Guarantee Property Q's failed
An insured's negligence. Liability insurance responds to actions claiming an insured's negligence caused injury or damage to another.
A general liability policy will respond to claims against an insured when bodily injury or property damage is caused by a)An insured's negligence. b)Acts of God. c)Chance. d)A third party's negligence.
Rebating Rebating is defined as any inducement offered in the sale of insurance products that is not specified in the policy.
A licensed life agent wrote a policy that covers the life of his brother. Since the policyowner was related, the agent refunded his brother the commission earned on this policy. This action would be considered a)Rebating. b)Controlled business. c)A normal business practice. d)Unfair discrimination.
Auto collision coverage. Auto collision is not a liability coverage; therefore, the personal umbrella will not act as excess
A personal umbrella policy may act as excess over any of the following insurance coverage policies EXCEPT a)Auto collision coverage. b)Homeowners Section II coverage. c)Auto liability coverage. d)Comprehensive personal liability.
Professional liability Under the consent to settle a loss provision, when a claim is filed under a professional liability policy, the insurer cannot settle the claim by offering to pay the claimant without the consent of the insured.
A policy contains a consent to settle a loss provision, which requires the insurer to obtain the consent of an insured before the settlement of a claim. With this in mind, what kind of liability policy does the insured most likely have? a)Protective liability b)Errors and omissions c)Professional liability d)Excess liability
Vacant. For the purposes of insurance coverage, a structure is considered vacant if no person or people utilize the building for personal or work related reasons or storage of property. Vacancy occurs after a specific time period, stated in the policy (usually 60 days).
A structure that is not inhabited by anyone and stores no property is considered a)Empty. b)Derelict. c)Vacant. d)Unoccupied.
Absolute liability Absolute liability is imposed on one who owns something that is or does something that is inherently dangerous. An injured party does not need to prove negligence.
All are legal defenses against a claim of negligence EXCEPT a)Absolute liability. b)Intervening cause. c)Contributory negligence. d)Assumption of risk.
The insurer must provide proof that the insured received the notice. The insurer only has to prove that the notice was mailed to the address on file, not that the insured received the notice.
All of the following are TRUE regarding the cancellation condition of a policy EXCEPT a)The insured may cancel the policy at any time by mailing a written notice of cancellation to the company. b)The insurer may cancel the policy by mailing a written notice to the first named insured only. c)The insurer is required to give advance notice of its cancellation to the insured. d)The insurer must provide proof that the insured received the notice.
Suggesting negotiations in settling the claim. When settling claims, negotiation can come into play.
All of the following are unfair claims settlement practices EXCEPT a)Failing to acknowledge pertinent communication regarding a claim. b)Suggesting negotiations in settling the claim. c)Refusing to pay claims without conducting an investigation. d)Failing to implement reasonable standards for settling claims.
Policy dividends issued by mutual companies are guaranteed and not taxable. Insurance policy dividends are not guaranteed and are not taxable.
All of the following statements about mutual insurance companies are correct EXCEPT a)Mutual companies issue policies referred to as participating. b)Policy dividends issued by mutual companies are guaranteed and not taxable. c)Dividends allow policyholders to share in a mutual company's divisible surplus. d)Dividends are a return of unused premiums.
The HO-3 policy covers the mysterious disappearance of personal property. Mysterious disappearance is the disappearance of property without knowledge as to the location, time, or how the property was lost. Mysterious disappearance, or losses that cannot be identified as to the time and place, are excluded from most personal property coverages.
All of the following statements regarding personal property coverage in the homeowners program are correct EXCEPT a)Earthquake coverage may be added by endorsement. b)The HO-3 policy covers the mysterious disappearance of personal property. c)Coverage on money is limited to $200. d)Personal property coverage is usually 50% of the Coverage A limit.
Twisting This is the definition of twisting, which is an unfair trade practice.
An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as a)Twisting. b)Fraud. c)Concealment. d)Misrepresentation.
