Insurance Answers

Under the additional coverages of the standardized Businessowners policy, how much is the limit for "Pollutant Clean-Up and Removal" if caused by a covered loss?

$10,000 in any 12-month period..

Alexander has covered a home he has inherited under a DP-1 form with the EC perils included. The home is situated on property that has been passed down in Alexander's family for generations and there is a fairly large family cemetery on the property. How much coverage would Alexander have under Coverage B of his policy, to cover the grave markers and mausoleums in his family cemetery?

0

Dexter covers his dwelling under a DP-2 policy with $10,000 personal property (contents) coverage. He owns a canoe and stores it at a lake in a private garage that he does not own. Fire destroys the garage and Dexter's boat. How much coverage will Dexter's DP-2 form provide for his boat?

0

The NAIC Model Unfair Claim Settlement Practices Act specifies that the insurance company must provide the proper claim forms with a reasonable explanation of how to use them to the claimant within:

15 calendar days of the request.

Chuck's home is covered under a DP-1 policy, when his dwelling suffers significant damage due to a tornado. His Coverage A limit is $100,000 and this satisfies his coinsurance requirement. His policy does not have a deductible form attached. His dwelling is severely damaged and he submits a claim for $96,520 for the dwelling. How much coverage does Chuck have remaining on his policy to cover an appurtenant structure on his property that was also severely damaged.

3480

Adjusters in Texas are required to keep records of the continuing education courses they have taken to meet the license renewal requirement. How long are licensees required to keep these records?

4 years

What is the "retained limit" of a Personal Umbrella policy that must be paid when the umbrella policy covers a claim that was excluded by the underlying policy?

A deductible that the insured must pay when the Personal Umbrella policy covers a claim that was excluded by the underlying liability policy..

Nathan owns an ice cream shop in a strip mall next door to Eli's Hot Dogs & More restaurant. Eli's restaurant is damaged by fire, and Nathan is denied access to his ice cream shop by the fire department because it is adjacent to the damaged restaurant. If Nathan's Commercial Property policy includes a Business Income coverage form, then the insurance company will cover Nathan's loss of business income for:

A maximum of four weeks..

A standard Homeowners policy is best described as:

A package policy that provides both property and liability insurance..

Coverage under the Builders' Risk form is written for:

A period of one year..

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?

Barraty

Section I of the Businessowners policy places limitations on coverage for certain losses if they are not caused by a specified cause of loss. All of the following are specified causes of loss under the policy, EXCEPT:

Building glass breakage..

Homeowners policies provide personal liability coverage that follows an insured anywhere in the world under:

E

Bill may be negligent if he:

Fails to do what a reasonably prudent person would do in the same circumstance. .

Which of the following is an example of the "assumption of risk" defense against negligence?

Fred, in a hurry to get to work, takes a shortcut over a bridge marked "condemned," that subsequently collapses under the weight of his car..

The Garage Coverage form can be used to cover dealers that sell all of the following, EXCEPT:

Jet skis

If the Standard Fire policy is issued with the extended coverage endorsement attached, coverage will be provided for all of the following, EXCEPT:

Law and Ordinance..

In order for a contract to be binding in a court of law, it must be designed for:

Legal purposes..

All of the following statements are true of liability insurance, EXCEPT:

Liability insurance provides indemnification for the insured..

The focus of Equipment Breakdown coverage is:

Loss Prevention

What are the limits on medical benefits for workers compensation claims?

No dollar limit and no time limit

Which of the following would be considered "general damages" that could be awarded to a plaintiff in a negligence case?

Pain and suffering..

Which of the following types of bonds guarantees that all project materials will be paid in full by the contractor upon completion of the project?

Payment Bond

What is "express authority" under the law of agency?

The authority given to the agent as specified in the contract..

In a trial, the duty of a party to prove that the facts it claims are true is known as:

The burden of proof.

Coverage under a standard Personal Watercraft policy extends to all of the following, EXCEPT:

The crew of the boat for medical payments..

Which of the following statements is NOT TRUE regarding the implied warranties of an Ocean Marine policy?

The implied warranties are attached to the policy as an endorsement..

The medical payments coverage of an Aircraft Liability policy can cover the expenses incurred for bodily injury to a passenger in all of the following situations, EXCEPT:

The passenger has slipped and fallen on a wet floor inside the airport, breaking a leg. .

Which of the following would NOT be included in an adjuster's initial / field / preliminary report?

The results of mediation

All of the following are situations where a Commercial Umbrella policy would be triggered to provide coverage, EXCEPT:

The underlying liability policy limits are sufficient to pay the entire claim..

Which of the following is NOT a "duty of the insured" after a loss?

To pay damages to any third-party claimant while waiting to be reimbursed by the insurer for the loss..

During a tornado, Natalie's house is destroyed when a section of a wall is blown down, knocking over a heater, which sets the house on fire and creates smoke. The proximate cause of this loss is:

Tornado

All of the following are "Duties of the Insured" in case of a loss under the 1943 New York Standard Fire policy, EXCEPT:

Within 30 days submit a signed proof of loss stating the time and origin of the loss..

Under a standardized DP-2 or DP-3 policy, what is the maximum that would be paid for additional living expenses if Coverage A was $60,000?

Your answer: $12,000 is correct.

A commercial building worth $400,000 is insured under a Commercial Property policy for $240,000, and an 80% coinsurance clause applies. A $20,000 loss to the building has occurred. How much will the insured receive when a claim is filed?

Your answer: $15,000 is correct.

Personal property normally kept at other residences owned or rented to the insured is covered under the Homeowners forms for:

Your answer: 10% of the Coverage C limit or $1,000, whichever amount is larger.. is correct.

Paolo has an expensive boat and is purchasing insurance to cover it. He is discussing the deductible and his agent suggests a deductible amount that Paolo could pay if the Hull of his boat was severely damaged. Which of the following types of deductibles would be best for Paolo?

Your answer: A percentage deductible. is correct.

Which of the following would be excluded under Part A of the Personal Auto policy?

Your answer: A person transports people from the airport to nearby hotels for a fee. is correct.

Which of the following vehicles is considered a temporary substitute auto under a personal auto policy?

Your answer: An auto loaned by the garage while the vehicle of the insured is being repaired. is correct.

