P&C License Test
A Commercial Package policy must include A) Common Policy Declarations, Common Policy Conditions, two or more coverage forms. B) Basic Cause of Loss form, Broad Cause of Loss form, Earthquake Cause of Loss form. C) Building and Personal Property Coverage form, Commercial Inland Marine Coverage form, Commercial General Liability Coverage part. D) Common Policy Declarations, Interline Endorsements, Basic Cause of Loss form.
Answer A is correct. A Commercial Package Policy has 4 key components consisting of the following: Common Policy Declarations, Common Policy Conditions, Interline Endorsements, and Coverage Parts. The Common Declarations and Conditions are simply common to all coverage parts in the entire package. Interline endorsements are used to connect all of the coverage parts to the Common Declarations and Conditions. Normally, A CPP has two or more coverage parts, which makes it a package, however, one coverage part may be purchased by itself making it a stand alone policy. When this happens, there is no need for interline endorsements.
Which vehicle is excluded from coverage under your Personal Auto Policy? A) A company vehicle provided for your regular use. B) A vehicle listed on your declarations page. C) A trailer that the insured owns. D) A vehicle purchased 10 days ago.
Answer A is correct. A company car would be covered by the company's Commercial Auto coverage.
What is a hazard? A) An increase in the possibility that a loss might occur B) Any event that results in a loss C) A cause of a loss D) An example of risk transfer
Answer A is correct. A hazard is something that increases the chance of a loss occurring.
Under the Commercial Package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer? A) First named insured B) Second named insured C) Any additionally named insured D) All of the above.
Answer A is correct. Although there may be other insureds listed in the policy, only the first named insured has rights and responsibilities such as canceling or making changes to the policy.
An Assigned Risk Plan for Auto insurance does which of the following? A) Makes insurance available to drivers who are unable to obtain it through normal channels. B) Makes insurance available to low income or unemployed individuals provided they are insurable. C) Provides coverage once the risk or fault has been assigned to one party or the other. D) All of the above.
Answer A is correct. Assigned Risk plans are voluntary agreements between insurance companies licensed in a particular state to share poor driving risks among themselves.
A driver has liability limits of 25/50/25. The most his policy will pay for property damage in any one occurrence is: A) $25,000 B) $50,000 C) $75,000 D) $150,000
Answer A is correct. Auto liability limits are written as Bodily Injury per person / Bodily Injury per accident / Property Damage per accident, for example, $25,000 Bodily Injury Per Person limit in any one accident, $50,000 Bodily Injury total for 2 or more injured in any one accident, and $25,000 Property Damage per occurrence for any damages to the other vehicle.
A Laundry business offers pick-up and delivery services to its customers. Which of the following Inland Marine endorsements would the Laundry business need to protect against the off-premises damage done to its customers clothing? A) Bailee's liability. B) Annual transit form. C) Trip Transit form. D) Commercial Articles floater.
Answer A is correct. Bailees' Customers form provides coverage for liability to the damage to property of others in your care.
A man becomes ill after eating a meal in a restaurant. The cost of treatment at a local hospital is $1,700. Which coverage section of the restaurant's Commercial General Liability policy will respond to the claim? A) Products B) Operations C) Medical Payments D) Contractual liability
Answer A is correct. By endorsement, food served in a restaurant becomes a product once served under "product liability exposure". Product liability does not provide any Medical Payments. You must prove the product caused the illness and seek recovery under Bodily Injury / Property Damage coverage.
A notice of cancellation of an automobile insurance policy for nonpayment of premium must be mailed or delivered to the named insured at least ______ days before the effective date of the cancellation. A) ten B) fifteen C) twenty one D) thirty
Answer A is correct. Cancellation of an automobile policy due to nonpayment of premium must be sent a minimum of 10 days prior to the effective date of cancellation. 30 days for all other reasons.
According to the cancellation condition in the Common Policy Conditions form, if the insurance company is canceling a Commercial Package Policy for nonpayment of premium, the insured must be given at least _________ days' notice of cancellation. A) 10 B) 20 C) 30 D) 60
Answer A is correct. Cancellation of any policy because of nonpayment of premium requires a 10 day written notice to the insured.
