Florida Certified Adjuster Pre-Licensing

Adjuster Andy is trying to determine a final settlement amount for Stacy's claim. Stacy's house was destroyed in a fire and it will cost $185,000 to rebuild it. Stacy's homeowners policy has a limit of $178,000 and a $1,800 deductible. Typically, how much would Adjuster Andy calculate Stacy's final settlement amount to be?

$178,000 (because the cost of repairs is more than the policy limit, the final settlement amount is the full policy limit ($178,000) and the deductible is absorbed into the amount of the loss that exceeds the limit.

Kelly took her eyes off the road and ended up smashing into the back of a passenger van. All five passengers were injured, and each one ended up with $25,000 in medical costs. Assuming Kelly has liability coverage with limits of 50/100/50, how much will she have to pay out of pocket?

$25,000

While Andrea was grocery shopping in BB Mart, the large Dairy sign fell off the wall and landed on her. Because of her extensive injuries, Andrea sued BB Mart and was awarded $375,000 in damages. BB Mart's Commercial General Liability policy has a general aggregate limit of $1,000,000 and a per occurrence limit of $300,000. What is the per occurrence limit after this claim is settled?

$300,000

Sam's Ocean Marine hull policy has a franchise deductible of $50,000. When Sam's ship suffers $75,000 in damage after being overtaken by pirates, how much indemnification can Sam expect to get from his insurer?

$75,000

HIPAA was enacted by the US Congress in _________.

1996

Under the Longshore and Harbor Workers' Compensation Act, how much would the surviving spouse of a deceased worker receive in benefits?

50% of the deceased worker's Average Weekly Wage

Josephine has purchased a Business Owners Policy. She insures both the real and personal property at 80% under the policy. Assuming no endorsements apply, the losses will be adjusted on a(n) _______________ basis.

A BOP offers replacement cost valuation for property losses if the business is insured for 80% of its value. For businesses that insure less than 80% of value, the policy will pay either actual cash value or the replacement cost with a penalty applied, whichever is higher.

A Discovery Form Commercial Crime policy can apply to losses discovered during the policy period, as well as up to how many days after its expiration date?

A Discovery Form Commercial Crime policy can apply to losses discovered during the policy period, as well as up to 60 days after its expiration date.

Which of the following is NOT one of the differences between a BAP and a truckers policy? A. A BAP uses coverage symbols to designate covered autos. B. A BAP typically excludes businesses that transport the property of others. C. Liability coverage in a truckers policy includes coverage for people who hire out or lend their cars to the insured for business purposes. D. A truckers policy includes trailer interchange coverage.

A. A BAP uses coverage symbols to designate covered autos.

On January 27, 2008, Ryan was using an exercise bike purchased from NusquamCycle when the chain broke, causing him to fall and severely bruise his knee. It seemed to heal just fine, but three years later, on January 25, 2011, Ryan's knee gave out while jogging. His doctor told him that he'll need surgery and that this deterioration most likely resulted from the earlier accident with the exercise bike. Which of the following CGL policies would cover Ryan's claim filed January 25, 2011? A. A claims-made policy from Jan 31 2010 -Jan 31 2011 with a retroactive date of Jan 1 2008 B. A claims-made policy from Jan 31 2010 -Jan 31 2011 with a retroactive date of Jan 31 2008 C. A claims-made policy from Jan 31 2011 -Jan 31 2012 with a retroactive date of Jan 1 2005 D. A claims-made policy from Jan 31 2010 -Jan 31 2011 with a retroactive date of Jan 1 2009

A. A claims-made policy from Jan 31 2010 -Jan 31 2011 with a retroactive date of Jan 1 2008

Andrew's friend Mario asked for a ride from Detroit to Cleveland, and Andrew decided to take Mario in his plane. Getting out of the plane, Mario trips and falls into the propeller and ends up losing 3 fingers on his right hand. Mario also signed a form agreeing to release Andrew from further liability in exchange for a sum of money. Which of the following is FALSE? A. After Mario has received his monetary sum to indemnify him for the loss of his fingers, he can sue Andrew because of recurring back pain. B. Andrew can decide whether he would like his friend's injuries to be covered under his base liability policy. C. Andrew has a form of coverage that will make it possible to avoid a lawsuit with his friend Mario. D. Andrew has a form of coverage called Guest Voluntary Settlement.

