Insurance Exam
A common way for mobile homes that are used as owner occupied residences to be insured is:
through an endorsed ISO homeowners policy 2058
Under 31 Pa. Code Chapter 146a, which implements the privacy requirements of the Gramm-Leach-Bliley Act, a notice of information practices must be given to customers by an insurer no later than:
when the licensee established a customer relationship 880
An employee is injured on the job. The employee earns $52,000 annually, or $1,000 per week. The employee will receive $666.66 in weekly benefits while unable to work due to his injury. This amount is his:
workers' compensation benefit 2073
What is an aleatory contract?
A contract whose outcome is affected by chance 733
The four categories of Ocean Marine insurance are hull insurance, cargo insurance, freight insurance and:
protection and Indemnity 2150
An insurance producer may charge an applicant how much for the completion of an application for a contract of insurance?
$0 719
When coins or stamps are covered on a blanket basis by the Scheduled Personal Property Endorsement form to the homeowners policies, the maximum limit on an unscheduled coin collection is:
$1,000 2214
Each domestic insurer in Pennsylvania that operates under an exclusive general agency agreement must certify to the Department the name of the exclusive general agent within ten days from the effective date of the contract or agreement. If an insurer fails to provide this certification, the insurer has committed a misdemeanor in the third degree and will be sentenced to pay a fine not to exceed $__________ for each day of noncompliance.
$1,000 875
A vacation home is covered by DP-2 coverage. The home is normally rented regularly from May-October, based on many years of renting the property. The entire home is rented to others, the cost to rent is $100 per night and it is normally rented 20 days of each month, so has a fair rental value of $2,000 monthly from the period of May-October. If the home must be repaired in June due to an unexpected windstorm that directly causes damage to the home and is unable to be rented for 15 days while it is repaired, the fair rental value coverage will pay:
$1,000, less expenses that do not continue while the house is not fit to live in 2044
The unlawful taking of property to the deprivation of an insured is:
theft 1363
What is the normal limit for the identity fraud endorsement to the homeowners forms?
$15,000 2213
In the Homeowners Forms, the Special Limit of Liability for loss by theft of firearms and related equipment is generally:
$2,500 2041
The insured under a homeowners HO-3 policy has a $200,000 Coverage A - Dwelling limit of liability. The Coverage B - Other Structures maximum coverage amount of loss is:
$20,000 2037
A homeowner has a mortgage loan on his insured home with an outstanding loan balance of $125,300. The home is totally destroyed by fire. The replacement value of the home is $376,000, and the insurer will pay a total of $376,000. The mortgage lender has mortgagee rights under the homeowners insurance policy. How much will the homeowner be paid by the insurance company for this fire loss?
$250, 700 2026
Coverage for grave markers has a limit of ________ in the homeowners forms:
$5,000 2210
An insurer that fails to report appointments, terminations and supporting documents as required by Pennsylvania law may, after notice and hearing, have its license or certificate of authority suspended or revoked and may have civil penalties imposed against the insurer in an amount not to exceed ___________ for each violation.
$5,000 879
The maximum medical benefit which may be paid by an insurer providing first party benefits according to Pennsylvania's Motor Vehicle Financial Responsibility laws on behalf of any one eligible claimant is:
$50,000 per year 2219
The company's gross income for a 12-month period is $1,200,000. Total expenses are $760,000, with non-continuing expenses of $400,000 and continuing expenses of $360,000. For insurance purposes, "business income" equals:
$800,000 Business income is defined as net income before taxes plus continuing expenses. In simple terms, net income before taxes is sales, less GOGS, resulting in gross income ($1,200,000), less expenses ($760,000). Expenses are made up of continuing expenses and non-continuing expenses. The continuing expenses ($360,000) are added to net income before taxes to result in "business income". [($1,200,000 - $760,000) + $360,000 = $800,000] 2050
Consumer reports can be generated foe the following reasons:
- Because of a court order - Because the consumer has given written authorization to do so
Reasons for consumer reports may also include:
- for employment purposes - for underwriting insurance - to determine the eligibility for a government issued license, or other government benefit where financial responsibility or status must be reviewed - for investors or insurers to evaluate the credit risk of a consumer
Generally, consumer reports do NOT include:
-Bankruptcies over 10 years old - Civil suits, civil judgments, and arrests over 7 years old - Paid tax liens over 7 years old - Collection accounts or accounts written off by the creditor over 7 years old - Other adverse items, other than criminal convictions, over 7 years old
The limit of insurance for Coverage D- Fair Rental Value is:
10% of Coverage A 2202
The Other Structures coverage in the Homeowners forms is generally limited to:
10% of the total coverage on the dwelling 2205
When an insurer notifies an agent in Pennsylvania that his or her agency contract will be terminated, the insurer must offer to continue the agent's insurance policies and amendments to policies for how long from the date of termination?
