Chapter 4: Types of Casualty Policies, Bonds, and Related Terms
All of the following are factors in rating workers compensation insurance EXCEPT A Job classification. B Sales. C Payroll. D Loss experience.
B Sales The hazard of the work, the amount of payroll, and the employer's prior loss experience are all rating factors.
Which of the following forms provides the broadest coverage under an employee theft coverage form? A Name schedule B Individual C Blanket position D Position schedule
C Blanket position Blanket position bond covers all employees in all positions on a per employee basis.
With regards to the personal auto policy, in the event of a claim or loss, the insured is required to do all of the following EXCEPT A Protect the insured auto from further damage. B Promptly contact the police if the accident was a hit-and-run. C Immediately report to an emergency room for medical examination. D Notify the insurer as soon as possible with a description of the accident.
C Immediately report to an emergency room for medical examination. The personal auto policy states that the insurer has no duty to provide coverage under the policy if the insured's failure to comply with the duties after an accident or loss results in harm to the insurer.
Which of the following policies will help an auto dealership cover most of its liability exposures? A A motor carrier coverage form B A commercial general liability policy with a crime endorsement C A businessowners policy D A garage liability coverage
D A garage liability coverage The garage liability coverage form provides liability protection for the insured's premises, autos, products, and work performed.
In a participation plan, the insured may be eligible for which of the following? A An increase in insurance over time B Lower premiums C Guaranteed dividends D A partial premium refund
D A partial premium refund The insured is eligible for dividends (partial premium refund) if the experience during the policy term falls within guidelines established by the insurer at the inception of the policy term. Dividends are not guaranteed, and to be eligible for participation, the account must generate a minimum amount of premium.
A plasterer泥水匠has finished a job. What kind of liability coverage would protect him if the plaster falls and hurts someone because he did not do the job correctly? A Professional errors & omissions (E&O) B Completed operations C Medical payments D Products
B Completed operations The plasterer's completed operations pays because his negligence led to the loss. It does not pay to redo the job.
Employment practices liability insurance (EPLI) would NOT cover claims arising from A Discrimination. B Deliberate law violation. C Sexual harassment. D Wrongful termination.
B Deliberate law violation. Claims arising because of intentional acts of the insured are not covered.
CGL Coverage B (Personal 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 Inadvertent injury無意的傷害to others caused in the course of advertising the insured's product. Personal and advertising injury coverage does not apply to professional advertisers or intentional injury, and does not guarantee the product will perform as advertised.
Which of the following statements is NOT true regarding a personal umbrella liability policy? A It provides excess liability coverage over underlying personal liability. B It provides errors and omissions coverage for an agency. C It may cover certain exposures not provided under the primary layer. D It may require the payment of a self-insured retention.
B It provides errors and omissions coverage for an agency. Personal umbrella policies cover the personal exposure of the insured. Errors and omissions coverage is provided only in a professional liability policy.
A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the A Limit of liability. B Penalty. C Face value. D Stated amount.
B Penalty. A bond is written for a set limit, sometimes called the penalty. If the principal's obligation exceeds the limit, the surety will be liable only for the amount of the limit.
Coverage for medical payments under a personal auto policy applies to expenses following a covered accident that are incurred and services rendered within what maximum time period? A 90 days B 1 year C 3 years D 5 years
C 3 years A coverage requirement in the policy states that medical expenses must be incurred within three years of the accident. The services also must be rendered within that time period.
An insured was involved in an automobile accident for which the insured was at fault. Which of the following coverages would pay for damage to the insured's automobile? A Other-than-collision B Property damage liability coverage C Comprehensive coverage D Collision
D Collision The policy defines collision as the upset or impact of a covered vehicle with another vehicle or object.
A startup used car dealership buys cars at auto auctions in 30 states. It wants to be certain that damage coverage is provided when the cars are driven or transported from the auctions to the dealership. In regard to the business auto physical damage coverage, which is true? A Coverage is provided for the wholesale amount only. B Coverage is not provided under this form. C Coverage is provided if dealership employees are in possession of the subject automobile. D Coverage is provided at additional premium.
