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If the workers employed by a factory are assigned a workers compensation classification code with a rate of $8.00 and the employer has payroll of $200,000 for that classification code, what is the unmodified premium for that classification?

$16,000 ($200,000 payroll / 100 = 2,000 total units of exposure) (2,000 units of exposure * $8.00 rate = $16,000 unmodified premium

Transportation expenses cover up to:

$20 per day with a max of $600

What is the minimum amount of liability coverage required in an automobile insurance policy issued in Alabama for damage to the property of others in an accident?

$25,000

Gertrude's television set was stolen from her home. She bought it five yeas ago, which is half the TV's expected 10-year lifespan. A similar TV costs $1,200 today. Using the actual cash value loss valuation method, how much will Gertrude recover for this loss?

$600 less deductible

Rosario owns and operates a coffee shop and bakery. A rack of baked goods collapses and seriously injures two customers, Penny and Lilly. Penny's medical expenses are $3,500 and Lilly's are $6,500. Rosario's BOP has a per person medical expenses limit of $5,000. What is the total amount paid under the BOP's medical expenses coverage for these losses?

$8,500

A leased auto may be listed in the declarations in a personal auto policy (PAP) if it is leased to the named insured under a written contract for at least

6 months

If Mary Beth suffers a temporary total disability due to a work-related accident, what percentage of her wages will she receive during the disability period

66 2/3%

Donaldson Insurance Company had earned premiums of $100 million last year and incurred losses of $75 million in that same time period. What is this insurer's loss ratio?

75% (75 million losses/ 100 million premium = .75 or 75%)

What does the Federal Aviation Administration issue to grant authority for an airline to operate an aircraft in flight?

A certificate of airworthiness

With respect to the pollution exclusion under the business auto policy (BAP), in which of the following cases would the BAP cover liability arising from the escape of pollutants?

A covered delivery truck discharges diesel fuel into a stream when its fuel tank is ruptured in an accident, resulting in an EPA clean-up of the stream

If the Commissioner intends to suspend or revoke an insurer's certificate of authority, how much advance notice must the Commissioner provide?

At least 10 days notice

By what means is mandatory automobile insurance available for risk that are unacceptable in the voluntary insurance market?

Automobile assigned risk plan

Beatrice works from her home, on a part-time basis, as a hairdresser. What definition in the homeowners policy describes Beatrice's activities as a hairdresser?

Business

Which of the following types of insurance company ONLY covers risks of the parent organization that owns it?

Captive insurance company

What is required before an insurance company may transact insurance business in Alabama?

Certificate of Authority

Evidence of insurance that a motor vehicle is covered by a liability insurance policy may include all of the following EXCEPT:

Certificate of authority

Rex wants to avoid the expense of liability insurance so he obtains a counterfeit insurance card. What offenses has he committed?

Class C felony

HO-6 Unit Owners form is designed to cover a(n):

Condominium Unit

Clearwater Rafting has been unable to secure liability insurance and approaches you for assistance. Before you are able to secure coverage in the surplus lines market, what must you do?

Conduct a diligent search of the admitted market

Dale as driving his car when he was involved in a head-on collision. Though he only suffered minor bruises, his car was damaged extensively. The repairs are estimated to cost $13,500. The actual cash value of his auto before the collision was $16,000. His insurer will most likely treat his claim as as:

Constructive total loss

Vandals paint graffiti on the garage door of a house. Which dwelling form(s) cover their loss?

DP 2 and 3; coverage is optional in the DP 1

Helene took an island cruise. She became friendly with the captain who, in an effort to impress her, ordered the ship through a narrow channel between some islands. He ignored the crews warnings and the ship ran aground on a coral reef. The ship sank and Helene drowned. Her husband may seek to recover damages under the:

Death on the High Seas Act (DOHSA)

Mel is a salesman for Acme Paper Supply Company and an avid golfer. One day he takes an extended lunch break to sneak in nine holes of golf and is injured in an auto accident while leaving the golf course. On what grounds, if any, might the workers compensation insurer deny Mel's claim?

Deviation from course of employment

What legislation prohibits discrimination against domestic abuse victims?

Domestic Abuse Protection Act

The fidelity insuring agreement of a standard Financial Institution Bond provides coverage for dishonest acts relating to what peril?