12 months 2248
A licensee is required to successfully complete 24 credit hours of approved continuing education for each two-year license period as a condition for license renewal unless the Department modifies this requirement through regulation. A licensee may carry forward a maximum of ________ hours from one licensing period to the next licensing period.
24 870
An insurer who terminates an appointment must notify the department in writing within _______ days following the date of termination.
30 days 266
In order to be eligible for dwelling insurance, a dwelling may have up to a maximum of how many boarders?
5 2201
The waiting period for Workers Compensation benefits in Pennsylvania is:
7 days after disability begins 2245
According to the Telephone Consumer Protection Act, generally, telephone solicitations cannot be placed before 8 am or after:
9 pm, local time 2249
A person who knowingly and with the intent to defraud an insurer, engages in unlicensed agent activity commits
A felony in the third degree 267
_______________________ is committed by one party who causes injury or damage to another party or to another's party, without violating a public right.
A tortious act 1325
A consumer report may include:
Accounts placed for collection three years before the report 305
Which type of crop policies insure crop producers against revenue losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease?
Actual Revenue History (ARH) policies 2060
The primary purpose of an endorsement is to:
Address particular needs and situations 1338
Under the business auto policy, when specified causes of loss coverage applies to the physical damage coverage, the insurer will pay for loss caused by any of the following perils, EXCEPT:
Aircraft 2226
Which of the following must be licensed as insurance producers assuming they only perform the functions listed?
An employee of an insurer who contacts people who have asked for rate quotes for insurance through an internet site, determines the best product for them, offers it to them and receives a commission for each sale 248
The type of interline commercial form that changes the term of the commercial package policy is:
An endorsement 2126
What type of commercial auto coverage is used for a business selling motorcycles?
Auto Dealers Form 2229
Which dwelling form endorsement automatically increases the policy limit at renewal based on the increase in housing costs in the prior policy year?
Automatic Increases in Insurance Coverage Endorsement 2203
In order to offer automobile insurance through the Pennsylvania Assigned Risk Plan, producers must:
Be certified with the Plan 2220
Each of these are exclusions from the Coverage A in the Commercial General Liability form, EXCEPT:
Bodily Injury 2237
Courts may award damages in a liability lawsuit based on all of the following types of liability except:
Breached 1334
The endorsement to the Homeowners policies that applies coverages E and F to the business pursuit named in the endorsement is:
Business Pursuits Endorsement 2211
A business is insured by the Commercial Building and Personal Property Form. A snow storm hits and a roof on the business' building collapses under the weight of the snow. This loss is not covered. By which causes of loss form is the business covered?
Causes-of-Loss Basic Form 2049
The insurance company has the obligation to do each of the following, EXCEPT:
Change any of the terms of the contract upon request of the insured 1382
Dolly owns a store, including the building which holds the store's merchandise. The building is insured under a policy issued by Company A for $1,000,000, which contains an "other insurance" clause that provides that the insurance is excess over other insurance. Dolly's store is also covered by a $500,000 policy issued by Company B, which contains an "other insurance" clause that provides that the insurance is primary. Dolly's coverage meets the 80% coinsurance requirements of the building coverage. If the store suffers fire damage to the building causing a cost to repair and replace of $1,200,000:
Company B will pay $500,000 and Company A will pay $700,000 2030
A retailer's computer system was used to fraudulently transfer company funds to a foreign bank account. This crime is covered by what coverage in the Crime Coverage form?
Computer Fraud 2076
Which of the following laws were established under the FACT Act?
Consumers are to be given a notice of their Rights to Obtain and dispute information in Consumer Reports and Obtain Credit scored from the reporting agency when consumer reports are generated 874
Which of the Dwelling Forms applies open peril coverage to the Dwelling and Other Structures coverages?
DP-3 The Special Dwelling Form 2042
All of the following are endorsements available for homeowners coverage, except:
Death of an Insured Endorsements 1749
Inland Marine Insurance is the subjection of the Nationwide Definition that places inland marine coverage types into six categories. Each of the following is one of these categories, EXCEPT:
Domestic Shipments 2053
Inland marine insurance includes dealers forms that cover certain types of businesses who have stock that is generally on premises, but may also be off premises. Each of the following are inland marine dealers forms, except:
Electronic Data Processing Form 2052
Major credit bureaus
Experian Equifax TransUnion
Which of the following authorities is a name for authority specifically given to an agent?
