Property & Casualty Quizz
Which of the following statements apply to Professional Liability policies? A.They cover the insured's liability arising out of rendering or failing to render services of a professional nature. B.They duplicate the coverage provided by the CGL policy. C.They are tailored to fit specific occupational needs. D.They cover most general liability and automobile liability losses.
A and C are correct. Liability arising out of rendering or failing to render services of a professional nature is excluded under CGL policies. Special Professional Liability policies have been developed for many professionals, such as physicians, lawyers, and insurance agents. Each policy is tailored to fit a specific occupational need.
Which of the following losses would be covered under the property coverage of a BOP? A.An insured moved inventory to another location to protect it from a tornado. Two days later, a sewer backup in the new location damaged that property. B.An explosion at the insured's business spewed toxic chemicals onto property belonging to another company. That company's owner sues the insured for the costs to clean up the chemicals. C.When a tornado damaged a nearby business, authorities closed off the area for one week to clean up the damage. The insured lost business income during that period. D.Because of negligence of an employee, an explosion on the insured's premises damages a nearby building.
A and C are correct. The Pollutant Cleanup and Removal additional coverage pays the costs to extract pollutants from the insured's premises, not property belonging to others. Damage to a nearby building might be the basis for a liability claim against the insured, but is not insured by the BOP property coverage.
In the homeowners forms, A.the property coverage varies in each form. B.the property coverage is the same in each form. C.the liability coverage varies in each form. D.the liability coverage is the same in each form.
A and D are correct. The liability coverage is identical in all of the homeowners forms. It is only the property coverage that varies with the homeowners form selected.
How do deductibles apply in the Equipment Breakdown Protection coverage form? A. Deductibles apply separately for each applicable coverage unless the deductibles are shown as "combined" for any two or more coverages. B. A single deductible applies to all applicable coverages. C. Deductibles are always stated as a specific dollar amount. D. There are no deductibles under this coverage.
A is correct. Deductibles apply separately for each applicable coverage unless the deductibles are shown as "combined" for any two or more coverages. Depending on the coverage, the deductible might be expressed as a dollar amount, a time limit, a percentage of loss, or a multiple of daily value.
The insured's business sustains $25,000 damage in a fire. The fire department that was called to the scene billed the insured $1,000. The business is insured under the Building and Personal Property coverage form for $500,000 with a $5,000 deductible. How much will the insurance company pay for this loss? A. $21,000 B. $20,000 C. $24,000 D. $26,000
A is correct. Fire department service charges are paid in addition to the limit of insurance, with no deductible.
A breakdown of equipment covered under the Equipment Breakdown Protection coverage form results in the simultaneous breakdown of three other pieces of covered equipment. According to the form, how many "breakdowns" occurred in this loss? A. One B. Two C. Three D. Four
A is correct. One breakdown means that if an initial breakdown causes other breakdowns, all are considered a single breakdown. All breakdowns at any one premises that manifest themselves at the same time and are the direct result of the same cause are considered "one breakdown."
What is the limit on Pollutant Cleanup and Removal coverage under the Business and Personal Property coverage form? A. $10,000 B. $20,000 C. $25,000 D. $50,000
A is correct. The policy will pay up to $10,000 for pollutant cleanup and removal if the pollution was caused by a covered peril.
Which of the following describes the principle of indemnity? A.After a loss, an insured should be restored to approximately the same condition that existed before the loss. B.Every insured will receive full compensation for all losses in all cases. C.When property is damaged or destroyed, the insurance company must pay the full replacement cost. D.In the case of bodily injuries, liability coverage must be available without regard to any policy exclusions.
A is correct. The principle of indemnity states that when a loss occurs, an individual should be restored to the approximate financial condition he or she was in before the loss.
Which of the following could not be covered under a Dwelling policy? A. A mobile home that is not permanently located B. A single family home that is under construction C. A three-unit townhouse D. A home that is rented to another person
A is correct. To be eligible, a mobile home must be permanently located.
Liability that an insured incurs because of the actions of others, such as employees, is called what? A. Vicarious liability B. Absolute liability C. Breach liability D. Proximate liability
A is correct. Vicarious liability is liability that a person or business incurs because of the actions of others, such as family members or employees
Under a CPP, how many days advance notice is required if the insurance company is cancelling the contract for nonpayment of premium? A. 10 days B. 21 days C. 30 days D. 60 days
A is correct. When a CPP is cancelled by the insurer for nonpayment of premium, it is required to give notice at least 10 days in advance. In all other cases of permitted cancellation by the insurer, it must give notice at least 30 days in advance.
