Insurance License Exam Practice
If the bus drivers employed by a business are assigned a workers compensation classification code with a rate of $2.50 and the employer has payroll of $100,000 for that classification code, what is the unmodified premium for that classification?
$2,500
What sublimits, if any, apply to stolen cash and securities under a homeowners policy?
$200 for money, $1,500 for securities
Ames Insurance Agency has an equipment breakdown policy with a $100,000 limit of liability. When Mr. Ames submits a claim for damage to his computer system, what sub-limit of liability applies to his data and media?
$25,000
What is the limit applied to expenses included in an Identity Fraud Expense Coverage endorsement in a BOP?
$25,000
Because the value of her inventory varies from month to month, Samantha had a value reporting endorsement attached to her policy, which covers her personal property with a $100,000 limit. The endorsement requires Samantha to submit monthly reports of her values, but she had not yet submitted the first report when a small fire, three months after the policy went into effect, destroyed $10,000 of her covered property. According to the terms of her policy, and ignoring any deductible that might apply, Samantha's insurer is obligated to pay
$7,500.
Agustin's building has an insurable value of $100,000, but he has insured it for only $80,000 in a property policy with a 90 percent coinsurance clause. If Agustin's building has a $10,000 loss caused by a covered peril, the insurer will pay him (ignore any deductible that might apply)
$8,889
Rick and Roseanne's home has a current replacement cost value of $800,000 but, to save on their homeowners insurance, they purchased only $600,000 of coverage on the dwelling. A windstorm causes damage to their home. The damaged property has a replacement cost value of $10,000 and an actual cash value of $8,000. How much will their insurer pay?
$9,375
Dina's unmodified homeowners policy will provide no liability coverage for her outboard boat if its engine has more than
25 horsepower.
A damaged auto is considered to be a constructive total loss if the estimated cost of repairs is:
75 to 80 percent or more of the vehicle's actual cash value
Which one of the following is an example of vicarious liability?
A boatowner is held responsible for a boating accident caused by someone who borrowed the bo
With respect to the pollution exclusion under the business auto policy (BAP), in which of the following cases would the BAP cover liability arising from the escape of pollutants?
A covered delivery truck discharges diesel fuel into a stream when its fuel tank is ruptured in an accident, resulting in an EPA clean-up of the stream.
Carlos has a Lessees of Safe Deposit Boxes endorsement on his commercial crime policy to cover insured property kept in a bank safe deposit box. He does NOT need to show which of the following to prove a burglary within the definition of this endorsement?
A guard was on duty at all times.
California's rating laws, like those of other states, do not require insurance rates to be
Affordable.
In which of the following situations would the homeowner benefit from the liability coverage available by adding an additional residence rented to others 1, 2, 3, or 4 families endorsement to her homeowners policy?
Alejandra owns two single-family homes, lives in one of them, and rents the other to a tenant.
Estelle transferred the legal title to her home to her son Jimmie. However, she cannot transfer her insurance policy to Jimmie without the insurer's permission because of what clause in her policy?
Assignment
Dr. Lenard purchased an commercial general liability policy on his office. With his insurer's consent, Dr. Lenard is able to transfer his interest in the policy to Dr. Brown. Which of the following policy provisions applies in this case?
Assignment.
All of the following sustained water damage when a flash flood swept through the his canyon where his house is located, but Shelton discovered that his national flood insurance dwelling policy covered only his
Attached garage.
A business insurance policy shows the following persons as named insureds, listed in this order: Bernie Burns, Chet Cooper, and Alice Adams. Which of the three named insureds is authorized to change or cancel the policy?
Bernie only
Jack is concerned about flooding in his town, so he is surprised to learn that his homeowners policy does not cover damage by flooding. What is an immediate option he might have to protect his property from flood damage?
Buy flood insurance through the National Flood Insurance Program.
Stephan's homeowners policy insures his house for $250,000, which reflects its replacement cost value. It would cost another $75,000 to replace the detached garage in his back yard, where Stephan keeps his classic car collection. Stephan's homeowners policy automatically includes only $25,000 of coverage on "other structures." Adequate limits of coverage on the garage
Can be obtained by adding the other structures-increased limits endorsement to his homeowners policy.
