentation.

All of the following statements are TRUE re the coverage of mobile or trailer homes under a Dwelling insurance policy, EXC

Mobile or trailer homes can NOT be owner or tenant occupied. Only applies to owner occupied.

An insured has fabricated a claim so that it would appear to be legitimate. This would be a:

Moral hazard Not peril - serious and immediate danger

Which of the following is NOT eligible for a coverage under a Homeowners insurance policy?

Owner-occupants of a 5-6 family dwelling. A HO policy will not cover any dwelling that houses more than 4 families in a household

When a loss occurs and coverage is provided by a reciprocal exchange, which of the following is responsible to cover the loss?

The member insurers. Individuals and businesses exchange insurance contracts and spread the risks associated with those contracts among themselves.

Under the A.M. Best insurance company rating system, a rating of "E" means that the company is:

Under state supervision

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:

$120,000 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.

Maci has $500 cash destroyed by fire in her covered home. She files a claim under her standard Homeowners policy. How much will the policy pay on this claim?

$200 the standard HO policies cover money, but money is subject to a special limit of liability of $200.

Indemnify Insurance, Inc. is a Texas insurer has violated the regulations with regard to the timely payment of claims. Indemnify will now be required to pay interest on the amount of the claim at a rate of:

18% per year.

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.

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

Adjusters in TX must complete _____ hours of their continuing ed requirements in a "classroom" course

50 percent/ 12 hours

The Texas Department issues emergency adjuster licenses in case of an emergency arising out of a disaster. An emergency license is valid for ______ days.

90 days and can be extended by the Commissioner for an additional 90 days.

Which of the following is NOT TRUE re FAIR Plans?

A FAIR Plan cannot deny coverage to anyone bc their roof is in need of repair. A FAIR Plan CAN deny coverage to someone whose roof is in need of repair. The Plan will usually make coverage contingent upon repairs. States offer diff plans. Usually used in high risk cases.

What type of bond guarantees that if a bid is accepted, the bidder will satisfy further bonding requirements?

A bid bond One of the guarantees of a bid bond is that if the principal's bid is accepted, he/she will satisfy further bonding requirements to purchase bonds such as performance or payment bonds.

An additional coverage provided by Part D of the Personal Watercraft policy includes coverage for "salvage liability". This is best described as:

A maritime law requiring watercraft owners to recover items that have gone overboard.

Which of the following types of investigations would an adjuster undertake to determine if the medical treatment a claimant is receiving is appropriate for the injuries claimed?

A medical investigation

Because a Homeowners policy provides both property and liability coverage in a single policy, the policy is called:

A multi-line policy. A Homeowners policy is known as a multi-line policy because it provides coverage for both property and liability

Which of the following could be considered "your covered auto" under a standard Personal Auto policy?

A newly acquired car reported to the insurer.

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 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.

Which of the following shows a correct sequence of activities for an adjuster when negotiating a claim?

Acknowledging the claim, then opening a line of communication with the insured or claimant.

Lawrence is studying for a state licensing exam to allow him to obtain an adjuster license. He notices that most of his study material covers the language of specific types of insurance policies. Lawrence does not understand why he needs to understand insurance policy language when he simply wants to adjust insurance claims. Which of the following statements would explain to Lawrence why it is important to understand policy language?

Adjusters must have extensive knowledge of policy language to properly determine if a loss is covered and to adequately explain the coverage to the insured. is correct.

An insurer that was chartered under the laws of Canadian province but conducting business in Minnesota, would be considered a _____ insurer by the Minnesota Department of Insurance.

Alien

Public Law 15 reserved with of the following insurance regulation functions for the federal government

Anti- Trust matters and fair labor standards

The "Sudden and Accidental Tearing Apart, Cracking, Burning or Bulging" broad form peril applies to all of the following, EXCEPT:

Any structural wall of the covered dwelling or other structure. Broad form peril does NOT apply to structural walls of the dwelling.

Typical state WC laws stipulate that the amt of weekly disability benefits paid for a temp disability is determined by

Applying a state mandated percentage to the EE's AWW.

A contractor's bid bond is used:

As a promise from the surety that if the principal is awarded the contract, the principal will enter into the contract for the bid amount and provide required performance bonds.

Angela is using her own vehicle to pick up lunch at a local restaurant for her co-workers. She becomes distracted when a text message comes in and she swerves off the road and hits a tree. Angela's medical expenses will be paid

By the medical payments coverage of Angela's own personal auto policy bc she was using her own car.

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

Carolyn's Fine Gifts must shut down for a month to repair flood damage. Flood is an excluded peril

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?

Chad's newly acquired building will be covered for 30 days from the date of acquisition for $250,000

Which of the following statements is NOT TRUE regarding "common law"?

