AINS 22 -Chp 6, AINS 22- Chp 7, CPCU 553, Chapter 8, AINS 22-Chp 11, Unit 4: Homeowners, Dwelling and Related Coverages, Chapter 12 - Personal Auto Policy, AINS 22 - CHAPTER 1, 4 Part A - Liability Coverage Quiz, Smart Exam Assignment 1, 4 Part F - G...

Li has a Personal Auto Policy (PAP) for his car with a $100,000 limit for uninsured motorists (UM) coverage. He was injured in an accident with a legally intoxicated uninsured motorist. Li submitted a UM claim to his insurer. The case went to trial and Li was awarded $50,000 for medical bills, $10,000 for rehabilitation expenses, $5,000 for lost wages, and $10,000 for punitive damages. How much can Li collect under the UM coverage of his PAP?

$65,000

Part A - Liability Coverage - Supplementary Payments

- Cost of bail bonds - pays up to $250 for cost of bail bonds - Premium on appeal bonds and bonds to release attachments - Interest accruing after a judgment - Loss of earnings because of attendance at trials - Other reasonable expenses incurred a the insurer's request

Rating Factors

-for liab cov. factors include: age, sex, marital status, driving record, vehicle use, annual mileage, territory of garage, and liab limits selected. Some states use number of years of driving experience instead of age - For physical damage, factors include: all of the above, plus the year, make, and model of the insured vehicle, and the deduct selected

Part F - General Provisions 4. Legal Action Against the Insurer 5. Insurer's Right to Recover Payment 6. Policy Period and Territory

4. Legal Action Against the Insurer -no legal action can be brought against the insurer until the insured has fully complied with all of the policy terms 5. Insurer's Right to Recover Payment - often called subrogation clause -insurer pays loss to an insured who is not at fault, insurer can go after the at-fault party for payment of loss 6. Policy Period and Territory -PAP only applies to accidents within the policy period

Part F - General Provisions 8. Transfer of Insured's Interest in the Policy 9. Two or More Auto Policies

8. Transfer of Insured's Interest in the Policy -states that the named insured's rights and duties under the policy cannot be assigned to another party without the insurer's written consent 9. Two or More Auto Policies - Provisions prevents staking

Incontestable clause

A clause that states that the insurer cannot contest the policy after it has been in force for a specified period, such as two years, during the insured's lifetime.

Suicide clause

A clause that states the insurer will not pay the death benefit if the insured commits suicide within a certain period (usually two years) after policy inception.

Endorsement

A document that amends an insurance policy.

Human life value approach

A mathematical computation used to determine how much life insurance is needed by valuing a human life.

Special damages

A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person's loss, such as medical expenses or lost wages.

The Johnson family leases an apartment. Under the lease, the Johnson's agree to assume all liability of the landlord arising out of the leased premises. This is an example of

A hold-harmless agreement

Uninsured motor vehicle

A land motor vehicle or trailer that is not insured for bodily injury liability, is insured for less than the financial responsibility limits, is a hit-and-run vehicle, or whose insurer denies coverage or becomes insolvent.

Reinsurance facility

A state-wide reinsurance pool to which insurers can assign premiums and losses for high-risk drivers; original insurers service the policies, but all insurers in the pool share the losses and expenses of the facility in proportion to the total auto insurance they write in that state.

Insuring agreement

A statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service.

Proof of loss

A statement of facts about a loss for which the insured is making a claim.

Flood hazard boundary map

A temporary map designed to identify flood-prone areas in the community.

Vehicle identification number (VIN)

A unique number that is assigned to each vehicle and that identifies certain vehicle characteristics.

The risk associated with the nature of the industry in which the issuer of an investment operates and the management of the issuer itself is known as Select one: A. Business risk. B. Financial risk. C. Liquidity risk. D. Market risk.

A. Business risk.

Perils of the sea

Accidental causes of loss that are peculiar to the sea and other bodies of water.

Flexible-Premium Annuity

Annuity where premium amount and frequency is determined by investor/owner

Single-Premium Annuity

Annuity where premium is one lump-sum payment

The medical payments coverage in the Personal Auto Policy (PAP) applies to

Any person occupying a covered auto.

Policy provision

Any phrase or clause in an insurance policy that describes the policy's coverages, exclusions, limits, conditions, or other features.

Policy condition

Any provision that qualifies an otherwise enforceable promise made in the policy.

An individual is concerned about dying in a train crash and chooses not to travel by rail. This is an example of

Avoidance.

Contents coverage for single family dwellings under the National Flood Insurance Program (NFIP) emergency program is generally limited to Select one: A. 10% of dwelling coverage. B. $10,000 C. $35,000 D. $100,000

B. $10,000

In a state with a modified no-fault plan, how will the insurance companies pay the bodily injury expenses resulting from an automobile accident between two unrelated drivers insured with the required no-fault coverage? Select one: A. Each insurer will pay for the other driver's damages. B. Each insurer will pay for its own policyholder's damages. C. The insurers must determine which driver was greater than 50% at fault. The insurer of that driver will compensate both parties. D. The insurers must determine the percentage to which each driver was at fault. The insurers will compensate each driver based on those percentages.

B. Each insurer will pay for its own policyholder's damages.

What is the largest category engaged in group life insurance? A. Schools B. Employers C. Credit unions D. Religious affiliations

B. Employers

In the auto insurance policy definitions, an eligible private passenger auto, pickup, or van of which the named insured becomes the owner during the policy period is a Select one: A. Temporary substitute vehicle. B. Newly acquired auto. C. Replacement auto. D. Trailer.

B. Newly acquired auto.

Most Fair Access to Insurance Requirements (FAIR) plans will not cover Select one: A. Properties which the voluntary market is unwilling to insure. B. Properties that are vacant or open to trespass. C. Properties that are susceptible to damage by riot or civil commotion. D. Properties in need of credit support.

B. Properties that are vacant or open to trespass.

Under the HO-3 policy Section I—Conditions, the Abandonment of Property Condition A. Outlines a method for resolving disagreements between the insured and the insurer. B. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. C. Establishes how the amount to be paid for a property loss will be determined. D. States that the insurer will adjust all losses with the insured or the insured's spouse, if a resident in same household.

B. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it.

All of the following are necessary to determine a person's human life value, EXCEPT: Select one: A. The person's cost of self-maintenance B. The needs of survivors C. A present value factor D. An estimation of Social Security benefits

B. The needs of survivors

In general, a loss prevention measure is implemented to Select one: A. Spread loss exposures over numerous projects or products. B. Reduce loss severity. C. Break the sequence of events that leads to a loss. D. Keep backup information and assets in reserve.

C. Break the sequence of events that leads to a loss.

Adverse selection occurs because A. The underwriting guidelines are inadequate to detect applicants who will have losses. B. An underwriter unfairly discriminates in the underwriting process. C. People with the highest probability of loss are the ones most likely to purchase insurance. D. People who intend to commit insurance fraud purchase coverage.

C. People with the highest probability of loss are the ones most likely to purchase insurance.

Which one of the following is a warranty that is likely to be required by an insurer that underwrites a boatowners or yacht policy? A. Uninsured boaters B. Contractual liability C. Seaworthiness D. Transportation

C. Seaworthiness

Combination Plan

Combines features of fixed-dollar and variable annuities. Insurer might make the investment decisions in the interest of the owner, but the owner bears the investment risk.

An insurance policy states that the insured must cooperate with the insurer in any legal proceedings. This is an example of a policy

Condition

Collision coverage

Coverage for direct and accidental loss or damage to a covered auto caused by collision with another object or by overturn.

The insuring agreement often contains policy provisions regarding the

Covered causes of loss

True or False: A nondwelling structure from which a business is conducted would be covered under the HO-3 policy.

False

To determine the extent of coverage a policy provides, pre-loss policy analysis almost exclusively relies on

Scenario analysis.

Cancellation

Termination of a policy, by either the insurer or the insured, during the policy term.

Which one of the following is the primary risk to financial assets for a retiree?

That the assets allocated for retirement will be insufficient

Fixed-period option

The death benefits are paid to a beneficiary over some fixed period of time. The amount of the payment is a function of the amount of the death benefit, the rate of interest paid on the balance of the death benefit held by the insurer, the frequency of benefit payments, and the period selected by the beneficiary

Capital apprectiation

The increase in value of investments over a relatively long period. Often intended to help investors pay for long-term goals.

Risk management process

The method of making, implementing, and monitoring decisions that minimize the adverse effects of risk on an organization.

Inflation (Purchasing power) risk

the risk associated with the purchasing power of an investment's proceeds

Appraisal

A method of resolving disputes between insurers and insureds over the amount owed on a covered loss.

Compensatory damages

A monetary award equivalent to the actual value of injuries or damage sustained by the aggrieved party.

General damages

A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific measurable expenses.

Defined contribution plan

A pension plan in which the contribution is a percentage of the participating employee's earnings or a flat dollar amount.

Defined benefit plan

A pension plan that is based on the monthly retirement benefit rather than on the contribution rate.

Third party

A person or business who is not a party to the insurance contract but who asserts a claim against the insured.

Liberalization Clause

A policy condition providing that if a policy form is broadened at no additional premium, the broadened coverage automatically applies to all existing policies of the same type.

Exclusion

A policy provision that eliminates coverage for specified exposures.

Write-Your-Own (WYO) program

A program allowing private insurers to write flood insurance under the National Flood Insurance Program (NFIP).

Warranty

A promise made by an insured that guarantees compliance with the insurer's conditions.

For a personal loss exposure to be present

The possibility of loss must exist

Liana insured her car with a Personal Auto Policy (PAP) that has split limits for liability coverage of $100/$300/$75. She was found by a court to be at fault for an accident that injured the other driver and ordered to pay a judgment of $98,000, plus $6,000 in prejudgment interest. How much will Liana's insurer pay under her PAP?

$100,000

Punitive damages (exemplary damages)

A payment awarded by a court to punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct; the award need not bear any relation to a party's actual damages.

Marta insured her home with an HO-3 policy that includes a Personal Property Replacement Cost Loss Settlement endorsement. Her large screen television fell off the wall and was damaged beyond repair. She had paid $2,000 for it. At the time of loss it had an actual cash value of $800 and a replacement cost of $1,500. Because she found that she had little time to watch television, she decided not to replace the TV. How much did her insurer pay on the claim? A. $0 B. $800 C. $1,500 D. $2,000

A. $0

Regarding group life insurance, instead of receiving individual policies, insured members receive Select one: A. A certificate of insurance. B. A copy of the Declarations page. C. No confirmation of coverage. D. A copy of the master policy.

A. A certificate of insurance.

The perils covered for Coverage C—Personal Property of the HO-3 policy differ significantly from the special form coverage for Coverage A and B. Damage from which one of the following events would be covered under Coverage A but not for Coverage C? Select one: A. A chandelier accidently fell from the ceiling and damaged the dining room floor, the dining room table, and a centerpiece. B. Due to an ice dam, water enters a home causing damage to the home and furniture inside. C. A pipe froze and leaked causing damage to the floor and personal property while the homeowners were asleep. D. Due to a power surge the home heat pump and a window air conditioner suffered electrical damage.

A. A chandelier accidently fell from the ceiling and damaged the dining room floor, the dining room table, and a centerpiece. A chandelier accidently falling from the ceiling and damaging the dining room floor, the dining room table, and a centerpiece would be covered for the damage to the floor but not the table or centerpiece.

Universal life insurance is Select one: A. A life insurance policy that separately states the protection, savings, and expense components. B. A savings account that provides for life insurance payments from the interest on the savings. C. A type of term life insurance without cash values. D. An insurance and savings account that requires disciplined adherence to monthly payments.

A. A life insurance policy that separately states the protection, savings, and expense components.

There are three exclusions in the HO-3 policy that apply only to Coverages A and B in addition to the basic nine exclusions in Section I—Exclusions. These three exclusions are weather, Select one: A. Acts or decisions of any person, group, organization, or governmental body, and faulty workmanship. B. Acts or decisions of any person, group, organization, or governmental body, and intentional loss. C. Ordinance or law, and faulty workmanship. D. Governmental actions, and faulty workmanship.

A. Acts or decisions of any person, group, organization, or governmental body, and faulty workmanship.

Which of the following is NOT a common trigger for benefits for LTC policies? A. Age B. Inability to complete a specified activities of daily living (ADLs) C. Medical necessity D. Cognitive impairment

A. Age

Consumer-Directed Health Plans (CDHPs) usually include these 3 major components: A. An HSA or HRA, high-deductible medical coverage, and access to informational tools for making healthcare decisions B. HMOs, PPOs, and EPOs C. Medicare, major medical, and supplemental benefits coverages D. Low premiums, deductibles, an out-of-pocket expenses

A. An HSA or HRA, high-deductible medical coverage, and access to informational tools for making healthcare decisions

Under the Personal Auto Policy (PAP), a branch falling from a tree and denting the hood of a covered auto is an example of Select one: A. An other than collision loss. B. A collision loss. C. An uninsured motorists loss. D. A liability loss.

A. An other than collision loss.

Under the tort liability system, injured accident victims must prove that Select one: A. Another party was at fault before they can collect damages. B. They are unable to purchase insurance from another source before they can collect damages. C. The insurance limits they have purchased are equal to or greater than the state minimum limits before they can collect damages. D. They have met the financial responsibility laws of the state before they can collect damages.

A. Another party was at fault before they can collect damages.

Unlike in the HO-3 policy, the DP-3 conditions Choose one answer. A. Are contained in a single section. B. Apply only to Coverage A C. Apply to both Section I and Section II. D. Are added by endorsement.

A. Are contained in a single section.

Unlike in the HO-3 policy, the DP-3 policy conditions Select one: A. Are contained in a single section. B. Apply only to Coverage A. C. Apply to both Section I and Section II. D. Are added by endorsement.

A. Are contained in a single section.

A policy excludes losses that result from the insured's carelessness. Which one of the following best explains the purpose for this exclusion? A. Assist in managing morale hazards B. Assist in keeping premiums reasonable C. Eliminate coverages requiring special treatment D. Reduce likelihood of coverage duplications

A. Assist in managing morale hazards

All of the following usually are excluded by a personal umbrella policy, EXCEPT: Select one: A. Bodily injury B. Intentional injury C. Damage to the insured's property D. Professional liability

A. Bodily injury

An uninsured motor vehicle under the Personal Auto Policy (PAP) can mean a land motor vehicle or trailer of any type that meets which one of the following criteria? Select one: A. Bodily injury liability limit is less than the financial responsibility law. B. Bodily injury insurance or bond applies to the vehicle at the time of an accident. C. A bodily injury liability policy applies to it at the time of an accident with an insurance company that is solvent. D. It is a hit-and-run vehicle whose operator can be identified and it hits the named insured's covered auto.

A. Bodily injury liability limit is less than the financial responsibility law.

Which one of the following is an exclusion to part A of the Personal Auto Policy (PAP)? Select one: A. Bodily injury to an insured's employee B. A prejudgement interest payment C. Bodily injury to any family members using a covered auto D. Any organization responsible for the acts of a person using a covered auto

A. Bodily injury to an insured's employee

Which one of the following is a certificate of debt that includes the seller's promise to pay investors a fixed amount on a fixed maturity date? Select one: A. Bond B. Mutual fund C. Annuity D. Stock

A. Bond

Bob and Martha have an unendorsed HO-3 policy. They purchased a new home and leased furniture for the living room and dining room. The furniture leasing company asked to be added as an additional insured for the leased furniture. If they incur a covered loss to the leased property, a claim draft would likely be payable to Select one: A. Both the named insured and the loss payee. B. Neither the named insured nor the loss payee. C. The loss payee only. D. The named insured only.

A. Both the named insured and the loss payee.

When determining the amount of life insurance to own using the needs approach, final expenses needs include Select one: A. Cash needed immediately for funeral expenses, uninsured medical bills, estate taxes and probate. B. Cash needed immediately for distribution to heirs. C. A long term fund needed to pay for long term secured and unsecured debts. D. A long term fund needed to establish retirement income for a surviving spouse and an education fund for dependent children.

A. Cash needed immediately for funeral expenses, uninsured medical bills, estate taxes and probate.

An insurance policy states that the insured must cooperate with the insurer in any legal proceedings. This is an example of a policy: A. Condition. B. Definition. C. Insuring agreement. D. Declaration.

A. Condition.

The Richleys have an HO-3 policy. A deliveryman cut across the grass, rather than using the walk to the Richleys' front door, and twisted his ankle on the unlevel surface. He had to go to the emergency room and incurred medical expenses of $750. Which one of the following coverages, if any, would pay for the $750 in expenses? Select one: A. Coverage F—Medical Payments to Others B. Coverage E—Personal Liability C. No coverage D. Section II—Additional Coverages

A. Coverage F—Medical Payments to Others CorrectCorrect. Coverage F—Medical Payments to Others would pay for the $750 in expenses.

Under an ISO Mobilehome Endorsement, accidental damage to permanently installed furniture is A. Covered under Section I, Coverage A—Dwelling. B. Covered under Section I, Coverage B—Other Structures. C. Covered under Section I, Coverage C—Personal Property. D. Covered under Section I, Coverage D—Loss of Use.

A. Covered under Section I, Coverage A—Dwelling.

Which one of the following is an insured peril under Coverage C of an unendorsed HO-3 policy? Select one: A. Damage to furniture from sudden release of soot from the furnace B. Damage to the outside awning from the weight of snow and ice C. Damage to china and crystal from earthquake tremors D. Damage to the kitchen table from the ceiling fan that fell on it

A. Damage to furniture from sudden release of soot from the furnace Damage to furniture from sudden release of soot from the furnace is an insured peril under Coverage C of an unendorsed HO-3.

Which one of the following losses is covered under Section I of the HO-3 policy? Select one: A. Damage to the insured's flooring due to a sudden leak in the insured's dishwasher B. Damage to the exterior of the insured's house due to environmental pollution C. Injury to the insured's dog D. Wear and tear damage to the insured's walls

A. Damage to the insured's flooring due to a sudden leak in the insured's dishwasher CorrectCorrect. The HO-3 provides coverage for sudden and accidental discharge of water, like water flowing suddenly from a dishwasher leak.

Which one of the following is an employer-sponsored retirement plan that forces employees to completely assume the investment risk of earnings volatility? Select one: A. Defined contribution plan B. Roth IRA C. Defined benefit plan D. Defined benefit 401(k) plan

A. Defined contribution plan

A pension plan in which the contribution rate or amount is specified, but the retirement benefit is variable is a Select one: A. Defined contribution plan. B. Defined benefit plan. C. Individual retirement account. D. Profit-sharing plan.

A. Defined contribution plan.

In addition to primary rating factors, auto insurers may use additional rating factors that can reduce the cost of insurance to the policyholder. A credit for driver education is justified by regulators because Select one: A. Driver training can help reduce the frequency and severity of losses. B. Competition is increased by the availability of discounts. C. Inexperienced drivers must be charged higher rates. D. Children of existing policyholders are less likely to change insurers.

A. Driver training can help reduce the frequency and severity of losses.

Which one of the following is used to calculate the base premium for a homeowners policy? Select one: A. Dwelling location B. Endorsements C. Deductible changes D. Claim history

A. Dwelling location

Under the HO-3 policy Section I—Conditions, the Loss Settlement condition: A. Establishes the process for determining the amount to be paid for a property loss. B. Outlines a method for resolving disagreements between the insured and the insurer. C. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. D. States that the insurer will adjust all losses with the insured or the insured's spouse, if a resident in the same household.

A. Establishes the process for determining the amount to be paid for a property loss.

Property described in Coverages A, B, and C of an HO-3 policy that is destroyed, confiscated, or seized by order of any governmental or public authority is Select one: A. Excluded. B. Covered. C. Covered, but subject to a special sublimit. D. Covered in excess of a large deductible.

A. Excluded.

Which one of the following causes of damage to a boat hull is covered by a boatowners policy written on a special form ("all-risks") basis? A. Explosion B. Wear and tear C. Freezing of ice D. War

A. Explosion

Under the Write-Your-Own (WYO) program of the National Flood Insurance Program (NFIP), which one of the following determines the rates? A. Federal Insurance Administration (FIA) B. Private insurers C. Federal Emergency Management Agency (FEMA) D. Flood Insurance Reform Act of 2004

A. Federal Insurance Administration (FIA)

Which one of the following annuity types entails the insurer bearing the investment risk? A. Fixed-dollar annuity B. Variable annuity C. Combination plan D. Tax-exempt annuity

A. Fixed-dollar annuity

The water damage exclusion in the HO-3 policy eliminates coverage for losses caused by Select one: A. Flood, surface water, waves, and water or water-borne material such as sewage that backs up through sewers and drains. B. Flood, surface water, and waves, but not water-borne material such as sewage that backs up through sewers and drains. C. Flood caused by heavy rains, but not waves or tidal flooding. D. Waves and tidal flooding, but not flood caused by heavy rains.

A. Flood, surface water, waves, and water or water-borne material such as sewage that backs up through sewers and drains.

The Section II Duties of an Injured Person - Coverage F condition stipulates that if an individual makes a claim for an occurrence under Medical Payments to Others coverage, the injured person must fulfill all of the following requirements, EXCEPT: A. Forward legal documents promptly to the insurer B. Give the insurer written proof of the claim as soon as possible C. Authorize the insurer to obtain copies of medical reports and records D. Submit (the injured person) to a physical exam by a doctor chosen by the insurer as often as the insurer requires such exams

A. Forward legal documents promptly to the insurer

The Personal Effects Form is specifically designed for A. Frequent travelers. B. Homeowners. C. Salespersons. D. Financial institutions.

A. Frequent travelers.

The HO-8 policy contains a special building valuation clause that specifies that damage will be covered on a Select one: A. Functional replacement cost basis. B. Historical cost basis. C. Actual cash value basis. D. Replacement cost basis.

A. Functional replacement cost basis.

The major exclusions commonly found in small boat policies include repair or service, business pursuits, and A. General risks of direct loss B. General risks of indirect loss C. Specific risks of direct loss D. Specific risks of indirect loss

A. General risks of direct loss

What type of renewability provision is found in most long-term care insurance policies? Select one: A. Guaranteed renewable B. Noncancelable C. Conditionally renewable D. Optionally renewable

A. Guaranteed renewable

Which one of the following homeowners forms provides the broadest property coverage of any of the standard unendorsed homeowners forms? Select one: A. HO-5 policy. B. HO-3 policy. C. HO-2 policy. D. HO-8 policy.

A. HO-5 policy.

Which one of the following statements about the effect of inflation on retirement planning is true? Select one: A. Healthcare costs are especially sensitive to higher inflation rates. B. The effect of inflation generally needs to be considered only during the first few years of retirement. C. Inflation is of little concern to retirees whose income is fixed. D. During inflationary periods, interest rates tend to drop.

A. Healthcare costs are especially sensitive to higher inflation rates.

The primary reason for selling a personal umbrella policy is to provide Select one: A. High liability coverage limits. B. Worldwide coverage. C. High property coverage limits. D. Broad coverage with no retained limit.

A. High liability coverage limits.

An insured may have more than one auto covered by a single Personal Auto Policy (PAP). Which one of the following statements regarding coverage under Part D of the PAP is true? A. If a nonowned auto is damaged by a covered cause of loss, Part D of the PAP provides the broadest coverage applicable to any covered auto shown in the declarations. B. Part D of the PAP provides primary coverage for damage to a nonowned auto regardless of the existence of other physical damage coverage on the auto. C. Part D of the PAP provides coverage for damage to nonowned autos made available for the insured's regular use. D. If a nonowned auto is damaged by a covered cause of loss, Part D of the PAP provides coverage only if the owner of the auto has physical damage coverage.

A. If a nonowned auto is damaged by a covered cause of loss, Part D of the PAP provides the broadest coverage applicable to any covered auto shown in the declarations.

Which one of the following statements is true? Select one: A. If the Personal Auto Policy (PAP) provides physical damage coverage for owned autos, it also provides coverage for rental vehicles, subject to the applicable exclusions. B. The physical damage section of the Personal Auto Policy (PAP) provides coverage for theft of compact disks in a covered auto if the auto was locked at the time of the theft. C. Transportation expenses under the Personal Auto Policy (PAP) are subject to the deductible amount applicable to the covered cause of loss. D. The physical damage section of the Personal Auto Policy (PAP) provides coverage for damage to tires on a covered auto resulting from the insured striking a pothole.

A. If the Personal Auto Policy (PAP) provides physical damage coverage for owned autos, it also provides coverage for rental vehicles, subject to the applicable exclusions.

A family funds a retention program by maintaining a savings account for the purpose of paying for any losses that fall within the deductible of its homeowners policy. Which one of the following steps in the risk management process is the family following? Select one: A. Implementing selected risk management techniques B. Selecting appropriate risk management techniques C. Examining the feasibility of risk management techniques D. Analyzing loss exposures

A. Implementing selected risk management techniques

The HO-5 policy special limits for jewelry and furs, firearms, and silverware apply to all of the following items, EXCEPT: Select one: A. Intentionally lost items B. Misplaced items C. Accidentally lost items D. Stolen items

A. Intentionally lost items

With respect to a nonowned vehicle, medical payments coverage under a Personal Auto Policy (PAP): A. Is excess over other collectible auto insurance that pays medical expenses. B. Is primary for medical and funeral expenses. C. Is shared on a pro rata basis. D. Are specifically excluded from coverage.

A. Is excess over other collectible auto insurance that pays medical expenses.

A temporary substitute auto under the Personal Auto Policy (PAP) Select one: A. Is treated the same as other nonowned autos for physical damage coverage. B. Is used as a long-term substitute for another covered auto. C. Cannot be covered for medical payments coverage. D. Cannot be covered for uninsured motorists coverage.

A. Is treated the same as other nonowned autos for physical damage coverage.

Which one of the following statements about the elimination period in a long-term care insurance policy is true? Select one: A. It functions as a time deductible before benefits are payable. B. It allows the insurer to pay reduced benefits if the insured needs long-term care before a policy has been in force for a specified period. C. It is the period the insurer has to terminate the policy if the insured is unacceptable from an underwriting standpoint. D. It is the period an insurer will pay home health care benefits before an insured qualifies for institutional benefits.

A. It functions as a time deductible before benefits are payable.

Bob and Diane Rothwell's rural home is insured with an HO-3 policy. During spring clean up, the Rothwells hired a college student to help clean up and burn the brush that had accumulated over the prior season. As the brush pile was burning, an unexpected wind carried the fire across the Rothwells' pasture. Bob and Diane, their 15-year-old son Jeff, Diane's father who was visiting, the college student, and a neighbor all worked together to put out the fire before it spread to the neighbor's yard. They all suffered some burns. All of the parties involved in fighting the fire will be able to collect compensation for their medical bills to treat their burns from the Medical Payments to Others coverage from the Rothwells' HO-3, EXCEPT: A. Jeff B. The neighbor C. The college student D. Diane's father

A. Jeff

Bob and Diane Rothwell's rural home is insured with an HO-3 policy. During spring clean up, the Rothwells hired a college student to help clean up and burn the brush that had accumulated over the prior season. As the brush pile was burning, an unexpected wind carried the fire across the Rothwells' pasture. Bob and Diane, their 15-year-old son Jeff, Diane's father who was visiting, the college student, and a neighbor all worked together to put out the fire before it spread to the neighbor's yard. They all suffered some burns. All of the parties involved in fighting the fire will be able to collect compensation for their medical bills to treat their burns from the Medical Payments to Others coverage from the Rothwells' HO-3, EXCEPT: Select one: A. Jeff B. The neighbor C. Diane's father D. The college student

A. Jeff Jeff's medical bills will not be covered, because Jeff is an insured. Medical Payments to Others covers medical payments incurred by others, not insureds or regular household residents.

Which one of the following causes of damage to a boat hull is covered by a boatowners policy written on a special form ("all-risks") basis? A. Lightning B. Weathering C. Freezing of ice D. War

A. Lightning

Annual tax-deductible contributions to a traditional individual retirement account (IRA) are Select one: A. Limited to a certain amount per year. B. Unlimited. C. A maximum of 50% of taxable compensation. D. A minimum of 50% of taxable compensation.

A. Limited to a certain amount per year.

In analyzing their loss exposures, the Jones family focuses on their losses over the past 10 years. They recall that family members were responsible for three auto accidents. They also recall that three years ago a thief broke into their home and stole cash, and last year a windstorm caused damage to their roof. Which one of the following loss characteristics is the Jones family primarily focusing on? A. Loss frequency B. Loss severity C. Total dollar losses D. Timing

A. Loss frequency

A family rents its vacation home to others for several months each year. A fire caused extensive damage to the home just before the rental season began one year, and the family was unable to collect any rent on the property until it was repaired. This inability to collect rent is an example of which one of the following outcomes of loss? A. Lost income B. Increased expenses C. Reduction in value of property D. Special damages

A. Lost income

Which of the following best describes the risk control technique of separation? A. Maintaining an additional location for safekeeping of assets B. Allocating assets among a variety of investments C. Creating additional copies of valuable papers D. Deciding not to purchase an asset

A. Maintaining an additional location for safekeeping of assets.

Sandra, whose car is covered by a Personal Auto Policy (PAP), was injured in an accident along with her neighbors who were riding as guests in her car. Tragically, the neighbors' daughter was killed in the accident. All of the following are categories of expenses resulting from the accident that would generally be paid under Sandra's medical payments coverage, EXCEPT: A. Medical services rendered within five years of the accident B. Funeral service expenses C. Medical expenses for injuries sustained by Sandra's neighbors riding in the car D. Surgical expenses for Sandra's neighbors

A. Medical services rendered within five years of the accident

In an HO-3 policy, the definitions Select one: A. Might be different from dictionary definitions. B. Are the same as dictionary definitions. C. Must comply with applicable provisions. D. Have no effect on the coverage provided.

A. Might be different from dictionary definitions.

Marcia has sustained serious injuries in an automobile accident with another driver. If the no-fault automobile insurance law in Marcia's state permits her to sue the other driver for economic damages only if her economic damages exceed her no-fault coverage limit, what type of no-fault law applies in Marcia's state? A. Modified no-fault B. Pure no-fault C. Add-on no-fault D. Personal injury protection

A. Modified no-fault

Which of the following no-fault plans has restrictions on the right to sue an at-fault driver but does no entirely eliminate the right is a: A. Modified no-fault plan B. Add-on plan C. Choice no-fault plan D. Personal injury protection plan

A. Modified no-fault plan

Which one of the following statements about long-term care insurance is true? Select one: A. Most individual policies have a guaranteed renewability provision. B. The majority of policies sold today cover care only if it is provided in a nursing home. C. To prevent adverse selection, most individual policies have preset benefits and offer little choice to consumers. D. A nonforfeiture option provides cost-of-living increases.

A. Most individual policies have a guaranteed renewability provision.

Compulsory insurance laws are considered to be superior to financial responsibility laws because Select one: A. Motorists must provide proof of financial responsibility before an accident occurs, rather than afterward. B. There are minimal delays in compensating the victim of an automobile accident through effective use of compulsory auto insurance. C. Compulsory insurance laws do not require that the victims of an automobile insurance accident prove fault to receive compensation. D. States enforce compulsory insurance laws more effectively than financial responsibility laws.

A. Motorists must provide proof of financial responsibility before an accident occurs, rather than afterward.

People who do not regularly own an auto or who occasionally drive another person's vehicle or a rental vehicle can secure coverage for the loss exposures arising out of their use of a nonowned auto by purchasing a Personal Auto Policy (PAP) with the: A. Named Non-Owner Coverage endorsement. B. Extended Non-Owned Coverage—Vehicles Furnished or Available for Regular Use endorsement. C. Miscellaneous Type Vehicle endorsement. D. Auto Loan/Lease Coverage endorsement.

A. Named Non-Owner Coverage endorsement.

Which type of renewal provision in a disability income policy is most attractive to insureds? Select one: A. Noncancelable B. Guaranteed renewable C. Conditionally renewable D. Optionally renewable

A. Noncancelable

Which one of the following Additional Coverages under the HO-3 policy is dependent on another covered loss occurring? Select one: A. Ordinance or Law B. Collapse C. Tree, Shrubs, and Other Plants D. Glass or Safety Glazing Material

A. Ordinance or Law

An add-on plan adds no-fault benefits to auto insurance policies. A feature that distinguishes an add-on plan from a modified no-fault plan is that an add-on plan A. Places no restrictions on the injured person's right to sue a negligent party for economic or noneconomic damages. B. Restricts the right of the injured person to sue a negligent party for economic damages, but places no restrictions on the right to sue for noneconomic damages. C. Is subject to a monetary threshold. D. Is subject to a verbal threshold.

A. Places no restrictions on the injured person's right to sue a negligent party for economic or noneconomic damages.

Some specialty insurers provide auto insurance to high-risk drivers. The auto insurance policies from these specialty insurers generally have Select one: A. Premiums that are substantially higher than premiums charged in the standard market. B. Premiums that are subsidized by all insurers writing automobile insurance in the state according to an assessment representing their proportionate share of losses and expenses. C. Limits of insurance that are lower than the state's compulsory insurance laws. D. Collision insurance coverage with a low deductible when the vehicle has a loss payee.

A. Premiums that are substantially higher than premiums charged in the standard market.

In which one of the following ways do Fair Access to Insurance Requirements (FAIR) plans provide needed support for credit? A. Provide adequate property insurance coverage. B. Enact legislation in response to local market needs C. Provide loans at affordable rates. D. Define urban areas that pose greater-than average risk of loss.

A. Provide adequate property insurance coverage

Under the HO-3 policy Section I—Conditions, the Abandonment of Property Condition Select one: A. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. B. Establishes how the amount to be paid for a property loss will be determined. C. Outlines a method for resolving disagreements between the insured and the insurer. D. States that the insurer will adjust all losses with the insured or the insured's spouse, if a resident in same household.

A. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it.

In homeowners policy rating, the base premium is based on several factors. Which one of the following is one of these factors? A. Public protection class B. Claim history C. Insurance score D. Package policy credits

A. Public protection class

A conscious act or decision not to act that reduces the frequency and/or severity of losses or makes losses more predictable is known as: A. Risk control B. Risk management C. Risk financing D. Risk assessment

A. Risk control

Marc and Kathi have a Personal Auto Policy (PAP). Their foster child Marie, who lives with them, just got her license. Which one of the following statements is correct with regard to Marie's PAP coverage? Select one: A. She is covered because Marie lives in the household. B. She is not covered because Marie is not related by blood. C. She is covered as long as Marie is an operator of a vehicle owned by Marc or Kathi. D. She is not covered since Marie has not been adopted by Marc and Kathi.

A. She is covered because Marie lives in the household.

A retirement plan in which the employer contributes to an IRA established for each eligible employee, with annual contribution limits substantially higher than those allowed for traditional IRAs, describes a Select one: A. Simplified Employee Pension (SEP) plan. B. Section 403(b) plan. C. Profit-sharing plan. D. Section 401(k) plan.

A. Simplified Employee Pension (SEP) plan.

Which one of the following statements about original Medicare is true? Select one: A. Some people under age 65 may be eligible for coverage. B. Part B is financed solely by premiums paid by voluntarily enrolled persons. C. Part A provides benefits for long-term custodial care. D. It is a means-tested welfare program.

A. Some people under age 65 may be eligible for coverage.

Legal liability imposed by a specific statute or law is: A. Statutory Liability B. Tort Liability C. Absolute Liability D. Contractual Liability

A. Statutory Liability

Which one of the following statements regarding compulsory insurance laws is most accurate? A. Such laws provide incomplete protection due to low minimum requirements. B. All accident victims are guaranteed compensation. C. Accident victims are compensated immediately with no delay from the legal system. D. Such laws encourage careless driving and increase the number of automobile accidents.

A. Such laws provide incomplete protection due to low minimum requirements.

Technical words or phrases used in an insurance policy but not defined in the policy are given their Select one: A. Technical meanings. B. Legal meanings. C. Cultural meanings. D. Ordinary meanings.

A. Technical meanings.

Which one of the following would be an exception to the Coverages E and F Business exclusion to the liability coverage provided by the HO-3 policy? A. Teenage son of named insured painting neighbor's fence in exchange for a few dollars B. Charging neighborhood families for home daycare services C. Full-time beauty salon in the home D. Full-time landscaping business

A. Teenage son of named insured painting neighbor's fence in exchange for a few dollars

The underinsured motorists (UIM) coverage can be added to the Personal Auto Policy (PAP) to provide coverage to the insured when a negligent driver has auto liability limits Select one: A. That are lower than the limits provided by the underinsured motorists coverage of the insured person. B. Equal to or greater than the insured's underinsured limits but not adequate to pay for the injuries caused by the accident. C. That have been cancelled. D. Supplemented by a personal umbrella policy.

A. That are lower than the limits provided by the underinsured motorists coverage of the insured person.

Tom recently met with his insurance agent to discuss his homeowners coverage. The agent has suggested that Tom change his present HO-2 policy to either an HO-3 policy or an HO-5 policy. Which one of the following is a reason the agent might give to support his suggestion? Select one: A. The HO-3 and the HO-5, in particular, will provide broader coverage for his home and personal property. B. The HO-3 will be less expensive saving Tom some premium dollars for similar coverage. C. The HO-3 will provide open perils coverage for Tom's personal property. D. The HO-5 will provide coverage without a deductible.

A. The HO-3 and the HO-5, in particular, will provide broader coverage for his home and personal property. CorrectCorrect. The HO-3 and the HO-5, in particular, will provide broader coverage for his home and personal property.

Which one of the following best describes what is included in a loss payment under the Auto Loan/Lease Coverage endorsement to the Personal Auto Policy (PAP)? A. The balance of the loan or lease amount for the vehicle B. Penalties imposed under a lease C. Balances transferred from previous loans or leases D. Overdue lease or loan payments

A. The balance of the loan or lease amount for the vehicle

Angela has a five-year-old pickup truck which she uses to commute from her ranch to her job at a feed store. She recently had a collision with another vehicle, after which both drivers required minor medical treatment. Angela lives in a modified no-fault state. Which one of the following is a primary rating factor in determining the premium for Angela's automobile insurance? A. The commuting use of the vehicle. B. The accident C. The vehicle is a truck D. Marsha lives in a no-fault state

A. The commuting use of the vehicle

Most long-term care policies have a provision that provides the services of a care coordinator. Which one of the following statements about this provision is true? Select one: A. The coordinator helps arrange for and monitor care. B. Care is limited to the providers who work with the coordinator. C. The care coordinator's help is usually mandatory. D. The coordinator must be a licensed physician.

A. The coordinator helps arrange for and monitor care.

A named insured owns two cars, one covered by a Personal Auto Policy (PAP) and one with no insurance at all. Which one of the following is a correct statement regarding the medical payments coverage provided by the PAP if the insured is injured in a collision while driving the uninsured auto? A. The exclusion of other vehicles owned by the insured or available for insured's regular use applies. B. The PAP will provide medical payments coverage for medical care for the injuries because the insured was driving a vehicle other than a covered auto. C. The PAP will provide medical payments coverage for medical care for the injuries under the insuring agreement. D. The exclusion of vehicles owned by or available for family member's regular use applies.

A. The exclusion of other vehicles owned by the insured or available for insured's regular use applies.

Some states' underinsured motorists (UIM) coverage endorsements contain a "damages trigger." In states that apply the UIM damages trigger, UIM coverage applies when A. The negligent driver carries liability insurance limits that are lower than the injured party's actual damages. B. The insured has failed to maintain the minimum limits required for bodily injury liability. C. The negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party. D. The insured has failed to acquire medical payments coverage for any injuries received while occupying a motor vehicle.

A. The negligent driver carries liability insurance limits that are lower than the injured party's actual damages.

Which one of the following statements is true regarding public or livery conveyances and the liability coverage provided under the Personal Auto Policy (PAP)? Select one: A. The public or livery conveyance exclusion applies when a conveyance is indiscriminately offered to the public. B. Liability insurance applies to an insured's ownership or operation of the vehicle while it is being used as a public or livery conveyance. C. The public or livery conveyance exclusion applies to share-the-expense car pools. D. The public or livery conveyance exclusion eliminates coverage for ordinary business use of a car.

A. The public or livery conveyance exclusion applies when a conveyance is indiscriminately offered to the public.

Coverage F—Medical Payments to Others in the homeowners policy applies to bodily injury to a residence employee in all of the following situations, EXCEPT: A. The residence employee is away from the insured location and is not working B. The residence employee is away from the insured location but is working C. The residence employee is on the insured location and is working D. The residence employee is on the insured location but is not working

A. The residence employee is away from the insured location and is not working

Current assumption whole life insurance includes features of a Select one: A. Traditional whole life policy and a universal life policy. B. Traditional whole life policy and a first-to-die (joint) life policy. C. Variable universal life policy and a term policy. D. Term policy and a traditional whole life policy.

A. Traditional whole life policy and a universal life policy.

Which one of the following is an exception to the Coverage E and F Business exclusion to the HO-3 policy? A. Volunteer activities B. Activities generating income of $10,000 or less during the year preceding the policy period C. A plumbing business operated from the home D. Home daycare services performed for neighbors for a fee

A. Volunteer activities

Under the HO-3 policy, which one of the following perils is excluded for Coverages A and B only? Select one: A. Weather B. Earth movement C. Government actions D. Neglect

A. Weather

Under the HO-3 policy, which one of the following perils is excluded for Coverages A and B only? Select one: A. Weather B. Earth movement C. Neglect D. Government actions

A. Weather CorrectCorrect. Weather is excluded for Coverages A and B only in the HO-3 policy.

Jackie insures her home with an HO-3 policy. She operates a seamstress service from her home. A customer was picking up some altered pants, tripped on a loose floorboard on her porch, and was injured. Is there coverage for this claim? A. Yes, if Jackie's policy was endorsed with the Home Business Insurance Coverage endorsement B. Yes, if Jackie's policy was endorsed with the Personal Injury Coverage endorsement C. No, because of the Business Liability Exclusion in the HO-3 D. No, because of the Home Business Exclusion in the HO-3

A. Yes, if Jackie's policy was endorsed with the Home Business Insurance Coverage endorsement

Josh owns an auto service center. A customer dropped off a car for repair one morning and Josh agreed to drive the customer to the customer's office. Josh used his personal car insured by a Personal Auto Policy (PAP) to do this. While driving the customer to work, Josh got into an auto accident with another car in which the customer and the other driver were injured. Would Josh's PAP apply to this loss? A. Yes, under an exception to the garage business use exclusion. B. No, because the garage business use exclusion would apply. C. No, because the event does not qualify as an accident under the insuring agreement. D. Yes, under an exception to the other business use exclusion.

A. Yes, under an exception to the garage business use exclusion.

Which one of the following statements about health-related loss exposures is true? Select one: A. Young, healthy individuals often do not recognize the financial benefits that health insurance can provide. B. The lack of availability is the only major reason why many lower-income persons fail to have health insurance. C. Under private health insurance, people generally select more benefits or lower copayments than under group insurance plans of large employers. D. Individuals who have health insurance tend to have shorter life expectancies because they are unhealthy.

A. Young, healthy individuals often do not recognize the financial benefits that health insurance can provide.

Occurrence

An accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Arbitration

An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a settlement, which can be final and binding.

Deferred annuity

An annuity with an accumulation period that usually lasts a number of years.

A couple's retirement investment portfolio is an example of

An asset exposed to loss

A couple is expecting their first child and is considering the implications the premature death of the primary wage earner would have on the child's future. The primary wage earner's ability to provide income for this child is best described as

An asset exposed to loss.

Binding authority

An insurance agent's authority to effect coverage on behalf of the insurer.

Named perils coverage

An insurance policy in which the covered causes of loss are listed or "named" in the policy.

Declarations page

An insurance policy information page or pages providing specific details about the insured and the subject of the insurance.

Waiver

An intentional, knowing relinquishment of a legal right.

Loss exposure

Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs.

If law enforcement officials seize an insured's personal computer to search for files that might be related to a crime, the insured under an HO-3—Special Form (HO-3) may be unsuccessful in claiming a theft loss on the computer due to the A) Intentional Loss exclusion. B) Governmental Action exclusion. C) Ordinance or Law exclusion. D) Personal Computer exclusion.

B) Governmental Action Exclusion

For a Dwelling Flood policy, which is correct: A) Buildings are covered for "all risk:' B) Primary residences are covered at replacement cost on building losses. C) Contents can be endorsed for replacement cost if the dwelling is the primary residence. D) Contents only are covered for "all risk:'

B) Primary residence are covered at replacement cost on building losses.

Jamal flew from his home in New York to California for a vacation. While there, he rented a car. Jamal declined all of the optional coverages that were offered to him at the rental agency. While driving the rental car, Jamal was at fault in a collision with a truck. The repairs to the rental car will cost $2,000. Jamal's Personal Auto Policy (PAP) has a $250 other than collision deductible and a $500 collision deductible. What amount will Jamal's insurer pay for the loss?

