p and c state test part 1

Kim was stopped at a red light when she was rear-ended by Paige, who didn't have auto liability insurance. Kim's car sustained $3,000 in damages and she suffered $1,000 of bodily injury. Her uninsured motorists limits of liability are $15,000 per person for bodily injury and $30,000 per accident for bodily injury. How much will her UM coverage pay for her loss?

$1,000

Todd has a large gun collection and his wife, Tina, has several items of valuable jewelry. How does the homeowners policy limit coverage for these types of property?

$1,500 for jewelry; $2,500 for theft of firearms

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

Transportation expenses cover up to

$20 per day with a maximum of $600

Dave has a homeowners insurance policy. He keeps a considerable amount of cash and other valuables on him and around his home. What limitations, if any, apply to cash and securities?

$200 for money, $1,500 for securities

The Morgans rent a dwelling and buy standard flood insurance on their personal property. They improve the home by installing new cabinets and flooring in the kitchen. Their personal property coverage limit is $50,000. How much coverage would they have if the improvements they made were damaged by a covered peril?

$5,000

Insurers may not sell or provide underinsured motorist coverage in an amount less than

$50,000

What is the maximum amount an employer will pay for reasonable funeral expenses if an employee dies as a result of a work-related injury?

$7,500

A notice of cancellation of an automobile insurance policy is not effective unless mailed or delivered by the insurer to the named insured at least how many days before the effective date of cancellation?

20

Additional coverage for damage to property removed for safekeeping is included in an FP 00 40 form. If a building is endangered by a covered peril, the insurer will pay for loss to covered property damaged by any cause during its removal from the endangered building and for up to how many days after its removal?

30 days

Ethan buys a used car from a nonfranchised auto dealer. The dealer must pick up the car from another customer and transport it back to his dealership so he can deliver it to Ethan. A collision exclusion eliminates coverage for physical damage to the auto while it is being taken from the point of purchase to its destination if these points are more than how many miles apart?

50

The Gunderson family runs a small farm and has a farm insurance policy, which includes coverage for their dwelling. The farm policy would define their dwelling as all of the following EXCEPT:

A barn used to store farm equipment

What are the penalties for violating a cease and desist order issued by the Indiana Commissioner of Insurance?

A civil penalty and/or license suspension or revocation

Of the seven exclusions contained in the ISO liquor liability form, four are substantially the same as those found in the commercial general liability form. Which of the following is one of the three unique liquor liability exclusions?

Absence of a required license

Atlas Company has a business auto policy with symbol 1 designated for liability coverage. Which of the following types of vehicles would be covered under this symbol?

Any auto, including owned, non-owned, or hired autos.

Donovan's Supply Company is constructing an additional building to house its equipment and supplies. While the building is being constructed, Mr. Donovan wants assurances from his agent that the building, building materials and supplies, and temporary structures used to erect the building, are all covered. What type of insurance should he consider?

Builders risk coverage

ABC Insurance Company is able to predict its loss costs based upon data collected about prior losses and because its business expenses have been fairly predictable. ABC should therefore be able to estimate accurately the amount of money it will need to pay claims. What could significantly impact that estimated amount?

Catastrophic events

Mr. Bibeault is furious that his insurance company won't pay his claim. You explain that he must comply with certain provisions of the policy before the insurer must make payment. You tell Mr. Bibeault that his policy is what type of contract?

Conditional

Total Manufacturing, Inc. gets its materials from Material Supply Company. Material Supply suffers a boiler explosion that halts its mechanical equipment. As a result, Total must cease operations until Material Supply restores its equipment and resumes operations. Which coverage under Total's equipment breakdown policy will cover its loss of income?

Contingent business income and extra expense

The DP-3 Dwelling Form contains all of the following coverages EXCEPT:

Coverage A - Land

George is a sales representative and keeps much of his business equipment and merchandise in his home and in his car. He has a homeowners policy and wonders if it covers the business equipment. Which statement is correct?

Coverage for business property on the premises is limited to $2,500; away from the premises the limit is $1,500.

Vandalism and Malicious Mischief (VMM) is an optional coverage that can be added by endorsement to which policy?

DP-1

The garagekeepers exclusions preclude coverage for contractually assumed liability for all of the following EXCEPT:

Damage to customer's car caused by a fire while it was stored in a garage awaiting repairs

Edward is a contractor who is being sued for a construction-related bodily injury sustained by an independent subcontractor. When Edmund's insurer defends the suit, it may do all of the following EXCEPT:

Deposit the policy limits with the insured and walk away from any obligation to defend

Diane's agency agreement specifically gives her the authority to collect insurance premiums. This type of authority is called

Express authority

Seamus, a commercial banking specialist with Metro National Bank, conspires with one of his less solvent accounts to give it a loan and get a kickback from the account. What type of bond will Metro need to cover a loss it suffers from this transaction?

Financial institution bond

If the Hampton Insurance Company is organized under the laws of the District of Columbia, what is its classification in relation to Indiana?

