Insurance
HO-2 (broad form)
Designates a "broad form" homeowners insurance policy that provides insurance coverage on a "named-peril" basis. There are 16 covered perils on a broad form policy: Lightning or fire Hail or windstorm Damage caused by aircraft Explosions Riots or civil disturbances Smoke damage Damage caused by vehicles Theft Vandalism Falling objects Volcanic eruption Damage from the weight of snow, ice, or sleet Water damage from plumbing, heating, or air conditioning overflow Water heater cracking, tearing, and burning Damage from electrical current Pipe freezing
HO-5
Designates a "comprehensive form" homeowners insurance policy. This policy type covers both your home and personal property on an "open-peril" basis
HO-3 (special form)
Designates a "special form" homeowners insurance policy that provides insurance coverage for the structure of your home on an "open-peril" basis. "Open-peril" means that you are covered against all losses except those that are expressly excluded in your policy.
Worker's Compensation & Employer's Liability Insurance Part 2
Employer's Liability- liability arising out of employees' work-related injuries that do not fall under the workers compensation
All of the following statements are TRUE of the terms used in the standard workers' compensation policy, EXCEPT:
a. "The Policy" means the Information page and all endorsements and schedules listed there. b. "Locations" means all the workplaces listed on the Information page. c. "State" means any state of the United States, the District of Columbia, and all territories and possessions.✔ d. "The Insured" is the employer named in item 1 of the Information page.
Under a standardized DP-2 or DP-3 policy, what is the maximum that would be paid for additional living expenses if Coverage A was $60,000?
a. $12,000✔ b. $6,000 c. $7,000 $9,500
Which of the following types of insurance companies is known as a "nonparticipating company" because they do not pay their policyholders a dividend?
a. A domestic insurance company. b. A mutual insurance company. c. A stock insurance company.✔ d. A reciprocal exchange.
Worker's Compensation & Employer's Liability Insurance Part 3
Other-states Insurance
Symbol 23
Owned private passenger autos only-Provides coverage for owned private passenger autos only and includes automatic coverage for private passenger autos the insured newly acquires. It can be used for dealers and non-dealers to provide uninsured motorist's insurance and physical damage coverages. It may also be used to provide medical payments insurance for non-dealers.
Symbol 31
Physical damage coverage only for the dealers' autos, including owned autos, autos for sale, and autos on consignment-Provides physical damage coverages for autos consigned to the dealer or held for sale in possession of a non-dealer.
The NAIC Model Unfair Claim Settlement Practices Act specifies that when a violation of the Act is suspected, a hearing must be held:
a. Anytime within a year following the violations being reported to the Department. b. Not less than 30 days after notice has been provided to those involved.✔ c. Anytime within 3 months following the violations being reported to the Department. Not less than 15 days after notice has been provided to those involved.
A loss reserving method that establishes aggregate reserves for all claims for a single line of insurance is known as:
a. Average value method. b. Roundtable method. c. Formula method. d. Loss ratio method.✔
If the Commissioner determines that someone is guilty of unfair trade practices he or she may do all of the following, EXCEPT:
a. Ban the person from the insurance business for life.✔ b. Issue a cease and desist order. c. Impose a monetary fine. d. Suspend or revoke the person's license.
An insurance company that permits different rate classifications for individuals of the same class and same hazard may be guilty of:
a. Boycotting. b. Misrepresentation. c. Unfair discrimination.✔ d. Defamation.
A business covered by a standard Businessowners policy is shut down due to the acts of a civil authority. Which of the following additional coverages would NOT be subject to a waiting period before coverage would apply?
a. Business Income. b. Extra Expense.✔ c. Extended Business Income. d. Business Income from Dependent Properties.
All of the following are characteristics of a principal that a surety will scrutinize during the underwriting process, EXCEPT:
a. Capability. b. Character. c. Consideration.✔ Capital
A person becomes legally liable by:
a. Committing a tort.✔ b. Purchasing insurance. c. Becoming negligent. d. An intervening cause
An "admitted insurer" in any given state could include all of the following, EXCEPT:
a. Domestic insurer b. Foreign insurer c. Surplus lines insurer✔ d. Alien insurer
With a "claims-made" CGL form, the policy is:
a. Excess over any other policy that is not claims-made.✔ b. Primary over any other policy that is not claims-made. c. Excess over any other policy that is not occurrence. d. Primary over any other policy that is not occurrence.
