Texas Practice Exam 1
Which of the following best demonstrates a morale hazard? a. A recent purchaser of auto insurance drives less carefully, knowing that the insurer will cover the loss. b. A person with low morale seeks psychological counseling after filing a false insurance claim. c. A person with insurance seeks payment of a claim after intentionally causing a loss. d. A person who fails to pay their premium gets cancelled.
a. A recent purchaser of auto insurance drives less carefully, knowing that the insurer will cover the loss.
What is covered by a SP-23 protection and indemnity policy? a. All of the responses are correct. b. Loss of life, injury and illness c. Collision liabilities including defense costs. d. Damage to docks, buoys and other structures.
a. All of the responses are correct.
The Commercial Building and Personal Property coverage form provides five extensions of coverage, but only if: a. An 80% or higher coinsurance percentage is shown on the Declarations page, and the property amount of coverage, based on that percentage, is purchased. b. The extensions are listed on the Declarations page of the policy, and an additional premium is paid. c. The coverage for buildings is written on a replacement cost basis. d. All coverages under the policy are written on a blanket basis.
a. An 80% or higher coinsurance percentage is shown on the Declarations page, and the property amount of coverage, based on that percentage, is purchased.
Estoppel is best exemplified by which of the following? a. An insurer is prohibited from denying a claim that its appointed producer advised the insured was covered. b. An insurance producer is prohibited from selling insurance with unauthorized insurers. c. An insurer is prohibited from appointing persons without a valid producer's license. d. An insured is prohibited from suing its insurer if the policy was cancelled for non-payment of premium.
a. An insurer is prohibited from denying a claim that its appointed producer advised the insured was covered.
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? a. An occurrence b. An accident c. An event d. A condition
a. An occurrence
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: a. An open perils basis. b. A named perils basis. c. A broad form. d. A specific form.
a. An open perils basis.
Which of the following best describes "covered property" under the Equipment Breakdown coverage form? a. Any property that the insured owns or is in the insured's care b. Buildings and personal property owned by the insured c. Boilers and machinery owned or operated by the insured d. Electronic data processing equipment
a. Any property that the insured owns or is in the insured's care
An oral or written contract for temporary insurance is referred to as a: a. Binder. b. Rider. c. Declaration. d. Certificate of Insurance.
a. Binder.
Which of the following coverages provides payments to a third party, rather than to the named insured? a. Bodily injury and property damage liability b. Commercial property building coverage c. Automobile comprehensive coverage d. Medical payments under a personal auto policy
a. Bodily injury and property damage liability
A controlled Commercial Inland Marine insurance policy form: a. Can be customized as much as the insurer wants to meet the needs of individual clients. b. Is written on a non-standard form. c. Does not disclose the rates being charged. d. Is filed with the Department of Insurance.
a. Can be customized as much as the insurer wants to meet the needs of individual clients.
In liability insurance the term "occurrence" means: a. Continuous or repeated exposure to the same conditions. b. An accident. c. Non intentional. d. A non fortuitous accident.
a. Continuous or repeated exposure to the same conditions.
Which of the following losses is NOT excluded under the Physical Damage coverage of a personal auto policy? a. Damage to a covered auto while being used as part of a car pool. b. Damage to equipment designed for the detection of radar. c. Loss caused by freezing of the cooling system. d. Loss of custom furnishings in a customized van.
a. Damage to a covered auto while being used as part of a car pool.
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? a. Deny the claim because of an exclusion b. Pay the claim c. Pay 50% of the claim d. Require evidence that she was modeling the jewelry
a. Deny the claim because of an exclusion
A weather report would be considered what type of evidence? a. Documentary b. Demonstrative c. Interrogatory d. Material
a. Documentary
One purpose of a deductible is to: a. Eliminate small claims. b. Prevent underinsurance. c. Prevent catastrophic claims. d. Allow the insured to ignore physical hazards.
a. Eliminate small claims.
Basic benefits available under a typical workers compensation policy include which of the following? I. Medical expenses. II. Loss of income. III. Rehabilitation. IV. Pain and suffering. a. I, II, and III only. b. I and II only. c. I, III, and IV only. d. I, II, III and IV.
a. I, II, and III only.
