FL Personal lines study set

What is the maximum service charge a general lines agent may charge per installment for financial insurance premiums?

$3

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

$30,000

Which of the following is NOT true about earthquake coverage?

Coverage is commonly provided through a federally-funded program.

Which of the following dwelling coverage forms would pay replacement cost for the dwelling?

DP-2 and DP-3

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

Declarations.

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?

Defamation

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.

What is the purpose of the coinsurance clause found in property insurance policies?

Encourage the insured to insure the property closer to its full value

All of the following actions can be described as twisting EXCEPT

Explaining to client the advantages of permanent insurance over term and suggesting changing policies

Replacement cost is defined as

Full replacement of property at its current cost, new and without reduction for depreciation.

Under the professional liability loss settlement provision, what must an insurer do before offering to pay a claimant to settle a claim?

Get the insured's consent

The homeowners policy form that covers condominium unit owners is

HO-6.

The policy conditions define

How parties to the contract must act following a loss.

With regards to the personal auto policy, in the event of a claim or loss, the insured is required to do all of the following EXCEPT

Immediately report to an emergency room for medical examination.

The time limit on certain defenses provision in health policies deals with which of the following?

Incontestability of statements on the application

Which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment?

Insurance Guaranty Association

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

Insurance premium paid.

Persons covered under an insurance policy, whether named or not, are known as the

Insureds

The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the

Insuring agreement.

The Office of Insurance Regulation is responsible for all of the following insurer activities EXCEPT

Issue of securities.

Which of the following best describes a misrepresentation?

Issuing sales material with exaggerated statements about policy benefits

All of the following statements describe the concept of strict liability EXCEPT

It is imposed on defendants engaged in hazardous activities.

If a person accumulates more continuing education hours than is necessary to fulfill the requirements for a 2-year period, which of the following will occur?

Larger.

Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?

Law of large numbers

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

The insured's house is located one mile from the county's new landfill and across the road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received was $80,000. The insurance company will insure the house for only $80,000. What method of valuation is used to insure this property?

Market value

Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called

Material misrepresentations.

According to the standard mortgage clause, who has the right to bring a suit in their own name to recover damages, pay policy premiums, and submit a proof of loss?

Mortgagee

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

Negligence that leads to an injury

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

The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property is called

Pro rata liability.

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.

Limited fungi, wet or dry rot, or bacteria endorsement in HO policies applies to

Property and liability losses

The Gramm-Leach-Bliley Act was passed to

Protect private customer information filed with a financial institution.

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

Provisions

The risk of loss may be classified as

Pure risk and speculative risk.

What type of information would be found in a policy's insuring agreement?

Renewal dates

Which method of loss valuation is contrary to the basic concept of indemnity?

Replacement cost

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

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

Twisting.

How can an agent determine if an insurer is authorized to transact insurance in the state of Florida?

Visit the OIR website and conduct a company search

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

Warranty

Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective?

12:01 am the day after the application and premium payment are mailed

For cancellation of a commercial property policy during the first 90 days, for a reason other than nonpayment of premium, the insurer must give the insured advance written notice of at least how many days?

20 days

Within how many days must a property insurer pay on a claim after the settlement is reached?

20 days

If a licensee changes his or her residence address, within how many days must the department be notified?

30

An agent has been convicted of a crime punishable by a 1-year imprisonment. Within how many days must the agent notify the department of insurance?

30 days

An insured's driver's license was revoked 90 days after his auto insurance policy was issued. If the insurer chooses to cancel the auto insurance policy, it must give the insured a minimum of how many days' notice?

45 days

The dwelling insured on HO-2, HO-3, or HO-5 forms is covered for replacement, provided that it is insured for at least what percentage of replacement cost on the date of loss?

80%

Which of the following would NOT be classified as personal property for insurance purposes?

A house

An automobile that is owned by multiple individuals who are not spouses or otherwise in the same household may be insured under a personal auto policy if

A joint ownership coverage endorsement is added.

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance

With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto?

A vehicle that is titled to another person, but is being used with permission by an insured

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

Absolute

Which of the following is another term for an authorized insurer?

Admitted

Which of the following describes the transfer of a legal right or interest in an insurance policy?

Assignment

Insurable interest in a property policy must be proven

At the time of loss.

In return for premium, an insurance company must

Be fair in underwriting and pay covered losses.

An insured was involved in an automobile accident for which the insured was at fault. Which of the following coverages would pay for damage to the insured's automobile?

Collision

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

Which of the following is a statutory defense?

Comparative negligence

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of

Concealment.

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions.

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 insurer violated?

Consideration

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

A Certificate of Insurance is a written document that

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

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

Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called

Specific coverage.

A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method?

Stated amount

When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as

Stated amount.

Which of the following insurers are owned by stockholders?

Stock

Insurance procured from an unauthorized insurer is called

Surplus lines insurance.

Negligence is defined as

The failure to do what a reasonable prudent person would do under given circumstances.

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.

The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT

The insured is injured while exiting a friend's mobile home.

Which of the following is most likely to occur if it is determined by the audit that the deposit premium was too high?

The insured will receive a return premium.

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 for the amount required as underlying limits in the event of a claim.

In which of the following situations would off-premises coverage in a broad theft endorsement of the insured's dwelling policy apply?

The insured's camera is stolen from his suitcase while he is on vacation.

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen?

The policy will not be affected.

All of the following are perils covered under the broad form dwelling policy EXCEPT

Theft.

In Florida, no-fault laws exempt an at-fault motorist who causes injury to another from suits for recovery for noneconomic losses, such as pain and suffering, unless

There is permanent injury.