Personal Lines

Personal Jewelry Floater

Coverage is limited to 25% of the amount of insurance listed for that class of property, or $10,000, whichever is less.

Explosion

Property insurance policies exclude losses resulting from inherent vice, which would include all of the following perils, except:

A named peril basis

Property insurance policies that apply coverage only to perils that are stated in the policy are considered to be written on:

Lightning

Property policies will generally exclude all of the following perils from coverage, except:

Non-owned golf cart

Under a Personal Auto policy, which of the following vehicles is covered by liability coverage?

$140,000

A property purchased 10 years ago for $100,000 has a replacement value today of $200,000. It has depreciated 3% each year. What is today's actual cash value?

Building coverage for one building at a single location

A blanket limit of insurance could apply to any of the following risks, except:

A deductible

After a covered partial property loss, the insured must retain an amount of the loss, and that amount is subtracted from the insurer's claim payment. This amount is known as:

Pay the difference between the actual cash value of the property before and after the loss

After a partial loss to property that is included in a set, the insurer may:

A business with temporary custody of the insured property

All of the following may be listed as an insured on a property policy, except:

Computers

All of the following pieces of property are considered uninsurable on the standard fire policy, except:

The owner of clothing left in the care of a dry cleaner is called a bailee

All of the following statements regarding property insurance are correct, except:

The lost value of the single earring, plus the lost value of the earrings as a pair

An insured has a pair of pearl earrings insured by a property policy. One of the earrings is lost, and the loss is covered by the policy. The claim payment from the insured will equal:

No Benefit to Bailee

An insured puts $50,000 of covered inventory into storage, where the items are later damaged by a covered peril. What provision on the insured's property policy prevents the storage facility from collecting any payment from the insured's claim?

Keep the claim payment and surrender the returned property to the insurer

An insured's property is stolen, and the loss is covered by the insurer. A few weeks after the insured receives the claim payment, the stolen property is located and returned to the insured. The insured can:

$30,000

C's home has a replacement value of $125,000, and C insures the home for $75,000. A fire causes $40,000 in damages to C's home. If C's insurance policy requires C to insure the home for at least 80% of its replacement value, how much will the insurer pay for the loss?

Coinsurance

Casualty insurance policies may contain any of the following conditions, except:

What type of insurance is provided by the Terrorism Insurance Program established by TRIA?

Commercial property and casualty(TRIA, the Terrorism Risk Insurance Act, provides for a Terrorism Insurance Program. Only commercial property and casualty insurance is covered by the program; personal lines and life/health are not.)

Admitted

If Insurer ABC is authorized to do business in a particular state, it is said to be:

Articles Floater is used to insure individual items of personal property, which are listed (scheduled) on the policy. Coverage may be provided for different classes of property, including:

Jewelry Furs Cameras Musical instruments Silverware and goldware Golfer's equipment Fine arts Stamp collections Coin collections

Specific limit

K owns several buildings at different locations, with each building insured on a separate policy. Which of the following methods of writing insurance does this describe?

special form

The _______ (HO-3) offers open perils coverage for the dwelling and other structures, and named perils coverage for personal property.

Actual cash value may be defined as:

The cost to replace or repair property, minus depreciation

Open perils

When coverage applies to a property loss by any peril except those that are specifically excluded, the policy is written on which basis?

Special form coverage

Type of policy that provides coverage for direct physical loss subject to a list of exclusions. If a loss is not specifically excluded, coverage applies.

Assign the policy to another person with the insurer's permission

Under the Mortgage clause of a property policy, a mortgagee is given the right to do all of the following, except:

Unoccupied

What is the term for a dwelling that is uninhabited, but has household furniture inside?

The insurer pays the lesser the insured's reported value of the property and the property's actual cash value

When a property policy values property on a stated value basis, how would the insurer settle a total loss?

Agreed value

When property is difficult to replace or value, like fine art pieces, insurers will often use which valuation basis to settle covered losses?

At today's costs, without any deduction for depreciation

When property is valued on a replacement cost basis, losses will be paid

Umpire

When the insurance company and insured cannot agree on the amount of a property loss, the person selected to help the two hired appraisers is called a(n):

Residual market

Where can an insured find insurance coverage after being rejected by an insurer due to claims history?

Replacement cost minus depreciation

Which of the following is the best definition of actual cash value in property insurance?

The insurer has the right to take possession of damaged property after payment of a loss

Which of the following is true about the right of salvage?

Each policy pays its pro rata share of the loss

Which of the following statements best describes the Other Insurance condition on a standard property insurance policy, when two separate property policies provide coverage for the same loss?

Loss Settlement

Which property policy condition indicates which loss valuation method applies to covered property?

A spark that jumps from a fireplace and ignites a nearby rug would be deemed a hostile fire

Which statement about property insurance terminology is correct?

