P&C Practice Exam

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

$115,000

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 third passenger. How much will the policy pay under medical payments coverage?

$14,000

If the actual values exceed the limit of insurance, the businessowners policy (BOP) contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by

25%.

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

A businessowner has a building and personal property policy that covers a shed in which he stores extra parts. If he buys a second shed for the same purposes, this will be automatically covered for how long?

30 days

Under the additional coverages of a BOP, property removed to protect it from loss will be covered at another location for up to

30 days.

Losses caused by vandalism and malicious mischief are excluded under a homeowners policy if the dwelling had been vacant for more than

60 days.

A tornado that destroys property would be an example of which of the following?

A peril

If cargo is damaged short of destination, Lloyd's agent at an intermediate port may agree to sell at best price, with settlement based on the difference between insured value and net proceeds of the sale. This is considered

A salvage loss.

When other insurance is written on the same basis as a commercial property policy, the obligation of the insurer is to cover

A share of the loss.

In the event of a loss covered by the policy, if the insurer requests a signed sworn proof of loss, the named insured is required to submit it within

A specified time.

The declarations page of the homeowners policy provides all of the following information EXCEPT

A statement that earthquake damage is not covered.

Which of the following would be considered an insured under a business auto coverage form?

Anyone while using, with permission, a covered auto owned by the named insured

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

Apply to injuries of any guests or visitors.

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

Automatically transfer to a legal representative.

A small trucking company stops transporting hay for area farmers and begins to haul hay for its own farm exclusively. In regard to the coverage on its trucks, which of the following is true?

Business auto coverage form may apply.

The difference in the contents coverage on an HO-3 and HO-5 is which of the following?

Contents are covered open peril on HO-5, and named peril on HO-3.

Which endorsement under the commercial auto policy provides the insured's employees additional protection while using a vehicle not owned, hired, or borrowed for the insured business?

Employees as insureds

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

Foundation

Replacement cost is defined as

Full replacement of property at its current cost, new and without reduction for depreciation.

In accordance with American Institute Hull Clauses, a pro rata return of premium will be given for all the following reasons EXCEPT

If the policy is cancelled by the insured.

A passenger in a friend's car is injured while getting into the car. Which of the following statements would apply if both the passenger and the driver had medical payments coverage under a personal auto policy?

The driver's policy will pay.

The abandonment provision in property insurance policies states that

The insured may not relinquish ownership of damaged property to claim a total loss, but must protect damaged property from further loss.

Which common policy condition prohibits the insured from changing the rights or duties as defined under the policy to any other person or entity without the written consent of the insurance company?

Transfer of rights and duties under the policy

A commercial auto coverage form that is designed for insureds engaged in the business of transporting goods for others is a

Truckers coverage form.

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

Unilateral

According to the principles of ocean marine insurance, an actual total loss may occur in all of the following situations EXCEPT

When cargo is misplaced.

The bankruptcy provision found in the personal auto policy states that bankruptcy of the insured

Will not relieve the insurer of its policy obligations.

Anyone who willfully violates a cease and desist order can be fined up to

$100 per day.

Bob's home is insured for $100,000 under a dwelling policy. Yesterday his home suffered $20,000 damage from a fire. Today the home was struck by lightning, starting another fire that completely destroyed the structure. Bob's policy will pay

$100,000

An insured has a standard HO-4 policy with a $30,000 limit of coverage for personal property. While he was traveling, a fire in his hotel destroys clothes and luggage with a replacement value of $10,000 and jewelry with a replacement value of $10,000. Disregarding any deductible, and assuming a depreciation of 20% has occurred in both properties, what amount is the insurer obligated to pay?

$16,000

The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period?

1 year

Under a businessowners policy, a loss of earnings is subject to

12-month time limit for business income.

What is the minimum age requirement for an insurance producer in this state?

18

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

Which of the following could be covered by an HO policy?

An oriental rug in an on-premises apartment

What type of bond guarantees that a construction contractor will enter into a contract at a set price?

Bid bond

Under farm liability, Coverage H includes

Bodily injury.

Which employee fidelity bond pays no more than its limit of liability for each separate occurrence no matter that several separately identifiable employees were involved in a single loss?

Commercial blanket position

A farmer is remodeling his 100-year-old farmhouse. He is in the process of painting the porch and hanging shutters. He keeps his ladder, paint, and other materials used to remodel his home under the porch. Which of the following provides coverage for his remodeling materials?

Coverage A

In a farm policy, which of the following coverages would reimburse the insured for loss of rental income following damage to the insured dwelling by an insured peril?

Coverage D

Which of the following would provide coverage for loss of income when an insured rental dwelling is rendered uninhabitable because of a covered loss?

Coverage D

With regards to a homeowners policy, which coverage provides for indirect or consequential losses?

Coverage D

Which of the following endorsements is used by individual business owners who use company vehicles for personal use rather than purchasing a personal vehicle?

Individual named insured

The Director must conduct an examination of each insurer in this state at least

Every 5 years or as often as deemed appropriate.

Which of the following statements would be an example of a product liability claim?

Faulty packaging of a cereal caused spoilage that resulted in someone getting sick.

The main difference between an HO-4 and an HO-6 is

HO-6 provides limited dwelling coverage as well as contents coverage.

The policy conditions define

How parties to the contract must act following a loss.

Which of the following terms describes the concept of disrupting the chain of events?

Intervening cause

All are true of the South Carolina Valued Policy law EXCEPT

It applies to both real and personal property.

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

Physical damage.

Which of the following is true regarding personal liability coverage?

It must be added as a supplement or written as a separate policy.

One advantage of claims-made liability forms from the insurer's point of view is that

It prevents stacking of limits.

Under the dwelling policy, Coverage C - Personal Property is

Limited to covering a servant's property while at the insured location.

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

Loss sustained form.

If an insurance company underwriter discovers that an applicant for a policy has been convicted of submitting a fraudulent claim to an insurer in the past, the application may be rejected as a

Moral hazard.

An insured has a personal property replacement cost endorsement under her homeowners policy. If an expensive painting and an antique chair are stolen from the insured's home, what will the insured receive on the claim under that endorsement?

Nothing

What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?

Other insurance

Which of the following liability exposures is most likely for a small specialty clothing retail boutique?

Premises liability exposure

What type of licensee represents the insurance company?

Producer

The Federal Fair Credit Reporting Act

Regulates consumer reports.

If the insured owns a watch valued at $10,000, full coverage can be provided on a homeowners policy by purchasing the

Scheduled personal property endorsement.

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?

Stated amount

The amount an insurer will pay under Coverage D (Loss of Use) depends on

The amount of coverage on the dwelling.

Surety bonds are written for a definite limit called

The bond penalty.

An insured is driving her auto and strikes a large pothole, causing a flat tire. Which coverage of the insured's personal auto policy will pay for the repair?

This loss is not covered