Property and Casualty Practice Exam 6
All of the following statements are TRUE of the terms used in the standard workers' compensation policy, EXCEPT:
"State" means any state of the United States, the District of Columbia, and all territories and possessions.
Blake is covered by a Homeowners policy with a $50,000 Coverage C limit. Disregarding any deductibles, what is the most Blake can collect if his $1,500 boat is stolen from the insured premises?
$1,500.
The additional coverage on the Building and Personal Property coverage of a Commercial Property policy for electronic data provides _________ for the cost of replacing and restoring electronic data that has been destroyed or corrupted by a covered cause of loss.
$2,500 in the aggregate.
the cancellation of a residential property policy in west virginia for non payment of premium requires a ___ notice to the insured
10 day
Wholesalers can be covered by the BOP if no more than _____ of their total floor area is open to the public.
25%
According to the Gramm-Leach-Bliley Act, Binders Keepers Insurance, Inc., who shares nonpublic private financial information with third parties, must provide their customers with all of the following, EXCEPT:
A "short-form" notice each time an insurance transaction is conducted with the customer.
In order to lawfully write insurance business in a state, an insurance company must hold:
A certificate of authority.
In which of the following scenarios would the Businessowners policy additional coverage for "Interruption of Computer Operations" pay for business income and the extra expenses incurred due to an interruption of computer operations that causes the business to close for a period of time?
A computer virus created by unknown hackers finds its way into the computer systems of Reilly's Rivispins, Inc. and shuts down and locks all the computers needed to run the business. Reilly's must shut down until the virus is removed and the system restored.
A defendant in a lawsuit has been found negligent. Due to this finding, the plaintiff has been awarded damages for pain and suffering. This means the plaintiff has received:
A general damage award.
Which of the following would be covered under a Homeowners policy for liability off the residence premises?
A golf cart used to play golf off the insured's premises.
Which of the following alleged cases of negligence is more likely to be valid?
A large oak tree in Wilbur's yard was struck by lightning. A limb was severed and remained suspended across two other limbs. Three months later, it fell and hit a neighbor's car. Wilber was sued for negligence.
All of the following would be eligible as "your covered auto" under a standard personal automobile policy, EXCEPT:
A motorcycle owned by the insured.
Sam the shopkeeper mops the floor of his store and forgets to set the "Caution: Wet Floor" sign in the area to warn his customers. Sarah walks through the store a few moments later, slips on the floor and injures her arm and leg. This is an example of:
A negligent tort.
Charlene states on an application for personal automobile insurance, that she has not been involved in any "at-fault" accidents within the past five years. The next day, Charlene later remembers an accident and corrects this statement to include an accident that occurred three years ago. Charlene's original statement can be described as:
A representation.
Coverage A of a Homeowners policy would cover all of the following, EXCEPT:
A storage shed connected to the dwelling by a utility line.
The Terrorism Risk Insurance Act and all of its extensions and reauthorizations is actually an agreement:
Between the Federal Government and insurance companies.
Entering into any agreement to commit, or by any concerted action committing, any act resulting in or tending to result in unreasonable restraint of the business of insurance is an example of:
Coercion.
On a standard BOP policy, all of the following items have a limitation on the coverage amount if the cause of loss is theft, EXCEPT:
Computers.
Which of the following terms would describe a situation where a building is not a total loss, but the cost to repair the building is greater than the value of the building?
Constructive total loss
Each of the following is true about Builders' Risk Coverage, EXCEPT:
Coverage terminates the day after construction is completed.
Each of the following is a comprehensive loss under the physical damage coverage of a Business Auto policy, EXCEPT:
Damage caused when the auto overturned on a sharp curve.
Which of the following is NOT one of the five types of general liability exposures?
Errors and Omissions
Which of the following is NOT found under Part A of Section II of the Business Auto policy?
Exclusions.
Monique's house is covered in brick veneer. Monique's house is which of the following types of construction?
Frame
The Crime policy insuring agreements "Inside the Premises - Theft of Money and Securities" covers loss of money and securities resulting from all of the following, EXCEPT:
Fraud
All of the following are covered under the Limited Fungi, Wet or Dry Rot, or Bacteria Coverage endorsement, EXCEPT:
Fungi that are in a product that is intended for consumption.
