exam questions

What is the maximum dollar amount an insurer will pay for loss to sound equipment permanently installed in a vehicle insured under a business auto policy?

$1,000

An insured has a policy with an insurance company that became insolvent. The policy has $1,600 of unearned premium. How much of this premium will the insured be able to recover from the Texas Property and Casualty Insurance Guaranty Association?

$1,600

Workers compensation rating is developed by applying a rating bureau job classification rate to each

$100 of payroll.

An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage?

$14,000

The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss?

$160,000

In Texas, unless higher optional limits are purchased, the maximum amount payable for all auto personal injury protection benefits arising out of a single accident shall not exceed

$2,500.

If an auto policy has split limits of 30/60/25, how much will the policy pay for property damage in a single accident?

$25,000

An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has been depreciating at $200 per year and the insured's policy is written on the actual cash value(ACV), how much will the policy pay toward the insured's new roof?

$5,000

Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?

$5,000

How many hours of continuing education can be carried over from one licensing period to the next?

0

An insurer must acknowledge receipt of a Notice of Claim within how many days?

15

An insurer may cancel a personal auto policy if the policy has been in effect for at least how many days?

60 days

Insurers must file all rates and forms for Commissioner's approval within how many days prior to use?

60 days

Coverage under the builders risk form will end in all of the following situations EXCEPT

60 days after the construction has ended.

How soon after a direct loss does the period of restoration for business income coverage under businessowners property insurance begin?

72 hours

An agent's license will terminate within how many days from the due date of obligatory fees and continuing education requirements?

90

A tornado that destroys property would be an example of which of the following?

A peril

With respect to auto insurance, the term owned autos includes all of the following EXCEPT

A pickup or van titled to and used in the named insured's business.

An uninsured motor vehicle includes all of the following EXCEPT

A vehicle owned and operated by a self-insurer.

What type of liability would a person who owns wild animals have?

Absolute

In a personal auto policy, the medical payments coverage is similar to

Accident insurance, because it pays medical expenses regardless of fault.

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?

Additional coverage

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

Agreed value

Which of the following can qualify for a surplus lines license?

Any of the above

Under a personal auto policy, in which of the following locations would a vehicle primarily garaged in California be covered?

Any other state

Which of the following would be considered an insured under a business auto coverage form?

Anyone while using, with permission, a covered auto owned by the named insured

All of the following must be true of an individual before a license can be issued EXCEPT that the

Applicant submitted his or her most recent tax return to the department.

A policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal do not agree on the value of a property loss is known as

Appraisal.

Under a businessowners policy, an insured can cancel the policy

At any time by mailing a written notice of cancellation.

Which members of a corporation or partnership are required to obtain an individual insurance agent's license in order for the association to be licensed?

At least one officer or partner and any other person acting as an agent

Which of the following is an example of a protective safeguard in a businessowners policy?

Automatic sprinkler system

A liability policy that provides coverage for a claim for injury or damage if the claim is first reported or filed against the insured during the policy period is called

Claims-made form.

A professional who wants coverage for all liability exposures should purchase what form of liability insurance?

Commercial general and professional

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the i

Consideration

All of the following are supplemental payments found in liability policies EXCEPT

Costs the insured incurred in hiring an attorney.

An insurance professional advises a client regarding the benefits of her life insurance policy, in exchange for a fee. Which of the following terms best describes this type of insurance professional?

Counselor

The part of a property policy that shows the amount of insurance, premium, and policy term is the

Declarations.

Employment practices liability insurance (EPLI) would NOT cover claims arising from

Deliberate law violation.

A beauty parlor burns to the ground. What type of loss is this to the owner?

Direct

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer.

In addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT

Employers liability.

All of the following are excluded in the equipment breakdown basic policy EXCEPT

Explosion of steam boilers.

Which federal act provides benefits to injured civilians who are employed by the federal government?

Federal Employees Compensation Act

The requirement that agents not commingle insurance monies with their own funds is known as

Fiduciary responsibility.

All of the following are exclusions that apply in all three types of Dwelling Policies EXCEPT

Fire or lightning

Which of the following would be named on the declarations page of a property or liability policy?

First named insured

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?

Foreign

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?

Foreign

Which of the following is NOT covered by the condominium unit owners endorsement?

Furniture in the building

Which of the following homeowners forms is designed to provide named peril coverage for personal property to individuals who rent an apartment?

HO-4

In liability insurance policies, supplementary payments are made

In addition to the limit of liability.

The pro rata liability clause is designed to protect the principle of

Indemnity.

What do individuals use to transfer their risk of loss to a larger group?