Codified law is NOT common law a "body of law" based on court decisions rather than codes or statutes

Samantha is renting an apartment and has just purchased a Homeowners policy using the HO-4 form. Which of the following insuring agreements is NOT included on Samantha's policy?

Coverage D. HO-4 does not provide any amount under Coverage A - Dwelling, because the HO-4 is a policy for tenants (people who are renting their premises from someone else). The HO-4 provides personal property Coverage C and it can include Loss of Use (Coverage D) and Personal Liability (Coverage E).

Homeowners policies provide personal liability coverage that follows an insured anywhere in the world under:

Coverage E - Personal liability

Morton's Millinery is covered by a Commercial Property policy with a broad cause of loss form attached. Morton's closes up their covered building for a long holiday break. When they return, a loss has occurred. Which of the following loss scenarios would NOT be covered?

Damage caused by frozen pipes that burst and leaked for several days while the business was closed for the holiday break because Morton turned the thermostat way down low to save on energy

When pertaining to Equipment Breakdown insurance, the term "breakdown" includes all of the following, EXCEPT:

Damage to any vacuum tube, glass tube, or brush The term "breakdown" includes pressure or vacuum equipment failure, electrical failure, and mechanical failure. It does not mean damage to any vacuum tube, glass tube, or brush.

All of the following are functions of the standard mortgage clause in a property insurance policy, EXCEPT:

Does NOT guarantee that the mortgage payments will be made by an insurance POLICY, if the insured does not make the payments.

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?

Extra Expense. 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.

The optional coverage for "Money and Securities" under a standard Businessowners policy provides for the loss of money and securities used in the insured's business as a result of all of the following, EXCEPT:

Fraud - taking money from the insured is not covered. Theft, disappearance, and destruction are all covered.

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

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

All of the following are eligible risks for Commercial Inland Marine insurance, EXC

Goods manufactured in the US for EXPORT to other countries

Which of the following statements concerning the Earthquake and Volcanic Eruption Endorsement to a Commercial Property policy is NOT TRUE?

If the policy expires before the end of the 168-hour period, coverage will not apply to the time period following the expiration date of the policy. The endorsement explicitly states that "the expiration of the policy will not reduce the 168-hour period" covered by the endorsement.

Many stationary objects, such as bridges, tunnels, and powerlines fall within the nationwide marine definition bc they are considered to be

Instrumentalities of transportation and communication.

A non-waiver agreement allows the insurer to:

Investigate a loss without implying that it is covered. 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.

All statements are TRUE re the Federal Employers Liability Act (FELA), EXC

It provides WC coverage for EE working in Fed government buildings. Similar to WC (no fault), but this finds fault for liability. Was created for RR workers injured on the job

The "Medical Expense" coverage of Section II of the Businessowners policy will pay the reasonable expenses for first aid, medical services, and funeral services, within:

One year from the date of the accident.

Which of the following statements is TRUE re an "examination under oath"?

Only requested by an insurer if they have reason to believe an insured has not been truthful in their account of the circumstances of the loss.

Lawrence holds both an independent staff adjusters license and a public adjusters license as permitted by law in his state. He is employed by Binders Keepers, Inc. and regularly adjusts claims for the company that arise from Homeowners policies. Lawrence has been hired by Kelli to act as a public adjuster on her behalf to present a claim under her Homeowners policy that was issued by Binders Keepers, Inc. If Lawrence accepts the contract with Kelli, it may:

Present a conflict of interest It would not be a violation of his appointment by Binders Keepers, Inc. because the question states that state law permits Lawrence to hold both licenses.

Which of the following Ocean Marine implied warranties is considered to be the most important?

Seaworthiness. If the vessel is not seaworthy, the entire voyage is at risk.

If an insured fails to report a claim in a timely fashion, the adjuster will immediately:

Send the insured a reservation of rights letter. Failure to report a claim in a timely fashion denies the insurer of the opportunity to promptly investigate the circumstances of the claim. Valuable information from witness could be lost, as well as other physical evidence. When this occurs, the insurer will normally send the insured a reservation letter to protect the rights of the insurer.

Which of the following functions must the insured carry out in order for the freezing of her pipes in her unoccupied vacation home to be covered under her DP-2 form?

Shut off the water supply and drain the pipes before vacating the premises.

The "Common Policy Conditions" of a Commercial Package Policy

States that to properly rate the policy, the insurer has the right to examine the books and records of the insured company

Which of the following coverage symbols would be designated on the Declarations of a Commercial Auto policy to cover a customer's auto left with the insured to be serviced?

