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Homeowners policies provide personal liability coverage that follows an insured anywhere in the world under:
Personal liability coverage for the insured under a Homeowners policy is found in Section II - Coverage E of the Homeowners policy.
If an insured covers his home with a standard unendorsed HO-5 form and purchases a Coverage A limit that meets the coinsurance requirement, which of the following would NOT be covered on a replacement cost basis?
Replacement cost coverage does not apply to Coverage C - Personal Property unless purchased by endorsement.
Which of the following bonds are used by financial institutions?
Standard form #24 is a commonly used financial institution bond used by banks and various financial oriented agencies. The other bonds are fidelity and surety bonds and are used to either guarantee performance of a task or that dishonest acts will not happen. The financial institution bonds are similar to the crime insurance policies used by businesses.
Which of the following sections of an insurance policy contains language to assist an insurance company in managing moral and morale hazards?
The "exclusions" set forth in a policy can be a method to manage moral and morale hazards by excluding losses cause by "intentional acts" and "breach of duty", among others, from coverage.
An independent adjuster acts on behalf of his or her principal. Which of the following is the principal for an independent adjuster?
The "principal" for an independent adjuster is the insurer. Independent adjusters work on behalf of the insurance company against which, the claim is being made.
The definition of "collapse" as defined in the additional coverage of the Homeowners forms includes:
The definition defines collapse as an "abrupt falling down or caving in of the structure or a part of the structure."
Under "pollution cleanup and removal" coverage under the standard ISO BOP form, when must a loss be reported?
The expenses will be paid only if they are reported to the insurer within 180 days of the date of the direct loss or by the end of the policy period, whichever is earlier.
Extended reporting periods under the Commercial General Liability policy apply only to:
The extended reporting period applies only to the "claims-made" CGL coverage form.
Which of the following losses would be covered by the EC peril of "volcanic eruption" under a standard Dwelling form?
The exterior siding of the dwelling that was ruined by the ash that settled on it from the erupting volcano
Coverage D - Loss of Use on the Homeowners forms provides coverage for "Civil Authority Prohibits Use" for:
The indirect loss coverage for "Civil Authority Prohibits Use" under the Homeowners forms, coverage is provided for additional living expenses and fair rental value for no more than two weeks.
Every insurer must reply in no later than ____ working days to all claims communications from insureds or claimants.
The insurer must respond within 10 working days.
In the case of a covered loss under a fire policy the company must begin the adjustment of the loss within _____days after receipt of notice of loss.
The loss adjustment procedure must commence within 15 days upon receipt of notice of claim.
In a liability policy, the limits of coverage can be expressed as all of the following, EXCEPT:
There is no such limit a restricted limit. Liability limits can be expressed as a split limit for bodily injury and property damage, or a single limit for both bodily injury and property damage per occurrence. The policy may also contain an aggregate limit which is the most the policy will pay for all claims (bodily injury and property damage) submitted for the entire policy period.
Which of the following statements is NOT TRUE concerning Assigned Risk Plans?
These plans were created to randomly assign all auto policies written in a state to admitted insurers, to be sure all insurance companies can write a proportional amount of business.
Which of the following is a covered basic form peril of the Homeowners policies?
Volcanic eruption is a covered basic form peril of Homeowners policies. Earthquake, subsidence, and land shock waves are not covered.
The doctrine that states an insured's policy should provide the coverage that a sensible and prudent person would expect is:
When a person buys an insurance policy to insure a specific exposure, there is a reasonable expectation that in case of a covered loss the policy should respond to cover the loss. The doctrine of reasonable expectations states that a policy should include coverages that an average person would reasonably expect it to include.
Carol is covered under a Commercial Property policy with an Earthquake & Volcanic Eruption -- Sprinkler Leakage Only Endorsement attached. Which of the following statements is correct regarding Carol's deductible under the endorsement?
When the endorsement indicates coverage for "Sprinkler Leakage Only", the flat dollar deductible for fire applies.
Which one of the following situations would be considered an example of absolute (strict) liability?