D Coverage is provided at additional premium. Although this coverage is normally excluded, transporting autos coverage can be purchased under the business auto physical damage form for an additional premium.
A professional liability policy will provide coverage for loss in all of the following cases, except, when the insured doctor was shown to be A Incompetent. B Negligent. C Improperly trained. D Criminally negligent.
D Criminally negligent. The policy will not cover criminal acts of an insured.
If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy? A General liability policy B Auto policy C Umbrella policy D Excess policy
B Auto policy The underlying policy is the primary liability policy. In this scenario, it's the insured's personal auto policy.
The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT A A friend is injured while driving the insured's vehicle with permission. B The insured is injured while exiting a friend's mobile home. C The insured is injured by a motor vehicle while crossing the street. D The insured's child sustains injuries when the car she is in accidentally rolls down a hill.
B The insured is injured while exiting a friend's mobile home. Medical payments only provide coverage to the insured and any passengers in the insured's vehicle. Injuries to other persons are covered by a personal auto policy (PAP) liability coverage.
The employee theft crime policy includes a coverage extension that applies to employees temporarily outside the coverage territory for up to A 30 days. B 60 days. C 90 days. D 120 days.
C 90 days. The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 90 days.
What's the difference between a fidelity bond and a surety bond? A The trigger is different. B A fidelity bond is a court bond; the surety bond is an honesty bond. C A surety bond guarantees something will happen; a fidelity bond guarantees something will not happen. D A fidelity bond guarantees something will happen; a surety bond guarantees something will not happen
C A surety bond guarantees something will happen; a fidelity bond guarantees something will not happen. A fidelity bond is sometimes called an honesty bond and pays if someone has been dishonest. A surety bond is a guarantee someone will perform as promised and pays if they do not.
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays A The excess over the self-insured retention. B The amount specified in the policy under the additional coverage provisions. C The amount in excess of the underlying policy deductible. D A percentage of the loss as described on the declarations.
C The amount in excess of the underlying policy deductible. Retention is the equivalent of a deductible in property insurance.
A dealership loans a car to its customer to use while the dealership is repairing the customer's car. If the dealership has business auto physical damage coverage and a customer's automobile insurance does not cover damages to loaner cars, which of the following is true? A Only coverage for damage to a third party's vehicle is provided. B The customer is personally liable. C The loaner vehicle is covered by the business auto policy. D No coverage is provided.
C The loaner vehicle is covered by the business auto policy. A dealership that provides loaner cars to customers while their vehicles are being repaired is covered under the business auto physical damage section.
Which employee fidelity bond pays no more than its limit of liability for each separate occurrence no matter that several separately identifiable employees were involved in a single loss? A Blanket position B Position schedule C Individual D Commercial blanket position
D Commercial blanket position The commercial blanket bond has a per occurrence limit meaning it will pay no more for any one loss no matter how many separately identifiable employees were involved.
An insured is driving her automobile and strikes a large pothole that causes a flat tire. Which coverage of the insured's personal auto policy will pay for the repair? A Comprehensive B Collision C Transportation expenses D Loss is not covered.
D Loss is not covered. A flat tire that occurs from a cause other than vandalism is considered a road hazard and is specifically excluded from coverage in the policy.
In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called A Stop-loss. B Coinsurance. C Participation requirement. D Self-insured retention.
D Self-insured retention. In casualty insurance, the portion of a claim not paid by insurance is called a retention. In property insurance, it is called a deductible.
What type of coverage do umbrella policies provide? A Excess coverage over an underlying or primary policy B Property coverage for those who do not qualify for homeowners insurance C Property coverage for the basic perils of fire, wind, and hail D Primary coverage for risks that are difficult to insure
A Excess coverage over an underlying or primary policy Umbrella policies, sometimes called catastrophe insurance, provide excess coverage over the underlying or primary liability policy.