What is the maximum amount of coverage that can be purchased for a single-family home under the emergency Flood insurance program? A.$35,000 for buildings and $10,000 for contents B.$250,000 for buildings and $100,000 for contents C.$100,000 for buildings; contents coverage is not available under the emergency program D.$100,000 for contents; building coverage is not available under the emergency program
A is correct. When the regular program goes into effect, additional coverage can be purchased: up to $250,000 for building coverage and up to $100,000 for contents.
Which of the following benefits are paid under workers compensation laws? A. Medical B. Rehabilitation C. Disability income D. Pain and suffering
A, B, and C are correct. Workers compensation laws pay benefits in four categories: disability/loss of income benefits, medical benefits, survivor/death benefits, and rehabilitation benefits. They do not pay benefits for pain and suffering.
Which of the following could be considered an uninsured motorist? A. Motorist who has less insurance than required by the state's financial responsibility law B. Driver whose insurance company is insolvent C. Motorist who has enough insurance to meet the state's financial responsibility law, but not enough to fully reimburse the insured for his or her injuries D. Unidentified hit-and-run driver
A, B, and D are correct. Choice C is an example of an underinsured motorist.
Which of the following may be covered under a Farm coverage part? A. Farm buildings, equipment, and livestock B. Liability arising out of farm operations C. Growing crops D. Farm dwelling and its personal property
A, B, and D are correct. Growing crops are not covered under a Farm coverage part.
Which of the following would be excluded under Coverage C of the CGL? Select all that apply. A.A shopper is injured in the insured's retail store when a box falls on him from an overhead shelf. B.The insured sponsors a foot race on the land surrounding his retail store. A participant is injured during the race. C.An individual hired by the insured to paint her business office falls off a ladder and is injured. D.One of the insured's employees is injured while on the job.
A, B, and D are the correct answers. Coverage C excludes injuries to the insured's employees and injuries that occur while participating in athletics.
Which of the following losses would be excluded under Part D of a Personal Auto policy? A. When the insured fails to pay his taxes, the IRS confiscates and sells his car. B. The insured's car is stolen on a cold winter day. The thieves run down the battery, and then abandon the car in a field. Before the car is discovered, the battery freezes and is ruined. C. The insured's cell phone that she sometimes carries in her car is damaged in a collision. D. Custom carpeting that the named insured added to his van is damaged in a flood.
A, C, and D are correct. Damage due to freezing is normally excluded under Part D. However, an exception is made when the damage results from the total theft of the auto.
Which of the following coverages are included in an unendorsed Garage coverage form? A. Garagekeepers B. Uninsured Motorists C. Liability D. Physical Damage
A, C, and D are correct. The Garage coverage form includes Liability, Garagekeepers, and Physical Damage coverage. Medical Payments, Uninsured Motorist, and Underinsured Motorists coverage may be added by endorsement.
Which of the following statements concerning Business Auto Liability coverage are correct? A. It covers BI or PD caused by an accident. B. It does not cover pollution losses. C. It only covers sums for which the insured is legally liable. D. The BI or PD must result from the ownership, maintenance, or use of a covered auto.
A, C, and D are correct. This coverage pays all sums an insured legally must pay as a covered pollution cost or expense to which the policy applies as long as certain conditions are met.
If Coverage C (personal property coverage) is written on a dwelling form, the Other Coverages section of the policy will extend the insurance to provide worldwide personal property coverage for an amount up to which of the following? A. 10% of the Coverage C limit B. 25% of the Coverage C limit C. 40% of the Coverage C limit D. 50% of the Coverage C limit
A. 10% of the Coverage Answer A is correct. In addition to the major coverages written, if personal property coverage is included, a dwelling policy will provide up to 10% of the Coverage C limit for personal property located anywhere in the world. This would include such things as clothing, personal effects, cameras, and luggage taken on vacation.
The written agency contract between an insurer and an agent constitutes the agent's A. Express authority. B. Implied authority. C. Assertive authority. D. Apparent authority.
A. Express authority. A is correct. The specific provisions of the written agency contract constitute the authority expressly given to the agent by the insurer.
Mobile home policies include which of the following? A. Include Liability coverage that is similar to Section II of the homeowners policy B. Might include collision coverage C. Cover the mobile home unit, but not its contents D. Do not cover additional living expenses
A. Include Liability coverage that is similar to Section II of the homeowners policy B. Might include collision coverage A and B are correct. Mobile home policies include coverage for contents and additional living expenses.