Express authority 732
The Auto Dealers form includes each of the following coverages, EXCEPT:
First Party Benefits 2115
One of the types of vehicles that is required by the Motor Carrier Act to carry $5,000,000 of public liability coverage is:
For-hire and private motor carrier in interstate or foreign commerce, with a gross vehicle weight rating of less than 10,000 pounds which is a Hazard Zone A Carrier 2230
Motor Carrier insurance does NOT include:
Garagekeepers Coverage 2228
An insurer pays a liability claim on behalf of an insured to a third party after a suit was filed in court against the insured. The amount of the claim was $35,000, which was the amount necessary to repair the claimant's damaged property because of an accident caused by the insured. This $35,000 payment ordered by the court is known as:
General Damages 1979
Which homeowners form has no dwelling coverage?
HO-4 2207
Under the tort law system, reasons for transferring the consequences of loss from the injured party to another DO NOT include:
Harm caused by negligence on the part of the person suffering the consequences of the loss 1327
Which Businessowners policy endorsement applies the business liability coverage in Section II of the policy to bodily injury or property damage arising out of the use of any non-owned auto in the business by any person?
Hired and Non-Owned Auto Liability Endorsement 2242
Which endorsement adds liability and physical damage coverage similar to that found in the Personal Automobile Policy for the person named, spouse, and resident family members and is used to endorse the Business Auto Coverage Form, Motor Carrier Form and/or Auto Dealers Form?
Individual Named Insured Endorsement 2231
Which of the following insurance concepts can be described as being able to predict the approximate number of deaths or occurrences of disability within a certain group during a set period of time?
Law of large numbers 36
The insurance used to fill the gap left by the Fire Damage coverage in the CGL to which the Damages to the Premises Rented by You limit applies is:
Legal Liability Coverage 2238
What commercial property form fills the coverage gaps and low limits in the CGL coverage for damage to property of others for a business that rents when the rental period is over 7 days and when the cause of loss is other than fire?
Legal Liability Coverage Form 2129
What coverage is found in Homeowners (HO) policies but is not found in Dwelling (DP) policies?
Liability 2043
The endorsement used when work is covered by the Merchant Marine Act to provide coverage for seamen covered by this Act is the:
Maritime Coverage Endorsement 2244
The inaccurate comparison of insurers or policies for the purpose of inducing a client to change, surrender, lapse or forfeit an existing policy, which could cause detriment to the policyholder is called:
Misrepresentation 296
An individual who is covered by homeowners insurance does not fix the lock on a window when it breaks. According to insurance principles, what kind of hazard is this action an example of?
Morale Hazard 1964
Which automobile coverage for businesses provides liability and physical damage coverage to truckers, including for-hire truckers, private truckers and truckers who are private and perform for-hire services?
Motor Carriers Coverage 2118
Prior to generating consumer reports for employers, a consumer:
Must give written consent 319
If a person is found by a court go competent jurisdiction to have violated any section of the insurance fraud regulations, the person is subject to civil penalties of:
Not more than $5,000 for the first violation $10,000 for the second violation $15,000 for each subsequent violation
When full tort is elected under Pennsylvania's private passenger motor vehicle responsibility laws, the persons bound by this election are eligible to seek compensation for noneconomic loss claimed and economic loss sustained in a motor vehicle accident as the consequence of the fault of another person pursuant to applicable tort law. Which of the following is considered economic compensation?
Payments for medical expenses due to bodily injury 2217
Which of the following statements relating to the Fair Credit Reporting Act is not true?
Reports can be generated because the consumer has given verbal authorization to do so 873
In crime or fidelity coverage, unlawfully taking property by force or by threat of force is the definition of:
Robbery 1988
Ralph owns a classic car that is restored with original parts of the same make, model and year. When he purchases an insurance policy to insure the auto, Ralph and the insurer agreed that the contract would pay $75,000 under coverage for damage to your auto if the auto were totaled, regardless of the actual amount of the loss. This type of insurance contract is known as a(n):
Stated value policy 1969
Coverage A in the Homeowners form applies to each of the following types of property, EXCEPT:
Structures set apart from the residence by clear space 2209
The legal term for the process through which an insurer is able to recover damages from the party liable for damages once the insurer has paid an insured or claimant is:
Subrogation 1401
Simon has two property policies that cover damage to a building on his property. He reads both insurance contracts to find out how the two policies will share in the payment for the loss. In what part of the insurance policies will he find this information?
