Insurance Adjustor Exam Practice Questions

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Under the farm forms, theft of certain types of property has a theft coverage limitation. The theft limitation on firearms and other related equipment is: $1,500. $500. $3,000. $5,000.

A: $3,000.

Under the terms of the HO-3 form, a residence employee includes all of the following, EXCEPT: A person who routinely delivers groceries to the insured dwelling A nanny who cares for the insured's children A person who trims the insured's lawn every two weeks A live-in cook who also works part-time outside the insured's home

A person who routinely delivers groceries to the insured dwelling. All are residence employees except the delivery person who is employed elsewhere.

Customer's property under a Commercial Property policy: Is covered for transportation exposures Is never covered unless an endorsement is used Is covered while on the insured's premises only Is covered only under a bailee type policy

Which of the following amounts would be paid on a covered auto suffering a total loss? The retail value is $1,250 and the average trade in value is $1,000. $1,000 plus applicable taxes $1,500 plus applicable taxes $1,250 plus applicable taxes $2,995 plus applicable taxes

A: $1,250 plus applicable taxes. (In case of a total loss to a covered vehicle the insurer is required to pay the retail value of the vehicle plus any applicable sales taxes.)

What is the limit for damage to a non-owned trailer under the personal auto policy? $1,500 $500 $1,000 $2,000

A: $1,500. The limit is $1,500 for damage to a non-owned trailer that is designed to be pulled by a private passenger auto, pickup truck or van.

Under the BOP, the building limit of insurance is $100,000 and the deductible is $1,000. The building loss amount is $110,000. Which of the following is the correct loss payment? $89,000 $110,000 $99,000 $100,000

A: $100,000. (The deductible is subtracted from the loss and not the limit of coverage. The loss exceeded the limit of coverage. Had the loss been less than the limit of the policy the deductible would still be deducted from the loss amount.)

An insured purchases a $1 million umbrella policy with a $1,000 self-insured retention (SIR) and agrees to maintain the following underlying limits: auto liability - $100/300/50 and personal liability limits of $300,000. The insured is involved in an at-fault auto accident and the claimant is awarded $200,000 for his bodily injuries. What will the umbrella pay if the insured only carries $50/100/50 auto limits? $100,000 $200,000 $50,000 Nothing because the insured violated the maintenance of the policy's underlying provision.

A: $100,000. When the insured does not maintain underlying limits as stated in the umbrella policy, the umbrella carrier pays as though those limits were in effect. The insured would have to pay $50,000, the underlying carrier would pay $50,000 and the umbrella carrier would pay the remainder.

The Homeowners policy provides a special limit for Damage to Property of Others in the Section II (liability) Additional Coverages of: $500. $250. $1,000. $2,000.

A: $1000

A vehicle rolled over exiting the interstate. The insured carries collision coverage with a $1,000 deductible and other than collision coverage with a $500 deductible. The damage to the vehicle is $2,000. What amount is the insurer responsible to pay? $1000 $2000 $1500 Nothing

A: $1000 A vehicle that rolls over and sustains damage is considered to be a collision claim versus an other than collision claim. The damage to the vehicle is $2,000 and the deductible is $1,000. Therefore, the insurer is liable for $1,000.

The maximum payable for damage or loss to signs attached to the building covered under a BOP is: $2500 The building limit since it's attached to the building $1000 $5000

A: $1000.

Under a dwelling broad or special form, what is the maximum that would be paid for "loss of use" if Coverage A was $60,000? $12,000 $2,500 $6,000 $5,000

A: $12,000. (The forms provides 20% of Coverage A for fair rental value and additional living expense under the DP-2 and DP-3. Therefore, the correct response is $12,000 ($60,000 X 20% = $12,000).)

A personal auto policy provides liability coverage on a single limit basis for $100,000. A covered accident caused by Mr. Jones involves a $75,000 liability judgment to Mr. Allen for his injuries and $25,000 liability judgment for his car. In addition, $20,000 in legal bills are incurred defending the insured. The company will pay: $120,000. $25,000. $75,000. $100,000.

A: $120,000. Legal expenses are in addition to the limit of liability. The single limit covers both bodily injury and property damage liability. Therefore, the policy can pay the $120,000.

A: $1250 plus applicable taxes. (In case of a total loss to a covered vehicle the insurer is required to pay the retail value of the vehicle plus any applicable sales taxes.)

Mr. York had his pickup truck stolen while it was parked in a "no parking" zone outside his office. The value of the truck was $18,500. In addition, tools valued at $200, extra tires and hubcaps for the truck valued at $550 and a tarp worth $50 were in the truck. Mr. York has a collision deductible of $500 and a comprehensive deductible of $250. The insurance company will pay what amount? $18,000 $18,250 $19,050 $18,800

A: $18,800 (The loss of the truck plus the extra tires and hubcaps would be considered in this claim. These total $19,050 less the deductible of $250 equals $18,800.)

Oliver Dogwood was in an auto accident which destroyed his car. While investigating the accident, Adjuster Doright found that Mr. Dogwood paid $1,000 for the vehicle. After checking with others he found the same vehicle with an asking price of $1,700, a retail price of $2,150 and a dealer price of $1,750. What amount will Mr. Dogwood receive? $1,950 $2,150 $1,000 $1,700

A: $2,150. Mr. Dogwood will receive $2,150 plus any sales tax. The insured is required to pay retail price plus sales tax.

Joan is covered for $10,000 under a personal articles floater for her jewelry. She acquires another piece of jewelry valued at $2,500. Under the automatic coverage provision within the policy, how much coverage would apply to the newly acquired jewelry for 30 days? Nothing $1,000 $1,500 $2,500

A: $2,500 The policy provides for 25% of the limit of insurance to apply to newly acquired jewelry of the same class for a period of 30 days.

In the state of Louisiana, an insurance producer or adjuster doing business under any name other than the producer's or adjuster's legal name is required to notify the Commissioner of Insurance prior to using the assumed name. Prior to the use of or changes to any trade name or names, an insurance producer must provide written notification of such use or change to the Commissioner. Failure to make the required notification may result in a fine not exceeding: $250.00 $500.00 $750.00 $1,000.00

A: $250 (The use by any insurance producer of a nonapproved trade name may subject such person to a fine not exceeding $250.00. Additionally, if the licensee continues to utilize a nonapproved trade name for 10 or more days after being notified by the Commissioner to cease using the nonapproved trade name, the licensee will be subject to an additional fine not to exceed $5,000.)

Mr. Owens owns 50% of a building that is worth $600,000 and is insured for $500,000. What is the maximum that Mr. Ownes can collect in case of a total loss to the building? $300,000 $500,000 $250,000 $240,000

A: $250,000. (Mr. Owens has an insurable interest of 50% and can only collect up to $250,000.)

If the insured has purchased auto insurance with uninsured motorist coverage and does not carry physical damage to their auto they can purchase property insurance for property damage caused by an uninsured motorist. The coverage will be subject to a $______ deductible. $1,000 $500 $250 $100

A: $250. (The coverage must be for the actual cash value of the vehicle or $10,000 whichever is less. The deductible is $250.00.)

A homeowner policy has been issued with $75,000 coverage on a dwelling. What is the automatic amount of insurance on personal property? $37,500 $7,500 $15,000 $45,000

A: $37,500. (Personal property is automatically covered for 50% of the amount of the dwelling limit. If replacement cost coverage is purchased on the personal property, the limit of insurance will be increased. The insured can always increase the contents limit for an additional premium.)

A new home costing $500,000 to build would have to be covered for what minimum limit according to the loss settlement provision of the policy in order for the insured to receive full replacement cost coverage in the event of a $50,000 fire loss? $400,000 $50,000 $250,000 $500,000

A: $400,000 (The loss settlement provision requires a home to be covered with a limit of at least 80% of the home's full replacement value.)

The Now Company carries a special BOP policy with a liability limit of $500,000. The company is involved in an accident causing $200,000 bodily injury damage and $200,000 property damage. The total amount collectible under the policy is: $500,000 $400,000 $200,000 $100,000

A: $400,000. BOP policies provide a single limit of liability. Both bodily injury and property damage coverage is provided. Since the amounts for bodily injury and property damage combined do not exceed the 500,000 occurrence limit, the total amount of the claim would be covered.

The additional coverage for Debris Removal will now pay to clean up the debris of others on the insured premises even if the insured has no damage to their own property. The maximum payable to remove this debris of others is: $25,000 $5,000 $10,000 $50,000

A: $5,000 (The Debris Removal additional coverage now extends to $5,000 to cleanup debris of others on the insured premises even if the insured property has not been damaged.)

What limit of liability would be needed for a risk that transports radio active materials as required by the Motor Carrier Act under the MCS-90 endorsement? $500,000 $750,000 $1,000,000 $5,000,000

A: $5,000,000 The MCS-90 endorsement requires the insured to carry a minimum of $5,000,000 in liability coverage. The endorsement provides for environmental restoration coverage as a result of pollution damages. The higher limit is required if transporting extra hazardous material.

A building with an actual cash value of $240,000 is insured for $200,000. The policy has an 80% coinsurance requirement. If there are no deductibles, how much would be paid for a $60,000 loss? $60,000 $48,000 $57,600 $62,500

A: $60,000. (The insured needs to be covered for at least 80% x $240,000 or $192,000 to avoid a penalty in case of a partial loss. In this case, the insured carries more than is required, and therefore, all the loss is covered.)

When an HO-3 is issued with a $75,000 dwelling limit on a one-family dwelling, what is the automatic amount of insurance on Other Structures? $10,000 $37,000 $75,000 $7,500

A: $7,500 Other Structures (Coverage B) are automatically covered for 10% of the limit that applies to the dwelling. Insureds can request higher limits if the other structures on their premises are worth more than 10% of the dwelling limit.

When an HO-3 is issued with a $75,000 dwelling limit on a one-family dwelling, what is the automatic amount of insurance on Other Structures? $15,000 $75,000 $7,500 $37,500

A commercial building is insured for $150,000 and is worth $250,000. A $100,000 loss occurs. The policy contains an 80% coinsurance clause. How much will the insurer pay? $75,000 $100,000 $150,000 $250,000

A: $75,000 (To comply with the 80% coinsurance clause the insured should have carried $200,000 of coverage on the building. The insured is covered for 75% of what should have been carried and therefore, the insurer would pay $75,000.)

How much advance notice of a hearing must the Louisiana Insurance Commissioner give to affected or interested parties? 20 days 30 days 10 days 45 days

A: 10 Days

How much advance notice of a hearing must the Louisiana Insurance Commissioner give to affected or interested parties? 20 days 30 days 10 days 45 days

A: 10 days The Commissioner will, not less than 10 days in advance, give notice to each person to be affected by the hearing of the time and place and specifying the matters to be considered at the hearing.

When an insured shown on a Commercial Building and Personal Property Policy fails to pay the premium, the insurer is required to give advance written notice of cancellation to the insured and the mortgagee of at least: 10 days prior to cancellation. 20 days prior to cancellation. 30 days prior to cancellation. 60 days prior to cancellation.

A: 10 days prior to cancellation. (There are two cancellation provisions. One requires a 10-day notice for non-payment of premium and the other requires a 30-day notice for all other reasons. This may vary by state.)

An insurance professional has willfully embezzled or misappropriated money, premiums or other property of an insurer. Under the Federal Insurance Fraud and False Statements Act, the violator is subject to imprisonment for up to: 5 years. 10 years. 1 year. 2 years

A: 10 years. (Violators are subject to a fine and/or imprisonment for up to 10 years. The term of imprisonment may be up to 15 years if the crime jeopardized the safety and soundness of an insurer and was a significant cause of the insurer being placed in conservation, rehabilitation, or liquidation by an appropriate court.)

A: 10 years. Violators are subject to a fine and/or imprisonment for up to 10 years. The term of imprisonment may be up to 15 years if the crime jeopardized the safety and soundness of an insurer and was a significant cause of the insurer being placed in conservation, rehabilitation, or liquidation by an appropriate court.

What is the percentage that the insured can apply to Coverage A of the DP-2 and DP-3 dwelling forms for ordinance or law coverage? 10%. 5%. 20%. 15%.

A: 10% (Up to 10% of the Coverage A limit may be used to cover increased costs of repair/rebuilding after a covered loss occurs due to the enforcement of any ordinance or law regulating construction, demolition, remodeling, etc.)

The maximum seating capacity and total floor space for a fine dining restaurant covered under a BOP is? 75 150 75 seats with 7,500 total square feet 150 seats with 7,500 total square feet

A: 150 seats with 7,500 total square feet (A fine dining restaurant can have up to 150 seats but still must have only 7,500 of total floor space.)

The HO-3 policy covers loss to personal property caused by: Any peril not excluded All perils Fire or theft 17 listed perils

A: 17 listed perils With the HO-3 policy, personal property is covered against loss caused by any of the 17 named perils listed in the HO-2 policy. They are (1) fire or lightning; (2) windstorm or hail; (3) explosion; (4) riot or civil commotion; (5) aircraft; (6) vehicles; (7) smoke; (8) vandalism and malicious mischief; (9) theft; (10) breakage of glass; (11) volcanic eruption; (12) freezing of plumbing; (13) accidental discharge or overflow of water from an appliance or plumbing system; (14) weight of ice, snow or sleet; (15) damage from falling objects; (16) sudden and accidental tearing apart of systems or appliances and (17) damage from sudden surges from artificially generated electric current.

A catastrophe or emergency claims adjuster license in Louisiana will be effective for a period not to exceed _____ days. 90 120 60 180

A: 180 days. (A catastrophe or emergency claims adjuster license is issued for a period not to exceed 180 days. This may be extended by the Insurance Commissioner for a period of 90 days.)

In the state of Louisiana, you may cancel and reschedule the state examination appointment without forfeiting your state exam fee if your cancellation notice is received ___ days before the scheduled examination date. 2 3 4 5

A: 2 days (You may cancel and reschedule an examination appointment without forfeiting your fee if your cancellation notice is received 2 days before the scheduled examination date. For example, for a Monday appointment, the cancellation notice would need to be received on the previous Saturday.)

In the state of Louisiana, how many days do you have to wait before you can retake a failed state insurance exam? There is no waiting period, the students can take it again that day if an exam is offered. 1 day 2 days 10 days

A: 2 days. (It is not possible to make a new examination appointment on the same day you have taken an examination; this is due to processing and reporting scores. A candidate who tests unsuccessfully on a Wednesday can call the next day, Thursday, and retest as soon as Friday, depending upon space availability.)

A: 2 days. (You may cancel and reschedule an examination appointment without forfeiting your fee if your cancellation notice is received 2 days before the scheduled examination date. For example, for a Monday appointment, the cancellation notice would need to be received on the previous Saturday.)

Every claims adjuster in the state of Louisiana must file an application for license renewal every ____ years. 2 3 4 5

A: 2 years (Every licensed claims adjuster must file an application for renewal of his license every two years, by notifying the Commissioner of Insurance using methods prescribed by the Commissioner, of the licensee's intention to continue his license.)

The Louisiana Citizens Property Insurance Corporation will give preference to adjusters adjusting claims for the Corporation who have been domiciled in Louisiana for a period of at least: six months. 90 days. two years. five years.

A: 2 years. (With respect to contracting with adjusters to adjust claims, the Corporation will give preference to adjusters and businesses engaged in the business of adjusting claims, who have been domiciled in Louisiana for a period of at least two years, provided the adjusting of said claims is subject to a fee schedule or other fixed fee arrangement.)

An individual who holds an adjuster's license in Louisiana must complete ____ hours of continuing education in order to renew the license every two years. 12 30 16 24

A: 24 hours (The adjuster must complete 24 hours of continuing education every two years.)

An individual who holds an adjuster's license in Louisiana must complete ____ hours of continuing education in order to renew the license every two years. 12 30 16 24

A: 24 hours. (The adjuster must complete 24 hours of continuing education every two years.)

An individual who holds an adjuster's license in Louisiana must complete ____ hours of continuing education in order to renew the license every two years. 12 hours 30 hours 16 hours 24 hours

A: 24 hours. (The adjuster must complete 24 hours of continuing education every two years.)

In keeping with the terms and conditions of the Louisiana Standard Fire Insurance policy, an insured may file a suit to recover for a loss only if all policy requirements have been complied with, and only if the suit is filed within ___ months of the date of loss. 12 15 24 36

A: 24 months (An insured may file a suit to recover for a loss only if all policy requirements have been complied with, and only if the suit is filed within 24 months of the date of loss. The Standard Fire Policy limits lawsuits to within one year of the date of loss.)

A: 24 months. (An insured may file a suit to recover for a loss only if all policy requirements have been complied with, and only if the suit is filed within 24 months of the date of loss. The Standard Fire Policy limits lawsuits to within one year of the date of loss.)

The business personal property limits will be increased by what amount in order to cover seasonal variations in stock in the BOP? 25% The current rate of inflation 8% 15% unless a different percentage amount is shown on the declarations page.

A: 25% The business personal property will increase by 25% to provide coverage for seasonal variations in stock but only if the insured had insured the property for at least 100% of its monthly average over the last 12 months.

The insured owns a four family dwelling insured on a HO-5 Form. The dwelling is insured for $500,000. What is the percentage of Coverage A for contents? 50% 20% 25% 30%

A: 25%. (A four family dwelling is covered for 25% of Coverage A for contents. A three family dwelling is covered for 30% and a one or two family dwelling is covered for 50% of the Coverage A limit.)

In the state of Louisiana, if a loss is made payable under the Louisiana Standard Fire Insurance policy to a designated mortgagee other than the insured, that interest in the policy may be cancelled by giving the mortgagee ___ days written notice of cancellation, or ___ days written notice if cancellation is for nonpayment of premium 10 / 10 20 / 15 30 / 10 30 / 15

A: 30 / 10 If loss is made payable to a designated mortgagee other than the insured, that interest in the policy may be cancelled by giving the mortgagee 30 days written notice of cancellation, or 10 days written notice if cancellation is for nonpayment of premium. The Standard Fire policy requires 10 days notice to the mortgagee in all cases.

If the insured purchases a new aircraft to replace a scheduled aircraft, there is automatic coverage provided the insurance company is notified within __ days of the purchase and premium payment is made. 30 45 60 10

A: 30 days. (If the insured purchases a new aircraft to replace a scheduled aircraft, there is automatic coverage provided the insurance company is notified within 30 days of the purchase and premium payment is made. The coverage is the same as on the scheduled aircraft. If the insured purchases an additional aircraft, there is automatic coverage provided the insurance company currently insures all of the insured's owned aircraft. The insured must notify the insurance company within 30 days of the acquisition. The coverage is the same as another aircraft with similar passenger capacity. The physical damage limit is the actual amount the insured paid for the aircraft.)

In Louisiana, all insurers issuing any type of contract, other than life and health insurance, must pay the amount of any claim due within_____days after receiving proofs of loss from the insured or other claimant where payment is obviously owed. 15 30 45 60

A: 30 days. (The claim must be honored within 30-days after receipt of a properly executed proof of loss for a covered claim.)

In the case of a catastrophic loss, the insurer must initiate loss adjustment within ____ days of receipt of the claim by the claimant. 14-days 30-days 45-days Immediately upon receipt of the claim

A: 30 days. (The loss adjustment must commence within 30 days of receipt of a catastrophic claim.)

Under the dwelling forms, personal property moved to a new principal residence will be automatically covered at the new location (subject to policy expiration) for a period of: 30 days. 10 days. 20 days. 60 days.

A: 30 days. (This is usually standard in the insurance industry. Coverage is pro-rated between the locations in case of a loss.)

Under the dwelling insurance program, an endorsement may be attached to the policy to cover dwellings during the course of construction. The insurance company must be advised when construction is completed, and within ____ after the insured takes occupancy of the dwelling. 30 days 45 days 60 days 90 days

A: 30 days. (When the intended occupant of a dwelling under construction is the named insured, the dwelling under construction endorsement is attached to the dwelling policy to provide coverage. The insurance company must be advised when construction is completed and within 30 days after the insured takes occupancy of the dwelling.)

How many days does the liberalization clause provide for under the BOP prior to or during the policy? 55 days 30 days 45 days 35 days

A: 45 days (The policy reads, "If we adopt any revision that would broaden the coverage under this policy without additional premium within forty-five days prior to or during the policy period, the broadened coverage will immediately apply to this policy.")

Under the Commercial Property Liberalization Clause, if the insurer makes any coverage revision which broadens the coverage without an additional premium charge, it will automatically apply to existing policies if the revision is adopted during the policy term or within: 45 days prior to the effective date. 30 days prior to the effective date. 60 days prior to the effective date. 75 days prior to the effective date.

A: 45 days prior to the effective date. (This is standard in Commercial Property Insurance.)

Policies issued under the National Flood Insurance Program provide removal coverage for property which is moved to another location to protect it from a flood. This coverage applies for up to: 45 days. 10 days. 30 days. 60 days.

A: 45 days. (Removal coverage is designed to avoid loss if the property can be moved elsewhere for protection against flood damage. This coverage is provided for up to 45 days.)

Under the HO-3 Policy if an insured suffers a fire loss to his residence, what extra amount of insurance is provided for debris removal if needed? $1,000 Actual incurred cost of removal up to the limit of the dwelling 10% of the total coverage in effect 5% of the Coverage A limit

A: 5% of the Coverage A limit. (Coverage for debris removal is found under the Additional Coverages portion of the policy. In addition to the total limit indicated under the dwelling coverage an additional 5% of that amount is available for debris removal.)

The Commercial Building and Personal Property form suspends coverage for losses caused by vandalism or theft if, at the time of loss, the building has been vacant for more than: 60 consecutive days. 90 consecutive days. 30 consecutive days. 20 consecutive days.

A: 60 consecutive days. Vacancy means the building is unoccupied and does not contain contents. After 60 days of vacancy certain perils and coverages are affected.

If an insurer intends to non-renew a commercial policy in Louisiana a _____ day notice of non-renewal is required. 60 45 20 30

A: 60 days (A 60-day notice is required. If the insurer desires to increase the rate a 30 day notice must be sent to the insured. The notice of a rate change is not necessary when the insurer has filed the rate changed\ with the Insurance Rating Commission and they have been approved for use.)

Which of the following is not considered an instrumentality of transportation or communication under the nationwide inland marine definition? A toll bridge A truck-tractor Electric transmission lines A television transmitter

A: A truck-tractor (A truck-tractor is not considered an instrumentality of transportation or communication under the nationwide inland marine definition.)

If Commercial Property coverage is written on the Building and Personal Property coverage form and a loss occurs, the insured must furnish a signed statement of loss within: 60 days after the request of the insurer. 30 days after the request of the insurer. 45 days after the request of the insurer. 75 days after the request of the insurer.

A: 60 days after the request of the insurer. (The form requires that the insured provide a signed proof of loss within 60 days after the request of the insurer. This is standard in the insurance industry.)

Don has a fine art collection scheduled on a personal articles floater. If he purchases additional fine arts, how soon must he schedule them on the policy before the newly acquired property provision expires? 90 days. 30 days. At renewal. At the time of purchase.

A: 90 days (The policy provides 90 days of coverage for newly acquired fine arts if fine arts are scheduled on the policy. For jewelry, furs, cameras and musical instruments, the extension is only 30 days.)

The insured has sustained a loss of income loss from a covered peril under his Businessowners Policy. What deductible applies to loss of income coverage? A 72 hour waiting period before the policy pays The same deductible that applies to the building or contents coverage A $500 deductible No deductible

A: A 72 hour waiting period before the policy pays. (Business income coverage is triggered by physical loss or damage, from a covered cause of loss, to property at the described premises. This loss must result in a suspension (now defined within the coverage) of the business's operations—that is, the business activities—during the period of restoration. The period of restoration begins seventy-two hours after the time of the direct physical loss or damage. Thus, there is a time deductible.)

