Insurance

An insured owns a large dog. The first day he hast to leave the dog home alone to go to work, the insured comes back to find his $400 couch, torn apart, his hundred dollar coffee table chewed up, his $50 window curtain, shredded, and a $200 window pane, shattered where his dog jumped through. The insured has personal property coverage under a special form drawing policy. How much of this loss will the policy cover? A. $0 B. $200. C. $250. D. $750.

$0 - damage that results from domestic animals is excluded under the special form dwelling policy

And insured has and $50,000 special form (DP3) dwelling policy. The insured's dog vice, a child, and the parent sue the insured for $500 at the child medical bills, 1000 for rabies shots, and 5000 for pain and suffering. How much will the policy pay? A. $0 B. $500. C. $1500. D. $6500.

$0 - personal liability is not automatically included, it must be endorsed.

And insured has a $70,000 dwelling policy (DP1) basic with a $500 deductible. While the insured is on vacation, burglars break into the house and steal several items. The total contact loss is estimated to be $5000. How much of that loss will be paid under the policy? A. $0 B. $4500. C. $5000. D. $5500.

$0 - theft is not covered, must be endorsed

And insured has a $70,000 dwelling policy (DP1) basic with a $500 deductible. While the insured is on vacation, burglars break into the house and steal several items. The total Contant loss is estimated to be $5000. How much of that laws will be paid under the policy? A. $0 B. $4500. C. $5000. D. $5500.

$0 - theft is not covered. It must be endorsed.

An insured has a $60,000 special form DP3. When a covered loss in the amount of $10,000 damages, the attached garage, how much of that amount is paid under the coverage B - other structures? A. $0 B. $1000. C. $5000. D. $10,000.

$0 coverage B other structures is for structures not attached. Attached garage is coverage A - dwelling

What is the minimum amount of additional coverage provided by umbrella policies?

$1 million

An insured has a dwelling policy (DP3) for $50,000. After a covered fire loss, the insured moves to a local hotel while repairs are being made to the house. The entire stay cost $12,000. How much of that will the policy cover? A. $0 B. $5000. C. $10,000. D. $12,000.

$10,000 - dwelling for additional living expenses is 20% of coverage A (20% x 50k = $10,000)

Bob's home is insured for $100,000 under a dwelling policy yesterday his home suffered $20,000 damage from a fire. Today the home was struck by lightning starting another fire that completely destroyed the structure. Bob's policy will pay. A. $100,000. B. $80,000. C. $20,000. D. $120,000

$100,000 - if the repairs have been made ($20,000) and then the home destroyed, the policy would have paid $120,000 as two separate losses. Due to the unrepaired damage, the total amount of coverage is only the face amount of the policy.

A homeowner policies, liability coverage pays up to... for an insured, sheriff loss assessment charged by a property of homeowners association A. $1000. B. $2500. C. $5000. D. The policy limit.

$1000

And insured has $5000 of medical coverage under a personal auto policy at the time of a covered accident. The insured had 3 passengers are injured. The insured's medical expenses are $8000. The first passengers total $4000; the second passengers total $6500; and the third passengers total $1200. How much will the policy pay under the medical payments coverage? A. $5000. B. $8000. C. $15,200. D. $19,700.

$15,200 - the medical payments coverage is provided by a limit of liability per person. In this example, the limit for the policy is $5000 per person, so the policy will pay the maximum ($10,000) for the insured and the 2nd passenger, because their medical expenses exceed the limit. All of the expenses for the first passenger and third passenger would be paid $5200. The grand total it paid under medical expenses is $15,200.

What is the limit for damage to a non-owned trailer under the personal auto policy? A. $500. B. $1000. C. $1500 D. $2000.

$1500

How much coverage can be available for watercraft damage in the homeowners policy? A. No more than $1000. B. Homeowners policies do not cover watercraft. C. Up to $1500. D. Unlimited amount.

$1500 - homeowner policies limit the amount of property and liability coverage available for watercraft. Only $1500 of coverage is provided in the homeowners policy for damage to watercraft, accessories, equipment, and trailers, and liability for watercraft, is limited by the size of the boat.

A home with a $200,000 homeowners policy has a detached garage that is completely destroyed for a covered peril. How much will the policy pay for the garage? A. $20,000. B. $25,000. C. $30,000. D. Nothing.

$20,000 - 10% of A for coverage B

Which loss listed below would be fully covered by homeowners policy? A. $12,000 pedigreed golden retriever stolen. B. $24,000 bass boat destroyed in a tornado. C. $5000 fire arm collection stolen. D. $2000 silver tea set stolen.

$2000 silver tea set stolen - tea sets are covered with a special limit of $2500 for the peril of theft; the firearm collection is covered for no more than $2500 if stolen; boats are covered for no more than $1500 for any payroll the policy covers; the dog is not covered at all

The insured purchased a car for $40,000 and added $5000 in insured modifications. Four years later it was worth $24,000 when it was totaled in a crash. According to the principle of indemnity, how much should the insured receive from the insurance proceeds? A. $29,000. B. $40,000. C. $45,000. D. $24,000.

$24,000 - ACV adheres to the principle of Indian manatee, the value of the car at the time of the loss was $24,000

What is the basic limit for costs incurred at the place of vehicle, is disabled provided by the towing and labor costs endorsement A. $25 B. $50 C. $75 D. $100

$25 - this endorsement provides a basic limit of $25 for towing in labor costs incurred at the place a vehicle is disabled. Higher limits are available for an additional premium.

If an auto policy has split limits of 30/50/25, how much will the policy pay for property damage in a single accident?

$25,000

If an auto policy has split limits of 30/50/25, what is the maximum amount the policy will pay for injuries to one person in a single accident?

$30,000

A single family dwelling me purchase up to what amount of flood insurance in the NFIP's emergency program A. $35,000. B. $50,000. C. $100,000. D. $250,000.

$35,000

An insured has an $80,000 dwelling policy with a $500 deductible. In addition to the house, the property includes a detached garage, storage shed, and a artist studio. During a thunderstorm, the garage, and the storage shed are damaged by lightning. The loss is $3000 to the garage and $1000 to the shed. What amount is covered by the policy? A. $0 B. $3000. C. $3500. D. $4000.

$3500

And insured has an $80,000 dwelling policy with a $500 deductible. In addition to the house, the property includes a detached garage, storage shed, and an artist studio. During a thunderstorm, the garage and storage shed are damaged by lightning. The cost is $3000 to the garage and $1000 to the shed. What amount is covered by the policy? A. $0 B. $3000. C. $3500. D. $4000.

$3500

And insured has purchased a grave marker and cemetery plot at the local cemetery. Vandals enter the cemetery and destroy the grave marker valued at $3500. How much will the insured's homeowners policy pay for the damage under coverage C A. Nothing. B. $2500, less any deductible. C. $1500 less any deductible. D. $3500 less any deductible

$3500 less any deductible - the policy will pay up to $5000 for grave markers, on or away from the residence premises, for a loss caused by a peril insured, undercover C

And insured has a HO3 with a $250 deductible. Coverage A is $50,000. A tree is struck by lightning and falls on the insured's garage. The garage is valued at $4000 and a tree $750. How much will the insured collect? A. $5250. B. $4500. C. $4250. D. $4000.

$4250

A dwelling property policy will provide how much additional coverage for a fire department service charge? A. $250. B. $500. C. $750. D. $1000

$500

How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card? A. $100. B. $500. C. $1000. D. $5000.

$500 - $500 is provided automatically and may be increased by endorsement

All of the following are special personal property limits under a homeowners policy, except A. $1500 for trailers not used with watercraft. B. $2500 for theft of firearms C. $500 for business personal property on the insured premises. D. $1500 for securities accounts, deeds, and evidence of debt.

$500 for business personal property on the insured premises - H02 Farms Pl. a $2500 limit for a business personal property that applies on premises only. A limit of $500 applies to loss of business personal property while away from the premises.

An insured has a special form dwelling policy written for $100,000 on a dwelling. The dwellings replacement cost is 115,000. Fire causes 75,000 in damage to the dwelling, $15,000 damages to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for the trees? A. $5000. B. $10,000. C. $60,000. D. $75,000.

$5000 - in the broad in special form, coverage B (other structures) is an additional amount of insurance, limited to 10% of coverage a (in this example, $10,000). Trees, shrubs, and plants are covered, limited to not more than $500 for one tree or plant, not to exceed 5% of coverage in total.

A fur coat insured on a personal articles floater for $5000 was stolen. The replacement cost is $6000 but it's actual cash value was $4000. The policy will pay. A. $4500. B. $4000. C. $6000. D. $5000.

$5000 is the amount it was insured for on the PAF

A copy machine was purchased eight years ago for $9000. It had depreciated 50% at the time of loss and will cost the insured $12,000 to replace. If the policies loss settlement provision is on an actual cash value bases, how much will the insurer pay for the insurance loss of the copier? A. $0 B. $3000. C. $6000. D. 12,000

$6000 - the replacement value of $12,000 (today's value) less 50% depreciation is $6000

The McCoy's own and insure a building for $300,000. The policy has an 80% coinsurance clause. A $10,000 fire loss occurs and the replacement value at the time of loss is $500,000. How much will the policy pay for the loss? A. $0 B. $5000. C. $7500. D. $10,000.

$7500 - did carry (300,000)/should carry (400,000) * loss = claim paid out

If an auto policy has liability limits of 40/60/20, what would be the equivalent combined single limit?

$80,000 - combined total of coverage for bodily injury and property damage

Coinsurance Equation

(Insurance Carried / Insurance Required) x Loss Amount = Loss Payment

If three volcanic eruption's happened within 48 hours, and each contributes to property damage, how many deductibles will apply in the dwelling policy?

1 deductible (all instances of volcanic eruption's that occur within a 72 hour period are considered one occurrence)

What are the 4 categories of uninsured motor vehicles?

1) No insurance or liability bond; 2) Insurance is less than what's required by the financial responsibility laws; 3) A hit-and-run accident where the driver cannot be identified; and 4) The insurer denies coverage or becomes insolvent.

What are the elements of a legal contract?

1. Agreement - offer and acceptance 2. Consideration - the applicants consideration is the answer that they put on the application and the premium check. The insured or promise to pay a claim. 3. Competent parties - must be a legal age, mentally, competent, not under the influence of drugs, or alcohol. 4. Legal purpose - meaning you are not doing anything that is against public policy.

Stephanie receives notice by mail that her automobile insurance policy is not being renewed. The insurer states the reasons for the non-renewal and Stephanie's right to complain to the Director. How many days from the receipt of notification does Stephanie have to complain? A. 30. B. 15. C. 7 D. 10.

10 - the notice must be accompanied by the reasons for cancellation or non-renewal and a notice of the insured's right to complain to the Director within 10 days of the receipt of notification

Within the first 60 days of coverage under a dwelling policy, how much notice is required for the cancellation of a policy? A. 5 days. B. 10 days. C. 15 days. D. 20 days.

10 days - no matter what the reason, if a policy is canceled within the first 60 days, only 10 days advance notice is required

Under a DP - 3, improvements, alterations, and additions, made by Attendance may be covered for which amount? A. 20% of coverage C B: 20% of coverage A C. 10% of coverage A D. 10% of coverage C

10% of coverage C

The personal property off premises extension of dwelling forms provides limits of coverage up to A. 10% of coverage C anywhere in the world. B. 10% of coverage A anywhere in the US or Canada. C. 10% of coverage a anywhere in the world. D. 10% of coverage C anywhere in the US or Canada.

10% of coverage C anywhere in the world -under all dwelling forms, the insured may apply up to 10% of the coverage C limit against losses, by covered perils to personal property (other than rowboats or canoes), while it is anywhere in the world

A trucking company has a $1 million umbrella policy in place. The business owner agrees to maintain a 200/500/100 limit on auto liability, and a personal liability of $400,000. After a car accident., The business is sued. Injuries are awarded to a single injured party in the amount of $300,000. It turned out that the business actually carried only 100/250/50 auto liability limits. What is the total amount the umbrella policy will pay? A. $50,000. B. $100,000. C. $200,000. D. $300,000.