A. After Mario has received his monetary sum to indemnify him for the loss of his fingers, he can sue Andrew because of recurring back pain.

In order to adjust claims for the NFIP, adjusters must meet several requirements. Which of the following is NOT one of these requirements? A. Attend an NFIP claims presentation every 3 months B. Be NFIP certified C. Attend an NFIP claims presentation annually D. Have at least 4 consecutive years of full-time property loss adjusting experience

A. Attend an NFIP claims presentation every 3 months

Bob has a home in Florida with full replacement cost insurance coverage. After a severe hurricane levels his home, the property is declared a total loss. Bob is so discouraged that he takes several months to decide whether it is worth it to rebuild. Which of the following statements is TRUE? A. Bob's insurer must pay the full replacement cost of the property without waiting for proof that Bob has rebuilt his home. B. Bob must submit all receipts for completed work to his insurer within 6 months of the loss in order to be indemnified. C. Bob must notify his insurer of his intent to rebuild within 180 days of the loss in order to be indemnified. D. Bob's insurer must pay the ACV of Bob's property immediately, but can wait until Bob submits proof of his rebuilding expenses before paying the full replacement cost.

A. Bob's insurer must pay the full replacement cost of the property without waiting for proof that Bob has rebuilt his home.

Which of the following is NOT one of the requirements that adjusters must meet in order to handle NFIP claims? A. Complete NFIP continuing education every three years B. Have at least four consecutive years of adjusting experience C. Inform claimants that only the NFIP Servicing Agent or WYO company can make a final decision on their claim D. Become NFIP certified

A. Complete NFIP continuing education every three years

Which of the following is NOT considered "covered equipment" under an Equipment Breakdown Protection Coverage Form? A. Equipment that is buried in the ground B. Mechanical equipment that generates energy C. Equipment that operates under internal pressure or vacuum D. Computer equipment

A. Equipment that is buried in the ground

Loggers, roofers, and coal miners would fall into which of the following categories? A. High-risk employees B. High-maintenance employees C. Low-risk employees D. Low-maintenance employees

A. High-risk employees

Which of the following statements about the Standard Flood Insurance Policy is FALSE? A. It is subject to state courts. B. It is governed by federal law. C. It is not subject to local courts. D. It is available through the Direct Program and the Write Your Own program.

A. It is subject to state courts.

According to the "Definitions" section of a Personal Auto Policy, which of the following is NOT "occupying" her vehicle? A. Rachel leaves her cat in her car, with the windows cracked, while she goes into the drugstore to fill a prescription. B. Trishey is leaning on her car during a lunch break while she eats her lunch. C. Jaminda is sitting on top of her car as she talks to her best friend on the phone. D. Jordan is sitting in her parked car listening to music while she waits for her sister to finish yoga class.

A. Rachel leaves her cat in her car, with the windows cracked, while she goes into the drugstore to fill a prescription.

Florida Insurance Code states the qualifications required to become a licensed insurance adjuster in the state of Florida. Which of the following is NOT one of the requirements for applicants? A. Spend 20 hours in the field working with a licensed insurance adjuster B. Be at least 18 years of age C. Be trustworthy D. Be a US citizen or legal alien authorized to work in the United States

A. Spend 20 hours in the field working with a licensed insurance adjuster

Which of the following statements best describes a part of the appraisal process? A. The claimant and the insurer each select an appraiser, and those two select an umpire. B. All parties must agree to the final amount in order for it to be binding. C. A neutral third party, called the appraiser, plays an advisory role to help the disputing parties come to a settlement. D. The opposing parties submit their evidence to the appraiser, who makes a final and binding decision.

A. The claimant and the insurer each select an appraiser, and those two select an umpire.

Which of the following insurers is NOT engaging in an Unfair Claims Settlement Practice? A. XYZ Insurance Company owns its own auto repair shop and sends policyholders' cars there to be repaired. B. Nellis Insurance Company does not usually send an explanation of why claims are denied, unless a policyholder specifically requests one. C. Antelope Insurance Company is understaffed and generally does not respond to claims until after a couple of months have passed. D. ABC Insurance Company routinely requires additional information from claimants but does not specify what information is needed.

