Property

Mark bought a small private airplane for $30,000. The aircraft was damaged by a severe windstorm while parked outside the hangar and is a total loss. Mark's hull coverage was written on an actual cash value basis and the limit of liability on the policy is $20,000. The actual cash value at the time of loss was $25,000. How much will the insurer pay Mark?

20,000

The liability coverage section of a homeowners policy excludes coverage for watercraft-related losses to all the following EXCEPT:

25-foot sailboat the insured borrows from a friend

To renew a Texas adjusters license, an adjuster must participate in a continuing education program that includes how many hours of continuing education (CE) within each reporting period?

30

Excelsior Insurance Company wrote premiums of $100 million last year and incurred expenses of $40 million in that same time period. What is this insurer's expense ratio?

40%

A claims-made commercial general liability (CGL) policy that is canceled by the insured automatically gets a basic extended reporting period (BERP), at no additional period, for how long after the policy is cancelled?

5 years

William works 20 hours every week as an accountant for a local store. During the 13 weeks preceding his disabling injury, the store paid him $3,900. For determining impairment income benefits, supplemental income benefits, lifetime income benefits, and death benefits, William's average weekly wage is $195.

600

Gertrude's television set was stolen from her home. She bought it five years ago, which is half the TV's expected 10-year lifespan. A similar TV costs $1,200 today. Using the actual cash value loss valuation method, how much will Gertrude recover for this loss?

600 less deductible

How do a hazard and a peril differ?

A hazard is a condition that increases the frequency and severity of loss while a peril is a cause of loss.

Abner and Benjamin are appraisers assigned to an insurance claim. They dispute the value of the claim and therefore select Cornell as umpire. The value of an item subject to the claim may be established by any of the following EXCEPT:

Benjamin does not believe the item is covered, and Cornell agrees with him.

Bill, who owns a businessowners policy, operates a small grocery shop in a rented building which has a large plate glass window in front. A windstorm damages the window. Will Bill's BOP cover the damage?

Bill's business personal property coverage under the BOP will cover the damage.

Which of the following statements regarding written and oral binders is correct?

Both types are legally binding, but a written binder is preferable because it reduces the likelihood of a dispute over terms.

A major storm struck the Rio Grande Valley. To accommodate the sudden increase in claims, Bluebonnet Insurance Company increases the number of catastrophe (CAT) adjusters it has available to assign to claims. If it recruits CAT adjusters from neighboring states, how may Bluebonnet comply with Texas licensing requirements?

CAT adjusters in Texas may qualify for an emergency adjuster license.

Samantha causes an auto accident. An injured party makes a claim against her for $30,000. She discovers that she has two concurrent policies that provide coverage. The limit of liability for Company A's policy is $50,000 while the limit of liability for Company B's policy is $100,000. How will the companies pay the claim?

Company A pays $10,000 and Company B pays $20,000.

A fire in a commercial building forces the owner to store office furniture and files away from the office. Will the owner's commercial property policy cover this personal property?

Coverage applies for up to 30 days at the new location.

What commercial crime endorsement provides coverage when an employee is held captive and forced to surrender money because of an immediate threat to his physical safety?

Extortion--Commercial Entities

Julian was unaware of any tornados in the Amarillo area occurring on the date Reggie claims his barn sustained windstorm damage. Therefore, when adjusting the loss, Julian did not examined Reggie's barn before denying the claim. Which statement is correct about Julian's conduct?

He denied the claim without conducting a reasonable investigation.

Minerva was injured in an auto accident. She makes a claim against the other driver's insurer, Bandera Insurance. Bandera assigns Kendall to adjust the claim. Minerva calls Kendall and leaves an angry message concerning her pending claim. What must Kendall do?

Immediately respond to the call

The garage policy is used to provide insurance to franchised and nonfranchised auto and trailer dealers. When compared to other types of insurance, the garage coverage form has a unique feature. What is it?

It combines coverage for general liability, auto liability, auto physical damage, and garagekeepers insurance in a single policy.

