Texas Personal Lines Insurance Exam
An insurance contract must contain all of the following to be considered legally binding EXCEPT
Beneficiary's consent
Which of the following property coverages would provide protection to contents damaged by fire?
Coverage C
An insured has an auto liabilit policy w/ limits of 25/50/15. the insured is involved in an accident caused by her negligence and is held legally liable for BI of 3 persons in the other auto as folls: "A" $15,000 "B" 30,000 "C" 35,000. How much will her insurer pay in total for all injuries?
$50,000 - The second limit is the most the policy will pay for all injuries if more than one person is injured in a single accident
If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to
$500
the main difference b/w an HO4 and an HO6 is
HO6 provides limited dwelling coverage as well as contents coverage
Who is responsible for filling out a notice of claim form
Insured
All of the following are conditions commonly found in the insurance policy EXCEPT
Insuring Agreement
The Federal Fair Credit Reporting Act
Regulates consumer reports
The amount an insurer will pay under Coverage D(loss of use) depends on
The amount of coverage on the dwelling
Which of the following would qualify as a competent party in an insurance contract
The applicant has a prior felony conviction
In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for
UM coverage
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriter approves coverage
what type of liability would a person who owns wild animals have
absolute - any conduct tht is inherently dangerous, such as explosives or keeping wild animals -- claimant does not have to prove anything
In a personal auto policy, the medical payments coverage is similar to
accident insurance, because it pays medical expenses regardless of fault
which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?
additional coverage - provides an additional amt of coverage for specific loss expense, at no additional premium
all of the following statements about the continuing education requirement in this state are true EXCEPT
all liscensed agents must comply by January 1 of even-numbered years -- CE reporting period coincides witht he license renewal date every 2 years
this is not true regarding the relationship among the amts of insurance
all property losses under the basic form are settled on a replacement cost basis - all property losses under the basic form are settled on an actual cash value (AVC) basis
in insurance, an offer is usually made when
an applicant submits an application to the insurer
which of the following would NOT qualify as a hired auto?
an auto borrowed from an employee
The general property policy form is used for other-residential and non-residential structures and their contents such as
any of the above wld be covered - commercial structures, cooperative associations, & apartment buildings
all of te following are considered unfair or deceptive acts in connection w/ the sale of insurance EXCEPT
attempting to settle a claim in which liability is clear
an insurer that holds a certificate of authority in the state in which it transacts business is considered a/an
authorized insurer
homeowners policies provide coverage for
business property while on the residence premises - contents will cover up to a 2,500 for loss of business prop on premises
forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
coercion - for example , is when the bank won't give you an auto loan unless you agree to buy auto insurance from them
An insurer appoints a new agent. 5 years later, the appointment is terminated and withdrawn. Which entity must the insurer notify?
commissioner of insurance
which of the following is mandatory part of an insurance policy that varies with each individual policy?
declarations- tell who, what, when & where, this information is different in each contract
which of the following provisions requires that the insured protects the damaged property from further damage, cooperates w/ the insurer in settling the loss, & submits to the insurer signed proof of loss w/in a specified period of time?
duties after loss
a license may NOT be denied, suspended or revoked if the licensee
submits an unsigned insurance policy application
liability imposed on one party as result of the actions of another person is known as
vicarious liability - ie parent/child or employer/employee
an insured owns a large dog. 1st day has to leave the dog home alone, he comes back to find his $400 couch torn apart, 100 coffee table chewed, his 50 window curtains shredded, and 200 window pane shattered. The insured has personal property coverage under a special form dwelling policy. how much of this loss will the policy cover?
$0 - damage that results from domestic animals is excluded under the special form dwelling policy
what is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating?
$25 - in this state, promotional materials, articles of merchandise or gifts taht have redeemable value of $25 or less are not considered "valuable consideration", and therefore, are allowed
which of the following is the basic auto liability limit required for BI or death to any one person in any once accident
$30,000 - this is the minimum for tx, $60,000 for BI or death to 2 or more persons in any once accident, $25,000 for damage to property of others arising out of in any one ocurrence
What is the minimum amount of coverage that should be carried on an HO2 on a home that was purchased 4 years ago for $75,000, which today has a replacement value of $100,000
$80,000 - due to it needing to be insured at least 80% of rc in order to collect the full rc of a partial loss
what is a required notice of cancellation of a homeowners policy to the insured
10 days - the insurer may cancel the policy by mailing written notice to the insured at least 10 days prior to the effective date of cancellation
if an agent has completed 35 hours of continuing education in one renewal period how many CE hours will the agent have to complete in the next renewal period?
24 - licensees are not allowed to carry over excess hours to the next reporting period
under the dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it must inform the insured w/in how many days of receiving proof of loss
30 days
an insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. the removal coverage applies for
30 days- for removal coverage
what percentage of CE hrs must be in a classroom or classroom equivalent setting approved by the dept
50%
a Managing General Agent must complete the continuing education requirments that are set for
A Local Recording Agent or a Legal Reserve Life Agent
A person who, for a fee, examines, evaluates and assesses contracts of insurance for another and offers advice on methods of reducing risk, must be licensed as
A risk manager - they may also offer advice on methods to reduce risk, but they do not solicit insurance for a commission
In insurance, an offer is usually made when
An applicant submits an application to the insurer
Under a personal auto policy, in which of the following locations would a vehicle primarily garaged in California be covered
Any other state
A policy that insures all property at multiple locations for a single amount is referred to as
Blanket
A mobile homeowners policy us structured the same as a
Homeowners policy
All of the following statements describe the concept of strict liability EXCEPT
It is imposed on defendants engaged in hazardous activities
For a contract to be enforceable by law, the purpose of the contract must be
Legal and not against public policy
General exclusions for all 3 DP forms are?