A split-limit policy must provide at least

$25,000 for bodily injury per person; $50,000 for bodily injury to 2 or more persons per accident; $15,000 for property damage per accident.

Part B - Medical Payments Coverage of a Personal Auto policy would cover medical expenses sutained by any insured while they occupy

:A vehicle used as a share-the-expense car pool is not considered a public or livery conveyance, and is therefore not excluded under the policy. Medical payments coverage is not provided for bodily injuries sustained while occupying a vehicle with fewer than 4 wheels, a vehicle used as a residence, or a vehicle furnished to an insured for their regular use (like a company car).

The named insured's resident family member injures someone in an accident while using a covered auto without the insured's permission

A Personal Auto policy's liability coverage would protect the insured in the event that:

60 Days

A Tennessee insurer must give an insured at least 20 days' written notice of cancellation if the automobile policy is an initial policy that has been in effect _____ days or more.

Gramm-Leach-Bliley Act (GLBA)

A U.S. law that requires banks and financial institutions to alert customers of their policies and practices in disclosing customer information.

lay-up warranty

A _______ applies when the insured boat is in storage, and it allows for a return of premium

per occurrence

A _______ deductible applies to hull losses.

Write Your Own (WYO) Program

A cooperative effort between FEMA and private insurers that allows private insurers to write, issue, and service flood insurance under their own names

The self-insured retention of a Personal Umbrella Liability policy is described as which of the following?

A method of cost-sharing

Fair Credit Reporting Act

Act that protects privacy of background information and ensures that information supplied is accurate.

Pay to the insured the remaining damages under underinsured motorists coverage

After an auto accident, an at-fault driver, C, owes damages to Q for bodily injury. If the amount of damages owed to Q exceeds C's liability limits, Q's Personal Auto policy will

A report can be changed by court action only

All of the following are true of the Fair Credit Reporting Act, except:

Reduction

An alarm system installed in a home is considered which of the following ways to manage risk?

Notice of Cancellation

An insurer must give an insured at least 20 days' written notice of cancellation if the policy is an initial policy that has been in effect 60 days or more. If the policy has been in effect for less than 60 days or if cancellation is due to nonpayment of premium, then at least 10 days' advance notice must be given. If a cancellation notice does not state the reason for cancellation, it must include that the insurer must state the reason for cancellation within 15 days, upon request.

The other driver's policy pays up to the $50,000 per person limit, and B's UIM coverage pays the remaining $40,000 owed to them.

B has a Personal Auto policy with 100/300/50 liability limits, a $5,000 medical payments limit, and underinsured motorists coverage of $50,000. After an accident for which the other driver is at fault, B is awarde $90,000 in damages for bodily injury. If the other driver's liability limits are 50/100/20, how much will B's policy pay?

Coverage A of a Mobile Home policy would cover all of the following, except:

Contents Coverage A - Mobile Home insures the mobile home itself and permanently installed property, including appliances, cabinets, and utility tanks. The contents, another term for personal property, are covered by Coverage C - Personal Property.

Coverage is provided for losses resulting from a quality of the property that causes it to destroy itself

Coverage provided by a standard property policy contains all of the following policy terms, except:

When the customer relationship is established and annually thereafter

Customers of an insurer must be provided with a notice of the insurer's privacy policies and practices regarding customers' nonpublic personal information at least:

Which federal entity administers the Terrorism Insurance Program created by TRIA?

Department of the Treasury

As Additional Coverages paid in addition to the limit of liability, the Umbrella policy will pay for:

Expenses incurred against an insured that relate to the defense Premiums on bonds and postjudgment interest Reasonable expenses incurred by the insured for assisting in the defense, up to $250 per day

the reporting agency must reinvestigate the facts and make changes as necessary.

If a consumer says that certain information is incorrect

Policyholders

If a mutual insurer has a surplus at the end of the year after paying all covered claims and operating expenses, the surplus may be returned as dividends to the company's

Loss to the covered auto's tires caused by road damage

If an insured has comprehensive physical damage coverage provided by their Personal Auto policy, the insurer would deny which of the following physical damage claims?

Coverage does not change and is provided as though the Homeowners policy was still in place

If an insured's Personal Umbrella Liability policy requires an underlying Homeowners policy and the Homeowners policy is cancelled, how does the Umbrella policy respond?

Insolvency Protection Limitation

If an insurer becomes insolvent within 1 year after an accident for which it represents the party at fault, the injured party's uninsured motorist coverage, if any, must cover any unpaid claims resulting from the accident.

Foreign

If an insurer is incorporated in Rhode Island, but primarily does business in New York, what type of insurer would it be considered in New York?

Retain the salvage of the property without notifying the insured

If an insurer recovers lost property for which it has already paid a claim to the insured, the insurer must do all of the following, except:

The Umbrella drops down to act as the primary policy

In which of the following circumstances would the insured be required to pay the self-insured retention of a Personal Umbrella Liability policy?

