Licensing 3

Rudolph's liquor liability policy's declarations show an aggregate limit of $300,000 and an each common cause limit of $100,000. Rudolph's insurer had previously paid a $100,000 claim during the current policy term when another incident occurred in which an intoxicated patron collided with two other vehicles and injured their drivers, resulting in judgments of $200,000 and $75,000, respectively. What amount will Rudolph's insurer pay?

$100,000

Yong dealt with two personal liability claims during the past year while his homeowners insurance policy with a $100,000 personal liability limit was in force. The first incident involved damages of $125,000 for bodily injury and $50,000 in property damage. The second incident involved $2,000 in damages for bodily injury. How much did Yong's insurer pay in damages?

$102,000

When Maryanne's furnace malfunctioned, five guests in her house required medical treatment for carbon monoxide poisoning. Maryann's homeowners policy has a medical payments to others limit of $5,000. The five guests' medical bills were in amounts of $6,000; $4000; $3,000, $2,000; and $1,000. How much will her insurer pay to cover these medical bills?

$15,000

Florist has a business auto policy with a $300,000 limit, and a commercial umbrella policy with a $1 million limit and a $10,000 self-insured retention. While driving the company van, Florist's driver rear-ended a school bus. The injured bus passengers' claims and damage to the bus result in a $500,000 judgment against Florist. How much will be paid by the insurer that issued the umbrella policy?

$190,000

Samuel has a homeowners insurance policy with a $300,000 liability limit and a personal umbrella liability policy with a $1 million limit. Both policies provide personal liability coverage, and the personal umbrella specifically states that it provides excess coverage. Samuel accidentally damages a friend's property, and the friend obtains a $2,000 judgment against Samuel. How will these two policies handle the claim?

$2,000 will be paid under the homeowners policy and nothing will be paid under the umbrella policy.

Fran's personal auto policy (PAP) lists her three autos. Each of them has uninsured motorists coverage with a $50,000 limit. Fran is permanently disabled by injuries she receives while riding in a friend's car that is struck by a hit-and-run driver. According to her policy, how much can Fran expect to collect under Fran's own PAP's uninsured motorists coverage?

$50,000

Zenith Restaurant has a business auto policy (BAP) with a $500,000 limit, and a commercial umbrella policy with a $1 million limit, and a $10,000 self-insured retention. While driving the company van, Zenith's driver collides with the back of a tour bus. Injured bus passengers' claims and damage to the bus result in a $750,000 judgment against Zenith. How much will be paid by insurer that issued the business auto policy?

$500,000

Which one of the following incidents that resulted in liability claims against Aida did not involve "bodily injury" as defined in her homeowners insurance policy?

A neighbor's reputation was harmed because Aida spread false rumors about the neighbor.

Although Alicia's farm liability coverage form provides fairly broad coverage, she is also aware of its numerous exclusions. Which one of the following activities is covered?

Alicia operates a mower mounted on a diesel-fueled tractor in her own hay field.

Evidence points to Zeta Construction's negligence as the cause of a stage collapse that resulted in the death of Bonita, a famous performer. Zeta Construction's commercial general liability (CGL) policy with Alpha Insurance Company has limits of $300,000 that would apply to the multimillion dollar claim of Bonita's estate. Under the circumstances,

Alpha has a duty to defend Zeta until Alpha has paid $300,000 in judgments or settlements.

Trisha is driving Angelo's car with his permission when she causes an accident in which she sustains minor injuries. Trisha and Angelo both have personal auto policies (PAP) with medical payments coverage. From what source(s) will Trisha recover her medical expenses?

Angelo's insurer provides primary coverage in this case.

Which of the following is NOT typically part of a complete Personal Auto Policy?

Coverage audit

In which of the following incidents would Elba's personal auto policy's medical payments coverage provide no protection for the person who was injured?

Elba's car strikes a jaywalking pedestrian.

Frederick Jewelers' crime policy includes an extortion—commercial entities endorsement. Which of the following situations does this endorsement not cover?

Frederick makes no attempt to notify authorities before giving in to an extortionist's demands to surrender his diamonds.

Which of the following activities, if located on the farm premises, would NOT be considered a farming operation covered by the farm liability coverage form?