With absolute (strict) liability there is little if any defense. In most jurisdictions where absolute liability is imposed, the defendant is held responsible whether or not he or she is negligent. Wayne had a duty to keep the dog restrained when open for business.
In the adjustment of auto claims, "local market area" means?
"Local market area" means a maximum distance of 75 miles surrounding the area where the motor vehicle is principally garaged and not limited to the geographic boundaries of the state of New Hampshire.
A claim is made on an excess liability policy. It is discovered during the claims investigation, that the underlying liability policy and the excess liability policy have different inception and expiration dates. The adjuster finds that the different dates has created a situation where the underlying policy was not in effect at the time of the occurrence, and therefore cannot trigger the excess liability policy to pay the claim. This situation is known as:
"Nonconcurrency" is a situation where an underlying policy and an excess liability policy, have different inception and expiration dates, creating a situation where the underlying policy is not in force to trigger coverage under the excess liability policy.
Which of the following best demonstrates the meaning of "contract of adhesion?"
A contract that is written by one party and merely accepted by the other party "as is" is known as a "contract of adhesion." In these contracts, courts usually rule in favor of the non-writing party in the event of ambiguity or unclear provisions in the contract. Insurance policies are contracts written by the insurer, thus the insured would be favored in the event of an ambiguity.
In claims settlement, an open-ended release:
An example would be where the insurance company agrees to pay some additional bills when they become available. These additional bills are viewed as part of the settlement agreement. Open-ended releases are generally subject to specific time and monetary limits.
The process of bringing a contract dispute before an objective third party for resolution is known as:
Arbitration is the process of bringing a contract dispute before an objective third party for resolution.
Which of the following can be covered under a commercial inland marine policy?
Bridges and tunnels can be covered under a commercial inland marine policy. This is defined under the nationwide definition of coverage.
Which of the following is generally intended to cover property that moves from one location to another?
Floaters refer to a form of inland marine insurance. Some, but not all, are designed to cover the property during the course of transportation. Several cover the property wherever it is located.
Dan insures a home for adequate limits under a DP-2. If a flood causes $1,000 in damage, what is the maximum the insurer will pay, disregarding deductibles?
Flood is an excluded peril under all the dwelling forms unless fire ensues and then only the loss caused by fire is covered.
Which of the following would not be covered by a Garage Liability policy?
Garage Liability insurance includes automobile liability and general liability as well, but products being recalled are excluded from the ISO Garage Liability form. This is because liability insurance is used to cover occurrences and products are recalled to prevent an occurrence.
What coverage is used to cover damage to a customer's vehicle in the care and custody of a repair garage?
Garagekeeper's Legal Liability covers damage to the customer's vehicle as a result of the negligence of the repair facility. This coverage can also be provided on a direct and primary basis, meaning that any damage sustained to the customer's vehicle while in the garage facility's care custody and control would be covered without proving negligence.
Which of the following would be considered "general damages" that could be awarded to a plaintiff in a negligence case?
General damages reimburse an injured party for intangible, non-economic items such as pain and suffering.
A commercial inland marine condition defining the insurer's subrogation rights:
Guarantees the insurer's ability to recover from a third party who is responsible for a covered loss..
Section I of Homeowners policies cover all of the following, EXCEPT:
Homeowners policies do not cover locations owned by the named insured if they are not described on the declarations page of the policy.
The penalty for failure to satisfy a coinsurance requirement of a property insurance policy is:
If the insured's policy contains a coinsurance clause and the insured carries less than 80% of the value of the property, a penalty will occur in case of partial losses.
In which of the following situations should an adjuster consider obtaining a non-waiver agreement?
In coverage dispute situations, an adjuster may want to make clear that a known right is NOT being waived by any party.
Money and securities are best covered under which of the following Commercial Crime insuring agreements?
Inside the Premises Theft of Money and Securities
A separate limit scheduled "per type of property" on a cause of loss form, is known as:
Insuring on a specific basis.
