SET 7

Which of the following correctly describes the practice of Twisting? A. Offering anything of value to a client that is not already a part of the policy, as an incentive to purchase insurance B. Misleading and convincing an insured to surrender, lapse or exchange an existing policy for a different one, to the insured's detriment C. Entering into any agreement to commit an act of boycott, coercion, or intimidation resulting in an unreasonable restraint of the business of insurance D. Representing to the applicant that a specific coverage or product is required by law in conjunction with the purchase of insurance when such coverage or product is not required

B. Misleading and convincing an insured to surrender, lapse or exchange an existing policy for a different one, to the insured's detriment (Offering anything of value to a client that is not already a part of the policy, as an incentive to purchase insurance) describes Rebating. (Entering into any agreement to commit an act of boycott, coercion, or intimidation resulting in an unreasonable restraint of the business of insurance) describes Boycott, Coercion, and Intimidation.

The Homeowners Policy is a package policy. Which of the following is the most accurate concerning package policies? A. They are designed to insure multiple locations in one policy B. They offer fewer gaps in coverage, a savings in premium, and fewer policies are required C. They are simpler to read and understand D. They cannot be cancelled mid-term

B. They offer fewer gaps in coverage, a savings in premium, and fewer policies are required The package policy combines Property Coverage and Liability Coverage, which previously required separate policies, into one policy. This prevents overlaps and gaps in coverage, and the simplified processing results in lower premiums.

Which of the following regarding the Value Reporting Form is true? A. The final premium is based on the values reported in the last report of the policy term B. The Value Reporting Form contains an 80% coinsurance clause C. The form may be attached to any Commercial Property Part coverage forms D. Late reporting or under-reporting will result in a penalty in the event of a loss

D. Late reporting or under-reporting will result in a penalty in the event of a loss It is extremely important the reports be accurate and timely.

Sam has business offices in several locations and checks with his agent to make sure that all his locations are covered under his CGL and the agent points out that which of these locations is not covered? A. U.S. B. Puerto Rico C. Mexico D. Canada

Sam's office in Mexico is not covered under his CGL.

The taking of property from inside the premises by a person unlawfully entering or leaving the premises as evidenced by visible signs of forcible entry or exit, is covered under which of the following Crime Coverages? A. Burglary B. Theft C. Robbery D. Extortion

A. Burglary The principal difference between burglary and other forms of dishonesty, is that burglary involves the forcible entry into or exit from premises from which money or property is taken.

What type of a policy should a contractor purchase to protect equipment that is used for electricity, heating, and plumbing, before the building owner accepts it? A. Electrician's Floater B. Contractor's Equipment Floater C. Equipment Dealer's Floater D. Installation Floater

D. Installation Floater This policy provides coverage on the contractor's property during transportation, and unloading, while it is on the job site and being installed, until ownership is transferred to the purchaser.

In surety bonding, what is the party called whose obligation is guaranteed? A. The Surety B. The Principal C. The Obligee D. The Guarantor

B. The Principal The party whose obligation is guaranteed. The Principal might be a contractor, an administrator, a guardian, or a business subject to municipal or other laws and regulations.

A Surplus Lines Broker is best described as which of the following? A. They are brokers that deal with admitted carriers only B. They place risks with non-admitted insurers when coverage cannot be placed with admitted insurer carriers C. They are brokers who deal with direct writing companies only D. They are brokers who accept business only from non-resident agents

B. They place risks with non-admitted insurers when coverage cannot be placed with admitted insurer carriers States regulate the procurement of business from non-admitted carriers by regulating the brokers who place business with these carriers. These brokers are known as Surplus Lines Brokers.

Which of the following is true with regard to the Home Business Endorsement HO 07 01? A. The definition of 'employee' is changed to not include a 'leased worker' B. Property of others that is in the insured's care is excluded C. The definition of 'employee' is changed to include a 'temporary worker' D. Insurers may examine and audit an insured's records relating to this coverage for up to 3 years after a policy period expires

The definition of 'employee' is changed to include a 'leased worker', but not a 'temporary worker'. Property of others that is in the insured's care is covered. Leased personal property for which the insured has a contractual responsibility to insure is covered.

Which of the following statements is NOT correct concerning Endorsement, PP 01 54? A. Cancellation, Renewal and Nonrenewal provisions are amended to conform to Connecticut law B. 'Minimum limits' are defined as per Connecticut law C. The Right to Recover Payment provision applies to Medical Payments D. The policy will pay up to $100 for the cost of all bail bonds required because of an accident or traffic law violation

C. The Right to Recover Payment provision applies to Medical Payments The Right to Recover Payment provision does not apply to Medical Payments.

