Texas Property and Casualty Exam - Missed and Guessed Questions
If the workers employed by a factory are assigned a workers compensation classification code with a rate of $8.00 and the employer has payroll of $200,000 for that classification code, what is the unmodified premium for that classification?
$16,000 To calculate the unmodified premium, divide the total amount of coverage ($200,000) by the basic unit of exposure for workers compensation ($100) to yield the total units of exposure (2,000), then multiply the total units of exposure (2,000) by the premium rate assigned to that insured ($8.00) to yield the preliminary unmodified premium ($16,000)
To be considered a business under a homeowners policy, the insured must earn at least:
$2,000 per year On the homeowners policy, "business" is defined to include a full-time, part-time, or occasional trade, profession, or occupation as well as other activities engaged in for money or other compensation of at least $2,000 per year.
All automobile liability insurance policies issued or delivered in Texas must provide up to what amount of personal injury protection (PIP) to each insured?
$2,500 Personal injury protection provides up to $2,500 in benefits to each insured, member of the insured's household, and authorized operator or passenger for medical expenses that arise from an accident and are incurred within three years from the date of the accident.
What is the minimum amount of bodily injury coverage that may be provided under an insurance policy in Texas?
$30,000 per person and $60,000 per accident The limits of liability contained in a policy must be at least the following amounts: $30,000 for bodily injury to or death of one person in any one accident; $60,000 for bodily injury to or death of two or more persons in any one accident; and $25,000 for property damage in any one accident.
An insurer will consider an injured employee to have reached maximum medical improvement when:
104 weeks have passed since the date income benefits were first due. The date of maximum medical improvement means the earliest of the date that, based on reasonable medical probability, further improvement from an injury can no longer reasonably be anticipated or 104 weeks from the date that income benefits begin to accrue.
Robert is having a home built, which is 50 percent completed. He protects it with a dwelling policy that includes the Dwelling Under Construction endorsement. If lightning were to strike and destroy it, what (if anything) would the policy pay?
50 percent of the coverage A limit The Dwelling Under Construction (DP 11 43) endorsement adjusts the dwelling policy to accommodate the increasing value of a home under construction. If a house is destroyed when it is half completed, half the Coverage A limit covers the loss.
With respect to the pollution exclusion under the business auto policy (BAP), in which of the following cases would the BAP cover liability arising from the escape of pollutants?
A covered delivery truck discharges diesel fuel into a stream when its fuel tank is ruptured in an accident, resulting in an EPA clean-up of the stream. The BAP covers liability for the discharge or escape of fuel, lubricants, fluids, exhaust gases, or similar pollutants that are needed for or result from the normal functioning of the covered auto or its parts, if the pollutants escape or are discharged directly from an auto part designed to hold or dispose of them. The other examples are excluded from liability coverage.
With respect to the business auto policy, what is the difference between hired autos (symbol 8) and non-owned autos (symbol 9)?
A rental car is a hired auto; an employee's pickup truck used in the business would be a non-owned auto. A hired auto (symbol 8) is an auto that the insured leases, hires, rents, or borrows, but not any auto that is leased, hired, rented, or borrowed from an employee. A non-owned auto (symbol 9) is an auto used in the insured's business that is not owned, leased, hired, rented, or borrowed by the insured. This includes autos owned by the insured's employees, partners, or members of their households while used in the insured's business or personal affairs.
Ace Real Estate is considering a businessowners policy for an office building that has eight stories and is less than 100,000 square feet. Its agent will advise Ace that:
Ace is ineligible because the building is taller than six stories. Office buildings are eligible for the businessowners policy if they do not exceed six stories in height or 100,000 total square feet.
To discipline his teenage daughter Annie, Alvin forbids her from using the family car. Annie steals the keys and drives the car to a party. She causes an accident that severely injures the other driver. Who, if anyone, is covered by Alvin's personal auto policy (PAP)?
Annie is covered because she is a family member, and Alvin is also covered. The nonpermissive use exclusion does not preclude coverage for a family member using a covered auto owned by the named insured.
Clark sued his insurance company because it didn't pay his claim, saying he found the wording in his policy vague and ambiguous. Based only on this information, in whose favor did the Court render judgment?