B. $1,500

Jared had a Personal Auto Policy (PAP) with a single limit of $100,000 for bodily injury and property damage liability. He was found to be at fault for an accident by a court and a $95,000 judgment was entered against him. In addition, prejudgment interest of $10,000 was awarded. Since entry of judgment, $1,000 in postjudgment interest has accrued. Jared earns $150 a day in salary and missed five days of work to attend the trial. His insurer spent $25,000 defending the lawsuit against Jared. Which one of the following is the total that should be paid by Jared's insurer under his PAP? Select one: A. $126,000 B. $126,750 C. $131,000 D. $131,750

B. $126,750

Anna is a single mother of two small children and earns an annual salary of $65,000. She has been advised to evaluate the amount of life insurance she currently owns to see if it is adequate. She estimates her final expenses needs at $35,000, and estimates family living expenses needs to be $300,000. She also estimates special needs of $200,000 for her children's education fund and any unexpected events. Anna's total financial assets are $350,000, including $200,000 of life insurance. Using the needs approach, how much additional life insurance does Anna need? Select one: A. $150,000 B. $185,000 C. $300,000 D. $335,000

B. $185,000

Eileen, who is insured under an unendorsed HO-3 policy, borrows her neighbor's power washer valued at $600. Eileen leaves it running and ruins its motor. How much will Eileen's HO-3 insurer reimburse the neighbor for damage to the power washer, assuming it is damaged beyond repair? Select one: A. Nothing, because the power washer is not Eileen's property and, therefore, is excluded B. $600, regardless of whether Eileen is proven to be at fault C. $600, only if Eileen is proven to be at fault D. Nothing, because property in the care, custody, and control of Eileen is excluded

B. $600, regardless of whether Eileen is proven to be at fault

Ian owns a sailboat and insures it under a small boat policy with a $300,000 limit for liability coverage. Ian also has a personal umbrella policy with a $2,000,000 limit of liability. The umbrella policy requires that any underlying watercraft liability policies have a minimum liability limit of $500,000. Ian's sailboat collides with another vessel, damaging its hull and injuring its passengers. The loss totals $1,100,000. How much will Ian's personal umbrella insurer pay for the loss? A. $0 B. $600,000 C. $800,000 D. $1,100,000

B. $600,000

ABC Auto Insurance (ABC) is one of two servicing insurers in a state with a joint underwriting association (JUA), servicing 50% of the market. XYZ Auto Insurance (XYZ) is not a servicing insurer, but writes 25% of the voluntary auto insurance in the state. What percentage of the JUA's underwriting losses and expenses is XYZ's responsibility? Select one: A. 0% B. 25% C. 50% D. 75%

B. 25%

Which one of the following is covered for liability by a Personal Auto Policy (PAP)? Select one: A. A canoe B. A boat trailer C. A sail boat D. Small boat equipment

B. A boat trailer

Which one of the following is considered real property? A. An automobile B. A brick storage shed C. Household appliances D. A motorhome

B. A brick storage shed

The Agreement and Definitions page of the Personal Auto Policy (PAP) includes Select one: A. The name of the insurer issuing the policy. B. A general agreement stating that the insurer is providing the coverage subject to payment of premium and to the terms of the policy. C. The name and mailing address of the insured. D. A general agreement stating the insurer's duty to pay damages and defense costs subject to the terms of the policy.

B. A general agreement stating that the insurer is providing the coverage subject to payment of premium and to the terms of the policy.

Which one of the following is considered real property? A. An automobile B. A house C. Furniture D. A motorhome

B. A house

Grant and Gretchen and their family are insured under a healthcare plan that allows them to see any physician, but they have higher copayments if they visit one who is not a member of the plan's network. They are also not required to select a primary care physician. This type of plan is Select one: A. A health maintenance organization. B. A preferred provider organization. C. A point-of service plan. D. An exclusive provider organization.

B. A preferred provider organization.

Under which one of these types of Medicare Advantage plans does Medicare pay a portion of the premium to the plan and does the beneficiary go to any Medicare-approved doctor or hospital that accepts the plan's payment? A. A health maintenance organization (HMO) plan B. A private fee-for-service (PFFS) plan C. A preferred provider organization (PPO) plan D. A special needs plan (SNP)

B. A private fee-for-service (PFFS) plan

Ralph is a homeowner living in a subdivision that has a formal homeowners association. Collectively the members of the association own the subdivision's clubhouse and tennis courts. The Loss Assessment additional coverage under Section II—Liability Coverages of Ralph's homeowners policy will provide coverage to Ralph for an assessment up to $1,000 arising from which one of the following losses? Select one: A. A tennis player accidentally dropped a cigarette in the trash next to the clubhouse. The resulting fire totally destroyed the clubhouse. B. A tennis player tripped over a torn chain link fence surrounding the court. The tennis player sued the association for her injuries and recovered a judgment. C. Ralph's dog bit a tennis player on one of the courts and that tennis player made a claim against Ralph. D. Ralph's daughter injured another player on the court when she accidentally released her racquet following a serve, and that injured player made a claim against Ralph and his daughter.

B. A tennis player tripped over a torn chain link fence surrounding the court. The tennis player sued the association for her injuries and recovered a judgment. Coverage would be provided where a tennis player tripped and sued the association. Coverage E excludes coverage for liability loss assessments, but Section II—Additional Coverage provides $1,000 in such coverage, which can be increased by endorsement.

One of the effects of the Personal Injury Coverage endorsement on an HO-3 policy is to A. Add liability coverage for medical payments. B. Add the definition of personal injury. C. Add definitions for bodily injury and property damage. D. Add liability coverage for bodily injury.

B. Add the definition of personal injury.

The major advantage of the Limited Mexico Coverage endorsement to the Personal Auto Policy (PAP) is that it provides Select one: A. Primary liability insurance within twenty-five miles of the United States border. B. Additional liability insurance as well as providing physical damage coverage. C. Liability and physical damage coverage for trips to Mexico of more than ten days. D. All auto insurance coverages required by Mexican law.

B. Additional liability insurance as well as providing physical damage coverage.

Doris owns jewelry appraised at $10,000. She would like insurance coverage that will protect her jewelry for its appraised value. Doris also would like broad coverage for her jewelry in case she accidentally loses a piece or a stone falls out of a ring. Assuming that she purchased an HO-3 policy, which one of the following will provide the coverage she wants? A. An HO-3 with a Supplemental Loss Assessment Coverage endorsement with a $10,000 limit B. An HO-3 with a Scheduled Personal Property endorsement scheduling all of the jewelry C. An HO-3 with a Scheduled Personal Property endorsement scheduling $9,000 of the jewelry, on top of the $1,000 coverage limit provided by the HO-3 D. The unendorsed HO-3

B. An HO-3 with a Scheduled Personal Property endorsement scheduling all of the jewelry

An HO-4 policy includes building additions and alterations coverage up to 10% of the limit of Coverage C—Personal Property. Which one of the following individuals would typically benefit from this coverage? A. A condominium unit owner who renovates the kitchen and installs more expensive cabinets than were originally in the unit B. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit C. An owner of a single family home who has installed wheelchair ramps at the doors of her home to accommodate her wheelchair D. An owner of an older house with obsolete construction

B. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit

Which one of the following statements is accurate with regard to state automobile insurance plans? Select one: A. Most plans demand higher limits than those required by the state's financial responsibility laws. B. Applicants must show evidence that they have been denied auto liability insurance within a certain number of days. C. Applicants are eligible for coverage regardless of offenses committed or the number of violations of state or local laws. D. Premiums for liability coverage are usually comparable to those available in the standard market.

B. Applicants must show evidence that they have been denied auto liability insurance within a certain number of days.

An intentional and unlawful threat of bodily harm is Select one: A. Battery. B. Assault. C. Slander. D. Nuisance.

B. Assault.

Some types of personal property are excluded under Coverage C of the HO-3 policy. Which one of the following is excluded from this personal property coverage? Select one: A. The insured's clothing while on a cruise ship B. Birds owned by the named insured C. A laptop borrowed from a neighbor D. A daughter's property in a college dormitory

B. Birds owned by the named insured

Bob and Martha have an unendorsed HO-3 policy. They purchased a new home and leased furniture for the living room and dining room. The furniture leasing company asked to be added as an additional insured for the leased furniture. If they incur a covered loss to the leased property, a claim draft would likely be payable to Select one: A. The named insured only. B. Both the named insured and the loss payee. C. The loss payee only. D. Neither the named insured nor the loss payee.

B. Both the named insured and the loss payee.

The risk associated with the nature of the industry in which the issuer of an investment operates and with how the issuer is managed is known as: A. Investment manager risk B. Business risk C. Maturity risk D. Market risk

B. Business risk

Under the Personal Auto Policy (PAP), the named insured's rights and duties under the policy Select one: A. Can be assigned to another party without the insurer's written consent. B. Cannot be assigned to another party without the insurer's written consent. C. Can be transferred if the insured sells an auto. D. Can be transferred by a verbal agreement.

B. Cannot be assigned to another party without the insurer's written consent.

Under the Personal Auto Policy (PAP), the named insured's rights and duties under the policy Select one: A. Can be assigned to another party without the insurer's written consent. B. Cannot be assigned to another party without the insurer's written consent. C. Can be transferred if the insured sells an auto. D. Can be transferred by a verbal agreement.

B. Cannot be assigned to another party without the insurer's written consent. CorrectCorrect. Under the Personal Auto Policy (PAP), the named insured's rights and duties under the policy cannot be assigned to another party without the insurer's written consent.

Carol has an unendorsed HO-5 policy with adequate limits and a $500 deductible. Carol rented a place at the shore for a week in August. While she was on the beach a sudden rainstorm developed and Carol suffered water damage to her personal property from the rain through a window she had left open. To replace the damaged items it cost her $650. After depreciation the personal property was valued at $450. How much would Carol be able to collect from her insurer? Select one: A. Carol would collect $450 as her deductible does not apply to off premises claims. B. Carol would not collect anything as her policy covers actual cash value less the deductible. C. Carol would collect $150 as the HO-5 policy is a replacement cost policy. D. Carol would not collect anything as the HO-5 does not cover rain damage through open windows.

B. Carol would not collect anything as her policy covers actual cash value less the deductible.

All of the following are steps in the risk management process, EXCEPT: A. Identify loss exposures B. Combine loss exposures C. Examine the feasibility of risk management techniques D. Implement the selected risk management techniques

B. Combine loss exposures

Juan lives on a large property insured with an HO-3 policy. His home is heated by fuel oil that is stored in an underground tank in his backyard. Juan did not realize that there has been a small leak in the tank and that for several years fuel has slowly trickled out of it, making its way into a neighbor's well. The neighbor has made a claim against Juan, who turned the claim over to his insurer. Under Juan's HO-3 policy, this is A. Not considered an occurrence because it was not sudden. B. Considered an occurrence because it was a continuous condition and it was fortuitous. C. Not considered an occurrence because it did not cause bodily injury. D. Considered an occurrence because it destroyed tangible property.

B. Considered an occurrence because it was a continuous condition and it was fortuitous.

Juan lives on a large property insured with an HO-3 policy. His home is heated by fuel oil that is stored in an underground tank in his backyard. Juan did not realize that there has been a small leak in the tank and that for several years fuel has slowly trickled out of it, making its way into a neighbor's well. The neighbor has made a claim against Juan, who turned the claim over to his insurer. Under Juan's HO-3 policy, this is Select one: A. Not considered an occurrence because it was not sudden. B. Considered an occurrence because it was a continuous condition and it was fortuitous. C. Not considered an occurrence because it did not cause bodily injury. D. Considered an occurrence because it destroyed tangible property.

B. Considered an occurrence because it was a continuous condition and it was fortuitous.

Insuring agreements: A. Contain unique information about the insured B. Contain a promise to make payment C. Include only one agreement for a package policy D. Limit or expand coverage based on definition of terms

B. Contain a promise to make payment

The purpose of a bed reservation benefit guarantee in a long-term care insurance policy is designed to do which one of the following? Select one: A. Pay the additional cost for a stay in a single-room of a long-term care facility B. Continue to pay for a nursing home bed if the insured needs to go to a hospital for a short stay C. Pay for the cost of a hospital bed that is used when a person receives home health care D. Guarantee that the insurer will locate a bed in facility if the insured needs long-term care

B. Continue to pay for a nursing home bed if the insured needs to go to a hospital for a short stay

Josef left the garage door of his home open one night and a homeless person sneaked in and fell asleep. During the night, a shovel that was hanging on the wall fell down, hitting the person in the head, causing him to seek emergency medical treatment at a nearby hospital. Which one of the following statements is true about Josef's coverage under his HO-3 policy? A. The injured person is entitled to benefits under Coverage F—Medical Payments to Others. B. Coverage F—Medical Payments to Others is not available for persons on the insured location without permission. C. The injured person is entitled to benefits under Coverage F—Medical Payments to Others because there is no evidence that he caused the shovel to fall. D. Only Josef and his relatives are entitled to benefits under Coverage F—Medical Payments to Others.

B. Coverage F—Medical Payments to Others is not available for persons on the insured location without permission.

Ben insures his home under a DP-3 policy with the following limits: Coverage A $200,000 Coverage B Included Coverage C $20,000 Coverage D Included Coverage E Included Coverage L $100,000 Coverage M $1,000 While visiting Ben's home, Laura tried to perform a cartwheel on the lawn, lost her balance, and fell, breaking her arm. Ben paid $500 in emergency room charges to set and cast Laura's broken arm. Which one of the coverages in Ben's DP-3 policy is most likely to respond to his request for payment of the emergency room charges? A. None B. Coverage M C. Coverage L D. Coverage D

B. Coverage M

Joshua is a claim representative who has been assigned an auto liability claim. To determine whether his company's Personal Auto Policy (PAP) provides coverage for the claim, Joshua should first review the policy's: A. Insuring Agreement. B. Declarations. C. Exclusions. D. Conditions.

B. Declarations.

A Self-insured retention (SIR) in a personal umbrella policy is similar to a A. Coverage limit B. Deductible C. Policy premium D. Exclusion

B. Deductible

Which one of the following is a combination of a defined benefit plan and a defined contribution plan? Select one: A. Combination defined contribution plan B. Defined benefit 401(k) plan C. Define contribution Keogh plan D. Annuity

B. Defined benefit 401(k) plan

A pension plan in which the retirement benefit is specified and the employer's contributions vary depending on the amount needed to fund the benefit is a Select one: A. Defined contribution plan. B. Defined benefit plan. C. Individual retirement account. D. Profit sharing plan.

B. Defined benefit plan.

If an insured deliberately leaves his or her auto in an urban area, unlocked, with the keys in the ignition, and later claims that the car has been stolen, the insurer discovering these facts will Select one: A. Invoke the automatic termination provision in the policy. B. Deny coverage for the claim on the basis of the fraud condition. C. Subrogate against the insured. D. Invoke the appraisal provision in the policy.

B. Deny coverage for the claim on the basis of the fraud condition.

If an insured deliberately leaves his or her auto in an urban area, unlocked, with the keys in the ignition, and later claims that the car has been stolen, the insurer discovering these facts will Select one: A. Invoke the automatic termination provision in the policy. B. Deny coverage for the claim on the basis of the fraud condition. C. Subrogate against the insured. D. Invoke the appraisal provision in the policy.

B. Deny coverage for the claim on the basis of the fraud condition. CorrectCorrect. The insurer discovering these facts will deny coverage for the claim on the basis of the fraud condition.

The first step in determining the premium for an HO-3 policy is Select one: A. Reviewing the claim history. B. Developing the base rate. C. Considering the endorsements added. D. Determining the deductible.

B. Developing the base rate.

A family invests in both stocks and bonds. This is an example of Select one: A. Separation. B. Diversification. C. Duplication. D. Avoidance.

B. Diversification.

Part B of original Medicare (medical insurance) provides benefits for which one of the following? Select one: A. Outpatient prescription drug coverage B. Doctors' services C. Hospice care D. Inpatient hospital care

B. Doctors' services

Consumers of individual life insurance bear its entire cost unlike some other sources of life insurance. Which one of the following is a reason for increased costs associated with individual life insurance? Select one: A. The costs are typically subsidized by their employers. B. Each application must be evaluated by the insurer. C. Coverage is subject to many changes. D. Coverage options are broader.

B. Each application must be evaluated by the insurer.

The Part B—Medical Payments Coverage of the Personal Auto Policy (PAP) contains an Other Insurance provision. If two automobile policies from different insurers cover the same owned vehicle A. The policy with the lower limit of liability is excess. B. Each insurer pays its pro rata share. C. The first insurer to receive notice of the claim becomes primarily liable. D. The policy with the lower limit of liability is primary.

B. Each insurer pays its pro rata share.

Under the National Flood Insurance Program (NFIP), residential condominium building associations are Select one: A. Eligible for coverage under the dwelling form. B. Eligible for coverage under the residential condominium building association form. C. Eligible for coverage under the general property form. D. Not eligible for coverage.

B. Eligible for coverage under the residential condominium building association form.

Among the costs associated with premature death, probate costs would be categorized as: A. Unpaid long-term obligations B. Estate planning costs C. Outstanding debts D. Lost income

B. Estate planning costs

All of the following are costs associated with premature death, EXCEPT: Select one: A. Loss of deceased's income B. Financial assets of the deceased C. Additional costs for child-care expenses D. Uninsured medical bills of the deceased

B. Financial assets of the deceased

Insurance score as a rating factor for an individual auto insurance applicant is based on which one of the following? Select one: A. Loss history B. Financial history C. Territory demographics D. Income data

B. Financial history

Payment of benefits under the Social Security disability income program requires a waiting period of what length? Select one: A. Two months B. Five months C. Nine months D. Twelve months

B. Five months

Payment of benefits under the Social Security disability income program requires a waiting period of what length? Choose one answer. A. Two months B. Five months C. Nine months D. Twelve months

B. Five months

Under an HO-3 policy, Section I—Exclusions contains an additional three exclusions that apply only to Coverage A—Dwelling and Coverage B—Other Structures. These exclusions include all of the following, EXCEPT: Select one: A. Weather B. Fraud C. Acts or decisions D. Damage that results from faulty construction, planning, or materials

B. Fraud

Which one of the following ISO 2011 HO forms would be most appropriate for an apartment tenant who does not require coverage on the dwelling itself? A. HO-2 B. HO-4 C. HO-8 D. HO-5

B. HO-4

Which one of the following causes of loss is covered under the collision section of the Personal Auto Policy (PAP)? Select one: A. Malicious mischief or vandalism B. Hitting a tree C. Riot or civil commotion D. Missiles or falling objects

B. Hitting a tree

Sammy and Sally Oshua insure their home with an HO-3 policy. They own a cocker spaniel puppy. While a neighboring couple and their five-year-old daughter were visiting, the puppy bit the girl as she was playing with it. The child suffered a serious wound and the neighbors sued the Oshuas. Which one of the following statements is true? Select one: A. Defense costs are not covered for the Oshuas if the lawsuit is found to be groundless. B. In addition to paying up to the limit of liability, the insurer will pay defense costs associated with the lawsuit. C. Because the child is a minor, the insurer will pay the damages regardless of legal liability. D. Because the dog was on the Oshuas' property, they are not covered for injury to the child.

B. In addition to paying up to the limit of liability, the insurer will pay defense costs associated with the lawsuit. CorrectCorrect. The HO-3 insurer provides for defense costs in addition to coverage for liability damages.

Which one of the following statements is true regarding cancellation of the Personal Auto Policy (PAP)? Select one: A. An insurer cannot cancel a policy for nonpayment of premium. B. Insurers can usually cancel a new policy that has been in force for less than a certain number of days (such as sixty days). C. In most states a verbal notice of cancellation is sufficient, provided notice is given 90 days prior to the cancellation. D. Whenever state laws and policy cancellation provisions conflict, the policy provisions supersede the state law.

B. Insurers can usually cancel a new policy that has been in force for less than a certain number of days (such as sixty days). CorrectCorrect. Insurers can usually cancel a new policy that has been in force for less than a certain number of days (such as sixty days).

The repair of a covered auto's timing belt that failed because of poor maintenance Select one: A. Is covered as an other than collision loss under the PAP. B. Is not a covered loss under the Personal Auto Policy (PAP). C. Is covered under Part D of the PAP. D. Is covered as a collision loss under the PAP.

B. Is not a covered loss under the Personal Auto Policy (PAP).

Which one of the following statements best describes Medicaid. Select one: A. It is a social insurance program that provides medical expense benefits to certain categories of persons, regardless of their income and assets. B. It is a means-tested federal-state welfare program that covers the medical expenses of low income persons. C. It is a federal program that provides long-term care benefits to anyone who is enrolled in Medicare. D. It is a series of state programs designed to make medical expense coverage more readily available to all state residents.

B. It is a means-tested federal-state welfare program that covers the medical expenses of low income persons.

Which one of the following statements about the basic provisions of the Affordable Health Care Act of 2010 is true? Select one: A. It allows adult children to remain on a parent's healthcare plan indefinitely. B. It requires insurers to spend set percentages of premiums received on direct medical care or improvements in the quality of care provided. C. It allows insurers to deny coverage to children with preexisting conditions under certain circumstances. D. It requires insurers to set lifetime limits on benefits as a way to encourage wiser choices about medical care by consumers.

B. It requires insurers to spend set percentages of premiums received on direct medical care or improvements in the quality of care provided.

Which of the following statements about property and liability loss exposures is true? A. Property loss exposures cover real property only B. Liability loss exposures can result from someone else's injury C. Insurance works well for catastrophe loss exposures D. A property deductible is not a form of risk financing

B. Liability loss exposures can result from someone else's injury

Personal umbrella policies usually cover the insured's liability for personal injury. Under the ISO Personal Umbrella Liability Policy, which one of the following is included under the definition of personal injury? A. Assault and battery intentionally committed B. Libel C. Property damage to property of others D. Bodily harm

B. Libel

Personal umbrella policies usually cover the insured's liability for personal injury. Under the ISO Personal Umbrella Liability Policy, which one of the following is included under the definition of personal injury? Select one: A. Assault and battery intentionally committed B. Malicious prosecution C. Property damage to property of others D. Bodily harm

B. Malicious prosecution

The Dwelling Policy Form is issued to provide flood insurance for which one of the following properties? Select one: A. Nursing home B. Manufactured mobile homes C. Apartment building D. Residential cooperative building

B. Manufactured mobile homes

Personal financial planning loss exposures include all of the following EXCEPT: A. Retirement loss exposures B. Marital and family loss exposures C. Premature death loss exposures D. Health and disability loss exposures

B. Marital and family loss exposures

The risk associated with fluctuations in prices of financial securities, such as stocks and bonds, is known as Select one: A. Inflation risk. B. Market risk. C. Financial risk. D. Business risk.

B. Market risk.

Megan owns two cars, a sedan and a coupe, each insured with a Personal Auto Policy (PAP) from a different insurer. She is injured while driving the sedan when it is involved in an accident with an at-fault uninsured driver. Both policies include uninsured motorists (UM) coverage, and Megan makes claims for UM coverage under both policies. Which one of the following statements is true? A. Megan should receive UM coverage from both policies. B. Megan should receive UM coverage from the sedan's policy but not the coupe's. C. Megan should receive UM coverage from the coupe's policy but not the sedan's. D. Megan is not entitled to UM coverage from either policy.

B. Megan should receive UM coverage from the sedan's policy but not the coupe's.

Which one of the following statements is true regarding no-fault automobile insurance? Select one: A. Under a no-fault system, an injured person does not need to establish fault, but must prove negligence in order to collect payment for damages. B. Most no-fault laws apply only to bodily injury and not to property damage. C. No-fault laws typically provide no benefits for loss of earnings for an injured person. D. An injured party must sue to obtain medical expenses above a particular monetary threshold in all no-fault plans.

B. Most no-fault laws apply only to bodily injury and not to property damage.

An insured has an HO-3 policy covering his home. While he was away during a special athletic tournament in his town, he rented his home for a week to one of the athletes. During that week, the mail carrier was injured on a loose floorboard on the porch of the home. A claim was made against the insured. Does the Coverage E business exclusion apply? Select one: A. It depends on whether a dollar threshold for the amount of rent charged is met. B. No, because rental of an insured location on an occasional basis is a covered loss exposure if the location is used only as a residence. C. No, because home rental is not considered a business activity. D. Yes, because renting property to others qualifies as a business as defined by the policy.

B. No, because rental of an insured location on an occasional basis is a covered loss exposure if the location is used only as a residence. CorrectCorrect. No, because rental of an insured location on an occasional basis is a covered loss exposure if the location is used only as a residence. This is one of three exceptions to the exclusion, allowing for some common rental situations.

All of the following are duties the insured must fulfill after a loss under the HO-3, EXCEPT: A. Verify the loss B. Obtain estimates of the damage C. Protect the property from further damage D. Prepare an inventory

B. Obtain estimates of the damage

The objective of the human life value approach for determining the amount of life insurance to own is to determine life insurance amounts Select one: A. As a multiple of gross income. B. On the total amount of income that is lost when a person dies. C. By using insurance company mortality tables. D. On the needs of survivors.

B. On the total amount of income that is lost when a person dies.

The Named Non-Owner Coverage endorsement of the Personal Auto Policy (PAP) automatically covers Select one: A. All persons who drive the vehicle specified in the endorsement. B. Only a person who is named in the endorsement. C. Only a person who is named in the endorsement and the named insured's spouse. D. The named insured and all resident family members.

B. Only a person who is named in the endorsement.

Off-premises theft coverage is available under the ISO Dwelling Policy program Select one: A. On an ACV basis under Coverage C—Personal Property. B. Only if on-premises coverage is purchased. C. Up to the policy limits for money, jewelry, and firearms. D. Only under the Limited Theft Coverage endorsement.

B. Only if on-premises coverage is purchased.

Which one of the following types of personal inland marine forms is designed for frequent travelers? A. Personal Articles Standard Loss Settlement Form B. Personal Effects Form C. Tenant Homeowners Form D. Personal Property Form

B. Personal Effects Form

Ben lost in his lawsuit against his neighbor, Jim, alleging that Jim had created a nuisance on his property. Jim has now filed a malicious prosecution claim against Ben. Under which endorsement to Ben's homeowners policy can coverage for this claim be found? A. Personal Liability endorsement B. Personal Injury Coverage endorsement C. Additional Liability Coverages endorsement D. Ordinance or Law—Increased Amount of Coverage endorsement

B. Personal Injury Coverage endorsement

Regulators usually approve the use of auto insurance rating categories such as "standard," which results in normal premiums, and "nonstandard," which results in higher premiums, because Select one: A. They allow the application of discounts and credits. B. Policyholders receive equitable treatment based on the loss exposure they represent. C. The overall cost of insurance is usually reduced for the consumer. D. Competition among insurers requires them to discriminate high-risk exposures from average exposures.

B. Policyholders receive equitable treatment based on the loss exposure they represent.

Bob has a Personal Auto Policy (PAP) with physical damage coverages. Bob got up early one morning to go to work and found vandals had broken the rear window of his car during the night. Two nights later it rained heavily, which ruined the back seat upholstery. After a few days, Bob submitted a claim to his insurer. Which one of the Duties After an Accident or Loss in the PAP has Bob failed to comply with? Select one: A. Cooperation with the insurer B. Prevent further loss C. Permit inspection and appraisal D. Proof of loss

B. Prevent further loss

Retirees and other people facing high nursing home costs are subject to special Medicaid eligibility standards that attempt to do which one of the following? Select one: A. Force them to get such coverage under Medicare B. Prevent them from disposing of substantial assets before applying for Medicaid C. Require them to use home healthcare rather than institutional care D. Encourage them to live with children

B. Prevent them from disposing of substantial assets before applying for Medicaid

The purpose of the suicide clause in a life insurance policy is to Select one: A. Provide payment of death proceeds anytime during the policy period as a public service to the family members. B. Provide the insurer with some protection against an insured who purchases a life insurance policy with the intention of committing suicide. C. Exclude all death benefits that result from suicide to discourage policyholders who might contemplate ending their lives. D. Enable the insurer to retain paid premiums if an insured commits suicide and the insurer denies the claim.

B. Provide the insurer with some protection against an insured who purchases a life insurance policy with the intention of committing suicide.

A tax-deferred retirement plan is a plan that Select one: A. Is immune to excessive fluctuations in investment returns. B. Receives special tax advantages if they comply with certain requirements. C. Cannot be achieved through a private pension plan. D. Does not allow an employee's contribution.

B. Receives special tax advantages if they comply with certain requirements.

All of the following are risk control techniques used by individuals and families, EXCEPT: Select one: A. Avoidance B. Retention C. Loss prevention D. Diversification

B. Retention

The DP-3 policy provides Coverage A protection under which one of the following approaches? A. Named perils B. Risk of direct loss to property C. Universal coverage D. Domestic coverage

B. Risk of direct loss to property

To determine the extent of coverage a policy provides, pre-loss policy analysis almost exclusively relies on Select one: A. Post-loss policy analysis. B. Scenario analysis. C. The DICE method. D. Coverage triggers.

B. Scenario analysis.

Which one of the following is an excluded peril under Section I—Coverages A and B of the HO-3 policy? Select one: A. Unintentional loss B. Settling of the dwelling C. Hail D. Accidental leak of water from plumbing

B. Settling of the dwelling CorrectCorrect. An excluded peril under Section I of the HO-3 policy is settling of the dwelling.

Arthur has decided to continue working full-time past his full Social Security retirement age of sixty-six. He is aware that by postponing receipt of his Social Security retirement benefit, which he does not currently need, he can receive a significantly larger benefit later. After what age will his benefits no longer increase because of such a postponement? Select one: A. Sixty-eight B. Seventy C. Seventy-two D. Seventy-five

B. Seventy

Social Security retirement benefits are reduced if taken before a worker's full retirement age. This age is gradually being increased. For persons born in 1960 or later, this age will be Select one: A. Seventy. B. Sixty-seven. C. Seventy-two. D. Sixty-nine.

B. Sixty-seven.

A Web designer breaks three fingers and is unable to type until her fingers heal one month later. However, she is able to continue to work on various Web-design concepts. This is an example of Select one: A. Temporary total disability. B. Temporary partial disability. C. Permanent total disability. D. Permanent partial disability.

B. Temporary partial disability.

Which one of the following is a characteristic of universal life insurance? Select one: A. The cash value of the policy will always keep the coverage in force. B. The cash value is guaranteed to earn at least a minimum interest rate. C. If the policyholder becomes unemployed, premiums will be waived. D. Policyholders are locked in to regular premium payment.

B. The cash value is guaranteed to earn at least a minimum interest rate.

Which one of the following best describes contributions made to a thrift plan? Select one: A. The employee contributes a fixed amount. The employer contributes a percentage of that amount. B. The employee contributes up to a certain percentage of his or her salary. The employer contributes a percentage of the employee's contribution. C. The employer contributes a portion of the company's profits. The employee contributes a fraction of the employer's contribution. D. The employee contributes a fixed amount. The employer matches that amount.

B. The employee contributes up to a certain percentage of his or her salary. The employer contributes a percentage of the employee's contribution.

Juan lives on a large property insured with an HO-3 policy. His home is heated by fuel oil that is stored in an underground tank in his backyard. Juan did not realize that there has been a small leak in the tank and that for several years fuel has slowly trickled out of it, making its way into a neighbor's well. The neighbor has made a claim against Juan, who turned the claim over to his insurer. Which one of the following is the best argument for denying coverage because there has been no occurrence as defined in the liability section of Juan's policy? Select one: A. The discharge had been accidental. B. The event was not sudden. C. The event was fortuitous. D. The leak was continuous.

B. The event was not sudden. The event was not sudden. An occurrence is an accident, and can be a sudden event, a gradual series of incidents, or a continuous condition, as long as it is fortuitous.

If an insurer determines that a fire loss and a burglary loss that appear to have occurred at the same time to an insured's home are actually separate events, how are deductibles handled under a DP-3 dwelling policy? A. The insured would have to pay one deductible before the insurer pays both losses B. The insured would have to pay two deductibles before the insurer pays both losses C. The insured would pay one 20 percent of the total of the 2 deductibles before the insurer pays both losses D. No deductible would apply

B. The insured would have to pay two deductibles before the insurer pays both losses

Under the PAP, which one of the following statements is true regarding the nonrenewal provisions for a policy that has a policy period of one year or longer? A. The insurer has the right to nonrenew at the end of the policy period without giving notice. B. The insurer has the right to nonrenew at each anniversary of the policy's original effective date. C. The insurer has the right to nonrenew beginning 6 months after the original effective date. D. The insurer cannot nonrenew a policy that has been in effect for more than 1 year.

B. The insurer has the right to nonrenew at each anniversary of the policy's original effective date.

Alfred has an unendorsed HO-3 policy. After a severe fire loss to Alfred's house, an investigation proved that Alfred intentionally set the fire. Alfred was jailed for arson, and his property claim was denied. Which one of the following describes the rights granted by Alfred's HO-3 to the mortgagee? Select one: A. The mortgagee will collect the full amount of the claim if it joins with the insurer in prosecuting Alfred. B. The mortgagee will collect the amount of its insurable interest in the property. C. The mortgagee will not collect any amount of the claim because the loss was a fraudulent act. D. The mortgagee will collect the full amount of the claim.

B. The mortgagee will collect the amount of its insurable interest in the property. CorrectCorrect. The mortgagee will collect the amount of its insurable interest in the property.

Which one of the following most accurately describes the needs approach to determining a family's life insurance requirements? A. The needs approach does not take into account Social Security benefits or other available benefits. B. The needs approach subtracts existing assets and life insurance from identified financial needs to determine the amount of additional life insurance required. C. The needs approach focuses on immediate financial needs rather than the family's long-term needs.

B. The needs approach subtracts existing assets and life insurance from identified financial needs to determine the amount of additional life insurance required.

The Schedule of Coverages indicates the coverage and limits that apply to each listed auto, along with Select one: A. Each auto and trailer's rating class. B. The premium for each coverage. C. The primary location of an insured auto. D. Each auto and trailer specifically listed.

B. The premium for each coverage.

Which one of the following statements is true regarding public or livery conveyances and the liability coverage provided under the Personal Auto Policy (PAP)? A. Liability insurance applies to an insured's ownership or operation of the vehicle while it is being used as a public or livery conveyance. B. The public or livery conveyance exclusion applies when a conveyance is indiscriminately offered to the public. C. The public or livery conveyance exclusion applies to share-the-expense car pools. D. The public or livery conveyance exclusion eliminates coverage for ordinary business use of a car.

B. The public or livery conveyance exclusion applies when a conveyance is indiscriminately offered to the public.

Which one of the following is an excluded peril under Section I—Coverages A and B of the HO-3 policy? Select one: A. Volcanic eruption B. Theft of construction materials C. Aircraft D. Accidental leak of water from plumbing

B. Theft of construction materials

All of the following are characteristics of universal life insurance, EXCEPT: A. It combines life insurance protection with an investment or a savings aspect. B. Three interest rates are stipulated in the policy. C. The insurance protection, savings, and expense components of the policy are unbundled. D. For most universal life policies, the insured's premium payments are flexible.

B. Three interest rates are stipulated in the policy.

Which one of the following is a reason insurance professionals should conduct pre-loss policy analysis? Select one: A. To determine the appropriate premium for the policy B. To ensure that the policy being sold is appropriate for the insured's loss exposures C. To determine whether a policy complies with state requirements D. To determine the extent of coverage for a loss

B. To ensure that the policy being sold is appropriate for the insured's loss exposures

Under the needs approach, the amount of life insurance needed is determined by subtracting which one of the following from total estimated needs? Select one: A. Current life insurance amount B. Total financial assets C. Estate clearance fund D. Total income needs

B. Total financial assets

Under which one of the following PAP endorsements does PAP coverage last until a passenger enters a transportation network company (TNC) driver's vehicle? A. Limited Transportation Network Driver Coverage (No Passenger) B. Transportation Network Driver Coverage (No Passenger) C. Public or Livery Conveyance Exclusion D. Transportation Network Driver Company Definition

B. Transportation Network Driver Coverage (No Passenger)

Sammy was driving his automobile insured with an unendorsed Personal Auto Policy (PAP) when he was involved in a collision with another car. The driver of the other car was at fault for the accident. Sammy was severely injured and may be facing lifelong disability and medical bills of several hundred thousand dollars. The only applicable insurance policy for the at-fault driver has liability limits of $10,000 per person and $20,000 per accident. The at-fault driver has no personal assets. From Sammy's perspective, this situation illustrates the benefit of purchasing: A. Uninsured (UM) motorist coverage. B. Underinsured motorist (UIM) coverage. C. A personal umbrella policy. D. An excess policy.

B. Underinsured motorist (UIM) coverage.

Flexibility is a fundamental characteristic of Select one: A. Term life insurance. B. Universal life insurance. C. Whole life insurance. D. Group life insurance.

B. Universal life insurance.

The inadvertent assumption of a loss exposure that has not been identified or accurately analyzed is known as Select one: A. Diversification. B. Unplanned retention. C. Risk transfer. D. Avoidance.

B. Unplanned retention.

Most households choose risk management techniques by Select one: A. Analyzing loss timing. B. Using financial criteria. C. Analyzing loss control requirements. D. Using nonfinancial criteria.

B. Using financial criteria.

Martha recently determined that she should buy an additional $150,000 of life insurance to protect her family if she should die prematurely. Martha does not have a large emergency fund, and she is concerned about paying the life insurance premium if she is unable to work because of a disabling condition. Which one of the following riders to or provisions in her new life insurance policy would best address this concern? Select one: A. Accelerated death benefit provision B. Waiver of premium rider C. Extended term insurance nonforfeiture option D. Assignment clause

B. Waiver of premium rider

Under Coverage E—Personal Liability of the HO-3 policy, the insurer's obligation to defend ends Select one: A. When policy limits are exhausted by the claim expenses. B. When the liability limit for the occurrence is exhausted by payment of a settlement or judgment.. C. When the cost of defense exceeds the personal liability limits. D. When the costs of defense limits are exhausted.

B. When the liability limit for the occurrence is exhausted by payment of a settlement or judgment.

Marisa lives in a two-story rental apartment and she has an HO-4 policy. Because she needs a wheelchair to get around, she had special ramps installed over the steps between floors. If a fire destroys the ramps, are the ramps covered under her policy? Select one: A. No, because tenant-added fixtures are excluded. B. Yes, because they are a building addition and alteration. C. No, because she has no insurable interest in the apartment. D. Yes, because the ordinance and law provision applies to the Americans with Disabilities Act.

B. Yes, because they are a building addition and alteration.

Irrevocable beneficiary designation

Beneficiary changes must have the beneficiary's consent

All of the following usually are excluded by a personal umbrella policy, EXCEPT

Bodily injury

All of the following describe an exclusion in Part A of the PAP, EXCEPT: Bodily injury or property damage intentionally caused by an insured Property damage to property owned or being transported by an insured Property damage to property rented to, used by, or in the care of the insured Bodily injury or property damage when using a vehicle not owned by the insured

Bodily injury or property damage when using a vehicle not owned by the insured

Tom and Martha insure their house with an unendorsed HO-3—Special Form (HO-3) with a Coverage A—Dwelling limit of $300,000, which is the replacement cost of the house. A thief breaks into the house while Tom and Martha are on vacation and steals the following items: •$500 cash•$50,000 stock certificates. Ignoring any deductible that may apply, how much, if any, will Tom and Martha's insurer pay for the loss of the items? A) $0 B) $200 C) $1,700 D) $50,500

C) $1,700

Renee is an insured under an unendorsed HO-3—Special Form (HO-3) with a Coverage C—Personal Property limit of $100,000. She owns a secondary residence that contains $15,000 of personal property. Only her primary residence is listed on the declarations page of the HO-3 policy. A fire destroys all of Renee's personal property at her secondary residence. How much of this loss will be paid by Renee's HO-3 policy? Question options: A) $0 B) $1,000 C) $10,000 D) $15,000

C) $10,000

Ralph has an unendorsed HO-3—Special Form (HO-3) policy. While coming home from a coin show, Ralph discovers that his automobile was broken into and a package containing $2,000 in coins, some tools, and groceries was stolen. Disregarding any deductible that may apply, will Ralph's HO-3 insurer pay for the loss of the coins? Question options: A) No, theft of money is an excluded peril. B) No, leaving money in an unattended vehicle is negligent behavior, which is excluded. C) Yes, the coins are covered up to a specified limit. D) Yes, the coins are covered up to the limit of Coverage C as long as they are of a collectible nature.

C) Yes, the coins are covered up to a specified limit.

Jacob lives in a rural farmhouse which he insures under an unendorsed DP-3 policy because the lack of public fire protection makes it ineligible for homeowners coverage from his insurer. The dwelling policy includes the following limits and coverages: Limit Coverage A $125,000 Coverage C $10,000 Jacob recently took an extended tour of Europe, and while he was traveling on a train, luggage with all his clothing, personal effects, and souvenirs was destroyed in a baggage car fire. Jacob values the lost property at $2,000. Ignoring any deductible that may apply, how much of Jacob's loss will be covered by his DP-3 policy? A. $0 B. $200 C. $1,000 D. $2,000

C. $1,000

Garth insures his home with an HO-3 policy. Garth was invited to a party at the apartment of his friend, Julie. Garth was having trouble closing the front door behind him as he entered the apartment. He pulled the door hard, which shook the walls and caused a vase to fall off of a shelf and break into pieces. Julie made a claim against Garth for the replacement cost of the vase, which was $1,108. Garth's insurer did not believe that the accident was Garth's fault in any way. How much did the insurer pay to Julie? Select one: A. $0 B. $554 C. $1,000 D. $1,108

C. $1,000 Under the Damage to Property of Others additional coverage, the insurer will pay, at replacement cost, up to $1,000 per occurrence for property damage to others caused by an insured, regardless of fault or legal liability. (Note: some exclusions exist.)

Mira has an unendorsed HO-3 policy with a $500,000 limit for liability coverage. She also has a personal umbrella with a $2,000,000 limit and a $10,000 self-insured retention. Mira is sued for defamation of character and the court awards $1,300,000 to the plaintiff. What amount will Mira's personal umbrella insurer pay for this award? A. $790,000 B. $800,000 C. $1,290,000 D. $1,300,000

C. $1,290,000

Liana insured her car with a Personal Auto Policy (PAP) that has split limits for liability coverage of $100/$300/$75. She was found by a court to be at fault for an accident that injured the other driver and ordered to pay a judgment of $98,000, plus $6,000 in prejudgment interest. How much will Liana's insurer pay under her PAP? Select one: A. $92,000 B. $98,000 C. $100,000 D. $104,000

C. $100,000

Malvern Life provides ordinary life insurance at the following premiums: Age Premium 25 $10 per $1,000 of insurance 26 $11 per $1,000 of insurance Lee purchases $110,000 of insurance for $1,100 per year, stating her age as 25 rather than her correct age of 26. How much will Malvern Life pay if Lee dies? Select one: A. $0 B. $89,000 C. $100,000 D. $110,000

C. $100,000

Alita owns a single-family home which she insures under a DP-3 policy with a Coverage A limit of $150,000, a Coverage C limit of $10,000, no other limits or endorsements, and a $1,000 deductible. Alita had rented the partially-furnished property under a long-term lease, and her tenant added an attached screened-in porch at a cost of $8,000. Recently, the home suffered a loss by fire valued at $148,000. Contents belonging to Alita with an ACV of $15,000 were also destroyed. How much will Alita's insurer pay for the loss? A. $147,000 B. $148,000 C. $158,000 D. $159,000

C. $158,000

Following an auto accident, Jim's vehicle was towed to a body shop, and it remained there for five days for repairs. The damage was covered under the collision coverage of Jim's Personal Auto Policy (PAP). During those five days, Jim used public transportation at a cost of $5.00 per day. What amount will Jim's insurer pay under his PAP for his transportation expenses while his vehicle was being repaired? Select one: A. $0 B. $15 C. $20 D. $25

C. $20

Patrick is preparing a worksheet to estimate the amount of life insurance he needs. He estimates his final expenses needs to be $25,000, and estimates family expenses needs to be $425,000. He estimates his special needs to be $200,000. Patrick's total financial assets are $450,000, including $250,000 of life insurance and $100,000 in a Section 401(k) plan. Using the needs approach, how much additional life insurance does Patrick need? Select one: A. $0 B. $175,000 C. $200,000 D. $400,000

C. $200,000

Marty renewed his Personal Auto Policy (PAP), decreasing his coverage from a $500,000 to a $300,000 combined single limit. Marty's umbrella insurer requires an underlying combined single limit for auto liability of at least $500,000. Marty is involved in an auto accident and is found negligent. The injured party is awarded $735,000 in damages. What amount will the umbrella insurer pay for this accident? A. $0 B. $225,000 C. $235,000 D. $435,000

C. $235,000

Josef left the garage door of his home open one night and a homeless person sneaked in and fell asleep. During the night, a shovel that was hanging on the wall fell down, hitting the person in the head, causing him to seek emergency medical treatment at a nearby hospital. Which one of the following statements is true about Josef's coverage under his HO-3 policy? Select one: A. The injured person is entitled to benefits under Coverage F—Medical Payments to Others. B. Coverage F—Medical Payments to Others is not available for persons on the insured location without permission. C. The injured person is entitled to benefits under Coverage F—Medical Payments to Others because there is no evidence that he caused the shovel to fall. D. Only Josef and his relatives are entitled to benefits under Coverage F—Medical Payments to Others.

C. $330,000.

Rosa's sedan is covered by a Personal Auto Policy (PAP) with split limits for liability coverage of $100/$300/$50. Rosa's friend, Lamont, owns a sports car that is covered by a PAP with split limits for liability coverage of $25/$50/$10. Rosa borrowed Lamont's sports car and caused an accident with another vehicle driven by James. James and his passenger, Fred, were injured and they filed suit against Rosa. A court awarded $35,000 to James for his bodily injuries and $110,000 to Fred for his bodily injuries. Which one of the following will be paid under each policy? Select one: A. $29,000 under Lamont's policy and $116,000 under Rosa's policy B. $35,000 under Lamont's policy and $110,00 under Rosa's policy C. $50,000 under Lamont's policy and $95,000 under Rosa's policy D. $95,000 under Lamont's policy and $50,000 under Rosa's policy

C. $50,000 under Lamont's policy and $95,000 under Rosa's policy

Eileen, who is insured under an unendorsed HO-3 policy, borrows her neighbor's power washer valued at $600. Eileen leaves it running and ruins its motor. How much will Eileen's HO-3 insurer reimburse the neighbor for damage to the power washer, assuming it is damaged beyond repair? Select one: A. Nothing, because property in the care, custody, and control of Eileen is excluded B. Nothing, because the power washer is not Eileen's property and, therefore, is excluded C. $600, regardless of whether Eileen is proven to be at fault D. $600, only if Eileen is proven to be at fault

C. $600, regardless of whether Eileen is proven to be at fault The insurer will pay $600 to replace the power washer regardless of whether Eileen is proven to be at fault. The Damage to Property of Others additional coverage provides a limit of $1,000 for damage to property to others caused by an insured, regardless of fault or legal liability.