Pure risk

Insurance is designed to provide protection against which of the following?

Actuaries

Insurers often publish their standard rates in their manuals. These general rates are determined by

Personal Umbrella and Excess Liability Insurance Exclusions

Intentional injury, except for injury or damage resulting from the use of reasonable force to protect people or property Damage to property in the care, custody, or control of an insured Damage to the insured's own property Aircraft or hovercraft liability Liability resulting from the ownership or use of an auto while it is being used as a public or livery conveyance, or while engaging with a race, speed contest, or stunt activity Business pursuits Professional liability and directors and officers liability, which are commercial coverages with their own specialized policies. Liability for acts or omissions by an insured who is an officer or board member of a nonprofit is covered if the insured does not receive compensation. Discrimination Bodily injury covered by a Workers' Compensation, nonoccupational disability, or occupational disease law

Bodily injury or property damage to others

Liability coverage provided by a Personal Auto policy covers damages awarded against an insured for:

Damage to a private garage rented to the insured, caused by the insured's child driving a covered auto

Liability coverage provided by a Personal Auto policy would cover which of the following damages?

The basis for an insurance claim made by a policyholder is a:

Loss (A loss is a reduction, decrease, or disappearance in value that serves as the basis of an insurance claim. Risk is the uncertainty about whether or not a loss will occur, and a peril is what causes the loss.)

C's policy

M and C both have Personal Auto policies with liability limits of 20/30/10. If M borrows C's car and injures a pedestrian, causing injuries that will cost $5,000 to treat, which policy will provide coverage for the injured party?

$70,000

N has a Personal Auto policy with 30/60/15 limits. After an accident where N was at fault, $45,000 in damages is awarded against N for bodily injury to the other driver and $10,000 in damages is awarded against N for property damage to the other driver's car. N also incurred defense costs equal to $30,000. How much will N's insurer pay?

ABC Insurer

P is an agent for ABC Insurer, which has just issued an insurance policy to M. In this transaction, who is known as the principal?

A car used to carpool with colleagues

Part B - Medical Payments Coverage of a Personal Auto policy would cover medical expenses sutained by any insured while they occupy:

Funeral service expenses incurred by an insured

Part B of a Personal Auto policy would pay for which of the following expenses?

What is the term for a cause of loss, such as the theft of a car?

Peril

It provides an additional layer of liability insurance after the limits of underlying primary policies are exhausted due to paid claims It provides coverage on a broader basis than the primary policies, so that when a primary policy does not cover a claim, the Umbrella policy drops down to provide first-dollar coverage, as though it is a primary policy

Personal Umbrella Liability insurance, a type of excess coverage, has two main functions:

A pickup's bedliner

Physical damage to which of the following items is covered by an unendorsed Personal Auto policy?

An agreement between the insurance company and the reinsurer

Policyholder A's insurer is providing coverage on too many homes subject to wind losses. As a result, the company decides to reinsure those policies to share the high risk of wind loss. The reinsurance contract can best be described as which of the following?

The insured to maintain insurance equal to 80% of the building's replacement cost

Property policies with an 80% coinsurance requirement usually require:

Loss exposure

Purely by existing, a person may be injured or property may be damaged, even if the injury or damage does not occur. This condition is known as:

Voluntary Market

Risks insurance companies find acceptable within the framework of their rates

The insured cancels the policy mid-term

Short-rate cancellation occurs when:

Powers of the Commissioner

Supervising insurance companies and other licensed entities in the state Conduct investigations, issue subpoenas, examine witnesses Issue rules and regulations as necessary to enforce existing state insurance laws Promulgate notification and documentation processes for insurer's, producers, business entities

Payments for costs associated with investigating and resolving claims, such as premiums on appeal bonds

Supplementary payments are best described as:

$4,000

T has two Personal Auto policies applying to an auto. The policy through Company A has a limit of $25,000 per accident for property damage liability. The policy through Company B has a limit of $50,000 per accident for property damage liability. How much will Company B have to pay for a covered loss of $6,000 after T damages someone else's property?

Which of the following is an example of risk reduction?

Taking action to minimize the severity of a potential loss

30 days after the issuance or the order or receipt of the complaint

The Commissioner must provide a copy of any order and/or complaint filed against an individual under investigation no later than:

Mudflow

The NFIP defines flood as the inundation of normally-dry land resulting from overflow of tidal waters, rapid accumulation of surface waters, _______, and collapse of land along a shoreline due to unusual wave activity.

Comprehensive Form

The _______ (HO-5) offers open perils coverage for the dwelling, other structures, and personal property.

