Quiz Questions

Mr. Jones has a $50,000 HO 00 03 homeowners policy. He has a theft loss that results in $2,000 damage to his home and the theft of $250 in cash and $650 of plane tickets. How much will he collect?

$2,850

A $1,000,000 Umbrella policy was issued over a homeowners policy with personal liability limits of $300,000. The umbrella could have been issued with a $1,000 self-insured retention (SIR). The homeowners policy has canceled. However, the company issuing the umbrella does not become aware of the homeowners cancellation until an occurrence takes place. An award of $700,000 is granted to the injured party. How much will the umbrella policy pay?

$400,000

Smith carries $60,000 fire insurance on his building with company "A" and $40,000 with company "B". Smith suffers a loss of $10,000 and "B" goes bankrupt. Smith will collect how much from company "A"?

$6,000

A building valued at $500,000 is insured under a Building and Personal Property form with a policy value of $300,000, a deductible of $5,000 and an 80% co-insurance requirement. How much will the insurer pay on a $100,000 covered loss?

$70,000

An insured has a $100,000 Extra Expense Coverage policy. What would be the may payable for a 48-day loss?

$80,000

Your house has a replacement cost of $100,000. In order to have replacement cost coverage without penalty for partial structural losses, your home must be insured for at least how much at the time of the loss?

$80,000

An insured has $400,000 of business income coverage written with a monthly limit of indemnity of ¼. How much will the insurer pay if during a period of restoration the insured's loss was $125,000 during the first 30 days, $135,000 during the next 30 days and $80,000 during the remaining period before operations were resumed?

$280,000

In order to be covere under the medical payments portion of the CGL, the expenses must be incurred and reported to the insurer within

1 year

Which of the following acts of an agent would be considered an Unfair Trade Practice?

Stating that the marketing activities of another agent are under investigation.

Which of the following would NOT be considered a consequential loss?

damage to personal property considered - Loss of rental income. - Additional living expenses incurred while the damaged property is being restored. - Loss of business income while a business is closed because of a fire loss.

Which of the following results of an application would be considered an adverse underwriting decision?

denying coverage of a property

Which of the following structures would NOT be insured under Coverage B?

A gazebo connected to the dwelling by a wood deck. would be covered - A garage connected to the dwelling by utility lines. - A tree house built in the back yard. - A free standing utility building.

Which of the following dwellings may NOT be covered under the Dwelling Program?

A single family dwelling on a farm of less than 30 acres. covered - An apartment building with 3 apartments. - A frame structure considered too old to be insured on a homeowners policy. - A single family dwelling with a beauty parlor operated by the insured.

The Post Assessment Guaranty Association applies to all of the following coverages EXCEPT:

Business Income policies. applies - HO policies - Dwelling policies - Personal Auto policies

When Martha returned to her car after class, another driver who left no name or phone number had damaged the rear bumper. Damage to the car was $400. Under what coverage under her personal automobile policy could she collect?

Collision

Damage to a windshield by a bird would be covered under:

Comprehensive

Under the claims made form of the CGL, how does the retroactive date apply?

Excludes claims that occurred before the retroactive date.

Which of the following statements is FALSE concerning financial responsibility laws?

Financial responsibility laws make insurance compulsory. true - Financial responsibility laws require proof of the ability to respond to damages following certain occurrences. - Driving privileges may be lost if financial responsibility laws cannot be met after an accident. - Proof of future financial responsibility is sometimes required.

The SFP without endorsements provides coverage for:

Fire, lightning and removal of endangered property.

The perils covered by the North Carolina Insurance Underwriting Association include all of the following EXCEPT:

Flood covered - Vandalism - Fire - Smoke

The definition of rental value includes:

Gross rental income from tenant occupancy. Fair rental value of the portion of a dwelling occupied by the insured held for rental.

Which of the following homeowners policies provides open peril coverage on personal property?

