Insurance exam simulator
A married couple owns a single family dwelling with Special Forum coverage with replacement cost coverage equaling $150,000. If their home and garage are total losses, how much will the homeowners policy pay?
$165,000- Coverage B Other Structures provides up to 10% of the dwelling coverage amount in additional to the amount paid under Coverage A
What is the minimum dollar coverage amount requirement for Basic form coverage in a Dwelling Policy?
$0-- there is no minimum dollar coverage requirement for a Basic form policy
Under a BOP policy the limit paid on damage to an attached outdoor sign is:
$1000
S has an UIM limit of $75,000 and is injured by at-fault driver F who has a single B.I. limit of $25,000. S sustains $55,000 of loss. How much will the policy of S pay toward the total loss suffered by S under their UIM clause?
$30,000-- UIM-B.I=UIM payment amount. The loss is $55,000. Subtract the B.I limit of F which is $25,000 and the result is that the policy of S will pay the difference between the two.
T replaced his home's roof five years ago. T suffers a covered loss to his roof which must be replaced. The insurer deems that the roof will cost $10,000 to replace and his old roof depreciated at a rate of $1,000 a year. If T's roof value is based off of ACV how much will T's Policy pay to replace the damaged roof?
$5,000
The homeowner policy will pay up to what maximum amount, without deductible, for credit card, forgery and counterfeit money loss?
$500
What is the standard deductible for a Business Owner Policy (BOP)?
$500
Which of the following would be an example of a loss paid due to the exposure known as Completed Operation Liability?
An electrician mounted a couple of electrical panels into the ceiling after finishing some electrical work and two months later the a panel falls down and hurts a passerby.
K owns a factory and has an Equipment Breakdown Policy on his business. Which of the following would be covered as a "pure accident" under the contract language?
A boiler malfunctions and blows up
Which of the following statements pertaining to Medical Payment Part C of the CGL is False?
A person has to establish the liability of the insured before medical benefits will be paid under the contract
What is not true about Extra Expense Coverage?
All businesses need it: Not all businesses would require the purchase of Extra Expense coverage, only those who cannot afford to be shut down even briefly because of potential permanent loss of customers need it
N just purchased a HO-4 policy to insure his apartment. If N wants to find the description of property insured as well as any endorsements to the policy, N should look at the (blank) part of the contract:
Declarations
In the Flood Program, which entity specifies the flood control measure that certain communities must adopt to be eligible for flood insurance?
FEMA- The Federal Emergency Management Agency
J has a small carpet cleaning business. At the beginning of the year, he has a steady flow of customers but new accounts are getting harder to find. J decides to make a few local TV commercials and by the end of the year they are a huge success, tripling J's business. Because of the company's expansion, he has to hire more help and give his current employees raises. If J paid a premium at the beginning of the year for Workers Compensation and the insurer does and audit of J's books at the end of the year, which of the following is most likely to happen?
J will have to pay a premium at the end of the year upon an audit--He will have to pay more for Worker's Compensation because his business increased with hiring new employees
In the Special form of Commercial Building and Business Personal Property form, dishonest or criminal acts by employees is not covered. What is the reason for this exclusion?
It is a cause of loss not meant to be covered under property insurance but is instead a casualty policy loss--Dishonest or criminal acts of employees are covered under Crime insurance policy not property insurance
Authorized insurers in Georgia participate in the FAIR plan:
Must participate on a prorated basis
Which type of insurance company allows their policyowners to elect a governing body?
Mutual
J claims that last night over $1,000,000 of cash was stolen from his desk drawer but when the policy investigates, there is no evidence of any signs of forced entry and J cannot explain that how this loss occurred. This loss would be a:
Mysterious Disappearance- any loss in which the property is missing cannot be explained
B owns a home with a Basic Dwelling Policy (DP1) and rents it out to a family. One day, a burglar tries to break into the house causing $2,000 of damage. After submitting the claim, B is informed that since burglar damage is not covered under the policy, the damage will not be paid by the policy. B's policy is a:
Named Peril Policy
Statements made by an applicant for property insurance which in the opinion of the applicant, are true to the best of his or her knowledge are called:
Representations
Binders are issued on what type of policies?