100,000 - the umbrella policy pays as if the underlying limits were in effect. The underlying Lemon agreed to buy this business was $200,000 per person. Therefore, the umbrella would be the additional hundred thousand dollars. The business itself would be responsible for the difference between what was required and what was actually paid?

The homeowners policy provides only limited coverage for watercraft. Property coverage for watercraft is subject to a special limit of what amount? A. 500. B. 2000. C. 1500. D. 1000.

1500

Under the additional living expenses coverage, if a civil authority, prohibits the insured from using the dwelling because of direct damage to a neighboring location from apparel covered in the insurance policy, last would be covered for up to A. 1 month. B. 90 days. C. 1 week. D. 2 weeks

2 weeks- a dwelling policy will pay loss of use due to civil authority for a maximum of two weeks

In dwelling policies, within how many years of a lost may an insured bring a lawsuit against the insurer?

2 years

What is the standard limit for coverage D - fair rental value on dwelling policy forms? A. 25% B. 20%. C. 15%. D. 10%.

20%

Under the fair credit reporting act a licensee must give notice to the consumer no later than how many days after a report is requested A. 1 B. 2 C. 3 D. 5

3

Coverage for medical payments under a Personal Auto Policy applies to expenses following a covered accident that are incurred and services rendered within what time period?

3 years

An insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for how many days?

30 days

How long is a waiting period upon purchase of flood coverage through NSIP?

30 days

If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for how long?

30 days

In Arizona under the conditions of the dwelling policy, within how many days does an insurer have to pay for a loss. Once a proof of loss form has been received, and an agreement with the insured as to the amount payable has been reached? A. 20 days. B. 30 days. C. 45 days. D. 90 days.

30 days - losses will be paid within 30 days of receiving proof of loss and coming to an agreement with the insured as to the amount payable. This time period is set by the mandatory special provisions - Arizona endorsement.

If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for A. 60 days. B. 90 days. C. 5 days. D. 30 days.

30 days - personal property being moved to a new location can be coverage for up to 30 days without notice to the insurer

Removal coverage that is included in the broad form dwelling policy will cover property temporary removed from the premises to protect it from damage for how long? A. Five days. B. 15 days. C. 30 days. D. 60 days.

30 days - removal coverage is provided for 30 days in the bride and special form, provided that endangerment buy a cover payroll made the removal necessary

The insurer will pay transportation expenses under the PAP beginning ... after a theft of the insured automobile A. 24 hours. B. 48 hours. C. 72 hours. D 96

48 hours

Under a personal auto policy, for an auto to be considered owned, it must be leased for how many continuous months? A. 1 month. B. 3 months. C. 6 months. D. 12 months.

6 months

According to the last payment condition, in HO policies, losses must be paid within how many days of the insurer receiving proof of loss A. 30 days. B. 60 days. C. 90 days. D. 120 days.

60 days

Losses caused by vandalism and malicious mischief are excluded from coverage if a dwelling has been vacant for how many days?

60 days

In dwelling policies, any volcanic activity will come be considered part of one occurrence if it happens within how many hours?

72 hours

Under a homeowners policy, and insured means all of the following, except: A. Mother-in-law who is living with the insured B. A 22 year old foreign exchange student living with the insured. C. The insured 19-year-old foster child. D. Resident 23-year-old full-time student away at college.

A 22 year old foreign exchange student living with the insured.

Which of the following could be used to prove that a person applying for a license is in the country legally? A. A credit card from a US based company. B. A Social Security card. C. A certificate as identification, signed by the governor. D. A bureau of Indian affairs, affidavit of birth.

A bureau of Indian affairs, affidavit of birth - a bureau of Indian affairs, affidavit on birth is one of many ways. A person can prove his or her presence in the country is legal - a requirement for being licensed.

What are the most common penalties for violations of insurance statutes?

A cease and desist order, a fine, and license suspension or revocation

Coinsurance Clause

A clause in which the insured agrees to share in the loss to the extent that he/she is under insured at the time of loss. Applies only in the event of a partial loss. The deductible is not included.

Which of the following rest would be eligible for coverage under a dwelling policy form? A. A single family dwelling that is located on farm premises. B. A duplex that is occupied by two families, each of which have a bedroom rented to a boarder. C. A single family dwelling occupied by a single person who operate a business of buying and selling firearms in the basement. D. A single family dwelling that contains a beauty shop that employees three full-time operators.

A duplex that is occupied by two families, each of which have a bedroom rented to a boarder - eligible dwelling properties, do not need to be exclusively residential, but any incidental business must provide service rather than sales, and must not have more than two persons working on the premises. Risk cannot be located on a farm.

All of the following would be eligible for coverage under the dwelling policy, except A. A house that has five residential units. B. A tenant occupied dwelling. C. Eight dwelling in the course of construction. D. A duplex with one primary owner.

A house that has five residential units - eligibility requires that the dwelling have not more than 4 family units

All of the following would be eligible for coverage under the dwelling policy, except A. A house that has five residential units. B. A tenant occupied dwelling. C. I dwelling in the course of construction. D. A duplex with one primary owner.

A house that has five residential units - eligibility requires that the dwelling have not more than four family units

Concurrent causation is A. A legal doctrine that states when a property loss is due to two causes, one of which is excluded, and one of which is covered, the policy provides coverage. B. When two causes of loss occurs at the same time and both policies pay an equal shares. C. When two or more insurance file a claim at the same time. D. The basis for the short rate cancellation.

A legal doctrine that states when a property loss is due to two causes, one of which is excluded, and one of which is covered, the policy provides coverage.

Who is an insurance agent?

A person authorized to sell, solicit and negotiate insurance contracts

Who is the first named insured?

A person whose name appears first on the policy declaration.

What is consideration on the part of the insurer?

A promise to pay in the event of a loss

Homeowners policies permit, all of the following incidental occupancies except A. Knitting lessons, talk to no more than three students on the premises at a time. B. A 2 chair Barber Shop. C. Bookkeeping service with one accountant D. A retail sales operation run by the insured from his garage.

A retail sales operation run by the insured from his garage - how many hours policies allow incidental office or professional service - type occupancy as long as no more than two people work there at a time. Retail sales are not allowed.

Which vehicle is not eligible for coverage under a personal auto policy? A. A truck with a 10,500 pound gross vehicle weight. B. A two wheel trailer designed for use with a private passenger auto. C. A station wagon used for business. D. A truck with a 1000 pound capacity.

A truck with a 10,500 pound gross vehicle weight - 10,000 pound gross vehicle weight is the maximum allowed for personal auto policy

What does the term unilateral contract mean?

A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise.

What would be considered a newly acquired auto?

A vehicle acquired by the insured during the policy period

What is a covered auto?

A vehicle shown in the policy declarations

What is an example of negligence? A. A roofer installs, inferior shingles and charges the customers for superior shingles. B. A waitress spills some soup and burns a customer. C. An employee intentionally injures a customer. D. A ballpoint pen fails to work as well as advertised.

A waitress spills some soup and burns a customer.

The replacement cost minus depreciation

Actual Cash Value (ACV)

What kind of coverage is included? And does not change the premium A. Endorsements. B. Exclusions. C. Additional coverages. D. Insuring agreement.

Additional coverages

Coverage E in the dwelling policy provides coverage for? A. Fair rental value. B. Additional living expenses. C. Personal liability. D. Medical expenses.

Additional living expenses.

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions,. What contract characteristic does this described? A. Unilateral. B. Conditional. C. Personal. D. Adhesion.

Adhesion - a contract of adhesion is prepared by the insurer; the insured's only option is to accept, or reject the policy as it is written

Ensuring risks that are more prone to losses than average risk

Adverse selection

According to the Law of Agency, who represents the principal?

Agent or producer

What is the term used for the total amount of insurance available in a policy year? A. Restoration limit. B. Liberalization C. Subrogation. D. Aggregate limit.

Aggregate limit

What are the four elements of an insurance contract?

Agreement (offer and acceptance), consideration, competent parties, and legal purpose

Which of the following is a duty of the insured defined under homeowners section 2 following an insurable occurrence? A. Eight in pursuing subrogation attempts. B. Notify the police is a loss is the result of theft. C. Prepare an inventory of the damage to property. D. Protect the property from further loss

Aid in pursuing subrogation attacks

Which of the following would not be covered in the insured garage under an HO3? A. Rowboat. B. Airplane. C. Firearms. D. Motorized wheelchair.

Airplane

Conditions of a Contract

Aleatory - unequal exchange Personal - between the insurer and the insured Adhesion - take it or leave it you don't get to change the verbiage of the contract as it is written by the insurance company Unilateral - one-sided, promise Conditional - certain conditions must be met

DP-3 is an open-peril form. What does that mean

All perils are insured unless specifically excluded

The special form, DP3, covers the dwelling and other structures for? A. All risk/open perils. B. Named/broad form perils only. C. Extended coverage perils only. D. Only the perils of fire, lightning and internal explosion.

All risk/open perils

Coverage D additional living expenses is intended to A. Pay hotel cost but not the cost of meals or transportation. B. Pay all expenses incurred by a family who cannot use your home because of a covered loss. C. Allow the family to maintain their normal standard of living. D. Pay a set amount per day.

Allow the family to maintain their normal standard of living - additional living expense coverage is intended to allow the normal standard of living to be maintained. It will cover housing costs, meals, transportation, etc.

How many owner-occupied residences per covered home are allowed by Homeowners policies?

An HO policy may insure a property that has 1- to 4-family owner-occupied residences.

What is warranty in an insurance contact?

An absolutely true statement upon which the validity of the insurance contract is based

proximate cause

An act or event that is the immediate or actual cause of a loss.

Who is considered a non-resident agent?

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state

What does an application for insurance contractually represent for the insured? A. An agreement of terms. B. A primary source of information. C. A promise to pay. D. And offer.

An offer

The personal auto policy, to what geographical region does the out-of-state coverage apply?

Any U.S. state or territory, as well as Canada

Under coverage B - other structures, a homeowners policy that provides coverage for other structures on the residence premises. Which of the following statements is NOT true of this coverage? A. A detached garage may be covered. It rented to others as a private garage. B. Other structures may not be used to store business property of others, even though a business is not conducted from the structure. C. Any loss paid under Coverage B reduces the coverage a limit of liability D. Other structures covered under coverage B must be set apart from the dwelling by clear space.

Any loss paid under Coverage B reduces the coverage a limit of liability - the automatic limit for coverage B is 10% of the liability limit that applies to coverage a. Use of this coverage does not reduce the coverage a limit of liability.

Slander

Any oral or verbal and true statement that injures a person or company's reputation is considered slander and provides grounds for litigation against the offending party

Libel

Any written, or printed and true statement that injures persons or companies reputation is considered a liable, and provides grounds for a litigation against the offending party

Because an agent is using stationary with the logo of an insurance company, applicants for insurance, assume that the agent is authorized to transact on behalf of that insure. What type of agent authority does this describe? A. Express B. Implied. C. Assumed. D. Apparent

Apparent - also known, as perceived authority, is the appearance of the assumption of authority based on the actions, words, or deeds of the principal, or because circumstances the principal created

Which of the following types of agent authority is also called "perceived authority"? A. Implied B. Fiduciary. C. Apparent D. Express

Apparent authority, also known as perceived authority, is the appearance of the assumption of authority based on the actions, words, or deeds of the principal, or because of circumstances, the principal created

Agent authority - based on the principles, actions or words

Apparent or perceived authority

Which of the following is false regarding the coinsurance condition? A. Deductible is not part of the coinsurance formula. B. Insurance policy must be at least 80% of replacement value of property. C. Applies to partial losses. D. Applies to total losses.

Applies to total losses.