Symbol 30 - left for service

Ted holds a property & casualty adjuster's license as well as a workers' compensation adjuster's license in Texas. Which of the following statements best describes how the mandatory continuing education requirements will apply to Ted?

Ted will be required to complete a total of 24 hours of continuing education to meet the requirement for BOTH licenses. In Texas, licensees are required to complete 24 hours of continuing education credit regardless of the number of licenses they hold.

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 Auto policy. One evening, one of Gino's hired drivers has an accident and injures other ppl. 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?

The Commercial Auto policy will respond to the claim. The Businessowners policy does not cover auto and Hired and Nonowned Auto Liability Endorsement is not permitted to be purchased if the insured is already covered for liability.

Which of the following sections of an Ocean Marine policy is very similar to the "Duties of the Insured" in other property policies?

The Sue and Labor clause requiring that property be protected from further loss

An insured carries a liability policy and an umbrella policy. 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 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 umbrella insurer has the option to appeal even though the underlying insurer and the insured chooses not to appeal.

A written insurance contract that includes all coverage forms and endorsements is known as

The insurance policy

A public adjuster represents the interest of:

The insured.

When a Tx insurer has a reason to believe that a loss resulted from arson, the time limit the insurer has to notify the claimant of acceptance or denial of the claim is ________ after the date the insurer receives all items, statements, and forms required by the insurer to process the claim.

The insurer has 30 days to accept or deny the claim in writing, if arson is suspected.

An insured has his dwelling and a detached garage covered under a DP2 form when a tornado takes the roof off both structures. The insured pays to have temporary repairs completed on the roofs of both structures. He also purchases a cover to protect his sports car that was parked in the garage that no longer has a roof. In this situation, which of the following statements are TRUE?

The insurer will pay for the temporary repairs on both of the roofs to protect the dwelling and garage and the contents within them from further damage.

Which of the following is TRUE re nuclear energy loss coverage under a Personal Auto policy?

The personal auto policy will NOT provide coverage for bodily injury or property damage caused by the insured's nuclear energy losses. They will be covered under a specialized nuclear energy liability policy.

A requirement that a plaintiff file a lawsuit within a specific period of time after the cause of the lawsuit has occurred, which is oftentimes when the injury occurred or was discovered is known as

The statute of limitations

Claims investigations should be concerned with all the following, EXCEPT

The workload of the adjuster while attempting to investigate the claim

Which of the following statements is TRUE regarding controlled commercial inland marine forms?

These forms are usually issued according to published rules and rates. 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.

Which of the following statements is TRUE re nonwaiver agreements and reservation of rights letters?

They are used only w first party claimants to protect the rights of insureds and insurers.

The "concealment and fraud" provision of the 1943 New York Standard Fire policy permits the insurer to _________ if the insured willfully conceals or misrepresents a material fact before or after a loss.

Void the entire policy

All of the following are reasonable duties of care that are required of employers with regard to workers' compensation, EXCEPT:

Warn workers of obvious dangers. Employers are required to warn workers of INHERENT dangers. In the case of workers compensation coverage, this would mean the employer has the duty to warn workers of the dangers that are a part (inherent) to the job. Employers are not required to point out obvious dangers.

The freight charge is paid by the shipper to the carrier:

When the cargo has been delivered to its destination point. The freight charge is paid by the shipper to the carrier when the cargo has been delivered to its destination point. There are many things that can happen to cargo before it reaches its destination point and if the cargo is damaged or destroyed, the shipper will not pay the freight charge. This is the reason the "freight charge" is covered by insurance.

Which of the following vehicles would NOT be eligible for coverage under a personal automobile policy?

A vehicle leased for 4 months To be eligible for coverage under a personal automobile policy, a leased vehicle must be leased for 6 months or longer.

Coverage D of a Dwelling policy provides coverage for

Fair Rental Value - Loss of Rental Income is an indirect loss sustained by the insured when the dwelling is rendered uninhabitable by a direct loss. Coverage D provides protection for this indirect loss.

An object that is covered under Morton's Equipment Breakdown policy has been "red tagged". This means Morton's coverage is suspended until Morton takes certain steps. Which of the following statements is NOT one of the steps Morton must take before his Equipment Breakdown coverage can be reinstated?

He must have all of his equipment (even the objects that were not red tagged) inspected by the insurer before the coverage can be reinstated.

Any intentional misinformation provided by an applicant for an insurance policy that would have kept the insurance company from issuing the policy had that information been known is:

Material misrepresentation. Fraud - wrongful or criminal deception intended to result in financial or personal gain. Concealment - the action of hiding something or preventing it from being known.

With WC insurance, the insurer is considered to have received notice of a claim

When the employer has notice of the claim.

