final

You own a Harley Davidson motorcycle and also the black Ford F-150 pickup with the Harley Davidson trim package. Which could be insured on a PAP? a) Neither the pickup nor the bike on an auto policy b) Only the pickup c) Both the pickup and the motorcycle d) The pickup and the bike if the bike is in the back of the pickup

) Both the pickup and the motorcycle Pickups are normally insured on PAPs; the Harley may be added with a Miscellaneous Vehicle endorsement.

All of the following statements are true regarding fire department service coverage under the businessowners policy EXCEPT a) This coverage limit pays in place of the limit of insurance shown in the declarations. b) This coverage limit is payable in addition to the limit of insurance shown in the declarations. c) This coverage is not subject to any deductible. d) This coverage provides an additional amount of insurance.

) This coverage limit pays in place of the limit of insurance shown in the declarations. The fire department service charge covers charges up to $2,500 for DP '10 ($1,000 for DP '02) and is payable in addition to the limit of insurance shown in the declarations and is not subject to any deductible.

According to the telemarketing sales rules, what are the permissible calling hours for telemarketing calls? a) 10am until 10pm b) 7am until 7pm c) 7am until 9pm d) 8am until 9pm

Permissible calling hours for telemarketers are between 8am and 9pm.

How much coverage can be available for watercraft damage in the homeowners policy? a) No more than $1,000 b) Homeowners policies do not cover watercraft. c) Up to $1,500 d) Unlimited amount

c) Up to $1,500 Homeowners policies limit the amount of property and liability coverage available for watercraft. Only $1,500 of coverage is provided in the homeowners policy for damage to watercraft, accessories, equipment and trailers, and liability for watercraft is limited by the size of the boat.

If a property or casualty producer has less than 2 years left on his or her existing license, what percentage of the surplus lines broker license fee will the producer be charged for the addition of that license? a) 30% b) 75% c) 40% d) 50%

d) 50% A licensee adding surplus lines broker authority to his or her license will be charged half the fee if the licensee has less than two years left on the existing license at the time the Director receives the application.

On a rainy night, a producer gets into an automobile accident and is injured. He is considered to be physically disabled and unable to work. His wife, currently unemployed, is now the family's sole source of income. What could the Director issue her so she can continue her husband's business? a) A producer's license b) Nothing c) A monthly stipend d) A temporary producer's license

d) A temporary producer's license The Director may issue a temporary producer's or broker's license, without requiring a written examination to the spouse, next of kin, employee, or conservator of a licensed producer or broker who is disabled due to sickness, injury, mental or physical disability.

Bob's neighbor will not stop parking his motorcycle in Bob's rose garden no matter how many times he has been asked to quit parking there. Bob finally gets a court order requiring the neighbor to refrain from parking there. It turns out it was his neighbor's property all along. What bond was Bob required to post guaranteeing his neighbor's damages in this wrongful action will be paid? a) Bail b) Cost c) Injunction d) Attachment

An injunction bond is a guarantee that if the injunction should not have been issued, damages will be paid to the injured party.

In a farm policy, which of the following coverages would reimburse the insured for loss of rental income following damage to the insured dwelling by an insured peril? a) Coverage A b) Coverage C c) Coverage D d) Coverage E

Coverage D provides coverage for the loss of use of the insured dwelling when it is rendered uninhabitable because of damage by an insured peril.

Retroactive dates in claims made CGL policies apply to a) BI and PD, PIL and Advertising Liability, and Med Pay. b) PIL and Advertising Liability only. c) BI and PD only. d) Both BI and PD and PIL and Advertising Liability.

For Medical Payments to apply, the expense must be incurred and reported within one year of the accident.

The pollutant cleanup and removal coverage in the businessowners policy has a limit of a) $10,000 in any 12-month period. b) $2,500 in any 12-month period. c) $5,000 in any 6-month period. d) $20,000 in any 6-month period.

a) $10,000 in any 12-month period. The policy limit is $10,000 in any 12-month period if the release was caused by a covered loss during the policy period.

An employer that qualifies for a self-insured workers compensation plan may wish to further limit his liability against catastrophic losses by purchasing excess insurance coverage called a) Aggregate excess coverage. b) Catastrophic excess coverage. c) Self-insurance liability coverage. d) Extreme liability coverage.

a) Aggregate excess coverage. Aggregate excess coverage covers liabilities above the employers "retention requirement" up to a predetermined loss limit.

Which of the following is NOT a primary property coverage in homeowners coverage? a) Collapse b) Dwelling c) Other structures d) Loss of use

a) Collapse The commercial general liability coverage form excludes bodily injury or property damage that the insured has assumed under any contract or agreement. However, the exclusion does not apply to certain types of contracts, as long as the injury or damage occurs after the execution of the contract.

