Florida Adjuster licensing

During a severe windstorm, a large tree in Jeff's yard was blown down and two large bushes were ripped from the ground. Jeff has an HO-3. What is the maximum amount that Jeff can receive for the replacement of the tree and bushes that were damaged by the windstorm? $0 $1,000 $1,500 $500

$0

Which of the following incidents would a liability insurance policy cover? The company van is stolen from your warehouse. A fire damages the back bedroom of your house. A man crashes his car into his own fence. A man slips inside a grocery store and injures himself.

A man slips inside a grocery store and injures himself.

Which of the following is NOT considered "covered equipment" under an Equipment Breakdown Protection Coverage Form? Mechanical equipment that generates energy Equipment that is buried in the ground Equipment that operates under internal pressure or vacuum Computer equipment

Equipment that is buried in the ground

Anton is purchasing homeowner's insurance for his new house. He wants to make sure his policy offers the BEST coverage available. Which policy should Anton choose? HO-2 HO-5 HO-8 HO-3

HO-5

Which of the following homeowners policies provide coverage on an open-peril basis for personal property without endorsement? HO-3 and HO-5 HO-2 and HO-3 HO-8 HO-5

HO-5

The DP-3 is known as the: Basic Form. Special Form. Amended Form. Broad Form.

Special Form.

Which characteristic would prohibit a convenience store/gas station from purchasing a BOP? The use of microwave ovens Over 4,000 square feet of retail space Gasoline accounts for over 50% of sales The operation of a car wash

The operation of a car wash

Which of the following does NOT fall under the classification of "small grains"? Oats Barley Wheat Corn

Corn

Robert is delivery driver for Acme Surplus. On his last stop of the day, he runs a stop sign and broadsides Daryl's car, causing $14,000 in damage to Daryl's car, as well as $21,000 in damage to his company truck. Which type of coverage would help protect Acme Surplus from these losses? Employer liability insurance Daryl's auto liability insurance. Personal auto liability insurance Personal liability insurance

Employer liability insurance

A large corporation owns a small hunting cabin in the woods, that it uses for occasional weekend getaways. The corporation can insure the cabin against property damage with a: dwelling policy. Standard Fire Policy. homeowners policy. commercial liability policy.

dwelling policy.

In the Standard Fire Policy, "intentional losses" and "extreme perils that cause catastrophic damage to a large number of policyholders" would be considered examples of: insurable risks. conditions. hazards. exclusions.

exclusions.

Jackie lives in an area recently devastated by a hurricane and has filed a claim with her insurance company, ABC Insurance. Jerry, an adjuster contracted by ABC Insurance, pulls up to Jackie's house in a truck with the ABC Insurance logo on the side, and wearing a shirt with the ABC Insurance logo on the front. Although Jackie doesn't know that Jerry is contracted by ABC Insurance, she has reason to believe he has the authority to adjust her claim. This is an example of: agency authority. expert authority. express authority. implied authority.

implied authority

William is wearing an ABC Insurance jacket and has an ABC Insurance sign over his rented office. The walk-in customer could reasonably believe that he has the authority to write an insurance contract because of his: apparent authority. express authority. agent authority. implied authority.

implied authority

Jim is an insurance adjuster working a theft claim. As part of his investigation, Jim might want to do all of the following, EXCEPT: thoroughly inspect all damages related to the theft. take statements from all witnesses. look for ways to lower the settlement for the claimant. review any available police reports.

look for ways to lower the settlement for the claimant.

For loss settlement purposes, most homeowners policies: pay up to 80% of the value of the damaged item, leaving the remaining 20% to be paid by the insured. pay for damages to personal property at actual cash value, and damages to structures at replacement cost. pay for damages to structures at actual cash value, and damages to personal property at replacement cost. pay for damages to structures and personal property at actual cash value.

pay for damages to personal property at actual cash value, and damages to structures at replacement cost.

In a Personal Auto Policy, deductibles are applied on a/an ________ basis. aggregate per claim per insured per vehicle

per claim

Once a claimant files a complaint to the court, the claimant will become the: plaintiff. answering party. negligent party. defendant.

plaintiff.

Which of the following automobile components is NOT covered by a Mechanical Breakdown Insurance policy? Tires Engine Drive train Steering assembly

Tires

This agent is self-employed and able to offer insurance products from more than one company at a time. Independent Sales Agent Direct Writer General Agent Independent Adjuster

Independent Sales Agent

The coverage limit in Bob's commercial property policy goes up 2% every time the policy renews. Which optional coverage might Bob have included as part of his insurance package? Inflation Guard Agreed Value Advanced Premium Replacement Cost

Inflation Guard

Which of the following is a feature typically found in a Business Owners Policy? Inflation Guard for buildings and structures Malpractice coverage Professional Liability coverage Coverage for company-owned vehicles

Inflation Guard for buildings and structures

One morning, Jill arrives to open the bank, only to find the door already unlocked. Upon entering the bank, she sees the vault door has been blown open and a large amount of money has been burned when an explosive charge went off. Which commercial crime insurance coverage might cover the loss? Computer Fraud Forgery Inside the Premises: Theft of Money and Securities Inside the Premises: Robbery or Safe Burglary

Inside the Premises: Theft of Money and Securities

Agnes purchased a home ten years ago in an upcoming neighborhood for $75,000. The home's value has since tripled to $225,000! Agnes still has $25,000 left on her mortgage, but has increased her dwelling coverage to $225,000 to keep up with the home's appreciation. When it burns to the ground in a fire, her mortgage company wants to be indemnified $75,000 because the value of the home has tripled. Which policy condition protects against this claim? Liberalization Clause Recoverable Depreciation Insurable Interest Severability of Interests

Insurable Interest

In the case of condominiums: the unit owner and condo association share responsibility for insuring the property. the unit owner is only responsible for insuring personal property. the condo association is wholly responsible for insuring units. the unit owner is responsible for insuring the whole condo unit, inside and out.

the unit owner and condo association share responsibility for insuring the property.

Lightning strikes one of Christy's trees in her backyard and starts a fire that spreads to two other trees before firefighters are able to put it out. The fire department charges her $600 for responding to her call. Christy's DP-2 policy has a Coverage A limit of $95,000. What is the maximum amount of indemnification that Christy can expect to receive for this loss (ignoring any deductible)? $2,000 $500 $4,750 $1,500

$2,000

In Florida, every driver must have $10,000 in property damage liability coverage and $10,000 in PIP in order to operate a motor vehicle. If the driver is in a wreck and is found to be at fault, how much liability coverage must the driver have for total bodily injury per accident? $20,000 $10,000 $15,000 $30,000

$20,000

A processing and servicing company would qualify for a BOP only if they have less than _____ in annual revenues. $5 million $2 million $3 million $1 million

$3 million

Norris borrows Arnold's truck to pick up some lumber from the hardware store. On the way to the store, Norris collides with a car, injuring the three people inside. The driver suffers $15,000 in injuries, one passenger suffers $25,000, and the other passenger suffers $20,000. Norris has a PAP with liability limits of 50/100/50, and Arnold's policy has liability limits of 25/50/10. How much will the primary policy pay for the injuries? $30,000 $50,000 $25,000 $60,000

$30,000

Which of the following is a hazard? A skiing accident Vandalism Lightning A driver's tendency to text while driving

A driver's tendency to text while driving

Which of the following may be covered under a Mechanical Breakdown Insurance policy? Breakdown due to electrical system malfunction Breakdown due to flooding Breakdown occurring while towing with the vehicle Breakdown on a vehicle with an altered odometer

Breakdown due to electrical system malfunction

In a DP-2 Broad Form, which of the following would be covered under the peril of Theft? A stolen vehicle. Stolen electronics. Stolen cash. Broken windows caused by a burglar breaking in.

Broken windows caused by a burglar breaking in.

Haley takes a bottle of water into a store, pours some of it on the floor when no one is looking, and then pretends to slip and fall. She cries out for help in apparent pain until someone comes to her aid. She then sues the store for her fake injury in an effort to collect an insurance settlement. What has Haley committed? Misrepresentation Tortfeasor Soft fraud Hard fraud

Hard Fraud

Frank owns a bakery specializing in authentic French bread. He uses two specialty ovens for his daily production of French bread. If one of these giant ovens were to break down, it would cost Frank's bakery a lot of money to repair, not to mention the loss of revenue caused by lower production. On his Equipment Breakdown Protection Form, each of Frank's ovens would be considered: an "object." a "liability." a "peril." a "machine."

an "object."

In order to set a yield guarantee for Maren's policy, Maren's agent will need a record of the last four years of her crop yields. This record is called: an Actual Yield History. an Actual Production History. a Transitional Yield Report. an Average Production Report.

an Actual Production History.

While a claim remains open, an insurer may require the adjuster to submit an interim report: at regular set intervals, which lists any new or important information about the claim. every 15 days, which explains why the claim is still open and when the adjuster expects to close it. every week for the purpose of documenting the adjuster's claim-related expenses. every day, which lists the amount of time spent working the claim.

at regular set intervals, which lists any new or important information about the claim.

In a garagekeepers policy, PIP coverage is: included unless the insured declines it in writing. available with an endorsement. not available. mandatory.

available with an endorsement.

Wilson is a Florida resident who maintains a liability policy with limits of 10/20/10. Recently, he was visiting a friend in Georgia when he ran a red light and hit a BMW, causing $30,000 in property damage. The minimum liability requirement in Georgia is 25/50/25. How much will Wilson's liability insurance pay in this situation? $10,000 $50,000 $25,000 $20,000

$25,000

To meet the 80% level of co-insurance required by his lender, Tom discovers he must insure his home for at least $320,000. What is the value of Tom's home? $320,000 $256,000 $400,000 $440,000

$400,000

What is the standard deductible on an Equipment Breakdown Protection Coverage Form? $250 $0 $1,000 $500

$500

What is the current minimum amount of liability coverage required by the state of Florida for a driver who is found to be at fault in an accident? 10/20/10 25/10/50 25/50/10 It depends on the value of the car.

10/20/10

The Standard Fire Policy is also known by a nickname: The "___ " Policy. 1918 Original Monoline 165 Line

165 line

According to the commercial property policy, a commercial building is considered vacant if less than ____ of the available square footage is occupied for ____ consecutive days. 15%, 30 31%, 60 31%, 30 15%, 60

31%, 60

Jane's has a $150,000 homeowners policy with a 3% percentage deductible. One night, an oven fire destroys her kitchen, causing $50,000 in damage. How much of the damage falls under Jane's responsibility? $15,000 $4,500 $1,500 $3,600

4500

The insured carries a BOP policy with protective systems such as a sprinkler system. If the system becomes inoperative, the insured must advise the insurance company of the problem within _______ if the system cannot be restored to working order. 30 hours. 48 hours 30 days 60 days

48 hours

A Discovery Form Commercial Crime policy can apply to losses discovered during the policy period, as well as up to how many days after its expiration date? 30 60 15 None. The policy cannot apply to losses discovered after the expiration date.

60

In Florida, an insurer has ___ days to pay or deny a claim. 90 30 15 100

90

Lucille owns her own woodworking business, building custom items such as dressers, wooden trunks, and mantelpieces. A fire destroys her entire operation and Lucille files a claim with her insurer. Which of the following would be covered under Coverage A of the Building and Personal Property Coverage Form in her commercial property policy? A bandsaw permanently affixed to the floor Lucille's computer in her office A hand-held circular saw The three wooden toy chests Lucille has completed for a client

A bandsaw permanently affixed to the floor

Dr. Jones' current occurrence malpractice policy is in effect from July 1, 2005 through July 1, 2006. Which lawsuit would trigger this malpractice insurance policy? A woman sues Dr. Jones on January 24, 2006 for an eye surgery he performed on July 1st, 2004. A man sues Dr. Jones on July 26, 2009 for a damaging knee surgery performed on March 3, 2006. A woman sues Dr. Jones on July 17, 2005 for a poor nose job he performed on May 2, 2005. A man sues Dr. Jones on February 26, 2007 for misdiagnosing cancer on December 21, 2006.

A man sues Dr. Jones on July 26, 2009 for a damaging knee surgery performed on March 3, 2006.

A fire burns down Jenny's Hardware, leaving virtually nothing salvageable. Which of the following items would NOT be covered under Coverage B of the Building and Personal Property Coverage Form in her commercial property policy? Computers purchased by the business A portable table saw used to cut lumber to a customer's specifications Inventory for sale A paint mixer permanently affixed to the floor

A paint mixer permanently affixed to the floor

Which of the following is NOT be considered a covered theft in a Commercial Crime policy? The delivery man secretly withholds a package of goods for his own use after having them signed for. Three employees are discovered siphoning cash from the register at regular intervals. A customer dashes out of the store with a bag full of goods. A periodic assessment of inventory reveals that 4% of a store's inventory is inexplicably missing.

A periodic assessment of inventory reveals that 4% of a store's inventory is inexplicably missing.

What is a reserve, in insurance terms? The amount of revenue that the insurer sets aside to pay employee salaries A group of policyholders who pay into the same pool of premiums A pool of collected premiums that the insurer sets aside to pay claims A set of rules governing how the insurance industry should work

A pool of collected premiums that the insurer sets aside to pay claims

Xavier owns a small insurance company. Recently the company won a bid to insure a new housing development in Omaha, NE. His company can handle any claims that arise, but if a series of tornados were to tear through the area and destroy the entire development, Xavier's company would suffer financially. Which type of insurer could help Xavier's company protect itself the most from this potential loss? A re-insurer A fraternal benefits society A stock insurer A reciprocal insurance group

A re-insurer

In which of the following cases would Mechanical Breakdown Insurance NOT apply? During a long incline in Colorado, Seth's engine overheats, damaging the pistons. Sam's car transmission wears out. A rock strikes and shatters Horace's windshield. The air conditioning system in Sarah's car fails at only 37,000 miles.

A rock strikes and shatters Horace's windshield.

Which of the following would be considered an insurable risk? The gold stored in Fort Knox A high-crime area A riverbank A squadron of police cars

A squadron of police cars

Which of the following statements regarding actual cash value is FALSE? Actual cash value is always most beneficial to a policyholder. Actual cash value includes the depreciation on an item. A replacement cost valuation will generally be more than the ACV valuation. The actual cash value generally reflects the market value of an item.

Actual cash value is always most beneficial to a policyholder.

Which insurance professional is responsible for investigating and negotiating claims? Agent Broker Direct writer Adjuster

Adjuster

Which settlement option is most often used when a claimant misses work because of bodily injury, but a settlement has not yet been reached? Scheduled payment release Advance payment settlement Open ended release Rehabilitation settlement

Advance payment settlement

Peter works as a real estate agent and uses the internet extensively for sales leads and advertising. One day, he finds another realtor's ad online and copies it, using his own information as the contact info. This generates a lot of business for Peter, but unfortunately Peter gets a call one day and is informed that he is being sued for copyright infringement. This is an example of what type of claim covered under Peter's Commercial General Liability policy? Wrongful Entry Advertising Injury Libel and Slander Malicious Prosecution

Advertising Injury

Which of the following best defines the principle of indemnity? Both parties to an insurance contract must contribute something of value. After a loss, the insured should be restored to his approximate financial condition before the loss. In order to be legally binding, a contract must have agreement, consideration, competent parties, and legal purpose. In exchange for a premium, the insurer grants peace of mind by reducing the insured's insecurity about the future.

After a loss, the insured should be restored to his approximate financial condition before the loss.

Allen works as an adjuster for Insurer B. Which of the following is FALSE? Insurer B has given Allen express authority to perform on its behalf. Allen is an agent of Insurer B. Insurer B is bound by Allen's words or decisions that he makes while on the job. Allen is a salaried employee who only sells Insurer B's products.

Allen is a salaried employee who only sells Insurer B's products.

Which of the following is NOT eligible for Dwelling coverage? A duplex owned by a corporation A mobile home on a permanent foundation An 8-unit apartment building in which the owner resides A single-family home that is wholly rented out

An 8-unit apartment building in which the owner resides

A fire burns down Jenny's Hardware, leaving virtually nothing salvageable. Which of the following items would NOT be covered under Coverage A of the Building and Personal Property Coverage Form in her commercial property policy? The lumber storage shed, listed on the dec page An employee's laptop which she uses for work The heating and air conditioning system The brand new flooring Jenny had installed a month ago

An employee's laptop which she uses for work

Which of the following statements is NOT true of endorsements? An endorsed policy has been changed from the original version. An endorsed policy will always provide more coverage than an unendorsed policy. Endorsements may be added to a policy at any time during the policy period. Endorsements may be added to a policy at the time of purchase and at renewal.

An endorsed policy will always provide more coverage than an unendorsed policy.

Which of the following statements is NOT true of an insurance adjuster? An insurance adjuster must always use reasonable judgement for both the insurer and the claimant. An insurance adjuster who settles claims on behalf of an insurer has the power to bind that insurer, even if she makes a mistake. An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract. An insurance adjuster is an agent.

An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract.

A fiduciary agent must regularly report to the principal. Which of the following is the BEST example of a principal in the context of insurance? A public adjuster who is employed by a claimant to examine her damaged property. An adjuster who signs a form on behalf of his employing insurance company. An insurer that employs an insurance adjuster to investigate damage claims. A policyholder who has filed a first-party claim with his insurance company.

An insurer that employs an insurance adjuster to investigate damage claims.

An adjuster has a duty to provide which of the following to the claimant? A recommendation of a reputable claims lawyer in the local area A settlement sufficient to offset the out-of-pocket burden of the deductible Periodic reports detailing the status of the claim An open line of communication

An open line of communication

In the Business Auto Policy, what does the symbol #2 mean? Specifically Described Autos Owned Autos Subject to No-fault Insurance Any Owned Vehicle Owned Private Passenger Autos Only

Any Owned Vehicle

Which of the following statements about the negotiation process is FALSE? Failing to address minor clerical issues can stall the negotiations. If an adjuster can rectify minor issues with the claimant right away, the negotiation process may quickly take care of itself. In negotiations, a seemingly trivial matter can prevent a successful outcome. Apologizing for minor mistakes can weaken the adjuster's power in the negotiations.