A settlement in which the claimant receives payment in installments over a period of time instead of a lump sum is: A Structured Settlement. Scheduled Payment Release. Full Release Settlement. Open-Ended Release.

A: A Structured Settlement. (A structured settlement is usually reserved for large settlements. Structured settlements may call for part of the full amount to be paid as a lump sum.)

What type of passenger would not be covered under an aircraft liability policy with passenger coverage excluded? A Travel Agent Pilot A Flight Attendant Company Aircraft Mechanic

A: A Travel Agent A travel agent would be considered a passenger that would be excluded if passenger liability coverage is excluded.

Payment may be made if which of the following procedures has been executed? A partial signed release A Walk-Away release A prima-facia signed release None of the answer choices is correct.

A: A Walk-Away release (The walk-away release indicates the final disposition of the matter and relinquishes the claimant's right to sue so payment may be issued. In some states the signing of the payment check indicates a walk-away release.)

Which of the following phrases best defines "hazard?" A condition that increases the chances of a loss The uncertainty of a loss The cause of a loss An unexpected loss

A: A condition that increases the chances of a loss (Poor wiring, oily rags, bad housekeeping or maintenance are examples of "hazards" that increase the opportunity for a loss to occur.)

What type of a ship would be used to transport break-bulk or bulk cargo shipments? A conventional cargo ship. Container ship. Tanker. Barge.

A: A conventional cargo ship

An auto is described in the schedule of the hired autos endorsement to a business auto policy. For purposes of BAP coverage, this auto will be considered: A nonowned, but covered, auto. A hired, but covered, auto. A covered auto owned by the named insured. An auto that is not a covered auto.

A: A covered auto owned by the named insured. When this endorsement is used for specified hired autos, they are treated as covered autos as if owned by the named insured.

Which of the following would be covered under a Commercial General Liability policy? Property damaged by a customer bumping into a merchandise display. A customer slipping and falling on a wet floor in a department store. Injuries to an employee while at work. An insured falling and injuring his/her arm in their own store.

A: A customer slipping and falling on a wet floor in a department store. ("Falling down" claims are very common occurrences for a business. These are covered under the Commercial General Liability policy based on the negligence of the insured for failure to maintain the premises.)

Under the umbrella policy, what is a "self-insured retention"? All legal expenses Supplementary coverage A deductible that applies when the umbrella covers a claim not covered under the primary policy A percentage of the policy limits

A: A deductible that applies when the umbrella covers a claim not covered under the primary policy. (This is the deductible that the insured pays under the umbrella policy when the primary coverage does not apply on a claim but the umbrella policy will cover the claim.)

A fire in an insured's restaurant burns the kitchen walls and causes smoke damage to the entire interior. Water used to extinguish the fire causes extensive damage to floors and furnishings. The water damage is BEST described as: A direct loss. A time element loss. A consequential loss. An indirect loss.

A: A direct loss. The water damage is considered a direct loss to the property as well as other damage the fire fighters may cause to the premises.

Which of the following would be considered an insured under the liability section of a farm policy? A retail feed store employee A representative from a farm chemical company A farm stand employee A custom farming employee hired to plow the insured's field

A: A farm stand employee. (A farm employee is covered while acting within the scope of his duties. Farming includes the incidental operation of roadside stands where farm products principally produced by the "insured" are sold.)

Under which of the following are the invoices presented under a claim paid with no attempt to obtain a separate release? A partial release A walk-away release An open-end release None of the answer choices is correct.

A: A walk-away release Under a "walk-away" release, the bills presented are paid with no attempt to obtain a separate release, although the wording on the draft or check may also serve as a form of release. After a certain amount of time has passed with no further contact with the claimant, the file is considered closed.

Following a hearing, what is the monetary penalty that may be imposed by the Louisiana Insurance Commissioner for using deceptive or unfair methods of competition? A statewide public reprimand by the Commissioner, a fine of $5,000 and loss of license. Loss of license and a fine of $500. Loss of license and a fine of $100. A fine of up to $1,000 for each act up to a total of $100,000 if the person did not know the act was a violation.

A: A fine of up to $1,000 for each act up to a total of $100,000 if the person did not know the act was a violation. (If a person is found guilty of using unfair methods of competition or deception, the Commissioner may order the person to cease and desist from the method of competition, act or practice and/or order a fine of up to $1,000 for each act up to a total of $100,000 if the person did not know the act was a violation. If the person know or reasonably should have known the act was a violation, the fine may be up to $25,000 for each act, up to a total of $250,000 in any six month period and/or suspension or revocation of the person's license.)

Which of the following perils would provide coverage under the accounts receivable coverage floater? A fire that caused a building to collapse. War. Bookkeeping errors. Voluntary parting of property to others.

A: A fire that caused a building to collapse. The fire that caused the building to collapse is covered. All of the other answers are exclusions in the policy.

A person asserting a right to payment under an insurance policy is referred to as: A first party claimant A third party claimant An insurer An agent

A: A first party claimant. (*The insured is the first party claimant.)

Which of the following entities that own vehicles MUST provide evidence of auto financial responsibility in Louisiana? The United States Louisiana or any political subdivision or municipality of the state A bona fide organized public volunteer fire department that owns and operates specially equipped motor vehicles for firefighting purposes A furniture store that delivers customer's purchases

A: A furniture store that delivers customer's purchases

Which of the following would be covered under the homeowners policy for "off premises" liability? An unlicensed recreational dirt bike used in a state park An antique car used in a parade A golf cart used to play golf off the insured's premises A 50 hp outboard motor boat owned by the insured on a lake

A: A golf cart used to play golf off the insured's premises. (A golf cart is covered off the insured's premises for liability purposes.)

Which of the following is not an "insured" under a homeowner policy? A neighbor moves into the named insured's house with all of his belongings. A neighbor who has custody of the named insured's dog while the named insured is on vacation. The named insured's sister moves into the named insured's house. The new spouse of the named insured who moves all of her furniture into the husband's house.

A: A neighbor moves into the named insured's house with all of his belongings (Insureds under a homeowner policy include any person responsible for the named insured's domestic animals as well as the named insured's relatives and spouses who reside with the named insured.)

Which of the following would be excluded under the Personal Auto liability coverage? A person transports people from the airport to nearby hotels for a fee. A person uses his car to transport his workmates once per week in a car pool. A person borrows a friend's vehicle to travel to the airport. A person gets a speeding ticket in addition to being cited for an accident.

A: A person transports people from the airport to nearby hotels for a fee. (The PAP excludes claims when an auto is being used as a taxi or other livery conveyance.)

A slippery floor is an example of: A physical hazard. Strict liability. Occurrence. A peril.

A: A physical hazard. A physical hazard is any hazard arising from the material, structural, or operational features of the risk itself, apart from the persons owning or managing it. A slippery floor is an example of a physical hazard.

An attorney will provide notice of deposition to an individual when the attorney wishes to secure from that individual: A recorded statement under oath Any form of statement A written statement A feeling for how he or she will appear as a witness

A: A recorded statement under oath. (Notice of deposition is provided to an individual when the attorney wishes to secure from that individual a recorded statement under oath.)

Which of the following vehicles is considered a covered auto under a personal auto policy? A replacement car purchased by the insured three days ago but not yet reported to the insurance company. A vehicle used by the insured to transport passengers to and from an airport for a fee. The insured's all-terrain vehicle with three wheels. A company car provided to the insured by an employer.

A: A replacement car purchased by the insured three days ago but not yet reported to the insurance company. (If the insured trades vehicles, the newly acquired vehicle is automatically covered. Liability coverage is continuous until the end of the policy period. To continue physical damage coverage certain restrictions and limitations apply.)

Some policies will pay full current cost for new property when there is a loss that is insured on: A replacement cost basis. A valued policy basis. A market value basis. An actual cash value (ACV) basis.

A: A replacement cost basis. Replacement cost coverage pays to replace the property at today's cost without regard to depreciation. The insured would have to carry coverage based on replacement cost instead of actual cash value (ACV).

Which of the following would be considered an owned covered auto under the personal auto policy? A vehicle used to transport people back and forth to the airport for a fee. The insureds all-terrain vehicle not being used in an emergency. A replacement vehicle purchased a week ago but that has not been reported to the insurance company. A company vehicle being used by the insured with the owner's permission.

A: A replacement vehicle purchased a week ago but that has not been reported to the insurance company. The personal auto policy provides an extension of coverage that provides coverage for a replacement vehicle subject to certain time limitations for coverage to apply.

Flood insurance can be purchased from: Any licensed property agent. Any insurance agent. The federal authorities only. Your local community.

A: Any licensed property agent. (In order to sell flood insurance, an agent must hold a property insurance license.)

Which of the following statements best describes a representation in an insurance application? A representation is a statement made by the applicant that he believes to be true when made, but which might prove to be false. A representation is a promise by the applicant that certain conditions will continue to exist throughout the policy term. A representation explains the promise made by the insurance company. Another name for a representation is a warranty.

A: A representation is a statement made by the applicant that he believes to be true when made, but which might prove to be false. (A representation is considered to be the truth, to the best of the applicant's knowledge and belief. It is an honest statement of a supposed fact. A misrepresentation is a knowingly false statement. A warranty is a statement guaranteed as factual.)

Which of the following is not eligible for coverage under a homeowner policy form? A tenant living in an apartment building A condominium unit owner A residence on a farm A mobile home used as a permanent residence

A: A residence on a farm. (Farm property is not eligible for the homeowner program. Separate farm programs are available.)

Under the Permitted Incidental Occupancy endorsement added to a Homeowner policy, which of the following would NOT be considered an insured location: The office in the insured's home used for his tax preparation A secondary location used for the insured's business A room used for art instruction A photography studio in the insured's residence

A: A secondary location used for the insured's business. (Another location used for the insured's business would not qualify.)

Which of the following is not "mobile equipment" under the Business Auto policy? A self-propelled vehicle with permanently attached street-cleaning equipment. A Caterpillar tractor. A forklift. An electric-powered cart used solely for transportation within a large warehouse.

A: A self-propelled vehicle with permanently attached street-cleaning equipment. (In the definitions of "mobile equipment" which is usually covered by the CGL policy, a self-propelled vehicle with permanently attached street-cleaning equipment is considered to be an auto and not "mobile equipment".)

Coverage A of the Homeowners policy would provide coverage for all of the following, EXCEPT: A storage shed connected to the dwelling by a utility line. The residence being insured. Structures attached to the dwelling. Material and supplies intended for repair or alteration of the dwelling.

A: A storage shed connected to the dwelling by a utility line. Structures connected by a fence or utility line would be covered under Coverage B - Other Structures. Coverage A provides the dwelling coverage under the Homeowners policy.

Under a farm policy, which of the following would be covered under Coverage A? A structure attached to the dwelling A structure detached from the dwelling Dwelling Contents Livestock

A: A structure attached to the dwelling Coverage A covers the dwelling and any attached structures such as a garage.

Under the specified causes of loss coverage in the garagekeeper's coverage, which of the following losses is excluded as a covered loss? A suppliers auto suffers flood damage when torrential rains cause a stream to overflow as he is making a delivery. A covered auto is damaged when an explosion occurs. Lightning strikes a covered auto and causes a fire. Several teenagers use baseball bats to break out windshields of covered autos when dared to do so as part of initiation into a club.

A: A suppliers auto suffers flood damage when torrential rains cause a stream to overflow as he is making a delivery. The supplier would have to carry comprehensive coverage on his owned vehicle.

Insurers can recoup payments under the Federal Terrorism Risk Act by: A surcharge in the rates for insureds. Filing for a rate increase with the Insurance Department. Attaching an endorsement charging an additional premium. Collect the premium on the policy anniversary date.

A: A surcharge in the rates for insureds. (Commercial property and casualty insurers will collect (by policyholder surcharge) the mandatory and discretionary recoupments and remit them to the federal government. Surcharges cannot exceed three percent of any policy's annual premium. The Treasury Secretary, however, has the discretion to make certain adjustments to the surcharge and its timing.)

An insurance binder is best described as: A temporary, short-term evidence of coverage. A large bound volume of rules, rates, and forms. A rate manual supplied by one of the rating organizations. A temporary agreement to pay a claim pending final settlement.

A: A temporary, short-term evidence of coverage. Prior to policy issuance, an insured may need evidence of insurance in writing. This is the purpose of an insurance binder. Once the policy has been issued, the binder is void.

Janet Feldman sells an apartment building to another party. A month later she is found negligent for the following incidents. Which claim(s) can be covered on Janet's general liability policy? Heavy rains damage a tenant's furniture. The roof leaked because of a poor re-roofing job, which Janet supervised prior to the property sale. A tenant loses his footing and is injured when a balcony railing snaps. Janet installed the railing just prior to the sale of the building. Defective wiring catches the building on fire. None of the responses are covered claims.

A: A tenant loses his footing and is injured when a balcony railing snaps. Janet installed the railing just prior to the sale of the building. (The policy excludes property damage coverage for claims that arise from premises sold if the property damage arises out of any part of those premises. This claim is for bodily injury and would be covered by the policy.)

A Personal Auto Policy provides coverage for all of the following drivers of an insured car, EXCEPT: A thief who steals the car. A neighbor who uses the car with the insured's permission. The insured's spouse. The insured's child who attends school in another state.

A: A thief who steals the car. (Obviously, the thief did not have permission to drive the car. He/she would never be considered an insured.)

Pollution coverage is normally excluded under commercial auto coverage. Under which of the following situations would coverage apply without endorsement? The insured is hauling pollutants and has an accident and a pollution loss occurs. The insured has a truck that has been gradually leaking pollutants. The insured is hauling pollutants for others and has an accident causing the pollutants to spill onto the land. A truck has an accident and gasoline escapes from the gas tank.

A: A truck has an accident and gasoline escapes from the gas tank. The policy responds to cover pollution losses when the vehicle has been involved in an accident and the fluids that pertain to the operation of the vehicle cause the pollution damage.

In an application for marine insurance, a yacht owner states that the yacht will only be sailed on inland waters. If the insured subsequently sails the yacht on the seas, coverage may be denied because the insured has breached: A warranty. The Inchmaree clause. The policy clause. A representation.

A: A warranty. (In marine insurance, and more often in ocean marine, the statement made by the insured may be a guarantee that all the information is correct. Warranties are much more restrictive than representations. Incidentally, Inchmaree was the name of a ship that suffered an uncovered machinery loss.)

Under the farm property form with replacement cost coverage, after the first $1,000 how is the claim paid? ACV until repairs are completed and then the full replacement cost is paid ACV until the proof of loss is sent to the insurer ACV until the loss is paid by the insurer ACV unless the 80% of the total loss

A: ACV until repairs are completed and then the full replacement cost is paid Like most property forms that provide replacement cost coverage, the insurer will not pay replacement cost until the repairs have actually been made.

Under an unendorsed commercial building and personal property form, loss valuation is based on: Actual cash value. Market value. Original cost. Replacement cost

A: Actual cash value Losses are settled at ACV (Actual Cash Value). If the insured desires replacement cost settlement, a separate endorsement must be purchased.

Under an unendorsed commercial building and personal property form, loss valuation is based on: Actual cash value. Market value. Original cost. Replacement cost.

A: Actual cash value. (Losses are settled at ACV (Actual Cash Value). If the insured desires replacement cost settlement, a separate endorsement must be purchased.)

What is the Business Income Limit of Insurance under Businessowners Coverage Form? $100,000 Actual loss sustained for up to six months Actual loss sustained for up to 12 months The actual loss of income from the date of the damage to the end of the policy period

A: Actual loss sustained for up to 12 months There is no specific limit of insurance. Coverage applies for the actual loss sustained for up to 12 months.

A: Actual loss sustained for up to 12 months. (There is no specific limit of insurance. Coverage applies for the actual loss sustained for up to 12 months.)

Under the business auto policy, the endorsement used to protect the owner of a leased vehicle is: Named Owner endorsement Employers Non Owned Auto Joint Ownership Endorsement Additional Insured - Lessor

A: Additional Insured - Lessor The actual owner of the leased vehicle needs to be listed as an additional insured on the lessee's policy by using the Additional Insured—Lessor endorsement.

In Louisiana, a licensee with a limited claims adjuster license can: Adjust only crop insurance claims Adjust any type of claim but only under the strict supervision of a fully licensed adjuster Adjust only the types of claims specified within the authority of the license Adjust a maximum of two types of claims

A: Adjust only the types of claims specified within the authority of the license The licensee can only adjust those types of claims for which they are authorized to adjust based on the authority granted by the Insurance Commissioner.

Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim is negotiated? Advance Payment Rehabilitation Partial Release Partial Release With Conditions

A: Advance Payment. Most adjusters are given the authority to make advance payments when liability is clear. This relieves the financial burden on the claimant when funds are needed immediately. The remainder of the claim is negotiated and settled at a later date.

Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim can be negotiated? No Release or Walk-Away Assist in separating the damaged property from the undamaged property Advanced Payment Open-Ended Release

A: Advanced Payment Most adjusters are given the authority to make advance payments when liability is clear. This relieves the financial burden on the claimant when funds are needed immediately. The remainder of the claim is settled at a later date.

Which of the following would cover copyright infringement by an insured under a CGL policy? Personal Injury Products Liability Advertising Injury Liability Directors and Officers Liability

A: Advertising Injury Liability. Advertising Injury Liability provides coverage for the infringement of copyrighted ideas, slogans, trademarks, advertising, and others.

Which of the following most accurately describes an indirect loss? After a loss, an insured homeowner sustains a hotel bill while the house is being repaired. While putting out the fire the fireman's water hoses damaged some of the door frames. An electrical short in a basement appliance causes a fire which destroys the kitchen. High winds cause a dead tree to fall across a power line which cuts off power to the refrigerator, leading to spoilage of the food inside.

A: After a loss, an insured homeowner sustains a hotel bill while the house is being repaired. Indirect losses are the result of direct, physical losses as with the hotel bill after a loss. The other answer choices describe consequential situations, but still direct losses.

Two workers on a construction site drop a board on a pedestrian. What policy would apply? Owner's and contractor's protective Installation floater Builders risk Commercial General Liability

A: Commercial General Liability The commercial general policy covers operations liability on the part of the employees of a contractor.

The Extended Business Income provision covers the first 60 days after the loss for reimbursement of earnings for the insured business: Immediately after the loss has occurred. After a waiting period of 72 hours. After the repairs have been made to the insured property. Only applies if the insured is forced to relocate.

A: After the repairs have been made to the insured property. (Extended Business Income pays for any additional loss of business after the property is actually repaired and operations are resumed, with reasonable speed, until the operation generates the business income amount that would have existed had no loss occurred. This coverage is usually limited to 60 days. An endorsement can be used to extend the period of time and an additional premium is charged.)

Sue Stokers owns an expensive collection of jewelry. She is worried about the fluctuating values of gold, silver and diamonds. She has the collection appraised. Her agent suggests a Personal Articles Floater to insure these items. If she wants to avoid a decrease in her coverage due to a decrease in market value, what is the best clause she can have included in her policy? Functional replacement cost Actual cash value Agreed amount clause Diminished value

A: Agreed amount clause The agreed amount clause will protect her against a decrease in value. It will not insure for an increase in value.

Loss to insured property caused by self-propelled missiles is covered under which of the following perils? Windstorm Riot Aircraft Vandalism

A: Aircraft (Self-propelled missiles would be considered aircraft.)

Which of the following items would be included in the usual definition of "the insured's work" under a commercial umbrella policy? A chain saw used to cut lumber for the construction of an office building. The lumber itself. A hoist used during construction to raise materials to an upper level. All are included.

A: All are included. ("Your work" is defined as materials, parts or equipment furnished in connection with such work or operations.)

Who must participate in the residual property insurance market programs? All insurers writing insurance in Louisiana All insurers writing auto insurance in Louisiana All Domestic insurers and Surplus lines insurers writing insurance in Louisiana All insurers that write property insurance in Louisiana

A: All insurers writing property insurance in Louisiana (All insurers that write property insurance in Louisiana are required to participate in these plans.)

The E-commerce endorsement provides which of the following? Security breaches of customer information. Defense costs for a liability suit brought against the insured for personal customer data that has been compromised. Recovery of the information lost or corrupted in a breach of security. All of the answer choices are correct.

A: All of the answer choices are correct. (The E-commerce endorsement form is designed to protect the insured from data security breaches. Depending on the coverage selected, the form can provide defense costs and damages in a liability claim against the insured and also the cost of recovery and restoration of the information that was breached. Some forms will also cover the loss of business income due to the breach.)

If a contractor does not properly protect a job site, another person could be injured. This is an example of: Negligence A tort A civil wrong All of the responses are correct

A: All of the responses are correct

Which of the following can be categorized as liability doctrines? Strict Vicarious Res Ipsa Loquitur All of the responses are correct

A: All of the responses are correct All of these responses are correct. Res Ipsa Loquitur means "the thing speaks for itself."

An adjuster has received a claim and went on vacation for two weeks without starting an investigation or making contact with the claimant. The claimant reports this inaction to the Insurance Commissioner. What is the possible action the Commissioner may take for violation of the immediate contact rule? Place the adjuster on probation Revoke or suspend the license Apply a penalty not to exceed $500 per violation up to $10,000 aggregate All of the responses are correct

A: All of the responses are correct The Commissioner of Insurance may place on probation, suspend, revoke, or refuse to issue, renew, or reinstate a claims adjuster's license or may levy a fine not to exceed $500 for each violation up to $10,000 aggregate for all violations in a calendar year, unless a fine is established by separate statute in this title authorizing a greater penalty, or any combination of actions, for failure to complete assignment of adjustment of a claim in a thorough and timely manner, including submission of the adjustment of a claim to the party which made that assignment.

Proof of financial responsibility, when required with respect to a motor vehicle or with respect to a person who is not the owner of a motor vehicle, may be given by filing: A certificate of insurance or a certificate of self-insurance, as provided by law. A bond as provided by law. A certificate of deposit of money or securities in the amount of $30,000. All of the responses are correct.

A: All of the responses are correct.

The Louisiana Standard Fire Policy follows the provisions of the Standard Fire Policy used in other states except as follows: If the insurer cancels the policy it must provide for a 10-day notice for non-payment of premium and at least 30-days in all other cases. Loss is payable 30-days after proof of loss is received by the insurer. An insured may file a suit to recover for a loss only if all policy requirements have been complied with, and only if the suit is fired within 24-months of the date of the loss. All of the responses are correct.

A: All of the responses are correct.

An insured has a BOP and desires to add the endorsement that provides Utility Servises-Direct Damage coverage. What types of property must be listed for coverage to apply? Overhead transmission lines Water Supply Services Wastewater Removal Property All of the responses are correct

A: All of the responses are correct. (All of the responses are correct. The form must indicate that overhead transmission lines are to be included. In addition to the items listed in this question, Communication Supply Services and Power Supply Services can be included. Note: This is a possible test question.)

Which of the following is NOT a claim settlement option for liability claims? Excessive amounts claimed Lost wages claimed Loss of Use Disfigurement

A: Excessive amounts claimed (Excessive amounts claimed are always contested by the insurer. Liability losses are categorized as "special damages"or "general damages." Special damages include medical expenses and loss of wages or the costs of other known expenses. General damages would include pain and suffering, punitive damages, loss of consortium, disfigurement and disability claims.)