Clark's, because the policy is a contract of adhesion Because they are contracts of adhesion, vague and ambiguous wording will be interpreted in favor of the party that didn't write the contract (i.e., the policyowner in this case).
A commercial property policy would NOT include:
Commercial general liability coverage form A complete property policy would not include a general liability coverage form. However, a commercial package policy would likely include both property and liability coverage forms.
Which form(s) value dwelling buildings on the basis of actual cash value?
DP 1 Buildings are valued on an actual cash value basis under the DP 1.
Which one of the following federal acts provides employment-related benefits to employees of interstate railroads?
Federal Employers Liability Act The Federal Employers Liability Act provides employees of interstate railroads with a negligence remedy for on-the-job injury without having to overcome some employer defenses.
Which ISO homeowners insurance form provides open perils coverage on the dwelling and named perils coverage on personal property?
HO 3 The HO 3 Broad Form insures the dwelling and other structures on an open perils basis, and personal property on a named perils basis.
The Tuttles own a late-19th-century Victorian home. If it suffered extensive damage and had to be replaced, the replacement value might substantially exceed its market value. The Tuttles are willing to compromise on insurance coverage to reduce their expenses in maintaining the home. What homeowners policy form would best suit the Tuttles' needs?
HO 8 Modified Coverage Form The HO 8 Modified Coverage Form insures the dwelling and other structures based on the amount required to repair or replace the property using common construction materials and methods. It is designed to insure older homes when the replacement cost of a house may substantially exceed its market value. In addition, it covers loss of use, personal liability, and medical payments.
Jackson has been denied coverage by two insurers in Texas for a personal automobile insurance policy. What is the result if he applies for coverage through the Texas Automobile Insurance Plan Association?
He will be eligible for insurance. To be eligible for insurance through the Texas Automobile Insurance Plan Association, an applicant must certify that he or she has been rejected for insurance by at least two insurers.
Which individual would need to be licensed as a surplus lines agent?
Henry, who negotiates and binds surplus lines contracts Only Henry would need to be licensed as a surplus lines agent since he is actively engaged in soliciting, negotiating, and binding surplus lines contracts.
Stephan is injured in Hilda's backyard. What additional condition must be met before Hilda's homeowners policy pays damages for Stephan's bodily injury under Coverage E?
Hilda must be legally responsible for Stephan's injury. Unlike the medical payments to others coverage, liability coverage applies only when an insured is legally responsible to pay damages because someone has been injured.
George frequently suffers back pain. To collect medical benefits, he files a workers compensation claim against his employer. In order to prove that workers compensation covers his claim, George must be able to show all the following EXCEPT:
His injury resulted in a wage loss. George does not need to prove any wage loss to demonstrate that he is entitled to medical benefits, but he must prove this loss if he also intends to qualify for wage replacement benefits.
Eduardo's Music Company sells a piano to Sheri through an online auction service and assures her that they will deliver it in good condition. However, while transporting the piano to Sheri's house, the moving van is in an accident that damages the piano. How will Eduardo's CGL policy respond to this loss?
It does not cover the loss because of the exclusion for contractual liability. The loss was not caused by Eduardo's negligence, and Eduardo's assurance contractual agreement with Sheri was a guarantee, not an assumption of liability.
All of the following statements are true about the conditions requiring notice endorsement EXCEPT:
It is optional for a commercial general liability policies. The conditions requiring notice endorsement is mandatory for all commercial general liability policies.
An employee's thumb was crushed in a printing press accident while working for his employer, Print Shop. The accident was a direct result of a design defect in a printing press recently bought from L&M Co. Which of the following statements accurately describes how Print Shop's workers compensation insurer will handle this case?
It will pay benefits to the employee and subrogate against L&M Co. It benefits payments are made to an injured employee, the insurer has a right to recover the benefit payments from any liability party.
Which of the following endorsements, if any, will add coverage for a motorcycle to a personal auto policy (PAP)?