All the following would be considered an 'insured' under a Hired Auto and Nonowned Auto Liability Endorsement in a businessowners policy (BOP) EXCEPT:
Carl, a business owner when conducting personal business while using a nonowned auto
Colossal Casualty Insurance Company, an admitted insurance company in California, has appointed Winfred, who has a California insurance agent's license, to sell Colossal Casualty insurance policies. When he is engaged in providing insurance for Justine, Winfred represents
Colossal Casualty.
After considering whether to add an earthquake endorsement to his homeowners policy or to buy a separate California Earthquake Association (CEA) policy, Rick chose the CEA policy because it includes limited coverage for all the following additional coverages, EXCEPT:
Costs of removing property for safekeeping when an earthquake is expected.
A single-unit home owned by Karen and rented to a tenant is damaged by fire and becomes uninhabitable while it is repaired, resulting in lost rental income during the repairs. Which of the following dwelling policy coverages will help Karen cover some of the lost rent?
Coverage D - Fair Rental Value
Question 10 of 150 The Peterson family owns a farm that they insure on a farm policy. Which section of their policy insures their sheep, chickens, hay, and grain?
Coverage E - Scheduled Farm Personal Property
Jack and Jill are vacationing at a golf resort when a thief enters their room and steals a laptop computer, golf clubs, cash, and clothing. Jack and Jill contact their homeowners insurer and ask the claim representative whether they are covered for this loss. What does the representative tell them?
Coverage applies just as it would if were stored at the insured's home.
Harlan often takes family members and guests for a river cruise on his houseboat. He should carefully examine his boatowners policy's medical payments coverage because the medical payments coverage in some policies
Covers guests but not insureds.
Mrs. Lombardi's dwelling policy denied her claim for the collapse of her deck. On what form is her dwelling policy written?
DP-1 Basic Form
Which dwelling form does NOT include Coverage E - Additional Living Expense except by endorsement?
DP-1 Basic Form
Because the Earthquake-California endorsement has been added to Esteban's homeowners policy, the major difference between his coverage for earthquakes and his coverage for other perils lies in the
Deductible.
Wilmer's auto insurance paid $2,000 of the $2,500 it will cost to repair the collision damage to Wilmer's car. It did not pay the remaining $500 because Wilmer's policy has a(n)
Deductible.
Most professional liability policies cover claims for what kind of injury or loss suffered by third parties?
Economic or financial losses
Anderson's board has asked him to explain what coverage the company's directors and officers (D&O) liability insurance policy provides. On examining the policy, he determines that the policy includes three distinct coverages. Which of the following is not one of those three coverages?
Employers liability coverage.
A disgruntled former employee who was recently laid off and has been unable to obtain other employment sues her former supervisor, Maryanne, for wrongful termination. What type of insurance might defend Maryanne and her employer against this claim and pay any damages if the former employee wins the lawsuit?
Employment practices liability insurance
As a recently licensed California insurance agent, Alonzo realizes that he could make a mistake with an insurance policy that might cause an angry client to sue him. Therefore, Alonzo realizes it is important for him to carry
Errors and omissions insurance.
Because mold has become a problem for insurers, many policies now provide limited coverage by
Excluding mold and then adding an additional coverage with a dollar limit.
Jason, who owns a residence in a mobile home park, is insured under an HO 3 homeowners policy with the mobile home endorsement attached. This endorsement makes all the following modifications to his mobile home policy EXCEPT:
Expands Jason's liability coverage to apply to common areas of the mobile home park.
Dwayne works for a drug store. He sees Joel, a customer, carrying a large bag and acting suspicious, so Dwayne suspects Joel of shoplifting. Without creating a disturbance, Dwayne quietly asks Joel to go to the store's office where Dwayne keeps him until the police arrived. When they search Joel and his bag, they do not find any stolen merchandise. Joel sues Dwayne and the store, accusing them of
False arrest.
Colossal Casualty Insurance Company, which is incorporated in Pennsylvania and has its home office in Philadelphia, is an admitted insurer in California. California regulators would categorize Colossal Casualty as what kind of insurer?
Foreign
Regarding the commercial general liability (CGL) policy, which of the following correctly describes the primary difference between the Pollution Liability Coverage Form Designated Sites (CG 00 39) and the Pollution Liability Limited Coverage Form Designated Sites (CG 00 40) endorsements?