A. XYZ Insurance Company owns its own auto repair shop and sends policyholders' cars there to be repaired.

Risk retention groups do NOT: A. have the support of state Guaranty Funds. B. provide liability insurance. C. spread liability exposure to their members. D. have permission to operate in Florida.

A. have the support of state Guaranty Funds.

Medical payments coverage in a Farm policy includes all of the following EXCEPT: A. libel or slander. B. funeral costs. C. hospital benefits. D. dental benefits.

A. libel or slander.

Peter works as a real estate agent and uses the internet extensively for sales leads and advertising. One day, he finds another realtor's ad online and copies it, using his own information as the contact info. This generates a lot of business for Peter, but unfortunately Peter gets a call one day and is informed that he is being sued for copyright infringement. This is an example of what type of claim covered under Peter's Commercial General Liability policy?

Advertising Injury

Greg was in the process of completing the CE for his Florida adjuster license when unforseen circumstances made it necessary for him to drop everything and take care of his aging mother for a year. Now, Greg's license is about to expire and he does not have the CE credits he needs. What should he do?

Apply to the Department of Financial Services for an extension.

Jennifer's PAP has a Comprehensive deductible of $100. Jennifer lets her sister Tina borrow her car, and Tina hits a llama worth $500. The llama's owner files a claim for the loss of his llama. How will that claim be settled? A. $400 under Jennifer's Physical Damage coverage B. $500 paid under Jennifer's liability coverage C. $0 paid because it is not a covered loss D. $400 paid under Tina's liability coverage

B. $500 paid under Jennifer's liability coverage

What is the most common type of Time Element Insurance? A. Contingency Insurance B. Business Interruption Insurance C. Liability Insurance D. Business Direct Insurance

B. Business Interruption Insurance

Which of the following statements is TRUE regarding Mechanical Breakdown Insurance? A .It covers oil changes and tire rotation. B. It will not cover the cost of repairs that exceed the value of a vehicle. C. It covers damage caused by the towing process. D .It would indemnify a policyholder for damage to an engine caused by the owner inadvertently driving into a lake.

B. It will not cover the cost of repairs that exceed the value of a vehicle.

Which of the following statements about MPCI insurance is FALSE? A. It is subsidized by the FCIC. B. Its coverage applies per acre, not per "unit." C. Its coverage applies per "unit", not per acre. D. It covers damage to crops due to weather-related perils.

B. Its coverage applies per acre, not per "unit." (crop-hail insurance is rated per acre)

Lemon Insurance Co. decides not to renew Hugh's Personal Auto policy, which is set to expire on May 31. Which of the following statements is TRUE? A. Lemon Insurance must notify Hugh at least 10 days before the policy expires. B. Lemon Insurance must notify Hugh at least 45 days before the policy expires. C. Hugh's policy will be effective until 12:00 AM on June 1. D. Hugh's policy will be effective until 11:59 PM on May 31.

B. Lemon Insurance must notify Hugh at least 45 days before the policy expires.

Which of the following is NOT a condition for payment on a Mechanical Breakdown Insurance claim? A. The insured must provide the insurer proof of regular maintenance prior to the breakdown. B. The cause of the breakdown cannot be associated with the front-end suspension. C. The operator of the vehicle must have made a reasonable effort to minimize repair costs. D. The insurer has the right to inspect the vehicle before repairs are made.

B. The cause of the breakdown cannot be associated with the front-end suspension.

In appraisal, who chooses the umpire? A. The claimant B. The two appraisers C. The insurance company D. The adjuster

B. The two appraisers

Coverage C - Personal Property of a homeowners policy typically excludes: A. furniture. B. fish. C. dishes. D. blanket coverage of personal property.

B. fish

After a loss covered under a dwelling policy, Ordinance or Law coverage pays for: A. confiscation of property by the government. B. increased repair costs due to laws or codes. C. any change that decreases the value of the property. D. remediation of pollutants.