A formal request to an insurance company requesting a payment according to the terms of an insurance contract is known as:

Your answer: An insurance claim. is correct.

Which of the following would be covered under a Personal Umbrella policy?

Your answer: An insured who commits an intentional act of violence to protect his family. is correct.

All of the following statements are true regarding an interline endorsement used in a Commercial Package policy (CPP), EXCEPT:

Your answer: It can apply to one or more coverage parts. is correct.

A Personal Umbrella liability policy:

Your answer: May cover risks that are excluded by the underlying policy. is correct.

The HO-7 form is a rarely used form that covers:

Your answer: Mobile and Manufactured Homes for property damage and liability. is correct.

Paul had his roof inspected by a local contractor, after a strong storm with high winds and hail, passed through his neighborhood. The contractor found damage to the roof and gave Paul an estimate of $9,850 to replace it. Paul filed a claim with his insurance company, and the company promptly sent an adjuster to inspect the roof. The adjuster's estimate to repair the roof came to $9,650. How will the adjuster likely attempt to settle this claim?

Your answer: Negotiate the claim in an attempt to persuade Paul to agree to the lesser amount. is correct.

Marcus has two Commercial Property policies covering his warehouse. Policy A is the primary policy and has a $200,000 limit, and Policy B is an excess policy with a $100,000 limit. After a fire causes $140,000 damage to his warehouse, how will each of Marcus' policies respond (disregarding any deductible)?

Your answer: Policy A will pay $93,333 and Policy B will pay $46,667. is correct.

"Experience rating" provides employers with the incentive to:

Your answer: Prioritize safety and control hazards in the workplace. is correct.

Which of the following is one of the duties of the insured as specified in a Commercial Inland Marine policy?

Your answer: Submit to an examination under oath if the insurer requests it. is correct.

Which of the following is the first duty of the insured after suffering a property loss?

Your answer: Take steps to protect the property from further loss. is correct.

Which of the following Commercial Property conditions is meant to prevent "over indemnification" of the insured?

Your answer: The "Insurance Under Two or More Coverages" condition. is correct.

Which of the following is NOT a correct statement in determining the cost of a "comparable automobile" when a physical damage loss has a occurred?

Your answer: The cost of a comparable automobile as determined by a computerized automobile valuation service that produces statistically valid fair market values within the United States market. is correct.

Mr. Thompson carries the minimum auto liability limits in his state. He drives his car to New York which requires bodily injury limits of $25/50 and a wrongful death limit of $50/100 and no-fault coverage. If he has an accident in New York what coverage would he have?

Your answer: The coverage will automatically be modified to comply with the New York requirements. is correct.

A public adjuster represents the interest of:

Your answer: The insured. is correct.

A public adjuster's fiduciary responsibility is to:

Your answer: The insured. is correct.

The Section I Additional Coverage of the standard Businessowners policy provides coverage for "Debris Removal". Which of the following statements best describes the limit for this coverage?

Your answer: The total limit may be up to 25% of the policy limit for the loss payable with the deductible included, plus up to an additional $25,000 if the policy limits are exhausted. is correct.

The NAIC Model Legislation governing the settling of insurance claims was created:

Your answer: To set forth standards for the investigation and disposition of claims arising under policies or certificates of insurance. is correct.

An insured's boat is struck by another boat. He and his family are injured. His boat sinks because of the damage. An investigation determines that the party that caused the accident is not insured. If the insured carries a watercraft policy, what coverages would apply?

Your answer: Uninsured boater's coverage and hull insurance. is correct.

Which of the following protects against legal liability for loss or damage to baggage?

cargo liability

which of the following is covered under part A of the personal auto policy

damage to the attached garage of a dwelling rented by the insured

Which of the following workers' compensation reserves will be used to pay the expenses associated with IMEs?

expense reserves

Monique's house is covered in brick veneer. Monique's house is which of the following types of construction that insurers use to set insurance premiums?

frame

helena insurance has not been paid in a significant amount of time

it will be cancelled

Which of the following types of insurance companies is known as a "nonparticipating company" because they do not pay their policyholders a dividend?

stock insurance company..

Which of the following sections of an Ocean Marine policy is very similar to the "Duties of the Insured" in other property policies?

the Sue and Labor clause..

Which of the following statements is NOT TRUE regarding the "period of restoration" for Business Income and Extra Expense coverage?

the period of restoration ends when the policy period ends..

which of the following statements is NOT true concerning the law of large numbers

the size of the sample group is not relevant to the accuracy of the results

The definition of "occupying" in the personal auto definitions means all of the following, EXCEPT:

under

Teri is a Texas adjuster who has had her license suspended by the Commissioner. What is the maximum length of time Teri's license can be suspended according to the Texas insurance code?

uno year

The giving up of a known right is called:

waiver

An insured has a vacation home covered under a Dwelling policy and he would like to add coverage to his policy for Personal Liability and Medical Payments. The insured purchased a Personal Liability Supplement with the minimum limits for Coverage M - Medical Payments. How much coverage for medical payments will the insured have for each person?

1000

The insured is covered under a standard Businessowners policy. She has several computers used in the business and the electronic data stored on them becomes corrupted as a result of lightning. The cost to research and restore this data is $20,000. How much will the policy pay for the electronic data?

10k

Blake is covered by a Homeowners policy with a $50,000 Coverage C limit. Disregarding any deductibles, what is the most Blake can collect if his $1,500 boat is stolen from the insured premises?

1500

The insured carries an unendorsed DP-3 dwelling policy on his home and personal contents. While traveling abroad someone broke into the home and stole $200 in cash, a shotgun valued at $1,000, and other household items valued at $2,000. Damage caused by the burglars is $1,500. Assuming no deductible applies to their coverage how much would be paid?

1500

To obtain an insurance agent, producer, or adjuster license, an applicant must be years old

18

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?

2,150

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

Surplus Lines companies in Texas have _____ to acknowledge the receipt of a claim.

30

Hamish has covered his antique automobile with a loss settlement amount that is stated in the policy of $55,000. The ACV of the vehicle is $32,000, but Hamish insured it for more because of his emotional attachment to the car. The policy deductible is $1,000. Hamish is driving his beloved automobile to an antiques car show one afternoon, when he is distracted by another antique vehicle and crashes into a brick retaining wall. Hamish's antique car is a total loss. Which of the following is the amount he should receive for his claim?