Jack and Gabriela rent the second floor of a two-family dwelling. They have an unendorsed HO-4 policy with a Coverage C—Personal Property limit of $90,000. Due to a fire on the first floor of the dwelling, Jack and Gabriela were forced to stay in a motel for five nights. The motel costs were $100 a night and they spent $50 a day on meals. They estimate their normal food budget to be $15 a day. There was no damage to the second floor of the dwelling or any of Jack and Gabriela's personal property, so they submitted a claim for $750 to their insurer. How much, if any, will their insurer pay? Select one: A. $0 B. $500 C. $675 D. $750

C. $675 The insurer will pay $675. $675 $500 + $250 = $750 $750 - $75 (normal food expense) = $675

According to the National Safety Council, what percentage of disabling accidents and illnesses are work-related? Select one: A. 70 percent B. 50 percent C. 10 percent D. 30 percent

C. 10 percent

The policy period of the PAP starts at: A. 12:00 PM standard time at the address of the policyholder B. 12:00 PM standard time at the address of the insurer C. 12:01 AM standard time at the address of the policyholder D. 12:01 AM standard time at the address of the insurer

C. 12:01 AM standard time at the address of the policyholder

John has a Personal Auto Policy (PAP) with both collision and other than collision coverages. While John was working out at the gym, his car was stolen from the parking lot. The police recovered John's car five days later, but it had been damaged. John's car was in the shop 10 days for repairs. For what number of days will John's insurer pay him for transportation expenses? A. 5 B. 10 C. 13 D. 15

C. 13

Which one of the following is covered for watercraft liability under an HO-3 policy? A. A 48-foot sailing vessel owned by an insured B. A 60-horsepower inboard boat rented by an insured C. A 48-foot sailing vessel not owned or rented by an insured D. A 60-horsepower inboard boat owned by an insured at policy inception

C. A 48-foot sailing vessel not owned or rented by an insured

Personal inland marine policies have a shared structure consisted of the Declarations page, Common Policy Provisions and A. An insuring agreement B. Definitions C. A coverage form D. Exclusions

C. A coverage form

When determining the amount of life insurance to own using the needs approach, the amount needed to allow for monthly income after a parent's death until children are financially independent is categorized as Select one: A. A financial asset. B. A special need. C. A family living expense need. D. A cash need.

C. A family living expense need.

Which one of the following could fit the definition of a "residence premises" under an HO-3 policy if all other conditions are met? Select one: A. An apartment building that the named insured owns and manages, but in which he does not reside B. Another structure at a location different than that shown on the declarations page of the policy C. A four-family dwelling where the named insured resides in one of the units D. A two-family dwelling that the named insured owns and rents to others

C. A four-family dwelling where the named insured resides in one of the units

An example of an uninsured motor vehicle under the Personal Auto Policy (PAP) is Select one: A. A vehicle that is self-insured under state law. B. An old bus placed on blocks and used as a home. C. A hit-and-run vehicle with an unidentified owner that hits the named insured's covered auto. D. An uninsured auto owned by the named insured's spouse.

C. A hit-and-run vehicle with an unidentified owner that hits the named insured's covered auto.

A claim for money damages because of injury to another party or damage to another party's property best describes Select one: A. A tort. B. Errors and omissions. C. A liability loss. D. A property loss exposure.

C. A liability loss.

From what risk would a lienholder be seeking protection in requiring a mobile home owner to purchase the Mobilehome Lienholder's Single Interest endorsement? A. The mobile home may be destroyed by fire. B. The mobile home owner may default on a mortgage. C. A mobile home is exposed to transportation risks. D. The mobile home owner's loss of a site lease.

C. A mobile home is exposed to transportation risks.

Underemployment occurs when Select one: A. A person loses his job. B. A person's unemployment is voluntary. C. A person's work hours are reduced. D. An employee is terminated for performance-related reasons.

C. A person's work hours are reduced.

Gina has a Personal Auto Policy (PAP) with a medical payments limit of $10,000 with ABC Insurance Company and also has a PAP with a medical payments limit of $5,000 with DEF Insurance Company. Both policies cover Gina's car. If Gina is injured while driving her car and has medical bills of $8,000, how much will each insurer pay? Select one: A. ABC will pay $2,667and DEF will pay $5,333. B. ABC will pay $3,000 and DEF will pay $4,000. C. ABC will pay $5,333 and DEF will pay $2,667. D. ABC will pay $8,000 and DEF will pay nothing.

C. ABC will pay $5,333 and DEF will pay $2,667.

Adam and his insurer disagree on the amount of a loss covered by his homeowners policy. Adam wants the insurer to pay $10,000 toward the loss. The insurer's representative feels that the loss should be valued at $5,000. How could the appraisal process resolve this situation? Select one: A. Adam's loss will be valued at $7,500 which is an equitable compromise. B. Adam is forced to litigate the loss since agreement cannot be reached. C. Adam and the insurer will each select an appraiser, and the two appraisers will submit their differences to an impartial umpire who will reach a resolution. D. Both Adam and the insurer will jointly select an acceptable appraiser to set the value.

C. Adam and the insurer will each select an appraiser, and the two appraisers will submit their differences to an impartial umpire who will reach a resolution.

A multiple-policy discount on personal auto insurance is justified because Select one: A. Loss costs are reduced. B. Regulatory costs are reduced. C. Administrative costs are reduced. D. Destructive competition is reduced.

C. Administrative costs are reduced.

Chris and Bill have their family insured under a plan that allows them to select their own healthcare provider without any restrictions. The plan then reimburses them for a percentage of their medical expenses after the satisfaction of a deductible. This is an example of Choose one answer. A. A preferred provider organization plan. B. A health maintenance organization plan. C. An indemnity plan. D. A point-of service plan.

C. An indemnity plan.

The Auto Loan/Lease coverage endorsement of the Personal Auto Policy (PAP) amends physical damage coverage for leased vehicles or vehicles with outstanding loan amounts to include Select one: A. Penalties imposed under a lease for excessive use. B. Penalties imposed under a lease for high mileage. C. An unpaid amount due on the lease or loan. D. Costs for extended warranties.

C. An unpaid amount due on the lease or loan.

In a state with a reinsurance facility for high-risk drivers, a private insurer that does not want to bear the risk of a high-risk applicant may Select one: A. Assign the application to the reinsurance facility to be underwritten and serviced. B. Accept and service the policy, but collect excess losses from the reinsurance facility. C. Assign the premium and losses to the reinsurance facility, and continue to service the policy. D. Accept the application, but assign servicing and losses to members of the reinsurance facility pool on a proportional basis.

C. Assign the premium and losses to the reinsurance facility, and continue to service the policy.

Qualification for Social Security disability income benefits requires objective medical evidence that a worker's impairment meet which one of the following requirements with respect to duration? Select one: A. Be expected to last at least 24 consecutive months B. Be expected to eventually result in death C. Be expected to last at least 12 consecutive months or to result in death D. Be expected to last until the earlier of death or the worker's eligibility for Social Security retirement benefits

C. Be expected to last at least 12 consecutive months or to result in death

Which one of the following statements is true regarding most beachfront and windstorm plans? Select one: A. Coverage is limited to real property (real estate). B. Homeowners may choose between private insurance and the beachfront and windstorm plan. C. Buildings rebuilt after a specific date must conform to applicable building codes. D. Coverage is available on a statewide basis.

C. Buildings rebuilt after a specific date must conform to applicable building codes.

In the context of assets exposed to loss, elements such as fire, wind, hail, and theft are best described as examples of A. Real property exposures. B. Personal property exposures. C. Causes of loss. D. Consequences of property losses.

C. Causes of loss.

In the context of assets exposed to loss, long-term illness and loss of employment are best described as examples of A. Real property exposures. B. Personal property exposures. C. Causes of loss. D. Consequences of loss.

C. Causes of loss.

The largest group of Medicaid recipients is: A. Pregnant women B. People with disabilities C. Children D. Elderly

C. Children

Coverages A and B of the unendorsed HO-3 policy insure against direct physical loss to property described followed by a list of excluded perils. Which one of the following is true regarding the excluded perils that apply to Coverage A and B? Select one: A. Freezing of plumbing and heating systems is excluded at all times unless endorsed. B. Vandalism damage is excluded if it occurs anytime the property is not occupied. C. Collapse is excluded as a cause of loss but is covered if it results from other causes. D. Freezing damage to external property is excluded unless reasonable precautions are taken.

C. Collapse is excluded as a cause of loss but is covered if it results from other causes.

The Personal Auto Policy (PAP) provides physical damage coverage for a covered auto that is damaged when the car's driver loses control and overturns the car on a sharp curve. This coverage is called Select one: A. Comprehensive coverage. B. Falling object coverage. C. Collision coverage. D. Other than collision coverage.

C. Collision coverage

The loss settlement for Coverages A—Dwelling and B—Other Structures in the HO-8 policy is significantly different from the loss settlement in the HO-3 policy. Under the HO-8, if the insured makes repairs after a loss, the insurer will not pay more than the Select one: A. Replacement cost for the dwelling. B. Purchase price of the building, excluding land. C. Cost of repairs using common construction materials and methods. D. Actual cash value.

C. Cost of repairs using common construction materials and methods.

The Millers insure their dwelling under an HO-3 policy. They recently purchased a shed for their back yard where they will store tools, bicycles, and other sporting equipment. Which one of the following property coverages under Section I of the HO-3 policy would apply to the shed? Select one: A. Coverage A—Dwelling B. Additional Coverage C. Coverage B—Other Structures D. Coverage C—Personal Property

C. Coverage B—Other Structures

The Transportation Network Driver Coverage (No Passenger) endorsement uses the wording of the Public or Livery Conveyance Exclusion and includes an exception that Select one: A. Adds a transportation network platform definition. B. Provides coverage when the insured is logged into a transportation network platform until the driver accepts a passenger's request. C. Covers share-the-expense carpooling and operation of an auto without passengers while the driver is logged into a transportation network platform. D. Specifies that coverage does not apply to Part C—Uninsured Motorists Coverage.

C. Covers share-the-expense carpooling and operation of an auto without passengers while the driver is logged into a transportation network platform.

Which one of the following states the dollar limits of an insurance policy? Select one: A. Conditions B. Insuring agreements C. Declarations D. Definitions

C. Declarations

Under the liability coverage in the Personal Auto Policy (PAP), the insurer agrees to pay Select one: A. Judgments in excess of the liability limits. B. Judgments for bodily injury intentionally caused by the insured. C. Defense costs incurred by the insurer. D. Costs incidental to claims not covered by the policy.

C. Defense costs incurred by the insurer.

John used an inheritance to purchase an annuity at age 50 to provide him a fixed-annual income after he reaches age 65. This is an example of a(n) Select one: A. Flexible-premium annuity. B. Equity indexed annuity. C. Deferred annuity. D. Variable annuity.

C. Deferred annuity.

An insurer typically charges a premium for coverage that is based on a base premium and base premium adjustments. Which one of the following correctly describes a factor that assists in setting the base premium? Select one: A. Construction factors affect base premium adjustments, but not the actual base premium. B. An individual's insurance score may affect the package policy credits available to the insured. C. Different geographic divisions may have different basic premiums. D. The coverage amount affects base premium adjustments, but not the actual base premium.

C. Different geographic divisions may have different basic premiums.

Which one of the following is true with regard to coverage for acts of directors or officers under a personal umbrella policy? A. They are always excluded. B. They are always covered. C. Directors or officers of a not-for-profit organization are covered. D. Directors or officers of a for-profit organization are covered.

C. Directors or officers of a not-for-profit organization are covered.

Some older people are in poor health and require long-term care in a nursing facility. However, the current Medicare program Choose one answer. A. Is not expected to continue long-term nursing care benefits beyond the year 2010. B. Is not expected to continue long-term nursing care benefits beyond the year 2025. C. Does not cover care in a nursing facility for extended periods of time. D. Covers only custodial care in a nursing facility.

C. Does not cover care in a nursing facility for extended periods of time.

The Snowmobile Endorsement to the Personal Auto Policy (PAP) Select one: A. Does not provide coverage for snowmobiles used off public roads. B. Does not allow for uninsured motorists coverage. C. Does not provide coverage for snowmobiles used in business. D. Does not allow for physical damage coverage.

C. Does not provide coverage for snowmobiles used in business.

Which one of the following is typically a party to a group life insurance contract? Select one: A. Broker B. Beneficiary C. Employer D. Employee

C. Employer

Which one of the following types of annuities features interest rates that fluctuate based on the stock market's performance but guarantee annuitants payment of a minimum principal amount and interest rate? Select one: A. Combination plan B. Variable annuity (VAs) C. Equity indexed annuity (EIA) D. Fixed-dollar annuity

C. Equity indexed annuity (EIA)

Marge and her husband Jack have a Personal Auto Policy (PAP) to cover their two automobiles. Marge also has a company car provided by her employer. Which one of the following endorsements would best provide Marge with liability and medical payments coverage for her company car? Select one: A. Named Non-Owner Coverage endorsement B. Miscellaneous Type Vehicle endorsement C. Extended Non-Owner Coverage—Vehicles Furnished or Available for Regular Use endorsement D. Auto Loan/Lease Coverage endorsement

C. Extended Non-Owner Coverage—Vehicles Furnished or Available for Regular Use endorsement

Howard is a 52-year-old single father of a 16-year-old son, Ben. He has been insured by a $500,000 life insurance policy for 16 years. As policyholder, Howard has selected a fixed-amount settlement option. Howard dies suddenly of an aneurysm. How will the death proceeds be paid to Ben? Select one: A. The proceeds will be paid to Ben periodically over a fixed period of time. B. Ben will receive the interest from the death proceeds in periodic payments. C. Fixed monthly amounts will be paid to Ben until the principal and interest are exhausted. D. Ben will receive an income for life.

C. Fixed monthly amounts will be paid to Ben until the principal and interest are exhausted.

A general type of annuity is a combination plan. Combination plans combine features of Select one: A. Deferred and immediate annuities. B. Life insurance and equity indexed annuities. C. Fixed-dollar and variable annuities. D. Flexible-premium and single-premium annuities.

C. Fixed-dollar and variable annuities.

Which one of the following does the Insuring Agreement of Part B of the PAP promise to pay? A. Medical expenses rendered 4 years from the date of the accident B. Veterinary X-ray expenses C. Funeral expenses D. Medical expenses that are unreasonable or unnecessary

C. Funeral expenses

A sinkhole causes the partial collapse of a wall of Ryan's residence. The home is insured under an unendorsed DP-3 dwelling policy. Where would the question of whether this loss is covered be answered? Choose one answer. A. Other coverages B. Perils insured against C. General exclusions D. Conditions

C. General Exclusions

A sinkhole causes the partial collapse of a wall of Ryan's residence. The home is insured under an unendorsed DP-3 policy. Where would the question of whether this loss is covered be answered? A. Other coverages B. Perils insured against C. General exclusions D. Conditions

C. General exclusions

A reinstatement clause in a life insurance policy Select one: A. Continues a life insurance policy in force for 30 days after the premium due date, allowing the policyowner the opportunity to pay the overdue premium to reinstate the policy. B. Continues a life insurance policy in force for 60 days after the premium due date, allowing the beneficiaries the opportunity to pay the overdue premium to reinstate the policy. C. Gives the policyowner the right to reinstate a life insurance policy that has lapsed for nonpayment of premium. D. Gives the insurer the option, but not the obligation, to reinstate policies for lapsed policyholders who wish to reactivate coverage.

C. Gives the policyowner the right to reinstate a life insurance policy that has lapsed for nonpayment of premium.

Jim and Sue, a young married couple, are under contract to purchase a condominium unit. Which one of the following ISO policy forms is best designed to meet their homeowners insurance needs? A. HO-2—Broad Form B. HO-4—Contents Broad Form C. HO-6—Unit-Owners Form D. HO-8—Modified Coverage Form

C. HO-6—Unit-Owners Form

Unsatisfied judgment funds are funds established in some states to compensate auto accident victims who Select one: A. Sustain bodily injury caused by an uninsured motorist and obtain compensation from their own uninsured motorist coverage. B. Are injured by a negligent driver who has liability insurance at the time of the accident. C. Have obtained a court judgment that is uncollectible because the guilty party cannot pay. D. Are injured at work and able to collect workers compensation.

C. Have obtained a court judgment that is uncollectible because the guilty party cannot pay.

All of the following are types of benefits provided by Social Security, EXCEPT: A. Disability benefits paid to insured workers and their eligible dependents B. Survivors (death) benefits paid to surviving dependents of insured workers C. Health insurance benefits (Medicare) paid to insured persons age 55 or older and to certain other beneficiaries D. Retirement (old age) benefits paid to insured workers and their eligible dependents

C. Health insurance benefits (Medicare) paid to insured persons age 55 or older and to certain other beneficiaries

Regarding insuring the premature death loss exposure, which one of the following statements is true? Select one: A. In two-income families without children, life insurance is generally not needed. B. In single-parent families, the need for life insurance is not great since there is no surviving spouse. C. In a traditional family structure, the need for life insurance on the spouse that stays at home can be as important as the need for life insurance on the spouse in the labor force. D. In two-income families with children, life insurance is generally needed only on the spouse with the higher income.

C. In a traditional family structure, the need for life insurance on the spouse that stays at home can be as important as the need for life insurance on the spouse in the labor force.

Regarding the premature death loss exposure, which one of the following statements is true? Select one: A. In sandwiched families, life insurance is generally not needed. B. In single-parent families, the need for life insurance is not great since there is no surviving spouse. C. In a traditional family structure, the need for life insurance on the spouse that stays at home can be as important as the need for life insurance on the spouse in the labor force. D. In two-income families with children, life insurance is generally needed only on the spouse with the higher income.

C. In a traditional family structure, the need for life insurance on the spouse that stays at home can be as important as the need for life insurance on the spouse in the labor force.

The application of two or more underinsured motorists (UIM) coverage limits to a single auto accident because two or more separate policies apply is called: A. Other insurance stacking. B. Intrapolicy stacking. C. Interpolicy stacking. D. Pro rata stacking.

C. Interpolicy stacking.

All of the following are considered taxable compensation for IRA purposes, EXCEPT: A. Salaries B. Tips C. Investment Income D. Self-employment Income

C. Investment Income

The HO-3 policy A. Cannot be assigned to another party. B. Is fully assignable without the insurer's consent. C. Is assignable only with the insurer's written consent. D. May be assigned when the insured makes a written request within 60 days of the assignment.

C. Is assignable only with the insurer's written consent.

Social Security retirement, survivors, and disability benefits are a function of a worker's primary insurance amount (PIA)? How is the PIA determined? Select one: A. It is equal to twice the federal minimum wage. B. It is determined annually by Congress. C. It is determined by a formula that considers a worker's average monthly earnings over a specified number of years. D. It is determined by a formula that considers a worker's age and number of dependents.

C. It is determined by a formula that considers a worker's average monthly earnings over a specified number of years.

Megan is scheduled to settle on her new oceanfront condo on January 20th at 4:00 p.m. Megan's mortgage becomes effective on January 21st at 9:00 a.m. when the property is transferred to her. Megan submits an application and pays the appropriate premium to National Flood Insurance Program (NFIP) on January 19th for flood insurance for her new condo. When will Megan's flood policy become effective? Select one: A. January 19th at 9:00 a.m. B. January 20th at 4:00 p.m. C. January 21st at 9:00 a.m. D. February 21st at 9:00 a.m.

C. January 21st at 9:00 a.m.

Jim purchased an HO-3 policy with a $270,000 Coverage A—Dwelling limit. Unaware that Jim had purchased a policy, his wife Sue Ellen also purchased an HO-3, with a $330,000 Coverage A—Dwelling limit. A fire destroys the couple's home, which has a $300,000 replacement cost. How will the two insurers share the loss? Select one: A. Jim's insurer will pay $270,000; Sue Ellen's insurer will pay $30,000 B. Jim's insurer will pay $150,000; Sue Ellen's insurer will pay $150,000 C. Jim's insurer will pay $135,000; Sue Ellen's insurer will pay $165,000 D. Jim's insurer will pay $165,000; Sue Ellen's insurer will pay $135,000

C. Jim's insurer will pay $135,000; Sue Ellen's insurer will pay $165,000

Larry owns and occupies a home with a detached garage that is insured under an HO-3 policy. Due to the cold winters, Larry has decided to connect the garage to his home with an enclosed breezeway, permanently connecting the dwelling and the garage with a connected roof, to avoid going outside to get to and from his automobile. Which one of the following is true regarding Larry's homeowner policy coverage? Select one: A. Larry should include the cost of the land the garage is on for the Coverage A limit. B. Larry should consider the breezeway a "fixture" to be covered under Coverage A of the policy. C. Larry may need to increase his Coverage A limit for the value of the garage and breezeway. D. Larry should reduce his Coverage B limit for the value of the garage.

C. Larry may need to increase his Coverage A limit for the value of the garage and breezeway.

Which one of the following is a warranty commonly applied to personal watercraft insurance? A. Mechanical breakdown B. Uninsured boaters C. Lay-up period D. Escape of pollutants

C. Lay-up period

A policy condition providing that if a policy form is broadened at no additional premium, the broadened coverage automatically applies to all existing policies of the same type is known as the Select one: A. Broadened coverage clause. B. Subrogation clause. C. Liberalization clause. D. Automatic coverage clause.

C. Liberalization clause.

Megan owns two cars, one that is insured with a Personal Auto Policy (PAP) and one that is not insured at all. While driving the uninsured car, she is injured in an accident with an at-fault uninsured driver. Megan makes a claim under her uninsured motorist (UM) coverage. Which one of the following statements is true? A. Megan is not entitled to UM coverage because of the Owned Vehicle With Primary UM Coverage in Other Policy exclusion. B. Megan is entitled to UM coverage in this situation pursuant to the UM Insuring Agreement. C. Megan is not entitled to UM coverage because of the Owned But Not Insured Vehicle exclusion. D. Megan is entitled to UM coverage pursuant to an exception to the Owned But Not Insured Vehicle exclusion.

C. Megan is not entitled to UM coverage because of the Owned But Not Insured Vehicle exclusion.

All of the following are examples of motor vehicles covered under Section II - Liability coverages of the HO-3, EXCEPT: A. Motor vehicle designed as a toy vehicle for use by children under 7 years of age that is powered by one or more batteries and has not been modified after being manufactured to exceed 5 mph on level ground B. Motor vehicle in dead storage on an insured location C. Motor vehicle used solely to service a nonresidential commercial building D. Motor vehicle designed for assisting people who are handicapped

C. Motor vehicle used solely to service a nonresidential commercial building

Which one of the following established the National Flood Insurance Program (NFIP)? Select one: A. Federal Emergency Management Agency (FEMA) B. Federal Insurance Administration (FIA) C. National Flood Insurance Act of 1968 D. National Insurance Reform Act of 2004

C. National Flood Insurance Act of 1968

While mowing the lawn at his family's home, Jake accidentally ran over the foot of his three-year-old son, causing severe injury. What coverages for this loss, if any, would be provided under Jake's HO-3 policy? Select one: A. Coverage F—Medical Payment to Others only B. Coverage E—Personal Liability only C. None D. Coverage E—Personal Liability and Coverage F—Medical Payment to Others

C. None

While mowing the lawn at his family's home, Jake accidentally ran over the foot of his three-year-old son, causing severe injury. What coverages for this loss, if any, would be provided under Jake's HO-3 policy? Select one: A. Coverage F—Medical Payment to Others only B. Coverage E—Personal Liability only C. None D. Coverage E—Personal Liability and Coverage F—Medical Payment to Others

C. None Coverages E and F do not apply to insureds for their own injuries.

Jessie has an electronic navigation system that attaches to the dashboard of his car with a Velcro patch. Jessie discovered one morning that his car had been broken into and his radio, CD player, and navigation system were taken. Jessie insures his car under an unendorsed Personal Auto Policy (PAP). Disregarding any deductibles, what amount will Jessie's auto insurer pay for the navigation system? Select one: A. Replacement costs B. The amount necessary to replace the item with property of like kind and quality C. Nothing D. Actual cash value

C. Nothing

The Section II Limit of Liability provision in the HO-3 policy states that for Coverage E, all bodily injury and property damage that result from continuous or repeated exposure to the same harmful conditions are considered Select one: A. Multiple occurrences, depending on how many events caused the bodily injury and property damage. B. Three occurrences, namely, the bodily injury, the property damage, and the combination of bodily injury and property damage. C. One occurrence, even if the occurrence that caused the bodily injury or property damage was not a single event. D. Two occurrences, namely, the bodily injury and the property damage.

C. One occurrence, even if the occurrence that caused the bodily injury or property damage was not a single event.

Under the HO-3 policy Section I—Conditions, the Appraisal condition: A. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. B. States that the insurer will adjust all losses with the insured or the insured's spouse, if a resident in same household. C. Outlines a method for resolving disagreements between the insured and the insurer. D. Bars an insured from bringing legal action against the insurer unless the insured has complied with all policy provisions.

C. Outlines a method for resolving disagreements between the insured and the insurer.

The assignment clause of a life insurance policy provides which one of the following? Select one: A. Dividends are assigned in accordance with the option selected. B. If the policyowner and the insured are not the same person, policy rights are assigned to the insured. C. Ownership rights in the policy can be transferred to another party. D. The order of beneficiaries is assigned by a formula.

C. Ownership rights in the policy can be transferred to another party.

Jennifer owns a valuable stamp collection, and her insurer refuses to provide the required amount of coverage by endorsement to her homeowners policy. Which one of the following types of personal inland marine coverage forms should Jennifer use to cover her stamp collection for its full value on a scheduled basis? A. Personal Effects Form B. Personal Property Form C. Personal Articles Standard Loss Settlement Form D. Floating Property Form

C. Personal Articles Standard Loss Settlement Form

Philip insures his car with a Personal Auto Policy (PAP). Philip's car is damaged when he is involved in an accident that is entirely caused by the driver of another car. The other car is also insured with a PAP. Which one of the following is the most accurate? Select one: A. Philip cannot collect for this loss from the insurer of the other car. B. If Philip's insurer pays, Philip's insurer cannot subrogate against the insurer for the other car. C. Philip can collect for this loss from his own insurer. D. If the other car's insurer pays, the other car's insurer can subrogate against Philip's insurer.

C. Philip can collect for this loss from his own insurer.

Having a theoretically infinite number of possible loss scenarios is one of the limitations of Select one: A. Post-loss policy analysis. B. The DICE method. C. Pre-loss policy analysis. D. Determining the amount payable for a claim.

C. Pre-loss policy analysis.

Investors who are conservatively investing to reach short-term financial goals, such as saving for a down payment on a home, are likely most concerned with which one of the following investment objectives? Select one: A. Current income B. Capital appreciation C. Preservation of capital D. Growth and income

C. Preservation of capital

Which of the following retirement plans' unpredictability often cause investors to couple it with another retirement savings plan? A. 401k plan B. Thrift plan C. Profit-sharing plan D. Employee stock ownership plan

C. Profit-sharing plan

Which of the following describes the operation of no play, no pay laws? A. Compensates an insured for bodily injury caused by an uninsured motorist B. Provides minimal liability coverage at a reduced cost C. Prohibits uninsured drivers from initiating lawsuits for noneconomic damages D. Requires motorists to provide proof of financial responsibility

C. Prohibits uninsured drivers from initiating lawsuits for noneconomic damages

In addition to general duties under a Personal Auto Policy (PAP), a person seeking coverage under Part C—Uninsured Motorists Coverage must perform additional duties. Which one of the following is one of these additional duties? Select one: A. Submit to a physical examination conducted by a doctor chosen by the insurer B. Promptly notify police if a covered auto is stolen C. Promptly notify police if a hit-and-run driver was involved in the accident D. Permit inspection and appraisal

C. Promptly notify police if a hit-and-run driver was involved in the accident

Part E - Duties After an Accident or Loss includes general duties and additional duties. Which of the following is an additional duty required if the insured is seeking payment under Coverage C - Uninsured Motorists Coverage of the PAP? A. Notify the police if the vehicle is stolen B. Agree to submit to a physical examination if requested by the insurer C. Promptly notify the police if a hit-and-run driver is involved. D. Authorize the insurer to obtain medical reports and other pertinent records

C. Promptly notify the police if a hit-and-run driver is involved.

Auto insurance protects against Select one: A. Property and premature death loss exposures. B. Property loss exposures only. C. Property and liability loss exposures. D. Liability loss exposures only.

C. Property and liability loss exposures.

Personal property coverage for watercraft is A. Excluded by the DP-3 policy but covered on a limited basis under the homeowners policy. B. Provided by the homeowners policy and the DP-3 policy for watercraft under 25 horsepower. C. Provided on a limited basis for rowboats and canoes under both the homeowners policy and the DP-3 policy. D. Excluded by the homeowners and DP-3 policies.

C. Provided on a limited basis for rowboats and canoes under both the homeowners policy and the DP-3 policy.

Which one of the following is a component of the Personal Auto Policy (PAP) declarations page? Select one: A. Duties after an accident B. Provisions for cancellation of the policy C. Rating information D. Agreement and definitions

C. Rating information

In general, a loss prevention measure is implemented to Select one: A. Eliminate any possibility of loss. B. Reduce loss severity. C. Reduce the frequency of a particular loss. D. Keep backup information and assets in reserve.

C. Reduce the frequency of a particular loss.

In general, a loss prevention measure is implemented to: A. Eliminate any possibility of loss. B. Reduce loss severity. C. Reduce the frequency of a particular loss. D. Keep backup information and assets in reserve.

C. Reduce the frequency of a particular loss.

The Trailer/Camper Body Coverage endorsement provides coverage for related facilities and equipment, including: A. Clothing or luggage B. Business or office equipment C. Refrigeration facilities D. Sales samples or articles used in exhibitions

C. Refrigeration facilities

Policy provisions of the mobilehome policy Select one: A. Are the same as those of the homeowners form. B. Differ widely from those of the homeowners form. C. Revise those of the homeowners form. D. Form the basis for those of the homeowners form.

C. Revise those of the homeowners form.

Larry is age 50 and already fully insured under Social Security. What is the earliest age he can retire and elect to start receiving retirement benefits? Select one: A. Fifty-five B. Fifty-nine and one-half C. Sixty-two. D. Sixty-six

C. Sixty-two.

Which one of the following types of policies can be used to provide special form ("all risks") coverage for small watercraft? A. Homeowners B. Personal auto C. Small boat D. Protection and indemnity

C. Small boat

Which one of the following statements is true regarding automobile insurance rating? Select one: A. State regulators require that all insurers offer discounts on auto rates for passive restraints. B. Most insurers base automobile rates on primary rating factors and do not consider any other factors in establishing rates. C. State regulators require that rates be adequate, reasonable, and not unfairly discriminatory. D. Drivers with lower-than-average loss exposure are charged higher rates.

C. State regulators require that rates be adequate, reasonable, and not unfairly discriminatory.

If the insurer makes a loss payment to a person who has a right to recover damages from a negligent third party, the insurer has which one of the following legal rights against that third party? Select one: A. Estoppel B. Salvage C. Subrogation D. Loss mitigation

C. Subrogation

If the insurer makes a loss payment to a person who has a right to recover damages from a negligent third party, the insurer has which one of the following legal rights against that third party? Select one: A. Estoppel B. Salvage C. Subrogation D. Loss mitigation

C. Subrogation CorrectCorrect. Subrogation is a right against the third party.

The Insuring Agreement in Part A—Liability Coverage of the Personal Auto Policy (PAP) addresses all of the following categories, EXCEPT: Select one: A. Persons and organizations insured B. Defense costs covered C. Supplementary payments D. Damages covered

C. Supplementary payments

Section 403(b) plans are tax-deferred retirement plans for Select one: A. Self-employed individuals. B. Employers who employ 100 or fewer eligible employees. C. Tax-exempt organizations. D. Banks, insurance companies, and other financial institutions.

C. Tax-exempt organizations.

While driving on a work-related sales call, a motorist is injured in an auto accident and is unable to work for three months, after which he makes a full recovery. This is an example of a Select one: A. Temporary partial disability. B. Permanent partial disability. C. Temporary total disability. D. Permanent total disability.

C. Temporary total disability.

Ian has a Personal Auto Policy (PAP) to cover his owned vehicle. Ian works for a bakery and drives his employer's van on weekdays making deliveries. The bakery has a workers compensation policy covering all of its employees, but has let the commercial auto insurance covering the delivery van expire. Ian is injured in an accident while driving the van making a delivery and sustains medical bills of $1,000. Ian's injury is the type for which workers compensation benefits are required. Ian's medical bills will be paid by Select one: A. Ian's PAP insurer and the bakery's workers compensation insurer on a shared basis. B. Ian. C. The bakery's workers compensation insurer. D. Ian's PAP insurer.

C. The bakery's workers compensation insurer.

A cash value life insurance policy may allow a loan to be taken against the policy cash value. What happens if the insured dies before repaying the loan? Select one: A. Repayment becomes an obligation of the insured's estate. B. No insurance payment is made. C. The death benefit amount is reduced by the outstanding loan amount. D. The obligation is forgiven.

C. The death benefit amount is reduced by the outstanding loan amount

Which one of the following statements about annuities is true? Select one: A. The premium for individual annuity plans is paid with pre-tax dollars. B. The investment income that accumulates under individual annuity plans is taxable in the year it is earned. C. The fundamental purpose of an individual annuity is to provide periodic income for a fixed period or over an individual's lifetime. D. With annuity plans, the purchaser must begin receiving payments one month from the purchase date.

C. The fundamental purpose of an individual annuity is to provide periodic income for a fixed period or over an individual's lifetime.

A common coverage trigger in a long-term care insurance policy is Select one: A. Being over the age 70 and having had the policy for at least 10 years. B. Having a family member certify that nursing home care is needed. C. The inability to perform a certain number of activities of daily living. D. Eligibility for Medicare.

C. The inability to perform a certain number of activities of daily living.

Preservation of capital is Select one: A. The ability to quickly convert an investment into cash with a minimal loss of principal. B. Managing investments to reduce the variability of investment outcomes. C. The objective of selecting assets that have a low risk of losing value. D. An increase in the value of investments.

C. The objective of selecting assets that have a low risk of losing value.

For a personal loss exposure to be present Select one: A. An actual loss must occur. B. An individual or family must cause another person to suffer injury or loss. C. The possibility of loss must exist. D. An individual or family must own their residence.

C. The possibility of loss must exist.

The fewest number of people recognize which one of the following personal financial exposures? Select one: A. The need for retirement planning B. The importance of securing property and liability insurance on their home and auto C. The potential financial devastation they could face if they or their spouse were to became disabled D. The need for life insurance for themselves and their spouses and dependents

C. The potential financial devastation they could face if they or their spouse were to became disabled

Which one of the following is true regarding a Roth IRA? Select one: A. Annual contribution limits are higher than they are for a traditional IRA. B. Annual contribution limits are lower than they are for a traditional IRA. C. There are no required distributions during the lifetime of a Roth IRA. D. The account holder is able to deduct contributions for income-tax purposes.

C. There are no required distributions during the lifetime of a Roth IRA.

Which one of the following statements about Medicare Advantage (Part C) plans is true? Select one: A. They eliminate the need for a beneficiary to pay the Medicare Part B premium. B. They usually provide a lower level of benefits than does original Medicare. C. They can take several forms, including managed care and fee-for-service plans. D. They are sold by a government agency administered by the Social Security Administration.

C. They can take several forms, including managed care and fee-for-service plans.

Inland marine floaters typically share which one of the following characteristics? Select one: A. They are written for docks, watercraft, and related marine structures. B. They usually cover unique perils not addressed by "traditional" insurance policies. Examples include wear and tear, insect damage, and mechanical breakdown. C. They generally provide special form (open perils) coverage on a worldwide basis. D. They are always written with a deductible.

C. They generally provide special form (open perils) coverage on a worldwide basis.

Each of these statements pertains to a maximum benefit period, EXCEPT: A. This period is defined as the longest period for which disability benefits will be paid to the insured B. This period may be established as a lifetime benefit C. This period is defined as the time period for which benefits will be paid to a disabled individual D. This period can extend many years; if so, higher disability insurance premiums are required

C. This period is defined as the time period for which benefits will be paid to a disabled individual

Which one of the following conditions affects which state's UM and UIM insurance laws apply and determines who receives UM/UIM protection and under what circumstances? A. Whether the single auto policy covers more than 1 vehicle B. Whether the insured has a good driving record C. Where the insured's vehicle is registered or principally garaged D. Whether the insured lives in an urban area or rural area

C. Where the insured's vehicle is registered or principally garaged

Jackie had been having trouble paying her bills and decided to get a second job as a taxi driver. She was involved in a collision with a van and her fare-paying passenger was injured. Jackie's car was insured with a Personal Auto Policy (PAP) that included medical payments coverage. Jackie's passenger Select one: A. Will receive medical payments under the PAP as an innocent participant. B. Will receive medical payments under the PAP under the Public or Livery Conveyance coverage provision. C. Will not receive medical payments under the PAP because of the Public or Livery Conveyance exclusion. D. Will not receive medical payments under the PAP because of the PAP's Omnibus clause.

C. Will not receive medical payments under the PAP because of the Public or Livery Conveyance exclusion.

Intermediate nursing care

Care for a stable condition that requires daily care but not twenty-four-hour nursing supervision

Preservation of Capital

Conservative investment objective placing the emphasis on maintaining the value of investments, rather than on increasing their value. Often entails selecting low risk investments with low rate of return.

Other than collision (OTC) coverage

Coverage for physical damage to a covered auto resulting from any cause of loss except collision or a cause of loss specifically excluded.

Personal injury protection (PIP) coverage

Coverage that pays benefits, regardless of fault, for medical expense, income loss, and other benefits, resulting from bodily injury to occupants of a covered auto.

Coverage for Damage to Your Auto (Maximum Limit of Liability)

Covers each described vehicle for a stated amount of insurance as indicated in the endorsement schedule that applies to collision and OTC losses

Trailer/Camper Body Coverage Endorsement

Covers trailer or camper bodies, including related facilities or equipment

An insured under a personal auto policy with liability limits of $100,000/$300,000/$25,000 is responsible for an auto accident that resulted in $90,000 in damages for bodily injury. The costs incurred by the insurer to defend the insured were $20,000. Which one of the following amounts did the insurer pay as a result of the accident? A. $20,000 B. $90,000 C. $100,000 D. $110,000

D. $110,000

Rosa owns a car insured with a Personal Auto Policy (PAP) with split limits for liability coverage of $100/$300/$50. The same car is covered with a second PAP with split limits for liability coverage of $25/$50/$10. While driving her car Rosa caused an accident with another vehicle driven by James. James and his passenger, Fred, were injured and they filed suit against Rosa. A court awarded $35,000 to James for his bodily injuries and $110,000 to Fred for his bodily injuries. Which one of the following amounts will be paid under each policy? Select one: A. $29,000 under the first PAP and $116,000 under the second PAP B. $35,000 under the first PAP and $110,00 under the second PAP C. $50,000 under the first PAP and $95,000 under the second PAP D. $116,000 under the first PAP and $29,000 under the second PAP

D. $116,000 under the first PAP and $29,000 under the second PAP

Sarah and Ernest Ridley have an unendorsed Personal Auto Policy (PAP) covering Sarah's sedan and Ernest's SUV with the following coverages and limits: Liability $100,000/$300,000/$50,000 Medical Payments $5,000 Uninsured Motorists $100,000/$300,000 Other Than Collision Actual Cash Value Less $250 Collision Actual Cash Value Less $500 Ernest was running errands in the SUV along with Sarah and their granddaughter, Millie. As a deer ran across the road in front of him, Ernest lost control of the vehicle and struck a parked car. The damages and costs from the accident are as follows: Damages to the SUV $15,000 Damages to the parked car $8,500 Ernest's medical injuries $10,000 Sarah's medical injuries $7,000 Millie's medical injuries $4,000 Defense cost $7,500 How much, if any, would Ridley's PAP insurer pay under Part B—Medical Payments Coverage? Select one: A. $0 B. $4,000 C. $5,000 D. $14,000

D. $14,000

The maximum amount of insurance available for a residence under the regular program of the National Flood Insurance Program is Select one: A. $35,000 for the dwelling and $10,000 for contents. B. $100,000 for the dwelling and $10,000 for contents. C. $250,000 for the dwelling and $35,000 for contents. D. $250,000 for the dwelling and $100,000 for contents.

D. $250,000 for the dwelling and $100,000 for contents.

Jill and Tom have a home with a $300,000 replacement cost and an HO-3 policy with a Coverage A limit of $270,000. Lightning strikes the central air conditioning unit and destroys it beyond repair. The unit has a replacement cost of $5,000, is five years old, and has a useful life of 10 years. Ignoring any deductible that might apply, how much will the insurer pay to replace the air conditioning unit? Select one: A. $2,500 B. $3,000 C. $4,500 D. $5,000

D. $5,000 The insurer will pay the replacement cost of $5,000 since the dwelling limit equals or exceeds 80% of the replacement cost.

Li insured his car with a Personal Auto Policy (PAP) that has split limits for liability coverage of $50/$100/$25. He was found by a court to be at fault for an accident that injured the other driver and ordered to pay a judgment of $45,000, plus $5,000 in prejudgment interest. How much will Li's insurer pay under his PAP? Select one: A. $25,000 B. $30,000 C. $45,000 D. $50,000

D. $50,000

A property owner of a repeatedly flooded property who refuses a reasonable flood-hazard mitigation from the NFIP will experience a flood insurance premium increase of what % of the chargeable rate for the property at the time of the mitigation offer? A. 50% B. 75% C. 125% D. 150%

D. 150%

Jerry who lives in a rural area has experienced several animal-related losses to his home. Which one of the following losses would be covered under Jerry's HO-3 policy? Select one: A. A bird built a nest in the wall, causing damage to the drywall. B. Jerry's dog chewed the leg of his coffee table, destroying the piece of furniture. C. Jerry's cat brought in a squirrel that got away and later chewed electrical wiring, causing damage to Jerry's home. D. A deer ran through Jerry's glass door and destroyed the door and other property.

D. A deer ran through Jerry's glass door and destroyed the door and other property. CorrectCorrect. The HO-3 policy excludes damage caused by animals that the insured owns or keeps, or by birds, vermin, rodents, or insects. A deer that ran through Jerry's glass door and destroyed the door and other property would be covered.

All of the following items are examples of personal property, EXCEPT: A. A diamond wedding ring B. A set of cookware C. A fishing boat D. A detached garage

D. A detached garage

One of the costs associated with premature death that can be addressed with life insurance is Select one: A. Loss of Social Security retirement benefits if the deceased was less than 55 years old at the time of death. B. Missing potential benefits to society that might have been derived from the deceased's future efforts. C. Loss of companionship experienced by the extended family members. D. A family's reduction in the standard of living because of insufficient replacement income.

D. A family's reduction in the standard of living because of insufficient replacement income.

A point-of-service (POS) plan is a hybrid healthcare plan that has characteristic of which two other types of healthcare plans? Select one: A. A preferred provider organization (PPO) and an exclusive provider organization (EPO) B. A major medical plan and Medicare C. An indemnity plan and a health maintenance organization (HMO) D. A health maintenance organization (HMO) and a preferred provider organization (PPO)

D. A health maintenance organization (HMO) and a preferred provider organization (PPO)

Liability coverage applies only to bodily injury and property damage that result from an occurrence. An occurrence can be any of the following, EXCEPT: A. A sudden event B. A gradual series of incidents C. A continuous condition D. A non-fortuitous event

D. A non-fortuitous event

All of the following can be covered by a dwelling policy, EXCEPT: A. A two-family dwelling where the owner lives in one of the units and rents the other unit B. A one family dwelling rented by the owner to others C. A mobile home located at a permanent location D. A small apartment complex with six units, which the owner rents to others

D. A small apartment complex with six units, which the owner rents to others

The Coverage for Damage to Your Auto (Maximum Limit of Liability endorsement) covers each described vehicle for Select one: A. A specified limit for bodily injury and property damage liability coverage. B. A specified limit for medical payments and uninsured motorists coverage. C. A stated amount of insurance that applies to collision but not to other than collision losses. D. A stated amount of insurance that applies to collision and other than collision losses.

D. A stated amount of insurance that applies to collision and other than collision losses.

Melissa and her husband Herb are in their early 40s. Each is employed and has a good income. An analysis of their financial situation shows that their current life insurance would enable the other to live adequately if one of them should die prematurely. However, there is one gap that they need to fill in case one or both of them die within the next 12 years. It is how to finance their children's college education. The children should all graduate from college within this 12-year period. Which one of the following products will best address this concern? Select one: A. A universal life insurance policy B. A Roth IRA C. An annuity D. A term life insurance policy

D. A term life insurance policy

Adam and his insurer disagree on the amount of a loss covered by his homeowners policy. Adam wants the insurer to pay $10,000 toward the loss. The insurer's representative feels that the loss should be valued at $5,000. How could the appraisal process resolve this situation? Select one: A. Adam's loss will be valued at $7,500 which is an equitable compromise. B. Both Adam and the insurer will jointly select an acceptable appraiser to set the value. C. Adam is forced to litigate the loss since agreement cannot be reached. D. Adam and the insurer will each select an appraiser, and the two appraisers will submit their differences to an impartial umpire who will reach a resolution.

D. Adam and the insurer will each select an appraiser, and the two appraisers will submit their differences to an impartial umpire who will reach a resolution.

