Insurance Test

A tornado completely destroyed a family home that had $200,000 homeowner's insurance with a $1,000 deductible. Replacement costs for the home are $180,000. The insurer will pay $179,000. $199,000. $200,000.

$199,000

An insured obtained coverage from the West Virginia Essential Insurance Coverage Act (FAIR Plan). After a fire, it was determined that damage repairs would cost $255,000. The FAIR Plan will pay $200,000 Full replacement costs. Costs above what other insurers pay. $150,000

$200,000

An insured has a homeowners policy with a limit of $210,000 and a deductible of $500. The insured's home is struck by lightning and is completely destroyed. The replacement cost of the dwelling at the time of loss is $200,000. How much should the insured receive? $145,000 $159,500 $209,500 $199,500

$209,500

Under West Virginia's automobile financial responsibility law, the minimum required bodily injury limits are $30,000/$60,000. $15,000/$30,000. $20,000/$40,000. $25,000/$50,000.

$25,000/$50,000.

A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss? $20,000 $30,000 $40,000 $60,000

$30,000

An insured has an auto liability policy with limits of 25/50/25. She is involved in an accident caused by her negligence, and is held legally liable for bodily injuries of three persons in the other auto as follows: "A" $25,000, "B" $35,000, and "C" $30,000. How much will her insurer pay in total for all injuries? $25,000 $50,000 $90,000 $100,000

$50,000

An insured has a personal auto policy with both comprehensive (other-than-collision) and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20 per day, how much will his policy pay? $45 $60 $75 $100

$60

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

10 days

To avoid unfair claims settlement practices, insurers must acknowledge the receipt of notice of claim within how many days? 30 calendar days 3 working days 10 calendar days 15 working days

15 working days

How long is a waiting period upon purchase of flood coverage through NFIP? 10 days 30 days 60 days There is no waiting period.

30 days

If an administrative action is taken against a producer, the producer must report this action to the Commissioner within how many days of the final disposition? 30 days 45 days 2 months 6 months

30 days

How many days following a hearing does the Commissioner have to enter an order based on conclusions reached during the hearing? 15 20 30 45

45

The Commissioner has a duty to examine each domestic insurer admitted to transact insurance in West Virginia at least once every 5 years. 1 year. 2 years. 3 years.

5 years

An insured was involved in a hit-and-run accident. Within what time period must the insured report the accident to the insurance company? 24 hours 72 hours 30 days 60 days

60 days

If an insurer introduces a new insurance policy, the form must be filed with the Commissioner for approval at least 30 days prior to use. 45 days prior to use. 60 days prior to use. 90 days prior to use.

60 days prior to use.

An insured runs a day care in her home. She has purchased the home day care endorsement under her homeowners policy. Which of the following losses would her coverage cover? A child trips over a toy in the driveway, cuts her knee, and requires stitches. A child is playing in the insured's car, puts it in drive, and backs into the neighbor's mail box. A child has bruises on her legs from receiving a spanking from the insured and must be seen by her pediatrician. A child riding the insured's horse falls off, breaking his collar bone.

A child trips over a toy in the driveway, cuts her knee, and requires stitches.

With respect to auto insurance, the term owned autos includes all of the following EXCEPT A pickup or van titled to and used in the named insured's business. Any private passenger auto titled to the named insured. A pickup or van acquired by the named insured during the policy period. Any private passenger auto leased to the named insured for a period of more than 6 months.

A pickup or van titled to and used in the named insured's business.

What is a material misrepresentation? Any misstatement by the producer Concealment A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company Any misstatement made by an applicant for insurance

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

What is a material misrepresentation? Any misstatement made by an applicant for insurance Any misstatement by the producer Concealment A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

An insured owns and operates a ranch. The insured has several vehicles that are used in the ranching operation and for personal use. Which of the following could NOT be insured under a personal auto policy? A two-ton grain truck with a 6,500-pound capacity A two-wheeled trailer designed to be towed by the station wagon A farm pickup with 1,000-pound capacity A station wagon that is used personally

A two-ton grain truck with a 6,500-pound capacity

When a mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy The loss reimbursement will be paid to the mortgagee as their interest may appear. The mortgagee's rights of recovery will not be defeated by any act or neglect of the insured. The mortgagee may bring a suit in their own name to recover damages to covered property. All of the above are true.

All above are true

When a mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy The loss reimbursement will be paid to the mortgagee as their interest may appear. The mortgagee's rights of recovery will not be defeated by any act or neglect of the insured. The mortgagee may bring a suit in their own name to recover damages to covered property. All of the above are true.

All of the above are true.

Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss? Valuation clause Loss settlement clause Appraisal clause Loss payment clause

Appraisal clause

Which of the following describes the transfer of a legal right or interest in an insurance policy? Abandonment Obligation Legal purpose Assignment

Assignment

Insurable interest in property insurance must exist At the time of policy application only. At all times. After a claim is made. At the time of loss.

At the time of loss

In return for premium, an insurance company must Give the insurer valuable consideration. Be fair in underwriting and pay covered losses. Provide the insured with coverage adequate for all potential losses. Use standardized tables of coverage for specific risks to be excluded from coverage.

Be fair in underwriting and pay covered losses.

An insurance contract must contain all of the following to be considered legally binding EXCEPT Consideration. Competent parties. Beneficiary's consent. Offer and acceptance.

Beneficiary's consent.

An insurance contract must contain all of the following to be considered legally binding EXCEPT Offer and acceptance. Consideration. Competent parties. Beneficiary's consent.

Beneficiary's consent.

Which of the following would NOT be covered under the liability section of a personal auto policy? Property damage to a store front while the insured driver is under the influence Bodily injury caused by the insured's negligence while driving a three-wheel all-terrain vehicle Property damage caused by a trailer detaching from an insured vehicle Bodily injury resulting from an accident while a person other than the named insured is operating the vehicle

Bodily injury caused by the insured's negligence while driving a three-wheel all-terrain vehicle

Which of the following other coverages is NOT included in the basic form dwelling policy? Tenant's improvements, alterations, and additions Breakage of glass Removal coverage Personal property temporarily away from the insured premises

Breakage of glass

Under the HO-4 and HO-6 homeowners policy forms, property is insured against Comprehensive form perils. Broad form perils. Basic form perils. Special form perils.

Broad form perils

Which of the following must an insurer obtain in order to transact insurance within a given state? Producer's certificate Business entity license Insurer's license Certificate of authority

Certificate of authority

A state-issued document empowering an insurance company to become an admitted insurer is called Certificate of deposit. Certificate of admission. Certificate of authority. Certificate of title.

Certificate of authority.

All of the following are defined as transacting insurance under the Insurance Code EXCEPT Selling. Soliciting. Coercing. Negotiating.

Coercing

An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have? Aggregate Per occurrence Combined single Split

Combined single

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT Conditions. Consideration. Legal purpose. Offer and acceptance.

Conditions

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT Consideration. Legal purpose. Offer and acceptance. Conditions.

Conditions

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? Representation Adhesion Consideration Good faith

Consideration

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? Consideration Good faith Representation Adhesion

Considerations

The at-fault driver in an insured's auto crash had the state required minimums for auto liability coverage, but not enough to pay for all the damage done to the insured. This driver is Required to post a bond for the amount of damages above his limits. Considered uninsured. Considered underinsured. Not liable for the damages in excess of his limits.

Considered underinsured.

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

Coverage A is for all-risk perils, and Coverage C is for the broad form perils.

In a dwelling policy, which of the following provides coverage for additional living expenses incurred by an owner-occupant in the event a covered peril makes the premises uninhabitable due to a covered loss? Coverage E Coverage A Coverage B Coverage C

Coverage E

Which of the following is NOT true about earthquake coverage? Coverage may be written in a Difference of Conditions policy. Coverage is commonly provided through a federally-funded program. Coverage is excluded by most property forms. Coverage may be added to property policies by endorsements.

Coverage is commonly provided through a federally-funded program.

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of Discrimination. Nothing, unless the remarks were in writing Defamation. Misrepresentation.

Defamation

What term includes damage where the insured peril was the proximate cause of loss? Indirect loss Consequential loss Negligent loss Direct loss

Direct Loss

Residential structures, including individual condominium units, and their contents are insured by what part of the National Flood Insurance Program? Dwelling policy form Basic coverage form Residential Condominium Building Association Policy (RCBAP) General property policy form

Dwelling policy form

Which of the following would be named on the declarations page of a property or liability policy? Additional insureds First named insured Beneficiaries All insureds

First named insured

What type of compensatory damages will pay for pain and suffering and disfigurement? General Special (specific) Tort Normal

General

What type of compensatory damages will pay for pain and suffering and disfigurement? Normal General Special (specific) Tort

General

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? Lower limits The insurer will not pay for out-of-state accidents Only the limits specified in the policy Higher limits

Higher limits

The Property and Casualty Insurance Guaranty Association must maintain all of the following separate accounts EXCEPT Homeowners insurance. All other insurance. Automobile insurance. Workers compensation.

Homeowners insurance

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

How parties to the contract must act following a loss.