Under what circumstances may an adjuster contact a claimant who is represented by an attorney? a. If permission is granted by the attorney. b. If permission is granted by the claimant. c. If permission is granted by the insurance company. d. If permission is granted by the court.
a. If permission is granted by the attorney.
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? a. Immediately seek subrogation rights against a third party. b. Verify the effective date of the coverage. c. Verify the proximate cause of loss. d. Determine those that have insurable interests in the property.
a. Immediately seek subrogation rights against a third party.
The attempt to restore an insured to the his or her previous financial condition before the loss occurred is BEST described as: a. Indemnification. b. Subrogation. c. Coinsurance. d. Self-insurance.
a. Indemnification.
A company's promise to "pay for damage caused by or resulting from any covered cause of loss" would be found in which of the following sections of an insurance policy? a. Insuring Agreement b. Declarations c. Conditions d. Exclusions
a. Insuring Agreement
Under the provisions of the Standard Fire Policy, an insured may file a suit to recover for a loss only if all of the policy requirements have been complied with. The suit must be brought within: a. One year. b. Two years. c. Three years. d. Four years.
a. One year.
For the insured dwelling and other detached structures, the DP-3 provides: a. Open peril coverage. b. Broad perils coverage. c. Basic perils coverage. d. Fire, lightning, extended coverage and vandalism & malicious mischief coverage.
a. Open peril coverage. 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.
Paul's neighbor Pete gives Paul the keys to his uninsured pickup truck to use whenever Paul wants to. When would this vehicle NOT be considered a "covered auto" on Paul's auto policy? a. Paul's vehicle is out of gas. b. Paul's vehicle has a dead battery. c. Paul's vehicle is in for repair work. d. Paul's vehicle was wrecked and towed away.
a. Paul's vehicle is out of gas.
What is the purpose of the "sue and labor clause" in ocean marine insurance? a. Pertains to protecting the ship and other property from further damage. b. Affects the benefits payable to injured crew members. c. Provides defense costs from suits from passengers. d. A clause in a labor contract with the crewmembers.
a. Pertains to protecting the ship and other property from further damage.
The three parties to a contract bond are: a. Principal, obligee, surety. b. Obligor, principal, surety. c. Principal, obligee, employee. d. Employee, obligor, principal.
a. Principal, obligee, surety.
Bill Berry was at fault in an automobile accident. Which of the coverages listed would apply to the rental car expense incurred by the other driver while his damaged auto was being repaired? a. Property Damage Liability b. Bodily Injury Liability c. Additional (supplementary) payments d. Medical Payments
a. Property Damage Liability
What is the personal umbrella policy/personal excess liability coverage designed to do? a. Provide coverage in excess, with higher limits, than the primary policy. b. Provide coverage to you under a workers compensation claim. c. Provide coverage for intentional acts. d. Provide coverage for all acts.
a. Provide coverage in excess, with higher limits, than the primary policy.
What does an insurer do when the insured has possibly waived his or her rights in a liability claim? a. Send a "reservation of rights" letter. b. Deny the claim. c. Pay only a portion of the proven liability claim. d. Insist the insured obtain his or her own legal counsel.
a. Send a "reservation of rights" letter.
Which of the following is the first duty of the insured after suffering a property loss? a. Take steps to protect the property from further loss. b. Have the damaged property appraised. c. Hire an outside claims adjuster. d. Increase his coverage.
a. Take steps to protect the property from further loss.
What is the purpose of the Nationwide Definition for inland marine exposures outlined in specific detail: a. The coverage that marine insurers could write. b. The classes of property not eligible for inland marine coverage. c. What types of insurance companies could issue inland marine policies. d. The role of the National Association of Insurance Commissioners.
a. The coverage that marine insurers could write.
Who must be notified when a commercial property policy is cancelled? a. The first named insured b. Any insured c. A representative of the insured d. The Insurance Department
a. The first named insured
The "medical payments" coverage of a personal automobile policy covers: a. The insured as an occupant of a car, an occupant of the insured vehicle and the insured as a pedestrian when hit by a car. b. The insured as an occupant of a car only. c. An occupant of the insured vehicle only. d. The insured as a pedestrian only.
a. The insured as an occupant of a car, an occupant of the insured vehicle and the insured as a pedestrian when hit by a car.