31k

A Commercial Property policy has the "Protective Safeguards endorsement attached indicating that the insured has protective safeguards installed such as a sprinkler system. Should the system become inoperative, how long does the insured have to report this fact to the insurer?

48 hours

To be eligible for coverage under a standardized Dwelling policy, the insured must not allow more than _______ boarders to live on the premises.

5

An employee suffers a work-related injury in Texas and is granted workers' compensation coverage. According to Texas regulations, any medical examination of the employee may not be conducted more frequently than every ______ days, unless there is good cause for more frequent examinations.

60

How long after being notified of an injury does an insurance carrier or self-insured employer have to contest the compensability of a workers' compensation claim?

60

Commercial inland marine policies require the insured to submit a signed, sworn statement of loss:

60 days of the insurer requesting it

An employer in Texas receives notice that an employee is suffering from an occupational disease covered by workers compensation. The employer must report this to his/her insurance carrier within _____ days of this notification.

8

Texas issues emergency adjuster licenses in case of an emergency arising out of a disaster. The application must be certified not later than the fifth day after the date on which the person begins works as an adjuster. An emergency license is valid for ______ days.

90

All of the following perils are covered for collapse under the Commercial Property additional coverage, EXCEPT:

A building that is in danger of collapsing..

Dina is a workers' compensation adjuster who is an employee of an insurance company. Dina is:

A company or staff adjuster..

a surety bond is

A form of credit..

The Texas Commissioner reasonably believes that a person has violated a cease and desist order. All of the following penalties may be imposed by the Commissioner, EXCEPT:

A jail term of 30 days..

Which of the following would be considered vacant on an unendorsed Commercial Property policy?

A leased building in which less than 31% of the building is occupied..

Any intentional misinformation provided by an applicant for an insurance policy that would have kept the insurance company from issuing the policy had that information been known is:

A material misrepresentation. .

The "Part B - Medical Payments" coverage of a personal automobile policy covers injuries for all of the following, EXCEPT:

A passenger who is injured in another vehicle that is struck by the insured's vehicle in an accident..

Which of the following losses would be covered by the EC peril of "Windstorm or Hail" under a Dwelling policy?

A roof that suffered damage in a tornado..

Which of the following is NOT covered by liability coverage under a Homeowner policy?

A snowmobile in a park..

Which of the following watercraft would be covered under Section II - Liability of the Homeowners forms?

A watercraft in storage

mr kessler has an auto policy w/ bodily injury limits of $15000/$30000. He injures 2 people in one accident. Mr Brown receieves injuries of $19,000 ........

A: 4000

Dave has suffered a property loss. He hires Katie, a public adjuster to assist him in presenting his claim to indemnify insurance, inc. the company that insures his damaged property. indemnify assigns the claim to mark, one of their staff adjusters. which of the following statements best describes how katie and mark will proceed in processing daves claim.

A: katie will proceed with her investigation and mark will proceed w/ his independently of each other.

A "dual capacity" claim in workers' compensation is filed:

Against an employer that was acting in a capacity "other than as an employer" at the time the injury occurred..

All of the following circumstances are included in the definition of "one breakdown" in an Equipment Breakdown policy, EXCEPT:

All breakdowns may be the result of different causes..

Lara is moving to Europe for two years in order to take advantage of a promotion at her job. She will not take her 4-seat propeller plane with her. What type of Aviation policy would be best for Lara to purchase for coverage on her plane while it is in storage and she is in Europe?

All risk Not in MOtion

Indemnify Insurance, Inc. writes Ocean Marine policies using a deductible amount that is stated on the form and applies to any loss covered by the policy. This is known as:

An average deductible

Which one of the following is an "employee" under Texas workers compensation law and not exempt from the law?

An employee temporarily assigned to do a job outside the employer's normal business..

In order to qualify for a surety bond there are times the principal must have another party sign the agreement. This party agrees to reimburse the surety if the principal defaults. This party is known as:

An indemnitor..

Under the BOP Part III - Conditions section, all of the following would be considered unoccupied, EXCEPT:

An office building containing two empty units and these two empty suites represent 25% of the total floor space..

All of the following are exceptions to the workers' compensation exclusive remedy, EXCEPT:

An on-the-job injury caused by worker fatigue from working an excessive number of over-time hours..

A contractor's bid bond is used:

As a promise from the surety that if the principal is awarded the contract, the principal will enter into the contract for the bid amount and provide required performance bonds..

Alec goes to an amusement park and rides a roller coaster that was designed to flip the riders upside down. Alec is taller than the average person so when the roller coaster flips, he hits his head on the safety bar. After receiving medical care, Alec files a claim against the amusement park, seeking payment for his medical bills, pain and suffering. What defense against negligence would the amusement park most likely use to deny this claim?

Assumption of risk.

All of the following statements are TRUE regarding the Flood Coverage Endorsement to the Commercial Property policy, EXCEPT:

Back-up or overflow of a sewer or drain is covered if that overflow occurs within 48 hours after the flood recedes and the overflow was caused by the flood..

An oral or written contract for temporary insurance is referred to as a:

Binder

Which of the following statements BEST DESCRIBES the main difference between a Commercial Umbrella policy and an Excess Liability policy?

Both Excess Lines policies and Commercial Umbrella policies increase the limits of the underlying policy but the Commercial Umbrella policy can also broaden and extend the coverages..

With regard to workers compensation coverage, a "competitive" state is:

Both private and government insurers write workers compensation policies that compete against each other

All of the following are duties of a workers' compensation adjuster, EXCEPT:

Conducting arbitration on disputed claims..

Which of the following is NOT TRUE of coverage for Business Personal Property and Personal Property of Others in a Commercial Property policy?

Coverage is provided while the property is located within a covered vehicle at any location as long as the vehicle is owned by the insured business..

Bob and Pete's Used Cars has purchased a Garage policy with dealer's physical damage coverage on the cars owned by the dealership at its location. Pete goes to an auto auction 150 miles away, purchases a vehicle and drives it back to the dealership. If Pete suffers a physical damage loss during this trip:

Coverage will apply only if the "Dealers Drive Away Collision" endorsement is attached to the Garage policy..

