Practice Exam

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Which of the following is defined as a covered cause of loss in businessowners property coverage?

leakage from fire-extinguishing equipment

Which of the following policy provisions would automatically broaden coverage under a policy without requiring additional premium?

liberalization

Which of the following coverages in dwelling and homeowners policies is for indirect losses?

loss of use

According to the standard mortgage clause, who has the right to bring a suit in their own name to recover damages, pay policy premiums, and submit a proof of loss?

mortgagee

Which of the following terms refers to other insurance that is written on the same risk, but not on the same coverage basis?

nonconcurrency

Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?

only written statements can considered fraud

An insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. Which type of limit of liability does this insured's policy have?

per occurrence

Which of the following liability coverages must be added by endorsement to a homeowners policy in order to apply?

personal injury

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

Section I of a boatowners policy covers

physical damage

While an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of the insured's auto policy would pay for the damage to the store?

property damage liability

What type of information would be found in a policy's insuring agreement?

renewal dates

All of the following are additional causes of loss included in the broad form of a commercial property policy EXCEPT

replacement cost

Who decided which property is "on the coast" and may be insured by the SCWHUA?

sc general assembly

Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called

specific coverage

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

All of the following businesses would need a financial institution bond, except:

stock broker

An insurance producer has not been appointed to an insurance company. Who is the producer considered to represent?

the client

A parking garage owner completed major renovations to a parking garage just prior to selling it to another company. Three months later, overhead concrete fell onto cars in the second floor level. Under the garage coverage policy conditions, which of the following is true?

the damage occurred when the concrete fell

Under the workers compensation system, who is responsible for the expenses resulting from work-related injuries and occupational diseases?

the employer, regardless of whether it was at fault for the injury or disease

All of the following statements concerning liability coverage are true EXCEPT

the policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met.

On a DP-3 Dwelling Property Special Form policy, the coverage provided for personal property is

the same as provided on the dp-2 broad forms

When a vehicle travels from one state to another, what happens to the limits of policy liability in a personal auto policy?

they do not change

In order to be eligible for coverage by the Workers Compensation Assigned Risk Pool in South Carolina, how many times must an applicant have been turned down in the voluntary market?

twice

In South Carolina, which of the following coverages would be considered an optional coverage with regards to a personal auto policy?

underinsured motorist coverage

In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for

uninsured coverage

An insured is a member of the neighborhood association, and has become liable for damage to a third party. Each member of the association has been assessed a portion of the loss equal to $2,000. How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay?

up to $1000

Once the Director issues a cease and desist order, how soon must an insurer comply with the order?

within 30 days

An insured suffers a windstorm loss in which the insured's driveway is blocked by two of the insured's trees and two of the neighbor's trees. The total amount of the removal adds up to the following: three trees at $300 per tree, and one tree at $600. How much will the insurer pay for the loss?

$1000

Which loss listed below would be fully covered by a homeowners policy?

$2,000 silver tea set stolen

What is the basic limit for costs incurred at the place a vehicle is disabled provided by the towing and labor costs endorsement?

$25

The insured's home is covered by an HO-3. Two years ago, the insured bought the home for $58,000. Today, its replacement value is $60,000. How much Coverage A does the insured need to qualify for replacement cost coverage?

$48,000 A house must be insured for at least 80% of its value on the date of loss to qualify for replacement coverage. In this example, 80% of $60,000 is $48,000.

Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?

$5,000

A large antenna is damaged when a tree branch hits an insured farm dwelling during a storm. Coverage A of a farm property coverage form would insure damages for this occurrence up to

1,000

The broad theft coverage endorsement on the dwelling form specifies all of the following limitations EXCEPT

1,000 on silverware.

If a company turns you down for automobile insurance, how many days do you have to file to have the action reviewed by the Director of Insurance?

15 days

A producer was issued a temporary license 30 days ago. How much longer can the license remain in effect?

150 days

Equipment breakdown coverage is written with a single limit of insurance per accident. What is the sublimit for hazardous substance cleanup or repair or replacement of contaminated property?

25,000

In South Carolina, every automobile insurance policy must include liability coverage with limits not less than

25,000/$50,000/$25,000

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 commercial property special form covers property in transit up to

5,000

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

60 days

In earthquake coverage provided by endorsement in a homeowners form, one or more earthquake shocks would be considered a single earthquake if they occur within what maximum time period?

72 hours

If the insurer nonrenews a homeowners policy during the hurricane season, how many days' notice must the insurer provide to the policyowner?

90 days

Which of the following is eligible for a businessowners policy?

A 6-story office building with less than 100,000 square feet total area

Which of the following would NOT be considered an insured under a homeowners policy?

A divorced spouse living in another state

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.

Which of the following definitions best defines the term "accident"?

A sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage neither expected nor intended

An uninsured motor vehicle includes all of the following EXCEPT

A vehicle being used for public livery.

The insured with a homeowners policy has had damage to his property caused by a volcano. Which of the following is true?

All volcanic eruptions within a 72-hour period will be considered one occurrence.

While an insured's covered auto is in the repair shop following damage caused by a collision, the insured would have coverage for which of the following vehicles under a personal auto policy?

Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair

All of the following are classes of inland marine risks EXCEPT

Common carrier cargo liability.

In which of the following sections of a commercial auto policy will you find specific information about the policy period?

Conditions

Which of the following risks is eligible for coverage under a businessowners policy?

Condos

What type of insurance can be obtained through a surplus lines insurer?