Property and Casualty
J has a sports car that is worth $400,000 and is insured for $400,000 through three different insurers. Company X covers $200,000, Company Y covers $100,000 and Company Z covers the remaining $100,000. If J has a $100 deductible, how much will each company pay on a $20,000
X pays $9,950, Y pays $4,975, and Z pays $5,000 Company X: $200,000/$400,000= .5 .5($20,000-$100)= .5x$19,900= $9,950
X and Z own a company that is insured through a commercial property policy. X is the first named insured on the contract while Z is also listed as an insured. If any endorsements need to be made in the contract, who has the sole right to make changes?
X-- because X is first named insured X has absolute rights to made changes
Which of the following insured property would be covered under a replacement cost basis in a Business Owner Policy under Coverage B
a copier leased by the insured--Coverage B of the BOP pays for loss to business personal property of the insured including personal property leased by the insured for which the insured is contractually liable
When the Commissioner examines an insurer's records, who pays for the costs associated with the examination
The insurance company being examined
What is the main advantage to an insurer under a Claims Made CGL?
The insurer knows the definitive date upon which their potential liability ends--once a claims made policy expires the insurer is no longer responisble to pay any claim unless notified under the tails concept of Basic Extended Reporting Period. Even if notified under the tails the insurer still knows definite time claims presented must be paid (no longer than 5 years)
A driver in Illinois having 20/40/15 Part coverage does $75,000 of bodily injury to a man while driving in a Canadian province requiring 100/30/100 coverage. How will the insurer respond?
The insurer will pay the full $75,000 to the injured party. Part A limits will increase if needed when the insured incurs liability in an out of state situation., up to the limits required in another state. This includes territories and provinces in Canada.
Who would be eligible for temporary license issued in Georgia
The personal representative of a deceased agent to provide service to existing policyowners
An insured was covered at the time of an accident that was the insured's fault which happened two months after the insured file bankruptcy. What right does the bankruptcy of the insured legally and contractually bestow upon the insurer in this situation?
The right to pay the loss as if the insured had not filed personal bankruptcy-- if an insured declares bankruptcy, the insurance company is still obligated to pay any part of a judgement that was covered by insurance at the time of the loss.
What do the duties of the insured do?
They are listed to help provide immediate notice, preventing further losses, making an inventory of loss and filing all appropriate paperwork related to loss in a timely manner. The actions/duties of an insured when loss occurs requires reasonable compliance in these areas.
Which of the following statements regarding a warranty is correct?
They are statements which are supposed to be absolutely true
D just purchased a warehouse at an auction. When D receives the keys and documents, he arrives at the building to find it completely empty with no people or contents. The warehouse has a
Vacancy
B has a company that produces garden tools. One day, one's of B's employees accidently ran over a visiting customer's foot with a forklift. Which of the following would define B's liability for the forklift incident
Vicarious
The maximum number of families allowed to lice in a dwelling covered under a homeowners policy is
4
In a property policy, the mortgagee is defined as the:
lender
Which coverage is needed when a company car is given to an employee, partner or officer of the business and the car is the only vehicle available for use by the named insurer?
Drive Other Car-- a commercial auto endorsement that is needed when a company car is furnished to an individual. It is not necessary if the individual has PAP coverage of their own covered auto
Section I of a Homeowners policy provides:
Dwelling and Detached structures on the insured's premises, Personal Property of the Insured, Loss of use
In an HO 8 modified form, what percentage of the Coverage A amount is available for Coverage D, Loss of Use?
