Insurance test 2

10% Drivers who complete defensive driving courses will receive a 10% discount on their policies for 3 years as long as they have a good safety record in the prior 3 years.

A driver who completes a defensive driving course may qualify for a premium discount of

Loss by vandalism and malicious mischief is excluded. After vacancy for more than 60 consecutive days, vandalism and malicious mischief (VMM) coverage is excluded under a dwelling policy.

A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the following statements is true

5 years All records must be kept for 5 years after the completion of a transaction or for the term of the contract - whichever is greater.

Agents, subagents, and counselors are required to maintain records of all insurance transactions for what time period?

Common carrier cargo liability. The four classes of inland marine risks are the following: domestic shipments and transportation risks; bridges, tunnels, and other instrumentalities of transportation and communication; commercial property floater risks; and personal property floater risks.

All of the following are classes of inland marine risks EXCEPT

Provisions. Provisions is a broad term used to refer to the sections or clauses of an insurance policy that communicate the policy's benefits, conditions, etc. The essential parts of the policy are declarations, insuring clause, conditions and exclusions.

All of the following are considered parts of the policy structure EXCEPT

Theft. Theft is not a peril named in the policy.

All of the following are perils covered under the broad form dwelling policy EXCEPT

Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. A personal auto policy does not pay the cost of the release of a vehicle impounded by a law enforcement agency.

All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT

Rebates are allowed if it is in the best interest of the client. A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium.

All of the following are true regarding rebates EXCEPT

The coinsurance formula will also be applied to total losses. In the event of a total loss, the coinsurance clause does not operate and the face amount of the policy is paid.

All of the following statements concerning coinsurance are true EXCEPT

$14,000

An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage?

30 days The waiting period is 30 days as required by the National Flood Insurance Program.

How long is the waiting period after the application has been accepted before flood coverage goes into effect?

30 days The insurer must deliver or mail a written notice of nonrenewal to the insured no fewer than 30 days before the date of such nonrenewal.

How many days before a policy is nonrenewed must an insurer deliver or mail written notice to the insured?

$500. A Mobile Homeowners Policy will pay up to $500 if the insured moves the mobile home to a safer area to protect it from loss by a covered peril.

If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to

Accident insurance, because it pays medical expenses regardless of fault. Medical payments will pay for accidental bodily injury of an insured, regardless of fault or auto. It will pay medical expenses of others occupying the insured auto.

In a personal auto policy, the medical payments coverage is similar to

Self-insured retention. In casualty insurance, the portion of a claim not paid by insurance is called a retention. In property insurance, it is called a deductible.

In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called

Handling insurer funds in a trust capacity. An agent's fiduciary responsibility includes handling insurer funds in a trust capacity.

In insurance transactions, fiduciary responsibility means

2 years.

Insurers must update copies of its rates, plans, systems, and underwriting rules every

General General compensatory damages are for intangible elements that cannot be specifically measured in terms of dollars.

What type of compensatory damages will pay for pain and suffering and disfigurement?

Stated amount. In stated amount coverage, the value of the insured property is determined at the time the policy is written. In the event of a loss, that amount is paid without regard to any coinsurance provision. However, if the loss is less than total, the insurer has salvage rights with the insured having first right of refusal of the salvage.

When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as

Mechanical breakdown Damage due to wear and tear, freezing, mechanical or electrical breakdown, and road damage to tires is a common exclusion to the physical damage coverage section.

Which of the following is a common exclusion found in Part D: Coverage for Damage to Your Auto of a PAP?

The trust that a client places in the producer in regard to handling premiums. An agent acts in a fiduciary capacity, based upon trust and confidence, when handling the financial affairs of their customers, including the handling of premiums.

Which of the following is an example of a producer's fiduciary duty?

Liability coverage Supplementary payments, found in Part A - Liability, include expenses incurred by the insured at the insurer's request, including $200 per day for attending trials or hearings.

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?

A camera the insured has with him on vacation All of these examples except the camera are types of property specifically excluded from coverage under the broad theft endorsement.

Which of the following would be covered by the broad theft endorsement on a dwelling policy?

Additional coverage The additional coverage portion of a policy provides an additional amount of coverage for specific loss expense, at no additional premium.

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?

$50,000 The first limit shown is the most the policy will pay for injuries to any one person. The second limit is the most the policy will pay for all injuries if more than one person is injured in a single accident. The third limit is the most the policy will pay for property damage resulting from a single accident.

An insured has an auto liability policy with limits of 25/50/15. The insured is involved in an accident caused by her negligence and is held legally liable for bodily injuries of 3 persons in the other auto as follows: "A" $15,000, "B" $30,000, and "C" $35,000. How much will her insurer pay in total for all injuries?

Higher limits According to the out-of-state coverage provision in the personal auto policy (PAP), if the state or province has a financial responsibility law specifying limits of liability higher than the limits shown in the declarations, the insured's policy will provide the higher specified limits.

An insured is involved in an auto accident in another state. The state has a financial responsibility law that specifies limits of liability higher than the limits shown in the declarations. What amount will the insured's policy pay?