Pennsylvania Public Adjuster Examination--Series 16-19 Set 1
An equipment dealers coverage form is designed to provide insurance on: A. Equipment owned by the insured dealer. B. Equipment in the insured's custody for servicing or storage. C. Equipment entrusted to the insured dealer for sale. D. All of the responses are correct.
D. All of the risks listed may be covered.
The crew of a ship is guilty of fraud with the intention of reaping gains at the expense of the owner. In ocean marine coverage, what is this called? A. Perils of the sea B. Jettison C. General average D. Barratry
D. Barratry means fraud by the master or the crew with the intention of reaping gains at the expense of the owner. Examples include setting the ship on fire, diverting the ship from its course, or embezzlement of the cargo.
Under the Terrorism Risk Insurance Program Reauthorization Act of 2015, the maximum limit for the Act for total claims paid under the Act by either private insurers or the government is still limited to: A. $50 billion B. $200 billion C. $75 billion D. $100 billion
D. Even though the Act was amended and extended, the maximum limit for all claims paid by either private insurers or the government is still $100 billion dollars in any one year.
The standard deductible for each coverage under the "emergency flood program" is:
The standard deductible for the emergency program is $2,000. Both building and contents coverages have a deductible.
A claim has occurred and the statute of limitation is about to expire. The law requires that first party claimants be given a _____ day notice and third party claimants must be given a _____ day notice.
A first party claimant must be given a 30 day notice and a third party claimant must be given a 60 day notice of the expiration of the statute of limitations.
Under an ISO standardized Businessowners policy, which of the following is NOT automatically covered under the policy? A. Hired and Non-owned Automobile coverage B. Loss of earnings after a covered fire C. Limited Sign coverage D. Replacement cost settlement on building losses
A. "Hired and Non-owned Automobile" coverage must be added by endorsement.
The maximum obligation of the Pennsylvania Insurance Guaranty Association for a covered loss is: A. $300,000 per claimant B. $500,000 per claimant C. $250,000 per claimant D. $100,000 per claimant
A. $300,000 per claimant, This limit has been adopted in most states including Pennsylvania.
Copies of any and all advertisements in Pennsylvania by an insurer must be retained by the insurer and available to the Insurance Department for a period of: A. 4 years. B. 2 years. C. 3 years. D. 5 years.
A. All advertisements must be kept by the insurer for four years or until the next regularly scheduled statutory exam whichever occurs first.
I. Both DP-2 and DP-3 settle losses to covered personal property at actual cash value (ACV). II. Both DP-2 and DP-3 settle partial losses to covered dwellings at replacement value in all situations. A. I only B. II only C. Both I and II D. Neither I nor II
A. Both DP-2 and DP-3 cover partial dwelling losses at replacement value only if adequate insurance to value is in force. (Adequate insurance to value must be 80% or more of the replacement cost value of the structures.)
How many days does the Pennsylvania Insurance Code provide for an insurer to respond to an inquiry by the Insurance Department? A. 15 working days. B. 10 days. C. 10 working days. D. 15 days.
A. By regulation, the Commissioner requires a prompt response from insurers to inquiries made by the Insurance Department, and 15 working days is considered prompt and reasonable.
Which of the following "home businesses" are not eligible for the home business insurance endorsement to a homeowner policy? A. A corporation B. An accountant's office C. A craft school D. An acceptable business that generates less than $250,000 in receipts
A. The form may not be used to cover the exposures of corporations. It is used to cover a variety of home businesses which must be owned by the named insured, or by a partnership, joint venture, or organization comprised solely of the named insured and resident relatives.
Vandalism and malicious mischief (V&MM) covers: A. Intentional acts. B. Damage to a wall caused by a burglar stealing a painting. C. Unintentional acts. D. All of the perils included in extended coverage.
A. V&MM covers loss caused by intentional and malicious damage to insured property. Vandalism or malicious mischief does not include loss by pilferage, theft, burglary or larceny.
Common and Contract Carriers Liability that covers damage to cargo, may be insured under: A. Means of transportation forms. B. Motor truck cargo forms. C. Transit forms. D. Equipment dealer's forms.
B. Motor truck cargo forms are used to cover common and contract carriers against damage to the property being transported.