Bill was sued and the court determined that he was negligent. This means:
He failed to do what a reasonably prudent person would do in the same circumstance.
An insured carries a Personal Property Replacement Cost endorsement attached to his Homeowners policy and he has suffered a $2,000 loss to covered personal property. He submits a claim for actual cash value (ACV) at the time of the loss and notifies the insurer that he intends to make a claim for replacement cost later. The insurer will pay the replacement cost claim later if which of the following two conditions are met?
If the cost to repair or replace is more than $500 and the insured has already had the property repaired or replaced.
The attempt to restore an insured to his or her previous financial condition before a loss occurred is BEST described as:
Indemnification.
A legal term describing an intentional act that is illegal or morally wrong, and contributes to the injury of another person is:
Malfeasance.
Charles' wife Mary has a company car furnished to her through her job. One day, Charles runs out of the wax he is using to polish his boat and he decides to go out to the store and get more. Mary's company car is parked behind Charles' car in the driveway, so he grabs Mary's keys and drives her car to the store. On the way back home, Charles has an accident in which he is at fault, and bodily injury and property damage are the result. Which of the following statements is TRUE regarding how this claim will be settled?
Mary's company policy will pay first, and Charles' policy will also pay, but on an excess basis.
For a misrepresentation to void an insurance policy, it must be:
Material.
Which of the following statements is FALSE concerning coverage under the Business Auto policy?
Medical payments coverage is automatically provided.
Which of the following is NOT an intentional tort?
Negligence
All of the following sections are included on the Business and Personal Property coverage form, EXCEPT:
Perils Insured Against.
Sondra, who is covered under a Standard Fire policy, has a fire break out in her house. She begins moving all the property that she can, outside into the yard. After the fire department extinguishes the flames and things have calmed down on the scene, she discovers that some of her personal property that she moved to her lawn is missing. Which of the following statements is TRUE in this scenario?
Sondra's property will be covered because the peril of "removal" can result in theft or disappearance of property.
A risk where both profit and loss are possible is a ____________ risk.
Speculative.
Which of the following defenses against negligence imposes a time limit in which the plaintiff can file a lawsuit?
Statute of limitations.
When an insured's right to collect damages is transferred to the insurer, this is known as:
Subrogation
An insured has her property covered under an "open peril" cause of loss form. She experiences a loss. The burden of proof that the peril that was the actual cause of loss in the claim, lies with:
The insurance company.
Generally, liability insurance policies do not provide coverage for injury or damage caused to:
The insured
Underinsured motorist coverage provides first-party protection to an insured after an accident in which of the following situations?
The other driver has insufficient liability limits and is "at-fault".
Which of the following would be covered under the building coverage of an NFIP policy?
The plumbing system of the covered building.
All of the following are excluded under the 1943 Standard Fire policy, EXCEPT:
The theft of property after it had been removed from the insured premises to protect it from further loss.
The liability section of the Business Auto policy excludes coverage for pollution damage except in certain circumstances. Which of the following statements describe a circumstance where pollution would NOT be covered by the Business Auto policy?
When a covered truck leaks contaminating anti-freeze from its radiator because the radiator cap was accidentally left off.
An insured has her dwelling covered by an HO-3 form, with a $500,000 limit of liability for Coverage A. A fire breaks out and the dwelling is a total loss. The entire $500,000 limit is used to cover the direct physical damage to the dwelling. However, there is a large amount of debris from the burned structure covering the insured's property that will need to be removed. In this situation, how will the cost of the debris removal be paid?
When the entire Coverage A limit is used to cover the direct physical damage to the dwelling, an additional 5% of the Coverage A limit will be added to cover debris removal.
An insured has a vacation home covered under a Dwelling policy and he would like to add coverage to his policy for Personal Liability and Medical Payments. The insured purchased a Personal Liability Supplement with the minimum limits for Coverage M - Medical Payments. How much coverage for medical payments will the insured have for each person?
$1,000.
Stu carries the minimum financial responsibility limits required by the state of West Virginia for automobile liability coverage. When Stu has an "at-fault" accident, the maximum that will be paid for the bodily injury to the one person Stu injured in the accident is:
$25,000
How much coverage is provided by the "Accounts Receivable" coverage extension of the Businessowners policy for loss to accounts receivable records off-premises?