Employment practices liability Personal liability, CGL, and workers compensation exclude this type of liability
An executive is accused of sexual harassment. What type of coverage would respond? a)Commercial general liability (CGL) b)Employment practices liability c)Workers compensation d)Hiring practices liability
Misrepresentation Misrepresentation is the act of portraying sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This refers to all forms of communication.
An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done? a)Rebating b)Twisting c)Defamation d)Misrepresentation
$15,200 The medical payments coverage is provided by a limit of liability per person. In this example, the limit for the policy is $5,000 per person, so the policy will pay the maximum ($10,000) for the insured and the second passenger because their medical expenses exceed the limit. All of the expenses for the first passenger and third passenger would be paid ($5,200). The grand total paid under medical expenses is $15,200.
An insured has $5,000 of medical coverage under a personal auto policy at the time of a covered accident. The insured and 3 passengers are injured. The insured's medical expenses are $8,000. The first passenger's total $4,000; the second passenger's total $6,500; and the third passenger's total $1,200. How much will the policy pay under the medical payments coverage? a)$5,000 b)$8,000 c)$15,200 d)$19,700
$125,200. The amount of coverage for the other driver's injuries is limited to $100,000. The damage to the other driver's car, $25,000, is covered in full. The damage to the insured's car is covered minus the $1,000 deductible. Thus, the total payment is $125,200.
An insured has an automobile policy with limits of 100/300/50 and a deductible of $1,000. He is involved in an auto accident and crashes into another driver's auto. The other driver is awarded $125,000 for his injuries and $25,000 for the damage to his car. The insured's vehicle has damage in the amount of $1,200. The total payment made under the insured's policy is a)$126,200. b)$100,200. c)$150,200. d)$125,200.
Allow the family to maintain their normal standard of living. Addition living expense coverage is intended to allow the normal standard of living to be maintained. It will cover housing costs, meals, transportation, etc.
Coverage D, additional living expenses, is intended to a)Pay a set amount per day. b)Pay hotel costs but not the cost of meals or transportation. c)Pay all expenses incurred by a family who cannot use their home because of a covered loss. d)Allow the family to maintain their normal standard of living.
Defamation It is against the law for any person to make, publish, or circulate any oral or written statement or literature that is false, maliciously critical of or substantially misrepresents the financial condition of any insurer, and which is intended to injure any person engaged in the insurance business.
During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of a)Defamation. b)Twisting. c)False advertising. d)Misrepresentation.
An intervening cause If there is an intervening cause, then something has changed the course of events, so negligent liability cannot exist.
For negligent liability to exist, which is NOT a requirement? a)Proximate cause b)A breach of a legal duty to act or not act c)Injury or damage to another d)An intervening cause
90 days In regards to medical malpractice insurance, an insurer must give the named insured a 90-day notice of a policy's cancellation or nonrenewal.
How much notice must an insurer give if it is cancelling or nonrenewing a medical malpractice policy? a)60 days b)90 days c)30 days d)45 days
30 If a licensee whose license has been temporarily suspended demands a hearing, the Commissioner must hold the hearing within 30 days after receipt of the demand, or within 30 days of the effective date of a temporary license suspension issued after such demand, unless postponed by mutual consent.
If a person whose license has been temporarily suspended demands a hearing, the Commissioner must hold the hearing within how many days after receipt of the demand? a)20 b)40 c)15 d)30
Phantom A phantom vehicle is one that causes a loss for the insured without direct physical contact
If an insurance policy has the additional coverage provision, how does it affect the policy premium? a)Premium will be recalculated when a specific loss covered by this provision occurs. b)Additional premium will be assessed. c)Premium will be calculated on a pro rata basis based on the amount of additional coverage. d)There is no additional premium.
Abandonment Abandonment is the relinquishing of insured property into the hands of another or into the possession of no one in particular.
If an insurance policy prohibits the insured from relinquishing ownership of insured property that has been damaged, it is prohibiting a)Assignment. b)Subrogation. c)Selling of property. d)Abandonment.
60 days After an insurance contract goes into effect, it can be cancelled within 60 days for any reason.