Miscellaneous Type Vehicle endorsement The Miscellaneous Type Vehicle endorsement broadens the definition of "your covered auto" to include miscellaneous type vehicles such as motorcycles, motor homes, all-terrain vehicles, and golf carts.
What entity provides the "standard" policy form for the workers compensation and employers liability policy?
National Council on Compensation Insurance (NCCI) The NCCI workers compensation and employers liability policy developed and drafted the policy used by the majority of the states since the early 1990s.
The land immediately behind Amy's home was being excavated to install underground wiring to her garage. The earth movement resulted in a gas line break and explosion that damaged her home. Which statement is true about coverage for losses due to earth movement under Amy's DP 3 form?
Only damage resulting from the explosion is covered. Earth movement losses, which include perils such as earthquake, land shock waves, and landslide, are excluded under the DP 3 form. However, coverage is provided if a direct loss by fire or explosion ensues, but only for the damage resulting from the fire or explosion.
Paving Contractor has a contractors' equipment floater that covers its paver and other scheduled equipment. If the paver is totally destroyed by a covered peril during the policy term, what will the insurer do?
Pay the claim and refund the unearned premium on the paver The reinstatement of limit after loss provision in the common inland marine conditions form provides that, when there is a total loss to a scheduled item of property, the insurer will pay the claim and then refund the unearned premium on that item.
Frieda Hotel's crime policy includes a guests' property endorsement that covers all the following claims or losses EXCEPT:
Property stolen from a guest's car while parked in Frieda's lot. Loss to property in or on vehicles is excluded.
Elizabeth buys a 1999 pickup truck for occasional removal of household trash and yard debris. In light of the vehicle's age and intended use, how will Elizabeth likely decide to insure the truck?
She will forgo collision coverage on the truck. People typically do not buy collision coverage on older vehicles with diminished value, or when there is no lienholder to require physical damage coverage.
Overland Express Company is insured under a motor carrier policy. Which person is NOT insured under the policy's liability coverage?
Sunshine Fruit Farms, whose products are transported by Overland Express The named insured, permissive users, and the owner of a borrowed trailer connected to a covered power unit are covered as insureds.
David, an electrician, is installing electrical wiring in a building under construction. While working on an electrical control panel, he negligently starts a fire that burns down most of the building. Is there coverage for the damage under the liability section of David's businessowners policy?
The damage to the control panel is excluded, but the fire damage is covered. The liability section of the businessowners policy will not cover damage to the part of the property on which the insured is working. It will cover damage to other property that results from the insured's work.
Heat and electricity were out for four days at Tanner's home due to a city power outage. The lack of heat, combined with freezing weather conditions, caused the pipes in Tanner's home to burst. Will his DP 3 Special Dwelling policy cover this loss?
The freezing loss is covered by the DP 3 only. The power failure exclusion refers to the failure of power or any other utility service if this failure occurs off the residence premises. However, if a covered loss ensues as a result of this failure, the ensuing loss itself is covered.
Tina borrows a neighbor's car to run a personal errand. She collides with another car and injures the other driver. The injured driver files a liability claim against Tina and the neighbor. Whose policy will handle the claim?
The neighbor's policy will be primary; Tina's policy will be excess. The other insurance clause specifies that any insurance for vehicles not owned by the insured is excess over any collectible insurance. Primary coverage always follows the car, so the neighbor's policy would be primary and Tina's policy would be excess.
An employee accidentally damaged a sprinkler head that is part of Jumbo Store's automatic sprinkler system. The manager shuts off the system's main valve and notifies the sprinkler company, which schedules the repair for that evening. Shortly before the store closes that night, a fire breaks out in the storeroom. How will the protective safeguards endorsement to Jumbo's businessowners policy respond to the claim for fire damage?
The policy will cover the loss because the protective system was shut off for less than 48 hours. The protective safeguards endorsement permits an exception to the notice requirement when the safeguard is impaired for less than 48 hours.
When will coverage from a personal umbrella liability policy be activated?
When primary coverage is exhausted Coverage from a personal umbrella liability policy is activated when the underlying limits of the primary policy are exhausted.
Which of the following correctly identifies three elements that must be present to create an enforceable contract?
acceptance, consideration, and offer The creation of a contract must include offer, acceptance, and consideration.