Under a Commercial Package Policy, how many days does one have to notify the insurance company of a claim? a. The insurer must be notified promptly. The number of days is not specified b. 30 days c. 60 days d. 10 days
a. The insurer must be notified promptly. The number of days is not specified
The declarations section of an insurance policy provides which of the following? a. The name and address of the insured and the duration of the policy b. Specifications for the payment of a loss c. The insured's statement about the condition of the property d. The conditions and exclusions
a. The name and address of the insured and the duration of the policy
The insured is covered under a BOP and sustains a direct loss to his building and contents. What is the period of time the policy provides coverage for the loss of income? a. The policy pays for up to twelve months after the loss. b. The policy pays for up to six months. c. The policy pays for up to eighteen months. d. Loss of income is not included and coverage must be added by endorsement.
a. The policy pays for up to twelve months after the loss.
Requiring a claimant to travel a long distance to have his or her automobile repaired violates which of the following standards for prompt investigations and fair and equitable settlements? a. Unreasonable Travel b. Avoidance of Payment c. Notice of Applicable Time Limitations d. Denial of Claims
a. Unreasonable Travel
Which of the following perils is covered by the Broad Form but is not covered by the Basic Form? a. Weight of ice and snow b. Vandalism c. Riot d. Sinkhole collapse
a. Weight of ice and snow
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: a. Within 1 year following a covered accident. b. Within 5 years following a covered accident. c. Within 3 years following a covered accident. d. Within the policy period.
a. Within 1 year following a covered accident.
Surplus Lines companies in Texas have _____ to acknowledge the receipt of a claim. a. 15 days. b. 30 days. c. 10 days. d. 20 days.
b. 30 days.
Three of the situations below describe circumstances in which an individual is usually not an insured by a commercial umbrella liability policy. Which situation describes circumstances in which an individual IS an insured? a. An employee of the insured injured another employee while driving the insured's forklift. b. A deceased insured's brother has temporary legal custody of the insured's business property. c. Personal property belonging to a partner in the insured business is damaged. d. A stockholder in the insured corporation was driving her own auto and was involved in an accident on the way to a stockholder's meeting.
b. A deceased insured's brother has temporary legal custody of the insured's business property.
Which of the following qualifies as a compensable injury under a Workers Compensation policy? a. A worker is involved in an accident while driving to work. b. A factory worker fractures an arm while working overtime at his/her job. c. An employee is struck by a car, and is seriously injured while walking back to work following a lunch break. d. An employee is injured in a bank robbery while depositing his/her paycheck.
b. A factory worker fractures an arm while working overtime at his/her job.
All of the following are Texas adjusters who are not permitted by law to adjust a loss related to roofing damage on behalf of an insurance company, EXCEPT: a. An adjuster who is also a roofing contractor. b. An adjuster that has taken roofing classes and is capable of repairing a damaged roof. c. An adjuster who sells roofing products and services. d. An adjuster who also holds a controlling interest in a roofing-related business.
b. An adjuster that has taken roofing classes and is capable of repairing a damaged roof.
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? a. Breach of duty on the part of the customer. b. Assumption of risk and contributory negligence on the part of the customer. c. Trespassing on non-entry areas by the customer. d. Comparative negligence.
b. Assumption of risk and contributory negligence on the part of the customer.
On December 31st of each year, the Texas Department of Insurance computes the reinsurance reserves for all unexpired risks of domestic, foreign and alien insurers doing business in Texas. All of the following types of insurance are EXEMPT from these calculations, EXCEPT: a. Life insurance. b. Commercial property insurance. c. Commercial inland marine insurance. d. Lightning insurance.
b. Commercial property insurance.
