HARD TEST QUESTIONS
A producer feels that the commisoner was not justified in suspending his license and decides to request a hearing within how many days must a hearing be held
30 days
The following coverages are included in the Maryland Auto Insurance Fund, and are not considered "add ons" Except for
Emergency living expense coverage
Which of the following is not a duty of the commissioner
setting insurance rates
In contrasting stock insueres with mutual insurers, which statement is true?
stock insurers are owned by the shareholders and issue nonparticipating policies
Business auto coverages apply only to those autos that are identified as covered autos in the declarations by entry of the appropriate numerical symbol. Which symbol affords the broadest coverage?
1
The personal property off- premises extension of dwelling forms provides limits of coverage up to
10% of Coverage C anywhere in the world
The business owners policy extension coverage form for personal property off premises is limited to
10,000
An employer that fails to comply with Workers Compensation laws can be found guilty of a misdemeanor and subject to a maximum fine of
1000
How many days from the termination of a producers appointment must the insurer notify the commissioner?
15 days
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 injuried. The insureds medical expenses are 8000. Passenger 1 total was 4000. Passenger 2 6500. Passenger 3 was 1200. How much will the policy pay under the medical payments provisions
15200
What type of policy, which may be added by endorsement or purchased separately, may an insured purchase in order to provide coverage for other types of contracts?
A contractual liability policy
Which of the following risks would be eligible for coverage under a dwelling policy form?
A duplex that is occupied by two families, each of which have a bedroom rented to a boarder
Which of the following would be legible for coverage F in the event of injury at the insureds premises
A full time maid
When insurance is written on a dwelling form, which of the following types of property would be insured under coverage B (other structures)
A garage separated from the dwelling
The term "Functional replacement cost" refers to
A loss valuation method
HO polices permit all of the following incidental occupancies EXCEPT:
A retail sales operation run by the insured from his garage
After a covered loss on a homeowners policy, the insured must do all of the following except
Abandon the property involved to the insurer
Who acts on behalf of the principal?
Agent
A house insured with a homeowners policy has been blown off foundation from a tornado. It must be demolished and removed so a replacement house can be built. Which of the following is true about debris removal?
An additional 5% of the policy limit may be paid for debris removal
A general liability policy will respond to claims against an insured when bodily injury or property damage is caused by
An insureds negligence
For negligent liability to exist, which is not a requirement
An intervening cause
In DP-1, if the insured elects to apply coverage B to a detached garage, Coverage A will
Be reduced by 10%
How is a professional liability policy written
Claims- made
When an individual applies for an insurance policy, he intentionally forgets to mention details about his medical history. This is called
Concealment
An insureds home catches fire. As a result, the insureds family must stay in a motel until the home is repaired. The cost of the motel stay would be considered
Consequential loss
Which of the following exclusions would specifically fall under the coverage E in homeowners insurance
Contractual liability
Rental reimbursement will pay for which of the following in the event the insureds vehicle has been damage?
Cost of renting a vehicle
All of the following statements about mutual insurance companies are correct except
Dividends allow policyholders to share in mutual companies divisible surplus
Max limits available for residential properties are
Dwelling 455,00 and 228,000 contents
An insured intentionally drives his automobile into a tree. As a result, he suffers injuries. In all likelihood the insurer would
Exclude coverage for this loss
The federal act that provided more favorable benefits for interstate railroad workers by allowing the injured worker to sue the employer for negligence is the
Federal Employers Liability Act (FELA)
The requirement that producers must account for all insurance funds collected and refrain from commingling is referred to as
Fiduciary responsibility
To have insurable interest in the person or property covered by a property insurance policy, which of the following potential risks must the policyowner face?
Financial loss
Which of the following is covered under a dwelling policy?
Fire caused by an earthquake
Which homeowners policy form insures both buildings and personal property on an open peril basis
HO-5
A scheduled personal property endorsement will be used to insure
Higher limits of coverage for fine arts items
When reviewing a standard workers compensation and employers liability policy, the limits of coverage are described in Part One of the policy. The dollar limits of the benefits provided are stated
In the state workers compensation law itself
What part of the insurance contract describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured?
Insuring agreement
Which of the following is not found in the common policy declarations of a commercial package policy?
Insuring agreement
Which of the following is NOT true regarding the automatic increase in insurance endorsement in dwelling policies
It does not required additional premium
Which of the following describes an insurers responsibility for payment under a policy, as stated in the common policy provisions
Limits of liability
Fair rental value coverage in the dwelling policy is similar to which homeowners policy form?
Loss of use
What entity was created to provide a resource to obtain auto liability insurance for those unable to purchase insurance from private insurers
Maryland Auto Insurance Fund (MAIF)
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation
Virtually all employers with one or more employees (full or part time) are required to provide workers compensation coverage. Which of the following is an example of employees that would be covered by the law?
Prisoners (if working for municipality)
Which of the following would NOT be covered under the directors and officers liability coverage?
Reimbursement for fines and penalties
For an additional premium, the extended coverages written on a basic form dwelling policy would cover
Riot
An insured's child ran into a neighbors planter on his bike and broke the planter and ruined the plants. The cost to replace the planter was 400 and the cost to replace the plants was 100. Which section of the insureds homeowners policy would pay?
Section II with no deductible
Coverage B - Personal and Advertising Injury Liability responds to claims arising from
Suits alleging infringement of a copyright
All of the following statements concerning surplus lines brokers are true EXCEPT
Surplus lines brokers are not permitted to be license as an insurance agent
Which of the following is a federal act that covers crews of ships the same as railroad workers?
