Insurance Property and Casualty test ver
When a producer was reviewing a potential customer's insurance coverage that is written by another company, the producer made several oral statements that were maliciously critical of that other insurer. The producer could be found guilty of Misrepresentation. Twisting. False advertising. Defamation.
Defamation.
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT a) Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. b) Up to $200 a day for loss of earnings due to attendance at hearings or trials. c) Premiums on appeal bonds in any suit the insurer defends. d) Up to $250 for bail bonds required because of a covered accident.
a
All of the following statements concerning coinsurance are true, EXCEPT a) The coinsurance formula also will be applied to total losses. b) It is used to help adequacy and equity in rates. c) The insured agrees to maintain insurance equal to some specified percentage of the value of the property. d) If the insurance carried is less than required, the insurance may not cover the whole loss.
a
An additional loss that results from a direct loss of property is called a/an a) Indirect loss. b) Proximate loss. c) Liability loss. d) Punitive loss.
a
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following terms best describes what the insurer has violated? a) Consideration b) Good Faith c) Representation d) Adhesion
a
Insurance is the transfer of a) Peril. b) Risk. c) Loss. d) Hazard.
b
The pro rata liability clause is designed to protect the principle of a) Waiver and estoppel. b) Indemnity. c) Subrogation. d) Insurable interest.
b
In terms of parties to a contract, which of the following does NOT describe a competent party? a) The person must not be under the influence of drugs or alcohol. b) The person must be of legal age. c) The person must be mentally competent to understand the contract. d) The person must have at least completed secondary education.
d
Which of the following is NOT true of National Flood Insurance? a) Emergency program limits are available to communities immediately. b) Participating communities must agree to implement certain land use regulations. c) National Flood Insurance provides coverage that is excluded from property insurance policies. d) Insurance provided by the flood program also is available in standard property policies.
d
The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the a) Conditions. b) Exclusions. c) Declarations. d) Endorsements.
. b
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT a) Conditions. b) Consideration. c) Legal purpose. d) Offer and acceptance.
a
Greg owns several buildings, each at a different location and insured on a separate policy. What type of coverage does Greg have? a) Specific b) Schedule c) Blanket d) Special
a
How long is the waiting period after the application has been accepted before flood coverage goes into effect? a) 30 days b) 6 months c) 12:01 am the next day d) 5 days
a
If a producer fails to place a reasonable value on a property being insured for fire within 90 days, and a loss occurs, upon what will the settlement be based? a) The value as shown by the policy or application b) The actual cash value of the property c) The fair market value of the property d) A number agreed upon by arbitrators
a
In an auto policy, the medical payments coverage is similar to a) Accident insurance, because it pays medical expenses regardless of fault. b) Bodily injury coverage, because it provides legal protection if the insured causes injuries to others. c) Bodily injury coverage, because it pays the insured's doctor bills. d) Accident insurance, because it has the same limits.
a
Insurable interest in the property covered in a policy must be proven a) At time of loss. b) When a beneficiary is changed. c) When a claim is paid. d) At time of application.
a
Lily is driving her car through a residential area. She loses control of the car, and crashes into Max's front porch. Max, who was sitting on the porch, is injured. Lily's liability insurance policy has a limit set at $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does Lily have? a) Combined single b) Split c) Aggregate d) Per occurrence
a
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages? a) Special b) Tort c) Normal d) General
a
The at-fault driver in an insured's auto crash had the state required minimums for auto liability coverage, but not enough to pay for all the damage done to the insured. This driver is a) Considered underinsured. b) Not liable for the damages in excess of his limits. c) Required to post a bond for the amount of damages above his limits. d) Considered uninsured.
a
The part of the insurance contract that describes the covered perils, and the nature of coverage of the contractual agreement between the insurer and the insured is called the a) Insuring agreement. b) Conditions. c) Exclusions. d) Declarations.
a
The policy conditions define a) How parties to the contract must act following a loss. b) The basic underwriting information. c) The excluded perils. d) The amount of coverage.