In Washington, after an insurance contract goes into effect, it can be cancelled for any reason within a)30 days. b)60 days. c)90 days. d)15 days.
Personal For any person or property covered under an insurance policy, insurable interest must exist. Insurable interest is broken into three categories which include financial (a monetary interest), blood (a relative) and business (a business partner).
In reference to insurable interest, which of the following is NOT an element of insurable risk? a)Personal b)Blood c)Financial d)Business
Judgment rates. Underwriters develop judgment rates based on their skill and experience.
Insurance rates developed by the underwriter based on his skill and experience instead of actuarial analysis are known as a)Experience rates. b)Manual rates. c)Judgment rates. d)Merit rates.
May be rejected the insured. Underinsured property damage must be offered, however, the named insured may reject the coverage.
Property damage coverage required under state auto laws means physical damage to the insured vehicle, unless the policy specifically provides coverage for the vehicle's contents or other forms of property damage. Property damage coverage a)Is offered only at the option of the insurer. b)Must be requested in writing. c)Is mandatory on all policies issued in Washington. d)May be rejected the insured.
Broad peril HO-4 (contents broad form), also referred to as tenant broad form, insures personal property for broad perils.
The HO-4 form designed for tenants covers losses on what basis? a)Broad peril b)Open peril c)Special peril d)Basic peril
Vending machines rented to others The renting of vending machines to others would be a contractual liability exposure
The insured's product under a commercial general liability policy does NOT include which of the following? a)Warranties made with respect to the fitness or quality of the product b)Any goods or products manufactured by the insured c)Vending machines rented to others d)Containers furnished in connection with the product
25% Under Business Personal Property Limit - Seasonal Increase, the limit for business personal property will be automatically increased by 25% for seasonal fluctuations, unless otherwise specified in the declarations. This increase is only applicable if the insured carries insurance equal to 100% of the average monthly values for the past 12 months.
Under Business Personal Property Limit - Seasonal Increase, if no percentage is specified in the declarations, seasonal fluctuations will automatically increase the limit for business personal property by a)10%. b)15%. c)25%. d)50%.
Any loss paid under Coverage B reduces the Coverage A limit of liability. The automatic limit for Coverage B is 10% of the limit of liability that applies to Coverage A. Use of this coverage does not reduce the Coverage A limit of liability
Under Coverage B - Other Structures, a homeowners policy provides coverage for other structures on the residence premises. Which of the following statements is NOT true of this coverage? a)A detached garage may be covered if rented to others as a private garage. b)Other structures may not be used to store business property of others, even though a business is not conducted from the structure. c)Any loss paid under Coverage B reduces the Coverage A limit of liability. d)Other structures covered under Coverage B must be set apart from the dwelling by clear space.
$2,000 per head Livestock not specifically insured is limited to actual cash value (ACV), 120% of the amount obtained by dividing the total insurance on the class and type of animal by the number of head of that kind of animal owned at the time of loss, or $2,000, whichever is lower. Thus, $2,000 is the most that will be paid.
Under Coverage E - Scheduled Farm Personal Property, livestock that is not specifically insured is limited to a coverage limit of a)$500 per head. b)$1,000 per head. c)$2,000 per head. d)$2,500 per head.
When an applicant remits premium money to the insurer. When an agent receives premium money when purporting to bind coverage, the receipt must state that it is a binder
Under what circumstance must an agent or other representative of an insurance company give a binder to an applicant? a)When there is a mortgage holder or lienholder shown on the application. b)An agent or other representative of an insurance company does not have the authority to issue a binder. c)In all instances when an application is signed. d)When an applicant remits premium money to the insurer.
Speculative With speculative risk a chance to win or a chance to lose exists. Speculative risks are not insurable.
Wagering on a sporting event is an example of what type of risk? a) Simple b) Pure c) Speculative d) Calculated
An appropriate license In order to receive a commission, service fee or other valuable consideration for transacting insurance, a person must be licensed.