All of the following statements are true regarding Difference in Conditions insurance (DIC), EXCEPT:

Covers losses due to windstorm..

Which of the following would be covered under Coverage A - Building of the Business and Personal Property coverage form if the damage was caused by a covered cause of loss?

Damage to the insured's lawn mower used by the company maintenance crew..

All of the following statements are TRUE regarding the perils of the Homeowners forms, EXCEPT:

Fire or lightning is a named peril covering the buildings and other structures under an HO-4 form..

Most aircraft physical damage (hull) policies are settled on a:

Insured value basis..

Which of the following statements is correct regarding pollution coverage under the special cause of loss form of a Commercial Property policy?

It is excluded unless it was caused by a covered peril..

Which of the following statements best describes a "monopolistic" state workers compensation fund?

It is the primary source of workers' compensation insurance in those states that do not allow private workers compensation insurance to be sold..

Which of the following situations would be considered "misrepresentation" by an agent or adjuster is:

Leading a client to believe that an insurance policy provides coverage that it does not provide..

All of the following statements are TRUE regarding automobile "no-fault" laws, EXCEPT:

Medical payments and physical damage claims are paid by the state assigned risk fund without determining fault to any party in the accident..

Scott lives in Texas and has submitted a claim to his insurance company. He has received notice from the insurer that the claim is covered under the policy and they will be paying the claim. How long does the insurer have to pay Scott's claim according to Texas law?

Not later than the fifth business day after the notice was made

Under a standard Equipment Breakdown policy, the loss settlement is:

On a replacement cost coverage, if the repair or replacement, is made within 24 months of the loss..

In ocean marine insurance, each of the following is true about the term "general average", EXCEPT:

Only the party having an interest in the lost property suffers a loss. .

If an insured covers his home with a standard unendorsed HO-5 form and purchases a Coverage A limit that meets the coinsurance requirement, which of the following would NOT be covered on a replacement cost basis?

Personal property..

The insured is moving to a new primary residence. Coverage under a Homeowners policy for the personal property being moved between the old and new location is:

Pro Rata Basis

Which of the following coverages would NOT be included in the liability section of the Businessowners policy?

Professional liability

Which of the following lost or damaged property is NOT covered when the Actual Cash Value endorsement is attached to an Equipment Breakdown policy?

Property that has reached obsolescence..

All of the following statements are TRUE regarding Section II - Liability of the Garage Coverage form, EXCEPT:

Provides coverage when an employee causes damage to a customer's vehicle..

In a liability policy, the limits of coverage can be expressed as all of the following, EXCEPT:

Restricted.

Which of the following is NOT covered under the basic cause of loss form of a Commercial Property policy?

Smoke from industrial operations.

Regulation of the insurance industry in the United States is primarily left to:

State governments..

Which of the following coverage symbols would be designated on the Declarations of a Commercial Auto policy to cover a customer's auto left with the insured to be serviced?

Symbol 30..

The insured auto dealer has opted to include Part IV - Garage Physical Damage coverage to her policy. Which of the following symbols must be indicated on the Declarations page of the policy for physical damage coverage to apply?

Symbol 31

Selena would like to select an optional coverage for her standard Businessowners policy to cover a large outdoor business sign, not attached to her building, that she owns. Which of the following statements is CORRECT regarding this optional coverage?

The amount of the optional coverage for outdoor signs is selected by the insured and scheduled on the Businessowners policy..

Jerry is fishing from his 22-foot boat on Lake Norman when he is caught in a sudden hail storm. His boat suffers extensive hail damage. When he files a claim against his Homeowners policy, the most likely reason his claim is denied because:

The boat was not fully enclosed inside a building during the hail storm..

As a condition to gain entrance into Louisiana to conduct insurance business, a Texas domestic insurer makes a deposit with the Texas Comptroller. The amount of the deposit is sufficient to satisfy the Louisiana Department that the insurer can cover the claims submitted by the insureds in Louisiana. Who has jurisdiction to collect taxes on the interest earned on this deposit?

The county and municipality in Texas where the principal business office of the insurer making the deposit is fixed by the insurer's charter..

Which of the following would NOT be covered under the HO-2 form?

The insured hits and damages his fence with his car..

When an insured is fulfilling the duty of proving a loss by taking an inventory of the damaged property, who pays the expenses incurred by the insured?

The insured..

Adrianna owns a dwelling that is covered under a DP-3 form and located in a rural area close to a small wooded area. While grazing outside of Adrianna's picture window one day, a deer sees its own reflection and jumps through the picture window to scare off the "other" deer. Once inside the dwelling, the deer realizes he is trapped and causes significant damage to the walls, floor and furniture. Adrianna is covered for $100,000 under Coverage A and for $50,000 under Coverage C. Which of the following statements is TRUE regarding this loss?

The insurer would deny the claim for the personal property and pay the loss to the dwelling on an RCV basis. is correct.

Ocean marine insurance contracts rely heavily on the principle of utmost good faith because:

The insurer's underwriters are not usually in a position to thoroughly investigate the risk..

Which of the following is generally not considered to be a legal defense against claims of negligence?

The loss to the plaintiff was caused intentionally by the defendant.

Which of the following claims would NOT be covered under Section II -- Liability of a Homeowners policy?

The named insured files a claim for damage to his house caused by his dog.

The cancellation and non-renewal provisions in property policies are two of the policy provisions that are most frequently subject to statutory amendments by the states. All of the following statements is correct regarding the cancellation and non-renewal provisions in the standardized Commercial Policy coverage form, EXCEPT:

The standardized Commercial Property forms do not contain cancellation and non-renewal provisions because they are almost always amended by statute..

If an insured is covered under an HO-2 policy, damage caused by wind to his/her personal property would be covered if:

The wind created an opening in the structure, allowing the wind to damage the personal property inside..

Under Coverage B of the BOP, how are exterior signs covered?

They are listed as "property not covered" but they can be covered if they are scheduled on the policy..

which of the following statements about Excess Liability insurance policies is FALSE?

They can be written to broaden the coverage of the underlying liability policy

Which of the following statements is TRUE with regard to Admitted Aircraft Liability coverage (Guest Voluntary Settlement)?