The Personal Auto Policy (PAP) contains a section outlining several important duties with which the insured must comply in order for the policy to provide coverage. Which one of the following is a general duty under the Personal Auto Policy (PAP)? Select one: A. Provide prompt notice to the state insurance department regarding the accident or loss B. Agree to submit to a physical examination at the insured's own expense C. Submit the state required regulatory compliance forms to the insurer within a reasonable amount of time D. Agree to an examination under oath if required by the insurer

D. Agree to an examination under oath if required by the insurer

The Section II Limit of Liability provision of the HO-3 policy stipulates that the limit of Coverage E—Personal Liability appearing on the declarations page is the total limit of coverage for Select one: A. Each insured separately. B. Each person injured in a claim. C. Each claim made relative to an occurrence. D. Any one occurrence.

D. Any one occurrence.

The medical payments coverage in the Personal Auto Policy (PAP) applies to Select one: A. Anyone injured in an accident involving an insured. B. Any insured who is also covered by workers compensation for the same accident. C. Anyone occupying a car not owned by any insured but driven by an insured. D. Any person occupying a covered auto.

D. Any person occupying a covered auto.

The Ordinance or Law provision of the Additional Coverages of the HO-3 policy Section I Select one: A. Includes coverage for Collapse which would include settling, cracking, shrinking and provides an additional limit. B. Provides an additional amount of $1000 for the increased costs from a covered loss resulting from enforcement of building codes. C. Adds coverage for increased costs required to deal with the effects of pollutants resulting from the loss. D. Applies to the increased construction costs from a covered loss resulting from enforcement of building codes.

D. Applies to the increased construction costs from a covered loss resulting from enforcement of building codes.

The Personal Auto Policy (PAP) contains a section outlining several important duties with which the insured must comply in order for the policy to provide coverage. Which one of the following is a general duty under the Personal Auto Policy (PAP)? Select one: A. Provide prompt notice to the state insurance department regarding the accident or loss B. Agree to submit to a physical examination at the insured's own expense C. Submit the state required regulatory compliance forms to the insurer within a reasonable amount of time D. Authorize the insurer to obtain medical reports and other pertinent records

D. Authorize the insurer to obtain medical reports and other pertinent records

A disability income policy has a rider that increases the monthly benefit amount by 4 percent for each of the first five years the policy is in force, if benefits have not yet begun. This is an example of which one of the following types of riders? Select one: A. Guaranteed insurability B. Future increase option C. Cost of living adjustment D. Automatic increase

D. Automatic increase

Bo was injured in an auto accident while using his car as a taxicab. Bo's car is covered by a Personal Auto Policy (PAP) that included medical payments coverage. Which one of the following statements about Bo's coverage for the accident is correct? Select one: A. Bo will receive medical payments under the PAP under the Public or Livery Conveyance coverage provision. B. Bo will receive medical payments under the PAP under the Vehicles Used in the Business of an Insured coverage provision. C. Bo will not receive medical payments under the PAP because of the Taxi and Omnibus exclusion. D. Bo will not receive medical payments under the PAP because of the Public or Livery Conveyance exclusion.

D. Bo will not receive medical payments under the PAP because of the Public or Livery Conveyance exclusion.

Carol has an unendorsed HO-5 policy with adequate limits and a $500 deductible. Carol rented a place at the shore for a week in August. While she was on the beach a sudden rainstorm developed and Carol suffered water damage to her personal property from the rain through a window she had left open. To replace the damaged items it cost her $650. After depreciation the personal property was valued at $450. How much would Carol be able to collect from her insurer? Select one: A. Carol would collect $150 as the HO-5 policy is a replacement cost policy. B. Carol would collect $450 as her deductible does not apply to off premises claims. C. Carol would not collect anything as the HO-5 does not cover rain damage through open windows. D. Carol would not collect anything as her policy covers actual cash value less the deductible.

D. Carol would not collect anything as her policy covers actual cash value less the deductible.

Coverages A and B of the unendorsed HO-3 policy insure against direct physical loss to property described followed by a list of excluded perils. Which one of the following is true regarding the excluded perils that apply to Coverage A and B? Select one: A. Freezing damage to external property is excluded unless reasonable precautions are taken. B. Freezing of plumbing and heating systems is excluded at all times unless endorsed. C. Vandalism damage is excluded if it occurs anytime the property is not occupied. D. Collapse is excluded as a cause of loss but is covered if it results from other causes.

D. Collapse is excluded as a cause of loss but is covered if it results from other causes.

Chris drives a late-model, high-performance car. He was recently involved in an intersection collision in which the other driver was at fault. Chris's car required $2,000 in repairs. Chris has now received a renewal notice for his auto insurance policy, and he noticed that his premium had decreased. Why might this occur? Select one: A. Insurers provide discounts for high-performance vehicles because they are more likely to be driven by experienced drivers. B. Chris's insurance company was able to recover the amount paid to him for his damages in the accident from the other party. C. The circumstances of the accident placed Chris in a safe-driver category, lowering his premiums. D. Competition among insurers for automobile business is intense. Chris's insurance company might be competing against other insurers.

D. Competition among insurers for automobile business is intense. Chris's insurance company might be competing against other insurers.

An individual may face a claim for tort damages on the basis of any act of the following, EXCEPT: A. Negligence B. Intentional Tort C. Absolute Liability D. Contractual Liability

D. Contractual Liability

Under a defined contribution plan, the employer's Select one: A. Contributions vary depending on the amount needed to fund the benefit. B. Contributions do not change. C. Contribution rate is defined, and the retirement benefit is defined. D. Contribution rate is defined, but the retirement benefit is variable.

D. Contribution rate is defined, but the retirement benefit is variable.

In general, individuals and families should apply at least one risk financing technique and one risk A. Exposure technique. B. Transfer technique. C. Retention technique. D. Control technique.

D. Control technique.

Which one of the following is an example of a supplementary payment under the liability coverage of the Personal Auto Policy (PAP)? Select one: A. Traffic violation fines B. Emergency response assessment C. Pre-verdict interest D. Cost of bail bonds

D. Cost of bail bonds

Nick's five-year-old nephew from another state was visiting for the day. Nick was mowing the grass at his home when he accidentally ran over his nephew's toe, causing injury. Nick has an HO-3 policy. Which of the following coverages would apply to this loss? Select one: A. Coverage F—Medical Payments to Others only B. Coverage E—Personal Liability only C. None D. Coverage E—Personal Liability and Coverage F—Medical Payments to Others

D. Coverage E—Personal Liability and Coverage F—Medical Payments to Others

The Property Removed coverage of Section I of the HO-3 policy encourages the insured to save, by removing as much property as possible when it is endangered, due to a covered peril such as a forest fire. This Additional Coverage provides Select one: A. A separate deductible for the removed property while it is at a temporary location. B. An extended limit for the personal property after it has been removed C. Coverage limited to the peril threatening loss during and while removed for protection. D. Coverage for all risk of direct loss while removed or being removed.

D. Coverage for all risk of direct loss while removed or being removed.

The Inflation Guard endorsement gradually and automatically increases limits throughout the policy period in homeowners policies for Select one: A. Coverage A only. B. Coverages A and B only. C. Coverages A, B, and C only. D. Coverages A, B, C, and D.

D. Coverages A, B, C, and D.

The Flood Insurance Reform Act of 2004 Select one: A. Encourages filling in floodplains to mitigate future losses. B. Provides FEMA grants to encourage people with repeated losses to participate in the NFIP. C. Helps people with repeated flood losses restore their homes to pre-flood conditions. D. Created incentives to mitigate repeated losses.

D. Created incentives to mitigate repeated losses.

In the insuring agreement of Part D—Coverage for Damage to Your Auto of the Personal Auto Policy (PAP), the insurer promises to pay for Select one: A. All accidents not caused by an insured driver. B. Any unintended accident caused by a declared driver. C. All losses within the deductible amount. D. Direct and accidental loss to a covered auto.

D. Direct and accidental loss to a covered auto.

Which of the following insurance policy provisions limit and clarifies coverage? A. DECLARATIONS B. INSURING AGREEMENTS C. CONDITIONS D. EXCLUSIONS

D. EXCLUSIONS

Steps of the DICE method include all of the major policy provisions, EXCEPT: A. DECLARATIONS B. INSURING AGREEMENTS C. CONDITIONS D. EXPENSES

D. EXPENSES

Edward suffered a fire loss to his home, which he insures under a DP-3 policy. The loss is fully covered under the policy. When Edward purchased the home, he acquired a mortgage, which is still in effect. Edward hired a contractor to repair the fire damage. Who is payable under the conditions of the DP-3? A. The contractor B. Edward C. The mortgagee D. Edward and the mortgagee

D. Edward and the mortgagee

Regarding the Personal Auto Policy (PAP), which one of the following includes details on coverage related to state-specific laws and regulations? Select one: A. Agreements and Definitions B. Part F—General Provisions C. Declarations D. Endorsements

D. Endorsements

Mary and Bob have their house insured under an HO-3 policy. Bob intentionally sets fire to their home. Mary was not involved in the arson. The HO-3 policy will Select one: A. Cover the loss if Mary submits the claim, but Bob is not entitled to coverage. B. Cover the loss because fire is an insured peril. C. Exclude the loss under the Neglect exclusion. D. Exclude the loss under the Intentional Loss exclusion.

D. Exclude the loss under the Intentional Loss exclusion. CorrectCorrect. The HO-3 policy will exclude the loss under the Intentional Loss exclusion. Under the Intentional Loss exclusion, coverage for any loss arising out of an act that any insured commits or conspires to commit with the intent to cause a loss is excluded.

In evaluating the effectiveness of financial responsibility laws in providing protection against irresponsible drivers, critics point out that they may provide inadequate indemnification for injuries because Select one: A. The costs of auto accidents are increasing too rapidly for the financial responsibility laws to keep pace. B. The insurance companies providing insurance that meet financial compensation laws are unable to compensate accident victims in a timely manner. C. The legal system is continually eroding the effectiveness of the financial compensation laws by generating compensation for minor injuries. D. Financial responsibility laws require only minimum amounts of financial responsibility, which might not fully compensate the injured person.

D. Financial responsibility laws require only minimum amounts of financial responsibility, which might not fully compensate the injured person.

Which one of the following reduced intensive development in repeatedly flooded areas to help restore the natural functions of floodplains, such as wildlife biodiversity and wetlands that absorb flood waters? A. Emergency Program B. National Flood Insurance Act of 1968 C. Regular Program D. Flood Insurance Reform Act of 2004

D. Flood Insurance Reform Act of 2004

A worker covered under Social Security can earn up to four "credits" per year. What is the maximum number of credits a worker will ever have to earn to be fully insured in order to receive retirement benefits? Select one: A. Eighty B. Thirteen C. Twenty D. Forty

D. Forty

Defined benefit pension plans Select one: A. Define an employee contribution rate. B. Define an employer contribution rate. C. Generally are the most risky type of qualified employer-sponsored retirement plan for employees. D. Generally require no contributions by employees.

D. Generally require no contributions by employees.

The purpose of the guaranteed insurability rider for a life insurance policy is to Select one: A. Guarantee the insured's future insurability even though he or she might allow the policy to lapse due to nonpayment of the premium. B. Allow the insurer the option of nonrenewing the policy if the insured misrepresents his or her insurability on the application. C. Allow the insurer the option of canceling the policy if the insured misrepresents his or her insurability on the application. D. Guarantee the insured's future insurability even though he or she might develop poor health.

D. Guarantee the insured's future insurability even though he or she might develop poor health.

Kevin recently purchased a long-term disability income policy. The policy states that he can renew the coverage until age 65 as long as he is gainfully employed. However, the insurer reserves the right to raise the premium at renewal. This policy is considered Select one: A. Optionally renewable. B. Conditionally renewable. C. Noncancelable. D. Guaranteed renewable.

D. Guaranteed renewable.

Which one of the following homeowners forms provides the broadest property coverage of any of the standard unendorsed homeowners forms? Select one: A. HO-2 policy. B. HO-3 policy. C. HO-8 policy. D. HO-5 policy.

D. HO-5 policy. CorrectCorrect. The HO-5 provides the broadest property coverage of any of the standard, unendorsed homeowners forms. The HO-5 is essentially an HO-3 modified to provide special form coverage, not only for the dwelling and other structures, but also for Coverage C—Personal Property.

Sue and Rich are under contract to purchase a historic home in a city where local property values, including the value of the historic home, are far below replacement cost. Which one of the following ISO homeowners policies would likely be most suitable for Sue and Rich? Select one: A. HO-2—Broad Form B. HO-4—Contents Broad Form C. HO-6—Unit-Owners Form D. HO-8—Modified Coverage Form

D. HO-8—Modified Coverage Form

Most beachfront and windstorm plans provide coverage for which one of the following exposures in addition to windstorm? Select one: A. Erosion B. Fire C. Flood D. Hail

D. Hail

Most beachfront and windstorm plans provide coverage for which one of the following exposures in addition to windstorm? Choose one answer. A. Erosion B. Fire C. Flood D. Hail

D. Hail, most beachfront and windstorm plans provide coverage for windstorm and hail losses.

An insured with an accelerated death benefits rider attached to his life insurance policy has the right to receive some or all of the available life insurance proceeds before death occurs if Select one: A. He or she becomes unemployed for a period that exceeds one year. B. He or she becomes totally disabled before a certain age. C. He or she becomes seriously injured as a result of an accident. D. He or she contracts a catastrophic or terminal illness.

D. He or she contracts a catastrophic or terminal illness.

Which one of the following statements about insurance treatment of health-related, disability, and long-term care loss exposures is true? Select one: A. Multiple forms of disability income insurance are never an appropriate purchase. B. Long-term care insurance allows an insured little or no choice among benefit options. C. Health insurance premiums are the same regardless of an insured's age. D. High costs associated with medical care, disability, and long-term care can force some individuals and families into bankruptcy.

D. High costs associated with medical care, disability, and long-term care can force some individuals and families into bankruptcy.

All of the following statements regarding the Appraisal provision of Part D - Coverage for Damage to Your Auto of the PAP are true, EXCEPT: A. Each party selects a competent and impartial appraiser B. Each party pays for its own appraiser C. The two appraisers select an umpire D. If the insurer agrees to an appraisal, it waives its rights under the policy

D. If the insurer agrees to an appraisal, it waives its rights under the policy

Sammy and Sally Oshua insure their home with an HO-3 policy. They own a cocker spaniel puppy. While a neighboring couple and their five-year-old daughter were visiting, the puppy bit the girl as she was playing with it. The child suffered a serious wound and the neighbors sued the Oshuas. Which one of the following statements is true? Select one: A. Because the dog was on the Oshuas' property, they are not covered for injury to the child. B. Defense costs are not covered for the Oshuas if the lawsuit is found to be groundless. C. Because the child is a minor, the insurer will pay the damages regardless of legal liability. D. In addition to paying up to the limit of liability, the insurer will pay defense costs associated with the lawsuit.

D. In addition to paying up to the limit of liability, the insurer will pay defense costs associated with the lawsuit.

In general, which one of the following is the most effective risk management technique for managing a family's property and liability loss exposures? Select one: A. Retention B. Avoidance C. Noninsurance risk transfer D. Insurance

D. Insurance

The HO-5 policy special limits for jewelry and furs, firearms, and silverware apply to all of the following items, EXCEPT: Select one: A. Accidentally lost items B. Misplaced items C. Stolen items D. Intentionally lost items

D. Intentionally lost items CorrectCorrect. Special limits do not apply; the intentional loss exclusion applies.

Personal liability coverage under the DP-3 policy Select one: A. Is not available. B. Is provided under Section II. C. Is only provided if a limit for Coverage E is shown on the declarations page. D. Is available using the personal liability supplement.

D. Is available using the personal liability supplement.

Which one of the following accurately describes the coverage modification created by the Mobilehome Endorsement (MH 04 01) when it is attached to the HO-3 policy? Select one: A. Section I loss settlement condition is changed to actual cash value (ACV) for all Coverage A items. B. Section II—Liability Coverages are limited to exclude coverage for all watercraft and motor vehicles. C. Coverage B—Other Structures is 50% of the limit that applies to Coverage A. D. It provides up to $500 for reasonable expenses incurred for the removal and return of the mobile home if it is endangered by an insured peril.

D. It provides up to $500 for reasonable expenses incurred for the removal and return of the mobile home if it is endangered by an insured peril.

Which one of the following accurately describes the coverage modification created by the Mobilehome Endorsement (MH 04 01) when it is attached to the HO-3 policy? Choose one answer. A. Section I loss settlement condition is changed to actual cash value (ACV) for all Coverage A items. B. Section II—Liability Coverages are limited to exclude coverage for all watercraft and motor vehicles. C. Coverage B—Other Structures is 50 percent of the limit that applies to Coverage A. D. It provides up to $500 for reasonable expenses incurred for the removal and return of the mobile home if it is endangered by an insured peril.

D. It provides up to $500 for reasonable expenses incurred for the removal and return of the mobile home if it is endangered by an insured peril.

Sammy is the named insured on an HO-3 policy covering his family's home. Sammy and his wife, Sally, have a young daughter, Suzie, and a grown-up son, Steve, who lives with them, and they own a cocker spaniel puppy. While a neighboring couple and their five-year-old son, Jay, were visiting, the puppy bit Jay. Jay suffered a serious wound and his parents sued Sammy and Sally. All of the following are insureds under the HO-3, EXCEPT: Select one: A. Sally B. Suzie C. Steve D. Jay

D. Jay

Jean lent her van to a church member, Lindsey, who was transporting a group of teenagers to a church sponsored picnic. While on the way to the picnic, the van overturned, injuring one of the teenagers. The parent of the injured teenager has sued Jean, Lindsey, and the church for the teenager's injuries and future disability. Who is insured for liability under the Jean's Personal Auto Policy (PAP) for this accident? A. Jean only B. Jean and Lindsey only C. Lindsey and the church only D. Jean, Lindsey, and the church

D. Jean, Lindsey, and the church

Jerry was driving his car that is insured with a Personal Auto Policy (PAP) with a $10,000 limit on medical payments coverage. Sally, his passenger, has her own car that is insured with a Personal Auto Policy (PAP) with a $5,000 limit on medical payments coverage. Jerry rear-ended a bus, injuring Sally in the accident. Sally's medical expenses total $12,000. How much will each insurer pay? Select one: A. Jerry's pays $4,000 and Sally's pays $8,000. B. Jerry's pays $7,000 and Sally's pays $5,000. C. Jerry's pays $8,000 and Sally's pays $4,000. D. Jerry's pays $10,000 and Sally's pays $2,000.

D. Jerry's pays $10,000 and Sally's pays $2,000.

Joel is a delivery driver for XYZ Auto Supply. He usually drives the company van, but one day, since he only had to deliver a small part, Joel used his own car that is insured with a Personal Auto Policy (PAP). While doing so, Joel was involved in a two-vehicle accident and a liability claim was made against Joel and XYZ Auto Supply. Which one of the following is an insured(s) under Joel's PAP in this situation? Select one: A. None B. Joel only C. XYZ Auto Supply only D. Joel and XYZ Auto Supply

D. Joel and XYZ Auto Supply

Which one of the following is a qualified plan that allows self-employed individuals to make tax deductible contributions to a retirement plan? Select one: A. 401(k) plan B. Thrift plan C. Simplified Employee Pension plan D. Keogh plan

D. Keogh plan

An individual's liability losses A. May not exceed the value of his or her real property. B. May not exceed the value of all of his or her assets, including both personal and real property. C. May not exceed the amount of his or her current income. D. May consume most of his or her present assets and future income.

D. May consume most of his or her present assets and future income.

Medicaid does not solve the problems of many elderly patients because of all these limitations, EXCEPT: A. Most elderly patients in nursing homes don't initially qualify for long-term care under Medicaid B. Medicaid's eligibility requirements change frequently C. Some nursing homes do no accept Medicaid recipients D. Medicaid is available only for the long-term low-income population

D. Medicaid is available only for the long-term low-income population

Hedging is a noninsurance risk transfer technique in which Select one: A. A family uses duplication to treat loss exposures. B. One of the parties to the contract assumes the legal liability of another party. C. A family uses separation to treat loss exposures. D. Money is paid to offset the risk associated with another asset.

D. Money is paid to offset the risk associated with another asset.

Lori has a company car with insurance coverage provided by her employer and does not own a car. On occasion, Lori helps her elderly grandmother, Nell. Lori occasionally drives Nell's car to pick up prescriptions. Lori knows that Nell has low limits of liability and is afraid that Nell might allow the insurance on her car to lapse. What coverage can Lori purchase to provide insurance for herself when she drives Nell's car? Select one: A. A Personal Auto Policy (PAP) covering her company car B. Miscellaneous Type Vehicle endorsement attached to a PAP C. Extended Non-Owned Coverage for Named Individual endorsement attached to a PAP D. Named Non-Owner Coverage endorsement attached to a PAP

D. Named Non-Owner Coverage endorsement attached to a PAP

A Named Non-Owner Coverage endorsement automatically covers: A. A permissive user or occupant of the vehicle B. Named insured's spouse C. Resident family member of the named insured D. Named insured

D. Named insured

A person, corporation, partnership, or other entity identified as an insured party in a Personal Auto Policy (PAP) Declarations page is known as the Select one: A. Additional insured. B. Producer. C. Insurer. D. Named insured.

D. Named insured.

The Definitions section of the Personal Auto Policy (PAP) defines several words and phrases. Which one of the following words is used in connection with Part B—Medical Payments Coverage and Part C—Uninsured Motorists Coverage, clarifying the coverages provided? Select one: A. Trailer B. Property damage C. Leased Vehicles D. Occupying

D. Occupying

Which one of the following terms contained in the HO-3 policy is defined as an accident, including continuous or repeated exposure to the same general harmful conditions? Select one: A. Claim B. Exposure C. Loss D. Occurrence

D. Occurrence

Within the Personal Auto Policy (PAP), the name of a lender, loss payee, or lienholder is usually shown Select one: A. On the schedule of coverages. B. In the definitions section. C. In the insuring agreement. D. On the Declarations page.

D. On the Declarations page.

The HO-3 policy provides Select one: A. Open perils coverage on personal property. B. Named perils coverage on other structures. C. Named perils coverage on dwellings. D. Open perils coverage on dwellings.

D. Open perils coverage on dwellings.

Under the HO-3 policy Section I—Conditions, the Appraisal condition Select one: A. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. B. Bars an insured from bringing legal action against the insurer unless the insured has complied with all policy provisions. C. States that the insurer will adjust all losses with the insured or the insured's spouse, if a resident in same household. D. Outlines a method for resolving disagreements between the insured and the insurer.

D. Outlines a method for resolving disagreements between the insured and the insurer. CorrectCorrect. Under the HO-3 Section I—Conditions, the Appraisal condition outlines a method for resolving disagreements between the insured and the insurer.

All of the following are usually analyzed as part of the DICE method of policy analysis, EXCEPT: Select one: A. Declarations B. Insuring agreement C. Exclusions D. Past loss experience

D. Past loss experience

Which one of the following is included within the definition of newly acquired autos under the PAP? A. Pickups and vans with a gross vehicle rating of over 10,000 lbs B. Pickups and vans used for the transportation of goods and materials C. Pickups and vans used for other than farming or ranching operations D. Pickups and vans with a gross vehicle rating of 10,000 lbs or less

D. Pickups and vans with a gross vehicle rating of 10,000 lbs or less

Molly is a 35-year-old single mother of a 17-year-old daughter. She is insured by a $300,000 life insurance policy for 17 years. Her daughter Nancy is the sole beneficiary of the insurance policy. Molly had the following riders on the insurance policy: Waiver of Premium Accidental Death Benefits Molly became totally and permanently disabled as a result of a car accident. What benefits can Molly and Nancy expect from the policy? Select one: A. $300,000 B. Nothing C. 2% of the policy face amount each month up to $150,000 D. Premiums will be waived while Molly is disabled

D. Premiums will be waived while Molly is disabled

Amy used the valet parking services at her local mall. Her car was damaged while in the custody of the valet service. Amy had a Personal Auto Policy (PAP) which provided physical damage coverage for the cause of loss. The No Benefit to Bailee provision in the policy Select one: A. Provides that Amy's insurance is excess over the valet service's insurance. B. Allows Amy's insurer to pay only its proportionate share of the loss once negligence has been established. C. Allows the insurer to withhold payment to Amy until it is determined who was negligent. D. Preserves the right of Amy's insurer to recover from the valet service any amount it pays to Amy if the valet service was negligent.

D. Preserves the right of Amy's insurer to recover from the valet service any amount it pays to Amy if the valet service was negligent.

For the same benefits provided, why is the cost of private health insurance significantly greater that the cost of group health insurance? Select one: A. Private health insurance is more heavily taxed. B. Private health insurance is only offered by for-profit organizations. C. Private health insurance is unregulated. D. Private health insurance lacks the economies of scale associated with group health insurance.

D. Private health insurance lacks the economies of scale associated with group health insurance.

Which one of the following is usually excluded under a personal umbrella policy? A. Slander B. Defense costs C. False arrest D. Professional liability

D. Professional liability

In addition to general duties under a Personal Auto Policy (PAP), a person seeking coverage under Part D—Coverage for Damage to Your Auto must perform additional duties. Which one of the following is one of these additional duties? Select one: A. Promptly notify police if a hit-and-run driver was involved in the accident B. Submit to a physical examination conducted by a doctor chosen by the insurer C. Submit a proof of loss when required by the insurer D. Promptly notify police if a covered auto is stolen

D. Promptly notify police if a covered auto is stolen

Homeowners insurance protects against Select one: A. Property loss exposures only. B. Property and premature death loss exposures. C. Liability loss exposures only. D. Property and liability loss exposures.

D. Property and liability loss exposures.

Under the uninsured motorists (UM) coverage provisions of the Personal Auto Policy (PAP), coverage for an accident in which the insured is injured while occupying a vehicle the named insured does not own is Select one: A. Not provided. B. Provided on a pro rata basis. C. Provided on a primary basis. D. Provided on an excess basis.

D. Provided on an excess basis.

When endorsed to a boatowners policy, hurricane protection coverage reimburses boatowners for the cost of Select one: A. Repairing hull damage from a hurricane. B. Repairing damage to the property of others resulting from a hurricane. C. Compensating crew members for hurricane-related bodily-injury, including any expenses for first aid rendered at the time of a hurricane-related accident. D. Removing watercraft from the water if a hurricane is approaching.

D. Removing watercraft from the water if a hurricane is approaching.

All of the following are a type of asset exposed to loss due to health and disability loss exposures, EXCEPT: Select one: A. Employment income B. Savings C. Employer-provided benefits D. Social Security income

D. Social Security income

Under the needs approach as used to identify an adequate amount of life insurance, monetary gifts to family members is considered a Select one: A. Retirement income need. B. Final expenses need. C. Family living expense need. D. Special need.

D. Special need.

An insurer's right to recover payment from a legally liable third party is Select one: A. Appraisal. B. Assignment. C. Adherence. D. Subrogation.

D. Subrogation. CorrectCorrect. An insurer's right to recover payment from a legally liable third party is subrogation.

Which one of the following is true regarding endorsements available only with a mobilehome policy? A. The Transportation/Permission to Move endorsement provides its coverage for a period of 90 days from the effective date of the endorsement B. The Ordinance or Law Coverage endorsement encourages the policyholder to remove a mobile home when necessary to avoid damage C. The Mobilehome Lienholder's Single Interest endorsement provides coverage to the policyholder for collision and upset transportation exposures D. The Actual Cash Value Mobilehome endorsement changes the loss settlement terms for the mobile home, structures, carpeting, and appliances.

D. The Actual Cash Value Mobilehome endorsement changes the loss settlement terms for the mobile home, structures, carpeting, and appliances.

Which one of the following statements about the HO-2 policy and HO-3 policy is correct? A. Both the HO-2 and HO-3 provide special form coverage for Coverages A, B, and C. B. The HO-2's Section I—Perils Insured Against is the same as that in the HO-3. C. Both the HO-2 and HO-3 provide named perils coverage for Coverages A, B, and C. D. The HO-2's Section I—Perils Insured Against is different from the HO-3.

D. The HO-2's Section I—Perils Insured Against is different from the HO-3.

Steve owns a home insured under the HO-3 policy. While Steve was painting his living room, he accidentally dropped an open paint can from his ladder which spilled onto his wall-to-wall carpet and sofa. The carpet and sofa were damaged beyond repair and needed to be replaced. What damage to Steve's property is covered under his HO-3? Select one: A. Damage to the carpet and sofa are both covered. B. The damage to the sofa is covered; the damage to the carpet is not covered. C. None of the damage is covered. D. The damage to the carpet is covered; the damage to the sofa is not covered.

D. The damage to the carpet is covered; the damage to the sofa is not covered.

Under the Personal Auto Policy (PAP), legal action can be brought against the insurer only when Select one: A. Coverage has been denied. B. Insurance subrogation attempts have failed. C. The liability of the insured is involved. D. The insured has fully complied with all of the policy terms.

D. The insured has fully complied with all of the policy terms.

Under the Personal Auto Policy (PAP), legal action can be brought against the insurer only when Select one: A. Coverage has been denied. B. Insurance subrogation attempts have failed. C. The liability of the insured is involved. D. The insured has fully complied with all of the policy terms.

D. The insured has fully complied with all of the policy terms. CorrectCorrect. Under the Personal Auto Policy (PAP), legal action can be brought against the insurer only when the insured has fully complied with all of the policy terms.

The Claim Expenses additional coverage under Section II of a homeowners policy covers Select one: A. Medical payments incurred by others. B. The insured's personal liability. C. Premiums on bonds exceeding the personal liability limit. D. The insured's reasonable expenses at the insurer's request.

D. The insured's reasonable expenses at the insurer's request.

The insuring agreement of a homeowners policy specifies that Select one: A. Five property coverages are provided by the policy. B. Endorsements are available to modify the contract. C. Defined words have special meanings when they are used within the policy. D. The insurer will provide coverage and the insured will pay the premium and comply with the policy conditions.

D. The insurer will provide coverage and the insured will pay the premium and comply with the policy conditions.

There are 12 Additional Coverages under Section I of the HO-3 policy. Which one of the following statements is true regarding coverage for trees, shrubs, and other plants? Select one: A. The limit is $500 per tree, shrub, or plant, subject to a $1,000 maximum. B. The additional coverage is dependent on another covered loss for it to apply. C. The deductible stated on the declarations page applies to each tree, shrub, or plant. D. The limit is $500 per tree, shrub, or plant with the total amount not to exceed 5% of the Coverage A limit.

D. The limit is $500 per tree, shrub, or plant with the total amount not to exceed 5% of the Coverage A limit.

All of the following are included as insureds for the Section II—Liability Coverages of a homeowners policy, EXCEPT: A. The named insured's neighbor while caring for the insured's dog if the dog causes injury while in the neighbor's care B. The named insured's spouse who lives with the named insured but is away on business most Mondays through Fridays C. The 19-year-old exchange student who temporarily lives with and under the care of the named insured and his spouse D. The named insured's 30-year-old best friend who is not related but becomes a temporary resident of the named insured's household

D. The named insured's 30-year-old best friend who is not related but becomes a temporary resident of the named insured's household

The following statements are true about premature death EXCEPT: A. It occurs before an individual reaches his or her life expectancy B. The assets exposed to loss include the expected income on which the family or heirs rely C. The human life value approach can be used to determine what the deceased would have contributed to the family if he or she had lived D. The needs-based approach is never used in conjunction with the human life value approach

D. The needs-based approach is never used in conjunction with the human life value approach

Eddie and Janet Orr are married and have a Personal Auto Policy (PAP). Eddie's name is the only one listed on the declarations page of the policy. Janet is concerned because she thinks both their names should appear since they each own vehicles. Which one of the following is true? Select one: A. Only Eddie's name, as the primary named insured, should appear on the declarations page. B. Eddie and Janet should each have their own policy. C. The policy can be written in Eddie's and Janet's names by using an additional named insured endorsement. D. The policy can be written in Eddie's name, Janet's name, or both Eddie's and Janet's names.

D. The policy can be written in Eddie's name, Janet's name, or both Eddie's and Janet's names.

Coverage F—Medical Payments to Others in the homeowners policy applies to bodily injury to a residence employee in all of the following situations, EXCEPT: Select one: A. The residence employee is on the insured location but is not working B. The residence employee is away from the insured location but is working C. The residence employee is on the insured location and is working D. The residence employee is away from the insured location and is not working

D. The residence employee is away from the insured location and is not working

Organizations use a wide variety of methods, including loss control surveys, to identify their property and liability loss exposures. By contrast, individuals and families tend to rely on some or all of the following, EXCEPT: Select one: A. Friends B. Family members C. Their insurance agent or broker D. Their investment advisor

D. Their investment advisor

Mary is a transportation network driver. The transportation network company (TNC) she drives for provides a commercial policy that begins when a passenger enters Mary's personal auto. Based on this, which one of the following should Mary add to her personal auto policy (PAP)? Select one: A. Limited Transportation Network Driver Coverage (No Passenger) Endorsement B. Public or Livery Conveyance Exclusion Endorsement C. Transportation Network Platform Definition Endorsement D. Transportation Network Driver Coverage (No Passenger) endorsement

D. Transportation Network Driver Coverage (No Passenger) endorsement

A company that uses a mobile application or website to connect riders with drivers and arrange transportation in a personal auto for a fee is called a Select one: A. Livery conveyance. B. Limited transportation network. C. Personal auto company. D. Transportation network company.

D. Transportation network company.

The policy territory of the Personal Auto Policy (PAP) includes the United States, Select one: A. Puerto Rico and Mexico. B. Puerto Rico, Mexico, and Canada. C. U.S. territories and possessions, Mexico, and Canada. D. U.S. territories and possessions, Puerto Rico, and Canada.

D. U.S. territories and possessions, Puerto Rico, and Canada.

All of the following items are examples of personal property, EXCEPT: A. Sports equipment B. Silverware C. A fishing boat D. Underground pipes

D. Underground pipes

When is community participation in the National Flood Insurance Program (NFIP) required? Select one: A. When FEMA has determined that a community is flood-prone. B. When a community has unsuccessfully contested a flood-prone designation. C. When accepting a federal-related construction project. D. When required as part of a state's floodplain management program.

D. When required as part of a state's floodplain management program.

In states that apply the limits trigger in underinsured motorists (UIM) coverage situations, the UIM endorsement applies Select one: A. When the negligent driver carries liability limits that are lower than the injured party's actual damages. B. When the negligent driver carries liability limits above the limits provided by the UIM coverage of the injured party. C. When the negligent driver carries liability limits that are equal to the limits provided by the UIM coverage of the injured party. D. When the negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party.

D. When the negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party.

Examining policy conditions can help the insurance professional clarify which one of the following points? Select one: A. Whether coverage exists if an insured party breaches the insuring agreement B. Whether the cause of loss is covered C. Whether the property is covered D. Whether the post-loss duties of the insured and the insurer affect coverage

D. Whether the post-loss duties of the insured and the insurer affect coverage

Which one of the following is a characteristic of most personal umbrella policies? Select one: A. $10,000 retained limit B. $500,000 required underlying limits C. Same insurer required for all underlying policies D. Worldwide coverage

D. Worldwide coverage

True or False: The cash values in variable universal life insurance are guaranteed, as are a minimum interest rate.

False

True or false: All standard long-term care policies offer routine basic benefits.

False

True or false: Medicaid benefits and eligibility are standard from state to state.

False

Universal life insurance

Flexible premium permanent life insurance that separates the protection, savings, and expense components.

Major medical insurance

Insurance that covers medical expenses resulting from illness or injury that are not covered by a basic medical expense plan.

Fixed-dollar annuity

Insurer invests its customers' annuity premiums in securities in exchange for a fixed rate of return. The value of the annuity does not fluctuate with the market performance, but interest rate annuitant earnings may vary. It is more conservative than other annuities, but has a lower rate of return. The insurer bears the investment risk.

Brian recently purchased a home in a wind-prone area along the coast. He is considering the possibility that a hurricane may cause wind damage to his new property. This possibility is best described as a

Loss exposure.

Disability income rider

May be added to a life insurance policy to provide a regular monthly income if the insured becomes permanently disabled. Most riders specify a level of income for a determined period of time

person, corporation, partnership, or other entity identified as an insured party in a Personal Auto Policy (PAP) Declarations page is known as the

Named insured

Variable Annuity

Owner invests annuity premiums in diversified subaccounts with various objectives to optimize returns according to an investment time horizon. When payout begins, the current value of the fund in converted into units. Guarantees that a specific number of units will be paid periodically, but the value of each unit will vary as determined by the performance of the subaccounts. Owner bears the investment risk.

Bodily injury

Physical injury to a person, including sickness, disease, and death.

Property damage

Physical injury to, destruction of, or loss of use of tangible property.

Automobile insurance plan

Plan for insuring high-risk drivers in which all auto insurers doing business in the state are assigned their proportionate share of such drivers based on the total volume of auto insurance written in the state.

Safe driver insurance plan (SDIP)

Plan that allows for lower basic premiums for accident-free driving records and a surcharge for accidents.

Medicare Supplement Insurance policies (Medigap policies)

Policies sold by private insurers to fill the gaps in original Medicare Parts A and B coverage.

Severability of Insurance condition

Policy condition that applies insurance separately to each insured; does not increase the insurer's limit of liability for any one occurrence.

In general, a loss prevention measure is implemented to

Reduce the frequency of a particular loss & break the sequence of events that leads to a loss

A family that takes a $5,000 deductible on its homeowners policy is practicing the risk management technique of

Retention

401(k) Plan

Retirement plan where employees to contribute a portion of their pretax salary to a qualified retirement plan. Employers often match their employees' contributions. Payment of income tax on contributions, and the earnings from those contributions, is deferred until withdrawals are made, which usually occurs during retirement. Withdrawal of funds without penalty is allowed only for one of these reasons (1) Attainment of age fifty-nine-and-one-half or older (2) Separation from employment (3) Death or disability (4) Hardship for the employee as defined by the Internal Revenue Service (IRS)

Regular program

Second phase of the National Flood Insurance Program in which the community agrees to adopt flood-control and land-use restrictions and in which property owners purchase higher amounts of flood insurance than under the emergency program.

Definitions

Section of an insurance policy that clarifies the meaning of certain terms used in the policy.

No-fault laws

State statutes that require motorists to purchase (or require insurers to make available) insurance that provides minimum first-party benefits to injured persons regardless of fault.

Real property (realty)

Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land.

Waiver of premium rider

The insurer agrees to waive the payment of any premium falling due while the policyowner or insured is disabled, as defined in the waiver of premium provision. To be eligible for the benefit, the policyowner must have incurred a disability (as defined by the waiver of premium benefit) before the age stipulated in the contract (usually age sixty or sixty-five).

Residence premises

The place where the insured resides as identified in the policy declarations.

Liquidity risk

the risk that an asset may not be easily or quickly convertible into cash at a reasonable price

Special form coverage

Property insurance coverage covering all causes of loss not specifically excluded.

Social Security Supplement Coverage

Provides additional benefits to an insured when Social Security disability benefits do not apply

Consumer-directed health plans (CDHPs)

Provides consumers with access to high-quality care without requiring deductibles for preventive care and provide healthcare benefits to those who might otherwise be uninsured. Usually include three major components: (1) An HSA or HRA (2) High-deductible medical coverage, with preventive care not charged against the deductible (3) Access to informational tools for making informed healthcare decisions

Limited Mexico Coverage Endorsement

Provides excess liability coverage over Mexican auto insurance for an insured who is involved in an accident or loss in Mexico within 25 miles of the US border on a trip of 10 days or less

Named Non-owner Coverage Endorsement

Provides liability, medical payments, uninsured, and underinsured motorists coverages for drivers who do not own an auto but regularly or occasionally drive another person's vehicle or a rental vehicle

Accidental death benefit

Provision in a life insurance policy that doubles (or triples) the face amount of insurance payable if the insured dies as a result of an accident

Nonforfeiture options

Provisions in a life insurance policy that give the policyowner a choice of ways to use the cash value if the policy is terminated and that protect the policyowner from forfeiting the cash value.

Employee Stock Ownership Plans (ESOPs)

Qualified retirement plans that operate much like profit-sharing plans, except the employer's contributions are not dependent on whether it has made a profit and employer contributions may be in the form of cash or employer's stock. The value of either form of contribution is limited to 25 percent of payroll.

Harry has a Personal Auto Policy (PAP) with liability limits of $100/$300/$50 and medical payments limits of $5,000 insuring his SUV. Harry also has other than collision and collision coverages with deductibles of $250 and $500, respectively. The local taxicab drivers are on strike and Harry decides to capitalize on the situation by transporting persons in his SUV for a fee. While transporting a businessman, Harry loses control of his SUV and hits a parked car. The damages are as follows: Harry's medical costs - $2,000 The businessman's medical costs - $1,000 Damage to the parked car - $14,000 Damage to Harry's car - $12,000 How much, if any, will Harry's PAP insurer pay for damages under Part A—Liability Coverage?

$0

Harry has a Personal Auto Policy (PAP) with liability limits of 100/$300/$50 and medical payments limits of $5,000 insuring his SUV. Harry also has other than collision and collision coverages with deductibles of $250 and $500, respectively. The local taxicab drivers are on strike and Harry decides to capitalize on the situation by transporting persons in his SUV for a fee. While transporting a businessman, Harry loses control of his SUV and hits a parked car. The damages are as follows: Harry's medical costs $2,000 The businessman's medical costs $1,000 Damage to the parked car $14,000 Damage to Harry's car $12,000 How much will Harry's PAP insurer pay for damages under Part B—Medical Payments coverage?

$0

Financial responsibility law

Law enacted to ensure that motorists have the financial ability to pay for any property damage or bodily injury they might cause as a result of driving or owning an auto.

Compulsory auto insurance law

Law that requires the owners or operators of automobiles to carry automobile liability insurance at least equal to certain minimum limits before the vehicle can be licensed or registered.

Medicare Part B

part of Medicare that pays for medically necessary non-hospital services and is largely financed through a monthly premium paid by beneficiaries and the federal government's general revenues

For most insureds, the primary source of information for generating scenarios for pre-loss policy analysis is

past loss experience

Noncancelable disability income policy

Policy that can never be canceled by the insurer and the insurer cannot change the benefits provided, the rates, or other policy features unless the insured requests a change.

Difference in conditions (DIC) policy, or DIC insurance

Policy that covers on an "all-risks" basis to fill gaps in the insured's commercial property coverage, especially gaps in flood and earthquake coverage.

Guaranteed renewable policy

Policy that will continue as long as the premiums continue to be paid, up to a specified age, such as sixty-five or seventy, as long as the insured is gainfully employed (earning a reasonable salary)

Conditionally renewable policy

Policy where the insurer has an option to increase the premium and change the policy terms at renewal and allows the insurer to cancel the contract if the conditions for renewal are not met

Snowmobile Endorsement

provides coverage for snowmobiles other than vehicles propelled by airplane-type propellers or fans

Investment manager risk

the risk associated with the variability in performance of persons responsible for managing an investor's assets

Financial (or credit) risk

the risk that issuers of investments may have financial difficulties and, as a result, may not pay investors as expected

Waiting period

the time that elapses after a wage earner becomes disabled, before income benefits will be paid

Benefit period

time period for which benefits will be paid to a disabled individual (the insured), ends when the insured "returns to work" or reaches the maximum benefit period.

All of the following are duties the insured must fulfill after a loss under the HO-3, EXCEPT: -Verify the loss - Obtain estimates of the damage -Protect the property from further damage -Prepare an inventory

- Obtain estimates of the damage

Blanket basis

A basis for insuring all items within a single amount of insurance without specifically identifying each item.

Which one of the following is an exclusion to part A of the Personal Auto Policy (PAP)? Select one: A. Bodily injury to any family members using a covered auto B. Bodily injury to an insured's employee C. A prejudgement interest payment D. Any organization responsible for the acts of a person using a covered auto

B. Bodily injury to an insured's employee

Transportation network company

A company that uses a mobile application or website to connect riders with drivers and arrange transportation in a personal auto for a fee.

Duplication

A risk control technique that uses backups, spares, or copies of critical property, information, or capabilities and keeps them in reserve.

Retention

A risk financing technique by which losses are retained by generating funds within the organization to pay for the losses.

A homeowners policy differs significantly from the DP-3 policy in that the unendorsed DP-3 policy: A. Provides liability coverage only for owner-occupied dwellings. B. Does not provide liability coverage. C. Provides liability coverage only for on-premises occurrences. D. Does not provide liability coverage for "intentional acts."

B. Does not provide liability coverage.

United States Longshore and Harbor Workers' Compensation Act (LHWCA)

A federal statute that eliminates the right of most maritime workers (other than crew members of vessels) to sue their employers and, in return, requires such employers to provide injured or ill workers with benefits like those provided by state workers compensation statutes.

Variable life insurance

A form of life insurance providing a death benefit that may change with time due to its variable cash value.

Flood Insurance Rate Map (FIRM)

A map that shows exact boundaries for special flood hazard areas, the various flood zones, and base flood elevations.

Which one of the following types of life insurance is useful to someone whose current need for life insurance will diminish after a number of years? Select one: A. Variable life B. Universal life C. Term life D. Whole life

C. Term life

Which one of the following is the primary risk to financial assets for a retiree? Select one: A. That the retiree will lose regular employment income B. That the retiree will lose employer-provided benefits C. That the assets allocated for retirement will be insufficient D. That the retiree will die prematurely

C. That the assets allocated for retirement will be insufficient

Lynne purchased a 52-foot motorboat and would like to cover it for physical damage, liability, medical payments, and uninsured boaters coverage. Lynne most likely will purchase a(n) Select one: A. HO-3 policy. B. Personal auto policy. C. Yacht policy. D. Small boat policy.

C. Yacht policy

Ancillary benefits in defined benefit plans are funds used for all of the following EXCEPT: A. Early retirement B. Termination C. Death D. Demotion E. Other event that ends employment before retirement age of 65 years

D. Demotion

Sally insures her house with an unendorsed HO-3 policy with a Coverage A—Dwelling limit of $275,000, which is the replacement cost of the house. A fire destroys the house including a collection of blueprints belonging to Sally's employer, valued at $10,000. Sally was storing the blueprints at her home while her office was changing locations. Assuming no deductible applies, how much, if any, will Sally's HO-3 insurer pay to replace the blueprints? Select one: A. $0 B. $1,500 C. $2,500 D. $10,000

A. $0

Transportation expenses

Additional coverage in the Personal Auto Policy for substitute transportation costs incurred as the result of a covered physical damage loss.