Mary intentionally trips her neighbor while the neighbor is trespassing on the insured's property. Although the neighbor is not injured, Mary gives the neighbor $500 in cash to settle any potential liability claim. How will Mary's insurance company most likely respond in this situation?
Intentional acts are excluded and the company will deny the claim. The only exception to this exclusion is when the insured is attempting to use reasonable force to protect themselves or their property.
Which of the following is most likely to be uninsurable?
Investing in real estate is an example of a speculative risk. The other choices are pure risks. Speculative risks are not uninsurable while many pure risks are insurable.
Tony is sailing his 28-foot cabin cruiser on the lake. He runs into a neighbor's dock, destroying the structure and damaging Tony's boat. A crew member in the cabin of the boat is injured and a guest riding on the boat is also injured. All of the following policies below would provide coverage in this situation, EXCEPT:
Medical Payments coverage under Tony's Homeowner policy
Which of the following statements is FALSE concerning coverage under the Business Auto policy?
Medical payments coverage is an optional coverage (and not automatically provided) for autos under the Business Auto policy.
Which of the following types of property may not be insured under the valuable papers and records coverage form?
Money and securities is crime coverage and these items are not covered by the valuable papers and records coverage form.
An insured auto dealer has purchased a Garage policy with physical damage coverage against specified causes of loss. Which of the following losses will not be covered by the policy?
A specified cause of loss is named perils coverage and collision is not one of the named perils. Collision is a separate physical damage coverage requiring the upset of the covered vehicle, or its impact with another vehicle or object.
Which of the following is covered under the broad form farmowners policy that is not covered under the basic form farmowners policy?
Accidental shooting of livestock, as well as electrocution of covered livestock, drowning of livestock and accidents involving livestock while loading and unloading are covered by the broad form and not covered by the basic form.
Mr. Jamison owns a summer home in the woods that he rents to others. During his absence, bears enter the home and cause considerable damage. The insured reports the claim to his insurance company. The adjuster advises Mr. Jamison to report the claim as vandalism damage. The claim report is investigated by the state insurance department. How should the Department treat this action on the part of the adjuster?
Advising the insured to misrepresent the facts of the claim would be an unfair claims practice.
All of the following are excluded under CGL coverage for bodily injury and property damage liability, EXCEPT:
Bodily Injury or Property Damage caused by the operation of mobile equipment.
Philip has several vehicles that are all covered under Personal Automobile policies. He has several acres of land with a barn and chicken coup on the property. To drive around on the acreage, Philip has a very old truck that is not licensed or insured. One afternoon, Philip is driving out to check on his cows when he hits a rut and his head slams down on the steering wheel, injuring him severely. How will Part B - Medical Payments provide coverage for Philip's injuries?
Bodily injury sustained while occupying an uninsured auto owned by the insured is excluded under Part B, therefore no coverage would apply
Under the liability coverage of the commercial auto policy, which of the following would NOT be covered?
Commercial auto liability extends to "loading and unloading" of covered autos. It does not include products liability for a faulty product.
Alexander has covered a home he has inherited under a DP-1 form with the EC perils included. The home is situated on property that has been passed down in Alexander's family for generations and there is a fairly large family cemetery on the property. How much coverage would Alexander have under Coverage B of his policy, to cover the grave markers and mausoleums in his family cemetery?
Coverage B of the Dwelling forms excludes grave markers and mausoleums.
All of the following statements regarding the Motor Carrier Act of 1980 are correct, EXCEPT:
It requires truckers to certify that they are able to meet financial obligations arising from physical damage to their vehicle as a result of their trucking operations The Motor Carrier Act applies to liability only. The MCS-90 form is used to indicate that the vehicle in question has the proper amount of liability coverage including pollution liability for the materials being hauled.
Meg has been in very good health in the past 3 years. She has been exercising, her blood pressure is at a perfect level and her cholesterol is the envy of all her friends. Because Meg is feeling so healthy, she decides to cancel her health insurance policy. This is an example of which of the following risk management methods?
