Study Up
An independent adjuster may include which of the following? a)A firm who acts on behalf of the insurer b)Officer, director or regular salaried employee of an insurer c)Adjustment bureau or association owned by the insurers d)Attorney at law
An independent adjuster is any person, firm, association or corporation, who, for a commission, acts on behalf of an insurer in the work of investigating and adjusting claims.
Under businessowners policy Section I, if an insurer wants to nonrenew a policy for nonpayment of premium, how many days before the expiration date must the insurer notify the mortgageholder? a)10 days b)15 days c)20 days d)30 days
a)10 days If an insurer will not be renewing a policy for nonpayment of premium, according to businessowners policy Section I, it must notify the mortgageholder at least 10 days before the policy expires.
An insured was involved in an accident and cannot perform her current job for three years. If she could reasonably perform another job utilizing similar skills after one month, how long would she receive benefits under an own occupation disability plan? a)2 years b)1 month c)She would not receive any benefits. d)3 years
a)2 years Under an own occupation plan, if the insured cannot perform his or her current job for a period of up to two years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that two-year period. After that, if the insured is capable of performing another job utilizing similar skills, benefits will not be paid.
Under the conditions of the dwelling policy, within how many days does an insurer have to pay for a loss once a proof of loss form has been received and an agreement with the insured as to the amount payable has been reached? a)60 days b)30 days c)31 days d)45 days
a)60 days Losses will be paid within 60 days of receiving proof of loss and coming to an agreement with the insured as to the amount payable.
Which of the following is a statutory defense? a)Assumption of risk b)Intervening cause c)Contributory negligence d)Comparative negligence
d)Comparative negligence Many states, by statute, require that damages be apportioned based upon the degree of negligence of each party in an accident.
In the event of a loss covered by the policy, if the insurer requests a signed sworn proof of loss, the named insured is required to submit it within a)A specified time. b)1 year. c)5 business days d)30 days.
a)A specified time. In the event of a loss covered by the policy, the named insured is required to submit to the insurer a signed sworn proof of loss within the allotted time (usually 60 days, but may vary).
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of a)Concealment. b)Waiver. c)Fraud. d)Breach of warran
a)Concealment. In insurance, concealment is the withholding of information that will result in an imprecise underwriting decision.
Which commercial crime form would provide coverage for a loss that did not necessarily happen during the policy period but was revealed during the policy period? a)Discovery form b)Retro form c)Reporting form d)Loss sustained form
a)Discovery form The discovery form is used for losses that are discovered during the policy period but may not have happened during the policy period. The discovery form is one of the conditions contained in the crime general provisions forms, which contain conditions and exclusions applying to all crime forms. The discovery period is normally 1 year
The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the a)Exclusions b)Declarations. c)Endorsements. d)Conditions.
a)Exclusions. The exclusions section of an insurance policy details what perils are not insured against and what persons are not insured.
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? a)False advertising b)Unfair claims c)Twisting d)Defamation
a)False advertising False advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading.
A health policy includes the following statement on the first page: "The insurer will cover total disability losses resulting from injuries or sickness subject to the policy definitions, exclusions, and other provisions. Loss must begin while this policy is in force." This is an example of a)Insuring agreement. b)Entire contract. c)Payment of claims provision. d)Conformity with state statutes provision.
a)Insuring agreement. The insuring agreement or clause is usually located on the first page of the policy. It is a general statement that identifies the basic agreement between the insurance company and the insured, and the company's promise to pay to provide insurance and cover the claims.
A property insurance policy that insures a commercial building on a replacement cost basis includes the ordinance or law coverage endorsement. This endorsement will cover all of the following expenses EXCEPT a)Ordinance with which the insured was required to comply prior to the loss. b)Loss to the undamaged portion of the building. c)Any increased cost of repairs or reconstruction. d)Demolition and removal cost.
a)Ordinance with which the insured was required to comply prior to the loss. This endorsement incorporates the coverages that were provided by contingent liability endorsement, demolition cost endorsement, and increased cost of construction endorsement. Often, if the insured has an exposure to one of these coverages, there will be exposure to all of them. No coverage will be provided for ordinances or laws the insured was required to comply with prior to the loss.