Cost-of-living adjustment (COLA)

After a specified period, the monthly benefit to be paid increases by amount specified in the rider, usually due to increase in CPI or other inflation measure

Personal property

All property not classified as real property

Preferred provider organization (PPO)

An administrative organization that meets the common needs of healthcare providers and clients and that identifies networks of providers and contracts for their medical services at discounted rates.

Garth insures his home with an HO-3 policy. Garth was invited to a party at the apartment of his friend, Julie. Garth was having trouble closing the front door behind him as he entered the apartment. He pulled the door hard, which shook the walls and caused a vase to fall off of a shelf and break into pieces. Julie made a claim against Garth for the replacement cost of the vase, which was $1,108. Garth's insurer did not believe that the accident was Garth's fault in any way. How much did the insurer pay to Julie? A. $0 B. $554 C. $1,000 D. $1,108

C. $1,000

A couple meets with a financial adviser to review their insurance needs and investment choices. In the course of the discussion, a variety of topics are covered, including the impact of a long-term illness of the primary wage earner. In this context, the long-term illness is best described as: A. An uninsurable risk. B. An asset exposed to loss. C. A cause of loss. D. A financial consequence of loss.

C. A cause of loss.

In general, individuals and families should apply at least one risk financing technique and one risk

Control technique.

Which one of the following is correct regarding the Transportation Network Driver Coverage (No Passenger) endorsement and the Limited Transportation Network Driver Coverage (No Passenger) Endorsement to the personal auto policy? Select one: A. They cost the same amount of additional premium. B. They both end coverage when an insured accepts a passenger's request. C. They both provide coverage until a passenger enters the vehicle. D. They both exclude coverage when a passenger is occupying the vehicle.

D. They both exclude coverage when a passenger is occupying the vehicle.

Personal property that is owned or used by persons who qualify as insureds is covered property under Coverage C of the HO-3 policy. The standard Coverage C limit for personal property Select one: A. At a secondary residence rented at the shore is 50% of the Coverage C limit. B. Usually located at the insured premises can be reduced down to 10% of the Coverage A—Dwelling limit. C. Located elsewhere while home renovations are being done is 10% of the Coverage C limit. D. Usually located at the insured premises is 50% of the Coverage A—Dwelling limit.

D. Usually located at the insured premises is 50% of the Coverage A—Dwelling limit.

An insured has a Personal Auto Policy (PAP) to cover his automobile and travel trailer and an HO-3 policy for his home. While on vacation, he unhitched the trailer at a campground for a one-week stay. During the middle of the week, a visitor was injured when an awning on the trailer fell on his head. The visitor made a claim against the insured. Is this a covered claim under the HO-3? Select one: A. Yes, because a trailer cannot be a motor vehicle under the motor vehicle exclusion. B. No, because the awning is not a part of the trailer. C. No, because the trailer is a defined motor vehicle under the HO-3 policy and therefore subject to a liability exclusion. D. Yes, because a trailer that is not being carried on, towed by, or hitched for towing by a motor vehicle is not subject to the motor vehicle exclusion.

D. Yes, because a trailer that is not being carried on, towed by, or hitched for towing by a motor vehicle is not subject to the motor vehicle exclusion. CorrectCorrect. Yes, because a trailer that is not being carried on, towed by, or hitched for towing by a motor vehicle is not subject to the motor vehicle exclusion. Once it is unhitched, it is no longer a motor vehicle as defined.

Fixed-amount option

Death benefits are paid in fixed amounts at predetermined intervals, usually monthly. Interest payments are included in the fixed amount, which may extend the time period during which payments may be made.

All of the following are a type of asset exposed to loss due to health and disability loss exposures, EXCEPT:

Employment income Savings Employer-provided benefits Social Security income

Regarding the Personal Auto Policy (PAP), which one of the following includes details on coverage related to state-specific laws and regulations?

Endorsements

Personal umbrella policies usually cover the insured's liability for personal injury. Under the ISO Personal Umbrella Liability Policy, which one of the following is included under the definition of personal injury?

False arrest

Organizations use a wide variety of methods, including loss control surveys, to identify their property and liability loss exposures. By contrast, individuals and families tend to rely on some or all of the following, EXCEPT:

Friends family members Their insurance agent Their investment adviser.

Future Increase Option Rider (FIO)

Guarantees the insured's insurability for a specific period, allowing the insured to increase benefit coverage as they get older and income increases

Medicare Advantage plans

Health insurance plan options that provide benefits in addition to basic Medicare; offered by private insurers that contract with Medicare and available to beneficiaries currently enrolled in Medicare Part A and Part B.

Current Income

Higher priority on generating income from their investments than on long-term capital appreciation. Attractive to investors who are retired and may need to supplement Social Security benefits or other pension plan.

Public or livery conveyance

In case law, a method of transportation that is indiscriminately offered to the general public, such as a taxi or public bus.

Transfer

In the context of risk management, a risk financing technique by which the financial responsibility for losses and variability in cash flows is shifted to another party.

Emergency program

Initial phase of a community's participation in the National Flood Insurance Program in which property owners in flood areas can purchase limited amounts of insurance at subsidized rates.

Elimination period

Initial time period in a health insurance or disability income policy during which benefits are not paid.

Scheduled coverage

Insurance for property specifically listed (scheduled) on a policy, with a limit of liability for each item.

No-fault automobile insurance

Insurance that covers automobile accident victims on a first-party basis, allowing them to collect damages from their own insurers regardless of who was at fault.

Liquidity

Investors require the ability to quickly sell an investment with minimal loss of principle. Allows investor to meet sudden obligations that require cash.

Growth and Income

Investors seek both capital appreciation and current income. Results in a high total rate of return but comes with a high level of risk.

With respect to a vehicle used as a temporary substitute for the insured's covered auto, medical payments coverage under a Personal Auto Policy (PAP)

Is excess over other collectible auto insurance that pays medical expenses.

Sandwiched Family

Often consists of an aging parent or dependent family member who receives financial assistance or other types of support from his or her adult child or another younger relative. This same adult child or younger relative, in turn, supports his or her own dependent children

Waiver of Premium Rider

Optional rider that requires an insurer to assume payment of premiums should the insured become totally disabled for six months for the duration of the disability.

Personal effects

Personal property items owned by individuals that are personal in nature, such as jewelry, clothes, wallets, or purses.

Guaranteed insurability rider (guaranteed purchase option)

Rider that permits the policyowner to buy additional amounts of life insurance at standard rates without evidence of insurability.

Cause of loss (peril)

The actual means by which property is damaged or destroyed.

Level of inflation protection

The amount by which benefits will increase over time to keep up with inflation

After using the DICE method to determine whether a claim is covered by a policy, the next step is for the insurer to determine

The amount payable

Apparent authority

The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

Life income option

The beneficiary receives the death benefits over his or her life. The installment payments might only be paid while the beneficiary is alive and cease on the beneficiary's death (no-refund option), otherwise the payments remaining would be paid to a contingent beneficiary

Functional replacement cost

The cost to replace damaged property with less expensive and more modern construction or equipment.

Self-insurance (self-funding)

The employer funds and pays part or all of an employee's medical expenses, employer either performs their own claim processing or contracts with third-party administrators to manage the plans, including enrolling employees and processing claims

Policy termination

The ending of the contractual relationship between the insured and insurer by cancellation, expiration, or nonrenewal.

A named insured owns two cars, one covered by a Personal Auto Policy (PAP) and one with no insurance at all. Which one of the following is a correct statement regarding the medical payments coverage provided by the PAP if the insured is injured in a collision while driving the uninsured auto?

The exclusion of other vehicles owned by the insured or available for insured's regular use applies.

If a motorist incurs the cost to repair his vehicle after a collision, this result is best described as

The financial consequence of loss

"Any Occupation" Trigger

The individual must be totally disabled and unable to perform the duties of any occupation; the policy will not pay benefits if the insured can perform the duties of another occupation or can attain the necessary education or training to perform the duties of a new occupation.

First party

The insured in an insurance contract.

Seaworthiness

The insured warrants that the boat is in a seaworthy condition.

Pleasure use

The insured warrants that the boat will be used only for private, pleasure purposes and will not be hired or chartered unless the insurer approves

Elimination period or deductible

The length of time and the amount of money an insured must pay out of pocket before the insurer starts to pay (from "first day coverage" to a one-year wait)

Interest option

The life insurer retains the death benefits and pays only the interest to the beneficiary at periodic intervals---generally used on an interim basis until the lump sum payment or another settlement option is made.

Eddie and Janet Orr are married and have a Personal Auto Policy (PAP). Eddie's name is the only one listed on the declarations page of the policy. Janet is concerned because she thinks both their names should appear since they each own vehicles. Which one of the following is true?

The policy can be written in Eddie's name, Janet's name, or both Eddie's and Janet's names.

Extended term insurance

The policyowner may choose to continue the full death benefit of the original policy, but for a shorter period, under a term policy.

Reduced paid-up insurance

The policyowner may elect to use the accumulated cash value in the policy to purchase paid-up insurance at a reduced face amount. The type of coverage provided is the same as that provided under the original contract that was surrendered.

Cash surrender value

The policyowner would surrender the policy for cash, and all of the insurer's future obligations under the policy would cease. Any outstanding loan amounts would be deducted from the cash surrender amount.

Subrogation

The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss.

Policy period

The time frame, beginning with the inception date, during which insurance coverage applies.

Physical damage coverages

There are four kinds: comprehensive—pays for loss to covered auto or its equipment from any cause not excluded, except collision or overturn; specified causes of loss—provides named peril coverage; collision—covers loss to a covered auto or its equipment by collision with another object or by overturn; and towing—provides coverage for towing and labor performed at the place of disablement.

Excess electronic equipment endorsement

This endorsement adds coverage for tapes, records and disks used with electronic media and increases the limit of insurance for electronic equipment that is permanently installed in the auto

Second-to-die (Survivorship) Life Insurance

Two lives are insured in a single policy, with death benefits payable to the beneficiary when both insureds have died. Policies can be traditional fixed-premium whole life policies, current assumption policies, universal life, or even a combination of permanent and term life insurance. Premiums for such policies are typically lower.

The inadvertent assumption of a loss exposure that has not been identified or accurately analyzed is known as

Unplanned retention

Settlement options

Various ways of paying life insurance policy proceeds to the beneficiary.

Which one of the following is an exception to the PAP exclusion that eliminates coverage for liability arising out of the ownership, maintenance, or use of any vehicle that has fewer than four wheels? -Motorcycle -Vehicle designed mainly for use off public roads -Golf carts owned by the insured -Vehicle used by an insured in a medical emergency

Vehicle used by an insured in a medical emergency

"Period of Disability"

a continuous period during which an individual is disabled, must be established during a worker's disability or within twelve months after the disability ends, assuming the worker has met "disability insured status" and the disability lasted at least five consecutive months

Needs approach

a method of determining how much life insurance you need based on funds your family would require to maintain their lifestyle after your death

Deductible

a portion of a covered loss that is not paid by the insurer

Insurance

a risk management technique that involves the transfer of a risk to another party

Workers compensation

a system of insurance set up by state law that pays employees who are injured on the job

Medicare Part D

a voluntary program through which the government subsidizes the costs of beneficiaries' prescription drugs underwritten through private insurance carriers, provides coverage for beneficiaries who have very high or unexpected prescription drug bills

tort

a wrongful act or an infringement of a right (other than under contract) leading to civil legal liability.

Auto Loan/Lease Coverage

amends physical damage coverage for leased vehicles or vehicles with outstanding loan amounts to include an unpaid amount due on the lease or loan

Health maintenance organization (HMO)

an organization that provides comprehensive medical care to subscribers for a fixed fee

In the context of assets exposed to loss, long-term illness and loss of employment are best described as examples of

causes of loss

Miscellaneous-Type Vehicle Endorsement

covers motor homes, motorcycles, and other vehicles with fewer than four wheels that are designated for off public road use

Towing and Labor Costs Coverage

covers the towing of a disabled covered or nonowned auto, including costs for labor performed at the place of disablement

Cash option

dividends are paid in cash, usually at the policy anniversary

Negligence

failure to take proper care in doing something

Blended Family

family unit in which one or both partners bring with them dependent children from a prior relationship. One or both partners in the blended family may be employed.

Lay-up period

he insured warrants that the boat will not be in operation during certain periods, such as during the winter months

"Bed Reservation Benefit Guarantee"

holds a bed for a short hospital stay, paying for a number of days to hold a nursing-home bed in case the insured requires hospitalization

Participating Policies

life insurance policies that pay dividends

HO-2 Broad Form

meets most needs of owner-occupants for dwelling, other structures, and personal property coverage at a lower premium than the HO-3 or HO-5 coverages

Cognitive Impairment

necessitates care to protect the patient and others from threats to safety caused by the patient's condition

Annuitant

owner of an annuity (the insured)

Extended Non-owned Coverage

provides liability and medical payments coverages for drivers of vehicles furnished or made available for the regular use of the named insured and/or family members

Gatekeeper Provision

states the requirements that the insured must meet to receive benefits

Double indemnity

the accidental death benefit policy provision that doubles the face amount of insurance if the insured dies as a result of an accident

Maximum benefit period

the longest period for which benefits will be paid to the insured

Accumulation Period

the period between the annuity owner's purchase of the annuity and the annuitant's age at which benefit payments begin

Payout Period

the period during which the benefits are paid

Named insured

the person or persons named in the declarations section of the policy

Market risk

the risk associated with fluctuations in prices of financial securities, such as stocks and bonds

Interest-rate risk

the risk associated with price changes of existing investments due to changes in the general level of interest rates in the capital markets

Maturity risk

the risk associated with securities that may mature at a time when interest rates in the capital markets are lower than those provided by the maturing investments, causing the investor to reinvest at a lower rate of interest

Which one of the following is an expense payable under the Part B—Medical Payments Coverage of the Personal Auto Policy (PAP)? A. Lost wages B. General damages C. Funeral expenses D. Cost of bail bonds

C. Funeral expenses

Part A of the Personal Auto Policy (PAP) provides coverage for all of the following classes of persons or organizations, EXCEPT: -The named insured and family members -Any person using the named insured's covered auto -Any person legally responsible for the acts of a covered person -Any person legally responsible for the named insured's or family member's use of any auto or trailer

-Any person legally responsible for the acts of a covered person

Rosa's sedan is covered by a Personal Auto Policy (PAP) with split limits for liability coverage of $100/$300/$50. Rosa's friend, Lamont, owns a sports car that is covered by a PAP with split limits for liability coverage of $25/$50/$10. Rosa borrowed Lamont's sports car and caused an accident with another vehicle driven by James. James and his passenger, Fred, were injured and they filed suit against Rosa. A court awarded $35,000 to James for his bodily injuries and $110,000 to Fred for his bodily injuries. Which one of the following will be paid under each policy?

$50,000 under Lamont's policy and $95,000 under Rosa's policy

Dudley and Tricia Barton have an unendorsed Personal Auto Policy (PAP) covering Tricia's sedan and Dudley's SUV with the following coverages and limits: Liability $100,000/$300,000/$50,000 Medical Payments $5,000 Uninsured Motorists $100,000/$300,000 Other Than Collision Actual Cash Value Less $250 Collision Actual Cash Value Less $500 Rushing to get home after working late one night, Tricia ran a red light, striking a van and injuring its driver, Wilma. The damages and costs resulting from the accident and subsequent lawsuit are as follows: Damages to Tricia's sedan $5,000 Damages to Wilma's van $12,000 Wilma's medical injuries $57,000 Tricia's medical injuries $2,000 Defense costs $10,000 Tricia is found to be liable for the accident. Dudley and Tricia live in a state without a no-fault insurance law. How much will Tricia's insurer pay under Part A—Liability Coverage?

$79,000

Which one of the following types of annuities is considered a more conservative investment and has a lower rate of return? Select one: A. Equity indexed annuity (EIAs) B. Variable annuity (VA) C. Fixed-dollar annuity D. Combination plan

C. Fixed-dollar annuity

Part D - Coverage For Damage to Your Auto - Limits of Liability

-Coverage for physical damage loss is the lower of either the actual cash value (ACV) of the damaged or stolen property or the amount necessary to repair or replace the property with other property of like kind and quality

Insurers and other organizations that make insurance available to those who are unable to obtain coverage from the standard market are collectively called Select one: A. A reinsurance facility. B. The residual market. C. The secondary market. D. An automobile insurance plan.

B. The residual market.

The Inflation Guard endorsement gradually and automatically increases limits throughout the policy period in homeowners policies for Coverage(s) Choose one answer. A. A only. B. A and B only. C. A, B, and C only. D. A, B, C, and D.

D. A, B, C, and D.

If Mary hits Betty in the arm, Mary has committed Select one: A. Battery. B. Slander. C. Assault. D. Trespass.

A. Battery.

An individual is concerned about dying in a train crash and chooses not to travel by rail. This is an example of Select one: A. Diversification. B. Separation. C. Loss prevention. D. Avoidance.

D. Avoidance.

Profit Sharing Plan

Retirement plan that distributes a percentage of an employer's profit among participating employees. An employer's annual contributions are discretionary and are allocated to individual employees' accounts according to a pre-established formula, often based on a participant's compensation.

Sarah and Ernest Ridley have an unendorsed Personal Auto Policy (PAP) covering Sarah's sedan and Ernest's SUV with the following coverages and limits: Liability $100,000/$300,000/$50,000 Medical Payments $5,000 Uninsured Motorists $100,000/$300,000 Other Than Collision Actual Cash Value Less $250 Collision Actual Cash Value Less $500 Ernest was running errands in the SUV along with Sarah and their granddaughter, Millie. As a deer ran across the road in front of him, Ernest lost control of the vehicle and struck a parked car. The damages and costs from the accident are as follows: Damages to the SUV $15,000 Damages to the parked car $8,500 Ernest's medical injuries $10,000 Sarah's medical injuries $7,000 Millie's medical injuries $4,000 Defense cost $7,500 How much, if any, would Ridley's PAP insurer pay under Part C—Uninsured Motorists Coverage?

$0

Sarah and Ernest Ridley have an unendorsed Personal Auto Policy (PAP) covering Sarah's sedan and Ernest's SUV with the following coverages and limits: Liability $100,000/$300,000/$50,000 Medical Payments $5,000 Uninsured Motorists $100,000/$300,000 Other Than Collision Actual Cash Value Less $250 Collision Actual Cash Value Less $500 Ernest was running errands in the SUV along with Sarah and their granddaughter, Millie. As a deer ran across the road in front of him, Ernest lost control of the vehicle and struck a parked car. The damages and costs from the accident are as follows: Damages to the SUV $15,000 Damages to the parked car $8,500 Ernest's medical injuries $10,000 Sarah's medical injuries $7,000 Millie's medical injuries $4,000 Defense cost $7,500 How much will Ridley's PAP insurer pay under Part D—Damage to Your Auto?

$14,500

Sarah and Ernest Ridley have an unendorsed Personal Auto Policy (PAP) covering Sarah's sedan and Ernest's SUV with the following coverages and limits: Liability $100,000/$300,000/$50,000 Medical Payments $5,000 Uninsured Motorists $100,000/$300,000 Other Than Collision Actual Cash Value Less $250 Collision Actual Cash Value Less $500 Ernest was running errands in the SUV along with Sarah and their granddaughter, Millie. As a deer ran across the road in front of him, Ernest lost control of the vehicle and struck a parked car. The damages and costs from the accident are as follows: Damages to the SUV $15,000 Damages to the parked car $8,500 Ernest's medical injuries $10,000 Sarah's medical injuries $7,000 Millie's medical injuries $4,000 Defense cost $7,500 Sarah and Ernest live in a state without a no-fault insurance law. How much, if any, will Ridley's PAP insurer pay under Part A—Liability Coverage?

$16,000

Tim and Kelly have a Personal Auto Policy (PAP) with liability limits of $100/$300/$50. They were at fault in an accident when they lost control of their vehicle and ran into a van, injuring eight passengers in the van. There was a $600,000 judgment against Tim and Kelly, which was the total of $75,000 for each of the eight passengers in the van. Defense costs totaled $25,000. How much will Tim and Kelly's PAP insurer pay for this accident?

$325,000

Dudley and Tricia Barton have an unendorsed Personal Auto Policy (PAP) covering Tricia's sedan and Dudley's SUV with the following coverages and limits: Liability $100,000/$300,000/$50,000 Medical Payments $5,000 Uninsured Motorists $100,000/$300,000 Other Than Collision Actual Cash Value Less $250 Collision Actual Cash Value Less $500 Rushing to get home after working late one night, Tricia ran a red light, striking a van and injuring its driver, Wilma. The damages and costs resulting from the accident and subsequent lawsuit are as follows: Damages to Tricia's sedan $ 5,000 Damages to Wilma's van $ 12,000 Wilma's medical injuries $ 57,000 Tricia's medical injuries $ 2,000 Defense costs $ 10,000 Tricia is found to be liable for the accident. Dudley and Tricia live in a state without a no-fault insurance law. How much will Tricia's insurer pay under Part D—Damage to Your Auto?

$4,500

Margaret and Tom Churchill have an unendorsed Personal Auto Policy (PAP) covering Margaret's sedan and Tom's pick-up truck. They have liability limits of $100/$300/$50, medical payments limits of $5,000, uninsured motorists limits of $100/$300, other than collision with a $250 deductible and collision with a $500 deductible. Margaret was driving her daughter Ellie, and Ellie's friend Samantha, to ballet lessons when she lost control of the vehicle and struck another car at an intersection. The damages were as follows: Damages to Margaret's sedan $10,000 Damages to the other vehicle $8,500 Margaret's medical injuries $3,000 Ellie's injuries $1,000 Samantha's injuries $1,500 Injuries to the driver of the other car $2,000 Defense costs $14,000 Margaret and Tom live in a state without a no-fault insurance law. How much, if any, will the Churchill's PAP insurer pay under Part B—Medical Payments Coverage?

$5,500

Larry and his friend John were driving in Larry's sports utility vehicle. A vehicle ran a red light at an intersection and struck them. Larry's vehicle was at a complete stop. The driver of the other vehicle was intoxicated, and clearly at fault in the accident. The drunken driver's automobile insurance had canceled for nonpayment when the accident occurred. Larry and John were taken to the hospital. They incurred the following losses as result of the accident: Larry: $20,000 in medical bills $4,000 in lost wages $20,000 in pain and suffering John: $10,000 in medical bills $2,000 in lost wages $20,000 in pain and suffering Larry has liability limits of $100/$300/$50 and a $100,000 uninsured motorists coverage limit on his Personal Auto Policy (PAP) covering his sports utility vehicle. Which one of the following amounts will Larry's insurer pay as a result of this accident?

$76,000

Part D - Coverage For Damage to Your Auto - -Transportation Expenses -Exclusions

-this is a coverage extension for substitute transportation costs incurred when a private passenger type auto has been stolen Exclusions: - Public or livery conveyance - Wear and Tear, Freezing, Breakdown, and Road Damage to Tires - Radioactive Contamination or War - Electronic Equipment - Media and Accessories - Government Destruction or Confiscation - Trailer, Camper body, or Motor Home - Non owned Auto Used without Reasonable Belief of Being Entitled - Radar and Laser Detection Equipment - Customizing Equipment - Nonowned auto Used in Garage Business - Racing - Rental Vehicles

Part F - General Provisions 1. Bankruptcy of Insured 2. Changes in Policy 3. Fraud

1. Bankruptcy of Insured -provisions states that if the insured declares bankruptcy or becomes insolvent, the insurer is not relieved of any obligations under the policy 2. Changes in Policy - policy can only be changed by endorsement from the insurer - increase/decrease in premium from change in policy can caused by: - the number, type, or use of insured vehicles - the operators using the insured vehicles - The place of principal garaging or insured vehicles - the coverage provided, deductibles, or limits of liability -another portion of this provision deals with the liberalization clause -this means a policy condition providing that if a policy form is broadened at no additional premium, the broadened coverage automatically applies to all existing policies of the same type 3. Fraud -provision says that no coverage exists for any insured that makes fraudulent statements in connection with a claim

Risk Management Process

1. Identify loss exposures 2. Analyze loss exposures 3. Examine feasibility of risk management techniques 4. Select the appropriate risk management techniques 5. Implement selected risk management techniques 6. Monitor results and revise the risk management program

Part D - Coverage For Damage to Your Auto - -Payment of Loss - No Benefit to Bailee -Other Sources of Recovery -Appraisal

5. Payment of Loss -Insurer has option of paying for the loss in money or repairing or replacing the damaged/stolen property 6. No Benefit to Bailee - states policy will not benefit any bailee (person who assumes custody of the property of others for business) 7. Other Sources of Recovery - PAP will only pay its share of a loss if the loss is covered by other sources of recovery 8. Appraisal -if there's a disagreement between parties, an "umpire" comes in to see who is at fault

A couple meets with a financial adviser to review their insurance needs and investment choices. In the course of the discussion, a variety of topics are covered, including the impact of a long-term illness of the primary wage earner. In this context, the long-term illness is best described as

A cause of loss.

Loss assessment

A charge by the condominium association against the unit owners for the cost of uninsured losses.

Civil law

A classification of law that applies to legal matters not governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others.

Property loss exposure

A condition that presents the possibility that a person or an organization will sustain a loss resulting from damage (including destruction, taking, or loss of use) to property in which that person or organization has a financial interest.

Risk financing

A conscious act or decision not to act that generates the funds to pay for losses and risk control measures or to offset variability in cash flows.

Risk control

A conscious act or decision not to act that reduces the frequency and/or severity of losses or makes losses more predictable.

Coverage Triggers

A critical LTC policy provision that involves the conditions that determine who is eligible to receive benefits

Permanent partial disability (PPD)

A disability caused by a work-related injury or disease that impairs the injured employee's earning capacity for life, but the employee is able to work at reduced efficiency.

Permanent total disability (PTD)

A disability caused by a work-related injury or disease that renders an injured employee unable to ever return to gainful employment.

Temporary partial disability (TPD)

A disability caused by a work-related injury or disease that temporarily limits the extent to which a worker can perform job duties; the worker is eventually able to return to full duties and hours.

Temporary total disability (TTD)

A disability caused by a work-related injury or disease that temporarily renders an injured worker unable to perform any job duties for a period of time.

Medicaid

A federal-state government healthcare plan that provides a public assistance (welfare) healthcare plan for low-income persons, including those who are aged, blind, or disabled; members of families with dependent children; and pregnant women and certain children

Equity Indexed Annuity

A fixed-dollar annuity that is linked to the stock market index. Insurer guarantees a minimum principal payment and interest rate. Allows the owner to participate in the growth of the stock market and provides downside protection against the loss of principal and prior interest earnings if the annuity is held to term. The insurer bears the investment risk.

Condominium

A real estate development consisting of a group of units, in which the air space within the boundaries of each unit is owned by the unit owner, and all remaining real and personal property is owned jointly by all the unit owners.

Roth IRA

A retirement savings plan by which an individual can accumulate investment income on a tax-free basis (subject to certain limitations).

Traditional individual retirement account (IRA)

A retirement savings plan by which an individual can use tax-deductible and tax deferred methods for accumulating funds

Avoidance

A risk control technique that involves ceasing or never undertaking an activity so that the possibility of a future loss occurring from that activity is eliminated.

Simplified Employee Pension (SEP) plan

A form of a traditional individual retirement account (IRA) that enables employers to contribute to their employees' retirement accounts or allows the self-employed to fund their own retirement accounts. The annual contribution limit is much higher than for an IRA. An employer must contribute to the employee's plan if the employee is at least 21 and has worked for the employer in the current year and in 3 of the last 5 years. Income tax on an employer's contributions and the earnings on those contributions is deferred until withdrawal. Withdrawals are subject to the same restrictions as traditional IRAs.

Cooperative corporation

A form of real property ownership in which the real property is owned by a corporation whose shareholders are the tenants of the property.

Variable universal life insurance

A form of universal life insurance that allows the policyholder to make fund choices for the investment component but that has no guaranteed cash value and no guaranteed interest rate.

Unsatisfied judgment fund

A fund designed to provide a source of recovery for victims of motor vehicle accidents when an at-fault motorist is unable to pay any judgment.

Syndicate

A group of insurers or reinsurers involved in joint underwriting to insure major risks that are beyond the capacity of a single insurer or reinsurer; each syndicate member accepts predetermined shares of premiums, losses, expenses, and profits.

Separation

A risk control technique that isolates loss exposures from one another to minimize the adverse effect of a single loss.

Loss prevention

A risk control technique that reduces the frequency of a particular loss.

Loss reduction

A risk control technique that reduces the severity of a particular loss.

Diversification

A risk control technique that spreads loss exposures over numerous projects, products, markets, or regions.

Medicare

A social insurance program that extends health coverage to almost all Americans age 65 and over.

Grace period

A provision that continues a life insurance policy in force for a certain number of days (usually thirty or thirty-one) after the premium due date, during which time the policyowner can pay the overdue premium without penalty.

Inherent vice

A quality of or condition within a particular type of property that tends to make the property destroy itself.

Managed care plan

A type of healthcare plan providing members with comprehensive services and incentives to use providers belonging to the plan.

Indemnity plan

A type of healthcare plan that allows patients to choose their own healthcare provider and reimburses the patient or provider at a certain percentage (usually after a deductible is paid) for services provided.

Annuity

A type of life insurance policy or contract that makes periodic payments to the recipient for a fixed period or for life in exchange for a specified premium.

Brad purchased a 16-foot boat with a 15-horsepower motor for $4,500. He also purchased a boat trailer for $1,000. After a fishing trip, Brad parked his truck and the trailer carrying the boat at a restaurant. After leaving the restaurant, he discovered that the trailer, boat, and motor were missing. Disregarding any deductibles, what amount will Brad's unendorsed HO-3 policy pay for the loss? A. $0 B. $1,000 C. $4,500 D. $5,500

A. $0

John's house is insured under a DP-3 policy with a Coverage A limit of $100,000. John temporarily repairs a roof that is damaged in a hurricane until he can have the roof replaced. How much, if any, is available in addition to the $100,000 Coverage A limit under the policy to pay for the temporary repairs? A. $0 B. $1,000 C. $5,000 D. $10,000

A. $0

Becky owns an automobile insured with an unendorsed Personal Auto Policy (PAP). Her friend lets her drive his motorcycle, and rides on back as a passenger. Becky accidentally drives the motorcycle into a tree, killing her friend and injuring herself. The funeral for her friend costs $3,000. Becky's hospital bills total $3,000, and she has surgical bills of $4,000. As a result of this accident, the Part B—Medical Payments Coverage of Becky's PAP will pay

A. $0.

Max has a personal inland marine policy on which he has scheduled his gold watch for a value of $2,500. While golfing, he damaged the watch. The actual cash value of the watch at the time of the damage was $4,000. The cost to repair the watch to its prior condition is $1,500. The cost to replace the watch with a substantially identical replacement is $5,000. Which one of the following amounts will Max's insurer pay for the covered loss? Select one: A. $1,500 B. $2,500 C. $4,000 D. $5,000

A. $1,500

Which one of the following best defines premature death? A. A death that occurs before a person reaches his or her life expectancy B. A death that occurs before a person retires C. A death due to illness D. A death due to accident

A. A death that occurs before a person reaches his or her life expectancy

The Johnson family leases an apartment. Under the lease, the Johnsons agree to assume all liability of the landlord arising out of the leased premises. This is an example of Select one: A. A hold-harmless agreement. B. Insurance. C. Hedging. D. Retention.

A. A hold-harmless agreement.

An uninsured motor vehicle under the Personal Auto Policy (PAP) can be: A. A land motor vehicle that has no bodily injury liability insurance or legal substitute for insurance that applies to it at the time of the accident. B. Owned by a governmental unit or agency. C. Operated on rails if it primarily carries passengers. D. A motor vehicle to which a liability bond with minimum required limits rather than liability insurance applies at the time of the accident.

A. A land motor vehicle that has no bodily injury liability insurance or legal substitute for insurance that applies to it at the time of the accident.

Which one of the following is considered "your covered auto" under the PAP? A. A temporary substitute auto B. A rented motorcycle C. A nonowned trailer D. An owned golf cart

A. A temporary substitute auto

There are three exclusions in the HO-3 policy that apply only to Coverages A and B in addition to the basic nine exclusions in Section I—Exclusions. These three exclusions are weather, Select one: A. Acts or decisions of any person, group, organization, or governmental body, and faulty workmanship. B. Governmental actions, and faulty workmanship. C. Acts or decisions of any person, group, organization, or governmental body, and intentional loss. D. Ordinance or law, and faulty workmanship.

A. Acts or decisions of any person, group, organization, or governmental body, and faulty workmanship.

Exclusions are useful for each of the following purposes EXCEPT: A. Adding coverages requiring special treatment B. Reducing likelihood of coverage duplications C. Eliminating coverage for uninsurable loss exposures D. Assisting in managing moral and morale hazards

A. Adding coverages requiring special treatment

All of the following statements are true of automobile joint underwriting associations (JUAs), EXCEPT: Select one: A. All auto insurers in the state must issue policies for their proportionate share of high-risk drivers. B. A servicing insurer receives applications, issues policies, collects premiums, and settles claims. C. All auto insurers in the state accept their proportionate share of underwriting losses and expenses. D. The JUA sets the insurance rates and approves the policy forms to be used for high-risk drivers.

A. All auto insurers in the state must issue policies for their proportionate share of high-risk drivers.

The HO-3 policy excludes liability coverage for Select one: A. Any motor vehicle that is rented to others. B. A motorized golf cart owned by an insured and used on a golf course. C. A motorized vehicle not requiring registration that is designed for recreational use off public roads and owned by an insured, and used on an insured location. D. A motor vehicle in dead storage on an insured location.

A. Any motor vehicle that is rented to others.

Provisions of the Ordinance or Law Coverage endorsement available to a mobilehome policyholder Select one: A. Are virtually identical to the Ordinance or Law provisions of the homeowners policy. B. Provide 10% of Coverage A limits as additional coverage. C. Allow for the flexibility of selecting a desired dollar-value limit. D. Do not provide coverage for debris removal.

A. Are virtually identical to the Ordinance or Law provisions of the homeowners policy.

To be considered "disabled" under Social Security, a worker must Select one: A. Be unable to engage in any substantial gainful activity because of a medically determinable physical or mental impairment as defined in the Social Security law. B. Be blind, mentally and physically disabled and unable to find gainful employment. C. Have a physical condition that has lasted for a minimum of two years. D. Have a mental condition that has lasted for a minimum of two years.

A. Be unable to engage in any substantial gainful activity because of a medically determinable physical or mental impairment as defined in the Social Security law.

For a building or contents to be eligible for coverage under the National Flood Insurance Program, the Select one: A. Building must be located in a participating community B. Owner must also purchase loss of use coverage. C. Community must supplement the individual's costs. D. Owner must always be part of the emergency program.

A. Building must be located in a participating community

Most term life insurance policies Select one: A. Carry some guarantee of renewability. B. Are available to meet financial obligations that continue for a lifetime. C. Are not convertible. D. Are hybrid combinations of life insurance and investment vehicles.

A. Carry some guarantee of renewability.

An insurance policy states that the insured must report losses promptly to the insurer. This is an example of a policy: A. Condition. B. Definition. C. Insuring agreement. D. Declaration.

A. Condition

A garage attached to a dwelling would be covered under which one of the following HO-3 Section I coverages? A. Coverage A - Dwelling B. Coverage B - Other Structures C. Coverage C - Personal Property D. Additional coverages

A. Coverage A - Dwelling

Detached structures are covered under A. Coverage B of the DP-3 policy. B. Homeowners policies, but not under dwelling policies. C. Coverage A of the DP-3 policy. D. Coverage C of the DP-3 policy.

A. Coverage B of the DP-3 policy.

Dirk has a restored 1968 Mustang. Dirk has spent a lot of money and time bringing the car back to a like-new condition. Dirk insures the Mustang under his Personal Auto Policy (PAP) with collision and other than collision coverages. Dirk can best establish the value of the Mustang with his insurer by attaching which one of the following endorsements to his PAP? Select one: A. Coverage for Damage to Your Auto (maximum limit of liability) B. Named Non-Owner Coverage C. Extended Non-Owned Coverage—Vehicles Furnished or Available for Regular Use D. Miscellaneous Type Vehicle

A. Coverage for Damage to Your Auto (maximum limit of liability)

Underinsured motorist coverage is Select one: A. Coverage that provides additional limits of protection when a negligent driver's insurance limits are insufficient to pay for the damages. B. An expansion of the perils and coverage limits that are provided by uninsured motorist coverages. C. Available only in states that have financial responsibility laws. D. Coverage that stacks on top of the lower uninsured motorist coverage limits.

A. Coverage that provides additional limits of protection when a negligent driver's insurance limits are insufficient to pay for the damages.

A pension plan in which the contribution rate or amount is specified, but the retirement benefit is variable is a Select one: A. Defined contribution plan. B. Defined benefit plan. C. Individual retirement account. D. Profit-sharing plan.

A. Defined contribution plan.

Larry drove his car and was involved in a two-car accident caused by the other driver, who was uninsured. The at-fault driver offered Larry a substantial amount of money in satisfaction of his damages. Larry accepted the money in settlement of his losses and released the other driver from further liability. Larry later submitted an uninsured motorists claim under his Personal Auto Policy (PAP). The uninsured motorists claim would be: A. Denied because coverage under these circumstances is excluded. B. Paid in addition to the money paid by the at-fault driver. C. Denied because the at-fault driver can be considered self-insured under the circumstances. D. Paid for damages accruing after the settlement with the at-fault driver.

A. Denied because coverage under these circumstances is excluded.

George owns a sedan that he keeps tuned for ultimate performance. During the week, he drives it to and from work. On Saturdays, he uses it for drag racing at a track run by a local hot rod association. The suspension system failed during one of the races. The car crashed into a barrier, injuring George. He submitted a claim for medical payments coverage under the Personal Auto Policy (PAP) covering the car. The claim representative should: A. Deny the claim because George was competing in an organized race. B. Pay the claim because George's car could be driven on the highway. C. Deny the claim because racing was not the manufacturer's intended use for the car. D. Pay the claim because George was the occupant of a covered auto.

A. Deny the claim because George was competing in an organized race.

Which one of the following statements about Social Security survivors benefits is true? Select one: A. Dependent parents age sixty-two or older can receive benefits. B. A surviving spouse receives benefits only if he or she is at least age sixty-five. C. Children are eligible for benefits up to age twenty-two if they are in college. D. Survivors benefit are exempt from the family maximum that applies to other Social Security benefits.

A. Dependent parents age sixty-two or older can receive benefits.

A community that includes a special flood hazard area (SFHA) and chooses not to participate in the National Flood Insurance Program (NFIP) may receive what kind of federal assistance following a flood? Select one: A. Disaster assistance not related to permanent repair and reconstruction B. Federal Housing Administration (FHA) loans C. Assistance elevating or moving homes away from flood-prone waters D. No assistance

A. Disaster assistance not related to permanent repair and reconstruction

One of the most important differences between homeowners policies and the DP-3 policy is that the unendorsed DP-3 policy A. Does not cover theft of personal property B. Only covers theft of personal property up to 10% of the coverage A limit. C. Does not cover property damage by burglars during theft of personal property. D. Only covers theft of endangered personal property removed from the premises for up to 30 days.

A. Does not cover theft of personal property.

As opposed to other sources of life insurance, the cost of individual life insurance Select one: A. Does not include a group or volume discount. B. Does not vary based on age or gender. C. Does not vary based on health and habits. D. Is tethered to the insured's employment status.

A. Does not include a group or volume discount.

An insured covers his owned auto with more than one Personal Auto Policy (PAP), each from a different insurer. In the event of a claim for medical payments coverage, Select one: A. Each insurer pays its pro rata share based on the proportion that its limit of liability bears to the total of applicable limits. B. The older insurance policy becomes primary and the newer insurance policy becomes excess. C. The first insurer to be placed on notice of the claim pays the entire claim. D. Each insurer pays equal shares.

A. Each insurer pays its pro rata share based on the proportion that its limit of liability bears to the total of applicable limits.

Bonita has a 10 year old son, Ray who has a number of medical conditions and prefers to see certain specialists for his treatments. Bonita changed jobs, and her new employer offers two managed-care option, a PPO plan and an EPO plan. While Bonita would prefer a flexible plan with low deductibles and co-payments and minimal paperwork, Ray would like to continue treatments with his preferred specialists. Which one of these options would be meet Bonita's and Ray's healthcare needs? A. Employer's PPO plan B. Employer's EPO plan C. Private healthcare insurance

A. Employer's PPO plan

Protection and indemnity (P&I) insurance

Insurance that covers shipowners against various liability claims due to operating the insured vessel.

Although the basis for the amount of insurance can differ, most group term life insurance plans provide an amount of insurance Select one: A. Equal to some multiple of the employee's annual salary. B. Based on the employee's length of service. C. Based on the employee's position. D. Equal to a flat amount for all employees.

A. Equal to some multiple of the employee's annual salary.

Under the HO-3 policy Section I—Conditions, the Loss Settlement condition Select one: A. Establishes the process for determining the amount to be paid for a property loss. B. Outlines a method for resolving disagreements between the insured and the insurer. C. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. D. States that the insurer will adjust all losses with the insured or the insured's spouse, if a resident in the same household.

A. Establishes the process for determining the amount to be paid for a property loss.

Under the HO-3 policy Section I—Conditions, the Loss Settlement condition Select one: A. Establishes the process for determining the amount to be paid for a property loss. B. Outlines a method for resolving disagreements between the insured and the insurer. C. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. D. States that the insurer will adjust all losses with the insured or the insured's spouse, if a resident in the same household.

A. Establishes the process for determining the amount to be paid for a property loss.

Which one of the following statements about disability is true according to the Social Security Administration? Select one: A. Fewer than one-half of Social Security Disability Insurance claims are approved. B. The average benefit paid by Social Security Disability Insurance is almost $3,000 per month. C. About 4 percent of Americans are disabled. D. Only about five percent of Americans entering the work force today will become disabled before they retire.

A. Fewer than one-half of Social Security Disability Insurance claims are approved.

A sandwiched family usually needs life insurance because the premature death of an income earner in a sandwiched family can cause Select one: A. Financial hardship for surviving children and surviving parents. B. Financial hardship for extended relatives who must assume responsibility for their grandparents. C. Emotional and financial hardship for surviving children who might witness grandparents dependent on Medicare. D. Loss of an estate to surviving children when grandparents must "spend down" assets to become eligible for Medicaid.

A. Financial hardship for surviving children and surviving parents.

The conditions under which the insurer can nonrenew a Personal Auto Policy (PAP) vary according to the length of the policy period. If the policy period is less than six months, the insurer Select one: A. Has the right to nonrenew every six months, beginning six months after the policy's original effective date. B. Has the right to nonrenew every year, beginning twelve months after the policy's original effective date. C. Has the right to nonrenew every 60 days. D. Does not have the right to nonrenew.

A. Has the right to nonrenew every six months, beginning six months after the policy's original effective date. CorrectCorrect. The conditions under which the insurer can nonrenew a Personal Auto Policy (PAP) vary according to the length of the policy period. If the policy period is less than six months, the insurer has the right to nonrenew every six months, beginning six months after the policy's original effective date.

With respect to a vehicle used as a temporary substitute for the insured's covered auto, medical payments coverage under a Personal Auto Policy (PAP): A. Is excess over other collectible auto insurance that pays medical expenses. B. Is shared on a pro rata basis. C. Is primary for medical and funeral expenses. D. Are specifically excluded from coverage.

A. Is excess over other collectible auto insurance that pays medical expenses.

Coverage for the peril of fire A. Is provided by most Fair Access to Insurance Requirements (FAIR) plans. B. Is only available when difference in conditions (DIC) coverage is added to FAIR plans. C. Is excluded by most FAIR plans. D. Can be denied to FAIR plan applicants for hazardous environmental conditions beyond the control of the owner.

A. Is provided by most Fair Access to Insurance Requirements (FAIR) plans.

Coverage for the peril of fire Select one: A. Is provided by most Fair Access to Insurance Requirements (FAIR) plans. B. Is only available when difference in conditions (DIC) coverage is added to FAIR plans. C. Is excluded by most FAIR plans. D. Can be denied to FAIR plan applicants for hazardous environmental conditions beyond the control of the owner.

A. Is provided by most Fair Access to Insurance Requirements (FAIR) plans.

Defense costs coverage is included under Section II—Liability Coverages in the HO-3 policy. This coverage: A. Is supplemental to the liability limit. B. Has a liability limit separate from the personal liability limit. C. Is excluded if the suit against the insured is groundless. D. Is included in the personal liability limit.

A. Is supplemental to the liability limit.

Which one of the following statements about Medicare Supplement Insurance (Medigap) is true? Select one: A. It fills gaps in the Original Medicare program (Part A and Part B). B. It must be purchased through the Medicare program. C. It includes benefits for the cost of Medicare Prescription Drug Coverage (Part D). D. It is most appropriate for a person who also has coverage under a Medicare Advantage (Part C) plan.

A. It fills gaps in the Original Medicare program (Part A and Part B).

The major advantage of the tort liability system for compensation of auto accident victims is that Select one: A. It provides a remedy for victims of negligent or irresponsible drivers who cause accidents. B. It eliminates time delays in reaching a settlement. C. It is less costly than other alternative approaches. D. It does not allow punitive damage awards to be included as part of the compensation.

