Insurance

An insured has a policy with an insurance company that became insolvent. The policy has $1,600 of unearned premium. How much of this premium will the insured be able to recover from the Texas Property and Casualty Insurance Guaranty Association?

$1,600

The Commissioner of Insurance issues a Cease and Desist Order and immediately receives a request for the charges to be reviewed in a hearing. Within what number of days must the hearing be held?

10

The date of "maximum medical improvement" is defined as the earliest of the date that, based on medical probability, further medical improvement to an injury can no longer be reasonably anticipated, or

104 weeks.

An employee's average weekly wage is computed according to the sum of wages paid in what period of time immediately preceding the date of the injury?

13 consecutive weeks

An agent completed a CE course in 2014. Until what year must the agent keep the records of completion?

2018 Producers must maintain records of completion of continuing education courses for 4 years from the date of the course completion.

Which of the following is NOT covered under accounts receivable coverage form?

Any loans required to offset uncollectible amounts

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

Illegal

Which of the following is NOT an element of negligence?

Libel

Which of the following would be covered under the crime coverage inside the premises - theft of money and securities?

Loss or damage to a locked safe, vault, or cash register Inside the premises - theft of money and securities would cover loss or damage to a locked safe, vault, or cash register.

If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT

Physical damage. Subrogation rights do not apply to physical damage coverage if the damage is caused by a person using the auto with a reasonable belief that they were entitled to do so.

An agent explains the details of a life insurance policy to a client. The agent does not realize, however, that the state has recently rewritten two of the provisions. As a result, the agent inadvertently misrepresents the policy, making it more attractive than it really is. What best describes this situation?

There is no misconduct

Transportation expenses are covered under a personal auto policy for

$20 per day, for a maximum of $600.

If an auto policy has split limits of 30/60/25, how much will the policy pay for property damage in a single accident?

$25,000

How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card?

$500

What is a required notice of cancellation of a Homeowners policy to the insured?

10 days

A liability policy that provides coverage for a claim for injury or damage if the claim is first reported or filed against the insured during the policy period is called

Claims-made form

Who will transport the property of anyone who hires them?

Common carriers

A plasterer has finished a job. What kind of liability coverage would protect him if the plaster falls and hurts someone because he did not do the job correctly?

Completed operations

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

All of the following are supplemental payments found in liability policies EXCEPT

Costs the insured incurred in hiring an attorney.

Additional coverages in the liability section of a homeowners policy cover all of the following EXCEPT

Damage to a third-party property for which the insured is legally liable.

What term includes damage where the insured peril was the proximate cause of loss?

Direct loss

Which of the following special liability coverages will provide protection to managers of a corporation for claims arising from a wrongful act committed by the manager while in an official capacity?

Directors and officers liability

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

The requirement that agents not commingle insurance monies with their own funds is known as

Fiduciary responsibility.

Which of the following claims would be included under the dwelling policy?

Fire damage to the insured's rowboat stored in the attached garage

The homeowners policy covers collapse caused by all of the following EXCEPT

Foundation cracks.

Persons covered under an insurance policy, whether named or not, are known as the

Insureds.

Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss?

Liability coverage

A participating insurance policy may do which of the following?

Pay dividends to the policyowner

Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as

Rebating.

A claim is considered to have been made

When notice is received and recorded by any insured or the insurer, whichever comes first.

In liability insurance policies, supplementary payments are made

In addition to the limit of liability.

The Texas Windstorm Insurance Association provides windstorm and hail insurance

In the seacoast territory of this state only.

Which of the following occupations would NOT directly help to qualify someone for the office of Commissioner of Insurance?

Insurance agent

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?

$8,000

Which of the following is covered under the Camera and Musical Instruments Dealers floater?

A customer's camera left at a camera shop for repair Covered property includes customer's property left for repair, cleaning or service.

A business income coverage form would cover all of the following situations EXCEPT

A union strike of construction workers causes the repair of the insured's building to be delayed for a period of time.

In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation?

Agreed value

Which of the following activities may be performed by a Managing General Agent?

Appoint agents for the insurer Adjust losses for the insurer Direct the activities of Local Recording Agents for the insurer All of the above

Business personal property coverage form covers all of the following EXCEPT

Automobiles held for sale.

A BOP (businessowners policy) is most similar to

Homeowners.

The qualify for a surplus lines license, the applicant must be licensed as a(n)

Local Recording Agent.

When does the coverage begin under the builders risk form?

On the date construction starts

A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called

Proof of loss.

Which of the following would NOT be considered a source of insurability information by an insurer?

The applicant's marital status

How much is the premium for the dwelling under construction endorsement under the dwelling policy?

The average amount of insurance during construction

Which of the following is NOT a possible penalty for a violation of the Insurance Code?

A fine up to $100,000

In a participation plan, the insured may be eligible for which of the following?

A partial premium refund

A unique feature in a bailee form is that it covers

Customers' property whether or not the insured has been negligent.

What is the purpose of the coinsurance clause found in property insurance policies?

Encourage the insured to insure the property closer to its full value

Terrorism Risk Insurance Program Reauthorization Act of 2015 has extended the TRIA to the year

2020.

What is the minimum percentage of a licensee's total volume of premiums in a calendar year that must come from business other than controlled business?

25%

Under the conditions of a Film Coverage Form, how long must the insured maintain records of each production?

3 years after the policy expires

Which of the following would be covered under the Film Coverage Form?

None of these are covered.

Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?

Special

In the event of a claim under a commercial general liability policy, the insured has all of the following duties to the insurer EXCEPT

Submitting to a medical exam when requested.