If an insured, an insurer are unable to agree on the amount of the claim to be paid, which of the following will be utilized: A. Appraisal. B. Salvage. C. Mediation. D. Assignment.

Appraisal

If the insured does not agree with the insures decision, regarding a claim, what process helps decide the outcome? A. Jury trial. B. Consequential hearing. C. Inspection. D. Arbitration.

Arbitration

Under coverage C of an HO-3 policy what is the amount of insurance provided for personal property?

At least 50% of the Coverage A limit (this applies to all policies except for HO-4 and HO-6)

Replacement cost coverage is provided in both the prod and special form dwelling policies when the amount of insurance on the dwelling is what percentage?

At least 80% of the replacement cost

In property insurance, when must insurable interest exist?

At the time of loss

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Authorized or admitted

If an insurer meets the states financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted

If an insurer makes a change to broaden coverage in a dwelling policy, while it is in effect, the changes will apply A. When the party is up for renewal B. Within 60 days. C. Automatically. D. When the new policy is written

Automatically - changes made to broaden coverage in a dwelling policy, if made, while the policy is in effect or 60 days before it goes into effect, will apply automatically, and will not need to be endorsed to the policy

What are the methods of managing risks?

Avoidance, transfer, sharing, retention, and reduction

The damage caused by burglars is excluded, under which one of the dwelling forms? A. Basic DP1. B. Broad DP2. C. Special DP3. D. All forms exclude damage caused by burglars.

Basic DP one

What are the three types of coverage available in dwelling policies?

Basic, Broad, Special

In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will A. Only be applicable if the insured pays an additional premium. B. Be increased by 10%. C. Be decreased by 10%. Only be applicable if the insured pays a higher deductible

Be decreased by 10%

Property coverage that does not require a specific limit of insurance for each item to be insured is called? A. Blanket B. Comprehensive. C. Specific. D. All risk.

Blanket

What type of losses are indicated by the split limits in an auto insurance policy?

Bodily injury per person, bodily injury per accident, and property damage per accident

You on a Harley Davidson motorcycle and also the black Ford F150 pick up with the Harley Davidson trim package. Which would be insured on a personal auto policy? A. Both the pick up and the motorcycle. B. The pick up and the bike if the bike is in the back of the pick up. C. Neither the pick up nor the bike on an auto policy. D. Only the pick up.

Both the pick up and the motorcycle - pick ups are normally insured on PAP's; the Harley may be added with a miscellaneous vehicle endorsement

Bodily injury coverage includes all of the following, except A. Breach of contract. B. Lost wages. C. Mental anguish. D. Disfigurement.

Breach of contract

Which of the following is covered by the HO-2 "additional coverages" insurance? A. Structures, other than the dwelling. B. Tenants. C. Condominium structures. D. Breakage of glass.

Breakage of glass

Which of the following other coverages is not included in the basic form dwelling A. Personal property temporary early away from the insured premises. B. Tenant improvements, alterations, and additions. C. Breakage of glass. D. Removal coverage.

Breakage of glass is included in the DP2 and DP3

Under the HO for homeowners policy form, property is insured against A. Basic form perils. B. Broad and special form perils. C. Comprehensive form perils. D. Broad form perils only.

Broad form perils only - H04 (contents rod form), also referred as tenant broad form, insures personal property for broad perils

Who is a licensed individual who negotiates insurance contracts with insurers, on behalf of the applicant? A. Insured. B. Agent. C. Insurer. D. Broker.

Broker

All of the following are commonly used personal inland marine forms, except A. Personal article floater. B. Fine arts property floater. C. Builders floater form. D. Personal effects floater.

Builders floater form

Homeowners policies provide coverage for A. The land under the residence. B. Property of tenant, rumors, or borders, not related to any insured. C. Business property while on the residence premises. D. Losses caused by off premises power failure.

Business property while on the residence premises. - your contents coverage will cover up to $2500 for loss of business property on premises

Replacement cost coverage is provided in both broad and special form dwelling policies when A. The amount of insurance on the dwelling is at least 90% of its replacement cost when the policy is written. B. The dwelling is insured for 100% of its replacement cost at the time of a loss. C. The amount of insurance on the twirling is at least 80% of its replacement cost at the time of loss. D. The amount of insurance on both the dwelling and personal property is at least 80% of its replacement cost when the policy is written.

C - it is always a requirement on property forms that provide replacement cost coverage that insurance on the dwelling be at least 80% of its replacement cost at the time of loss to

Which one of the following statements about dwelling policies is correct? A. Can provide coverage for single-family rental properties. B. That is automatically covered under a dwelling policy. C. Liability coverage is automatically included in a dwelling policy. D: the building must be occupied to be insured

Can provide coverage for single-family rental properties.

What are the differences between cancellation and non renewal?

Cancellation is the termination of an insurance policy by either party prior to the policy's expiration date. Non-renewal is the termination of a policy at its expiration date by not offering a continuation of the existing policy.

Which of the following is owned by a corporation to serve that organizations needs at lower rates than would otherwise be available with commercial insurance? A. Internal insurer. B. Custom insurer. C. Reinsurer. D. Captive insurer.

Captive insurer - corporations organize captive insurers in order to obtain lower insurance rates and avoid the uncertainties and risks associated with commercial insurance

If the commissioner/superintendent find a licensee engaging in an unfair method of competition or unfair practice what order will be issued?

Cease and desist order

What does term reasonable expectations mean in insurance?

Certain expectations for coverage that a reasonable person would have based on sources other than just the policy language

What document is required for an insurance company to transact insurance?

Certificate of Authority

A state issued document in powering an insurance company to become an admitted insurer is called what?

Certificate of authority

What is not a supplementary payment under section 2 of the homeowners policy? A. The insured's loss of earnings. B. Expenses incurred by the insured at the insurers request. C. Claims settlement payments. D. Defense costs

Claims settlement payments.

What coverages are available in the physical damage section of the personal auto policy?

Collision and other-than-collision coverages

What are producers required to do in order to renew their license?

Complete continuing education hours and pay a renewal fee

Should the insured or insure or recover any property for which a claim has already been paid, procedures to be followed, are found in the policy: A. Conditions B. Insuring agreement. C. Exclusions. D. Declarations.

Conditions

The duties and obligations of the insured are found under what part of the insurance policy? A. Declarations. B. Insuring agreement. C. Additional coverages. D. Conditions.

Conditions

Where are the obligations of the insured an insurer? A. Insuring agreement. B. Conditions. C. Additional coverages. D. Endorsements.

Conditions

Where is the appraisal process found in the policy? A. Declarations. B. Insuring agreement. D. Conditions. E. Exclusions

Conditions

Which of the following elements of an insurance contract requires payment of premium A. Consideration. B. Legal purpose. C. Competent parties. D. Offer and acceptance.

Consideration - the binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and representations made in the application. Consideration on the part of the insurer is a promise to pay in the event of a loss.

What is consideration in an insurance contract?

Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.

When an insurance policy is not clear, the court will usually interpret in favor of the insured. What type of contract does this describe? A. liberalization B. Contract of adhesion. C. Indemnity. D. Unilateral.

Contract of adhesion.

Which of the following exclusions? What's the typically fall under coverage E in homeowners insurance? A. Land. B. Contractual liability C. Bodily injury to a residence employee D. Falling objects.

Contractual liability - HO coverage E is a personal liability form. The following are the exclusions that apply to it: damage to property owned by, or in the care of the insured; Liability for any assessment charged against the insured as a member of an association; contractual liability; bodily injury to any person eligible for Worker's Comp.; bodily injury to the named insured, relative or minor, residing in the household

Two insurers cover a percentage of an insurance building and personal property exposure. If a loss occurs, each insurer will pay the same amount of money until one or both reached the limits of their policy, under which method of apportionment. A. Contribution by equal shares. B. Concurrent contribution. C. Pro rata contribution. D. Other insurance.

Contribution by equal shares.

All of the following are used to establish negligence except A. Cost of damages. B. Legal duty owed. C. Proximate cause D. Reach of legal duty

Cost of damages

Under homeowners, which coverage applies to new roofing shingles next to the house? A. Coverage A B. Coverage C C. Coverage D. D. Coverage E.

Coverage A

What are the five coverages of dwelling policies?

Coverage A - Dwelling, Coverage B - Other structures, Coverage C - Personal property, Coverage D - Fair rental value, and Coverage E - Additional living expenses

Which of the following statements is true concerning the special form dwelling policy? A. Both coverage A and coverage C, I provided for the broad form perils. B. Coverage A is for all risk, perils, and coverage C is for a basic perils only. C. Coverage A is for all risk perils, and coverage C is for the broad form perils. D. Both coverage A and coverage C are provided on an all risk basis.

Coverage A is for all risk perils, and coverage C is for the broad form perils - the all risk coverage applies to property insured under coverage A & B only

What are the major coverages included in a Homeowners policy?

Coverage A: Dwelling Coverage B: Other Structures Coverage C: Personal Property Coverage D: Loss of Use

Which dwelling policy coverage will insure a garage not attached to the primary insured dwelling?

Coverage B - Other Structures

Which of the following is the principal coverage provided under the HO 4 policy? A. Coverage D. B. Coverage C C. Coverage A D. Coverage B

Coverage C - HO 4 renters does not have a coverage A

Which dwelling policy coverage will provide protection for contents, damaged by fire in an insured dwelling?

Coverage C - Personal Property

In Homeowners policies, which coverage provides protection against an indirect or consequential loss?

Coverage D - Loss of Use

An insured suffers a covered loss to some rental property that forces the tenant to move to another location. Under which section of the dwelling policy with the insured receive payment during the time the property is being repaired? A. Coverage A - dwelling B. Coverage B - other structure C. Coverage D - fair rental value. D. Coverage E - additional living expenses

Coverage D - fair rental value.

What are the 2 liability coverages included in Homeowners policy form?

Coverage E - Personal Liability, and Coverage F - Medical Payments to Others

An insured's house becomes uninhabitable due to damage by a fire. As a result, the insured has to rent an apartment until repairs are made. Which type of coverage under the dwelling policy will pay for the expense of renting the apartment?

Coverage E - additional living expenses

Other than the perils, the difference in the 3DP forms is in coverage provided. Which of the following coverage option is covered by the DP2 and DP3 but not DP1? A. Coverage B - other structures. B. Coverage D - fair rental value. C. Coverage E - additional living expenses. D. Coverage A - dwelling.

Coverage E - additional living expenses - additional living expense must be obtained through an endorsement in a DP1

Which of the following does a binder of coverage guarantee? A. A policy will be issued. B. The application need not be completed. C. Previous losses will be covered. D. Coverage is in place immediately.

Coverage is in place immediately.

What is the purpose of the extended non-owned coverage for a named individual endorsement? A. Covers owned vehicles for the insured regular use. B. Covers non-owned vehicles furnished for the insured regular use. C. Covers an individual who does not own a car. D. Extends coverage for a leased vehicle.

Covers non-owned vehicles furnished for the insured regular use.

What is the calculation for the actual cash value method of valuation?

Current replacement cost - depreciation = ACV

Which of the 3 DP forms provide the most limited coverage?

DP-1 (Basic)

Which dwelling form is called the broad form?

DP-2

Which dwelling coverage form(s) will pay for the replacement cost of a dwelling?

DP-2 (Broad) and DP-3 (Special)

Which dwelling form provides open peril coverage on the building?

DP-3 (Special)

The damage caused by burglars is excluded under which of the dwelling forms? A. Basic (DP1) B. Broad. (DP2) C. Special. (DP3) D. All forms exclude damage caused by burglars.

DP1

Which of the following statement is false? A. DP3 is open perils on the structures A&B and named perils on the personal property C. B. DP2 is named perils on coverages A, B, & C. C. DP1 is limited perils on coverages A, B, and C D. DP3 is open perils on both structures (A&B) and open perils on personal property C.