A. It provides a remedy for victims of negligent or irresponsible drivers who cause accidents.

Which one of the following describes a rationale for underinsured motorist (UIM) coverage? Select one: A. Many at-fault motorists have insurance that meets the state minimum liability limits but are unable to fully compensate an injured person. B. It provides an insured with an excess layer of liability coverage to protect an insured that causes a catastrophic accident. C. Because UIM payments are taxable, UIM provides a revenue source for the state. D. UIM replaces medical payments coverage for those who cannot afford comprehensive policy packages.

A. Many at-fault motorists have insurance that meets the state minimum liability limits but are unable to fully compensate an injured person.

The Jordans own a small ranch, and keep several ponies on the property for their personal use. Mr. and Mrs. Jordan are concerned that their children's friends and visiting relatives could be injured when riding the family's ponies. What coverage would the unendorsed DP-3 policy provide for this loss exposure? A. No coverage B. Full coverage, up to the policy limits C. Medical expenses only, up to $2,000 D. 20% of the Coverage A limit

A. No coverage

The Snyder family purchased a three wheel all-terrain vehicle (ATV) for their children to use on an open field behind their property. Which one of the following endorsements should be attached to the Snyder's Personal Auto Policy (PAP) to provide liability coverage for the ATV? A. Miscellaneous Type Vehicle Endorsement B. Auto Loan/Lease Coverage Endorsement C. Named Non-Owner Coverage Endorsement D. Coverage for Damage to Your Auto (Maximum Limit of Liability) Endorsement

A. Miscellaneous Type Vehicle Endorsement

Keith commutes into the city in his car, and he provides a ride to two co-workers who live near him. Every other week, the co-workers take turns buying the gasoline for Keith's car. Does this activity create a public or livery conveyance situation that would preclude liability coverage under Keith's Personal Auto Policy (PAP)? A. No, because Keith is involved in a share-the-expense car pool. B. No, as long as Keith does not report the money for the gasoline as taxable income. C. Yes, coverage is excluded as long as Keith receives compensation from his co-workers in the form of gasoline expenses. D. Yes, coverage is excluded, but only while the co-workers are in the vehicle.

A. No, because Keith is involved in a share-the-expense car pool.

A personal injury protection (PIP) endorsement is an endorsement added to an auto insurance policy to provide Select one: A. No-fault benefits. B. Excess benefits beyond medical expense coverage limits. C. Coverage for noneconomic losses. D. Liability benefits in states with pure no-fault plans.

A. No-fault benefits.

Vanessa insures her lakefront vacation cottage under a DP-3 policy with a Coverage A limit of $85,000, a Coverage C limit of $8,000, and no other limits or endorsements. Following a rash of burglaries at the lakefront, Vanessa removed a widescreen plasma TV worth $2,500 to protect it from the burglars. While being stored in her car the next day, the TV was stolen. Will Vanessa's DP-3 policy cover this loss? A. No. It was not endangered by a covered loss. B. Yes. Property removed is covered for any cause of loss. C. No. Personal property away from the premises is not covered. D. Yes. Personal property away from the premises is covered up to 10% worldwide.

A. No. It was not endangered by a covered loss.

Jill is insured by a Personal Auto Policy (PAP). Several witnesses saw her run a red light and collide with a car that clearly had the right of way. Jill was at fault for the accident. Although the other car sustained damage, its driver drove off and neither the car nor the driver was ever identified. Jill sustained injuries in the accident and made an uninsured motorists (UM) coverage claim under her PAP. Jill will: A. Not be able to recover under her UM coverage because the driver of the other car was not at fault for the accident. B. Be able to recover under her UM coverage because the other car was a hit-and-run vehicle. C. Not be able to recover under her UM coverage because the other car was a hit-and-run vehicle. D. Not be able to provide the other driver with UM coverage under her PAP because he or she has never been identified.

A. Not be able to recover under her UM coverage because the driver of the other car was not at fault for the accident.

Ed purchased an individual disability income policy several years ago and continued to pay the annual premium with after-tax dollars. He recently was severely disabled and is not expected to ever return to work. His monthly benefit is $4,000, which represents 60 percent of his predisability earnings. The present value of his expected benefits is $240,000, and the aggregate premiums he has paid for the policy are $60,000. How much of each monthly benefit is subject to income taxation? Select one: A. Nothing B. $2,000 C. $2,400 D. $4,000

A. Nothing

Martin had a collection of CDs worth $250 in his car. Martin discovered one morning that his car had been broken into and his radio, CD player, and CDs were all taken. Martin insures his car under an unendorsed Personal Auto Policy (PAP). Disregarding any deductibles, what amount will Martin's auto insurer pay for the CDs? Select one: A. Nothing B. $250 C. Actual cash value D. The amount necessary to replace the item with property of like kind and quality

A. Nothing

Under the HO-3 policy, Coverage B—Other Structures applies to structures Select one: A. On the residence premises that are not attached to the dwelling and are separated from the dwelling by clear space. B. Not on the residence premises but owned by the insured. C. On the residence premises and attached to the residence premises by permanent structures. D. On the residence premises and more than 100 feet from the dwelling.

A. On the residence premises that are not attached to the dwelling and are separated from the dwelling by clear space.

Yassar had borrowed his friend Mariam's car while his was in the shop for repairs. Yassar was driving Mariam's car when he was injured in a collision with an at-fault uninsured motorist. Yassar has a Personal Auto Policy (PAP) for his own car, and Mariam has a PAP for her car. In this situation, uninsured motorist (UM) coverage is: A. Provided on an excess basis under Yassar's policy. B. Provided on a primary basis under Yassar's policy. C. Not provided under Yassar's policy. D. Provided on a pro rata basis under Yassar's policy.

A. Provided on an excess basis under Yassar's policy.

One of the most effective ways for the average family to mitigate the financial uncertainty associated with the premature death loss exposure is to A. Purchase life insurance. B. Participate in an individual retirement account (IRA). C. Purchase health and disability insurance. D. Participate in a 401(k) plan.

A. Purchase life insurance.

Guaranteed Insurability Rider

Allows insured to purchase additional amounts of disability income insurance on stated policy anniversary dates without providing proof of insurability

Which one of the following statements is true regarding Coverage A—Dwelling as it applies to the dwelling on the "residence premises" listed on the HO-3 policy declarations page? Select one: A. The HO-3 could cover the entire building for a policyholder who owns a four-family home, lives in one unit, and rents the other units to tenants. B. When buying insurance, a homeowner should determine the Coverage A limit based on the cost to replace the dwelling including the cost of the land. C. Coverage A does not apply to structures attached to the dwelling, such as a garage or deck. D. The land at the residence premises is specifically included in the property coverage.

A. The HO-3 could cover the entire building for a policyholder who owns a four-family home, lives in one unit, and rents the other units to tenants.

Debris removal coverage differs between the HO-3 policy and the DP-3 policy in which one of the following ways? A. The HO-3 provides an additional 5% coverage over the applicable limit. C. The DP-3 provides an additional 5% coverage over the applicable limit. D. The HO-3 includes coverage for removal of trees and shrubs, up to the limits of the applicable coverage.

A. The HO-3 provides an additional 5% coverage over the applicable limit.

Which one of the following describes the difference between the HO-3 policy and the HO-2 policy? A. The HO-3 provides coverage for all causes of loss, unless specifically excluded, for Coverages A and B. The HO-2 provides coverage for named perils for Coverages A and B. B. The HO-3 is the preferred homeowners policy for homeowners who have had no prior losses. The HO-2 is designed for homeowners who have experienced some losses. C. The HO-3 provides Coverage C limits that are 50% of Coverage A. The HO-2 provides Coverage C limits that are 40% of Coverage A. D. The HO-3 is designed for an owner-occupant of a house. The HO-2 is designed for a tenant-homeowner of an apartment.

A. The HO-3 provides coverage for all causes of loss, unless specifically excluded, for Coverages A and B. The HO-2 provides coverage for named perils for Coverages A and B.

When comparing Coverage D—Loss of Use as provided by the HO-3 policy and HO-4 policy, Select one: A. The HO-4 policy automatically provides coverage at 30% of the Coverage C limit, rather than 30% of the Coverage A limit, as in the HO-3 policy. B. The HO-4 policy automatically provides coverage at 30% of the Coverage A limit, rather than 30% of the Coverage C limit, as in the HO-3 policy. C. Both policies automatically provide coverage at 30% of the Coverage C limit. D. Both policies automatically provide coverage at 30% of the Coverage A limit.

A. The HO-4 policy automatically provides coverage at 30% of the Coverage C limit, rather than 30% of the Coverage A limit, as in the HO-3 policy.

Under Section I—Additional Coverages of an HO-3 policy, which one of the following statements is true when an insurer reimburses an insured for reasonable costs to protect a property from further damage when it is damaged by a covered cause of loss? Select one: A. The coverage for expenses incurred does not increase the limit of coverage that applies to the covered property. B. The deductible stated on the declarations page does not apply. C. The costs of materials would be paid as part of the loss under Coverage C. D. The coverage for expenses incurred increases the limit of coverage that applies to the covered property.

A. The coverage for expenses incurred does not increase the limit of coverage that applies to the covered property.

The garage location shown on the Declarations page of a Personal Auto Policy (PAP) is Select one: A. The location where the auto is principally parked overnight. B. The mailing address of the insured's employer. C. Not used for rating purposes. D. A garage at a primary residence, not a driveway or street.

A. The location where the auto is principally parked overnight.

Which one of the following statements about IRAs is true? Select one: A. The tax penalty for early withdrawal may be waived if the owner becomes disabled. B. Contribution limits increase as an owner's income increases. C. Distributions must start before an owner reaches age 67. D. Eligibility to invest in them is limited to persons under age 55.

A. The tax penalty for early withdrawal may be waived if the owner becomes disabled.

Which one of the following is a major characteristic of a consumer-directed health plan? Select one: A. The use of a health savings account (HSA) or a health reimbursement arrangement (HRA) C. Little or no access to tools for making healthcare decisions D. Low premiums because of lower-quality care than under other types of healthcare plans

A. The use of a health savings account (HSA) or a health reimbursement arrangement (HRA)

An insured has a Personal Auto Policy (PAP) that includes medical payments coverage. The insured crashed his car while trying to be the first car to pull away from a stop at a red light when the light turned green. The insured: A. Would be eligible for medical payments under the Personal Auto Policy (PAP) as the occupant of a covered auto. B. Would not be eligible for medical payments under the Personal Auto Policy (PAP) because he is being reckless. C. Would not be eligible for medical payments under the Personal Auto Policy (PAP) because of the exclusion for racing. D. Would be eligible for medical payments under the Personal Auto Policy (PAP) because occasional racing is permitted by exception to the exclusion for racing.

A. Would be eligible for medical payments under the Personal Auto Policy (PAP) as the occupant of a covered auto.

An owner of a car insured with a Personal Auto Policy (PAP) for which an insured selected and paid a premium for medical payments coverage Select one: A. Would not be eligible for medical payments under the PAP if injured while occupying a motorcycle on a public highway. B. Would not be eligible for medical payments under the PAP if injured while driving a motorcycle but would be eligible for such coverage while riding as a passenger on a motorcycle. C. Would be eligible for medical payments under the PAP if injured while occupying a motorcycle on the insured's own property. D. Would be eligible for medical payments under the PAP if injured while occupying a motorcycle on a public highway.

A. Would not be eligible for medical payments under the PAP if injured while occupying a motorcycle on a public highway.

Bill carves duck hunting decoys for sale in the basement of his home, which is insured with an HO-3 policy. This is his full-time job. One day, a customer picked up a sharp chisel after Bill told him not to touch it because it was dangerous. The customer mishandled it and severely cut his hand, requiring several stitches at the local emergency room. Would the Medical Payment to Others coverage in the HO-3 apply in this situation? A. Yes, if Bill's policy was endorsed with the Home Business Insurance Coverage endorsement B. Yes, if Bill's policy was endorsed with the Personal Injury Coverage endorsement C. No, because of the Home Crafter exclusion in the HO-3 D. No, because of the Personal Injury Liability exclusion in the HO-3

A. Yes, if Bill's policy was endorsed with the Home Business Insurance Coverage endorsement

Residual (Partial) Disability Rider

Allows for partial payment of benefits, in proportion to the income lost, when the insured suffer a specified percentage of reduction in earned income. This benefit is typically paid after a period of disability.

Immediate annuity

An annuity contract bought with a single payment and with a specified payout plan that starts right away.

Minimizing taxes

An objective for high-income investors; priority is placed on investments whose earning are not taxed even though the rate of return may be lower than that of comparable investments. Purpose is to obtain a tax savings large enough to offset the lower rate of return, which would result in a higher net rate of return after taxes.

Single-limits basis

One coverage limit that applies to all damages arising from bodily injury or property damage or both, resulting from a single accident.

Liability loss exposure

Any condition or situation that presents the possibility of a claim alleging legal responsibility of a person or business for injury or damage suffered by another party.

Special flood hazard area (SFHA)

Area that the NFIP has classified as being expected to experience flooding at least once in 100 years.

Anne and Joe have a home with a $300,000 replacement cost and an HO-3 policy with a Coverage A limit of $150,000. Lightning strikes the central air conditioning unit and destroys it beyond repair. The unit has a replacement cost of $5,000, is five years old, and has a useful life of 10 years. Ignoring any deductible that might apply, how much will the insurer pay to replace the air conditioning unit? Select one: A. $2,500 B. $3,125 C. $4,125 D. $5,000

B. $3,125 The insurer will pay the greater of the ACV or the proportion of the cost to repair or replace the damage that the limit bears to 80% of the replacement cost. The ACV is 5/10 X 5,000, or $2,500; $150,000 ÷ (80% × $300,000) × $5,000 = $3,125. The insurer will pay $3,125.

Donna owns a car insured by a Personal Auto Policy (PAP) with the minimum liability limits required by her state, $10/$20/$5. While on vacation in another state where the minimum liability limits are $15/$30/$5, she causes an accident. For purposes of that loss, her liability limits under her PAP are Select one: A. $10/$20/$5. B. $15/$30/$5. C. $15/$30/$10. D. $25/$50/$15.

B. $15/$30/$5.

Under an ISO Mobilehome Endorsement, Section I, Coverage B—Other Structures is no less than A. 2% of Coverage A. B. $2,000. C. 10% of Coverage A. D. $1,000.

B. $2,000.

Chris causes an accident while driving her car. The driver of the other car is injured and is awarded damages of $650,000. Chris has a Personal Auto Policy (PAP) with a bodily injury liability limit of $250,000 per person. She also has an umbrella policy with a $1,000,000 limit of liability and a $1,000 self-insured retention (SIR). What amount will the umbrella insurer pay for bodily injury for this accident? A. $399,000 B. $400,000 C. $649,000 D. $650,000

B. $400,000

Renee owns a sailboat and insures it under a small boat policy with a $500,000 limit for liability coverage. She also has a personal umbrella policy with a $2,000,000 limit of liability. Renee's sailboat collides with another vessel, damaging its hull and injuring its passengers. Renee is found liable for $900,000. Subsequently, it is discovered that the amount payable by the insurer providing Renee's small boat policy is uncollectible. How much will Renee's personal umbrella insurer pay for the loss? A. $0 B. $400,000 C. $500,000 D. $900,000

B. $400,000

Patrick causes an accident while driving his car. The driver of the other car is injured and is awarded damages of $750,000. Patrick has a Personal Auto Policy (PAP) with a bodily injury liability limit of $300,000 per person. However, it is later discovered that the amount due from Patrick's PAP insurer is uncollectible. Patrick also has an umbrella policy with a $1,000,000 limit of liability and a $1,000 self-insured retention (SIR). What amount will the umbrella insurer pay for this accident? A. $449,000 B. $450,000 C. $749,000 D. $750,000

B. $450,000

Steve and Julie purchased a HO-3 policy with a Coverage A limit of $200,000 and a Coverage C limit of $100,000. Steve and Julie added the Earthquake endorsement to their policy, which has the standard deductible. A landslide occurs and causes significant damage to their dwelling and property. If Steve and Julie suffered a $75,000 loss as a result of the landslide, how much coverage will their policy provide? A. $0 B. $65,000 C. $70,000 D. $74,500

B. $65,000

Jon is a 17-year-old driver with six speeding tickets and an at-fault accident. Jon has chosen insurance as his preferred method to meet the automobile financial responsibility law in his state. Jon's applications for insurance in the standard market have been declined. All of the following programs (if available in his state) would help Jon secure auto insurance, EXCEPT: Select one: A. A reinsurance facility B. A modified no-fault system C. An automobile insurance plan D. A specialized program in a voluntary market

B. A modified no-fault system

Beneficiary

person entitled to benefits or proceeds of an insurance policy or will

A traditional individual retirement account (IRA) is designed for retirement income. If IRA funds are withdrawn before age 59 1/2 for purposes of financing an automobile purchase, Select one: A. No tax applies to the distribution. B. A penalty tax must be paid on the amount of the distribution. C. No tax applies as long as the account has been held for at least five years. D. The withdrawals are taxed as capital gains.

B. A penalty tax must be paid on the amount of the distribution.

For an urban area subject to riot and civil commotion, the operators of a group that jointly underwrite and share the risks and profits of property insurance in that area are known as Select one: A. A FAIR plan. B. A syndicate. C. A citizens property insurance corporation. D. A beachfront and windstorm plan.

B. A syndicate.

Ralph is a homeowner living in a subdivision that has a formal homeowners association. Collectively the members of the association own the subdivision's clubhouse and tennis courts. The Loss Assessment additional coverage under Section II—Liability Coverages of Ralph's homeowners policy will provide coverage to Ralph for an assessment up to $1,000 arising from which one of the following losses? A. Ralph's daughter injured another player on the court when she accidentally released her racquet following a serve, and that injured player made a claim against Ralph and his daughter. B. A tennis player tripped over a torn chain link fence surrounding the court. The tennis player sued the association for her injuries and recovered a judgment. C. A tennis player accidentally dropped a cigarette in the trash next to the clubhouse. The resulting fire totally destroyed the clubhouse. D. Ralph's dog bit a tennis player on one of the courts and that tennis player made a claim against Ralph.

B. A tennis player tripped over a torn chain link fence surrounding the court. The tennis player sued the association for her injuries and recovered a judgment.

A couple is expecting their first child and is considering the implications the premature death of the primary wage earner would have on the child's future. The primary wage earner's ability to provide income for this child is best described as A. A peril. B. An asset exposed to loss. C. A cause of loss. D. A financial consequence of loss.

B. An asset exposed to loss.

A couple's retirement investment portfolio is an example of Select one: A. The multiplier effect. B. An asset exposed to loss. C. A cause of loss. D. The financial consequence of loss.

B. An asset exposed to loss.

Chris and Bill have their family insured under a plan that allows them to select their own healthcare provider without any restrictions. The plan then reimburses them for a percentage of their medical expenses after the satisfaction of a deductible. This is an example of Select one: A. A health maintenance organization plan. B. An indemnity plan. C. A point-of service plan. D. A preferred provider organization plan.

B. An indemnity plan.

Dominic and Amy are a married couple who insure their home, which sits on a large property, with an HO-3 policy. It has a Coverage E—Personal Liability limit of $300,000. They were riding their snowmobiles on their own property when they saw a man crouching behind the shrubs, so they assumed he was a burglar. They drove their snowmobiles directly at the man, seriously injuring him. Then they discovered the man was a technician installing cable for their television. The cable technician sued Dominic and Amy and was awarded $300,000 against Dominic and $100,000 against Amy. The defense costs were $30,000. The court ruled that the insurer could not deny coverage for an intentional or expected injury because the couple was using force reasonably believed necessary to protect their home. As a result of the lawsuit, Dominic and Amy's insurer will pay Select one: A. $0. B. $300,000. C. $330,000. D. $400,000.

B. Coverage F—Medical Payments to Others is not available for persons on the insured location without permission. CorrectCorrect. Coverage F—Medical Payments to Others is not available for persons on the insured location without permission.

IF other applicable UIM insurance is available under one or more PAPs, all of the following provisions may apply to the payment of damages, EXCEPT: A. The total amount paid will be no more than the highest limit of any of the policies that provide coverage B. Coverage for an accident involving a vehicle the named insured does not own is provided on a primary basis C. If "this policy" and another policy provide coverage on a primary basis, each will contribute proportionally D. If "this policy" and another policy provide coverage on a excess basis, each will contribute proportionally

B. Coverage for an accident involving a vehicle the named insured does not own is provided on a primary basis

The nine exclusions listed in Section I—Exclusions of the HO-3 policy apply to which one of the following coverages? Select one: A. Coverages A, B, and D only B. Coverages A, B, and C C. Coverage C only D. Coverages A and B only

B. Coverages A, B, and C

A windstorm causes a tree on the insured's premises to fall, breaking the electrical lines that enter the house. The loss of electrical power causes the food in the freezer to thaw and spoil. This loss is: A. Covered because damage resulting from loss of electrical power is covered. B. Covered because it was caused by a covered peril on the residence premises. C. Not covered because damage resulting from loss of electrical power is excluded. D. Not covered because food is not considered personal property.

B. Covered because it was caused by a covered peril on the residence premises.

A windstorm causes a tree on the insured's premises to fall, breaking the electrical lines that enter the house. The loss of electrical power causes the food in the freezer to thaw and spoil. This loss is Select one: A. Covered because damage resulting from loss of electrical power is covered. B. Covered because it was caused by a covered peril on the residence premises. C. Not covered because damage resulting from loss of electrical power is excluded. D. Not covered because food is not considered personal property.

B. Covered because it was caused by a covered peril on the residence premises. CorrectCorrect. This loss is covered because it was caused by a covered peril on the residence premises.

For liability, medical payments, and uninsured motorists under the Personal Auto Policy (PAP), a replacement auto is Select one: A. Not covered for more the fourteen days unless the insured asks for the coverage. B. Covered for the remainder of the policy period, even if the insured does not ask for coverage. C. Not covered without prompt notice to the insurer. D. Covered for the remainder of the policy period in addition to the physical damage coverage.

B. Covered for the remainder of the policy period, even if the insured does not ask for coverage.

Which one of the following Additional Coverages under the HO-3 policy provides defense coverage for the insured if needed? Select one: A. Ordinance or Law B. Credit Card, Electronic Fund Transfer Card or Access Device, Forgery, and Counterfeit Money C. Loss Assessment D. Fire Department Service Charge

B. Credit Card, Electronic Fund Transfer Card or Access Device, Forgery, and Counterfeit Money

Which one of these additional loss exposures is unique to mobile home? A. Loss of use of the mobile home following a loss B. Increased fire hazard because debris can build up underneath a mobile home that is not protected by skirting material C. Increased exposure to damage to or destruction of other structures

B. Increased fire hazard because debris can build up underneath a mobile home that is not protected by skirting material

Provisions that increase or decrease limits, add or remove coverages, change definitions, clarify policy intent, or recognize specific characteristics that require a premium increase or decrease are found in which section of the HO-3? A. Agreement & Definitions B. Endorsements C. Declarations D. Section I

B. Endorsements

The Transportation/Permission to Move endorsement (MH 04 03) to a mobilehome policy provides coverage Select one: A. For increased limits in removal expenses for a mobilehome endangered by an insured peril. B. For transportation perils (such as collision) when the mobilehome is moved to a new location. C. To a lienholder only for the transportation perils of collision and upset. D. To a mobile home tenant who changes to a new mobilehome location seasonally.

B. For transportation perils (such as collision) when the mobilehome is moved to a new location.

Grayson runs a business from his home. His loss exposures include personal property used in the business and liability for his business activities. Grayson has an HO-3 policy for his home. Which one of the following endorsements will provide coverage for Grayson's business loss exposures? A. Supplemental Loss Assessment Coverage endorsement B. Home Business Insurance Coverage endorsement C. Personal Property Replacement Cost Loss Settlement endorsement D. Scheduled Personal Property endorsement

B. Home Business Insurance Coverage endorsement

A family suffered extensive fire damage to its home and was temporarily unable to inhabit it. The family was forced to rent a hotel room while its home was under repair. The cost incurred to rent the hotel room is referred to as which one of the following outcomes of loss? Select one: A. Lost income B. Increased expenses C. Reduction in value of property D. Special damages

B. Increased expenses

An insured purchases coverage for their vehicle a Personal Auto Policy (PAP) which includes uninsured motorist (UM) coverage. The insured is injured when a city-owned transit bus without liability insurance, a bond, or self-insurance causes a collision with the insured's vehicle. The insured Select one: A. Is entitled to UM coverage under the PAP under the share-the-expense car pool exception. B. Is not entitled to UM coverage because the definition of "uninsured motor vehicle" excludes any vehicle owned by a governmental unit or agency. C. Is entitled to UM coverage under the terms of the Insuring Agreement. D. Is not entitled to UM coverage because of the public or livery conveyance exclusion.

B. Is not entitled to UM coverage because the definition of "uninsured motor vehicle" excludes any vehicle owned by a governmental unit or agency.

Which one of the following statements about whole life insurance is true? Select one: A. It is a form of term insurance that is convertible to universal life insurance. B. It develops a cash value that, with some limitations, is available to the insured during the life of the policy. C. It provides protection for a fixed period of time. D. It has an annual premium that is usually less than the premium for a comparable amount of term insurance.

B. It develops a cash value that, with some limitations, is available to the insured during the life of the policy.

Greg purchased a $500,000 life insurance policy, naming his wife, Zasha, as beneficiary. When Greg died and Zasha made a claim against the policy, she was told she would not receive $500,000 but rather $2,000 a month until she dies. What settlement option has Greg likely selected for his life insurance policy? Select one: A. Fixed period option B. Life income option C. Periodic payment option D. Fixed amount option

B. Life income option

Which one of the following best describes the likely life insurance needs of a family with two working spouses and dependent children? Select one: A. Life insurance on the spouse with the higher income B. Life insurance on both spouses C. Life insurance on both spouses and the children D. Life insurance on both spouses and school-age children

B. Life insurance on both spouses

Megan owns two cars, a sedan and a coupe, each insured with a Personal Auto Policy (PAP) from a different insurer. She is injured while driving the sedan when it is involved in an accident with an at-fault uninsured driver. Both policies include uninsured motorists (UM) coverage, and Megan makes claims for UM coverage under both policies. Which one of the following statements is true? Select one: A. Megan should receive UM coverage from the coupe's policy but not the sedan's. B. Megan should receive UM coverage from the sedan's policy but not the coupe's. C. Megan is not entitled to UM coverage from either policy. D. Megan should receive UM coverage from both policies.

B. Megan should receive UM coverage from the sedan's policy but not the coupe's.

The steps in the risk management process include all of the following EXCEPT: A. Analyzing loss exposures B. Monitoring the financial condition of suppliers C. Implementing the selected risk management techniques D. Monitoring the results and revising the risk management program

B. Monitoring the financial condition of suppliers

All of the following motor vehicle exposures are covered by Section II—Liability Coverages of the HO-3 policy, EXCEPT: A. Motor vehicles used solely to service an insured's residence B. Motor vehicles used to carry persons or cargo for a charge C. Motor vehicles designed for assisting people who are handicapped D. Trailers not towed by, hitched to, or carried on a motor vehicle

B. Motor vehicles used to carry persons or cargo for a charge

Jon is an owner of a car insured with a Personal Auto Policy (PAP) that includes medical payments coverage. A friend loaned his motorcycle to Jon for a weekend ride. Jon was injured while riding the motorcycle when it collided with a truck. Will Jon's PAP cover any of his medical bills? A. Yes, Jon is eligible for medical payments coverage under the PAP because he was injured while occupying a motorcycle on a public highway. B. No, Jon is not eligible for medical payments coverage under the PAP because he was injured while occupying a motorcycle. C. No, Jon is not eligible for medical payments coverage under the PAP because the injury did not occur on his own property. D. Jon would not be eligible for medical payments coverage under the PAP if injured while driving the motorcycle but would be eligible for such coverage if injured while riding as a passenger on the motorcycle.

B. No, Jon is not eligible for medical payments coverage under the PAP because he was injured while occupying a motorcycle.

Helen was staying at the vacation house of her friend, Grace. One night, Helen decided to go out for snacks. She wanted to borrow Grace's car, but Grace was asleep. Grace had told Helen earlier not to use the car without first obtaining Grace's permission, but Helen figured that the car was not being used anyway, so she should be able to use it. She found Grace's keys and drove the car to a convenience store. Along the way, she caused an accident and a liability claim was made against her. Is there coverage for this claim under Grace's Personal Auto Policy (PAP)? A. Yes, because Helen's belief that she should be able to use the car was reasonable. B. No, because Helen's sense of entitlement was not reasonable. C. Yes, because for insurance purposes, it is assumed that an insured has permission to use a friend's car. D. No, because Helen intentionally borrowed the car.

B. No, because Helen's sense of entitlement was not reasonable.

An insured has an HO-3 policy covering his home. While he was away during a special athletic tournament in his town, he rented his home for a week to one of the athletes. During that week, the mail carrier was injured on a loose floorboard on the porch of the home. A claim was made against the insured. Does the Coverage E business exclusion apply? Select one: A. It depends on whether a dollar threshold for the amount of rent charged is met. B. No, because rental of an insured location on an occasional basis is a covered loss exposure if the location is used only as a residence. C. No, because home rental is not considered a business activity. D. Yes, because renting property to others qualifies as a business as defined by the policy.

B. No, because rental of an insured location on an occasional basis is a covered loss exposure if the location is used only as a residence.

Clarise owns a vacation home on a lake, and has insured it under an unendorsed DP-3 policy with a Coverage A limit of $120,000 and a Coverage C limit of $40,000. Clarise discovered that a rowboat she keeps tied to her dock on the lake has been stolen. She filed a claim under her dwelling policy for $700, the actual cash value of the rowboat. Would theft of the rowboat be a covered loss? A. No, watercraft is excluded property. B. No, theft is not a covered peril. C. No, theft of watercraft is covered only if the boat is within a fully enclosed building. D. No, 10% of the Coverage C limit is provided for rowboats and canoes while the property is away from the premises.

B. No, theft is not a covered peril

Regarding property damage coverage under the Section II—Additional Coverages for Damage to Property of Others in the HO-3 policy, the insurer will Select one: A. Not pay for intentional property damage to a neighbor's home caused by a 12-year-old insured. B. Not pay for any damage to property owned by the insured. C. Pay for damage to property owned by a tenant of the insured. D. Pay for damage to property owned by a resident of the named insured's household.

B. Not pay for any damage to property owned by the insured.

The Bankruptcy of Insured provision of the Personal Auto Policy (PAP) states that if the insured declares bankruptcy or becomes insolvent, the insurer is Select one: A. Relieved of obligations under the policy. B. Not relieved of any obligations under the policy. C. Required to pay more than its obligations under the policy. D. Not allowed to recover damages from a third party that is legally liable for a loss.

B. Not relieved of any obligations under the policy. CorrectCorrect. The Bankruptcy of Insured provision of the Personal Auto Policy (PAP) states that if the insured declares bankruptcy or becomes insolvent, the insurer is not relieved of any obligations under the policy.

Jessie was away from home and wanted to charge the battery on his laptop computer. He left the laptop in his car, plugged into the cigarette lighter. Jessie later discovered that his car had been broken into and his laptop had been stolen. Jessie's car is insured under an unendorsed Personal Auto Policy (PAP). Disregarding any deductibles, what amount will Jessie's insurer pay for the laptop? A. Replacement costs B. Nothing C. The amount necessary to replace the item with property of like kind and quality D. Actual cash value

B. Nothing

Regarding the Other Insurance condition in Section II of the homeowners policy, the Coverage E limits applicable to any Select one: A. Occurrence are paid as primary and any other collectible insurance provides excess coverage. B. Occurrence are paid as excess over any other collectible insurance except for other insurance written specifically to provide excess coverage. C. Loss are paid on a pro rata basis with other collectible insurance. D. Loss are paid as excess over any other primary or umbrella coverages.

B. Occurrence are paid as excess over any other collectible insurance except for other insurance written specifically to provide excess coverage.

After a loss covered by a homeowners policy, an insured may find that repairs must be made under a newer, stricter building code. An endorsement that provides increased coverage for such a situation is the A. Supplemental Loss Assessment Coverage endorsement. B. Ordinance or Law—Increased Amount of Coverage endorsement. C. Change in Code endorsement. D. Loss Contingency endorsement.

B. Ordinance or Law—Increased Amount of Coverage endorsement.

The HO-5 policy is designed to meet the risk management needs of Select one: A. Owner-occupants of dwellings who may not meet insurer underwriting standards required for other policy forms. B. Owner-occupants of dwellings who would like the broadest coverage available among ISO's forms for their property. C. Tenants of apartments or dwellings. D. Owners of condominium units.

B. Owner-occupants of dwellings who would like the broadest coverage available among ISO's forms for their property.

Which one of the following sections of the Personal Auto Policy (PAP) would provide coverage for medical costs and loss of wages when the insured is injured by a hit-and-run driver? Select one: A. Part D—Coverage for Damage to Your Auto B. Part C—Uninsured Motorists Coverage C. Part B—Medical Payments Coverage D. Part A—Liability Coverage

B. Part C—Uninsured Motorists Coverage

A tax-deferred plan that pays part of the firm's profits to participating employees and employer's annual contributions are discretionary defines a Select one: A. Thrift plan. B. Profit-sharing plan. C. SIMPLE plan. D. Keogh plan.

B. Profit-sharing plan.

A statement of facts about a loss for which the insured is making a claim is known as a Select one: A. Fact sheet. B. Proof of loss. C. Deposition. D. Appraisal.

B. Proof of loss.

Which one of the following is an excluded peril under Section I—Coverages A and B of the HO-3 policy? Select one: A. Unintentional loss B. Settling of the dwelling C. Hail D. Accidental leak of water from plumbing

B. Settling of the dwelling

All of the following are policy conditions that apply to both Sections I and II of the HO-3 policy, EXCEPT: A. Liberalization B. Severability of Insurance C. Nonrenewal D. Death

B. Severability of Insurance

Marti fell asleep on a towel while sunbathing on the beach. A driver of a motorized all-terrain vehicle designed for off-road use ran over her, severely injuring her. No liability insurance coverage pertained to the accident. Marti made an uninsured motorist (UM) coverage claim under her Personal Auto Policy (PAP). Marti's claim: A. Should be paid under the Other Insurance clause. B. Should be denied because it involves no uninsured motor vehicle as defined by the PAP. C. Should be denied because the all-terrain vehicle owner would be considered self-insured. D. Should be paid under the public or livery conveyance provision.

B. Should be denied because it involves no uninsured motor vehicle as defined by the PAP.

The definitions section of the Personal Auto Policy (PAP) uses Select one: A. Legal terminology to help insureds understand how to file claims under the policy. B. Simple-to-understand language to define important words and phrases that are used throughout the policy. C. Technical language to explain insurance terminology to individuals who do not work in the industry. D. Complicated language to define important words and phrases that are used throughout the policy.

B. Simple-to-understand language to define important words and phrases that are used throughout the policy.

Which one of the following is a form of social insurance used by families and individuals to mitigate the financial uncertainty associated with their retirement loss exposures? Select one: A. Unemployment compensation B. Social Security C. 401(k) plans D. Individual retirement accounts (IRAs)

B. Social Security

Which one of the following statements concerning the Scheduled Personal Property Endorsement is true? Select one: A. The Section I deductible applies to scheduled items. B. The Coverage C special limits do not apply to scheduled items. C. Cameras cannot be scheduled under the endorsement. D. The endorsement covers fewer causes of loss than does the HO-3 policy.

B. The Coverage C special limits do not apply to scheduled items.

Which one of the following best explains why an HO-2 policy has a slightly lower premium than an HO-3 policy with similar limits? Select one: A. The HO-2 covers only the named insured and resident relatives for specific causes of loss. B. The HO-2 covers the dwelling building and other structures against fewer causes of loss. C. Recovery under the HO-2 is on an actual cash value basis rather than on replacement cost basis for buildings. D. There is no coverage for other structures under the HO-2.

B. The HO-2 covers the dwelling building and other structures against fewer causes of loss. CorrectCorrect. The HO-2 covers the dwelling building and other structures against fewer causes of loss than the HO-3, so the HO-2's premiums are lower. The primary reason insureds choose the HO-2 is premium reduction.

When comparing Coverage D—Loss of Use as provided by the HO-3 policy and HO-4 policy, Select one: A. The HO-4 policy automatically provides coverage at 30% of the Coverage A limit, rather than 30% of the Coverage C limit, as in the HO-3 policy. B. The HO-4 policy automatically provides coverage at 30% of the Coverage C limit, rather than 30% of the Coverage A limit, as in the HO-3 policy. C. Both policies automatically provide coverage at 30% of the Coverage C limit. D. Both policies automatically provide coverage at 30% of the Coverage A limit.

B. The HO-4 policy automatically provides coverage at 30% of the Coverage C limit, rather than 30% of the Coverage A limit, as in the HO-3 policy.

All of the following are true statements concerning the HO-6 policy, EXCEPT: A. Section I—Perils Insured Against provides named perils coverage for Coverages A and C. B. The HO-6 defines residence premises as a one- to four-family dwelling where the insured resides. C. Coverage A includes other structures owned solely by the insured. D. The insured selects the limit for Coverage C—Personal Property.

B. The HO-6 defines residence premises as a one- to four-family dwelling where the insured resides.

All of the following are true statements concerning the HO-6 policy, EXCEPT: Select one: A. The insured selects the limit for Coverage C—Personal Property. B. The HO-6 defines residence premises as a one- to four-family dwelling where the insured resides. C. Coverage A includes other structures owned solely by the insured. D. Section I—Perils Insured Against provides named perils coverage for Coverages A and C.

B. The HO-6 defines residence premises as a one- to four-family dwelling where the insured resides. The HO-3 defines residence premises as a one- to four-family dwelling where the insured resides. The HO-6 defines residence premises as the unit where the insured resides.

All of the following could lead to a liability loss for a family, EXCEPT: Select one: A. A guest slips on an icy sidewalk in front of the family's home and breaks his leg. B. The father trips on a broom he left lying in the driveway and breaks his arm. C. The daughter, who is 16 years old, sideswipes a neighbor's car and dents its fender while driving her own car. D. The son, who is 13 years old, throws a rock at a classmate who requires stitches for an injury to his head.

B. The father trips on a broom he left lying in the driveway and breaks his arm.

If a motorist incurs the cost to repair his vehicle after a collision, this result is best described as: A. An asset exposed to loss. B. The financial consequence of loss. C. A cause of loss. D. A peril.

B. The financial consequence of loss.

Which one of the following is true regarding the differences between traditional and Roth IRAs? Select one: A. Eligibility for Roth IRAs apply only to those under 70 1/2 years old while there are no age restrictions for traditional IRAs. B. The funds in a Roth IRAs accrue on a tax-free basis, while the funds in a traditional IRA accrue on a tax-deferred basis. C. Withdrawals from Roth IRAs are subject to a penalty they start after the owner is 70 1/2 years old while no such penalty applies to traditional IRAs. D. A $5,000 annual contribution limit applies to all owners of Roth IRAs while the annual contribution limit for traditional IRAs varies based on age.

B. The funds in a Roth IRAs accrue on a tax-free basis, while the funds in a traditional IRA accrue on a tax-deferred basis.

Which one of the following statements is true regarding "aircraft liability" coverage under the HO-3 policy? Select one: A. Hobby aircraft that do not carry people or cargo are considered to be "aircraft" in the HO-3 policy. B. The homeowners policy excludes all aircraft liability. C. If the insured flies her radio-controlled model airplane through a neighbor's picture window, the resulting liability claim would not be covered. D. Model airplanes that do not carry people or cargo are considered to be "aircraft" in the HO-3 policy.

B. The homeowners policy excludes all aircraft liability.

Some states' underinsured motorists (UIM) coverage endorsements contain a "limits trigger." In states that apply the UIM limits trigger, UIM coverage applies when Select one: A. The insured has failed to maintain the minimum limits required for bodily injury liability. B. The negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party. C. The negligent driver carries liability insurance limits that are lower than the injured party's actual damages. D. The insured has failed to acquire medical payments coverage for any injuries received while occupying a motor vehicle.

B. The negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party.

Which one of the following is an excluded peril under Section I—Coverages A and B of the HO-3 policy? Select one: A. Volcanic eruption B. Theft of construction materials C. Aircraft D. Accidental leak of water from plumbing

B. Theft of construction materials CorrectCorrect. An excluded peril under Section I of the HO-3 policy is theft of construction materials.

One disadvantage of the tort liability system for compensation of auto accident victims is that Select one: A. It does not provide a remedy for victims of irresponsible drivers who cause accidents. B. There are substantial time delays in reaching a settlement either through negotiation or through the courts. C. It does not allow punitive damage awards to be included as part of the compensation. D. The minimal amount of protection is generally not enough to meet the full needs of accident victims.

B. There are substantial time delays in reaching a settlement either through negotiation or through the courts.

Which one of the following statements about Blue Cross and Blue Shield plans is true? Select one: A. Their biggest limitation is that they offer only basic medical expense coverage. B. They are often administered by for-profit organizations. C. They are usually considered commercial insurers and regulated by the same laws. D. They typically reimburse insureds for medical expenses incurred, and then the insureds pay providers.

B. They are often administered by for-profit organizations.

Which one of the following statements about most group long-term disability income insurance plans is true? Select one: A. They have a waiting period of at least two years. B. They have a coordination-of-benefits provision that defines how disability income benefits from programs such as Social Security will affect benefits under the group plan. C. They use an "any occupation" definition of disability for an initial period, and then change to an "own occupation" definition of disability. D. They replace 100 percent of lost income.

B. They have a coordination-of-benefits provision that defines how disability income benefits from programs such as Social Security will affect benefits under the group plan.

Withdrawals from both traditional and Roth IRAs can be subject to penalties. A penalty for which one of the following only applies to Roth IRAs? Select one: A. Withdrawals starting after the owner is 70 1/2 years old B. Withdrawals made within five years of opening the account C. Withdrawals made before the owner is 59 1/2 years old D. Withdrawals made within 10 years of opening the account

B. Withdrawals made within five years of opening the account

Individual Insurance can be used to protect against the personal financial planning loss exposures that individuals an families possess in each of the following major categories, EXCEPT: A. Property loss exposures B. Workers compensation loss exposures C. Premature death loss exposures D. Liability loss exposures

B. Workers compensation loss exposures

An insured has a Personal Auto Policy (PAP) to cover his automobile and travel trailer and an HO-3 policy for his home. While on vacation, he unhitched the trailer at a campground for a one-week stay. During the middle of the week, a visitor was injured when an awning on the trailer fell on his head. The visitor made a claim against the insured. Is this a covered claim under the HO-3? A. No, because the trailer is a defined motor vehicle under the HO-3 policy and therefore subject to a liability exclusion. B. Yes, because a trailer that is not being carried on, towed by, or hitched for towing by a motor vehicle is not subject to the motor vehicle exclusion. C. No, because the awning is not a part of the trailer. D. Yes, because a trailer cannot be a motor vehicle under the motor vehicle exclusion.

B. Yes, because a trailer that is not being carried on, towed by, or hitched for towing by a motor vehicle is not subject to the motor vehicle exclusion.

Is mold damage to the dwelling covered by an HO-3 policy? Select one: A. Yes, if resulting from a sump pump malfunction. B. Yes, if hidden and it results from an accidental leak of water from a plumbing, heating, or air conditioning system. C. Yes, if resulting from natural deterioration and wet rot. D. No forms of mold, fungus, or wet rot are covered.

B. Yes, if hidden and it results from an accidental leak of water from a plumbing, heating, or air conditioning system. CorrectCorrect. Yes, if hidden and it results from an accidental leak of water from a plumbing, heating, or air conditioning system.

Which one of the following statements is correct [is true] regarding auto liability policies written on a split-limits basis with three types of limits? -Property damage in each accident is listed first. -Bodily injury to each person is listed second. -Property damage to each person is listed third. -Bodily injury to all persons in each accident is listed second.

Bodily injury to all persons in each accident is listed second.

Which one of the following is an exclusion to part A of the Personal Auto Policy (PAP)?

Bodily injury to an insured's employee

In general, a loss prevention measure is implemented to

Break the sequence of events that leads to a loss.

