Exam FX missed problems
Which of the following policies will help an auto dealership cover most of its liability exposures? a) A garage liability coverage b) A motor carrier coverage form c) A commercial general liability policy with a crime endorsement d) A businessowners policy
a) A garage liability coverage The garage liability coverage form provides liability protection for the insured's premises, autos, products, and work performed.
Who are members of the Texas Windstorm Insurance Association? a) All authorized property insurers b) Only the insurers who issue windstorm insurance c) City and county governments d) State licensed builders and engineers
a) All authorized property insurers The association is made up of all property insurers authorized to transact property insurance in the state.
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) Personal and advertising injury liability b) Bodily injury liability c) Property damage liability d) Crime coverage part
a) Personal and advertising injury liability This suit would fall under the coverage of personal injury, damage to the character of the claimant.
Bob's insurer declared bankruptcy. It has not yet paid his $1,000 claim. Which of the following is true? a) The Property and Casualty Insurance Guaranty Association will cover his claim. b) Bob will have to sue the insurer in order to collect his money. c) Bob can collect this money through the NAIC Insolvency Fund. d) Bob will not be able to recover his $1,000.
a) The Property and Casualty Insurance Guaranty Association will cover his claim. The purpose of the Property and Casualty Insurance Guaranty Association is to pay claims due to insureds when their insurance companies become insolvent.
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 insured expects to extend operations to that state. b) The insured has operations in the state where the policy is written. c) The insurer is not licensed to write workers compensation in that state. d) The state has a monopolistic workers compensation fund.
a) 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 a policy with an insurance company that became insolvent. The policy has $1,600 of unearned premium. How much of this premium will the insured be able to recover from the Texas Property and Casualty Insurance Guaranty Association? a) $25,000 b) $1,600 c) The total of the premium paid at the inception of the policy d) None
b) $1,600 To be considered a covered claim, the claim must be under a policy issued by an insurer authorized to do business in Texas at the time of the insured event. Unearned premiums of up to $25,000 are also considered covered claims under the law, so in this scenario, the insured's unearned premium of $1,600 will be covered.
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.
What percentage of continuing education hours must be in a classroom setting? a) 25% b) 50% c) 75% d) 100%
b) 50% At least 50% of all required continuing education hours must be completed in a classroom setting or a classroom equivalent setting approved by the department.
A plasterer 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.
Which of the following is a method of claim settlement used when the insured and insurer cannot agree on how to settle a claim? a) Proof of Loss b) Restoration c) Appraisal d) Arbitration
d) Arbitration Arbitration is a method of claim settlement used when the insured and insurer cannot agree on how to settle a claim. The arbitrator's decision is binding to both parties.
Which of the following would be named on the declarations page of a property or liability policy? a) Beneficiaries b) All insureds c) Additional insureds d) First named insured
d) First named insured First named insured is the individual whose name appears first on the policy's declaration.
Under the coverage of which of the following liability policies may an insured require the insurer to defend a claim? a) General liability b) Personal liability c) Professional liability d) Auto liability
? Because the reputation of the professional, as well as the monetary amount is at risk, if the insured feels certain that they are not at fault, even though it might be less expensive to pay the amount of loss sought, they can require the insurer to defend the claim. Usually there is a significant discount of premium to the insured if they will give up this right.
Which of the following will NOT be considered unfair discrimination by insurers? a) Assigning different risk classifications to applicants based on gender identity b) Discriminating in benefits and coverages based on the insured's habits and lifestyle c) Charging applicants with similar health histories different premiums based on their ethnicity d) Cancelling individual coverage based on the insured's marital status
b) Discriminating in benefits and coverages based on the insured's habits and lifestyle Discriminating between individuals of the same class with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.