Insurance

A health care provider wants to provide medical professional liability insurance for its employees. Unfortunately, the provider has searched unsuccessfully for an insurance carrier that can provide this insurance. Which of the following will most likely be able to provide this insurance?

Joint Underwriting Association

Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss?

Liability coverage

A policy condition that states if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type is known as

Liberalization clause.

A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the following statements is true?

Loss by vandalism and malicious mischief is excluded.

Under the Texas Property and Casualty Insurance Guaranty Association, what is the maximum amount that a claimant may recover from an occurrence under a policy issued by an insolvent insurer?

The lesser of the above amounts

A dealership loans a car to its customer to use while the dealership is repairing the customer's car. If the dealership has business auto physical damage coverage and a customer's automobile insurance does not cover damages to loaner cars, which of the following is true?

The loaner vehicle is covered by the business auto policy.

According to businessowners policy Section I, which of the following is NOT a condition to be met for the terms of the policy to apply to mortgageholders?

The mortgageholder must petition the state department of insurance for named status.

An agent explains the details of a life insurance policy to a client. The agent does not realize, however, that the state has recently rewritten two of the provisions. As a result, the agent inadvertently misrepresents the policy, making it more attractive than it really is. What best describes this situation?

There is no misconduct

All of the following are true statements regarding the supplementary payments of a commercial general liability policy EXCEPT

They pay defense costs even after the aggregate limit has been reached.

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

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

Which common policy condition prohibits the insured from changing the rights or duties as defined under the policy to any other person or entity without the written consent of the insurance company?

Transfer of rights and duties under the policy

An applicant properly notifies her insurer of a straightforward claim, but the insurer waits an exceedingly long time to process it. Which of the below terms best describes the behavior of the insurer?

Unfair claims settlement practice

If the death of an employee results from a compensable injury, the insurance carrier will pay

Up to $10,000 for the cost of burial.

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty

When a replacement auto is acquired during the policy period, what coverage will apply to it automatically under a personal auto policy?

Whatever coverage applied to the vehicle being replaced

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?

other insurance

In Texas, under workers compensation law, lifetime income benefits are paid at what rate?

An amount equal to 75% of the employee's average weekly wage

Which of the following statements regarding coverage for the flood and earthquake perils is true?

Both flood and earthquake are excluded perils in all property policies.

All of the following are conditions commonly found in the insurance policy EXCEPT

Insuring agreement

All of the following are true regarding deposit premium EXCEPT

It is 50% of the actual premium.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Not taxable since the IRS treats them as a return of a portion of the premium paid.

When is a hired and nonowned auto liability endorsement available in a businessowners policy (BOP)?

Only if the insured does not have commercial auto coverage

Which of the following personal auto coverages would apply for damage caused by a bird hitting the windshield?

Other-than-collision coverage

What is the major difference between a stock company and a mutual company?

Ownership

Which of the following liability exposures is most likely for a small specialty clothing retail boutique?

Premises liability exposure

Which of the following liability policies is usually written on a "claims-made" form?

Professional liability insurance

A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called

Proof of loss.

The Gramm-Leach-Bliley Act was passed to

Protect private customer information filed with a financial institution.

Under the personal auto policy, liability for bodily injury resulting from the insured's use of a nonowned automobile is

Provided by the insured's policy on an excess basis.

All of the following are considered parts of the policy structure EXCEPT

Provisions.

After a loss, an insured covered by a business property coverage is NOT required to

Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation.

The commission will refer an employee who is receiving supplemental income benefits to the Rehabilitation Commission if it determines that rehabilitation and training will

Return the employee to work earlier.

Insurance is the transfer of

Risk.

A Certificate of Insurance is a written document that

Shows the types and amounts of insurance issued to the insured.

A license may NOT be denied, suspended, or revoked if the licensee

Submits an unsigned insurance policy application.

An agent discovers his newest client was the result of a referral. To show his thanks to the referring customer, the agent could

Thank the customer.

All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT

The injury or damage must occur within 90 days after the insured's work is completed.

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.

Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT

The insurer does not have the right to inspect the insured's property and operations.

If more than one person has an insurable interest in the property covered under a dwelling policy,

The insurer will be liable for only the insured's interest in the damaged property.

When ABC Appliance's marketing stated that its mowing machine was the only safe mower available for purchase in town, ABC was sued by XYZ Lawn and Garden. ABC's coverage would come from which part of its general liability coverage?

ersonal and advertising injury liability

All of the following statements concerning coinsurance are true EXCEPT

he coinsurance formula will also be applied to total losses.

Which of the following statements is true concerning a bonded contractor who defaults on a construction performance contract?

he obligee may engage another contractor and then seek reimbursement from the surety.

All of the following are factors in the determination of actual cash value EXCEPT

insurance premium paid.