Which of the following would be included in an unendorsed Business Auto coverage policy? Select all that apply. A. Liability coverage B. Physical Damage coverage C. Uninsured Motorists coverage D. Medical Payments coverage
A. Liability coverage B. Physical Damage coverage A and B are correct. Uninsured Motorists and Medical Payments coverage are available only by endorsement.
Which of the following can be covered under the Physicians and Surgeons Equipment coverage form? Select all that apply. A. Medical instruments that are on the premises B. Dental instruments that are off the premises C. Radium D. All of the above
A. Medical instruments that are on the premises B. Dental instruments that are off the premises This form covers medical and dental instruments on and off the premises, furniture and fixtures at the office, and the insured's interest in improvements and betterments. Radium is not covered.
Under the business auto coverage part, each of the following is true about the classifications of covered autos, which are designated by numerical symbols shown in the declarations, except for which of the following?
An insured can select which vehicles are to be "covered autos" for each individual coverage. Different symbols can be used for various coverages and autos. With the exception of specifically described autos, autos acquired during the policy period are automatically covered.
Which of the following is not excluded under commercial general liability coverage for bodily injury and property damage liability? A.Injury or damage caused by the operation of mobile equipment B.Damage to property rented to the named insured C.An injury that is also covered by a workers compensation law D.Liability resulting from the accidental escape of pollutants
Answer A is correct. BI and PD coverage for the ownership, operation, or use of mobile equipment is covered by CGL policies. All of the other answer choices are specifically excluded.
To avoid problems with underinsurance and overinsurance, a business that has fluctuating inventory values during the year should consider coverage written on A. The value reporting form. B. A replacement cost basis. C. The business income form. D. A blanket basis.
Answer A is correct. The value reporting form is an endorsement specifically designed for businesses with fluctuating inventory values because of seasonal variations in business or shifting inventory between different locations. When this coverage applies, the insured must report values periodically, such as monthly, and the actual amount of insurance in effect will be adjusted accordingly. The final premium will be adjusted at the end of the policy year based on average values.
Claims-made general liability coverage does not apply to bodily injury or property damage that occurs when? A. On the policy's retroactive date B. Before the policy's retroactive date C. After the policy's retroactive date D. Before the effective date, if there is no retroactive date
Answer B is correct. A retroactive date on a claims-made liability policy marks the date on which coverage for reported claims begins. An occurrence on the retroactive date would be covered, but there would be no coverage for bodily injury or property damage that occurred prior to the retroactive date.
Claims that are paid by general liability coverage are charged against the aggregate policy limits and reduce the amount of insurance remaining to pay future claims. However, CGL aggregate limits will be reinstated in full A. If there are more than five claims during a policy period. B. On the next policy anniversary date. C. If the insured pays an extra premium for reinstatement. D. As soon as the aggregate is actually exhausted.
Answer B is correct. Claims paid under general liability coverage are charged against the applicable aggregate policy limits and reduce the amount of insurance remaining to pay future claims during the policy period, but they apply separately to each consecutive policy period and are reinstated on each policy anniversary date.
Under which type of marketing system do agents or agencies operate as independent businesses but agree to represent only one insurance company? A.Direct writer system B.Exclusive of captive agency system C.Direct response system D.Independent agency system
Answer B is correct. In the exclusive of captive agency system, the insurance company contracts with agencies, which are independent businesses, to represent and sell insurance only for that insurance company.
Which type of insurer consists of an unincorporated group of members who share losses and provide insurance to each other? A.Lloyd's Association B.Reciprocal exchange C.Mutual company D.Multi-line insurer
Answer B is correct. Reciprocal insurers consist of members who are unincorporated and collectively share losses and provide insurance to themselves. Lloyd's Associations are syndicates of insurance underwriters, and mutual and multi-line insurers are examples of traditional insurance companies.
Homeowners coverage for loss of personal property because of "mysterious disappearance" is provided by what? A. The special form (HO-3) only B. The broad and special forms (HO-2 and HO-3) only C. The comprehensive form (HO-5) only D. All homeowners forms
Answer C is correct. The comprehensive form (HO-5) is the only homeowners policy that insures loss of personal property items by what is known as "mysterious disappearance" because it covers loss by "theft, misplacing, or losing." The other policy forms only cover loss because of damage, destruction, or theft of property. The broad form (HO-2) covers only named perils, and mysterious disappearance is not one of them. The special form (H0-3) offers only broad form coverage for personal property.
The only significant difference between the occurrence and claims-made forms of general liability insurance is found in which of the following? A. The coverages provided by the policy B. The policy's exclusions C. The "trigger," or the way in which coverage is activated under the policy D. The policy's conditions
Answer C is correct. There are two primary CGL coverage forms: the occurrence form and the claims-made form. Although the two forms contain basically the same coverages, exclusions, and conditions, they only differ in how the coverage under the form is activated, or "triggered" for Coverages A and B.