DP3 is open perils on both structures (A&B) and open perils on personal property C. - personal property is broad peril

Which of the following statement is false? A. DP3 is open perils on the structures (A&B) and named perils on personal property (C) B. DP2 is named perils on coverage is A, B and C. C. DP-1is limited perils. On coverages A, B and C D. DP3 is open perils on both the structures (A&B) and open perils on personal property (C)

DP3 is open perils on both the structures (A&B) and open perils on personal property (C)

All of the following are common exclusions in a personal auto liability policy, except A. Vehicles used in racing contests B. Damage to property owned by the insured. C. Damage caused by acts of civil disobedience in riots. D. Losses covered under Worker's Compensation laws.

Damage caused by acts of civil, disobedience and riots

A property damage, liability policy offers protection, for which of the following losses: A. a slip and fall injury that happened on the insureds premises B. damages done to a gas station due to insured's parking collision. C. The neighbors injuries sustained at the insured's outdoor party D. damages to the insured's home caused by a family member.

Damage is done to a gas station due to the insured's collision

All of the following statements are true, regarding the insured's duties to the insurer after a loss to an insured dwelling, except A. Insured must furnish proof of loss. B. And damage property must be protected from further loss. C. Damage property must be appraised. D. The insurance company must be notified of the loss.

Damage property must be appraised.

Additional coverages in the liability section of the homeowners policy, cover all of the following, except A. Damage to the property of others. B. Damage to third-party property for which the insured is legally liable. C. Claims expenses. D. Expenses the insured in occurs rendering first aid for badly injury to third parties.

Damage to third-party property for which the insured is legally liable - legal liability coverage is a primary liability coverage, not an additional coverage

Which peril is covered by an "open peril" dwelling policy? A. Mudslide. B. Flood. C. Damage by burglar. D. Deterioration.

Damaged by burglar

Which of the following is excluded as a cover loss under the DP-3 coverage? A. Damaged by ice to outdoor radio and television, antennas, and Aerials. B. Freezing of pipes when water is shut off during a vacancy. C. Sudden seepage from an air conditioning system. D. Vandalism in the house vacant for 30 days.

Damaged by ice to outdoor radio and television, antennas, and Aerials.

What are additional coverages available in Homeowners policies without additional premiums?

Debris removal, lawns/plants/shrubs, and trees, removal, reasonable repairs, and fire department service charge

In which section of the policy will the insured find the basic underwriting information, such as the insured's name, address, amount of coverage, and premiums?

Declarations

The part of a property policy that shows the amount of insurance, premium, and policy term is there A. Conditions B. Endorsements. C. Declarations. E. Insuring clause.

Declarations - who, what, when, where, and how much insurance and premiums are all stated in the policy declarations

Where is the policy period stated in an insurance policy?

Declarations page

What part of the policy includes the policy. A. Declaration page. B. Insuring agreement. C. Endorsements. D. Conditions.

Declarations page sharing agreement

Which of the following would be an insurable, pure risk? A. An investors risk of market loss. B. A criminal prosecution. C. Defending a negligence claim. D. Repair is due to wear and tear.

Defending a negligence claim.

Coverage F - medical payments to others includes coverage for? A. Pain and suffering. B. Dental services. C. Punitive damages. D. Loss of consortium.

Dental services

How are direct and indirect losses related

Direct losses can cause indirect losses.

What type of losses may be covered by property insurance?

Direct losses only

All of the following are a covered cause of loss under the homeowners HO - 2 broad form, except A. Weight of ice, snow, or sleet. B. Discharge or overflow of water from a sump. C. Freezing of plumbing or related systems. D. Sudden and accidental damage from artificial electrical current.

Discharge or overflow of water from a sump.- water, back up and sump discharge or overflow is an endorsement

Insurers are classified according to their domicile. What are the three types of ensurers? Or domestic for an alien

Domestic, foreign, and alien

Which of the following provisions requires that the insured protects the damage property from further damage, cooperates with the insurer in settling the loss, and submits to the insure, signed proof of loss within a specified period of time? A. Proof of loss. B. Duties after loss. C. Legal action. D. Loss settlement.

Duties after loss - duties after last provision requires that the insured protects the damage property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer, signed proof of loss within a specified period of time

What do dwelling policies insure?

Dwelling only, contents only, or both dwelling and contents

In general, what do Homeowners policies cover?

Dwellings used primarily as private residences

All of the following are other coverages under the dwelling policy, except A. Improvements, alterations, and additions. B. Earth movement C. Other structures. D. Debris removal.

Earth movement - earth movement is not included in the other coverages of the dwelling policy

What are some of the exclusions found in all three dwelling forms?

Earth movement, water damage, power failure, neglect, war, nuclear hazard, intentional loss, freezing of plumbing, ordinance or law, and government action

Which of the following is covered by auto other than collision (comprehensive ) coverage? A. Radar detector B. Portable CD player. C. Awning attached a car for camping. D. Electrical equipment required for the normal operation of the car.

Electrical equipment required for the normal operation of the car - radar detectors, electronic equipment, not permanently installed, and anything added for living space is excluded.

It Hass to be due to chance, it Hass to be random, it is accidentally and not on purpose Asked to be definite and measurable Statistically predictable Not Catastrophic Randomly selected (not on purpose), see backward/large loss exposure (law of large numbers)

Elements of insurable risk

What is the name of printed addendums to a contract that are used to change the policy's original terms, conditions, or coverages?

Endorsements

What part of the policy can either add or take away from the policy A. Declarations. B. Exclusions. C. Endorsements. D.! additional coverages

Endorsements

ABC insurance company receives an incomplete application and issues the policy anyway. Six months later ABC realizes the missing information. What term is used that prevents ABC from forcing the policy owner to answer further questions? A. Consideration. B. Estoppel. C. Adhesion. D. Unilateral.

Estoppel - ABC had waived it's right to receive answers to the missing information. Once the policy was issued. Therefore, they are a stopped from enforcing those waived rights.

What time of coverage do umbrella policies provide?

Excess coverage over the primary policy

Which of the following best describes the aleatory nature of an insurance contract? A. Ambiguities are interpreted in favor of the insured. B. Policies are submitted to the insure on a take it, or leave it bases. C. Exchange of unequal values. D. Only one of the parties being legally bound by the contract.

Exchange of unequal values - and aleatory contract is a contract in which an equal amounts or values are exchanged. The amount of premium the insured pays is much less than the potential loss assumed by the insurer.

Which part of an insurance contract describes a loss for which the insured will not be indemnified? A. Conditions B. Insuring agreement. C. Exclusions. D. Declarations.

Exclusions

And insured just purchased an auto policy for his new car. He wants to understand what perils are not insured against. Which section of his policy should the insured check? A. Declarations. B. Definitions. C. Exclusions. D. Insuring agreement.

Exclusions - this section of the insurance policy details what perils are not insured against and wet persons are not insured

Agent authority - a written contract

Express authority

Which of the following best describes negligence? A. A situation that creates a probability of loss. B. A Latin defect or fault in property. C. The inability to meet the burden of proof. D. The failure to use reasonable and prudent care.

Failure to use reasonable and prudent care

All the following self insurance in the residual market accept A. National flood insurance program. B. Disability insurance. C. Fair plan program. D. Federal crop insurance.

Fair plan program

The requirement that agents must account for and promptly remit all insurance funds collected, is known as what type of agent responsibility?

Fiduciary

The requirement that agents not commingle insurance monies with their own funds, is known as A. Accepted accounting principles. B. Fiduciary responsibility. C. Premium accountability. D. Express authority.

Fiduciary responsibility - money collected with respect to an insurance transaction must be held in a position of trust by the agent or broker

To have insurable interest in the person or property, covered by a property insurance policy, which of the following potential risk must the policy owner face? A. Physical injury. B. Property damage. C. Illness. D. Financial loss.

Financial loss - to purchase insurance, the policyowner must face the possibility of financial loss in the event of loss. This is called insurable interest. In property and casualty insurance, insurable interest must exist at the time of lost.

All of the following personal articles floaters allow just 30 days for reporting newly acquired items, except A. Musical instrument floater. B. Personal jewelry floater. C. Fine arts floater. D. Camera floater.

Fine arts floater - fine arts has 90 days for reporting newly acquired items

Each of the following is a typical property insurance policy, exclusion, except A. Ordinance or law B. Flood. C. Fire. D. Neglect.

Fire

Which of the following claims would be included under the dwelling policy? A. Theft of the insured auto from the detached garage. B. Death to the insured's Pat caused by smoke inhalation. C. Fire damage to the insured rowboat stored in the attached garage. D. Fire damage to a garage located on the insured premises used as an auto repair shop.

Fire damage to the insured, rowboat stored in the attached garage - rowboats and canoes are covered under the dwelling policy as personal property

A basic dwelling policy automatically provides coverage against what?

Fire, lightning, and internal explosion

How is coverage usually written for HO-8 forms?

For the market value of the property

Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization? A. Reciprocal association. B. Fraternal benefit society. C. Mutual company. D. Stock company.

Fraternal benefit society - fraternal insurers operate on the basis of a lodge or charitable organization, but they may also sell formal insurance plans for the benefit of their members. Reciprocal insurers are also associations that provide insurance for their members, but they are formed only for the purpose of providing insurance.

Which method valuation will most likely be used for a property that cannot be restored with the original materials or methods of construction?

Functional replacement cost

What does the conditions section of the policy define?

General rules or procedures that the insurer and insured agree to follow under the terms of the policy

All of the following are covered for named perils, under home courage be except A. A detached garage. B. An inground swimming pool. C. Perimeter fencing. D. Grave markers.

Grave markers

Which of the following homeowners form provides the most comprehensive coverage? A. H08. B. H05. C. H06. D. HO4.

H05 is open perils on coverages A, B and C while HO3 is open perils on A and B, & name perils on C

What coverage forms are available homeowners policies?

HO-2 HO-3 HO-4 HO-5 HO-6 HO-8

What Homeowners policy form is known as a special form?

HO-3 special form

What homeowners policy form is known as a special form?

HO-3 special form

What HO form insures a tenant living in an apartment?

HO-4 (tenant broad form)

What homeowners policy form is known as contents broad form?

HO-4 contents broad form

Why does the HO-4 form not provide dwelling coverage?

HO-4 is written for a tenant residing in a rented dwelling; the tenant does not own the dwelling

What HO form covers condominium unit owners?

HO-6 (condominium unit owners)

What HO form covers a historic home with replacement cost more than the market value?

HO-8 (modified homeowners)

Which is the most limited HO-8 coverage?

HO-8(modified homeowners)

Which homeowners form provides a broad form named peril coverage on the property of a condominium unit owner? A. H02. B. H04. C. H06. D. HO8

HO6

A restaurant has clogged heating and cooling decks. This is an example of a. A. Occurrence. B. Risk. C. Hazard. D. Peril.

Hazard

Plugging too many electrical cords into a single outlet can be best described as a A. Uninsurable risk. B. Peril. C. Hazard. D. Law of large numbers.

Hazard

conditions that increase the chance of a loss are known as what?

Hazards Hazards are any factors that increase the likelihood that a loss may occur.

Events or hazards that increase the chance and insured loss occurring are referred to as? A. Hazards. B. Exposures. C. Risks D. Perils.

Hazards - conditions such as lifestyle and existing health, or activities, such as scuba, diving or hazards, and may increase the chance of loss occurring

A doctor was on vacation, and he aided a wounded person, and they died, so they sued, what coverage would that be under? A. No coverage. B. Auto. C. Homeowners - medical payments. D. Medical malpractice.

Homeowners - medical payments.

The policy conditions define A. How parties to the contract must act following a loss B. The basic underwriting information. C. The excluded perils. D. The amount of coverage

How parties to the contract must act following a loss - conditions is an essential part of a policy structure. Conditions defined what each party to the policy is required to do contractually in the event of a loss of.

Which of the following would be covered by the broad soft endorsement on a dwelling policy? A. An antique car. B. A camera the insured has with him on vacation. C. A pedigreed show dog. D. Fabric and patterns in a clothing designers studio at her home.