What is a prerequisite for receiving a commission from an insurance transaction? a)An appointment with a company b)A policy summary delivery c)A signed contract d)An appropriate license
24 hours Expense payments begin after a 24-hour waiting period for reasons other than theft
What is the waiting period for transportation expenses coverage for a loss other than theft of a covered vehicle? a)12 hours b)24 hours c)48 hours d)There is no specified waiting period.
Equipment breakdown Equipment breakdown coverage is for high-pressure systems.
What policy would a business owner whose business fills scuba tanks most likely need to insure unfired pressure vessels and compressors? a)Commercial general liability b)Contractors equipment floater c)Equipment breakdown d)Inland marine scuba floater
Per occurrence Per occurrence is a sublimit in a liability policy that puts a ceiling on the payment for all claims that arise from a single accident.
What sublimit in a liability policy sets the maximum amount that will be paid for all claims arising from a single accident? a)Aggregate b)Per occurrence c)Per person d)Combined single
Common policy declarations and common policy conditions Any commercial lines coverage in the program may be written independently as a monoline policy, or it may be written with other coverages as part of a package. In either case, all policies make use of the same common policy declarations page and the same common conditions. The only difference is the number of coverage parts.
What two policy components are part of every commercial package policy? a)Consideration and agreement b)Property coverage and liability coverage c)Common policy declarations and common policy conditions d)Common policy exclusions and agreement
5 working days. A copy of any notice or offer to an insured must be provided to the agent or broker of record within 5 working days.
Whenever a notice of cancellation, nonrenewal, or offer to renew is furnished to an insured, a copy of the notice or offer must be provided to the insured's agent or broker of record within a)10 working days. b)5 working days. c)30 days. d)20 days.
Convenience stores Convenience stores are eligible for coverage.
Which of the following entities is eligible for a businessowners policy? a)Convenience stores b)Places of amusement c)Automobile sales and servicing operations d)Manufacturing operations
Contractual liability HO Coverage E is a personal liability form. The following are the exclusions that apply to it: damage to property owned by or in the care of the insured; liability for any assessment charged against the insured as a member of an association; contractual liability; bodily injury to any person eligible for workers comp; and bodily injury to the named insured, relative, or minor residing in the household.
Which of the following exclusions would specifically fall under Coverage E in Homeowners insurance? a)Land b)Contractual liability c)Bodily injury to a residence employee d)Falling objects
Injuries to a member of the general public that occurs on premises Medical payments coverage makes payment of necessary medical and first aid for injuries to third parties occurring on the insured premises, regardless of fault.
Which of the following injuries may be covered under Coverage C - Medical Payments of a commercial general liability policy? a)Injuries to a member of the general public that occurs on premises b)Injuries to an employee due to participation in an athletic event c)Injuries to an employee during performance of his or her job d)Injuries to an independent contractor on the premises
The company will reimburse the insured for all loss of earnings. Only a limited amount of lost earnings per day will be paid, and only on those days the insurer requires the insured to be somewhere other than at work
Which of the following is FALSE concerning liability coverage of a business auto policy? a)The company will reimburse the insured for all loss of earnings. b)The company will pay the premium on any appeal bond. c)The company will pay any interest accruing between time of judgment and payment. d)The company will defend any suit alleging bodily injury (BI) or property damage (PD) covered by the policy.
Mortgage insurance The Association applies to all direct insurance except life, title, surety, disability, credit, mortgage guarantee, worker's compensation and ocean marine.
Which of the following is NOT one of the separate accounts of the Washington Property and Casualty Insurance Guaranty Association? a)All other applicable insurance (unless excluded) b)Longshore and Harbor Workers Compensation Act insurance c)Automobile insurance d)Mortgage insurance
Endorsements may only add coverage to a current policy, not remove. Endorsements can be used to correct items, add coverage or delete coverage from an existing policy. This may be done when the policy is issued or during the policy term. When added, the written endorsement must be signed by an executive officer of the insurer and attached to the policy.
Which of the following statements does NOT describe endorsements? a)Endorsements are printed addenda to a policy. b)Endorsements must be signed by an executive officer. c)Endorsements may only add coverage to a current policy, not remove. d)Endorsements may be added during the policy term.