What is the purpose of a retroactive date in the claims-made form? A.Extends the period of time in which a claim can be covered under the policy B.Stipulates a date as the first date on which an event can occur and be covered by the policy if a claim is filed C.Extends the policy period D.Stipulates a date after which any loss that occurs will not be covered
B. Stipulates a date as the first date on which an event can occur and be covered by the policy if a claim is filed The retroactive date provides some protection against losses that occurred before the claims-made form was written.
Which of the following would be eligible for a Personal Auto policy? A. McGuffin's Linen Service Company B. Nancy Hardwicke C. John and Suzette Oglesby, a married couple who live together D. Don Wilson's 16-wheel big rig, which he owns
B and C are correct. Choice A is not correct because the auto is owned by a business. Choice D is not correct because a PAP can only insure four-wheel vehicles.
An agreement between the insured and the insurer that certain conditions will be met is which of the following? A.Misrepresentation B.Warranty C.Estoppel D.Certificate of insurance
B is correct. A warranty becomes part of the policy. If it is breached, the insurer can void the policy.
What is meant by a contract of adhesion? A. Both parties are required to provide services for the other. B. One party draws up the contract provisions, and the other party adheres to the terms. C. The contract can be revoked by any party at any time for any reason. D. A contract that is formed without any consideration by either party.
B is correct. Insurance policies are contracts of adhesion because the insurance company drafts the policy provisions and the insured adheres to the policy terms.
Which of the following could be covered under the Liability section of a named insured's Personal Auto policy? A. Injuries a named insured receives in a car accident B. Injuries to a person struck by the named insured's auto C. Injuries to a member of the named insured's family who was a passenger in the named insured's car when it overturned D. Damage to personal property being transported when the car was involved in a collision
B is correct. Part ALiability coverage covers damages for bodily injury or property damage that an insured becomes legally responsible for because of an auto accident. Injuries to the named insured or his or her family members would be covered under Part BMedical Payments coverage. Loss of personal property of an insured is not a matter of legal liability, and is not covered.
What is the standard deductible under the regular program of the National Flood Insurance Program? A. $1,000 B. $500 C. $250 D. $100
B is correct. The standard deductible is $500 under the regular program and $1,000 under the emergency program. Higher deductibles are available.
Which one of the following answer choices lists all of the parties to a Surety bond? A. Principal and obligee B. Principal, obligee, surety C. Surety and obligee D. Principal and surety
B is correct. There are three parties to a Surety bond: the principal, the obligee, and the surety.
An insured has a DP-3 covering a home that has a replacement value of $100,000. The insured carries $60,000 of insurance. Following a loss, the determined is made that it would cost $12,000 to replace the damaged portion of the home. How much could the insured collect, assuming the ACV of the loss is $6,000? A. $12,000 B. $9,000 C. $6,000 D. Nothing
B is correct. To qualify for replacement cost coverage, the insured must carry insurance equal to 80% of the replacement cost of the building. Because the insured does not carry enough insurance, the loss will be paid at proportional replacement cost or ACV, whichever is larger. In this case, proportional replacement cost ($9,000) is larger than ACV ($6,000).
Which of the following classes of personal property are subject to special sublimits of coverage under a homeowners policy? A. Animals, birds, and fish B. Money C. Watercraft D. Trailers
B, C, and D are correct. Loss of animals, birds, and fish are excluded entirely. All the other answer choices are subject to special sublimits of liability.
Which of the following are excluded under Business Auto Liability coverage? A. Liability assumed under a contract that is considered an insured contract B. Damage to the insured's own auto C. Injury to employees covered by workers compensation laws D. Liability for property in the insured's custody
B, C, and D are correct. The exclusion for liability assumed under contract or agreement does not apply to contracts that meet the policy's definition of an insured contract.
Vanessa's Liability coverage has split limits of 100/300/50. How much coverage does Vanessa have for property damage liability? A. $5,000 B. $50,000 C. $100,000 D. $300,000
B. $50,000 B is correct. The last figure is the Property Damage limit.
Under the 1989 dwelling policy forms, if coverage for vandalism and malicious mischief is attached to a policy, it will be suspended whenever the building has been vacant for more than how many days? A. 45 consecutive days B. 30 consecutive days C. 20 consecutive days D. 10 consecutive days
B. 30 consecutive days If a dwelling policy includes the extended coverage (EC) perils, coverage for vandalism and malicious mischief (V&MM) may also be added. However, this coverage will not apply whenever the building has been vacant for more than 30 consecutive days.