Foreign insurer

Ann is injured when she trips and falls in Marilyn's home. Marilyn is not at fault, but Ann files a claim for medical payments against Marilyn because Ann is currently without health insurance. Under the medical payments section of Marilyn's homeowners policy, Ann must comply with certain duties. Which of the following is not one of these duties?

Give the insurer current financial statements and proof that she has no health insurance.

Broad form provides coverage for which of the following perils?

Glass breakage

A tenant who does not need to buy coverage for the dwelling itself but would like to cover his own personal property should obtain which type of homeowners policy?

HO-4

HO-2, HO-3, HO-4, HO-5, HO-6, and HO-8 are all types of homeowners policies. Which two sets of policies are not solely designed for owner-occupied dwellings?

HO-4 and HO-6

To obtain the broadest coverage available for an owner-occupied dwelling, the insured should purchase which type of homeowner's policy?

HO-5 comprehensive form

Alex sold an insurance policy before his license lapsed and earned a commission on the sale. Is he entitled to a commission if the policy is renewed?

He is entitled because he was licensed when the policy was sold.

The ordinance or law coverage endorsement does not cover which of the following losses?

Income lost during reconstruction or repairs

Abner owns a gas station. A contractor working on the site discovers that the ground water has been polluted, the result of leaks in Abner's underground petroleum storage tanks. The contractor wants the pollution cleaned up before he continues his work. Which statement is true about Abner's commercial general liability policy?

It does not cover underground storage tanks.

Your client, Warren, reports that his basement is filled with water because water beneath the surface of the ground seeped through foundation. He asks you to submit his claim to the insurer that writes his dwelling policy. How will the insurer respond to Warren's claim?

It will deny the claim under the water damage exclusion

Jordan, a local tax collector, uses tax receipts to buy a lake home. She is prosecuted for embezzling these funds and converting them her personal use. Although her official acts are guaranteed by a public official bond, what must happen before the bond will pay for the loss?

Jordan must be financially unable to pay a judgment against her.

Which of the following is not a common exclusion on a property insurance policy?

Lightning

Delilah's Diner hosts a party for its employees and their spouses. An employee gets drunk and gets into a fight with a co-worker's spouse. The spouse files a claim against the diner. What exclusion in Delilah's businessowners policy might preclude coverage?

Liquor liability

States obtained the principal right to regulate the business of insurance through the

McCarran Ferguson Act

Which type of insurance company pays dividends to its policyowners?

Mutual insurance company

Andrea's son was recently convicted of driving under the influence of alcohol. What endorsement does her auto insurance carrier want to add to her PAP in order to exclude coverage for her son when he's driving?

Named Driver Exclusion

Aurelio owns a pizza parlor and hires Blythe as a full-time waitress to serve pizza and alcoholic beverages. Aurelio verifies Blythe's age with her birth certificate and driver's license, both of which are fraudulent. If Blythe is injured on the job and files a workers' compensation claim, will Aurelio be fined for the illegal employment of a minor?

No, because he did not knowingly hire a minor in violation of the law.

Which of the following statements about a no-fault system is not true?

No-fault benefits compensate injured parties for pain and suffering.

Sanborn Supplies has a commercial property policy with a causes of loss broad form. In a hurry to deliver an order, a company driver strikes a corner of the warehouse, causing substantial damage to it. Will the company's commercial property policy cover the damage to the building?

No. Although vehicle damage is a covered cause of loss, coverage is excluded when the insured is at fault.

While a guest in Tanya's home, Mary contracts an infectious disease from Tanya's daughter. Mary files a claim against Tanya for medical expenses and medications. Will Tanya's homeowners policy cover the claim?

No. The communicable disease exclusion applies to any contagious disease.

While visiting her friend Kathy's home, Mary sustains a serious injury while playing. Kathy's parents are now obligated to fulfill certain duties under their homeowners policy. Which of the following is not one of these duties?

Notify the police of the accident immediately

Special forms coverage is coverage on a DP policy form that combines broad form perils with what other form of perils?

Open perils

The HO-8, also known as the modified coverage form, is designed to meet the needs of what type of insured?

Owners of a historic home whose replacement cost value exceeds the value of the home itself

Depending on the state, uninsured motorists coverage may apply to all of the following accidents EXCEPT:

Paxton, who was injured in a hit-and-run accident with an identifiable driver at fault

Ted owns a bicycle repair shop. A furnace explodes and damages work clothes, jewelry, and a cell phone. Where might Ted find coverage under his businessowners policy?

Personal effects under Coverage Extensions

While driving through a school zone, Melanie collides with a school bus full of children. Twenty children are rushed to area hospitals, some with severe injuries. Melanie's personal auto policy has a combined single limit of liability of $300,000, an amount that is clearly insufficient to pay for the potential claims. What additional insurance policy would Melanie need to pay for claims in excess of her PAP limits?

Personal umbrella liability policy

Which of the following would NOT be considered controlled business?

Producer Allen received commissions on insurance written on family members that equaled 15% of his or her aggregate commissions during a 12-month period.

The personal auto policy (PAP) provides loss settlement at the lesser of the actual cash value of the vehicle or the amount necessary to repair or replace the damaged property. How is 'actual cash value' defined?