Coverage that is unavailable through authorized insurers

Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis?

DP-1

Which of the following is NOT covered under the Utility Services - Time Element endorsement?

Damage to the insured's property caused by utility service disruption

Employers Liability Coverage under a Workers Compensation Policy EXCLUDES all of the following EXCEPT

Damages claimed by third parties

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

What is another name for liquor liability insurance?

Dram shop insurance

All of the following are optional coverages that may be attached to an HO-3 policy EXCEPT

Dwelling replacement cost.

What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?

Experience modification factor

The authority granted to an agent through the agent's contract is referred to as

Express authority

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair crediting reporting act

Which endorsement adds coverage for employee use of automobiles in the insured's business and the insured's use of rented autos if no coverage is provided on a business auto policy?

Hired and nonowned auto liability

With regards to the personal auto policy, in the event of a claim or loss, the insured is required to do all of the following EXCEPT

Immediately report to an emergency room for medical examination.

The pro rata liability clause is designed to protect the principle of

Indemnity

In a dwelling policy, which of the following is true regarding personal liability coverage?

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

An insured's home is mortgaged by the local bank. The insured is required to carry insurance on the home, showing the bank as the mortgagee. If the home is damaged by a covered peril, which of the following is true?

Losses will be paid to the mortgagee and mortgagor as their interest appears.

An insured unintentionally accepted forged currency during the course of regular business. Which of the following crime coverages protects against such a loss?

Money orders and counterfeit paper currency

According to the standard mortgage clause, who has the right to bring a suit in their own name to recover damages, pay policy premiums, and submit a proof of loss?

Mortgagee

A business using its own trucks to move its own cargo would insure the cargo using

Motor truck cargo - owners form.

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

Must be informed of the source of the report.

A loss has occurred before the first report has been filed on a value reporting coverage form. Which is NOT true?

Never more than 75% of the loss is paid.

in order to transact insurance business in this state, an agency must meet all of the following requirements EXCEPT

Obtain an insurance agency license.

A plant worker for a chemicals manufacturer was recently diagnosed with a rare blood disease. She told her doctor that her job required her to handle industrial waste chemicals. Which of the following types of injuries is covered under the workers compensation policy?

Occupational disease caused or aggravated by a condition of employment

Where is the policy period stated?

On the declarations page of the policy

If an insured bakery is sued because its marketing states that the products of another bakery may not be safe, which coverage of a commercial general liability policy will defend the suit?

Personal and advertising injury liability

Which of the following perils is covered by the HO-2 and HO-3?

Sudden and accidental rupture of a heating system

How are surety bonds different from insurance?

Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses.

A producer was issued a temporary license 30 days ago. How much longer can the license remain in effect?

Symbol 9 - nonowned autos only

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

All of the following statements concerning coinsurance are true EXCEPT

The coinsurance formula will also be applied to total losses.

The contents coverage on a homeowners policy would pay how much after the loss of one of a pair of golden candlesticks?

The difference in the actual cash value as a pair and as a single

Negligence is defined as

The failure to do what a reasonable prudent person would do under given circumstances.

All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT

The injury or damage must occur within 90 days after the insured's work is completed.

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

Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT

The insurer does not have the right to inspect the insured's property and operations.

All of the following are true regarding physical damage coverage EXCEPT

The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle.

An insured's fire policy has been in force for over 120 days. For which of the following reasons may the insurer cancel the policy?

The producer photographed the wrong house; the insured's house would not pass underwriting standards.

A neighbor's tree has fallen into the insured's yard. The insured's homeowners policy will only pay to remove the tree if

The tree is blocking the driveway.

What is the business auto coverage territory for?

United States and its territories, Canada, or worldwide for private passenger hired autos

When would uninsured motorist coverage apply?

When the other party is legally liable but has no insurance

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

According to the Law of Agency, a principal is represented by a/an

agent

Employers liability insurance, Part Two of a standard workers compensation and employers liability (WC&EL) policy form, excludes

an intentional act that is caused by the insured

First aid costs for others injured on the insured's premises

are paid in addition to the liability limit

Which of the following defenses attests that if a person recognizes and understands that there is danger involved in an activity and voluntarily chooses to encounter it, he or she may be barred from seeking recovery for injuries due to negligence?

assumption of risk

If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy?

auto policy

Which bonds are issued to secure the release of a person from jail pending a courtroom appearance?

bail bonds

What types of business are excluded from a BOP?

banks, auto dealers, and bars

Under farm liability, Coverage H includes

bodily injury

Which of the following other coverages is NOT included in the basic form dwelling policy?

breakage of glass

Under the HO-4 and HO-6 homeowners policy forms, property is insured against

broad form perils

In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the

company

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?

conditional

An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it?

contractors equipment floater

Which of the following statements is NOT true regarding the Director of Insurance in this state?

director is elected for the term of 4 years

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

Expenses that an organization would not have incurred if business interruption had not existed are known as

extra expenses

All of the following are exclusions that apply in all three types of Dwelling Policies EXCEPT

fire or lightning

An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act?

fraud

The homeowners policy form that covers condominium unit owners is

ho-6

When would a misrepresentation on the insurance application be considered fraud?

if it is intentional and material

The pro rata liability clause is designed to protect the principle of

indemnity

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

indemnity

All of the following are factors in the determination of actual cash value EXCEPT

insurance premium paid

Which of the following is true regarding a risk retention group?

it is a liability insurance company owned by its members


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