The Conditions 2022
_______________ is an open peril policy as it applies to the Dwelling and Other Structures coverage.
The Special Dwelling Form 1720
In an insurance policy, what is a deductible?
The amount the policy owner pays before the insurer will pay an insurance benefit 888
Every personal auto policy applicant in Pennsylvania must be offered uninsured and underinsured motor vehicle coverage. When an applicant rejects this offer:
The applicant must sign a "rejection of uninsured" and "rejection of underinsured" notice supplied by the insurer 2108
LMN Construction is hired by the city of Alden to put sidewalks in its ten city center blocks. The city requires LMN Construction to post a bond guaranteeing that it would perform according to the contract. Who is the obligee in the bond?
The city of Alden 1545
What is adverse selection?
The condition when only people who are at a high risk for a particular type of loss are likely to purchase insurance 734
In insurance, what is exposure?
The hazard or period that can cause harm of loss, along with the scope of harm or loss it can cause 729
An insurance contract is considered to be a contract of adhesion. All of the following statements about contracts of adhesion are correct EXCEPT:
The parties cannot include endorsements or riders to such policies 42
The Broad Theft Coverage Endorsement adds what two perils as covered causes of loss to the dwelling form?
The peril of theft and the peril of vandalism and malicious mischief 2204
Under the Insurance Fraud Protection Act, any person who has been convicted of a criminal felony involving dishonesty or breach of trust is prohibited from engaging or participating in the business of insurance, unless:
The person has the written consent of any insurance regulatory official 722
The extra expenses totaled $25,000. They were necessary, occurred during the period of restoration and minimized business losses. What other condition must be met in order to be payable under Extra Expenses coverage?
They must be of a type that would not have been incurred if there had been no loss 1774
Misrepresenting a product in order to convince an insured to replace his or her existing policy is:
Twisting 292
Each of the following perils are covered by all the homeowners forms, EXCEPT:
Weight of Ice, Snow or Sleet 2208
A consumer discovers that a consumer reporting agency is reporting inaccurate information about her credit history. If the agency is not able to verify the information as accurate, by when must the agency most likely be required to delete the information?
Within 30 days 883
A warehouse business is charged a premium of $6,000 for commercial insurance coverages when the policy is issued. At the end of the policy period, an audit of the warehouses' financial records, inventory and losses is done by the insurer, and the warehouse business is given a refund of $480. When the policy renews, the business is charged $5,600 for the policy period. This premium charge will be reviewed and may be adjusted at the end of the policy period. The premium charge initially set by the insurer at the beginning of the warehouses business' policy period is known as:
a deposit premium 1365
The type of insurance risk that is generally charged the lowest premium rate is:
a preferred risk 73
The replacement value of a building damaged due to fire is $350,000. The depreciation on the building was $30,000. The policy will pay a maximum of $320,000 for the damage. The policy pays the loss based on:
actual cash value 1968
Loss of use coverage of a homeowners form pays for:
additional living expenses related to maintaining the insured's normal standard of living if the residence premises is uninhabitable due to a covered peril and the uninhabitable residence premises are the insured's principal place of residence 1729
The commercial property policy has a limit of liability on each scheduled building of $500,000. The insured meets the policy coinsurance amount of 80%. If three buildings are damaged in one policy period resulting in damage of $1,500,000, these losses are the only claims made under the policy, and the policy will pay $1,000,000 for the losses, the ______________ under the contract is $1,000,000.
aggregate limit of liability 1981
A homeowner chooses the option to have ordinance or law coverage that will pay for the increased expense of repair or replacement if an ordinance or law requires upgrades to the dwelling or other structures after a covered loss. This coverage will be provided by _________________ to the homeowners policy.
an endorsement 1976
The financial institution holding company has five buildings in different locations that are covered by a property policy. The property policy has a $5,500,000 limit of coverage that applies to loss or damage regardless of the location and building that suffers a covered loss. This type of coverage is known as:
blanket coverage 1987
Rental cars are ______________.