$5,000
Payment for a covered loss under the 1943 New York Standard Fire policy must be made within ______ days after a satisfactory proof of loss has been received by the insurer.
60
All of the following would be considered an "insured" on a Homeowners policy, EXCEPT:
A non-related tenant living in the insured residence.
Which of the following statements best describes the term "fiduciary".
A person who is entrusted with the assets of another.
The amount it would cost to repair or replace property minus depreciation, is the definition of:
Actual cash value
Loss to insured property caused by self-propelled missiles is covered under which of the following perils of the Homeowners form?
Aircraft.
When a standard Personal Umbrella policy has been in effect for less than 60 days, the insurer may terminate (cancel) the policy:
For any reason.
Which of the following would NOT be covered by the Commercial General Liability policy?
Liability that the insured assumes in a contract.
Mikela is walking from her car, across a dark parking lot, to her apartment one evening after work. Suddenly, a masked man jumps out from between two cars and holds a gun to Mikela's head. The man tells Mikela that he will kill her if she does not give him her purse. Mikela has just experienced a:
Robbery.
Happy Hills Hospital is covered by a "Hospital Professional Liability" policy. Which of the following "medical incidents" occurring on the premises of Happy Hills would be excluded from coverage under their professional liability policy?
Sue, a medical assistant at Happy Hills slips and falls on some water that a patient spilled. Sue's back is injured and she needs to have her medical expenses paid.
Jack, a West Virginia resident, has had his automobile liability insurance policy cancelled by his insurer for just cause. Jack must now:
Surrender the registration plate immediately to the DMV.
Which of the following Business Auto symbols would permit the insured to purchase both liability coverage and physical damage coverage?
Symbol 2.
The most widely used property and casualty insurance forms used in the United States today are published by:
The Insurance Services Office, Inc. (ISO).
Jerry is fishing from his 22-foot boat on Lake Norman when he is caught in a sudden hail storm. His boat suffers extensive hail damage. When he files a claim against his Homeowners policy, the most likely reason his claim is denied because:
The boat was not fully enclosed inside a building during the hail storm.
The West Virginia Insurance Commissioner is appointed by __________ with the advice and consent of __________.
The governor / state senate.
Under the DP-3 special form, which of the following would be covered?
Theft of outside lighting attached to the dwelling.
All of the following statements are TRUE with regard to punitive damages, EXCEPT:
They are awarded in such a high amount that the court will not award compensatory damages to the plaintiff because they are no longer necessary.
Aiden paid $500 for a new sofa that was destroyed by fire three years later. The sofa depreciated 10% each year after it was purchased and an identical replacement sofa costs $700 today. Disregarding any deductible, how much will Aiden's insurer pay for the sofa when the policy settles the loss at actual cash value?
$550 ACV = Replacement Cost ($700) - Depreciation ($150)
Which of the following is NOT usually considered a "custodian" under the Securities Deposited with Others endorsement to a Crime policy?
A licensed property and casualty broker.
A "dual capacity" claim in workers' compensation is filed:
Against an employer that was acting in a capacity "other than as an employer" at the time the injury occurred.
Larry owns and runs a political website that posts stories that are favorable to one political party and unfavorable to the other parties. Larry has a message board feature where he encourages his visitors to post their own negative opinions about the parties in which they do not agree. Many of these posts have gone beyond opinion and have sunk to the level of slander and Larry is sued. Larry's Commercial General Liability insurer will:
Deny coverage for defense costs and damages awarded by a court because the policy specifically excludes coverage for this exposure.
Torts that can be covered by insurance policies include all of the following, EXCEPT:
Intentional torts purposely committed to cause harm to another.
Which of the following statements is TRUE regarding the Terrorism Risk Insurance Program Reauthorization Act of 2019?
It extended the TRIPRA 2015 Act with only minor changes.
Using the modified comparative negligence standard, a plaintiff in a lawsuit who is 60% at fault for her injuries will receive:
No award.
Which of the following statements is TRUE regarding an Extended Reporting Period (ERP) of a CGL policy?
Once in effect, Extended Reporting Periods may not be cancelled.
Which of the following is NOT covered under the basic cause of loss form of a Commercial Property policy?
Smoke from industrial operations.
The contract between an insurance agent/producer and an insurance company is known as:
The appointment contract.