Ordinance or Law ; Earth movement; Water damage; Power failure; Neglect; War; Nuclear hazard; Intentional loss; Governmental action
The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property is called
Pro Rata liability
What type of information would be found in a policy's insuring agreement?
Renewal Dates
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT
Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident
With respect to auto insurance, the term owned autos includes all of the following EXCEPT
a pickup or van titled to and used in the named insured's business
with respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto?
a vehicle that it titled to another person, but is being used with permission by an insured
the abc corporation has 100,000 of coverage on its building through insurance company a, and 50,000 of identical coverage on the same building through company b. assuming coinsurance is not an issue, when a 24,000 loss occurs and the pro rata method is used, how much will each insurer pay
company a will pay 16,000 and company b will pay 8,000
which of the following statements is true concerning the special form dwelling policy
coverage A is for all risk perils, and Coverage C is for the broad form perils-- the all-risk coverage applies to property insured under coverage A & B only
An insured's house is damaged by a fire and is uninhabitable. AS a result, the insured has to rent an apartment until repairs are made. A dwlling insurance policy will pay for the expense of renting the apartment. Which type of broad or special form coverage does the insured have?
coverage E - additional living expense
The owner of a smaller restaurant submits a claim to his insurer after a loss due to fire. The insurer's investigation finds a police report that shows that a fire may have been of suspicious origin. The insurer of hte following?
delay an acceptance or rejection decision - insurer can delay up to 30 days if arson is suspected
Replacement cost is defined as
full replacement of property at its current cost ,new and w/out reduction for depreciation
what type of compensatory damages will pay for pain and suffering and disfigurement>
general
which of the following would NOT be considered rebating>
giving a client a $25 pen w/ the insurer's logo during the insurance application process
in insurance transactions, fiduciary responsibility means
handling insurer funds in a trust capacity
Under which of the following conditions can broad theft coverage be added to a dwelling policy
if the insured is owner-occupant of the dwelling
The proof of loss statement must be
in writing
an additonal loss that results from a direct loss of property is called a/an
indirect loss
what do individuals use to transfer their risk of loss to a larger group
insurance
which of the following is NOT true regarding a Certificate of Authority
it is issued to group insurance participants
what is inland marine-coverage
its for property that is portable - personal property floater (all risk any where in the world)//personal article floaters (furs jewelry, cameras, fine art, etc)// Personal Effects floaters (personal effects carried or worn by travelers anywhere in the world, but not while the property is at home
Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss
liability coverage
Under the dwelling policy, coverage c - personal property is
limited to covering a servant's property while at the insured location
which of the following coverages in dwelling and homeowners policies is for indirect losses?
loss of use
which of the following coverages is included in an unendorsed homeowners policy
medical payments to to others- medical pymts are automatically included in Section II of all HO policies
an insured purchased an insurance policy 5 yrs ago. last yr, she recd a dividend check from the insurance company tht was not taxable. this yr, she did not receive a check from the insurer. from what type of insurer did the insured purchase the policy
mutual - funds not paid out after paying claims and other operating cost are returned to the policyowners in the form of dividend. if all funds are paid out, no dividends are paid
a sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called
proof of loss
while an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. what part of the insured's auto policy would pa for the damage to the store
property damage liability
Under the personal auto policy, liability for BI resulting from the insured's use of a nonowned automobile is
provided by the insured's policy on an excess basis
an gent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. the agent is guilty of
rebating - this is when producers give or promise anything of value that is not specified in the policy
a certificate of insurance is written document tht
shows the types and amts of insurance issued to the insured
Payment for medical expenses, loss of wages, funeral expenses,
special- special damages are tangible damages that can be specifically measured in dollar amounts (such as out of pocket expenses for medical, miscellaneous expenses, and loss of wages)
Which of the following perils is covered by the HO2 and HO3
sudden and accidental rupture of a heating system
under a dwelling policy, which of the following is NOT a factor in determining a loss?
the amount negotiated by the insured
the amount an insurer will pay under coverage D (loss of use) depends on
the amount of coverage on the dwelling
which of the following is NOT the consideration in policy
the application given to a prospective insured
all of the following statements concerning coinsurance are true EXCEPT
the coinsurance formula will also be applied to total losses
when an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays
the excess over the self-insured retention
if an insured failed to maintian the underlying limits as required by a personal umbrella policy
the insured would be responsible for the amt required as underlying limits in the event of a claim
Under the Tx property and casulaty insurance guaranty association ,what is the max amt tht a claimant may revcover from an occurrence under a policy issued by an insolvent insurer
the lesser of the above amts - not exceeding the max available amt which is $300,000
A temporary license holder can receive a commission from a sale made to all of the following EXCEPT
the license holder's sister-in-law
all of the following are true regarding physical damage coverage EXCEPT
the limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the veh
All of the following are true regarding physical damage coverage EXCEPT
the limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle
an agent explains the details of a life insurance policy to a client. the agent does not realize, however, that the state has recently rewritten two of the provisions. As a result, the agent inadvertently misrepresents the policy, making it more attractive than it really is. what best describe this situation
there is no misconduct