TX ALL LINES LICENS
Willie's Widgets is covered by a policy that includes a franchise deductible of $50,000 and a policy limit of $400,000. A fire rips through Willie's warehouse, and he sustains $342,000 in damage. How much of the claim will Willie's Widgets be responsible for paying?
$0. EXPLANATION: With a franchise deductible, once the loss has exceeded the amount of the franchise deductible, the ENTIRE LOSS is paid, up to the policy limit. Because the loss was $342,000, it exceeded the $50,000 franchise deductible amount. Therefore, the insurer will pay $342,000 and Willie's will pay $0.
Adjusters in Texas must complete ______ hours of their continuing education requirements in a "classroom" or "classroom equivalent" course.
12
Nina has the "Preservation of Property" additional coverage included in her standard Businessowners policy. How long does coverage apply while the property is being stored at another location?
30 days from the day the property was first moved. EXPLANATION: The additional coverage provides open peril coverage for 30 days when property is removed to protect it from damage from a covered peril such as fire.
When the insurance company broadens the coverage of their Personal Umbrella policies the change will automatically be included in all Personal Umbrella policy on the date the change is made. However, the date of the change must fall within _______ prior to or during the policy period that is stated on the Declarations page.
60 days.
The Foreign Coverage endorsement to a workers' compensation policy provides foreign voluntary compensation insurance while the employee is temporarily outside the United States for no longer than:
90 days. EXPLANATION: The Foreign Coverage endorsement provides coverage for employees while they are temporarily outside the United States for no longer than 90 days.
An "insured" under an unendorsed Homeowners policy can be all of the following, EXCEPT: - A 14-year-old niece of whom the named insured has custody. - A childhood friend of the named insured who is visiting for a month from England. - The named insured's 22-year-old daughter who is a full-time graduate student. - The spouse of the named insured who is also a resident of the insured location.
A childhood friend of the named insured who is visiting for a month from England.
A defendant in a lawsuit has been found negligent. Due to this finding, the plaintiff has been awarded damages for pain and suffering. This means the plaintiff has received:
A general damage award.
An additional coverage provided by Part D of the Personal Watercraft policy includes coverage for "salvage liability". This is best described as:
A maritime law requiring watercraft owners to recover items that have gone overboard. EXPLANATION: The additional coverage for "salvage liability" refers to a maritime law requiring watercraft owners to recover items that have gone overboard.
The insured has filed a claim under the "Business Income Dependent Properties -- Broad Form" because the primary buyer of products and services from the business has filed for bankruptcy. Under this form, the primary buyer's business would be known as:
A recipient location.
Which of the following vehicles would NOT be eligible for coverage under a personal automobile policy? A newly acquired vehicle owned by the insured. A pick up truck not used for business. An SUV. A vehicle leased for 4 months.
A vehicle leased for 4 months. EXPLANATION: To be eligible for coverage under a personal automobile policy, a leased vehicle must be leased for 6 months or longer.
Billy has his commercial interests covered with a Commercial Package Policy. He would like to modify one of his coverage parts. This change will be made by:
Adding an endorsement to the coverage part he would like to change.
Which of the following describes a moral hazard?
An arsonist applying for property insurance. EXPLANATION: A moral hazard is presented by applicants or insureds who would cheat, lie or commit other crimes to benefit from insurance coverage. Faulty wiring and overuse of electrical outlets are physical hazards. Laziness and apathy are morale hazards.
The Texas code pertaining to unfair practices defines a "written communication" as all of the following, EXCEPT:
An encrypted email that must be transcribed in order to be read. EXPLANATION: An encrypted email that must be transcribed in order to be read is not considered to be a "written communication" according to the Texas code.
Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following EXCEPT:
Damage to or loss of another ship caused by a negligent collision. EXPLANATION: Hull coverage is required to cover the damage to the ship. P&I provides legal liability coverage for injuries and certain types of damages. Damage to another ship is not covered under the P&I coverage. Coverage can be provided under the hull coverage form for this coverage to other vessels. This is called the "running down clause".
