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Under the examinations of books and records condition, the insurance company has the right to examine and audit the insured's books and record related to the policy
during the policy period and for up to 3 years after the termination of the policy
An insured was involved in an accident that was caused by a tire blowing out. The insured was severely injured an incurred medical expenses of $100,000. The insured brought a recovery action the manufactures of the auto and tires. The court held that the tire was the cause of the accident. Who is required to pay for this loss
manufacturer of the tire; the manufacturer of the tire made am implied warranty that the product was safe to use, therefore, it would be held strictly liable
Binders cease at the earliest of
rejection of the application by underwriting, issuance of the policy, or 60 days following the issue date of the binder
What is the the purpose of the FAIR Plan
to make essential property insurance available to those who cannot obtain it through the normal market; the purpose of the NJ FAIR Plan is to provide essential property insurance to people who are otherwise unable to obtain it
A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage except
workers compensation coverage; it is not available through the commercial package policy
What is a material misrepresentation
a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
The Federal Fair Credit Reporting act
regulates consumer reports; also known as consumer investigative report or credit report
What is an exception of excluded in the equipment breakdown basic policy
explosion of steam boilers; equipment breakdown coverage covers the sudden and accidental breakdown of the vessel. Business interruption may be added by endorsement
The broad theft coverage endorsement on the dwelling form specifies all of the following limitation except
$1,000 on silverware; the limit on silverware is $2,500
An inusured has a homeowners policy and is required to be a member of the homeowners association in her neighborhood. The association's community house has burned down, and the insured has been assessed $1,200 for her share of the rebuilding cost. How much of the assessment will her homeowners policy pay
$1,000; as an additional coverage, homeowners policies will pay up to $1,000 of a loss assessment
If an insurer intends to cancel a property policy for nonpayment of premium, within how many days of the cancellation must the insurer provide a notice to the insured
10 days; when the reason for the policy cancellation is nonpayment of premium, only 10 days notice is required
If a producer has been convicted of a crime, he or she must notify the Commissioner within
30 days
Jean owns a craft store. The Protective Safeguards endorsement of her BOP requires Jean's store to have a functional automatic sprinkler system. a winter storm freezes the pipes to the sprinkler system, causing the system to shut down. How many hours does Jean have to restore the system before she must notify her insurer
48 hours
A homeowner has misplaced some of her insured personal property and has no idea what may have happened to it. What HO policy form would cover such a loss
HO-5; it covers misplacing, or losing as a theft loss
A small restaurant was forced to close for 10 days in August when the power company's transformer was destroyed by lightning and the restaurant was without electricity. What endorsement could be added to the BOP that would provide protection against loss of income from such events
Utility services - time element endorsement; this endorsement would cover business income and extra expense arising from utility service disruption that is caused by a covered peril
What is most likely ineligible for coverage under a businessowners policy
a bank; the BOP is a prepackaged policy designed to fit the needs of a small to medium business. Financial institutions are typically ineligible for the BOP coverage
In choosing an insurance business name, what would be allowed
a proper name which does not belong to any officers, stockholders, or executives; a business name may not be misleading or deceptive. The name cannot be identical or confusingly similar to the business name of another currently licensed resident producer
What would indicate a contractual relationship between a producer and an insurance company
a signed contract; contractual relations between a producer and an insurance company are conducted through a contract signed by both parties
All of the following would be considered rebating except
an agent misrepresents policy benefits to convince a policyowner to replace policies; rebating occurs when an insured is offered something of value in order to induce the sale of an insurance product. Both the offer and acceptance of a rebate are illegal
In DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will
be reduced by 10%; Coverage B applies 100% of Coverage A to a detached structure
Who will transport the property of anyone who hires them
common carriers; common carriers transport the property of anyone who hires them
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
misrepresentation; issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.