Form CG 00 39 provides coverage for pollution cleanup costs whereas form CG 00 40 provides no coverage for cleanup costs.
Long before the fatal accident occurred, Jose knew his truck's brakes were failing, but he kept driving while sending text messages on his phone. Given such egregious behavior, the dead motorist's survivors could properly accuse Jose of
Gross negligence.
Christie owns the following items that she would like to schedule under a scheduled personal property endorsement to her homeowners policy. Which one of these items cannot be scheduled under this endorsement?
Hunting rifle.
Employment practices liability insurance covers claims resulting from
Inappropriate employment conduct.
Insurance has both costs and benefits to society. One of the costs involves
Increased losses due to moral and morale hazards.
All of the following are rating organizations that review an insurance company's financial strength in some way, EXCEPT:
Insurance Services Office (ISO)
Most personal umbrella policies in California are written on what forms?
Insurers' own personal umbrella forms.
Because many liability insurance policies cover deliberate offenses such as libel, slander, false arrest, and invasion of privacy, it would be accurate to say that these policies cover some
Intentional torts.
The air conditioning unit at Iggy's Ice Cream Shop failed, causing its frozen inventory to melt. How did Iggy's unendorsed commercial property policy respond to the loss of frozen inventory?
It denied coverage under the Mechanical Breakdown exclusion.
Hart Food Supply was forced to shut down when the electrical service to its building was disrupted due to a motor vehicle accident that took place on the other side of town. How will the Special Causes of Loss Form on Hart's commercial property policy respond to its claim for spoiled inventory?
It will deny the claim under the Off-Premises Utility Service Interruption exclusion.
Jack and Mel are involved in an auto accident in which Jack is injured and incurs medical expenses. Jack sues Mel, and the court determines that Jack is 30 percent at fault and Mel is 70 percent at fault. If the state apportions liability under a comparative negligence law, what will happen?
Jack will recover 70 percent of his damages.
On July 1, 2020, a visitor to Valley Farm, which is insured under the farm liability coverage form (FL 00 20), tripped over a piece of farm equipment, injuring her back. Should she require medical care in the future due to this injury, the policy will pay reasonable medical expenses through what date?
June 30, 2023
Matt's auto insurer denied a liability claim because the person seeking reimbursement is not an "insured" under Section A - Liability of Matt's auto policy. Which of the following submitted the claim?
Matt's roommate, after he totaled his own uninsured car
Shauna's insurance premium is lower than Louise's, because Shauna has had no tickets or accidents during the past three years. Louise has a much worse driving record. Shauna's premium is lower because her insurer uses what rating system?
Merit rating
Shauna's insurance premium is lower than Louise's. Shauna has had no traffic citations or accidents during the past three years. Louise has a poor driving record in comparison. Shauna's premium is lower because her insurer probably uses what rating system?
Merit rating
Which of the following endorsements, if any, will add coverage for a motorcycle to a personal auto policy (PAP)?
Miscellaneous Type Vehicle endorsement
Advisory organizations like Insurance Services Office (ISO) develop forms for various lines of business that are considered standard policy forms because so many insurers use them. ISO's commercial umbrella policy, which ISO introduced in 2000, is not considered a standard policy because
Most insurers use their own umbrella forms, and there is a lot of variation in these forms.
Randal's business is covered by an occurrence-basis commercial general liability (CGL) policy with a policy term of January 1 of last year to January 1 of this year and a general aggregate limit of $1,000,000. This means that Randal's insurer will pay
No more than $1 million for all claims not involving the products-completed operations hazard incurred during last year.
Nate, a small business owner, bought a delivery van last year from Discount Auto Sales. Since then, he has spent a lot of money to repair the van. When he gets the latest repair bill from Discount, he loses his temper and drives the van through the plate glass window of the dealer's showroom. Will Nate's business auto policy cover Discount's claim for property damage?
No, the expected or intended exclusion will rule out coverage.
Bill and Ben are employees of Norton's Appliances. Bill usually drives the company van on deliveries and Ben helps Bill unload and deliver the appliance. While they are taking a refrigerator to a customer, they collide with a large truck. Ben is injured and files a claim against Bill and Norton's Appliances. Is Ben's claim covered under Norton's business auto policy?
