Test !!!!

Which of the following terms includes "continuous or repeated exposure to conditions that may result in bodily injury or damage neither expected nor intended by the insured?" A. Occurrence B. Accident C. Event D. Condition

A The definition of "occurrence" includes an accident (which tends to be sudden) and "continuous or repeated exposure to substantially the same general harmful conditions which results during the policy period in bodily injury or property damage."

Under the Commercial Building and Personal Property Coverage Form, the Valuable Papers Extension applies to: A. The cost of restoring lost information. B. Replacing antique goods. C.Replacing the original while the duplicate is being used. D. All of the listed answers are correct.

A Without this extension, the company would only pay for the blank paper. The limit of coverage is $2,500 unless increased.

An aleatory contract is most accurately described by which of the following? A. It is a contract in which the performance of one party is contingent upon the occurrence of a fortuitous (accidental) event. B. It is a contract which alleges certain facts to be true in the written agreement. C. It is a contract in which one party offers payment in exchange for the other party's performance. D. It is a contract which alters a previous agreement.

A Examples of aleatory contracts include insurance policies and product warranties. The other choices are false. Note: "Contingent" means dependent on the occurrence of something not yet certain (conditional).

What does the Homeowner Endorsement "Identity Fraud Expense" cover? A. Covers expenses up to $15,000. This includes attorney fees to cover defense costs. B. Covers defamation due to identity fraud. C. Covers loss of monies due to identity fraud. D. Covers loss of monies, defamation and cost of defense expenses.

A Identify fraud only covers the expenses incurred by the insured up to a limit of $15,000 for actions brought against the insured by merchants and financial institutions.

A commercial property policy specifies which of the following responsibilities as a duty of the insured? A. To provide a proof of loss statement following a loss if requested by the company. B. To return the policy if it is canceled by the insurance company. C. To pay the bank in full in the event of a total loss. D. To pay premiums within thirty days after receiving an invoice.

A If the insured reports a covered loss, the insurer may request the insured to complete a proof of loss statement. If this request is made, the insured must complete the proof of loss relatively quickly. Some policies give the insured only 60 days to complete the proof of loss after the insurer makes its request.

Which of the following statements about a mortgagee's rights under the dwelling property basic form (DP-1) is incorrect? A. The mortgagee may abandon the insured property to the insurance company. B. No act by the insured will jeopardize the mortgagee's rights. C. The mortgagee may file a proof of loss if the insured fails to do so. D. The mortgagee is entitled to receive prior notice of a policy's cancellation.

A Neither the insured nor the mortgagee may abandon the insured property to the company in case of a loss.

Each of the following is true about Difference in Conditions (DIC) insurance, EXCEPT: A. Traditional perils (such as wind and hail) are usually excluded. B. Coverage is usually written on a open peril basis. C. Difference in Conditions insurance can provide Flood insurance. D. Difference in Conditions insurance can provide Earthquake coverage.

B Coverage is usually written on a named peril basis.

A bailee customers' policy: A. Is purchased by individual customers of a bailee. B. Covers damage to customers' property when the insured is liable. C. Protects an insured from liability for injury to customers. D. Covers damage to the insured's property caused by customers.

B A dry cleaners usually carries this type of coverage. A bailee is not considered an insured under a policy of a customer. Should a loss occur where the bailee is held responsible for the damage, a bailee customers' property policy is needed.

Ms. Hoover sells her only car to her son, Tom. Tom does not live in the household. Ms. Hoover's Personal Auto Policy: A. Is automatically assigned to Tom B. Cannot be assigned to Tom unless the insurance company consents in writing C. Will automatically extend coverage to Tom while continuing to insure Ms. Hoover D.Will be extended to include Tom upon notification of the insurance company

B A policy cannot be assigned to another without the written consent of the insurer.

The Forgery and Alteration Coverage Form protects the insured from losses resulting from forgery or alteration of: I. Outgoing checks. II. Drafts. III. Promissory notes. IV. Instruments drawn against the insured. A. I and II only B. I, II, III and IV C. I and III only D. I, II, and III only

B All four of the instruments listed above are covered. This form is meant to protect the insured from loss through theft by these instruments drawn against them.