An insurance agent's E&O policy covers insurance producers against errors and omissions claims brought by:
both clients and insurers The two major classes of claimants under insurance agents errors and omissions policies are clients and insurers.
Which pollution-related liability claim would an ISO businessowners policy cover?
carbon-monoxide fumes from a defective furnace that make motel guests ill Despite the breadth of the BOP's pollution exclusion, it covers bodily injury from fumes emitted by a building's heating equipment.
A cargo ship owned by Neptune Transportation Company collides with another ship and sinks in a harbor. Although the ship rests in shallow water, the cost to save its cargo exceeds the cargo's value. What kind of loss is this?
constructive total loss A constructive total loss arises when the cost to salvage cargo is more than the salvaged cargo would be worth.
Minestra Company produces a defective quantity of mushroom soup which results in the hospitalization of consumers who become ill from eating it. In anticipation of their claims, Minestra instructs retailers to remove its mushroom soup from their stores. Minestra asks its commercial general liability insurer to cover its expenses in removing the product from the market. Minestra's CGL policy will:
cover consumer claims but not recall expenses The recall of products exclusion in the CGL policy precludes coverage for recall expenses.
Genevieve's Boutique was burglarized on August 1 last year. Fortunately, she had a commercial crime policy at the time, which she allowed to expire on December 31 last year. On May 1 of this year she realized that a sapphire ring was also missing and presumed stolen in the burglary, though she had not reported it until May 1. The claim for the ring will NOT be paid if she had:
discovery-based coverage Discovery-based coverage applies to a loss that is discovered during the policy period or within 60 days after the policy period ends (within one year for employee benefit plans). In this case, there is no coverage in the discovery basis policy because the claim was not filed within 60 days after the policy expired.
When an insurance policy provides crime coverage on a loss sustained basis, coverage is triggered by a loss that occurs:
during the policy period and is discovered within one year after the policy period ends Loss sustained coverage applies to loss that occurs during the policy period and is discovered within one year after the policy period ends. Discovery-based coverage applies to loss that is discovered during the policy period or within 60 days after the policy period ends.
Kathleen's Victorian house is not eligible for coverage under a homeowners insurance policy. Which policy might provide comparable property coverage?
dwelling policy A dwelling policy is often used for residences that fail to meet eligibility requirements for homeowners insurance.
What term is used to describe a workers compensation law provision that bars employees injured on the job from making a tort liability claim against their employers if they elect to receive workers compensation benefits?
exclusive remedy An exclusive remedy provision stipulates that benefits provided by law are the only available source of recovery for employees who sustain on-the-job injuries. An injured employee who accepts workers compensation benefits is not permitted to sue his or her employer under most circumstances.
Arnold's Auto Repair Shop's garage policy does NOT cover it for loss sustained by a vehicle that it:
is painting for a customer The physical damage coverage of the garage policy applies to vehicles that the insured owns, hires, or holds for sale. By adding garagekeepers coverage to its garage policy, an insured can also protect customers' vehicles in its care, custody, or control.
A standard flood insurance policy includes all the following coverage forms EXCEPT:
loss of use form The NFIP has three standard coverage forms: dwelling form, general property form, and residential condominium building association policy (RCBAP) form. Loss of use is not a covered risk.
Mrs. Ogden submitted a claim under her personal auto policy for injuries she sustained in an accident. The insurer made payment, it said, despite the fault of the driver. Under what coverage did the insurer make payment for Mrs. Ogden's injuries?
medical payments Medical payments coverage pays for necessary medical and funeral expenses, regardless of the negligence of the driver.
Through a fidelity bond issued by Omega Assurance, Olga is guaranteed that her employee, Dee, will not be dishonest. In this transaction, Olga is the:
obligee The obligee is the party, usually the employer, to whom the surety (Buford) makes the guarantee.
A person who wants to purchase the most comprehensive insurance coverage available for a valuable diamond ring would be best served by a(n):
personal articles floater A personal articles floater provides open perils property coverage for jewelry, furs, cameras, musical instruments, silverware, golfer's equipment, fine arts, stamp collections, and coin collections.