Apologizing for minor mistakes can weaken the adjuster's power in the negotiations

Bob has been in the construction business a long time and is ready to retire. He sells the company to his friend Scott and then lets the insurer know that any claims against his policy should be paid to Scott from now on. The insurer informs Bob that they cannot do this due to which condition? Liberalization Assignment Premium Audit Control of Property

Assignment

Alice is an adjuster and is currently negotiating a settlement with Gale. Which of the following actions that Alice could take would be disrespectful towards Gale, and thus hinder the negotiation process? Seeking to understand Gale's perspective Looking Gale in the eye Not interrupting or correcting Gale Assuming to know what Gale wants

Assuming to know what Gale wants

Alan owns a commercial landscaping business and does most of his work during the summer months. One day, he arrives at work to find an enormous hole in the middle of the yard where he stored his lawn mowers. Under which Causes of Loss form(s) would the mowers, which were consumed by the sinkhole, be covered by his commercial property policy? They will only be covered by endorsement Special Form only Basic, Broad, and Special Forms Broad, and Special Forms only

Basic, Broad, and Special Forms

Which of the following does NOT apply to commercial property insurance? Because of their complexity, commercial policies only offer named-peril coverage. A commercial policy typically provides some coverage for loss to personal property of employees. Commercial policies are generally not designed to cover farms and 1-4 family dwellings. Commercial property coverages are usually paid on an actual cash value basis.

Because of their complexity, commercial policies only offer named-peril coverage.

There are several terms that are often interchangeable with "endorsements." Which of the following is NOT one of these terms? Riders Attachments Binders Addendums

Binders

Which of the following endorsements is mandatory for all Florida residential property policies? Catastrophic ground cover collapse Sinkhole Earthquake Sewer backup

Catastrophic ground cover collapse

As an insurance adjuster, Heather is responsible for updating and maintaining an accurate record of all the information pertinent to an individual's insurance claim, including copies of all written documentation, photos and property sketches, witness statements, and copies of medical bills. What is this record called? Evaluation report Investigative file Field report Claim file

Claim file

On January 27, 2004, Ryan was using an exercise bike from NusquamCycle when the chain broke, causing him to fall and bruise his knee. Seven years later, on January 25, 2011, Ryan's knee gave out while jogging. His doctor told him that he'll need surgery and that this deterioration was probably caused by his bruise from the exercise bike. Assuming NusquamCycle is no longer in business, which CGL policy would cover Ryan's claim filed on January 25, 2011? Claims-Made policy from Jan 1 2001-Jan 1 2002 with a basic extended tail Claims-Made policy from Jan 1 2003-Jan 1 2004 with a supplemental extended tail Claims-Made policy from Jan 1 2001-Jan 1 2002 with a supplemental extended tail Claims-Made policy from Jan 1 2003-Jan 1 2004 with a basic extended tail

Claims-Made policy from Jan 1 2003-Jan 1 2004 with a supplemental extended tail

Sarah is playing with a basketball on the stairs at Bob's house. In doing so, she trips, falls, and breaks her leg. She files a claim against Bob's insurance company for her injuries. The adjuster determines that Sarah was 50% partially responsible for her own injuries, and therefore should only receive indemnification for 50% of her medical bills. What defense of the claim is the adjuster using? Third-party negligence Assumption of risk Comparative negligence Contributory negligence

Comparative negligence

Wendy hires Jim to build an addition to her house. Jim takes the job and finishes it in good time. Unfortunately, as Wendy is walking across the threshold of the new addition, a floorboard gives way and Wendy falls into the crawl-space below, injuring her leg and back. Which commercial general liability coverage could help cover the cost of Wendy's injuries? Insured Contracts Liability Premises Liability Product Liability Completed Operations Liability

Completed Operations Liability

Assuming Ernie holds a BOP with a Selected Per Occurrence limit of $300,000, what would Ernie's Completed Operations and General Aggregate limits equal? Completed Operations: $1,000,000; General Aggregate: $1,000,000 Completed Operations: $1,200,000; General Aggregate: $2,000,000 Completed Operations: $600,000; General Aggregate: $600,000 Completed Operations: $300,000; General Aggregate: $500,000

Completed Operations: $600,000; General Aggregate: $600,000

In which section of an insurance policy might you find the following statement? "Damage to insured property must be reported within 15 days of the damaging occurrence." Exclusions Definitions Conditions Declarations Page

Conditions

Sam is a claimant seeking damages from XYZ Insurance. The XYZ adjuster comes to meet with Sam to hear the circumstances of her injury. The adjuster determines that Sam played an active role in her own injuries, and therefore XYZ Insurance will pay her nothing at all for her injuries. What defense is the adjuster using? Full negligence Comparative negligence No negligence Contributory negligence

Contrib

In a Farm Insurance policy, which of the following would cover the main dwelling on the insured farm? Coverage C Coverage B A separate homeowners policy Coverage A

Coverage A

When a fire breaks out inside XYZ Printing, it damages the building structure, and two of the printing presses, which were bolted to the floor. What coverage within the BOP policy would cover the printing presses? None Coverage A Coverage C Coverage B

Coverage A

Christine's spinach field was partially destroyed by fire that resulted from a lightning strike during a recent storm. She lost 23 of her 150 acres. The adjuster writes her a check for the value of the damaged 23 acres, even though the yield from the rest of the field is doing exceptionally well and may make up for the damaged portion. What type of insurance policy does Christine have? Revenue Protection Yield Guarantee Crop-Hail Multi-Peril Crop Insurance

Crop-Hail

Due to decreased demand, the market price of beets dropped dramatically during the recent growing season. Consequently, Michelle's crop of beets did not make as much money as she was expecting this year, based on her production history and the harvest-time futures price. However, Michelle is insured for this type of situation. What kind of insurance does she have? Multi-Peril Crop Insurance Yield Guarantee Crop-Yield Crop-Revenue

Crop-Revenue

Which of the following individuals is NOT considered a "custodian" in commercial crime insurance? Employee Customer Insured Partner

Customer

Stan owns ABC Mattress Supply. During a storm, lightning strikes a large tree, causing it to fall through the front of his building, resulting in $23,000 in damages. Which coverage in a BOP would pay for the extraction of the tree from Stan's store? Extra expense coverage Debris removal coverage Liability coverage Business interruption coverage

Debris removal coverage

In a homeowners policy, Coverage B - Other Structures provides insurance for which of the following? Detached garages Structures held for rental purposes Detached structures used for business Detached structures that are wholly rented out

Detached garages

Jim drops his car off at ABC Garage to have his exhaust system repaired and takes the train to work. When he returns, he finds that his car has been vandalized. Jim has comprehensive coverage, but feels the garage is responsible for the damage since Jim entrusted the car to ABC Garage. Which coverage type under ABC's garagekeepers policy would cover any part of the loss that Jim's policy does not cover? General Liability Coverage Direct Excess Coverage Excess Comprehensive Coverage Direct Primary Coverage

Direct Excess Coverage

Jim drops his car off at ABC Garage to have his exhaust system repaired and takes the train to work. When he returns, he finds that his car has been vandalized. Jim has comprehensive coverage, but feels the garage is responsible for the damage since Jim entrusted the car to ABC Garage. Which coverage type under ABC's garagekeepers policy would split the cost of the loss with Jim's own insurer without placing blame on ABC Garage? Comprehensive Coverage Liability Coverage Direct Excess Coverage Direct Primary Coverage

Direct Primary Coverage

This agent is a salaried employee who sells insurance products for only one insurer. Captive Agent General Agent Direct Writer Exclusive Agent

Direct Writer

Phil heads over to visit his friend Josh, who is sick with the flu. While at the house, Josh fails to cover his mouth when he coughs and Phil ends up contacting the flu. Phil files a claim with Josh's insurer for medical expenses and lost income while Phil is out sick from work. The insurer denies the claim because: Disease transmitted from the insured to a third party is excluded. Phil was comparatively negligent, since he failed to get a flu shot. Phil was contributorily negligent, since he failed to get a flu shot. Phil came over to Josh's house of his own accord.

Disease transmitted from the insured to a third party is excluded.

Dr. Adams is in the middle of a malpractice lawsuit. Her insurer decides it will be more cost effective to simply settle the suit rather than draw the process out over several months. Assuming Dr. Adams holds a Professional Liability Policy, which of the following statements is TRUE in regards to settling the claim? An umpire must be employed to settle the claim through arbitration. Dr. Adams' insurer must seek her consent before settling the claim Dr. Adams must pay all her own legal expenses. The insurer has the right to settle the claim anyway it finds advantageous to its interests.

Dr. Adams' insurer must seek her consent before settling the claim

Which of the following best describes who adjusters can work for? Private investigators Claimant Either insurers or claimants Insurance companies

Either insurers or claimants

What kind of adjuster is only allowed to work on claims relating to a disaster and may be from another state? Emergency adjuster Public adjuster Independent adjuster Staff adjuster

Emergency adjuster

David just opened his own consulting business, and has taken on several new clients. He's having difficulty managing his schedule on top of all the other responsibilities related to owning his own business, so he hires Tina via contract to work as his full-time office manager for $15 per hour. According to the definitions in David's Commercial General Liability policy, which of the following best describes Tina? Leased Worker Volunteer Worker Temporary Worker Employee

Employee

Which Business Auto Policy endorsement covers employees while using their personal cars for business purposes? Mobile Equipment Drive Other Car Employee as Additional Insured Individual Named Insured

Employee as Additional Insured

Tim, taking advantage of the economic downturn, started a business buying gold and silver from people who needed cash. Tim and one employee negotiated deals with sellers in the front of the shop, while another employee worked in the back of the shop, where she counted the money and kept the books. Which commercial crime coverage would protect Tim from losses resulting from theft, specifically by either his current money counter or any other money counter he may employee after her? Employee theft: scheduled positions Employee theft: high-security Employee theft: all employees Employee theft: schedule persons

Employee theft: scheduled positions

Cliff receives a letter from the IRS, informing him that he has severely underestimated his Adjusted Gross Income for the past year. Cliff was oblivious to this fact because XYZ Accounting has filed his taxes for him for the past 15 years. Now, Cliff owes $15,000 in back taxes. He sues XYZ Accounting for this mistake. Which of the following would cover the cost of the lawsuit for XYZ Accounting? Commercial Liability Insurance Accounting Insurance Errors and Omissions Insurance Malpractice Insurance

Errors and Omissions Insurance

Jane owns an aquarium supplies store and purchases a Business Owners Policy to protect her assets. Which of the following protections can Jane expect from her standard BOP with no endorsements? Insurance for her company-owned vehicles Malpractice insurance Extra expense coverage Named peril coverage

Extra expense coverage

Farmer Scott owns a farm and raises goats, producing a lot of manure. Occasionally, after a strong rain, some of the waste washes into a nearby river. Which insurance coverage can protect Scott from any liability caused by the goat waste runoff? Farm Livestock-Waste Liability Farm Pollution Liability Custom Farming Liability Farm Product Liability

Farm Pollution Liability

Which of the following would be covered under Coverage A in a dwelling policy? Gas furnace in the basement Building materials that will be used to construct a storage shed Damage to the land Construction tools next to the dwelling

Gas furnace in the basement

This agent works for only one insurer, and supervises and trains other agents. Captive Agent Direct Writer General Agent Exclusive Agent

General Agent

Hank has collision coverage with a $2,000 deductible on his 2010 truck. One dark, rainy night, Hank's truck slips off the road and rolls down the embankment. The truck sustains $45,000 in damages, but the actual cash value of the vehicle is only $25,000. Which of the following statements is TRUE? Hank will be indemnified by his insurer for $23,000. Hank will be indemnified by his insurer for $43,000. Hank will be indemnified by his insurer for $25,000. Collision coverage will not indemnify Hank for this accident.

Hank will be indemnified by his insurer for $23,000.

Which of the following losses may be covered by Mechanical Breakdown Insurance? Someone put sugar in Selma's gas tank, which ruined her engine. Elliot's windshield wipers cracked shortly after purchase. Harry's power steering system failed at 55,000 miles. Tina's clutch failed at 100,000 miles.

Harry's power steering system failed at 55,000 miles.

Which of the following statements is TRUE of a claim dispute litigated in a state that follows the doctrine of Contributory Negligence? If the plaintiff if found to be at all negligent, she will receive no settlement. The settlement amount will be reduced by the percentage of the plaintiff's negligence. The settlement amount will be reduced by the percentage of the defendant's negligence. If the defendant is found to be at all negligent, she will receive no settlement.

If the plaintiff if found to be at all negligent, she will receive no settlement.

Which of the following is NOT a form of insurance fraud? Lighting a candle and leaving it next to your window curtains before leaving for work. Increasing your insurance coverage when you think a loss is likely. Faking a death. Staging an accident.

Increasing your insurance coverage when you think a loss is likely.

Which of the following is NOT true about a scheduled payment release? The insurer agrees to pay all compensatory damages up to the point of settlement. It is also called a rehabilitation settlement. It is most often used with Workers' Compensation claims. It can't be used with Workers' Compensation claims.

It can't be used with Workers' Compensation claims

Which of the following is TRUE of the vacancy condition in a typical insurance policy? It establishes the parameters for considering a building vacant for the purpose of coverage. It states that the insurance policy will terminate if the insured building is vacated. In commercial policies, it states that a building is vacant if more than 31% of the building is unoccupied. It states that a dwelling vacant for more than 15 days is not insurable.

It establishes the parameters for considering a building vacant for the purpose of coverage.

Which of the following statements about the Standard Fire Policy is TRUE? It is no longer used in its original format. It still provides the basic foundation for liability insurance policies today. It provided replacement cost valuation. It only provided coverage for fire.

It is no longer used in its original format.

Which of the following statements about Crop-Hail insurance is FALSE? It is subsidized by the FCIC. It covers for damage due to hail, but also fire, lightning, wind, and others. It is rated on an acreage basis. It is generally available from private insurers.

It is subsidized by the FCIC.

Which of the following statements about a moral hazard is FALSE? A moral hazard increases risk. It is reckless behavior because of security offered by insurance. It is a hazard caused by human behavior. It is the result of an unconscious behavior.

It is the result of an unconscious behavior.

How is the power to bind transferred to an adjuster? It is passed from one adjuster to another. It is transferred by a sworn oath. It is implied by the position. It is transferred through a written contract.

It is transferred through a written contract.

Which of the following is NOT a requirement for a legally binding contract? There must be a legal purpose. There must be mutual consent. Both parties must bring something of value. It must be a notarized document.

It must be a notarized document.

Which of the following statements about the original Standard Fire Policy is FALSE? It was the first multi-line policy, combining both Physical Damage and Liability coverages. Valuation was usually done on an actual cash value basis. The only perils covered under the policy were fire and lightning. It was a named peril policy.

It was the first multi-line policy, combining both Physical Damage and Liability coverages.

Strong winds have torn a hole in Janet's roof. On top of that, heavy rain is expected in her area in the next few days. Figuring it would simply be too much effort to put a tarp over the hole in her roof, Janet elects to do nothing. The rains come and destroy several of her possessions inside her home. Janet files a claim with her insurer for the losses, but it comes back denied. This is because: Homeowner's insurance covers personal property at an actual cash value, and her personal items were worth nothing after they were destroyed. Janet failed to make a reasonable effort to protect the property from further damages. Storm damage is not covered under a standard homeowner's policy. Janet's policy has coverage for wind damage, but not flood damage.

Janet failed to make a reasonable effort to protect the property from further damages.

When record-breaking rainfall causes severe flooding in Janie's home town, Janie's rental property suffers extensive damage. Which of the following is an indirect loss? Janie's tenant has to replace his sofa that was damaged by the water. Janie must pay to have the wood floors replaced in her rental unit. Janie must hire a contractor to reinforce a damaged retaining wall in the backyard of her rental unit. Janie loses a month of rental income when her tenant must move out while repairs are made to the home.

Janie loses a month of rental income when her tenant must move out while repairs are made to the home

Nancy and Drew borrow Joe's car so they can have a picnic at the old water tower. On their way to the picnic, Drew accidentally rear-ends Mr. Jackley, causing $2,900 in damage. Whose liability insurance will pay first for the damages? Nancy's Mr. Jackley's Joe's Drew's

Joe's

Which of these is NOT typically excluded from coverage in a property insurance policy? Off-premises power failure Civil confiscation Nuclear events Lightning

Lightning

Which of the following is NOT one of the requirements that a "Fast Food Restaurant" business must meet in order to qualify for a BOP? Liquor must not account for more than 25% of total annual sales. The restaurant must maintain appropriate fire extinguishing equipment. The restaurant may not seat more than 150 people. The restaurant must not exceed 7,500 square feet.

Liquor must not account for more than 25% of total annual sales.

