Exam Questions to review
What is the limit for Medical Payments per person on a HO-2?
$1,000
The insured carries an unendorsed DP-3 Dwelling Policy ('02) on the home and personal contents. While traveling abroad someone broke into the home and stole $200 in cash, a shotgun valued at $1,000, and other household items valued at $2,000. Damage caused by the burglars is $1,500. Assuming no deductible applies to their coverage how much would be paid?
$1,500 Theft of contents is not covered, just the damage caused by burglars.
How many days notice is required when the insurance company would like to cancel the Homeowners Policy for non-payment of premium?
10 day
If an insured carries Coverage C (contents) under a dwelling (not homeowners) form, how much coverage applies on a worldwide basis?
10% of the coverage C limit
How many at fault accidents required for an insurer to be permitted to cancel a persons auto policy?
3 in 36 months
Which of the following watercraft would be covered under the liability section (Section II) of the HO form?
A kayak
Of the following, which scenario would an auto policy pay excess liability when the insured is negligent in an accident? A person uses his car to transport his coworkers. A person transports people in his vehicle from the airport to nearby hotels for a fee. A person drives his car into Canada. A person borrows a friend's vehicle to travel to the airport and has an at fault accident.
A person borrows a friend's vehicle to travel to the airport and has an at fault accident
The meeting of the mind is best describes by:
Agreement
The promise by one party that is conditioned on an uncertain event and where the value given by each party is unequal is called:
Aleatory Contract
Which of the following insurers must be members of the Arizona Property and Casualty Guaranty Fund? All non-authorized insurers licensed to sell property and casualty insurance in Arizona. All surplus lines insurers licensed to sell property and casualty insurance in Arizona. All authorized insurers licensed to sell property and casualty insurance in Arizona. All producers/insurers selling property and casualty insurance in Arizona.
All authorized insurers licensed to sell property and casualty insurance in Arizona
Liability coverage always excludes:
Damage or injury caused intentionally by the insured
All the following are covered under Section II of the homeowner policy EXCEPT: Injury to a newspaper carrier who slips on the insured's steps. Premiums on bonds required for lawsuits defended by the insurer. Intentional bodily injury to others by the insured. Reasonable expenses incurred by the insured to assist with a lawsuit.
Intentional bodily injury to others by the insured
An applicant has been advised by his insurer that something adverse appeared on his investigative consumer report. The information is in error. What can the applicant do?
Obtain the name of the reporting agency from the insurer and correct the error
For the insured dwelling and other detached structures, the DP-3 provides:
Open peril coverage for the dwelling and other structures
Which of the following dwelling forms will provide replacement cost for the dwelling: The broad (DP-2) and special form (DP-3) only. The basic (DP-1), broad (DP-2), and special (DP-3) forms. The basic (DP-1) and broad (DP-2) forms only. The special (DP-3) form only.
The broad (DP-2) and special form (DP-3) only
An insurance policy is a contract. Which of the following is true about how the court will rule if any of the contract is ambiguous? The court will rule in favor of the arbitrator. The court will rule in favor of the mediator. The court will rule in favor of the insurance company. The court will rule in favor of the insured.
The court will rule in favor of the insured
An insured has an HO-3 policy. They have insured the wife's diamond ring and the husband's gun collection on a personal property floater. All of the items are stolen. What policy and deductibles would apply?
The homeowner policy would not pay and the personal property floater would pay without a deductible.
All of the following statements are true regarding the cancellation or nonrenewal of an auto policy in Arizona, after it has been in effect for 60 days or more, EXCEPT: The insurer cannot cancel for nonpayment of premium. The insurer can cancel insurance obtained through fraudulent misrepresentation. The insurer can cancel or non-renew if an insured has had his or her drivers license suspended or revoked. The insurer can cancel or non-renew if, within 36 months, the insured has been convicted of a DUI, reckless driving, or leaving the scene of an accident.
The insurer cannot cancel for nonpayment of premium
An insured has a diamond ring scheduled on a Personal Articles floater for $8,000. She also has a Homeowner's policy with the same insurance company. The ring is stolen on vacation and the cost to replace the ring is $9,000. What will be the outcome of this loss?
The insurer will pay $8,000 from the Personal Articles floater and nothing under the Homeowner policy.
All of the following are true in regards to a personal auto policy EXCEPT: Liability insurance protects only those who are classified as "insureds" in the policy. Named insureds are covered for Liability claims arising from accidents that occur in Canada The maximum amount payable under the Supplementary Payments for court costs is $250. After policy limits have been exhausted by payment of claims, there is no further duty for the insurer to defend against other claims from the same accident.
The maximum amount payable under the Supplementary Payments for court costs is $250
How are the HO-2, HO-4 and HO-6 forms similar?
The perils covered
The insured carries an HO-3 homeowner policy. He has complied with the 80% to value provision for replacement cost dwelling coverage. He suffers a fire loss. Which of the following property is NOT covered on a replacement cost basis? The roof The wallpaper The sofa The windows
The sofa
What is true regarding deductibles under comprehensive and collision? They have separate deductibles. They share a deductible. The deductible must be at least $250. The deductibles must match.
They have separate deductibles
What type of contract is binding on only one party?