a
The secretary of the treasury estimates that a recent terrorist attack caused losses of more than $100 billion. According to the 2007 reauthorization of the Terrorism Risk Insurance Program, how many days' notice must the secretary provide to Congress? a) 15 b) 30 c) 45 d) 60
a
The secretary of the treasury estimates that a recent terrorist attack caused losses of more than $100 billion. According to the 2007 reauthorization of the Terrorism Risk Insurance Program, how many days' notice must the secretary provide to Congress? a) 15 b) 30 c) 45 d) 60
a
Under a dwelling policy, the insurer will be liable for no more than the insured's interest in a damaged property if the property is insured by a) More than 1 person. b) More than 2 people. c) More than 4 people. d) More than 5 people.
a
Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss? a) Appraisal clause b) Loss payment clause c) Valuation clause d) Loss settlement clause
a
Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss? a) Liability coverage b) Medical payments c) Comprehensive coverage d) Collision coverage
a
Which of the following would provide coverage to a garage not attached to the primary insured dwelling? a) Coverage B b) Coverage C c) Coverage E d) Coverage A
a
A policy that insures all property at multiple locations for a single amount is referred to as a) Specific. b) Blanket. c) Reporting. d) Special.
b
All of the following are unfair claims settlement practices EXCEPT a) Failing to acknowledge and act promptly with respect to claims arising under insurance policies. b) Offering substantially more than the amounts ultimately recovered in actions brought by insureds. c) Attempting to settle claims on the basis of an application which was altered without notice to or knowledge of the insured. d) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue.
b
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? a) Estoppel b) Material misrepresentation c) Waiver d) Utmost Good Faith
b
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? a) Legal, provided that the other insurers are paid royalties for the usage of their names b) Illegal under any circumstances c) Legal, provided that the information can be verified d) Illegal until endorsed by the Guaranty Association
b
If an insurance company does not intend to renew a contract of any kind of personal risk insurance, the company must mail or deliver to the named insured notice of its intention not to renew at least ______ prior to the expiration of the policy. a) 20 days b) 30 days c) 40 days d) 45 days
b
In any controversy between the insured or the insured's beneficiary and the insurer that arises from the application for insurance or any policy issued in connection with the application, the producer is considered to be the agent of which of the following? a) The beneficiary b) The insurer c) Himself or herself d) The insured
b
In commercial policies, who has control of the policy? a) Beneficiary b) First named insured c) Second named insured d) Insurer
b
Legal liability is when a person is considered liable for damages according to a) The injured party. b) The law. c) The insured. d) The insurance company.
b
Sally has a property insurance policy that is not subject to any coinsurance requirements. Her policy has a set amount of insurance scheduled for her property. What loss valuation method does her policy use? a) Reproduction cost b) Stated amount c) Actual cash value d) Replacement cost
b
The homeowners policy covers collapse caused by all of the following EXCEPT a) Weight of too many people attending en event hosted in the house. b) Foundation cracks. c) Weight of snow. d) Hidden insect or vermin damage.
b
The requirement that an agent not co-mingle insurance monies with their own funds is known as a) Accepted accounting principal. b) Fiduciary responsibility. c) Premium accountability. d) Express authority.
b
To insure coin collections, stamp collections, and other items that would be difficult to appraise after a loss, it is best to insure with a) ACV coverage. b) Stated amount insurance. c) Completed value form. d) Replacement cost coverage.
b
Under Coverage C of a homeowners policy, the amount of insurance provided to cover personal property of the insured is a) 50% of the amount provided as Coverage B. b) 50% of the amount provided as Coverage A. c) Equal to the amount provided as Coverage B. d) Equal to the amount provided as Coverage A.
b
Under which of the following circumstances would an insurer be allowed to cancel a dwelling policy midterm? a) The insured reached his or her limit on the number of claims. b) The insured knowingly lied about the year the property was constructed. c) The insured's claims have exceeded the amount of coverage. d) The insured wants to make suspicious increases to his or her coverage.