HO 5

Something that increases the chance of a peril occurring is a:

Hazard

If the Rate Bureau implements newly proposed rates prior to the final determination of the validity of such rates, the difference in premium between the old and new rates is:

Held in escrow for possible refund if the proposed rates are denied.

Smith and Jones own a building equally with an actual cash value of $100,000. It is insured for $100,000 in the name of Smith only, and burns to the ground.

Smith gets $50,000. Jones gets nothing.

Which of the following parts of an insurance contract would identify the nature of the coverage provided by the insurer?

insuring agreements

Documentation required by an insurer from an insured to substantiate the specifics of a claim is known as a(n):

proof of loss

All statements given by applicants on an insurance application are considered:

representations

All of the following are methods of handling risk EXCEPT:

risk elimination methods - Risk transfer. - Risk retention. - Risk reduction.

Which of the following best defines "risk"?

the uncertainty of loss

The primary purpose of the cause of loss form is

to describe the perils insured against

An insured driver is involved in an accident in which she avoids hitting an animal, loses control of the vehicle and hits a telephone pole. The damage to the insured's vehicle would be covered:

under the collision coverage

All of the following statements concerning property, casualty and personal lines insurance agents are true EXCEPT:

They act on behalf of the insured. true - They act on behalf of the insurer. - They are authorized by contract to solicit insurance policies. - Their actions and knowledge are binding on the insurance company.

A flood policy goes into effect at which of the following times?

Thirty days after the date of the application.

Medical payments under the personal auto policy pays all reasonable medical expenses incurred within:

Three years from the date of the accident.

Which of the following statements is correct regarding the Towing and Labor endorsement to the PAP:

To be covered, the labor must be performed at the place of disablement.

Liability policies

Pay on behalf of the insured. Defend the insured against real and alleged claims.

All of the following are included in the definition of personal injury EXCEPT:

Bodily injury. included - slander - libel - defamation

Under the Insurance Information and Privacy Protection Act, an authorization for information disclosure in property and casualty insurance is in effect for:

1 year

What are the maximum liability limits obtainable through the Facility?

100/300/50

An insurer may cancel a personal automobile liability policy for non-payment of premium by giving the insured how many days notice?

15

What is the basic benefit provided by Workers Comp Insurance for disabilities arising out of employment?

2/3 of weekly earnings

The minimum split limits of liability on an automobile required by the State of North Carolina are

30.60.25

How many days will a fire policy provide coverage on property moved to another location to protect it from further damage?

5 days

If a proposed automobile rate filing is not felt to be in compliance with the regulations of the State of North Carolina, the Insurance Commissioner must notify the North Carolina Rate Bureau within:

50 days of the filing.

After a loss has occurred, proof of loss must be filed with the company within:

60 days

All of the following optional value coverages are available on a Building and Personal property coverage form EXCEPT

ACV are available - agreed value - replacement cost - inflation guard

Which of the following practices are considered unfairly discriminatory?

Adding a surcharge on automobile liability insurance due to the age of the operator. not - Refusal to issue property coverage due to the occupancy (use) of the structure. - Placing coverage in a residual market due to information supplied by a consumer reporting service. - Reducing rates for a specific class of insureds without reducing rates for all insureds.

Which of the following is the correct term when a contract is prepared by one party and submitted to the other party on a take-it or leave-it basis and where there is no bargaining power on the wording of the contract?

Adhesion

What is the meaning of actual cash value (ACV)?

Replacement cost less depreciation.

Where must property be located to receive coverage through the NC Insurance Underwriting Association?

Anywhere within NC east and/or south of the intracoastal waterway.

An uninsured motorist claim that cannot be settled between the insured and the insurance company is subject to which of the following?

Arbitration

Which of the following situations would be covered by the products-completed operations hazard in the Commercial General Liablity Policy?

BI caused by a defect in a product

Which of the following acts may an agent legally conduct?

Represent multiple insurance companies.

If the insured operated in other states, how will Workers Comp benefits be satisfied for those locations?