Which of the following coverages are available in the ISO Equipment Breakdown protection coverage form? Expediting Expenses Business Income and Extra Expense or Extra Expense Only Spoilage Damage All of the responses are correct

A: All of the responses are correct. (All of the responses are correct. There are ten coverages available under the form. They include: property damage, expediting expenses, business income and extra expense or extra expense only, spoilage damage, utility interruption, newly acquired premises, ordinance or law coverage, errors and omissions coverage, brands and labels and contingent business income and extra expenses or extra expense only.)

In ocean marine, what is covered by protection and indemnity coverage? All of the responses are correct. Loss of life, injury and illness. Crew member burial expense. Damage to docks, buoys and other structures not owned, leased, or hired by the insured.

A: All of the responses are correct. (The protection and indemnity coverage applies to all of the responses.)

Which of the following are common deductibles found in aviation policies? All of the responses are correct Not-in-motion deductible - applies whenever the aircraft is not moving In-motion deductible - applies when the aircraft is intentionally moving either on the ground or in flight In-flight deductible - applies when the aircraft is intentionally in flight

A: All of the responses are corrects

Which of the following is considered a noneconomic loss under the Louisiana uninsured motorist law? All of the responses listed are correct. Pain and suffering Inconvenience Mental anguish

A: All of the responses listed are correct. (All of the responses listed are examples of noneconomic losses.)

The dwelling form on flood insurance will cover: Single family residence Two family residences Up to three family residences All of the responses listed are correct.

A: All of the responses listed are correct. (The dwelling flood form will cover residential structures up to four families or manufactured housing.)

An act of terrorism under the Terrorism Risk Insurance Act (TRIA) is defined as: All of the responses listed are correct. Any act certified by the Secretary of Treasury, in concurrence with the Secretary of State and the Attorney General. To be a violent act or an act that is dangerous to human life. To be a violent act or an act that is dangerous to property or infrastructure.

A: All of the responses listed are correct. All of the responses are correct and are considered to be terrorism as defined by the Act. Note: The Act was again extended in 2015 and is due to expire on December 31,2020. Please check the outline from the testing vendor in your state to determine the version of the Act on which it is testing. Under the 2015 amendment, an act of terrorism must now be certified by the Secretary of Treasury in concurrence with the Secretary of Homeland Security (formerly in concurrence with the Secretary of State) and the Attorney General.

Which of the following would be considered a "supplementary payment" coverage under a business auto policy? All post-judgment interest in a suit defended by the insurer Payment for an insured employee's truck being used by the employee on a business-related trip Costs for a private investigator hired by an employee to prove he was not involved in a hit and run accident of which he has been accused Up to $2,000 for the cost of bail bonds for an employee involved in an accident while he was on a trip to Mexico that he won for exceeding sales goals set by the company

A: All post-judgment interest in a suit defended by the insurer. (Supplementary payments do not include physical damages, nor personal expenses of employees. The bail bonds would be covered except that Mexico is outside the coverage area.)

Medical Payments coverage under your Personal Auto policy would cover you if you became injured in which of the following situations? As you were walking along the sidewalk in Nova Scotia and hit by a car If you were a paying passenger on a bus If you were a passenger in another person's automobile All the responses are correct

A: All the responses are correct. (For the named insured and his/her family members, the Personal Auto Medical Payments coverage includes coverage for injuries sustained in any auto related accident or when the insured or a family member is a pedestrian and is struck by a car anywhere in the coverage territory.)

In a legal sense, the term "person" includes: Individuals Companies Other business entities All the responses listed are correct.

A: All the responses listed are correct. (All the responses are correct. All of these are considered a "person.")

The insured has a commercial umbrella liability policy with $1 million limit of insurance. Claims were filed against the insured's umbrella policy three times during one policy period for three different occurrences. The claims are: for $75,000 on February 5; for $800,000 on May 4; and for $500,000 on July 10. Which of these claims will be paid? The February 5 claim only The February 5 and May 4 claims only All three claims None of the claims

A: All three claims. (Assuming these claims came from three different occurrences, all three would be paid. Keep in mind that the umbrella policy has two limits. One is the occurrence limit and the other is the aggregate limit that limits the total claim payment amounts during the policy year. The aggregate limit does not apply under most umbrella policies to automobile claims.)

A Commercial General Liability policy issued to Martin Wright as the sole owner of a business may cover which of the following additional persons? Jasper Jones, an employee of Martin's business. Arthur Wright, Martin's grown son, also an employee of Martin's business. Marcia Wright, Martin's wife, who works in the business. All three of the listed people would be covered.

A: All three of the listed people would be covered. (The policy provides coverage for individual proprietorships and includes the spouse as an insured. Employees are also insureds under the policy while acting within the scope of their duties.)

Which of the following autos are eligible for coverage under a business auto policy? A sedan A truck-tractor A trailer All would be eligible

A: All would be eligible

A CGL policy provides coverage for which of the following exposures? Contractual Liability in "insured contracts" Professional Liability Employee Injury Liability Pollution Liability

A: Contractual Liability in "insured contracts" (The CGL policy provides for a limited amount of contractual coverage. If the insured assumes liability of another party in an "insured contract," there is contractual liability coverage. It does not cover professional liability, pollution liability (except under specific situations) nor employee injury liability which is a workers compensation claim.)

A sudden an unexpected event that is normally identifiable as to time and place is best described as: An accident. Liability. Negligence. An error or omission.

A: An Accident. (In insurance policies an "accident" is an event that is sudden and unforeseen, neither expected nor intended from the standpoint of the insured. The event should be identifiable as to time and place. Many policies use the broader term "occurrence" as the trigger of coverage. That term is typically defined as "an accident, INCLUDING continuous or repeated exposure to substantially the same general harmful conditions." In layman's terms, an "occurrence" could be a sudden OR more long-term event which results in damage, whereas an "accident" would be restricted to sudden events.)

An insured sells heavy equipment to contractors. He needs coverage for the inventory on the premises and while it is off the premises on a trial basis. What type of policy would fit the insured's needs? An Equipment Dealers Inland Marine Form A Contractors Equipment Policy A Commercial Property Form A Businessowners Policy

A: An Equipment Dealers Inland Marine Form The broadest form for this business is the equipment dealers inland marine form.

An "uninsured motor vehicle" under a personal auto policy does not include: An abandoned car used as a residence. A "hit and run" driver. A vehicle carrying liability insurance in an amount less than required by a state's financial responsibility law. A car whose bodily injury liability coverage has expired.

A: An abandoned car used as a residence.

An insurer has failed (without proper cause) to pay a claim within the required time limit after properly completed proofs of loss have been received. What penalty might apply? An additional 20% of the amount due the claimant An additional 40% of the amount due the claimant An additional 50% of the amount due the claimant An additional 60% of the amount due the claimant

A: An additional 50% of the amount due the claimant.

All of the following statements are true concerning the acceptable actions of an adjuster licensed in Louisiana, EXCEPT: An adjuster may not permit an unlicensed employee or representative of the adjuster to conduct business for which a license is required by law. An adjuster may not have a direct or indirect financial interest in any aspect of the claim, other than the salary, fee, or other consideration established with the insurer. An adjuster may not acquire any interest in salvage of property subject to the contract with the insurer. An adjuster may solicit on behalf of any attorney, contractor or subcontractor any claim they are concerned or employed with.

A: An adjuster may solicit on behalf of any attorney, contractor or subcontractor any claim they are concerned or employed with. (An adjuster may not solicit employment for, recommend or otherwise solicit engagement, directly or indirectly, for or on behalf of any attorney at law, contractor or subcontractor, in connection with any loss or damage with respect to which such adjuster is concerned or employed.)

In the event of a loss under a personal auto policy, an insured is required to submit to the insurance company all of the following information, EXCEPT: An appraisal of the damaged property. A list of any known witnesses. A notice of claim. Proof of loss statement if requested.

A: An appraisal of the damaged property. (Obtaining an appraisal of damaged property is not a required duty of the insured. Verification of the damage is the duty of the auto appraiser.)

Which of the following is not covered under the HO forms? A self propelled missile or spacecraft An earthquake A bolt of lightning Wind driven rain

A: An earthquake Earthquake coverage must be separately purchased and is not covered under the HO forms.

Al has an umbrella liability policy which does not pay damages until such time as Al is legally obligated to pay them. This type of policy is known as: A reimbursement policy. A pay-on-behalf-of policy. An indemnification policy. An obligation policy.

A: An indemnification policy. Most insurance contracts are indemnification policies.

Injuries in which of the following would NOT be covered for medical payments under the general liability policy? A parking lot immediately adjoining the named insured's place of business but not owned or rented by the named insured An office the named insured rents to others in his office building, if the injured person is not an occupant of that office An office of the named insured in Acapulco, Mexico A public park during the named insured's company picnic

A: An office of the named insured in Acapulco, Mexico. (Mexico is outside the covered territory.)

Attempting to settle a claim for less than the amount a reasonable person would have believed he or she was entitled to according to written or printed advertising material which accompanied or was part of an application is considered to be: Twisting Rebating False advertising An unfair claim practice

A: An unfair claim practice

Ruth has been in an auto accident caused by a third party. Her vehicle is totaled and she has injuries and loss of wages. The adjuster states that he does not want to pay for anything until she agrees to the damage to repair her vehicle and her special damages. This is considered: A cost savings method. A dishonest act. An unfair claims settlement practices act. An acceptable business practice.

A: An unfair claims settlement practices act. (This is considered an unfair claims settlement practices act. The adjuster should pay for her vehicle damage and leave the claim open for the other expenses. This would be considered an open-ended release.)

An insurance company that generally fails to affirm or deny coverage of claims within a reasonable period of time after receiving proof of loss may be found guilty of: An unfair claims settlement practices. A breach of fiduciary responsibility. Defamation. Misrepresentation.

A: An unfair claims settlement practices. (Most states have passed laws outlining time restrictions regarding claim payment. A violation can cause an insurer to be guilty of unfair claims settlement practices.)

A commercial umbrella liability policy with a supplemental reporting period extends the period for reporting claims to: A period specified in the policy. 60 days following expiration of the policy. Five years or inception of a new policy, whichever comes first. An unlimited period following expiration of the policy.

A: An unlimited period following expiration of the policy. (When this option is purchased, coverage is provided for "claims made" for an unlimited period following the expiration date of the policy. The damages must have occurred before the expiration date of the policy.)

Which of the following best describes "covered property" under the Equipment Breakdown coverage form? Any property that the insured owns or is in the insured's care Buildings and personal property owned by the insured Boilers and machinery owned or operated by the insured Electronic data processing equipment

A: Any property that the insured owns or is in the insured's care. (The Equipment Breakdown coverage form covers "breakdown" to "covered equipment" that causes direct damage to "covered property" on the described premises. The latter term is defined as "any property owned by the insured, or property of others that is in the insured's care and for which the insured is legally liable.")

Which of the following is not specifically considered an unfair trade practice under the insurance code of most states? Appointment of producers by unauthorized insurers Unfair discrimination of insurance applicants Providing misleading policy comparisons Requiring an auto to be repaired at a specific repair shop in all windshield claims

A: Appointment of producers by unauthorized insurers (Although an unauthorized insurer cannot legally transact insurance in the state, there is no specific provision prohibiting the appointment of producers by such an insurer.)

Under the Commercial Building and Personal Property Form, all of the following are extensions of coverage, EXCEPT: Appraisal. Personal effects. Property Off Premises. Valuable papers.

A: Appraisal. (The appraisal clause is not an extension of coverage. This clause is in most, if not all, property insurance contracts to assist in the resolving of disputes between the insured and the insurer as to the value of the damaged property.)

The liability coverage of a Personal Auto Policy does not apply to persons who: Are engaged in work for the insured as an employee of a business. Unintentionally cause bodily injury and property damage. Engage in car pools. Damage to a residence garage not owned by the insured.

A: Are engaged in work for the insured as an employee of a business. (This is a business exposure and as such should be covered under a commercial insurance type policy such as Workers Compensation.)

After inspecting an insured fire loss, it is a duty of the adjuster to: Contract a contractor for a repair bid. Assist the insured with the cleanup. Remove the debris. Assist the insured with information on separating the damaged from the undamaged property and how to inventory the damaged property.

A: Assist the insured with information on separating the damaged from the undamaged property and how to inventory the damaged property. (It is a duty of the adjuster is to assist the insured in explaining how to separate the damaged property from the undamaged property and how to inventory and determine values.)

The coinsurance clause in commercial property policies encourages the insured to carry insurance: At the full value, or at least 80% to value of the property. At 70% of the full value of the property. At 60% of the full value of the property. At one-half the full value of the property.

A: At the full value, or at least 80% to value of the property. The coinsurance clause encourages the insured to insure at full value or to at least 80% of the value of the property. In exchange, the insured will receive a discount in the property insurance rates. Failure to comply with this clause reduces payments for a loss to the insured for partial losses. The insured will be penalized the same percentage as the percentage that he was underinsured. If he would insure the property for 70% to value instead of 80% to value he would receive 10% less on his partial loss. The coinsurance clause does not apply to total losses.

In property and casualty insurance, when must a person absolutely have an insurable interest? At the time of the loss At the time of the application completion At any time Before the loss occurs

A: At the time of the loss (It is true that the insured must have an insurable interest at the time of the loss. Sometimes during the policy period there may be a name change and the insurable interests stated in the original application for coverage may change. One partner may sell his portion to another. Sometimes this name change is overlooked and causes problems when the incorrect named insured is left on the policy and the new name is left off and there is a loss. This occurs when there is a partnership ownership situation. So the more accurate answer is that the insured must absolutely have an insurable interest at the time of the loss.)

Symbol 2 is entered for one of the physical damage coverages in the declarations of the BAP. The insured buys an additional auto after the policy begins. The newly acquired auto will become a covered auto: Automatically. If all the other autos owned by the named insured are covered by the same insurer for the same coverage. If the insurance company is notified within 30 days that the named insured wants the same coverage for the new auto. All of the responses are true.

A: Automatically. Symbol 2 is used to cover owned autos only and would automatically cover a newly acquired auto for physical damage coverage.

Inland marine insurance is commonly used to insure all of the following, EXCEPT: Automobiles. Stamps. Camera equipment. Jewelry.

A: Automobiles (Autos are best covered under an automobile policy.)

The crew of a ship is guilty of fraud with the intention of reaping gains at the expense of the owner. In ocean marine coverage, what is this called? Perils of the sea Jettison General average Barratry

A: Barratry. Barratry means fraud by the master or the crew with the intention of reaping gains at the expense of the owner. Examples include setting the ship on fire, diverting the ship from its course, or embezzlement of the cargo.

Which of the following types of losses will NOT be excluded by Thomas Drug Company's CGL policy? Bodily injury to a customer arising out of a forklift being used by the insured Damage to a forklift owned by others which was in the custody of the insured Property damage caused to the insured's water system when a forklift dropped a drum of caustic chemicals owned by the insured Bodily injury to an employee driving a forklift

A: Bodily injury to a customer arising out of a forklift being used by the insured. The use of "mobile equipment" like a forklift on or off the insured's premises is covered under the CGL policy. Property in the insured's care, custody or control is excluded. Pollution is also excluded as well as injuries to employees.

Uninsured Motorist coverage includes the named insured's: I. Medical bills and pain and suffering. II. Lost wages. Both I and II Neither I nor II I only II only

A: Both I and II. (Coverage C (Uninsured Motorists) provides for payments to or on behalf of the named insured for injuries sustained through the negligence of an uninsured driver.)

Two weeks after Paul's Perfect Pipe Plumbing repaired the toilet at Dan's house, the water feed line that was incorrectly installed, breaks and water ruins the walls, carpet and sub-flooring in Dan's home. Dan makes a claim for damages. How will Paul's CGL respond? The CGL will pay for all of the damage caused by the water. The CGL will not pay to correctly reinstall the water feed line. Both answer choices are correct. Neither answer choices are correct.

A: Both answer choices are correct. (The Completed Operations hazard of the CGL will pay for all of the damage caused by the water but will not pay the cost to reinstall the pipe as this was Paul's work.)

Because of the Nationwide Inland Marine definition, which of the following can be covered under a commercial inland marine policy? Bridges Dwellings Licensed trucks Aircraft

A: Bridges Bridges are eligible because they are an instrumentalities of transportation. The same is true of tunnels.

The HO-6 provides ________ peril coverage on personal property. open broad basic limited

A: Broad (The HO-6 (Condominium form) provides broad peril coverage on the personal property of condominium owners.)

Which property coverage form should be used for a building under construction? Value Reporting Form Business Construction Form Builders Risk Form Owners and Contractors Protective

A: Builders Risk Form. (Builders Risk Coverage form is used specifically to cover a building while it is under construction. Limit is based on Completed Value, and there is typically a 100% coinsurance clause. When a building is finished, the builders risk coverage can be replaced with permanent property coverage.)

Which of the following coverages may be added by endorsement to an Equipment Breakdown Policy? Business Income Expediting Expenses Property Damage Liability Damage to property of the insured

A: Business Income (Business income coverage can be added to the Equipment Breakdown policy.)

The current version of the nationwide definition recognizes six broad classes of property as eligible for marine coverage. These eligible classes include all of the following, EXCEPT: Domestic shipments. Imports and exports. Instrumentalities of Transportation and Communication Business personal property.

A: Business personal property. Business personal property is not a "class" or category of business mentioned in the definition specifically. Obviously this type of property can be covered under the commercial property forms or the BOP.

The insured carries Commercial Property insurance and he has property belonging to others in his care, custody and control. His insurance agent tells him that in case of a loss where there is negligence, the owner of the property may want his property covered on a replacement cost basis. What coverage must the insured purchase to be properly covered? Carry a sufficient limit and purchase replacement cost coverage on the customers property Nothing since the form automatically covers customers property on a replacement cost basis Customer's property is covered on an unlimited basis The insured needs to purchase a bailee type policy

A: Carry a sufficient limit and purchase replacement cost coverage on the customers property. The insured must carry a limit sufficient to cover the property of others. The new version of commercial property forms allow the insured, as an option, to cover property of others on a replacement cost basis. The older forms only allowed for reimbursement on an ACV basis.

What is the maximum obligation of the Louisiana Insurance Guaranty Association? Claims in excess of $100 and less than $150,000. Claims in excess of $100 and up to $300,000. Claims up to $200,000. Claims up to $175,000.

A: Claims in excess of $100 and less than $150,000. (Claims in excess of $100 and less than $150,000 are paid by the fund.)

What is the maximum obligation of the Louisiana Insurance Guaranty Association? Claims in excess of $100 and up to $300,000. Claims in excess of $100 and less than $150,000. Claims up to $200,000. Claims up to $175,000.

A: Claims in excess of $100 and less than $150,000. (Claims in excess of $100 and less than $150,000 are paid by the fund.)

There are two versions of the commercial general liability policy. They are known as: Claims-made and occurrence. Claims-made and claims-paid. Claims-paid and occurrence. Occurrence and acceptance.

A: Claims-made and occurrence. (Claims-made and the occurrence forms are the only two forms available for CGL.)

Entering into any agreement to commit, or by any concerted action committing, any act resulting in or tending to result in unreasonable restraint of the business of insurance is an example of: Coercion Rebating Misrepresentation Defamation

A: Coercion Unreasonable restraint by means of intimidation is an example of coercion and is an unfair insurance trade practice.

For which of the following does the deductible apply under the aircraft hull policy? Collision Theft Lightning Explosion

A: Collision. (The deductible would apply to collision. In aviation insurance the deductible does not apply to: fire, lightning, explosion, transportation, theft, robbery or pilferage.)

Michelle Winters seeks coverage for her manufacturing company to include premises liability coverage, products liability coverage, insured contracts, and completed operations coverage. Which of the following policies would cover all of these potential loss exposures? Commercial General Liability Contractual Liability Products and Completed Operations Liability Personal Injury Liability

A: Commercial General Liability (Only the CGL policy can include all the coverages the insured is requesting.)

The APEX Corporation purchases widgets from the Holly Company. The following statement is on the back of each invoice: "Purchaser shall hold seller harmless from liability arising out of the sale of these widgets." To cover this possible loss exposure, the APEX Corporation should obtain which of the following types of insurance? Commercial General Liability Contractual Liability Contingent Liability Contractual Liability and Contingent Liability

A: Commercial General Liability Commercial general liability includes contractual liability coverage for certain defined contracts that are considered to be "insured" contracts. Seldom, if ever, is contractual coverage written by itself.

None of the following can be covered by the Federal Terrorism Act insurance program, EXCEPT: Commercial Property and Casualty Risks (except auto). Federal Crop Insurance policies. Personal Insurance policies. Health and Life Insurance policies.

A: Commercial Property and Casualty Risks (except auto) Commercial property and casualty risks (except commercial auto, burglary and theft) are eligible. Personal insurance, crop insurance and life and health insurance are not eligible for the program. The Federal Terrorism Act was revised and extended in 2015 and a few more lines of insurance have been added to the list of excluded lines. Commercial auto, surety and burglary and theft were excluded in the 2015 amendment. Please check the testing outline for the vendor in your state to determine the version of the Act on which it is testing.

A commercial property coverage part includes each of the following, EXCEPT: Commercial property conditions. Common policy conditions. Commercial property declarations. One or more causes of loss forms.

A: Commercial property conditions. The commercial property conditions are not a separate form.

What should be the central goal of the claims adjuster? Follow the rules dictated by the principal Not violate state insurance laws Comply with the provisions of the insurance contract Maximize profit for the insurance company

A: Comply with the provisions of the insurance contract (The central goal of the adjuster is to comply with the insurance contract.)

George Wilson has a personal auto policy. Select the coverage that would apply when a deer leaps onto Mr. Wilson's car and causes extensive damage. Comprehensive (other than collision) Bodily Injury and Property Damage Liability Collision Medical Payments

A: Comprehensive (other than collision) (Contact with a bird or animal is considered to be an "other than collision" loss.)

When an applicant fails to disclose known facts this act is considered to be: Concealment. Misrepresentation. Coercion. Rebating.

A: Concealment. (Concealment occurs when an applicant fails to reveal known facts.)

Because an insurance policy is based on rules, regulations, and requirements of the parties, it is considered to be a: Personal contract. Contract of adhesion. Unilateral contract. Conditional contract.

A: Conditional contract. (Insurance policies are based on conditions which are rules of conduct that apply to both parties, thereby making it a conditional contract.)

In which part of an insurance contract would you expect to find a description of the duties and obligations of the insured? Conditions Insuring Agreement Exclusions Definitions

A: Conditions. (The conditions clause spells out the duties and obligations of the parties to the contract. For example, in case of a property loss the insured is obligated to protect and save the property from further loss.)

A flood has struck the state of Louisiana. The insurer must determine value and loss under a homeowner policy using which of the following procedures? Using the flood water mark on a covered structure Consider all other evidence to determine if the cause of loss was from other than flood Neither is correct Both are correct procedures

A: Consider all other evidence to determine if the cause of loss was from other than flood. (No insurer may use the floodwater mark on a covered structure without considering other evidence when determining whether a loss is covered or not covered under a homeowner's insurance policy. No insurer may use the fact that a home is removed or displaced from its foundation without considering other evidence when determining whether a loss is covered or not covered under a homeowner's insurance policy.)

Which of the following is legal for an adjuster to do when adjusting a claim? Advise the claimant not to obtain an attorney. Contact the claimant when it is known that they have legal representation. Withhold one portion of the claim when negotiating another. Contact the claimant with the permission of the attorney.

A: Contact the claimant with the permission of the attorney. (When an adjuster knows that the claimant is represented by an attorney, the adjuster may contact the claimant only with the permission of the attorney.)