The insured's limit of liability is 25% of the sum of the direct loss payment plus the deductible amount. The debris removal coverage pays for the removal of debris of covered property. The insured automobile is not a covered item under the BOP. It would be covered under an auto policy. The debris must be reported within 180 days of the loss. The debris removal provision does not apply to costs for cleanup or removal of pollutants from land - this is provided under provisions of another additional coverage.
Which of the following statements is correct regarding the debris removal coverage under the businessowners policy (BOP)? a)The insured's limit of liability is 25% of the sum of the direct loss payment plus the deductible amount. b)It pays for cleanup or removal of pollutants from land or water. c)It pays for removal of the debris of the insured's damaged automobile. d)The debris of covered property must be reported in writing within 270 days of the loss.
The insured causes a head-on collision with the car of an uninsured motorist. Uninsured motorist coverage applies to the insured, relatives of the insured, and those occupying the covered vehicle. UM coverage applies when the uninsured vehicle is at-fault, not the insured vehicle.
Which of the following would NOT be covered by uninsured motorist coverage? a)The insured's car is hit by someone whose auto insurer is insolvent. b)The insured's family member is struck by a hit-and-run driver. c)The insured causes a head-on collision with the car of an uninsured motorist. d)The insured's neighbor borrowed the insured's car and was hit by an uninsured motorist.
Reimbursement for fines and penalties Directors and officers liability policies will pay only for damages that the corporation would, under the law, be required to reimburse the individual director or officer. The policy generally will not pay for fines, penalties, or punitive damages.
Which of the following would NOT be covered under the directors and officers liability coverage? a)Neglect and breach of duty b)Misstatements made by the directors and officers c)Reimbursement for fines and penalties d)Wrongful acts while directors and officers are acting in an official capacity
An insured slams a hand in a car door while getting in, breaking the hand. Auto medical payments coverage applies while in, on, entering, or leaving a car.
Which of these would be covered by the medical payments coverage in a personal auto policy? a)An insured trips over the curb while crossing the street on the way to her car and sprains a wrist. b)An insured slams a hand in a car door while getting in, breaking the hand. c)An insured falls down while water-skiing and is run over by a boat. d)A runaway shopping cart in a mall parking lot knocks an insured down, breaking his leg.
Express The agent's contract gives the agent express authority.
Which type of authority is found in the agent's contract? a)Apparent b)Implied c)Assumed d)Express
Agent An agent acts on behalf of the principal, who is the entity that the agent represents in contractual agreements with third parties.
Who acts on behalf of the principal? a)Insurer b)Insured c)The state d)Agent
Soliciting producer Any producer who solicits, negotiates, or procures an application for insurance in this state must make a good faith effort to determine whether the entity that is issuing the coverage is either authorized to transact insurance in this state, or conducting business through a surplus lines broker.
Who is responsible for verifying that an insurer is authorized to sell insurance policies in this state? a)Soliciting producer b)Guarantee Association c)NAIC d)Policy purchasers
May apply to more than one line of insurance that is included in the package. Interline endorsements are those that apply, or could apply, to more than one coverage part on a CPP. They are prepared to eliminate redundancy and to minimize the number of endorsements in the package.
With respect to the commercial package policy, an interline endorsement is one that a)Never applies to all of the lines of insurance that is included in the package. b)Applies to all of the lines of insurance that are included in the package. c)Applies to only one line of insurance that is included in the package. d)May apply to more than one line of insurance that is included in the package.
15 Every licensed person in this state must reply within 15 business days to an inquiry of the Commissioner regarding the business of insurance.
Within how many business days must an insurance producer reply to an inquiry of the Commissioner relative to the business of insurance? a)5 b)10 c)15 d)30
At least to the minimum required by that state This is a standard condition of a personal auto policy (PAP
You are at fault in an auto wreck out of state. How does your company adjust? a)Will not pay at all b)At least to the minimum required by that state c)The limit of your policy, no matter what the other state's minimum d)By the other state's highest form