All of the following are EXCLUDED under the Earthquake Endorsement to a Homeowners policy, EXCEPT:
a. Flood and tidal wave. b. Land shock waves.✔ c. Waves and tsunami. d. The cost of filling land.
Under a claims-made CGL policy, which of the following would NOT be covered?
a. Injury or damage that occurred prior to the retroactive date.✔ b. Injury or damage that occurred during the policy period. c. An occurrence first reported 20 days into an extended reporting period. d. A claim made more than five years into a supplemental extended reporting period.
Miranda has her $300,000 dwelling insured for $200,000. Her insurance policy has an 80% coinsurance requirement. Miranda:
a. Is underinsured by $40,000 if she suffers a partial loss.✔ b. Carries the correct amount of insurance to cover her for partial losses to her dwelling. c. Should carry $270,000 to meet her coinsurance requirement. d. Will receive $300,000 from her policy but only if she suffers a total loss.
Which of the following methods is specified by the standard NCCI workers' compensation policy to handle claims payments when other insurance, including self-insurance, covers the workers' compensation risk?
a. Pro-rata share. b. Contribution by equal shares.✔ c. Apportionment. d. Primary policy pays until the limit of liability is exhausted.
Which of the following coverage symbols would be designated on the Declarations of a Commercial Auto policy to cover a customer's auto left with the insured to be serviced?
a. Symbol 30.✔ b. Symbol 31. c. Symbol 32. d. Symbol 33.
Which of the following property insurance cause of loss forms provides coverage for all risks of loss?
a. The broad form. b. The special form.✔ c. The reporting form. d. The basic form.
Which of the following would NOT be included in an adjuster's initial / field / preliminary report?
a. The results of mediation
Premiums in a workers' compensation policy include an adjustment, up or down, based upon how the employer's actual loss experience compares to that expected of employers that perform similar work. This premium adjustment is calculated using:
a. The scheduled rating factor. b. The loss constant. c. The loss ratio adjustment factor. d. The experience modification factor.✔
Claims investigations should be concerned with all the following, EXCEPT:
a. The workload of the adjuster while attempting to investigate the claim.✔ b. Discovering the cause of the loss. c. The legal liability of the insured. d. The value of the damage.
How long must a licensee maintain records of all insurance transactions?
a. Three years b. Four years c. Five years✔ d. Six years
The "Medical Expense" coverage of Section II of the Businessowner's policy will pay the reasonable expenses for first aid, medical services, and funeral services, within:
a. Three years from the date of the accident. b. One year from the date of the accident.✔ c. 60 days from the date of the accident. d. 90 days from the date of the accident.
What is the purpose of tort law?
a. To apply criminal penalties to those who commit a tort that causes bodily injury. b. To require the tortfeasor to carry insurance that will cover any injuries they may inadvertently cause that may result in a lawsuit. c. It provides a tort victim with a civil remedy to pursue a claim for compensation in the courts.✔ d. To provide a victim with a way to pursue a claim for damages in a court of law when a contract is breached.
The Hull coverage of a Yacht policy provides settlement on a(n) ___________ for partial losses.
a. Valued basis b. Blanket basis c. Replacement cost basis✔ d. Actual cash value basis
Under a Crime insurance discovery form, a loss is "discovered":
a. When the insured first becomes aware that a loss has occurred or gives notice of an actual claim of a covered loss.✔ b. When the person who committed the crime is discovered and arrested. c. When the insured becomes aware of the exact details of the occurrence. d. When the stolen property is discovered and returned to the insured by the authorities.
Font Masters Printing Company has a printing press that suffers a covered total loss. The company paid $25,000 ten years ago for the press. Actual cash value is $40,000 and the replacement cost is $55,000. The company has had to cancel several contracts for printing due to the loss of the press and they are anxious to resume full production. Font Masters is covered under a Businessowner's Policy (BOP). How much will the insurer pay for this claim?