A steam boiler has been inspected and found to be in serious need of repairs. The inspector "red tags" the item. This means: a. A thirty day grace period is provided until repairs are made after which coverage is suspended b. Coverage is suspended until repairs are made c. The entire facility must be shut down until repairs are made d. The company will cancel the entire insurance applicable to all property insured
b. Coverage is suspended until repairs are made
Which of the following statement is true of the jewelers block coverage form? a. The form insures a package of property and liability coverage. b. Coverage may be written for the stock for retail jewelers or the jewelry stock of department and discount stores. c. Coverage may be written for pawnbrokers dealing in jewelry. d. Customers' property is not covered under the form.
b. Coverage may be written for the stock for retail jewelers or the jewelry stock of department and discount stores.
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"? a. Treating doctor. b. Designated doctor. c. Doctor. d. Appointed physician.
b. Designated doctor.
The following losses would be covered under the HO-2 and the HO-3 homeowners forms, EXCEPT: a. Theft of clothing in England b. Flood damage to a home c. Accidental and sudden discharge of water from a plumbing system d. A power failure caused by lightning causes all food in an insured's freezer to spoil
b. Flood damage to a home
A department store has a large inventory of costume jewelry and watches. No single item is valued for more than $100.00. A customer steals most of the items and flees the scene. What theft coverage would be provided by an unendorsed ISO standardized BOP policy? a. $500 b. Full contents limit c. $2,500 d. No coverage for the theft of jewelry and watches
b. Full contents limit
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. a. I and II only. b. I, II and III only. c. I, II, III & IV. d. I, II and IV only.
b. I, II and III only.
All of the following would be covered under Part B - Medical Payments of the personal auto form, EXCEPT: a. Injuries sustained by the insured's mother when a tree falls on the automobile while she is sitting inside the automobile while it is parked in the driveway. b. Injuries sustained by an elderly man riding in the insured vehicle after having paid the insured to take him to the grocery store. c. Injuries sustained by the insured when using his father's pickup truck to pick up furniture he recently purchased. d. Injuries sustained by a neighbor who carpools with the insured and who, while getting into the insured's car, slips, falls, and injures her knee.
b. Injuries sustained by an elderly man riding in the insured vehicle after having paid the insured to take him to the grocery store.
Common and Contract Carriers Liability that covers damage to cargo, may be insured under: a. Means of transportation forms. b. Motor truck cargo forms. c. Transit forms. d. Equipment dealer's forms.
b. Motor truck cargo forms.
You and your son, who lives with you, are crossing the street when both of you are struck by a drunk driver. The medical payments coverage under your auto policy will: a. Provide coverage for you, but not your son. b. Provide coverage for both you and your son. c. Will not apply as you were pedestrians when struck. d. Will be deferred to the driver of the vehicle that struck you.
b. Provide coverage for both you and your son.
The HO-3 form insures for direct physical loss to covered property involving collapse of a building caused by all of the following, EXCEPT: a. Hidden decay b. Settling c. Weight of contents d. Use of defective materials
b. Settling
A surety which provides a Performance Bond to a contractor might also provide another performance bond which guarantees the materials will be provided at the price quoted and the quality and quantity specified. This bond is referred to as a: a. Completion Bond. b. Supply Bond c. Performance Bond. d. Financial Guarantee Bond.
b. Supply Bond
An insurance binder is: a. Evidence of permanent insurance. b. Temporary evidence of insurance coverage. c. A complete policy. d. Proof of insuring agreements and exclusions.
b. Temporary evidence of insurance coverage.
Which of the following would be considered a non-pecuniary wage in Texas? a. An end-of-year bonus. b. The health insurance premium paid by a workers employer. c. Commissions paid for sales made. d. A raise to the workers salary.
b. The health insurance premium paid by a workers employer. Non-pecuniary wages are not paid in "money", but they are still considered as "wages".
