Test Questions
If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur? a)The change must be reported to the Commissioner. b)The change must be reported to the Federal Producer's Directory. c)The licensee must obtain a new license. d)It is illegal to transact insurance under any name other than the one listed on the license.
a
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
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a)Legal purpose b)Contract of adhesion c)Acceptance d)Consideration
d
In a personal auto policy, Coverage C: Uninsured Motorist defines an insured person as any of the following persons EXCEPT a)Occupying a covered auto. b)Injured in an auto accident. c)Member of the named insured. d)Member of the insured being struck as a pedestrian.
b
Which of the following is NOT a government health insurance a)Medicaid b)Federal Deposit Insurance Corporation (FDIC) c)Old-age, Survivors and Disability Insurance (Social Security) d)Medicare
b
against an insured for damages due to bodily injury or property damage caused by an occurrence to which the coverage applies? a)Coverage D - Loss of Use b)Coverage E - Personal Liability c)Coverage F - Medical Payments to Others d)Coverage C - Personal Property
b
Which of the following would provide coverage for loss of income when an insured rental dwelling is rendered uninhabitable because of a covered loss? a)Coverage D b)Coverage A c)Coverage B d)Coverage C
a
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages? a)General b)Special c)Tort d)Normal
b
Robbery is a)Taking of property from within the premises leaving visible signs of forced entry. b)Taking of property by use of force, violence, or fear. c)Taking of property without causing property damage or bodily harm. d)Any act of stealing.
b
The Occurrence form trigger is based on which of the following? a)The amount of claims made during the policy period b)The date when injury or damage occurs c)The place where the injury or damage occurs d)The amount of the insured's deductible
b
A commercial property special form covers property in transit up to a) $5,000. b)ACV. c) $500. d)Full replacement cost.
a
A date stipulated on the declaration page of a claims-made liability form as the first date on which an incident may occur and be covered by the policy is called a)Retroactive date. b)Retrocedent date. c)Effective date. d)Retention date.
a
A policyholder has a boiler and machinery 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) $175,000 b) $180,000 c) $200,000 d) $100,000
a
Additional coverages in the liability section of a homeowners policy cover all the following EXCEPT a)Damage to a third party property for which the insured is legally liable. b)Claims expense. c)Expenses the insured incurs rendering first aid for bodily injury to third parties. d)Damage to the property of others.
a
Which of the following is NOT an optional coverage available in a BOP? a)Employee dishonesty b)Workers compensation c)Outdoor signs and exterior-grade floor glass d)Mechanical breakdown
b
All of the following statements regarding parts used in the repair of an insured vehicle are true EXCEPT a)Parts used in the repair of an insured vehicle by other than the original manufacturer must use replacement parts from the manufacturer only. b)All aftermarket parts installed on the vehicle must be clearly identified on the repair estimate. c)Insurers or repair facilities must disclose to the insured if used parts were installed on a vehicle. d)Parts used in the repair of an insured vehicle by other than the original manufacturer must be at least equal in like kind and quality in terms of fit, quality and performance.
a
All of the following statements describe the concept of strict liability EXCEPT a)Claimants may need to provide proof that a product defect caused an injury. b)It is imposed regardless of fault. c)It is applied in product liability cases. d)It is imposed on defendants engaged in hazardous activities.
d
Expenses that an organization would not have incurred if business interruption had not existed are known as a)Continuing expenses. b)Additional expenses. c)All inclusive expenses. d)Extra expenses.
d
Under a dwelling policy, the value of a loss is determined by all of the following EXCEPT a)The policy limit. b)The amount reflecting the insured's interest in the property at the time of loss. c)The amount necessary to repair or replace the property. d)The amount negotiated by the insured.
d
Under the dwelling policy, Coverage C - Personal Property is a)Automatically provided as 50% of Coverage A. b)A prohibited coverage in the dwelling form. c)Limited to 50% of the amount of insurance that is written as Coverage A. d)Limited to covering a servant's property while at the insured location.
d
According to the Law of Agency, a principal is represented by a/an a)Broker. b)Insured. c)Agent. d)Insurer.