Businessowners policies provide an additional coverage for preservation of property when it is removed from the premises to protect it from loss by a covered peril. The coverage will apply at other locations for up to A. 60 days B. 30 days C. 20 days D. 15 days
B. 30 days The preservation of property additional coverage under a businessowners policy covers direct physical loss or damage from any cause if the property has been removed to another location in order to protect it from loss by a covered peril. Coverage applies while the property is being moved and while it is temporarily stored at another location, but only for 30 days after the property is first moved.
Under the dwelling property forms, personal property moved to a new principal residence will be automatically covered at the new location (subject to policy expiration) for a period of how long? A. 60 days B. 30 days C. 20 days D. 10 days
B. 30 days. Answer B is correct. Coverage is provided for personal property moved from the described location to a new principal residence. This coverage applies only for 30 days and not beyond the policy expiration date.
An employer purchases a fidelity bond to protect against potential losses by employee dishonesty. In this situation, each of the employees covered by the bond is considered which of the following? A. A fiduciary B. A principal C. A guarantor D. An obligee
B. A principal Fidelity bonds are contracts between three parties. The employees who are required to act honestly are the principals. The surety or guarantor, which is usually an insurance company, agrees to be responsible for a loss if a principal violates the terms of the bond. The obligee, the employer, is the party who is being protected by the bond and who will be paid if a loss occurs.
Coverage for defense costs is included in which of the following? A. Computer Fraud coverage B. Forgery or Alteration coverage C. All of the Crime coverages D. None of the Crime coverages
B. Forgery or Alteration coverage B is correct. Under Forgery or Alteration coverage, if the insured is sued for refusing to pay a forged or altered instrument and obtains the insurer's written permission to defend the suit, the insurer will pay reasonable defense costs incurred by the insured.
Under the business auto coverage part, liability insurance applies to mobile equipment while which of the following occurs? A. It is being operated on public roads. B. It is being carried or towed by a covered auto. C. It is being operated away from the insured's premises and work sites. D. It is being used for the purpose for which it was designed
B. It is being carried or towed by a covered auto. Although mobile equipment exposures are usually covered by CGL insurance, it is covered by business auto insurance while being carried or towed by a covered auto because in such cases it is considered an extension of the covered auto
How often is the insured required to submit reports of values under the Floor Plan coverage form? A. Quarterly B. Monthly C. Annually D. Weekly
B. Monthly Coverage under the Floor Plan form is written on a reporting basis. The insured must file reports of values within 30 days after the end of each month.
Which of the following properties can be covered under the Film coverage form? Select all that apply. A. Positive prints B. Motion picture film C. Soundtrack D. Unused footage
B. Motion picture film C. Soundtrack The Film coverage form covers exposed motion picture film, soundtracks, videotapes, and magnetic tapes used in the production scheduled in the declarations and that the insured owns or has in his or her custody or control. It does not cover cutouts, unused footage, positive prints or films, or library stock.
Failure to use the care that is required to protect others from the unreasonable chance of harm is called what? A. Proximate cause B. Negligence C. A criminal act D. An intervening cause
B. Negligence B is correct. Negligence is the lack of reasonable care that is required to protect others from the unreasonable chance of harm.
A woman is injured when she breaks a tooth on a rock that mysteriously found its way into a box of cereal. This is an example of which of the following? A. Premises and operations exposure B. Products-completed operations exposure C. Contingent liability exposure D. Contractual liability exposure
B. Products-completed operations exposure The products-completed operations hazard includes all BI and PD occurring away from the premises owned or rented by the insured, and arising out of the insured's product or work, other than products that are still in the insured's physical possession and work that has not yet been completed or abandoned.
An action that, in a natural and continuous sequence, produces a loss is the A. Hazard. B. Proximate cause. C. Appraisal point. D. Exposure.
B. Proximate cause. B is correct. Proximate cause is one of the elements required to establish a charge of negligence. It is an action that, in a natural and continuous sequence, produces a loss.
Which of the following would be considered mobile equipment under the Commercial General Liability coverage form? Select all that apply. A. Truck used to transport personnel to construction sites B. Road construction grader C. Bulldozer D. Self-propelled vehicles designed for snow removal
B. Road construction grader and C. Bulldozer Both of these items are specifically listed in the policy's definition of mobile equipment. An auto is a land motor vehicle, trailer, or semitrailer designed for travel on public roads, including any attached machinery or equipment.