Which of the following insurance marketing or distribution systems includes agents that are hired as actual employees of the insurance company?
The direct writer system.
All of the following statements are TRUE of a Farm Liability policy with a Limited Farm Pollution Extension endorsement attached, EXCEPT:
The endorsement covers pollution clean up costs required by a government authority.
A named insured in a Personal Umbrella policy has died. Which of the following is true regarding how the policy will be "assigned" following the death?
The policy will continue to cover the spouse or any member of the deceased insured's household, but only while residing in the residence premises and only until the end of the policy period.
Patrice has received a reduced payment for her insurance claim and the explanation states that the reduction was due to the "obsolescence" of the damaged property. Which of the following best describes the reason for the reduction in the claims payment?
The property that was destroyed was obsolete.
A burglar apprehended in Smith's Jewelry Store by Mr. Smith, the owner, puts up a fight and suffers a broken jaw as a consequence. The burglar sues Smith's Jewelry Store for bodily injury. Will the store's CGL policy provide defense of the suit?
Yes. Although intentional, the injury was committed by Mr. Smith to protect himself and his property and is therefore covered.
Public Law 15 reserved which of the following insurance regulation functions for the federal government?
anti trust matters and fair labor standards
The standardized Homeowners forms provide coverage for Vandalism & Malicious Mischief only if the structure has not been vacant for:
60 or more consecutive days when the loss occurs.
No insurance binder in West Virginia may be valid beyond the issuance of the policy with respect to which it was given, and no agent or insurer may issue a binder covering a period in excess of _____ days from its effective date.
90
Which of the following BEST describes a tort?
An act causing harm to an innocent party for which a civil remedy is provided through the payment of monetary damages.
Under the provisions of the 1943 New York Standard Fire Policy, an insured may file a suit to recover for a loss, only if all of the required duties have been met and the period of limitation tolled is ________ from the date of the loss.
One year.
Insurable interest in property as defined by the West Virginia insurance code means having any of the following types of interests, EXCEPT
Probable interest
All of the following may be the subject of an investigative consumer report under the Fair Credit Reporting Act, EXCEPT:
Race.
Replacement cost value (RCV) coverage is best defined as:
Replacement cost without deduction for depreciation.
When the appraisal clause is used under the Standard Fire policy, the appraisers and the umpire are establishing:
The actual cash value (ACV) of the loss.
The Rhododendron Insurance agency is located in Beckley, West Virginia and is applying for a license as an insurance producer. The agency must provide all of the following, EXCEPT:
The amount of gross premium their actuaries are predicting they will produce each year in the state.
One of the Unfair Claim Settlement Practices is "failing to affirm or deny coverage of claims within a reasonable time after having completed its investigation related to such claim or claims". How is the length of time that is considered "reasonable" decided?
The state legislatures set the reasonable time period by statute.
All of the following are reasons the federal government encouraged private insurance carriers to participate in the WYO program, EXCEPT:
To provide federal government jobs to insurance agents who would be in charge of selling the WYO policies.
Wet marine and transportation insurance in West Virginia does NOT include:
Transportation solely over land.
Jason has his home covered by a Dwelling policy with Coverage C included. When he transports covered property temporarily off the premises, it is destroyed by fire. How much coverage does Jason have to cover his destroyed property?
10% of the Coverage C amount.
An insurer in West Virginia plans to nonrenew Kellie's automobile policy at its expiration date for a reason permitted by law. The insurer must provide Kellie with a _______ notice of nonrenewal.
45-day
A condition found in many insurance policies is known as "Transfer of Rights of Recovery Against Others to Us" actually refers to:
Subrogation.
Making distinctions in the premium rates charged for insurance between insureds or property having similar risk characteristics is an example of:
Unfair discrimination
All of the following are methods used by state Insurance Departments to protect the insurance consuming public, EXCEPT:
Writing new and expanded insurance laws.
Samantha, who is covered under a Standard Fire policy, has suffered a loss and submitted a claim. After the claim was paid, Samantha's insurance company has decided to take possession of the damaged property to sell it for its salvage value. The insurance company must provide Samantha with _______ notice.
30 days' notice.
Individual producers must maintain copies of continuing education course completion certificates listing the courses of instruction successfully completed, which has been executed by the organization sponsoring the courses, for a period of not less than:
4 years