What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations? A Experience modification factor B Workers classification factor C Merit rating plan D Arbitration plan
A Experience modification factor An experience modification factor is developed by a rating bureau. The calculations relate an employer's losses, payroll, and premiums, segregated according to classifications of operations, all as reported to the bureau by the employer's insurance company.
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 Liability coverage B Medical payments C Comprehensive coverage D Collision coverage
A Liability coverage Supplementary payments, found in Part A - Liability, include expenses incurred by the insured at the insurer's request, including $200 per day for attending trials or hearings.
Employee fidelity may be written in all the following ways EXCEPT A Location schedule. B Individual. C Name schedule. D Position schedule.
A Location schedule. Fidelity bonds are purchased by employers and may be written for individual named employees, on a named schedule basis where one bond is issued for several employees listed by name, or position schedule where several positions are listed and whoever is occupying a scheduled position is covered.
Coverage A - Bodily Injury and Property Damage in the commercial general liability policy will cover A Losses due to the insured's negligence. B Liquor liability. C Contractual liability. D Damage to the insured's product.
A Losses due to the insured's negligence. Coverage A provides protection for bodily injury and property damage suffered by third parties due to the negligence of the insured. The rest are exclusions.
A restaurant is out of business for 3 days after an insured's automobile hits an electrical pole. The pole falls and hits the building, knocking out all electrical power supply. Which of the following is NOT covered under the insured driver's auto policy? A Lost revenues from the restaurant B Damage to the insured's auto C Damage to the restaurant D Spoilage of foods kept in storage
A Lost revenues from the restaurant The restaurant will need a business income policy to provide this coverage.
Crunchy Flakes Cereal Company shipped some of its product in faulty containers that caused spoilage. This resulted in some consumers becoming ill. If the company is sued for this event, it would be an example of a A Product liability claim. B Premises and operations claim. C Personal injury claim. D Contractual liability claim.
A Product liability claim. Product liability provides coverage against loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor due to injury or damage resulting from the use of a covered product.
An insurance agency could purchase an errors and omission insurance policy which would provide protection in the event of any of the following events EXCEPT A The agency loses commission income from policies that were not issued by the insurer. B The agency negligently fails to offer an increased limit of coverage or benefit under a policy. C The agency is sued by an insured for giving incorrect advice. D The agency negligently fails to renew a policy causing a client to suffer a financial loss.
A The agency loses commission income from policies that were not issued by the insurer. Errors and omissions insurance protects an insured against actions claiming the insured has failed to act in a professional manner. It does not cover claims arising out of criminal wrongs.
Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy? A The insured is injured while driving his motorcycle on his resident premises. B The insured's friend is injured in an accident while riding as a passenger in the insured's car. C The insured's mother is injured while exiting from the insured vehicle. D The insured is struck by another vehicle while crossing the street.
A The insured is injured while driving his motorcycle on his resident premises. Coverage does not apply when the insured is occupying a vehicle with fewer than 4 wheels.
With respect to commercial auto policies, the Garage Coverage Form provides liability protection for all of the following EXCEPT A The insured's business income losses due to personal injury. B The insured's business premises. C The insured's business autos. D The insured's business products and work performed.
A The insured's business income losses due to personal injury. The Garage Coverage Form does NOT cover personal injury and loss of wages from those injuries. Such coverage would be provided by a CGL policy.
Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records? A $1,000 B $5,000 C $10,000 D $25,000
B $5,000 A special limit of $5,000 per occurrence applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings or records.
An uninsured motor vehicle includes all of the following EXCEPT A The vehicle has no liability bond or insurance in force. B A vehicle being used for public livery. C The accident was a hit-and-run. D The insurance company denies coverage.
B A vehicle being used for public livery. A vehicle being used for public livery is a standard exclusion in uninsured motorist coverage, not a category or type of uninsured motor vehicle.