Nikos purchases a small boat for $1,200 and a boat motor for $700. A fire destroys the boat and motor while they are parked in Nikos' garage. Disregarding any deductibles, what amount will Nikos' unendorsed HO-3 policy pay for the loss? A. $0 B. $1,200 C. $1,500 D. $1,900

C. $1,500

Sam and Sophia insure their house with an unendorsed HO-3 policy. Sam stores a small fishing boat and trailer behind the house. While they are out for the evening, a fire destroys most of their kitchen and completely destroys the boat and trailer. Assuming Sam's boat and trailer are valued at $4,000 and ignoring any deductible that may apply, what amount will their HO-3 insurer pay for the loss of the boat and trailer? Select one: A. $0 B. $1,000 C. $1,500 D. $4,000

C. $1,500

Mario has an unendorsed HO-3 policy with a $500,000 limit for liability coverage. He also has a personal umbrella with a $2,000,000 limit of liability and a $10,000 self-insured retention. Mario is sued for invasion of privacy and the court awards $1,600,000 to the plaintiff. What amount of the loss is paid by the umbrella policy? A. $1,090,000 B. $1,100,000 C. $1,590,000 D. $1,600,000

C. $1,590,000

Tom and Martha insure their house with an unendorsed HO-3 policy with a Coverage A—Dwelling limit of $300,000, which is the replacement cost of the house. A thief breaks into the house while Tom and Martha are on vacation and steals the following items: $500 cash $50,000 stock certificates Ignoring any deductible that may apply, how much, if any, will Tom and Martha's insurer pay for the loss of the items? Select one: A. $0 B. $200 C. $1,700 D. $50,500

C. $1,700

Felipe has an unendorsed HO-3 policy with a $300,000 limit for liability coverage. He also has an umbrella policy with a $1,000,000 limit of liability and a $2,000 self-insured retention (SIR). While playing golf, Felipe accidentally injures his golfing partner while swinging a golf club. His partner is partially disabled, and Felipe is found liable for $450,000. How much will Felipe's umbrella policy pay for this loss? A. $0 B. $148,000 C. $150,000 D. $448,000

C. $150,000

Brian owns a mobilehome at a permanent mobilehome park in Florida. He rents the residence to retirees during the winter months for $3,000 per month. Brian insures the property under a DP-3 policy with limits of $40,000 for Coverage A, and $10,000 for Coverage B. A windstorm caused $10,000 in damage to the structure and Brian was unable to rent it for three months during his normal rental season while making repairs. Ignoring any deductible, how much will Brian recover from his insurer? A. $10,000 B. $11,000 C. $18,000 D. $19,000

C. $18,000

Dudley and Tricia Barton have an unendorsed Personal Auto Policy (PAP) covering Tricia's sedan and Dudley's SUV with the following coverages and limits: Liability $100,000/$300,000/$50,000 Medical Payments $5,000 Uninsured Motorists $100,000/$300,000 Other Than Collision Actual Cash Value Less $250 Collision Actual Cash Value Less $500 Rushing to get home after working late one night, Tricia ran a red light, striking a van and injuring its driver, Wilma. The damages and costs resulting from the accident and subsequent lawsuit are as follows: Damages to Tricia's sedan $5,000 Damages to Wilma's van $12,000 Wilma's medical injuries $57,000 Tricia's medical injuries $2,000 Defense costs $10,000 Tricia is found to be liable for the accident. Dudley and Tricia live in a state without a no-fault insurance law. How much, if any, will Tricia's insurer pay under Part B—Medical Payments Coverage? Select one: A. $0 for Tricia's injuries; $0 for Wilma's injuries B. $0 of Tricia's injuries; $5,000 for Wilma's injuries C. $2,000 for Tricia's injuries; $0 for Wilma's injuries D. $2,000 for Tricia's injuries; $5,000 for Wilma's injuries

C. $2,000 for Tricia's injuries; $0 for Wilma's injuries

Jack insures his house with an unendorsed HO-3 policy with a Coverage A—Dwelling limit of $250,000, which is the replacement cost of the house. A thief breaks into the house while Jack is on vacation and steals his gun collection valued at $7,500. Ignoring any deductible that may apply, how much, if any, will Jack's HO-3 insurer pay for the loss to the guns? Select one: A. $0 B. $1,500 C. $2,500 D. $7,500

C. $2,500

Jim and Elana own a single-family home insured to value under an unendorsed HO-3 policy with a limit of $350,000 for the Coverage A—Dwelling. Jim has an extensive gun collection valued at $15,000. A thief breaks into their home while they are away on vacation and steals the complete gun collection. Ignoring any deductible that may apply, the HO-3 insurer will pay Select one: A. $0. B. $1,000. C. $2,500. D. $15,000.

C. $2,500.

Marty has an umbrella policy with a $1,000,000 limit of liability and a $10,000 self-insured retention (SIR). Marty renewed his Personal Auto Policy (PAP), decreasing his coverage from a $500,000 to a $300,000 combined single limit. Marty's umbrella insurer requires an underlying combined single limit for auto liability of at least $500,000. Marty is involved in an auto accident and is found negligent. The injured party is awarded $735,000 in damages. What amount will the umbrella insurer pay for this accident? Select one: A. $0 B. $225,000 C. $235,000 D. $435,000

C. $235,000

Samantha has a personal umbrella policy with a limit of liability of $1 million. The underlying limit requirements for both homeowners Section II and personal auto are $500,000. The self-insured retention (SIR) is $1,000. Samantha has the following coverages for her house and auto: Unendorsed homeowners policy with a $500,000 Section II limit Unendorsed auto policy with a $100,000 combined single limit (equal to the states financial responsibility limit) Samantha is negligent and causes an accident while driving her car. The injured party is awarded damages that total $750,000. Assuming the full umbrella limit is available, what amount, if any, will be paid by the umbrella insurer? Select one: A. $649,000 B. $0 C. $250,000 D. $650,000

C. $250,000

Liability split limits for a Personal Auto Policy (PAP) expressed as $300/$500/$100 mean limits of Select one: A. $300 per person for bodily injury, $500 per accident for bodily injury, and $100 per accident for property damage. B. $300,000 per accident for bodily injury, $500,000 for property damage and bodily injury, and a $100,000 deductible. C. $300,000 per person for bodily injury, $500,000 per accident for bodily injury, and $100,000 per accident for property damage. D. $900,000 for all damages combined.

C. $300,000 per person for bodily injury, $500,000 per accident for bodily injury, and $100,000 per accident for property damage.

Liability split limits for a Personal Auto Policy (PAP) expressed as $300/$500/$100 mean limits of: A. $300 per person for bodily injury, $500 per accident for bodily injury, and $100 per accident for property damage. B. $300,000 per accident for bodily injury, $500,000 for property damage and bodily injury, and a $100,000 deductible. C. $300,000 per person for bodily injury, $500,000 per accident for bodily injury, and $100,000 per accident for property damage. D. $900,000 for all damages combined.

C. $300,000 per person for bodily injury, $500,000 per accident for bodily injury, and $100,000 per accident for property damage.

Dominic and Amy are a married couple who insure their home, which sits on a large property, with an HO-3 policy. It has a Coverage E—Personal Liability limit of $300,000. They were riding their snowmobiles on their own property when they saw a man crouching behind the shrubs, so they assumed he was a burglar. They drove their snowmobiles directly at the man, seriously injuring him. Then they discovered the man was a technician installing cable for their television. The cable technician sued Dominic and Amy and was awarded $300,000 against Dominic and $100,000 against Amy. The defense costs were $30,000. The court ruled that the insurer could not deny coverage for an intentional or expected injury because the couple was using force reasonably believed necessary to protect their home. As a result of the lawsuit, Dominic and Amy's insurer will pay A. $0. B. $300,000. C. $330,000. D. $400,000.

C. $330,000.

Bertha is insured under an unendorsed HO-5 policy. The declarations page shows the following coverages: Coverage A—Dwelling $200,000 Coverage B—Other Structures $20,000 Coverage C—Personal Property $ 100,000 Coverage D—Loss of Use $60,000 As Bertha was returning home from a business trip, a rainstorm erupted as the airline crew was unloading her baggage. The rain soaked Bertha's two soft-sided suitcases until they could be reached and taken under cover. After Bertha got home she discovered that the rain had ruined a number of silk and other fine cloth clothing items. Bertha calculated her loss to be $1,200. She filed a claim with the airline, which paid its maximum liability of $400. Bertha has met all conditions required by the HO-5 policy. Assuming no deductible applies, which one of the following best explains the maximum amount the insurer would pay for the loss? Select one: A. $400, coverage under HO-5 only matches other available insurance B. $1,200, full coverage available under HO-5 for loss to personal property by any peril C. $800, coverage under HO-5 is available for direct loss by rain away from an insured property D. $0, no coverage under HO-5 for damage from dampness or temperature extremes

C. $800, coverage under HO-5 is available for direct loss by rain away from an insured property The HO-5 policy covers water damage for personal property coverage away from an insured property. $1,200 loss less $400 paid by the airline = $800 coverage under the HO-5.

A state's no-fault automobile insurance law permits an injured party to sue the responsible party for noneconomic loss if the victim's medical and lost-wage expenses exceed $5,000. This feature of the no-fault law illustrates Select one: A. A deductible. B. An unsatisfied judgment fund. C. A monetary threshold. D. A verbal threshold.

C. A monetary threshold.

Which one of the following best describes a pure no-fault system? Select one: A. A person retains full rights to sue a negligent party for injuries. B. A person retains full rights to pursue an uninsured motorists claim. C. A person seeks compensation for injuries from his or her own policy and cannot seek damages from a negligent party. D. A person's right to seek damages for injuries from a negligent party is limited, but not eliminated.

C. A person seeks compensation for injuries from his or her own policy and cannot seek damages from a negligent party.

Part A of the PAP provides coverage for the all of the following classes of persons or organizations, EXCEPT: A. The named insured and family members B. Any person using the named insured's covered auto C. Any person legally responsible for the acts of a covered person D. Any person legally responsible for the named insured's or family member's use of any auto or trailer

C. Any person legally responsible for the acts of a covered person

Which one of the following is a primary way a community's residents can become eligible for flood insurance? A. Petitioning the Governor to declare their community a flood disaster area B. Adding a special flood endorsement to their homeowners policy C. Applying to the Federal Insurance Adminstration to be included in the National Flood Insurance Program D. Applying to the National Disaster Recovery Agency to be included in the National Flood Insurance Program

C. Applying to the Federal Insurance Adminstration to be included in the National Flood Insurance Program

Following an accident with an uninsured motorist, Renee submitted an uninsured motorists claim to her Personal Auto Policy (PAP) insurer. The insurer made her an offer of settlement, which Renee rejected because she suspected her injury was more severe than the initial indications. The claim adjuster believes Renee's shoulder injury might have resulted from her years of playing golf. Renee and the adjuster are unable to come to an agreement. This claim can best be resolved through Select one: A. A proportional sharing between Renee's personal health care insurer and the personal automobile insurer. B. Negotiation between Renee's medical provider and the personal automobile insurer. C. Arbitration. D. Subrogation.

C. Arbitration.

In which one of the following family structures is the risk of incurring child-care costs over a prolonged period a unique consideration in establishing life insurance needs? Select one: A. Sandwiched family B. Traditional family C. Blended family D. Single-parent family

C. Blended family

All of the following are true regarding the HO-6 policy, EXCEPT: Select one: A. Coverage C—Personal Property in the HO-6 is written for a limit selected by the insured. B. The definition of the residence premises refers to a "unit." C. Coverage B—Other Structures is included in the HO-6 subject to a basic limit. D. Coverage A—Dwelling is included in the HO-6 policy subject to a basic limit.

C. Coverage B—Other Structures is included in the HO-6 subject to a basic limit. Coverage B—Other Structures is eliminated from the HO-6. In the condominium form, Coverage A includes other structures owned solely by the insured.

Which one of the following indicates persons or organizations, such as a loss payee, that have additional coverage interests under an insurance policy? Select one: A. Conditions B. Insuring agreements C. Declarations D. Definitions

C. Declarations

A personal umbrella policy provides coverage for a particular loss, but the underlying policies do not. This feature of an umbrella policy is called Select one: A. Retention. B. Laser coverage. C. Drop-down coverage. D. Self-insurance.

C. Drop-down coverage.

Under the Severability of Insurance condition in the HO-3 policy, A. The insurer's limit of liability is increased for any one occurrence if more than one insured is involved. B. The insurer and the insured are subject to separate sets of conditions. C. Each insured seeking protection is treated as if that insured has separate coverage under the policy, but the limit of insurance is not increased for any one occurrence. D. Separate limits of liability exist for bodily injury and property damage.

C. Each insured seeking protection is treated as if that insured has separate coverage under the policy, but the limit of insurance is not increased for any one occurrence.

Ed and Genie Allen submitted a claim under an HO-2 policy for a property loss, and the insurer conducted an investigation. Under their HO-2, which one of the following statements is true regarding the burden of proof? Select one: A. Because the HO-2 policy is an all-risks policy, the burden of proof lies in the coverage investigation by the insurer. B. Under the HO-2 there is no burden of proof on either the Allens or the insurer. C. Ed and Genie must prove that the loss was caused by a covered cause of loss. D. The insurer must prove that the loss was caused by an excluded cause of loss.

C. Ed and Genie must prove that the loss was caused by a covered cause of loss. CorrectCorrect. With named perils coverage such as the HO-2, the insured must prove that the loss was caused by a covered cause of loss for coverage to apply. The burden of proof, then, is on the insureds, Ed and Genie.

The HO-3 policy Section I ordinance or law exclusion A. Applies to insured other structures but not dwellings. B. Applies to insured dwellings but not other structures. C. Eliminates coverage for losses resulting from any ordinance or law that reduces the value of the property or that requires testing for or cleaning up of pollutants. D. Eliminates coverage for the destruction, confiscation, or seizure by order of any governmental or public authority.

C. Eliminates coverage for losses resulting from any ordinance or law that reduces the value of the property or that requires testing for or cleaning up of pollutants.

Under the HO-3 policy, which one of the following excludes coverage for property seized by law enforcement officials investigating a crime? A. Ordinance or law B. Intentional loss C. Governmental action D. Acts or decisions

C. Governmental action

Grace owns two vehicles that are insured under her Personal Auto Policy (PAP). One of the vehicles is covered for both collision and other than collision (OTC). The other is covered only for OTC. The collision deductible is $500, and the OTC deductible is $250. Grace borrowed her neighbor Helen's vehicle one day to run an errand while both of her vehicles were unavailable. On her way home, she lost control of the vehicle and hit a tree. There were no serious injuries, but the damage to the vehicle was $5,000. Helen's PAP covers the vehicle for OTC coverage only, subject to a $250 deductible. Which one of the following statements regarding this scenario is true? A. Grace's PAP insurer will pay $4,750 for this loss. B. There is no coverage available under either Grace's PAP or Helen's PAP. C. Grace's PAP insurer will pay $4,500 for this loss. D. Helen's PAP insurer will pay $4,750.

C. Grace's PAP insurer will pay $4,500 for this loss.

A young working couple is purchasing their first home. Facing budget pressures, they are content to accept named perils coverage on the dwelling in exchange for a lower premium. Assuming there are no mortgage restrictions, which one of the following ISO policy forms would be most appropriate for this couple? A. HO-5—Comprehensive Form B. HO-6—Unit-Owners Form C. HO-2—Broad Form D. HO-4—Contents Broad Form

C. HO-2—Broad Form

Each of the following types of business activities are exceptions to the HO-3 Coverage E & F Business Exclusion, EXCEPT: A. Activities for which the insured received $2,000 or less during the year preceding the policy period B. Volunteer activities C. Home daycare services involving compensation and not an exchange of services D. Home daycare services rendered to a relative

C. Home daycare services involving compensation and not an exchange of services

An insured may have more than one auto covered by a single Personal Auto Policy (PAP). Which one of the following statements regarding coverage under Part D of the PAP is true? Select one: A. If a nonowned auto is damaged by a covered cause of loss, Part D of the PAP provides coverage only if the owner of the auto has physical damage coverage. B. Part D of the PAP provides coverage for damage to nonowned autos made available for the insured's regular use. C. If a nonowned auto is damaged by a covered cause of loss, Part D of the PAP provides the broadest coverage applicable to any covered auto shown in the declarations. D. Part D of the PAP provides primary coverage for damage to a nonowned auto regardless of the existence of other physical damage coverage on the auto.

C. If a nonowned auto is damaged by a covered cause of loss, Part D of the PAP provides the broadest coverage applicable to any covered auto shown in the declarations.

Felipe purchases flame-retardant roofing for his house. Which one of the following steps in the risk management process is Felipe following? Select one: A. Examining the feasibility of risk management techniques B. Selecting appropriate risk management techniques C. Implementing the selected risk management techniques D. Analyzing loss exposures

C. Implementing the selected risk management techniques

The risk associated with the purchasing power of an investment's proceeds is known as Select one: A. Market risk. B. Interest-rate risk. C. Inflation risk. D. Business risk.

C. Inflation risk.

The Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Coverage—Increased Limit endorsement may be appropriate for A. Insureds who tend to overspend because of credit availability. B. Insureds who pay their bills online. C. Insureds who hold credit cards. D. Insureds who use automated teller machines.

C. Insureds who hold credit cards.

Stu is a high school student. Stu and three of his friends decided on a car-pool arrangement to get to school instead of taking the bus. Stu would drive his mom's car, and each friend would chip in towards gas. Stu did not inform his parents of his plans. While driving to school on the first day of the car-pool arrangement, Stu and his passengers saw a science teacher who had recently given Stu a low grade. In an attempt at revenge, Stu drove his mom's car into the teacher's car, causing moderate damage to both vehicles. The teacher pressed charges and also made a property damage claim against Stu, who turned the claim over to the family's Personal Auto Policy (PAP) insurer. The insurer denied coverage based on an exclusion in the PAP. Which one of the following exclusions applies to this incident? A. Vehicle used without reasonable belief of being entitled B. Vehicles owned by or available for family member's regular use C. Intentional injury D. Public or livery conveyance

C. Intentional injury

Which one of the following statements about the elimination period in a long-term care insurance policy is true? Select one: A. It allows the insurer to pay reduced benefits if the insured needs long-term care before a policy has been in force for a specified period. B. It is the period the insurer has to terminate the policy if the insured is unacceptable from an underwriting standpoint. C. It functions as a time deductible before benefits are payable. D. It is the period an insurer will pay home health care benefits before an insured qualifies for institutional benefits.

C. It functions as a time deductible before benefits are payable.

Which one of the following statements is generally true about beachfront and windstorm plans? Select one: A. Applications are only accepted when a hurricane has formed within a certain distance of where the property is located. B. Only requests for increase in limits are accepted when a hurricane has formed within a certain distance of where the property is located. C. No applications or requests for increase in limits are accepted when a hurricane has formed within a certain distance of where the property is located. D. Eligible properties must apply for coverage when a hurricane has formed within a certain distance of where the property is located, or disaster relief will not be available from the state.

C. No applications or requests for increase in limits are accepted when a hurricane has formed within a certain distance of where the property is located.

Which one of the following sections of the PAP provides compensation for reasonable and necessary expenses because of bodily injury to the insured caused by an auto accident? A. Agreements & Definitions B. PART A - Liability coverage C. PART B - Medical payments coverage D. PART C - Uninsured motorists coverage

C. PART B - Medical payments coverage

Louise has a Personal Auto Policy (PAP) with liability limits of $100/$300/$50 insuring her SUV and sedan. Louise's daughter, Tina, who lives in another state, borrowed Louise's sedan while Tina's car was in the shop for maintenance work. Tina has a Personal Auto Policy (PAP) with limits of $250/$500/$50. Tina, talking on her cell phone, was distracted while driving the sedan and rear-ended the car in front of her causing minor damage. The liability loss resulting from this accident will be A. Not covered by Louise's insurer or Tina's insurer. B. Shared by both Louise's insurer and Tina's insurer. C. Paid by Louise's insurer. D. Paid by Tina's insurer.

C. Paid by Louise's insurer.

For most insureds, the primary source of information for generating scenarios for pre-loss policy analysis is Select one: A. The DICE method. B. An analysis of common policy exclusions. C. Past loss experience. D. An analysis of common policy insuring agreements.

C. Past loss experience.

The Public or Livery Conveyance Exclusion Endorsement Select one: A. Raises the premium for the public or livery conveyance exclusion in the personal auto policy. B. Removes the public or livery conveyance exclusion in the personal auto policy. C. Reinforces the public or livery conveyance exclusion in the personal auto policy. D. Replaces the public or livery conveyance exclusion in the personal auto policy.

C. Reinforces the public or livery conveyance exclusion in the personal auto policy.

The radioactive contamination or war exclusion in the PAP applies to all of the following EXCEPT: A. Civil war B. Insurrection C. Riot D. Rebellion

C. Riot

Installing burglar alarms, storing vehicles in a garage, and maintaining vehicles in good working order are all examples of which one of the following? Select one: A. Risk retention B. Transfer of risk C. Risk control D. Insuring loss exposures

C. Risk control

Which one of the following statements is true regarding watercraft liability coverage under the HO-3 policy? Select one: A. Watercraft owned by the insured that is stored at a marina is not covered. B. Sailboats longer than 26 feet not owned by or rented to an insured are not covered. C. Sailboats shorter than 26 feet owned by the insured are covered. D. Inboard watercraft with 50 horsepower engines owned by the insured are covered.

C. Sailboats shorter than 26 feet owned by the insured are covered.

The deductible, which appears on the declarations pages of a homeowners policy, is deducted from Select one: A. All loss payments. B. The total of all losses during the policy period. C. Section I (property) losses. D. Section II (liability) losses.

C. Section I (property) losses.

Which one of the following best explains why an HO-2 policy has a slightly lower premium than an HO-3 policy with similar limits? Select one: A. The HO-2 covers only the named insured and resident relatives for specific causes of loss. B. Recovery under the HO-2 is on an actual cash value basis rather than on replacement cost basis for buildings. C. The HO-2 covers the dwelling building and other structures against fewer causes of loss. D. There is no coverage for other structures under the HO-2.

C. The HO-2 covers the dwelling building and other structures against fewer causes of loss.

Which one of the following statements about the HO-2 policy and HO-3 policy is correct? Select one: A. Both the HO-2 and HO-3 provide special form coverage for Coverages A, B, and C. B. The HO-2's Section I—Perils Insured Against is the same as that in the HO-3. C. The HO-2's Section I—Perils Insured Against is different from the HO-3. D. Both the HO-2 and HO-3 provide named perils coverage for Coverages A, B, and C.

C. The HO-2's Section I—Perils Insured Against is different from the HO-3. CorrectCorrect. The HO-2's Section I—Perils Insured Against is different from the HO-3. The HO-2 provides named perils coverage for Coverages A, B, and C. The HO-3 provides special form coverage for Coverages A and B and named perils coverage for Coverage C.

Tom recently met with his insurance agent to discuss his homeowners coverage. The agent has suggested that Tom change his present HO-2 policy to either an HO-3 policy or an HO-5 policy. Which one of the following is a reason the agent might give to support his suggestion? Select one: A. The HO-3 will be less expensive saving Tom some premium dollars for similar coverage. B. The HO-5 will provide coverage without a deductible. C. The HO-5 will provide much broader coverage for his home and personal property. D. The HO-3 will provide open perils coverage for Tom's personal property.

C. The HO-5 will provide much broader coverage for his home and personal property.

After using the DICE method to determine whether a claim is covered by a policy, the next step is for the insurer to determine Select one: A. The scenario under which the loss occurred. B. Whether the post-lost duties of the insured affect coverage. C. The amount payable. D. Whether the loss occurred within the coverage territory.

C. The amount payable.

Which one of the following best describes "double indemnity" regarding a life insurance policy? Select one: A. Death as the result of suicide will pay no more than half the face value. B. If two policies are issued on the same life, only one policy must pay in the event of death. C. The death benefit doubles if death is the result of an accident. D. The death benefit is doubled if death occurs in the first two years.

C. The death benefit doubles if death is the result of an accident.

The Suit Against Us condition in Section II of the HO-3 policy provides for all of the following, EXCEPT: A. No one can join the insurer as a party to any action against an insured. B. No action with respect to Coverage E can be brought against the insurer until the obligation of the insured has been determined by a final judgment or agreement signed by the insurer. C. The insurer must first meet all of its obligations under Section II before the insurer can bring a legal action against the insured. D. The insured must first meet all of its obligations under Section II before the insured can bring a legal action against the insurer.

C. The insurer must first meet all of its obligations under Section II before the insurer can bring a legal action against the insured.

Why do those covered by a consumer-directed health plan (CDHP) pay lower premiums for their health coverage? Select one: A. There is less coverage provided by a CDHP than other types of healthcare plans B. There is less access to informational tools for making informed healthcare decisions. C. The out-of-pocket fees, particularly the deductibles, are high. D. The insureds act as a large group that achieves greater bargaining power.

C. The out-of-pocket fees, particularly the deductibles, are high.

Bill and Marge Beatty are named insureds on an HO-3 policy with a $300,000 limit for Coverage E—Personal Liability and a $2,500 limit for Coverage F—Medical Payments to Others. Bill and Marge rented a cabin in a mountain resort for their summer vacation. They invited neighbors to a campfire one evening. The campfire was too close to the Beattys' cabin and a gust of wind blew sparks that ignited the cabin roof. Before the fire was extinguished, it caused $5,000 damage to the roof. Bill and a guest suffered burns as they tried to extinguish the fire. Bill's medical expenses totaled $700. The guest was more severely injured and incurred medical expenses of $1,900. Which one of the following statements accurately describes the coverage available for this occurrence under the Beattys' HO-3? Select one: A. There is no coverage for either the property damage or the bodily injury because the occurrence was not at an insured location. B. There is no coverage for damage by fire to property in the insured's care, but the medical expenses of Bill and the guest will be paid in full. C. There is full coverage for damage by fire to property in the insured's care and for the guest's medical expenses, but there is no medical payments coverage for Bill. D. There is full coverage for damage by fire to property in the insured's care, but the medical expenses of Bill and the guest are not covered.

C. There is full coverage for damage by fire to property in the insured's care and for the guest's medical expenses, but there is no medical payments coverage for Bill. CorrectCorrect. There is full coverage for damage by fire to property in the insured's care and for the guest's medical expenses, but there is no medical payments coverage for Bill.

A retail chain sometimes requires its clerks to use their own cars to transfer special order merchandise from one store to another. Tamika, one of its employees, was moving items from one location to another in her station wagon which is insured with a Personal Auto Policy (PAP). Tamika was injured in an auto accident along the way, and her medical bills can be paid by her employer's workers compensation insurance. Her medical payments coverage under her PAP Select one: A. Is excess coverage. B. Will be pro rated with the workers compensation coverage. C. Will pay nothing. D. Is primary coverage.

C. Will pay nothing.

Under Coverage C—Personal Property of the homeowners policy, which one of the following statements is true? Select one: A. Loss caused by smoke from agricultural smudging or industrial operations is covered under Coverage C. B. Theft is included under Coverage C for watercraft, including its furnishings and equipment, away from the residence premises. C. Windstorm or hail damage to personal property inside a residence is not covered unless the building is first damaged. D. Theft from a building under construction and theft of construction materials are covered under Coverage C.

C. Windstorm or hail damage to personal property inside a residence is not covered unless the building is first damaged.

An owner of a car insured with a Personal Auto Policy (PAP) for which an insured selected and paid a premium for medical payments coverage Select one: A. Would be eligible for medical payments under the PAP if injured while occupying a motorcycle on a public highway. B. Would be eligible for medical payments under the PAP if injured while occupying a motorcycle on the insured's own property. C. Would not be eligible for medical payments under the PAP if injured while occupying a motorcycle on a public highway. D. Would not be eligible for medical payments under the PAP if injured while driving a motorcycle but would be eligible for such coverage while riding as a passenger on a motorcycle.

C. Would not be eligible for medical payments under the PAP if injured while occupying a motorcycle on a public highway.

Hank has purchased a home in a desirable urban neighborhood. The house has a rental unit on the second floor, as well as the first-floor unit in which Hank plans to live. Hank spent all of his savings on the down payment, and now is considering insuring the property under a DP-3 policy rather than an HO-3 policy to save money. Is Hank's new residence eligible for a DP-3 policy? Select one: A. No, because the residence qualifies for HO-3 coverage. B. No, because dwelling policies are designed for tenant-occupied dwellings. C. Yes, as long as it meets an insurer's underwriting guidelines. D. Yes, as long as part of the dwelling is rented to others.

C. Yes, as long as it meets an insurer's underwriting guidelines.

Phil was unable to obtain homeowners insurance for his desert canyon home through his private insurer because the area is subject to brush fires, so he was forced to obtain it through the local FAIR plan. Will Phil's private insurer likely be willing to provide theft coverage for this property? A. Yes, most FAIR plans provide theft coverage, so any private coverage would be excess. B. No, If FAIR plan coverage is provided, private insurance is not available. C. Yes, because fire is the primary loss exposure, and fire coverage is provided by the FAIR plan. D. No, because the private insurer would be forced to provide fire coverage as well, which is unacceptable to the insurer.

C. Yes, because fire is the primary loss exposure, and fire coverage is provided by the FAIR plan.

Sixteen-year-old Helen and her family were staying at a motel while on vacation. One night, Helen decided that she wanted to go out for snacks. She wished to borrow her parents' car, but her parents had gone to bed early. Helen was not sure whether her parents would mind her using their car, but she figured that the car was not being used anyway, so she should be able to use it. She found the keys and drove the car to a convenience store. Along the way, she caused an accident and a liability claim was made against her. Is there coverage for this claim under her parents' Personal Auto Policy (PAP)? A. Yes, because no one explicitly told Helen that she could not use the car. B. No, because Helen's sense of entitlement was not reasonable. C. Yes, because for insurance purposes, it is assumed that a family member has permission to use another family member's car. D. No, because Helen intentionally borrowed the car.

C. Yes, because for insurance purposes, it is assumed that a family member has permission to use another family member's car.

Ralph has an unendorsed HO-3 policy. While coming home from a coin show, Ralph discovers that his automobile was broken into and a package containing $2,000 in coins, some tools, and groceries was stolen. Disregarding any deductible that may apply, will Ralph's HO-3 insurer pay for the loss of the coins? Select one: A. No, theft of money is an excluded peril. B. No, leaving money in an unattended vehicle is negligent behavior, which is excluded. C. Yes, the coins are covered up to a specified limit. D. Yes, the coins are covered up to the limit of Coverage C as long as they are of a collectible nature.

C. Yes, the coins are covered up to a specified limit.

All of these are reasons why many Americans do not have health insurance, EXCEPT: A. The high cost of health insurance and lack of availability are deterrents. B. Some individuals are unaware that private plans exist. C. Young, healthy individuals do not need health insurance coverage (either group or individual) D. Elderly and retired individuals may not buy private insurance because the cost for the benefits provided is significantly greater than the cost of group insurance

C. Young, healthy individuals do not need health insurance coverage (either group or individual)

A couple meets with a financial adviser to review their insurance needs and investment choices. In the course of the discussion, a variety of topics are covered, including the impact of a long-term illness of the primary wage earner. In this context, the long-term illness is best described as

Cause of loss

In the context of assets exposed to loss, elements such as fire, wind, hail, and theft are best described as examples of

Causes of loss.

In the context of assets exposed to loss, long-term illness and loss of employment are best described as examples of

Causes of loss.Long-term illness and loss of employment are examples of causes of loss that can occur to assets.

Convertible

Characteristic of a term insurance policy that allows the policy to be exchanged for some type of permanent life insurance policy with no evidence of insurability.

Traditional Family

Consists of a mother, a father, and their children, only one parent is employed, while the other partner manages the household and takes care of the dependent children.

Part F - General Provisions - Termination

Contains four parts 1. Cancellation -if a new policy has been in force under 60 days, insurer can cancel by mailing cancelation to the insured, this gives the insurer 60 days to investigate whether the insured meets underwriting standards - if cancelation is for nonpayment, insurer must give at least 10 day notice -in all other cases, insurer must give 20 day notice -after the 60 days, insurer can only cancel policy for 3 reasons: -premium isn't paid -insured's driver's license is suspended or revoked - policy has been obtained by a material misrepresentation 2. Non-renewal -if policy period is less than six months, insurer has the right to nonrenew every six months, starting 6 months after effective date -if policy period is from 6 months to a year, insurer can non-renew at the end of the policy period - if policy period is 1 year or loner, insurer has the right to nonrenew at the anniversary of effective ate 3. Automatic Termination -if insured rejects renewal policy, the policy stops at the end of the period 4. Other Termination Provisions -Policy contains 3 additional termination provisions 1. Insurer may choose to deliver the cancelation notice rather than mail it 2. If policy is canceled, insured has right to refund 3. Effective date of cancellation stated in the notice becomes the end of policy period

Exclusive provider organization (EPO)

Contracts with insurers to provide healthcare to plan members at a much lower premium than healthcare provided by other plans. Charges insurers an access fee for use of the network, negotiates with healthcare providers to set fee schedules for guaranteed service levels, and helps resolve issues between insurers and healthcare providers.

There are five supplementary payments in Part A:

Cost of bail bonds Premiums on appeal bonds and bonds to release attachments Interest accruing after a judgment Loss of earnings because of attendance at trials Other reasonable expenses incurred at the insurer's request

Actual cash value (ACV)

Cost to replace property with new property of like kind and quality less depreciation.

Basic medical expense coverage

Coverage for medical expenses, such as hospital and surgical expenses, physicians' visits, and miscellaneous medical services.

Uninsured boaters coverage

Coverage for the insured's bodily injury incurred in a boating accident caused by another boat's owner or operator who is uninsured and who is legally responsible for the injury; similar to the PAP's uninsured motorists coverage.

Underinsured motorists (UIM) coverage

Coverage that applies when a negligent driver has liability insurance at the time of the accident but has limits lower than those of the injured person's coverage.

Medical payments coverage

Coverage that pays necessary medical expenses incurred within a specified period by a claimant (and in certain policies, by an insured) for a covered injury, regardless of whether the insured was at fault.

Liability coverage

Coverage that protects the insured from damages owed because of legal liability to another party. For auto policies, it protects insureds against liability arising out of the ownership or operation of automobiles.

Uninsured motorists (UM) coverage

Coverage that provides a source of recovery for occupants of a covered auto or for qualifying pedestrians who are injured in an accident caused by an at-fault motorist who does not have the state minimum liability insurance or by a hit-and-run driver.

For liability, medical payments, and uninsured motorists under the Personal Auto Policy (PAP), a replacement auto is

Covered for the remainder of the policy period in addition to the physical damage coverage.

For liability, medical payments, and uninsured motorists under the Personal Auto Policy (PAP), a replacement auto is

Covered for the remainder of the policy period, even if the insured does not ask for coverage.

First-to-Die (Joint) Life Insurance

Covers two individuals, but death benefit is payable upon the first death. When the first person dies, the death benefit can provide the survivor with funds to cover a home mortgage, other personal or business debt obligations, and dependent care.

What is the Section I standard deductible in the HO-3 policy? Select one: A. $50 B. $100 C. $250 D. $500

D. $500

Mike and Leona own a single-family home insured to value under an HO-3 policy with a limit of $350,000 for the Coverage A—Dwelling. While they were out to dinner one evening, an electrical fire started in the kitchen, destroying the kitchen and part of their bedroom on the second floor. The fire destroyed the contents of the bedroom and the clothing in their closets, as well as Leona's jewelry valued at $5,000 and a fur coat valued at $2,000. Ignoring any deductible that may apply, how much coverage is provided for the jewelry and fur coat? Select one: A. $1,500 B. $2,000 C. $5,000 D. $7,000

D. $7,000

Bertha is insured under an unendorsed HO-5 policy. The declarations page shows the following coverages: Coverage A—Dwelling$200,000 Coverage B—Other Structures$20,000 Coverage C—Personal Property$100,000 Coverage D—Loss of Use$60,000 As Bertha was returning home from a business trip, a rainstorm erupted as the airline crew was unloading her baggage. The rain soaked Bertha's two soft-sided suitcases until they could be reached and taken under cover. After Bertha got home she discovered that the rain had ruined a number of silk and other fine cloth clothing items. Bertha calculated her loss to be $1,200. She filed a claim with the airline, which paid its maximum liability of $400. Bertha has met all conditions required by the HO-5 policy. Assuming no deductible applies, which one of the following best explains the maximum amount the insurer would pay for the loss? Select one: A. $1,200, full coverage available under HO-5 for loss to personal property by any peril B. $0, no coverage under HO-5 for damage from dampness or temperature extremes C. $400, coverage under HO-5 only matches other available insurance D. $800, coverage under HO-5 is available for direct loss by rain away from an insured property

D. $800, coverage under HO-5 is available for direct loss by rain away from an insured property

All of the following are examples of collision losses covered under Part D - Coverage for Damage to Your Auto of the PAP, EXCEPT: A. A car damaged in a collision with another car B. A car damaged when it hits a tree C. A car damaged when a passenger in a neighboring parked car opens a car door, striking the insured vehicle D. A car that is vandalized while it is parked

D. A car that is vandalized while it is parked

Which one of the following best describes the likely life insurance needs of a single person with no dependents or outstanding financial obligations? Select one: A. An extensive amount of whole life insurance as an investment for retirement B. A moderate amount of term insurance to benefit family members C. A moderate amount of term insurance for charitable donations D. A modest amount of life insurance for funeral expenses and uninsured medical bills

D. A modest amount of life insurance for funeral expenses and uninsured medical bills

A state's no-fault automobile insurance law permits an injured party who experiences permanent disfigurement to sue the responsible party for noneconomic loss. This feature of the no-fault law illustrates Select one: A. A deductible. B. An unsatisfied judgment fund. C. A monetary threshold. D. A verbal threshold.

D. A verbal threshold.

A state's no-fault automobile insurance law permits an injured party who experiences permanent disfigurement to sue the responsible party for noneconomic loss. This feature of the no-fault law illustrates Select one: A. A deductible. B. An unsatisfied judgment fund. C. A monetary threshold. D. A verbal threshold.

D. A verbal threshold.

An HO-4 policy includes building additions and alterations coverage up to 10% of the limit of Coverage C—Personal Property. Which one of the following individuals would typically benefit from this coverage? Select one: A. An owner of a single family home who has installed wheelchair ramps at the doors of her home to accommodate her wheelchair B. A condominium unit owner who renovates the kitchen and installs more expensive cabinets than were originally in the unit C. An owner of an older house with obsolete construction D. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit

D. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit CorrectCorrect. The apartment dweller who has installed a power-lift chair would benefit. The HO-4 is typically a renters policy. Even though a tenant may have no insurable interest in the apartment building, there is an insurable interest in installations which, if damaged, would be a loss to the tenant.

A plan for insuring high-risk drivers, in which all auto insurers doing business in the state are assigned their proportionate share of high-risk drivers based on the total volume of automobile insurance written in a state, is Select one: A. A joint underwriting association. B. A reinsurance facility. C. Excess and surplus lines. D. An automobile insurance plan.

D. An automobile insurance plan.

All of the following describe an exclusion in Part A of the PAP, EXCEPT: A. Bodily injury or property damage intentionally caused by an insured B. Property damage to property owned or being transported by an insured C. Property damage to property rented to, used by, or in the care of the insured D. Bodily injury or property damage when using a vehicle not owned by the insured

D. Bodily injury or property damage when using a vehicle not owned by the insured

Which one of the following statements is true regarding auto liability policies written on a split-limits basis with 3 types of limits? A. Property damage in each accident is listed first B. Bodily injury to each person is listed second C. Property damage to each person is listed third D. Bodily injury to all persons in each accident is listed second

D. Bodily injury to all persons in each accident is listed second

Under the uninsured motorists (UM) coverage in the Personal Auto Policy (PAP), the insurer agrees to pay damages that the insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle. These damages are best identified as which one of the following? Select one: A. Lost wages B. Rehabilitation expenses C. Medical expenses D. Compensatory damages

D. Compensatory damages

Which of the following best describes the risk control technique of avoidance? A. Maintaining an additional location for safekeeping of assets B. Allocating assets among a variety of investments C. Creating additional copies of valuable papers D. Deciding not to purchase an asset

D. Deciding not to purchase an asset

Which one of the following is a disadvantage of uninsured motorists coverage? Select one: A. The victim must prove that he or she has no other source of compensation before coverage applies. B. Uninsured motorists coverage does not cover damages resulting from a hit-and-run accident. C. Uninsured motorists coverage is not mandatory in any states. D. Property damage is excluded in many states.

D. Property damage is excluded in many states.

Beachfront and windstorm plans are state-sponsored insurance plans whose primary purpose is to Select one: A. Provide flexible coverage to fill gaps in the National Flood Insurance Program's flood coverages. B. Provide a state-based alternative to the federally operated flood insurance programs. C. Restrict construction and limit land use in coastal areas exposed to heavy windstorm losses. D. Provide property insurance in coastal areas exposed to heavy windstorm losses.

D. Provide property insurance in coastal areas exposed to heavy windstorm losses.

Personal injuries are defined in the Personal Injury endorsement as injuries arising out of any of the following, EXCEPT: A. False arrest, detention or imprisonment B. Malicious prosecution C. Invasion of privacy, wrongful eviction, or wrongful entry D. Publication, in any manner, of material that violates a corporations right to services

D. Publication, in any manner, of material that violates a corporations right to services

The Personal Articles Standard Loss Settlement Form provides special form coverage for: A. Personal property, such as luggage, normally carried by tourists and travelers. B. Unscheduled personal property owned or used by the insured and normally kept at the insured's residence. Examples include clothing and household furniture. C. Property normally kept in personally owned watercraft but not attached to the watercraft. D. Several classes of personal property with a specific amount of insurance shown for each class of property or for each specific article. Examples include jewelry and silverware.

D. Several classes of personal property with a specific amount of insurance shown for each class of property or for each specific article. Examples include jewelry and silverware.

The declarations page of a Personal Auto Policy (PAP) Select one: A. Identifies common policy definitions. B. Lists any exclusions that are attached to the policy. C. Indicates that the policy period starts at 12:01 PM standard time at the address of the insurer. D. Shows the name of the insured and the insured's mailing address.

D. Shows the name of the insured and the insured's mailing address.

What type of annuity would a lottery winner be most likely to purchase to provide tax-deferred safekeeping of the winnings while still receiving period payouts throughout his or her lifetime? A. Deferred annuity B. Flexible-premium annuity C. Combination plan D. Single-premium immediate annuity

D. Single-premium immediate annuity

Ming purchased a 24-foot inboard motorboat and would like to cover it using special form ("all-risks") coverage. Which one of the following types of policies is Ming most likely to purchase? A. HO-3 policy B. Yacht policy C. Personal Auto Policy (PAP) D. Small boat policy

D. Small boat policy

Which one of the following is true with regard to the personal property coverages provided under a homeowners policy? Select one: A. Coverage is tailored for specific types of property, such as cameras and musical instruments. B. Jewelry is covered for all perils except theft. C. The Personal Articles Standard Loss Settlement Form is usually added by endorsement. D. Some of the personal property coverages are restrictive, creating a need for personal inland marine policies.

D. Some of the personal property coverages are restrictive, creating a need for personal inland marine policies.

The HO-3 policy Sections I and II—Conditions contain a liberalization clause that Select one: A. Specifies how coverage may be cancelled by the insured. B. Broadens the definition section in accordance with state regulations. C. Increases the limit of liability when there are multiple insureds involved in a claim. D. Specifies how coverage is broadened for insureds when the insurer changes a current edition of a policy.

D. Specifies how coverage is broadened for insureds when the insurer changes a current edition of a policy.

Under the HO-3 policy Section I—Conditions, the Loss Payment condition Select one: A. Establishes how the amount to be paid for a property loss will be determined. B. Outlines a method for resolving disagreements between the insured and the insurer. C. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. D. States that the insurer will adjust all losses with the insured or the insured's spouse (unless another person is named in the policy or is legally entitled to receive payment).

D. States that the insurer will adjust all losses with the insured or the insured's spouse (unless another person is named in the policy or is legally entitled to receive payment).

Which one of the following describes the difference between the HO-3 policy and the HO-2 policy? Select one: A. The HO-3 is designed for an owner-occupant of a house. The HO-2 is designed for a tenant-homeowner of an apartment. B. The HO-3 is the preferred homeowners policy for homeowners who have had no prior losses. The HO-2 is designed for homeowners who have experienced some losses. C. The HO-3 provides Coverage C limits that are 50% of Coverage A. The HO-2 provides Coverage C limits that are 40% of Coverage A. D. The HO-3 provides coverage for all causes of loss, unless specifically excluded, for Coverages A and B. The HO-2 provides coverage for named perils for Coverages A and B.

D. The HO-3 provides coverage for all causes of loss, unless specifically excluded, for Coverages A and B. The HO-2 provides coverage for named perils for Coverages A and B.

All the following factors will affect the retirement payout from a defined contribution plan, EXCEPT: Select one: A. The retirement age B. The investment returns earned C. How long the plan is funded D. The projected Social Security benefits

D. The projected Social Security benefits

Jack and Linda are meeting with their insurance agent to review their homeowners and auto policies. The agent has suggested that they add an umbrella policy. Which one of the following is the best reason the agent will likely provide for purchasing this coverage? A. To provide an increased limits policy with no exclusions B. To offset the deductibles on their other policies C. To avoid any retained limits for the broader coverage D. To provide increased limits for large jury awards

D. To provide increased limits for large jury awards

Tomas has an HO-3 policy covering his home. A neighbor jumped Tomas's fence to use his yard as a shortcut to a store, tripped over a small shovel left on the lawn, and was injured. The neighbor sued Tomas. Tomas's insurer defended and won the lawsuit on the theory that the neighbor was a trespasser to whom no duty was owed by Tomas. The insurer's defense included $20,000 in legal fees. Who is responsible for these fees? Select one: A. Tomas and the insurer share responsibility for the legal fees. B. The insurer is responsible for the legal fees only if Tomas is not able to pay them. C. Tomas is, because liability coverage is not triggered absent a finding of liability. D. Tomas's HO-3 insurer is responsible for the legal fees.

D. Tomas's HO-3 insurer is responsible for the legal fees. CorrectCorrect. Tomas's HO-3 insurer is responsible for the legal fees. Defense costs coverage, which is supplemental to the liability limit, is provided even if a suit is groundless, false, or fraudulent.

The policy territory of the Personal Auto Policy (PAP) includes the United States, Select one: A. Puerto Rico and Mexico. B. Puerto Rico, Mexico, and Canada. C. U.S. territories and possessions, Mexico, and Canada. D. U.S. territories and possessions, Puerto Rico, and Canada.

D. U.S. territories and possessions, Puerto Rico, and Canada. CorrectCorrect. The policy territory of the Personal Auto Policy (PAP) includes the United States, U.S. territories and possessions, Puerto Rico, and Canada.

Which one of the following make a property ineligible for both FAIR plans and windstorm and beachfront plans? A. Vacancy B. Hazardous environmental conditions C. Difference in conditions coverage D. Unrepaired damage

D. Unrepaired damage

The primary factors that most states and companies use for determining the cost of personal auto insurance include all of the following, EXCEPT: Select one: A. Territory B. Driver age C. Use of the auto D. Vehicle horsepower

D. Vehicle horsepower

Which one of the following is an exception to the PAP exclusion that eliminates coverage for liability arising out of the ownership, maintenance, or use of any vehicle that has fewer than 4 wheels? A. Motorcycle B. Vehicle designed mainly for use off public roads C. Golf carts owned by the insured D. Vehicle used by an insured in a medical emergency

D. Vehicle used by an insured in a medical emergency

Scheduled Personal Property Endorsement provides scheduled coverage for specific items, which include all of the following, EXCEPT: A. Jewelry B. Musical instruments C. Rare coins D. Vintage autos

D. Vintage autos

The waiver of premium rider that can be added to a life insurance policy Select one: A. Reduces or waives premium payments for a whole life policy when the insured reaches a maximum age threshold. B. Reduces or waives premium payments for a whole life policy if interest rates exceed an established percentage. C. Eliminates premium payments during a period of unemployment if the duration of the unemployment is one year or more. D. Waives premium payments during a period of disability as defined in the policy if the disability occurs before a stipulated age.