Embezzlement

What type of liability insurance would cover an employee's claim of sexual discrimination and sexual harassment by her supervisor?

Employment practices liability (EPL)

How frequently must the Commissioner of Insurance examine an insurer's books and records?

Every 5 years

Lucy tells you she is the only person authorized to cancel her insurance policy or make changes. Her spouse and other members of her household, who are also insured under the policy, do NOT have this authority. Lucy is the policy's:

First named insured

Boat owners who want more coverage than is provided by an unendorsed homeowners policy can increase coverage with a boat owners policy, which covers all the following EXCEPT:

Garages where boats are stored off-season

Which legislation prevents a financial institution from disclosing a consumer's nonpublic personal information to an unaffiliated third party unless it provides notice to the consumer and allows the consumer an opportunity to opt out?

Gramm-Leach-Bliley Act

Which of the homeowners form provides open perils coverage on the home, named perils coverage on personal property, and personal liability coverage?

HO-3 Special Form

Which homeowners policy form is designed to cover a tenant's personal property, but NOT the dwelling in which the tenant resides?

HO-4 Contents Broad Form

What homeowners form was designed to provide coverage for older homes because their replacement value exceed their market values by a significant amount?

HO-8 Modified Coverage form

What do Dram Shop laws accomplish?

Imposition of liability on those selling liquor

Policies issued by insurers writing fire insurance and other lines closely related to fire insurance through agents operating on the debit agency system are called:

Industrial fire insurance policies

When broken glass is among the damage resulting from the collision of a covered auto, the insured may choose to have the glass breakage covered as part of the collision loss. What is the purpose of this provision?

It allows the insured to avoid paying separate comprehensive and collision deductibles

Valerie's home is insured on a dwelling policy. It is destroyed when it falls into a sinkhole. How does Valerie's insurer respond when she submits a claim for damage to the building?

It denies her claim per the earth movement exclusion

Your client, Warren, reports that his basement is filled with water because water beneath the surface of the ground seeped through foundation. He asks you to submit his claim to the insurer that writes his dwelling policy. How will the insurer respond to Warren's claim?

It will deny the claim under the water damage exclusion

All of the following perils are excluded on a dwelling policy EXCEPT: A. Power failure B. Neglect C. War D. Lightning

Lightning

The Alabama Department of Revenue Acme Insurers mails a Notice of Suspension letter to Billy on March 1. On what date will the suspension of Billy's motor vehicle registration take effect?

March 30 (The notice of suspension letter states that the owners registration will be suspended 30 calendar days after the date on which the notice is mailed)

Mrs. Odgen submitted a claim under her personal auto policy for injuries she sustained in an accident. The insurer made payment, it said, despite the fault of the driver. Under what coverage did the insure make payment for Mrs. Ogden's injuries?

Medical Payments

Which of the following statements is true about an insurance company's membership in the Alabama insurance guaranty association?

Membership is mandatory

Though she lives in a high crime area, Hilda rarely locks the door to her apartment when she goes out, figuring that whatever she owns of value is insured and can be easily replaced if stolen. What type of hazard does this represent?

Morale Hazard

Tony's farm policy includes farm liability coverage. He decides to earn a little extra money on the weekends by renting out his horses for riding purposes. When a rider is injured and submits a claim under Tony's farm policy, how does the insurer respond?

No coverage applies for the use of livestock in exchange for a fee

Jeremy leaves his watch at a watch repair shop to have the battery replaced. When he picks it up, he learns it was accidentally damaged beyond repair by the shop owner, who suggests Jeremy file a claim with his own insurance company. Is Jeremy's insurer likely to pay this claim?

No, because the policy has a no benefit to bailee provision

Sean owns two cars but only insures one, hoping to get coverage for both cars while paying for only one policy. If he has an accident that damages the uninsured car, what exclusion in the personal auto policy would eliminate coverage for that vehicle?

Noncovered autos own by named insured or available for regular use exclusion

Ron bought a homeowners policy for the house he and his wife Sue own jointly. Sue noticed that only Ron's name is listed as an insured in the declarations. What should she do, if anything, to make sure she is also recognized as an insured?