c
A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint,the building is considered a)Closed. b)Vacant. c)Unoccupied. d)Condemned.
b
An insured carries a property policy on her home in the amount of $250,000. A bank is shown as the mortgagor in the policy. Last month the insured made her final mortgage payment, but did not remove the bank from the policy. In the event of a covered loss to her home, how much will the bank receive? a)All of the payment would be made to the mortgagor shown in the policy. b)Nothing c)Up to the amount of debt that the insured has with the bank d)The standard minimum of 10% that is paid to lenders
b
CGL Coverage B (Personal Injury and Advertising Injury) will cover a)An offense committed by an insured whose business is advertising. b)Inadvertent injury to others caused in the course of advertising the insured's product. c)The failure of goods to conform to advertised quality or performance. d)Oral or written publication of material the insured knows is false.
b
The commercial property declarations page contains which of the following? a)Cause of loss forms b)Description of the property insured c)Interline endorsements d)Common policy conditions
b
Which one of the following statements regarding coverage for the flood and earthquake perils is true? a)Both are excluded perils in all property policies. b)Flood and earthquake coverage is available in all policies. c)Flood and earthquake coverage is available only through the government. d)Flood insurance usually is provided in property policies. However, earthquake insurance is available by endorsement only.
a
Which policy consists of the declarations and conditions, endorsements, and other attachments applicable to a single line of insurance? a)Monoline b)Insurance c)Casualty d)Commercial package
a
If more than one person has an insurable interest in the property covered under a dwelling policy, a)All insureds must decide which one will be liable for the loss. b)The insurer will be liable for only the insured's interest in the damaged property. c)Liability will be split evenly among all people who have insurable interest. d)All involved insurers must decide which one will be liable for the loss.
b
Which of the following is true regarding personal liability coverage? a)It must be added as a supplement or written as a separate policy. b)It does not cover medical payments to others. c)It is included in all dwelling policies. d)It is the same as in homeowners policies.
a
Which of the following would NOT be considered an "insured" under a business auto coverage form? a)The owner from whom the named insured hires or borrows a covered auto b)Employee in the business of selling, servicing, or parking autos c)A partner of the named insured for any covered auto owned by that person or a member of his/her household d)Anyone while using a covered auto with the named insured's permission
a
The insured's home is covered by an HO-3. Two years ago, the insured bought the home for $58,000. Today, its replacement value is $60,000. How much Coverage A does the insured need to qualify for replacement cost coverage? a) $46,400 b) $48,000 c) $58,000 d) $60,000
b
Which of the following would be covered by the physical damage coverage of your Business Auto Policy? a)Your car's factory installed disc player was stolen. b)The radioactive waste it was hauling damages your truck. c)Your car is damaged while being prepared for an organized racing event. d)Freezing damaged the truck's engine.
a
Which is NOT included in a commercial package policy? a)Boiler and machinery coverage b)Commercial property c)Dwelling policy coverage d)Commercial crime coverage
c
An agent is acting ethically in all of the following situations EXCEPT a)Always representing the insured. b)Working within the conditions of his/her contract. c)Representing the insurer, not the insured. d)Keeping customers' best interests in mind.
a
The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT a)A pedestrian is struck by the insured while crossing in front of the vehicle. b)The insured is injured by a motor vehicle while crossing the street. c)The insured's infant daughter sustains injuries when the car she is occupying accidentally rolls down a hill. d)A friend is injured while driving the insured's vehicle with permission.
a
The other insurances clause of an ocean marine policy allows coverage for which reasons? a)To obtain coverage for war, strikes, and related risks not covered by the policy b)To replace an existing policy c)To add endorsements d)To expand existing coverages such as earthquake, fire, and hail
a
All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT a)The injury or damage must occur after the insured has released physical possession of the product to another. b)The injury or damage must occur within 1 year after the insured's work is completed. c)The injury or damage must occur away from the insured premises. d)The injury or damage must arise out of the insured's product or work.
b
Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will a)Defend with the hopes of not paying damages. b)Either pay or defend as it decides. c)Pay the alleged damages. d)Proceed according to your request.