Which would NOT be covered by the inside the premises - robbery or safe burglary of other property coverage? A A store clerk is forced into the storage room and locked in while the intruder steals high-value merchandise. B An employee is caught stealing cash from the register. C Two men break a window during an attempted robbery. D Someone breaks in after business hours, pries open a wall vault and steals several valuable paintings.
B An employee is caught stealing cash from the register. Dishonest or criminal acts of any employee or representative are specifically excluded.
Coverage A - Bodily Injury and Property Damage in the commercial general liability policy will cover A Damage to the insured's product. B Losses due to the insured's negligence. C Liquor liability. D Contractual liability.
B Losses due to the insured's negligence. Coverage A provides protection for bodily injury and property damage suffered by third parties due to the negligence of the insured. The rest are exclusions.
All of the following statements are FALSE regarding garage physical damage coverage EXCEPT A Specific causes-of-loss coverage is not available for physical damage coverage. B No coverage is provided for any auto stored for more than forty-five days at a location not shown in the declarations. C Collision coverage is provided only for dealers. D Autos held for sale by a dealer are listed individually in the policy.
B No coverage is provided for any auto stored for more than forty-five days at a location not shown in the declarations. Collision coverage is not for any specific risk. Autos held for sale are covered when auto designation Symbol 31 is shown on the declaration page. The "specific causes of loss" coverage is available for physical damage coverage.
Which of the following liability exposures is most likely for a small specialty clothing retail boutique? A Completed operations liability exposure B Premises liability exposure C Operations liability exposure D Product liability exposure
B Premises liability exposure The premises liability exposure exists when there is use of the premises. Operations liability exposure relates to activities in addition to use. Product liability exposure is the possibility that the public might be injured by the product. Completed operations liability refers to liability for work already performed or completed. For a boutique retail store, the only possible liability would arise from customer injury while on the premises.
In the event of a claim under a commercial general liability policy, the insured has all of the following duties to the insurer EXCEPT A Assisting the insurer upon request in the enforcement of any right against any person or organization that may be liable to the insured. B Submitting to a medical exam when requested. C Providing prompt written notice of any claim or suit actually filed against the insured. D Furnishing the insurer with copies of any demands, notices, or other legal papers received in connection with a claim or suit.
B Submitting to a medical exam when requested. Under medical payments coverage, the injured third party has to submit to an exam upon request, not the insured.
Which one of the following symbols used in business auto coverage is correctly described? A Symbol 7 - hired autos only B Symbol 9 - nonowned autos only C Symbol 1 - owned auto only D Symbol 2 - owned autos subject to no-fault
B Symbol 9 - nonowned autos only Symbol 1 is used for any auto, Symbol 2 is used for owned autos only, and Symbol 7 is used for specifically described autos only.
What is the deductible of a personal liability umbrella policy called? A The CPP B The SIR C The PIL D The CGL
B The SIR The self-insured retention (SIR) is an initial part of a loss the insured pays before the umbrella pays if no other policy covers the loss.
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 The date when injury or damage occurs The occurrence form trigger is based on the date when injury or damage occurs and covers claims made at any time for injuries that occur during the policy period.
Most fidelity bonds have a period of time in which losses which occurred while the bond was in force are covered even though not found until after the coverage has terminated. This is known as A A retro period. B A look back period. C A discovery period. D An indemnity period.
C A discovery period. Normally a year after the bond coverage terminates, claims for losses which occurred while bond was in force but not known about until after coverage ended, will be paid. This is the discovery period.
Which of the following statements is true regarding the premium computation for workers compensation insurance? A The insured pays a guaranteed premium based on an estimated value of the annual income received. B The premium is set at the beginning of the policy period and will not change. C A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis. D The premium basis for workers compensation insurance varies by the type of industry in which the insured is involved.
C A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis. Because the initial premium calculation is based on estimated payrolls, a premium auditor may inspect actual payrolls paid to ensure that adequate premiums are being paid.