10%
Harry bought a used Mercedes in great condition and would like Part D coverage for the vehicle on his PAP. Harry currently has Part D coverage on one of his two currently covered autos. How long does Harry have to notify the insurer to have Part D coverage the Mercedes?
14 days.
Under Coverage B, Medical Payments in a Personal Auto Policy, how long a period can an insured collect benefits from the date of the incident
3 years
When an insurer cancels a homeowner's policy, it must provide how much advanced notice?
30 days as required by law of the insurer other than nonpayment of a premium
A producer must notify the Commissioner within _____ days of an address change.
30 days-- an agent who moves to a new address must notify the commissioner of the address change within 30 days
Which of the following equipment would be covered under Part D in a Personal Auto Policy?
A high end sound system installed by the auto manufacturer--Sound and communication systems that are installed after an auto is purchased are excluded under Part D but sound systems that are permanently installed in the vehicle by the manufacturer or authorized dealer are not excluded from coverage
Which of the following structures would not qualify for a Dwelling form?
A six unit residential apartment building.
A husband is the named insured and his wife lives with him in the same household. Their auto policy renews on Jan 5 for six months and on March 2, the insured wife moves out and files for divorce. On April 30 the spouse secures her own Personal Auto Policy. At which time is the spouse no longer covered on the insured auto policy?
April 30th. If the spouse ceases to be a resident of the same household during the policy period, then the spouse will no longer be covered when the earliest of the following conditions occurs: 1) the coverage period ends; or 2) the spouse gets his or her own policy naming them as the insured or 3) 90 days from the change residency
Which of the following personal articles is best insured utilizing stated value basis for loss payment? A. A rare coin collection B. An original oil paint by a prominent artist C. Family owned sterling silverware which has been handed down for six generations in a family D. Vintage and rare camera equipment
B- stated value is used for items like artwork which can be difficult to value
The type of crime coverage form that would insure either damage to a safe or cash register that occurs due to forcible entry with felonies intent into an insured's premises is:
Burglary
Which of the following incidents would not be excluded under a DP-3 policy?
Burglary of a property that was vacant for 30 consecutive days--Vandalism, malicious mischief, burglary and glass breakage would be excluded when the dwelling has been vacant for more than 60 consecutive days
What is a BOP
Business Owners Policy
H owns a small retail store which sells handbags. Which type of exposure would be most threatening to H's business?
Premises and Operations
If the local police refuse to let a busines owner gain access to his business due to safety concerns for a couple of weeks, the owner is entitled to Business income because of which assitional expense coverage?
Civil Authority
What is a CGL
Commercial General Liability
An unbroken chain of events that begins with negligence and leads to loss is known as:
Proximate Cause
The part of a homeowners policy that will pay the medical expenses of an injured person when the insured is not legally liable to pay but feel a moral responsibility is:
Coverage F--pays for medical expenses even if the insured is not legally liable for the injury of another. Medical payments if others is a no-fault coverage
J has a policy and wants to know what his rights and duties of the policy will be and what duties and rights the insurer has. J should read the (blank) part of the contract:
Conditions- set forth and describe the rights and duties of BOTH parties of the contract. They also protect the company from loss due to hazards there were within control of the insured
Which of the following Coverage D statements in incorrect as it pertains to Dwelling Program forms?
Coverage D is up to 20% of the coverage A amount in DP-1 In Dp-1 up to 20% of the coverage A amount can be applied only at the maximum rate of 1/12 per month if the lost rental value warrants it. Also an amount paid under Coverage D reduces the Coverage A amount dollar for dollar under a DP-1
G's small business just suffered a data breach. Which of the following would cover G's loss? A. WC B. PAP C. Cyber Risk D. Internet Protection
Cyber Risk
High-risk properties which cannot secure insurance elsewhere can apply for coverage through
FAIR plan
M has committed an act of dishonesty and has triggered a bond payment known as the limit of liability. The bond in question is a:
Fidelity Bond
Cyber Risk Insurance that covers both Customers and Legal Settlements would be known as
First Party Response and Third Party Defense
In order for an insure to write Worker's Compensation policies in Georgia they must
First file rates with the department of insurance
In order for an insurer to write Worker's Compensation policies in Georgia, they must
First file their rates with the Department of Insurance-- Georgia is a "file and use" state. The insurer does not have to have their rates pre-approved but they must first file their rates with the department
Which of the following conditions does qualify for coverage under a flood policy?
