Readiness Exam P&C 2024

To qualify for an original certificate of authority, what minimum capital stock or surplus must an insurer have?

$1.5 million

An insured has $5,000 of medical coverage under a personal auto policy at the time of a covered accident. The insured and 3 passengers are injured. the insured's medical expenses are $8,000. The first passenger's total $4,000; the second passenger's total $6,500; and the third passenger's total $1,200. How much will the policy pay under the medical payments coverage?

$15,200

If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?

$2,500

A business has a CGL policy with limits of $20,000 per person and $50,000 per occurrence. The business is found liable for the bodily injury to three customers, each accruing $25,000 in medical expenses. How much will the CGL policy pay?

$50,000 total

Using the pro-rata method, if a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss?

$8,000

NFIP flood insurance policies have a term period of

1 year

What guarantees that the information explained in the insurance contract is true?

A warranty

In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will

Be reduced by 10%

Which of the following statements does NOT describe endorsements? a. Endorsements may only add coverage to a current policy, not remove. b. Endorsements may be added during the policy term. c. Endorsements are printed addenda to a policy. d. Endorsements must be signed by an executive officer.

Endorsements may only add coverage to a current policy, not remove.

Under what circumstances will a worker be paid for the first 7 days of being unable to work?

If the worker misses more than 21 consecutive days

Which of the following provisions is usually found in HO policies and provides a replacement cost settlement to policyholders who carry adequate insurance?

Insurance to value

How does insurance distribute the financial consequences of individual losses?

It transfers the risk to all persons insured.

A house insured with a HO policy has been blown off its foundation by a tornado. It must be demolished and removed so a replacement house can be built. which of the following is true about debris removal?

It will be paid if the debris removal endorsement has been added.

An insured was involved in an accident that was caused by a tire blowing out. The insured was severely injured and incurred medical expenses of $100,000. The insured brought a recovery action against the manufacturers of the auto and tires. The court held that the tire was the cause of the accident. Who is required to pay for this loss?

Manufacturer of the tire

Lost Treasures has a guard dog in a fenced lot to protect the salvage yard. The dog scared a passerby, who now claims that it was a traumatic experience and that he now suffers from recurring nightmares. A claim for personal injury of $5,000 is filed against Lost Treasures. Why will the personal and advertising injury liability section (Coverage B) of the CGL policy cover this claim? a. The injury was expected or intended. b. The occurrence was off premises c. Mental anguish is a covered injury. d. Animals are excluded from coverage.

Mental anguish is a covered injury.

Which of the following documents notifies the insurer of events that may lead to a possible claim?

Notice of claim

All of the following statements about mutual insurance companies are correct EXCEPT a. Dividends allow policyholders to share in a mutual company's divisible surplus. b. Dividends are a return of unused premiums. c. Mutual companies issue policies referred to as participating. d. Policy dividends issued by mutual companies are guaranteed and not taxable.

Policy dividends issued by mutual companies are guaranteed and not taxable.

An insured has an extended coverage on her dwelling that includes coverage for vandalism and malicious mischief. One evening, she is sitting in her living room when she hears a crash and the sound of glass breaking. She runs to the door and discovers a brick has been thrown through her glass door. To inform her insurer of a possible claim, she fills out a form detailing the events leading to the loss. What is the name of the form?

notice of claim form

Prior to paying a claimant under a professional liability policy, the insurer must

obtain the consent of the insured

Which of the following types of property would be covered under Coverage C-Personal Property in a dwelling policy? A. Rowboats B. 2-passenger aircraft C. Any personal watercraft D. Motor vehicles

Rowboats

What does the application of contract of adhesion mean?

Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured.

An auto policy has limits of 30/50/25. The number 50 means

The max limit for bodily injury claims that can be paid for one accident.

If a mortgagee is named in a mortgagee clause, how would a property policy pay claims on a home damaged in a fire?

The mortgagee would receive loss reimbursement.

If an insurance policy has the additional coverage provision, how does it affect the policy premium?

There is no additional premium.

While engaged in a pick-up soccer game in the neighborhood park, the insured collides with another player, breaking his nose. Would the insured's homeowners medical payments cover the injury?

Yes, medical payments coverage also applies off the insured premises.

Which of the following could be insured with replacement cost coverage under the flood insurance program? a. a shed b. a single-family home c. a garage d. an apartment building

a single-family home

HO policies consider all of the following insured locations EXCEPT a. land owned by the insured on which his new home is under construction b. and individual cemetery plot c. the hotel ballroom rented by the insured for a family reunion d. a strawberry patch owned by the insured

a strawberry patch owned by the insured

All of the following are sections of a CGL policy EXCEPT a. additional coverages b. medical payments c. personal and advertising injury d. limits of insurance

additional coverages

Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination? a. Charging insured higher premium based on race b. making malicious statements about the insured based on race c. charging different premium rates to the insured in different insuring classes d. charging the insured higher premium based on life expectancy

charging insured higher premiums based on race

A sworn statement must usually be furnished by the insured to an insurer, and must include what information about the occurrence and the amount of indemnity claimed?

date and description

All of the following are optional endorsements that may be added to the standard equipment breakdown coverage form EXCEPT a. extra expense b. business interruption c. debris removal d. utility interruption

debris removal

What are the two types of utility service endorsements?

direct damage and time element

If a producer willfully violates fiduciary responsibility statutes, resulting in misappropriation of more than $1,000, the producer may be found guilty of a

felony

To have insurable interest in the person or property covered by a property insurance policy, which of the following potential risks must the policyowner face? a. illness b. financial loss c. physical injury d. property damage

financial loss

Space Age Rockets makes model rocket supplies and has 12 employees. The company is located in Atlanta, GA. Georgia has compulsory workers compensation laws. Space Age's owner thinks that his company is too small and unprofitable to carry the workers comp plan mandated by the state. Possible consequences of noncompliance include all of the following EXCEPT

forced payment of billing for services rendered by any private insurer that "binds" coverage based on an employee's request for coverage

A structure may be eligible for coverage under the National Flood Insurance Program if it meets all of the following requirements EXCEPT a. is not located within the Coastal Barrier Resource System b. has 2 solid walls and a roof c. is principally above ground d. is entirely over water

is entirely over water

Section III of the business auto policy provides physical damage coverage. All of the following are physical damages that may be selected coverages EXCEPT a. collision coverage b. limited peril coverage c. specified causes of loss coverage d. comprehensive coverage

limited peril coverage

Which of the following describes an insurer's responsibility for payment under a policy, as stated in the common policy provisions? a. premiums b. limits of liability c. consideration d. utmost good faith

limits of liability

In a BOP, which of the following would be covered? a. pollution b. mobile equipment c. medical expenses d. liquor liability

medical expenses

An agent's license has been suspended, but he continues to transact insurance for his existing clients. This will be considered a

misdemeanor

The amount of loss the insured is willing to absorb without insurance protection is known as

self-insured retention

An insured was having a new home built. While digging the footings for the foundation, the contractor struck a solid rock formation and found that was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbor's home several blocks away. Who pays for this damage?

the contractor

the Under an HO-2 policy, the insurer will pay no more than the actual cash value of the property damage until

the property repair or replacement is complete

When an insured's gardener was spraying weeds in his lawn, he failed to notice that the wind was drifting the spray into the neighbor's yard where he damaged their flower bed. The insured was found to be legally liable for this damage. This is an example of

vicarious liability