Larry owns a dwelling and detached garage rented to tenants and insures it under a DP-3 with Coverage A of $100,000. How much is the detached garage insured for if damaged by a covered claim? A. $5,000 B. $10,000 C. $20,000 D. $50,000

B. 10,000 The Coverage B limit of insurance is 10% of the Coverage A limit.

Detached structures on the insured premises are included in which coverage under a Dwelling Policy? A. Coverage A B. Coverage B C. Coverage C D. Coverage D

B. Coverage B Coverage B is the coverage for other structures on the Insured Location. The other structures must be set apart from the dwelling by clear space.

Which of the following is not covered by a Business Auto Policy covering the named insured's small business? A. The named insured leases a car to be used for sales calls B. Director of Sales who often rents vehicles C. A fellow employee injured while driving a covered auto D. A Manager's wife driving her husband's company car

B. Director of Sales who often rents vehicles.

The Territorial Limits of the Personal Auto Policy include which of the following? A. The United States, Mexico, Canada, and while being transported between covered ports B. The United States, its territories and possessions, Puerto Rico and Canada, and while being transported between covered ports C. The United States, its territories and possessions, Canada, Mexico, and while being transported between covered ports D.The United States, Puerto Rico, Canada, and Mexico

B. The United States, its territories and possessions, Puerto Rico and Canada, and while being transported between covered ports The policy covers only accidents and losses that occur within the Policy Territory. Mexico does not fall within the policy territory as the policy is written.

Which of the following properties is not eligible for a Businessowners Policy? A. A residential condominium association B. An office building that has no more than 100,000 square feet C. A mercantile risk that has no more than 35,000 square feet D. An eligible service risk that has a total of 45,000 square feet

D. An eligible service risk that has a total of 45,000 square feet A service risk can have no more than 35,000 square feet.

Which of the following statements is false with respect to notices of information practices? A. An insurer or agent may provide an abbreviated notice of information practices B. A notice of information practices is only required to be provided on an annual basis C. A notice of information practices must advise the applicant or policyholder of his/her right of access and correction with regard to personal information collected D. A notice of information practices must set forth the types of personal information that may be collected and the sources and methods that may be used to collect such information

B. A notice of information practices is only required to be provided on an annual basis A notice of information practices must be provided to an applicant or policyholder upon request.

Which of the following statements is true concerning the availability of insurance on real property? A. An insurer may not discriminate on risks in this state for loss for damage to personal property in which a person has an insurable interest B. An insurer may cancel insurance for reasons that apply to all persons of the same marital status, sex, race, color, religion, or national origin C. An insurer may not discriminate on risks in this state for loss of or damage to real property used mainly for residential purposes D. An insurer may not discriminate on risks in this state concerning the legal liability of a person for loss of property or injury to a person

B. An insurer may cancel insurance for reasons that apply to all persons of the same marital status, sex, race, color, religion, or national origin An insurer may cancel insurance for reasons that apply to all persons of the same marital status, sex, race, color, religion, or national origin.

The limit of insurance on the HO-8 policy is the ___________. A. Actual Cash Value B. Functional Replacement Value C. Replacement Cost D. Valued Policy

B. Functional Replacement Value Functional Replacement Cost Value is the cost to replace the damaged property with property that performs the same function, but is not like-kind or quality.

The property insurance condition that states that the insured may not file suit against the insurer unless all terms of the policy have been complied with, is: A. Ordinance or Law condition B. Legal Action Against Us C. Claim settlement condition D. Loss Payment condition

B. Legal Action Against Us An insured cannot ignore their responsibilities under the policy, then subsequently bring legal action against the insurer.

Specified Causes of Loss under Physical Damage Coverage of the Business Auto Coverage Form includes all of the following, except. A. Theft B. Windstorm, hail or earthquake C. Glass breakage D. Flood

C. Glass breakage Specified Perils Coverage is similar to Comprehensive (or Other than Collision) Coverage, but it is a specified perils form and glass breakage is not specified as an insured peril.

Which of the following is not a reaction to risk? A. Avoiding the risk B. Transferring the risk C. Subrogating the risk D. Retaining the risk

C. Subrogating the risk Risk may be avoided, transferred, or retained.

Which of the following is true regarding eligibility of a Homeowners Policy? A. The dwelling may be multi-family with up to 5 families B. The dwelling must be less than 30 years old C. The dwelling must be the principal residence of the insured, and an incidental office may be permitted D. There must be no business occupancies in the dwelling

C. The dwelling must be the principal residence of the insured, and an incidental office may be permitted The underlying concept of the Homeowners Policy is that owner-occupied property has, in most cases, better care and maintenance than tenant-occupied property and is therefore eligible for package insurance and discounted rates.