B. increased repair costs due to laws or codes.

Which of the following may be covered under a Mechanical Breakdown Insurance policy? A. Breakdown due to flooding B. Breakdown on a vehicle with an altered odometer C. Breakdown due to electrical system malfunction D. Breakdown occurring while towing with the vehicle

C. Breakdown due to electrical system malfunction

Jim drops his car off at ABC Garage to have his exhaust system repaired and takes the train to work. When he returns, he finds that his car has been vandalized. Jim has comprehensive coverage, but feels the garage is responsible for the damage since Jim entrusted the car to ABC Garage. Which coverage type under ABC's garagekeepers policy would cover any part of the loss that Jim's policy does not cover? A. Direct Primary Coverage B. Excess Comprehensive Coverage C. Direct Excess Coverage D. General Liability Coverage

C. Direct Excess Coverage

Which of the following may be covered under an Equipment Breakdown Protection Coverage Form? A. Self-propelled equipment B. Dragline, excavation, and construction equipment C. Equipment built to operate under internal pressure or vacuum D. Equipment used solely for therapeutic or surgical purposes

C. Equipment built to operate under internal pressure or vacuum

Jane owns an aquarium supplies store and purchases a Business Owners Policy to protect her assets. Which of the following protections can Jane expect from her standard BOP with no endorsements? A. Named peril coverage B. Insurance for her company-owned vehicles C. Extra expense coverage D. Malpractice insurance

C. Extra expense coverage

One morning, Jill arrives to open the bank, only to find the door already unlocked. Upon entering the bank, she sees the vault door has been blown open and a large amount of money has been burned when an explosive charge went off. Which commercial crime insurance coverage might cover the loss? A. Forgery B. Computer Fraud C. Inside the Premises: Theft of Money and Securities D. Inside the Premises: Robbery or Safe Burglary

C. Inside the Premises: Theft of Money and Securities

Which of the following statements about the original Standard Fire Policy is FALSE? A. It was a named peril policy. B. Valuation was usually done on an actual cash value basis. C. It was the first multi-line policy, combining both Physical Damage and Liability coverages. D. The only perils covered under the policy were fire and lightning.

C. It was the first multi-line policy, combining both Physical Damage and Liability coverages. The Standard Fire Policy was a monoline policy - it only covered property damage.

Strong winds have torn a hole in Janet's roof. On top of that, heavy rain is expected in her area in the next few days. Figuring it would simply be too much effort to put a tarp over the hole in her roof, Janet elects to do nothing. The rains come and destroy several of her possessions inside her home. Janet files a claim with her insurer for the losses, but it comes back denied. This is because: A. Homeowners insurance covers personal property at an actual cash value, and her personal items were worth nothing after they were destroyed. B. Storm damage is not covered under a standard homeowner's policy. C. Janet failed to make a reasonable effort to protect the property from further damages. D. Janet's policy has coverage for wind damage, but not flood damage.

C. Janet failed to make a reasonable effort to protect the property from further damages.

Bob's home was severely damaged by a thunderstorm and he claims it will cost $74,000 to repair. His insurer has investigated the claim, found the repairs could be done for $49,000, and has offered Bob this amount of indemnification. Negotiation between Bob and his insurer seems to be failing. Due to the unpredictability of the result, which of the following options should be avoided by the insurer if possible? A. Appraisal B. Mediation C. Litigation D. Arbitration

C. Litigation

Coast-to-Coast Trucking is in the business of transporting fresh produce from farmers to markets all across the U.S. Which type of inland marine policy would best protect Coast-to-Coast Trucking's interest in the produce that it ships? A. Instrumentalities of Transportation and Communication policy B. Trip Transit policy C. Motor Truck Cargo policy D. Mail Coverage Policy

C. Motor Truck Cargo policy

Which of the following people committed soft fraud? A. Ian, who works as a claims processor for ABC Insurance, regularly creates fake claims and has the settlement checks sent to his brother. B. Farah doused her sofa with gasoline, started a fire, and burned down her house so she could collect money from her insurer. C. Rafael accidentally slipped on a wet floor at the supermarket. Although his only injury was a sprained ankle, he claimed he had back and neck pain when he sued the supermarket in an effort to get more money in the settlement. D. Taariq slammed on the brakes in order to make the person behind him run into the back of his truck, so he could collect a settlement from their insurance.