Modified Form

The _______ (HO-8) is for older buildings that are otherwise uninsurable on other Homeowners forms

A vehicle newly acquired by the named insured that has not been reported to the insurer

The definition of an uninsured motor vehicle under a standard Personal Auto policy does not include:

Law of Agency

The law that governs the relationship between a principal and his or her agent.

Mexico

The policy territory of an unendorsed Personal Auto policy includes all of the following, except:

Terrorism Risk Insurance Act (TRIA)

The terrorism Risk Insurance Act (TRIA) was first passed in 2002 and has been extended through 2014. The Act created a Federal Terrorism Insurance Program to administer a system of shared public/private compensation for insured losses resulting from acts of terrorism in order to protect consumers and create a transitional period for private insurance markets to stabilize. The Secretary of the Treasury oversees the program and has the authority to establish regulations and procedures to implement the program. Commercial policies must cover the peril of terrorism. The Act does not apply to personal lines policies.

Watercraft Insurance Exclusions

The watercraft is not covered if it is being rented to others, used as a public or livery conveyance, or hired for charter. Other exclusions include wear and tear, failure to maintain, scratching or denting, freezing or overheating, ice damage while afloat or laid-up, latent defect, mechanical or electrical breakdown, losses from an organized race or stunting activity, war, and confiscation by government.

The insured's kayak is stolen from a public beach while the insured is on vacation

Under a Homeowners policy, which of the following property losses to watercraft is NOT covered?

The policy limit is applied on a per occurrence basis, not per person

Under a Personal Auto policy, all of the following are correct about medical payments coverage, except:

Unpaid acts of the insured, who is acting as a board member of a nonprofit Personal Umbrella Liability policies exclude the insured's professional liability, including their liability when acting as a director or officer, because there are specific commercial liability policies designed to provide those coverages.

Under a Personal Umbrella Liability policy, coverage could be provided for liability arising out of:

No deductible applies to loss of contents

Under flood insurance provided by the National Flood Insurance Program, which of the following statements regarding flood insurance is NOT correct

Consequential loss

What is the correct term for a secondary loss that occurs as a result of a direct loss from a covered peril?

Theft of the insured's cell phone from the auto

When a Personal Auto policy includes OTC coverage, physical damage coverage will cover all of the following losses, except:

Agents may write flood insurance coverage with the NFIP, but may not bind coverage

When an applicant wants flood insurance, which of the following best describes the authority of agents?

The actuarial department

Which insurance company department determines the probability of loss and determines premium rates?

Loss Assessment

Which of the following Additional Coverages is NOT included on the Personal Liability Supplement attached to a Dwelling policy?

Paying claims without conducting a reasonable investigation

Which of the following choices is not considered an unfair claim settlement practice in Tennessee?

Covered instruments may not be played for pay during the policy term unless the insured selects a coverage option

Which of the following contract terms applies to the Musical Instruments Floater?

Members are provided insurance by the company

Which of the following is a characteristic of a mutual insurance company?

Implied authority

Which of the following is a type of authority producers have when they represent an insurer?

A stock insurance company is run by officers and directors and has a stated amount of capital stock owned by stockholders

Which of the following is true about a stock insurance company?

It has navigational limits that describe the area where the yacht is allowed to operate

Which of the following is true regarding the Yacht Policy?

A model airplane

Which of the following items of property is covered under the Homeowners policies?

Flood damage to a convertible when the top is left down

Which of the following losses could be covered under Part D of a Personal Auto policy?

The purpose of coinsurance is to have the insured retain part of the risk

Which of the following statements about a property policy is false?

Implied

Which type of producer authority is not spelled out in the contract, but is necessary for carrying out the producer's duties?

Personal Auto policies

Which type of standard policy includes coverage options that would not exclude damage by flood?

The insurer

Who do producers represent when transacting the business of insurance?

Coverage B

____ covers structures separated from the dwelling, not including those used strictly for business or rented to others as anything other than a private garage.

Coverage D

_____ covers indirect losses, such as additional living expenses and fair rental value.

Coverage C

_______ covers personal property worldwide.

Coverage A

_______ covers the dwelling on the residence premises, attached structures, and materials and supplies used to construct or repair the dwelling or other structures.

A peril

cause a loss to property, such as fire, hail, or theft.

Broad Form

covers personal property loss or damage specified in the policy

Limited Lines Producer

is a person authorized by the Commissioner to sell, solicit, or negotiate limited lines insurance

Subrogation

is not a risk management technique, but rather a means of collecting a loss payment from a liable party

Risk reduction

is one method of managing risk that involves reducing the severity or frequency of potential loss, without eliminating the risk exposure entirel

Risk transfer and risk avoidance

is the elimination of risk by not participating in activities that involve a chance of loss, are separate methods.

Complete 40 hours of prelicensing education

n order to apply for a license to sell life and health insurance in the state of Tennessee, an individual must:

Transfer of risk

nsurance is an example of which type of risk management technique?