Bob's home was severely damaged by a thunderstorm and he claims it will cost $74,000 to repair. His insurer has investigated the claim, found the repairs could be done for $49,000, and has offered Bob this amount of indemnification. Negotiation between Bob and his insurer seems to be failing. Due to the unpredictability of the result, which of the following options should be avoided by the insurer if possible? Litigation Mediation Appraisal Arbitration

Litigation

Which of the following situations does NOT involve an instance of "pure risk?" Loss of money invested in the stock market Loss of a house due to a hurricane Loss of crops due to an infestation of parasites Loss of a company car in an unfortunate accident

Loss of money invested in the stock market

Which of the following would be covered under the peril of "theft" in an homeowners policy? Theft from an area of the premises rented out to a non-insured Theft from a building under construction Theft by an insured Losses caused by attempted theft

Losses caused by attempted theft

DEC Construction was hired to completely renovate Randall's department store . DEC Construction is in charge of the project, but hires Mac Electric (an independent contractor) to complete the electrical portion, and requires Mac to have Owners & Contractors Protective Liability coverage for the job. Who is responsible for paying the premiums for this policy? Mac Electric and DEC Construction Randall's DEC Construction Mac Electric

Mac Electric

Stan has a personal auto policy to cover his two vehicles, but he recently purchased a custom built motorcycle as well. Which type of endorsement will Stan need to cover the motorcycle? Miscellaneous Vehicle Endorsement Customized Equipment Endorsement Two-wheeled Vehicle Endorsement Motorcycle Endorsement

Miscellaneous Vehicle Endorsement

Grant works at ABC Convenience. One day, a man pulls up in an expensive car and pays cash for his gas with a hundred dollar bill. Grant accepts the bill without checking its validity. When Grant's manager checks the bill later, he discovers it is a fake. Which commercial crime coverage could protect ABC Convenience from financial loss associated with accepting the fake hundred dollar bill? Money Orders and Counterfeit Paper Currency Inside the Premises: Theft of Money and Securities Forgery or Alteration Funds Transfer Fraud

Money Orders and Counterfeit Paper Currency

Walter works for a shipping company, delivering packages and picking up orders. He lives very close to work and the grocery store is only a few blocks away, so he can live conveniently without owning a car. However, he would like to have some Personal Injury Protection, just in case he ever gets injured in an accident. Which BAP endorsement could his employer use to give him this coverage? Named Individuals Broadened PIP Personal Injury Protection Medical Payments Uninsured Motorist PIP

Named Individuals Broadened PIP

Mark is a college student and frequently needs to either rent a car or borrow his friend's car. Although he doesn't own a car of his own, he wants to buy himself some liability coverage that would apply whenever he drives someone else's car. Which coverage should Mark get? Miscellaneous Vehicle Coverage Uninsured Motorist Coverage No-Fault Coverage Non-Owner Coverage

Non-Owner Coverage

Gail's restaurant is doing more business than ever, so Gail decides to add more dining space. Three weeks into the project, a hurricane blows through town, reducing the new construction to rubble. Gail maintains commercial property insurance coverage valued at 70% of her property's replacement cost, although her policy says she must maintain at least 80% to be fully insured. Which coverage on her policy could pay to rebuild her restaurant at replacement cost? Increased Construction Costs coverage Outdoor Property extension Replacement Cost endorsement None

None

Craig is just starting out with his business. He needs an insurance policy to cover his liability against any unknown defects within his products. Of the four types of CGL policies listed below, which offers the best coverage for Craig's business, regardless of when a claim is filed? Occurrence Policy Claims-Made Policy with Supplemental Extended Tail Claims-Made Policy with Basic Extended Tail Claims-Made Policy

Occurrence Policy

Having a positive attitude can help an adjuster during negotiations. Which of the following aspects of an adjuster's attitude can hinder negotiations? Over-confident or arrogant Open to new facts Willing to listen Humble and understanding

Over-confident or arrogant

Which of the following is NOT true of Personal Injury Protection? PIP restricts policyholder's right to recover losses in civil court PIP is primary coverage PIP provides no-fault protection PIP is usually secondary coverage

PIP is usually secondary coverage

Babette crosses the street and is struck by a car, causing her to sustain injuries in the amount of $45,000. The driver has minimum coverage. Which coverage section of Babette's auto policy could help pay for her medical costs? Part A: Liability Part B: Medical Payments Part D: Comprehensive Coverage Part C: Uninsured Motorist Coverage

Part B: Medical Payments

Which of the following insurance protections is NOT offered by a garagekeeper's insurance policy? Personal injury protection Specific causes of loss Collision coverage Comprehensive coverage

Personal injury protection

Jim has two policies that cover the same risk, but they respond differently: Policy X is primary and Policy Z is excess. Policy X has a limit of $50,000 and Policy Z has a limit of $25,000. When Jim suffers an insured loss totaling $62,000, how will each policy respond? Policy X will pay $50,000 and Policy Z will pay $12,000 Policy X will pay $41,335 and Policy Z will pay $20,665 Policy X will pay $31,000 and Policy Z will pay $31,000 Policy X will pay $37,000 and Policy Z will pay $25,000

Policy X will pay $50,000 and Policy Z will pay $12,000

Tina has two policies (Policy X and Policy Y) that cover the same risk on a pro rata basis. Policy X has a limit of $100,000 and Policy Y has a limit of $25,000. When Tina suffers a loss totaling $75,000, how will the two policies respond? Policy X will pay $50,000 and Policy Y will pay $25,000 Policy X will pay $37,500 and Policy Y will pay $25,000 Policy X will pay $60,000 and Policy Y will pay $15,000 Policy X will pay $75,000 and Policy Y will pay nothing

Policy X will pay $60,000 and Policy Y will pay $15,000

Which of the following may be covered under a DP-3? Power failure on the premises Earthquake Water backup from sewers Flood

Power failure on the premises

Alex owns a manufacturing business creating toys for young children. Some of the toys have small parts which, if used inappropriately, could cause harm to small children. He has a warning label printed on his packaging, cautioning parents of the potential risks, but needs insurance to handle any potential claims against his product. Which type of insurance would best cover Alex's insurance needs? Product liability insurance Workers' compensation insurance Employer liability insurance Public liability insurance

Product liability insurance

An insured may only add Utility Interruption coverage to her Equipment Breakdown policy if at least one of three other coverages are also present. Which of the following is NOT one of these other coverages? Spoilage Damage Extra Expense Only Business Income and Extra Expense Property Damage

Property Damage

According to the "Definitions" section of a Personal Auto Policy, which of the following is NOT "occupying" her vehicle? Jordan is sitting in her parked car listening to music while she waits for her sister to finish yoga class. Rachel leaves her cat in her car, with the windows cracked, while she goes into the drugstore to fill a prescription Trishey is leaning on her car during a lunch break while she eats her lunch. Jaminda is sitting on top of her car as she talks to her best friend on the phone.

Rachel leaves her cat in her car, with the windows cracked, while she goes into the drugstore to fill a prescription

Which of the following people committed soft fraud? Ian, who works as a claims processor for ABC Insurance, regularly creates fake claims and has the settlement checks sent to his brother. Farah doused her sofa with gasoline, started a fire, and burned down her house so she could collect money from her insurer. Taariq slammed on the brakes in order to make the person behind him run into the back of his truck, so he could collect a settlement from their insurance. Rafael accidentally slipped on a wet floor at the supermarket. Although his only injury was a sprained ankle, he claimed he had back and neck pain when he sued the supermarket in an effort to get more money in the settlement.

Rafael accidentally slipped on a wet floor at the supermarket. Although his only injury was a sprained ankle, he claimed he had back and neck pain when he sued the supermarket in an effort to get more money in the settlement.

Which of the following would be most likely to purchase an Errors and Omissions policy? Logger Professor Actor Real Estate Agent

Real Estate Agent

Don works as an adjuster for ABC Insurance. Which of the following is most likely NOT one of Don's responsibilities? Provide ABC Insurance with complete claim documentation Represent the insured if a claim goes to court Always use reasonable care and judgement Adhere to the terms of his contract

Represent the insured if a claim goes to court

Which of the following activities could be a useful negotiation technique? Asking trivial questions in order to distract the claimant Matching an aggressive tone of voice with claimant's in order to demonstrate dominance Telling a dirty joke in an effort to lighten the mood Reviewing video footage with the claimant that contradicts the claimant's position

Reviewing video footage with the claimant that contradicts the claimant's position

Which endorsement to the Commercial Crime policy would protect a bank against its legal liability for burglary, robbery, destruction, or damage to customers' belongings kept in safe deposit at the bank? Deposit Box Liability Securities Deposited with Others Client's Property Safe Depository

Safe Depository

In which case would the insured be indemnified by her liability coverage? She has to pay a fee to retrieve relevant court documents. She gets into an accident that leaves her car totalled. She causes property damage to her neighbor. None; liability coverage never indemnifies the insured.

She has to pay a fee to retrieve relevant court documents.

When Emma's house was burglarized, the thieves stole several pieces from her art collection. Although the pieces were only prints, Emma files a claim stating that they were originals, and therefore worth a good deal more than they really are. What has Emma committed? Soft fraud Tortfeasor Concealment Hard fraud

Soft fraud

An insurance adjuster acts as a fiduciary agent for her employer. Which of the following statements is FALSE about the adjuster's role as fiduciary agent? The adjuster may not give the claimant materials showing how he came up with a settlement amount. The adjuster may not act with any notion of self-interest. The adjuster may not profit whatsoever from the relationship with a claimant or contractor without the express consent of the principal. The adjuster cannot perform adequately while maintaining a conflict of interest.

The adjuster may not give the claimant materials showing how he came up with a settlement amount.

Who must sign a non-waiver agreement? The claimant, the insurer, and the adjuster The adjuster The insurer and the adjuster The claimant

The claimant

Which of the following events would trigger the end to a commercial property Builders Risk Coverage Form? One year after the completion of the building. The building is accepted by the purchaser. The foundation of the building under construction is poured. The building is 50% completed.

The building is accepted by the purchaser.

Which of the following is NOT a condition for payment on a Mechanical Breakdown Insurance claim? The insured must provide the insurer proof of regular maintenance prior to the breakdown. The insurer has the right to inspect the vehicle before repairs are made. The operator of the vehicle must have made a reasonable effort to minimize repair costs. The cause of the breakdown cannot be associated with the front-end suspension.

The cause of the breakdown cannot be associated with the front-end suspension.

Which of the following statements best describes a part of the appraisal process? All parties must agree to the final amount in order for it to be binding. The opposing parties submit their evidence to the appraiser, who makes a final and binding decision. A neutral third party, called the appraiser, plays an advisory role to help the disputing parties come to a settlement. The claimant and the insurer each select an appraiser, and those two select an umpire.

The claimant and the insurer each select an appraiser, and those two select an umpire.

Which item would NOT belong in an adjuster's initial report on a claim? A list of all known circumstances surrounding the claim The final settlement amount A detailed list of the damages being claimed The date that the adjuster first contacts the claimant

The final settlement amount

Which of the following would you find in the Conditions section of an insurance policy? The meaning of certain important words in the contract Causes of loss that are not covered Policy limits The insured's duty after a loss

The insured's duty after a loss

According to the "Definitions" section of a Personal Auto Policy, which of the following would NOT qualify as a "family member"? The insured's ex-wife who moved out of the house 4 months ago The insured's foster child The insured's cousin who is living with the insured The insured's adopted daughter

The insured's ex-wife who moved out of the house 4 months ago

Greg plays trombone in his school band during football games. During a rally song in the stands one day, Greg annoys one of the opposing team's fans, who grabs his $400 trombone and hurls it down the bleachers, completely destroying it. Greg's insurance pays him $400 to replace the trombone, but then the opposing team's coach also offers to replace the instrument, at whatever the cost. So Greg orders a new $3,200 trombone and has the opposing team's athletic department absorb the cost. Which principle has Greg violated? The principle of consideration The principle of legal purpose The principal of the opposing team The principle of indemnity

The principle of indemnity

In a dwelling policy, how much will the Fire Department Service Charge coverage pay? Up to $750 if the fire department charges for responding to a covered peril 75% of the bill charged by the fire department for responding to a covered peril (after the deductible has been met) Up to $500 if the fire department charges for responding to a covered peril 50% of the bill charged by the fire department for responding to a covered peril

Up to $500 if the fire department charges for responding to a covered peril

Which of the following is NOT useful in moving the negotiation process forward toward a successful resolution? Being open to new perspectives Maintaining professionalism at all times Using sarcasm in response to the claimant's anger Keeping criticisms out of the discussion

Using sarcasm in response to the claimant's anger

Which of the following is NOT a feature of a typical Business Owners Policy? Extra Expense coverage Liability protection for lawsuits from accidents or products Built-in inflation protection Usually Actual Cost Valuation

Usually Actual Cost Valuation

What BOP endorsement would cover a company's lost business income and extra expense due to loss of electrical service? Spoilage Utility Time Element This type of loss cannot be covered Utility Services - Direct Damage

Utility Time Element

Craig must close his business for three months after being injured in an auto accident. When Craig recovers, he returns to his shop where he finds broken glass and notices some of his supplies have been pilfered. Under what condition in his commercial property policy might the insurer deny coverage? Vacancy Control of Property Medical Payments Vandalism

Vacancy

Susan is insured with a homeowners policy. After someone destroyed her late husband's gravestone with a vehicle, Susan filed a claim against her homeowners policy. Which of the following statements is TRUE? With Grave Marker coverage, Susan can receive a maximum of $2,500 to pay for the damaged gravestone. Even with Grave Marker coverage, Susan will receive no indemnification because damage caused by vehicles is not a covered peril. Susan will receive no indemnification because damage to gravestones can not be covered by homeowners insurance, and there is no such thing as Grave Marker coverage. With Grave Marker coverage, Susan can receive a maximum of $5,000 to pay for the damaged gravestone.

With Grave Marker coverage, Susan can receive a maximum of $5,000 to pay for the damaged gravestone.

Phil owns a public pool. One day, Phil has an altercation with a woman visiting the pool. Phil doesn't like the way she looks, so he tells her that she has to leave the premises right away. The woman takes Phil to court for violating her civil rights. This is an example of what type of personal injury covered under Phil's Commercial General Liability policy? Advertising Injury Libel and Slander Malicious Prosecution Wrongful Eviction

Wrongful Eviction

Kate has a Personal Auto Policy through XYZ Insurance. In which of the following scenarios would XYZ Insurance NOT be allowed immediately to increase Kate's policy premium? XYZ Insurance adds Comprehensive coverage to Kate's policy, per her request. XYZ Insurance expands coverage for all policies - a change which automatically applies to Kate's policy, as well. Kate gets married and adds her husband to her personal auto policy. Kate moves and updates her address with XYZ Insurance.

XYZ Insurance expands coverage for all policies - a change which automatically applies to Kate's policy, as well.

The first step in the claim process is to: research the claim. begin negotiations. acknowledge the claim within the required time frame. determine the insurer's liability.

acknowledge the claim within the required time frame.

Who is responsible for maintaining the claim file during the claim process? The agency The insurer The claimant The adjuster

adjuster

A claimant is: the initial report filed by an insured after a loss occurs. an individual who has committed an act of negligence. the entity to which an insurance adjuster must report. an individual or business that makes a claim for payment after a loss occurs.

an individual or business that makes a claim for payment after a loss occurs.

Chandler is a photographer who is taking pictures at a reenactment of the Battle of Gettysburg, when Harper (Union Cavalry) crashes through the brush and into Chandler, breaking both his arms and his camera. In court, Chandler demands payment not only for his medical bills and broken camera, but for future lost business; now that he is unable to take pictures for the next 6 months, his clients are moving on and entering into contracts with other photographers. When Chandler speaks of this total amount of all damages that have resulted and will result from Harper's mistake, he is referring to: diminution of value. joint tortfeasors. punitive damages. reservation of rights.

diminution of value.

Coverage C - Personal Property of a homeowners policy typically excludes: fish. furniture. dishes. blanket coverage of personal property.

fish.

UM/UIM coverage excludes: government vehicles any auto with liability insurance. pedestrians. hit-and-run accidents.

government vehicles

When a car stops short in front of Mike's car, he manages to hit the brakes in time and avoids a collision. To Mike's surprise, the other driver then throws the car into reverse and backs into Mike's car! The other driver's actions are an example of: hard fraud negligence. arson. soft fraud.

hard fraud

Strict liability: does not hold up in a court of law. releases an individual from liability in dealing with dangerous objects. holds a person liable for his actions regardless of how much care he demonstrates. holds an individual to a lower level of care.

holds a person liable for his actions regardless of how much care he demonstrates.

After a loss covered under a dwelling policy, Ordinance or Law coverage pays for: any change that decreases the value of the property. confiscation of property by the government. remediation of pollutants. increased repair costs due to laws or codes.

increased repair costs due to laws or codes.

When an adjuster has decided to deny a claim, it is necessary to: inform the claimant in person. inform the claimant in writing, with a full explanation. inform the claimant by registered mail. inform the claimant in writing.

inform the claimant in writing, with a full explanation.

The factual statements of the insured upon which an insurance policy is based are called: representations. allegations. utmost good faith. misrepresentations.

representations.

Tim is the plaintiff in a case involving an auto accident. To recover monies he feels are due him, Tim produces documents to prove he had to pay over $55,000 in medical bills. If the court were to award Tim $55,000, the damages would be classified as: general damages. imperative damages. special damages. tort damages.

special damages.

An adjuster might deny a claim for all of the following reasons, except: the loss occurred outside of the policy period. the claimant can't prove the damages. the claim is fraudulent. the adjuster has a conflict of interest.

the adjuster has a conflict of interest.

In a BOP, the General Aggregate Limit is: twice the Products-Completed Operations Aggregate Limit. twice the claims-made limit. equal to the claims-made limit. twice the per occurrence limit.

twice the per occurrence limit.

An insurance contract is an agreement between two parties where each side promises to be truthful, factual, and honest about their respective positions. Therefore, an insurance contract is said to be a contract of: promises. truthfulness. utmost good faith. warranties.

utmost good faith.

While out playing one day, Bill's son throws rocks at a neighbor's home and breaks several windows. Bill is responsible for the damages because of: employer liability. product liability. public liability. vicarious liability.

vicarious liability

Coverage B of the BOP would provide indemnification for damages to all of the following except: windows. inventory. an attached storefront sign. an office copy machine.

windows.