With regard to fire insurance premiums, structures with which of the following type of construction would most likely have the most favorable premium rate for the peril of fire? a) Fire-resistive b) Frame c) Masonry d) Noncombustible

a) Fire-resistive

If a farm building or structure is vacant or unoccupied, which is true? a) If for 120 consecutive days, the limits applicable to the building and its contents are reduced by 50%. b) If for 30 consecutive days, no coverage for vandalism and malicious mischief, glass breakage, or theft. c) If for 60 consecutive days, no coverage for vandalism and malicious mischief, glass breakage, or theft. d) If for 60 consecutive days, amount paid for covered losses is reduced by 15%.

a) If for 120 consecutive days, the limits applicable to the building and its contents are reduced by 50%. The farm policy changes the standard vacant and unoccupancy conditions applying to HO and commercial policies.

Under the claims-made CGL the supplemental extended reporting period a) Provides an unlimited extension for making claims for losses that occurred during the policy period, but the insured must pay an additional premium. b) Automatically extends coverage to include claims made within 5 years of policy expiration, provided the losses occurred during the policy period. c) Automatically provides an unlimited extension for losses that occurred during the policy period but for which a claim is not made until after policy expiration. d) Automatically extends coverage for losses that occurred during the policy period and are claimed within 60 days following policy expiration.

a) Provides an unlimited extension for making claims for losses that occurred during the policy period, but the insured must pay an additional premium. The basic extended reporting period is five years and is included automatically. The extended reporting period must be purchased and has no time limit.

All of the following statements regarding a boatowners policy are true EXCEPT a) Replacements for the boat listed in the Declarations are automatically covered, if the insured notifies the insurer within 60 days and pays the additional premium. b) Watercraft liability protects up to specified limits for claims against a "covered person" for damages due to bodily injury caused by a watercraft. c) Physical damage coverage is provided on an actual cash value (ACV) basis. d) Perils are insured on an open-peril basis, providing that the insurer will pay for direct and accidental loss to the property insured.

a) Replacements for the boat listed in the Declarations are automatically covered, if the insured notifies the insurer within 60 days and pays the additional premium. Automatic coverage is provided on replacements for the boat listed in the declarations provided the insured notifies the insurer within 45 days of purchase and pays any additional premium required.

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.

The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT a) The insured is injured while exiting a friend's mobile home. b) The insured is injured by a motor vehicle while crossing the street. c) The insured's child sustains injuries when the car she is in accidentally rolls down a hill. d) A friend is injured while driving the insured's vehicle with permission.

a) The insured is injured while exiting a friend's mobile home. Medical payments only provided coverage to the insured and any passengers in the insured's vehicle. Injuries to other persons are coverage by a PAP's liability coverage

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.

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay? a) $0 b) $30,000 c) $32,000 d) $40,000

b) $30,000 This insured only carried 75% of the amount of insurance he had agreed to carry ($120,000 of the agreed $160,000), so the insurer will pay only 75% of the loss, or $30,000. If the insured had carried the required amount of insurance, partial losses would be paid in full. In the event of a total loss, the face of the policy would be paid. If the full amount is not carried, divide the actual amount carried by the amount that should be carried (the coinsurance amount), and multiply it by the loss.

All powers of the Arizona Property and Casualty Insurance Guaranty Fund are exercised through a) The insurance companies it represents. b) A board. c) The Director. d) The Arizona Property and Casualty Insurance Guaranty Foundation.

b) A board. The fund is deposited in a depository set up by the Director. All powers of the fund are exercised through a board.

An insured couple owns a pontoon boat. Which situation would NOT be covered by their watercraft endorsement under their homeowners policy? a) One of the insureds is taking the boat out and injures her grandson. b) A friend rents their boat and runs it into a neighbor's dock. c) The insured's granddaughter slips on the boat and needs stitches. d) A friend borrows the boat and has an accident with another boater.

b) A friend rents their boat and runs it into a neighbor's dock. This endorsement provides liability protection for bodily injury or property damage caused by the ownership or use of watercraft (excluding when used to carry persons for a fee or when rented to others).

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a) Adhesion b) Consideration c) Good faith d) Representation

b) Consideration he binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.

Which of the following coverages will respond if a claim is made or a suit is brought against an insured for damages due to bodily injury or property damage caused by an occurrence to which the coverage applies? a) Coverage D - Loss of Use b) Coverage E - Personal Liability c) Coverage F - Medical Payments to Others d) Coverage C - Personal Property

b) Coverage E - Personal Liability Coverage E - Personal liability will respond if a claim is made or a suit is brought against an insured for damages due to bodily injury (BI) or property damage (PD) caused by an occurrence to which the coverage applies.

Under the examinations of books and records condition, the insurance company has the right to examine and audit the insured's books and records related to the policy a) Only after the policy period. b) During the policy period and for up to 3 years after the termination of the policy. c) Only during the policy period. d) During the policy period and for up to 5 years after the termination of the policy.

b) During the policy period and for up to 3 years after the termination of the policy. Any time during the policy period and for up to 3 years after the termination of the policy, the insurer may examine the books and records.