Under the New York No-Fault Law, which of the following claims would NOT be restricted from tort action? a)Property damage claims b)Bodily injury claims c)Loss of income claims d)Medical expense claims
a)Property damage claims New York No-Fault Law does not include restrictions on property damage claims, they remain under the tort (fault) system.
Under the personal auto policy, liability for bodily injury resulting from the insured's use of a nonowned automobile is a)Provided by the insured's policy on an excess basis. b)Not covered. c)Shared on a pro rata basis. d)Provided by the insured's policy on a primary basis.
a)Provided by the insured's policy on an excess basis. Automobile insurance follows the insured auto, so the coverage written on the auto is primary. Automobile insurance also follows the insured as excess over other collectible insurance.
In this state, all of the following employees must be covered by the employer's workers compensation insurance EXCEPT a)Public school aides .b)Workers of a nonprofit organization. c)State employees. d)Full-time domestic workers.
a)Public school aides. Public school aides are excluded from the required workers compensation coverage. All the other types of employees listed must be covered by the employer's workers compensation insurance.
After a loss, an insured covered by a business property coverage is NOT required to a)Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation. b)Resume business operations as soon as possible. c)Send the insurer a sworn proof of loss within 60 days d)Take all reasonable steps to protect property from further damage.
a)Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation. Although the insured is required provide a description of how, when, and where the loss or damage occurred, there is no demand for a timeline leading up to the loss.
All of the following statements concerning liability coverage are true EXCEPT a)The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met. b)The insurer cannot refuse to pay a claim even if the insured is bankrupt. c)Liability policies normally include supplementary payment provisions. d)Liability policies defend the insured against claims, real or alleged.
a)The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met. The legal action against the insurer condition states that the policyholder cannot sue the insurer unless he or she has met all conditions of the policy.
Which of the following is NOT a goal of risk retention? a)To minimize the insured's level of liability in the event of loss b)To reduce expenses and improve cash flow c)To increase control of claim reserving and claims settlements d)To fund losses that cannot be insured
a)To minimize the insured's level of liability in the event of loss Retention usually results from three basic desires of the insured: to reduce expenses and improve cash flow, to increase control of claim reserving and claims settlements, and to fund losses that cannot be insured.
Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?a)$1,000 b)$5,000 c)$10,000 d)$25,000
b)$5,000 A special limit of $5,000 per occurrence applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings or records.
How long does a licensee have to deliver information requested by the Superintendent of Financial Services? a)10 days b)15 days c)25 days d)30 days
b)15 days A licensee must submit requested information to the Superintendent within 15 days.
According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss? a)30 days b)60 days c)90 days d)120 days
b)60 days All losses will be paid within 60 days of receiving the proof of loss.
A beauty parlor burns to the ground. What type of loss is this to the owner? a)Consecutive b)Direct c)Consequential d)Specific
b)Direct Damage caused by a peril that is insured against is classified as direct loss.
In addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT a)Bankruptcy. b)Employers liability. c)Separation of insured. d)Legal action against insurer.
b)Employers liability. The following conditions apply to the liability coverage in addition to the common policy conditions: bankruptcy, duties in event of occurrence, claim or suit, legal action against the insurer, and separation of insured. Employers liability is an exclusion.
Which statement regarding insurable risks is NOT correct? a)An insurable risk must involve a loss that is definite as to cause, time, place and amount. b)Insureds cannot be randomly selected. c)Insurance cannot be mandatory d)The insurable risk needs to be statistically predictable.
b)Insureds cannot be randomly selected. Granting insurance must not be mandatory, selecting insureds randomly will help the insurer to have a fair proportion of good risks to poor risks. All other statements are true.
Valuable papers and records form provides coverage for the reconstruction of all of the following types of records EXCEPT a)Historical records. b)Prepackaged software. c)Blueprints. d)Deeds.
b)Prepackaged software. Coverage for reconstructing prepackaged software is specifically excluded.
An insurance agency could purchase an errors and omission insurance policy which would provide protection in the event of any of the following events EXCEPT a)The agency negligently fails to renew a policy causing a client to suffer a financial loss. b)The agency loses commission income from policies that were not issued by the insurer. c)The agency negligently fails to offer an increased limit of coverage or benefit under a policy. d)The agency is sued by an insured for giving incorrect advice.
b)The agency loses commission income from policies that were not issued by the insurer. Errors and omissions insurance protects an insured against actions claiming the insured has failed to act in a professional manner. It does not cover claims arising out of criminal wrongs.