Which of the following must be true in a burglary? A. Property must be taken from a custodian or watchperson. B. There must be no evidence of force or violence. C. The burglary must involve unlawful entry or exit from the premises. D. There must be visible evidence of forcible entry or exit.
C and D are correct. Although burglary is not specifically defined in the Crime forms, it still has a specific meaning in the insurance industry. Burglary is the taking of property from inside the premises by a person unlawfully entering or leaving the premises. There must be evidence of forcible entry or exit, such as marks made by tools, explosives, chemicals, or electricity. There is no requirement that the property be taken from a custodian or watchperson.
Which of the following have special loss valuation requirements under the Building and Personal Property coverage form? A. Buildings B. Furniture and fixtures C. Glass D. Valuable papers and records
C and D are correct. Stock, glass, valuable papers and records, and tenants improvements and betterments all have special valuation requirements.
Which of the following could be covered by an unendorsed homeowners policy? A.Mobile home B.Home that is rented to another person C.Home occupied by the insured and two boarders D.Home that is owned and occupied by the insured
C and D are correct. Up to two boarders per family are allowed if the home is also occupied by the insured. An endorsement is required to insure a mobile home under a homeowners policy. The insured must live in the dwelling to qualify for homeowners coverage.
Adequate coverage for large, powerful boats is provided by which of the following? A. A homeowners policy B. A homeowners policy with the Watercraft endorsement attached C. Specialized personal watercraft policies, such as Outboard Motor and Boat, Boatowners, or Personal Yacht policies D. The reinsurance component of FAIR Plans
C is correct. A homeowners policy provides only limited coverage for watercraft. Property coverage is subject to a special limit of $1,500, and coverage can be totally excluded for certain perils. Liability coverage is excluded for boats with motors of more than specified horsepower or boats of more than a specified length. Insureds typically need more coverage for this exposure than that provided by a homeowners policy, particularly those who own larger or more powerful boats. This coverage can be provided through Inland Marine forms, Ocean Marine policies, or specialized policies.
Which of the following statements concerning binders is correct? A. They guarantee that a policy will be issued. B. They can be issued by insurance companies, but not agents. C. They expire on the effective date of the policy to which they apply, or on the expiration date of the binder if the policy is not issued. D. They show an intent to consider issuing insurance, but do not include any commitment to provide coverage.
C is correct. An agent or an insurance company can issue a binder. A binder does not guarantee that a policy will be issued; it only guarantees temporary coverage. If the company decides to not issue the policy, coverage under the binder may be cancelled by a formal cancellation notice; however, if no formal cancellation is made, coverage remains in effect until the binder expires. If a policy is issued, coverage under the binder ceases as of the effective date of the policy.
Which of these items of personal property would be covered under a Dwelling policy when Coverage C is written? A. A motorcycle B. A pet poodle C. A pool table D. A sailboat
C is correct. Animals, motor vehicles, and most types of boats are excluded under Coverage C
Which of the following losses could be paid under Uninsured Motorists coverage? (Assume that there are no endorsements attached to the policy.) A. Tabb, the insured, drives the wrong way down a one-way street and collides with another car. Tabb is seriously injured. The driver of the other car has no Liability insurance. B. Barb, the insured, is hit by a drunk driver who is uninsured. She is not injured, but her car is totaled. C. Leslie, the insured, is injured when she is struck by a car that runs a red light. The driver has no Liability insurance. D. Bernard, the insured, is on his way to work when his vehicle is rear-ended by a car that was following too closely. Bernard suffers a back injury. The driver of the other car carries the minimum amount of insurance required in the state.
C is correct. Choice A is not correct because the uninsured driver was not liable for the accident. Choice B is not correct because the loss does not involve bodily injury. Choice D is not correct because the driver who caused the accident is not an uninsured motorist.
Jake has two insurance policies on his house. They are issued by different companies, but they are otherwise identical. The term for this is A. Concurrent causation B. Fraud C. Concurrent coverage D. Double indemnity
C is correct. Concurrent coverage refers to two policies that offer the same coverage against the same perils. Concurrent causation is when two perils contribute to the same loss. Having concurrent coverage is not fraudulent. Double indemnity is a provision of life insurance policies that pays an extra benefit if death results from an accident rather than an illness.
At DEF Insurance Company, agents are employees of the company who are paid a salary plus commissions. This is an example of what type of insurance marketing system? A. Captive B. Independent C. Direct writer D. Direct response
C is correct. In the direct writer system, the insurer's agents are actually employees. They can receive a salary, be paid on commission, or both.