Unilateral
A homeowner has a Homeowners Policy HO-3. Which of the listed perils would be excluded when damaging personal property in the home? The roof collapsing due to the weight of ice and snow Hail damage to the roof of the home Water seeps into the house due to leaves blocking your gutters. It not only damages your walls but also the sofa Water and soap suds from your washing machine that damages your wall to wall carpeting
Water Seeps into the house due to leaves blocking your gutters. It not only damages your walls but also the sofa.
The insured carries a Personal Auto Policy providing a Bodily Injury Limit of 50/100. He injured 2 occupants in another vehicle. Their injuries total $60,000 for Mr. Jones and $50,000 for Mrs. Jones. The insurance company spent $40,000 in defense and investigation. How much will the insured's policy pay?
$140,000
Which of the following is not eligible for coverage under a homeowner policy form? A tenant living in an apartment building. An owner of a condominium. A residence premise located on a farm. A home that also has a tenant living in the basement.
A residence premise located on a farm
All of the following are covered by liability coverage under a Homeowner policy EXCEPT: A snowmobile in a park A golf cart on a golf course A runaway lawnmower Motorized wheelchair
A snowmobile in a park
Transportation expense through the Personal Auto Policy pays for which type of loss? A direct loss An indirect loss A speculative loss A casual loss
An Indirect Loss
Which of the following would be covered by a broad cause of loss form (HO-2) but not a modified cause of loss form (HO-8) when the insured has a Homeowner Policy ? Explosions that occur inside the home Collapse of the roof due to the weight of ice snow and sleet Lightning damage to the shingles A grease fire in the kitchen
Collapse of the roof due to the weight of ice snow and sleet
A car loses control, flips over and the windshield shatters. Which coverage on The Personal Auto Policy will pay to repair the windshield?
Collision
Which of the following is covered under the personal auto policy? Damage to a private garage rented by the insured. Intentional Acts. Damage to insured's property in the vehicle. Damage to property of others in the vehicle.
Damage to a private garage rented by the insured.
The Dwelling Policy (02) DP-2 provides which broad peril? Fire Internal Explosion Falling Objects Lightning
Falling Objects
T's 30 foot sailboat is stolen in the middle of the night from her garage. Which of the following statements is true about how her Homeowners Policy will pay for her 30 foot sailboat?
Her homeowner policy will pay up to $1500
A licensee in Arizona has intentionally violated the insurance code. In addition to or instead of revoking the license, the Director can:
Impose a civil penalty of not more than $2,500 for each violation
Where in the policy would the insured find the listed perils for the policy?
Insuring Agreement
The selling of insurance products through the use of captive agents, independent agents, or insurance company employees in a call center are examples of:
Marketing distribution systems
Mrs. Collins rents a house with an attached garage. While backing her car out of the garage her daughter opens the car door which catches the side of the garage causing severe damage to the wall. Mrs. Collins carries an HO-4 Homeowner Policy and Auto Policy and her landlord carries a DP-3. who should ultimately pay for the loss?
Mrs. Collins auto policy (she is liable for damages caused to other party)
A chance of loss without a chance of any gain
Pure Risk
Chance of loss is:
Risk
Losses caused by all of the following are covered under the National Flood Insurance Program, EXCEPT: Sewer backup/ water main breaks Overflow of tidal waters Mudslide Rapid accumulation or runoff of surface water
Sewer backup/ water main breaks
The insured is liable for $500,000 in damages for a personal injury claim that is covered under the insured's primary liability policy. The primary liability policy has a $300,000 limit per occurrence. The insured also has a $1 million umbrella liability policy with a $3,000 self insured retention limit. How would this case likely be settled?
The primary policy would pay $300,000 and the umbrella policy would pay $200,000
Which of the following is true about flood? There is one deductible that will cover both the dwelling and personal property. There are is a deductible for the dwelling and a separate deductible for personal property. Flood policies will never have a deductible because FEMA is covering the damage. Anyone that is selected by the federal government because of the location of their home will never have a deductible.
There are is a deductible for the dwelling and a separate deductible for personal property.
The purpose of the Arizona Property and Casualty Insurance Guaranty Fund is:
To provide for the payment of covered claims of insolvent insurers.
Which of the following is true? Umbrella policies will never have a retention because they are liability policies. Umbrella policies will have a retention when the underlying policy does not cover the loss. Umbrella policies will always have a deductible because the policy is a property policy. Umbrella policies will never have a retention when the underlying policy does not cover the loss.
Umbrella policies will have a retention when the underlying policy does not cover the loss
Which of the following will pay for D and her passenger's injuries when hit by a driver that has inadequate coverage ?
Underinsured Motorist
Which of the following is NOT true regarding the Mortgagee Clause? When the named insured commits fraud the mortgagee will not get paid on the claim. When the named insured commits fraud the mortgagee will still have an opportunity to file a claim. When the named insured does not submit a proof of loss in 60 days the mortgagee is given 60 days. The insurance company notifies the mortgagee in the event of cancellation because the bank has insurable interest.
When the named insured commits fraud the mortgagee will not get paid on the claim
Which of the following would pay through Part A - Liability (BI and PD) of a Personal Auto Policy? Your 11 year old child that accidentally hits the gear shift in your car and hits someone at the gas station. A CEO that rear ends one of their employees in the parking lot at work. Your 10 year old child that was injured when someone hit your car in the parking lot and drove away. A repairman that t-bones someone at an intersection while test driving your vehicle with your knowledge.
Your 11 year old child that accidentally hits the gear shift in your car and hits someone at the gas station