Which of the following qualifications for obtaining a resident insurance agent's license in the state of New York is FALSE? a)The applicant must complete a minimum of 20 hours prelicensing training per line of authority. b)The applicant must have two letters of recommendation attesting to trustworthiness, reliability and good reputation. c)The applicant must be at least 18 years of age. d)The applicant must be a resident of the state of New York.
b)The applicant must have two letters of recommendation attesting to trustworthiness, reliability and good reputation. The insurer that agrees to appoint the applicant as an agent attests to their character and qualifications.
All of the following are characteristics of the dwelling policy EXCEPT a)Dwellings up to four family units are eligible. b)The dwelling must be owner-occupied. c)Coverage includes the dwelling only, contents only, or both. d)Incidental occupancy of limited service-type exposure is permitted.
b)The dwelling must be owner-occupied. Dwelling policies insure residential exposures with only limited service-type business exposures allowed. The dwelling can be completed or under construction, and can be owner- or tenant-occupied. The dwelling policy can insure the dwelling only, contents only, or both.
Supplementary payments on a CGL provide all of the following EXCEPT a)The cost of bonds to release attachment. b)Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds. c)$100 in gasoline costs by the insured driving a witness to and from court. d)Pre-judgment and post-judgment interest.
b)Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds. Supplementary payments will cover only $250 for these.
The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period? a)90 days b)120 days c)1 year d)3 years
c)1 year Medical payments coverage of a businessowners policy (BOP) will pay medical, dental, hospital, and funeral services incurred within one year from the date of an accident to a person who suffers bodily injury by accident on or next to the insured's premises, or because of the insured's operations.
A dwelling policy has been in effect for 60 days when fraud was discovered by the insurer. Prior to the cancellation date, the insurer must provide a notice of a)14 days. b)21 days. c)30 days. d)45 days.
c)30 days. The insurer has the right to cancel a dwelling policy at any time for fraudulent activities. An advance notice of 30 days is required prior to proposed cancellation
If an insurer intends to nonrenew a dwelling policy, it must alert the insured of the nonrenewal at least how many days before the effective date? a)15 days b)30 days c)45 days d)60 days
c)45 days If an insurer chooses to renew a dwelling policy, as allowed by the laws of the state of New York, such insurer must notify the insured at least 45 days prior to the expiration date of the policy.
Which of the following is NOT considered an insured contract under the commercial general liability policy? a)An obligation as required by ordinance to indemnify a municipality, except for work for a municipality b)A written lease agreement on the insured premises c)A written agreement which indemnifies a person for fire damage to the premises rented to the insured d)An elevator maintenance agreement
c)A written agreement which indemnifies a person for fire damage to the premises rented to the insured General liability covering premises includes automatic coverage for written lease of premises, sidetrack agreements, elevator maintenance agreements, easement agreements, and municipality indemnification. Protection from claims arising from fire damage to nonowned property would need to be covered by fire damage (legal) liability.
What documentation grants express authority to an agent?a)Fiduciary contract b)State provisions c)Agent's contract with the principal d)Agent's insurance license
c)Agent's contract with the principal The principal grants authority to an agent through the agent's contract.
Which of the following would NOT be considered an insurance producer? a)A reinsurance intermediary b)An insurance agent c)An insurer's officer d)An insurance broker
c)An insurer's officer Insurance producer means any person required to be licensed to sell, solicit or negotiate insurance, including agents, brokers and intermediaries. Officers are not required to be licensed.
Persons covered under an insurance policy, whether named or not, are known as the a)First named insureds. b)Additional insureds. c)Insureds. d)Named insureds.
c)Insureds. The insureds are persons covered under a policy, whether named or not.
What type of coverage does a homeowners policy include that a dwelling policy does not? a)Other structures b)Broad form c)Liability d)Personal property
c)Liability Homeowners policies are very similar to dwelling policies, except that homeowners policies include liability coverage.
According to the Insurance Frauds Prevention Act, will the person who suspects a fraudulent transaction be penalized for reporting it to the Superintendent? a)No; in no case may the person be penalized. b)Yes c)No, as long as the act is reported in good faith d)Each person who reports to the Superintendent will receive a monetary reward. As long as the suspected fraudulent transaction was reported in good faith, no civil liability will be placed against the person who reported it.
c)No, as long as the act is reported in good faith As long as the suspected fraudulent transaction was reported in good faith, no civil liability will be placed against the person who reported it.