An additional loss that results from a direct loss of property is called a/an a) Punitive loss. b) Indirect loss. c) Proximate loss. d) Liability loss.

b) Indirect loss. Direct losses come about because of perils named in the policy. Indirect losses, also known as consequential losses, come about as a result of a direct loss.

All of the following statements are true regarding employee dishonesty optional coverage under the businessowners policy (BOP) EXCEPT a) Coverage includes all property, including money and securities owned or held by the insured. b) It provides coverage for all employees, even those employees who were terminated in the past 90 days. c) It provides coverage for direct loss or damage to business personal property. d) Losses result from dishonest acts of any of the insured's employees.

b) It provides coverage for all employees, even those employees who were terminated in the past 90 days. When items are scheduled, they are excluded from Coverage C as insured items, and are covered only under the scheduled personal property endorsement.

Rates that are established based on the similarities of the risk with other risks are known as a) Merit rates. b) Manual rates. c) Experience rates. d) "A" rates.

b) Manual rates.

The removal coverage that is included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long? a) 5 days b) 15 days c) 30 days d) 60 days

c) 30 days Removal coverage is provided for 30 days in the broad and special form, provided that endangerment by a covered peril made the removal necessary.

In an auto policy, the medical payments coverage is similar to a) Bodily injury coverage, because it pays the insured's doctor bills. b) Accident insurance, because it has the same limits. c) Accident insurance, because it pays medical expenses regardless of fault. d) Bodily injury coverage, because it provides legal protection if the insured causes injuries to others.

c) Accident insurance, because it pays medical expenses regardless of fault. Medical payments will pay for accidental bodily injury of an insured, regardless of fault or auto. It will pay medical expense of others occupying the insured auto.

In which of the following sections of a commercial auto policy will you find specific information about the policy period? a) Selected endorsements b) Definitions c) Conditions d) Additional coverages

c) Conditions The conditions section of an auto policy defines coverage in greater detail and determines such things as policy period, coverage territory, and how coverage will apply in certain situations.

An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it? a) Builders risk form b) General property form c) Contractors equipment floater d) Bailee's customers form

c) Contractors equipment floater The contractors equipment floater covers equipment left unattended on a job site until the project is finished.

Transacting insurance could include all of the following EXCEPT a) Receiving an application for insurance. b) Effectuating a contract. c) Designing insurance advertisements. d) Negotiating insurance.

c) Designing insurance advertisements. These transactions could include the solicitation, negotiation, inducement, receipt or delivery of contracts or applications. It is strictly prohibited to transact insurance without a license.

A business using its own trucks to move its own cargo would insure the cargo using a) Motor carrier form. b) Trip transit coverage. c) Motor truck cargo - owners form. d) Motor truck cargo - truckers form.

c) Motor truck cargo - owners form. A business using its own trucks to move its own cargo would insure the cargo using the owners form.

When is a hired and nonowned auto liability endorsement available in a businessowners policy (BOP)? a) Only if the insured has 4 or more employees. b) Never c) Only if the insured does not have commercial auto coverage d) Only in addition to commercial auto coverage.

c) Only if the insured does not have commercial auto coverage This endorsement can be added to the BOP only if the insured does not have commercial auto insurance. This coverage is excess over any primary insurance coverage on the hired or nonowned auto.

An insurance policy or countersignature endorsement must be signed by any of the following EXCEPT a) Bail bond agent. b) Managing general agent. c) Licensed insurance producer. d) Director of Insurance.

d) Director of Insurance. An insurance policy or countersignature endorsement must be signed by a licensed insurance producer, a managing general agent, or a bail bond agent, whichever is applicable.

An insured has a personal property replacement cost endorsement under her homeowners policy. If an expensive painting and an antique chair are stolen from the insured's home, what will the insured receive on the claim under that endorsement? a) 70% of the replacement cost b) 80% of the replacement cost c) 100% of the actual cash value d) Nothing

d) Nothing The personal property replacement cost endorsement excludes property such as art and antiques.

How much is the premium for the dwelling under construction endorsement under the dwelling policy? a) 75% of the gross premium b) The full value of the house c) 50% of the actual value premium d) The average amount of insurance during construction

d) The average amount of insurance during construction The premium is based on the average value of the house and building materials from the first day of construction until completion.

Frank's Steaks furnishes meat to steakhouses. An accident on the premises causes the building to lose refrigeration for 32 hours. The state inspectors will not allow the meat in the refrigerating units to be sold for human consumption, and Frank loses $18,500 in disposing of the meat. What coverage under Frank's BOP policy will cover the loss? a) Utility service - time element b) Extra expense c) Protective safeguards d) Utility service - direct damage

d) Utility service - direct damage Utility service - direct damage would pay for the loss of the meat that was damaged because of no refrigeration.