Gift shop

Cesar's homeowners insurance policy provides no liability coverage on Cesar's 30-foot sailboat that is moored at a local marina. Why?

It is 26 feet long or longer.

For the farm liability coverage form to cover personal injury, an offense must meet all of the following conditions EXCEPT:

It must be committed intentionally.

Within the Coverage A insuring agreement of the CGL, what does the insurer promise to do?

It promises to pay "sums" that the insured becomes legally obligated to pay "as damages" because of "bodily injury" or "property damage" covered by the policy.

Earline's business auto policy (BAP) includes comprehensive and collision coverage on owned autos. A high-mileage pickup truck struck debris on the road that tore the engine's oil pan, and the resulting sudden loss of oil, ruined the engine. Earline's insurer arranges to have a new engine installed, and the pickup will now be worth much more than it was before. What will the insurer pay?

It will pay for the new engine and its installation after making an adjustment for betterment.

Which one of the following incidents that resulted in liability claims against Jacquelyn did not involve "property damage" as defined in her homeowners insurance policy?

Jacquelyn copied an article from the Internet and submitted it as her own homework.

Jonathan runs a shoe repair business as a sole proprietor, and his wife Laura keeps the books for the business. Jonathan is the only named insured listed under the shoe shop's commercial general liability (CGL) insurance policy, and he has no other business activities. Laura and her sister Amy also operate a fish restaurant as a partnership. Who is an insured under the shoe shop's CGL policy?

Jonathan and Laura are insureds, but only with respect to the shoe business.

Josiah runs a luggage repair business as a sole proprietor, and his wife Bonnie keeps the books. Josiah is the only named insured listed under the shop's commercial general liability (CGL) insurance policy. Bonnie's sister Ruth is a part-time employee of Josiah's business. Who is covered as an insured under the luggage repair shop's CGL policy?

Josiah, Bonnie, and Ruth with respect to any business activities

Last year, the board of directors of Laurence Corporation voted to sell one of its subsidiaries, Eloy, Inc., which had been operating at a loss, to a competitor. Soon after the sale, Eloy's past research and development succeeded in launching a very profitable new product. Which of the following is most likely to happen?

Laurence Corporation shareholders might sue the directors and officers alleging a lack of due care in making the decision to sell the now-profitable subsidiary.

Maurice has a personal auto policy (PAP) on the family car that lists Maurice alone as the named insured. His wife, Sondra, is involved in an accident while using the family car as a Charity Organization volunteer. The injured parties sue Maurice, Sondra, and Charity Organization. Which of these parties is insured under the PAP's liability coverage?

Maurice, Sondra, and Charity Organization are insureds.

When Janine bought a new car, she also bought a new personal auto policy (PAP), but she did not cancel the policy she already had. Does she have duplicate coverage now?

No, because the automatic termination provision in her first policy terminates the policy on the effective date of the replacement policy.

Various hazardous processes are involved in manufacturing Pete's products. Which one of the following does not involve a pollutant as that term is defined in the Insurance Services Office, Inc. (ISO), pollution liability coverage forms?

Pete's welding operation creates electrical interference with neighbor's television signals.

Rebecca has a $1 million personal umbrella policy with a $500 retained limit (deductible) for slander and defamation, and a personal auto policy (PAP) with a $500,000 limit. She is at fault in an auto accident that is settled for $600,000. How will this settlement amount be paid?

Rebecca will pay nothing, the PAP insurer will pay $500,000, and the umbrella insurer will pay $100,000.

A deck collapsed during a big engagement party at Paula and Elliott's house, and everyone on the deck (including all the following people) sustained minor injuries. The medical payments to others coverage of Paula and Elliott's homeowners insurance policy will pay for whose medical bills?

Sanford's, the honored guest

Now that she is going to college, Mattie wants to reduce her expenses. She sells her car and no longer needs auto insurance. What must she do to cancel her policy?

She must either return the policy to her insurer or give the insurer written notice of the cancellation date.

Suzette has a $1 million personal umbrella policy with a $250 retained limit (deductible) for personal liability and a personal auto policy (PAP) with a $300,000 limit. She is at fault in an auto accident that is settled for $500,000. How will this settlement amount be paid?