A heavy snowfall causes the roof over Amaya's living room to collapse. The insurance company asks her to move her belongings out of the living room to protect them from further damage and put a tarp over the roof until it can be repaired. It also asks her to complete a proof of loss form listing the items that were damaged. This is an example of the application of what policy condition? A. Appraisal B. Arbitration C. Duties after loss D. Subrogation
C is correct. Most insurance policies include conditions that specify what the insured and insurer must do when a loss occurs. The insured's responsibilities after a loss include giving notice of claim to the agent or company, protecting property from further damage, and completing a proof of loss form.
Which of the following statements applies to Mechanical Breakdown coverage? A. It is not available in a BOP. B. It is automatically provided in a BOP. C. It is an optional BOP coverage that is activated by an entry in the declarations. D. It is specifically designed to cover insured objects while they are being tested.
C is correct. Optional coverages are usually preprinted in the policy, but apply only if they are designated in the declarations. Losses involving an object during testing are specifically excluded.
Which of the following would not normally be excluded under a property insurance contract? A. Catastrophic losses B. Nonaccidental losses C. Losses to personal property D. Extra-hazardous perils
C is correct. Property insurance policies typically exclude nonaccidental losses, losses controllable by the insured, extra-hazardous perils, catastrophic losses, and property covered in other policies.
Which of the following is not excluded under Businessowners Liability coverage? A. Damages the insured causes intentionally B. Liquor liability for those in the business of serving liquor C. Liability assumed under an insured contract D. Damage to the insured's own work
C is correct. The exclusion for liability assumed under contract has some exceptions. One is liability assumed under an insured contract. All the other choices are specifically excluded.
Which part of an insurance policy describes what property and/or perils will be covered by the contract? A. Definitions B. Exclusions C. Insuring agreement D. Conditions
C is correct. The insuring agreements state what types of losses the insured will be indemnified for. This section also describes the type of property covered and the perils against which it is insured.
A business that wants coverage for its liability for employment-related acts can obtain it by purchasing which of the following? A.CGL insurance B.Workers Compensation and Employers Liability insurance C.Employment Practices Liability insurance D.Any of the above
C is correct. This coverage is provided by Employment Practices Liability insurance. The other policies listed specifically exclude losses arising out of employment-related practices.
Which of the following business liability exposures are either excluded altogether from the CGL or covered only in certain circumstances? Select all that apply. A. Premises and operations B. Indirect/contingent liability C. Pollution D. Work-related injuries to employees
C. Pollution and D. Work-related injuries to employees Businesses face a number of liability exposures, including work-related injuries to employees; pollution; contractual agreements in which the insured assumes liability; and ownership, maintenance, or use of autos, watercraft, and aircraft. However, because of the unique nature of these liability exposures, they are either excluded outright from the CGL policy or may be covered only in certain circumstances or for limited amounts. More complete protection for these liability exposures is available under contracts specifically designed to cover them.
Which of the following statements concerning regulation of the insurance industry is correct? A. The insurance industry is regulated exclusively by the federal government. B. The insurance industry is very loosely regulated. C. The state insurance department is responsible for controlling insurance matters within the state. D. The state insurance department serves only the interests of the insurance industry.
C. The state insurance department is responsible for controlling insurance matters within the state. C is correct. Insurance is regulated primarily by the states. It is closely regulated for the good of the insurance industry and the general public.
Which of the following properties would not be excluded under the Building and Personal Property coverage form? A. Lawn B. Driveway C. Private company jet D. Animals held for sale
D. Animals held for sale(Missed) Feedback D is correct. The first three choices are excluded, but animals are not excluded if they are boarded or held for sale.
Which of the following losses would be paid under the Business Auto coverage form's Comprehensive coverage? A. Gradual corrosion of the grillwork on a covered auto because of continuous exposure to salt air B. Overturn of a covered auto C. Collision damage to a covered auto D. Theft of a covered auto
D is correct. Losses from wear and tear are excluded. The other two losses are considered collision losses.
Which of the following is covered under the Builders Risk coverage form? A.Building under construction B.Foundation of the building under construction C.Fixtures, machinery, and equipment used to service the building if they will become a permanent part of the building and are located within 100 feet of the building D.All of the above
D is correct. The Builders Risk coverage form covers the building under construction and its foundation. Fixtures, machinery, equipment used to service the building, and the insured's building materials and supplies can be covered if they will become a permanent part of the building and are located within 100 feet of the building.
The "ground rules" are described in which part of an insurance policy? A. Definitions B. Exclusions C. Insuring agreement D. Conditions
D is correct. The conditions describe the responsibilities and obligations of the insurer and the insured.