Coverage is provided in compliance with other state if the insurer is notified before or within 30 days of work commencing

Uninsured motorists coverage:

Covers injuries caused by hit-and-run drivers.

Which of the following losses is covered under a SFP with the VMM endorsement?

Damage caused by an individual spray painting graffiti on the dwelling.

Examples of direct losses covered under the SFP include:

Damage to the insured's home caused by lightning. Damage to the insured's furniture due to fire caused by sparks from the fireplace. Damage to property removed within 3 days to protect it from damage after a fire.

All of the following violations could result in surcharges under the Safe Driver Incentive Plan EXCEPT:

Illegal parking in a designated fire lane. possible subcharges - driving while impaired - Speeding in excess of 15 MPH over the posted speed limit. - death by a vehicle

All of the following procedures would reduce the risk of adverse selection EXCEPT:

Inclusion of a deductible. reduce the risk - Rating-up substandard risks. - Common policy exclusions. - Endorsements waiving a specific condition from the coverage.

The Post Assessment Guaranty Association protects policyholders from financial loss due to:

Insolvency of insurers.

The Commissioner of Insurance has the power to:

Issue subpoenas on behalf of individuals in order to conduct a hearing.

One of the following is considered to be a misrepresentation and is illegal:

Issuing a statement that is not entirely true about the terms of a policy issued or to be issued.

All of the following statements concerning medical payments coverage in the personal automobile policy are true EXCEPT:

It can cover injuries caused by the insured to a pedestrian if they lose control of the vehicle. true - It provides medical expense coverage for the insured and any passengers in the vehicle. - It pays regardless of fault. - It can cover medical expenses incurred within three years of an accident.

With property insurance, an insurable interest:

It is not necessary at the time the policy is written but is necessary at the time of the loss.

The personal article floater (PAF) is an insurance form used to insure individual personal property such as jewelry, furs, cameras, musical instruments, silverware, fine arts, golfer's equipment, stamps and coin collections, and outboard boats and motors, all on a (an):

Itemized basis. Open perils basis.

Contents coverage in Homeowners insurance:

Limits the amount payable for a theft loss to jewelry.

Which of the following acts is legal concerning property insurance policies and business practices?

Listing the rates charged for specific types of property coverage. illegal - Providing a 10-year policy renewal period. - Issuing a policy that insures property for amounts greater than the value of the property. - Adjusting losses according to company rules not stated in the policy.

The North Carolina Reinsurance Facility:

Makes motor vehicle insurance available for hard to place risks.

A homeowners policy provides coverage for all of the following EXCEPT:

Medical payments for the insured. provides for - Property damage to others. - Medical payments to others. - Bodily injury to others.

All of the following are true regarding a reciprocal insurance company EXCEPT:

Members are grouped into syndicates. true - If funds are insufficient to pay claims, the subscribers can be assessed for additional revenue. - It is managed by an attorney-in-fact. - Each subscriber assumes part of the risk of all other subscribers.

Rebating is:

Offering any special inducements or valuable consideration, whatever, not specified in the contract.

An insurance contract is a unilateral contract which means that:

Only the insurer makes an enforceable promise.

Completed Operations Insurance covers

Operations completed by the insured

A mutual insurance company is:

Owned by policyholders. Controlled by trustees and officers.

A property insurance policy that provides open peril coverage will:

Pay for any loss except those caused by perils that have been specifically excluded in the insuring agreement.

The Business Income Coverage form will

Pay for lost net income in the event a covered peril damages the insured building to the extent that the business must shut down operations.

A potential agent must have satisfied all of the following requirements prior to effectuating insurance coverage in this state EXCEPT:

Posted a $50,000 surety bond. requirements - Received an appointment from an admitted insurer - B) Completed an educational course from an approved school. - Received an insurance license from the Department of Insurance.

Obtaining information through a personal interview where the agent does not accurately identify themselves is known as a(n):

Pretext interview.

The clause in the SFP that specifies the amount of recovery when more than one policy exists on the same property is called:

Pro-rata liability.