Suzette will pay $250, the PAP insurer will pay $300,000, and the umbrella insurer will pay $199,750.

Consuela's business auto policy (BAP) includes comprehensive and collision coverage on all owned autos. Four of them are Jeep Wranglers. One weekend, Consuela and three of her employees take these Jeeps on a hunting expedition that does not turn out well. Which one of the following losses does her BAP cover?

The Jeep Consuela is driving overturns while climbing a hill.

Mauricio drives The Flower Shop's van to deliver fresh flowers to Leila, a regular customer. He trips on steps leading to her porch. The flowerpot he drops makes a big gouge in her freshly painted porch floor. How will The Flower Shop's business auto policy (BAP) respond to Leila's property damage liability claim, if at all?

The claim is covered because the damage occurred while Mauricio was unloading the vehicle.

For the past four years, Cheryl's business has been insured by four different insurers under commercial general liability (CGL) insurance policies with an occurrence trigger. For a claim to be covered by Cheryl's current policy:

The injury or damage must have occurred during the current policy period.

Mary lost control of her car, which rolled onto the sidewalk and injured Wilmer, a pedestrian. Katharine witnessed the incident and had to engage a psychiatrist for her resulting mental anguish. Mary's personal auto policy covers liability resulting from bodily injury, which would include

Wilmer's doctor bills but not Katharine's psychiatrist bills.

When her out-of-town boyfriend was visiting Lori, she accidentally slammed his hand in a door. A friend suggests that Lori's homeowners insurance policy's medical payments to others coverage should cover the boyfriend's resulting medical expenses if the incident took place on an "insured location." Which one of the following locations qualifies as an "insured location"?

a hotel room that Lori and her boyfriend occupy

The swimming pool in the atrium of the Highland Court Apartment Building provides for a humid environment that encourages mold growth. To limit its exposure to mold-related claims, what kind of endorsement could the insurance company providing the CGL coverage add?

a limited fungi or bacteria coverage endorsement

Because Leanne's personal auto policy (PAP) provides liability coverage on temporary substitute autos, Leanne's PAP will protect her against a liability claim if she is driving

a pickup truck she borrows from a friend while Leanne's car is in the body shop.

Because Pamela lives in a state with a financial responsibility law, she will be required to prove she has insurance

after a serious traffic violation or accident.

When his sports car was returned from the body shop following repairs for collision damage, Guillermo was dismayed to learn that the shop had used parts that were not made by the car's manufacturer. What did the insurer in this case apparently permit the shop to use?

aftermarket (or non-OEM) parts

An Insurance Services Office, Inc. (ISO), liquor liability coverage form includes which two limits of insurance?

an aggregate limit and an each common cause limit

Riley's Chrysler coupe is insured under a personal auto policy (PAP) that includes only liability, uninsured motorists, and other-than-collision coverages. Riley did not dispose of the Chrysler or change his PAP when he bought a new Honda sedan. According to Riley's PAP, what kind of coverage does he have?

automatic collision coverage on the Honda if he reports it to the insurer within four days

Eliza's car is insured under a personal auto policy (PAP) that includes liability, collision, and other-than-collision coverages. Eliza did not get rid of her car or change her personal auto policy when she bought the Chevrolet pickup truck with a 5,000 pound gross vehicle weight (GVW) rating that she just brought home. According to Eliza's PAP, Eliza has

automatic liability coverage on the pickup if she reports it to the insurer a week from today.

Roslyn owns a small manufacturing plant that contains the following items. Which does not qualify as covered equipment in her equipment breakdown coverage form?

boiler room

Tonya owns and operates a neighborhood sports bar where she sells sandwiches, beer, and other alcoholic beverages to her patrons. In addition to auto and workers compensation insurance, what liability insurance policy or policies would protect Tonya against most liability claims arising out of this business?

both a commercial general liability (CGL) policy and a liquor liability insurance policy

As an independent property and liability insurance agent who represents several insurers, Gayle is covered by an insurance agents errors and omissions insurance policy. Gayle's policy covers her against errors and omissions claims brought against her by:

both clients and insurers

Vito's farm does not produce enough income to support his family, so he works as a self-employed carpenter during the winter months. Which exclusion in Vito's farm liability coverage form precludes coverage for any loss resulting from his side business as a carpenter?

business pursuits

Even though Beverly has homeowners, personal auto, watercraft liability, and other liability policies, she might also want to buy a personal umbrella policy to protect against:

catastrophic liability losses

The cries of Jodie's young daughter distracted Jodie while she was driving the child to school. Jodie collided with Emanuel's car, pushing it into a telephone pole. Emanuel's car was damaged, and the telephone pole was destroyed. The resulting traffic jam delayed other drivers from getting to work on time. As defined in Jody's personal auto policy, all the following claims involve property damage EXCEPT

claims for lost wages by the other drivers who were late to work.