What is the main difference between the DP-1 and DP-2 forms? a. The property covered b. The perils insured against c. The coverage territory d. The eligibility requirements
b. The perils insured against
The insured owns a 50 HP fishing boat covered under a watercraft policy for hull insurance. He also carries a homeowner policy. He ties his boat to a tree and goes ashore to camp. The next morning he discovers that his boat is stolen. Which policy would pay the claim? a. The homeowners policy b. The watercraft policy c. Both policies would pay the claim jointly d. Neither policy would pay because it is theft of a boat
b. The watercraft policy
Emily owns a home that she has covered under a Homeowners policy. Because Emily lives alone, she had to leave her home and stay with her parents for the past six months while she recovers from major surgery. Except for the day-to-day items that Emily needs while she stays at her parents' home, all of her other belongings are still located in her home. Which of the following best describes the condition of Emily's home? a. Deserted. b. Unoccupied. c. Vacant. d. Empty.
b. Unoccupied.
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? a. $80,000 b. $152,000 c. $160,000 d. $190,000
c. $160,000 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.
The insured has a building worth $500,000 and insures it for $300,000. The policy contains an 80% coinsurance clause. In case of a total loss, what will the insured receive? a. $240,000 b. $500,000 c. $300,000 d. Nothing because the insured was not in compliance with the coinsurance clause.
c. $300,000
To be eligible for the ISO standardized Watercraft policy, the insured watercraft must be used on inland or coastal waters within: a. 15 miles of the shore or in the Great Lakes, within the United States, Puerto Rico, Mexico, and Canada. b. The borders of the United States, Canada, Puerto Rico, and Mexico. c. 12 miles of the shore or in the Great Lakes, but only when within the United States and its territories, Puerto Rico, or Canada. d. The borders of the United States.
c. 12 miles of the shore or in the Great Lakes, but only when within the United States and its territories, Puerto Rico, or Canada.
An insured has received actual cash value payment from the adjuster for a covered loss. At the time he is satisfied with the payment. He later changes his mind and wants the full replacement value. How many days does he have to submit the receipts to get the replacement cost payment under a HO-3 form? a. 30 days b. 60 days c. 180 days d. 365 days
c. 180 days
Which of these product liability lawsuits is NOT covered under the BOP? a. A product is made in Canada and the lawsuit is brought in Canada. b. A product is made in New York and the lawsuit is brought in the United States. c. A product is made in Zaire and the lawsuit is brought in Germany. d. A product is made in the United States and the lawsuit is brought in Canada.
c. A product is made in Zaire and the lawsuit is brought in Germany. he product must be manufactured or sold AND the lawsuit must be brought within the coverage territory, which is the United States, its territories or possessions, Puerto Rico and Canada, for coverage to apply.
Which of the following is not eligible for coverage under a homeowner policy form? a. A tenant living in an apartment building b. A condominium unit owner c. A residence on a farm d. A mobile home used as a permanent residence
c. A residence on a farm
The New York Standard Fire Policy covers which of the following types of personal property? a. Money b. Evidences of debt c. Appliances d. Securities
c. Appliances
What is an insurance producer's "implied authority"? a. The authority that the public reasonably believes the producer has. b. The authority that the producer believes it has. c. Authority given by the principal to the agent that is not formally expressed or communicated. d. Those specified in a contract with the insurer.
c. Authority given by the principal to the agent that is not formally expressed or communicated.
Liability coverage under the personal auto policy includes: a. Bodily injury coverage. b. Property damage coverage. c. Both bodily injury and property damage coverage. d. Damage to personal property of others in the insured's vehicle and damaged in an accident.
c. Both bodily injury and property damage coverage.
The insured carries collision and other than collision coverage. Which of the following losses would be considered a collision claim? a. A rock rolls down a hill and strikes the insured vehicle. b. The vehicle is damaged when a flood occurs and a large log strikes the vehicle. c. The insured is going around a curve and fails to miss a large boulder in the road. d. A tree falls on the vehicle causing hood and glass breakage damage.
c. The insured is going around a curve and fails to miss a large boulder in the road.
Which of the following would be covered under Part II - Employer's Liability of a Workers Compensation policy? a. Contractual Liability b. The employee sues the employer from emotional stress due to termination c. The spouse of the injured employee sues the employer for loss of consortium d. Injury to an employee working after working too much overtime
c. The spouse of the injured employee sues the employer for loss of consortium
What is the standard minimum limit of liability for Section II -- Personal Liability coverage on Homeowners policies? a. $100,000 per occurrence. b. $50,000 per occurrence. c. $1,000 per person. d. $1,000,000 per occurrence.
d. $1,000,000 per occurrence. 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.