I Camera, the insured has with him on vacation - all of these examples except the camera or types of property specifically excluded from coverage under the broad theft endorsement

When is an appraisal needed and how can it be requested

If an insured and an insurer disagree about the value of a property loss, either party can make a written demand for an appraisal.

When would a misrepresentation on insurance application be considered fraud?

If it is intentional and material

When would a misrepresentation on the insurance application be considered fraud? A. If it is intentional and material. B. Never: statements by the applicant are only representations. C. When the application is incomplete. D. Any misrepresentation is considered fraud.

If it is intentional and material - a misrepresentation would be considered fraud if it is intentional and material. Fraud would be grounds for avoiding the contract.

Under what conditions can broad theft coverage be added to a dwelling policy?

If the insured is the owner-occupant of the dwelling

What authority is not written, and allows a producer to conduct business of the insurer? A. Apparent B. Implied C. Informal D. Express

Implied

Which authority is not stated in an agent contract, but is required for the agent to conduct business? A. Implied. B. Apparent C. Assumed. D. Express

Implied - implied authority is not written in the agents contract, but is required in order for the agent to conduct business. Implied authority exists, because not every single detail of an agents authority can be written in a contract.

Agent authority - not written into the contract, but is assumed an example you sit down with a client you take the application from them they considered you have the authority to do that

Implied authority

Under PAP, part A liability, the cost of defense is? A. Part of the liability limits. B. In addition to the liability limits. C. $250. D. $10,000.

In addition to the liability limits.

All of the following activities are subject to strict liability, except A. Manufacturing ladders. B. Chemical processing. C. Staging fireworks displays. D. In-home childcare.

In-home childcare

What provision states that if a policy allows for greater benefits than the financial loss incurred, the insured may be compensated only for the amount loss?

Indemnity

When fire on the premises causes a power outage which causes meat in the freezer to spoil, the meat spoilage would be considered. What type of loss? A. Direct B. Primary. C. Indirect. D. Initial.

Indirect

An insured's business is damaged by a fire and temporarily shut down for repairs. As a result, the insured suffers loss of income. What type of loss is the loss of income.

Indirect or consequential

A quality within property that causes it to damage or destroy itself. Examples include rust, rot and fading of paint, and is not covered by a property policy. A. Bailor B. Subrogation. C. Proximate cause D. Inherent vice.

Inherent vice

For the peril of freezing to be covered for plumbing pipes, all of the following are required, except A. Maintain heat in the building. B. Shut off the water supply. C. Insulate the walls. D. Drain the pipes.

Insulate the walls

In general, who can be excluded from producer, licensing, and examination requirements?

Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical)

What are residual markets?

Insurance markets designed to assume risks that are generally not insurable in the normal insurance market

What is controlled business?

Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates

Medical payments coverage under the homeowners policy includes all the following, except A. Insured or regular residents B. Persons on the insured location with the permission of the insured. C. Badly injury caused by an animal, owned by the insured, either on or off the premises. D. Bodily injury off the insured location if the injury is caused by activities of the insured.

Insured or regular residents

And insured invites his neighbors out for a day on the water in his boat powered with 150 hp outboard motor. While attempting to tie the boat to the dock, his neighbors hand is broken and caught between the boat and the dock. What coverage would apply to the broken hand? A. The insured's outboard boat and motor policy B. Homeowners personal liability coverage. C. Homeowners property coverage. D. The insured's boat owners policy.

Insured's boat owners policy - outboard boat and motor policies are property coverage only. Homeowners liability does not apply to outboard with more than 25 hp. Boatowner's policies contain property, liability, and medical payments coverage.

Which of the following presents a Basis for holding an insured responsible due to vicarious liability? A. Store employee damages, insured vehicle while loading cargo. B. Insureds child injures a friend in a sports accident. C. Repair person causes a fire fixing the insured's furnace. D. Neighbors lawn mower throws a rock damaging insured's car.

Insureds child injures a friend in a sports accident.

An insured is involved in an automobile accident. The adjuster declares the insured's car to be a total loss and authorizes payment to the insured for the actual cash value of the car. The salvage belongs to the. A. Insurer. B. Adjuster. C. Repair shop. D. Insured.

Insurer

In the agent/insurer relation, who is considered the principal?

Insurer

Which of the following is false regarding the FCR - fair credit reporting act? A. Ensures, data collected is confidential, accurate, relevant. B. Protects the public from overly intrusive information collection practices. C. Can be used in insurance underwriting for insurability. D. Insurer is responsible for collecting in accuracies on any reports.

Insurer is responsible for collecting in accuracies on any reports.

The insurance companies promise of protection is found in the A. Exclusions. B. Declarations. C. Insuring agreement. D. Conditions.

Insuring agreement

What part of the policy includes the perils covered A. Declaration page. B. Insuring agreement. C. Endorsements. D. Conditions.

Insuring agreement

What part of the policy is the promise to pay? A. Declarations page. B. Insuring agreement. C. Endorsements. D. Additional coverages.

Insuring agreement

Which part of the insurance contract states the obligation of the insurance company to provide insurance coverages as stated in the policy?

Insuring agreement

All of the following are conditions commonly found in the insurance policy, except A. Insuring agreement. B. Cancellation and non-renewal. C. Subrogation. D. Appraisal.

Insuring agreement - the insuring agreement provides information on the policies coverages. Conditions state the legal obligations and duties of the parties to the contract.

What losses are excluded from coverage in the liability section of the Personal Auto Policy?

Intentional injury or damage, damage to property owned or transported by the insured, use of a vehicle as a public conveyance, or use of a vehicle without permission.

A Delivered affect causes harm to another person, regardless of whether the harm is intended is called A. Absolute liability. B. Tortfeasor C. Vicarious tort D. Intentional tort.

Intentional tort - an intentional tort is a Delivered act that causes harm to another person. Tortfeasor is a person, a business, or another party, who has committed a tort. Vicarious liability is legal responsibility. That occurs when one party is held liable for the actions of another party. Absolute liability is legal liability that arises from inherently dangerous activities that result in injury or harm to another person.

Which of the following would be covered under the broad form (DP - 2 (policies, falling object peril? A. Exterior pavement, and patio damage. B. Interior building damage if the exterior was damaged first. C. Damage to the buildings awnings D. Damage to outdoor television antennas if there is no interior damage.

Interior building damage is the exterior was damaged first - DP1 & DP2 policy forms, loss or damage resulting from falling objects is covered, except for damage to awnings, fences, outdoor equipment, outdoor radio, and television, and antennas or aerials, mass or towers. Damage to the interior of the building is covered only if the exterior was has been damage first.

A gas stove exploding in the dwelling is an example of which named peril?

Internal explosion

Which of the following describes why the insuring agreement is the heart of an insurance policy? A. He describes the losses for which the insured is not covered. B. It lists the amount of coverage provided. C. It states the ground rules for the policy. D. It describes property covered and perils insured.

It describes property covered and perils insured.

Which of the following is NOT true regarding the automatic increase in insurance endorsement in dwelling policies? A. It is optional. B. It provides protection from inflation. C. It does not require additional premium. D. It increases the amount of coverage by an annual percentage.

It does not require additional premium - automatic increase in insurance is an optional endorsement that may be added to a dwelling policy to increase the amount of insurance by an annual percentage, to offset the effects of inflation. This endorsement requires additional premium.

Which statement is false of section one of the homeowners policy? A. It will cover theft from a safe deposit box. B. Covers property of gas while on the insured premises. C. It has a $500 limit for trailers not used with watercraft. D. The replacement cost clause, eliminate the deduction for depreciation.

It has a $500 limit for trailers, not used with watercraft - this is faults because there is $1500 for trailers

A DP 2 policy with cover losses from all of the following perils except A. Falling objects. B. Weight of snow, ice, sleet C. Known infestation of insects. D. Damage by burglars.

Known infestation of insects.

What are some exclusions from coverage in all of the Homeowners forms?

Land, structures used for business purposes, animals/birds/fish, aircraft, rented property, electronic data, and motor vehicles

What types of losses do not meet the definition of flood under NSIP and, therefore, are excluded from coverage?

Landslides, backup of sewers unrelated to a flood, wind, blown rain, snow, or sleet, as well as flooding that is within the insured's control

Each of the following must be included in an insurable risk, except A. Calculable chance of loss. B. Excluded catastrophic perils. C. Large group with dissimilar members. D. Accidental losses.

Large group with dissimilar members

A relationship between two or more parties, where one party (the agent or producer) acts on behalf of the other party, known as the principal or insurer. A. Law of agency. B. Law of principal. C. Law of authority. D. Law of liability.

Law of agency

Mr. Haley failed to keep control of his car and collided with Mrs. Gonzalez, who incurred injuries. Mrs. Gonzalez is entitled to recover financially for her injuries under the concept of. A. Legal liability. B. Occurrence. C. Assumption of risk. D. Contributory negligence.

Legal liability

What Personal Auto coverage would pay for the insured's travel expenses and loss of earnings while the insured is involved in the settlement process of a covered loss?

Liability

What type of coverage is included in Homeowners policies but is not available in dwelling policies?

Liability coverage

Strict - product liability

Liability for a defective product, regardless of fault or negative negligence

What provisions in a property policy applies when the insurer broadens coverage, but does not increase the premium?

Liberalization

Which of the following losses is covered under coverage A dwelling A. Paint spilled on living room couch B. Vehicle damage to fence C. Lightning strike on homes chimney D. When damage to detached garage.

Lightning strike on homes chimney

Under the dwelling policy, coverage C - personal property is A. Limited to covering a servants property while at the insured location. B. Automatically provides as 50% of coverage a C. Prohibited coverage in the dwelling form. D. Limited to 50% of the amount of insurance that is written as coverage a

Limited to covering a servants property while at the insured location - dwelling coverage E is limited to covering property, owned by a guest or a servant while the property is at the insured location.

What determines an insurer's responsibility for payment, as stated in an insurance policy.

Limits of liability

And insurance organization that does not issue insurance policy that provides a meeting place for underwriters to conduct business is known as A. Capital stock company. B. Lloyd's association. C. Fraternal society. D. Mutual company.

Lloyds association - a Lloyds association itself does not issue insurance policies, or provide insurance protection. Lloyd's association provide a meeting facility for the individual underwriters to conduct the business of insurance.

Which of the following is the basis for a claim against an insurance policy? A. Misrepresentation. B. Loss. C. Material change. D. Hazard.

Loss

Which of the following is an optional coverage that can be added to a mobile home policy? A. Loss from foreclosure. B. Loss from collapse of awnings. C. Loss from collision damage. D. Loss from flood damage.

Loss from collision damage

What are the five characteristics of an ideally insurance risk?

Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) Randomly selected

(Incurred losses + adjusting expenses) / earned premium

Loss ratio

And insured's home is mortgaged by the local bank. The insured is required to carry insurance on the home, showing the bank as the mortgagee. If the home is damaged by apparel, which of the following is true? A. Losses will be paid to the mortgagee and mortgagor as their interest appears. B. Coverage is suspended if they're building is mortgage and the insurance not told of his indebtedness C. The mortgagee must settle with the mortgagor in the event of loss D. The additional premium required for the mortgage endorsement must be paid by the mortgagee.

Losses will be paid to the mortgagee and the mortgagor as their interest appears - if a mortgagee is shown on a property policy, in the event of loss, the insurer agrees to pay its financial interest of the loss up to the policy limits. If the policy is to be canceled, the insurer agrees to give the mortgagee at least 10 days prior notice of the cancellation.

Which of the following is not required to be included on the insurance proof of financial responsibility card? A. Mailing address of the insurer or agent. B. Name of the insurer or agent C. Mailing address of the insured. D. Telephone number of the insurer or agent.