The insurer must provide the coverage stated in the policy. A common exclusion found under physical damage to your auto includes A Riot or civil commotion. B Towing and labor. C Mechanical breakdown. D Glass breakage.
C Mechanical breakdown. Damage due to wear and tear, freezing, mechanical or electrical breakdown and road damage to tires are common exclusions to the physical damage coverage section.
A claim is considered to have been made A When notice is received by any insured. B When notice is received and recorded by the insurer. C When notice is received and recorded by any insured or the insurer, whichever comes first.
C When notice is received and recorded by any insured or the insurer, whichever comes first. This is a standard claims-made condition.
The bankruptcy provision found in the personal auto policy states that bankruptcy of the insured A Will suspend the physical damage coverage. B Will waive all future premiums. C Will not relieve the insurer of its policy obligations. D Is one of the reasons an insurer can cancel the policy.
C Will not relieve the insurer of its policy obligations. The insurer must provide the coverage stated in the policy.
While an insured's covered auto is in the repair shop following damage caused by a collision, the insured would have coverage for which of the following vehicles under a personal auto policy? A Any vehicle used by the insured without the reasonable belief that the insured is entitled to use such vehicle B Any auto furnished for the insured's regular use, but not named on the policy C Any vehicle while located inside a racing facility for the purpose of racing D Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair
D Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair The temporary auto coverage provision allows the personal auto policy to provide coverage for an insured while using any vehicle as a temporary substitute for any other vehicle described in the policy that is out of normal use because of breakdown, repair, or servicing. This coverage does not apply to vehicles not owned by the insured, but furnished for an insured's regular use.
The party to a surety or fidelity bond who promises to fulfill the obligation is the A Custodian. B Surety. C Obligee. 債權人 D Principal.
D Principal. The principal purchases the bond and promises to perform.
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 away from the insured premises. B The injury or damage must arise out of the insured's product or work. C The injury or damage must occur after the insured has released physical possession of the product to another. D The injury or damage must occur within 90 days after the insured's work is completed.
D The injury or damage must occur within 90 days after the insured's work is completed. The products and completed operations hazard includes injuries or damage that occur after the insured has completed its job and left the site, or relinquished control of a product it manufactured or sold. There is no time limit on the injury or damage.
Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? A The insured would have to pay the self-insured retention limit. B The insured would be responsible for the amount required as underlying limits in the event of a claim. C It would have no effect on the umbrella policy. D The policy will be cancelled.
B The insured would be responsible for the amount required as underlying limits in the event of a claim. The amount of insurance required as underlying limits in other policies is treated as a deductible amount to the umbrella for that particular exposure, so if underlying limits are not maintained, it is the insured's responsibility.
When a vehicle travels from one state to another, what happens to the limits of policy liability in a personal auto policy? A They decrease based on the state law. B They do not change. C They do not apply. D They increase based on the state law.
B They do not change. The minimum liability limits do not change when a vehicle travels from state to state and remain the same regardless of the state the vehicle is in.
B&B Market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be the meter reader. Which coverage would apply to this suit? A Property damage liability B Crime coverage part C Personal and advertising injury liability D Bodily injury liability
C Personal and advertising injury liability This suit would fall under the coverage of personal injury, damage to the character of the claimant.
If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT A No-fault medical payments. B Liability. C Physical damage. D Uninsured motorist.
C Physical damage. Subrogation rights代位權do not apply to physical damage coverage if the damage is caused by a person using the auto with a reasonable belief that they were entitled to do so.
Which of the following liability policies is usually written on a "claims-made" form? A Personal liability B Umbrella liability C Professional liability insurance D Automobile liability
C Professional liability insurance Most professional liability policies are written on a claims-made form which means that coverage may not be provided for claims arising from acts that occurred prior to the inception of the policy and for claims arising for acts that occur during the coverage period, but where the claim is not made until after the expiration of the policy, will not be covered, unless an "extended reporting period" (tail-coverage) is purchased.