Among people in the same class and like expectancy, what factor can be used to influence premium rates
occupation; discrimination in rates, premium, policy benefits, etc, for persons within the same class or with the same life expectancy is illegal. No discrimination may be made on the basis of marital statue of an individual, race, color, national origin, creed, or ancestry unless the distiniction is made for business purpose or required by law
What is a cause of loss
peril
In contrasting stock insurers with mutual insurers, what statement is true
stock insurers are owned by sharholders and issue nonparticipating policies
What entities is considered principal
the insurer issuing a policy; the insurer (principal) is the company or organization that issues a policy of insurance
A producer's appointment lasts for how long
until it is terminated; while the producer is licensed, any agency appointment continues in effect until termination
What is not settled on an actual cash value basis while covered under the business property coverage form
valuable papers and records are valued at the cost of blank materials for reproducing the records and labor to copy the records
What would not be required to complete CE hours in this state
nonresident producers
Under a dwelling policy, what clauses applies if an insured has lost one of two matching silver candlestick
pair or set; pair or set is a clause stating that if only one item of a set has been lost, the insurer is not obligated to pay the total value of the set
A participating insurance policy may do what
pay dividends to the policy owner; a participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and cost
A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy
$175,000; the limit of the equipment breakdown policy applies to property of the insured, property of others, and expediting expenses in any combination as long as expediting expense does not exceed $25,000
The regular National flood insurance program would insure an eligible single-family dwelling for up to
$250,000; it is written for the value of the dwelling up to $250,000 on a replacement cost basis
A licensee violates an insurance regulation. A hearing is held, and the person is found guilty. If this is the person's first offense, the penalty is no more than
$5,000
Under the business personal property limit- seasonal increase, if no percentage is specified in the declaration, seasonal fluctions will automatically increase the limit for business personal property by
25%; under business personal property limit - seasonal increase, the limit for business personal property will automatically increase by 25% for seasonal fluctions, unless otherwise specified in the declaration. This increase is only applicable if the insured carries insurance equal to 100% of the average monthly values for the past 12 months
Under the dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it must inform the insured within how many days of receiving proof of loss
30 days
How long is the waiting period after the application has been accepted before flood coverage goes into effect
30 days; the waiting period is 30 days as required by the national flood insurance program
When is a hired and nonowned auto liability endorsement available in a businessowners policy
only if the insured does not have commercial auto coverage; this endorsement can be added to an BOP only if the insured does not have commercial auto insurance. This coverage is excess over any primary insurance coverage on the hired or nonowned auto
What is a coverage that is not included in both a broad and special form
theft of personal property; theft of personal property can only be included by endorsements
What term refers to solicitation, negotiation, effectuation or advising related to an insurance contract
insurance transaction;
What is not true about cancellation provision of a commercial insurance policy
the insurer is required to provide proof that the insured received the cancellation notice prior to cancelling the policy; it is only required that the insured mailed it to the first named insured
On a DP-3 Dwelling Property special form policy, the coverage provided for personal property is
the same as provided on the dp-2 broad form; although coverage A and B on the DP-3 are written on an open peril or all-risk basis, the coverage for personal property is written on a named or specified peril
What is not covered by the condominium unit owners endorsement
furniture in the building; alteration, appliances, fixtures and improvements that are part of the building, but which the insured is required to maintain coverage on because of the condominium association agreement, can be insured with this endorsement. Furniture is not specifically covered
Under a dwelling policy, what is not a factor in determining a loss
the amount negotiated by the insured; The value of a loss is decided according to the ACV of the property, policy limit, the amount needed to repair or replace the property, or the amount reflective of the insured's interest in the property
What form insures both building and person property on an open peril basis
HO-5; only ho-5 form insures both the buildings and personal property on an open peril basis
What is best describes a misrepresentation
Issuing sale material with exaggerated statements about policy benefits; misrepresentation is issuing, publishing, or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This includes oral statements
What peril is covered by flood insurance
mudslide caused by accumulations of water under the ground; flood policies exclude losses caused by landslides, sinkholes, and falling water. Rising water or excessive runoff is covered
If an insurance policy has the additional coverage provision, how does it affect the policy premium
there is no additional premium; additional coverage is a provision in an insurance policy that provides an additional amount of coverage for specific loss expense, at no additional premium
What does the term proximate cause refer to
negligence that leads to an injury; proximate cause is the reasonably foreseeable act or event that results in an injury or damage. Negligence may often be the proximate cause of the damage; without it, the accident would not have happened. This is also called direct liability
What is a person or organization that is allowed to write business New Jersey for insurance companies that do not possess a certificate of authority in NJ, if no authorized insurers in NJ offer the specific type of insurance in question?