Which of the following are excluded under Coverage A of the CGL? A. Damage the insured causes intentionally B. Pollution losses caused by the insured C. Liquor liability for those in the business of serving liquor D. All of the above
D. All of the above
Which of the following losses is not excluded under the physical damage coverage of a personal auto policy? A. Loss of custom furnishings in a customized van B. Loss caused by freezing of the cooling system C. Damage to equipment designed for the detection of radar D. Damage to a covered auto while being used as part of a car pool
D. Damage to a covered auto while being used as part of a car pool is not excluded. All of the other answer choices are specifically excluded.
All of the following reduce the CGL's General Aggregate Limit except which of the following? A. Medical Payments sublimit B. Personal and Advertising Injury limit C. Fire Damage limit D. Products-Completed Operations limit
D. Products-Completed Operations limit (Missed) Feedback There is a separate Products-Completed Operations Aggregate limit that is not subject to the General Aggregate limit.
National flood insurance is available for which of the following? A. Private residences only B. Private residences and residential contents only C. Residential and nonresidential buildings only D. Residential and nonresidential buildings and contents
D. Residential and nonresidential buildings and contents Almost any building that is walled and roofed, is principally above ground, and is fixed to a permanent site is eligible to be covered by a flood policy. A policy may cover a building, its contents, or both.
According to the terms of the Mortgage condition, which of the following does not apply to the rights and duties of the mortgagee? A. The mortgagee might have to pay the premium if the insured doesn't. B. The mortgagee can file a proof of loss when the insured fails to do so to protect its rights under the policy. C. The mortgagee might have coverage under the policy even if something the insured does causes a claim to be denied. D. The mortgagee has no insurable interest in the covered property.
D. The mortgagee has no insurable interest in the covered property. Feedback D is correct. Lenders or mortgagees do have an insurable interest in property. The Mortgage condition specifies the rights and duties of the mortgagee under the policy. For instance, if an insured fails to file a proof of loss, the mortgagee must do so after being notified by the insurer to protect its rights under the policy. In addition, the mortgagee might be expected to pay the premium if the insured fails to do so. The policy might provide that if some condition caused by the insured would result in the insurer denying coverage for a loss it would otherwise have covered, the mortgagee might still have protection under the policy.
Vehicles that might be insured by a personal auto policy are described in the eligibility rules and the policy definitions. Each of the following is true about vehicles eligible for PAP coverage except A. Vehicles with fewer than four wheels are not eligible. B. Vehicles owned by an individual or married couple may be insured C. Private passenger autos, pickup trucks, and vans used for personal transportation may be insured. D. Vans used in a delivery business are eligible for coverage.
D. Vans used in a delivery business are eligible for coverage. Generally, four-wheel private passenger autos, pickups, and vans owned by an individual or married couple are eligible if used for pleasure or general transportation. Pickups and vans used in a business, other than farming or ranching, are not eligible.
What is meant by the term "adverse selection"? A.Underwriting practices that discriminate against applicants in certain geographical areas B.Selling types of insurance to applicants who do not need that particular kind of coverage C.Agency marketing practices that promote only the policies that pay the highest commissions D.The tendency of people with greater than average exposure to loss to purchase insurance
D. is correct. Adverse selection means the tendency of people with a greater than average exposure to loss to purchase insurance coverage. For example, if insurers only sold earthquake coverage to applicants in earthquake-prone areas, or flood insurance only to those in flood-prone areas, the situation known as adverse selection would exist. Insurers and underwriters guard against adverse selection by trying to sell broad ranges of coverages to a large cross-section of the population in order to increase the premium base and spread the risk of loss.
In the event of a physical damage loss that makes a covered auto unavailable for a period of time, a personal auto policy will provide coverage for transportation expenses at the rate of $20 per day up to how much?
In addition to collision and other than collision coverage, if a covered loss makes an insured auto unavailable, a personal auto policy will provide coverage for transportation expenses up to $20 per day, subject to a maximum payment of $600.
Which type of insurance professional does not actually sell insurance coverages, but sells advice about insurance coverages?
Insurance consultants do not actually sell insurance; they sell advice. Agents, brokers, and solicitors are all producers who sell insurance.
If the insurance company requests a proof of loss on a Commercial Inland Marine claim, the insured must submit it within how many days? A. 10 days B. 30 days C. 60 days D. 90 days
The Commercial Inland Marine Conditions form states that the insured must send a signed, sworn statement of loss within 60 days after the insurer requests it.
An insurer's loss ratio is determined by dividing what?
The loss ratio is used to compare the company's loss experience from year to year. It is calculated by dividing the amount of incurred underwriting losses by the earned premium. It can be calculated separately for individual lines of insurance or the company's entire operations.