Which of the following is least likely to be considered a "covered auto" for purposes of the Personal Auto Policy (PAP)?

commercial tractor-trailer combination

After a serious accident, Melanie is not pleased to learn that her insurance company refuses to pay to have her auto repaired because the repairs would cost 85 percent of the vehicle's current market value. This indicates that the insurer considers Melanie's car to be a(n):

constructive total loss

Colin hires Sal, a retired farmer, to help him with the harvest. Sal is seriously injured when he falls off the tractor he was operating in Colin's field. Colin's farm liability coverage form

covers Sal's injuries unless state law requires Colin to provide workers compensation benefits.

Lacey's careless use of a space heater resulted in $200,000 in fire damage to the office building she rented. Although the loss is within the $300,000 general aggregate limit of her commercial general liability (CGL) insurance policy, the insurer pays only $100,000 of this property damage liability claim because of the policy's:

damage to premises rented to you limit

Which of the following expenses would not fall within those covered by a business auto policy paying a claim for "property damage," as that term is used in a BAP?

damage to property being transported in a covered auto

Which one of the following terms refers to money paid as compensation to a person or business that has suffered a loss caused by an insured?

damages

As an accounts receivable clerk, Teresa often receives checks through the office mail. Last month, Teresa took one of the larger checks that was payable to her employer, endorsed it by printing her employer's name, and deposited the check to her own account. The forgery coverage in the employer's crime policy

does not cover the claim because Teresa is an employee.

When Eduardo sold a piano to Sheri through an online auction service, he included assurances that he would deliver it in good condition after the transaction had been completed. However, the moving company van that carried the piano was involved in an accident en route to Sheri's house, and the piano was damaged. Eduardo's CGL policy

does not cover this loss because of the contractual liability exclusion.

While Roderick was making a delivery, a radiator hose on his delivery van suddenly burst and sprayed a mix of antifreeze and water. The spray stained the customer's new concrete driveway, and the customer wants Roderick to pay to have the driveway resurfaced. The pollution exclusion in Roderick's business auto policy

does not exclude coverage for the damage.

While entering a construction site, Dustin's dump truck struck a rock that tore a hole in the engine's oil pan and released motor oil that seeped into the sandy soil. The owner of the site expects Dustin to pay to have the oil removed. The pollution exclusion in Dustin's business auto policy

does not exclude coverage for this damage.

In his homeowners insurance application, Dan stated that he had had no previous liability losses. He did not mention the bar fight in which Dan was ultimately held responsible for another patron's injuries. Because Dan concealed this information, the concealment or fraud provision in Dan's homeowners insurance policy states that the insurer

does not provide liability coverage for Dan.

Many states have enacted laws holding businesses that serve alcohol responsible for monitoring their patrons' alcohol consumption. What are these laws called colloquially?

dramshop acts

Nelson, CEO of his company, has a company car. Since Nelson does not own another vehicle, he has no auto insurance in his own name that might protect him when he drives anyone else's car. What is an endorsement to Nelson's business auto policy that would give him this protection?

drive other car—broadened coverage for named individuals

Sandy requires her employees to use their personal autos to make customer calls. Sandy is protected by her business auto policy's $1 million liability limit, but her employees must rely on their personal auto policies. If Sandy adds the employees as insureds endorsement to her BAP, employees who are using their personal cars in her business will have

excess coverage for losses that exceed their personal auto liability limits.

Physicians professional liability insurance is designed to cover all the following exposures a medical practitioner faces EXCEPT

failing to meet continuing education requirements.