covered by personal auto insurance policies when driven by an insured 1498
In the Standard Fire Policy's coverage, if fire ensues after a riot and damages insured property, the policy:
covers the loss 1927
An errors and omissions policy will NOT pay for:
damages that arise out of dishonest and fraudulent acts while performing professional duties 2082
Under the standard Workers' Compensation and Employers Liability Insurance Policy, covered bodily injury includes:
death 1527
Additional coverage for collapse, which is defined as abrupt falling down of or caving in a building, is included in the HO-2, HO-3, HO-4, HO-5 and HO-6 forms. This coverage DOES NOT pay for direct physical loss to a building or any part of a building caused by:
earthquake 2039
The Commissioner has the authority to examine and investigate the affairs of _________ in order to determine whether the person has been or is engaged in any unfair or deceptive act or practice as defined under the law:
every person engaged in the business of insurance in Pennsylvania 871
Commercial general liability insurance does not provide payment for:
property damage to a machine owned by the business, on the business' property and operated by employees of the business 2064
Overflow of inland or tidal waters that partially inundate two or more acres of normally dry land area where at least one of the acres is the policyholder's property meets the definition of _____________ in a National Flood Insurance Program Standard Flood policy.
flood 2057
A ___________________ is an excess policy that offers additional coverage for the same kind of coverage as the underlying policies.
following form policy 1560
The primary component of a surety's premium is:
for evaluating principal 1553
The federal Terrorism Risk Insurance pays for losses:
if the cause of loss is determined to be terrorism as certified by the Secretary of the Treasury, the terrorist act has resulted in property and casualty losses of $100 million or more, and after an insurer has met its insurer deductible 2035
Percy had been insurance licensed for thirty years. He retired nine months ago and let his insurance license lapse. The insurer with whom he'd been appointed will continue to pay him renewal commissions on his insurance contracts for fifteen more months. This commission payment:
is considered salary deferral income within a qualified retirement plan 2247
A person who secures and furnishes written information for group insurance plans and who is not paid commission for this activity:
is not required to be licensed 868
If covered injury or damage occurs and is known but not reported before the policy period, nor while any retroactive date is applicable. and a claim is made during the policy period:
neither an occurrence based and a claims made based policy will cover the injury or damage 1471
Salaried, full-time employees who advise their employers concerning appropriate amounts and types of insurance must be licensed as a producer:
only if they sell or solicit the insurance and receive commission on it 250
The standard coverage in the Businessowners property coverage is:
open period 2239
All of the following are generally included as duties of the insured in the event of a claim, EXCEPT:
paying for legal expenses without the authorization of the insurer 2234 (the following: notifying the insurer as soon as possible of any possible claims, notifying the insurer as soon as possible of any actual claims, and immediately sending the insurer copies of any demands, notices, summonses or other legal papers regarding the claim)
Under liability forms, an injury arising out of false arrest, detention or imprisonment is a(n) ___________________ injury.
personal and advertising 1464
The hazard arising from completed work, including all bodily injury and property damage that occurs from the premises the insured owns or rents and that arises out of the insured's product or work when the products are not in the insured's physical possession and the work has been completed or abandoned, as defined in the Commercial General Liability policy, is the:
products-completed operations hazard 2066
A manufacturer of oil exploration equipment was found legally liable when on three separate occasions its equipment collapsed during use and killed people working underneath it. The court found the manufacture liable without the plaintiffs having to prove negligence on the part of the manufacturer. The type of liability that the manufacturer was assigned by the court that required the manufacturer to pay for the death and damage caused by its equipment is known as:
strict liability 1974
The hot tub manufacturer and dealer's premises suffered a small damaged loss by a fire that was quickly contained and extinguished. Which of the causes of loss forms in the Commercial Package Policy covers damage or loss due to fire?
the Broad, Basic and Special Forms 2045
A large tree farm and nursery that ships on a retail and wholesale basis nationally is covered by a commercial package policy including the Building and Personal Property Form with coverage extensions, the commercial general liability form, inland marine coverage and endorsements providing other appropriate coverage for the business, and the Causes of Loss Broad form. When an earthquake hits the area, one of the businesses' warehouses where trees and shrubs are prepared for shipping was damaged, and the business suffered $240,000 in damage. The insurer paid for the loss. Of the following, what other insurance form must the business have included in its commercial package policy since this damage?
the Causes-of-Loss Earthquake form 2046
A global financial institution hires a design and construction firm to design and remodel hundreds of its locations. It requires the design and construction firm to post a bond guaranteeing that the financial institution will be paid if the design and construction firm does not meet its contractual obligations for this mammoth job. Who is the principal in this bond?
the design and construction firm 2079
In order for a claim that arises from a prior act to be covered by a Commercial General Liability policy, the insured:
the insured must have no prior knowledge before the effective date of the policy that any act, omission or error could result in a claim 2235