Systems that permit multiple adjusters to work on the same claim simultaneously and in conjunction with other claims professionals are known as:
Diary or suspense systems. EXPLANATION: A diary or suspense system provides the information needed for multiple adjusters to work on the same claim simultaneously and in conjunction with other claims professionals.
The NAIC Model Unfair Claim Settlement Practice Act DOES NOT apply to any of the following types of coverage, EXCEPT:
Dwelling insurance
All of the following are eligible risks for Commercial Inland Marine insurance, EXCEPT:
Goods manufactured in the United States for export to other countries.
All of the following statements about the HO-8 are correct, EXCEPT:
HO-8 covers the same named perils as the HO-2. EXPLANATION: The HO-8 Form provides coverage for the named BASIC perils for Section I. The HO-2 provides coverage for the BASIC and BROAD form perils, making the HO-2 Form broader than the HO-8 Form.
Texas workers' compensation regulations use the phrase "in the course and scope of employment". This includes: I. An activity conducted on the premises of the employer or at other locations of the employer. II. Transportation to and from the place of employment. III. Business-related travel by the employee that was coupled by personal or private affairs.
I only. EXPLANATION: Workers' compensation insurance is intended to compensate employees who are injured while performing duties within the course and scope of their employment.
The unendorsed standard Garage Coverage form includes all of the following, EXCEPT: - Garage physical damage coverage for the insured. - Medical payments coverage for the insured. - Garagekeepers physical damage coverage for property of others. - Premises liability coverage for the insured business.
Medical payments coverage for the insured. EXPLANATION: Medical payments coverage is not automatically included on the Garage Coverage form. This type of coverage must be added by endorsement.
Many states amend property insurance coverage additions and extensions by statute due to insufficient coverage amounts or time limits. All of the following are property insurance additions or extensions that are frequently amended by state statute, EXCEPT:
Other Structures. EXPLANATION: "Other Structures" is NOT a coverage addition or extension under a property policy, therefore, this is the correct answer.
Lawrence holds both an independent staff adjusters license and a public adjusters license as permitted by law in his state. He is employed by Binders Keepers, Inc. and regularly adjusts claims for the company that arise from Homeowners policies. Lawrence has been hired by Kelli to act as a public adjuster on her behalf to present a claim under her Homeowners policy that was issued by Binders Keepers, Inc. If Lawrence accepts the contract with Kelli, it may:
Present a conflict of interest. EXPLANATION: This situation may present a conflict of interest for Lawrence. It would not be a violation of his appointment by Binders Keepers, Inc. because the question states that state law permits Lawrence to hold both licenses.
A contractor in need of a bid bond to obtain a contract is an example of a(n):
Principal.
Which of the following types of property can NOT be covered under a Commercial Inland Marine form?
Property being manufactured and shipped to Europe for sale.
Which of the following Ocean Marine implied warranties is considered to be the most important?
Seaworthiness. EXPLANATION: If the vessel is not seaworthy, the entire voyage is at risk.
Which of the following functions must the insured carry out in order for the freezing of her pipes in her unoccupied vacation home to be covered under her DP-2 form? - Wrap all pipes with insulation if they may be exposed to cold temperatures. - Leave the faucets dripping water to keep it from freezing. - Shut off the water supply and drain the pipes before vacating the premises. - Turn on faucets and flush toilets at least once every 24 hours to be sure the water in the pipes is not freezing.
Shut off the water supply and drain the pipes before vacating the premises.
Which of the following statements is TRUE concerning the Businessowners policy?
The BOP is a type of package policy that prepackages a group of coverage desirable to small businesses.
Which "conditions" form in a complete Commercial Property policy specifies the coverage territory?
The Commercial Property Conditions form. EXPLANATION: The policy territory within a complete Commercial Property policy is specified in the Commercial Property Conditions form.