The manager at Don's Diner shut off the fire and burglar alarm after arriving at work because it developed a short and kept beeping. When the manager left for the night, he forgot to put the alarm back on. How did the Protective Safeguards endorsement on Don's Diner's BOP respond when the building was destroyed by a fire that night?

It excluded coverage for the fire loss.

Joe and Sandy have a homeowners policy. Their agent tells them that the liability section of the policy provides broad coverage if someone files a claim or lawsuit against them. However, which of the following situations would NOT be covered?

Joe gets into a fistfight with their neighbor Tom, who is injured

Matt's auto insurer denied a liability claim because the person seeking reimbursement is not an "insured" under Section A - Liability of Matt's auto policy. Which of the following submitted the claim?

Matt's roommate, after he totaled his own uninsured car

Under the liability coverage of a homeowners policy, which two types of coverage are considered goodwill coverage and do NOT require the legal liability of an insured?

Medical Payments to Others and Damage to Property of Others

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, due to the communicable disease exclusion in the homeowners policy

Which of the following correctly explains the difference between the stated amount loss valuation method and the agreed value method?

Policyowner may recover less than the listed amount under the stated amount method, and would recover the listed amount under the agreed value method.

A large private university wants to self-insure its workers compensation benefits. Which of the following is NOT something the university must do to qualify as a self-insurer?

Provide a list of all affected employees

Mr. and Mrs. Jones are each sued and submit claims under their homeowners policy. What liability condition states that coverage applies separately to each of them as insureds?

Severability of Insurance

Jean died following several months of medical treatment for her work-related injuries. Her death was directly attributable to those injuries. According to the Texas Workers Compensation Act, Jean and her survivors are eligible to receive several types of benefits. Which of the following is NOT one of those benefits?

Sustained benefit

Who is responsible for setting the rules that define when a Texas adjuster's license expires and must be renewed?

The Commissioner or any applicable provisions of Texas insurance law set license expiration and renewal rules.

Renee wanted to insure the accounts receivable records that she keeps in her office safe. Why would she not be permitted to insure them under a standard fire policy (SFP)?

The SFP excludes coverage for accounts and evidences of debt.

Conditions and restrictions on crime coverage under the Extortion--Commercial Entities (CR 04 03) endorsement include all of the following EXCEPT:

The captivity giving rise to the extortion threat must occur only within the U.S.

Which of the following correctly describes the coverage (if any) that is provided through a commercial property policy for an employee's personal computer that is brought to the company for business-related work?

The policy covers the personal property of others, such as employees, while the property is in the employer's care, custody, or control.

Arbitration is the submission of a dispute to one or more impartial persons for a final and binding decision. With regard to auto insurance, arbitration can be used to resolve disputes involving which coverage?

UM/UIM

Lloyd's Electronics never knows in advance what its inventory is going to be. Lloyd is hesitant to name a specific amount of coverage on his commercial property policy for fear that it will be too high or too low. What endorsement do you recommend to Lloyd?

Value Reporting Form

Sung is an adjuster who receives an auto liability claim from the insurer that employs him. Sung reads the insured's loss report, reviews the police report pertaining to the loss, interviews witnesses to the accident, determines that the parties' negligence caused the accident, and pays the claim. What important step in the process did Sung fail to carry out?

Verification of coverage

Darryl borrows formal dinnerware and glasses from his neighbor, Tanya, to use at a large party at his home. While Darryl and his guests participate in an enthusiastic line dance, he accidentally smashes several of Tanya's plates. Will Darryl's homeowners policy cover this loss to Tanya's property?

Yes, because the provision for Damage to Property of Others covers such loss.

The condo association to which Walt belongs assessed him $2,500 for fire damage to a party room collectively owned by the condo's residents. Each of the association members was assessed $2,500 to cover repair costs. Will Walt's unendorsed homeowners policy pay for his share of the loss assessment charged by the association?

Yes, his policy will pay, but only up to $1,000.

Star Enterprises rents office space and erects partitions and cabinets within the space. Although these are installed at Star's expense, it does not own them. The office sustains a fire and the cabinets and partitions are destroyed. Does Star's commercial property policy cover the loss?

Yes. They are covered as improvements and betterments.