Meg is retaining the risk that she may experience a major health issue and would have to pay the medical bills herself.
Parmelia is covered under two separate standardized Personal Automobile policies, with Part C limits under both policies set at $200,000. Parmelia is involved in an accident with an uninsured motorist and she sustains bodily injury damages for $262,320. How much will Parmelia receive when she submits a claim for these damages?
Permelia will receive $200,000, because Part C does not permit the stacking of limits. She will only collect the highest limit of a single policy for uninsured motorists coverage.
Which of the following is covered property under the HO-3 form?
Pets, no matter how valuable, are excluded under Coverage C, as is the property of boarders or renters.
Under Section II of a Homeowners policy, a cemetery plot owned by the insured is considered to be:
Section II - Liability of the Homeowners forms includes a cemetery plot as an "insured location".
Coverage D - Loss of Use on a farm policy will include coverage for: I. Additional living expenses incurred by the resident family. II. Loss of rental income of the owner for tenants who cannot live there due to a covered loss.
Similar to the loss of use coverage on the homeowner policy, Coverage D on the farm policy will pay both the additional living expenses of the owner occupant and any loss of rental income if a tenant is also unable to live there after a covered loss.
All of the following statements regarding eligibility of self-storage facilities for a standard BOP policy are true, EXCEPT:
The BOP DOES NOT require a self-storage unit to be limited to no more than 500 individual self-storage units to be eligible for coverage. All of the other answer choices are eligibility requirements of the BOP for coverage of self-storage facilities.
Which of the following would be eligible for coverage under a Businessowners policy?
The BOP is intended for small, owner-operated light businesses. Bars and taverns, auto body and auto repair shops are excluded from the BOP. The branch bank would not meet the general criteria due to the large crime exposure.
The Dwelling Form Flood policy will cover:
The Dwelling Form Flood policy will cover residential structures up to four families or manufactured housing.
Which of the following standard ISO Homeowners forms does not provide any amount of coverage under the Coverage A - Dwelling insuring agreement?
The HO-4 does not provide any amount under Coverage A - Dwelling, because it is a policy for tenants that only covers their personal property, and Coverage A is not included on the form.
Which of the following is the limit for "loss assessment" provided by Section II of the Homeowners forms?
The Homeowners policies, under Section II provide $1,000 for loss assessment.
Which of the following statements is TRUE regarding the Homeowners "additional coverage" known as Landlord's Furnishings?
The coverage is not additional insurance and does not increase the limits of the policy
After completing an inspection of an insured's pressure equipment and fire suppression systems, the inspector determines that the pressure equipment needs to be repaired and the suppression systems have not been cleaned and inspected in the time frame required by the policy. The insurer will:
The items will be immediately suspended from coverage and considered to be "red tagged" until they are reinspected and found to be in correct working order.
Manny is purchasing a Commercial Property policy with a Business Income form included. Manny can select from any of the following as a method to provide coverage, while avoiding the coinsurance requirement, EXCEPT:
The maximum monthly limit of indemnity optional coverage does not exist. The other three answer choices are all methods of coverage under a Business Income form that permits an insured to avoid the coinsurance requirement.
All of the following sections are included on the Business and Personal Property coverage form, EXCEPT:
The perils insured against are including on a cause of loss form that is attached to the Building and Personal Property coverage form, it is not included on the form.
The purpose of the Expediting Expenses coverage of a standard Equipment Breakdown policy is:
The purpose is to pay those expenses necessary to have repairs to the damaged equipment performed as quickly as possible to get the insured back in business.
What is the purpose of the New Hampshire Automobile Reinsurance Facility Plan?
The purpose of the plan is to offer an alternative market for auto insurance. All insurers licensed to write auto insurance in the state must participate in the plan.
All of the following are correct statements regarding the limits of liability under Part A of a Personal Auto policy, EXCEPT:
The standard Personal Auto policy states that no person can collect under Part A of the policy and under the Uninsured Motorist coverage.
What is the purpose of an adjuster's initial report?