Frank purchased a $150,000 insurance policy for his home, which is valued at $125,000, with the hopes of making a $25,000 profit in the event his home is destroyed. After Frank burns his house down, he files a claim against his homeowners policy. Assuming that Frank's policy includes an overinsurance provision, how much will his insurer indemnify Frank for his loss? $0 $25,000 $150,000 $125,000

$0

If a Florida HO policy has only been in effect for 45 days, the insurer must notify the policyholder at least ____ days before cancelling it for non-payment of premiums, or at least ____ days before cancelling it for any other approved reason. 20; 100 10; 20 10; 45 20; 30

10; 20

The BOP provides loss of income on an "actual loss" sustained basis for up to: 24 months 12 months 18 months 6 months

12 months

Under the Earthquake and Volcanic Eruption endorsement in a commercial property policy, what is the time span within which multiple earthquake or volcanic events are considered a "single occurrence" for coverage purposes? 24 hours (1 day) 72 hours (3 days) 120 hours (5 days) 168 hours (7 days)

168 hours (7 days)

Kevin has a homeowners policy with replacement cost valuation and a coverage limit of $90,000 for his personal property. Three years ago, Kevin purchased a sofa and loveseat for $1,000 and $500 respectively. Both pieces of furniture depreciate at $100 per year. A house fire damaged many of Kevin's belongings, including the sofa and loveseat, which now cost $1,200 and $700 to purchase today. Ignoring any deductibles, how much will Kevin's insurer give him for the damaged sofa and loveseat? $1,300 $1,900 $900 $1,500

1900

An individual has ________________ to file a lawsuit for False Arrest in Florida. four years one year three years no time limit

4

John moved out of his house and put it up for sale three months ago. While he was waiting for the house to sell, John's plumbing pipes froze and burst in the icy temperatures, which eventually led to water damaging the cabinetry and hardwood floors. Which of the following statements would most likely be TRUE? Although John's house was still covered under an HO-3, the surface water resulting from the damaged pipes is not a covered peril. Although John's house was still covered under an HO-3, the damage would not be covered because he didn't shut off the water supply. Freezing is not a covered peril in a HO-3, so this loss would not be covered. Because John's house was still covered under an HO-3, the damage would be covered.

Although John's house was still covered under an HO-3, the damage would not be covered because he didn't shut off the water supply.

Joan files a lawsuit against Andy because his dog escaped and caused her to fall on an icy sidewalk. Which of the following statements is FALSE? Andy must submit an answer. Andy must notify his insurer that he is being taken to court. Andy's insurer is obliged to defend him in court until it proves that there is no coverage under the policy in question, or until the suit is settled. Andy's insurer will send Joan a reservation of rights.

Andy's insurer will send Joan a reservation of rights.

Which of the following is NOT excluded from coverage under a Mechanical Breakdown Insurance policy? Breakdown due to the cracking of an engine block Breakdown due to racing or reckless driving Breakdown covered by regular auto insurance Breakdown due to neglect or delay in maintenance

Breakdown due to the cracking of an engine block

Bill has experienced a loss covered under the Business Income and Extra Expense coverage in his Equipment Breakdown Protection Coverage Form. When does the period of restoration begin? 72 hours after the breakdown occurred. At the time of the breakdown or 24 hours before Bill was notified of the breakdown, whichever is later. After a length of time in which Bill should have reasonably been able to repair or replace the damaged equipment. Five days after repair or replacement of covered equipment.

At the time of the breakdown or 24 hours before Bill was notified of the breakdown, whichever is later.

Kyle operates a collision repair garage and has many vehicles in his care, some for extended periods of time. Which type of coverage protects Kyle from any liability claims which may arise if one of the cars is further damaged or destroyed while in his possession? Subrogation Bailment Non-Owned Vehicle Coverage Bailee Coverage

Bailee Coverage

D'Anton spills coffee in his lap while driving, causing him to veer off the road and smash into a telephone pole. Which part of his Auto Insurance Policy will help him pay for the repairs to his car? Collision Coverage McDowells Coffee Coverage Comprehensive Coverage Liability Coverage

Collision Coverage

In which section of a Standard Fire Policy would you find information on rules of conduct and obligations the policyholder must follow in order for insurance coverage to apply? Exclusions Insuring Agreement Conditions Declarations

Conditions

Jay's Chip Factory makes potato chips, and it gets chip bags from Bags, Inc. One day, the bag-making machine at Bags, Inc. broke down, and thus, Jay's Chip Factory couldn't get the bags it needed to bag its potato chips. Jay's Chip Factory had to shut down production temporarily while waiting on Bags, Inc. to fix their machine. Jay's lost business income may be covered under what coverage in its Equipment Breakdown Protection Coverage Form? Brands and Labels Business Income and Extra Expense Contingent Business Income and Extra Expense None

Contingent Business Income and Extra Expense

A dryer fire scorches the interior of Bill's home, forcing him to move out while repairs are made. In addition to paying for temporary housing, he also loses the rental income he received from his roommate Frank.Which two Dwelling policy coverages could help Bill with the lost rental income AND his additional living expenses? Coverage D & Coverage E Coverage C & Coverage D Coverage A & Coverage D Coverage A & Coverage E

Coverage D & Coverage E

In Florida, what are the basic limits of liability for Coverage E and Coverage F in a homeowners policy? Coverage E: $100,000 per occurrence; Coverage F: $1,000 per person Coverage E: $100,000 per occurrence; Coverage F: $10,000 per person Coverage E: $50,000 per occurrence; Coverage F: $5,000 per person Coverage E: $300,000 per occurrence; Coverage F: $1,000 per person

Coverage E: $100,000 per occurrence; Coverage F: $1,000 per person

DEC Construction was hired to completely renovate Randall's department store. DEC Construction is in charge of the project, but hires Mac Electric (an independent contractor) to complete the electrical portion of the job and requires Mac to buy Owners & Contractors Protective Liability coverage as a condition of the contract. Who would be listed as the named insured(s) for this coverage? DEC Construction and Mac Electric DEC Construction Randall's Mac Electric

DEC Construction

Which of the following situations does NOT involve an insurable risk? Melody just bought a gas station and convenience store. Christine just bought her husband an expensive new watch. Dale just bought 30 shares of a hot new startup company online. Hank just bought a new outboard motor for his fishing boat.

Dale just bought 30 shares of a hot new startup company online.

A Reservation of Rights letter is sent by: the insurance broker. the claimant's lawyer. the claimant. the insurance company.

Insurance company

Which of the following is NOT true of the Company's Options provision in the standard fire policy? It requires the insurer to settle the claim, in whichever manner it chooses, within 30 days of receiving notice of the claim. It mandates that the insurer notify the claimant of its choices within 30 days of receiving required proof of loss. It allows the insurer the choice of whether to repair, rebuild, or replace damaged property. It states that the insurer may choose whether to take all, or part, of the damaged property at the agreed or appraised value.

It requires the insurer to settle the claim, in whichever manner it chooses, within 30 days of receiving notice of the claim.

What is the last step in the claim settlement process? Preparing the final adjustment reports Applying all policy coverage and provisions Determining insurer's liability in the claim Negotiating a settlement

Preparing the final adjustment reports

Jimmy owns a pawn shop which brings with it a certain amount of risk. He decides to hire a security guard, and install a surveillance system and an alarm system to reduce his monthly premiums on his commercial property policy through the: Protective Guardian endorsement. Risk Reduction endorsement. Security, Surveillance and Alarm endorsement. Protective Safeguard endorsement.

Protective Safeguard endorsement.

What is one thing that an adjuster is not able to negotiate about? Punitive damages Hit and run accidents Catastrophic storm damage Bodily injury

Punitive damages

Which of the following would NOT be covered under the Comprehensive section of a PAP? Flood Theft Fire Rollover

Rollover

Veronica owns a pottery business and is insured under a commercial property policy. She was in the process of building an extra structure for the sole purpose of kiln firing her pottery when a massive storm came through and blew down all the scaffolding, which added additional cost to the construction project. Which coverage extension of the Builder's Risk Coverage Form would cover the scaffolding? Property in Transit Preservation of Property Debris Removal Scaffolding, Construction Forms, and Temporary Structures

Scaffolding, Construction Forms, and Temporary Structures

Monica's husband, Sam, likes to buy her expensive jewelry, and she has amassed quite the collection over the years. What endorsement would Monica and Sam need to add to their homeowners policy to fully cover Monica's jewelry collection? Scheduled Personal Property Special Form Inflation Guard Personal Property Replacement Cost

Scheduled Personal Property

Which of the following is an example of how some insurers are fighting back against insurance fraud? Starting fraud busting units staffed with former detectives and police officers Imposing stiff fines and prison terms Expanding current fraud laws to include all payers Enacting tougher penalties for insurance fraudsters

Starting fraud busting units staffed with former detectives and police officers

While shopping at Acme, Mark slips and falls on a wet floor, knocking over some shelves, smashing a window, and injuring his knee. The medical costs for Mark's knee surgery total $8,000, and he will live the rest of his life with a limp since his knee may never fully heal. Which of these costs will be most difficult for Acme's insurer and Mark to negotiate? The mental anguish associated with never fully recovering The cost to replace the shelves The cost to replace the window The medical bills associated with the surgery

The mental anguish associated with never fully recovering

Which of the following factors holds the LEAST relevance when an adjuster is evaluating an insurance claim? The policy limits The coinsurance penalty The deductible The premium

The premium

In appraisal, who chooses the umpire? The adjuster The two appraisers The insurance company The claimant

The two appraisers

Francis has many employees who go out and market his product in the streets on a daily basis. This "go get 'em" approach seems to work well for business, but it does increase the risk of an auto accident. To curb the financial risk of a hospital stay resulting from an accident, Francis adds _____________ to his BAP. Collision coverage a Medical Payments/PIP endorsement Comprehensive coverage a Mobile Equipment endorsement

a Medical Payments/PIP endorsement

The "Consent to Settle" clause in the Professional Liability policy is best described as: a clause that requires the insured to get the consent of the insurer prior to settlement. a clause that requires the insured's approval before the insurance company discusses settlement options with a claimant. a clause that requires the insurance company to get approval from the insured before settling a claim. a clause that requires the insurance company to settle all claims.

a clause that requires the insurance company to get approval from the insured before settling a claim.

Each of the following would classify as an insurable risk, except: a brick patio. a rocket. a marriage. a barn.

a marriage.

Liability coverage in a BOP is provided on: an occurrence basis for bodily injury and property damage, and on a claims-made basis for personal/advertising injury. either an occurrence or claims-made basis, depending on which form the insured chooses. an occurrence basis, only. a claims-made basis, only.

an occurrence basis, only.

After her business suffered damage in a fire, Jane filed a claim with Acme Insurance, which dispatched Bob to adjust it, even though he was not allowed to adjust commercial claims. He investigated Jane's losses and submitted his estimate to Acme Insurance, which issued her a settlement check based on that estimate. Bob had _______ because Acme Insurance accepted his estimate and paid Jane's claim. apparent authority agency authority expert authority express authority

apparent authority

All of the following pieces of information can be found in the Conditions section of an insurance policy, EXCEPT: causes of loss that are not covered. what the insured must do in the event of a lawsuit. anything the insured must do for coverage to remain in effect. the insured's duties after a loss.

causes of loss that are not covered.

When Louise goes online and fills out phony applications with XYZ Auto Insurance in order to print the temporary insurance cards and sell them for a profit on the black market, she is: using a Ponzi Scheme. using a regular business practice. committing hard fraud. committing soft fraud.

committing hard fraud.

Dr. Nelson routinely schedules her patients for lab tests that they don't need so she can charge their insurers for more money. Dr. Nelson is: committing health insurance fraud. committing subrogation. operating within the letter of the law, if not its intent. committing a tortfeasor.

committing health insurance fraud.

The job of the adjuster can best be described as: comparing claimant's losses to promises made in insurance policy. completing the settlement process as quickly as possible. getting the best possible settlement for the claimant. getting the best possible settlement for the insurer.

comparing claimant's losses to promises made in insurance policy.

A lightning strike causes one of the storage buildings on John's farm to burn to the ground, aided by the fuel tanks he kept in the building. John knows he wasn't supposed to store any fuel in the building, so he keeps that piece of information to himself when he files a claim. John's insurer may deny his claim based on his: arson. hard fraud. liberalization. concealment.

concealment

In a BOP, the purpose of Supplementary Payments in conjunction with liability coverage is to: cover costs associated with defending and investigating a claim against the insured. cover a claimant's lost wages after suffering an injury caused by the insured. cover the cost of additional damage that was discovered after the settlement was paid. make incidental payments to an injured claimant before the final settlement amount is reached.

cover costs associated with defending and investigating a claim against the insured.

The Severability of Interests condition states that: coverage applies to each insured separately, as if no other insured existed. when an insurer pays a total loss settlement, policy coverage may terminate and any unearned premiums will be refunded to the insured. an insurer has the right to cancel an insurance policy at any time. an insured has the right to cancel an insurance policy at any time.

coverage applies to each insured separately, as if no other insured existed.

Jane has a small business and has a Business Owners Policy. To save money, Jane has insured her business at 60% coinsurance. When a fire erupts inside of the store, destroying most of Jane's merchandise, her insurer: covers the structure and contents on an ACV basis. denies the claim. imposes a coinsurance penalty. covers the structure and contents on a replacement value basis.

covers the structure and contents on an ACV basis.

A CGL can provide liability insurance coverage for all of the following persons, EXCEPT: volunteers. customers. stockholders. sole proprietors.

customers.

Herb owns a processing plant outside of town that services all the local farmers. He's been using over-theroad transportation but wants to streamline his business by using the railroads. He contacts ABC Railway Transport and the two come to an agreement: ABC Railway will run a sidetrack onto Herb's business premises, if Herb agrees not to hold ABC Railway responsible for certain liabilities that could result from the sidetrack's use. This agreement would fall under __________ in Herb's Commercial General Liability policy. insured contracts product liability operations liability premises liability

insured contracts

A few weeks ago Christopher's garage was destroyed by an out-of-control motorist. Fortunately, the motorist had sufficient liability insurance to cover the damages. However, the insurer insists that Christopher's garage is worth far less than the appraisals he has received from contractors. Christopher and the insurer have gone back and forth in negotiations for weeks, making little headway. Christopher decides it's time to: issue a complaint against the policyholder. issue a judgment. issue a reservation of rights. issue an answer for the policyholder.

issue a complaint against the policyholder.

If a claimant has a history of similar claims, that could mean: the policy should be amended. it is important to investigate for fraud. the policy coverage should be increased. it will be necessary to take a safety class.

it is important to investigate for fraud.

James and Eric want to play a prank on Bob for Halloween. They dress up like headless horsemen and throw ignited Jack O'Lanterns at his house. Unfortunately, one of the inflamed pumpkins catches the porch on fire, causing $3,500 in damages. Bob doesn't find this tomfoolery very entertaining and sues both James and Eric for the cost of the repairs. In court, James and Eric would be: intentional tort. the plaintiffs. a tortfeasor. a joint tortfeasor.

joint tortfeasor

All of the following causes of loss are excluded from coverage in an Equipment Breakdown Protection Coverage Form, EXCEPT: combustion explosion. hail. electrical testing. mechanical failure.

mechanical failure.

Clark is filling out an application for an insurance policy. The application asks for his birth date, and Clark writes 1-24-67. His actual birthday is 1-24-63, but he likes to appear younger so he uses a different date. This would be called: representation. concealment. warranty. misrepresentation.

misrepresentation.

In a BOP, all of the following losses are excluded from liability coverage, EXCEPT: product recall. pollutants. injury caused by medical services. property damage to premises rented by the insured.

property damage to premises rented by the insured.

After an earthquake, Jake's home is still standing, but it is a little shaken. The damage is not extensive, but Jake wants to cash in on the situation, so he takes a sledgehammer to some of his extra belongings and adds them to his claim. Jake has committed: health insurance fraud. property insurance fraud. arson. insurer fraud.

property insurance fraud.

Dwelling policies cover: rental properties only. liability only. property only. property, and liability with an endorsement.

property, and liability with an endorsement.

Six Stars Development Company has just been offered a great deal on ten large properties in Las Vegas. The economy in Las Vegas has been declining recently, but the CEO of Six Stars expects it to recover soon. This could be an exceptional opportunity for Six Stars, but it's also pretty risky. Ultimately, the Six Stars executive team decides not to purchase the properties. This is an example of: risk transference. risk reduction. risk retention. risk avoidance.

risk avoidance.

A staff adjuster is a: contractor working for the claimant. salaried employee working for only one insurer. contractor working for only one insurer. salaried employee working for a public adjuster.

salaried employee working for only one insurer.

Cindy, a drunk driver, accidentally crashes into Nancy's house, causing $22,000 in damage. On top of that, Nancy tries to get the adjuster to add an additional $20,000 for punitive damages to punish Cindy for driving while intoxicated. However, Nancy fails in her attempts at negotiation. This is because: the difference between the two dollar amounts is too small. the difference between the two dollar amounts is too great. the adjuster does not have authority to negotiate for punitive damages the adjuster knows that the insurer will not pay more than $25,000 for this claim. .

the adjuster does not have authority to negotiate for punitive damages

In a declaratory judgment action: the court makes a judgment about insurer's unfair settlement practices. the court's decision about the legal rights of the parties is not binding. the court resolves the case. the court decides the legal rights of both parties.

the court decides the legal rights of both parties.