A. $25,000. B. $55,000.✔ C. $40,000. D. $20,000.
Jim Cress owns an expensive fine arts collection. He has it appraised and covered under a personal articles floater. He takes his collection to England to have it auctioned. While the collection is in his hotel room it is stolen. What coverage would apply?
A. The loss is not covered.✔ B. The fine arts are covered for fire only outside the covered territory. C. Theft does not apply to fine arts. Property awaiting auction is never covered.
Section I Homeowners Policy
The initial section of Section I of the standard homeowners insurance policy simply clarifies what is and what is not covered by the insurance carrier. It summarizes the type of property coverage, the covered causes of loss (i.e. lightning, fire, windstorm), and lists exclusions to coverage.
symbol 32
Company use- This is a company specific code. Use to provide coverage when no other symbol applies. For example, to provide coverage for long-term leased vehicles. To use, write in the symbol.
symbol 30
"Autos" left with the insured for service, repair, storage, or safekeeping- Provides coverage for customer's autos that are in the care, custody, and control of the named insured. It provides garage keepers insurance for dealers and non-dealers when autos are left for service, repair, or storage.
On Monday afternoon, Carissa's boss requested that she finish updating the company website by Tuesday morning. Carissa did not want to stay at the office late into the evening so she took her work home to complete it there. On the way home, Carissa remembers that she left an external hard drive back at the office. This hard drive contained files that she needed to complete the website updates so she turns her car around and heads back to the office to retrieve it. Two blocks away from her office, another car runs a stop light and smashes into Carissa's car, severely injuring her. Which of the following statements would be TRUE in how Carissa would be handled by her employer's workers compensation coverage?
A. Carissa's injuries are not compensable because she contributed to her injuries by forgetting the hard drive. B. Carissa's injuries are compensable because she was driving to retrieve a work-related item. C. Carissa's injuries are not compensable as she was commuting to work and coverage does not apply in that case.✔ D. Carissa's injuries are compensable because she was technically "at work", she was simply taking work home.
Larry owns and runs a political website that posts stories that are favorable to one political party and unfavorable to the other parties. Larry has a message board feature where he encourages his visitors to post their own negative opinions about the parties in which they do not agree. Many of these posts have gone beyond opinion and have sunk to the level of slander and Larry is sued. Larry's Commercial General Liability insurer will:
A. Cover the cost to defend Larry and pay any damages awarded by the court. B. Deny coverage for defense costs and damages awarded by a court because the policy specifically excludes coverage for this exposure.✔ C. Deny coverage for damages awarded by a court, but will pay to defend Larry in court. D. Sue Larry for participating in activities that are specifically excluded by the policy.
Generally, losses that are covered under the "collision" coverage of a Personal Automobile policy are NOT covered under the "other than collision" coverage. Which of the following would be an exception to this general rule, allowing a claim to be paid under EITHER coverage?
A. Glass breakage that is due to an upset or rollover of a covered auto.✔ B. Glass breakage due to contact with a bird or animal. C. Glass breakage caused by theft or larceny. D. Glass breakage caused by a falling object.
Hannah is attending college and her family carries an HO-4 policy with $50,000 contents coverage. Hannah has about $15,000 of personal belongings consisting of clothing, musical instruments, electronic equipment, some appliances and other personal items in her dorm room. Which of the following statements is correct regarding coverage for Hannah's belongings?
A. The HO-4 form carried by Hannah's family would not provide enough coverage for Hannah's property, therefore a personal articles floater should be purchased. B. Hannah should purchase her own HO-4 form. C. The HO-4 form carried by Hannah's family would not provide enough coverage for Hannah's property, therefore a personal property floater should be purchased.✔ D. The HO-4 form that Hannah's family carries would provide all the coverage she needs for the personal property in her dorm room.
Gerald owns an expensive and rare painting. He has it appraised by an art dealer and insures it for $50,000 under a Personal Articles Floater. A year later, several other rare paintings similar to Gerald's and painted by the same artist are discovered, causing the value of Gerald's painting to be reduced to $40,000. Soon after this development, the painting is destroyed in a fire at Gerald's place of business. After ruling out fraud, how will the insurance company settle the loss?