How are surety bonds different from insurance? A Surety bonds guarantee that losses will be paid; insurance pays for obligations to be fulfilled. B Surety bonds are issued by the government; insurance is issued by private companies. C Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses. D Insurance guarantees specific duties or obligations will be fulfilled; surety bonds pay for losses.
C Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses. Surety bonds are not insurance in the traditional sense. Unlike insurance, surety bonds do not expect to pay for losses. Instead, they guarantee specific duties or obligations will be fulfilled. Surety bonds may be issued by private companies.
The claims-made trigger is based on which of the following? A The date the claim is first made orally against an insurer for injury or damage that occurred after the policy's retroactive date B The date the claim is first made orally against an insured for injury or damage that occurred after the policy's retroactive date C The date the claim is first made in writing against an insured for injury or damage that occurred on or after the policy's retroactive date D The date the claim is first made in writing against an insurer for injury or damage that occurred after the policy's retroactive date
C The date the claim is first made in writing against an insured for injury or damage that occurred on or after the policy's retroactive date The claims-made trigger is based on the date the claim is first made in writing against an insured for injury or damage that occurred on or after the policy's retroactive date.
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 arise out of the insured's product or work. B The injury or damage must occur after the insured has released physical possession of the product to another. C The injury or damage must occur within 90 days after the insured's work is completed. D The injury or damage must occur away from the insured premises.
C The injury or damage must occur within 90 days after the insured's work is completed. The products and completed operations hazard includes injuries or damage that occur after the insured has completed its job and left the site, or relinquished control of a product it manufactured or sold. There is no time limit on the injury or damage.
What is the primary objective of workers compensation? A To provide accident insurance to employees injured either on or off the job B To improve employee's working conditions C The payment of benefits to employees for injuries arising out of their employment D The payment of benefits to employees temporarily unemployed
C The payment of benefits to employees for injuries arising out of their employment Workers compensation is a type of liability insurance purchased by employers to pay for employment-related injuries to employees.
All of the following statements concerning liability coverage are true EXCEPT A Liability policies normally include supplementary payment provisions. B Liability policies defend the insured against claims, real or alleged. C The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met. D The insurer cannot refuse to pay a claim even if the insured is bankrupt.
C The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met. The legal action against the insurer condition states that the policyholder cannot
All of the following are true statements regarding the supplementary payments of a commercial general liability policy EXCEPT A They pay pre-judgment and post-judgment interest. B They pay all reasonable costs incurred by the insured in helping to investigate or defend a claim. C They pay defense costs even after the aggregate limit has been reached. D They pay all expenses incurred by the insurer.
C They pay defense costs even after the aggregate limit has been reached. Once the aggregate has been reached, the insurer will not be responsible for paying further claims; therefore, the insurer no longer pays to defend.
Prior to state-directed workers compensation statutes being enacted, employees had A Limited payments for their work-related injuries. B Guaranteed protection for their work-related injuries. C To sue an employer for the "loss" and prove that the employer was at fault. D No right to sue their employers for their work-related injuries.
C To sue an employer for the "loss" and prove that the employer was at fault. Prior to workers compensation statutes being enacted, workers had to sue employers for damages, and few lawsuits resulted in ANY compensatory payments.
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT A Premiums on appeal bonds in any suit the insurer defends. B Up to $250 for bail bonds required because of a covered accident. C Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. D Up to $200 a day for loss of earnings due to attendance at hearings or trials.
C Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. A personal auto policy does not pay the cost of the release of a vehicle impounded by a law enforcement agency.
If an insured needs protection on property other than money and securities inside the premises from losses caused by breaking and entering after business hours, which of the following Crime Coverage forms should be purchased? A Robbery and Safe Burglary B Extortion C Theft, Disappearance and Destruction D Inside Premises - Robbery or Burglary of Other Property
D Inside Premises - Robbery or Burglary of Other Property Covers taking of property, other than money or securities, when there is visible sign of forcible entry or exit from the premises.