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: a. An administrative penalty of $25,000 for each act. b. Order of complete restitution to all injured parties. c. A monetary penalty of $25,000 for each act and order complete restitution to all injured parties. d. A jail term of 30 days.
d. A jail term of 30 days.
Inland marine policies can cover all of the following, EXCEPT: a. Property of a moveable nature b. Bridges, Piers and Decks c. Radio and TV Towers d. Aircraft
d. Aircraft
Carlos is applying for a Personal Automobile policy with his agent. Currently, he only wants to get a minimal amount of coverage to keep his premiums as low as possible, so he decides not to include uninsured motorist coverage on his policy. His agent has him sign a document giving up his right to this coverage. What is this called? a. A binder b. A warranty c. An implied waiver d. An express waiver
d. An express waiver
Which of the following would be considered an unfair claims practice act? a. An advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading. b. Unfair discrimination in terms of insurance premiums being charged. c. Making false statements as to the financial status of an insurance company. d. Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured.
d. Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured.
The most common method of settling liability insurance claims is through: a. ADRs. b. Arbitration. c. Mediation. d. Negotiated settlement.
d. Negotiated settlement.
In computing Business Interruption Losses which of the following is the most important? a. Accounts receivables b. Accounts Payable c. Journals and Ledgers d. Profit and Loss Statement
d. Profit and Loss Statement
All of the following are duties that a Texas insurer must perform within 15 days after receipt of the claim, EXCEPT: a. Acknowledge receipt of the claim. b. Commence an investigation of the claim. c. Request from the claimant all items, statements, and forms that the insurer reasonably believes, at the time, will be required from the claimant. d. Schedule a hearing to dispute the claim, if necessary.
d. Schedule a hearing to dispute the claim, if necessary.
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? a. Medical Payments coverage. b. Liability coverage. c. Hull coverage. d. The Jones Act.
d. The Jones Act.
Under "Coverage A - Building" of the BOP form, which of the following is NOT covered? a. Completed additions, and additions under construction b. All permanently installed fixtures, machinery and equipment c. Outdoor fixtures d. Valuable papers and records
d. Valuable papers and records
What is the additional limit under the ISO standard BOP for debris removal in case the basic coverage is inadequate? c b. $20,000 c. $10,000 d. $15,000
a. $25,000
Motels insured under an ISO Businessowners may not exceed how many stories? a. 3 stories b. 4 stories c. 5 stories d. No limit
a. 3 stories
A building is being constructed and will cost $200,000 to complete. The amount of insurance equals $100,000 and there is a loss of $80,000. What percentage of the loss will be paid? a. 50% b. 25% c. 40% d. 30%
a. 50%
A deductible that is commonly used in aircraft physical damage insurance is usually: a. A percentage of the value b. A flat deductible c. A disappearing deductible d. A franchise deductible
a. A percentage of the value
If a loss is valued using functional replacement cost, which of the following would apply? a. Market value of the loss is paid. b. Deductibles are suspended. c. The coinsurance clause is not applicable. d. Replacement cost up to an agreed amount is payable.
c. The coinsurance clause is not applicable.
Under a personal automobile policy, "supplementary payments" refer to which of the following?
Payment of defense and other expenses by the insurance company beyond the limits of liability.
Kelly, Vince, Ed, and Ginny are all staff adjusters. Which of these adjusters is acting appropriately as a fiduciary agent? a. Kelly tries to calm an angry claimant by telling him that she's sure his claim will be covered, even though she has not yet determined the cause of loss. b. Vince finds additional damage that seems to be related to the claim, but he leaves it off of his estimate because the claimant didn't notice it in the first place. c. Ed knows the claimant can't possibly afford to pay for their extensive damages, but he denies the claim anyway because the cause of loss was not covered by the policy. d. Ginny investigates the claim and determines the loss is not covered, but writes up her estimate in such a way that it would appear to be covered so she can pay the claimant anyway.
c. Ed knows the claimant can't possibly afford to pay for their extensive damages, but he denies the claim anyway because the cause of loss was not covered by the policy.