surplus lines agent; a surplus lines agent is allowed to write business in NJ for insurance compaines that are not authorized NJ insurers. No authorized insurers in NJ can offer the specific type of insurance in question
In a liability policy with split limits of 25/50/25, what number is the max amount that would be payable in the event of damage to a person's property
the amount of the 3rd number, $25,000
When a regular bill of lading is issued, who will be responsible for the invoice cost of any damaged property
the carrier; when a regular bill of lading is issued, the carrier will be responsible for the invoice cost of any damaged property, and the shipper does not have any specifically declare a value
If the issuance of a license is denied and a hearing is requested, which entity will be making determination whether or not the license should be issed
the department of insurance; if a hearing is requested, the department will review the application and any additional information and determine where the license may be issued
A business income coverage form would cover all of the following situations except
a union strike on construction workers causes the repair of the insured's building to be delayed for a period of time; a business income form excludes coverage for the following: off-premises service interruption, finished stock exclusion, antenna exclusion; delay exclusion (delay is caused by the interference of strikers), and loss of privilege
When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the even of a covered loss, the coverage is said to be written as
stated amount; in stated amount coverage, the value of the insured property is determined at the time the policy is written. In the event of a loss, that amount is paid without regard to any coinsurance provision. However, if the loss is less than total, the insurer has salvage rights with the insured having first right of refusal of the salvage
All of the following professional designations are recognized by the department as acceptable substitutes for education and examination requirements except
Professional insurance agent
What is not a class of inland marine risks
common carrier cargo liability; the four classes of inland marine risks are the following: domestic shipments and transportation risks; bridges, tunnels, and other instrumentality of transportation and communication; commercial property floater risks; and personal property floater risks
What is not covered under Utility service - time element endorsement
damage to the insured's property caused by utility service disruption; utility services - time element covers business income or additional expense losses arising from disruption of service caused by a covered peril
What term describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurenace
defamation; defamation is making statements that are false as to the financial condition of any insurer and which are calculated to injure any person engaged in the business of insurance
If a fire erupts in the kitchen and spreads to the upstairs bedroom, resulting in the destruction of furniture, what type of loss has occured
direct; direct loss refers to any direct physical damage to buildings and personal property. Considering the fire was the initial cause of loss and spread to the bedroom, damages would be considered a direct loss of the fire
What would not be included in a commercial package policy
dwelling coverage; a commercial package policy may include coverage for exposures of business, but not the personal exposure of the insured. The dwelling policy is a personal lines policy and would not be in commercial package policy
The NJ FAIR Plan was established to make essential property insurance available to all of the follow except:
farm risk and automobile physical damage not insurable in the normal market
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. What is the best description of this practice
illegal; it is illegal to participate in any boycott, coercion, or intimidation that is intended to restrict fair trade or create a monopoly
The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land
owned or leased by the resident of the mobilehome;
the endorsement that can be attached to an equipment breakdown policy to provide coverage for perishable property for spoilage or damage caused by contact with refrigerant is called
refrigeration interruption coverage
For additional premium, the extended coverages written on the basic form dwelling policy would cover...
riot; the seven perils included in the extended coverages include coverage for damage by riots
Under the commercial property coverage program, the basic causes of loss form insures against loss caused by
sprinkler leakage
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; a stated amount is an amount of insurance scheduled in a property policy which is not subject to any coinsurance requirements in the event of a covered loss