C. Rafael accidentally slipped on a wet floor at the supermarket. Although his only injury was a sprained ankle, he claimed he had back and neck pain when he sued the supermarket in an effort to get more money in the settlement.

What must be proven in order for Time Element Insurance to cover a loss? A. The direct loss could not have been prevented. B. The losses wouldn't be covered by any other insurance. C. The indirect losses were the result of a covered direct loss. D. The losses only involved permanent structures.

C. The indirect losses were the result of a covered direct loss.

Which of the following statements about Mechanical Breakdown Insurance is FALSE? A. Wear and tear of replaceable parts is not covered. B .It will not pay for covered repair costs that exceed the actual cash value of the vehicle. C. Towing and roadside assistance are covered once a covered breakdown has occurred. D. Bodywork, windshield wipers, and the catalytic converter are not covered.

C. Towing and roadside assistance are covered once a covered breakdown has occurred.

With respect to Inland Marine insurance, a "Block" policy (such as a Jewelers Block policy, or a Furriers Block policy) is an example of: A. a Theatrical Property Floater. B. a Personal Property Floater. C. a Commercial Floater. D. an Export.

C. a Commercial Floater.

When an adjuster is engaging in salvage misappropriation, he is: A. failing to account for the salvage value in the loss estimate. B. taking possession of damaged property on behalf of the insurer. C. taking possession of salvaged property for his own use or benefit. D. incorrectly calculating the salvage value of the damaged property.

C. taking possession of salvaged property for his own use or benefit.

D'Anton spills coffee in his lap while driving, causing him to veer off the road and smash into a telephone pole. Which part of his Auto Insurance Policy will help him pay for the repairs to his car?

Collision Coverage (pays for damages to the insured's care after an accident)

John, a contractor, just purchased a new backhoe and wants to get an insurance policy to cover it. He's looking for a policy that will provide coverage not only on the job site, but also while transporting it back and forth between sites. What type of inland marine insurance policy would likely fit John's needs?

Contractor's Equipment floater

Which of the following is TRUE concerning a Business Owners Policy? A. A business owners policy is a good option for large multi-national corporations. B. Business owners policies are popular among large corporate vendors. C. Bars and taverns are eligible for business owners policies. D. A business owners policy offers liability protection.

D. A business owners policy offers liability protection.

On January 27, 2008, Ryan was using an exercise bike purchased from NusquamCycle when the chain broke, causing him to fall and severely bruise his knee. It seemed to heal just fine, but three years later, on January 25, 2011, Ryan's knee gave out while jogging. His doctor told him that he'll need surgery and that this deterioration resulted from the earlier accident with the exercise bike. Which of the following CGL policies may cover Ryan's claim filed January 25, 2011? A. An occurrence policy from Jan 31 2011-Jan 31 2013 B. An occurrence policy from Feb 28 2008-Feb 28 2010 C. A claims-made policy from Jan 31 2008-Jan 31 2010 D. A claims-made policy from Jan 31 2009-Jan 31 2011

D. A claims-made policy from Jan 31 2009-Jan 31 2011

Which of the following statements is NOT true of an insurance adjuster? A. An insurance adjuster must always use reasonable judgement for both the insurer and the claimant. B. An insurance adjuster is an agent. C. An insurance adjuster who settles claims on behalf of an insurer has the power to bind that insurer, even if she makes a mistake. D. An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract.

D. An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract.

Which of the following is TRUE about workers' compensation insurance? A. It benefits the employee only. B. It benefits the employer only. C. The employer always benefits more than the employee. D. It benefits both the employee and the employer.