This coverage pays for the costs associated with the injuries to a non-ticketed guest on an airplane without the necessity to prove negligence against the insured..

The "Medical Payments" coverage of the standard Yacht policy covers all medical expenses incurred by an insured, family members, invitees, or guests if a claim is submitted:

Within 1 year following a covered accident..

Section I of the Homeowners forms provides up to ________ when the insured is assessed by a corporation or property owner's association for damage to property owned collectively, but only if it was damaged by a peril insured against under Coverage A of the policy.

Your answer: $1,000. is correct.

Under a Personal Articles Floater, the total amount that will be paid for loss or damage to an unscheduled coin collection is:

Your answer: $1,000. is correct.

Under a DP-2 or DP-3 standardized policy what is the maximum that would be paid for one month for additional living expenses if Coverage A was $75,000?

Your answer: $1,250 is correct.

Alex has his SUV covered under a standard Personal Automobile policy. He has borrowed a trailer from his friend Josh, hitched it to his SUV, and begins moving some boxes from his house to a new house he recently purchased. After he has unloaded the trailer, he is driving back to his house and loses control of his vehicle, wrapping Josh's trailer around a tree. There is no other insurance covering Josh's trailer and Alex's Part D deductible for "Collision" is $250. His deductible for "Other Than Collision" is $300. Before the accident, the ACV of the trailer was $2,000. The cost to repair or replace the trailer with like kind and quality is $1,800. How much coverage would Alex's policy provide?

Your answer: $1,500. is correct.

An insured has a $2 million limit of insurance under a Personal Umbrella policy with a $2,000 self-insured retention limit. The insured is sued for $1 million in personal injury damages and $1.5 million in property damages arising from the same occurrence. The insured's underlying liability policies exclude coverage in this case, but the claim is covered under the Umbrella policy. In this case, the umbrella policy will pay:

Your answer: $1,998,000 of the damages. is correct.

The insured owns a one-family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the detached garage?

Your answer: $20,000. is correct.

When an HO-3 is issued with a $75,000 Coverage A limit on a one-family dwelling, what is the automatic amount of insurance for Coverage B?

Your answer: $7,500 is correct.

An insured is covered under a DP-2 broad form Dwelling policy. A water pipe has frozen and burst and the insured has suffered floor and ceiling damage in his two-story home. The cost to remove and replace the walls to get to the pipe is $300. The cost to repair the floor is $400. The pipe that burst must now be replaced with a more expensive option to meet newer building codes. The cost to replace the pipe is $200. How much will the insurer pay?

Your answer: $700. is correct.

The standardized Dwelling forms allow the insured to bring legal action against the insurer if they have complied with all policy provisions and the action is brought within:

Your answer: 2 years after the date of the loss. is correct.

Surplus Lines companies in Texas have _____ days to acknowledge the receipt of a claim.

Your answer: 30 days. is correct.

The BOP has limitations on the square footage in regard to eligible retail and service risks. What is the maximum square footage a building can contain and still be eligible for the policy?

Your answer: 35,000 square feet is correct.

Adjusters in Texas must complete at least _____ of the continuing education required to renew their license in a classroom or classroom equivalent setting.

Your answer: 50% is correct.

Under Texas Workers Compensation law, lifetime income benefits are paid at what rate?

Your answer: 75% of the employee's average weekly wage. is correct.

In order to lawfully write insurance business in a state, an insurance company must hold:

Your answer: A certificate of authority. is correct.

Which of the following terms would describe a situation where a building is not a total loss, but the cost to repair the building is greater than the value of the building?

Your answer: A constructive total loss. is correct.

Which of the following businesses is NOT eligible to be covered by a Businessowners policy?

Your answer: A credit union. is correct.

When insurance is written on a Dwelling form, each of the following types of property would be insured under Coverage A, EXCEPT:

Your answer: A detached garage. is correct.

Which of the following losses would be covered by Part D of a standard Personal Auto policy providing both "Other Than Collision" (Comprehensive) and "Collision" coverage?

Your answer: A front tire blows out in a high-speed head-on collision, which also causes extensive damage to the vehicle. is correct.

Which of the following people does NOT have an insurable interest in an insured property?

Your answer: A home owner's interest in the local town's water pipes that deliver water to his home. is correct.

All of the following would be considered "uninsured motorists", EXCEPT:

Your answer: A motorist driving with coverage up to the required state financial responsibility limits for liability, but not high enough to pay the claims for an at-fault accident. is correct.

All of the following would be considered an "insured" on a Homeowners policy, EXCEPT:

Your answer: A non-related tenant living in the insured residence. is correct.

After a standard Personal Automobile policy has been in effect for more than 60 days, the insurer may cancel the policy for all of the following reasons, EXCEPT:

Your answer: A regular operator of the vehicle has received a citation for speeding. is correct.

Which of the following losses would be covered by the EC peril of "Windstorm or Hail" under a Dwelling policy?

Your answer: A roof that suffered damage in a tornado. is correct.

The "Medical Payments" section of the standard Yacht policy will provide coverage for all of the following, EXCEPT:

Your answer: A scuba diving accident when diving from the insured boat. is correct.

Which of the following serves as a deterrent for an insured to cancel an insurance policy before its expiration date?

Your answer: A short-rate penalty deducted from the unearned premium. is correct.

When the property covered under an insurance policy is destroyed beyond repair and nothing of value remains, this is known as:

Your answer: Actual total loss. is correct.

Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim is negotiated?

Your answer: Advance Payment. is correct.

Part D of the Personal Auto policy provides coverage for all of the following, EXCEPT:

Your answer: All direct losses to the insured's covered auto. is correct.

Which of the following statements is TRUE regarding an "examination under oath"?

Your answer: An EUO will only be requested by an insurer if they have reason to believe an insured has not been truthful in their account of the circumstances of the loss. is correct.

All of the following are Texas adjusters who are not permitted by law to adjust a loss related to roofing damage on behalf of an insurance company, EXCEPT:

Your answer: An adjuster that has taken roofing classes and is capable of repairing a damaged roof. is correct.

Which of the following most closely describes a claim reserve?

Your answer: An amount expected to be ultimately paid on an open claim. is correct.

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:

Your answer: An appraisal of the damaged property. is correct.