Which of the following would be considered false advertising? a) Failing to include premiums in sales materials b) Implying that the agent is the insurer c) Stating the differences in benefits between Whole Life Insurance and Term Life Insurance d) Stating that a policy has limitations and exclusions
b) Implying that the agent is the insurer A person or entity cannot use a name that deceptively suggests it is an insurer. Premiums do not have to be included in sales materials because they will vary depending on the client's age and health. Most policies have limitations and exclusions, and there is a difference between whole life and term. It is not illegal to note this for applicants.
Which of the following is NOT considered a residual market? a) Assigned risk auto plan b) State Property and Casualty Guaranty Association c) Joint underwriting association d) FAIR plan
b) State Property and Casualty Guaranty Association FAIR plans, assigned risk plans, and a joint underwriting association are all considered residual markets. The state Guaranty Association is a mechanism for assisting the policyholders of bankrupt insurers and would not be called a residual market.
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.
A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy? a) $200,000 b) $100,000 c) $175,000 d) $180,000
c) $175,000 The limit of the equipment breakdown policy applies to property of the insured, property of others, and expediting expenses in any combination as long as expediting expense does not exceed $25,000.
Which of the following types of valuation works best for property whose value does not fluctuate much? a) Stated amount b) Inflation guard c) Agreed value d) Market value
c) Agreed value Agreed value works best for items whose value does not fluctuate much. When a loss occurs, the policy pays the agreed value as specified on the policy schedule, regardless of the insured item's appreciation or depreciation.
In Texas, how is the Commissioner of Insurance placed in office? a) Appointed by the Senate for a term of 2 years b) By election, at the same election when other state officials are chosen. c) Appointed by the Governor for a term of 2 years d) Appointed by the Governor for a term of 4 years
c) Appointed by the Governor for a term of 2 years As established by the Insurance Code, the Commissioner is appointed by the Governor for a term of 2 years.
What is the purpose of the coinsurance clause found in property insurance policies? a) Ensure that insureds do not overinsure their property b) Prevent insureds from profiting from a loss c) Encourage the insured to insure the property closer to its full value d) Encourage higher standards of care by requiring the insured to pay a portion of every loss
c) Encourage the insured to insure the property closer to its full value ???? In return for the insured's promise to insure the property to some certain percent of its value, the insurer agrees to give the insured a reduced rate per hundred on the insurance and pay partial losses in full.
Which of the following would be covered under the crime coverage inside the premises - theft of money and securities? a) Dishonest acts of employees, directors, trustees or representatives b) Accounting or arithmetic errors or omissions c) Loss or damage to a locked safe, vault, or cash register d) Loss resulting from the surrendering of property in any exchange or purchase
c) Loss or damage to a locked safe, vault, or cash register Inside the premises - theft of money and securities would cover loss or damage to a locked safe, vault, or cash register.
Which of the following was created to pay benefits due to insureds after their insurance companies have been declared insolvent? a) Federal Insurers Solvency Fund b) NAIC Insolvency Fund c) Property and Casualty Insurance Guaranty Association d) LLoyd's Association
c) Property and Casualty Insurance Guaranty Association The purpose of the Property and Casualty Insurance Guaranty Association is to pay claims due to insureds when their insurance companies become insolvent.
All of the following situations would be covered under a professional liability policy EXCEPT a) An accountant's error that inflated a bid and caused a client to lose a major account. b) Negligence of an architect who designed an unsafe building. c) The failure of an attorney to properly defend a client due to his personal dislike of the client. d) Failure of a doctor to render the quality of care that is customary in the medical field.
c) The failure of an attorney to properly defend a client due to his personal dislike of the client. Intentional breach of duty would not be covered.
A premium discount is the term that describes when an insured owes a total standard premium greater than a) $10,000. b) $15,000. c) $1,000. d) $5,000.
d) $5,000. A premium discount is when an insured owes a total standard premium greater than $5,000.
What is the minimum percentage of a licensee's total volume of premiums in a calendar year that must come from business other than controlled business? a) 80% b) 50% c) 60% d) 25%
d) 25% During any calendar year, at least 25% of a licensee's total volume of premiums must be from business other than controlled business.