Darrin is a claims adj that has been assigned to a claim submitted by Samantha. Darrin has asked Samantha to produce some receipts that he will need to process the claim. Samantha promises on May 28th to have copies of those receipts sent to Darrin by June 1st. Which of the following would be the best way for Darrin to remember to follow up with Samantha on June 1st if he has not received the receipts?

Darrin should enter a reminder to FU w Samantha into his "diary" or "suspense" system.

Under "pollution cleanup and removal" coverage under the standard ISO BOP form, when must a loss be reported?

Within 180 days. 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.

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

An office building containing two empty units and these two empty suites represent 25% of the total floor space. 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.

Which of the following statements is TRUE regarding Commercial Property coverage?

Commercial property coverage can be written as both a monoline policy and as part of a package policy.

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:

Is engaging in the unauthorized practice of law. 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.

Commercial inland marine policies require the insured to submit a signed, sworn statement of loss:

Within 60 days of the insurer requesting it. Claimant is expected to use Good Faith when filling out. The insurer will need to request the sworn statement of loss and provide the method the insured will need to use to submit this statement. The statement itself is due within 60 days of the insured requesting it and providing to method to submit those forms.

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. How long do Tabitha's friends have to submit their medical expense claims for coverage under Part B of Gavin's standardized Personal Auto policy?

Within three years of the date of the accident. Reasonable medical and funeral expenses will be paid under Part B - Medical Payments if they are submitted within three years of the date of the accident.

The owner of a movie theater was held liable when the balcony in the theater collapsed and killed d12 ppl. This is an ex of

A tort violation - a civil wrong that causes harm by violating a protected right.

Melinda's insurance policy is cancelled bc she has not paid the premium. In this scenario, which of the elements of a valid contract is missing?

A valuable consideration (the premium) is missing.

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?

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 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. Unlike the Commercial Package policy, the BOP is "prepackaged" and the insured cannot select the coverage parts.

The medical payments coverage of an Aircraft Liability policy can cover the expenses incurred for bodily injury to a passenger in all of the following situations, EXCEPT:

The passenger has slipped and fallen on a wet floor inside the airport, breaking a leg. is correct. When a passenger has slipped and fallen on a wet floor inside the airport an Airport Liability policy would provide coverage, not an Aircraft Liability policy.

A loss reserving method that establishes aggregate reserves for all claims for a single line of insurance ins known as

Loss ratio method. Uses a formula, not discussions to determine reserves

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

Malfeasance. Malfeasance is a legal term describing an intentional act that is illegal or morally wrong, that contributes to the injury of another person A tort is an act or omission that gives rise to injury or harm to another and amounts to a civil wrong for which courts impose liability.

To receive workers compensation benefits, an employee's occupational disease:

Must be caused by the conditions of the employment To be covered, a disease contracted by an employee must arise from the conditions of employment and in the course of employment. This means the disease must be identified with the occupation or place of employment the employee was working in, at the time of exposure

Temporary total disability benefits are paid under which section of the NCCI standardized WC policy?

Part ONE of the NCCI stand WC policy is where you will find the statutory benefits paid - same as temp total disability bene

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

The coverage is not additional insurance and does not increase the limits of the policy. We will pay up to $2,500 for your appliances, carpeting and other household furnishings, in each apartment on the "residence premises" wo increasing limits of policy

Corey was injured on the job in Texas. He has been receiving medical treatment for his injuries but a dispute has arisen between Corey and his employer as to the severity of his medical condition. To assist in resolving this dispute, Corey and his employer can appoint:

A designated doctor to recommend a resolution of the dispute as to Corey's medical condition A designated doctor will be appointed by Corey and his employer if they can both agree on that doctor. If they cannot agree on the doctor, the Division will appoint a designated doctor to assist in resolving the dispute as to Corey's medical condition.

Which would be excluded under part A of the Personal Auto policy.

A person transports ppl from the airport to nearby hotels FOR A FEE. To barrow a car or use a rental is acceptable.

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 regular operator of the vehicle has received a citation for speeding

The state of TX required adj to respond to pertinent communications "promptly." A response that the Dept considers to be reasonably prompt means an acknowledgment is provided within

An acknowledgment within 15 business days is presumed to be reasonably prompt;

Which of the following vehicles is considered a "temporary substitute auto" under a standardized personal auto policy?

An auto loaned by the garage while the vehicle of the insured is being repaired. auto not owned but barrowed with permission of owner.

Lara is moving to Europe for two years in order to take advantage of a promotion at her job. She will not take her 4-seat propeller plane with her. What type of Aviation policy would be best for Lara to purchase for coverage on her plane while it is in storage and she is in Europe?

All Risks - Not in Motion Because the plane will not be in motion, the best insurance to purchase would be the "Not in Motion" coverage