D. It benefits both the employee and the employer.

Stu has a collection of rare comic books. He wants to purchase theft insurance for his collection, separate from his home and other property. What term most accurately describes the type of policy Stu would purchase? A. Valuable Papers Policy B. Actual Cash Value Policy C. Standard Fire Policy D. Monoline Policy

D. Monoline Policy

Which of the following is NOT a reason to purchase umbrella liability coverage? A. To provide coverage for things the underlying coverage excludes B. To provide higher liability limits and broader coverage C. To avoid paying out-of-pocket for liability exceeding the limit of your liability insurance D. To reduce your insurance costs

D. To reduce your insurance costs

When a faulty electrode in a children's toy is recalled by ABC Toymakers Inc., it is a costly endeavor. Especially since ABC Toymakers Inc.'s base insurance policy doesn't cover product recalls. Which excess liability coverage could help pay for losses associated with the recall? A. Follow Form Policy B. Product Recall Policy C. Stand Alone Policy D. Umbrella Policy

D. Umbrella Policy

A dwelling policy would NOT be appropriate for: A. a duplex owned by an individual. B. a single-family home wholly rented out. C. a four-plex owned by a corporation. D. a motorhome owned by an individual.

D. a motorhome owned by an individual.

Why has Pollutant Cleanup and Removal coverage become more popular recently?

EPA fines and penalties have increased.

Which of the following endorsements is mandatory for all Florida residential property policies? A. Sinkhole B. Sewer backup C. Earthquake D. Catastrophic ground cover collapse

Every residential property policy in Florida must include coverage for D. Catastrophic Ground Cover Collapse.

Randy owns a clothing store. One day, he notices a shady character with a backpack who is hanging around acting nervous. Randy becomes suspicious and approaches the young man. As the boy makes an effort to avoid him, Randy grabs his arm and detains him until the police arrive. Not finding any stolen merchandise, the police let the boy go. Two weeks later Randy is notified that he will be sued for violation of the young man's civil rights. This is an example of what type of personal injury covered under Randy's Commercial General Liability policy?

False Arrest, Detention, or Imprisonment.

RWW Insurance creates a radio promotion where they advertise that they will insure any car for $200 a year. They don't actually offer such a plan, but they figure they will be able to sell hundreds of policies to people who show up looking for the bargain. What type of unfair insurance trade practice does this behavior exemplify?

False information and advertising

Which Farm policy would cover animal waste overflow and chemical spills?

Farm Pollution Liability

An explosion takes place at Acme manufacturing plant. Four employees are injured. Gina broke her leg and has third degree burns on 10% of her body. George's left leg is hurt so seriously that it later needs to be amputated. Taylor is permanently blind in one eye, and Jason has third degree burns on 15% of his body. Which of these employees is eligible for Permanent Total disability benefits?

George

Both Steve and his wife, Arlene, carry DP-2 policies on their $135,000 home. Steve's policy has a limit of $108,000 and Arlene's has a $27,000 limit, and both policies pay on a pro rata basis. After a hailstorm causes $13,000 in damage to their roof, how much of the damage will be covered by Steve's policy (ignoring any deductible)?

Hail is covered under the DP-2 policy and the dwelling is fully insured. When policies pay on a pro rata basis, each policy pays its share of the loss according to its share of all policy limits. Steve's policy limit amounts to 80% of the total coverage, so his policy will cover 80% of the loss. ($108,000 + $27,000 = $135,000 total) ($108,000 / $135,000 = 80% of total) ($13,000 x 80% = $10,400)

Residual market insurance programs are primarily designed to meet the needs of which type of consumer?

High-risk consumers

Maria was in the hospital for five days, recovering from a stroke. The bill she received for her hospital stay broke down the charges for room, lab fees, meals, and nursing care. However, her insurer paid a flat daily rate and she was left responsible for paying the remaining charges. What type of insurance does Maria have?

Hospital Indemnity insurance

Jacob is severely injured at work and receives $600 per week in Temporary Total Disability benefits under his Workers' Compensation insurance for 8 weeks. After 8 weeks, Jacob dies from his injury. What is the highest total amount that his dependents could receive in Death benefits?

If an employee dies within one year from a work-related accident, his dependents can receive death benefits, up to the maximum benefit amount of $150,000 for all claims combined (including the pre-death disability payments that the employee received). In this case, Jacob received $600/week for 8 weeks before he died, which is $4,800. This means that the most his dependents could receive is $150,000 - $4,800, which is $145,200.

Farmer Jane had an MPCI policy in place when her wheat field was ruined by a hail storm. Jane promptly plowed up the wheat and planted a cover crop. Two days later she filed a claim with her insurer. The claim was denied. What might be the reason for the denial?