When a claimant is represented by an attorney, which of the following is prohibited by the adjuster? Negotiate with a claimant's attorney Make a claim check payable to the claimant Contact the claimant without the consent of the attorney Have an attorney prepare a release

A: Contact the claimant without the consent of the attorney. (Once a claimant has hired an attorney, the adjuster may not contact the claimant directly without the consent of the attorney.)

Which of the following statements describes an action that the adjuster cannot take after a claimant has hired an attorney to represent him/her in handing a claim? Negotiate with the attorney Write the draft for payment of the claim directly to the claimant Contact the claimant without the consent of the attorney Have an attorney prepare releases

A: Contact the claimant without the consent of the attorney. (Once the claimant has hired an attorney to represent the claimant, the adjuster may not contact the claimant directly without the consent of the attorney.)

Under the HO-5, if the insured carries insurance coverage that falls between 80 to 100% of the full value of the structure, which of the following would replacement cost coverage NOT cover? The Dwelling Other Structures Contents An Attached Garage

A: Contents. (Replacement cost coverage does not apply to contents unless replacement cost for contents coverage is purchased by endorsement.)

Owners and contractors protective liability protects against which of the following? Contingent Liability Fire Excess Liability Theft

A: Contingent Liability (Contingent liability is a form of vicarious liability which includes being held legally liable for the acts of others.)

Evergreen Lawn Care has two lawn maintenance crews on separate job sites. Coverage for the lawn maintenance equipment on the way to the site, while at the site and in transit back to the shop can be covered by which of the following forms? Commercial Articles Coverage Form Contractors Equipment Floater Floor Plan Coverage Form Jewelers Block Coverage Form

A: Contractors Equipment Floater (The Contractors equipment Floater will cover the lawn maintenance equipment usually on an open peril basis. The covered territory is the US, its possessions, Puerto Rico and Canada.)

A CGL policy provides coverage for which of the following exposures? Contractual Liability in "insured contracts" Professional Liability Employee Injury Liability Pollution Liability

A: Contractual Liability in "insured contracts". (The CGL policy provides for a limited amount of contractual coverage. If the insured assumes liability of another party in an "insured contract," there is contractual liability coverage. It does not cover professional liability, pollution liability (except under specific situations) nor employee injury liability which is a workers compensation claim.)

Which of the following prevents someone from collecting payment for negligence under the laws of some states? Contributory Negligence Comparative Negligence Intervening Cause Assumption of Risk

A: Contributory Negligence There are a few states that still have the rule of contributory negligence. A person can be 2% negligent and be 98% damaged and receive nothing from the other party that caused the loss because the injured party was partially (2%) negligent.

The insurance department may suspend, revoke, or deny an agent's license for all of the following reasons, EXCEPT: Conviction of a misdemeanor that is unrelated to insurance. Untrue statements on an agent license application. Incompetency. Converting policyholder premium funds.

A: Conviction of a misdemeanor that is unrelated to insurance. (A misdemeanor unrelated to insurance does not affect the status of an insurance license. A conviction of any felony would, in most states, automatically revoke an agent's license. Converting policyholder premiums or agent incompetency would also be grounds for license denial, revocation, or suspension.)

A: Conviction of a misdemeanor that is unrelated to insurance. A misdemeanor unrelated to insurance does not affect the status of an insurance license. A conviction of any felony would, in most states, automatically revoke an agent's license. Converting policyholder premiums or agent incompetency would also be grounds for license denial, revocation, or suspension.

Which of the following would not be covered by garage liability? Costs the insured sustains to recall defective products. A customer falls down at the dealership building. A faulty break job causes a customer's vehicle to crash into another car. While driving a dealership-owned pickup, an employee has an accident, injuring another person.

A: Costs the insured sustains to recall defective products. (Garage liability coverage includes automobile liability and commercial general liability as well, but products being recalled are excluded from the ISO form. This is because liability insurance is to cover something that occurs and products are recalled to prevent something from occurring.)

Which of the following is NOT true concerning the Terrorism Risk Insurance Act and amended in 2015 and now referred to as the Terrorism Risk Insurance Extension Act? Coverage is mandatory. The insured can reject the coverage. It is an agreement between insurers and the United States government to provide coverage. Must be certified as an act of terrorism by the Secretary of Treasury in concurrence with the Secretary of Homeland Security and the US Attorney General.

A: Coverage is mandatory (The coverage is not mandatory and can be rejected. Under the 2015 extension, an act of terrorism must be certified by the Secretary of Treasury in concurrence with the Secretary of Homeland Secretary (previously it was the in concurrence with the Secretary of State). Note: Please check the outline from the testing vendor in your state to determine the version of the Act on which it is testing.)

Which of the following statement is true of the jewelers block coverage form? The form insures a package of property and liability coverage. Coverage may be written for the stock for retail jewelers or the jewelry stock of department and discount stores. Coverage may be written for pawnbrokers dealing in jewelry. Customers' property is not covered under the form.

A: Coverage may be written for the stock for retail jewelers or the jewelry stock of department and discount stores. (This form is used for retail jewelers or the jewelry of department and discount stores. The commercial property forms as well as the BOP contain a theft limitation for jewelry and therefore create the need for the jewelers block policy.)

Under the additional coverage of glass breakage in the Homeowner forms, building glass is: Covered unless the insured premises have been vacant for more than 60 consecutive days immediately before a loss. Never covered. Covered except for storm windows. Always covered regardless of the circumstance.

A: Covered unless the insured premises have been vacant for more than 60 consecutive days immediately before a loss. (Homeowner forms provide glass coverage, but claims are excluded if the premises has been vacant for more than 60 consecutive days (unless the breakage was caused by earth movement).)

Truckers interchange insurance: Covers physical damage to a specific trailer when the trucker is liable under a written interchange agreement. Is included under Symbol 47. Covers truckers physical damages when a vehicle is being used on the Interstate Highway system or connecting roads. Covers truckers liability when a vehicle is being used on the Interstate Highway system or connecting roads.

A: Covers physical damage to a specific trailer when the trucker is liable under a written interchange agreement. (Interchange coverage applies when truckers borrow or lease a trailer from another firm for use in their own business - a very frequent practice in the industry.)

What is the purpose of freight insurance? Covers shipper fees. Covers loss to the cargo. Covers the insurable interest of the shipper due to jettison of the cargo. Covers the cargo until it reaches the warehouse.

A: Covers shipper fees. (Freight insurance is designed to cover the shipper's fees charged to the shipper. It is the indirect loss/business interruption coverage which comes into play after a direct loss to the vessel.)

Flood coverage can be purchased under the Commercial Property policy using endorsement CP 10 65, if the property is eligible. If this Commercial Property endorsement is purchased and the property is already covered under a flood policy from the National Flood Insurance Program, then the coverage under this endorsement is considered to be: Primary Excess over the NFIP maximum limits Pro-rata with the NFIP policy Not applicable

A: Excess over the NFIP maximum limits If a NFIP policy is in force or was eligible for purchase at the time the commercial property policy was endorsed for flood coverage, then the endorsement becomes excess coverage over the NFIP policy maximum limits.

In commercial property insurance, what does the Ordinance or Law coverage endorsement provide? Covers the additional costs of rebuilding/repairing/upgrading, after a covered loss, to comply with a law or ordinance Covers loss due to government seizure of property Covers the loss of rent after to the imposition of a new zoning law Covers the insured's expenses of complying with local ordinances or laws

A: Covers the additional costs of rebuilding/repairing/upgrading, after a covered loss, to comply with a law or ordinance. (An unendorsed commercial property policy would deny coverage for items the insured did not have before the loss, in order to uphold the principle of indemnity. Sometimes, however, a local law or ordinance will require an insured who has suffered a property loss to rebuild/repair to new standards and require items (such as an extra exit, guardrail, sprinkler, etc) that were not required before the loss. The Ordinance or Law endorsement pays for these extras up to its limit.)

The Federal Terrorism Act covers all of the following, EXCEPT: Crop Insurance. Property Insurance. Workers Compensation. Casualty Insurance, except commercial auto.

A: Crop Insurance. (The Act does not apply to crop insurance. Note: The Act was amended and extended in 2015 to further limit the lines of insurance covered. It now also excludes commercial auto, surety, burglary and theft.)

A crew member has been injured on a ship. When his medical expenses are paid, this is known as: Cure. Protection. Indemnity. Jones Act.

A: Cure. (In ocean marine insurance this is called "cure" and is paid under the Protection and Indemnity coverage.)

Medical Payments coverage excludes all of the following, EXCEPT: Injuries to employees or anyone hired by the insured. Anyone entitled to benefits under workers' compensation. Customers slipping on the insured's wet floor. Injuries sustained while playing for the company softball team.

A: Customers slipping on the insured's wet floor. Medical Payments coverage is for other people, not the insured, or anyone hired by the insured. It also would not cover any kind of workers' compensation issue.

Which one of the following is not a homeowner policy form? DP-1 HO-4 HO-6 HO-8

A: DP-1 The DP-1 form is a Dwelling form. Dwelling forms, unless endorsed, do not cover theft and personal liability. The HO-4, HO-6, and HO-8 are homeowners forms and provide theft and personal liability without endorsement.

The most comprehensive coverage provided by the dwelling property program is found in the: DP-3. DP-1. DP-2. DP-4.

A: DP-3. The DP-3 form provides "open-peril" (all risk of loss) for the dwelling and other structures. The other forms provide "named peril" coverage.

Which of the following incidents of property damage would be covered by BAP liability coverage? Damage to a computer that was in a covered auto at the time of a collision. The computer was being returned by the named insured, who rented it. Damage to the named insured's building when a covered auto ran into it. Damage to a neighbor's auto parked on the street. A covered auto hit the parked auto. Damage to a radar detector caused by theft.

A: Damage to a neighbor's auto parked on the street. A covered auto hit the parked auto. Only the damage to the neighbor's parked car would be covered. The other items are specifically excluded.

Personal Excess Liability coverage provides all of the following, EXCEPT: Injuries sustained by a third party on the insured's property. Personal injury or property damage sustained by a third party due to an at-fault accident by the insured. Damage to an insured's property due to fire. Injuries to a neighbor while riding in the insured's covered boat.

A: Damage to an insured's property due to fire. (Personal Excess Liability provides higher limits, but does not broaden coverage like an umbrella policy would.)

Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following EXCEPT: Damage to or loss of another ship caused by a negligent collision. Injuries to seamen Cargo lost or damaged through negligence. Damage to piers.

A: Damage to or loss of another ship caused by a negligent collision. (Hull coverage is required to cover the damage to the ship. P&I provides legal liability coverage for injuries and certain types of damages. Damage to another ship is not covered under the P&I coverage. Coverage can be provided under the hull coverage form for this coverage to other vessels. This is called the "running down clause".)

Under the DP-2 broad form, which of the following losses would not be covered? Damage to the dwelling that is suddenly caused by wild animals. A picture window is blown out during a tornado. Vandalism damage caused by a prankster to a dwelling that has been vacant for 14 days. A roof caves in due to the weight of ice and snow.

A: Damage to the dwelling that is suddenly caused by wild animals. (The broad form is a named peril form and does not list damage caused by wild animals as a covered peril.)

An inland marine coverage which covers the insured's merchandise held for sale, such property that is sold but not delivered, customers property in the care and custody of the insured, and property being transported to or from the insured, is a: Dealers form Commercial articles floater. Floor plan merchandise coverage form. Bailee's customers policy

A: Dealers form (An equipment dealers form is an example.)

Information about the premium and policy limits, the identity and address of the named insured, and the policy period is found in which part of an insurance policy? Declarations Conditions Insuring Agreement Exclusions

A: Declarations. (The declarations page is usually the first page in an insurance policy. The conditions clause spells out the duties of the insured and insurer in case of a claim. The insuring agreement contains the promises of the insurer. Exclusions are items not covered in the policy.)

Which of the following sections of an insurance policy states who may be considered an insured in addition to the named insured? Definitions Declarations Insuring Agreements Conditions

A: Definitions The newer, "easier to read" insurance policies contain a list of definitions. The definition of "insured" describes who is considered an insured under the policy.

Which of the following terms can be defined as a policy provision that omits certain risks from coverage? Exclusions Conditions Insuring Agreement Declarations

A: Exclusions (The exclusions contain risks or perils that the insurer does not insure. Intentional acts, war, and nuclear losses are examples.)

The insured is covered under a Personal Auto policy and carries Liability coverage, Other than Collision (Comprehensive) coverage and Collision coverage. He has a large quantity of CDs in the vehicle. The vehicle is broken into and these items are stolen. How will the insurance company handle the claim for the CDs? Deny the claim in full. Pay the claim in full. Pay the claim minus depreciation. Pay the claim minus the deductible.

A: Deny the claim in full. (These items are specifically excluded under the policy, therefore the claim would be denied. There is an endorsement that can be added to the policy for an additional premium to cover these types of items, but the question did not specify that this endorsement was carried in our example.)

States have adopted statutes regarding claims adjusting. To avoid unfair treatment to a claimant the adjuster must not: Promptly investigate the claim Follow the laws regarding the number of days in which to commence an investigation Deny the claim until a fair and prompt investigation has commenced Pay the claim within a reasonable number of days after the final proof of loss has been received

A: Deny the claim until a fair and prompt investigation has commenced. (It is an unfair claim practice if the adjuster denies a claim prior to a prompt and comprehensive investigation has been completed.)

Which of the following would not be addressed by a court in the determination of a declaratory judgment? Determine if a particular exclusion would apply Determine if a particular insuring agreement would apply Determine fault or monetary damages Determine if other insurance policies apply

A: Determine fault or monetary damages The court would not determine the fault or monetary judgment in the determination of a declaratory judgment.

An insurance coverage which is designed to supplement other coverages and fill insurance gaps is: Difference in Conditions insurance. Special Causes of Loss coverage. Consequential loss coverage. Blanket insurance coverage.

A: Difference in Conditions insurance. Difference in conditions insurance is used to cover perils that would ordinarily be excluded or the coverage is limited under standard property forms. Years ago, before flood insurance became available, limited coverage was often written under this form.

To cover lawn mowing equipment under a HO form an insured must: Obtain permission forms. Purchase a specific amount of coverage. Do nothing since it is already covered. Include outdoor furniture.

A: Do nothing since it is already covered. Personal property is covered under a single limit. All personal property with some specific limitations is covered.

A weather report would be considered what type of evidence? Documentary Demonstrative Interrogatory Material

A: Documentary. (A weather report is a documentary report that is considered to be an official report. It is in a list of other official reports such as police reports, fire department reports, autopsy reports and court records showing previous convictions of crimes.)

An "other insurance" clause is included in an insurance policy to deal with the problem of: Duplicate insurance coverage. Excess insurance coverage. Inadequate coverage. Conditional coverage.

A: Duplicate insurance coverage. The other insurance clause is included in an insurance policy to provide a method of determining how much of a covered claim each insurer will pay when an insured carries more than one insurance policy. Settling a claim on a pro-rata basis is an example wherein each insurer pays its fair share of a loss, as determined by the percentage that the insurer's limit bears to the total coverage carried.

The HO-3 form covers which of the following that the HO-4 form does not? Automobiles Motorcycles Dwellings Work related injuries

A: Dwellings (The HO-3 covers a dwelling structure; the HO-4 covers the insured's contents. The other choices are excluded on both forms)

Under the HO-3 policy which of the following would not be covered? The insured runs into his house with his car. Earthquake A log rolls out of the fireplace and causes fire damage to the rug. A $500 diamond ring is stolen

A: Earthquake (Earthquake can be added by endorsement and is not automatically included in the unendorsed HO-3.)

In Louisiana, the Insurance Commissioner is: Elected for a term of four years. Appointed by the Governor for a term of six years. Appointed by the Governor for a term of four years. Elected for a term of two years.

A: Elected for a term of four years. (The Commissioner is an elected official, elected for a term of four years.)

Which of the following would be an example of a moral hazard? Carelessness Embezzlement Apathy Ineptitude

A: Embezzlement

An insured wishing to cover the employee while driving their own car on company time would need the following endorsement? Drive Other Car Coverage Auto Medical Payments Employees as insureds Employee drive other car coverage

A: Employees as insureds. (The "employee as insured" endorsement (CA 99 33) would cover the employee when also sued in an accident while driving their car on company time.)

If an insurance company covers an excluded claim, it may have to continue paying other such claims because of: Indemnity rule. Comparative payment. Policy language. Estoppel.

A: Estoppel.

If an insurance company covers an excluded claim, it may have to continue paying other such claims because of: Indemnity rule. Comparative payment. Policy language. Estoppel.

A: Estoppel. (If an insurance carrier allows payment of certain excluded claims, it may cause someone to rely on the coverage to be in place when it isn't. In some cases the insurer may have to honor future claims of the same type.)

A print shop is insured under a Businessowners Policy with a separate policy covering the press. If a loss occurs that is covered under both policies, how will the Businessowners Policy respond? Excess coverage Deny coverage Pay its share of the loss in proportion to the other policy Abandon the property in favor of the other policy

A: Excess coverage. Explanation: (The other insurance clause in the BOP is somewhat different than in other policies. The policy states that other coverage is considered primary (whether collectible or not) and that any coverage for the loss under the BOP will be considered EXCESS.)

Under the BOP, which of the following is not automatic coverage? Hired and Non-owned Automobile Coverage Loss of earnings after a covered fire Limited Sign Coverage Replacement cost settlement on building losses

A: Hired and Non-owned Automobile Coverage. Hired and non-owned automobile coverage is an elective coverage.

The DP-2 broadens which of the following extended coverage (EC) perils? Explosion, Smoke and Vehicles Explosion and Smoke Only Smoke and Vehicles Only Vehicles Only

A: Explosion, Smoke and Vehicles. (When the extended coverage (EC) endorsement is attached to the DP-1 form, explosion, smoke and vehicular damages are included. The DP-2 form broadens these perils.)

With a claims made CGL policy, if a loss occurred after the retroactive date but was not reported during the policy period, what else needs to be in place in order for the insurer to respond to the notice of claim? Extended policy term of 60 days. Extended supplemental retroactive date. Extended Coverage endorsement. Extended Reporting Period.

A: Extended Reporting Period. (An extended reporting period would need to be in place for claims that were not reported during the expiring policy term. There is a 60 day extended reporting period automatically built into the expiring policy, but if the insured needs more time, then a supplemental extended reporting period needs to be added by endorsement and an additional premium paid.)

Under business income coverage, what coverage clause continues payment of income after the period of restoration is complete? Maximum period of Indemnification Extension of coverage Agreed value Extended business income

A: Extended business income The coverage is called Extended Business Income and will allow for payment after the period of restoration is complete up to a maximum of 60 days. This is included in the form automatically. Coverage can be extended for a longer period by paying an additional premium.

Which of the following would not be considered an unfair claims practice act? Failing to pay an uncovered claim. Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured. Failing to adopt and implement reasonable standards for prompt investigation and processing claims arising under insurance policies. Misrepresenting to insureds or claimants pertinent facts or insurance policy provisions relating to any coverage at issue.

A: Failing to pay an uncovered claim. (Failing or refusing to pay a claim that is not covered is not an unfair claims practice act.)

A Louisiana adjuster license can be revoked, non-renewed or suspended for all of the following, EXCEPT: Conviction of a felony related to the adjustment of insurance claims Failing to pay child support Failing to pay an uncovered claim Using fraudulent or dishonest practices in the adjusting of insurance claims

A: Failing to pay an uncovered claim. (The failure to pay a claim that is not covered is not a reason to take action against an adjuster.)

What is the definition of custom farming? Farming for Others Share Cropping Raising Specialty Crops None of the answers apply

A: Farming for Others. (Custom farming is farming for others for a fee under a contract or agreement. A special endorsement is required if the receipts are in excess of $5,000 per year.)

If the adjuster has a simple first-party loss, the initial claims report could also serve as the: Final report. Interim report. Initial report. Negotiation file.

A: Final Report. On a simple first-party claim where payment is made immediately, this can also serve as the final report.

Which of the following causes more property damage in the United States than any other natural disaster? Floods Tornados Earthquakes Wildfires

A: Floods. (Floods cause more damage to more people than all other natural disasters combined.)

Under Coverage E - Scheduled Farm Property, how is the property covered? For the limit shown in the policy declarations Unlimited Blanket coverage Replacement cost basis

A: For the limit shown in the policy declarations

Under Coverage E - Scheduled Farm Property, how is the property covered? For the limit shown in the policy declarations Unlimited Blanket coverage Replacement cost basis

A: For the limit shown in the policy declarations. (The property is covered for the limit shown on the declarations page of the policy for the property specifically scheduled.)

An agent, insured or claimant has intentionally misled an insurer for financial gain. Such an act is known as: Fraud. Misrepresentation. Concealment. Malfeasance.

A: Fraud. (Fraud is an intentional act designed to deceive and induce another party to part with something of value. It could occur with an agent, insured or claimant. Fraud may be perpetrated before or after a policy has been issued. Fraud may also involve misrepresentation and/or concealment, but not all acts of misrepresentation or concealment are considered acts of fraud.)

The ocean marine coverage which insures either prepaid shipping charges or the income to be earned for moving cargo is: Freight insurance. Protection and indemnity A block policy. Cargo coverage.

A: Freight insurance Freight insurance covers only the shipping fees. Damage to the cargo is covered under a cargo form. Some coverage is also included under the protection and indemnity coverage legal liability.

Good 'Ole Boy Brewing acquires another brewery. Assuming there is no CGL in force for the newly acquired entity, how long will the new entity be automatically considered an insured under the current CGL for Good 'Ole Boy Brewing? Until the current policy for Good 'Ole Boy expires. From the time of acquisition and up to 90 days thereafter. No coverage until the insured informs the insurer of the acquisition. 180 days or the policy expiration, whichever occurs first.

A: From the time of acquisition and up to 90 days thereafter. (Newly acquired entities are considered an insured under the existing policy from the time of acquisition for 90 days.)

In which of the following does a claimant relinquish his or her right to sue? Scheduled Payment Release Advance Payment Full Release Settlement Structured Settlement

A: Full Release Settlement (After a claimant signs a Full Release Settlement, he or she waives the right to sue.)

An adjuster's report that contains all the facts, evidence and disposition of the claim and is considered to be the final report is known as the: Full Report. Field Report. Interim Report. Settlement Report.

A: Full Report. (The "full report" is the third and final report containing all the information gathered.)

Standard and Poors, A.M. Best and Moodys are examples of: Independent rating services. Insurance department regulatory agencies. Federal insurance regulatory agencies. State run monopolies.

A: Independent rating services. (The public relies on the information provided by these independent rating services to measure the financial stability of the insurers.)

A method of replacing damaged property with something not exactly like the damaged item, but will perform the same is known as: Agreed Replacement Value. Stated Amount Value. Functional Replacement Cost. Replacement Cost.

A: Functional Replacement Cost. Functional replacement cost will replace the damaged item, but with something that might not be exactly the same.

What coverage does the Difference in Conditions form provide? Gaps left by other property insurance forms Open peril coverage only Flood coverage only Earthquake coverage only

A: Gaps left by other property insurance forms. This form is used to cover the gaps left by other property insurance policies. This could include flood and earthquake.

An award for pain and suffering to a claimant who was burned when a tractor engine malfunctioned and spewed boiling water would be considered what kind of damages? Special Damages General Damages Punitive Damages Other Damages

A: General Damages Casualty policies cover compensatory damages which include bodily injury and property damage caused by the insured as a result of his or her negligence. Compensatory damages are broken down into two categories; special and general. Special damages are types of compensatory damages the injured party receives for direct and specific expenses involved in the loss, such as medical expenses and loss of wages. These damages pay for so-called "economic losses." General damages are types of compensatory damages that reimburse the injured party for such things as pain and suffering and disfigurement, and life-altering issues such as loss of mobility and loss of consortium not readily defined by actual incurred expenses. These damages pay for so-called "non-economic losses."