No, the fellow employee exclusion would apply.
Brendan, a mail clerk, often uses his car to run errands for his employer. If he has an accident while running one of these errands, his employer's business auto policy (BAP) will treat Brendan's car as a(n)
Nonowned auto.
Heather was notified that her insurance company will not issue another policy when her current policy expires. In other words, the insurer has decided that it will do what to her policy?
Nonrenew it.
Angela's personal articles floater, like most inland marine policies, excludes losses caused by
Normal wear and tear
Four months ago Betty purchased a strip mall building that can house five businesses of equal size. Although she has been trying to find tenants, only one of the five units is in use when vandals break into one of the empty units causing $10,000 in damage. Betty has a standard building and personal property coverage form with a vacancy clause. Assuming the amount of building insurance is adequate and vandalism is a covered peril, and ignoring deductibles, how much will Betty's insurer pay for this loss?
Nothing.
All the following statements regarding the commercial inland marine policy commercial articles floater are correct, EXCEPT:
Open perils coverage applies only if the insured property is stored at the insured's premises.
Carlene's insurance agent has suggested she "upgrade" her homeowners insurance by replacing her current HO-3 policy with an HO-5 policy. What will she get with the HO-5 that she does not already have with her unendorsed HO-3?
Open perils coverage on her household contents.
Mr. and Mrs. Oswald insure their home on a DP 3. Which of the following statements BEST describes the additional coverage provided by their policy when a local ordinance requires them to upgrade the electrical system in their home after an explosion?
Ordinance or law is an additional coverage on a DP 3.
Most boatowners policies do not include
Personal Injury Protection (no-fault) coverage.
Georgina's insurance company notifies her that it will not renew her current policy when it expires because her property no longer meets the insurer's underwriting criteria. It appears that Georgina's insurer is engaging in a practice known as
Post-selection.
What coverage extension provides up to $10,000 of coverage for property in transit or temporarily away from the insured premises?
Property Off-premises
Collette lives in a home on the ocean that is insured for $20 million. Although her insurance company would not be able to cover a $20 million loss with its own resources, the insurer is able to write a single policy with a $20 million limit for Collette because the insurance company has
Reinsurance.
Bernadine used to have a live-in nanny, but now that her childre
Requires that Bernadine's current homeowners policy include an endorsement providing workers compensation coverage on residence employees, but no premium for that endorsement will appear in her policy declarations.
Porter is the named insured in the declarations of a personal auto policy. He lives with his wife, Anne, who also drives the insured auto. Anne is NOT a named insured in the declarations, but Porter understands that, as his spouse, she is also covered by this policy. Which statement is correct if Porter names her in the declarations?
She will have no additional rights, privileges, or protection.
Bridget, a news reporter at a local television station, accidently stated on the air that Malcolm was a "convicted murderer" rather than a "suspected murderer." Bridget's statement is an example of
Slander.
Which one of the following is not an intentional tort?
Sleeping on the job
Jane is self-employed and hires two employees. When she purchases a workers compensation policy for the benefit of her employees, what endorsement would she purchase to provide workers compensation benefits for herself?
Sole-proprietors, Partners, Officers, and Others Coverage endorsement
An inland marine policy that covers an individual's jewelry is a filed line of insurance. This means that
State insurance regulators approve the forms and rates the insurer uses.
Which of the following federal regulations requires a violent act-or an act that is dangerous to human life, property, or infrastructure-to be insured as a covered peril on certain commercial P&C insurance policies?
Terrorism Risk Insurance Act
Mr. Pelletier is upset with his agent because his policy doesn't provide the coverage he asked for and was told the agent would apply for. Which of the following statements correctly describes the agent's responsibility in this case?
The agent is responsible in this case because one of an agent's primary duties is to obtain insurance as agreed upon.
When her new car was in an accident, Elma took it to the dealer for repairs. The dealer stored Elma's car in a secure garage while waiting for the necessary parts, but lightning started a fire that destroyed the garage and Elma's car. The dealer has a garage policy that includes garagekeepers coverage with the excess direct coverage option. Elma has a personal auto policy with a $1,000 deductible for collision and other-than-collision claims. Who will pay to replace Elma's car?