Shoveling snow and ice off an icy sidewalk is an example of what type of risk management technique?
prevention Risk prevention is a form of risk control that reduces the likelihood that a loss will occur.
Regarding the Farm Property-Farm Dwellings, Appurtenant Structure, and Household Personal Property Coverage Form (FP 00 12) policy, what does Coverage C-Household Personal Property of that form cover?
the insured owner's household personal property, but not farming supplies Coverages A, B, and C of the Farm Dwelling (FP 00 12) policy do not cover property related to the insured owner's farming operations.
The standard perils covered in Dwelling Property 1-Basic Form, do NOT include
windstorm Limited property insurance coverage is available with the DP 1 because fire, lightning, and internal explosion are the only standard perils under this form.
Regina rents a car to use while the collision damage to her own car is being repaired at her insurer's expense. Unless an endorsement changes the limits, Regina's personal auto policy (PAP) will cover her car rental expenses up to what amount?
$20 per day with a $600 maximum Transportation expenses are covered up to $20 per day, up to a maximum of $600. An endorsement can be added to provide higher limits.
Jewell is building a vacation cottage. Her dwelling policy has a dwelling under construction endorsement and Coverage A limit of $100,000. A windstorm destroys the house after it is half completed. What is the most that Jewell can recover?
$50,000 Halfway through construction, Jewell has coverage for half the Coverage A limit of $100,000, which is $50,000.
Dairy products in Bette's ice cream shop would be destroyed if her freezers failed for more than a few hours. So Bette added the utility services-direct damage endorsement, scheduling overhead transmission lines, to her businessowners policy. When the shop loses electrical power due to a mechanical breakdown of the utility company's equipment:
Bette's loss will not be covered because mechanical breakdown is not a covered peril For coverage to apply, the service interruption must result from damage to utility company property caused by a covered cause of loss. Mechanical breakdown is not a covered peril.
Bill, who owns a businessowners policy, operates a small grocery shop in a rented building which has a large plate glass window in front. A windstorm damages the window. Will Bill's BOP cover the damage?
Bill's business personal property coverage under the BOP will cover the damage. A tenant can own a BOP, which will cover exterior building glass in the care, custody, or control of the insured tenant.
Leopoldo's two-car garage is connected to his house by an enclosed breezeway. Which coverage of his homeowners insurance policy applies to his garage?
Coverage A Besides covering the named insured's house, Coverage A also covers structures attached to the dwelling, and Leopoldo has an attached garage. If there were an open space instead of a breezeway between the house and the garage, the garage would be considered an "other structure" covered under Coverage B.
Brandi rents her home to a tenant who furnishes it. Brandi's dwelling policy is most likely to have Coverage A-Dwelling and:
Coverage D-Fair Rental Value Coverage D covers the fair rental value-less noncontinuing expenses when property that is normally rented or held for rental is uninhabitable because of damage by a covered peril.
The Peterson family owns a farm that they insure on a farm policy. Which section of their policy insures their sheep, chickens, hay, and grain?
Coverage E - Scheduled Farm Personal Property Sixteen types of farm property may be scheduled under Coverage E - Scheduled Farm Personal Property; they include livestock, poultry (other than turkeys), grain, hay, straw, threshed seeds, and ground feed.
When broken glass is among the damage resulting from the collision of a covered auto, the insured may choose to have the glass breakage covered as part of the collision loss. What is the purpose of this provision?
It allows the insured to avoid paying separate comprehensive and collision deductibles. When broken glass is among the damage resulting from the collision or overturn of a covered auto, the insured may choose to have the glass breakage covered as part of the collision loss to avoid paying separate comprehensive and collision deductibles.
Eva bought a single-family home in an adult community that provides amenities that are supported by homeowners' association dues. The association has inadequate property insurance and charges Eva $750 for her share of payment for uninsured windstorm damage to the clubhouse. Which statement is correct about her HO 3 policy coverage for this expense?
Loss assessment additional coverage applies. The loss assessment additional coverage applies when the association's insurance coverage is inadequate to cover a property loss, and the association assesses its members to pay for the damage.