A business insured under a Commercial General Liability policy has a general aggregate limit of $1,000,000 and an occurrence limit of $100,000. If, today, an injured party is awarded $100,000, what will the company's general aggregate limit and occurrence limit be tomorrow? General aggregate of $900,000; occurrence limit of $100,000 General aggregate of $1,000,000; occurrence limit of $100,000 General aggregate of $1,000,000; occurrence limit of $0 General aggregate of $900,000; occurrence limit of $0

A: General aggregate of $900,000; occurrence limit of $100,000 Amounts paid under the occurrence limit are subtracted from the aggregate limit. The remaining amount is the total amount available for the rest of the policy period for future claims.

What is the purpose of an adjuster's initial report? Gives the results of the initial investigation of the claim Provides interim claim status Provides details of medical records and claim demands of claimants Provides an evaluation of the pain and suffering demands of a claimant

A: Gives the results of the initial investigation of the claim. This report merely details the result of the initial investigation and not the anticipated end result or even if coverage is applicable.

Which of the following is correct regarding the differences in coverage between an HO-3 and an HO-5? HO-3 covers personal property on a named peril basis, while personal property under an HO-5 is covered on an open peril basis. HO-3 pays market value for dwelling losses while the HO-5 pays replacement cost. HO-3 only covers personal property owned by the insured, while HO-5 can cover personal property owned or used by the insured. HO-3 has more exclusions pertaining to the insured dwelling than the HO-5.

A: HO-3 covers personal property on a named peril basis, while personal property under an HO-5 is covered on an open peril basis. The HO-3 and the HO-5 are the same in terms of dwelling exclusions, valuation on dwelling losses, and the type of personal property insured. They are different in terms of perils insured against for personal property losses.

Typically, how are defense costs handled under an aviation policy? Covered under the policy's insurance limit A separate limit applies Handled as a supplementary payment Paid after a deductible is applied

A: Handled as a supplementary payment Defense costs and related expenses are usually handled as supplementary payments and do not affect the policy's applicable insurance limit.

A: Handled as a supplementary payment. (Defense costs and related expenses are usually handled as supplementary payments and do not affect the policy's applicable insurance limit.)

The insured has a per occurrence limit of $50,000. He is found liable and his insurance company pays a claim for $50,000 to Claimant A. Claimant B files suit for $100,000 for injury arising out of the same occurrence. The company: Has no obligation to defend the suit Must defend the suit even if groundless Must still conduct an investigation None of the responses are correct

A: Has no obligation to defend the suit. Once the insurer has paid their limit in claims they have no further obligation to the insured.

Louisiana has a valued policy law. Which of the following property describes loss payment under this law? The insurer must pay its evaluation limit it computed on the property in issuing the coverage on the real property. The insurer must pay the loss on a replacement cost basis The insurer must pay the loss on the market value of the property at the time of the loss The insurer is obligated to pay the replacement cost of the real property less depreciation and consideration for market value fluctuations

A: Help me Obi-wan Kenobi, you're my only hope.

Which of the following is NOT a responsibility of the insured? Hire a public adjuster Protect the property from further damage Provide proof of loss Display the damaged property if requested to do so

A: Hire a public adjuster (The insured claimant is not required to hire a public adjuster in case of a claim.)

The insured in a property loss is not obligated by the terms of the policy to: Separate the damaged from the undamaged property Protect the property from further loss Produce records Hire a public adjuster to assist the insured in the claim

A: Hire a public adjuster to assist the insured in the claim. (The insured is not obligated to employ a "public adjuster" to assist in the claim against the insurance company. It is an option on the part of the insured.)

A: Hire a public adjuster to assist the insured in the claim. The insured is not obligated to employ a "public adjuster" to assist in the claim against the insurance company. It is an option on the part of the insured.

Upon discovering that an agent may have violated an insurance law, the state insurance department is required to take which of the following actions? Hold a hearing on the infraction Place the licensee on probation immediately Publish notice of the violation Revoke the agent's license

A: Hold a hearing on the infraction. (In most states, the head of the state's insurance department will hold a hearing and subpoena witnesses regarding a possible violation of insurance law. The agent would have the opportunity to present his or her side of the case at that the hearing. After the hearing is completed, the department head will issue an order/conclusion (similar to a verdict in a criminal case.)

The insured resides in a one family dwelling and is insured under a HO-5 Homeowner Form. She has decided to open a day care center for children. What coverage, if any, should she purchase to cover this liability exposure? Increased Liability Coverage Personal Injury Coverage Business Pursuits Coverage Home Day Care Coverage

A: Home Day Care Coverage (The insured should purchase the "home day care coverage endorsement" to extend her liability coverage to cover this additional liability exposure.)

How do eligibility requirements of homeowner and dwelling policies differ? Homeowner policies require that the named insured reside at the described premises while dwelling policies do not. Homeowner policies are only for actual home owners while dwelling policies can be written only for tenants. Homeowner and dwelling policies have the same eligibility requirements. Dwelling policies can be written on duplexes while homeowner policies are only for single-family dwellings.

A: Homeowner policies require that the named insured reside at the described premises while dwelling policies do not. (The named insured must be a resident of the insured premises under the HO program.)

Offering any return of premium, valuable consideration or inducement when purchasing an insurance policy is an example of: I. Illegal Inducement II. Rebating III. False Advertising I only I and II only I and III only I, II, and III

A: I and II only. Offering any return of the premium paid, any special advantage in the policy terms, or any valuable consideration in the purchase of insurance is known as rebating and/or illegal inducement.

Protection and indemnity coverage contained in an ocean marine policy covers: I. Liability against injuries to seamen. II. Injury to stevedores, longshoreman and harbor workers. III. Cargo, if lost or damaged through negligence. I, II and III. I and II only. II and III only. I and III only.

A: I, II and III (Protection and indemnity coverage would apply to all of these types of losses.)

Which of the following is included in the definition of a first party claimant: I. An individual II. A corporation III. A partnership I only I and II only II and III only I, II, and III

A: I, II and III. (A first party claimant is the entity that receives the benefit of an insurance policy that specifically covers their property. A first party claimant can be all of the following: an individual, corporation, association, partnership, or other legal entity.)

The circumstances under which a consumer reporting agency may furnish a consumer report include: I. A credit transaction involving the consumer. II. For employment purposes. III. With the underwriting of insurance. I, II and III I only I and II only I and III only

A: I, II and III. (All of these are circumstances under which an investigative consumer report may be ordered. However, a person may not procure or cause to be prepared an investigative consumer report on any consumer unless it is clearly and accurately disclosed to the consumer that an investigative consumer report may be made. This disclosure must be made in writing and mailed, or otherwise delivered to the consumer, no later than three days after the date on which the report was first requested.)

Which of the following would be considered fraud and grounds for voiding an automobile policy? I. The named insured intentionally answers "no" when asked on the application if he has had any speeding tickets in the past year. II. The named insured intentionally reports that all covered vehicles have a clear title when they are owned by others. III. The named insured submits a claim for fire damage that has been back-dated to a period before the policy's expiration date. IV. The named insured submits a claim for a total loss for a covered auto that he sold to an illegal auto chop shop. I, II, III and IV I and III only II and IV only I, II, and IV only

A: I, II, III and IV All four actions are fraudulent. Each is an example of deliberate misrepresentation or concealment of a material fact for purposes of improper gain. Insurers typically retain the right to void ANY insurance policy if an insured commits fraud relating to a policy.

Which of the following businesses would be eligible for a businessowners policy? I. Doughnut shop. II. Wholesale florist. III. Barber shop. IV. Taxidermist. I, II, III, and IV I and III only II and III only I, II, and III only

A: I, II, III, and IV Generally, businessowners policies are written to cover light businesses with limited locations and size. Most insurers would cover all of the ones in this question.

An insurance contract is considered: I. Aleatory. II. Unilateral. III. Adhesive. IV. Conditional. I, II, III, and IV I and II only I, II, and IV only II, III, and IV only

A: I, II, III, and IV. (An insurance contract is also a personal contract, a contract of utmost good faith, and based on the principal of indemnity.)

Which of the following Commercial Forms would cover sinkhole collapse? I. Basic. II. Broad. III. Special. IV. Extraordinary. I, II, and III only III and IV only II, III, and IV only I, II, III, and IV

A: I, II, and III only There is no extraordinary form. All three commercial forms cover sinkhole collapse.

Which of the following are additional coverages under a Businessowners policy with the named peril form attached? I. Debris removal. II. Pollutant cleanup and removal. III. Exterior glass. IV. Collapse. I, II, and III only I and II only III and IV only I, II, III and IV

A: I, II, and III only. The BOP is issued on an "open peril" basis, and the "open peril" form includes "collapse" as an additional coverage. This question is about a BOP with the named peril endorsement attached. When you attach the named peril endorsement IT REMOVES THE COVERAGE OF COLLAPSE.

Common and contract carriers' liability that covers damage to cargo may be insured under: Means of transportation forms. Motor truck cargo forms. Transit forms. Equipment dealer's forms.

A: Motor truck cargo forms. (Motor truck cargo forms are used to cover common and contract carriers against damage to the property being transported.)

Which of the following would be excluded under Coverage E - Personal Liability of the homeowner forms? I. Business activities II. Use of aircraft III. Personal activities in Paris, France IV. Use of licensed motor vehicles I and II only II, III, and IV only I, II, and IV only I, II, III and IV

A: I, II, and IV only. Personal liability coverage in homeowner policies applies to covered occurrences taking place anywhere in the world. There are several exclusions, however, such as "business activities" as defined in the policy, and the use of licensed motor vehicles and aircraft other than hobby aircraft.

The commercial inland marine coverage form known as valuable papers and records includes coverage for: I. Money and securities. II. Deeds, drawings and maps. III. Books, files and mortgages. II and III only I and II only I and III only I only

A: II and III only Money and securities are covered under a crime insurance form and not covered in the valuable papers and records form.

The increased cost of compliance coverage on flood insurance provides: I. Policy limit coverage for ordinance and law changes. II. Coverage for flood plain management ordinance or law changes. III. $30,000 of coverage per building. III only II only I, II and III II and III only

A: II and III only. The increased cost of compliance coverage will provide up to $30,000 of coverage to handle the flood plain management ordinance or law changes affecting the repair and reconstruction of a flood-damaged structure.

Which of the following is correct concerning the appraisal process under a Business Automobile policy: I. Only the named insured can make a written demand that the appraisal method be used. II. The appraisal method cannot be used to determine whether the loss is covered, rather than the amount of damages. II only. I only. Both I and II. Neither I nor II.

A: II only. (Either party - the insured or the insurer - can demand the appraisal method but only when the amount of damages is in dispute. Appraisal cannot be used to resolve coverage disputes.)

Which of the following pollution losses would be covered under the garage liability policy? I. Escape of toxic sludge from a dump site the named insured utilizes to store garage waste. II. Pollution of a creek caused by gasoline leaking from the ruptured fuel tank of a truck following a collision with another vehicle. II only. I only. Neither I nor II. Both I and II.

A: II only. Only escaped pollutants that are needed for the proper operation of the vehicle (such as fuel, oil, or battery) are covered.

Which of the following is NOT true in Louisiana regarding the licensing of a "non-resident" claims adjuster license? If not licensed as an adjuster in their home state, they must take and pass the Louisiana adjuster's exam. If licensed as an adjuster in their home state, they must still take and pass the Louisiana adjuster exam to become licensed in Louisiana. Can adjust claims if licensed in their home state and their home state reciprocates with Louisiana. The proper fees and paper work have been filed showing that they are licensed in our home state.

A: If licensed as an adjuster in their home state, they must still take and pass the Louisiana adjuster exam to become licensed in Louisiana. The applicant does not have to pass the Louisiana adjuster exam if they are licensed in the state in which they reside by passing that state's exam.

The BAP uses Symbol 7 to cover "specifically described autos" identified in the declarations. An auto acquired during the policy period will only be covered: If the insured insures all of their vehicles with the company or it replaces a covered auto. Only if it is a private passenger auto Only if it is other than a private passenger auto If reported to the company within 14 days of acquisition

A: If the insured insures all of their vehicles with the company or it replaces a covered auto. (First the insured must insure all of their vehicles they own, or the auto replaces a covered auto. In either case the insured must notify the insurance company of the change.)

When is it appropriate for an adjuster to secure a non-waiver agreement with the insured? If the adjuster senses the claim may be fraudulent in nature If the adjuster is unsure of coverage If there is a question of coverage When the adjuster has verified coverage

A: If there is a question of coverage A properly executed non-waiver agreement allows the insurance company to complete a thorough investigation without implying that coverage is available for the loss.

When is it appropriate for an adjuster to secure a non-waiver agreement with the insured? If the adjuster senses the claim may be fraudulent in nature. If the adjuster is unsure of coverage. If there is a question of coverage. When the adjuster has verified coverage.

A: If there is a question of coverage. A properly executed non-waiver agreement allows the insurance company to complete a thorough investigation without implying that coverage is available for the loss.

Under the personal auto policy the "supplementary payments" coverage is: In addition to the limit of liability. Added by endorsement. Included in the limit of liability. Not available under the personal auto policy.

A: In addition to the limit of liability.

Upon request made by the consumer, a person who procures an investigative consumer report on the consumer must make a complete and accurate disclosure to the consumer of the nature of the report and investigation within: In writing and mailed to the consumer within 30 days of the request. In writing and mailed to the consumer within 15 days of the request. In writing and mailed to the consumer within 10 days of the request. In writing and mailed to the consumer within 5 days of the request.

A: In writing and mailed to the consumer within 5 days of the request. (This disclosure must be made in writing and mailed or otherwise delivered to the consumer no later than five days after the date on which the request for the disclosure was received from the consumer.)

A homeowner with personal property insured for $60,000 had a fire which destroyed everything. The total value of the personal property at the time of the loss was only $50,000. What principle would be violated if her insurer paid her more than $50,000? Indemnity Negligence Liability Other Insurance

A: Indemnity. (Under the principle of indemnity insurance should not pay for more than the actual loss sustained by the insured, even if the policy limit is higher than the loss amount or if there is more than one policy applying to the loss.)

CGL policies are often referred to as "third party" contracts. Which company would be considered the "third party" in General Construction Company's policy? Inferno Heating Company, a claimant We Rip-Em-Off Insurance Company, the insurer General Construction Company, the insured We Rip-Em-Off Insurance Company, the insurer and General Construction Company, the insured

A: Inferno Heating Company, a claimant. (The claimant is always the third party in a liability claim.)

There are four people in the Smith family: Mr. Smith, Mrs. Smith, Susan Smith (Mr. and Mrs. Smith's daughter), and Mrs. Hillman (Mrs. Smith's mother). The Smiths own a family car which is covered by a personal auto policy. Mrs. Hillman also has a 1995 Chevy Impala on which she carries no insurance (it is not listed on the Smith's policy). Which of the following injuries would NOT be eligible for medical payments coverage under the Smith's personal auto policy? Injuries sustained by Mr. Smith while riding in the Chevy driven by Mrs. Hillman. Injuries sustained by Mrs. Hillman when she is driving Mr. Smith's car. Injuries sustained by Mrs. Hillman when she is driving her own car. Injuries sustained by Susan Smith when she is driving the "covered" family car.

A: Injuries sustained by Mrs. Hillman when she is driving her own car. Mrs. Hillman's vehicle is not insured and she is driving her own car when she sustains an injury. She is not covered. Other family members in her car would be covered by the other insurance carried by the Smith's.

All of the following exposures are covered under the commercial general liability policy, EXCEPT: Injury to an employee of the insured. Liability assumed under a lease of premises. Damages caused by products after their sale. Damages to others by slander.

A: Injury to an employee of the insured. Injuries to employees are only covered by workers compensation insurance.

Many stationary objects, such as bridges, tunnels and power lines fall within the nationwide marine definition because they are considered to be: Instrumentalities of transportation and communication. Of substantially high values. Capable of being transported. Exposed to the same perils as vessels at sea.

A: Instrumentalities of transportation and communication. (Items such as bridges, tunnels, power lines, pipelines, and radio transmission towers fall specifically under the nationwide marine definition category because they are "instrumentalities of transportation or communication." They are not insured under typical commercial property insurance. They fall specifically under the nationwide marine definition category called "bridges, tunnels, and other instrumentalities of transportation and communication".)

All of the following are considered to be family members on the PAP, EXCEPT: Insured's son who lives in the household Insured's foster child who lives in the household Insured's mother who doesn't live in the household Insured's step-son residing in the home

A: Insured's mother who doesn't live in the household The insured's mother although a relative by blood is not living in the household so therefore is not considered to be a family member. A family member is related to the insured by blood, marriage or adoption and resides in the household.

All the following are covered under Section II of the homeowner policy EXCEPT: Injury to a newspaper carrier who slips on the insured's steps Premiums on bonds required for lawsuits defended by the insurer Intentional bodily injury to others by the insured Reasonable expenses incurred by the insured to assist with a lawsuit

A: Intentional bodily injury to others by the insured. (Intentional acts are not covered under the homeowner policy.)

Amelia has suffered a covered collision loss to her vehicle. The insurer requires that her vehicle be repaired at a repair shop of the insurer's choice. The insurer: Is guilty of an unfair claims practice act. Can make this request. Waives the deductible, if any, in this case. Can usually get the work done for less and can help to reduce insurance costs.

A: Is guilty of an unfair claims practice act. The insurer can recommend a repair shop, but cannot require that a particular shop be used.

Which is true regarding towing and labor coverage in auto insurance? It covers mechanic's charges for work done at the scene of a breakdown. It only applies when there is an accident. It applies after a responsible driver's insurance is exhausted. It comes automatically when physical damage coverage is purchased.

A: It covers mechanic's charges for work done at the scene of a breakdown. (The optional towing and labor endorsement includes towing charges and labor charges for work done at the place of disablement.)

How is a combined deductible applied in an Equipment Breakdown policy? It applies per piece of covered equipment damaged as a result of a breakdown It is first deducted from the aggregate amount of any loss to which it applies The insurer will not be liable for any loss that occurs during the specified time period immediately following a breakdown It is based on a percentage of the breakdown loss

A: It is first deducted from the aggregate amount of any loss to which it applies (If a combined deductible applies to two or more coverages provided, it is first deducted from the aggregate amount of any loss to which it applies.)

Which of the following is true about "open perils" protection? It is limited by specific exclusions. It provides coverage for scheduled risks. It provides coverage for the named perils. It does not exclude any perils from coverage.

A: It is limited by specific exclusions. In "named peril" type policies the covered perils are named or specified. If the peril is not listed, then coverage does not apply. Conversely, in an "open perils" policy, ALL perils are covered unless specifically excluded. Open peril forms contain more exclusions than named peril forms for obvious reasons.

Which of the following statements is NOT correct regarding proof of loss? It is the insureds option to complete. The insurance company requests it. It confirms the insureds opinion of the loss. It is often a sworn statement.

A: It is the insureds option to complete. (Providing a proof of loss is NOT the option of the insured. Sometimes the insurer provides the forms, but a proof of loss is a sworn statement signed and presented by the insured for payment of a claim. Concealment or fraud in this statement can void claim payment. Accurate statements as to the time, cause of loss or other details in addition to items claimed are mandatory.)

Which of the following best describes the act of arson? It is a friendly fire It is usually done as a motive for profit It is an accidental fire The fire stays within its boundaries

A: It is usually done as a motive for profit (Arson is usually motivated by a chance for financial gain.)

All of the following statements regarding the Motor Carrier Act of 1980 are correct, EXCEPT: It requires truckers to certify that they are able to meet financial obligations arising from physical damages of their trucking operations. It requires truckers to certify that they are able to meet financial obligations arising from liabilities of their trucking operations. Commercial Inland Marine Motor Truck Cargo insurance is used to cover the liability for hauled cargo. The MCS-90 endorsement must be attached to a truckers policy to show that insurance is being used as proof of financial responsibility.

A: It requires truckers to certify that they are able to meet financial obligations arising from physical damages of their trucking operations. (The Motor Carrier Act applies to liability only. The MCS-90 form is used to indicate that the vehicle in question has coverage including pollution liability for specifies limits being defined by what is being hauled.)

Under the CGL policy, all of the following are "insured contracts" as defined by the policy, EXCEPT: Land and mine surveyor agreements. Lease of premises agreements. Railroad sidetrack agreements. Elevator maintenance agreements.

A: Land and mine surveyor agreements. (The CGL policy contains a contractual liability exclusion, which eliminates coverage for risks of others that the insured assumes in any written contract except an "insured contract." A land and mine surveyor agreement is not an "insured contract." The other three are covered as "insured contracts.")

All of the following is considered an "insured" under a CGL policy, EXCEPT: Officers and directors. The named insured's spouse. Stockholders of the named insured. Lawyers of the named insured.

A: Lawyers of the named insured. The lawyers for the named insured are not by definition an "insured" under the CGL policy. The other three choices are by definition, an insured under the policy.

Misrepresentation is: Encouraging a prospect to drop an existing policy in order to sell another policy. Leading a client to believe that an insurance policy provides benefits that it does not provide. Offering an inducement for the purchase of insurance. Suggesting that the insured's carrier is inferior and does not pay claims promptly.

A: Leading a client to believe that an insurance policy provides benefits that it does not provide. (Leading a client to believe that an insurance policy provides benefits that it does not provide is an example of misrepresentation.)

The deductible under a homeowner policy does not apply to which of the following? Liability coverage Theft coverage Glass coverage Vandalism coverage

A: Liability coverage. Liability coverage as well as medical payments coverage are not subject to a deductible.

Which of the following is not essential in determining if a salvage award is to be made? Life-saving efforts. The effort must be successful. The salvage service must be voluntary. The property involved must be in peril from some hazard.

A: Life-saving efforts. (No salvage award is involved solely for life-saving efforts.)

The maximum amount a policy will pay in the event of a loss is called the: Limits of liability. Coinsurance amount. Deductible. Pro rata return.

A: Limits of liability. (The limit of liability is determined at the time of the application and may be amended during the policy period by an endorsement. A company is not obligated to pay for a loss in excess of the insured's coverage.)

Which of the following conditions is not found in the commercial inland marine conditions form? Appraisal Pair, Set or Parts No Benefit to Bailee Maintenance of Security Systems

A: Maintenance of Security Systems. (Maintenance of security systems is not part of the conditions in the commercial inland marine conditions form.)

Mary is a newly hired and unlicensed employee of an insurance agency. She is being trained by the other staff members. A customer comes in and Mary collects the money for the premium. All of the following would apply in this situation, EXCEPT: Mary is transacting Insurance and is, therefore, guilty of a misdemeanor. Mary could be fined up to $500. Mary could be jailed for up to one year and pay a $500 fine. Mary is not guilty of anything.

A: Mary is not guilty of anything. (She is guilty of transacting insurance without a license. The penalties stated could be applied.) Literally what the **** is this explanation? Like **** me, right?!?

The insured's deliberate failure to reveal material facts that would affect the insurer's decision to issue an insurance policy is called: Rebating Material concealment Over indemnity Fraud

A: Material concealment Concealment would be a material misrepresentation and the insurer could cancel the policy.