The standard farm liability coverage form covers claims arising from all of the following EXCEPT:

farm retail activity

Nicolas, an electrician, accidentally shorts out a live wire in a fuse box he is working on. The resulting sparks destroy the fuse box and set fire to the adjacent wall. What will Nicolas's CGL policy cover?

fire damage to the wall but not to the fuse box

Enrique and Troy are the only residents of their fraternity house who own cars. Because they must park in a narrow driveway, they each have keys to both cars and use them interchangeably. Troy has a personal auto policy (PAP), but Enrique is uninsured. If Troy has an accident while driving Enrique's car, for whom will Troy's PAP provide liability coverage?

for neither Troy nor Enrique

After her insurance agent explained the options available under a business auto policy, Malinda decided to purchase specified causes of loss coverage, rather than comprehensive coverage, on the trucks in her fleet. Malinda will not have coverage for loss to a covered auto caused by:

glass breakage

No-fault insurance coverage is not available in Elva's state, but she wants to make sure she and her children have high medical coverage limits under her personal auto policy (PAP) if they are injured in an auto accident, no matter whether Elva or another driver is at fault. She should look to her health insurance, because auto medical payments coverage

has relatively low limits, typically $10,000 or less.

A commercial umbrella liability policy issued to a small business provides excess limits of coverage over and above the liability limits provided by all the following policies EXCEPT:

inland marine

After Patrice told insurance salesman James to leave her porch, he tried to force his way into her house. Fearful for her safety, Patrice used an umbrella to strike James. His subsequent bodily injury claim against Patrice

is covered because she intentionally used reasonable force to protect herself.

As part of his sales training program, Tyler accompanies Janelle in her calls on their employer's accounts. Janelle's company car has liability coverage under their employer's business auto policy (BAP). Janelle collides with a lamppost, and Tyler is injured. His subsequent bodily injury claim against Janelle

is not covered by the BAP because of the fellow employee exclusion.

A complete Personal Auto Policy (PAP) consists of all of the following major parts EXCEPT:

key definitions

After successfully negotiating an emergency loan, Sally's employer obeyed her kidnapper's instructions to deliver $250,000 to the kidnapper. The kidnapper then released her without harm. Which coverage of the employer's kidnap/ransom and extortion policy will reimburse the employer for its $250,000 loss?

kidnap/ransom and extortion—direct loss

Upon learning that Bryant, a key executive, has been kidnapped, Bryant's employer contacted the security firm listed in the declarations of its kidnap/ransom and extortion policy. The security firm was able to negotiate Bryant's release and billed his employer $250,000 for its services. Which coverage of the employer's kidnap/ransom and extortion policy will reimburse the employer for its $250,000 loss?

kidnap/ransom and extortion—expenses incurred

The commercial general liability (CGL) policy's limited fungi or bacteria coverage endorsement is usually used when an insurer wants to

limit its exposure to mold-related bodily injury liability claims.

As defined in the farm liability coverage form, which of the following does farming not include?

mechanized processing operations

Which of the following would not fall within the definition of "bodily injury" for purposes of coverage by the business auto policy (BAP)?

mental trauma

As defined in the business auto policy (BAP), the term "auto" does not include vehicles that fall under what definition?

mobile equipment

Bert soon found a buyer for the delivery van his business no longer needed. The buyer paid him $5,000 in cash. When Bert tried to deposit the cash, his bank told him that the bills are not real money. What insuring agreement in Bert's crime policy might cover his $5,000 loss?

money orders and counterfeit money

Darrel's car is insured under a personal auto policy (PAP) that includes liability, collision, and other-than-collision coverages. Darrel did not dispose of his car or change his PAP when he bought a heavy duty pickup truck with a 12,000-pound gross vehicle weight rating and brought it home. According to Darrel's PAP, what kind of coverage does Darrell have (or not have)?

no automatic coverage for the pickup because of its high weight rating

Some of Patricia's sales can be attributed to the public's confusing her product with a competitor's more popular product. If Patricia wrongfully appropriates the competitor's business or product name and makes it part of her e-mail address or Web domain name, the personal and advertising injury coverage of Patricia's commercial general liability (CGL) insurance policy will

not cover claims filed against Patricia.

Antoinette's business is the named insured under an Insurance Services Office, Inc. (ISO), pollution liability form. This form includes an extended reporting period option that permits Antoinette to

obtain an endorsement providing coverage for claims reported within one year after the policy period ends.