All of the following are types of Commercial Property coverage forms that can be included in a Commercial Package policy, EXCEPT:
The Control of Property coverage form. EXPLANATION: There is no such form as the "Control of Property" coverage form. Control of Property is a condition of a Commercial Property policy.
Willie's Widgets, Inc. carries an Equipment Breakdown policy with Business Income & Extra Expense coverage as well as Utility Interruption coverage included. When Willie's covered equipment breaks down and causes an interruption in utility services, coverage will apply if all the following circumstances apply, EXCEPT:
The interruption is the direct result of a breakdown of the insured's covered equipment. is correct. EXPLANATION: The breakdown of the insured's equipment would not cause a utility service to be interrupted. The coverage applies only when the untility's services are interrupted.
Insurance adjusters have the "power to bind". Which of the following statements best describes what this means?
The principal is bound to the decisions of the adjuster.
Which of the following statements is TRUE regarding controlled commercial inland marine forms?
These forms are usually filed for uniform use.
When an insured submits a claim under a Commercial Inland Marine policy, the insurer must pay the claim:
Within 30 days of reaching an agreement with the insured. is correct. EXPLANATION: When an insured submits a claim under a Commercial Inland Marine policy, the insurer must pay the claim within 30 days of reaching an agreement with the insured.
Which of the following symbols of the Protective Safeguards endorsement to a Commercial Property policy indicates "any system described in the schedule on the Declarations page"?
P-9
Under Part A of a Personal Automobile policy, "supplementary payments" refer to which of the following?
Payment of defense and other expenses by the insurance company beyond the limits of liability. EXPLANATION: Any expense the insurance company incurs in the processing of a claim is outside the limits of coverage. The insured is not penalized by a reduction in the limits of liability by these expenses incurred by the insurer.
Which of the following is NOT covered under aircraft physical damage (hull) insurance?
Personal effects. EXPLANATION: The only answer choice that is NOT covered under the hull coverage of an aviation policy is "personal effects". The fuselage, landing gear, and wings are covered.
Emily is an adjuster for Indemnify Insurance and she has been assigned to a first-party claim that was submitted by Harvey. Emily has set up several meetings with Harvey to obtain documents and records relevant to the claim investigation but Harvey has not shown up. Emily has also placed many phone calls to Harvey that he has not answered, nor has he returned the calls when Emily has left a message for him to do so. Which of the following statements is TRUE regarding how this claim will be concluded?
The insurance company has legitimate grounds to deny the claim based on Harvey's breach of duty to cooperate in the investigation of the claim.
Which of the following statements BEST describes how deductibles are handled when two or more policies cover the same loss?
The insured will pay the deductibles on all policies that pay on the loss. EXPLANATION: Deductibles will apply as usual on all policies covering the loss.
The Texas Department issues emergency adjuster licenses in case of an emergency arising out of a disaster. An emergency license is valid for ______ days.
90
The optional coverage for "Money and Securities" under a standard Businessowners policy provides for the loss of money and securities used in the insured's business as a result of all of the following, EXCEPT:
Fraud
The additional coverage of the Commercial Property cause of loss forms known as the "Limited Coverage for Fungus, Wet Rot, Dry Rot, and Bacteria" provides:
$15,000 coverage for all occurrences within a 12-month period. EXPLANATION: This additional coverage provides $15,000 coverage for all occurrences within a 12-month period.
A formal request to an insurance company requesting a payment according to the terms of an insurance contract is known as:
An insurance claim.
The importance of an "Insured or Witness Investigation" is that:
Obtaining their statements is very important in determining who is liable.
Under Ben Green's personal auto policy, each of the following would qualify as a "family member" EXCEPT:
Susan Green, Ben's wife. Susan maintains a separate residence although she and Ben are not divorced.
Which of the following statements is NOT TRUE about the coverage provided under the Employers Liability section of a workers' compensation policy?