What is the difference between arbitration and mediation in the adjusting of claims? Mediation is not binding whereas with arbitration, the decision is final and binding on the parties Both involve a signed waiver Arbitration usually involves a person in the legal profession Only one involves the law of estoppel

A: Mediation is not binding whereas with arbitration, the decision is final and binding on the parties. (Arbitration is when the parties in a dispute submit their differences to a private body and the private body's decision is usually final and binding to both parties. Mediation involves an impartial person, usually in the law profession, who helps the parties analyze their dispute and devise a compromise.)

In aviation insurance, which of the following would cover crew members? Medical Payments (by endorsement) Bodily Injury Extended Liability Passenger Liability

A: Medical Payments (by endorsement) (There is a provision under medical payments coverage that adds coverage for crew members for an extra charge.)

In aviation insurance, which of the following would cover crew members? Medical Payments (by endorsement) Bodily Injury Extended Liability Passenger Liability

A: Medical Payments (by endorsement) There is a provision under medical payments coverage that adds coverage for crew members for an extra charge.

Which of the following statements is FALSE concerning business auto coverage? Medical payments coverage is automatically provided. It may be used to cover specifically described autos only. If written to cover "any auto", non-owned and hired autos are automatically covered. Whether newly acquired autos are automatically covered depends upon the applicable coverage symbol.

A: Medical payments coverage is automatically provided. Medical payments coverage is an optional coverage (and not automatically provided) for private passengers autos under the BAP.

Mrs. Collins rents a house with an attached garage. While backing out of the garage her daughter opens the car door which catches the side of the garage causing severe damage to the wall. Mrs. Collins carries a HO-4 Homeowner policy and auto liability coverage. The landlord also carries a DP-3 on the dwelling and garage. Which policy should ultimately pay for this loss? Mrs. Collins' auto policy. Mrs. Collins' HO-4 policy. The landlord's auto policy. The landlord's DP-3 policy.

A: Mrs. Collins' auto policy. (Although the landlord's DP-3 dwelling policy would respond to this loss if the landlord made a claim under it, his insurer would most likely then subrogate against Mrs. Collins. Then, Mrs. Collins would file that claim under her Auto Liability coverage, which would respond up to its per accident property damage limit.)

Which of the following is true regarding admitted aircraft liability? Negligence is not a factor Must prove legal liability Based on a board review Based on a limited threshold of damage

A: Negligence is not a factor When an insured has purchased admitted liability for aircraft, negligence does not have to be proved when injuries or death occurs to passengers. The policy merely pays the claim, subject to the limits, without litigation.

A Commercial General Liability form provides automatic coverage for newly acquired organizations for up to: Thirty days. Ninety days. One year. Six months.

A: Ninety days

The insured is injured by an uninsured motorist in a vehicle that is owned by the insured but is not insured. What coverage would apply to the insured for their injuries caused by the uninsured motorist? The claim is covered Part of the claim is covered None of the claim is covered The insurer must seek reimbursement on behalf of the insured from the uninsured driver

A: None of the claim is covered. (No coverage would apply to the insured. All owned vehicles must be insured and uninsured motorist coverage must be purchased.)

Adjusters have a "good faith" duty owed to the claimants in a claim. Which of the following is not a "good faith" duty? Misrepresenting pertinent facts or insurance policy provisions relating to any coverage at issue Failing to pay a settlement within 30 days after an agreement is reduced to writing None of the responses apply to the "good faith" duty owed claimants Failing to pay the amount of any claim due any person insured by the contract within 60 days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause

A: None of the responses apply to the "good faith" duty owed claimants. (None of the following responses are permitted acts to satisfy the "good faith" duty to the claimants.)

Which of the following policies would cover an insured's $15,000 inventory loss discovered during a semi-annual inventory? None of these policies would cover the loss 'Businessowner's Policy Building and Personal Property form with Special Causes of Loss Employee Theft Coverage

A: None of these policies would cover the loss. When the only proof of a loss is an inventory or accounting computation, insurance will typically NOT pay for the loss. There needs to be more evidence of wrongdoing, such as physical evidence of a break-in or proof that an employee covered under a dishonesty bond caused the loss.

In the state of Louisiana, an adjuster cannot influence where an insurer gets his or her motor vehicle repaired. If the adjuster is caught influencing a claimant, he or she can be fined: Not more than $100.00 for each offense Not more than $250.00 for each offense Not more than $500.00 for each offense Not more than $1,000.00 for each offense

A: Not more than $500.00 for each offense. (When making a payment incident to a claim, no insurer shall require that as a condition to such payment, repairs be made to a motor vehicle, including window glass repairs or replacement, in a particular place or shop or by a particular entity. Any insurer violating the provisions of this section shall be fined not more than $500 for each offense.)

If a Louisiana licensee holds a non-resident license in another state and violates the insurance laws of the other state, what is required of that licensee in the state of Louisiana? Nothing. Notification must be given to the Louisiana Insurance Commissioner upon license renewal. Notification must be given to the Louisiana Insurance Commissioner within 30 days of the final disposition of those charges. Louisiana law pertains only to violations occurring in Louisiana.

A: Notification must be given to the Louisiana Insurance Commissioner within 30 days of the final disposition of those charges. (An insurance producer must report to the Commissioner of Insurance any administrative action taken against the producer in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. This report must include a copy of the order, consent to order, or other relevant legal documents.)

Prior to commencing subrogation, the insurer should: Notify the adverse party Present the adverse carrier with intent to subrogate Place the local arbitration forum on notice that subrogation is proceeding Obtain a signed subrogation agreement, trust agreement or loan receipt from the insured

A: Obtain a signed subrogation agreement, trust agreement or loan receipt from the insured (The insurer should obtain a signed subrogation agreement, trust agreement or loan receipt from the insured.)

Which of the following terms best describes an accident including continuous and repeated exposure to similar harmful conditions? Occurrence Accident Liability Negligence

A: Occurrence. (Occurrence is the most widely used definition of the cause of bodily injury or property damage liability. It includes the term, in most cases, accident, which is the sudden and accidental cause of loss.)

Which of the following policies would be used to cover imports and exports? Ocean marine Personal Property General Liability Businessowners policy

A: Ocean marine Ocean marine pertains to import and export risk, including the cargo being shipped as well as the vessel transporting goods or people.

Where is covered property listed and described on the BOP? In the coverage form Under the conditions On the declarations page Under the extensions of coverage

A: On the declarations page

Where is Covered Property listed and described on the BOP? In the coverage form Under the conditions On the declarations page Under the extensions of coverage

A: On the declarations page. (Covered Property is listed and described on the declarations page.)

In Louisiana, payment of losses to the insured resulting from a suspicious fire must be made: Immediately Within 30 days of the fire Once the arson investigation has officially concluded Once the arson investigation officially begins

A: Once the arson investigation has officially concluded The period set for payment of losses resulting from fire and the penalty provisions for nonpayment within the period does not apply where the loss from fire was arson related and the state fire marshal or other state or local investigative bodies have the loss under active arson investigation. The provisions relative to time of payment and penalties will commence upon certification of the investigating authority that there is no evidence of arson or that there is insufficient evidence to warrant further proceedings.

The policy term of a flood insurance policy is: One or three year term Three year term only Up to five years One year term only

A: One year term only. Flood insurance is written on a one-year term basis.

The penalty for failure to satisfy a coinsurance requirement of a property insurance policy is: Only a portion of a partial loss will be paid. No coverage will be in effect in the event of a total loss. There will be no coverage in the event of a partial loss. Only a portion of the policy limit will be paid if there is a total loss.

A: Only a portion of a partial loss will be paid. If the insured's policy contains a coinsurance clause and the insured carries less than 80% of the value of the property, a penalty will occur in case of partial losses. The insured can always insure for more than 80% of the value of the property.

Which of the following is true regarding the coverage under an aviation policy? Only the pilots named in the declarations or pilot endorsement can operate the aircraft. Qualified substitute pilots are covered and do not have to be listed for coverage to apply. Coverage applies in flight under any conditions requiring special permit or waiver from the FAA even if such permit or waiver has been granted. By a declared pilot operating outside the limitations imposed in the declarations.

A: Only the pilots named in the declarations or pilot endorsement can operate the aircraft. (Only the pilots named in the declarations or pilot endorsement can operate the aircraft.)

When an insured is liable for causing an intentional injury, under what circumstances, if any, will an umbrella liability policy cover such a loss? Only when the injury is bodily injury, and the insured used reasonable force to protect persons or property When the injury is personal injury, bodily injury or property damage, and the insured used reasonable force to protect persons or property Always, as long as the policy terms are met Never, because the injury was intentional

A: Only when the injury is bodily injury, and the insured used reasonable force to protect persons or property. The exclusion reads as follows: Expected or Intended Injury - "bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property.

The insured is covered under an HO-5 policy. What coverage does the insured have for contents coverage? Open Peril Coverage Broad Form Peril Coverage Named Peril Coverage Replacement Cost Coverage

A: Open Peril Coverage The HO-5 form provides open peril coverage on both structures and contents.

A Scheduled Personal Property endorsement under a Personal Inland Marine policy is usually issued on which of the following bases? Open peril. Blanket. Replacement cost. Valued.

A: Open Peril. Coverage is provided on an open peril basis. The property is covered on a per item scheduled basis and not a blanket basis. Losses are settled on an ACV (actual cash value) or agreed amount basis.

The DP-3 dwelling form provides: Open peril coverage on structures and broad form peril coverage on contents. Broad form peril coverage on buildings and contents. Basic peril coverage only. Fire, lightning, extended coverage and vandalism & malicious mischief coverage only.

A: Open peril coverage on structures and broad form peril coverage on contents. The DP-3 provides open peril coverage on structures and broad form peril coverage on contents. The other forms are named peril forms and are not as broad as the open peril form.

A tree has fallen on the insured's vehicle. This is an example of what type of loss? Other Than Collision Collision Specified Perils Coverage Property damage liability

A: Other Than Collision

Which of the following is covered by a flood policy? Overflow of inland or tidal water Vehicles A broken water main Livestock

A: Overflow of inland or tidal water. (Overflow of inland or tidal water is the prime coverage under flood insurance. Mudflow is also covered. Mudslides are not. The coverage does not include damage or loss of livestock or roads.)

If an insured chooses to purchase "uninsured motorist economic-only" coverage, how does it differ from regular uninsured motorist coverage? Pain and suffering are included. Pain and suffering are not included The coverage is the same Higher limits of coverage cannot be purchased

A: Pain and suffering are not included (The coverage is the same as uninsured motorist coverage except that it covers only the actual costs of injuries to the insured and the occupants of the insured's vehicle. Pain and suffering are not included under this coverage.)

A: Pain and suffering are not included. The coverage is the same as uninsured motorist coverage except that it covers only the actual costs of injuries to the insured and the occupants of the insured's vehicle. Pain and suffering are not included under this coverage.

The watercraft endorsement to the homeowner policy would cover liability due to: Hauling cargo for someone else in the boat Renting of docking slips Parasailing and hang-gliding Additional living expenses

A: Parasailing and hang-gliding Damage to property of others in the care of the insured is excluded. The endorsement would not cover additional living expenses or the renting of the dock. The only possible choice is liability caused by parasailing and hang-gliding which requires the boat to be in operation.

The purpose of the Louisiana Insurance Guaranty Association is to: Pay the covered claims of insolvent insurers. Provide a market for property risks unable to obtain coverage in the standard markets. Provide reinsurance for insurers who provide wind coverage. Provide a market for those automobile risks unable to purchase insurance in the standard markets.

A: Pay the covered claims of insolvent insurers. (The purpose of the plan is to pay the covered claims of insolvent insurers who cannot honor their claims.)

An agent has altered an auto application for a customer. He struck through the higher limits of auto coverage for underinsured motorist coverage and inserted a lower limit. Neither the insured nor the agent initialed the change. The insured signed the application. The policy was renewed for three years with the lower limit. The insured was involved in a hit and run accident and was killed. What should the insurer do? Pay the lower limit of coverage Deny the claim because of the vagueness of intent Pay the higher limit Refuse to adjust the claim on the basis of an altered application

A: Pay the higher limit. This is an actual case and the insurer paid the higher limit that had been struck through on the application without any acknowledgment on the part of the applicant. Unfair claims practice laws forbid the adjuster to adjust claims on the basis of an altered application. It was determined by the insurer's legal counsel that the higher limit should be paid.

The payment of a claim in exchange for a release indicating that the claim was paid as a result of a settlement agreed to by all parties is called a: Payment and Discharge. Full Settlement. Full Release. Full Payment.

A: Payment and Discharge. When all parties agree, the insurer pays the claim and the insured signs the release. It is referred to as "payment and discharge."

Which of the following is NOT provided by the farm employers liability and farm employees medical payments insurance endorsement? Payment of statutory workers compensation benefits Pays medical payments to an injured farm employee Provides employers legal liability coverage where a bodily injury has occurred to an employee Provides defense coverage to the farm owner as a result of an injured employee who brings a legal action

A: Payment of statutory workers compensation benefits. (This endorsement offers farm employers liability coverage and farm employee medical payments insurance. This endorsement does not provide statutory workers compensation benefits.)

Which of the following allows the insured to increase their contents coverage amount for specified periods of time when inventory may be higher than usual? Peak Season Endorsement. Difference in Conditions. Protective Safeguards Endorsement. Spoilage Endorsement.

A: Peak Season Endorsement. The Peak Season endorsement may be used by businesses such as department stores during the holiday season when their inventories are higher than usual.

Which of the following is the correct description of the medical expenses limit in the liability section of the BOP? Per accident Per person, per occurrence Per incident Per location, per occurrence

A: Per person, per occurrence

The insured owns a two-family dwelling and rents out one of the units. The insured suspects that drugs are being sold from the apartment unit he is renting and enters the premises without notice and searches the premises but does not find drugs. What coverage would the insured need if the tenant brings a lawsuit for invasion of privacy? Bodily Injury Coverage Medical Payments Coverage Personal Injury Coverage Contractual Coverage

A: Personal Injury Coverage. (The insured would need the "personal injury coverage" endorsement. Coverage would include invasion of privacy, defamation of character, wrongful eviction, malicious prosecution and other coverages that a landlord might need.)

The insured owns a two family dwelling and rents one of the units. He suspects drugs are being sold from the apartment unit and enters the premises without notice and searches the premises but does not find drugs. What coverage would the insured need if the tenant brings a lawsuit for invasion of privacy? Bodily Injury Coverage Medical Payments Coverage Personal Injury Protection Contractual Coverage

A: Personal Injury Protection (The insured would need "Personal Injury" Liability Coverage which can be added by endorsement to the Homeowner Policy. The coverage also includes defamation of character, wrongful eviction, malicious prosecution and a few other coverages that a landlord might need.)

What endorsement should an insured add to his or her homeowner policy to cover the replacement cost of personal property? Inflation Guard Endorsement Personal Property Replacement Cost Endorsement Scheduled Personal Property Endorsement Special Peril Endorsement

A: Personal Property Replacement Cost Endorsement

Coverage B covered by the general liability policy provides coverage for: Personal and advertising injury liability Bodily injury and property damage liability Medical payments None of the responses are correct.

A: Personal and advertising injury liability Coverage B in the CGL policy covers personal and advertising injury liability. Normally these claims do not involve bodily injury. The newer forms provide for bodily injury coverage when an injury occurs when a person such as a shoplifter has been detained and a scuffle occurs.

The personal inland marine coverage form which provides open peril insurance for specific classes of personal property on an itemized and scheduled basis is called a: Personal article floater. Personal property floater. Personal effect floater. Personal transportation floater.

A: Personal article floater. (The personal article floater requires the specific listing of each item to be insured. The personal property floater covers property on an "unscheduled" basis using a blanket limit per type of personal property to be insured. This form requires the specific listing of each item to be insured.)

Which of the following should an insurance agent recommend to a prospective insured who owns substantial amounts of valuable silverware, jewelry, and furs? Personal articles floater. Homeowners policy. Personal effects floater. Extended coverage endorsement.

A: Personal articles floater. Silverware, jewelry and furs contain theft limitations under the homeowners policy. Other limitations such as a loss of a stone from a ring are better insured specifically under a floater.

The insureds are retired and do not own a home. They live and travel extensively in their motor home. To cover their personal items what personal inland marine form would you suggest they purchase? Personal effects floater Personal articles floater Personal property floater Personal property and personal articles floaters

A: Personal property and personal articles floaters. (The best form for them would be the personal property form. However, certain items such as jewelry, fine arts or other collectibles might be better covered under a personal articles floater. Both forms should be recommended.)

A dead tree beside Jerry's home is best described as which of the following types of hazards? Physical hazard Proximate hazard Moral hazard Morale hazard

A: Physical Hazard (This is obviously a physical hazard to the house. Broken branches or a downed tree can cause injuries.)

Which of the following situations would be covered under bodily injury (BI) liability coverage? Physical Impairment False Arrest Libel Suicide

A: Physical Impairment Libel, slander, and suicide are not covered within the definition of bodily injury. Physical impairment is a form of bodily injury. Libel and slander are forms of "personal injury" coverage.

Though multiple parties may be involved in a lawsuit, the opposing sides are referred to as: Insured and claimant Complainant and defendant Plaintiff and defendant Counsel and co-counsel

A: Plaintiff and defendant. (The entity bringing the lawsuit is the plaintiff. The entity defending against the lawsuit is the defendant.)

Which of the following is not a duty of an adjuster in a property loss? Assist the insured in mitigating the loss Determine if the insured has complied with the policy provisions Determine the extent of salvage, if any, and its value Prepare repair cost estimates of the loss

A: Prepare repair cost estimates of the loss (It is the duty of the insured to obtain repair cost estimates of the damage and present them to the adjuster for payment or review. The adjuster would prepare a rough estimate for the insurer but in the final analysis for the payment of the claim, the insured would have to get the exact repair estimates.)

Which of the following has a separate aggregate limit provided in commercial liability insurance: Contractual Liability Products and Completed Operations Incidental Medical Malpractice Extended Bodily Injury

A: Products and Completed Operations

The home business insurance endorsement is available to cover certain businesses under the homeowner program. Which of the following coverages cannot be included? Professional Liability Coverage Property used for home business Business Liability, including Products-Completed Operations Business Income and Extra Expense, and Crime Coverages that Relate to the Home Business

A: Professional Liability Coverage (Professional liability coverage must be insured under a separate policy.)

The limited coverage for Mexico endorsement to the personal auto policy: Provides coverage for accidents that occur in Mexico within 25 miles of the United States border. Covers Mexican citizens while visiting the United States on a temporary basis. Eliminates the territory restriction in the PAP for travel within Mexico. Makes it unnecessry for a United States resident driving in Mexico to purchase Mexican auto insurance.

A: Provides coverage for accidents that occur in Mexico within 25 miles of the United States border. This endorsement provides coverage for accidents that occur in Mexico within 25 miles of the United States border. Coverage is in excess of liability coverage purchased through a Mexican insurer and applies only if Mexican coverage has been purchased. It applies only when the insured will be in Mexico for 10 days or less. It does not apply to any suit brought by a Mexican citizen. It does not cover a resident or citizen of Mexico driving the car.

An individual can satisfy the Louisiana automobile financial responsibility law with all of the following EXCEPT: Providing a personal (chattel) property bond equal to the required amount. Show evidence of auto coverage in the amounts of $15/30/25 Qualify as a self insurer. Provide a monetary bond issued by a surety in an amount equal to the required amounts.

A: Providing a personal (chattel) property bond equal to the required amount. (Providing a personal property (chattel) bond as opposed to a bond with real estate property as collateral, is not a method of satisfying the financial responsibility law.)

All of the following are duties of an insured when filing a claim, EXCEPT: Providing an adjuster to investigate the claim. Providing a proof of loss statement. Preserving the undamaged property to the best of his/her ability to avoid additional loss. Full cooperation in providing the insurance company with all relevant books and records.

A: Providing an adjuster to investigate the claim. (It is the duty of the insurer to investigate the claim. The insured is not obligated to obtain an adjuster. If there is a dispute, the insured has the option of retaining an attorney or hiring a public adjuster.)

Bodily injury claims are usually classified as types of damages. Which of the following is considered "exemplary" damages? Strict Damages Punitive Damages General Damages Special Damages

A: Punitive Damages (Punitive damages (also known as exemplary damages) are damages intended to reform or deter the defendant and others from engaging in similar conduct which formed the basis of the lawsuit. An example would be a driver going 120 miles per hour in a school zone and hits a school bus. Punitive damages would punish this driver and others from repeating the same offense.)

Under Coverage C (personal property) of the homeowners program all of the following categories of property are limited, EXCEPT: Securities. Gold. Recreational furniture. Watercraft.

A: Recreational furniture. (All of the HO forms contain a list of property subject to limitations. Recreational furniture is not included within this list.)

Personal umbrella liability policies usually cover liability as a result of: Performing a professional service. Serving as an officer or director of a nonprofit corporation or association. For a work related activity None of the activities are covered

A: Serving as an officer or director of a nonprofit corporation or association. (Coverage is included while serving as an officer or director of a nonprofit corporation or association.)

Losses caused by all of the following are covered under the National Flood Insurance Program, EXCEPT: Sewer backup. Overflow of tidal waters. Mudflow. Rapid accumulation or runoff of surface water.

A: Sewer backup. Most insurance carriers now offer sewer backup coverage. This type of loss is not considered to be a flood loss.

The term "undamaged stock", as defined in an Equipment Breakdown policy, applies to which of the following situations? Refers to stock that has not suffered a reduction in value. Refers to the salvage value of the stock after a total loss. Refers to the reduction in the value of the stock as a result of damage to other stock. Losses are not adjusted on a replacement cost basis.

A: Refers to the reduction in the value of the stock as a result of damage to other stock. This term applies to the reduction in value of undamaged stock parts that become unmarketable or obsolete. If an item cannot be sold because of a loss to other stock, it loses value. Therefore, if there is damage as a result of a direct loss, the insurer limits its liability for unmarketable or obsolete stock. The maximum limit payable is $25,000. As an example, ABC Manufacturing manufactures and sells cutlery sets. A mechanical breakdown loss results in the knives being destroyed. The forks and spoons in the warehouse are undamaged. All cutlery parts are made from the same batch of metal and cannot be properly matched to create a new batch of knives. The forks and spoons are sold as separates at a deep discount because they cannot be marketed as a set. The value of this loss is the reduction in value between the price as separate items and what ABC could have been received as part of a set.

Which of the following would be considered a deceptive act on the part of an adjuster? Refusing to complete a claim until the insured has paid his or her renewal premium Paying a claim based on a properly completed proof of loss Paying a claim in a timely manner Denying an uncovered claim

A: Refusing to complete a claim until the insured has paid his or her renewal premium. (An adjuster cannot require a claimant to pay a renewal premium on his or her policy in order for a claim to be adjusted. This would be considered a deceptive act.)

A standard commercial inland marine form is not available for which of the following? Equipment dealers Accounts receivable Valuable papers Release bill of lading

A: Release bill of lading Commercial inland marine offers many different coverage forms for specific needs of policyholders, including equipment, accounts receivable, and valuable papers.

No insurer may issue checks or drafts or partial settlement of a loss or claim that is still being negotiated that: Releases the insurer from additional liability. Releases the insurer unless the policy or bond limit has been paid. Releases the insurer unless a compromise has been made. Releases the insurer from liability in one instance but leaves open future demands for payment in an agreement agreed to by all interested parties.

A: Releases the insurer from additional liability. (An insurer cannot issue a check for partial payment of a claim that contains language that releases the insurer from total liability unless the limit of the policy or the bond has been paid or a compromise has been otherwise made.)

Claims expenses under Section II of the homeowner forms do not include which of the following? Investigation costs Premiums on bonds required in a suit the company defends Relocation expenses Reasonable expenses incurred at the company's request

A: Relocation expenses. (Claims expenses do not include relocating expenses.)