Ocean marine coverage for losses to the insured vessel caused by bursting boilers, latent defects in the vessel and negligence of the master or crew members are addressed by which of the following? A. Protection and indemnity coverage. B. The Inchmaree clause. C. Hull coverage D. Barratry

B Inchmaree was a steam ship that suffered a machinery loss that was not covered. A lawsuit followed, and future policies offered this coverage under what is commonly referred to as the Inchmaree clause.

An HO-5 form provides which of the following coverages for dwellings and their contents? A. Broad form perils for buildings and open peril coverage for personal property. B. Open peril coverage for buildings and personal property. C. Open peril coverage for buildings and broad form coverage for personal property. D. Name peril coverage for both buildings and personal property.

B The HO-5 form is the broadest HO form and provides open peril coverage on both covered buildings and the insured's personal property.

An insured's television set is damaged while at a repair shop. The interest of the repair shop is not covered because of which of the following clauses? A. Insurable Interest B. No Benefit to Bailee C. Pair and Set Clause D. Other Insurance

B The intent of the policy is to only cover the insurable interest of the insured. Bailees such as, a TV repair shop or a dry cleaners would not be an insured under the insured's policy. They must provide their own coverage.

What is the purpose of the "other insurance clause"? A. To avoid under insurance B. To avoid over payment of a claim C. Relates to limitations of coverage D. Provides for payment by equal shares

B The purpose of this clause is to avoid excess indemnity of a claim or over payment of a claim. This prevents the insured from obtaining coverage from more than one insurer and insuring the property for its full value and collecting from each the limit of the policy in case of a covered loss.

Which of these statements best describes "agency?" A. The activities of any party who receives a percentage of the profits from a business transaction. B. A relationship in which someone is authorized by contract to represent another party. C. The duties of a professional who is trained and licensed to prepare legal documents. D. The activities of any licensed insurance professional.

B This best describes the agency arrangements with insurers as well as insureds.

Which of the following statements concerning installation floaters is not true? a. The form covers property sold by the insured and transported to another location to be installed. b. Coverage is written on a named perils basis only. c. "Hoisting" coverage is a feature often written into Installation Floaters. d. Coverage may be written on a monthly reporting basis.

B Usually coverage is written on an "all risk" basis.

A ship has suffered damage and sunk. Which of the following would respond to cover the loss of the ship? A. Protection and indemnity coverage B. Shipper's fees C. Hull Insurance D. Cargo coverage

C

All of the following are additional property coverages under the homeowners program, EXCEPT: A. Debris removal. B. Reasonable repairs. C. Special damages. D. Loss assessment.

C Special damages are those addressed by the liability section of the policy. Medical expenses and loss of wages are a few examples.

An insurance policy is issued as a policy having two unequal parts, the liability assumed by the insurer, and the premium paid by the insured. This contract is referred to as: A. A conditional contract. B. A contract of estoppel. C. An aleatory contract. D. A contract of adhesion.

C A contract of insurance is known as an aleatory contract because the amount at risk between the parties is unequal. The insured pays a small premium compared to the insurance company's promise of something of greater value in the future in case of a loss.

A crew member has been injured on a ship. When his medical expenses are paid, this is known as: A. Protection. B. Jones Act. C. Cure. D. Indemnity.

C In ocean marine insurance this is called 'cure' and is paid under the Protection and Indemnity coverage.

If a loss is valued using functional replacement cost, which of the following would apply? A. Market value of the loss is paid B. Deductibles are suspended C. The coinsurance clause is not applicable D. Replacement cost up to an agreed amount is payable

C The coinsurance clause is not applicable because the coverage limit is based on the market value of the property which is probably below the 80% cost to replace it. This has been agreed to in the contract when functional replacement cost is the basis for loss settlement. Used particularly in losses involving antique, ornate or custom construction with less expensive, but functionally equivalent materials.

A furrier customers policy does not cover: A. Property in the custody of the insured. B. Property owned by the insured's customers. C. Loss in excess of the value of the property as declared by the owner. D. The furrier's liability as a bailee.

C The furrier is not responsible for a value beyond what is declared by the owner of the property.

The insured carries a Businessowners Policy (BOP). If the premises become 69% or more vacant what can the insurer do? A. The insurer can non-renew the policy. B. The insurer can reduce coverage. C. The insurer can cancel the policy. D. The insurer can restrict coverage.

C The insurance company can cancel the policy if the risk is 69% or more vacant.