Jeremy leaves his watch at a watch repair shop to have the battery replaced. When he picks it up, he learns it was accidentally damaged beyond repair by the shop owner, who suggests Jeremy file a claim with his own insurance company. Is Jeremy's insurer likely to pay this claim?
No, because the policy has a no benefit to bailee provision The no benefit to bailee provision in a property owner's property insurance policy clarifies that the insurer is not responsible for covering property under the care of a bailee.
Coverage E (personal liability) of the homeowners policy provides a defense against liability claims at the insurer's expense when the claim:
alleges bodily injury or property damage caused by a covered occurrence If a claim for damages alleges that an insured is responsible for damages resulting from bodily injury or property damage caused by an occurrence, the insurer will provide a defense, at the insurer's expense, even if the suit is without merit or fraudulent.
Storm damage to utility wires caused a power surge that ruined Delmer's 60-inch flat panel TV. Delmer submitted a homeowners insurance claim that was denied because his policy, like almost all policies on buildings and their contents, excludes coverage for:
artificially generated electrical current Almost all policies on buildings and their contents cover lightning damage but exclude coverage for damage to electronic equipment caused by short circuits, power surges, brownouts, and so forth.
A business that owns a commercial general liability (CGL) policy will be covered for all the following exposures EXCEPT:
auto liability and professional liability Commercial general liability insurance does not cover auto liability or professional liability.
Which of the following is not an acceptable reason for canceling a general liability policy that has been in effect for more than 60 days?
change in marital status An insurer may not cancel a general liability insurance policy that has been in effect for more than 60 days for all of the reasons listed except for a change in the insured's marital status.
Which form of the commercial general liability (CGL) policy covers the insured for injuries or damages only if the policy is in force when the claim arises?
claims-made form A claims-made policy covers the insured for injury or damage only if the policy is in force when the claim arises. It may also restrict coverage before a certain date.
Gerald's ISO commercial property policy would likely NOT include which causes of loss form?
comprehensive causes of loss form The three ISO causes of loss forms are basic, broad, and special; there is no comprehensive causes of loss form.
Randy goes to Main Street Insurance Company to buy a homeowners policy. He observes that he cannot negotiate the terms with the insurer, which presented the policy to him on a take-it-or-leave-it basis. This type of contract is considered a(n):
contract of adhesion A contract of adhesion is drafted by one party and offered on a take-it-or-leave-it basis. The other party has no opportunity to negotiate its terms, price, or other elements. The party must adhere to its provisions as presented.
Dewitt Brothers insures its workers compensation liabilities under a standard workers compensation insurance policy. Luther, an employee, is injured on a job site by a falling brick. What component of the state workers compensation act precludes Luther from filing a lawsuit against Dewitt for his injury?
exclusive remedy provision An exclusive remedy provision in every state's workers compensation law stipulates that benefits prescribed in the act ore the sole remedy against the employer for covered job-related injuries.
A building tenant who owns a businessowners policy (BOP) would be protected with which of the following losses?
fire damage to leased office equipment Leased personal property that the insured is contractually responsible to insure is covered under business personal property. The other items, cash, lawns, and fences, are not covered under the basic businessowners coverage.
Which of the following is commonly listed as an excluded cause of loss in an open perils property insurance?
flood An open (special) perils policy typically lists flood as an excluded peril, necessitating the need for flood insurance or a difference-in-condtitions (D-I-C) policy to cover that risk.
Several residents of the Shady Grove Nursing Home claim that they are missing some expensive jewelry. An investigation reveals that an attendant was stealing the jewelry. Which crime coverage endorsement would pay for these losses?
guests' property The guests' property endorsement is designed to protect an insured-such as a hotel, motel, hospital, or nursing home-that has guests staying on its premises. It covers the insured's legal liability for damage to guests' property while it is in safe deposit boxes in the insured's business premises, inside the insured's premises, or in the insured's possession.
In an HO 3 policy, the definition of "motor vehicle" includes automobiles and all of the following EXCEPT:
helicopters "Motor vehicle" is defined as a self-propelled vehicle or any trailer connected with it. This definition is broad enough to include not only autos but also motorcycles, self-propelled lawn mowers, and motorized wheelchairs. It does not include aircraft of any type.