In a policy with replacement cost to damaged carpet and countertops, if replacement will not match up in quality and appearance with the undamaged property, what must the adjuster do? Pay only for the damaged carpet and countertops Replace the carpet throughout the entire building Give the insured credit on the deductible for the mismatched carpet or countertops Replace the damaged carpet and countertops and some of the undamaged property within reasonable site lines.

A: Replace the damaged carpet and countertops and some of the undamaged property within reasonable site lines. (Replace the damaged carpet and countertops and some of the undamaged property within reasonable site lines.)

You are the adjuster and you are contacted by a claimant and advised that he has fired his attorney and wants to proceed to negotiate the claim directly with you. As an adjuster, what should you do? Request a "drop letter" Advise him to obtain other counsel Proceed to adjust the claim Do not proceed to adjust the claim

A: Request a "drop letter" The adjuster should request a "drop letter" from the claimant evidencing that he is no longer represented by counsel.

The Motor Carrier Act of 1980: Guarantees trucking operators liability coverage at a reasonable price. Established an insurance exchange to provide coverage to trucking operators. Monitors insurers writing liability coverage for trucking operators. Requires trucking operators to file proof of pollution liability insurance.

A: Requires trucking operators to file proof of pollution liability insurance. (This legislation mandated that trucking operators must file proof of pollution liability insurance.)

Which of the following would be considered a material misrepresentation by an insured that could void the insurance contract? When completing the application, Pat accidentally reverses the number in her street address. Robert fails to reveal that he manufactures fireworks in his basement. Carol has three dogs but does not mention this on the application. Kathy states on the application that she has been insured with three different insurance companies.

A: Robert fails to reveal that he manufactures fireworks in his basement. Manufacturing fireworks and not revealing this fact would be a material misrepresentation. The increase in exposure is not contemplated by the rates charged in a homeowner policy. The homeowner policy is not designed to cover this type of activity.

The ___ clause covers collision damage to another vessel. Sistership Sue and Labor Inchmaree Running-Down

A: Running-Down The running-down clause covers collision damage to another vessel. It does not cover docks or injury to passengers.

An umbrella policy provision that requires the insured to participate in a portion of a loss not covered by primary coverage but is covered under the umbrella is: Self-insured retention. Coinsurance clause. Participation clause. Deductible.

A: Self-insured retention. (This is called a self-insured retention which acts as a deductible for losses not covered under the primary coverage but are covered under the umbrella policy.)

The adjuster has uncovered some discrepancies in matters pertaining to a claim. He is unable to contact the insured to discuss these matters. What should the adjuster do? Deny the claim Send a reservation of rights letter to the insured's last known address Do nothing until the insured can be contacted Pay the claim and give the insured the benefit of the doubt

A: Send a reservation of rights letter to the insured's last known address. In this case the adjuster should send a reservation of rights letter to the insured's last known address to preserve the rights of the insurer.

In general liability insurance, which of the following would be considered an occurrence? Smoke from a factory discolors the paint on nearby homes An auto strikes and injures a pedestrian A digging machine breaks a water main A customer slips on an oily surface in a store and suffers severe head injuries

A: Smoke from a factory discolors the paint on nearby homes This is an example of an occurrence claim as opposed to an "accident." Occurrence includes damage caused by a sudden and unforeseen event and also includes a continuous or repeated exposure which results in bodily injury and/or property damage.

What is the definition of a non-resident agent? Someone licensed in his or her state and obtains a license in another state to solicit insurance business in that state. One that is licensed by a company that is not authorized to write business in the agent's state of residency. A Surplus Lines Agent A clerical employee of an out of state insurance agency.

A: Someone licensed in his or her state and obtains a license in another state to solicit insurance business in that state. (In order to obtain a non-resident insurance license an individual must be licensed in his or her home state.)

What is the definition of "agent?" Someone who represents an insurance company in the soliciting and negotiation of insurance. Someone who shops and obtains insurance for the insured. Someone with a certificate of authority. Someone who only handles claims for an insurer.

A: Someone who represents an insurance company in the soliciting and negotiation of insurance. (An agent is appointed by an insurance company after having obtained an insurance license. The role of an agent is to solicit and negotiate insurance with clients.)

Wages lost as a result of auto accident where a third party was at fault are considered: Special Damages Punitive Damages Other Damages General Damages

A: Special Damages. (Lost wages are considered to be special damages in that they can be readily determined.)

Mr. Jones has injured Susan Miller in an auto accident. Susan has sustained medical expenses, loss of wages, and the loss of use of her vehicle. These types of expenses are known as: Special Damages. General Damages. Exemplary Damages. Punitive Damages.

A: Special Damages. These are called "special damages" and involve expenses where the costs are known or can easily be determined.

The auto liability limits $100/300/50 are an example of: Split limits. Single limits. Aggregate limits. Occurrence limits.

A: Split limits. This is an example of a split limit. Separate limits apply to bodily injury per person, bodily injury per accident, and property damage per accident.

A customer has consumed contaminated food manufactured by the U-Eat company. It is discovered that the manufacturer failed to properly clean some of the equipment and as a result the food was spoiled. This is an example of: Strict liability. Absolute liability. Operations liability. Personal injury.

A: Strict liability. This is an example of strict liability and is most commonly applied in Products Liability claims. Certain parties are held liable without regard to fault or negligence. If the claimant can prove that a product was defective and that the defect caused the injury, the manufacturer can be held strictly liable.

Which of the following coverages does not have a limit of insurance listed in the CGL Declaration page? Supplementary Payments Fire Damage Medical Payments Personal Injury

A: Supplementary Payments. (Supplementary payments pay in addition to the limits of liability. While some do have their own individual limits such as the payment of bail bond premiums, the insurer can spend whatever it wants for certain other expenses.)

After completing an inspection of an insured's pressure equipment and fire suppression systems, the inspector determines that the pressure equipment needs to be repaired and the suppression systems have not been cleaned and inspected in the time frame required by the policy. The insurer will: -Give notice to the insured to make the repairs within 24 hours -Require the insured to send copies of the cleaning and repairs to the underwriter -Suspend coverage immediately by red tagging the items until they are repaired, cleaned and pass reinspection -Reduce coverage in case of loss by 25%

A: Suspend coverage immediately by red tagging the items until they are repaired, cleaned and pass reinspection.

What symbol is used for a non-owned auto in a commercial automobile policy? Symbol 9. Symbol 1. Symbol 5. Symbol 8.

A: Symbol 9.

Which of the following is an insured required to do after suffering a property loss? Take steps to protect the property from further loss Have the damaged property appraised Hire an outside claims adjuster Increase his coverage

A: Take steps to protect the property from further loss. (The insured is required to protect the property from further loss. The insurance company will pay all reasonable costs involved in protecting the property from further loss or damage.)

An HO-2 form sets special coverage limits on all of the following items, EXCEPT: Money. Television sets. Jewelry. Boats.

A: Television sets. Furniture is not subject to the special limit provisions of the policy.

What endorsement may be used on the dwelling policy to keep values current with the replacement cost of the buildings? The Automatic Increase Endorsement The Automatic Replacement Cost Coverage Construction Cost Increase Endorsement The Automatic Market Value Increase Endorsement

A: The Automatic Increase Endorsement. The "automatic increase endorsement" is used to keep the coverage current as a result of inflation on construction costs.

Which of the following dwelling forms provides coverage for loss of rental income? The Basic, Broad and Special Form The Basic and Broad Forms only The Broad and Special Forms only The Special Form only

A: The Basic, Broad and Special Form. All of the forms provide for rental value coverage. In the DP-2 and DP-3, it is 20% of the Coverage A limit and is additional coverage. With the DP-1, the 20% coverage reduces the available Coverage A amount on the dwelling. (Note: in North Carolina the percentage is 10%.)

Mr. Jones purchases a blender at a discount store. He brings it home, plugs it in and it malfunctions causing the house to catch fire. The fire destroys the blender, the home and its contents and causes bodily injury. What is not covered under the general liability policy? The House The Bodily Injury The Contents of the House The Blender

A: The Blender. (The product itself (the blender) is excluded.)

Which of the following dwelling forms provides replacement cost coverage for dwellings and "other structures?" The Broad and Special Forms only The Basic, Broad and Special Forms The Basic and Broad Forms only The Special Form only

A: The Broad and Special Forms only. (If the insured carries a limit of at least 80% of the replacement cost value on the dwelling and the other structures, the broad and special dwelling forms provide replacement cost settlement on the dwelling and other structures. The basic dwelling form provides actual cash value only.)

All of the following are examples of government insurers, EXCEPT: The state run FAIR plan The National Flood Insurance Program The Excess & Surplus Lines Market Medicare/Medicaid

A: The Excess & Surplus Lines Market The excess and surplus lines markets are privately run insurers that usually writes risks that the standard market does not want to write.

The federal law that requires insurers to give customers written privacy notices is: TRIA. The Fair Credit Reporting Act. The Gramm-Leach-Bliley Act. The CAN-SPAM Act.

A: The Gramm-Leach-Bliley Act. (The Gramm-Leach-Bliley Act (GLB Act), also known as the Financial Modernization Act of 1999, requires insurers to give customers written privacy notices that explain information-sharing practices and requires insurers to safeguard sensitive data.)

The federal law that requires insurers to give customers written privacy notices is: TRIA. The Fair Credit Reporting Act. The Gramm-Leach-Bliley Act. The CAN-SPAM Act.

A: The Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act (GLB Act), also known as the Financial Modernization Act of 1999, requires insurers to give customers written privacy notices that explain information-sharing practices and requires insurers to safeguard sensitive data.

An insurer has decided to non-renew a homeowner policy which has a mortgagee clause. Who must be notified of this action? The Insured and the mortgagee Only the insured Only the mortgagee The realtor

A: The Insured and the mortgagee. (The insurer must notify both the insured and the mortgagee in case of a cancellation or non-renewal of the policy.)

What part of the policy contains the promises made by the insurance company to the insured? The Insuring Agreement The Conditions Clause The Definitions Exceptions to the Exclusions

A: The Insuring Agreement. (The insuring agreement contains the promises made by the insurer to the insured in exchange for a premium.)

An insured has injured a third party while loading his private passenger automobile. Which of the following would respond to cover the claim? The Personal Auto Policy Section II of the Homeowner Policy A CGL Policy A Boatowners Policy

A: The Personal Auto Policy The personal auto policy is the only one that would cover the claim.

"Policy territory" in the CGL includes: The United States only The United States and Canada The United States, Canada, and Mexico The United States, Canada, Mexico, and England

A: The United States and Canada The policy territory includes the United States, Canada, Puerto Rico and other possessions of the U.S.

Jones Manufacturing produces a product for resale. They sell all of the items during the 2014 calendar year. During the year 2014 they are insured by ABC Insurance Company. In 2015 they change coverage to XYZ Insurance Company. Late in 2015, a consumer is injured because of a defect in the insured's product. Who is responsible for the claim? The consumer under "Let the Buyer Beware" doctrine. The ABC Insurance Company as Jones' liability carrier. The XYZ Insurance Company as Jones' liability carrier. A pro-rata agreement will have to be reached between the ABC and XYZ insurance companies.

A: The XYZ Insurance Company as Jones' liability carrier. (Though the faulty product was actually manufactured during the time that ABC was the insurer, the damages did not occur until XYZ had taken over the liability coverage. The entity responsibility for a liability or injury claim is the carrier providing coverage at the time of the injury.)

An insured with an HO-3 policy suffers a covered loss to a dwelling. If, at the time of the loss, the amount of insurance carried is 80% or more of the full replacement cost of the dwelling, the insurance company may settle the loss for not more than the least of the following amounts, EXCEPT: The actual cash value of that part of the building that has been damaged The limit of coverage under the policy that applies to the building The replacement cost of that part of the building that has been damaged The amount actually spent to repair or replace the damaged building

A: The actual cash value of that part of the building that has been damaged (If the insured complies with the 80% of the replacement cost clause on the dwelling, the losses must be paid on a replacement cost basis.)

What is "express" authority under the law of agency? Allows the agent to perform all of the usual tasks required to sell and service an insurance contract The authority the general public assumes the agent has The authority given to the agent by the company in a written contract or orally The authority granted by the insurance department in the issuance of an insurance license

A: The authority given to the agent by the company in a written contract or orally. Express authority is the authority specifically given to the agent either in writing or orally.

Coach Joe loans his car, covered under a Personal Auto policy, to assistant coach Tom to take several members of the Lake Recreation Swim Team home after a meet. In the event of an accident, the liability section of the Personal Auto policy would cover all of the following, EXCEPT: The auto manufacturer. Joe. Tom. Lake Recreation Swim Team.

A: The auto manufacturer. (Coach Joe is covered because he owns the car. Assistant coach Tom is covered because he had Joe's permission to drive his car. Lake Recreation Swim Team is also an insured but only with respect to legal responsibilities for acts or omissions of a person for whom coverage is afforded.)

Which common exclusion is intended to prevent duplicate coverage for a loss under a general liability policy? The care, custody and control exclusion The automobile exclusion The pollution or contamination exclusion The sistership exclusion

A: The automobile exclusion (Accidents involving licensed automobiles are excluded under the general liability policy.)

When a BOP declaration page contains more than one named insured, in case of a cancellation, who receives the notice? (All of the insureds must receive a copy of the notice The first named insured Any named insured is sufficient to be in compliance The second or third named insured)

A: The first named insured (In all property and casualty policies the first named insured receives the premium and cancellation notices.)

All of the following statements about claims-made coverage in a CGL policy are correct, EXCEPT: The basic extended reporting period gives the insured ten years to report claims that allegedly occurred during the policy period. The claims-made form includes Personal and Advertising Injury coverage. Under the claims-made form, claims filed during the policy period can be covered even if the event occurred prior to the policy's effective date. The date before which no claim will be accepted is known as the retroactive date.

A: The basic extended reporting period gives the insured ten years to report claims that allegedly occurred during the policy period. (A claims-made CGL policy automatically includes a "basic extended reporting period" which gives the insured 60 days beyond the expiration date to report occurrences to the insurer which the insured suspects MAY result in a claim. If a claim is made against the insured during the next FIVE years for one of those reported occurrences, the insurer will cover it.)

A fire starts in the rear of Paws & Such Veterinary Care. Four cats belonging to clients as well as the owner's dog are treated for smoke inhalation. What if any is covered by the BOP for the clinic? All the animal injuries are covered as they were in the building at the time Nothing is covered as animals are excluded The cats belonging to clients are covered but not the owner's dog The owner's dog is covered but the cats are excluded

A: The cats belonging to clients are covered but not the owner's dog. (Although animals are excluded from coverage on the BOP, the exception is any animal that is considered stock for sale or animals that belong to others that the insured is boarding. So in this case the cats belonging to clients would be covered but not the injury to the owner's dog.)

Henry Jones carries uninsured motorist coverage. While driving home he is run off the road by an unidentified driver and suffers injuries when his vehicle strikes a tree, There was no physical contact with the other driver's vehicle. In Louisiana, how will the adjuster proceed on this claim? The claim is not covered Medical payments are paid but no loss of wages are paid The claim would be paid and treated as an uninsured motorist event The other driver must be identified

A: The claim would be paid and treated as an uninsured motorist event. (Uninsured motorist coverage must include coverage for bodily injury arising out of a motor vehicle accident caused by an automobile that has no physical contact with the injured party. However, the burden of proof is the obligation of the injured party to show that the injury was the result of the actions of the driver of another vehicle whose identify is unknown or who in uninsured or underinsured.)

A new definition of collapse has been included in the commercial property forms that provide this coverage. The main change is: The collapse must involve an abrupt falling down or caving in of the structure, rather than a gradual sequence of damage. The entire building must fall down or cave in. Coverage is provided if caused by hidden insect or vermin damage even if the insured was aware of a problem. The collapse can be a gradual falling down or caving in of the structure.

A: The collapse must involve an abrupt falling down or caving in of the structure, rather than a gradual sequence of damage. (The collapse must involve an abrupt falling down or caving in of the structure or a part of the structure, rather than a gradual or sequence of damage.)

A staff adjuster primarily represents the interests of: The insured The claimant The company The public

A: The company (The staff adjuster primarily represents the interest of the insurance company and secondly those of the insured. A staff adjuster is also referred to as a company adjuster.)

Which statement is correct under the general liability policy? The insured generally has the right to settle a claim for damages. The company generally has the right to settle for damages. Both the insured and the company must agree before a claim for damages can be settled. None of the responses are correct

A: The company generally has the right to settle for damages. (Only the insurer generally has the right to settle a claim under the general liability policy.)

If the insured, covered under a Personal Automobile policy, sues an uninsured motorist and then obtains a judgment: The company is bound by the decision of the court. The company is not bound by the decision of the court, unless the company has given the insured written consent to sue. The company is bound by the decision of the court only if it falls within the limits of the policy. None of the responses are correct.

A: The company is not bound by the decision of the court, unless the company has given the insured written consent to sue. (The policy stipulates and excludes the following: "If that "insured" or the legal representative settles the "bodily injury" claim without our (the insurer) consent".)

Who makes a declaratory judgment? The insurance company The insured's attorney The court The insurance department

A: The court. (The court makes the declaratory judgment.)

When an insurance agent is writing a CGL policy and he/she has a choice of using an "occurrence" form or a "claims-made" form, he/she should be aware that the main difference between the two forms is: The coverage trigger. The policy period. The exclusions. The definitions in the policy.

A: The coverage trigger. (A coverage "trigger" is something that clearly defines when coverage begins and ends under a policy. The two forms differ as to when coverage is "triggered.")

Under the Equipment Breakdown policy loss settlement provisions, what date is used to determine value? The date of the loss The inception date of the policy The original date of the equipment purchase The market value of the equipment

A: The date of the loss

Under the DP-1 dwelling form, which of the following is true? The extended coverage (EC) perils can be added by endorsement. The extended coverage (EC) perils can only be added by attaching the vandalism & malicious mischief (V&MM) endorsement. The broad form perils can be added by endorsement. Money, securities, software and credit cards are included under Coverage C - Personal Property.

A: The extended coverage (EC) perils can be added by endorsement. (EC perils can be added by endorsement without adding the V&MM endorsement. Money and the like are excluded under Coverage C. The Broad Form DP-2 can be used instead of the Basic Form DP-1 but the broad form perils cannot be added by endorsement to the DP-1. There is no such endorsement.)

An umbrella policy without any special endorsements would NOT cover: Bodily Injury Personal Injury Uninsured Motorists Property Damage

A: Uninsured Motorists. (Uninsured motorists must be added by endorsement in order for the umbrella policy to cover this exposure.)

Which of the following statements regarding aircraft insurance is incorrect? The hull physical damage coverage is written with a flat deductible. Coverage for passengers can be excluded. Special coverage must be arranged for air meet liability exposures. Wear and tear is excluded

A: The hull physical damage coverage is written with a flat deductible. Aviation hull coverage is usually expressed as a percentage of the value of the aircraft.

The verdict in a personal injury liability suit was higher than the insured's underlying liability policy's limit of insurance. In this situation: The insured, the insurance company providing the insured's underlying policy and the company providing the insured's umbrella policy must agree on an appeal and share the expenses of that appeal. Neither the insured's underlying insurer nor the umbrella insurer may appeal without the insured's agreement. The insurance company providing the insured's umbrella liability policy can appeal the case at its own expense even if the insured and the company providing the underlying policy do not appeal. The case cannot be appealed by any of the parties.

A: The insurance company providing the insured's umbrella liability policy can appeal the case at its own expense even if the insured and the company providing the underlying policy do not appeal. The umbrella insurer has the option to appeal even though the underlying insurer and the insured chooses not to appeal.

Medical Payments under a Personal Automobile Policy cover: The insured as an occupant of the vehicle and any other occupant of the insured vehicle, and the insured as a pedestrian when hit by an auto. The insured as an occupant of a car only. An occupant of the insured vehicle only. The insured as a pedestrian only.

A: The insured as an occupant of the vehicle and any other occupant of the insured vehicle, and the insured as a pedestrian when hit by an auto. (Medical Payments Coverage in a Personal Auto Policy defines the "insured" in this coverage part as the named insured and spouse, plus any "family member." However, they are "insureds" only when occupying any trailer or a motor vehicle that is meant to be on a public road. They are also "insureds" if, while being a pedestrian, they are struck by either type of vehicle. Finally, anyone occupying a covered auto is also an "insured".)

When an insured is fulfilling his or her duties to prove a loss by inventorying the damaged property, who pays the expenses incurred by the insured? The insured only Insurer only Either the insured or the insurer, as the policy states The insured if any other conditions are not satisfied

A: The insured only. An insured has various duties in the event of loss: notify the insurer and police if a law may have been broken; give prompt notice to insurer of the claim; take reasonable steps to mitigate further damage; cooperate with the insurer, allowing inspection of the damaged property; and submitting a proof of loss within 60 days of its request. The insured is instructed to "keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim." Reasonable expenses paid by the insured to protect the property from further loss are the obligation of the insurer. Thus any other expenses incurred by the insured are NOT paid by the insurer and the insurer will only pay the "reasonable expenses" to protect the property if the insured maintains an inventory of expenses paid. Until that time, the insured is responsible for all expenses.

Under an HO-4, which of the following would be covered? The insured's contents and personal liability The dwelling A detached garage Excess jewelry coverage

A: The insured's contents and personal liability. The HO-4 is designed for apartment dwellers or those that live in a rented dwelling. Since they do not own the structures, no coverage is needed to cover the real property.

A non-waiver is issued by which party? The claimant The insurer The court The commissioner

A: The insurer A non-waiver is issued by an insurer when there are coverage issues which need further investigation, and the insurer wishes to maintain its rights to deny or limit coverage in the future.

The insured carries a Businessowners Policy (BOP). If the premises become 69% or more vacant, what can the insurer do? The insurer can cancel the policy. The insurer can non-renew the policy. The insurer can restrict coverage. The insurer can reduce coverage.

A: The insurer can cancel the policy. The insurance company can cancel the policy if the risk is 69% or more vacant.

The insurance company will pay liability damages on behalf of an insured when: The insurer determines the insured is legally liable. A relative is injured on the premises. Only when the court determines the insured is legally liable. Any time a third party is injured on the insured's premises.

A: The insurer determines the insured is legally liable. Most insurers will pay a claim once it is determined their insured is legally liable. To avoid paying a claim in a timely fashion would expose the insurer to an "unfair claims settlement practice" violation.

In regard to automobile insurance in Louisiana, if a person declares bankruptcy, what options does the insurance carrier have? The insurer has grounds to cancel or non-renew the policy The insurer has the option of raising the premiums The insurer has no legal rights as long as the premiums are being paid The insurer can lower the policy limits to the state's financial responsibility law limits

A: The insurer has no legal rights as long as the premiums are being paid. (As long as the insured continues to pay the policy premium, the insurer has no legal rights to take any action against the insured or change the premiums solely because of the bankruptcy.)

In Louisiana, what is the insurers responsibility to a claimant who has been deprived of the use of their personal vehicle for more than five working days excluding Saturdays, Sunday, and holidays due to the negligence of the insured driver? The insured driver must pay the expenses The insurer must pay the expenses The expenses are not covered It depends on the liability limits and coverage of the insured

A: The insurer must pay the expenses (The insurer shall pay, to the extent legally responsible, for reasonable expenses incurred by the third party claimant in obtaining alternative transportation for the entire period of time during which the third party claimant is without the use of his personal vehicle.)