A. The loss is excluded because the covered painting was away from the insured's residence at the time of the loss. B. The insurance company will cover the item for the full $50,000 amount.✔ C. The insurance company will pay $40,000 because it is the market value. D. The insurance company will pay the actual cash value of the painting at the time of the loss
Worker's Compensation & Employer's Liability Insurance Part 1
Worker's Compensation- the employer's statutory liabilities under workers compensation laws
When an HO-3 is issued with a $75,000 Coverage A limit on a one-family dwelling, what is the automatic amount of insurance for Coverage B?
a. $15,000. b. $75,000. c. $7,500.✔ d. $37,500.
What is the limit of coverage provided under a Mobile Homeowners policy for detached structures?
a. $2,000. b. 10% of the Coverage A limit or $2,000 whichever is greater.✔ c. $5,000 per structure. d. Coverage for detached structures must be added by endorsement.
Under the Business Auto policy, what is the limit for transportation expenses when the insured has suffered a theft loss of a private passenger type vehicle?
a. $20 per day subject to a maximum payment of $600.✔ b. $15. c. $15 per day subject to a maximum limit of $450. d. $25.
What limit of liability would be needed for a risk that transports radioactive materials as required by the Motor Carrier Act under the MCS-90 endorsement?
a. $500,000 b. $750,000 c. $1,000,000 d. $5,000,000✔
John has had his Georgia adjuster license revoked for cause. He will not be entitled to file another application for a license within ___ from the effective date of the revocation.
a. 1 year b. 18 months c. 3 years d. 5 years✔
Under a Commercial General Liability policy, how long is the extended reporting period that is made available automatically and free of premium charge?
a. 30 days or 1 year. b. 60 days or 1 year. c. 30 days or 5 years. d. 60 days or 5 years.✔
Which of the following losses would be covered by the EC peril of "volcanic eruption" under a standard Dwelling form?
a. The cracks in the ceiling of the dwelling due to the earthquake preceding a volcanic eruption. b. The damage to an exterior patio from a large bolder that was dislodged due to an aftershock. c. The exterior siding of the dwelling that was ruined by the ash that settled on it from the erupting volcano.✔ d. The cracked foundation of the covered dwelling resulting from the earthquake that caused the volcanic eruption.
An injured employee's choice of physician is selected in what manner?
a. The employee chooses his/her own physician per their choice. b. The employer chooses the physician. c. The state chooses the physician. d. The employee chooses from a list of physicians maintained by the employer.✔
An insurance agent/producer represents the interests of:
a. The insurance company.✔ b. The insured. c. The general public. d. The insurance company and the insured as an objective third-party.
Which of the following claims would NOT be covered under Section II -- Liability of a Homeowners policy?
a. The named insured files a claim for damage to his house caused by his dog..
Under a surety bond, the party that is guaranteed that the principal will perform is known as:
a. The obligee.✔ b. The obligor. c. The indemnitor. d. The surety.
Which of the following coverages is included as "no-fault" coverage on the standardized Personal Auto policy?
a. Uninsured Motorists coverage. b. Medical Payments and Physical Damage.✔ c. A state-mandated "no-fault" coverage plan. d. Liability coverage.
Section II of Homeowner's Policy
the first part of Section II outlines the type of coverage provided, what's excluded, and the conditions that are to be met for coverage to apply. The focus of Section II is primarily personal liability and medical payments for guests of the homeowner.
HO-1 Basic Form
this only covers you from 10 named perils: Fire or smoke Explosions Lightning Hail and windstorms Theft Vandalism Damage from vehicles Damage from aircraft Riots and civil commotion Volcanic eruption
HO-4
this policy type describes a renters insurance policy. Typically with these policies, your liability and your personal property are covered up to the policy limits. This is an ideal policy for someone renting an apartment or house.
Jordan's Jams purchases a standardized Commercial Property policy on August 15th from Binders Keepers, Inc. On September 20th, Binders Keepers adopted a form revision that provided broader coverage without additional premium, however Jordan's policy was written before the form revision was adopted. Which of the following statements is TRUE regarding how the broadened coverage would apply to Jordan's Jams?