The dealer's insurer will pay $1,000 and Elma's insurer will pay the rest.
Which of the following statements correctly describes how a commercial general liability (CGL) policy that includes the limited pollution liability extension endorsement will respond to a leak of gasoline from a service station's underground storage tank?
The endorsed policy would cover a leak from an above-ground storage tank but it does not cover leaks from underground storage tanks.
Some states require that if an applicant for auto insurance is not a resident of that state, he or she must meet another requirement. What is that requirement?
The insured vehicle must be principally garaged in the state.
Under a homeowners policy, what is the effect of an insured's bankruptcy or insolvency on the insurer's contractual obligations?
The insurer is not released from its contractual obligations to the insured.
If a homeowners policy provides "guaranteed replacement cost coverage" and the home is destroyed by fire, the insurer will pay
The replacement cost of a covered building loss, regardless of policy limits.
The Podunk Press published an anonymous letter to the editor in which the writer stated that the world would end on a certain date. That date passed and the world did not end. Although the published statement was false, it is not libel because
The statement did not damage a person's reputation.
Milo's Tavern has a commercial general liability policy. Alvin becomes intoxicated at the tavern before leaving in his car. He collides with a van carrying several passengers. The insured persons sue Alvin under his personal auto policy and sue Milo's Tavern for failing to monitor Alvin's drinking. Which statement is correct with respect to the claims against Milo's Tavern?
The tavern needs liquor liability insurance to cover the claims.
While driving, Tyler is distracted by a cellphone call and rear-ends Bennett's car that had stopped for a red light, injuring Bennett's passenger. The passenger's liability claim against Tyler is referred to as a(n)
Third-party claim.
While driving, Tyler is distracted by a phone call and collides into the rear of Bennett's car while it was stopped for a red light. Bennett's passenger was injured. The passenger's liability claim against Tyler is referred to as a(n)
Third-party claim.
What is the role of the California Insurance Guarantee Association?
To protect policyholders against insolvent insurers.
Bertie forgot to erect a warning sign after she mopped the floor in Giovanni's Pizza Parlor while Giovanni was out making a delivery. A patron who failed to notice the wet floor slipped and broke her ankle. Because Bertie is Giovanni's employee, Giovanni may be held responsible for the customer's injuries under the principle of
Vicarious liability.
Kendall Construction needs an endorsement added to its workers compensation policy that stipulates the insurer will not bring an action against Kendall Construction's general contractor if the general contractor negligently causes an injury to one of Kendall's employees. What endorsement do you recommend?
Waiver of Right to Recover from Others endorsement
The accumulation of surface water from an unusual rainstorm in February damaged Brandy's home and her neighbor's home. The two homes are on half-acre lots that have a lower elevation than the other homes in their neighborhood. No other homes were damaged. According to the "flood" definition in Brandy's National Flood Insurance Policy, this event
Was a flood because it inundated two properties, including the insured's.
When Minerva received her first California homeowners policy, she was surprised to see that the policy was accompanied by a "residential property disclosure statement." What information will she not find in the disclosure statement?
Whether earthquake coverage is included.
When she added the watercraft endorsement to her homeowners policy, April thought she was fully protected while operating her inboard motorboat, which has a 75 horsepower engine. She was disappointed to learn that this coverage only applies
While towing a waterskier.
While boating on Lake Erie, Hollis is injured when he is struck by a jet ski negligently operated by Doug. Doug has no insurance. Is there coverage for Hollis' injuries under his boatowners policy?
Yes. Hollis' uninsured watercraft coverage will pay for the injury.
Star Enterprises rents office space and erects partitions and cabinets within the space. Although these are installed at Star's expense, it does not own them. The office sustains a fire and the cabinets and partitions are destroyed. Does Star's commercial property policy cover the loss?
Yes. They are covered as improvements and betterments.