Under the appraisal clause in a commercial inland form, which of the following is true? The insurer still retains its right to deny the claim entirely It is not binding on all parties The insurer is not bound by the decision of the appraisers and/or umpire The insurer must seek legal action under the appraisal clause to enforce the terms and conditions

A: The insurer still retains its right to deny the claim entirely The insurer is bound by the outcome of the appraisal. They still reserve, however, the right to deny the claim if there is a coverage, rather than a valuation question.

When does an adjuster's license expire in Louisiana? The last date of the birth month of the adjuster in the odd-numbered year following issuance and on that same day every odd-numbered year thereafter. Every three years Every four years They are continuous

A: The last date of the birth month of the adjuster in the odd-numbered year following issuance and on that same day every odd-numbered year thereafter. (An adjuster license for an individual will expire on the last date of the birth month of the adjuster in the odd-numbered year following issuance and on that same day every odd-numbered year thereafter.)

Under an HO form with replacement cost coverage, what is the maximum amount that will be paid in case of a covered loss? The limit of coverage Limit of liability Actual cash value Depreciated value less the deductible

A: The limit of coverage. (In property insurance, the maximum the insurer will pay in case of a covered claim is the limit of the coverage. Deductibles are subtracted from the loss and not the limit of the coverage.)

Mrs. Vincent is covered on a PAP policy which covers her 2012 Ford SUV. She carries liability and full physical damage coverage. Her neighbor owns a 2002 Chevrolet pick up truck with liability coverage only. Mrs. Vincent borrows the truck to pick up lawn furniture, parks the truck at Home Depot and leaves the keys in the ignition. The truck is stolen and later found wrecked. Which of the following would apply? The loss is covered under Mrs. Vincent's "other than collision coverage." The loss would be covered under her neighbor's policy. The loss is covered under Mrs. Vincent's collision coverage. The loss would be covered under her neighbor's homeowners coverage.

A: The loss is covered under Mrs. Vincent's "other than collision coverage." The loss is covered under Mrs. Vincent's policy under the "other than collision" coverage because the damage resulted from the theft. Since the neighbor did not carry physical damage coverage Mrs. Vincent's policy would be primary. If the neighbor carried full physical damage coverage then Mrs. Vincent's policy would be excess.

What commercial auto policy form would be used to cover a company that transports their own property and property of others? The motor carrier form The business auto form The truckers form The garage liability form

A: The motor carrier form A motor carrier is anyone who transports property by auto in a commercial enterprise, regardless of whether he or she was hired for that purpose. The BAP can be used to cover an insured for transporting his or her own property. However, if an insured is transporting property of others and his or her own property, the Motor Carrier form should be used. The Truckers Form was withdrawn by ISO in 2005 and it has been replaced by the Motor Carrier form.

Which of the following claims would not be covered by the liability Section II of a Homeowner's Policy? The insured's neighbor files a claim for damage to his house caused by the named insured's dog. The named insured files a claim for damage to his house caused by his dog. An insured accidentally runs over his neighbor with a golf cart at the local country club. An insured's dog attacks and damages his neighbor's golf cart.

A: The named insured files a claim for damage to his house caused by his dog. (Section II is liability coverage while a claim for damage to a named insured's house is a property claim.)

All of the following statements are false regarding an insured's right to cancel an automobile policy, EXCEPT: The named insured may cancel an auto policy at any time. No partial or full premium refund is made if the named insured cancels the auto policy. The named insured may cancel the auto policy by giving 45 days written notice to the company. The named insured may not cancel the policy once it has been in force for two consecutive years with the insurance company.

A: The named insured may cancel an auto policy at any time. (The insured can cancel the auto policy at any time. No advance notice to the insurance company is required. When an insured cancels a policy, a return of premium will be given, less a penalty of around 10% of the unearned premium. For example, the insured pays a $1,200 annual premium and cancels exactly six months later. Instead of receiving a $600 refund (the remaining premium for the second half of the year) the insured will get approximately $540. This penalty is called a "short-rate" cancellation. If the insurer cancels the policy, the insured would receive the full $600, the amount of premium remaining for the second half of the year. This is called a pro-rata cancellation.)

Which of the following statements is true regarding the named insured's right to cancel a BAP during the policy period? The named insured may not cancel the policy. The named insured may cancel the policy by giving the insurer 30 days' written notice. No premium refund is made if the named insured cancels the policy. The named insured may cancel the policy by returning the policy or mailing advance written notice to the insurer at anytime.

A: The named insured may cancel the policy by returning the policy or mailing advance written notice to the insurer at anytime.

The definition of concealment is: The neglect to communicate that which a party knows and should communicate to the other party. The neglect to communicate that which a party believes to be true, but has no actual knowledge of. The neglect to tell the other party immaterial facts of which the other party has no knowledge. The neglect to tell the other party when the other party waives communication.

A: The neglect to communicate that which a party knows and should communicate to the other party. (Concealment is when one does not reveal information that should be communicated. Sometimes this is done because the information withheld could have an adverse affect if known.)

Underinsured motorist coverage provides protection to an insured after an accident in which of the following situations? The other driver has insufficient insurance and is negligent. The other driver has no insurance and is negligent. The other driver has no insurance but is not negligent. The insured driver has insufficient limits and is negligent.

A: The other driver has insufficient insurance and is negligent

Which of the following would NOT be covered under the Uninsured Motorists coverage of the Personal Auto policy? The owner of the uninsured vehicle. The 22-year-old college student. The estranged spouse of the insured. The neighbor borrowing the insured's car.

A: The owner of the uninsured vehicle. (The Uninsured Motorist coverage provides coverage for the insured and anyone riding in the insured's auto. It does NOT cover the owner of the uninsured vehicle.)

The term "bailment" as used in property insurance refers to: The type of bond posted to release an individual from jail. The amount of the bond needed to release an individual from jail. The licensing of a bail bondsman. The owner's property is temporarily in the possession of another and will ultimately revert back to the owner.

A: The owner's property is temporarily in the possession of another and will ultimately revert back to the owner. (The owner's property is temporarily in the custody of another. The owner is known as the "bailor" and the party with temporary custody is the "bailee.")

Which of the following should be insured by an HO-6? The owners of condominiums and townhouses A tenant who rents an apartment in a high-rise building The owner of a ranch-style house A person who wishes to schedule their valuable jewelry separately on a policy

A: The owners of condominiums and townhouses. (The HO-6 is for owners of condominiums and townhouses.)

What does the term "comparative negligence" refer to? The percentage of fault is shared by each driver in an accident in which both contribute to causing the accident. The one who is most negligent receives no payment when the claim is settled. The one who is the least negligent receives no payment when the claim is settled. If both parties have contributed to causing the accident, neither party receives any payment when the claim is settled.

A: The percentage of fault is shared by each driver in an accident in which both contribute to causing the accident. (Comparative negligence establishes the percentage of fault shared by each driver in an accident in which both contribute to causing the accident. Comparative negligence laws vary by state.)

The Equipment Breakdown policy (formerly called boiler and machinery) provides for replacement cost coverage in case of a covered claim. Under what conditions would the insurer only pay actual cash value in case of a loss? Only if the policy is endorsed to provide ACV coverage The policy pays replacement only if the repairs are made within twenty four months of the accident. The policy will pay replacement cost as long as the repairs are expedited regardless of a time limit. The policy always provides replacement cost coverage in case of a covered claim.

A: The policy pays replacement only if the repairs are made within twenty four months of the accident. (The valuation clause provides for replacement cost coverage on all property, except if repair or replacement is not made within 24 months of the date of the accident, actual cash value will be paid.)

Each of the following is true about farm coverages, EXCEPT: The principal residence may be covered by farm forms or homeowner forms. Farm coverage may be written as a monoline policy or part of a package. Livestock may be insured. Property and liability coverages may be included.

A: The principal residence may be covered by farm forms or homeowner forms. (The principal residence must be covered under a farmowne policy. The homeowner policy is not designed to cover farm property, even the residence.)

Which of the following statements is true about the automobile assigned risk program? The program designates an insurance company as the insurer of a specific insured. A number of insurance companies share the losses incurred by a specific insured. An insurance agent designates the insurance company for a specific insured. The insured designates a specific insurance company to insure his auto.

A: The program designates an insurance company as the insurer of a specific insured. Neither the agent, nor the insured, can designate the insurer that will accept the risk. The program makes this determination. The agent can request a certain company and often his or her request will be accepted.

A policyholder would expect to find which of the following information in the Insuring Agreement section of an auto policy? The promise of the insurance company to pay on the behalf of the insured. Bodily injury limits of liability. Exclusions regarding certain uses of the auto. The obligations of the insured in the event of a loss.

A: The promise of the insurance company to pay on the behalf of the insured. (The obligations of the insurance company are stated in the Insuring Agreement. Note that the policy contains several sections of coverage. Each section has its own insuring agreements. The exclusions follow the insuring agreements.)

Each of the following is true about commercial property floaters filed by the Insurance Service Office (ISO), EXCEPT: The rates for these coverages are unregulated. Individual insurers are not required to use the ISO forms. The coverages may be written as a monoline or part of a package policy. The coverages are usually written on an open perils basis.

A: The rates for these coverages are unregulated. Rates for Commercial Property Floaters filed with ISO are regulated. Each type of form requires a rating formula. These are audited by ISO. There are many forms, not filed with ISO, where the rates are not regulated. These are called "non-controlled" lines of insurance.

How does a non-waiver agreement differ from a reservation of rights letter? One is in writing while the other is verbal. The non-waiver agreement is good for 30 days, whereas the reservation of rights letter is unlimited. One is issued by the insurer, the other by the adjuster. The reservation of rights letter is a notice mailed to the insured, whereas the non-waiver agreement must be signed by the insured.

A: The reservation of rights letter is a notice mailed to the insured, whereas the non-waiver agreement must be signed by the insured. (The non-waiver agreement requires the insured's signature.)

In the event of a total loss on an automobile policy issued on a "stated amount" basis, coverage is: The policy limit ACV of the vehicle The stated amount or ACV whichever is less No limit applies

A: The stated amount or ACV whichever is less

The insurance industry in the United States is regulated primarily by: The U.S. Congress The President The states The Supreme Court

A: The states

The aggregate limits of an expiring claims-made policy are reinstated under: The basic extended reporting period. The supplemental extended reporting period. Limits can never be reinstated when claims are paid. Only under a new renewal policy.

A: The supplemental extended reporting period. When the insured purchases the supplemental extended reporting form the aggregate limits of the expiring policy are reinstated to their full amount.

The term "time element coverage" is used when the amount of loss depends on: The time it takes to repair, rebuild or restore damaged property. The time between the effective date and date of loss. The time between the date of loss and expiration date. The time of year when a seasonal business suffers a loss.

A: The time it takes to repair, rebuild or restore damaged property. (This is called the restoration period.)

Isaac owns a home with an older furnace in need of repair. He leaves his home for a month to avoid the cold weather. He returns to find that the furnace had stopped working. Water pipes have frozen and burst and his property has been damaged. Since the water ran for almost a month, his water bill is extremely high. What will the adjuster pay? The water damage Loss of water value The particular part of the plumbing system that busted The furnace repairs and/or replacement

A: The water damage. One could argue that this was caused by neglect, but the damage cannot be tied to the neglect exclusion. This exclusion applies post-loss and not before a loss has occurred. The company would have to prove intent on the part of the insured to damage his own property. Even if the furnace caused a fire, the company would have to prove an intentional act such as arson. Water is not considered covered property so the value of its loss (the water bill) is not covered.

Mary left an expensive ring on her bedroom dresser before leaving on a business trip. When she returned, the ring was gone. Under the terms of her HO-3 policy, this loss would be considered: Robbery Burglary Malicious mischief Theft

A: Theft. This would be a theft loss. In this case there is the presumption of theft.

Which of the following statements is true regarding controlled forms? These forms are very flexible and can be manuscripted to meet the needs of individual insured's. These forms are always issued by state insurance departments. Conditions and rates for these forms are determined solely on the basis of underwriting judgment. These forms are usually issued according to published rules and rates.

A: These forms are usually issued according to published rules and rates. (Controlled forms and their rates are filed for approval with the state insurance departments. They are usually issued according to published rules and rates. A jewelers block policy is an example.)

All the following are reasons that a driver would be insured under the assigned risk plan, EXCEPT: They desire to save premium They are uninsurable in the standard markets They have had too many claims They cannot show evidence of satisfying the financial responsibility law of the state

A: They desire to save premium Those drivers with a poor driving records or DUI charges are usually declined by the standard insurance markets. The only auto insurance market for them is the assigned risk plan. The plan is never used to save premium.

Business Auto coverage would apply to an accident or loss during the policy period in each of the following places, EXCEPT: Toronto, Canada. San Juan, Puerto Rico. Unalakleet, Alaska. Tijuana, Mexico.

A: Tijuana, Mexico. (The policy territory does not include Mexico. The newer versions of the BAP include coverage on a world-wide basis for a private passenger vehicle that the insured hires, rents or borrows without a driver for a period of 30 days or less.)

The purpose of asking the court to make a declaratory judgment is: To avoid going to court with a lawsuit To make a final decision as to who is liable To make a binding decision as to the relationship between the parties and their rights with respect to the matter before the court To make a final decision as to damages

A: To make a binding decision as to the relationship between the parties and their rights with respect to the matter before the court. (A binding judgment issued by the court that defines the legal relationship between the parties and their rights with respect to the matter before the court. A declaratory judgment does not provide for the enforcement of the judgment, however.)

The reason to purchase an Umbrella liability policy is: To provide higher liability limits and broader coverage. To provide coverage to cover everything that the underlying coverage might exclude. To avoid deductibles on liability claims. To reduce insurance costs.

A: To provide higher liability limits and broader coverage. Umbrella policies provide excess limits over primary coverages and broader coverage than underlying policies.

Tom has his 1969 Camaro insured on a PAP for $25,000 of stated value physical damage coverage. His car is totaled in an accident. Which of the following is correct in how his auto policy will respond? Tom will receive a check for $25,000. Tom will receive the ACV of the vehicle or $25,000 whichever is less. Tom will be given a brand new car. Tom will be given a car close to what he had and a check for the difference.

A: Tom will receive the ACV of the vehicle or $25,000 whichever is less. (The stated value coverage will attempt to replace the vehicle with one that is "substantially similar" in make, model, options and mileage or give the insured the monetary value of such a vehicle. If the car can be replaced for $14,000 (actual cash value of the vehicle) then he will get the replacement similar car or the $14,000. If the ACV is more than the $25,000, (car cannot be replaced for that amount) he will receive the $25,000.)

The insured, who is a chair manufacturer, produced a new line of lift chairs with electric heat and massage for people who are disabled. After the chairs had been on the market for several months, it was discovered that the control panel had been designed with a glitch in it that could be powerful enough to cause injury. The chairs were withdrawn from the market. The retailer who had purchased the chairs lost a great deal of money because of the recall. Under what circumstances, if any, will the insured's commercial umbrella liability policy cover those losses? Under no circumstances. If it is discovered there was no glitch in the control panels. If it is discovered why there was a glitch in the control panels. If the manufacturer voluntarily withdrew the chairs from the market.

A: Under no circumstances. Product recall is excluded in the policy for product liability. All recall costs must be absorbed by the insured.

A curtain catches fire above the stove in the kitchen. This is what type of fire? Friendly Controlled Sustained Unfriendly

A: Unfriendly. (This is considered to be an unfriendly fire. It has left its place of containment.)

Which of the following is not excluded under Section II-Liability of the BOP? Aircraft, auto or watercraft bodily injury Professional services bodily injury Pollution property damage Valet parking bodily injury

A: Valet parking bodily injury. (Coverage is included for valet parking bodily injury claims. However, the coverage only applies to the ways and means of the insured's premises that are owned or rented. The vehicle must be one that is not owned, rented or loaned to the insured. Coverage is the same in the general liability form.)

Equipment Breakdown coverage does not apply to which of the following losses? Vandals have destroyed a boiler A boiler safety relief valve has malfunctioned and caused the boiler to crack A boiler has exploded due to a water flow problem An electric motor has self-destructed as a result of a broken part

A: Vandals have destroyed a boiler. (Coverage does not apply to loss outside the equipment (often referred to as the insured object or objects). An explosion outside the equipment is not covered whereas an explosion inside the equipment is covered.)

Roger Reed, an employee of Moo Insurance Services, is driving his car while traveling to a client's office on company business. He strikes and injures a pedestrian. He will be liable as the operator and owner of the vehicle. Moo will potentially be ____ liable because Roger was acting on their behalf. Vicariously. Absolutely. Strictly. Primarily.

A: Vicariously. (Vicarious liability is being held liable for the actions of another person, such as an employee. Since Reed was working on behalf of Moo at the time of the accident, they would need Symbol 1 or 9 to cover this liability exposure. Symbol #1 provides coverage for any vehicle used in the insured business and symbol #9 covers non-owned vehicles.)

The giving up of a known right is called: Waiver. Estoppel. Violation of policy conditions. Rebating.

A: Waiver (A waiver can be intentional (expressed) or unintentional (implied).

Most inland marine "all risk" forms exclude loss or damage caused by: Smoke. Vandalism. War. Vehicles.

A: War. War is a standard exclusion under all of the inland marine forms.

Which one of the following situations would be considered an example of strict liability? Wayne keeps a large police-trained dog in his jewelry store as a deterrent to burglars. During the time the store is open for business, the dog is confined to a back room. One day, the dog escaped, ran into the showroom and bit a customer. The roof of a grocery store blew off during a tornado. Pieces of the roof struck the side of the store next door, damaged the siding and broke several windows. Carl thinks of himself as a master handyman but is careless with his tools. A trespasser tripped on a hammer and was injured. Alice deliberately hit Fred over the head with her heavy leather handbag after he remarked that she was overweight.

A: Wayne keeps a large police-trained dog in his jewelry store as a deterrent to burglars. During the time the store is open for business, the dog is confined to a back room. One day, the dog escaped, ran into the showroom and bit a customer. In strict liability there is little if any defense. In most jurisdictions where strict liability is imposed, the defendant is held responsible whether or not he or she is negligent. Wayne had a duty to keep the dog restrained when open for business.

When will an insurance company pay damages on behalf of an insured under a CGL policy? When the company determines that the insured is legally liable Only when a court of law determines that the insured is legally liable When an insured feels morally obligated to make a settlement Whenever a third party is injured on the insured's premises

A: When the company determines that the insured is legally liable. (The purpose of the CGL policy is to pay on behalf of the insured all sums for which the insured can be held legally liable if coverage applies for that particular type of claim.)

A release becomes "good" when: It is notarized It is written It is signed When the settlement check is cashed

A: When the settlement check is cashed. (This is based upon the premise that a release is essentially a contract and to be effective it must be supported by valuable consideration which only occurs when the check is cashed.)

An insured can collect on his automobile medical payments coverage in all of the following situations, except: While injured in an owned vehicle While struck as a pedestrian by a vehicle licensed for on road use As a paying passenger in a taxi cab While in an owned vehicle used as a livery

A: While in an owned vehicle used as a livery. (The personal auto medical payments will not provide coverage for any insured while injured in their vehicle that is used as a public or livery conveyance.)

On March 4, 2007, five people were injured at a department store. The store was negligent. Four of the people were injured very seriously and subsequently filed claims against the store's primary and umbrella polices. But one man whose leg was injured said his injury wasn't too bad, and he didn't file a claim against the store at that time. However, in April of 2008, the man's leg began to bother him, and he had trouble walking. He then saw a doctor and filed a claim for the injury. Since the department store is covered under an occurrence form of commercial umbrella liability policy, which was renewed in 2007, the claim: Will be covered by the 2007 Commercial Umbrella Liability policy. Will be covered by the 2008 Commercial Umbrella Liability policy. Will not be covered under either the 2007 or 2008 policies. Will be covered by both the 2007 and 2008 polices.

A: Will be covered by the 2007 Commercial Umbrella Liability policy. The umbrella is written on the occurrence form and the policy that was in effect at the time of the bodily injury would cover the claim

George is the named insured under a claims-made CGL policy with a retroactive date of July 1, 1990, and a policy period of January 1, 2007 to January 1, 2008. On February 10, 2008, a claim is made against George for property damage that occurred on December 31, 1990. This claim: Will be covered under the automatic 60 day extended reporting period if George has no other insurance that applies Is not covered but would be if George's policy were written on an occurrence basis Is not covered because the occurrence did not take place during the policy period Is not covered because the occurrence took place after the retroactive date

A: Will be covered under the automatic 60 day extended reporting period if George has no other insurance that applies. (The claim is made after the expiration of a claims made policy. Therefore, if reported to the company promptly, the claim would be covered under the 60 day extended reporting period.)

When a hearing is demanded by the Commissioner of Insurance in Louisiana, when must such a hearing be held? Within 60 days following receipt of such demand Within 20 days following receipt of such demand Within 30 days following receipt of such demand Within 45 days following receipt of such demand

A: Within 30 days following receipt of such demand Hearings must be held within 30 days after receipt of the demand, unless postponed by mutual consent. In no circumstance may such hearings be held later than 60 days from the date of the original demand for the hearing, unless otherwise agreed upon by all parties. Any demand for a hearing must be made within 30 days of receipt of notice.

Under the livestock coverage form, within how many days must newly acquired livestock be added to the policy? Within 30 days of purchase Immediately Within 10 days of purchase With 5 days of purchase

A: Within 30 days of purchase (Newly acquired livestock must be reported to the insurance company within 30 days of acquisition, at which time an additional premium will be charged the insured.)

Under the livestock coverage form, within how many days must newly acquired livestock be added to the policy? Within 30 days of purchase Immediately Within 10 days of purchase With 5 days of purchase

A: Within 30 days of purchase (Newly acquired livestock must be reported to the insurance company within 30 days of acquisition, at which time an additional premium will be charged the insured.)

Under Coverage D of the Personal Auto policy, "Coverage for Damage to Your Auto", temporary substitute vehicles are considered to be: Partially covered autos Your covered auto Private passenger autos Excluded autos

A: Your covered auto (A temporary substitute vehicle is considered to be "your covered auto.")

Under the terms of an insurance policy the insurance company's primary obligation is to: Pay covered losses. Cancel the policy. Keep records of the covered property. Ensure that the covered property is safe.

A: pay covered losses

In insurance terms, the party who has been wronged is known as the _____ party, and the person causing the injury is the _____ party. third / first first / third second / first first / second

A: third / first (The third party would be the claimant and the person committing the wrongful act would be the first party. The second party is the insurance company.)

In insurance terms, the party who has been wronged is known as the _____ party, and the person causing the injury is the _____ party. third / first first / third second / first first / second

A: third/first/ (The third party would be the claimant and the person committing the wrongful act would be the first party. The second party is the insurance company.)

A:Costs the insured sustains to recall defective products. (Garage liability coverage includes automobile liability and commercial general liability as well, but products being recalled are excluded from the ISO form. This is because liability insurance is to cover something that occurs and products are recalled to prevent something from occurring.)

ACV until repairs are completed and then the full replacement cost is paid Like most property forms that provide replacement cost coverage, the insurer will not pay replacement cost until the repairs have actually been made.

In Louisiana, the Insurance Commissioner is _____ and the term in office is: appointed by the state legislature/4 years. elected by the citizens of Louisiana/4 years. selected by the state legislature/6 years. appointed by the Governor/4 years.

Elected by the citizens of Louisiana/4 years.

The HO-3 provides _____ coverage on the dwelling and ____ coverage on personal property. Memorize this shit.

open peril / broad peril The HO-3 (Special form) provides open peril coverage for loss to the dwelling and other structures. It provides broad peril coverage for personal property.

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