An insured, covered under a Businessowners Policy, has sustained a fire loss to his building. Due to changes in the building codes it's going to cost $20,000 more to make the repairs. How much, if any, will the BOP pay for these extra costs? A. $5,000 B. Nothing C. $10,000 D. $20,000

C There is a limited amount ($10,000, increased from $5,000 in the earlier forms) for ordinance or law coverage —increased cost of construction. However, this coverage applies only to buildings insured on a replacement cost basis. Further, it cannot be used to pay any costs after a loss for an ordinance or law that the insured was required to comply with before the loss, but failed to. It is important to note that the ordinance or law exclusion is still in place, although the provision states that this additional coverage is not subject to the terms of the exclusion to the extent that the exclusion conflicts with the additional coverage.

The law recognizes two types of waivers. They are which of the following? A. Estoppel/indemnity B. Apparent/implied C. Express/implied D. Specific/contractual

C They are express and implied. An express waiver occurs when the insurer or its representative knowingly gives up a known right under the insurance contract. Perhaps the right to request an appraisal of the damaged property is an example. By comparison, an implied waiver may be the result from some act of neglect on the part of the adjuster.

When a motor vehicle is sold, transported, or delivered to a salvage motor vehicle dealer, it shall be accompanied by the following except: A. A properly endorsed certificate of title B. Salvage certificate of title C. Vehicle certificate of destruction D. A notarized document verifying ownership history

D A document regarding the verification of ownership history is not required.

The crew of a ship is guilty of fraud with the intention of reaping gains at the expense of the owner. In ocean marine coverage, what is this called? a. Perils of the sea b. Jettison c. General average d. Barratry

D Barratry means fraud by the master or the crew with the intention of reaping gains at the expense of the owner. Examples include setting the ship on fire, diverting the ship from its course, or embezzlement of the cargo.

Each of the following is true about the National Flood Insurance Program, EXCEPT: A. Coverage may be written by private insurance carriers. B. Coverages sold by licensed insurance agents. C. The federal government reimburses insurance companies for losses. D. Eligibility requirements are set by private insurance carriers.

D The Federal Emergency Management Agency (FEMA) sets the eligibility requirements for the communities.

A fidelity bond is designed to protect the employer against: a. Damage to property he is working on. b. Slander or libel c. Personal injury d. Theft by an employee

D The fidelity bond is designed to protect the employer from loss stemming from dishonest acts by his employees. The bond may be written to cover specific employees or positions (scheduled) or all employees (blanket).

On the basic dwelling policy all of the following perils are excluded EXCEPT: A. War B. Landslide C. Earthquake D. Volcano

D The question is about the DP-1 Basic form. War, earthquake and landslide are not named perils and are therefore excluded.

All of the following types of signs can be covered by the Sign Coverage Form, except: A. Neon B. Fluorescent C. Electrical, not attached to a building D. Signs carved in stone or brick

D The sign carved into stone or brick would not qualify for the form.

The elements of negligence include: I. A duty of care existed. II. A duty of care was breached. III. Injury or damage resulted. IV. Criminal conduct.

I, II, and III only. Explanation: Negligence is established as a tort - a civil wrong. It occurs when one party, either through action or inaction, fails to exhibit a reasonable care that causes another party to be subject to unnecessary harm. The negligent party is presumed to have an obligation or duty to protect against the negligent act.

In crime insurance, which of the following individuals is NOT considered to be a custodian? Employee Insured Janitor Partner

Janitor

The insured has a one family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the garage? A. $10,000 B. $15,000 C. $20,000 D. None

The policy provides for 10% of the dwelling limit. Therefore the garage is insured for $20,000 for the same perils that apply to the dwelling.

The purpose of expediting expenses under the Equipment Breakdown policy is: a. To pay moving expenses b. To pay the cost of removal c. To pay for repairs or replacement in a timely manner d. To reimburse the insured for loss of use

c The purpose is to pay those expenses necessary to repair or replace the damaged equipment as quickly as reasonable.

Which characteristic of an insurance contract supports the ambiguity ruling in favor of the insured on a policy? a. Aleatory b. Representations c. Reasonable expectations d. Unilateral

c Since an insured can reasonably assume certain things to be covered on a policy, the ruling will always be in the favor of the insured,if the language is vague or ambiguous