The bodily injury must also be covered for statutory benefits. EXPLANATION: The answer choice that is NOT TRUE is: "The bodily injury must also be covered for statutory benefits." When the injury IS covered by statutory workers' compensation, Employers Liability will not apply.
Which of the following statements regarding "appraisal" is NOT TRUE?
The insured selects the umpire. EXPLANATION: The statement that is NOT TRUE is, "the insured selects the umpire". The appraiser for each party selects the umpire.
Which of the following is the alternative dispute resolution (ADR) that is most commonly used to settle a coverage dispute when settling an insurance claim?
Negotiation. EXPLANATION: "Negotiation" is most commonly used to settle a coverage dispute during a claim settlement negotiation.
The Texas insurance code specifies that "misrepresentation" includes all of the following, EXCEPT:
Any false statement. EXPLANATION: Making "any false statement" is not considered a misrepresentation. The false or untrue statement must be material.
The Auto Dealers' (Garage) form can be used to cover dealers that sell all of the following, EXCEPT:
Jet skis. EXPLANATION: Dealers that sell jet skis are not covered under the Garage form. Auto dealerships that can be covered by the Garage (Auto Dealers') form include those that sell autos, trucks, motorcycles, recreational vehicles (not watercraft), and trailers.
Which of the following buildings would be considered "vacant" according to the provisions of a standardized property insurance policy?
A house with no furnishings or occupants for over 60 days. is correct. EXPLANATION: A vacant building is "empty". Vacancy presents a severe physical hazard to the insurer. Most standardized property policies restrict or reduce coverage for an empty (vacant) dwelling or building that persists longer than 60 days.
Under which of the following Aviation physical damage losses would a deductible apply?
Fire caused by a collision. EXPLANATION: The deductible does not apply to losses from fire, lightning, explosion, transportation, theft, robbery, or pilferage. However, the "in-motion" deductible does apply to losses from fire or explosion that occurs as a result of the collision of the aircraft.
Which of the following losses would be covered by the EC peril of "volcanic eruption" under a standard Dwelling form? - The cracks in the ceiling of the dwelling due to the earthquake preceding a volcanic eruption. - The damage to an exterior patio from a large bolder that was dislodged due to an aftershock. - The exterior siding of the dwelling that was ruined by the ash that settled on it from the erupting volcano. - The cracked foundation of the covered dwelling resulting from the earthquake that caused the volcanic eruption.
The exterior siding of the dwelling that was ruined by the ash that settled on it from the erupting volcano.
All of the following are methods used by state Insurance Departments to protect the insurance consuming public, EXCEPT: - Regulating the ethical conduct of insurance agents, producers, and adjusters. - Writing new and expanded insurance laws. - Assuring the public of insurance availability. - Monitoring the financial solvency of insurance companies.
Writing new and expanded insurance laws. EXPLANATION: Again, the Insurance Commissioner (the head of the Insurance Department) does NOT write insurance laws. Only the legislative branch of a government can write laws.
With regard to workers' compensation coverage, a "competitive" state is: - One where both private and government insurers write workers' compensation policies, but the government premium rates remain the lowest and most competitive. - One where the state government provides all workers' compensation policies, but there are enough different coverage choices within the program to be competitive. - One where both private and government insurers write workers' compensation policies that compete against one another. - One where the law requires a large enough number of workers' compensation carriers be granted a certificate of authority to write coverage so that it keeps the premium rates at a low, competitive rate.
One where both private and government insurers write workers' compensation policies that compete against one another. EXPLANATION: A "competitive" state is one where both private and government insurers write workers' compensation policies that compete against one another.
The medical payments coverage of an Aircraft Liability policy provided coverage for bodily injury expenses incurred by accident:
Within one year of the accident. EXPLANATION: The medical payments coverage of an Aircraft Liability policy provided coverage for bodily injury expenses incurred by accident within one year of the accident. This coverage applies to passengers but coverage for the crew can be added by endorsement for an additional premium.