b
What is a material misrepresentation? a) Concealment b) A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company c) Any misstatement made by an applicant for insurance d) Any misstatement by the producer
b
What is the purpose of the coinsurance clause found in property insurance policies? a) Prevent insureds from profiting from a loss b) Encourage insurance to value c) Encourage higher standards of care by requiring the insured to pay a portion of every loss d) Ensure that insureds do not overinsure their property
b
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays a) A percentage of the loss as described on the declarations. b) The excess over the self-insured retention. c) The amount specified in the policy under the additional coverage provisions. d) The amount in excess of the underlying policy deductible.
b
When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written a) Specific insurance. b) Stated amount. c) Replacement cost. d) Actual cash value.
b
Which of the following is an example of an agent's fiduciary responsibilities? a) Offering additional coverage to a client b) Forwarding premiums to the insurer c) Helping clients to file claims d) Performing a review of clients' coverage
b
Which of the following policies does NOT contain an automatic reinstatement provision? a) Homeowners b) General liability written with an aggregate limit c) Business automobile liability d) Personal automobile liability with split limits
b
Which of the following policies does NOT contain an automatic reinstatement provision? a) Homeowners b) General liability written with an aggregate limit c) Business automobile liability d) Personal automobile liability with split limits
b
Which of the following statements is NOT true regarding a personal umbrella liability policy? a) It provides excess liability coverage over underlying personal liability. b) It provides errors and omissions coverage for an agency. c) It may cover certain exposures not provided under the primary layer. d) It may require the payment of a self-insured retention.
b
A producer intentionally violated insurance statutes. Ultimately, the Commissioner determined there were a total of 25 separate violations. What is the total, monetary penalty this producer can expect to receive? a) $100,000 b) $25,000 c) $250,000 d) $625,000
c
A temporary insurance License may be issued without examination in all of the following instances EXCEPT a) To a producer replacing a licensed agent who is retiring. b) To the surviving spouse of a deceased producer. c) To an applicant who fails to pass an insurance producer's examination. d) To a designee of a producer who enters active duty with the US Armed Service.
c
A tornado that destroys property would be an example of which of the following?? a) A loss b) A physical hazard c) A peril d) A pure risk
c
All else being equal, which of the following will NOT be considered unfair discrimination by insurers? a) Cancelling individual coverage based on the insured's marital status b) Assigning different risk classifications to applicants based on ethnicity c) Discriminating in benefits and coverages based on the insured's habits and lifestyle d) Charging applicants with similar health histories different premium rates
c
All of the following are classes of inland marine risks EXCEPT a) Domestic shipments and transportation risks b) Bridges, tunnels, and other instrumentalities of transportation and communication c) Common Carrier Cargo Liability d) Commercial property floater risks
c
All of the following are conditions commonly found in the insurance policy EXCEPT a) Subrogation. b) Appraisal. c) Insuring agreement. d) Cancellation and non-renewal.
c
All of the following are essential parts of the insurance contract EXCEPT: a) Insuring clause. b) Conditions. c) Provisions d) Exclusions.
c
All of the following are perils covered under the broad form dwelling policy EXCEPT a) Lightning. b) Collapse. c) Theft. d) Fire.
c
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT a) Premiums on appeal bonds in any suit the insurer defends. b) Up to $250 for bail bonds required because of a covered accident. c) Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. d) Up to $200 a day for loss of earnings due to attendance at hearings or trials.
c
An agent offers his client free tickets to the Super Bowl game in exchange for the purchase of an insurance policy. The agent is guilty of a) Twisting. b) Controlled business. c) Rebating. d) Coercion.
c
As a condition for renewal of their licenses, how many hours of continuing education are required for all resident and nonresident insurance producers? a) 10 b) 20 c) 24 d) 12
c
For which of the following reasons may an auto insurance policy which has been in effect for 60 days be cancelled? a) The named insured disclosed he/she was involved in an accident during the preceding 36 months. b) The named insured disclosed information that made him/her a poor risk. c) The named insured obtained the policy through material misrepresentation. d) The policy may be cancelled for all of these reasons.
c
For which of the following reasons may an auto insurance policy which has been in effect for 60 days be cancelled? a) The named insured disclosed he/she was involved in an accident during the preceding 36 months. b) The named insured disclosed information that made him/her a poor risk. c) The named insured obtained the policy through material misrepresentation. d) The policy may be cancelled for all of these reasons.