D. Waives premium payments during a period of disability as defined in the policy if the disability occurs before a stipulated age.

In Section I—Exclusions of the HO-3 policy, there are three additional exclusions (weather, acts or decisions, and faulty workmanship) that apply only to Coverage A—Dwelling and Coverage B—Other Structures. Which one of the following statements is true regarding these exclusions? Select one: A. Weather is an excluded peril only if it contributes to a covered peril. B. The HO-3 covers losses directly from these perils unless excluded elsewhere in the policy. C. The HO-3 excludes ensuing losses resulting from these three perils. D. Weather is an excluded peril only if it contributes to a previously excluded peril.

D. Weather is an excluded peril only if it contributes to a previously excluded peril.

The first step of the DICE method is to examine the policy's

Declarations

All of the following are usually analyzed as part of the DICE method of policy analysis, EXCEPT:

Declarations Insuring agreement Exclusions Past loss experience

Revocable beneficiary designation

Denotes that the policyowner can make beneficiary changes without the beneficiary's consent

A family invests in both stocks and bonds. This is an example of

Diversification.

Premium reduction option

Dividend amounts can be applied to pay for future premium payments due.

Accumulated option

Dividends amounts remain with the insurer and accumulate interest. Dividends and accumulated interest can subsequently be withdrawn at any time can be paid in addition to death benefits amounts.

One-year term insurance

Dividends may also be used to purchase term, rather than whole, life insurance for one year. If the insured dies within that time, the term life amount is added to the death benefit payable under the policy.

Paid-up additions

Dividends may be used to buy increments of paid-up whole life insurance, which would increase the amount of the death benefit paid under the policy

The Insuring Agreement in Part A—Liability Coverage of the Personal Auto Policy (PAP) contains descriptions of all of the following, EXCEPT:

Exclusions to coverage

Selected Endts - Extended Non-owned Coverage Named Non-Owner Coverage Auto Loan/Lease Coverage

Extended Non-owned Coverage - provides liability, medical payments for driver of vehicles furnished or made available for regular use of named insured Named Non-Owner Coverage- provides liability, medical payments, uninsured, and underinsured motorists coverages for drivers who do not own an auto but regularly driver another person's auto Auto Loan/Lease Coverage- Amends physical damage coverage for leased vehicles or vehicles with outstanding loan amounts to include an unpaid amount due on the lease or loan

Modified "Own Occupation" Trigger

Full benefits are paid if the insured is unable to perform the duties of his or her specific occupation or any other occupation, but if the insured can earn income from another occupation, the benefit payments are reduced in proportion to the income earnings from the other occupation.

Part E - Duties After an Accident or Loss

General Duties: -Provide prompt notice to the insurer -Cooperate with the insurer -Submit legal papers to the insurer -Submit to physical examination - Agree to examination under oath -Authorize release of medical records -Submit proof of loss Additional Duties for UM coverage: -Notify police -Submit legal papers Additional Duties for Physical Damage Coverage -Prevent further loss -Notify police -Permit inspection and appraisal

"Own Occupation" Trigger

If the insured is unable to return to the duties of his or her specific occupation, but the insured is able to earn income from another occupation, he or she will still receive 100 percent of the disability benefits from their policy.

A family funds a retention program by maintaining a savings account for the purpose of paying for any losses that fall within the deductible of its homeowners policy. Which one of the following steps in the risk management process is the family following?

Implementing selected risk management techniques

Monetary threshold (dollar threshold)

In a no-fault system, a dollar limit in total medical expenses an injured victim must exceed before he or she is permitted to sue the other party.

Choice no-fault plan

In a no-fault system, a plan that gives the insured the option, at the time an auto insurance policy is purchased or renewed, of choosing whether to be covered on a no-fault basis.

Add-on plan

In a no-fault system, a plan that provides certain personal injury protection (PIP)-type benefits such as medical payments and disability coverages to injured victims, without regard to fault.

Verbal threshold

In a no-fault system, the designated criteria that are verbally "set forth in the statute that limit the right to sue."

Automatic Increase Rider (AIR)

Increases the insured's monthly benefit amount each year for a specified number of years to keep up with inflation.

Optional Limits Transportation Expenses Coverage Endorsement

Increases the limit for Coverage for Transportation Expenses under Coverage D

Inland marine insurance

Insurance that covers many different classes of property that typically involve an element of transportation.

Hull insurance

Insurance that covers physical damage to vessels, including their machinery and fuel but not their cargo.

Whole life insurance

Life insurance that provides lifetime protection, accrues cash value, and has premiums that remain unchanged during the insured's lifetime.

Personal financial planning loss exposures

Life, health, and retirement related loss exposures.

Selected Endts - Limited Mexico Coverage - Excess Electronic Coverage - Coverage for Damage to Your Auto -

Limited Mexico Coverage - Provides excess liability coverage over Mexican auto insurance for an individual who is involved in an accident in Mexico within 25 miles of border on a trip that is 10 days or less Excess Electronic Coverage - Increases the $1,000 limit that applies to electronic equipment installed in the vehicles in location not intended for that purpose by the auto manufacturer Coverage for Damage to Your Auto - Covers each described vehicle for a stated amount of insurance as indicated in the endorsement schedule that applies to collision and OTC losses

Point-of-service (POS) plan

Managed care plan that combines the characteristics of an HMO and a PPO; has a network of preferred providers who, if used by the member, charge little or nothing for services; healthcare received out of the network is covered, but members must pay substantially higher coinsurance charges and a deductible.

Coinsurance

Medical insurance provision that requires the insured to pay part of the covered medical expenses in excess of the deductible.

HO-8 Modified Coverage Form

Meets the needs of owner-occupants of dwellings who may not meet insurer standards required for other policy forms

HO-3 Special form

Meets the needs of owner-occupants of dwellings who want coverage on their dwellings and other structures that is broader than the HO-2 offers

HO-6 Unit Owners Form

Meets the needs of owners of condominium units and cooperative apartment shares

HO-4 Contents Broad Form

Meets the needs of tenants and other apartment or dwelling occupants who do not require coverage on the dwelling

HO-5 Comprehensive Form

Meets the needs owner-occupants of dwellings who want the broadest coverage available amount ISO's forms for their dwellings, other structures, and personal property

Selected Endts - Miscellaneous Type Vechile Endorsement - Snowmobile Endorsement Trailer/Camper Body Coverage Extended Non-owned Coverage

Miscellaneous Type Vechile Endorsement - Covers motor homes, motorcycles, and other vehicles with fewer than four wheels that are designed for off public road use Snowmobile Endorsement-coverage for snowmobiles other than vehicles propelled by an airplane-type propellers or fans Trailer/Camper Body Coverage-trailers or camper bodies, including related facilities or equipment

A policy issued by a mutual insurer describes each insured's right to vote in the election of the board of directors. This description is most likely found in the policy's

Miscellaneous provisions.

Damages

Money claimed by, or a monetary award to, a party who has suffered bodily injury or property damage for which another party is legally responsible.

Ella Fitzpatrick is retired and living in an adult retirement community. She has a 15-year-old sedan that she keeps for family outings when her children and grandchildren visit. Because she rarely uses the vehicle, and she tries to reduce expenses, Ella has a personal automobile policy with the following low coverage limits which satisfy the minimum requirements of her state: Part A—Liability Coverage $20,000/$40,000/$10,000 limits Part B—Medical Payments Coverage $1,000 per person Part C—Uninsured Motorists Coverage $20,000 combined single limit While on a family outing to a local beach in her state, Ella allowed her grandson, George, to drive her car. George was at fault when he failed to yield to a compact car at an intersection and collided. He injured the driver and passenger of the compact car, causing $15,000 in bodily injuries. The compact car, which has a value of $10,000 was totaled. Ella and George were injured. Ella had medical bills totaling $3,000. George had medical bills totaling $8,000. Assume that the driver of the compact car had $25,000 in damages, and he was able to collect $20,000 for those damages from Ella's policy. What amount, if anything, would the driver of the compact car be able to collect from the uninsured motorist coverage provided by his own personal automobile policy?

Nothing

Medicare Advantage (MA) plans (Medicare Part C)

Offers options similar to other managed-care plans. In addition to the basic benefits provided by Medicare under Part A and Part B, beneficiaries may be eligible for managed-care services and supplemental benefits and health services. Some supplemental benefits are mandatory for enrollees, and others are optional.

Joint underwriting association (JUA)

Organization that designates servicing insurers to handle high-risk auto insurance business; all auto insurers in the state are assessed a proportionate share of the losses and expenses based on their percentage of the voluntary auto insurance premiums written in the state.

Current Assumption Whole Life Insurance (Interest-Sensitive Life Insurance)

Premium and the cash value can be periodically recalculated by the insurer, based on new actuarial assumptions (drawn from the insurer's investment results and loss experience). The insurer guarantees a minimum interest rate, and some insurers offer maximum mortality and expense charges. These policies can have appeal at a time when interest rates are rising because higher investment earnings for the insurer can result in reduced premiums and/or increased cash value for the policyholder.

Maria's clothes, worth $1,000, are stored in her car. Later, the car is stolen along with the clothes. Maria discovers that the loss of her clothes is excluded under her personal auto policy but covered under her homeowners policy. What best explains the purpose for the exclusion in Maria's personal auto policy that applies to her clothes?

Reduce the likelihood of coverage duplication

403(b) Plan

Retirement plan for an employee of a tax-exempt organization that operates solely for charitable, religious, scientific, or educational purposes to invest in a tax-sheltered annuity. The annuity is tax-sheltered because the contributions are made with before-tax compensation. Contributions are subject to the same annual limit as 401(K).

Savings Incentive Match Plan for Employees (SIMPLE)

Retirement plan intended to encourage employers with 100 or fewer employees to establish qualified retirement plans. Employee eligibility is subject to a minimum salary requirement, and annual contributions are limited, with a provision for catch-up contributions for those 50 and older. If participating, employer may not sponsor another qualified retirement plan. Withdrawals are taxed as ordinary income and subject to a penalty if withdrawn before the employee reaches 59½

Thrift (or savings) plan

Retirement plan that allows an employee to contribute a certain percentage of his or her salary, which the employer will then match with a percentage of what the employee contributed. If the employer limits the amount it will match, employees may be allowed to make an additional contribution that is unmatched by the employer. Before-tax or after-tax contributions. Subject to the same withdrawal restrictions as a 401(k) plan.

Keogh plan

Retirement plan that gives owners of unincorporated businesses and other self-employed individuals the same tax advantages as their employees when investing for retirement. Must have earned income in the current year. The resulting amount, if positive, can be inserted into a formula provided by the IRS to calculate the amount that may be contributed to each employee's and self-employed individual's plan. The contributed amount is deducted from the individual's gross taxable income.

Split-limits basis

Separate coverage limits that allow one limit for bodily injury to each person; a second usually higher limit for bodily injury to all persons in each accident; and a third limit for all property damage in each accident.

The Personal Articles Standard Loss Settlement Form provides special form coverage for

Several classes of personal property with a specific amount of insurance shown for each class of property or for each specific article

Rider

Similar to an endorsement; modifies a life insurance policy.

While driving on a work-related sales call, a motorist is injured in an auto accident and is unable to work for three months, after which he makes a full recovery. This is an example of a

Temporary total disability

"Split Definition" Trigger

The "any occupation" and "own occupation" occupation concepts are combined.

A homeowner wishes the broadest possible coverage for his home and contents, which of the six ISO Homeowners program forms would be the most appropriate for his coverage needs?

The HO-5

Under the Personal Auto Policy (PAP), which one of the following statements is true regarding the nonrenewal provisions for a policy that has a policy period of one year or longer? -The insurer has the right to nonrenew at the end of the policy period without giving notice. -The insurer has the right to nonrenew at each anniversary of the policy's original effective date. -The insurer has the right to nonrenew beginning six months after the original effective date. -The insurer cannot nonrenew a policy that has been in effect for more than one year.

The insurer has the right to nonrenew at each anniversary of the policy's original effective date.

Benefit period

The length of time after filing a claim that the insurer will pay for care (from one year up to lifetime coverage)

Daily benefit

The maximum dollar or percentage amount the insurer will pay for care daily (from about $30 to $300 per day)

Residual market

The term referring collectively to insurers and other organizations that make insurance available through a shared risk mechanism to those who cannot obtain coverage in the admitted market.

Navigational limits

These warranties limit the use of the vessel to a certain geographical area (for example, inland waterways, and coastal areas only).

Medicare Part A

part of Medicare that pays for in-hospital services and is largely financed through payroll taxes paid by employees and employers

Business risk

the risk associated with the nature of the industry in which the issuer of an investment operates and the management of the issuer itself

Nikos purchases a small boat for $1,200 and a boat motor for $700. A fire destroys the boat and motor while they are parked in Nikos' garage. Disregarding any deductibles, what amount will Nikos' unendorsed HO-3 policy pay for the loss?

$1,500; under an ISO HO-3 policy, a $1,500 limit applies to watercraft, including trailers, furnishings, and equipment

Part C - Uninsured Motorists Coverage -- Exclusions

- Owned but not Insured Vehicles - Public or livery conveyance - Owned Vehicle with Primary UM Coverage on other policy - Claim settlement that prejudices Insurer's right of recovery - No benefit to workers compensation or disability benefits insurer - Punitive damages - Vehicles used without reasonable belief of being entitled

Part A - Liability Coverage - Limits of Liability

- PAPs are written on a split-limit basis with 3 types of limits -Bodily injury to each person -Bodily injury to all persons in each accident -property damage in each accident

Part D - Coverage For Damage to Your Auto - Insuring Agreement

-agreement to pay damages in loss -indicated whether or not insured has collision coverage, collision is defined in the PAP as the upset of or impact of "your covered auto" or "non- owned auto" with another vehicle or object -indicated whether insured as OTC coverage (physical damage not caused my a collision) -OTC is less expensive and has lower deductible than collision -OTC causes of loss include: a.missiles or falling object -fire -theft or larceny -explosion or earthquake -windstorm -hail, water, or flood -Malicious mischief or vandalism -riot or civil commotion -contact with a bird or animal -OTC covers any collision with a bird or animal z. breakage of glass; if glass is broken during a collision, insured can opt to have OTC cover it -states the coverages to a "non-owned auto" -Part D will cover a rented or borrow car that is not made for regular use -will also cover any auto or trailer that is being used as a temporary substitute because other auto or trailer is out of normal use -indicates deductible of policy

Part A - Liability Coverage - Out of State Coverage Financial Responsibility Other Insurance

-if accident occurs in a state with high liability limits, the PAP automatically provides higher limits for that accident -provides proof of insurance 7. Other Insurance - addresses situation in which more than 1 policy covers a liability claim - if this occurs, each insurer pays its pro ratio share, refer to page 3.20 in book

Sally insures her house with an unendorsed HO-3—Special Form (HO-3) with a Coverage A—Dwelling limit of $275,000, which is the replacement cost of the house. A fire destroys the house including a collection of blueprints belonging to Sally's employer, valued at $10,000. Sally was storing the blueprints at her home while her office was changing locations. Assuming no deductible applies, how much, if any, will Sally's HO-3 insurer pay to replace the blueprints? A) $0 B) $1,000 C) $2,500 D) $10,000

A) $0

Coverage for other structures is automatically provided under the HO-3 Special Form policy with a limit that is: A) 10 percent of Coverage A limit. B) 10 percent of Coverage C limit. C) 50 percent of Coverage A limit. D) 50 percent of Coverage C limit.

A) 10 % of Coverage A limit

One of the effects of the Personal Injury Coverage endorsement on an HO-3—Special Form (HO-3) is to Choose one answer. A. Add the definition of personal injury. B. Add definitions for bodily injury and property damage. C. Add liability coverage for medical payments. D. Add liability coverage for bodily injury.

A. Add the definition of personal injury

Provisions of the Ordinance or Law Coverage endorsement available to a mobilehome policyholder Choose one answer. A. Are virtually identical to the Ordinance or Law provisions of the homeowners policy. B. Provide 10 percent of Coverage A limits as additional coverage. C. Allow for the flexibility of selecting a desired dollar-value limit. D. Do not provide coverage for debris removal.

A. Are virtually identical to the Ordinance or Law provisions of the homeowners policy.

Under the Write-Your-Own (WYO) program of the National Flood Insurance Program (NFIP), which one of the following determines the rates? Choose one answer. A. Federal Insurance Administration (FIA) B. Private insurers C. Federal Emergency Management Agency (FEMA) D. Flood Insurance Reform Act of 2004

A. Federal Insurance Administration (FIA)

Vanessa insures her lakefront vacation cottage under a DP-3 dwelling policy with a Coverage A limit of $85,000, a Coverage C limit of $8,000, and no other limits or endorsements. Following a rash of burglaries at the lakefront, Vanessa removed a widescreen plasma TV worth $2,500 to protect it from the burglars. While being stored in her car the next day, the TV was stolen. Will Vanessa's DP-3 policy cover this loss? Choose one answer. A. No. It was not endangered by a covered loss. B. Yes. Property removed is covered for any cause of loss. C. No. Personal property away from the premises is not covered. D. Yes. Personal property away from the premises is covered up to 10 percent worldwide.

A. No. It was not endangered by a covered loss.

Purchasers of long-term care insurance typically have a choice of daily cash benefits that are paid Choose one answer. A. Over a maximum period of years, or for the insured's lifetime. B. In a lump sum to the care provider, or to the insured. C. Through the purchase of an annuity, or in a lump sum. D. Through many payment disbursement options, which are similar to life insurance.

A. Over a maximum period of years, or for the insured's lifetime.

Which one of the following statements about original Medicare is true? Choose one answer. A. Some people under age 65 may be eligible for coverage. B. Part B is financed solely by premiums paid by voluntarily enrolled persons. C. Part A provides benefits for long-term custodial care. D. It is a means-tested welfare program

A. Some people under age 65 may be eligible for coverage.

Under an ISO Mobilehome Endorsement, Section I, Coverage B—Other Structures is no less than Choose one answer. A. 2 percent of Coverage A. B. $2,000. C. 10 percent of Coverage A. D. $1,000.

B. $2,000.

A point-of-service (POS) plan is a hybrid healthcare plan that has characteristic of which two other types of healthcare plans? Choose one answer. A. A preferred provider organization (PPO) and an exclusive provider organization (EPO) B. A health maintenance organization (HMO) and a preferred provider organization (PPO) C. An indemnity plan and a health maintenance organization (HMO) D. A major medical plan and Medicare

B. A health maintenance organization (HMO) and a preferred provider organization (PPO)

Under the National Flood Insurance Program (NFIP), residential condominium building associations are Choose one answer. A. Eligible for coverage under the dwelling form. B. Eligible for coverage under the residential condominium building association form. C. Eligible for coverage under the general property form. D. Not eligible for coverage.

B. Eligible for coverage under the residential condominium building association form.

Sammy is the named insured on an HO-3—Special Form (HO-3) covering his family's home. Sammy and his wife, Sally, have a young daughter, Suzie, and a grown-up son, Steve, who lives with them, and they own a cocker spaniel puppy. While a neighboring couple and their five-year-old son, Jay, were visiting, the puppy bit Jay. Jay suffered a serious wound and his parents sued Sammy and Sally. All of the following are insureds under the HO-3 policy, EXCEPT: Choose one answer. A. Sally B. Jay C. Steve D. Suzie

B. Jay

Which one of the following established the National Flood Insurance Program (NFIP)? Choose one answer. A. Federal Emergency Management Agency (FEMA) B. National Flood Insurance Act of 1968 C. Federal Insurance Administration (FIA) D. National Insurance Reform Act of 2004

B. National Flood Insurance Act of 1968

Clarise owns a vacation home on a lake, and has insured it under an unendorsed DP-3 policy with a Coverage A limit of $120,000 and a Coverage C limit of $40,000. Clarise discovered that a rowboat she keeps tied to her dock on the lake has been stolen. She filed a claim under her dwelling policy for $700, the actual cash value of the rowboat. Would theft of the rowboat be a covered loss? Choose one answer. A. No, watercraft are excluded property. B. No, theft is not a covered peril. C. No, theft of watercraft is covered only if the boat is within a fully enclosed building. D. No, 10 percent of the Coverage C limit is provided for rowboats and canoes while the property is away from the premises.

B. No, theft is not a covered peril.

From what risk would a lienholder be seeking protection in requiring a mobile home owner to purchase the Mobilehome Lienholder's Single Interest endorsement? Choose one answer. A. The mobile home may be destroyed by fire. B. The mobile home owner may default on a mortgage. C. A mobile home is exposed to transportation risks. D. The mobile home owner's loss of a site lease.

C. A mobile home is exposed to transportation risks.

Qualification for Social Security disability income benefits requires objective medical evidence that a worker's impairment meet which one of the following requirements with respect to duration? Choose one answer. A. Be expected to eventually result in death B. Be expected to last at least 24 consecutive months C. Be expected to last at least 12 consecutive months or to result in death D. Be expected to last until the earlier of death or the worker's eligibility for Social Security retirement benefits

C. Be expected to last at least 12 consecutive months or to result in death

The Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Coverage—Increased Limit endorsement may be appropriate for Choose one answer. A. Insureds who pay their bills online. B. Insureds who use automated teller machines. C. Insureds who hold credit cards. D. Insureds who tend to overspend because of credit availability.

C. Insureds who hold credit cards.

Which one of the following statements best describes Medicaid. Choose one answer. A. It is a federal program that provides long-term care benefits to anyone who is enrolled in Medicare. B. It is a social insurance program that provides medical expense benefits to certain categories of persons, regardless of their income and assets. C. It is a means-tested federal-state welfare program that covers the medical expenses of low income persons. D. It is a series of state programs designed to make medical expense coverage more readily available to all state residents.

C. It is a means-tested federal-state welfare program that covers the medical expenses of low income persons.

Policy provisions of the mobilehome policy Choose one answer. A. Are the same as those of the homeowners form. B. Differ widely from those of the homeowners form. C. Revise those of the homeowners form. D. Form the basis for those of the homeowners form.

C. Revise those of the homeowners form.

Which one of the following is true with regard to how long-term care insurance policies deal with inflation in the cost of long-term care services? Choose one answer. A. Virtually no long-term care insurance policies help protect against inflation. B. Most long-term care policies offer "guaranteed renewability." C. Some plans allow insureds to purchase additional amounts of insurance in the future without evidence of insurability. D. Long-term care insurers negotiate long-term, fixed price contracts with service providers.

C. Some plans allow insureds to purchase additional amounts of insurance in the future without evidence of insurability.

An HO-4—Contents Broad Form (HO-4) includes building additions and alterations coverage up to 10 percent of the limit of Coverage C—Personal Property. Which one of the following individuals would typically benefit from this coverage? Choose one answer. A. An owner of an older house with obsolete construction B. An owner of a single family home who has installed wheelchair ramps at the doors of her home to accommodate her wheelchair C. A condominium unit owner who renovates the kitchen and installs more expensive cabinets than were originally in the unit D. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit

D. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit

Ben lost in his lawsuit against his neighbor, Jim, alleging that Jim had created a nuisance on his property. Jim has now filed a malicious prosecution claim against Ben. Under which endorsement to Ben's homeowners policy can coverage for this claim be found? Choose one answer. A. Personal Liability endorsement B. Ordinance or Law—Increased Amount of Coverage endorsement C. Additional Liability Coverages endorsement D. Personal Injury Coverage endorsement

D. Personal Injury Coverage endorsement

When is community participation in the National Flood Insurance Program (NFIP) required? Choose one answer. A. When FEMA has determined that a community is flood-prone. B. When a community has unsuccessfully contested a flood-prone designation. C. When accepting a federal-related construction project. D. When required as part of a state's floodplain management program.

D. When required as a part of a state's floodplain management program.

Felipe has an unendorsed HO-3—Special Form (HO-3) with a $300,000 limit for liability coverage. He also has an umbrella policy with a $1,000,000 limit of liability and a $2,000 self-insured retention (SIR). While playing golf, Felipe accidentally injures his golfing partner while swinging a golf club. His partner is partially disabled, and Felipe is found liable for $450,000. How much will Felipe's umbrella policy pay for this loss?

Felipe's umbrella policy pays the difference between the total loss amount and the liability limit of the HO-3 policy. The SIR does not apply.

Personal umbrella policies usually cover the insured's liability for personal injury. Under the ISO Personal Umbrella Liability Policy, which one of the following is included under the definition of personal injury?

Malicious prosecution

Marta insured her home with an HO-3—Special Form (HO-3) that includes a Personal Property Replacement Cost Loss Settlement endorsement. Her large screen television fell off the wall and was damaged beyond repair. She had paid $2,000 for it. At the time of loss it had an actual cash value of $800 and a replacement cost of $1,500. Because she found that she had little time to watch television, she decided not to replace the TV. How much did her insurer pay on the claim? Choose one answer. A. $0 B. $800 C. $1,500 D. $2,000

The insurer will pay $0 since falling off the wall is not a covered peril.

Which one of the following is true with regard to uninsured and underinsured motorist protection under an ISO Personal Umbrella Liability Policy?

Under an ISO Personal Umbrella Liability Policy, uninsured and underinsured motorists protection is available as an endorsement.

Chris causes an accident while driving her car. The driver of the other car is injured and is awarded damages of $650,000. Chris has a Personal Auto Policy (PAP) with a bodily injury liability limit of $250,000 per person. She also has an umbrella policy with a $1,000,000 limit of liability and a $1,000 self-insured retention (SIR). What amount will the umbrella insurer pay for bodily injury for this accident?

$400,000 The umbrella pays the difference between the damages and the underlying auto liability limits. The self-insured retention does not apply.

Part C - Uninsured Motorists Coverage - Underinsured Motorists Cov

- Increasing number of people with a high limit UM coverage are involved with accident with drivers who have coverage slightly above the state minimum -Because these driver's have the state minimum, they are not considered uninsured motorists

The Florida Valued Policy Law applies to: A) mobile homes B) motor homes C) total losses to a building only if caused by fire D) all coverages on the Declarations page

A) Mobile homes

Jim and Sue, a young married couple, are under contract to purchase a condominium unit. Which one of the following ISO policy forms is best designed to meet their homeowners insurance needs? A) HO-2—Broad Form B) HO-4—Contents Broad Form C) HO-6—Unit-Owners Form D) HO-8—Modified Coverage Form

C) HO-6 Unit-Owners Form

Ming purchased a 24-foot inboard motorboat and would like to cover it using special form ("all-risks") coverage. Which one of the following types of policies is Ming most likely to purchase?

Small boat policies are designed to cover boats up to a certain maximum size (such as 26-feet in length) and can be written to provide special form ("all-risks") coverage.

Mario has an unendorsed HO-3—Special Form (HO-3) with a $500,000 limit for liability coverage. He also has a personal umbrella with a $2,000,000 limit of liability and a $10,000 self-insured retention.Mario is sued for slander and the court awards $1,600,000 to the plaintiff. What amount of the loss is paid by the umbrella policy?

The loss is covered by the umbrella but not the HO-3, so the umbrella drops down and covers the entire loss minus the self-insured retention (SIR).

Ian owns a sailboat and insures it under a small boat policy with a $300,000 limit for liability coverage. Ian also has a personal umbrella policy with a $2,000,000 limit of liability. The umbrella policy requires that any underlying watercraft liability policies have a minimum liability limit of $500,000. Ian's sailboat collides with another vessel, damaging its hull and injuring its passengers. The loss totals $1,100,000. How much will Ian's personal umbrella insurer pay for the loss?

$600,000 Even though Ian failed to maintain the $500,000 underlying limit, his personal umbrella insurer will pay no more than it would have paid if Ian had a $500,000 underlying limit.

Part C - Uninsured Motorists Coverage - Insuring Agreements

- types of expenses include - medical expenses, rehabilitation, lost wages Persons Covered: -named insured -any other person occupying covered auto -any person legally entitled to recover damages Criteria that determine what is an UM vehicle: - no bodily injury insurance or bond - bodily injury liability policy or bond is not in force - hit-and-run - if the bodily injury insurance company denies coverage or becomes insolvent Criteria that determine what is NOT an UM vehicle: - it is owned by, furnished, or available for regular use of you or any family members - it is owned by self-insurer - owned by government unit or agency - operated on rails or crawler treads - designed mainly for use off public roads while not on public roads - located for use as a residence or premises

Definitions - Covered Auto

-Any vehicle on the dec page -newly acquired auto -any trailer that ind does not own, while being used as a temp substitute for any other vehicle because other auto is: 1. breakdown 2. repair 3. servicing 4. Loss 5. Destruction - temporary substitute auto or trailer

Part A - Liability Coverage - Exclusions

-Intentional Injury - Property owned or transported - Property rented to, used by, or in the care of the insured - Bodily injury to an employee of an insured - Public or livery Conveyance - Garage business use -Other business use -Vehicles used without reasonable belief of being entitled -Nuclear energy liability loss - Vehicles with fewer than four wheels or designed for off-road use - Other vehicles owned by insured or available for insured regular use - Vehicles owned by or available for family member's regular use - Racing

Part A - Liability Coverage - Insuring Agreement

-states insurers duties to pay damages and defense costs - damages include: compensatory damages, punitive or exemplary damages - prejudgment interest - interest that may accrue on damages before a judgment has been rendered -defines the persons and organizations insured under Part A Four classes: - named insured and family members - any person using the named insured's covered auto, - any person or organization legally responsible for the acts of a covered person while using a covered auto - any person or organization legally responsible for the named insured or family members use of any auto or trailer

Under the HO-3—Special Form (HO-3) Section I—Conditions, the Loss Settlement condition Question options: A) Establishes the process for determining the amount to be paid for a property loss. B) Outlines a method for resolving disagreements between the insured and the insurer. C) Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. D) States that the insurer will adjust all losses with the insured or the insured's spouse if a resident in the same household.

A) Establishes the process for determining the amount to be paid for a property loss.

Property described in Coverages A, B, and C of an HO-3—Special Form (HO-3) that is destroyed, confiscated, or seized by order of any governmental or public authority is Question options: A) Excluded. B) Covered. C) Covered, but subject to a special sublimit. D) Covered in excess of a large deductible.

A) Excluded

One of the main factors used in developing a base premium for a homeowners policy is A) The public protection class. B) The effect of endorsements on the premium. C) A change in the deductible from $500 D) The construction date

A) The public protection class.

Which one of the following has special limits of liability within Coverage C of the HO-3—Special Form (HO-3)? Question options: A) Theft of firearms B) Fire damage to jewelry C) Flood damage to a fur coat D) Fire damage to silverware

A) Theft of firearms.

A disability income policy has a rider that increases the monthly benefit amount by 4 percent for each of the first five years the policy is in force, if benefits have not yet begun. This is an example of which one of the following types of riders? Choose one answer. A. Automatic increase B. Future increase option C. Guaranteed insurability D. Cost of living adjustment

A. Automatic increase. This is an example of an automatic increase rider. A cost of living adjustment rider increase benefit payments that are already being made.

Which one of the following is a true statement regarding Coverage E—Personal Liability and Coverage F—Medical Payments to Others of the HO-3—Special Form (HO-3)? Choose one answer. A. Coverages E and F exclude coverage for the insured's rendering or failure to render professional services. B. Loss that results from the transmission of a communicable disease by an insured is specifically covered under Section II of the homeowners policy. C. Corporal punishment is specifically defined in the homeowners policy as "spanking, slapping, hitting, and similar disciplinary actions." D. The controlled substance exclusion applies to the legitimate use of prescription drugs by a person following the orders of a licensed physician.

A. Coverages E and F exclude coverage for the insured's rendering or failure to render professional services, as this business loss exposure should be addressed by a professional liability policy.

The Jordans own a small ranch, and keep several ponies on the property for their personal use. Mr. and Mrs. Jordan are concerned that their children's friends and visiting relatives could be injured when riding the family's ponies. What coverage would the unendorsed DP-3 policy provide for this loss exposure? Choose one answer. A. No coverage B. Full coverage, up to the policy limits C. Medical expenses only, up to $2,000 D. 20 percent of the Coverage A limit

A. No coverage, DP3 does not offer liability coverage

All of the following are policy conditions that apply to both Sections I and II of the HO-3—Special Form (HO-3), EXCEPT: Choose one answer. A. Suit Against Us B. Liberalization C. Nonrenewal D. Death

A. Suit against us

All of the following statements about the HO-5—Comprehensive Form (HO-5) policy are correct, EXCEPT: Choose one answer. A. The HO-5 Coverage D provides broader coverage than the HO-3 Coverage D. B. The HO-5 covers water damage for personal property away from a premises owned by an insured. C. The HO-5 generally covers personal property damaged by rain through an open window even if the building itself is not damaged. D. The HO-5 special limits for jewelry and furs apply to items that are lost.

A. The HO-5 Coverage D provides broader coverage than the HO-3 Coverage D.

Which one of the following is covered for watercraft liability under an HO-3 policy?

An ISO HO-3 policy provides watercraft liability coverage for all inboard, inboard-outdrive, and sailing vessels not owned or rented by an insured.

Which one of the following reduced intensive development in repeatedly flooded areas to help restore the natural functions of floodplains, such as wildlife biodiversity and wetlands that absorb flood waters? Choose one answer. A. National Flood Insurance Act of 1968 B. Flood Insurance Reform Act of 2004 C. Emergency Program D. Regular Program

B. Flood Insurance Reform ACT of 2004

Kevin recently purchased a long-term disability income policy. The policy states that he can renew the coverage until age 65 as long as he is gainfully employed. However, the insurer reserves the right to raise the premium at renewal. This policy is considered Choose one answer. A. Optionally renewable. B. Guaranteed renewable. C. Conditionally renewable. D. Noncancelable.

B. Guaranteed renewable.

Off-premises theft coverage is available under the ISO Dwelling Policy program Choose one answer. A. On an ACV basis under Coverage C—Personal Property. B. Only if on-premises coverage is purchased. C. Up to the policy limits for money, jewelry, and firearms. D. Only under the Limited Theft Coverage endorsement.

B. Only if on-premises coverage is purchased.

Most Fair Access to Insurance Requirements (FAIR) plans will not cover Choose one answer. A. Properties which the voluntary market is unwilling to insure. B. Properties that are vacant or open to trespass. C. Properties that are susceptible to damage by riot or civil commotion. D. Properties in need of credit support.

B. Properties that are vacant or open to trespass.

The Claim Expenses additional coverage under Section II of a homeowners policy covers Choose one answer. A. Premiums on bonds exceeding the personal liability limit. B. The insured's reasonable expenses at the insurer's request. C. Medical payments incurred by others. D. The insured's personal liability.

B. The insured's reasonable expenses at the insurer's request.

A homeowners policy differs significantly from the DP-3 policy in that the unendorsed DP-3 policy Choose one answer. A. Only provides liability coverage for owner-occupied dwellings. B. Does not provide liability coverage. C. Provides liability coverage only for on-premises occurrences. D. Does not provide liability coverage for 'intentional acts.'

B. The unendorsed DP-3 policy does not provide liability coverage.

With a long-term care insurance plan, an elimination period Choose one answer. A. Results in reduced benefits for 180 days. B. Functions as a "time deductible." C. Helps protect against inflation. D. Is the time during which a policy cannot be canceled.

B. Time deductible. The elimination period functions as a "time deductible" because coverage does not begin until after a certain time has elapsed.

Long-term care policies have physician certification (gatekeeper) provisions that determine Choose one answer. A. Renewal and refund requirements for nonpayment of premium. B. Whether the insured is eligible for benefits under the policy. C. The underwriting criteria for policy renewal. D. The criteria for approved nursing care facilities.

B. Whether the insured is eligible for benefits under the policy.

The HO-3—Special Form (HO-3) excludes coverage for liability assumed under contract or agreement. However, exceptions apply, provided the loss exposures do not involve coverage excluded elsewhere in the policy. Which one of the following describes an exception? Choose one answer. A. Agreements intending to injure a third party B. Written contracts relating to the ownership of an insured location C. Liability assumed after an accident occurs D. First-party liability

B. Written contracts relating to the ownership of an insured location

Sam and Sophia insure their house with an unendorsed HO-3—Special Form (HO-3) policy. Sam stores a small fishing boat and trailer behind the house. While they are out for the evening, a fire destroys most of their kitchen and completely destroys the boat and trailer. Assuming Sam's boat and trailer are valued at $4,000 and ignoring any deductible that may apply, what amount will their HO-3 insurer pay for the loss of the boat and trailer? A) $0 B) $1,000 C) $1,500 D) $4,000

C) $1,500

Bert and Maggie insure their house with an unendorsed HO-3—Special Form (HO-3) with a Coverage A—Dwelling limit of $300,000, which is the replacement cost of the house. A fire destroys their detached garage. The cost to replace the garage is $35,000. Ignoring any deductible that may apply, how much will Bert and Maggie's insurer pay to replace the detached garage? A) $20,000 B) $25,000 C) $30,000 D) $35,000

C) $30,000

Adam and his insurer disagree on the amount of a loss covered by his homeowners policy. Adam wants the insurer to pay $10,000 toward the loss. The insurer's representative feels that the loss should be valued at $5,000. How could the appraisal process resolve this situation? Question options: A) Both Adam and the insurer will jointly select an acceptable appraiser to set the value. B) Adam's loss will be valued at $7,500 which is an equitable compromise. C) Adam and the insurer will each select an appraiser, and the two appraisers will submit their differences to an impartial umpire who will reach a resolution. D) Adam is forced to litigate the loss since agreement cannot be reached.

C) Adam and the insurer will each select an appraiser, and the two appraisers will submit their differences to an impartial umpire who will reach a resolution.

A homeowners policy premium is determined by first developing the base premium. The base premium is influenced by certain factors, including which one of the following? A) Package policy credits B) Claim history C) Dwelling location D) Insurance score

C) Dwelling location

A storm causes power lines to break ten miles from the insured's premises. The loss of electrical power causes food in the insured's freezer to thaw and spoil. Coverage for this loss is A) Covered because damage resulting from loss of electrical power is covered. B) Covered because it was caused by a covered peril off the residence premises. C) Excluded because the power failure occurred off the residence premises. D) Not covered because food is not considered personal property.

C) Excluded because the power failure occurred off the residence premises.

Jacob lives in a rural farmhouse which he insures under an unendorsed DP-3 policy because the lack of public fire protection makes it ineligible for homeowners coverage from his insurer. The dwelling policy includes the following limits and coverages: Limit Coverage A $125,000 Coverage C $10,000 Jacob recently took an extended tour of Europe, and while he was traveling on a train, luggage with all his clothing, personal effects, and souvenirs was destroyed in a baggage car fire. Jacob values the lost property at $2,000. Ignoring any deductible that may apply, how much of Jacob's loss will be covered by his DP-3 policy? Choose one answer. A. $ 0 B. $ 200 C. $1,000 D. $2,000

C. $1000 The DP-3 provides up to 10 percent coverage of the Coverage C limit for loss of property covered under Coverage C while the property is anywhere in the world (10% of $10,000 = $1,000).

Alita owns a single-family home which she insures under a Dwelling Property 3—Special Form (DP-3) with a Coverage A limit of $150,000, a Coverage C limit of $10,000, no other limits or endorsements, and a $1,000 deductible. Alita had rented the partially-furnished property under a long-term lease, and her tenant added an attached screened-in porch at a cost of $8,000. Recently, the home suffered a loss by fire valued at $148,000. Contents belonging to Alita with an ACV of $15,000 were also destroyed. How much will Alita's insurer pay for the loss? Choose one answer. A. $147,000 B. $148,000 C. $158,000 D. $159,000

C. $158,000, The insurer will pay: (148K loss - 1K ded) + 10K Cov C limit + 1K additional insurance (10% of Cov C for tenant improvements).

Brian owns a mobilehome at a permanent mobilehome park in Florida. He rents the residence to retirees during the winter months for $3,000 per month. Brian insures the property under a DP-3 dwelling form with limits of $40,000 for Coverage A, and $10,000 for Coverage B. A windstorm caused $10,000 in damage to the structure and Brian was unable to rent it for three months during his normal rental season while making repairs. Ignoring any deductible, how much will Brian recover from his insurer? Choose one answer. A. $10,000 B. $11,000 C. $18,000 D. $19,000 Incorrect. $10,000 for the structural damage + $8,000 (maximum of 20% of Coverage A) for fair rental value = $18,000.

C. $18,000 - $10,000 for the structural damage + $8,000 (maximum of 20% of Coverage A) for fair rental value = $18,000.

All of the following are included as insureds for the Section II—Liability Coverages of a homeowners policy, EXCEPT: Choose one answer. A. The named insured's 17-year-old foster child B. The 19-year-old exchange student who temporarily lives with and under the care of the named insured and his spouse C. The homeowners association that sends a loss assessment bill to the named insured D. The named insured's neighbor while caring for the insured's dog if the dog causes injury while in the neighbor's care

C. All are insureds under the policy except for the homeowners association.

Phil was unable to obtain homeowners insurance for his desert canyon home through his private insurer because the area is subject to brush fires, so he was forced to obtain it through the local FAIR plan. Will Phil's private insurer likely be willing to provide theft coverage for this property? Choose one answer. A. Yes, most FAIR plans provide theft coverage, so any private coverage would be excess. B. No, If FAIR plan coverage is provided, private insurance is not available. C. Yes, because fire is the primary loss exposure, and coverage is provided by the FAIR plan. D. No, because the private insurer would be forced to provide fire coverage as well, which is unacceptable to the insurer.

C. Yes, because fire is the primary loss exposure, and coverage is provided by the FAIR plan.

Doris owns jewelry appraised at $10,000. She would like insurance coverage that will protect her jewelry for its appraised value. Doris also would like broad coverage for her jewelry in case she accidentally loses a piece or a stone falls out of a ring. Assuming that she purchased an HO-3—Special Form (HO-3), which one of the following will provide the coverage she wants? Choose one answer. A. The unendorsed HO-3 B. An HO-3 with a Supplemental Loss Assessment Coverage endorsement with a $10,000 limit C. An HO-3 with a Scheduled Personal Property endorsement scheduling $9,000 of the jewelry, on top of the $1,000 coverage limit provided by the HO-3 D. An HO-3 with a Scheduled Personal Property endorsement scheduling all of the jewelry

D. An HO-3 with a Scheduled Personal Property endorsement scheduling all of the jewelry

Part B of original Medicare (medical insurance) provides benefits for which one of the following? Choose one answer. A. Inpatient hospital care B. Outpatient prescription drug coverage C. Hospice care D. Doctors' services

D. Doctors' services Outpatient prescription drug coverage is covered by Part D of Medicare.

Personal property coverage for watercraft is Choose one answer. A. Excluded by the homeowners and DP-3 policies. B. Provided by the homeowners policy and the DP-3 policy for watercraft under 25 horsepower. C. Excluded by the DP-3 policy but covered on a limited basis under the homeowners policy. D. Provided on a limited basis for rowboats and canoes under both the homeowners policy and the DP-3 policy.

D. Provided on a limited basis for rowboats and canoes under both the homeowners policy and the DP-3 policy.

Under which one of the following conditions of a homeowners policy is each insured seeking protection treated as if he or she has separate liability coverage under the policy? Choose one answer. A. Limits of Liability condition B. Voluntary Payment condition C. Singularity of Coverage condition D. Severability of Insurance condition

D. Severability of Insurance condition

Under which one of the following conditions of a homeowners policy is each insured seeking protection treated as if he or she has separate liability coverage under the policy? Choose one answer. A. Limits of Liability condition B. Voluntary Payment condition C. Singularity of Coverage condition D. Severability of Insurance condition

D. Severability of Insurance condition

Long-term care insurance typically covers Choose one answer. A. Skilled nursing home care only. B. Home healthcare but only if provided by nonfamily members. C. General services that help the insured live independently. D. Skilled nursing home care and custodial care.

D. Skilled nursing home care and custodial care.

The HO-3—Special Form (HO-3) Sections I and II—Conditions contain a liberalization clause that Choose one answer. A. Broadens the definition section in accordance with state regulations. B. Specifies how coverage may be cancelled by the insured. C. Increases the limit of liability when there are multiple insureds involved in a claim. D. Specifies how coverage is broadened for insureds when the insurer changes a current edition of a policy.

D. Specifies how coverage is broadened for insureds when the insurer changes a current edition of a policy.

Which one of the following make a property ineligible for both FAIR plans and windstorm and beachfront plans? Choose one answer. A. Vacancy B. Hazardous environmental conditions C. Difference in conditions coverage D. Unrepaired damage

D. Unrepaired damage

Which one of the following is true with regard to the personal property coverages provided under a homeowners policy?

Some of the personal property coverages under a homeowners policy are restrictive in terms of limits and/or covered locations, creating a need for personal inland marine policies.

Definitions - Newly Acquired Auto

Two types of autos: -private passenger auto -pick up or van that no other insurance policy covers - must have Gross Vehicle Weight Rating of 10,000 pounds or less - can't be used for delivery or transportation of goods and materials, unless needed for business purposes, like farming or ranching Includes two stipulations for liability medical payments, uninsured motorists or any other PAP coverage except damage to your auto: - additional auto is automatically covered for fourteen days after insured becomes owner, the insured must request coverage - replacement auto is covered for remainder of the policy period even if the insured does not ask for coverage The two stipulations regarding damage to your car are: -if insured carries collision coverage or other than collision (OTC) coverage on at least one auto gets automatic coverage on a newly acquired auto for 14 days. -if insured does not have this coverage, they receive automatic coverage for 4 days subject to a $550 deductible