Sharon operates a school in her home for toddlers. Which endorsement to her homeowners policy is best suited to her business?
home day care coverage The Home Day Care Coverage Endorsement (HO 04 97) provides property and liability coverage for a home day care center operated by an insured on the residence premises.
Unlike an insurance policy, a surety bond:
is a three-party contract Three parties-the principal, the obligee, and the surety-are involved in a bonding relationship.
Although she intended to repair the roof, Jane never got around to it. A heavy rainstorm exacerbated the leakage problem and damaged furniture in her home. The insurer based its denial on which exclusion in the dwelling policy?
neglect exclusion The neglect exclusion refers to the neglect of an insured to use all reasonable measures to save and preserve property during and after a loss. An example is a named insured who fails to take reasonable steps to repair a roof damaged by rain.
As a condition for liability coverage under a homeowners policy, if a neighbor's child is accidentally injured on the insured's property, the insured is obligated to do all the following EXCEPT:
notify the police of the accident immediately The liability section of the homeowners policy does not require the insured to notify the police. If the insured fails to comply with the other duties listed and such failure impedes the insurer in the handling of the claim, the insurer has no duty to provide coverage.
For BOP business liability coverage to apply to a loss, the loss need NOT
occur within a single policy period. Business liability coverage covers continuous injury that occurs during more than one policy period.
Which form of the commercial general liability (CGL) policy covers the insured for injuries or damages that occur during the policy period even if that policy is no longer in force when the claim arises?
occurrence form The CGL occurrence form provides insurance for bodily injury or property damage that occurs during the policy period, regardless of when losses are reported.
The Permitted Incidental Occupancies endorsement provides coverage for what types of businesses on the homeowners policy?
offices and studios The Permitted Incidental Occupancies endorsement is used for incidental business exposures such as those of office, school, and studio exposures.
When describing the policy's coverage, the word "special" on the declarations page means the policy is a(n):
open perils form When describing the policy's coverage, the word "special" on the declarations page means it is an open perils policy.
Phoebe rents her home. She loses control of her car on the icy driveway and crashes into the garage door. It will cost $1,000 to repair or replace the door. The property damage liability coverage of Phoebe's personal auto policy will:
pay for the damage Although the PAP does not cover liability for damage to others' property that the insured possesses, it does cover such property when the insured rents a residence or private garage
All of the following are standard exclusions under the liability section of a businessowners policy (BOP) EXCEPT:
personal and advertising injury Contractual liability (except with insured contracts), electronic data, and product recall are among the 15 or so exclusions under the BOP's liability section. Personal and advertising injury is a standard liability coverage under a BOP.
While driving through a school zone, Melanie collides with a school bus full of children. Twenty children are rushed to area hospitals, some with severe injuries. Melanie's personal auto policy has a combined single limit of liability of $300,000, an amount that is clearly insufficient to pay for the potential claims. What additional insurance policy would Melanie need to pay for claims in excess of her PAP limits?
personal umbrella liability policy A personal umbrella liability policy provides high limits of liability to protect an insured against a catastrophic liability loss. Its coverage stacks on top of the primary liability coverage provided by the insured's homeowners, personal auto, watercraft, or any other underlying liability policy. It is activated when the underlying limits of the primary policy are exhausted. It can also fill some gaps in primary coverage.
The complete personal auto policy combines coverage for
property and liability insurance The ISO personal auto policy combines property and liability insurance in a single policy to protect families and individuals. Property insurance protects the vehicle from loss due to fire or collision. Liability insurance protects the owner or operator if the vehicle is involved in an accident that results in injury or death.
Which of the following correctly describes the type of property covered by inland marine insurance, as defined in the Nationwide Inland Marine Definition?
property in transit with some other relationship to transportation or communication The Nationwide Marine Definition recognizes that property qualifying for marine insurance coverage must be in transit or bear some other relationship to transportation or communication.