Coverage B - Other Structures of the homeowners policy covers which of the following detached structures?
a garage rented to a non-tenant who uses it as a private garage
All the following are generally eligible for a business owners policy (BOP) EXCEPT:
a manufacturer leasing 10,000 square feet of spaces
Which of the following would be covered under the property section of a homeowners policy?
a motorized wheelchair
With respect to the commercial inland marine transportation coverages, common carriers are not liable for losses resulting from two causes of loss: fault of the shipper and:
acts of God
Isabelle is an agent for an insurance company that is licensed to transact insurance in the state in which she lives and works. What type of insurance company does Isabelle r
admitted
When Mr. and Mrs. Unger lived in New Hampshire, they didn't buy earthquake insurance because they believed they were unlikely to suffer an earthquake loss. When they moved to California, however, they bought earthquake coverage immediately because of their high exposure to earthquakes in that state. What underwriting principle do their actions characterize?
adverse selection
Robin has a valuable porcelain collection she wants to insure. Because it's difficult to assess the collection's value, Robin and her insurer have worked out a schedule listing the value of each insured item. What valuation method have they used?
agreed value
An insurance policy may involve the exchange of unequal amounts, as when an insured submits a large claim after paying just one premium, which is possible because insurance policies are:
aleatory contracts
Jack lives in Michigan. The insurance company that writes his homeowners insurance policy is incorporated in Canada. What type of insurer is Jack's insurance company?
alien
Jane's insurance policy contains a stated amount valuation provision. This provision states that she will receive the lowest of three amounts if her covered property is stolen or destroyed. Which of the following is NOT one of those three amounts?
an amount agreed upon by the insurer and Jane
All of the following parties can be protected by a property or casualty insurance policy without the need for a special endorsement EXCEPT:
bailees
Donovan's Supply Company is constructing an additional building to house its equipment and supplies. Which of the following commercial property insurance coverages will cover the building materials and supplies while construction is taking place?
builders risk coverage
Judy owns a small beauty salon located on the first floor of her apartment building. A customer trips over a hair dryer cord in the salon and is injured. Judy is held legally liable for the customer's injury. What coverage under her businessowners policy (BOP) will pay for this customer's injury claim?
business liability coverage
All of the following are benefits provided by the Loss of Use coverage (Coverage D) in a homeowners policy EXCEPT:
car rental expense
With respect to property insurance underwriting, what type of rating system is used when insureds share similar characteristics?
class rating
Madeline's three-family dwelling was damaged in a fire. Several claims were submitted to the insurer that issued her dwelling policy by people who live in the dwelling. A claim for which of the following items of personal property was NOT paid by Madeline's insurer?
clothing of Madeline's second floor tenant
Which of the following perils is included on the commercial property Broad Causes of Loss Form but NOT on the Basic Causes of Loss Form?
collapse
Which of the following defenses to negligence argues that because the plaintiff's actions partly contributed to the accident, the plaintiff should bear a proportional share of the responsibility for his or her injury?
comparative negligence
Randy goes to Main Street Insurance Company to buy a homeowners policy. He observes that he cannot negotiate the terms with the insurer, which presented the policy to him on a take-it-or-leave-it basis. This type of contract is considered a(n):
contract of adhesion
A protection and indemnification (P&I) marine insurance policy will provide broad liability coverage for which of the following?
damage to docks or bridges
The homeowners policy only provides coverage for bodily injury or property damage that occurs or begins:
during the policy period
Which of the following is a covered peril under the farm policy's Farm Livestock Coverage (FP 00 40) form?
explosion
All of the following are covered perils under the basic dwelling form (DP 1) EXCEPT:
falling objects
All of the following are optional coverages available with the businessowners policy (BOP) EXCEPT:
fire department charges
Which of the following causes of loss are generally excluded from an open perils property insurance policy?
flood
Boat owners who want more coverage than is provided by an unendorsed homeowners policy can increase coverage with a boatowners policy, which covers all the following EXCEPT:
garages where boats are stored off-season
Under the terms of the Duties of an Injured Person - Medical Payments Coverage condition of a homeowners policy, an injured person who is seeking medical payments for an injury occurring on the insured's property is obligated to do all the following EXCEPT:
give the insurer current financial statements and proof that he or she has no health insurance
To control the outbreak of general liability mold claims, insurers introduced endorsements that limited coverage for mold. Which of the following is such an endorsement?
limited fungi or bacteria coverage endorsement
Which of the following activities is NOT recognized as "farming" on the farm liability coverage form?
maintaining a mechanized vegetable canning operation
Which of the following is not the action of an agent considering the best interests of an applicant or insured?