c
How many credit hours of excess continuing education are producers allowed to carry over to the next renewal cycle? a) None b) 3 hours c) 12 hours d) 24 hours
c
If a producer fails to place a reasonable value on a property being insured for fire within 90 days, and a loss occurs, upon what will the settlement be based? a) The fair market value of the property b) A number agreed upon by arbitrators c) The value as shown by the policy or application d) The actual cash value of the property
c
In an auto policy, the medical payments coverage is similar to a) Bodily injury coverage, because it pays the insured's doctor bills. b) Accident insurance, because it has the same limits. c) Accident insurance, because it pays medical expenses regardless of fault. d) Bodily injury coverage, because it provides legal protection if the insured causes injuries to others.
c
In compliance with Tennessee's financial liability law, written proof of liability insurance coverage provided by a single limit policy must be in what amount? a) $125,000 b) $25,000 c) $60,000 d) $100,000
c
In the event an insurer cancels an automobile insurance policy for a reason other than nonpayment of premium, what must be included in the notice? a) The exact reason for termination b) The name of the underwriter c) Notification that the named insured may be eligible for coverage through the Assigned Risk Plan d) Any unearned premium
c
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages? a) Normal b) General c) Special d) Tort
c
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called a) Blanket coverage. b) Described coverage. c) Specific coverage. d) Schedule coverage.
c
Section I of a boatowners policy covers a) Medical payments. b) Death. c) Physical damage. d) Liability.
c
The insured has violated the contract without the knowledge of the mortgage holder. After a loss a) Both the insured and mortgage holder will be paid. b) The pro rata liability clause applies. c) The insured cannot collect but the mortgage holder will still be paid. d) Neither the insured nor the mortgage holder will be paid.
c
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a) Contract of adhesion b) Acceptance c) Consideration d) Legal purpose
c
Which of the following is NOT covered by the condominium unit owners endorsement? a) Appliances in the building b) Fixtures in the building c) Furniture in the building d) Alterations to the building
c
Which of the following statements regarding coverage for the flood and earthquake perils is true? a)Flood and earthquake coverage is available only through the government. b) Flood insurance usually is provided in property policies. However, earthquake insurance is available by endorsement only. c) Both are excluded perils in all property policies. d) Flood and earthquake coverage is available in all policies.
c
A beauty parlor burns to the ground. What type of loss is this to the owner? a) Consequential b) Specific c) Consecutive d) Direct
d
Alan has a Personal Auto Policy with Part C limits of $100/$300 Uninsured/Underinsured Motorist. Alan is injured by Ben who has Part A limits of $50/$100. The police determine that Ben is at fault for the accident and Alan's $125,000 of medical expense. How much will Alan's Part C pay? a) $25,000 b) $125,000 c) $75,000 d) $50,000
d
All of the following statements are true regarding physical damage coverage EXCEPT a) Losses to nonowned autos will be covered the same as the broadest coverage available for any covered auto, but nonowned trailers are limited to $1,500. b) The policy will pay up to $20 per day up to a maximum of $600 for rental transportation. c) The insurer will pay for direct and accidental loss to a covered auto minus any applicable deductible. d) The limit of liability is the greater of the ACV of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle.
d
All of the following statements regarding a boatowners policy are true EXCEPT a) Watercraft liability protects up to specified limits for claims against a "covered person" for damages due to bodily injury caused by a watercraft. b) Physical damage coverage is provided on an actual cash value (ACV) basis. c) Perils are insured on an open-peril basis, providing that the insurer will pay for direct and accidental loss to the property insured. d) Replacements for the boat listed in the Declarations are automatically covered, if the insured notifies the insurer within 60 days and pays the additional premium.
d
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? a) A legal advertising strategy b) Unfair Discrimination c) Defamation d) Illegal
d
Any of the following would be considered an Unfair Trade Practice, EXCEPT a) An insurer failing to affirm or deny coverage within a reasonable time after proof of loss statements have been received by the company. b) Attempting to settle a claim on the basis of an application which was altered without notice to, or knowledge and consent of the insured. c) Attempting to settle a claim for less than the amount to which a reasonable person would have believed he was entitled by reference to written or printed advertising material used in the sale. d) Attempting to settle a claim by the use of arbitration.