In most states, which of the following most accurately describes an "admitted insurer"?

Your answer: An insurer that can transact insurance in the state under a certificate of authority. is correct.

In the insurance industry, which of the following terms refers to continuous or repeated exposure to conditions that may result in bodily injury or property damage neither expected nor intended?

Your answer: An occurrence. is correct.

Under the Personal Articles Floater, a loss is covered when it occurs:

Your answer: Anywhere in the world, except for fine arts. is correct.

Sarah is shopping at a grocery store and wants to purchase a bottle of juice. The aisle is marked off with a rope awaiting the clerk to clean up a previously broken bottle and spill on the floor. Sarah moves the rope to get the item and slips and falls on the floor, cutting her face on the scattered glass. Which of the following would be the defense that the insurance company would most likely use in this situation?

Your answer: Assumption of risk and contributory negligence on the part of the customer. is correct.

Catherine suffered a covered cause of loss that resulted in water in her basement along with other damage. Alan, an adjuster for Binders Keepers Insurance, tells Catherine to immediately have the water damaged carpeting and wall paneling removed from her basement, so that mold will not cause further damage. Alan then begins the process of identifying coverage under the policy and finds that the water damage is not covered. Which of the following statements is TRUE regarding this claim?

Your answer: Because Alan told Catherine to remove the carpeting and paneling before he checked the coverage, he waived the right of Binders Keepers to deny the claim. is correct.

Which of the following is a TRUE statement regarding how bullion and manuscripts are covered under the 1943 New York Standard Fire policy?

Your answer: Bullion or manuscripts may be covered, but only if they are specifically named in the policy. is correct.

The endorsement used to report the insured's actual and estimated business income under an Equipment Breakdown policy is called:

Your answer: Business income—Report of Values form. is correct.

Which of the following losses would NOT be covered by an unendorsed Commercial Property policy with the special cause of loss form attached?

Your answer: Carolyn's Fine Gifts must shut down for a month to repair flood damage. is correct.

When Chris' car is stolen from his apartment's parking lot, he heads down to the local dealership and buys a new car. Three months later, Chris decides he may as well report the stolen car to his insurer, so he can get some money for it. What is the most likely reason the insurer might deny his claim?

Your answer: Chris did not promptly report the stolen vehicle. is correct.

Which of the following statements is TRUE regarding Commercial Property coverage?

Your answer: Commercial property coverage can be written as both a monoline policy and as part of a package policy. is correct.

An applicant fails to disclose known facts when completing an application for insurance. This act is known as:

Your answer: Concealment. is correct.

All of the following are characteristics of a principal that a surety will scrutinize during the underwriting process, EXCEPT:

Your answer: Consideration. is correct.

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?

Your answer: Contact the claimant without the consent of the attorney. is correct.

The insured awoke and found that a water line on his side of the water meter has broken. Several thousand gallons of water have escaped. The water company bills the insured for the loss of the water, because the breakage in the waterline occurred on his side of the water meter. The insurance company will:

Your answer: Deny the claim because water is excluded under Coverage C. is correct.

The Insurance Commissioner/Director/Superintendent of a given state is granted the power to oversee the business practices of insurance companies that are formed under the laws of that state. These companies are referred to as:

Your answer: Domestic companies. is correct.

Kelly, Vince, Ed, and Ginny are all staff adjusters. Which of these adjusters is acting appropriately as a fiduciary agent?

Your answer: Ed knows the claimant can't possibly afford to pay for their extensive damages, but he denies the claim anyway because the cause of loss was not covered by the policy. is correct.

One of the purposes of the coinsurance clause is to:

Your answer: Encourage insureds to insure property for most, if not all of its value. is correct.

Coverage for all reasonable expenses incurred by an insured in order to continue as nearly as practicable the normal operation of his/her business after a loss is:

Your answer: Extra Expense Coverage is correct.

Angie has suffered an automobile physical damage loss. All of the following are the insured's duties after a loss under Angie's Personal Automobile policy, EXCEPT:

Your answer: Facilitate the repairs to the vehicle and submit the invoice to the insurer. is correct.

Fernando is a railroad worker covered under the Federal Employers Liability Act (FELA). He has sustained an injury on the job, which of the following must be true in order for Fernando to collect on a claim?

Your answer: Fernando must prove that his employer's negligence caused his injury. is correct.

Under which of the following Aviation physical damage losses would a deductible apply?

Your answer: Fire caused by a collision. is correct.

Which of the garage policy coverages will pay for physical damage to a garage customer's auto regardless of legal liability?

Your answer: Garagekeepers direct primary coverage. is correct.

A company that repairs customers' aircraft may need which of the following coverages to pay for the accidental damage to the customers' aircraft while it is in the insured's care, custody, or control?

Your answer: Hangarkeeper's liability coverage. is correct.

David has damaged his vehicle by striking a tree. He can: I. Take the car to a repair garage recommended by the insurer. II. Take the car to a garage of his choice. III. Accept payment based on the adjuster's estimate.

Your answer: I, II and III is correct.

The Texas Insurance Commissioner has the powers and duties vested in the Department by which of the following? I. The Texas insurance code. II. Any insurance laws passed in Texas that are not part of the insurance code. III. The Texas labor code. IV. The Texas occupations code.

Your answer: I, II and III only. is correct.

Under a standardized Personal Automobile policy, the definition of a "covered auto" for Part A - Liability includes: I. Private passenger autos the named insured acquires during the policy period. II. Trailers owned by the named insured. III. Autos or trailers not owned by the named insured that are being used as a temporary substitute. IV. Farm wagons or implements.

Your answer: I, II, III, and IV is correct.

All of the following statements are TRUE regarding the cancellation clause of the New York Standard Fire policy, EXCEPT:

Your answer: If the insured cancels the policy, there is no financial penalty assessed on the unearned premium. is correct.

Perry has his home covered under an HO-5 policy. He borrows a friend's expensive camera and takes it on vacation, where it is stolen. Coverage for the stolen camera is:

Your answer: Included anywhere in the world. is correct.

All license application and state licensing exam fees in Texas are deposited:

Your answer: Into the Texas Department of Insurance operating account. is correct.

A non-waiver agreement allows the insurer to:

Your answer: Investigate a loss without implying that it is covered. is correct.