Which of the following is subsidized by the federal government? A. Crop hail coverage B. Multi peril coverage C. Both D. Neither
B. Multi peril coverage
Which of the following statements correctly applies to a named perils policy? A. Only the perils described in the declarations are covered. B. All direct damage to property is covered, unless the policy specifically excludes the peril. C. Only the perils listed by name are covered under the policy. D. All indirect damage to property is covered.
C. Only the perils listed by name are covered under the policy.
Under the farm forms, theft of certain types of property has a theft coverage limitation. The theft limitation on firearms and other related equipment is: A. $1,500. B. $500. C. $3,000. D. $5,000.
C. The theft limitation on firearms and other related equipment is $3,000.
Which of the following is a not a common exclusion in inland marine insurance? A. Earth movement B. Loss of use C. Unauthorized instructions D. Dishonest acts by the insured
A. Common exclusions in commercial inland marine include government action, nuclear hazard, war, loss of use and loss of market, dishonest acts by an insured or its employees, voluntary parting of property by false pretense, and unauthorized instructions to transfer property.
Under an Equipment Breakdown policy, all of the following are supplementary payments, EXCEPT: A. Expediting expenses. B. Defense costs. C. Interest on judgment. D. Premiums on appeal bonds.
A. Expediting expenses are covered in the limit of the coverage. The other items are part of the supplementary payments that are "in addition to" the policy limit.
Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following EXCEPT: A. Damage to or loss of another ship caused by a negligent collision. B. Injuries to seamen C. Cargo lost or damaged through negligence. D. Damage to piers.
A. Hull coverage is required to cover the damage to the ship. P&I provides legal liability coverage for injuries and certain types of damages. Damage to another ship is not covered under the P&I coverage. Coverage can be provided under the hull coverage form for this coverage to other vessels. This is called the "running down clause".
Protection and indemnity coverage contained in an ocean marine policy covers: I. Liability against injuries to seamen. II. Injury to stevedores, longshoreman and harbor workers. III. Cargo, if lost or damaged through negligence. A. I, II and III. B. I and II only. C. II and III only. D. I and III only.
A. I, II and III.
An interline endorsement used in a Commercial Package Policy (CPP): I. May be mandatory or optional. II. Is an endorsement that applies to more than one line of insurance. A. Both I and II B. I only C. II only D. Neither I nor II
A. Interline endorsements are used in the CPP to simplify coverages and conditions among many different forms. Many of the same policy conditions apply to the various coverage parts.
The Pennsylvania Insurance Commissioner will conduct an examination of each insurance company at least once every _____ or accept reports from other states on foreign or alien insurers. A. 5 years. B. 2 years. C. 3 years. D. 4 years.
A. Pennsylvania state law demands that each insurance carrier doing business in the state must be examined every 5 years or, as often as the Insurance Commissioner deems necessary to protect the welfare of the public.
The insured is covered under a BOP and sustains a direct loss to his building and contents. What is the period of time the policy provides coverage for the loss of income? A. The policy pays for up to twelve months after the loss. B. The policy pays for up to six months. C. The policy pays for up to eighteen months. D. Loss of income is not included and coverage must be added by endorsement.
A. The BOP automatically includes loss of income on an actual loss sustained basis for up to twelve months after the loss even if the policy was set to expire in the meantime.
Under the dwelling policy, what is the purpose of adding the EC (extended coverage) endorsement? A. It adds additional perils to the coverage. B. It adds broad form perils to the policy. C. It adds open peril coverage to the policy. D. It limits coverage.
A. The EC endorsement is added to the DP-1 form to add additional perils.
Under a dwelling broad or special form, what is the maximum that would be paid for "loss of use" if Coverage A was $60,000? A. $12,000 B. $2,500 C. $6,000 D. $5,000
A. The forms provides 20% of Coverage A for fair rental value and additional living expense under the DP-2 and DP-3. Therefore, the correct response is $12,000 ($60,000 X 20% = $12,000).
John has commercial property coverage written on a value reporting form. The maximum limit of coverage for inventory values is $150,000. The insured has reported an inventory value of $75,000 when the actual value was $100,000. A $20,000 loss occurs. The insurer will pay: A. $15,000. B. $10,000. C. $20,000. D. $13,333.
A. The insured is required to carry a 100% coinsurance clause when the reporting form method is used. The insured is also required to report 100% of the actual inventory values. This insured reported less than the actual inventory by 25% and will only receive 75% of a partial loss or $15,000.