Adjusters are required to give claimants: a helpline number in case they have questions. their business address and phone number a satisfaction survey. an insurance company email they can use for questions. .

their business address and phone number

All of the following are true about mediation, except: settlement is only legally binding if both parties agree to it. either party may walk away. the mediator is a neutral third party. the mediator's decision is legally binding.

the mediator's decision is legally binding

In a __________, only one party is legally obligated to perform. unilateral contract conditional contract contract of adhesion contract of utmost good faith unilateral contract

unilateral contract

When would a default judgment occur? In cases that involve an intentional tort When a defendant does not answer a complaint When an insurer sends a reservation of rights When a defendant submits an answer

When a defendant does not answer a complaint

Farmer Steve barely escapes a massive tornado, but the storm does completely destroy one of the barns on his property. Luckily, Steve has an insurance policy on his barn with a replacement cost endorsement, and the barn was fully insured. At the time of the loss, the actual cash value of the barn was $65,000, and its replacement cost is currently $85,000. When will Steve receive full indemnification for his losses on the barn? When he submits a proof of loss to the insurer When he files a claim proving he met the 80% co-insurance requirement When he replaces the barn and submits receipts to the insurer Within 180 days of filing the claim

When he replaces the barn and submits receipts to the insurer

How much of a limit is included for Credit Card Fraud or Forgery, an additional coverage in a homeowners policy? $1,000 $500 $750 $250

$500

Grace purchased a recliner from XYZ Furniture. After getting it home, she decided to try out the new chair. While leaning back, the chair breaks and Grace injures her neck. She sues XYZ Furniture and is awarded $70,000. Assuming XYZ Furniture's CGL has a Products-Completed Operations limit of $500,000 with a per occurrence limit of $75,000, how much out-of-pocket expense will XYZ Furniture incur if the court costs total $85,000? $85,000 $70,000 $10,000 $0

$0

Sam, who has a typical HO-3 policy, is forced to evacuate his home by civil authorities due to rising flood waters in his neighborhood. It takes a month before Sam is allowed to come back to his home. During this time, he has spent $3,000 in hotel expenses, on top of his monthly mortgage payment of $850. When he files a claim, how much will Sam receive under Coverage D - Loss of Use? $850 $3,850 $3,000 $0

$0

Tamara is fully insured by a DP-1 on her $175,000 home. When a portion of Tamara's attached garage burns in a small fire, the adjuster estimates it will take $8,000 to repair the damage. However, based on the age of the structure, the adjuster writes Tamara a check for $5,500. Once repairs are completed, Tamara submits proof and receives how much more from her insurer? $1,750 $0 $2,500 $1,500

$0

Tim's $2,500 boat trailer was stolen from his driveway. Ignoring any deductibles, how much can Tim receive for his stolen trailer when he files a claim against his homeowners policy? $1,500 $2,000 $1,000 $2,500

$1,500

Both Steve and his wife, Arlene, carry DP-2 policies on their $135,000 home. Steve's policy has a limit of $110,000 and Arlene's has a $25,000 limit, and both policies pay on a pro rata basis. After a hailstorm causes $13,000 in damage to their roof, how much of the damage will be covered by Steve's policy (ignoring any deductible)? $10,400 $9,630 $13,000 $2,600

$10,400

Melanie's $300,000 home suffers $90,000 in damage from a fire. The adjuster finds the home's value since 2008 has depreciated 25%, making the ACV loss $67,500. Although Melanie's policy covers repairs at their replacement cost, she receives $67,500 at the time of loss. Repairs to her home end up totaling $79,500. How much, if any, further indemnification may Melanie receive from the loss? $0 $10,500 $22,500 $12,000

$12K

Craig has an HO-3 policy covering his primary residence with a Coverage A limit of $250,000, Coverage B limit of $25,000, and a Coverage C limit of $150,000. Craig also has a cabin on the lake, which was burglarized. The thieves stole much of the cabin's contents, for a total loss of $18,500. Ignoring any deductibles, how much will Craig's HO-3 policy pay for this claim? $15,000 $2,500 $0 $18,500

$15,000

Sherrie's roof and fence are damaged in a violent windstorm. Sherrie has a typical HO-3 policy with a $150,000 limit for Coverage A - Dwelling. Assuming she has no endorsements, how much coverage does she have available for the damage to her fence? $22,500 $150,000 $1,500 $15,000

$15,000

James owns a masonry business and has a commercial liability policy with the following aggregate limits: $150,000/$500,000. While at a job site, his cement truck's chute cannot reach the pour site, so the operator adds two extra chutes, extending its length. The chute collapses under the weight of the concrete, causing $35,000 in injury to one of the workers. The loss is covered by the policy, and James' insurer pays the claim. What will the new limits be for the remainder of the policy term? $150,000/$500,000 $150,000/$465,000 $115,000/$465,000 $115,000/$500,000

$150,000/$465,000

Adjuster Andy is trying to determine a final settlement amount for Stacy's claim. Stacy's house was destroyed in a fire and it will cost $185,000 to rebuild it. Stacy's homeowners policy has a limit of $178,000 and a $1,800 deductible. Typically, how much would Adjuster Andy calculate Stacy's final settlement amount to be? $178,000 $183,200 $185,000 $176,200

$178,000

Diana is insured under a DP-2 policy with the following coverage limits: Coverage A - $150,000, Coverage B - $15,000, and Coverage C - $25,000. She and her fiancé have planned a destination wedding, but their hotel catches fire shortly after their arrival. Smoke from the fire damages all of their belongings, including Diana's $4,000 wedding dress. Diana's loss totals $5,200. When she files a claim with her insurance company, how much can she expect to receive for this loss under her DP-2 (ignoring any deductible)? $1,500 $0 $2,500 $5,200

$2,500

Jeremy owns a business with several machines covered under an Equipment Breakdown Protection Coverage Form with a $500,000 limit. He has three deductibles on his policy: 1) a percentage deductible of 3% per loss, 2) a minimum deductible of $500, and 3) a maximum deductible of $10,000. After experiencing a covered loss of $85,000, how much will Jeremy have to pay out of his own pocket for the loss? $2,550 $10,000 $500 $15,000

$2,550

Mark is driving along and looking for an address on the East side of Walker Street. As he squints to see the numbers posted on the buildings, he plows into the back of a car waiting at a stoplight. Both the driver and the passenger of the struck car are injured. The driver suffers $60,000 in bodily injury, the passenger suffers $55,000 in bodily injury, and the vehicle Mark hit sustains $30,000 in damage. Mark has liability coverage with split limits of 50/100/25. How much will Mark be responsible for out-of-pocket after this accident? None; Mark is totally covered by his policy. $15,000 $45,000 $20,000

$20,000

Adjuster Alice is trying to determine the final settlement amount for Ted's claim. Ted's house was damaged in a covered loss, and Alice has estimated that it will cost $25,000 to make the necessary repairs. Ted's homeowners policy has a $100,000 limit and a $2,000 deductible. Typically, how much would Adjuster Alice calculate Ted's final settlement amount to be? 100,000 $98,000 $25,000 $23,000

$23K

Kelly took her eyes off the road and ended up smashing into the back of a passenger van. All five passengers were injured, and each one ended up with $25,000 in medical costs. Assuming Kelly has liability coverage with limits of 50/100/50, how much will she have to pay out of pocket? $50,000 $10,000 $15,000 $25,000

$25,000

Jerome was shopping at ABC Imports when a light fixture fell from the ceiling and hit him on the head. Jerome's injuries resulted in an extended hospital stay, so he sued ABC Imports and was awarded $400,000. Assuming ABC Imports carries a CGL with a General Aggregate of $750,000 and a per occurrence limit of $250,000, what is the maximum that ABC's insurer will pay for Jerome's injuries? $250,000 $75,000 $750,000 $400,000

$250,000

Greta's Ski Supply is covered under the Building and Personal Property Coverage Form with limits of $50,000 for business personal property and $100,000 for the building. The policy also has a $500 deductible. When a tornado tears through the vicinity, the store suffered $10,000 in damage to the building and $20,000 in losses to the contents. In addition, Greta has to fork out an extra $1,000 for debris removal. How much will Greta receive from her insurer? $30,500 $33,500 $19,500 $0

$30,500

While Andrea was grocery shopping in BB Mart, the large Dairy sign fell off the wall and landed on her. Because of her extensive injuries, Andrea sued BB Mart and was awarded $375,000 in damages. BB Mart's Commercial General Liability policy has a general aggregate limit of $1,000,000 and a per occurrence limit of $300,000. What is the per occurrence limit after this claim is settled? $700,000 $75,000 $300,000 $0

$300,000

Norris borrows Arnold's truck to pick up some lumber from the hardware store. On the way to the store, Norris collides with a car, injuring the three people inside. The driver suffers $15,000 in injuries, one passenger suffers $25,000, and the other passenger suffers $20,000. Norris has a PAP with liability limits of 50/100/50, and Arnold's policy has liability limits of 25/50/10. Everyone involved in the accident has minimum PIP coverage for Florida. How much will the primary policy pay for the injuries? $30,000 $50,000 $25,000 $60,000

$30K

During a strong storm, Missy's grain drill was mangled by a tornado, which rendered it useless. Before the damage, the grain drill was worth $25,000, but it would cost $45,000 to buy a new one today. Missy's farm policy has a replacement cost endorsement, and the grain drill is scheduled on a Mobile Agricultural Machinery and Equipment form with a $36,000 limit. Missy replaces her grain drill with one she found on sale for $40,000. How much total indemnification will she receive? $25,000 $36,000 $45,000 $40,000

$36,000

Jerry is using an expensive video recorder near the family pool when he slips and falls in, destroying the camera. Jerry bought the camera three years ago for $4,000, and it depreciates at $500 per year. A new, similar camera costs $5,000 today. Assuming the loss is covered, if Jerry had a replacement cost policy, how much would Jerry's insurer indemnify Jerry for the destroyed camera? $5,000 $4,000 $2,500 $3,500

$5,000

Marlene has been living in her $120,000 home for 31 years. Because she has paid off the mortgage, she decides to save some money on her monthly insurance premiums by reducing her homeowners coverage to $40,000. After a severe hailstorm totals her roof, her adjuster estimates the damage at $12,000. Assuming the insurer imposes the standard coinsurance penalty, and ignoring the deductible, how much will Marlene receive in the settlement? $9,600 $5,000 $10,000 $12,000

$5,000

Stephanie owns a house that she rents out for $2,500 a month. A massive kitchen fire forces her tenants to move out while the interior is overhauled. After two months, the repairs are complete, and Stephanie contacts her tenants, only to find that they've found a new place to live. It takes Stephanie another month and a half to find new tenants. Assuming that Stephanie had a $100,000 DP-2 policy, what is the maximum amount she could receive for lost rental income under Coverage D? $8,750 $5,000 $2,500 $7,500

$5,000

Grace purchased a recliner from XYZ Furniture. After getting it home, she decided to try out the new chair. While leaning back, the chair breaks and Grace injures her neck. She sues XYZ Furniture and is awarded $300,000. The costs for the legal defense come to $45,000. XYZ Furniture's CGL policy has a Products- Completed Operations Aggregate limit of $750,000, with a per occurrence limit of $250,000. How much will XYZ Furniture have to pay out-of-pocket for this claim? $250,000 $95,000 $45,000 $50,000

$50,000

Jennifer's PAP has a Comprehensive deductible of $100. Jennifer lets her sister Tina borrow her car, and Tina hits a llama worth $500. The llama's owner files a claim for the loss of his llama. How will that claim be settled? $400 under Jennifer's Physical Damage coverage $500 paid under Jennifer's liability coverage $400 paid under Tina's liability coverage $0 paid because it is not a covered loss

$500 paid under Jennifer's liability coverage

Stan built a porch for his home three years ago at a cost of $10,000. The value of the porch has depreciated by $6,000, and it would cost $12,000 to replace it today. After Stan's porch burnt down during a BBQ today, how much would a Standard Fire Policy indemnify Stan for his porch? $6,000 $12,000 $4,000 $10,000

$6,000

While Andrea was grocery shopping in BB Mart, the large Dairy sign fell off the wall and landed on her. Because of her extensive injuries, Andrea sued BB Mart and was awarded $375,000 in damages. BB Mart's Commercial General Liability policy has a general aggregate limit of $1,000,000 and a per occurrence limit of $300,000. What is BB Mart's general aggregate limit after the claim for Andrea's injuries is paid? $700,000 $375,000 $625,000 $1,000,000

$700,000

A fire in Sarah's factory causes her to shut the factory doors for 50 days. To limit her loss of income and keep production going, Sarah spends $125,000 renting equipment and another building. Sarah's commercial property policy doesn't have Business Income Coverage, but it does include Extra Expense Coverage. The limit on her Extra Expense coverage is $100,000 and she has Limits of Loss Payment of 40%/80%/100% during her period of restoration. How much indemnification will Sarah receive for her extra expenses? $80,000 $50,000 $125,000 $100,000

$80,000

Sue decides to get a valued insurance policy on her antique car. She and her insurance company agree to a value of $85,000. Three years later, the car is destroyed when a tree falls on it in a parking lot. The car depreciates at $2,000 a year, and its replacement cost is $100,000. Ignoring any deductible, how much can Sue expect her insurer to indemnify her? $85,000 $83,000 $94,000 $79,000

$85,000

While making a right-hand turn from the right lane, Ben is sideswiped by Roxanne, totaling the car he bought new 12 years ago for $15,000. Roxanne is judged to be at fault. She has an auto policy with limits of 50/100/25 and a $500 deductible on her collision coverage. Assuming Ben's car depreciates at a rate of $1,100 a year, how much will Roxanne have to pay out of pocket when Ben files a claim against her insurer for the damages? $1,100 $500 $1,800 $0

0

What requirements must Wholesalers and Distributors meet in order to be eligible for a BOP? 25% or less of floor space is available to the general public, and less than 50% of gross income may come from retail sales. 25% or less of floor space is available to the general public, and less than 25% of gross income may come from retail sales. More than 10% of floor space must be devoted to product storage, and less than 20% of expenditures may involve food service. Less than 20% of annual expenditures may involve food service, and less than 10% of building area may be open to the public.

25% or less of floor space is available to the general public, and less than 25% of gross income may come from retail sales.

Which of the following is NOT one of the differences between a BAP and a truckers policy? Liability coverage in a truckers policy includes coverage for people who hire out or lend their cars to the insured for business purposes. A truckers policy includes trailer interchange coverage. A BAP uses coverage symbols to designate covered autos. A BAP typically excludes businesses that transport the property of others.

A BAP uses coverage symbols to designate covered autos.

Which of the following statements regarding Commercial Package Policies (CPP) is TRUE? A CPP is an elective-based policy. Workers' compensation insurance is automatically included with a CPP. A CPP requires a separate declarations page for each coverage. A CPP is an example of a monoline policy.

A CPP is an elective-based policy.

Which of the following is TRUE concerning a Business Owners Policy? A business owners policy offers liability protection. Bars and taverns are eligible for business owners policies. Business owners policies are popular among large corporate vendors. A business owners policy is a good option for large multi-national corporations.

A business owners policy offers liability protection.

Dr. Smith has a claims-made malpractice insurance policy with a policy period from June 30, 2006 to June 30, 2007. Which claim would trigger this policy? A claim filed on January 13, 2007 for surgery performed on June 28, 2005. A claim filed on October 24, 2007 for surgery performed on November 15, 2006. A claim filed on December 7, 2007 for surgery performed on June 1, 2006. A claim filed on September 20, 2007 for surgery performed on June 1, 2007.

A claim filed on January 13, 2007 for surgery performed on June 28, 2005.

On January 27, 2008, Ryan was using an exercise bike purchased from NusquamCycle when the chain broke, causing him to fall and severely bruise his knee. It seemed to heal just fine, but three years later, on January 25, 2011, Ryan's knee gave out while jogging. His doctor told him that he'll need surgery and that this deterioration resulted from the earlier accident with the exercise bike. Which of the following CGL policies may cover Ryan's claim filed January 25, 2011? An occurrence policy from Jan 31 2011-Jan 31 2013 A claims-made policy from Jan 31 2009-Jan 31 2011 An occurrence policy from Feb 28 2008-Feb 28 2010 A claims-made policy from Jan 31 2008-Jan 31 2010

A claims-made policy from Jan 31 2009-Jan 31 2011

On January 27, 2008, Ryan was using an exercise bike purchased from NusquamCycle when the chain broke, causing him to fall and severely bruise his knee. It seemed to heal just fine, but three years later, on January 25, 2011, Ryan's knee gave out while jogging. His doctor told him that he'll need surgery and that this deterioration most likely resulted from the earlier accident with the exercise bike. Which of the following CGL policies would cover Ryan's claim filed January 25, 2011? A claims-made policy from Jan 31 2011 -Jan 31 2012 with a retroactive date of Jan 1 2005 A claims-made policy from Jan 31 2010 -Jan 31 2011 with a retroactive date of Jan 1 2009 A claims-made policy from Jan 31 2010 -Jan 31 2011 with a retroactive date of Jan 31 2008 A claims-made policy from Jan 31 2010 -Jan 31 2011 with a retroactive date of Jan 1 2008

A claims-made policy from Jan 31 2010 -Jan 31 2011 with a retroactive date of Jan 1 2008

Who is NOT eligible for a homeowners policy? An owner of a home under construction A tenant who rents a home or apartment A person who owns and lives in his house An owner of a house in which he does not live, but rents to a tenant

An owner of a house in which he does not live, but rents to a tenant

Francis owns a small shoe store. Since his business isn't particularly risky, he has a commercial property policy that provides named-peril coverage to his building and personal property, without any additional coverages. Which Causes of Loss form does Francis have attached to his coverage form? Special Form Universal Form Basic Form Broad Form

Basic Form

Which of the following would NOT be covered under Errors and Omissions insurance? Bodily injury claim Sexual harassment claim Discrimination claim Wrongful termination claim

Bodily injury claim

Bonnie's PAP includes Comprehensive coverage. Which of the following losses could this coverage pay for? Bonnie's car breaks down due to an engine malfunction. Bonnie rear-ends another vehicle. Bonnie rolls her vehicle in a one-car accident. Bonnie's car catches fire.

Bonnie's car catches fire.

Bob has a home in Florida with full replacement cost insurance coverage. After a severe hurricane levels his home, the property is declared a total loss. Bob is so discouraged that he takes several months to decide whether it is worth it to rebuild. Which of the following statements is TRUE? Bob's insurer must pay the full replacement cost of the property without waiting for proof that Bob has rebuilt his home. Bob must notify his insurer of his intent to rebuild within 180 days of the loss in order to be indemnified. Bob's insurer must pay the ACV of Bob's property immediately, but can wait until Bob submits proof of his rebuilding expenses before paying the full replacement cost. Bob must submit all receipts for completed work to his insurer within 6 months of the loss in order to be indemnified.

Bob's insurer must pay the full replacement cost of the property without waiting for proof that Bob has rebuilt his home.