Jane did not leave samples of the destroyed crop for the adjuster to examine.

Mark is driving along and looking for an address on the East side of Walker Street. As he squints to see the numbers posted on the buildings, he plows into the back of a car waiting at a stoplight. Both the driver and the passenger of the struck car are injured. The driver suffers $70,000 in bodily injury, the passenger suffers $65,000 in bodily injury, and the vehicle Mark hit sustains $30,000 in damage. Mark has liability coverage with split limits of 50/100/25, and both injured people carry the minimum PIP for Florida. How much will Mark be responsible for out-of-pocket after this accident?

Mark's limits are $50,000 per person, $100,000 for all injuries, and $25,000 for property damage. The other driver's PIP will pay the first $10,000 of his injuries, leaving Mark liable for $60,000. Mark's policy will pay up to $50,000, so Mark is responsible for $10,000. After the passenger's PIP pays for the first $10,000, Mark is liable for $55,000. Mark's policy will again cover up to $50,000, leaving $5,000 for Mark to pay. The property damage is covered up to $25,000, leaving Mark responsible for $5,000. $10,000 + $5,000 + $5,000 = $20,000.

Stan has a personal auto policy to cover his two vehicles, but he recently purchased a custom built motorcycle as well. Which type of endorsement will Stan need to cover the motorcycle?

Miscellaneous Vehicle Endorsement

Which policy is used as an alternative to the Trucker's Policy to cover companies that offer transportation services to the public on a regular basis, rather than for hire?

Motor Carrier policy

Gail's restaurant is doing more business than ever, so Gail decides to add more dining space. Three weeks into the project, a hurricane blows through town, reducing the new construction to rubble. Gail maintains commercial property insurance coverage valued at 70% of her property's replacement cost, although her policy says she must maintain at least 80% to be fully insured. Which coverage on her policy could pay to rebuild her restaurant at replacement cost?

None.

A fire in Sarah's factory causes her to shut the factory doors for 50 days. To limit her loss of income and keep production going, Sarah spends $125,000 renting equipment and another building. Sarah's commercial property policy doesn't have Business Income Coverage, but it does include Extra Expense Coverage. The limit on her Extra Expense coverage is $100,000 and she has Limits of Loss Payment of 40%/80%/100% during her period of restoration. How much indemnification will Sarah receive for her extra expenses?

Since it took more than 30 days but fewer than 60 days for repairs to be completed, her Extra Expenses coverage will pay up to 80% of the limit ($100,000) which comes to $80,000.

James is in the consulting business and frequently flies from city to city to meet clients and help them improve their business practices. Most cities have adequate public transit, but sometimes it's easier to rent a car. Which coverage symbol would specifically pertain to rental cars on James' Business Auto Policy?

Symbol 8

Stan built a porch for his home three years ago at a cost of $10,000. The value of the porch has depreciated by $6,000, and it would cost $12,000 to replace it today. After Stan's porch burnt down during a BBQ today, how much would a Standard Fire Policy indemnify Stan for his porch?

The Standard Fire Policy pays on an ACV basis. Recall from earlier in the course, that the formula for calculating ACV is Replacement Cost minus Depreciation. So, in this case: $12,000 - $6,000 = $6,000.

Jason's auto policy states that the insurer may cancel coverage if a premium is more than 30 days late. However, Jason is currently more than 30 days late, and has been so five times in the last year, and his insurer has done nothing about it. When Jason gets into an accident and files a claim, which of the following is most likely to happen?

The insurer will pay the claim because of the implied waiver they have made by not cancelling Jason's policy the previous times he was late with his payments

Randy runs a business where he takes on the possessions of others and transports them from one location to another in exchange for a fee. What type of occupation does Randy have?

Trucker

Insurers often protect themselves from providing insurance to people who are already ill by inserting which type of clause into a health insurance contract?

Waiting period

Phil owns a public pool. One day, Phil has an altercation with a woman visiting the pool. Phil doesn't like the way she looks, so he tells her that she has to leave the premises right away. The woman takes Phil to court for violating her civil rights. This is an example of what type of personal injury covered under Phil's Commercial General Liability policy?