d
How long does a producer have after writing a Fire insurance contract to have the building inspected? a) 30 days b) 45 days c) 180 days d) 90 days
d
If an insurer is going to terminate the appointment of an insurance producer, within how many days following termination must the insurer notify the Commissioner of the termination? a) 45 days b) 60 days c) 15 days d) 30 days
d
In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for a) Towing coverage. b) Comprehensive (other-than-collision) coverage. c) Collision coverage. d) Uninsured motorists coverage.
d
Insurable interest in the property covered in a policy must be proven a) At time of loss. b) When a beneficiary is changed. c) When a claim is paid. d) At time of application.
d
Insurance is the transfer of a) Loss. b) Hazard. c) Peril. d) Risk.
d
Sara owns a fire insurance policy on her house. If her home is totally destroyed in a fire, how much will the insurer be liable for? a) The cost to replace the property with like kind and quality b) The cost to replace the property minus depreciation c) The insurer will not be liable for any amount d) The actual cash value of the property at the time of loss
d
The ABC Corporation has $100,000 of coverage on its building through insurance Company A, and $50,000 of identical coverage on the same building through insurance Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs, how much will each insurer pay? a) Company A will pay $20,000; Company B will pay $4,000 b) Company A will pay $12,000; Company B will pay $12,000 c) Company A will pay $24,000; Company B will pay $0 d) Company A will pay $16,000; Company B will pay $8,000
d
Under a policy, the condition that determines how the amount of damaged or lost property will be determined is known as a) Loss payment. b) Appraisal. c) Coinsurance. d) Loss valuation.
d
What is a Certificate of Insurance? a) A written document obligating the insurer to the person to which the insurance was issued b) A written document naming the insured's beneficiary c) A written document allowing the insurer to inspect the insured's books d) A written document showing the types and amounts of insurance that have been issued to the insured
d
What is the deductible of a personal liability umbrella policy called? a) The PIL b) The CGL c) The CPP d) The SIR
d
What is the purpose of the coinsurance clause found in property insurance policies? a) Encourage higher standards of care by requiring the insured to pay a portion of every loss b) Ensure that insureds do not over-insure their property c) Prevent insureds from profiting from a loss d) Encourage insurance to value
d
What must be included in notice of cancellation or intent not to renew an auto liability policy? a) A refund of premiums paid b) A list of other potential insurers c) The reason for the nonrenewal d) A notice informing the insured of his/her possible eligibility for insurance through the automobile assigned risk plan
d
Which method of loss valuation is contrary to the basic concept of indemnity? a) Functional replacement cost b) Market value c) Agreed value d) Replacement cost
d
Which of the following best describes liberalization clause in a policy? a) The insurer is relieved of its contractual obligations to the insured. b) The insured may assign the policy to any person without their written consent. c) The policy cannot be cancelled. d) Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium.
d
Which of the following claims would be included under the dwelling policy? a) Fire damage to a garage located on the insured premises used as an auto repair shop b) Theft of the insured's auto stolen from the detached garage c) Death to the insured's cat due to smoke inhalation d) Fire damage to the insured's rowboat located in the attached garage
d
Which of the following would NOT be covered under the liability section of a personal auto policy? a) A trailer the insured vehicle is towing accidentally comes loose and causes injury to another person. b) A friend of your son is using the insured vehicle with the named insured's permission and causes an accident. c) After a party, the insured causes an accident and is charged with driving under the influence of alcohol. d) Bodily injury is caused by the insured's negligence while driving a three-wheel all-terrain vehicle.
d
With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto? a) A vehicle leased to the named insured for 12 months by a leasing company b) A vehicle that is titled and insured by the named insured, but is driven principally by the named insured's son, who is resident of the household c) A vehicle rented for the insured's personal use d) A vehicle that is titled to another person, but is being used with permission by an insured
d