Which of the following describes the policy liability limits that may be applied to either bodily injury or property damage, wherever needed or in any combination? A. Subrogation Limits B. Split Limits C. Combined Single Limits D. Per Occurrence Limits

Combined Single Limits have one limit of insurance per occurrence, which may be applied to either bodily injury or property damage, or a combination of the two, as needed.

The producer owes the insured which of the following duties? A. Maintain a trust account B. Forward premiums to the insurer on a timely basis C. Report any material facts that might affect underwriting D. Negotiate insurance

B. Forward premiums to the insurer on a timely basis Forwarding premium on a timely basis to the insurer is a responsibility owed by the producer to the applicant or insured.

Under the Building and Personal Property Coverage Form, which of the following is true regarding Property Off Premises? A. Property Off Premises is covered only for 30 days after its removal from the premises B. There is a coverage limit of $5,000 on Property Off Premises C. Property in a motor vehicle or in the care, custody, and control of a salesperson is not covered D. It is offered as an Additional Coverage

C. Property in a motor vehicle or in the care, custody, and control of a salesperson is not covered $10,000 Coverage is available for property that is away from the premises if it is temporarily at a location the insured does not own, lease or operate. It is a coverage extension, not an additional coverage.

Which of the following is not a type of insurer? A. Stock insurers B. Mutual insurers C. Reciprocal insurers D. Proprietary insurers

Proprietary insurer is not a type of insurer

Which of the following coverage forms covers those that sell liquor by the drink? A. Products Liability B. Host Liquor Liability C. Dram Shop Liability Coverage D. Contractual Liability

C. Dram Shop Liability Coverage Dram shop liability laws hold alcohol servers responsible for harm that intoxicated or underage patrons cause to other people.

All of the following about Products Exposure Liability Coverage are correct, except: A. Coverage applies to bodily injury occurring away from premises the insured owns or rents B. Coverage applies to bodily injury the product causes C. Coverage applies to property damage the product causes D. Damage to the product itself is covered

D. Damage to the product itself is covered Products Liability Coverage as relates to Commercial General Liability Insurance covers damage or injuries caused by the product, but does not include damage to the product itself.

All of the following are considered implied warranties, except: A. No Deviation in Voyage - The ship must sail the course that was filed with the insurer and can change course only to avoid a storm that might damage the ship or cargo, or to save human life B. Legality - The goods being shipped must be legal C. Seaworthiness - The ship is seaworthy and has a competent crew D. General Average - Refers to the loss resulting from a voluntary sacrifice of any part of the vessel or cargo to safeguard the vessel and the rest of the cargo

D. General Average - Refers to the loss resulting from a voluntary sacrifice of any part of the vessel or cargo to safeguard the vessel and the rest of the cargo Implied warranties aren't always written into the contract, but are generally understood by all parties and binding upon them. Examples of implied warranties include no deviation in voyage, legality, and seaworthiness.

In respect to Section II of a Homeowners Policy, all of the following are true, except: A. Bodily injury or property damage arising from a vehicle used to assist the handicapped, such as a wheelchair, is covered B. Individual and family cemetery plots qualify as an insured location C. Damage to Property of Others pays up to $1,000 per occurrence D. Section II losses are subject to a standard $250 deductible

D. Section II losses are subject to a standard $250 deductible Section II losses are not subject to a deductible. All remaining responses are true.

Choose the statement that best describes the purpose of a Self-Insured Workers' Compensation Program. A. Self-insurance is allowed in all states B. Self-insurance for Workers' Compensation is most generally used by smaller employers, who cannot afford to purchase Workers' Compensation insurance C. Benefits under self-insurance differ from those provided by Workers' Compensation insurers D. Sometimes large employers are attracted to self-insurance plans because losses can be predictable and benefits are capped by statute

D. Sometimes large employers are attracted to self-insurance plans because losses can be predictable and benefits are capped by statute Self-Insurance is most attractive to larger employers, particularly those in hazardous industries, who feel that they can pay and administer benefits for less than the cost of purchasing insurance. Employers must first be approved by the state to become self-insured.

The insured's bank crime insurance policy is written with a Discovery Form covering which of the following losses? A. The loss was reported after the policy termination B. The loss had to occur during the policy period and be reported during the policy period C. The loss occurred prior to the policy period but was reported during the policy period D. The loss took place during the policy period and discovered within one year after the termination of the policy period

D. The loss occurred prior to the policy period but was reported during the policy period The Discovery Form provides coverage for losses discovered during the policy period but did not necessarily occur during the policy period.

Which of the following insuring agreements provides coverage if a company accountant steals money by signing a businessowner's name on a $1,000 check? A. Forgery or Alteration B. Money Orders and Counterfeit Money C. Theft of Money D. Employee Theft

Forgery or Alteration insures against the forgery or alteration of checks for money drawn by the insured or someone acting on behalf of the insured.