Incent is a building carpenter. One of his customers has requested a document that shows evidence Vincent has liability insurance coverage in place. What type of document does Vincent need?

a certificate of insurance

Santiago is a Texas employer. If he does not want to self-insure his workers compensation benefits, he may obtain the required coverage from

a licensed insurance company.

Your client, Bob, needs to purchase insurance through the nonadmitted market and your agency doesn't represent any nonadmitted insurers. What type of insurance broker do you contact to help you place Bob's insurance?

a wholesale broker

When Mr. Huan's piano was damaged by vandals who broke into his house, the insurance company subtracted $200 for depreciation when it made its settlement offer. On what basis did the insurer value Mr. Huan's loss?

actual cash value

Jane's insurance policy contains a stated amount valuation provision. This provision states that she will receive the lowest of three amounts if her covered property is stolen or destroyed. Which of the following is NOT one of those three amounts?

an amount agreed upon by the insurer and Jane

Which of the following is an example of adverse selection?

an applicant whose business was recently burglarized deciding he had better buy some commercial crime insurance coverage

Which of the following persons would be considered legally competent to apply for an insurance policy?

an individual who is physically disabled

All of the following are commercial property conditions in a commercial property insurance policy EXCEPT:

arbitration

What is the name given to the insured party in an ocean marine policy?

assured

Why might Trent Manufacturing Co., which makes household furniture, need equipment breakdown insurance to cover losses to its mechanical and electrical equipment?

because such loss is excluded by commercial property insurance

The building and personal property coverage form of a commercial property policy includes what three categories of covered property?

building property, business personal property of the insured, and personal property of others

With respect to a commercial property policy, which of the following correctly describes the type(s) of property included in the term "building property"?

buildings and structures, indoor and outdoor fixtures, including signs attached to the building, and personal property used to service the building

All of the following are included on the declarations page of a commercial property insurance policy EXCEPT:

causes of loss

In ocean marine insurance, the term "freight" refers to which of the following?

charges assessed for carrying cargo

Which form of the commercial general liability (CGL) policy covers the insured for injuries or damages only if the policy is in force when the claim arises?

claims-made form

A standard commercial property policy is comprised of all of the following EXCEPT:

commercial general liability form

The Building and Personal Property Coverage Form of a commercial property policy covers all of the following EXCEPT:

company cars

Even if the cause of loss is covered, an insurance policy can stipulate that to be eligible for claim settlement a loss must be reported to the insurer within 20 days of the date of loss, because insurance policies are:

conditional contracts

In an auto insurance policy, the insurance company's promise to pay benefits in the event of a covered loss is legally known as:

consideration

A vessel owned by Del Mar Shipping was damaged during a storm. Adjusters have determined that the cost of salvaging the cargo is more than the value of the cargo. What type of loss did Del Mar Shipping suffer?

constructive total loss

A complete commercial property policy is made up of several separate forms, which include:

declarations, commercial property conditions, and one or more causes of loss forms

In accordance with the conditions of the liability section of a homeowners policy, all of the following are duties of the insured following an occurrence EXCEPT::

demonstrate goodwill by voluntarily making a personal payment to the claimant

Jackson Hardware has a basic property policy. Which of the following perils is NOT typically covered under such a policy?

earthquake

If an insurer repeatedly fails to exercise its right to cancel a policy due to a policyowner's chronically late payment of a premium, what legal principle would prevent the insurer from exercising that right later on?

estoppel

A storm at sea forces Davy Jones Freight Company to jettison some cargo to lighten the ship and keep it from sinking and losing the entire cargo. In ocean marine insurance, what provision determines how the loss to the cargo owners is treated?

general average clause

Which of the following is an example of risk reduction?

having fire extinguishers in place to limit the extent of a fire loss

Which of the following is an example of risk reduction??

having fire extinguishers in place to limit the extent of a fire loss

Because the Commissioner has decided to bring disciplinary action against Mark, a licensed claims adjuster, for violating the insurance code, the Commissioner may schedule a(n

hearing

What term on an aviation insurance policy refers to the aircraft's structure?