Which of the following statements is correct regarding the responsibilities of the insurance company when paying liability claims? A. The insurer may refuse to pay the cost to defend or settle a claim if the type of loss is not covered by the policy. B. The insurer must defend or settle all claims brought against the insured during the policy period. C. The insurer must defend or settle all claims brought against the insured for up to five years beyond the policy period. D. The insurer may refuse to defend or settle a claim until the court establishes legal liability.
A. The insurer is not required to defend or cover claims made against the insured that are not covered by the policy.
How much additional coverage under a Commercial Property Policy is provided for debris removal? Answer Choices: A. The policy will pay an additional limit of $25,000 B. The insured can only rely on the total limit of the property covered C. The insured can only rely on 25% of the covered property for debris removal expense D. The policy will pay an additional limit of $15,000
A. The policy provides for up to 25% of the limit of the property for debris removal. If this limit is not sufficient, the policy will pay an additional $25,000. (this was increased from $10,000)
The Commercial Building and Personal Property coverage form provides five extensions of coverage, but only if: A. An 80% or higher coinsurance percentage is shown on the Declarations page, and the property amount of coverage, based on that percentage, is purchased. B. The extensions are listed on the Declarations page of the policy, and an additional premium is paid. C. The coverage for buildings is written on a replacement cost basis. D. All coverages under the policy are written on a blanket basis.
A. The property must be insured for 80% of its value. The 5 extensions are: newly acquired or constructed property, personal effects and property of others, valuable papers and records, property off premises, and outdoor property.
Pennsylvania has a statue of limitations. If benefits have not been paid, an action for first party benefits must begin within _____ years from the date of an auto accident. A. Four. B. Three. C. Two. D. One.
A. The statute states that legal action must be instigated within four years of the accident.
A commercial building is insured for $150,000 and is worth $250,000. A $100,000 loss occurs. The policy contains an 80% coinsurance clause. How much will the insurer pay? A. $75,000 B. $100,000 C. $150,000 D. $250,000
A. To comply with the 80% coinsurance clause the insured should have carried $200,000 of coverage on the building. The insured is covered for 75% of what should have been carried and therefore, the insurer would pay $75,000.
Which of the following perils is covered by the Broad Form but is not covered by the Basic Form? A. Weight of ice and snow B. Vandalism C. Riot D. Sinkhole collapse
A. Weight of ice and snow
A tenant leases space in a building. The tenant's space is damaged by fire. When will the Commercial Property policy pay for the damage? A. When the owner of the building submits proof of loss for the damage B. If the tenant pays for the damage C. Will only pay if the lease agreement charges the tenant with the repairs D. Will not pay
A. When the owner of the building submits a proof of loss for the damage and the loss is paid.
A large tree has fallen into Paul's yard caused by wind. The claims service representative (CSR) advises Paul to call a contractor to remove the tree and send the bill to the insurance company. The bill is $1,200. However, the policy coverage for the debris removal of a tree that has fallen by wind, is only $500 unless the tree hits the house, which was not the case. What should the adjuster do? A. Pay only $500. B. Pay the $1,200. C. Pay the $1,200, but then explain the policy provisions and ask the insured to reimburse the insurer for the difference. D. Negotiate.
B. The consumer relied on the statements of the claims representative so the insurance company would be estopped from denying the claim. The insurer had already waived its right to deny full payment of the claim because of the statements of the claims representative. Therefore, the $1,200 should be paid.
The sprinkler leakage coverage of a Commercial Property form does not provide coverage for: A. Loss by water to another person's property. B. Damage to growing crops from malfunctioning sprinklers. C. Loss by water to insured property caused by leakage or breakage of automatic fire protection sprinklers. D. Damage to the building flooring.
B. The coverage does not apply to growing crops. Crop insurance is a separate line of insurance.
Which of the following would be eligible for coverage under a Businessowners policy? A. A family pub B. A funeral home C. An auto repair shop D. A credit union
B. There are many classes that are not eligible for coverage under a Businessowners policy. Businesses connected with automobiles, such as repair or service stations, dealerships, or parking lots or garages, are not eligible unless one of these is incidental to an eligible business. Bars and pubs are ineligible for coverage, as well as a credit union. A funeral home WOULD BE eligible.
Under a Businessowners policy, the "Hired Non-Owned" coverage endorsement would cover: A. The employer who uses his/her auto for personal use. B. Vehicles borrowed by the insured. C. The employee who uses his/her vehicle on personal business. D. The owner of a hired or non-owned vehicle.