The farm liability coverage form contains exclusions for all the following EXCEPT:

personal and advertising injury

In states with a no-fault law, what coverage may replace the personal auto policy's medical payments coverage?

personal injury protection (PIP) coverage

Because Sergio's insurer was willing to add the limited pollution liability extension endorsement to his CGL insurance policy, Sergio would now have coverage for bodily injury or property damage claims resulting from any of the following incidents EXCEPT where

pollutants seeping from Sergio's leaky underground storage tank contaminate a neighbor's well water.

The Farm Liability Coverage Form (FL 00 20) has three basic coverages. Which is not one of them?

pollution liability

Al's farm does not produce enough income to support his family, so he supplements his farming income by working as a veterinarian. Which exclusion in Al's farm liability coverage form precludes coverage for any loss resulting from his veterinary activities?

professional services

As an attorney, Ben has lawyers professional liability insurance that provides him with liability coverage for clients' claims arising out of all the following, EXCEPT:

property damage liability

After several violations, Napoleon Bar and Grill's liquor license was revoked. Napoleon did not inform its insurer of this fact and continued to serve alcohol to its regular customers, including Brett. After a long night at the bar, Brett was involved in a serious auto accident and sued Napoleon under the applicable dramshop act. Napoleon's liquor liability insurance

provides no coverage because Napoleon's required license was not in effect.

When it replaces the liability exclusion in the CGL insurance policy, what does the limited pollution liability extension endorsement do?

provides significantly broader coverage

What is no-fault auto insurance intended to do?

reduce insurance costs by reducing or eliminating litigation

After discovering that the motorist who injured her had no insurance, Mandy thought it fortunate that her personal auto policy included uninsured motorists coverage. However, Mandy and her insurer cannot agree on the amount of compensation, if any, she is entitled to receive. The arbitration provision in her policy provides a means of settling disputes over

the amount of damages and whether Mandy is entitled to recover damages.

Some of the coverages in Carmella's personal auto policy (PAP) apply only to vehicles that fall within her policy's definition of "your covered auto." What vehicles does this definition include?

the boat trailer that she sometimes tows with her station wagon

When she is about to retire, Cindy learns that she will not collect the pension she had been expecting because her employer's corporate pension plan has become insolvent. All the following might be held liable for the plan's insolvency EXCEPT

the financial adviser who helped Cindy prepare her estate plan.

Marty drove his car to Ritzy Restaurant where a parking valet opened the door so he could leave the car. While getting out of the car, Marty slipped on the icy driveway and broke his ankle. Two months later, he submitted his $1,000 medical bill to Ritzy Restaurant. Ritzy's commercial general liability (CGL) insurer will pay this claim under Coverage C—medical payments for all of the following reasons EXCEPT

the injury was caused by the insured's negligence.

Harvey's equipment breakdown policy includes errors and omissions coverage. The errors and omissions coverage in an equipment breakdown policy is most likely to apply if the form fails to provide coverage because

the insured made a mistake in completing the application.

Car Dealer was offering a free TV with the purchase of any new car. When a man in the showroom picked up a TV and carried it out of the showroom, the sales manager held the door open, assuming the man had just bought a car. He had not. What is Car Dealer the victim of?

theft

When the front fenders of Bobbie's Chevrolet coupe were damaged in an auto accident, his insurer arranged to have the damage repaired with non-original equipment manufacturer parts. Why does the insurer use non-OEM parts?

to help minimize the cost of repairs and the cost of insurance

Carter hopes to be reimbursed for the medical expenses he incurred when the bookshelf in Maxine's home library fell and injured him. Carter has no contractual relationship with Maxine's homeowners insurer. But if he wants her insurer to pay for his medical expenses, what does he have a duty to do?

to provide her insurer access to his medical records

Six school children were passengers in Danny's minivan when it was struck by a dump truck. Four children were killed. An investigation concluded that the accident was caused by a hazardous road condition and was not Danny's fault. However, Danny was asked to pay the children's funeral expenses. Danny's personal auto policy (PAP) has a $2,500 medical payments limit. What will his insurer pay for the funerals?

up to $10,000