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:

Your answer: Is guilty of an unfair claims practice act. is correct.

Mitch is covered by a Personal Auto policy. One night a cow breaks through a fence and is standing on the roadway. Mitch does not see the cow until it is too late and he hits it with his vehicle. Coverage for the damage to Mitch's vehicle:

Your answer: Is provided under Part D - Other Than Collision. is correct.

An insured has reported a claim late that occurred over one year ago and now seeks defense representation and coverage under his automobile policy. What should the adjuster do?

Your answer: Issue a reservation of rights letter to the insured is correct.

It has been reported to the Insurance Department in a given state that Callie, a licensee in that state, has violated an insurance law. The Insurance Commissioner will hold a hearing to determine the nature of Callie's behavior. After the hearing, the Commissioner is convinced that Callie has engaged in behavior that violates insurance law. Which of the following is the next step the Commissioner will take?

Your answer: Issuing a cease and desist order. is correct.

Which of the following statements is TRUE regarding the HO-6 form?

Your answer: It covers the walls, floors, and ceilings of dwelling unit. is correct.

Which statement is FALSE regarding an appointment contract with an insurance company?

Your answer: It is generally an oral agreement between the parties. is correct.

The insured carries a yacht policy. One of the crew members is injured while performing a work related task. What coverage must be added under the policy that would respond to cover the crew member's injuries?

Your answer: Jones Act (crew coverage). is correct.

All of the following are examples of unfair claim practices, EXCEPT:

Your answer: Making claim payments and stating the coverage under which payment is made. is correct.

A legal term describing an intentional act that is illegal or morally wrong, and contributes to the injury of another person is:

Your answer: Malfeasance. is correct.

Charles' wife Mary has a company car furnished to her through her job. One day, Charles runs out of the wax he is using to polish his boat and he decides to go out to the store and get more. Mary's company car is parked behind Charles' car in the driveway, so he grabs Mary's keys and drives her car to the store. On the way back home, Charles has an accident in which he is at fault, and bodily injury and property damage are the result. Which of the following statements is TRUE regarding how this claim will be settled?

Your answer: Mary's company policy will pay first, and Charles' policy will also pay, but on an excess basis. is correct.

Which of the following coverages is included as "no-fault" coverage on the standardized Personal Auto policy?

Your answer: Medical Payments and Physical Damage. is correct.

The unendorsed standard Garage Coverage form includes all of the following, EXCEPT:

Your answer: Medical payments coverage for the insured. is correct.

David has received a cancellation notice in the mail for the standard Personal Automobile policy he purchased 10 days ago. The notice informs David that his policy will be cancelled 10-days from the date the notice was mailed. Which of the following is the most likely reason his policy was cancelled?

Your answer: Non-payment of premium. is correct.

Katherine lives in Texas. A third-party claim has been filed against her insurance policy by Joe, for an accident in which Katherine was liable. Joe's attorney contacts Katherine's insurance company and makes an initial offer to settle the claim. The insurance company must notify Katherine of the offer, in writing:

Your answer: Not later than the 10th day after the date the initial offer was made. is correct.

A Texas adjuster may be subjected to a criminal penalty for all of the following, EXCEPT:

Your answer: Not paying court mandated child support. is correct.

Which of the following statements is TRUE of Ocean Marine insurance?

Your answer: Ocean marine insurance policy forms are not standardized. is correct.

An alien insurance company is:

Your answer: One formed in Great Britian. is correct.

The insured is covered under a Watercraft policy and asks the agent about a lay-up period credit to get a reduction in the premium. The dates of the lay-up period are specified in the policy. There is an emergency and the insured must use his boat in a life saving event. The boat is damaged and sinks. Under what circumstances would coverage apply?

Your answer: Only if the insurance company is notified within 10 days of the emergency use. is correct.

An HO-5 form provides which of the following coverages for dwellings and their contents?

Your answer: Open peril coverage for buildings and personal property. is correct.

Which of the following is NOT covered under aircraft physical damage (hull) insurance?

Your answer: Personal effects. is correct.

All of the following are duties of the insured after a loss, EXCEPT:

Your answer: Promptly hiring a public adjuster to assist in presenting the claim to the insurance company. is correct.

Which of the following is NOT one of the three main (general) coverages of the Building & Personal Property coverage form?

Your answer: Property damage liability coverage. is correct.

All of the following would be covered under a Builders Risk Policy, EXCEPT:

Your answer: Prospective buyer. is correct.

Aiden is reimbursed by his insurance company for the cost of a new sofa, after a 10-year-old sofa is destroyed by fire. Which of the following best describes the loss settlement method used in this situation?

Your answer: Replacement cost. is correct.

Which of the following Ocean Marine implied warranties is considered to be the most important?

Your answer: Seaworthiness. is correct.

Which of the following is NOT one of the four major coverages of an Ocean Marine policy?

Your answer: Seaworthiness. is correct.

An adjuster has uncovered some discrepancies in matters pertaining to a claim, and is unable to contact the insured to discuss these matters. What should the adjuster do in this situation?

Your answer: Send a reservation of rights letter to the insured's last known address. is correct.

The HO-3 form insures for direct physical loss to covered property involving collapse of a building caused by all of the following, EXCEPT:

Your answer: Settling. is correct.

Katrina has her commercial building covered by a Commercial Package policy. Which if the following is the section within her policy where she would see the dimensions of her building listed?

Your answer: The Commercial Property declarations page. is correct.

Hannah is attending college and her family carries an HO-4 policy with $50,000 contents coverage. Hannah has about $15,000 of personal belongings consisting of clothing, musical instruments, electronic equipment, some appliances and other personal items in her dorm room. Which of the following statements is correct regarding coverage for Hannah's belongings?

Your answer: The HO-4 form carried by Hannah's family would not provide enough coverage for Hannah's property, therefore a ((((PERSONAL PROPERTY)))) floater should be purchased. is correct.

Ocean marine coverage for losses to the insured vessel caused by bursting boilers, latent defects in the vessel and negligence of the master or crew members are addressed by which of the following?

Your answer: The Inchmaree clause. is correct.

Claims adjusters have a close relationship to the legal profession but must be careful not to become involved in the unauthorized practice of law. Which of the following would be an example of an adjuster who is engaged in the unauthorized practice of law?