Surety bonds are written for a definite limit called

The bond penalty.

All of the following statements concerning coinsurance are true EXCEPT

The coinsurance formula will also be applied to total losses.

Which of the following statements is true regarding the commercial general liability policy's Coverage C - Medical Payments?

The coverage is considered good will because payments are made without regard to fault.

The claims-made trigger is based on which of the following?

The date the claim is first made in writing against an insured for injury or damage that occurred on or after the policy's retroactive date

The occurrence form trigger is based on which of the following?

The date when injury or damage occurs

On a DP-3 Dwelling Property Special Form policy, the coverage provided for personal property is

The same as provided on the DP-2 Broad Form. Although Coverages A and B on a DP-3 are written on an open peril or all-risk basis, the coverage for personal property is written on a named or specified peril.

Workers compensation rating is developed by applying a rating bureau job classification rate to each

$100 of payroll.

The Insurance Commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every

5 years.

An insurer may cancel a personal auto policy if the policy has been in effect for at least how many days?

60 days

Under a businessowners policy, an insured can cancel the policy

At any time by mailing a written notice of cancellation. The insured may cancel the policy at any time by mailing a written notice of cancellation to the insurance company.

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an

Authorized insurer.

All of the following are excluded in the equipment breakdown basic policy EXCEPT

Explosion of steam boilers.

In which type of commercial crime policy coverage is triggered by a loss that happens during the policy period but is not necessarily discovered during the policy period?

Loss sustained form

An insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. Which type of limit of liability does this insured's policy have?

Per occurrence

Which of the following statements is INCORRECT with regard to surplus lines insurance?

Policies written by a surplus lines insurer typically contain standard coverages and forms.

The Federal Fair Credit Reporting Act

Regulates consumer reports.

An auto dealer reported $500,000 worth of automobiles on its lot at the end of May to its insurer. On June 10, it received $200,000 worth of cars. By June 20, the dealership sold $100,000 worth of cars. A hail storm on June 21 caused $50,000 worth of damage to the inventory. Without considering any deductibles, how much will the insurer pay for damages? (Dollar amounts are rounded to the nearest hundred.)

$41,700 Inventory at the time of the damage exceeded the reported inventory at the end of the previous month. Therefore, the insurer will pay only a portion of the total damages. Reported inventory = $500,000 + $200,000 = $700,000. $700,000 - $100,000 worth of cars sold = $600,000. Therefore, the insurer will pay $50,000 X 5/6 = $41,667 (or $41,700 rounded up).

The insured's mother-in-law broke her leg falling down the front steps of the insured's premises. The insured's homeowners medical payments coverage will

Apply to injuries of any guests or visitors.

In equipment breakdown coverage, all accidents would be considered a single accident if they occur

At a single location at the same time and from the same cause

When an individual obtains an insurance license for the primary purpose of writing insurance on him or herself, or for members of his or her immediate family, or business, this is called

Controlled business. When producers sell policies on themselves, their family, or their coworkers, this is called "controlled business." In this state, at least 25% of a licensee's total volume of premiums in a calendar year must be from business other than controlled business.

A health care provider wants to provide medical professional liability insurance for its employees. Unfortunately, the provider has searched unsuccessfully for an insurance carrier that can provide this insurance. Which of the following will most likely be able to provide this insurance?

Joint Underwriting Association

Which of the following is the basis for a claim against an insurance policy?

Loss

All of the following are major coverages included in the homeowners policy EXCEPT

Loss of income

All of the following statements are FALSE regarding garage physical damage coverage EXCEPT

No coverage is provided for any auto stored for more than forty-five days at a location not shown in the declarations.

An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have?

Specific

What is the maximum amount an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy?

$10,000 for all expenses incurred during a 12-month period

Super Value Store has a commercial general liability policy written with a general aggregate limit of $300,000 and an occurrence limit of $100,000. A customer injured on the premises was awarded $45,000 for medical expenses and loss of earnings, and $60,000 for pain and suffering. The court costs and attorney fees were $15,000. How much will the CGL policy pay?

$115,000

According to the common policy conditions for a commercial package policy, if the insured dies, the policy rights and duties

Automatically transfer to a legal representative.

What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?

Experience modification factor

An insured carries a property policy on her home in the amount of $250,000. A bank is shown as the mortgagor in the policy. Last month the insured made her final mortgage payment, but did not remove the bank from the policy. In the event of a covered loss to her home, how much will the bank receive?

Nothing

Which of the following is NOT considered a residual market?

State Property and Casualty Guaranty Association FAIR plans, assigned risk plans, and a joint underwriting association are all considered residual markets. The state Guaranty Association is a mechanism for assisting the policyholders of bankrupt insurers and would not be called a residual market.

All of the following are true statements regarding the supplementary payments of a commercial general liability policy EXCEPT

They pay defense costs even after the aggregate limit has been reached. Once the aggregate has been reached, the insurer will not be responsible for paying further claims; therefore, the insurer no longer pays to defend.

An insurance agent wants for a client to replace her current annuities plan with another one. He presents the new one in an incomplete and dishonest way, which makes the new contract seem far more appealing than the original one. The policyowner ends up surrendering her original contract and replacing it with the new one. Which term best describes what the agent did?

Twisting

After filing a claim, an insured tells the insurer that there is more than one insurance policy in force. That insurer sets aside the claim until it hears what the other company will pay. The insurer's action will be classified as

Unfair Unfair settlement practices include refusing or delaying a settlement solely because there is other insurance available to partially or entirely satisfy the claim loss. The claimant who has a right to recover from more than one insurer has the right to choose the coverage from which to recover and the order in which payment is to be made.