A. The broadened coverage would apply to Jordan's Jams but only after a 45-day waiting period as specified by the Liberalization clause of the Commercial Property form. B. The broadened coverage would apply to Jordan's Jams immediately on September 20th because the revision was adopted during the policy period and did not require an additional premium.✔ C. The broadened coverage would not apply to Jordan's Jams because the coverage was written before the form was revised. The broadened coverage would apply to Jordan's Jams but only on the date that Jordan's renews the policy, it would not apply during the current policy period.
A 40-year old commercial building is insured with a limit on the building of $300,000 and has suffered a partial loss as a result of a hot water heater explosion. It will cost $17,000 for the increased cost of construction to comply with the building codes and $20,000 for all other covered damages. The building is covered under a standardized Building and Personal Property coverage form, with the special cause of loss form attached. The insured submits the proof of loss for all of the repairs, including the increased costs to comply with the new building codes. Which of the following describes how this claim will be paid?
A. The insurer will pay $15,000 for the increased cost of construction, plus $20,000 for the cost of all other covered damages. B. The claims investigation will determine if the claim should be settled at "Actual Cash Value" or "Replacement Cost", and pay the entire amount accordingly. C. The insurer will pay $10,000 for the increased cost of construction, plus $20,000 for the cost of all other covered damages.✔ D. The insurer will pay only $20,000 under the "Replacement Cost" provision of the form, and deny the "Increased Cost of Construction" costs.
The insured has liability coverage with a limit of $300,000 per occurrence. She purchases a $1 million Personal Umbrella to extend and broaden her coverage. The Umbrella policy includes a $10,000 retained limit. The insured becomes liable for $800,000 in damages that are excluded by the underlying liability policy, but is covered by the Umbrella policy. How would this case likely be settled?
A. The underlying policy would pay nothing, the insured would pay $10,000, and the Umbrella policy would pay $200,000. B. The insured would pay $10,000 and the Umbrella policy would pay $790,000.✔ C. The underlying liability policy would pay $300,000 and the insured would pay $500,000. D. The underlying liability policy would pay $300,000 and the Umbrella policy would pay $500,000.
Ho-6
Designates a condo insurance policy. These policies generally cover your personal property and the structure of your condo from the wall studs in.
Under the 1943 New York Standard Fire Policy, how many days of coverage applies to the removal coverage when the insured property is endangered by the perils insured against?
a. 10 days. b. 15 days. c. 5 days.✔ d. 30 days.
Under an HO-6 form, the additional coverage for damage to trees, shrubs and other plants is provided at:
a. 10% of the Coverage C limit, or a maximum of $500 for any one tree, shrub, or other plant
Which of the following would NOT be considered an "employee" as defined by the Commercial Crime form?
a. A guest student or intern. b. A manager while performing acts usually assigned to employees. c. A temporary worker. d. An independent contractor.✔
What is a "notice to show cause?"
a. A notice that states the proposed action may be taken by the Insurance Department unless the person shows cause at a hearing why the action should not be taken.✔ b. It is a statement from the Insurance Department seeking information to justify a hearing. c. It is a part of the investigation process of the Insurance Department. d. It is a justification of an imposed penalty.
An insured's car is damaged in an auto accident. While it is being repaired, the body shop loans the insured a replacement. From a coverage standpoint, this replacement vehicle is known as:
a. A temporary substitute.✔ b. A non-owned auto. c. A newly acquired auto. d. A replacement vehicle.
The type of auto body frame that is most often used in today's automobile and is a single molded unit, is known as:
a. A universal frame. b. A subframe. c. A conventional frame. d. A unibody frame.✔
All of the following circumstances are included in the definition of "one breakdown" in an Equipment Breakdown policy, EXCEPT:
a. All breakdowns must manifest themselves at the same time. b. All breakdowns may be the result of different causes.✔ c. All breakdowns must occur at one premises. d. All breakdowns must be the a direct loss.
The common policy conditions apply to which coverage parts of a Commercial Package Policy?
a. All coverage parts of the policy.✔ b. The property insurance coverages. c. The optional insurance coverages. d. The liability insurance coverages.
Part D of the Personal Auto policy provides coverage for all of the following, EXCEPT:
a. All direct losses to the insured's covered auto.✔ b. Coverage for the types of damage that are not excluded. c. Direct and accidental losses to a non-owned automobile being used by the insured. d. Auto glass breakage caused by a collision.