In ocean marine insurance, the sue and labor clause refers to the insured's obligation to protect a ship or its cargo from loss or to minimize losses that occur after an accident. Under the clause, the insurer agrees to pay for:
reasonable costs incurred to prevent further loss to damaged property The sue and labor clause obligates the insured to save damaged property from further loss. The insurer agrees to pay the associated costs even if the property becomes a total loss despite the insured's efforts to save it. The insurer may pay a total loss plus the cost of the attempted salvage.
What is "actual cash value"?
replacement cost minus physical depreciation Actual cash value is generally defined as replacement cost minus physical depreciation.
When referring to the subject that is being insured under an insurance policy, the term that is used is:
risk The term "risk" is sometimes used to refer to the person, property, or activity that is insured under a policy.
When the Brianna collided with the Tania, marine experts determined that the captain of the Brianna was at fault. What provision in the Brianna's ocean marine policy protects the shipowner or operator against the Tania's property damage liability claim?
running down clause, also known as a collision liability clause Hull policies customarily include a collision clause, also known as a running down clause, that protects the shipowner or operator against loss resulting from liability for damage to another vessel or its cargo.
The business auto policy (BAP) provides the broadest possible liability coverage when what symbol is used for liability?
symbol 1 When symbol 1 is selected, any auto-whether owned, nonowned, hired, or otherwise-is protected by that coverage.
Toby's Aunt Bertha trips on a throw rug while visiting his home. She breaks an arm in several places and requires surgery. Toby knows Aunt Bertha's medical expenses will be high and wonders if his homeowners policy will cover her expenses. Where will he find this information?
the amount listed on his policy's declarations page for medical payments The maximum the insurer will pay for medical payments for bodily injury to any one person in any particular accident is the amount listed on the declarations page for medical payments.
A Write-Your-Own Program (WYO) flood insurance policy is fully reinsured by:
the federal government through the National Flood Insurance Program While all NFIP policies are fully reinsured by the federal government, almost 95 percent of them are actually issued by private insurers that participate in NFIP's Write-Your-Own (WYO) program.
As a result of flood damage to his store, Burt was out of business for several months, lost income, and incurred additional expenses to comply with a floodplain management ordinance requiring him to relocate the store to a higher elevation. Under some circumstances, Burt's NFIP policy might pay or reimburse him for:
the increased cost of complying with floodplain management ordinance The increased cost of compliance coverage will apply under the right circumstances. However, the NFIP provides no coverage for loss of use, lost revenue, or lost profits.
Atlas Manufacturing Company's workers compensation policy expires this year. Atlas is required to keep records of its policy in case they are audited for as long as the next
three years. When a workers compensation policy expires, the insured's payroll records are audited to determine the final premium. The insured must keep records of the necessary information for audits up to three years after the policy period ends.
Trang is on her way to a job interview when her car breaks down. A tow truck driver is able to fix her car and send her on her way. She pays the bill for roadside labor and submits it to her auto insurer for reimbursement. What coverage on Trang's PAP, if any, makes payment?
towing and labor costs endorsement The towing and labor costs endorsement pays up to the amount shown on its schedule for the costs of towing and roadside labor if a covered auto is disabled.
In an insurance contract, only the insurer makes a legally enforceable promise (to pay covered claims). The policyholder makes no legally enforceable promise, which means insurance policies are:
unilateral contracts An insurance contract is a unilateral contract in that only the insurer makes a legally enforceable promise which is to pay covered claims, that is, after the premium is paid and the policy is in force. The insured must continue to pay premiums to keep the policy in force, but is not obligated to continue to do so.
Monty, an employee of Happiness Bakery, is sending text messages on his phone while driving the company truck to deliver baked goods. He crashes into the car in front of him, injuring the driver, who sues Monty and Happiness Bakery. On what grounds could Happiness Bakery be held liable?
vicarious liability Vicarious liability arises when a person is legally responsible for the acts of another. A common example is when an employer is held liable for damages resulting from the negligence of an employee who was acting in the course and scope of his or her employment.
While a businessowners policy combines coverages that might otherwise be written on several forms, it does NOT include coverage for:
workers compensation A single BOP combines coverages that might otherwise be written on separate property, liability, crime, and inland marine forms.