Flooding in a widespread area--to be covered flooding must occur as a general condition of an area
Other than for nonpayment of premium, any time a property policy is canceled, a notice must be included stating that coverage may be available from
Georgia Fair Access to Insurance Requirements Plan (FAIR)
All of the following Homeowners forms offer replacement cost coverage for a detached garage except:
HO-4--The Tenant Broad form is a renter's policy which does not provide coverages for either the dwelling or other structures. Meaning there is not Coverage A or Coverage B in the renter's policy
The best definition of Windstorm is
Heavy or high winds with little or no rain
V has just had surgery and must spend two nights in the hospital . On the second day there was a mix-up and the hospital gave her the wrong medicine in error which caused her to become very ill. If V sues the hospital, which policy would protect the hospital for not delivering the required professional service?
Hospital Professional Liability Insurance
The responsibility for the insured to prevent further loss under reasonable conditions is listed under:
Insuring Clause
An insurance company insures two million homes under Homeowners coverage and collects $1,500 in premium from each insured. In the next policy year, only 200 homes suffer a total loss. In this event the insurer still collected enough premium dollars from all insureds to pay the actual losses as well as their overhead and still collected a profit. This is known as
Law of Large Numbers
Which of the following scenarios would best exemplify the Doctrine of Concurrent Causation under a BOP?
Lightning causes a power failure and interrupts business. This doctrine states that if two perils cause loss simultaneously and one peril is covered but the other is not, the policy must pay the loss.
Exclusions do what?
Limit the scope of benefits, list which types of perils are not covered by the contract, limit the wording of the insuring agreements
Boats of what length require Yacht coverage?
Longer than 26 feet
Convincing a prospective insured to buy an insurance policy based on exaggerations is called
Misrepresentation
V buys a home and has and idea to purposely set it on fire but will make the loss look like an accident to collect the benefits from the policy. This is an example of:
Moral Hazard
G decides that she wants to go to the convenience store and pick up the Sunday newspaper. Upon parking the car, G runs into the store but leaves her car running with doors unlocked because it is cold outside. This is an example of a
Morale hazard- a state of mind in which the insured displays an indifference to loss possibly occurring.
J has a policy on his business that protects against almost all liability losses. One of J's customers suffered a terrible loss to his workplace that caused several thousands in claims. J's insurer notifies J that because of all the claims that were paid, they are discontinuing coverage at the end of the policy period. J's policy has been
Nonrenewed
D just purchased the world's most rare car at auction. D is concerned that because the car is so valuable, one insurer should not cover the loss alone. D should purchase:
Other insurance: aka pro rate liability-- when one property is covered by more than one insurer
What is a PAP
Personal Auto Policy
What general type of business can qualify for the BOP
Small to medium sized concerns
F's toy company has just produced a child's toy that has sharp edges. Although F's toy company guarantees the product is safe, if a child were to get hurt, the company would have
Strict liability- solely applies to a business that manufactures products.
Which of the following descriptions of Dwelling Program coverage forms is incorrect?
The basic form pays for loss to the dwelling and detached other structures on a replacement cost basis
A coverage trigger is:
The event that makes a CGL policy respond to a claim--- IF the exposure to loss happened before the retroactive date, there is an occurrence trigger. On the other hand, if the exposure to loss happens on or after the retroactive date there is a claims made trigger
Which of the following is not included in the Insuring Clause?