Nothing. The named insured's spouse is also considered a named insured in a homeowners policy

Which form of the commercial general liability (CGL) policy covers the insured for injuries or damages that occur during the policy period even is that policy is no longer in force when the claim arises?

Occurrence Form

Which of the following statements correctly describes coverage for mold damage under the business owners policy (BOP)?

Only damage from mold resulting from water used to extinguish a fire is covered

Mrs. Updike returned from shopping one day to find that her car had rolled from the parking lot, down a ditch, and into the river. What coverage on her personal auto policy, if any, would cover this loss?

Other than collision

What term is used to describe the cause of loss, such as a fire or explosion?

Peril

Which of the following correctly explains the difference between the stated amount of loss valuation method and the agreed value method?

Policyowners may recover less than the listed amount under the stated amount method, and would recover the listed amount under the agreed value method

All of the following are purposes of exclusions in property and liability insurance policies EXCEPT:

Provide coverage for otherwise uninsurable risks

Atlas Insurance Company buys insurance to transfer some of the risks involved in its larger cases. What type of company would Atlas use for this purpose?

Reinsurance Company

In ocean marine insurance, what types of charges are paid to third parties who help save property exposed to loss?

Salvage

The Health Insurance Portability and Accountability Act (HIPAA) affects property and casualty insurers because medical information may be used in each of the following situations except:

Settle a claim for stolen property

What is not a duty of the Commissioner?

Soliciting insurance contracts

A customer slips and falls on a wet floor in a store, and incurs damages consisting of emergency room charges, doctor bills, X-rays, and lost earnings from her job when she couldn't work for two weeks. All of these are examples of:

Special Damages

An insurer issuing an industrial fire policy must incorporate as part of the caption any of the following words, as appropriate, EXCEPT:

Standard fire policy

What auto symbol is shown on the dec page of a business auto policy to indicate that only specifically described autos are insured for that coverage?

Symbol 7

The business auto policy uses a distinctive approach on the declarations page to indicate the coverages that apply to a specific insured. Specifically, how does the policy indicates this coverage for each vehicle?

Symbols are used to designate the vehicles covered and the coverages that apply

When an automobile insurance policy is canceled for reasons other than nonpayment of premium, the insurer must notify the named insured of his or her possible eligibility for insurance through

The automobile assigned risk plan

Your client wants to purchase a farm policy and owns $50,000 of non-farm personal belongings that he wants to insure on his farm policy. What is the correct response?

The belongings can be insured on the farm policy under Coverage C- Household Personal Property

All of the following are eligibility requirements for the Home Business Insurance Coverage endorsement that can be added to a homeowners policy EXCEPT:

The business must manufacture food or personal care products

Tina borrows a neighbor's car to run a personal errand. She collides with another car and injures the other driver. The injured driver files a liability claim against Tina and the neighbor. Whose policy will handle the claim?

The neighbor's policy will be primary; Tina's policy will be excess

Vanessa borrowed her friend's pickup and crashed it into a brick wall, totaling it. When she submits a claim under her personal auto policy for the destroyed pick up, her insurer says it won't make payment until a condition is met. What is that condition?

The pickup truck owners policy must pay first

Under what circumstance may a property or casualty insurer refuse to renew coverage for a subject of abuse after a claim has been filed?

The subject of abuse remains married to the abusive spouse

What do a direct writer and an exclusive agent have in common?

They both only represent one insurer

What statement must every surplus lines coverage insurance contract have stamped upon it?

This contract is registered and delivered as a surplus line coverage under the Alabama Surplus Line Insurance Law.

For how many days may a binder or other contract for temporary insurance be made?

Up to 90 days

Lloyd's Electronics never knows in advance what its inventory is going to be. Lloyd is hesitant to name a specific amount of coverage on his commercial property policy for fear that is will be too high or too low. What endorsement do you recommend to Lloyd?

Value Reporting Form

Esther has just bought an expensive painting as an addition to her art collection. Considering the high price she paid for it, she wants to be sure there will be no dispute with the insurer in the event it is damaged or stolen. What type of policy would you recommend Esther purchase?