All of the following are true regarding physical damage coverage EXCEPT A Losses to nonowned autos will be covered the same as the broadest coverage available for any covered auto, except nonowned trailers are limited to $1,500. B The policy will pay up to $20 per day up to a maximum of $600 for rental transportation. C The insurer will pay for direct and accidental loss to a covered auto minus any applicable deductible. D The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle.
D The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle. The limit of liability is the lesser of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle.
Which of the following statements is true concerning a bonded contractor who defaults on a construction performance contract? A The surety may cancel the bond and avoid paying any losses or expenses. B The contractor will lose his license to operate in the state. C The principal has no obligation to complete any remaining work or to pay for the expenses. D The obligee may engage another contractor and then seek reimbursement from the surety.
D The obligee may engage another contractor and then seek reimbursement from the surety. The bonding company would have to see that the job was completed and then seek recovery for its expenses from the bonded contractor (principal).
Supplementary payments on a CGL provide all of the following EXCEPT A $100 in gasoline costs by the insured driving a witness to and from court. B Pre-judgment and post-judgment interest. C The cost of bonds to release attachment. D Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds.
D Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds. Supplementary payments will cover only $250 for these.
The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information A Within 30 days. B Within 60 days. C As soon as practical. D Within 45 days.
D Within 45 days. This is a standard CGL claims-made provision.
A meteorite hits the insured's car, causing damage. Under which of the following coverages in a personal auto policy would this loss be paid? A Uninsured motorist B Collision C Other-than-collision D Liability
C Other-than-collision Damage caused by a falling object would be covered under other-than-collision.
Surety bonds are written for a definite limit called A Indemnity limit. B The limit of liability. C Loss costs. D The bond penalty.
D The bond penalty. If the specific obligation guaranteed by the bond is not fulfilled, a sum of money, known as a penalty, becomes payable as damages.
With respect to auto insurance, the term owned autos includes all of the following EXCEPT A A pickup or van titled to and used in the named insured's business. B Any private passenger auto titled to the named insured. C A pickup or van acquired by the named insured during the policy period. D Any private passenger auto leased to the named insured for a period of more than 6 months.
A A pickup or van titled to and used in the named insured's business. For eligibility, the personal auto policy will insure as covered autos those vehicles owned by the named insured and not used primarily for a business, other than farming. Vehicles leased to the named insured for periods of 6 months or longer also are classified as owned for insurance purposes.
All of the following are supplemental payments found in liability policies EXCEPT A Costs the insured incurred in hiring an attorney. B All expenses and defense costs incurred by the insurer. C Reasonable expenses incurred by the insured. D Limited amounts for bail bonds and other bonds related to a claim.
A Costs the insured incurred in hiring an attorney. Supplemental payments pay the insurance company's expenses and will not pay expenses incurred by the insured unless incurred at the insurer's request.
If an employer in a state with elective workers compensation laws chooses not be to subject to those laws, what does the employer lose? A Its common law defenses against liability suits B Its ability to provide group health insurance C Its right to hire persons with disabilities D Its eligibility for workers compensation insurance
A Its common law defenses against liability suits Elective law means the employer does not have to be subject to the state's workers compensation laws, but if the employer chooses not to be subject to the laws, it loses its common law defenses against liability suits.
A passenger in a friend's car is injured while getting into the car. Which of the following statements would apply if both the passenger and the driver had medical payments coverage under a personal auto policy? A The driver's policy would be primary. B The driver's policy will act in excess of the passenger's policy. C The passenger's policy would be primary. D Both policies will share equally in the loss.
A The driver's policy would be primary. Medical payments coverage pays all necessary medical and funeral expenses incurred and services rendered to the insured or passengers in the insured's vehicle, regardless of fault.