Mailing address of the insured - each card must contain the name of the insurer and mailing address and telephone number of the insurer or its authorized agent, as well as any information required by the department of transportation and the name, address, and telephone number of any authorized agent who has issued a binder

Which statement is true about strict liability? A. It is designed to protect general contractors from the acts of sub contractors. B. It provides medical payments. C. Manufacturers are held liable, regardless of fault. D. It is designed to protect the employee who drives a crate on the customers toe.

Manufacturers are held liable, regardless of fault.

Which act allows the business of insurance to be regulated at the state level A. Terrorism risk insurance act B. Fair credit reporting act. C. Graham - Leach - Bliley Act D. McCarran - Ferguson act.

McCarran - Ferguson act.

All of the following are included under section, one of the homeowners policy, except A. Coverage C B. Dwelling coverage. C. Other structures. D. Medical payments.

Medical payments is to others in section II

Coverage for recreational vehicles can be added to the personal auto policy by the: A. Named non-owner endorsement. B. Crossed terrain endorsement. C. Miscellaneous type of vehicle endorsement. D. Extended non-owned vehicle endorsement.

Miscellaneous type of vehicle endorsement.

What is mysterious disappearance?

Misplacement or loss of property without knowledge as to the location, time and cause of the loss

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. What is the company guilty of?

Misrepresentation

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

Misrepresentation

Guaranteeing future dividends is considered to be an unfair or deceptive act known as A. Misrepresentation. B. Twisting. C. False financial statements. D. Rebating.

Misrepresentation - it is considered to be misrepresentation to make any faults or misleading statements regarding the dividends to be received on any insurance policy.

All of the following types of construction are subject to front functional replacement cost basis, except A. Custom. B. Modern. C. Ornate. D. Antique.

Modern

Which of the following could be covered by both the national flood insurance program, and the earthquake endorsement? A. Sinkhole. B. Collapse, due to shore erosion. C. Title wave. D. Mudflow.

Mudflow

How does the dwelling property policy provide theft coverage? A. Automatically included on all dwelling forms. B. Only included in the DP & DP3. C. only included in the DP3 D. Must be added by endorsement to all policy forms.

Must be added by endorsement to all policy forms

How does the dwelling property policy provide theft coverage? A. Automatically included on our dwelling forms. B. Only included in the DP2 and DP3. C. Only included in the DP3. D. Must be added by endorsement to all policy forms.

Must be added by endorsement to all policy forms.

An insured purchased an insurance policy five years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insure did the insured purchase the policy? A. Reciprocal B. Nonprofit service organization. C. Stock. D. Mutual.

Mutual - funds not paid out after paying claims, and other operating costs are returned to the policy holders in the form of a dividend. If all funds are paid out, no dividends are paid.

Absolute liability can be imposed by law and exist in the absence of A. Hazardous operations. B. Negligence. C. Product liability. D. Third-party liability.

Negligence

An accident occurred in which A was 70% at fault and B 30% at fault. A's damages were $3000 and B's were $2000. If the accident occurred in a state that allowed contributory negligence as a defense what amount would be paid to each party? A. A would collect $3000 from B's carrier and B would collect $2000 from A's carrier. B. A what collect $900 from B'e carrier and B with collect $1400 from A's carrier C. Neither party would collect from the other carrier. D. A would collect nothing from B's carrier and B with collect $2000 from A's carrier

Neither party would collect from the other carrier because contributory is all or nothing

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are A. Guaranteed. B. Not taxable since the IRS treats them as a return of a portion of the premium paid. C. Paid at a fixed rate every year. D. Taxable as ordinary income.

Not taxable since the IRS treats them as a return of a portion of the premium paid - with participating policies, policy owners are entitled to dividends, which, in the case of mutual companies, are non-taxable, because they are considered a return of excess premiums

What is an accident and includes continuous or repeated exposure to the same general harmful conditions A. Salvage. B. Proximate cause C. Inherent vice. D. Occurrence.

Occurrence

All of the following exclusions are found under the personal auto policy, part a liability coverage, except A. Damage to property owned, or being transported by the insured B. Oddly injury to an insured's nonresident family member or relative. C. Damage to property rented to, used by, or in the care of the insured. D. Motorized vehicles with your than four wheels or designed for off-road use.

Oddly injury to an insured nonresident family member, or relative

How are dwelling and other structures covered in an HO-3 form?

On an open-peril basis

Homeowners policies limit the amount of property and liability coverage available for boat owners. How much coverage is provided in the homeowners policy for damage to water, grass, accessories, equipment, and trailers? A. $1500. B. $2000. C. $2500. D. $1000.

Only $1500 of coverage is provided in the homeowners policy for damage to watercraft, accessories, equipment, and trailers. If additional coverage is needed, a separate boat owners policy can be obtained.

When will damage to the interior of the building, be covered under the falling objects peril in the broad form of the dwelling policy?

Only if the interior damage is a direct result of exterior damage from a falling object

Where can National Flood Insurance be issued?

Only in participating, flood-prone areas

Who may share in the commission from the sale of an insurance policy?

Only producers properly licensed for the type of insurance transaction

The extended non-owned coverage provides protection to A. The person named on the policy and all residents family members. B. The person named and his or her spouse only. C. Anyone who has given permission to drive by the named insured D. Only the person named on the policy.

Only the person named on the policy - only the person named is covered. There's no automatic coverage for a spouse or other family members.

Under coverage C - never personal property in the dwelling policy, when will a guest property be covered?

Only when the property is at the insured location

When would theft of property of guests and residence employees be covered under the HO-8 form?

Only while on the insured premises

Which type of coverage applies to the dwelling under the HO3 policy? A. Open peril. B. Standard peril C. Broad form peril. D. Excess peril.

Open peril

A policy that covers all causes of loss except for those specifically excluded is known as what type of policy?

Open peril (or special) form

The HO3 homeowners policy provides A. All risk coverage for both the dwelling and personal property. B. Open peril coverage on the dwelling and broad form coverage on personal property. C. Open payroll coverage on the dwelling and basic form coverage on personal property. D. Basic coverage for dwelling and broad form coverage for personal property.

Open peril coverage on the dwelling and broad form coverage on personal property - the open peril coverage applies to property insured under coverages, A & B only

What Personal Auto coverage would pay for damages to a covered auto caused by a collision with a deer?

Other Than Collision (Comprehensive)

Which of the following calculations equals a company's loss ratio? A. All losses + expenses. B. Paid losses + loss reserves/total earned premium. C. Losses + total operating expenses divided by total written premium D. Paid losses + paid expenses divided by total earned premium.

Paid losses + loss reserves/total earned premium.

Specific damages provide Compensation to an injured party for all of the following, except A. Medical expenses. B. Pain and suffering. C. Loss of earnings. D. Hospital bills.

Pain and suffering is a "General Damage"

Under a dwelling policy, which of the following clauses applies if an insured has lost one of two matching silver candlesticks? A. Sets coverage. B. Fractional loss. C. Portion loss. D. Pair or set

Pair or set - is a clause stating that if only one item of us that has been lost, the insurance is not obligated to pay the total value of the set

If an insured is injured while driving his own car, what coverage in his personal auto policy will pay for the loss?

Part B: Medical Payments

A participating insurance policy may do which of the following? A. Provide group coverage. B. Pay dividends to the stockholder. C. Require 80% participation. D. Pay dividends to the policy owner

Pay dividends to the policy owner - a participating insurance policy will pay dividends to the owner based upon actual mortality, cost, interest earned and costs

A participating insurance policy may do which of the following? A. Require 80% participation. B. Pay dividends to the policyholder. C. Provide group coverage. D. Pay dividends to the stockholder.

Pay dividends to the policy owner - a participating insurance policy will pay dividends to the owner based upon actual mortality, cost, interest, earned and costs.

All of the following are supplementary payments under the personal auto policy, except A. Up to $200 per day for loss of earnings because of attendance at hearing. B. Reasonable expenses incurred by the insured at the insurer's request. C. Any interest that accumulates after a judgment has been entered D. Up to $500 for the cost of bail, bonds, fines, and penalties.

Pay up to $500 for the cost of bail,fines, and penalties

What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident?

Per occurrence

In reference to insurable interest, which of the following is not an element of insurable risk? A. Blood. B. Financial. C. Business. D. Personal.

Personal - for any person or property covered under insurance policy, insurable interest must exist. Insurable interest is broken into three categories, which include financial (a monetary interest), blood (a relative) and business (a business partner).

Which one provides "open peril" coverage? A. Extended coverage endorsement. B. DP to dwelling fire policy. C. A HO2 (broad form) D. Personal articles floater.

Personal articles floater

An insurance agent would recommend which of the following floaters to his client who is traveling to Europe for a months vacation? A. Scheduled personal property floater. B. Personal effects floater. C. Personal articles floater. D. Camera floater.

Personal effects floater.

All of the following are additional liability coverage is automatically provided in a homeowners policy, except A. Loss assessment coverage. B. Personal injury. C. Claims D. Damage to the property of others

Personal injury - maybe added by endorsement

What type of coverage is included in Section II of Homeowners insurance?

Personal liability coverage

Which of the following types of property are covered by the personal effects floater? A. Paintings, etchings, and pictures. B. Personal property carried by travelers. C. Golfers equipment. D. Coin collections.

Personal property carried by travelers.

What are the three types of hazards?

Physical, Moral, Morale

All of the following are true of personal umbrella, liability, policies, except A. Policies written in increments of 1 million. B. Policies generally cover first party claims. C. If the umbrella policy provides broader coverage than the underlying policy, the umbrella will cover the entire loss, less retention. D. Required minimum limit for underlying coverages.

Policies generally cover first party claims - umbrella policies covers third-party liability

Who might receive dividends from a mutual insurer? A. Stockholders. B. Agents. C. Policyholders. D. Subscribers.

Policyholders - a mutual insurer has no stock, and is owned by the policy holders. Since they may receive a dividend (not guaranteed), such policies are known as participating policies. Dividends received by policy holders of a mutual insure are not taxable.

Which of the following terms applies went to policies cover the same property? A. Non assigned B. Primary. C. Excess. D. Pro rata.

Pro rata

Which of the following is NOT one of the four primary elements considered in establishing negligence? A. Standard of care. B. Proof of carelessness. C. Proximate cause D. Legal duty.

Proof of carelessness - it must be shown that the defendant had a legal duty to act or not to act, and he, or she must have used a standard of care that breached the legal duty. Actual injury or damage must have been suffered by the party seeking recovery.

A dwelling property policy can ensure all of the following types of personal property except A. Motorized wheelchair. B. Property of renters. C. Lawnmower. D. Furniture

Property of renters

The risk of loss may be classified as A. Named risk and unnamed risk. B. High risk and low C. Pure risk and speculative risk. D. Certain risk and uncertainty risk.

Pure risk and speculative risk - peer risks, involve the probability or possibility of loss with no chance of game. Peer risks are generally insurable, speculative risk, involved, and certainty as to whether the final outcome will be gain or loss. Speculative risks are generally uninsurable.

An agent offers a client free tickets to a sporting event in the exchange for the purchase of an insurance policy. What is the agent guilty of?

Rebating - When producers give or promise anything of value that is not specified in the policy, they are guilty of rebating. Both offer and acceptance of rebates are illegal.

Which type of insurance is based on mutual agreement among subscribers? A. Mutual insurance. B. Limited liability. C. Reinsurance. D. Reciprocal insurance.

Reciprocal insurance - they are companies made up of subscribers, who are collectively known as a reciprocal insurance company or exchange. These types of companies are administered by the appointed attorney in fact.

Which type of insurance is based on mutual agreement among subscribers? A. Mutual insurance. B. Limited liability. C. Reinsurance. D. Reciprocal insurance.

Reciprocal insurance are companies made up of subscribers, who are collectively known as a Reciprocal Insurance Company or Exchange. These types of companies are administered by an appointed Attorney in Fact.

If an insurance company wants to transfer all or part of the risk, it has accepted, it would buy which of the following types of insurance? A. Reinsurance. B. Residual C. Reciprocal. D. Insurer.

Reinsurance

All of the following are marketing arrangements used by insurers, except A. Reinsurance system. B. General agency system. C. Direct response marketing system. D. Independent agency system.

Reinsurance system - is a method used by insurers to protect against catastrophic losses. The rest are marketing arrangements.

What type of information would be found in a policies insuring agreement? A. Insurers address. B. Renewal dates. C. Location of premises. D. Policy limits.

Renewal dates

What type of information would be found in a policies insuring agreement? A. Insurers address. B. Renewal dates. C. Location of premises. D. Policy limits.

Renewal dates - and ensuring agreement establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy. The insuring agreement lists the parties to the contract, effective and renewal dates, the description of the coverage provided, and perils (among other things). Location of premises, policy limits, supplementary representations, and insurers name, and address can all be found in the declarations.

Which of the following would be eligible under a dwelling policy?: A. 3 acre farm. B. Four dwelling unit with 6 borders. C. A motorhome. D. Rental house occupied by a tenant.

Rental house occupied by a tenant.

Cost to replace with like kind and quality at today's prices

Replacement cost

Which method of loss valuation is contrary to the basic concept of indemnity? A. Functional replacement cost. B. Market value. C. Agreed value D. Replacement cost.

Replacement cost - the replacement cost method of loss valuation is contrary to the basic concept of indemnity because following a loss, it may provide the insured with a settlement in excess of the properties actual cash value

And property insurance, actual cash value is defined as which of the following? A. Market value of the property at the time of loss. B. Stated value of the property as shown on the declaration. C. The actual amount of loss payable, less the policy deductible. D. Replacement cost at the time of loss, less depreciation.

Replacement cost at the time of loss, less depreciation

In property insurance, what is actual cash value?

Replacement cost at the time of loss, minus depreciation

Under a DP3, how are losses paid to dwelling, other structures, and personal property A. Replacement cost for dwelling, other structures and personal property. B. A CV for dwelling, other structures and personal property. C. ACV for dwelling, other structures and replacement cost for personal property. D. Replacement cost for dwelling, other structures, and ACV for personal property.

Replacement cost for dwelling, other structures, and ACV for personal property.

What is the method of loss valuation that values damage property at the cost to replace with property of light kind and quality, at current prices, and without deduction for depreciation? A. Functional replacement cost. B. Actual cash value. C. Replacement value. D. Market value.

Replacement value

Which of the following conditions best describes the type of home the HO8 modified coverage form was designed? A. Exhibiting poor overall maintenance. B. Replacement value far exceeding market value. C. Under construction or renovation. D. Exceptionally high reconstruction cost.

Replacement value far exceeding market value

At the time of loss insured against in a property and casualty policy, the insurer's claim settlement options include all of the following, EXCEPT A. Paying the value of the lost or damage property B. Replacing the property with another property of lesser kind or quality. C. Paying the cost of repairing, or replacing the lost or damaged property. D. Taking all or part of the property at and agreed or appraised value.

Replacing the property with other property of lesser kind or quality - at the time of loss, the insurers claim settlement options include the following: pay the value of the lost or damaged property; pay the cost of repairing, or replacing the last or damaged property; take all or part of the property at an agreed, or appraised value; or repair, rebuild, or replace the property with other property of like kind and quality

Statements made by the applicant that are believed to be true are A. Representations. B. Misrepresentations C. Warranty. D. Fraud.

Representations

The answers that insurance give on an application, and it's considered to be the truth to the best of their knowledge at the time when they wrote the information on the application

Representations

Which of the following is the type of insurance the government may step in to provide that is not ordinarily available from private insurers? A. Fidelity bonds B. Surety bonds. C. Surplus lines. D. Residual market.

Residual market

A contract of adhesion: A. Gives equal bargaining power to the insured an insurer. B. A contract offered on a take it, or leave it bases by an insured. C. Allows insureds to negotiate terms. D. Resolves ambiguities in favor of the insured.

Resolves ambiguities in favor of the insured.

Which of the following best describes the policy conditions? A. Losses for which the insured is not covered. B. Meanings of terms used in the policy. C. Responsibilities and obligations of insured and insurer D. And who is insured, location of risk, and what is insured?

Responsibilities and obligations of insured and insurer

When coverage in a personal umbrella policy is broader than the underlying policy, the umbrella policy will cover the entire loss, less a A. copayment B. Retention. C. Deductible. E. Penalty

Retention

Insurance is the transfer of A. Loss B. Hazard. C. Peril. D. Risk.

Risk - insurance is a transfer of risk of loss from an individual or a business entity to an insurance company. Hazards are conditions that increase the probability of an insured loss occurring, and perils are causes of loss. Losses cannot be transferred.

Stated value or limits of the policy

Scheduled amount of insurance, and the maximum the insurer will pay

Personal articles floater is similar to which homeowners endorsement? A. Scheduled personal property. B. Special personal property. C. Personal property - replacement cost. D. Guaranteed replacement cost.

Scheduled personal property.

What type of insurance is used when a business sets aside reserve funds to cover losses in advance? A. Risk retention insurance. B. Mutual insurance. C. Self insurance. D. Reciprocal insurance.

Self insurance

What is the name for the deductible in liability umbrella policies?

Self-insured retention (SIR)

Which of the following types of property is not eligible for dwelling coverage? A. Boarding house with five borders. B. Mobile home. C. Six unit apartment building. D. Vacant buildin

Six unit apartment building.

A hazard is best defined as: A. The uncertainty of loss B. Neglect to communicate and material fact. C. A delivery attempt to deceive. D. Something that increases the risk of loss.

Something that increases the risk of loss

An endorsement must be attached to all Dwelling Policies in Arizona. What is this endorsement called? A. Amended Policies - AZ B. Supplemental Provisions - AZ C. Additional Subsections - AZ D. Special Provisions - AZ

Special Provisions - AZ must be attached to all Dwellings Policies in this state. The endorsement changes multiple parts of the policy.

Wagering on a sporting event is known as what type of risk?

Speculative risk

What type of limits of liability has the limits separately stated for different coverages?

Split limits

What is not a common law defense? A. Intervening cause. B. Assumption of risk. C. Statute of limitations. D. Contributory negligence.

Statute of limitations

A policy provision found in property insurance policies that prevents the insured from collecting twice with the same loss is called A. Appraisal. B. Subrogation. C. Consent to settle loss. D. Write a salvage.

Subrogation

What is the term for the insurer's legal right to seek damages from third-parties after it has reimbursed the insured for the loss?

Subrogation

Unauthorized or non-admitted insurers that are permitted to write policies on risks that admitted insurer's cannot underwrite are called? A. Surplus lines insurers. B. Residual insurers. C. Admitted insurer's. D. Domestic insurer's.

Surplus lines insurers

What is the name for non admitted insurers who are allowed to transact business in a state?

Surplus lines insurers

What are the limits of theft coverage on an HO-8 form policy?

The ACV of what was stolen; however, additional limits may apply to certain classes of property

Who must be notified of a producers change of address?

The Department of Insurance (Commissioner/Director/Superintendent)

When can the Commissioner or Director examine insurers?

The Director may examine any insure doing business in Arizona as frequently as is necessary. However, each domestic insurer must be examined at least once every five years.

When replacement coverage cost is not reasonable, what HO coverage is applicable?

The HO-8 modified homeowners form is intended for use when replacement cost coverage is not practical.

In homeowners policies, what determines the amount an insurer will pay under coverage D?

The amount of coverage on a dwelling

Which of the following would qualify as a competent party in an insurance contract? A. The applicant is a 12 year old student. B. The applicant is under the influence of a mind in pairing medication, at the time of application. C. The applicant has a prior felony conviction. D. The applicant is intoxicated at the time of the application.

The applicant has a prior felony conviction - when an insurer and insured enter into a contract, both parties must be of legal age and mentally competent. It is legal for a person convicted of a felony to buy an insurance contract. Intoxicated person, however, may not be mentally competent, a 12-year-old student is considered to be under age in most states and a person under mind and pairing medication most likely would not be mentally competent.

Which of the following would be considered an offer? A. The insurer issues the applied for policy. B. When the applicant offers to pay the premium. C. The applicant submits an application to the insured with payment. D. The insurer offers to pay the claim.

The applicant submits an application to the insured with payment.

How much is the premium for the dwelling under construction endorsement under the dwelling policy? A. 50% of the actual cash value premium. B. The average amount of insurance during construction. C. 75% of the gross premium. D. The full value of the house.

The average amount of insurance during construction - the premium is based on the average value of the house and building materials from the first day as construction until completion

If the insured has a loss with a private passenger, not on temporary substitute vehicle, how will the loss be treated by the insured's own policy for physical damage? A. The broadest coverage available extends from the insurance policy. B. Liability coverage extends to the owner of the vehicle. C. Insured has access coverage only. D. No coverage extends from the insurance policy.

The broadest coverage available extends from the insurance policy.

Peril is most easily defined as A. The cause of loss insured against B. An unhealthy attitude about safety. C. The chance of loss occurring. D. Something that increases the chance of loss.

The cause of loss insured against

The insured lived close to Mount Saint Helens, and carried ADP to dwelling policy. The volcano irrupt it and movement of the Earth caused his home to collapse. He reports the claim as a volcanic eruption loss. What do you feel would be the result of the claim? A. They claim would be covered under the peril of volcanic eruption. B. A portion of the claim based on the deductible percentage would be paid. C. The claim would be denied. D. The claim would be paid for ACV only under these circumstances.

The claim would be denied.

Functional Replacement Cost

The cost to replace damaged property with less expensive and more modern construction or equipment.

What does form HO-5 cover?

The dwelling and other structures, as well as contents and personal property

A woman slips on icy steps and breaks her leg. What is the peril in this situation? A. The broken leg. B. The icy steps. C. The season of the year. D. The fall.

The fall

Which of the following entities established the do not call A. The federal trade commission. B. The better business bureau. C. The NAIC D. The consumer protection agency.

The federal trade commission.

When an insured has to auto policies with the same insurer, the insurance liability would not exceed: A. The combined limit at the two policies. B. The highest limit of the two. C. The limit of the first one purchased. D. The limit of the last one purchased

The highest limit of the two

Which of the following policy assignment rights occurs when the named insured dies? A. The insured legal representative takes over the policy. B. No one is permitted to take over the policy. C. A new owner of the property takes over the policy. D. The closest relative takes over the policy.

The insured legal representative takes over the policy.

Underinsured Motorist (UIM) coverage will pay the difference between which limits?

The insured's UIM limits and the at-fault driver's insurance bodily injury limits

Who is responsible for the cost associated with the examination of insurers?

The insurer who is being examined

If more than one person has an insurable interest in the property covered under a dwelling policy A. Liability will be split evenly among all people who have insurable interest. B. All involved insurers must decide which one will be liable for the loss. C. All insured must decide which one will be liable for the loss. D. The insurer will be liable for only the insured interest in the damage property.

The insurer will be liable for only the insured interest in the damage property.

If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true? A. The insurer must cover the loss out of its surplus. B. The insurer must apply for disaster, relief funds. C. The federal insurance administration will remove the insurer from the NFIP. D. The insurer will be reimbursed for the excess cost by the NFIP.

The insurer will be reimbursed for the excess cost by the NFIP - the federal government will not let a WYO flood insurance, or lose money in flood policies. If the premium is insufficient to cover losses, the insurers will be reimbursed for the excess costs by the NFIP.

The insurers limit of liability for a vehicle, damaged by a loss under part D is which of the following? A. Actual cash value. B. Replacement value. C. The lesser of actual cash value and replacement value. D. The greater of actual cash value and replacement value.

The lesser of actual cash value and replacement value

What is the limit of liability in Part D: Coverage for Damage to Your Auto?

The lesser of the actual cash value of the vehicle or the amount needed to repair or replace the vehicle

What is a combined limit in an auto insurance policy?