Insurers are limited in their ability to nonrenew property insurance policies that have been Written on homes built in the last 15 years. Secured after the free-look period. Renewed at least 1 time. In effect for at least 4 years.

In effect for at least 4 years.

An additional loss that results from a direct loss of property is called a/an Indirect loss. Proximate loss. Liability loss. Punitive loss.

Indirect loss

All of the following are conditions commonly found in the insurance policy EXCEPT Subrogation. Appraisal. Insuring agreement. Cancellation and nonrenewal.

Insuring agreement

The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the Insuring agreement. Conditions. Exclusions. Declarations.

Insuring agreement

Four months have passed since the insured filed his proof of loss, but the insurance company has failed to pay the claim in full. What type of penalty can the insurance company expect? No penalty, because the insurance company has 5 months to pay claims. Interest on the amount due at the current prime rate plus 1% Loss of their license A settlement of $500,000 to the claimant plus claim lost

Interest on the amount due at the current prime rate plus 1%

The Residential Condominium Building Association Policy (RCBAP) is used for residential condominium building associations to cover the entire building under one policy. Which of the following statements about RCBAP is true? This policy form is not approved for use in the states of New York or New Jersey. It does not protect the individual owner from loss to personal property owned exclusively by the unit owner. It provides limited coverage for personal property owned exclusively by the unit owner. It is designed to provide exclusive coverage for the individual owner and provides not coverage for the unit owner.

It does not protect the individual owner from loss to personal property owned exclusively by the unit owner.

All of the following statements describe the concept of strict liability EXCEPT It is imposed on defendants engaged in hazardous activities. Claimants may need to provide proof that a product defect caused an injury. It is imposed regardless of fault. It is applied in product liability cases.

It is imposed on defendants engaged in hazardous activities.

Which of the following statements is NOT true regarding a personal umbrella liability policy? It may cover certain exposures not provided under the primary layer. It may require the payment of a self-insured retention. It provides excess liability coverage over underlying personal liability. It provides errors and omissions coverage for an agency.

It provides errors and omissions coverage for an agency.

Which of the following coverages in dwelling and homeowners policies is for indirect losses? Contents Loss of use Dwelling Structures

Loss of use

An underground area that had been drilled for coal collapses and causes severe damage to a house. This is called Subterranean displacement. Mine subsidence. Sinkhole subsidence. Tectonic displacement.

Mine subsidence.

Rental Reimbursement is only available if the policy includes which coverage? Other Than Collision Coverage Extended Nonowned Coverage for Named Insured Towing and Labor Costs Named Nonowner Coverage

Other than collision coverage

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

Pair or set

Before an insurer will pay any loss under a policy, what is usually required from the insured? A binder A claims-made form Proof of loss Notice of claim

Proof of loss

Coverage may be placed with surplus lines insurers through The actual insurer only. The Commissioner. Any insurance producer with any license. Properly licensed representatives only.

Properly licensed representatives only

The Gramm-Leach-Bliley Act was passed to Allow consumers access to credit and private consumer reports. Allow insurance companies access to medical information for underwriting purposes. Protect private customer information filed with a financial institution. Define insurance as interstate commerce.

Protect private customer information filed with a financial institution.

All of the following are true regarding rebates EXCEPT Dividends are not considered to be rebates. Rebates are allowed if it's in the best interest of the client. Rebates are only allowed if specifically stated in the policy. Rebating can be anything of economic value, given as an inducement to buy.

Rebates are allowed if it's in the best interest of the client.

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

Replacement cost

In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called Self-insured retention. Stop-loss. Coinsurance. Participation requirement.

Self-insured retention

The endorsement that provides coverage for losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formations is a/an Earthquake endorsement. Earth subsidence endorsement. Sinkhole collapse endorsement. Mine subsidence endorsement.

Sinkhole collapse endorsement

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

Specific

A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method? Replacement cost Reproduction cost Stated amount Actual cash value

Stated amount

Who might receive dividends from a mutual insurer? Stockholders Agents Policyholders Subscribers

Stockholders

All of the following are unfair claims settlement practices EXCEPT Suggesting negotiations in settling the claim. Refusing to pay claims without conducting a reasonable investigation. Failing to adopt and implement reasonable standards for settling claims. Failing to acknowledge pertinent communication regarding a claim.

Suggesting negotiations in settling the claim.

Burglary is defined as Taking of property from within the premises leaving visible signs of forced entry. Taking of property from the care of a person in a violent act. Any act of stealing. Taking of property by use of force, violence, or fear.

Taking of property from within the premises leaving visible signs of forced entry.