After signing a contract and starting the job, a contractor realizes that the job cannot be completed at the agreed upon price. Which bond would pay? a)Supply b)Completion c)None d)Bid
c)None Bid bonds guarantee a contractor will enter a contract at the price bid if selected, supply bond guarantee supplies are delivered in accordance with a supply contract, completion bond guarantee money borrowed will be spent to complete the job free of liens and encumbrances. There is no bond to protect the contractor for faulty bids or cost overruns.
Which inland marine coverage condition says that an insurer will settle with the actual owners of property involved in a loss?a)Reinstatement of limit b)Legal action against the insurer c)Privilege to adjust with the owner d)Transfer of rights of recovery
c)Privilege to adjust with the owner Because inland marine coverages can cover property of others in the insured's care, custody, or control, the privilege to adjust with the owner condition says that the insurer will settle with the actual owners of the property in the event of a loss.
In order to qualify for a certificate of authority, every person, firm, association, corporation or joint-stock company must meet all of the following requirements EXCEPT a)If a stock company, the amount of capital and surplus required by law must be paid in cash or investments. b)If a mutual company, provide statements of at least 3 incorporators, proof of the required initial surplus in cash or investments, and the required number and amount of actual applications for insurance. c)The entity must be part of the New York Labor Union. d)The entity must fully comply with all applicable provisions of New York's insurance laws.
c)The entity must be part of the New York Labor Union. In order to qualify for a certificate of authority, every person, firm, association, corporation or joint-stock company must meet all the above requirements except for membership in the state Labor Union.
Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy? a)The insured's mother is injured while exiting from the insured vehicle. b)The insured is struck by another vehicle while crossing the street. c)The insured is injured while driving his motorcycle on his resident premises. d)The insured's friend is injured in an accident while riding as a passenger in the insured's car.
c)The insured is injured while driving his motorcycle on his resident premises. Coverage does not apply when the insured is occupying a vehicle with fewer than 4 wheels.
Under the provisions of the business income coverage form, all of the following are true EXCEPT a)The insured agrees to resume all or part of operations as quickly as possible. b)The insured is reimbursed for payroll that continues after the loss begins. c)The insured is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first. d)If the insured and insurer are unable to come to agreement as to the value of the loss, either party may make a written demand for an appraisal.
c)The insured is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first. Business income will pay beyond the expiration date of a policy. It will pay until the business is restored or the limits of coverage are exhausted.
A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy? a)$180,000 b)$200,000 c)$100,000 d)$175,000
d)$175,000 The limit of the equipment breakdown policy applies to property of the insured, property of others, and expediting expenses in any combination as long as expediting expense does not exceed $25,00
Under businessowners policy Section I, if an insurer wants to cancel a policy for any reason except nonpayment of premium, how many days before the effective cancellation date must the insurer notify the mortgageholder? a)10 days b)15 days c)20 days d)30 days
d)30 days If an insurer is cancelling a policy for any reason except nonpayment of funds, the insurer must give the mortgageholder at least 30 days' notice, following businessowners policy Section I.
Under the uniform required provisions for accident and sickness policies, proof of loss should be filed within how many days of a loss? a)20 days b)30 days c)60 days d)90 days
d)90 days Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within 90 days of a loss.
Professional photographers and musicians may insure their equipment with a)A theatrical property coverage form. b)A contractors equipment floater. c)An installation floater. d)A commercial articles floater.
d)A commercial articles floater. The commercial articles form covers photo equipment or musical instruments used commercially, such as by a professional band.
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? a)Exclusions b)Declarations c)Insuring agreement d)Additional coverage
d)Additional coverage The additional coverage portion of a policy provides an additional amount of coverage for specific loss expense, at no additional premium.
Which of the following is NOT covered under accounts receivable coverage form? a)Interest on loans required to offset uncollectible amounts pending payment of the insurance proceeds b)Sums due the insured that are uncollectible due to a covered loss c)Expenses to reestablish the records, if possible, and collection expenses that are in excess of normal costs d)Any loans required to offset uncollectible amounts
d)Any loans required to offset uncollectible amounts Loan principal amounts are not covered under the form. However, other expenses, such as interest on necessary loans, are covered.