Which of the following would NOT be included in the definition of "financial institution" as described on a basic Commercial Crime coverage form?
a. An armored car service.✔ b. A savings and loan association. c. An insurance company. d. An investment firm.
A surety bond is:
a. An insurance policy. b. Used to add coverage to existing insurance. c. A form of credit.✔ d. Used to indemnify the principle.
Which of the following would be covered under a Personal Umbrella policy?
a. An insured who is sued for failing to provide a professional service as promised. b. A loss assessment made against the insured as a member of her neighborhood's property owners association. c. An insured who commits an intentional act of violence to protect his family.✔ d. An insured who commits an intentional act of physical abuse.
Which of the following dwelling types would be eligible for the Limited Theft coverage endorsement to their Dwelling policy?
a. An owner-occupied condominium unit. b. A nonowner-occupied one-family dwelling. ✔ c. An apartment occupied by the named insured. d. An owner-occupied dwelling.
All of the following would be excluded by the basic cause of loss form under a Commercial Property policy, EXCEPT:
a. Damage caused to the covered buildings electrical system by a power surge. b. A water pipe that bursts and damages the interior of the building. c. Water leaks from the sprinkler system in the building, causing wall and floor damage.✔ d. Damage to flooring that occurs when water seeps from the dishwasher in the corporate kitchen for several months.
Homeowners insurance policies are designed to cover all of the following, EXCEPT:
a. Economic losses that occur as the result of damage to the dwelling caused by a covered peril. b. Economic losses suffered as a result of damage to personal property located within the dwelling as a result of a covered peril. c. Damage to the covered dwelling caused by the insured.✔ d. Liability for bodily injury arising from the personal activities of the insured.
The requirements of the Employment Retirement Income Security Act (ERISA) compel companies to cover their professional liability exposure for honest errors and omissions regarding employee benefit plans by purchasing:
a. Errors & Omissions insurance. b. Employment Practices Liability insurance. c. Fiduciary Liability insurance.✔ d. Directors & Officers Liability insurance.
Georgina works for Acme Industries, Inc. managing its employee retirement plan. Georgina should be covered for liability under a(n):
a. Errors & Omissions policy. b. Directors & Officers policy. c. Malpractice policy. d. Fiduciary Liability policy.✔
The coverage territory of the Business Auto form provides for "worldwide liability coverage" for private passenger autos that the insured:
a. Hires, leases, rents or borrows without a driver while outside the United States, its territories and possessions.✔ b. Purchases while outside the United States, its territories and possessions. c. Sells while outside the United States, its territories and possessions. d. Occupies while outside the United States, its territories and possessions.
Which of the following statements is CORRECT regarding the Building Ordinance or Law endorsement to a Dwelling policy?
a. It creates a new coverage on the DP-1 policy.✔ b. It creates a new coverage on the DP-2 and DP-3 policies. c. It increases the 10% coverage already provided by the DP-1 policy to any higher percentage selected by the insured. d. The endorsement provides ordinance or law coverage for the dwelling only.
Which of the following statements is TRUE regarding the HO-6 form?
a. It does not cover the insured for liability. b. It excludes coverage for loss of use. c. It covers the walls, floors, and ceilings of dwelling unit.✔ d. It covers the siding on the outside of the condominium unit.
Under a Commercial General Liability policy, "property damage" includes all of the following, EXCEPT:
a. Loss of use. b. Copyright.✔ c. Physical injury. d. Tangible property.
Which of the following statements is FALSE concerning coverage under the Business Auto policy?
a. Medical payments coverage is automatically provided.✔ b. It may be used to cover specifically described autos only. c. If written to cover "any auto", non-owned and hired autos are automatically covered. d. Whether newly acquired autos are automatically covered depends upon the applicable coverage symbol.
Which of the following is not a common risk management technique?
a. Multiply the risk by engaging in hazardous activities.✔ b. Avoid the risk by avoiding the activity or selling the property which created the risk. c. Assume the risk through deductibles or self-insurance. d. Share the risk with others.
Many states amend property insurance coverage additions and extensions by statute due to insufficient coverage amounts or time limits. All of the following are property insurance additions or extensions that are frequently amended by state statute, EXCEPT:
a. Newly Acquired Property. b. Debris Removal. c. Other Structures.✔ d. Ordinance or Law.