Replacement cost minus depreciation

Mary is an editor for a fashion magazine who works from home. As she descends the stairs to the dining room for supper, she trips on a loose carpet and falls, breaking her arm. Which of the following statements is true about coverage for this injury?

She cannot recover under workers compensation.

Mac bought a new gas grill from a local department store. After cooking dinner, he turns off the gas to the grill. A little later the grill explodes and damages Mac's home. The cause is determined to be a defect in the grill. Mac's homeowners policy pays for the damage to the home and grill. Having paid Mac's claim, the insurer is likely to do what with respect to the grill's manufacturer?

Subrogate the claim to seek recovery from the manufacturer

Unusual Enterprise cannot obtain property and liability insurance through standard markets because it is considered a high risk business whose products are untested and unproven. Which of the following represents the best option for Unusual Enterprise to obtain insurance?

Surplus lines broker

When taking his examination for an insurance producer license, Tad used unauthorized material to assist him. He justified this on the basis that the materials would be available to him in a real life situation if he needed them, and he needed them now. Is this an acceptable practice?

Tad committed a prohibited act.

A home may not be eligible for coverage under a FAIR plan in most states because of all of the following EXCEPT:

The air-conditioning and heating system is obsolete.

The majority of insurance regulation in the United States falls to which of the following authorities?

The individual states

A driver of a motor vehicle is not required to file a certificate of compliance when

The vehicle is operated by a motor carrier.

Tom bought a tractor-trailer and operates as a carrier-for-hire. He transports cargo for several companies and is paid a fee for his services. Which type of commercial auto form would be most appropriate for his business?

Truckers policy or motor carrier policy

If an insurance producer misrepresents the terms, benefits, or advantages of an insurance policy he or she is selling, that producer has engaged in a(n)

Unfair method of competition

Coverage C - Personal Property provides coverage for the insured's personal property under what circumstance?

While on the covered premises

Gramercy Apartments suffered a significant amount of damage after a recent catastrophe. Fortunately, its property policy provided coverage. Which of the following events caused the damage?

a tornado

A pipe bursts in Martha's home and water damages the ceiling, walls, and floors as well as furniture and clothing. Although she is willing to accept the insurer's settlement offer for the ceiling, walls, and hardwood floors, she objects to the insurer taking into account depreciation of the furniture and clothing. The insurer can do this because losses to personal property are settled on what basis?

actual cash value

Proof of financial responsibility would NOT be in the form of a

certificate of authority

The chief accountant for Iroquois Ironworks asks their agent which causes of loss form under the commercial property policy is best. The agent explains that the special form provides the broadest coverage. In addition, the special form

covers most types of theft and is less subject to a denial of coverage

If Vera wants to know the limit of liability in her uninsured motorists coverage, what part of her personal auto policy (PAP) should she read?

declarations

For purposes of payment of permanent partial impairment (PPI) compensation, a physician's impairment rating is converted to a dollar award through the use of a(n)

degree system

Which hazard is defined as intentionally causing, fabricating, or exaggerating a loss?

moral hazard

Sara is the owner of a gift shop that was struggling to make enough money to cover its bills. Sara knew there were reports of robberies in the area but continued to leave the doors to the store unlocked after she would leave at night. Sara figured if her store was robbed she could collect the insurance money and pay off some debt. Sara's carelessness is an example of what type of hazard?

morale hazard

Jack takes his computer to Atlas Computer Repair to have it repaired. The computer is damaged while at the repair shop. Atlas tells Jack that his homeowners coverage will cover Atlas since Atlas is a third party beneficiary of the policy. What provision in Jack's homeowners policy will eliminate coverage in this situation?

no benefit to bailee clause

Tanya's two-year limited insurance license was last renewed two years ago. How many hours of approved continuing education must she complete before her next renewal?

none

The Common Policy Conditions section of the business owners coverage form is essentially the same as those conditions provisions found in

other commercial policies

There are three elements to a loss exposure. What can be defined as a cause of loss?

peril

There are four types of hazards that cause a loss. An insured failing to salt and shovel her sidewalk after a snowstorm presents what type of hazard?

physical hazard

Risks can be classified as pure or speculative. Which of the two, pure or speculative, is always undesirable?

pure

The Anniversary Rating Date endorsement on a workers' compensation policy informs the insured that all of the following may change on the anniversary rating date EXCEPT:

recovery rights

Ohio Barge Company operates a barge on the Ohio and Mississippi rivers. During a storm, the barge is blown against a bridge and severely damaged. The company hires a tugboat to rescue the barge. What ocean marine coverage applies to pay for the cost of assistance from the tugboat company?

salvage clause

An unendorsed DP-3 policy does not provide coverage for which of the following exposures?

theft

Which of the following perils insured against is not included on a DP-2 Broad Form?

theft

Because insurance companies and policyholders rely on the honesty and disclosures of the other party when negotiating the sale of insurance policies, what doctrine is said to apply to the insurance contract?

utmost good faith

The purchase of mine subsidence insurance is considered

voluntary