Wrongful eviction (when an owner or landlord evicts a person from public space without cause)

Francis has many employees who go out and market his product in the streets on a daily basis. This "go get 'em" approach seems to work well for business, but it does increase the risk of an auto accident. To curb the financial risk of a hospital stay resulting from an accident, Francis adds _____________ to his BAP.

a Medical Payments/PIP endorsement

The "Consent to Settle" clause in the Professional Liability policy is best described as:

a clause that requires the insured's approval before the insurance company discusses settlement options with a claimant.

Edward is a member of the Knights of Columbus, a religious group dedicated to voluntary service to the benefit of society. He also recently purchased a $100,000 life insurance policy from the organization. This was possible because the Knights of Columbus is:

a fraternal benefit society

In order to set a yield guarantee for Maren's policy, Maren's agent will need a record of the last four years of her crop yields. This record is called:

an Actual Production History.

One day, a customer at Jim's Tire Sales was severely injured when a rack of tires collapsed and fell on her. Later, the customer filed a lawsuit against Jim for $750,000. Jim has a commercial general liability policy, but the limit for this type of loss is only $500,000. Not wanting to use his entire limit on this one claim, Jim tries to use his excess liability policy first, which has a limit of $1,000,000, so he can retain most of the aggregate limit in his base policy. Unfortunately for Jim, this is not possible because:

an excess liability policy pays only after the base policy's limit has been exhausted.

A reciprocal insurer is:

an unincorporated organization of subscribers that operates through an attorney-in-fact to provide insurance benefits for its members.

Bob has been in the construction business a long time and is ready to retire. He sells the company to his friend Scott and then lets the insurer know that any claims against his policy should be paid to Scott from now on. The insurer informs Bob that they cannot do this due to which condition?

assignment

In a garage policy, PIP coverage is:

available with an endorsement.

States that allow private insurers to offer workers' comp coverage as an alternative to the state workers' comp fund are called:

competitive

In a BOP, the purpose of Supplementary Payments in conjunction with liability coverage is to:

cover costs associated with defending and investigating a claim against the insured.

A few weeks ago Christopher's garage was destroyed by an out-of-control motorist. Fortunately, the motorist had sufficient liability insurance to cover the damages. However, the insurer insists that Christopher's garage is worth far less than the appraisals he has received from contractors. Christopher and the insurer have gone back and forth in negotiations for weeks, making little headway. Christopher decides it's time to:

issue a complaint against the policyholder

How is the power to bind transferred to an adjuster?

it is transferred through a written contract

Cindy and her insurer cannot reach an agreement for her property claim, and have gone back and forth for weeks without coming within $10,000 of each other. At this point, since both believe they are offering a fair settlement, a third party is needed to help facilitate the negotiation. Both parties still want to retain their ability to "walk-away" if they cannot reach an agreement. What is the next best step for Cindy and her insurer?

mediation

After an earthquake, Jake's home is still standing, but it is a little shaken. The damage is not extensive, but Jake wants to cash in on the situation, so he takes a sledgehammer to some of his extra belongings and adds them to his claim. Jake has committed:

property insurance fraud

A Florida company that is assigned to "Tier 2" for coverage under FWCJUA must pay:

rates that are 50% higher than voluntary market rates.

Jared hopes to purchase a new insurance policy for his car, but he has an extremely poor driving record. The insurance company decides to issue Jared an insurance policy, but charges him a premium much higher than the average driver. The insurance company is practicing:

risk reduction

When Jane rear-ends Frank, she causes minor damage to Frank's car, but Frank is not hurt. However, when Jane's insurer asks him about the accident, Frank claims that his back and neck have been hurting a lot because of the collision, even though he is actually fine. Frank is guilty of:

soft fraud

The insuring agreement for Part A-Liability in a personal auto policy states that:

the insurer has the right to settle liability cases out of court.

Which of the following is NOT a characteristic of insurance contracts? (aleatory, conditional, unilateral, universal)

universal

Mark has an ocean marine insurance policy with cargo coverage. The type and value of his cargo varies from one shipment to the next, so rather than having a set value for this coverage, the amount of his settlement is only determined after a covered loss. Mark's cargo coverage is written on a/an ________ basis.

unvalued