Which of the following lines of coverage could be found in a Commercial Package Policy? Business Auto insurance Disability insurance Health insurance Workers' Compensation insurance

Business Auto insurance

Honey's Bakery is a local coffee shop run by two sisters. In a rush to leave one afternoon, their new employee forgets to turn off the gas stove. The leaking gas causes an explosion, destroying the kitchen. Which condition in their commercial property policy could help the sisters cover the cost of the damage? Control of Property Other Insurance Legal Action Against the Insurer Non-Owner Condition

Control of Property

Larry owns a restaurant downtown and employs his cousin Vinny as one of the line cooks. Vinny is a rather careless individual, and one night he leaves the stove on, leaking gas throughout the kitchen. When the ice machine turns on, it sparks a massive explosion. Which condition in Larry's commercial property policy indicates that he may be covered for this loss? Other Insurance Legal Action Against the Insurer Non-Owner Condition Control of Property

Control of Property

Cameron is fully insured by a DP-2 on his $130,000 home. His monthly mortgage payment is $775 per month, and he usually pays $400 per month in groceries. When a kitchen fire damages his house, causing $61,000 in damage, he forced to move out for a month while the repairs can be made. Cameron's hotel bill for the month comes to $1,250 and he spends $600 eating at restaurants. Based only on this information, how much indemnification can Cameron expect to receive for this claim? Coverage A - $62,250; Coverage E - $600 Coverage A - $61,000; Coverage E - $1,450 Coverage A - $60,225; Coverage E - $1,250 Coverage A - $61,000; Coverage E - $1,850

Coverage A - $61,000; Coverage E - $1,450

Which of the following would NOT be covered under Part A of a Personal Auto Policy? Lost wages Damage the insured causes while driving his friend's car Legal defense costs Damage the insured causes to his own garage

Damage the insured causes to his own garage

Which of the following may be covered under an Equipment Breakdown Protection Coverage Form? Equipment built to operate under internal pressure or vacuum Dragline, excavation, and construction equipment Self-propelled equipment Equipment used solely for therapeutic or surgical purposes

Equipment built to operate under internal pressure or vacuum

When one of Frank's ovens breaks down at her wholesale bakery, it causes a dip in production that drastically affects the bottom line of the business. Luckily for Frank, he has an Equipment Breakdown Protection Coverage Form that can help cover the cost of repairing the expensive oven. Which policy coverage can help pay for costs associated with making temporary repairs and speeding up the permanent repairs? Expediting Expenses Oven Repair and Operations Automatic Coverage Supplementary Payment

Expediting Expenses

Jerry is an adjuster and has signed a contract with ABC Insurance to adjust claims in an area recently devastated by a hurricane. Jerry receives the claims from ABC Insurance, completes the inspections, and settles claims on behalf of ABC Insurance according to his contract. What type of authority has ABC Insurance given Jerry? Agency authority Express authority Apparent authority Implied authority

Express authority

Martin regularly travels much of the state for work, so his employer has given him a company car. Which endorsement to Martin's PAP would provide him with liability coverage for the company car? Customized Equipment Extended Non-Owner Miscellaneous Vehicle Non-Owner

Extended Non-Owner

Jane's Bakery has Equipment Breakdown Protection coverage on a large industrial oven used in producing several hundred loaves of bread a day. One day, the oven malfunctions and catches fire, rendering her business inoperable for four days. In order to fill bread orders, Jane must ship her dough to a warehouse where she found another oven to rent while her oven is repaired. Under which coverage would Jane be indemnified for the shipping and oven rental costs? Valued Business Interruption Coverage Automatic Coverage Supplementary Payments Coverage Extra Expense Coverage

Extra Expense Coverage

Robert's tomato crop production was well below the revenue guarantee this year, and Robert files a claim against his Crop-Revenue policy for the low yield. However, the adjuster denies Robert's claim after completing her inspection. What might be a reason for the denial? Failure to notify the insurer that there was a problem prior to the harvest Failure to hire enough farm employees Failure to use state-of-the-art farming equipment Failure to use the required amount of fertilizer

Failure to use the required amount of fertilizer

Randy owns a clothing store. One day, he notices a shady character with a backpack who is hanging around acting nervous. Randy becomes suspicious and approaches the young man. As the boy makes an effort to avoid him, Randy grabs his arm and detains him until the police arrive. Not finding any stolen merchandise, the police let the boy go. Two weeks later Randy is notified that he will be sued for violation of the young man's civil rights. This is an example of what type of personal injury covered under Randy's Commercial General Liability policy? False Arrest, Detention, or Imprisonment. Malicious Prosecution Suspicion of Theft Wrongful Entry

False Arrest, Detention, or Imprisonment.

Which Farm policy would cover animal waste overflow and chemical spills? Farm Product Liability Farm Pollution Liability Farm Waste Management Coverage Custom Farming Liability Coverage

Farm Pollution Liability

Several cases of listeria have been traced back to Aaron's crop of soybeans that he recently sold at market. What type of coverage will pay for the claims filed by those sickened by Aaron's soybeans? Bodily Injury and Property Damage Liability Medical Payments Farm Pollution Liability Farm Product Liability

Farm Product Liability

Farmer Bob would like to sell his recent harvest of lettuce to a local wholesaler. The wholesaler agrees, but only if Bob can prove he has insurance protection in the event that his lettuce causes people to become ill. What type of insurance does Bob need in this situation? Farm Product Liability insurance Medical Payments Farm Pollution Liability insurance Scheduled Farm Personal Property coverage

Farm Product Liability insurance

Which of the following is NOT an adjuster's duty in the claim process? Filing a claim Determining coverage on a claim Evaluating a claim Investigating a claim

Filing a claim

Which of the following claims may be covered under an Equipment Breakdown Protection Coverage Form? Hazardous material remediation was needed after a mechanical breakdown of the exhaust system's turbine caused ammonia to be released into the factory, contaminating the entire area. A severe hail storm damaged a company's air conditioning units. A self-propelled machine used to transport heavy objects within the factory experienced a malfunction in its computer program, causing it to run into a wall, which damaged it to the point of needing repair. While adjusting a pressurized boiler, an employee accidentally set the calibrations to incorrect levels, which damaged the boiler to the point of needing repair.

Hazardous material remediation was needed after a mechanical breakdown of the exhaust system's turbine caused ammonia to be released into the factory, contaminating the entire area.

Bill's new home is in the final stages of construction, and he has purchased an HO-2 policy to insure his financial interest in the property. This morning, Bill's contractor calls to tell him that an electrical fire has destroyed his new kitchen, and all of the crown molding that was supposed to be installed today has been stolen. It will be $15,000 to rebuild the kitchen and another $4,200 to replace the trim. How will Bill's insurer respond when he files a claim? His insurer will pay $4,200 for the stolen trim and nothing for the kitchen. His insurer will pay $15,000 to rebuild the kitchen and nothing for the stolen trim His insurer will deny the claim because the house was still under construction. His insurer will pay $19,200 for the entire amount of the loss.

His insurer will pay $15,000 to rebuild the kitchen and nothing for the stolen trim

Stephanie is in the process of adjusting George's auto claim. Currently, she is interviewing Shana, who witnessed George's accident and stopped to help. In what stage of the claim process is Stephanie currently working? Acknowledgement Investigation Negotiation Evaluation

Investigation

Which of the following statements does NOT apply to the Standard Fire Policy? It is the basis for all homeowners policies. It automatically covers wind and vandalism. It is a named peril policy. It pays actual cash value.

It automatically covers wind and vandalism.

Why should litigation be considered a last resort option? It can be costly and unpredictable. The court system is backed up. The court will likely side with the claimant. It is the last thing to try.

It can be costly and unpredictable.

Which of the following statements is TRUE regarding Mechanical Breakdown Insurance? It covers oil changes and tire rotation. It will not cover the cost of repairs that exceed the value of a vehicle. It would indemnify a policyholder for damage to an engine caused by the owner inadvertently driving into a lake. It covers damage caused by the towing process.

It will not cover the cost of repairs that exceed the value of a vehicle.

Which of the following is NOT true of the no-release settlement? The claimant's signing and cashing of the indemnity check substitutes for a release form. The insurer pays the bills submitted by the claimant. It's also called a "walk-away settlement."

It's also called an "advance payment settlement."

When discussing farm insurance, which of the following most accurately describes "scheduled property"? Excluded coverage Blanket coverage Excluded property Itemized property

Itemized property

Which of the following statements about MPCI insurance is FALSE? Its coverage applies per acre, not per "unit." It is subsidized by the FCIC. It covers damage to crops due to weather-related perils. Its coverage applies per ""unit"", not per acre.

Its coverage applies per acre, not per "unit."

Farmer Jane had an MPCI policy in place when her wheat field was ruined by a hail storm. Jane promptly plowed up the wheat and planted a cover crop. Two days later she filed a claim with her insurer. The claim was denied. What might be the reason for the denial? Jane had abandoned her crop. Jane did not leave samples of the destroyed crop for the adjuster to examine. Jane did not have Crop-Hail Insurance. Jane did not file the claim within 24 hours.

Jane did not leave samples of the destroyed crop for the adjuster to examine.

After her water heater leaked and damaged her hardwood floors, Clarice filed a claim with her insurer, KLM Insurance, who sent their adjuster, Bob, to inspect the loss. Clarice also hired a public adjuster, Jose, to represent her in her claim. Bob has the responsibility to report to which principal? KLM Insurance This information is not provided in the scenario. Jose Clarice

KLM Insurance

ABC Roofing has two CGL policies that cover the same losses. Both policies are occurrence forms, thus pay out on a pro rata basis. The first policy is through KLM Insurance and has a limit of $300,000. The second is through XYZ Mutual, with a limit of $600,000. One day, ABC Roofing suffers an occurrence resulting in a $150,000 covered loss. How will this loss be indemnified? XYZ Mutual will pay $50,000; KLM Insurance will pay $100,000 KLM Insurance will pay $150,000; XYZ Mutual will pay nothing KLM Insurance will pay $50,000; XYZ Mutual will pay $100,000 XYZ Mutual will pay $60,000; KLM Insurance will pay $30,000

KLM Insurance will pay $50,000; XYZ Mutual will pay $100,000

Which of the following losses may qualify for coverage under Coverage F - Medical Payments? Wilma breaks her ankle when she trips and falls down her basement stairs. Kevin accidentally shoots himself in the foot with a nail gun while he is helping Joe build a deck in Joe's backyard. Mike breaks his ankle when he trips and falls down the stairs heading to the basement apartment that he rents from Wilma. Stacy gets a full set of veneers after she chips her tooth on a softball while playing catch over at Kathy's house.

Kevin accidentally shoots himself in the foot with a nail gun while he is helping Joe build a deck in Joe's backyard.

Knightley Insurance Co. decides not to renew Emma's homeowners policy, which she has had for 6 years. Which of these statements is TRUE? Knightley Insurance may not terminate Emma's policy because it has been in effect for over 5 years. Knightley Insurance must submit an application on Emma's behalf for coverage under the Citizens Property Insurance Corporation. Knightley Insurance must notify Emma of the non-renewal at least 120 days before her policy expires. Emma can keep her policy active by paying the next year's annual premium in advance.

Knightley Insurance must notify Emma of the non-renewal at least 120 days before her policy expires.

Which of the following professionals would be most likely to purchase malpractice insurance? Politician Author Programmer Lawyer

Lawyer

All of the following are covered under Coverage A of a Business Owners Policy, except: Building maintenance equipment, such as fire extinguishers Flooring and floor coverings Leased business personal property that must be insured Owner's furniture in an apartment that is rented as furnished

Leased business personal property that must be insured

After Tony, the owner of XYZ Cleaners, accidentally starts a fire, XYZ Cleaners burns to the ground, taking all the garments with it. Afterwards, Tony has to rent a new building and purchase new equipment and supplies. He is also responsible for all the clothing that was in his care. Which type of coverage in his commercial property policy could help Tony with the cost of paying for his customers' destroyed clothing? Legal Liability Coverage Extra Expense Coverage Dry Cleaners Risk Coverage Leasehold Interest Coverage

Legal Liability Coverage

Phil runs a locomotive repair business, which is insured under a commercial property policy. One night, some blasting powder is accidentally ignited and blows a crowbar through one of the engines. No one is hurt, but the locomotive is severely damaged. Which coverage option may help cover the cost of repairing the engine from this unfortunate event? Replacement Cost Coverage Legal Liability Coverage Interior Explosion Coverage Mechanical Breakdown Coverage

Legal Liability Coverage

Which of these perils is NOT excluded from coverage in a homeowners policy? Water damage Earth movement Nuclear war Lightning

Lightning

Which of the following BEST describes how covered losses are settled under a typical Equipment Breakdown Protection Coverage Form? Losses are paid at replacement cost if the replacement or repair occurs with 12 months of the accident. Losses are normally paid at replacement cost, but an insured may change this with an Actual Cash Value endorsement. Losses are paid at actual cash value. Losses are normally paid at actual cash value, but an insured may change this with a Replacement Cost endorsement.

Losses are normally paid at replacement cost, but an insured may change this with an Actual Cash Value endorsement.

During a routine tooth extraction, Dr. Dentem administers too much laughing gas and causes brain damage to his client. The family sues Dr. Dentem for failing to follow procedure. Which kind of insurance would cover the cost of the lawsuit? Malpractice Insurance Personal Injury Protection Insurance Dental Insurance Errors and Omissions Insurance

Malpractice Insurance

Mark is on vacation in Italy when his luggage is stolen, including a $2,000 laptop, a $500 suitcase, and $400 in clothes. Mark has an HO-3 homeowners policy. Excluding any applicable deductible, which of the following statements is TRUE? Mark's homeowners policy will cover $2,000 of this loss. Mark's homeowners policy will cover $2,400 of this loss Mark's homeowners policy will cover the entire $2,900 loss. Mark's homeowners policy will not cover any of this loss because he was outside the US.

Mark's homeowners policy will cover $2,400 of this loss

Matthew works for Barry John Coal Company. One day, when all the work trucks are busy, Matthew's boss asks him to use his own truck to deliver a load of coal to a customer. On the way, Matt gets distracted looking at directions and swerves into oncoming traffic, causing a serious accident. Why might Matt's PAP liability insurer deny coverage for the damage Matt caused? Matt broke the law when he drove distracted, making him at fault for the accident. Matt's accident occurred during employment-related activities, so it will be covered by the employer's liability policy. Matt's accident occurred while he was hauling a heavy load, thereby excluding it from coverage. Matt didn't have the commercial license necessary to use his truck for work purposes.

Matt's accident occurred during employment-related activities, so it will be covered by the employer's liability policy.

Cindy and her insurer cannot reach an agreement for her property claim, and have gone back and forth for weeks without coming within $10,000 of each other. At this point, since both believe they are offering a fair settlement, a third party is needed to help facilitate the negotiation. Both parties still want to retain their ability to "walk-away" if they cannot reach an agreement. What is the next best step for Cindy and her insurer? Litigation Appraisal Mediation Arbitration

Mediation

Nick's home suffered major damage during a tornado. His contractor says it will cost $85,000 to complete repairs, but the adjuster's estimate gives a total of $63,000. Nick and his insurer have tried to reach an agreement, but have failed to do so. Both parties are now wanting a third party to facilitate their negotiations, but only in an advisory role. Which of the following is the best option in this case? Litigation Declaratory judgment action Arbitration Mediation

Mediation

Which of the following best describes how losses are valued under a Commercial Crime policy? Money is valued at face value; securities are set at their value on the day the settlement is paid; and other property is valued at the lesser of the cost to repair or replace. Money is valued at face value; securities are set at their value on the day the loss is discovered; and other property is valued at the lesser of the cost to repair or replace. Money is valued at face value; securities are set at their value on the day the loss is discovered; and other property is valued at actual cash value. Money is valued at face value; securities are set at their value on the day the settlement is paid; and other property is valued at replacement cost.

Money is valued at face value; securities are set at their value on the day the loss is discovered; and other property is valued at the lesser of the cost to repair or replace.

Stu has a collection of rare comic books. He wants to purchase theft insurance for his collection, separate from his home and other property. What term most accurately describes the type of policy Stu would purchase? Monoline Policy Valuable Papers Policy Actual Cash Value Policy Standard Fire Policy

Monoline Policy

Which policy is used as an alternative to the Trucker's Policy to cover companies that offer transportation services to the public on a regular basis, rather than for hire? Business Auto policy Trailer Interchange policy Garage policy Motor Carrier policy

Motor Carrier Policy

Which of the following steps would occur LAST in the processing of a claim? Determine the cost of repairs Negotiate a settlement with the claimant Investigate the claim Submit the proper paperwork to the claimant after acknowledging the claim

Negotiate a settlement with the claimant

A tree falls onto Melissa's house, damaging the roof and front porch in the amount of $11,276. An adjuster for ABC Insurance finds that the peril is covered under her policy and investigates the damages. Upon investigation, the adjuster comes up with a total for damages of $9,186. Of the following options, which course of action best describes how the adjuster will move forward with the claim? Let a court of law settle the claim. Negotiate a settlement with the claimant. Reject Melissa's request and deny the claim. Accept Melissa's request and pay the claim.

Negotiate a settlement with the claimant.

Helen's business is growing rapidly, so she decided to add an annex onto her office and hire another worker. While under construction, a storm blows down most of the annex structure, forcing Helen to restart from scratch. Her commercial policy provides insurance coverage equal to 75% of the property value, despite the fact that her policy requires 80% coverage to be fully insured. Which coverage extension could help Helen rebuild at replacement cost? Reasonable Repairs extension - covers all new buildings under construction Outdoor Property extension - covers all new buildings under construction Newly Acquired Property extension - covers all new buildings under construction None - Extensions are only available if the policyholder maintains the minimum level of insurance of 80% to value

None - Extensions are only available if the policyholder maintains the minimum level of insurance of 80% to value

Which one of the adjuster's reports usually includes the initial claim reserve amount? Draft report Final report Preliminary report Interim report

Preliminary report

One December morning, Alex arrives at his business to find freshly fallen snow on his property. Before he has a chance to shovel the snow, a customer slips and falls on the sidewalk, breaking her hip. What type of insurance might help pay for her injury? Negligence Product liability insurance Public liability insurance Employer liability insurance

Public liability insurance

Ron's truck experiences a mechanical breakdown and he has it towed to an auto repair facility. Upon further examination of Ron's claim, his Mechanical Breakdown Insurance provider denies coverage. Which of the following would be a valid reason for this denial? The repairs were very expensive. The auto shop determines the transmission caused the breakdown of the automobile. The auto shop determines the alternator caused the breakdown of the automobile. Ron had been hauling a large boat, which overloaded the vehicle and caused the breakdown.