The Jones Act
A temporary license may be issued for which of the following reasons?
The agent is seriously injured and their disability keeps them from working
Which of the following statements is correct regarding business coverage under the business owners policy
The business income losses are payable for 12 consecutive months following the occurrence
If a producer wants to use an assumed name instead of his real name while transacting insurance, what authority must the producer notify?
The commissioner
The claims made trigger is based on which of the following?
The date the claim is first made
The owner of a rental dwelling, insured under a DP-2 turns off the heat in the insured dwelling during the winter months because the dwelling is unoccupied. The buildings water pipes freeze and break, causing damage. How will the policy react to this loss?
This loss is excluded from coverage. Freezing and breaking pipes is not covered unless the insured maintains heat in building
Which of the following is true regarding a reinstatement of an expired license in the state of Maryland
To be reinstated, a license cannot be expired for longer than 1 year
What was the purpose of the Motor Carrier Act of 1980?
To establish financial responsibly requirements for interstate carriers
What is the purpose of a separate notice on the collision coverage of private passenger autos?
To inform the insured that waivers or additional coverage is not required on a rented auto
What is the purpose of a premium finance company?
To pay a large premium to an insurer for a in exchange for monthly installments by the client, along with interest
What is the purpose of the ordinance or law coverage endorsement?
To remove the exclusion of losses resulting from ordinances or laws
In a situation where automobile A's at fault drivers bodily injury and property damage coverage is at limits lower than Automobile B's coverage. Automobile A is deemed to be the
Underinsured vehicle
If a person is involved in an accident with a driver who does not have insurance, which type of policy will most likely be referenced?
Uninsured Motorist/ Underinsured motorist coverage
Supplementary payments under the personal auto policy include all of the following EXCEPT:
Unlimited cost of bail bonds
What amount of coverage is provided on HO polices for watercraft?
Up to 1,500
Which of the following would be a proper choice of policy for a company that transports goods that are irreplaceable in nature
Valued Policy
Which of the following is not part of section II of the boatowners policy?
Watercraft damage
When does the insurer's duty to defend a suit or claim end in a commercial general liability policy?
When loss payments equal the applicable limit of insurance
Your friends dog that you're watching bit someone. Does your homeowners liability coverage apply?
Yes, applies for animals in your care
While engaged in a pick up soccer game in the neighborhood park, the insured collides with another player, breaking his nose. Would the insureds homeowners medical payments cover the injury?
Yes, medical payments coverage also applies off the insured premises
The deductible under earthquake coverage is stateed as
a percentage of loss
Loss valuation is best described as the process of
determining the premium charged and the amount of insurance required on a specific property
An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request
3 days
In Maryland, insurers or producers must provide notice of renewal premium at least how many days prior to the policy renewal date
45
Ray is insured with an auto liability policy. His insurer decides, not to renew the policy. How many days prior to the expiration of the policy must Ray be notified
45
How much advance notice is required of an insurer to the insured when cancelling a property policy
45 days
What are two sources for workers compensation insurance
Monopolistic state fund and competitive market
All of the following are additional coverages under a homeowners policy except?
Outbuildings
Which of the following would be covered under a building and personal property coverage form
Outdoor sign on property
What does HO personal property coverage NOT cover?
Personal property of roomers not related to the insured
The garage coverage form is written to cover the insurance needs of an insured in the business of selling, repairing, servicing or storing automobiles. Which of the following coverages are not included in a garage policy?
Physical damage on a customers auto
If an insurance has the additional coverage provision, how does it affect the policy premium
There is no additional premium
Under the property and casualty conditions of a homeowners policy, what may happen if it is discovered that the policyowner committed concealment or fraud
The policy may be voided
Which of the following statements regarding surety bonds are true
The purpose of the surety bond is guarantee that specific duties and obligations will be fulfilled
Under which legal defense may a claimants recovery be defeated if the defendant can show that the claimant contributed in the slightest way?
Contributory negliegence
An audit revealed the administrator for a pension plan has made investments that were not consistent with the risk tolerance set forth in the plan for its members. The earnings for the past year are substantially below the average for comparable funds. The governing board wants to take action against the administrator. What type of commerical liability would the board need to provide for this risk
Fiduciary liability policy paid by the pension fund
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 is possible. Which term describes the agents actions
Misrepresentation
Which of the following benefits under the Marylands Workers Compensation law is subject to limitations
Payments for lost wages
All of the following statements about mutual insurance companies except?
Policy dividends issued by mutual companies are guaranteed and not taxable
Business owners liability coverage automatically includes all of the following liability coverages except:
Pollution
If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true
The insurer will be reimbursed for the excess cost by the NFIP
What happens if an insured does not sign and return the personal injury protection form?
The policy is issued with full PIP coverage
An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting from one accident which may be used in any combination of amount, not to exceed the single limit. What type of limit does this insured have?
Combined single
The commissioner must examine the transactions and records of each domestic insurer at least every
5 years
How soon does the period of restoration for business income coverage begin after the direct loss?
72 hours
If an individual willfully violates provisions of the fair credit reporting act, what is the maximum civil penalty?
2500
Which of the following symbols in a business auto policy indicates that coverage for newly acquired vehicles applies if the insurer already covers all autos owned by the insured?
Symbol 2
When symbol 7 is provided, which of the following statements is true with regards to newly acquitted autos
They are covered if they are used to replace previously owned autos with that coverage
Insurance rates are regulated to the extent of all of the following EXCEPT
They are in relation to the cost of living