PA Casualty Exam

In insurance, an offer is usually made when

the application is submitted to the insurer

What is the civil penalty for violating a cease and desist order of the Commissioner?

$10,000

An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage?

$14,000

A premium discount is the term that describes when an insured owes a total standard premium greater than

$5000

An insured has a personal auto policy with both comprehensive (other-than-collision) and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20 per day, how much will his policy pay?

$60

Within how many days must a producer respond to an inquiry from the Commissioner?

30 days.

Which of the following statements is true regarding the premium computation for workers compensation insurance?

A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis.

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance

What type of liability would a person who owns a swimming pool have?

Absolute

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?

Additional coverage

Which of the following is the closest term to an authorized insurer?

Admitted

What documentation grants express authority to an agent?

Agents contract with the principal

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent

Which of the following types of agent authority is also called "perceived authority"?

Apparent

Which of the following describes the transfer of a legal right or interest in an insurance policy?

Assignment

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an

Authorized insurer.

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be

Authorized.

An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined?

Benefits will be provided if the state was listed on the policy information page.

All of the following are parts of a personal auto policy EXCEPT

Physical Damage Coverage

A liability policy that provides coverage for a claim for injury or damage if the claim is first reported or filed against the insured during the policy period is called

Claims-made form.

An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $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 the insured have?

Combined single

Which of the following authorities is authorized to issue a temporary insurance producer's license?

Commissioner

Which of the following is a mandatory part of an insurance policy that varies with each individual policy?

Declarations

If an insurer appoints a producer, which authority must be notified?

Department of Insurance

Which of the following authorities monitors the financial strength of insurers?

Department of Insurance

Which of the following are the authorities that an agent can hold?

Express and implied

Which federal act provides benefits to injured civilians who are employed by the federal government?

Federal Employees Compensation Act

In addition to the coverages built into the property coverage form, insurers may offer other endorsements that can further expand the coverage provided in the policy

For an additional premium.

All of the following are licensing requirements for a business entity, EXCEPT

Having all employees complete continuing education courses once every 2 years.

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

Implied

In which type of commercial crime policy coverage is triggered by a loss that happens during the policy period but is not necessarily discovered during the policy period?

Loss sustained form

When an insured has multiple autos insured, what effect does the stacking of UM and UIM coverage have in terms of the benefits available?

Increases the limit of bodily injury coverage available to an insured to a total equal to the sum of the bodily injury available on all autos insured

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Indemnity.

The Pennsylvania Property and Casualty Insurance Guaranty Association provides protection to insureds in the event of

Insurance company insolvency.

Which of the following does a producer NOT have the authority to do?

Issue policies.

The form of payment bond that protects an owner contracting for work against liens from subcontractors, suppliers, or laborers who are not paid for their services and materials by the general contractor is called?

Labor and material bond.

Which of the following lists all the required elements for establishing a charge of negligence?

Legal duty owed, breach of legal duty owed, proximate cause, damages

Rates that are established based on the similarities of the risk with other risks are known as

Manual Rates

According to the doctrine of contributory negligence, when an individual is found to have contributed to his or her own loss in any way, another party

May not be held liable.

What other term is used to refer to unintentional torts?

Negligence

All of the following would be considered an insurance transaction EXCEPT

Obtaining an insurance license.

What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?

Other Insurance

The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property is called

Pro Rata Liability

Which of the following licensees is classified as a representative of the insurance company and not allowed to represent an insured or claimant?

Producer

Which of the following is NOT one of the four primary elements considered in establishing negligence?

Proof of Carelessness

While an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of the insured's auto policy would pay for the damage to the store?

Property damage liability

Which of the following would be the insured's duty in the event of a loss according to the duties in event of occurrence, claim, or suit condition?

Providing specific details regarding an occurrence

What type of damages may be awarded by the court to create disincentives that discourage behavior that is deemed highly undesirable by society?

Punitive

Which of the following is the most common way to transfer risk?

Purchase insurance

What type of information would be found in a policy's insuring agreement?

Renewal dates

All of the following are requirements for producer license renewal EXCEPT

Renewal examination.

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must

Respond to the consumer's complaint.

Workers compensation statutes require employers to meet capital reserves requirements sufficient to pay any claims that might arise. Employers can meet such obligations through all of the following EXCEPT

Second injury funds programs.

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?

Stock

The transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses?

Subrogation

With regards to premium rates, which of the following statements is NOT true?

The Commissioner sets all insurance premium rates used in Pennsylvania.

What is the deductible of a personal liability umbrella policy called?

The SIR.

Peril is most easily defined as

The cause of loss insured against.

If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?

The change must be reported to the Commissioner.

According to the privacy of consumer financial information regulation, if a consumer decides to opt out, this means

The consumer directs the licensee not to disclose the consumer's nonpublic personal financial information to a third party.

Which of the following statements is true regarding a mobile equipment endorsement in commercial auto policies?

The endorsement is available for an additional premium

According to the standard workers compensation and employer liability policy form, a state should be listed in Part Three - other states' insurance of the workers compensation and employers liability policy when

The insured expects to extend operations to that state.

Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT

The insurer does not have the right to inspect the insured's property and operations.

The individual named insured endorsement under a commercial auto policy provides coverage for which of the following?

The sole proprietor of the business and his or her family members.