The name of the insured
How are Coverage D and Coverage E paid in both the Broad and Special forms under the Dwelling Program?
Under DP-2 and DP-3, Coverage D and E are paid in addition to the dwelling amount but only up to a maximum of 20% of Coverage A combined and not 20% each for Coverage D and Coverage E separately.
H has a commercial policy covering his warehouse. During the application, H told the insurer that he guaranteed the smoke detectors where installed and functional in the building even though the warehouse does not have smoke detectors. If a fire were to occur and the insurer proves that there were no functional smoke detectors, they do not have to pay the claim. H's untrue statement of functional smoke alarms would be considered to be:
Warranty- guaranteed statements that are commonly only used in commercial policies when that insurer gives a discount on coverage in exchange for total honesty, such as the owner of a warehouse saying their sprinkler system works. If the system is not in working order and the owner or building knew that, it would relieve the company of their responisbility to pay claims. A warranty is a fact sworn to be absolute
According to the insuring agreement of Part A, Liability Coverage of the PAP, the insurer is obligated to pay
a loss to any third party to whom the insured becomes legally liable due to the insured's personal use of a covered auto
Which of the following uses of a detached garage is permissible under the terms of Coverage B in the Dwelling policy A. a non-tenant of the insured rents the structure as a private garage B. a tenant of the dwelling uses the garage as a manufacturing business C. A non-tenant of the insured uses the garage as a small industrial shop employing ten people D. a tenant of the insured uses the garage as a small industrial shop employing ten people
a non-tenant of the insured rents the structure as a private garage--business use of a detached structure is not permissible but is allowed for the insure to rent the garage to a non-tenant for use as a private garage
Every owner, of a motor vehicle, except for (blank), in Georgia must carry and be able to show that at least the required minimum limits of BI/PD are carried:
an approved self insurer
With whom may an agent legally share commissions?
another agent who is licensed in the same line of insurance
A legal process that is used when a claim settlement consensus cannot be made in an auto policy is known as:
arbitration
The process used in which a dispute can be lodged by either the insured or insurer on how to actually pay or settle a claim is known as
arbitration
The peril of collapse in a homeowner policy will not pay for loss if:
caused by obvious damaged due to nesting and infestation of raccoons--when abrupt collapse is caused by the nesting, infestation, and discharge of waste by any animal or by insects the damage must be HIDDEN in order to trigger coverage.
A change made by an insurer on an auto policy that deletes benefits after a policy has been issues is known as an:
endorsement
Actual Cash Value (ACV) takes usage of property into consideration when an insurer pays a claim so that the insured becomes whole again after a loss. To restore an insured in this manner is known as:
indemnity
In a fidelity bond, the period of discovery
is the time the employer has to realize they have suffered a loss
An example of rebating would be
offering a client something of value not stated in the contract in exchange for their business-- can be defined as offering a prospect something of value that is not specified in a contract in order to induce the purchase of that contract
Hired Auto coverage:
protects the owner of a business when they rent a car for business use--Hired Auto coverage can either supplement or replace a car rental agency's liability coverage. The policy's liability coverage protects the company an insured owns, it does not cover an employee driving the rented vehicle.
While not normally required, if it is determined there is a lack of competition or availability in the marketplace, the Commissioner can require that all rates be
pre-approved
B has a large warehouse for his tool and die business. One day a customer was injured on B's premises. While B's policy will cover the loss he contends that his customer smelled strongly of alcohol and feels that the injured party has some responsibility for getting hurt. The case goes to ci=ourt and B must go to give a deposition in which the policy will cover his loss of income for the day of work he misses. This is an example of a:
supplementary additional payment--paid in addition to the applicable amount of liability for lost wages when the insured is required to appear in court and or costs to post bonds to specified amounts
If an insurer receives permission to share information with non-affiliated third parties, under the Gramm-Leach-Bliley Act, customers must receive a notice every (blank years) for a long as the customer relationship lasts.
year