Exam FX practice test

All of the following events will terminate a producers appointment with an insurer EXCEPT

A new commissioner is put in office

Which of the following types of valuation works best for property whose value does not fluctuate much ?

Agreed value

Which of the following will NOT qualify as a hired auto ?

An auto borrowed from an employee

Compared with other drivers in his age group , a driver has had more minor accidents and traffic violations , which of the following rating types would most accurately reflect the driver true insurance risk ?

Experience

If an insurer intends to terminate an agents contact the insurer must give the agent 120 day notice if the reason is if for

Failure to meet production requirements

The insured owns an older home with lath plaster walls . Following a kitchen fire, the insurance company pays to have the walls replaced with drywall that is just as functional, but cost less than Lath plaster . Which loss valuation allows the insurance company to have plaster replace with drywall ?

Functional replacement cost

An insured paid her auto insurance premium for 6 months , after 2 months she discovers she qualifies for a better rate with another company. Which one of the following is true ?

Her present carrier will issue a premium refund

An insured is involved in an auto accident in another state. The state has a financial responsibility law that specified limits of liability higher than the limits shown in the declaration. What amount will the insureds policy pay .

Higher limits

What is a surplus lines insurance ?

Insurance placed with an unauthorized insurer

All of the following actions by a person could be described as risk avoidance EXCEPT

Investing in the stock market

A deli owner has a businessowners liability policy. When a customer slipped and hurt herself at the deli, the liability policy paid for medical expenses. The customer, however, is now suing the business owner because she claims there was no caution sign warning her that the floor was wet. What is the insurer obligated to do?

Pay to defend the policyowner in the lawsuit because liability coverage contains to a duty to defend provision

And insurance company can make changes to premium rates or policy terms

Prospectively only

I'm a dwelling policy , which of the following other structures would be covered?

Rented to neighbor for use as a private garage

Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?

Special

In Washington , the FAIR Plan is administered by

The Industry Placement Facility

Replacement cost is defined as

The market value of property at its current cost , new and without reduction for depreciation.

I'm terms of parties to a contact , which of the following does NOT describe a competent party ?

The person must have at least completed secondary education

If a producer has procured insurance coverage For a policy owner through and an authorized insurer , which of the following could happen ?

The producer may be held liable for policy claims .

Which of the following is NOT a goal of risk retention ?

To minimize the insured's level of liability in the event of loss

Which of the following best expresses the purpose of a stated value contact ?

To pre-establish the amount of coverage available for property items that are difficult to value .

An insured covered under a Mobile Homeowners Policy wants to move the location of the covered mobile home . Which of the following must the insured obtain from the insurer ?

Transportation/Permission to Move Endorsement

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

apparent

What is the legal defense that can be used in most states in which proportionate damages may be awarded when both the plaintiff and defendant were negligent ?

comparative negligence

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

false advertising

Which of the following liability coverages must be added by endorsement to the homeowners policy in order to apply?

personal injury

If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT

physical damage

Which loss listed below would be fully covered by a homeowners policy?

$2000 silver tea set stolen

Personal Injury Protection will pay for medical and hospital expenses incurred within

3 years of the accident

How long is the waiting period after the application has been accepted before flood coverage goes into effect?

30 days

Within how many days from Pre-trial hearing must insurance producers report to the commissioner of any criminal prosecutions brought against them

30 days

An insurance contract must contain all of the following to be considered legally binding EXCEPT

Beneficiary's consent

Which of the following statements regarding coverage for flooding earth quake perils is true ?

Both flood and earthquakes are excluded perils in any polices

Homeowners policy provides coverage for

Business Property while on the residence Premises

Which of the following is issued by the state Department of insurance to show that the insurer as power to write insurance contacts in that state?

Certificate of Authority

An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have?

Combined single

Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer . The insurer will

Either pay or defend as it decides

An additional loss that results from a direct loss of property is called a/an

Indirect loss

Which of the following statements is NOT true regarding a personal information liability policy?

It provides errors and omissions coverage for an agency .

While cutting grass in your yard with your brothers borrowed lawnmower , the fuel line ruptured and the lawn mower is destroyed in the fire . How will your HO liability react?

It will cover the damage

Extended nonowned coverage endorsement in PAP broadens which of the following coverages ?

Liability and medical payments

Which of the following coverages in dwelling and homeowners policies is for indirect losses ?

Loss of use

If an insurer advertises material that exaggerated the divided that a policy pays ,what kinds of illegal act it's committing?

Misrepresentation

Which of the following does the term proximate cause refer too ?

Negligence that held to an injury

Which term describes an individual who is domiciled and Licensed as a resident producer and than Washington ?

Nonresident producer

When does a property's fair value determined ?

On the effective date of the policy

Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance ?

Only written statements can be considered fraud

The HO-3 homeowners policy provides

Open peril coverage on the dwelling and broad form coverage on personal property.

A participating insurance policy may do which of the following?

Pay dividends to the policyowner

The Federal Fair Credit Reporting Act

Regulates consumer reports

What determines the maximum amount of bodily injury that can be purchased underinsured motorist coverage ?

The amount of third party liability coverage provided by the policy

Following is NOT a valid reason to deny an insurance claim under a Personal Injury Protection Endorsement?

The injury claim was related to an auto mobile accident

Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy?

The insured is injured while driving his motorcycle on his resident premises

Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy ?

The insured would be responsible the amount required as underlying limits in the event of a claim

All of the following are true regarding physical damaged coverage EXCEPT

The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle .