Insurance Guaranteed Exam (finished)
Which of the following is NOT found in the common policy declarations of a commercial property package policy? a.) insuring agreement b.) schedule of coverage parts c.) amount of premium for each coverage part d.) policy number
a.) insuring agreement There is an insuring agreement found in each coverage part that is included in the package.
Coverage B - Personal and Advertising Injury Liability responds to claims arising from a.) premises and operations injury claims b.) suits alleging infringement of a copyright c.) scope of patent protection d.) failure of products to preform as advertised.
b.) suits alleging infringement of a copyright Coverage B combines both personal injury and advertising injury into a single insuring agreement and limit of liability.
The defendant being released on a surety bail bond is the a.) obligee b.) the insured c.) the principal d.) surety
c.) the principal The defendant has made a promise to show up in court at the specified time. The principal makes a promise to perform.
Which form insures both buildings and personal property on an open peril basis? a.) HO-2 b.) HO-3 c.) HO-4 d.) HO-5
Only the HO-5 form insures both the buildings and personal property on an open peril basis.
Which of the following would be covered under a building and personal property coverage form? a.) building foundations b.) personal property while airborne c.) underground pipes d.) outdoor signs
Outdoor signs are covered for up to a specified amount if attached to a building, others are specifically excluded.
An insured has a commercial blanket bond in the amount of $25,000. Three identifiable employees steal $10,000 each in a single loss. How much will the bond pay? a.) $25,000 b.) $30,000 c.) $75,000 d.) $10,000
a.) $25,000 The commercial blanket bond has a per occurrence limit of liability. $10,000 x $30,000, but the limit of liability is only $25,000.
The personal property off-premises extension of dwelling forms 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
a.) 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 its anywhere in the world.
Which of the following would be repaired to become licensed as an insurance producer? a.) a customer service representative who solicits no more than one policy a year b.) agency supervisor whose actions do not include selling insurance c.) a person whose activities are limited to insurance advertising d.) an officer of an insurer who does not receive commissions
a.) a customer service representative who solicits no more than one policy a year A person does not require an insurance producer license if he or she only preform clerical takes or advertises without intent to solicit insurance. However, once there is solicitation or commissions, a license is required.
If a fire erupts in the kitchen and spreads to the upstairs bedroom, resulting in the destruction of the furniture, what type of loss has occurred? a.) indirect b.) consequential c.) proximate d.) direct
d.) direct Direct loss to any direct physical damage to buildings and personal property. Considering the fire was the initial cause of loss and spread to the bedroom, damages would be considered a direct loss of the fire.
If the Administrator finds that an employer has failed to provide workers compensation benefits to its employees, the employers will be charged a.) double the premium owed to a carrier b.) the sum of all claims owned to the employees c.) double the sum of the claims owed to the employees d.) the premium owed to a carrier plus interest
d.) the premium owed to a carrier plus interest If the Administrator finds that an employer has failed to provide compensation, he or she may make a determination, resulting in a charge equal to the sum of the premiums that would have been owed to a private carrier (not to exceed 6 years of service), and interest
An insured has an automobile policy with the limits of 100/300/50 and a deductible of $1,000. He is involved in an auto accident and crashes into another driver's auto. The other driver is awarded $125,000 for his injuries and $25,000 for the damage to his car. The insured's vehicle has damage in the amount of $1,200. The total payment made under the insured's policy is a.) $150,200 b.) $125,200 c.) $126,200 d.) $100,20
b.) $125,200 The amount of coverage for the other driver's injures is limited to $100,000. The damage to the other driver's car, $25,000, is covered in full. The damage to the insured's car is covered minus the $1,000 deductible. Thus the total payment is $125,200.
Able Insurance plans not to renew Joe's personal insurance policy. How much notice must Able give Joe of their intentions? a.) 45 days before expiration of the policy b.) 30 days before expiration of the policy c.) 60 days before expiration of the policy d.) 70 days before expiration of the policy
b.) 30 days before expiration of the policy If an insurer intends not to renew a personal policy, it must give the policy holder notice of such intentions at least 30 days before the expiration of the policy.
For there to be a negligent liability, all of the following must exist EXCEPT a.) proximate cause between the wrong and the injury or damage b.) a reasonable expectation that the act may cause injury or damage c.) a breach of the legal duty which results in injury or damage to another person d.) a legal duty to act, or not to act, under the circumstances
b.) a reasonable expectation that the act may cause injury or damage Liability insurance covers injury or damage to others that is neither intended nor expected by the insured. *remember what Jamie said: pound (LB) for pound (PD) L- legal duty B- breach PD- proximate damage
Homeowners policies consider all of the following insured locations EXCEPT a.) the hotel bathroom rented by the insured for a family reunion b.) a strawberry patch owned by the insured c.) land owned by the insured on which his new home is under construction d.) an individual cemetery plot
b.) a strawberry patch owned by the insured Insured location cannot include farmland or any premises used for business purposes.
In order to get a non-resident license in the state, agents must a.) surrender their license in their state of residence b.) apply and pay a fee to a non-resident state that reciprocates c.) past the non-resident state exam and satisfy their continuing education requirements d.) represent an agency located in the state
b.) apply and pay a fee to a non-resident state that reciprocates Agents may apply for a non-residential license by showing that they are in good standing as agents in their home state and by paying a fee, if the two states reciprocate
Which of the following policies can be written by a nonresident agent without a resident agent's countersignature? a.) flood insurance b.) life insurance c.) homeowner's insurance d.) businessowners insurance
b.) life insurance With the exception of life or health insurance policies, reinsurance contracts, or bid bonds, no insurer may make, write, or renew any policy if insurance upon persons, properties, or risks located in Nevada, except through an appointed and licensed agent. Any licensed agent of Nevada can countersign the policy.
In reference to insurable interest, which of the following is NOT an element of insurable risk a.) business b.) personal c.) blood d.) financial
b.) personal For any person or property covered under an insurance policy, insurable interest must exist. Insurable interest is broken into 3 categories which include financial (a monetary interest), blood (a relative) and business (a business partner).
Joe refused Matt's written binder for a $20,000 policy as proof of insurance. Joe is now being fined and held liable for the damages. What is the maximum amount that Joe will be fined? a.) $240 b.) $90 c.) $500 d.) $2,500
c.) $500 A binder related to an insurance policy that provides less than $1,000,000 of coverage must contain a statement that any person who refuses to accept the binder as proof of insurance is subject to a fine of up to $500 and liability to the party presenting the binder for actual damages sustained.
Using the pro rata method, if a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss? a.) $20,000 b.) 12,000 c.) 8,000 d.) 0
c.) $8,000 Each policy pays a percentage of the loss based on the percentage of coverage that policy provides. Company A carries 1/3 of the total coverage ($20,000 + $40,000 = $60,000). Therefore, it is responsible for 1/3 of the $24,00 loss or $8,000.
What kind of insurance do you have if it indemnifies you against loss arising from the lack of integrity of fidelity of persons holding positions of trust, from the insolvency of debtors, or from breaches of contract? a.) liability insurance b.) personal injury protection insurance c.) libel and slander insurance d.) surety insurance
d.) surety insurance Surety insurance is coverage that indemnifies the insured against loss arising from the lack of integrity of fidelity of persons holding positions of trust, from the insolvency of debtors, or form breaches of contract.
All of the following are true about the cancellation provision of a commercial insurance policy EXCEPT a.) the insurer is required to give advance notice of its intended cancellation to the insured b.) the insurer may cancel the policy by mailing or delivering written notice of cancellation for the fist name insured c.) the insured may cancel the policy at any time by mailing or delivering written notice of cancellation to the insurer d.) the insurer is required to provide proof that the insured received the cancellation notice prior to cancelling the policy.
d.) the insurer is required to provide proof that the insured received the cancellation notice prior to cancelling the policy. If the notice of cancellation is mailed, the insurance company is not required to prove that the insured actually received the notice. It is required to prove only that it was mailed to the first name insured at the mailing address as shown in the policy.
The equipment breakdown coverage form values loss on a/an a.) replacement cost basis b.) valued basis c.) stated amount basis d.) actual cash value basis
a.) replacement cost basis Property is insured on a replacement cost basis. However if the damaged property is not repaired or replaced within 24 months after the accident, settlement is at the smaller of actual cash value or the cost to repair or replace.
All of the following statements regarding personal property coverage in the homeowners program are correct EXCEPT a.) the HO-3 policy covers the mysterious disappearance of personal property b.) coverage on money is limited to $200 c.) personal property coverage is usually 50% of the coverage A limit d.) earthquake coverage may be added by endorsement
a.) the HO-3 policy covers the mysterious disappearance of personal property Mysterious disappearance is the disappearance of property without knowledge as to the location, time, or how the property was lost. Most disappearance, or losses that cannot be identified as to the time and place, are excluded from most personal property coverage.
Homeland Housing Corp holds a mortgage on a property that John and Carol Thomas purchased. John and Carol have a Homeowners policy with Home Protection Insurance which has a mortgagee clause naming Homeland as a loss payee. If John and Carol suffer a fire to their home a.) the Thomases and Homeland will be considered co-claimants and receive loss reimbursement from Home Protection Insurance. b.) Homeland will be considered the sole claimant and receive loss reimbursement from Homeland Protection Insurance. c.) the Thomases will be considered sole claimants and receive loss pay reimbursement from Home Protection Insurance. d.) John and Carol will be considered co-claimants and receive loss reimbursement from Home Protection Insurance.
a.) the Thomases and Homeland will be considered co-claimants and receive loss reimbursement from Home Protection Insurance. The Thomases and Homeland will be considered co-claimants and receive loss reimbursement from Home Protection Insurance based on each claimant's pro rata share of ownership in the property.
The insured's product under a commercial general liability policy does NOT include which of the following? a.) vending machines rented to others b.) containers furnished in connection with a product c.) warranties made with respect to the fitness or quality of the product d.) any goods or products manufactured by the insured
a.) vending machines rented to others The renting of vending machines to others would be a contractual liability exposure.
During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of a.) misrepresentation b.) defamation c.) twisting d.) false advertising
b.) defamation It is against the law for any person to make, publish, or circulate any oral or written statement or literature that is false, maliciously critical of or substantially misrepresents the financial condition of any insurer, and which is intended to injure any person engaged in the insurance business.
Which of the following duties is NOT required of the insured in the event of a loss? a.) immediately record the specifics of any claim and notify the insurer b.) immediately notify the insurer when the insured has filed for bankruptcy c.) authorize the insurer to obtain records and assist the insurer in its investigation d.) notify the insurer as soon as possible of the possibility of a claim
b.) immediately notify the insurer when the insured has filed for bankruptcy Bankruptcy of the insured will not relieve the insurer of its obligations under the policy, so after the loss, the insured is not obligated to notify the insurer of bankruptcy.
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
b.) who owns the auto The distinction between a hired auto and a nonowned 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 commercial crime coverage that would cover losses resulting from the theft of money, securities and other property by employee is a.) funds transfer fraud b.) forgery or alteration c.) inside the premises - theft of money and securities d.) employee theft
d.) employee theft Employee theft coverage covers loss by theft if committed by the insured's employees
Which of the following describes an insurer's responsibility for payment under a policy, as stated in the common policy provisions? a.) consideration b.) utmost good faith c.) premiums d.) limits of liability
d.) limits of liability Limits of liability are the insurer's liability for payment as stated in an insurance payment
Which of the following is NOT true regarding insurance consultants? a.) they are required to obtain insurance consultant license b.) a licensed insurance producer is not required to obtain a consultant license c.) A licensed attorney acting in his professional capacity would not need a consultant license d.) they may be employed by licensed producers or brokers
d.) they may be employed by licensed producers or brokers Licensed consultants cannot employ or be employed by any licensed producer, broker or insurer
The obligation to compensate injured workers without regard to fault or negligence is known as a.) absolute liability b.) employers liability c.) elective liability d.) compulsory liability
a.) absolute liability Absolute liability is the obligation to compensate injured workers without regard to fault or negligence.
The supplementary payments section of the commercial general liability policy would cover a.) court costs assessed against the insured in a suit b.) loss of the insured's earnings, up to $300 a day c.) up to the policy limits for bodily injury or property damage d.) up to $500 for the cost of required bail bonds
a.) court costs assessed against the insured in a suit Supplementary payments are amounts the insurer will pay in addition to the stated policy limits. They include any expenses the insurer incurs, up to $250 for the cost of required bail bonds, up to $250 a day for loss of income, cost taxed against the insured, prejudgment interest and interest that accrues on any judgement
Which statement best describes agreement as it relates to insurance contracts? a.) one party accepts the exact terms of the other party's offer. b.) the intent of the contract must be legally acceptable to both parties. c.) all parties must be capable of entering into a contract d.) each party must offer something of value
a.) one party accepts the exact terms of the other party's offer. In insurance contracts, there must be a definite offer by one party and this offer must be accepted in its exact terms by the other party. Agreement includes both an offer and acceptance.
With respect to the commercial package policy, an interline endorsement is one that a.) applies to only one line of insurance that is included in the package b.) may apply to more than one line of insurance that is included in the package c.) never applies to all of the lines of insurance that is included in the package d.) applies to all of the lines of insurance that are included in the package
b.) may apply to more than one line of insurance that is included in the package Interline endorsements are those that apply, or could apply, to more than one coverage part on a CPP. They are prepared to eliminate redundancy and to minimize the number of endorsements in the package.
What does HO personal property coverage NOT cover? a.) a resident's son's personal property b.) personal property of roomers not related to the insured c.) the spouse's personal property d.) the insured's personal property in another country
b.) personal property of roomers not related to the insured Contents coverage does not apply to the people who pay to be at the insured's home - tenant's, renters, or boarders
The exact, direct, uninterrupted cause of loss is the a.) absolute cause b.) proximate cause c.) actual cause d.) intervening cause
b.) proximate cause Proximate cause is an act or event that is the natural and reasonably foreseeable cause of damage or an event that occurs and damages property or causes bodily injury.
An insurer's right to take possession of property after having paid for the loss is referred to as the right of a.) replace b.) salvage c.) exchange d.) retain
b.) salvage After payment of a loss, the right to salvage allows the insurer to take possession of the property and sell it in whole or in part. By selling a salvaged good, the insurer reduces the initial cost of the claim.
Joe's notice of cancellation did not state a reason for the decision. Joe writes a request to his insurer for the reason. How long does the insurer have to supply Joe with the reasons for its decisions? a.) 60 days after receiving Joe's request b.) The insurer does not have to reply to Joe's request c.) 6 days after receiving Joe's request d.) 30 days after receiving Joe's request
c.) 6 days after receiving Joe's request If a notice of cancellation or nonrenewal does not state the facts on which the insurer's decision is based, the insurer must supply that information within 6 days after receiving a written request by the policyholder
Anyone who knowingly and willfully presents any false statements to an insurance company or who assists another in doing so commits insurance fraud. What would be a possible punishment for such acts? a.) At least 1 year in prison and a fine of $10,000 b.) At least 4 years in prison and a fine of $10,000 c.) Maximum of 4 years in prison and a fine of $5,000 d.) Maximum of 1 year in prison and a fine of $5,000
c.) Maximum of 4 years in prison and a fine of $5,000 If convicted of insurance fraud, a person can be charged with a category D felony and subjected to imprisonment of maximum of 4 years. In addition to any other penalty, the court may impose a fine of up to $5,000
A house insured with a homeowners policy has been blown off its foundation by a tornado. It must be demolished and removed so a replacement house can be built. Which of the following is true about debris removal? a.) It will be paid if the debris removal endorsement has been added. b.) HO policies do not cover debris removal. c.) An additional 5% of the policy limit may be paid for debris removal. d.) Because the full policy limit must be paid for the house, there is no coverage for the debris removal.
c.) an additional 5% of the policy limit may be paid for debris removal. Debris removal is not an additive coverage, it is part of the policy limit. However, when the amount of loss plus the cost to remove debris exceeds the policy limit, and additional 5% of the limit may be paid for debris removal.
A personal umbrella policy may act as excess over any of the following insurance policies EXCEPT a.) auto liability coverage b.) comprehensive personal liability c.) auto collision coverage d.) Homeowners Section II coverage
c.) auto collision coverage Auto collision is not a liability coverage; therefore, the personal umbrella policy will not act as excess.
Which of the following injuries may be covered under coverage c - medical payments of commercial general liability policy? a.) injuries to an employee during performance of his or her job b.) injuries to an independent contractor on the premises c.) injuries to a member of the general public that occurs on the premises d.) injuries to an employee due to participation in an athletic event
c.) injuries to a member of the general public that occurs on the premises Medical payments coverage makes payment of necessary medical and first aid for injuries to third parties occurring on the insured premises, regardless of fault.
How does insurance distribute the financial consequences of individual losses? a.) it transfers the risk to associates of the insured b.) it transfers the risk to a small number of persons insured c.) it transfers the risk to all persons insured d.) it retains the financial consequences
c.) it transfers the risk to all persons insured Insurance is the transfer of the possibility of a loss (risk) to an insurance company, which in turn spreads the cost of unexpected losses to many individuals. In most situations only a small number of those insured will actually suffer a loss. Insurance redistributes the financial consequences of individual losses to all persons insured.
An insured has extended coverage on her dwelling that includes coverage for vandalism and malicious mischief. One evening, she is sitting in her living room when she hears a crash and the sound of glass breaking. She runs to the door and discovers a brick has been thrown through her glass door. To inform her insurer of a possible claim, she fills out a form detailing the event leading to the loss. What is the name of this form? a.) proof of loss b.) mortgage rights form c.) notice of claim d.) appraisal form
c.) notice of claim Notice of claim is a form or statement from an insured to an insurer, informing the insurer that events leading to a possible claim have occurred. The notice of claim will include information as to how, when, where the loss took place.
The garage coverage form is written to cover the insurance needs of an insured in the business of selling, repairing, servicing or storing automobiles. Which of the following coverages are not included in a garage policy? a.) premises and operations liability b.) product liability c.) physical damage on a customer's auto d.) auto liability
c.) physical damage on a customer's auto The garage policy has a care, custody and control exclusion which would eliminate coverage for any damage to a customer's auto. This exposure would need to be covered under a garagekeepers policy.
Which of the following symbols in a business auto policy indicates that coverage for newly acquired vehicles applies if the insurer already covers all autos owned by the insured? a) symbol 1 b.) symbol 2 c.) symbol 7 d.) symbol 19
c.) symbol 7 If symbol 7 used, coverage for newly acquired vehicles applies if the insurer already covers all autos owned by the insured or if the newly acquired vehicle is replacing a previously owned auto that had that coverage.
If a producer is suspected of violating the Insurance Code, who would conduct the legal hearing? a.) the company's Boards of Directors b.) the state police c.) the commissioner d.) the state court system
c.) the commissioner The commissioner has the authority to order and conduct a hearing when he/she has reason to believe the insurance code has been or is being violated
An insured was having a new home built. While digging the footings for the foundation, the contractor struck a solid rock formation and found that was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbor's home several blocks away. Who pays for this damage? a.) the insured's insurer, if the neighbor proves that the insured was negligent b.) the insured's insurer, regardless of negligence c.) the contractor d.) the neighbor's insurer
c.) the contractor Most states impose absolute liability when a person's actions are determined to be against public policy. Damage caused by the use of explosives or damage caused by harboring poisonous snakes or wild animals are examples. The neighbor would not need to prove negligence, he would only need to prove that the damage occurred.
A producer previously licensed in another state recently moved to Nevada and now wishes to obtain a resident license. In order to avoid education and examination requirements, how soon must the license application be received? a.) within 30 days after the producer moved to Nevada b.) within 90 days after the cancellation of the license in another state c.) within 90 days after establishing legal residence d.) within 30 days after receiving the application from the DOI
c.) within 90 days after establishing legal residence A person licensed in another state who moves to Nevada and desires to become licensed as a resident producer with the benefit of the exemption provided ab-(cut off) apply for licensing within 90 days after establishing legal residence.
When Symbol 7 is provided, which of the following statements is true with regards to newly acquired autos? a) they are covered only until the end of the policy term b) they are not covered until the insurer is notified c) they are automatically covered only for 30 days d) they are covered if they are used to replace previously owned autos with that coverage
d) they are covered if they are used to replace previously owned autos with that coverage If symbol 7 is used, coverage for newly acquired vehicles applies if the insurer already covers all autos owned by the insured, or if the newly acquired vehicle is replacing a previously owned auto that had that had that coverage. The insured must inform the insurer that coverage is requested within 30 days of acquiring the vehicle.
An insurance policy that covers a private passenger auto in Nevada may exclude, reduce or limit coverage if a named insured or any member of a name insured's household has bodily injuries inflicted by a.) the policyholder b.) any insured of the policyholders choice c.) any group of insureds d.) any named insured
d.) any named insured A motor vehicle insurance policy delivered in Nevada that covers a private passenger auto may exclude, reduce, or limit coverage for the liability of any named insured for bodily injury to another named insured or any member of a named insured's household.
How can contractors and subcontractors be deemed as providing compensation for employees without purchasing Workers Compensation Insurance? a.) they can't b.) by making sure each employee has personal health and disability coverage c.) by only hiring the employees as part-time d.) by covering the employees under a consolidated insurance program
d.) by covering the employees under a consolidated insurance program contractors and subcontractors will be deemed to have provided and secured compensation for his or her employees if those employees are covered by a Consolidated insurance program
Herb is a musical instruments dealer at an Inland Marine site. He makes improvements to his building, company individuals, furniture, and tools. Which of these improvements is least likely to be covered under his Inland Marine policy? a.) building b.) furniture c.) tools d.) company automobile
d.) company automobile All Inland Marine policies must exclude coverage of money and securities, but musical instrument dealers, camera dealers and equipment dealers policies may include coverage of the tenant's interest in improvements of the building, furniture, fixtures, tools, machinery, patterns, molds and dies. Company automobiles are not covered.
Which of the following best defines the unfair trade practice of rebating? a.) making statements that misrepresent an insurance policy in order to induce an insured to replace the policy b.) charging premium accounts in excess of the amount stated in the policy c.) making false statement that are maliciously critical and intended to injury another person in the business of insurance d.) offering an inducement of something of value not specified in the policy
d.) offering an inducement of something of value not specified in the policy Rebating is offering anything of value that is not specified in the policy as an inducement to purchase insurance
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.) Federal Insurance Administration will remove the insurer from the NFIP d.) the insurer will be reimbursed for the excess costs by the NFIP
d.) the insurer will be reimbursed for the excess costs by the NFIP The federal government will not let a WYO flood insurer lose money on flood policies. If the premium is insufficient to cover losses, the insurers will be reimbursed for the excess costs by the NFIP.
When does the insurer's duty to defend a suit or claim end in a commercial general liability policy? a.) when the defense costs equal the applicable limit of insurance b.) when both loss payments and defense costs equal the applicable policy limit c.) when the insured agrees to the settlement d.) when loss payments equal the applicable limit of insurance
d.) when loss payments equal the applicable limit of insurance Claim-related expense is paid over and above the limit of insurance. Once the limit of insurance has been paid for loss, the insurer has no further obligation to be insured.
Your friend's dog that you are keeping while the friend is out of town bit 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
d.) yes, the coverage would apply for any animal in your care Personal liability coverage in Section II will respond to any claim made against an insured for damages due to bodily injury or property damage. Your liability coverage would apply to damage caused by your animals, as well as any other animals in your care.