Your answer: The adjuster has drafted the legally binding settlement papers on a claim. is correct.

The maximum amount a liability policy will pay for all occurrences taking place during the policy period, is known as:

Your answer: The aggregate limit. is correct.

Tori owns a cabin in the Ozark Mountains that she rents to Vincent. Tori has the cabin covered under a DP-2 policy. One cold evening, Vincent started a large fire in the cabin's fireplace and left the room to start dinner in the kitchen. Vincent didn't realize that he forgot to open the chimney flue before starting the fire and by the time he came back into the living room, it was completely filled with smoke. Vincent immediately opened the doors and windows to "air-out" the cabin but when the smoke cleared, there was extensive soot damage to the walls, ceilings and furnishings in the room. Which of the following statements is true regarding how this claim will be handled?

Your answer: The claim will be paid because the DP-2 extends the peril of "smoke" to cover smoke damage from a fireplace. is correct.

Generally, an employee's average weekly wage is determined in Texas by which of the following computations?

Your answer: The employee's wages for the 13 consecutive weeks preceding the injury divided by 13. is correct.

Which of the following losses would be covered by the EC peril of "volcanic eruption" under a standard Dwelling form?

Your answer: The exterior siding of the dwelling that was ruined by the ash that settled on it from the erupting volcano. is correct.

A method of setting claim reserves based on the claim's circumstances and the claim representative's experience in handling similar claims is known as:

Your answer: The individual case method. is correct.

Under the Equipment Breakdown Protection form that covers boilers and machinery, what is considered to be one loss event?

Your answer: The initial breakdown that causes other breakdowns. is correct.

An employee who was injured on the job in Texas would be considered "intoxicated" at the time of the injury in all of the following circumstances, EXCEPT:

Your answer: The injured worker was under the influence of a drug that was taken in accordance with a prescription written by a physician. is correct.

An insured is covered under a CGL policy. He would like to purchase another policy to increase the limits of insurance for his commercial liability exposures. Which of the following statements is correct regarding the insured's situation?

Your answer: The insured may purchase either a Commercial Umbrella or an Excess Liability policy to increase his liability insurance limits. is correct.

An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2,000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $500,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary underlying liability policy or the Umbrella policy. How will this loss likely be settled?

Your answer: The insured will be liable for the full $100,000 loss. is correct.

Mary intentionally trips her neighbor while the neighbor is trespassing on the insured's property. Although the neighbor is not injured, Mary gives the neighbor $500 in cash to settle any potential liability claim. How will Mary's insurance company most likely respond in this situation?

Your answer: The insurer will deny liability coverage because Mary's action was intentional. is correct.

Part One of the standard workers' compensation policy describes:

Your answer: The insurer's duty to pay promptly, when due, the benefits required of the employer by the workers compensation statute. is correct.

Which of the following parts of the insurance contract contains the "contractual agreement" between the insurance company and the insured?

Your answer: The insuring agreement(s). is correct.

When a claims representative is collecting information from a third-party claimant, which of the following is the information that should be obtained first?

Your answer: The nature and extent of the injuries or property damage claimed. is correct.

Under a surety bond, the party that is guaranteed that the principal will perform is known as:

Your answer: The obligee. is correct.

Joe makes a small down payment on a sports car and finances the remainder of the cost of the car with Benevolent Bank, Inc. He also purchases a standard Personal Automobile policy through Binders Keepers Insurance Company to cover the car. Joe makes one car payment before he is caught with $200,000 of drugs in the car on his way to deliver it to addicts for money. Joe is arrested and the car is permanently confiscated by the authorities. How will coverage apply in this situation?

Your answer: The policy will cover the damage to the body of the automobile on behalf of Benevolent Bank, Inc. is correct.

Which of the following statements is TRUE when determining the coverage limit for property damage under the standard Equipment Breakdown policy?

Your answer: The value of all the insured's property plus the value of property of others must be included. is correct.

An insured has a $1,000 insurance claim and is able to prove his loss and its value. The insurer's adjuster offers $500, knowing that the claimant would probably take the offer to avoid incurring the cost of an attorney to sue for the actual amount of the claim. The offer made by the adjuster is considered:

Your answer: To be an unfair claims settlement practice. is correct.

Tom rents half of a duplex. During a severe storm, lightning strikes a tree in the front yard and it falls, causing damage on Tom's side of the duplex. Which of the following losses will be covered by Tom's HO-4 policy?

Your answer: Tom's TV and entertainment system that were damaged when the tree fell through the roof. is correct.

The workers' compensation plan covering land-based maritime workers is called:

Your answer: U.S. Longshore and Harbor Workers' Compensation Act. is correct.

The insured has a communication failure at his premises due to a lightning strike at the phone company. The insured's phone system is damaged and he is out of business for four days. Which endorsement is necessary to provide coverage for the loss of business income?

Your answer: Utility Services - Time Element is correct.

Property with no occupants or contents is considered to be _______ whereas property with no occupants but with contents is considered to be _______.

Your answer: Vacant/Unoccupied is correct.

At which step in the adjusting process does the adjuster determine "who" or "what" is insured by the policy under which the claim was submitted?

Your answer: Verification of coverage. is correct.

The Commercial Property broad cause of loss form would cover which of the following types of water damage?

Your answer: Water escaping from a cracked water heater. is correct.

Under which circumstances would it be legal for an insurer to charge one insured more than another insured for the same coverage?

Your answer: When the insured is statistically more likely to experience a loss. is correct.

Under what circumstances does an insurer allow the transfer of an insured's rights and duties under a Commercial Package Policy without the permission of the insurer?

Your answer: When the named insured dies. is correct.

Which of the following best describes when an aircraft is "in motion?"

Your answer: When the plane is moving under its own power or from momentum generated from its own power. is correct.

Which of the following is true regarding pure and speculative risks?

Your answer: With pure risk there is only the possibility of loss. is correct.

The medical payments coverage of an Aircraft Liability policy provided coverage for bodily injury expenses incurred by accident:

Your answer: Within one year of the accident. is correct.

Which of the following statements is NOT TRUE regarding controlled commercial inland marine forms?

the forms can be used as part of a commercial package policy