Ron had been hauling a large boat, which overloaded the vehicle and caused the breakdown.

Which of the following is not the responsibility of the claimant? File a claim in a timely manner Prove the loss to the insurer Believe a loss is covered by an insurance policy Seek the assistance of an adjuster

Seek the assistance of an adjuster

Which of the following conditions is frequently included in Mechanical Breakdown Insurance policies? Subrogation Third party claims Agency authority Agreed valuation

Subrogation

James is in the consulting business and frequently flies from city to city to meet clients and help them improve their business practices. Most cities have adequate public transit, but sometimes it's easier to rent a car. Which coverage symbol would specifically pertain to rental cars on James' Business Auto Policy? Symbol 19 Symbol 7 Symbol 9 Symbol 8

Symbol 8

What is a binder? A legal principle that binds the insurer to its guarantees A voluntary surrender of a privilege Temporary coverage for an insurance applicant until the policy is issued A promise or guarantee that certain conditions will be met

Temporary coverage for an insurance applicant until the policy is issued

Who sets the critical production dates and assigns commodity market prices for MPCI policies? The Risk Management Agency Individual insurers The Natural Resources Conservation Service The Federal Crop Administration

The Risk Management Agency

While driving, Ben was struck by another driver, Roxanne. Ben then filed a claim with Roxanne's insurer. In essence, what was Ben doing when he filed this claim? Submitting a formal request to settle the damages with Roxanne's insurer Alerting Roxanne's insurer of his intent to take the case to court Ordering Roxanne's insurer to pay for his damages within 15 days Admitting he was actually "at fault"

Submitting a formal request to settle the damages with Roxanne's insurer

Sally throws a cigarette butt into Neal's dumpster, starting a fire on Neal's property that costs him $10,000. Neal files a claim with his insurer. The insurer pays Neal and then demands $10,000 from Sally to pay for the loss she caused. What gives the insurer the right to collect payment from Sally? Vicarious liability Right of recovery Estoppel Subrogation

Subro

Frank purchases an automobile policy from publicly-traded XYZ Insurance. He pays regular monthly premiums, and also purchases stock in XYZ and receives dividends when the company turns a profit. From which type of company has Frank purchased insurance? Re-Insurer Reciprocal insurer Mutual insurer Stock insurer

Stock insurer

Which settlement option is usually reserved for the largest claims? Scheduled payment release Structured settlement Advance payment settlement No-release settlement

Structured settlement

Which of the following claims might best be settled through negotiations? The claimant asks for $18,023; the insurer offers $18,000. The claimant asks for $560,000; the insurer offers $23,000. The claimant asks for $37,795; the insurer offers $31,000. The claimant asks for $92,350; the insurer offers $92,230.

The claimant asks for $37,795; the insurer offers $31,000.

ABC Masonry, Inc. has a liability policy with aggregate limits of 100,000/300,000. One day, an accident at a construction site leads to $150,000 in damage to public property. Assuming the cause of loss is covered under ABC Masonry's liability policy, how will this claim be paid? The insurer pays $150,000 and the aggregate limit is still $300,000. The insurer pays $100,000; the aggregate limit is still $300,000; and ABC Masonry must pay $50,000. The insurer pays $150,000 and the aggregate limit is now $200,000. The insurer pays $100,000; the aggregate limit is now $200,000; and ABC Masonry must pay $50,000.

The insurer pays $100,000; the aggregate limit is now $200,000; and ABC Masonry must pay $50,000.

Jared recently purchased a 25 foot watercraft with a 250 horsepower motor. While cruising on the lake, he accidentally runs into Gary's boat, causing $2,500 in damage to Gary's hull. How will Jared's insurer respond when Gary files a claim against Jared's homeowners policy for the damage he caused? His insurer will deny the claim because the boat was not completely enclosed in a building. The insurer will deny the claim because the policy excludes all watercraft from its liability coverage. The insurer will pay the claim because Jared's boat is covered by his homeowner's policy. The insurer will deny the claim because Jared's boat is excluded from his liability coverage.

The insurer will deny the claim because Jared's boat is excluded from his liability coverage.

After a rain storm, Nancy realizes that she left her bedroom windows open the entire time. Now there is extensive water damage to her area rug and furniture, and the laptop that had been sitting on her desk is ruined. Nancy has a Broad Form homeowners policy, so she calls her insurance company and files a claim. What is the likely result of Nancy's claim? The insurer will cover the all the damaged property. The insurer will pay for the furniture and the laptop, but not the area rug. The insurer will not cover any of the damage, since Nancy left the windows open. The insurer will only cover the area rug.

The insurer will not cover any of the damage, since Nancy left the windows open.

According to the Mortgagee Clause, what is NOT one of the rights of the mortgagee? The mortgagee may be indemnified, even in the event of fraud by the insured. The mortgagee will be notified if the insurer intends to cancel the policy. The mortgagee may receive a portion of claim payments. The mortgagee may change the coverage amount.

The mortgagee may change the coverage amount.

Adam has a treacherous drive to work every day. Not only does he have to drive down the pothole-strewn access road to the highway, but he also must traverse several icy bridges on the way to work. Why does the insurance company call these hazards "physical hazards"? Adam doesn't consciously choose to take this route. They take a toll on Adam physically, increasing the chance of a loss. The roads present a physical condition that increases the chance of a loss. Adam is indifferent to any losses he may suffer.

The roads present a physical condition that increases the chance of a loss.

How are mediators paid? A statewide mediation pool pays their fees. Their fees are split by all parties involved in the dispute. Their fees come out of the settlement amount. The insurance company pays all the fees.

Their fees are split by all parties involved in the dispute.

Which of the following statements about Mechanical Breakdown Insurance is FALSE? Bodywork, windshield wipers, and the catalytic converter are not covered. Wear and tear of replaceable parts is not covered. It will not pay for covered repair costs that exceed the actual cash value of the vehicle. Towing and roadside assistance are covered once a covered breakdown has occurred.

Towing and roadside assistance are covered once a covered breakdown has occurred.

Randy runs a business where he takes on the possessions of others and transports them from one location to another in exchange for a fee. What type of occupation does Randy have? Delivery Driver Lawyer Trucker Auto Body Repair Technician

Trucker

Which of the following is similar to a Business Auto Policy, but adds several policy provisions and protections specific to the trucking industry? Truckers policy Excess Liability insurance Garagekeepers policy Trip Transit policy

Truckers policy

Lance runs a staffing service in which his main job is transporting workers to and from various jobsites. His van can carry up to 12 people at a time, and he is worried about getting hit by a driver who does not have enough liability insurance to cover all of his passengers. Which additional coverage could help pay for injuries to his passengers if this were to happen? Employee as Additional Insured Comprehensive Coverage Uninsured/Underinsured Motorist Coverage Drive Other Cars Endorsement

Uninsured/Underinsured Motorist Coverage

Which of the following is NOT a characteristic of insurance contracts? Universal Conditional Unilateral Aleatory

Universal

Joe decides to go surfing for three months in Hawaii. Before he leaves, he locks up his surfboard shop and rents a storage unit for most of his equipment and merchandise. When Joe returns, he finds that his shop has been broken into and vandalized. Under what policy condition would Joe's insurer likely refuse to make a full payment? Vacancy Liberalization Concealment Changes in Policy

Vacancy

An insurance company might consider any of the following a risk, EXCEPT: a jewelry collection. an automobile. a home. a high crime neighborhood.

a high crime neighborhood.

Sally has an HO-3 policy on her $150,000 home in the country. One day, a bear breaks down Sally's back door to get into her kitchen for a snack. When Sally comes home to find the damage, she files a claim with her insurance company. Will the damage to Sally's home be covered, and why or why not? Yes. The HO-3 is an open-peril policy, without an exclusion for wildlife. Yes. Wildlife is a commonly named-peril found on all homeowner's policies. No. Since Sally did not take reasonable efforts to run the bear off, no damages may be covered. No. "Bear-Entry" is not listed as a named peril in Sally's HO-3 policy.

Yes. The HO-3 is an open-peril policy, without an exclusion for wildlife.

A farm insurance policy may include all of the following EXCEPT: a commercial package policy. dwelling coverage. farm liability insurance. farm personal property coverage.

a commercial package policy.

A dwelling policy would NOT be appropriate for: a single-family home wholly rented out. a motorhome owned by an individual. a duplex owned by an individual. a four-plex owned by a corporation.

a motorhome owned by an individual.

Errors and Omissions coverage in an Equipment Breakdown Protection policy provides coverage for: damage that would not otherwise be covered because the insured made a mistake or unintentionally omitted information required by the insurer. damage sustained by the insured after a contingent business made a mistake or unintentionally omitted information required by the insured. losses sustained by the insured because of the insurer's error or omission of material information. losses sustained by the insured's customers because of the insured's error or omission of material information.

damage that would not otherwise be covered because the insured made a mistake or unintentionally omitted information required by the insurer.

Ricky was watching a baseball game at XYZ Stadium, when the railing on which he was leaning gave way and he fell two stories. As a result of his fall, Ricky broke his back and is now paralyzed from the waist down. Ricky sued the owners of XYZ Stadium and was awarded $150,000 to cover his medical bills and $2.5 million in __________ because of the permanent nature of his injury. tort damages general damages punitive damages special damages

general damages

Mental anguish would be an example of: general damages. tangible damages. punitive damages. special damages.

general damages.

As a staff adjuster, one of Abigail's most important responsibilities is reporting to the principal. This would include all of the following except: sending the insurer a report with the final adjusted losses. keeping the claimant up-to-date on the progress and status of the claim informing the principal of the investigation results. letting the insurer know about any liability or expediency issues with the claim.

keeping the claimant up-to-date on the progress and status of the claim

Many adjusters prefer arbitration to litigation, because professional arbitrators tend to be more ___________than civil juries. knowledgeable open-minded driven by emotion expensive

knowledgeable

Medical payments coverage in a Farm policy includes all of the following EXCEPT: funeral costs. hospital benefits. dental benefits. libel or slander.

libel or slander.

In dwelling policies, Coverage D pays for: lost rental income. debris removal. personal property. increase in living expenses.

lost rental income.

When the dollar amount difference between an adjuster and a claimant is very large, the adjuster should: consult a more experienced adjuster. negotiate to decrease the difference between the two. begin the investigation over to see what has been missed. move to dispute resolution.

move to dispute resolution.

Cindy holds an insurance policy from Sine Nomine Insurance. This is not a publicly traded company, and Cindy can participate in the election of the board, receiving dividends if the company does well. Sine Nomine Insurance could be best described as a: a risk retention group. fraternal benefits society. stock insurance company. mutual insurance company.

mutual insurance company.

Jim is out turkey hunting on a private ranch when he hears some movement in the brush. Assuming it's a turkey, Jim raises his shotgun and fires. Unfortunately for Jim, he has not taken a turkey, but has severely injured one of the landowner's calves instead. Jim is responsible for the cost of the calf because he acted with: negligence. great care. liability. responsibility.

negligence.

If an insurer is unwilling to pay what the claimant is asking, the adjuster must: absorb the difference out of his own fee. accept the claimant's figure. negotiate a settlement. deny the claim.

negotiate a settlement.

As an adjuster for KLM Insurance, Chrystal has the important role of fiduciary agent. While acting in this capacity, Chrystal's primary responsibility is to: investigate the financial health of those insured through KLM Insurance. increase profits for KLM Insurance through ethical sales practices. act for, and on the behalf of, those insured through KLM Insurance. protect the financial and property interests of KLM Insurance.

protect the financial and property interests of KLM Insurance

When taking recorded witness statements, the adjuster should: remain objective. show sympathy for the situation. ask leading questions to get to the truth. discuss a possible settlement.

remain objective.

Josephine has purchased a Business Owners Policy. She insures both the real and personal property at 80% under the policy. Assuming no endorsements apply, the losses will be adjusted on a(n) _______________ basis. functional replacement cost actual cash value replacement cost market value

replacement cost

By signing a settlement release, the claimant gives up the right to: make sure that the insurer follows the terms of their agreement. increase her insurance coverage. call her insurer. seek any further damages.

seek any further damages.

When Jane rear-ends Frank, she causes minor damage to Frank's car, but Frank is not hurt. However, when Jane's insurer asks him about the accident, Frank claims that his back and neck have been hurting a lot because of the collision, even though he is actually fine. Frank is guilty of: insurer fraud. medical fraud. hard fraud. soft fraud.

soft

The Liberalization Clause in an insurance policy: states that any change to a policy form that broadens coverage without increasing the premium will automatically apply to existing policies. states that the insurer is obligated to pay for covered losses only up to the limit set by the policy. voids the policy if the insured deliberately conceals or misstates pertinent info. states that, in the event of a loss, the insurer will only pay up to the insured value of the risk.

states that any change to a policy form that broadens coverage without increasing the premium will automatically apply to existing policies.

___________ is a law set forth by a governing body such as a state or city. common law complaint law liability law statutory law

statutory law

Barbara has been negotiating a property claim with a claimant for a few hours now. She has displayed her assessments, gone over the policy, and offered a fair settlement amount within the policy limits. However, the claimant has dismissed it completely without any counter-offer. The most appropriate next step is for Barbara to: submit her backup offer. enter into arbitration. tell a joke to lighten the mood. remain silent.

submit her backup offer.

In a Commercial Crime policy, a "messenger" is defined as: someone hired by the insured to have no other duty but to transport insured property from the premises to another location. someone hired by the insured to have no other duty but to maintain care and custody of insured property inside the premises. the insured, a business partner, or an employee who has care or custody of insured property inside the premises, excluding anyone acting as a watchperson or janitor. the insured or relative of the insured, a business partner, or an employee who has care and custody of insured property while outside the premises.

the insured or relative of the insured, a business partner, or an employee who has care and custody of insured property while outside the premises

The insuring agreement for Part A-Liability in a personal auto policy states that: the insurer will cover the costs to defend the insured in court in subsequent lawsuits related to the same occurrence, even after the policy limit is reached. the insurer has the right to settle liability cases out of court. the insurer will pay for "bodily injury" or "property damage" to any "insured" because of an auto accident. the insurer will cover the costs to defend the insured in court, up to the policy limit.

the insurer has the right to settle liability cases out of court.

In a Personal Auto Policy, the term "family member" would include: the named insured's ex-husband, who moved out 5 months ago. the named insured's 18-year-old daughter, who lives with her husband in New Jersey. the named insured's 26-year-old son who lives at home. the named insured's ex-husband, who moved out 4 months ago.

the named insured's 26-year-old son who lives at home.

During a terrible storm, Theresa's home suffers $200,000 in damage. $60,000 of this damage was caused by flooding, which is specifically excluded from Theresa's policy. She attempts to persuade her adjuster to cover at least half of the flood damage, but her efforts are to no avail. This is because: Theresa should have demanded full payment and talked her way down to half. the policy's coverage is non-negotiable. her adjuster is an extremely effective negotiator. Theresa's coinsurance is 80%.

the policy's coverage is non-negotiable.

Veronica owns a pottery business and is insured under a commercial property policy. She was in the process of building an extra structure for the sole purpose of kiln firing her pottery, but after 40 days of waiting for it to be completed, she moved her business to a new location without any intention of moving back. Her Builder's Risk Coverage Form was terminated because: the property is abandoned. Coverage B - Business Personal Property supersedes Builder's Risk coverage. extra expense coverage supersedes builder's risk coverage. more than 30 days have passed since the start of construction.

the property is abandoned.

When Emma is found guilty of arson for burning down her $175,000 home, her insurance policy is voided and she receives no indemnification for the loss. Emma still had $155,000 left on her mortgage at the time of the fire. Under the mortgagee clause, Emma's mortgage lender can recoup: HALF the total amount left on the loan - $77,500. the total amount left on the loan - $155,000. HALF the total amount of the loss - $87,500. the total amount of the loss - $175,000.

the total amount left on the loan - $155,000.

All of the following are universal exclusions in a Commercial Crime policy, EXCEPT: indirect losses. theft of money or securities outside the insured premises in the care of a messenger. seizure or destruction of property by government authority. theft or dishonest acts committed by the insured.

theft of money or securities outside the insured premises in the care of a messenger

The purpose of the principle of indemnity is: to prevent an insured from making a profit on a loss. to transfer the risk of financial loss from one party to another. to transfer the right to collect a debt from one party to another. to prevent an insurer from making a profit on a loss.

to prevent an insured from making a profit on a loss.

Clara plays the harp in an orchestra. Her harp cost $12,000, and she had it for 5 years before it was stolen from her locker at a symphony hall. She recently found out a new harp will cost $15,000. Assuming her harp depreciated at $1,000 a year, how much will an actual cash value policy indemnify Clara? $7,000- ACV pays the original amount paid minus depreciation $10,000 - ACV pays at current market value minus depreciation $12,000- ACV pays the original amount paid for the item $15,000 - ACV pays the current market value

$10,000 - ACV pays at current market value minus depreciation

James is walking down the street when Andrea, an uninsured motorist, strikes him with her car. James suffers $12,000 in injuries from the accident. He has personal injury protection of $10,000 from his own automobile insurance policy, which immediately pays him the full amount. By accepting $10,000 from his own insurance company, James has waived the right to sue Andrea for more than _____ for personal injury. $12,000 $2,000 $5,000 $10,000

$2,000

Jesse's home is worth $199,000 and he has a homeowners policy with a $150,000 limit. After burglars broke in, stole several items of his personal property, and broke his glass patio door, Jesse is left with a total of $5,300 in damages. Assuming the insurer decides to invoke the standard coinsurance penalty, approximately how much can Jesse hope to receive in indemnification? $3,923 $5,300 $4,240 $4,992

$4,992

Which of the following would be considered an insurable risk? A partnership A suburb A mountain range A football stadium

A football stadium

Which of the following best describes a Fraternal Benefit Society? A fraternal benefit society is a for-profit provider of insurance. A fraternal benefit society uses investors' money to pay claims. A fraternal benefit society is a social organization based around common interests and beliefs. A fraternal benefit society pays dividends to its stockholders.