The basic extended reporting period:

Provides a 5-year period for filing claims for which the occurrence was reported during the policy period or within 60 days of the policy period.

The National Flood Insurance Program (NFIP) contains all of the following requirements and benefits EXCEPT:

Provides open peril dwelling coverage to property owners unable to purchase property insurance in the normal market due to the increased risk of flood. contains - Provides back-up reinsurance through FEMA allowing private insurers to provide the coverage at subsidized rates. - Eligibility for the regular plan is restricted to communities meeting FEMA'S requirement for flood control practices. - Rates paid by insureds for flood insurance will vary in accordance with the location of the property on the Flood Insurance Rate M

John's automobile dealership loans him a car while his vehicle is being repaired. The "loaner" vehicle would be classified as a(n):

Temporary substitute.

A building, insured under a SFP, is damaged by fire for which another person is responsible. From whom will the insured receive payment for the loss?

The company will pay the loss,and will then require the insured to assign to them their right of recovery from the person responsible for the loss, to the extent paid by the company.

If an insured cancels a SFP at the end of six months, what proportion of the premium must the company return to him?

The company will return less than one-half of the annual premium.

All of the following are true about "insurable risk" EXCEPT:

The loss must not be definite and definable. true - The law of large numbers should apply. - The loss must not be catastrophic in nature. - The loss must be large enough to create hardship.

Which of the following statements is or are true concerning the personal auto policy?

The policy provides coverage for personal effects. The policy provides medical payments coverage to riders of motorcycles.

In order for two fire policies to be concurrent, they must cover:

The same interest against the same perils.

In regards to personal property coverage in the homeowners program, all of the following statements are correct EXCEPT:

The special form (HO 00 03) provides open perils coverage on personal property. correct - Money and bullion are limited to $200. - Scheduled personal property coverage of greater than the established limits is available through a Personal Articles Floater. - Personal property coverage is usually 50% of the limit provided for Cov A

All of the following requirements apply to the N. C. Reinsurance Facility EXCEPT:

The twelve members of the Board of Governors are appointed by the member insurers. apply - Agents may not be given a quota of "clean risk" business in proportion to ceded business. - Ceded operators cannot be provided different services or adjustment methods from non-ceded operators. - Physical damage coverage may not be rated on the basis of ceded liability coverage.

The Notice of Information Practices indicates that the applicant has all of the following rights EXCEPT:

To have access to the underwriting standards of the company. rights - To know the reason for any adverse underwriting decision. - To dispute any information felt to be incorrect. - To know from whom pertinent information was gathered.

The purpose of liability insurance is:

To protect the insured against financial loss by reason of liability imposed by law, resulting from accidental bodily injury or property damage to another person for which the insured is held responsible.

Territorial limits of the personal articles floater are:

Usually worldwide.

The named insured wants to cover an additional auto under an existing personal auto policy. They must notify the company:

Within 30 days of purchase.

The earthquake coverage form covers all of the following sitations EXCEPT

aftershocks that occur 24 hours after policy inception and 48 hours after the initial quake covered - aftershocks that occur 24 hours after policy expiration and 48 hours after the initial event - landborne shockwaves and lava flows - explosive volcanic eruptions that begin with 168 hours of the policy inception

Which of the following statements is true?

agents can bind coverage false - Agents and brokers represent insurance companies. - Brokers can bind coverage. - Agents in the field of Property and Casualty insurance issue conditional receipts.

Insurance companies incorporated under the laws of foreign countries are called:

alien companies

Which of the following losses would normally be covered under "comprehensive" coverage (other than collision)?

collision with a deer

All of the following coverages fall under the jurisdiction of the North Carolina Rate Bureau EXCEPT:

general liablity fall under - Residential property with less than 5 units. - Workers Comp - Non-fleet motor vehicles.

Which of the following terms means that the purchaser of insurance must be in a position to lose money or something of value if the contingency insured against should happen?

insurable interest