hull

What term is used when a loss victim is financially restored up to the amount of his or her loss?

indemnify

All of the following are covered by a personal umbrella policy EXCEPT:

injury covered under a workers compensation policy

All of the following are elements of negligence EXCEPT:

intent

The additional BOP coverage for loss from fungi, wet or dry rot, or bacteria that results from one of the specified causes of loss, applies to all of the following EXCEPT:

loss from fungi resulting from fire and lightning

All of the following are conditions under Section II - Liability of the homeowners policy EXCEPT:

loss to a pair or set

A personal articles floater will cover all the following golf equipment EXCEPT:

lost golf balls

Helen submitted an insurance application and premium deposit to TLS Insurance Company. In doing so, she has:

made an offer to the insurer

Sheila lives in New Mexico in a home constructed of adobe. What basic type of construction is her home?

masonry

Ed is injured in a fall on Mona's property. Which homeowners coverage, if any, is most appropriate to cover his claim against Mona?

medical payments to others

If two or more property or casualty policies covering the same loss exposure do not have identical policy periods, they are said to be:

nonconcurrent

State Bank has a financial institution bond with seven separate insuring agreements. Which of these agreements is the bank's only source of recovery for money and securities lost in a fire, windstorm, or explosion?

on-premises insuring agreement

Marcus intends to adjust both workers compensation and property/casualty claims in Texas. To do so, requires that he hold what type of a license(s)?

only an all lines adjuster's license

All of the following are causes of loss forms available on the commercial property policy EXCEPT:

open causes of loss form

Although the direct damage to a building caused by an explosion may be covered under a property insurance policy, what exclusion might rule out coverage for costs that are necessary to comply with current building codes?

ordinance or law exclusion

A container of gasoline stored in the basement next to the furnace is an example of a:

physical hazard

All of the following topics are covered in the common policy conditions form of a commercial property policy EXCEPT:

policy period

Shoveling snow and ice off an icy sidewalk is an example of what type of risk management technique?

prevention

The Union Theater had two property policies in place the day it was destroyed in a fire. How did coverage apply under the policies if each made claim payment in proportion to the limits of liability contained in the policies?

pro rata

Mr. Davidson does not own car insurance. If his car sustains a loss, he will pay for the damages and injuries himself. What method of handling risk has he chosen??

retention

A business setting up a self-insurance program is an example of which method of risk management?

risk retention

Julia and her family own a large manufacturing business. She convinced her family to set aside funds for a self-insurance program instead of buying a commercial insurance policy. This would be considered what form of risk management

risk retention

What is the term used in a property insurance policy to describe damaged property??

salvage

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 provision applies to pay for the cost of assistance from the tugboat company?

salvage clause

Unique characteristics and requirements of a particular risk sometimes make it unacceptable to insurance companies in the standard insurance market. These characteristics do NOT include:

strict adherence to rate and form regulations

Mark has arranged for ABC Insurance Company to financially guarantee that Quality Construction Co. will build an addition to Mark's house in accordance with the construction contract between Mark and Quality. This arrangement is called:

suretyship

Nimiroski Motors failed to use a reasonable degree of care in protecting the vehicles parked in its lot overnight. It failed to lock the gate to the fence and turn on the outdoor lights in the lot. As a result, Oscar's car was vandalized. He most likely claimed Nimiroski Motors was guilty of:

the tort of negligence

Which of the following would be covered under the property section of an unendorsed businessowners policy (BOP)?

theft of furs

All of the following are additional coverages provided under an unendorsed businessowners policy (BOP) EXCEPT:

trees, shrubs, and plants

Evelyn's furniture was lost in a fire at her business office. The fire was able to spread before fire personnel were able to respond because the fire alarm system was turned off. The insurance company denies her claim because Evelyn had assured the insurance company in writing that the alarm system would always be in operation and, therefore, she failed to honor her:

warranty

The conditions section of a property insurance policy describes:

when and where coverage applies

If Clark, the named insured, were to make a claim for fire damage under a standard fire policy (SFP), he would be required to provide a proof of loss. stating his knowledge and belief concerning all the following EXCEPT

where he was at the time of the fire