This report merely details the result of the initial investigation and not the anticipated end result or even if coverage is applicable.
For restaurants to be eligible for coverage by the standard BOP policy, they cannot exceed _______ in total floor area.
To be eligible for coverage under a standard BOP policy, restaurants cannot exceed 7,500 square feet in total floor area.
Which of the following losses is NOT excluded under Part D of a standard Personal Auto policy?
An exception is made in the policy to allow coverage while the vehicle is involved in a car pool. Coverage is excluded if the vehicle is used as a livery. The other three choices are excluded. Coverage for the custom furnishings in a van must be added by endorsement.
The Section I Additional Coverage of the standard Businessowners policy provides coverage for "Debris Removal". Which of the following statements best describes the limit for this coverage?
Debris removal expense under a standard Businessowners policy is up to 25% of the policy limit for the loss payable with the deductible included, plus up to an additional amount of $25,000 if the policy limits are exhausted.
The Part B - Medical Payments coverage under a standard Personal Auto policy will cover the insured if he/she is injured while a passenger on a:
Personal auto medical coverage is available to the policyholder or a family member (resident relative) injured while occupying, or as a pedestrian, struck by a motor vehicle or trailer designed for use on public roads. It also covers any other persons while they are occupying your motor vehicle. It does not cover injuries sustained while riding in vehicles not intended for use on public roads such as trains, subways and airplanes.
Which of the following is NOT covered under the basic cause of loss form of a Commercial Property policy?
Smoke from industrial operations is NOT covered under the basic cause of loss form attached to a Commercial Property policy.
In liability insurance the term "occurrence" means:
Sometimes it takes time for damage or an injury to become evident. Previously, all liability policies were based on the concept of "accident" in which all damage is immediately evident. The courts ruled this concept too restrictive and for that reason, liability policies cover claims on an "occurrence" basis.
The Builders' Risk form provides an extension of coverage for building materials within 100 feet of the building being constructed and belonging to others, but under the care, custody, and control of the insured for up to:
The Builders' Risk form provides an extension of coverage for building materials within 100 feet of the building being constructed and belonging to others, but under the care, custody, and control of the insured for up to $5,000.
The Commercial Articles Coverage Form is designed to cover:
The Commercial Articles Form covers cameras, projection machines, musical instruments and their related equipment.
Which of the following lost or damaged property is NOT covered by a standard Equipment Breakdown policy?
The Equipment Breakdown policy does not pay for damaged property that is obsolete and useless to the named insured.
Once the adjuster is appointed by the insurer to represent the insurer, the adjuster has the power to do all of the following, EXCEPT:
The adjuster does not have the power to bind additional coverage when adjusting a claim.
Universal Foods buys the Chewy Cereal Company. After the purchase is completed, a well known actress sues Universal, claiming that her picture was used without her permission in a Chewy advertisement. The advertisement appeared some time before Universal acquired Chewy. Will Universal's Commercial General Liability policy cover this claim?
The claim is not covered. Personal injury coverage with respect to newly acquired organizations does not apply to offenses committed before the acquisition.
An insured carries a general liability policy and has hired a trucking company to transport equipment to the business location. The trucking company carries a commercial auto policy. The insured loads a piece of machinery onto the truck and fails to secure it properly. The trucking company is transporting the cargo and it falls off the truck and hits another car. Which policy or policies would cover this claim?
The commercial auto policy would respond to cover the claim for damages to the damaged party. The damage to the cargo itself would not be covered. The trucking company and the insured should both carry Inland Marine cargo coverage.
When a motor vehicle is a total loss, what method is used to determine its value?
The company is required to pay the fair value of the vehicle in the local area.
An insured's boat is struck by another boat. He and his family are injured. His boat sinks because of the damage. An investigation determines that the party that caused the accident is not insured. If the insured carries a watercraft policy, what coverages would apply?
The standard watercraft policy provides uninsured boaters coverage. This coverage only pays for the bodily injuries of the insured and his family. The damage to the insured's boat must be covered under the hull insurance.