making a misrepresentation of the terms of a proposed policy in the belief it's the only way to get the applicant to buy a policy that the agent believes is most appropriate for the applicant's needs
Salvador, a carpenter, is a contractor for Coogan Construction Company, which builds houses. After Salvador completes a large framing job, Coogan has financial problems and cannot pay him. Through which of the following might Salvador recover some payment for his labor?
mechanics lien
A state that maintains a fund that pays for workers compensation claims is called what type of workers compensation insurance market?
monopolistic state fund
Allie was shopping at the mall on a busy Saturday afternoon. She wore a bracelet with expensive charms attached to it, which she set down on a store counter as she was examining new charms. When she looked up, the bracelet was gone. Which of the following types of crime perils applies to this loss?
mysterious disappearance
Zach is named on the declarations page of his homeowners insurance policy, but his wife is not. Which of the following terms correctly applies to Zach's wife in the policy?
named insured
Which of the following insurance submarkets describes consumers who represent a higher-than-standard level of risk but are still eligible to buy insurance in the voluntary market, though at higher-than-standard rates?
nonstandard market
Mr. Newman's auto policy has liability limits of 25/50/10. When he drives into another state, its compulsory insurance laws require him to have liability limits of 50/100/50. What must Mr. Newman do to his personal auto policy to secure limits of 50/100/50 when he's in the other state?
nothing, coverage is automatically provided
As a condition for liability coverage under a homeowners policy, if a neighbor's child is accidentally injured on the insured's property, the insured is obligated to do all the following EXCEPT:
notify the police of the accident immediately
The truckers policy insures motor carriers that operate:
only on a "for-hire" basis
Because some of his California workers are undocumented, Grant has not bought workers compensation insurance or made arrangements to qualify as a self insurer. This means that Grant
ould be fined or imprisoned or assessed with a $10,000 fine.
Which of the following property insurance policy provisions states where coverage does and does not apply?
policy territory
Shoveling snow and ice off an icy sidewalk is an example of what type of risk management technique?
prevention
In ocean marine insurance, the sue and labor clause refers to the insured's obligation to protect a ship or its cargo from loss or to minimize losses that occur after an accident. Under the clause, the insurer agrees to pay for:
reasonable costs incurred to prevent further loss to damaged property
Which document do applicants for auto insurance use to indicate their state of residency or that their vehicle is principally garaged in that state?
residency statement
Employers unable to purchase workers compensation insurance in the voluntary private market can buy it from the state:
residual market facility
Which of the following types of liability holds an insured legally responsible if another party is injured or damaged because its operations, or other conditions pertaining to the insured, are considered inherently dangerous?
strict liability
Muller's Floral Shop uses vans to deliver flowers and is insured with a business auto policy. It wants auto liability coverage on all autos, but medical payments, UM/ UIM, and physical damage coverage only on owned autos. Which symbols does Muller's insurance agent recommend for these coverages?
symbol 1 for liability coverage on any auto; symbol 2 for medical payments, UM/UIM, and physical damage coverage on owned autos
In a property insurance policy, the term "we" refers to:
the insurance company
Trang is on her way to a job interview when her car breaks down. A tow truck driver is able to fix her car and send her on her way. She pays the bill for roadside labor and submits it to her auto insurer for reimbursement. What coverage on Trang's PAP, if any, makes payment?
towing and labor costs endorsement
Lombard Trucking is party to a contract with Murphy Motors. Each party agrees to exchange trailers with the other during the normal operations of their businesses. In the contact, each party also agrees to hold the other harmless for damage occurring to the other's trailer when in its possession. What type of contract do Lombard and Murphy have?
trailer interchange agreement
Purchasing homeowners insurance to protect against the financial risks of home ownership is an example of what risk management technique?
transfer
Which of the following coverages or provisions is NOT included in a businessowners policy?
umbrella coverage
In what type of contract is only one party required to make an enforceable promise?
unilateral contract
In a state where businesses can buy workers compensation insurance from insurers that issue business policies, including commercial property, commercial general liability, and commercial auto insurance, this is called a:
voluntary private market
All of the following are supplementary payments in the businessowners policy (BOP) EXCEPT:
work-related injuries
Jonas leased a brand-new Lexus for three years. What definition in his personal auto policy defines the Lexus after Jonas adds it to his policy?
your covered auto