Valued contract

Evelyn's furniture was lost in a fire at her business office. The fire was able to spread before fire personnel were able to respond because the fire alarm system was turned off. The insurance company denies her claim because Evelyn had assured the insurance company in writing that the alarm system would always be in operation and, therefore, she failed to honor her:

Warranty

An industrial fire insurance policy may only be issued on what type of premium payment basis?

Weekly or monthly

An insurance agent mistakenly tells policyholder Jerry that his boat is covered under a policy the agent recently sold him. Jerry's boat is damaged in a storm and he learns his boat is NOT covered when he files a claim. Will the insurer pay the claim?

Yes, because the agent legally represents the insurer

An insurer may disclose confidential abuse information to all of the following EXCEPT

a writer collecting materials for a book on preventing domestic abuse

Freddie has an equipment breakdown policy for his restaurant. There are no additional coverage options included in the policy. When a power surge damaged the restaurant's refrigeration system, the restaurant had to close while repairs were made. The policy will cover all the following losses EXCEPT:

additional cost to comply with new building codes

To calculate the estimated annual premium an employer will be charged for a workers compensation policy, the unmodified premium is:

adjusted by an experience modifier

If the insurer intends to nonrenew personal auto policy (PAP) coverage, it is required to notify the named insured:

at least 20 days before the policy expires

Ryan operates an appliance repair shop. He usually has a dozen appliances from customers in the shop. What type of commercial inland marine policy should his agent recommend for him to be covered in the event he damages any of these appliances?

bailee's customer floater

Which form of the commercial general liability (CGL) policy covers the insured for injuries or damages only if the policy is in force when the claim arises?

claims-made form

Most property and casualty insurance policies are:

contracts of indemnity

In a typical aviation insurance policy, all of the following perils are excluded from coverage EXCEPT:

damage to tires caused by vandalism

Patrick has a commercial property insurance policy that does not cover damage caused by an earthquake. He is interested in obtaining earthquake coverage. He read that it is possible to obtain a separate policy insuring against this specific peril and it was referred to as a(n)

difference-in-conditions policy

Which of the following persons is NOT an insured on a business auto policy (BAP)?

driver without the permission of the vehicle's owner

The homeowners policy only provides coverage for bodily injury or property damage that occurs or begins:

during the policy period

All of the following are standard provisions in all property or casualty insurance policies EXCEPT:

endorsement

A party to a contract may not enforce a right it has voluntarily waived by its past conduct, due to the legal principle known as

estoppel

the ordinance or law endorsement provides all the following coverages EXCEPT:

loss of revenue while repair work is underway

Kevin stated on his homeowners insurance application that the roof of his home had been recently replaced. In fact, the replacement occurred 18 years ago. Kevin made a false statement of a material fact, which is also known as

misrepresentation

The Permitted Incidental Occupancies endorsement provides coverage for what types of businesses on the homeowners policy?

offices and studios

To identify what perils they cover, property insurance policies use with the named perils approach or the:

open perils approach

which commercial property insurance policy endorsement is designed to cover high inventory values at certain times of the year?

peak season limit of insurance

Derek takes his car to an auto dealership that loans him a car while his own is being repaired. Derek checks his personal auto policy to see what coverages apply to temporary substitute autos. He learns that a temporary substitute is NOT considered a covered auto for purposes of

physical damage (collision and other-than-collision) coverage

Insurers and their producers are bound by common-law:

rules of agency

Toby's Aunt Bertha trips on a throw rug while visiting his home. She breaks an arm in several places and requires surgery. Toby knows Aunt Bertha's medical expenses will be high and wonders if his homeowners policy will cover her expenses. Where will he find this information?

the amount listed on his policy's declarations page for medical payments

Which of the following is a "hired auto" under the Hired and Non-owned liability endorsement that may be added to Gateway Motel's BOP?

the car rented by Gateway Motel

Under the terms of an insurance policy's liberalization clause, an insurer may revise a standard policy form at the time of the renewal for all the following reasons EXCEPT:

the insurer's need to make the policy more profitable

The general aggregate limit of coverage under the BOP liability coverage form is equal to

two times the liability and medical expenses limits

The products-completed operations aggregate limit of coverage under the businessowners policy (BOP) liability coverage form is equal to:

two times the liability and medical expenses limits