The maximum amount the insurer will pay on a covered loss

Aggregate Limit

The maximum limit of coverage available under a liability policy during a policy year regardless of the number of claims that may be made, or the number of accidents that may occur.

What does the term "you" refer to in a personal auto policy?

The names insured shown in the declarations, and the insured's spouse (if resident of the same household)

Each of the following may be insured under an HO3 homeowners policy, except A. The owner occupant of a condominium unit. B. An occupant of a dwelling under a life estate arrangement with dwelling coverage is at least 80% of the current replacement cost. C. One co-owner, when each distinct portion of a two family 20 occupied by co-owners. D. The intended owner - occupant of a dwelling under construction.

The owner occupant of a condominium unit - HO3 is designed to ensure a structure under coverage A. A condominium unit owner does not own the structure, only space in the structure.

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? A. The insurer will sue the insured for committing fraud. B. Because the insured is currently not a drug user, his policy will not be affected. C. The policy will not be affected. D. The policy will be avoided.

The policy will not be affected - in insurance fraud is the intentional misrepresentation of material information that is crucial when deciding whether or not to write a contract for an applicant. Provided that the discovery occurs within the first two years of the effective policy date. In this particular instance, the applicant did not commit intentional fraud.

Insurable interest in a property policy must be proven A. At the time of application. B. At the time of loss. C. When a policy owner is changed. D. When a claim is paid.

The time of loss - between the time a policy is issued in win a loss occurs, ownership may have changed, mortgages may have been put into place, etc. Therefore, and property and casualty insurance, insurable interest must exist at the time of loss

Who is considered insured under Part A: Liability of a personal auto policy?

The vehicle owner or his/her family member, or any person using the covered auto with permission

All of the following perils are covered under the DP-2 broad form, except A. Falling objects. B. Theft. C. Freezing pipes. D. Vandalism.

Theft

All of the following perils are covered under the DP2 broad form, except A. Falling objects. B. Theft C. Freezing of pipes. D. Vandalism

Theft

Which of the following is not a typical exclusion in a personal articles floater? A. Theft B. Wear and tear. C. Insects or vermin. D. Intentional loss.

Theft

All of the following are perils, covered under the broad form dwelling policy, except A. Lightning. B. Collapse. C. Theft D. Fire.

Theft - theft is not a peril named in the policy

Which of the following losses would most likely NOT be covered under coverage A in the dwelling policy? A. Outdoor personal property of the insured. B. Supplies used for repair of dwelling. C. Theft of a renter's lawnmower used to service the premises. D. Fire damage to building material on the premises.

Theft of a renter's lawnmower used to service the premises - coverage A, on the dwelling includes all attached structures, an outdoor personal property or equipment, used to maintain or service the premises, if not covered elsewhere. The lawnmower most likely would not be covered because the dwelling insured is rented to others without content coverage. If the landlord, furnishes lawnmowers or other equipment to service the premises, there is no need to schedule a small amount of contact coverage.

Agreed Value

Their valuation, based on the amount of insurance agreed-upon

Each of the following is an element of negligence, except : A. A duty is owed. B. The duty is violated. C. There is a foreseeable consequence. D. There is an intervening cause

There is an intervening cause

If an insurance policy has the additional coverage provision, how does it affect the policy premium? A. Premium will be calculated on a pro rata basis based on the amount of additional coverage. B. There is no additional premium. C. Premium will be recalculated when a specific loss covered by this provision occurs. D. Additional premium will be assessed.

There is no additional premium - coverage is a provision in an insurance policy that provides an additional amount of coverage for specific last expense, at no additional premium.

Which of the following is correct for amounts paid as supplementary payments covered in the personal auto policy part A - liability? A. They cannot be paid to the insured. B. They include the cost of bail bonds for a covered loss. C. They are included in the policy limit. D. They are subject to the deductible.

They include the cost of the bail bonds for a covered loss

All of the following are correct about excess surplus lines carriers, except A. They are not authorized insurers B. They offer a better contracts at lower rates C. Each state has specific regulations regarding business for cured by way of excess. D. They must follow insurance laws for the state where they operate.

They offer a better contracts at lower rates

To whom may I certificate of authority be issued?

To an insurer authorized to transact business in this state

All of the following are responsibilities of the insured listed in the loss, provisions for most property insurance contracts, except A. To give prop notice of claim. B. To submit an examination under oath C. To protect property from further damage. D. To determine adequate indemnification

To determine adequate indemnification

What is the purpose of the national flood insurance program (NFIP)

To fill the gap in flood coverage left by private insurers

Which of the following is NOT a goal of risk retention? A. To increase control of claim, reserving, and claims settlement. B. To fund losses that cannot be insured. C. To minimize the insured level of liability in the event of a loss. D. To reduce expenses and improve, cash flow

To minimize the insured level of liability in the event of a loss - retention usually results from the three basic desires of the insured: to reduce expenses and improve cash flow, to increase control of claim reserving and claims settlements, and to fund losses that cannot be insured

In dwelling policies, what is the purpose of the automatic increase in insurance endorsement that increases the amount of insurance by an annual percentage?

To offset the effects of inflation

What is the purpose of a cease and desist order?

To prevent a producer or insurer from further violating laws for transacting insurance

What does indemnify mean in insurance?

To restore an insured to the same financial status as before a loss

Valued policy law applies to A. Total losses. B. Partial losses. C. Both total and partial losses. D. Coinsurance.

Total losses

Purchasing boat owners insurance is an example of which method of handling risk? A. Retention B. Control. C. Transfer. D. Avoidance.

Transfer

Which type of misrepresentation, persuades and insured, to their detriment, to cancel, lapse, or switch policies from one to another?

Twisting

What is a risk?

Uncertainty of loss

What is the process that insurers use to determine whether a policy should be issued and on what terms and conditions?

Underwriting

Insurance contracts are aleatory in nature. What does that mean?

Unequal values are exchanged between the parties to a contract

What type of auto coverage will apply in a hit-and-run accident where the driver cannot be identified?

Uninsured Motorist - An unidentified hit-and-run driver would be considered an uninsured motorist.

What is the maximum number of units in residential dwellings insurable buy a dwelling policy?

Up to 4 units

All of the following establish a defense against negligence except A. Validity of the claim in a court of law. B. Comparative negligence. C. Assumption of risk. D. Contributory negligence.

Validity of the claim in a court of law

When a parent is required to pay for damages caused by their children, this is an example of A. Assumption of risk. B. Vicarious liability. C. Strict liability. D. Intervening cause

Vicarious liability - when one party is held liable for the act of another party.

The federal law, that prohibits a person who has been convicted of a felony involving dishonest or breach of trust from engaging in the insurance business A. Violent crime control in law enforcement act. B. Fair credit reporting act. C. Graham - Leach - Bliley (GLB) act D. USA patriot act.

Violent crime control in law enforcement act.

Absolutely true statements and a breach of it can void the policy

Warranties

Which of the following are defined as part of the policy and can void the policy if they are breached, whether the breach was intentional or unintentional? A. Waivers. B. Material facts. C. Representation. D. Warranties.

Warranties

K makes a statement on the insurance application, which becomes part of the contract, that K has an alarm system. Having the alarm system qualifies K for a premium discount. This statement is considered a: A. Representation. B. Material statement. C. Offer. D. Warranty.

Warranty

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A. Warranty. B. Concealment. C. Indemnity. D. Representation.

Warranty - a warranty and insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements, he, or she makes are generally not warranties, but representations. Representations are statements that are true to the best of the applicants knowledge.

Under coverage, E, and at the request of an insured, personal property of a guest or residence. Employee is covered. A. While it is in any residence, premises occupied by a named insured. B. Anywhere in the world. C. Only while on a residence premises. D. While it is in any residence premises occupied by an insured.

Well, it is in any residence premises occupied by an insured

Market Value

What a willing buyer will pay a willing seller

In forming an insurance contract when does acceptance usually occur? A. When insured submit an application. B. When and insurers underwriter approves coverage. C. When an insurer delivers the policy. D. When an insurer received an application.

When and insurers underwriter approves coverage - in insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when it insurers underwriter approved application and issues a policy.

When would a misrepresentation on an insurance application be considered fraud?

When it is intentional and material

When is controlled business legal?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)

In insurance contracts, when is the offer usually made?

When the insurance application is submitted

When can insurance be sold through a surplus lines insurer?

When the insurance cannot be obtained through an authorized carrier

In insurance contract, when does acceptance usually occur?

When the insurer approves a prepaid application

When does the Underinsured Motorist coverage apply?

When the motorist is at fault in an accident, but the limits of his/her auto insurance are not sufficient to cover the bodily injury to another motorist

When does Uninsured Motorist coverage apply?

When the other party is legally liable but has no insurance

What is the main distinction between a hired auto and a nonowned auto? A. Whether a payment is made for the use of the auto. B. Who owns the auto C. The length of time the insured uses the auto. D. The amount of premium.

Who owns the auto - the distinction between a hired and non-on auto does not depend on whether payment is made for the use of the auto, but rather on whether it is owned by an employee.

The DP 1 "extended coverage" endorsement covers, lost by which of the following perils? A. Malicious mischief. B. Lightning. C. Water. D. Wind.

Wind

A strong wind blew open the insured's door, then slammed the door, causing a lamp to fall on a child's leg, cutting his leg. What is the approximate cause of the cut of the child's leg? A. The door slamming. B. The lamp breaking. C. The child cutting his leg. D. The wind blowing.

Wind blowing

What are extended covered perils on a basic dwelling policy?

Windstorm or hail, explosion, smoke, aircraft and vehicles, riot or civil commotion, volcanic eruption, and vandalism and malicious mischief

And insured has this scheduled personal property endorsement attached to his homeowners policy. If the insured requires new works of art, when must the insurer be notified, for the new works of art to be covered under the endorsement? A. Immediately. B. Within 10 days. C. Within 30 days. D. Within 90 days.

Within 90 days

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce A. Without receiving written consent from an insurance regulatory authority B. Under any circumstances. C. Unless they have served an appropriate prison sentence. D. Without receiving written consent from a federal judge.

Without receiving written consent from an insurance regulatory authority. Title 18, US Code, sections 1033-1034 makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce without receiving written consent from an insurance regulatory authority.

Your friends dog that you are keeping while the friend is out of town bet a visitor in your home. Does your homeowners liability coverage apply? A. Yes, if the visitor has no health coverage. B. No, because the dog is not yours. C. No, because injury to others by animals is not covered. D. Yes, the coverage would apply for any animal in your care.

Yes, the coverage would apply for any animal in your care - personal liability coverage in section 2 will respond to any claim made against an insured for damages due to bad Landry or property damage. Your liability coverage would apply to damage caused by your animals, as well as any other animals in your care.

How does a higher deductible affect the premium of property policy?

a higher deductible lowers the premium

What type of licensee represents the insurance company?

agent

What type of authority is based on the agent's actions, or words?

apparent

How are additional insureds added to the policy?

by endorsement

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

defamation

If an insured peril was the proximate cause of loss, what type of loss is it?

direct

What are the two types of property losses that individuals and businesses are exposed to?

direct and indirect

Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

discrimination

Insurers are classified according to their domicile. What are the three types of insurers?

domestic, foreign, alien

What are the three types of agent authority?

express, implied, apparent

What type of insurer is formed under the laws of another state?

foreign

What do individuals use to transfer their risk of loss to a larger group?

insurance

When does an excess policy pay for loss?

only after primary policy has paid up to its limits

A tornado that destroys a property would be an example of what?

peril

What is the term for the causes of loss insured against in an insurance policy?

peril

In property and casualty insurance what is required to make policy assignments valid?

prior written consent of the insurer

A situation in which a person can experience only a loss and no gain presents what type of risk?

pure risk

Which of the following is not an element of a legal contract? A. Competent parties. B. Offer and acceptance. C. Consideration. D. signed document

signed document

Who owns stock companies?

stockholders

Who is responsible for evaluating applications submitted to the insurer and determining whether a policy should be issued?

underwriter