B. This endorsement is used with the BOP when the insured does not carry Business Auto coverage. The "Hired Non-Owned" endorsement provides two coverages. The first covers the insured's legal liability for bodily injury or property damage that arises out of the maintenance, or use, of a hired auto by the insured or the insured's employees, in the course of the insured's business. The second purpose of this endorsement is to provide bodily injury or property damage that arises out of the use any non-owned auto in the insured's business by any person. This endorsement would not cover the employee personally when driving their own auto on either company or personal time.
How can the "property causes of loss" be changed under a BOP policy, from risks of "direct physical loss" to "named perils" coverage? A. State the named perils on the Declarations page of the policy. B. Attach the "named perils" form endorsement to the BOP policy. C. The property "causes of loss" cannot be changed under a BOP policy. D. Change the policy to a different ISO Businessowners Coverage form.
B. To change the property coverage under the Businessowners policy from risks of "direct physical loss" to "named perils" coverage, the named perils endorsement must be attached to the policy.
The federal crop program that covers the revenue of the entire farm as opposed to a specific crop is called: A. Group Risk Income Protection B. Crop Revenue Coverage C. Adjusted Gross Revenue D. Income Protection Plan
C. Group Risk involves the average county revenue. Crop revenue compares the early market price of the crop to the harvest price and Income protection involves a combination of both low harvest prices and low yield. All of those can be tied to a specific crop depending on the farm. Adjusted Gross revenue insures the revenue of the entire farm as opposed to a specific crop.
A non-waiver agreement would allow the insurance company to do which of the following? A. Hire an attorney to protect its rights B. Decline to investigate the claim due to policy exclusions C. Investigate the loss without verifying that the loss is covered D. Hire a public adjuster to provide a second opinion
C. Insurers can use a non-waiver agreement when there is a question about coverage or limits. In such a signed agreement, the claimant/policyholder stipulates and acknowledges that the insurer's continued investigation into and the adjustment of the loss is not to be construed as an admission of coverage by the insurer.
The insured is transporting his yacht on its trailer and pulling it with his truck. The trailer separates from the truck hitch and the boat strikes another vehicle. There is property damage and bodily injury to a third party. The yacht and trailer are a total loss. What coverage would apply under the yacht policy? A. All the damages would be covered B. Only the third party damages would be covered C. Only the damage to the yacht and trailer D. None of the damages are covered
C. The damage to the yacht and trailer would be covered. The bodily injury and property damage to a third party would be covered under an auto policy.
How is property covered under an unendorsed BOP form? A. Coverage is written on a named peril basis B. Coverage is written on a broad peril form C. Coverage is written on an open peril basis D. Coverage is written on a basic peril bases
C. The forms were revised to provide open peril coverage on buildings and contents. Coverage can be amended to named peril basic coverage by endorsement.
All licensees are required to notify the insurance department of any change in address within ____ of such change. A. 10 days B. 45 days C. 30 days D. 6 months
C. The licensee must advise the insurance department within 30 days of the change.
Which of the following coverages are available in the ISO Equipment Breakdown protection coverage form? A. Expediting Expenses B. Business Income and Extra Expense or Extra Expense Only C. Spoilage Damage D. All of the responses are correct
D. All of the responses are correct. There are ten coverages available under the form. They include: property damage, expediting expenses, business income and extra expense or extra expense only, spoilage damage, utility interruption, newly acquired premises, ordinance or law coverage, errors and omissions coverage, brands and labels and contingent business income and extra expenses or extra expense only.
Under business income coverage, what coverage continues payment of income after the period of restoration is complete? A. Maximum period of Indemnification B. Extension of coverage C. Agreed value D. Extended Business Income
D. The coverage is called Extended Business Income and will allow for payment after the period of restoration is complete up to a maximum of 60 days. This is included in the form automatically. Coverage can be extended for a longer period by paying an additional premium.
Under the ISO standard Businessowners form, the building limit of insurance is $100,000 and the deductible is $1,000. The building loss amount is $110,000. Which of the following is the correct loss payment? A. $89,000 B. $110,000 C. $99,000 D. $100,000
D. The deductible is subtracted from the amount payable on the loss. The loss exceeded the limit of coverage, therefore the maximum payable for the loss would be the policy limit minus the deductible in this case. Had the loss been less than the limit of the policy, the deductible would still be subtracted from the amount payable on the loss.