Super Value Store has a commercial general liability policy written with a general aggregate limit of $300,000 and an occurrence limit of $100,000. A customer injured on the premises was awarded $45,000 for medical expenses and loss of earnings, and $60,000 for pain and suffering. The court costs and attorney fees were $15,000. How much will the CGL policy pay? A $105,000 B $115,000 C $120,000 D $100,000
B $115,000 The policy would pay up to the occurrence limit plus, as supplementary payments, the cost of the court and attorney fees over and above the limit.
Workers compensation rating is developed by applying a rating bureau job classification rate to each A $500 of payroll. B $1,000 of payroll. C $100 of payroll. D $250 of payroll.
C $100 of payroll. Workers compensation rating is developed by applying a rating bureau job classification rate to each $100 of payroll.
An auto dealer reported $500,000 worth of automobiles on its lot at the end of May to its insurer. On June 10, it received $200,000 worth of cars. By June 20, the dealership sold $100,000 worth of cars. A hail storm on June 21 caused $50,000 worth of damage to the inventory. Without considering any deductibles, how much will the insurer pay for damages? (Dollar amounts are rounded to the nearest hundred.) A $35,700 B $40,000 C $41,700 D $50,000
C $41,700 Inventory at the time of the damage exceeded the reported inventory at the end of the previous month. Therefore, the insurer will pay only a portion of the total damages. Reported inventory = $500,000 + $200,000 = $700,000. $700,000 - $100,000 worth of cars sold = $600,000. Therefore, the insurer will pay $50,000 X 5/6 = $41,667 (or $41,700 rounded up).
A premium discount is the term that describes when an insured owes a total standard premium greater than A $15,000. B $1,000. C $5,000. D $10,000.
C $5,000. A premium discount is when an insured owes a total standard premium greater than $5,000.
Crime insurance is usually written on what basis? A Named peril B Closed risk C All-risk D Specific risk
C All-risk Crime insurance is usually written on an all-risk, or open peril basis.
According to the standard workers compensation and employer liability policy form, a state should be listed in Part Three - other states' insurance of the workers compensation and employers liability policy when A The insurer is not licensed to write workers compensation in that state. B The state has a monopolistic workers compensation fund. C The insured expects to extend operations to that state. D The insured has operations in the state where the policy is written.
C The insured expects to extend operations to that state. By naming a state in Part Three of a workers compensation and employers liability (WC&EL) policy, an employer provides that company operations may be conducted in that state.
An insured has an auto liability policy with limits of 25/50/15. The insured is involved in an accident caused by her negligence and is held legally liable for bodily injuries of 3 persons in the other auto as follows: "A" $15,000, "B" $30,000, and "C" $35,000. How much will her insurer pay in total for all injuries? A $105,000 B $25,000 C $30,000 D $50,000
D $50,000 The first limit shown is the most the policy will pay for injuries to any one person. The second limit is the most the policy will pay for all injuries if more than one person is injured in a single accident. The third limit is the most the policy will pay for property damage resulting from a single accident.
An insured owns and operates a ranch. The insured has several vehicles that are used in the ranching operation and for personal use. Which of the following could NOT be insured under a personal auto policy? A A two-wheeled trailer designed to be towed by the station wagon B A farm pickup with 1,000-pound capacity C A station wagon that is used personally D A two-ton grain truck with a 6,500-pound capacity
D A two-ton grain truck with a 6,500-pound capacity A two-ton truck weighs 4,000 pounds. With its cargo weight of 6,500 pounds, it exceeds the 10,000-pound gross vehicle weight (GVW) limit and would not be eligible. The GVW is the maximum recommended weight, including the weight of the vehicle, fuel and fluids, passengers, and all cargo.
An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined? A The legal system will determine which state's benefits apply to this particular loss. B The state's benefits that pay the lowest amount will be selected by the insurance company. C The employee may elect to receive benefits from both the home state and the state in which the injury occurred. D Benefits will be provided if the state was listed on the policy information page.
D Benefits will be provided if the state was listed on the policy information page. Employers must list all states in which they do business on the policy information page for coverage to apply in those states.