A fraternal benefit society is a social organization based around common interests and beliefs.

Which of the following statements applies to liability insurance? A liability policy indemnifies the policyholder. Product liability insurance would cover a ""slip and fall"" accident. Liability must be decided by a court of law before an insurer will pay a liability claim. A liability insurance policy always indemnifies a third party.

A liability insurance policy always indemnifies a third party.

Which of the following is most likely a third party claim? A woman files an insurance claim when she is injured by an employee at a local bar. A woman files an insurance claim after she backs her car into a guardrail. A man files a claim against his health insurer for a surgery to remove his appendix. A man files a homeowners claim when his house is struck by lightning.

A woman files an insurance claim when she is injured by an employee at a local bar.

Adam is shopping for a car in a local automobile dealership. While visiting the showroom, he trips over a rug that has folded over and breaks his arm in the fall. Which of the following is true? The automobile dealership may file a first party claim with its own insurance company. Adam may file a first party claim with the dealership's insurance company. The automobile dealership may file a third party claim with its own insurance company. Adam may file a third party claim with the dealership's insurance company.

Adam may file a third party claim with the dealership's insurance company.

Kevin plays in a brass band using two rare antique Alexander tubas. Since they are no longer produced, the value of the tubas is difficult to determine. Which type of policy would best indemnify Kevin in the event that his tubas were ever damaged, lost, or stolen? Franchise deductible policy Replacement cost policy Actual cash value policy Agreed value policy

Agreed value policy

Arlene's house suffered structural damage in an earthquake last year, but her policy does not cover earthquake damage, so Arlene never got it fixed. When a tornado rips through her neighborhood, it causes some roof damage totalling $2,000, and Arlene sees an opportunity in the situation. She files a claim for the roof damage, but also claims that the tornado caused the structural damage to her house that was actually caused by the earthquake last year. Which of the following statements is true? Arlene has just created a physical hazard. Arlene has just committed soft fraud. Arlene has just created a morale hazard. Arlene has just committed hard fraud.

Arlene has just committed soft fraud.

Bobby just purchased an insurance policy for his home from XYZ Insurance. Which of the following would be a reason this policy may not be legally binding? Bobby has an outstanding warrant for selling marijuana. Bobby has been diagnosed with schizophrenia. Bobby paid his first premium when he and his agent agreed on a policy, but he is waiting for the policy documents to be prepared so he can sign them Bobby is only 19 years old.

Bobby has been diagnosed with schizophrenia.

Sam suffers $6,000 in injuries when Nicole runs a red light and crashes her uninsured car into Sam's. Sam's own insurance company, ABC Insurance, immediately pays him $5,000 for his injuries. Sam then ponders whether to file a $6,000 lawsuit against Nicole. Why can't Sam sue Nicole for the full amount of his injuries? Once ABC Insurance indemnifies Sam for $5,000, Sam is blocked from any further legal action. Sam first needs to wait to see how much Nicole pays to ABC Insurance. Nicole has already subrogated her rights to Sam's insurance company. By accepting payment from ABC Insurance, Sam subrogated a portion of his rights against Nicole to ABC Insurance.

By accepting payment from ABC Insurance, Sam subrogated a portion of his rights against Nicole to ABC Insurance.

If an adjuster needs to find clarification about what actually constitutes a collision, in which section of an insurance policy would she find that information? Declarations Exclusions Conditions Definitions

Definitions

In which section of an insurance policy might you find the following statement? "'We, us, and our' refers to ABC Insurance company." Definitions Declarations Conditions Exclusions

Definitions

Which of the following statements about the principle of estoppel is TRUE? Estoppel essentially guarantees no increases in the policyholder premiums after a policy term expires. Estoppel protects the insurer from the effects of a warranty. Estoppel allows an insurer to change the coverage in an insurance policy without the policyholder's consent. Estoppel protects the insured party from an insurer who initially approves coverage, but then later denies coverage after the insured pays for repairs.

Estoppel protects the insured party from an insurer who initially approves coverage, but then later denies coverage after the insured pays for repairs.

Which section of an insurance policy is designed to OMIT certain risks from coverage? Exclusions Insuring Agreement Coverage Forms Definitions

Exclusions

Flora is driving in the rain when she skids off the road and slams into Cam's billboard, totaling her car and causing $2,000 in damage to the billboard. Flora has an auto policy with ABC Insurance, and both Cam and Flora submit claims against this policy for their damages. Which of the following is TRUE? Flora will file a first-party claim for the damage to Cam's billboard and a third-party claim for the damage to her car. Flora will file a third-party claim for the damage to Cam's billboard and a first-party claim for the damage to her car. Flora will file a first-party claim for the damage to her car, and Cam will file a third-party claim for the damage to his billboard. Flora will file a third-party claim for the damage to her car, and Cam will file a first-party claim for the damage to his billboard.

Flora will file a first-party claim for the damage to her car, and Cam will file a third-party claim for the damage to his billboard.

Which of the following refers to being restored to the financial condition you were in before a loss? Indemnification Restoration Estoppel Subrogation

Indemnification

Which of the following statements is true about an insurance policy? The insured is obligated to the terms of the contract for the entire policy period. It relies on the utmost good faith of both the insured and the insurer. It is transferable if the property is sold to another party. The insured sets the terms of the policy.

It relies on the utmost good faith of both the insured and the insurer.

Which of the following does NOT have an insurable interest in Big Ed's Steak House, a local restaurant? Ed's partner, Bill, who owns 49% of the restaurant. Ed, who owns 51% of the restaurant. ABC Bank, which holds the mortgage on Big Ed's Steak House. Jim, who regularly eats at Big Ed's Steak House because it's his favorite restaurant.

Jim, who regularly eats at Big Ed's Steak House because it's his favorite restaurant.

Which of the following is an example of a moral hazard? Kim is jamming out to her music while driving to work and accidentally runs a red light. The road that leads to Mike's house is steep and narrow Ken lights a candle, sets it right next to the window draperies and leaves the house to go to work. Nancy falls asleep with a lit cigarette in her hand.

Ken lights a candle, sets it right next to the window draperies and leaves the house to go to work.

Which of the following statements about insurable interest is FALSE? When a renter leases your house, your insurable interest in the home remains. Maintaining property values allows your neighbor to have an insurable interest in your house Insurable interest reduces the incentive for someone to cause damages intentionally to insured property. Purchasing an insurance policy on your home helps protect your insurable interest in a home. .

Maintaining property values allows your neighbor to have an insurable interest in your house

When Zach purposefully burned down Matt's restaurant, Matt's insurer paid the claim and then went after Zach for the damages. Matt is furious about what Zach did and wants to sue him as well. Why is it NOT possible for Matt to sue Zach? Zach is protected by the Statute of Limitations. Matt has already received indemnification from his insurer. Zach may not be tried for the same thing twice. Matt was not present at the time of the fire.

Matt has already received indemnification from his insurer.

Rachel is filling out an application for a homeowners policy. She is truthfully answering the questions regarding her home's location, size, age, etc. Which of the following is a true statement? Rachel is providing representations. Rachel is providing factual misrepresentations. Rachel is providing binders. Rachel is providing warranties.

Rachel is providing representations.

When an insurer issues an insurance policy, the actual item, person, or organization that is being insured is called the: hazard. loss. peril. risk.

Risk

Which of the following is NOT a risk management technique? Risk retention Risk equality Risk avoidance Risk reduction

Risk equality

Which of the following is an example of a hazard? Sandra buys a lottery ticket every day. Sandra's home is destroyed when a massive earthquake hits. Sandra owns an exotic car that is extremely valuable. Sandra's home is in an area of Los Angeles that is often hit by earthquakes.

Sandra's home is in an area of Los Angeles that is often hit by earthquakes.

Which of the following is NOT a characteristic of social insurance programs? Social insurance programs are for-profit programs. Social insurance programs are designed to meet the needs of the general public as a whole. The benefits of a social insurance program may be prescribed by federal law. Social insurance programs involve mandatory participation.

Social insurance programs are for-profit programs.

While driving, Ben was struck by another driver, Roxanne. Ben then filed a claim with Roxanne's insurer. In essence, what was Ben doing when he filed this claim? Alerting Roxanne's insurer of his intent to take the case to court Submitting a formal request to settle the damages with Roxanne's insurer Ordering Roxanne's insurer to pay for his damages within 15 days Admitting he was actually "at fault"

Submitting a formal request to settle the damages with Roxanne's insurer

Jason's auto policy states that the insurer may cancel coverage if a premium is more than 30 days late. However, Jason is currently more than 30 days late, and has been so five times in the last year, and his insurer has done nothing about it. When Jason gets into an accident and files a claim, which of the following is most likely to happen? The insurer will deny the claim and cancel Jason's policy because of the implied waiver they have made by not canceling his policy the previous times he was late with his payments. The insurer will pay the claim because of the express waiver they have made by not canceling Jason's policy the previous times he was late with his payments. The insurer will pay the claim because of the implied waiver they have made by not canceling Jason's policy the previous times he was late with his payments. The insurer will deny the claim and cancel Jason's policy because he is more than 30 days late with his payment.

The insurer will pay the claim because of the implied waiver they have made by not canceling Jason's policy the previous times he was late with his payments.

Which of the following is found in the declarations page of an insurance policy? The perils insured against A description of how to file a claim The obligations of the insured after a loss The name of the insured party

The name of the insured party

A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system. The water from the sprinklers soak the carpets and short-out all the computers, causing thousands of dollars in damage. What is the proximate cause of the loss? The water from the sprinklers The automatic sprinkler system The electrical fire The power surge

The power surge

Which of the following statements applies to replacement cost valuation? Replacement cost valuations take into account the depreciated value of an item. Under replacement cost valuation, insurers may safeguard the principle of indemnity by requiring policyholders to replace insured items before making full reparations. Replacement cost valuations provide cheaper premiums for the policyholder than an actual cash value insurance policy. An actual cash value policy will pay out more than a replacement cost value policy.

Under replacement cost valuation, insurers may safeguard the principle of indemnity by requiring policyholders to replace insured items before making full reparations.

Jane's shed burns to the ground during a tornado, when the high winds break a wall of the shed, knocking over a lantern inside. What is the proximate cause of the loss? Fire Wall collapse The lantern Wind

Wind

During a storm, lightning strikes a tree in Harry's yard and starts a fire that spreads to his shed where he keeps all his equipment for his landscaping business. In addition to the shed, Harry has to purchase all new equipment to stay in business. The cost to replace the equipment would be considered: a peril. an occurrence. a direct loss. an indirect loss.

a direct loss.

SureTrust Insurance was founded and operates in Texas. In Texas, SureTrust is considered: a domestic insurer. a state insurer. an alien insurer. a foreign insurer.

a domestic insurer.

An insurance company may consider each of the following a risk, EXCEPT: a flood zone. a race car. a ruby necklace. a school bus.

a flood zone.

Edward is a member of the Knights of Columbus, a religious group dedicated to voluntary service to the benefit of society. He also recently purchased a $100,000 life insurance policy from the organization. This was possible because the Knights of Columbus is: a risk retention group. a mutual insurer. a reciprocal insurer. a fraternal benefit society.

a fraternal benefit society.

Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home, causing extensive damage to the East wall and roof. As a result, Sandra and her family must move into a hotel until the repairs are completed. The cost of staying in a hotel is: an indirect loss. a physical hazard. the proximate cause. a direct loss..

an indirect loss.

Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home, causing extensive damage to the East wall and roof. As a result, Sandra and her family must move into a hotel until the repairs are completed. Sam's car crashing into the house would be considered: an out-of-pocket expense. an indirect loss. a physical hazard. an occurrence.

an occurrence.

An "occurrence" is defined as: an insured item. an unexpected event that causes loss. something that increases the chance of a loss. the likelihood of experiencing a loss.

an unexpected event that causes loss.

A reciprocal insurer is: a publicly-traded insurance company owned by stockholders, which provide capital and participate in the insurer's profits and losses. an unincorporated organization of subscribers that operates through an attorney-in-fact to provide insurance benefits for its members. an insurance company that is owned by its policyholders, is not traded publicly, and is governed by a board of directors elected by the policyholders. a non-profit mutual aid organization that engages in charitable or benevolent activities and provides insurance to its members.

an unincorporated organization of subscribers that operates through an attorney-in-fact to provide insurance benefits for its members.

When Sally applies for an auto policy, her agent issues her a ________ so that she can benefit from insurance protection while he underwrites the policy. waiver representation warranty binder

binder

An oral or written statement providing temporary insurance coverage until an insurance policy can be issued is called a: contract. agreement. consideration. binder.

binder.

Risk avoidance is a risk management technique that: counterbalances risk. increases risk. reduces risk. eliminates risk.

eliminates risk.

A captive insurance company: exists solely to provide insurance for its parent company. provides insurance that is designed to meet the needs of the general public. provides insurance for insurers. operates through an attorney-in-fact to provide insurance benefits for its members.

exists solely to provide insurance for its parent company.

All of the following are typical exclusions in an insurance policy, EXCEPT: nuclear hazards. explosion. earthquakes. flooding.

explosion.

An insurer that adheres to the laws of a state but is located outside of that state is called a(n) ___________ insurer. national alien foreign domestic

foreign

As Jonathan was driving through an intersection, another driver ran a red light and crashed into the side of Jonathan's car, which caused significant physical damage to both vehicles. Jonathan must now rent a car while his is being repaired. The rental car expense would be considered a: physical hazard. proximate cause. indirect loss. direct loss.

indirect loss

John owes a lot more on his car than it is worth. He figures he would be better off if he burned the car and collected an insurance settlement. He has someone set fire to his garage to destroy the car. John's behavior would be considered a: hazard. physical hazard. morale hazard. moral hazard.

moral hazard.

Lewis owns a computer store, and he spends many hours a day on the sales floor demonstrating his products to customers. He often gets very animated when showing the electronics and, although he does not intend for anything bad to happen, he doesn't worry too much about handling them carefully, since he knows that his insurance policy will cover any damages. This behavior would be called a: physical hazard. fraud. moral hazard. morale hazard.

morale hazard.

Lucy has insurance on an expensive necklace she likes to wear to work every day. After work, she takes it off and leaves it in her car's cupholder so she can put it back on in the morning on her way to work. Lucy's behavior would be considered a: morale hazard. physical hazard. moral hazard. hazard.

morale hazard.

Insurance policies are unilateral contracts. This means: only one party has an obligation to perform. ambiguities are settled in favor of the insured. they depend on an unknown future event. they rely on the honesty of both parties.

only one party has an obligation to perform.

Indemnification may include all of the following except: reimbursement for hotel costs. reimbursement for rental car costs. payment for pain and suffering. payment for repairs to property.

payment for pain and suffering.

The fee paid by the insured in exchange for an insurance policy is called a: premium. legal purpose. binder. contract.

premium

An insurance adjuster will do all of the following regarding a claim EXCEPT: protect the insurer from the claim. determine if the claim falls under the coverage of the insurance policy. decide whether the claim has any merit. investigate the claim.

protect the insurer from the claim.

When an insurer buys insurance to reduce its exposure to loss, this is called: mitigation. loss reduction. co-insurance. re-insurance.

re-insurance.

Amy needs more floor space in her antique furniture store, so she buys a storage building 3 miles away. She is worried about keeping the furniture in the storage building safe, so she puts in an alarm system and smoke detectors. By purchasing the alarm system and smoke detectors, Amy is practicing: risk reduction. risk avoidance. risk transference. risk retention.

risk reduction.

Jared hopes to purchase a new insurance policy for his car, but he has an extremely poor driving record. The insurance company decides to issue Jared an insurance policy, but charges him a premium much higher than the average driver. The insurance company is practicing: risk reduction. risk avoidance. risk retention. risk transference.

risk reduction.

Six Stars Development Company has just purchased several large properties in Las Vegas. As a result of this large purchase, they are a little short on money and decide to save money by not purchasing insurance on their new properties. Six Stars is practicing: risk retention. risk avoidance. risk reduction. risk transference.

risk retention.

Six Stars Development Company has just been offered a great deal on a bulk purchase of dishwashers from a new company called Clean Machines. They've never purchased appliances from Clean Machines, so they're hesitant to make such a large purchase. Finally, Clean Machines offers to provide 10-year warranties for each of the dishwashers. This is an example of: risk avoidance. risk reduction. risk retention. risk transference.

risk transference.

A "hazard" is defined as: the likelihood of experiencing a loss. something that increases the chance of a loss. an unexpected event that causes loss. an insured item.

something that increases the chance of a loss.

In an insurance policy, the summary of what the insurer will do in the event of a covered loss is called: the insuring agreement. the dec page. the conditions section. the definitions section.

the insuring agreement.

Mark incurred $8,000 damage to his car in an accident. He received $8,000 from his insurance company and $4,000 from the other driver. By receiving a profit from the loss, Mark could be in violation of: the principle of financial status. the principle of financial restoration. the principle of profit and loss. the principle of indemnity.

the principle of indemnity

Steve has just purchased a wedding ring for his new bride. If something were to happen to the ring, he'd be out a lot of money, so he purchases an insurance policy. He is able to do this because: the ring is a safe risk. the ring is a sure risk. the ring is a speculative risk. the ring is a pure risk.

the ring is a pure risk.