The Businessowners Policy provides coverage on the buildings and contents. How is the coverage provided? a. Actual Cash Value Basis b. Replacement Cost Basis c. Either on an actual cash value basis or replacement cost basis d. Only on an agreed amount basis
c. Either on an actual cash value basis or replacement cost basis
Which of the following statements is TRUE regarding the automatic fines assessed by the Texas Department on licensees who do not comply with the continuing education requirement? a. All automatic fines assessed must be paid by check or money order payable to the Texas Guaranty Fund. b. All automatic fines assessed must be within 45 days after the fine was issued. c. If a licensee fails to obtain the required number of continuing education hours for their license type, an automatic fine of $50 per credit hour not completed will be assessed. d. If the licensee would like to contest the automatic fine, they must make a written request for a contested case hearing within 45 days after the fine was issued.
c. If a licensee fails to obtain the required number of continuing education hours for their license type, an automatic fine of $50 per credit hour not completed will be assessed.
The Fit and Trim Fitness Center wants to reduce its carbon footprint. A covered loss destroys some treadmills, damages the roof and most of the interior walls. Fit and Trim finds replacement treadmills that generate and actually return energy to the power grid. The cost is 15% higher than standard equipment. Which of the following, if any, would pay the increase? a. Ordinance and Law Coverage b. Fungi, Wet and Dry Rot c. Increased cost of loss and related expenses for "green" updates d. Consequential Loss Coverage
c. Increased cost of loss and related expenses for "green" updates
All of the following would need a License and Permit Bond, EXCEPT: a. Plumbers b. Electricians c. Lawyers d. Real Estate Agents
c. Lawyers
The insured owns a two family dwelling and is covered under a Homeowner policy. One of the units is rented. The insured also maintains a small incidental business in the structure. In case of a covered loss, which of the following would NOT be paid under Coverage D - Loss of Use? a. Rental income from the rental unit b. Additional living expenses incurred by the insured c. Loss of income from the incidental business d. Rental income and additional living expenses
c. Loss of income from the incidental business
What coverage under the BOP automatically applies if a customer slips and falls on the named insured's premises, regardless of legal liability? a. Business liability coverage b. Personal injury coverage c. Medical expense coverage d. Advertising injury coverage
c. Medical expense coverage
While stopped in traffic at a red light your car is hit in the rear by Mr. Jones. The damage to your car would be addressed by which of the following coverages? a. Your collision insurance only. b. Your comprehensive only. c. Mr. Jones property damage liability and your collision insurance. d. Mr. Jones property damage liability only.
c. Mr. Jones property damage liability and your collision insurance.
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)? a. Policy A will pay $70,000 and Policy B will pay $70,000. b. Policy A will pay $40,000 and Policy B will pay $100,000. c. Policy A will pay $93,333 and Policy B will pay $46,667. d. Policy A will pay $140,000 and Policy B will pay $0.
c. Policy A will pay $93,333 and Policy B will pay $46,667. 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.
Which of the following is not true of the 1943 New York Standard Fire policy? a. Covers direct loss claims b. Pays for a hostile fire loss c. Provides replacement cost coverage on contents d. Provides only named peril coverage
c. Provides replacement cost coverage on contents
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 wrongdoer and as a deterrent to similar conduct by others, is known as: a. Compensatory damages. b. General damages. c. Punitive damages. d. Special damages.
c. Punitive damages.
The ISO standardized Businessowners policy provides a limit of $2,500 for Fire Department Service charges. This limit applies: a. Per policy year. b. To one specified location. c. Regardless of the number of services or number of buildings. d. Coverage is limited as to the number of fire departments that respond.
c. Regardless of the number of services or number of buildings.
What coverage is provided under the BOP for a steam boiler explosion? a. The steam boiler itself is covered. b. The steam boiler and the damage to the building and contents are covered. c. Steam boiler explosions are excluded under the BOP. d. A separate limit is provided under the BOP for steam boiler explosions.
c. Steam boiler explosions are excluded under the BOP.