George Wilson is covered under a standard Personal Auto policy. Which of the following policy coverages would apply when a deer leaps onto Mr. Wilson's car and causes extensive damage?
a. Part D - Other Than Collision (Comprehensive).✔ b. Part A - BI & PD Liability. c. Part D - Collision. d. Part C - Uninsured Motorists Coverage.
Which part of a Workers Compensation & Employers Liability policy provides automatic coverage for workers in states not specifically listed on the information page of the policy for Part One coverage?
a. Part Two. b. Part Three.✔ c. Part Four. d. Part Five.
When the property covered under an insurance policy is destroyed beyond repair and nothing of value remains, this is known as:
a. Partial average loss. b. Constructive total loss. c. General average loss. d. Actual total loss.✔
Georgia has a valued policy law that applies to insurance on a one or two family dwelling. If a total loss occurs to the dwelling after the policy has been in effect for 30 or more days, the insurance company must:
a. Pay the full amount of insurance on the dwelling.✔ b. Cancel the policy and grant the insured a refund for the unused portion of coverage. c. Submit to an appraisal of the loss and pay the high limit. d. Submit to an arbitration board and let them determine what needs to be paid.
Which of the following is true regarding physical contact under an uninsured motorist auto accident?
a. Physical contact is not required under any circumstances. b. Physical contact is required unless details of the accident can be corroborated by a second eyewitness.✔ c. Physical contact is not required unless there is glass breakage involved. d. Physical contact is required unless detail of the accident can be corroborated by a police officer.
Which of the following statements describes the coverage provided under Coverage C of the Ordinance or Law Endorsement to a Commercial Policy policy?
a. Provides coverage for the cost to demolish and remove the undamaged portions of the building that must be destroyed due to an imposed ordinance or law. b. Provides coverage for the loss (the value) of the undamaged portion of the building that must be destroyed due to an ordinance or law imposed after the original building was constructed. c. Provides coverage for the increased costs to repair or rebuild to comply with current building, zoning, or land use ordinances or laws.✔ d. Provides coverage for the cost (the value) of the building that suffered a direct physical loss.
The "Automatic Increase in Insurance" endorsement to a Dwelling policy provides an increase in coverage:
a. Quarterly. b. When inflation rises by more than 2%. c. Annually.✔ d. When inflation rises by more than 5%.
The endorsement used to report the insured's actual and estimated business income under an Equipment Breakdown policy is called:
a. Report of net income form. b. Earnings reporting form. c. Estimated income form. d. Business income—Report of Values form.✔
What does an insurer do when the insured has possibly waived his or her rights in a liability claim?
a. Send a "reservation of rights" letter.✔ b. Deny the claim. c. Pay only a portion of the proven liability claim. d. Insist the insured obtain his or her own legal counsel.
When an insured suffers a property loss, he or she is obligated by the terms of the policy to do all of the following, EXCEPT:
a. Separate the damaged from the undamaged property. b. Mitigate the loss. c. Produce books and records relevant to the claim. d. Hire a public adjuster to represent them in the claims process.✔
The "liberalization clause" of an insurance policy:
a. States that if an insurer decides to broaden its standard policy coverages, then all outstanding policies issued prior to that decision will automatically receive those new coverages at no additional premium.✔ b. States that the insurer retains the right to suspend or cancel the policy at any time during the policy period. c. States that if a mortgage company liberalizes its loan agreement with the named insured, the insurer must be sent the revised wording within 60 days. d. States that if the insurer broadens its underwriting eligibility requirements, all previously denied applicants must be notified within 60 days.
The doctrine that states an insured's policy should provide the coverage that an average prudent person would expect is:
a. The "Reasonable Expectation" doctrine.✔ b. The "Applied Principles" doctrine. c. The "Ambiguous Language" doctrine. d. The "Limited Liability" doctrine.
Which of the following Dwelling forms provides "open peril" coverage for dwellings and other structures?
a. The DP-3 special form.✔ b. The DP-1, DP-2, and DP-3 forms all provide this coverage. c. The DP-2 broad form and the DP-3 special form. d. The DP-1 basic form and the DP-2 broad forms.