b
If the ocean marine contract pays the ACV of the property just prior to the loss, it is a)A valued contract. b)An indemnity contract. c)A replacement cost contract. d)A demurrage contract.
b
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? a)Making deceptive statements about a competitor b)Telling a client that his first premium will be waived if he purchased the insurance policy today c)Inducing the insured to drop a policy in favor of another one when it's not in the insured's best interest d)Charging a client a higher premium for the same policy as another client in the same insuring class
b
Which of the following other coverages is NOT included in the basic form dwelling policy? a)Tenant's improvements, alterations, and additions b)Breakage of glass c)Removal coverage d)Personal property temporarily away from the insured premises
b
An insured has legal liability coverage with a $50,000 limit on tenant's property. After a loss, the tenant sues for $75,000 because the property loss was more than $50,000. The defense costs were $10,000, and the other investigative expenses were $5,000. What will the insurer pay? a) $50,000 b) $55,000 c) $60,000 d) $65,000
d
Which of the following clauses under an Open Cargo Policy is the MOST restrictive? a)Transportation Clause b)With Particular Average Clause c)All Risk Form d)Free of Particular Average Clause
d
Which of the following is NOT true concerning the fair rental value coverage provided in a dwelling policy? a)It pays for the loss of rent you would have collected less any expenses that would not have continued. b)Coverage continues until repairs are completed. c)The period of time to repair or replace is not limited by the expiration date of the policy. d)Loss or expense caused by the cancellation of a lease is covered.
d
All of the following would be exempt from the workers compensation laws of this state EXCEPT a)Employers who only employ 5 workers b)Employers in domestic service c)Employers of domestic workers d)The self-employed
a
Who is not an insured for liability on a BAP? a)The owner of a car the insured borrows b)Anyone using a covered auto with permission c)Anyone liable for the conduct of the insured d)The named insured in any covered auto
a
All of the following are excluded in the equipment breakdown basic policy EXCEPT a)Loss of power, lights, heat, steam, or refrigeration. b)Explosion of Steam Boilers. c)Ordinance or law coverage. d)Business interruption.
b
An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay? a) $0 b) $30,000 c) $32,000 d) $40,000
b
#15. After a storm dumps 8 inches of snow, Matt spends several hours clearing his walks and driveway. Later that night it begins to sleet. Before Matt can clear his walks again, Rick, Matt's neighbor, walks his dog before going to bed. As he walks past Matt's house, he slips and falls, breaking his arm. Which defense will reduce recovery for Rick's injury? a)Comparative negligence b)Statute of limitations c)Intervening cause d)Contributory negligence
c
A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT a)Boiler and machinery coverage b)General liability coverage c)Workers compensation coverage d)Crime coverage
c
A stock insurer is defined as an insurer a)That invests no less than 20% of its premium income in the stock market. b)That issues health care coverage for farm animals. c)With its capital divided into shares and owned by its stockholders. d)Owned by its policyowners who receive policy dividends.
c
An insured is driving his or her automobile and strikes a large pothole, causing a flat tire. Which coverage of the insured's personal auto policy will pay for the repair? a)Comprehensive b)Collision c)Loss is not covered d)None of the above
c
One advantage of claims-made liability forms from the insurer's point of view is that a)The insurer will always know when to expect the claim to be filed. b)It allows stacking of limits. c)It prevents stacking of limits. d)The insurer does not pay claims years after the occurrence causing the damage.
c
What is a risk retention group? a)A risk retention group addresses adverse selection by selecting insurable risks, and is always regulated by state authorities b)A purchasing group for employers who are unable to purchase insurance due to the size of the company c)An insurance organization that most often addresses a commercial casualty concern d)A group of people classified as having substandard risk
c
Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss? a)Comprehensive coverage b)Collision coverage c)Liability coverage d)Medical payments
c
association in her neighborhood. The association's community house has burned down, and the insured has been assessed $1200 for her share of the rebuilding cost. How much of the assessment will her homeowners policy pay? a)None b) $500 c) $1,000 d) $1,200
c
Which of the following is NOT covered under accounts receivable coverage form? a)Interest on loans required to offset uncollectible amount 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