Which of the following statements concerning ocean marine insurance is INCORRECT?

The underwriting of ocean marine insurance is relatively new

Under Crime Coverage Form I - Lessees of Safe Deposit Boxes, securities are only covered in the event of

Theft

Which of the following is NOT a goal of risk retention?

To minimize the insured's level of liability in the event of loss

Which common policy condition prohibits the insured from changing the rights or duties as defined under the policy to any other person or entity without the written consent of the insurance company?

Transfer of rights and duties under the policy

An insured's 9-year-old son threw a ball, accidentally breaking a neighbor's plate glass window. The insured was found legally liable for the cost of replacing the window. This is an example of

Vicarious liability.

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty

Under farm liability, Coverage H includes

bodily injury

Transportation expenses are covered under a personal auto policy for

$20 per day, for a maximum of $600.

In addition to income benefits, how much will a dependent survivor receive as a funeral benefit for a deceased employee covered under Workers Compensation?

$3,000

Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?

$5,000

Once it has been reasonably proven that a person has knowingly violated the Insurance Code regarding unfair methods of competition, the Department may impose a civil penalty of?

$5,000 for each violation.

If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person?

$50,000

Coverage J under farm coverage agrees to pay reasonable medical expenses, regardless of fault, caused by an accident if the expenses are incurred and reported to the insurer within how many years of the accident date?

3 Years

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days.

For the purpose of examination by the department, insurers must keep a record of all financial files for at least

5 years.

According to the common policy conditions for a commercial package policy, if the insured dies, the policy rights and duties

Automatically transfer to a legal representative.

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 and the pro rata method is used, how much will each insurer pay?

Company A will pay $16,000; Company B will pay $8,000.

Which of the following is a statutory defense?

Comparative negligence

The transfer of money from inside a banking premises to a person other than a messenger outside those premises or to a place outside those premises is covered under which commercial crime coverage?

Computer Fraud

What term best describes the act of withholding material information that would be crucial to an underwriting decision?

Concealment

Which of the following risks is eligible for coverage under a businessowners policy?

Condominiums.

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair Credit Reporting Act

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?

Liability coverage

A policy condition that states if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type is known as?

Liberalization Clause.

The causes of loss insured against in an policy are known as?

Perils.

Which of the following terms refers to such disabilities as the loss of a limb, hearing, or eye sight?

Permanent Partial Disability

If an insured bakery is sued because its marketing states that the products of another bakery may not be safe, which coverage of a commercial general liability policy will defend the suit?

Personal and advertising injury liability

Which of the following insurance options would be considered a risk-sharing arrangement?

Reciprocal

Paul is a producer in Ohio and wants to become a producer in Pennsylvania. The Commissioner will waive certain examination requirements, provided that Ohio would waive these same requirements if a Pennsylvania producer sought licensure in Ohio. What term is used to describe this phenomenon?

Reciprocity

In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called

Self-insured retention.

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?

Special

Which one of the following symbols used in business auto coverage is correctly described?

Symbol 9 - nonowned autos only

An insured invites his neighbors out for a day on the water in his boat powered with a 150 hp outboard motor. While attempting to tie the boat to dock, his neighbor's hand is broken when caught between the boat and dock. What coverage would apply to the broken hand?

The insureds boat owners policy.

The members of a limited liability company are insureds under a businessowners policy (BOP) if

The limited liability company is designated as the named insured.

A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean?

There is no coverage.

How soon after the due date should the insurer pay the agent appointment fees?

Within 30 days

The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information

Within 45 days.

A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT

Workers compensation coverage.

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration

Which of the following includes information regarding a person's credit, character, reputation, and habits?

Consumer report

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce

Without receiving written consent from an insurance regulatory authority.

An advertising company has its annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupants of the other car involved in the accident sue the company for serving the customer too much alcohol. Will the company's businessowners policy provide coverage?

Yes, none of the exclusions will apply.

Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to

10 years

Coverage for medical payments under a personal auto policy applies to expenses following a covered accident that are incurred and services rendered within what maximum time period?

3 years

In the event of a loss covered by the policy, if the insurer requests a signed sworn proof of loss, the named insured is required to submit it within

A specified time.

The declarations page of the homeowners policy provides all of the following information EXCEPT

A statement that earthquake damage is not covered.

Which insurers are required to participate in the Pennsylvania Automobile Insurance Plan (Assigned Risk Plan)?

All insurers authorized to write auto liability insurance in the state

Which would NOT be covered by the inside the premises - robbery or safe burglary of other property coverage?

An employee caught stealing from the cash register.

Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as

Cancellation.

Which of the following must an insurer obtain in order to transact insurance within a given state?

Certificate of authority

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered?

Discrimination

All of the following are found in the declarations section of a policy EXCEPT the

Exclusions.

The provision in Pennsylvania workers compensation that requires an employer to pay compensation, without regard to negligence, according to a compensation schedule set by law, and for the injured employee to agree to limit the employer's responsibility to the amount of workers compensation to which he or she is entitled, is called

Exclusive remedy.

What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?

Experience modification factor

Which of the following terms refers to other insurance that is written on the same risk, but not on the same coverage basis?

Nonconcurrency

The insured's car was hit and damaged by a deer. Under which of the following coverages in a personal auto policy would this loss be paid?

Other-than-collision