Which of the following is an additional coverage that is covered by the broad causes of loss form? a)Lightning b)Ordinance or law c)Settling d)Collapse
d)Collapse Collapse is an additional coverage found in the broad causes of loss form. Collapse does not include settling. Lightening is a named peril and ordinance or law is an exclusion.
Which of the following statements is true concerning under-insured motorist coverage under a personal auto policy? a)It will pay up to the limits of insurance for any loss which involves an underinsured driver. b)Limits must equal the bodily injury limits of the policy. c)Limits may differ from the limits for uninsured motorist coverage. d)Coverage applies only to the extent that the underinsured motorist limits exceed the bodily injury limits carried by the operator of the other vehicle.
d)Coverage applies only to the extent that the underinsured motorist limits exceed the bodily injury limits carried by the operator of the other vehicle. Underinsured motorist coverage will act as excess over the at fault motorist's bodily injury coverage.
All of the following are optional coverages that may be attached to an HO-3 policy EXCEPT a)Home day care coverage. b)Earthquake coverage. c)Personal property replacement cost. d)Dwelling replacement cost.
d)Dwelling replacement cost. The HO-3 provides replacement cost coverage for losses to the dwelling without endorsement or optional coverage being added.
The time limit on certain defenses provision in health policies deals with which of the following? a)Waiting and elimination periods b)Fraud c)Payment of premium d)Incontestability of statements on the application
d)Incontestability of statements on the application The time limit on certain defenses provision states that no statement or misstatement (except fraudulent misstatements) made in the application at the time of issue will be used to deny a claim after the policy has been in force for 2 years.
Which of the following endorsements is used by individual business owners who use company vehicles for personal use rather than purchasing a personal vehicle? a)Drive other car b)Additional insured - lessor c)Hired autos specified as covered autos you own d)Individual named insured
d)Individual named insured The endorsement is used by individual business owners who use company vehicles for personal use rather than purchasing a personal vehicle.
According to the doctrine of contributory negligence, when an individual is found to have contributed to his or her own loss in any way, another party a)May be held liable, but to a reduced extent. b)May be held liable for full damages despite the other party's negligence. c)May be held liable only in the case of vicarious liability. d)May not be held liable.
d)May not be held liable. Contributory negligence is a common law defense that denies recovery to an injured party who contributed to the loss by failing to meet standards required for self-protection.
An insured has a personal property replacement cost endorsement under her homeowners policy. If an expensive painting and an antique chair are stolen from the insured's home, what will the insured receive on the claim under that endorsement? a)70% of the replacement cost b)80% of the replacement cost c)100% of the actual cash value d)Nothing
d)Nothing The personal property replacement cost endorsement excludes property such as art and antiques.
Which of the following limits, shown in the declarations of a policy, applies to medical expenses? a)Per occurrence b)Per injury c)Per incident d)Per person
d)Per person A combined single limit of insurance is applicable for all bodily injury and property damage losses that arise from a single occurrence. Medical expenses are limited to the per person limit shown on the declarations.
Which of the following is a cancellation procedure in which the premium returned to the insured is NOT in direct proportion to the number of days remaining in the policy period? a)Pro rata b)Flat rate c)Proportional d)Short rate
d)Short rate Short-rate cancellation is a cancellation procedure in which the premium returned to the insured is not in direct proportion to the number of days remaining in the policy period.
The common policy condition is a modular part combined with other parts to create the contract. The common policy condition section contains provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy? a)Prior to the insurer making inspections, surveys, and reports relating to the insurance, approval from the insured must be obtained. b)Requests for any changes in the policy from the insured may be made by the second named insured. c)The insurer is granted the right to audit books and records of the insured relating to the policy for a period of up to 5 years after the end of the policy. d)The first named insured may cancel the policy at any time by giving written notice to the insurer.
d)The first named insured may cancel the policy at any time by giving written notice to the insurer. The insurer is granted the right to audit books and records for a period of up to 3 years. The insurer is automatically granted the right to make inspections, surveys and such relating to the insurance. Only the first named insured may make requests for any changes in the policy.
All of the following are other coverages included in both the broad and special form dwelling policy EXCEPT a)Collapse. b)Breakage of glass. c)Lawns, trees, shrubs, and plants. d)Theft of personal property.
d)Theft of personal property. Theft of personal property can only be included by endorsement.