Which of the following is a requirement for eligibility for application to the West Virginia Auto Insurance Plan? The applicant must prove that they have been nonrenewed by one company and cancelled or rejected by at least 2 others. The applicant must have been rejected for auto insurance in the voluntary market within the last 60 days. The applicant must prove prior insurance in force within the last 60 days. The applicant must not have any convictions or accidents within the last 12 months.

The applicant must have been rejected for auto insurance in the voluntary market within the last 60 days.

An agent has quoted an auto insurance policy for a new client. The client has agreed to buy the policy effective today, and the agent placed the coverage in force immediately. Which of the following statements is NOT true concerning the length of coverage provided by the binder? The binder will cease 90 days from the date of application if no other action occurs. The binder will cease upon issuance of the policy. The binder will cease 30 days from the date of application if no other action occurs. The binder will cease if the insurer rejects the application.

The binder will cease 30 days from the date of application if no other action occurs.

All of the following statements concerning coinsurance are true EXCEPT The coinsurance formula will also be applied to total losses. It is used to help adequacy and equity in rates. The insured agrees to maintain insurance equal to some specified percentage of the value of the property. If the insurance carried is less than required, the insurance may not cover the whole loss.

The coinsurance formula will also be applied to total losses.

When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays The amount specified in the policy under the additional coverage provisions. The amount in excess of the policy's limits of liability. A percentage of the loss as described on the declarations. The excess over the self-insured retention.

The excess over the self-insured retention.

A homeowner sells his house to a friend. The friend wants to keep the homeowner's current policy in effect. Under the assignment provision, which of the following is most likely? The policy will have to be cancelled. The homeowner should let the friend take over the premium payments. The friend will have to apply for coinsurance from another insurance company. The homeowner will need to get written consent from the insurer before the policy can be reassigned.

The homeowner will need to get written consent from the insurer before the policy can be reassigned.

Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy? The insured's friend is injured in an accident while riding as a passenger in the insured's car. The insured's mother is injured while exiting from the insured vehicle. The insured is struck by another vehicle while crossing the street. The insured is injured while driving his motorcycle on his resident premises.

The insured is injured while driving his motorcycle on his resident premises.

Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? The insured would have to pay the self-insured retention limit. The insured would be responsible for the amount required as underlying limits in the event of a claim. It would have no effect on the umbrella policy. The policy will be cancelled.

The insured would be responsible for the amount required as underlying limits in the event of a claim.

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

The insured's boatowners policy

Legal liability is when a person is considered liable for damages according to The injured party. The law. The insured. The insurance company.

The law

All of the following are eligibility requirements for the FAIR Plan EXCEPT The insured must have been unable to secure coverage in the normal market. The property must be located in a specifically defined area. The property must be located in a riot-prone area. It must be an insurable risk.

The property must be located in a riot-prone area.

When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be An intervening cause. The proximate cause. The direct cause. Strict liability.

The proximate cause

For the purpose of insurance, risk is defined as An event that increases the amount of loss. The uncertainty or chance of loss. The certainty of loss. The cause of loss.

The uncertainty or chance of loss.

Which of the following best expresses the purpose of a stated value contract? To pre-establish the amount of coverage available for property items that are difficult to value To ensure that the principle of indemnification applies To establish the value of property subject to loss by theft or robbery To provide a maximum limit for which the insurance company may become liable in casualty losses

To pre-establish the amount of coverage available for property items that are difficult to value

How much coverage can be available for watercraft damage in the homeowners policy? Unlimited amount No more than $1,000 Homeowners policies do not cover watercraft. Up to $1,500

Up to $1,500

All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT Premiums on appeal bonds in any suit the insurer defends. Up to $250 for bail bonds required because of a covered accident. Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. Up to $200 a day for loss of earnings due to attendance at hearings or trials.

Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident.

All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. Up to $200 a day for loss of earnings due to attendance at hearings or trials. Premiums on appeal bonds in any suit the insurer defends. Up to $250 for bail bonds required because of a covered accident.

Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident.

After a hearing, the Commissioner establishes that a producer was aware that he was asserting false information about the company he represents. What can the producer expect as a penalty? Loss of all commissions during the period of negligence A penalty of up to $1,000 for each violation, up to an aggregate penalty of $10,000 for all related acts A flat penalty of $500 Up to $5,000 for each violation, up to an aggregate penalty of $100,000 for acts committed within any 6-month period

Up to $5,000 for each violation, up to an aggregate penalty of $100,000 for acts committed within any 6-month period

All of the following are considered parts of the policy structure EXCEPT Conditions. Provisions. Exclusions. Insuring clause.

provisions