Which of the following would have a need for the Garage Coverage Form? A) Car Dealership B) Valet Parking C) Car Wash D) Parking Lot
Answer A is correct. Car dealers are not only exposed to liability with customers' cars in their care, but also their auto inventory and the general liability of customers in their business like any other business.
Which of the following losses would be paid under the Business Auto coverage form's Comprehensive coverage? A) A covered auto was stolen and never recovered. B) A covered auto was involved in a collision with another automobile. C) A covered auto was damaged when it accidentally slipped out of park and rolled down a hill and hit a power pole. D) A covered auto experienced a mechanical breakdown causing a need for repair.
Answer A is correct. Comprehensive coverage provides coverage for anything other than collision that is not excluded. Mechanical breakdown is specifically excluded. The other two choices are examples of collision.
All of the following are reasons that the Commissioner may suspend a producers license, except: A) Conviction of a misdemeanor. B) Failing to comply with a child support order. C) Failing to pay state income tax. D) Lying on your application for license.
Answer A is correct. Conviction of a misdemeanor is not a reason to suspend or revoke a producers license. The following would be grounds for suspension or revocation: a conviction of a felony, overdue child support or state income tax, lying on your application, failing to pay child support, committing unfair trade practices or fraud, violating insurance law, and more!
Inside the Premises - Theft of Money and Securities covers all of the following, except: A) Merchandise B) Money that mysteriously disappears. C) Money stolen as a result of burglary or robbery. D) Money destroyed as a result of a fire on the premise
Answer A is correct. Covers any act of stealing: robbery, burglary, etc.. If a thief steals it, if a fire destroys it, or if it simply disappears, it's covered. Merchandise would not be covered under Money and Securities.
What other peril besides earthquake does the Earthquake endorsement cover? A) Volcanic eruption B) Sinkhole C) Volcanic Ash D) Water damage
Answer A is correct. Earthquake coverage earthquake shocks and volcanic eruption only. This endorsement does not cover the perils of sinkhole or volcanic ash.
The Extra Expense coverage form provides A) coverage that will permit the insured to continue in business without interruption following a property damage loss. B) coverage for the insured's legal liability for loss or damage to personal property of others in the insured's care, custody and control. C) the business net income loss that would have been earned plus operating expenses. D) coverage for business personal property while it is temporarily away from the premises at a location the insured does not own.
Answer A is correct. Extra Expense coverage provides necessary additional expenses that are incurred during the period of restoration which would not have incurred had there been no direct physical loss. It permits business continuation without interruption.
Which business would be eligible for a Business Owners Policy? A) Fast food restaurant B) Cocktail bar C) Credit union D) Parking garage
Answer A is correct. Fast food restaurants are eligible provided they are within the guidelines. Parking garages, banks or credit unions, bars, are all considered to be ineligible risks for a Business Owners Policy.
XYZ Manufacturing's boiler explodes, setting the factory on fire and causing extensive smoke damage. Significant water damage is done by the firemen extinguishing the blaze. All are true about XYZ's coverage, except: A) The fire damage is covered by XYZ's Equipment Breakdown coverage. B) The boiler is covered by XYZ's Equipment Breakdown coverage. C) The water damage is covered by XYZ's Commercial Property coverage. D) The smoke damage is covered by XYZ's Commercial Property coverage.
Answer A is correct. Fire is excluded under the Equipment Breakdown coverage because it is covered by the Commercial Property coverage. Water and smoke damages are covered by the Property coverages as indicated in the answers. The boiler is the only item that is covered by the Equipment Breakdown coverage form.
Who of the following would have coverage for liquor liability losses under the Commercial General Liability policy? Assume there are no endorsements attached to the policy. A) An advertising agency that serves liquor at a holiday party B) A grocery store that stocks and sells beer and wine. C) A liquor lounge that serves alcoholic beverages. D) All of the above
Answer A is correct. Liquor Liability is for those who distribute and sell liquor. It is always excluded unless added by endorsement. Host Liquor Liability is provided for those who only have incidental exposure, such as serving alcohol at a company holiday party.
The named insured on a Commercial General Liability policy is Sassy Department Store. Which of the following losses would be paid under the policy's Medical Payments coverage? A) A mannequin tips over and injures a customer. B) The store owner injures himself while climbing a ladder to set up a store display. C) An employee is injured while unloading inventory that has been delivered by a truck. D) None of the above.
Answer A is correct. Medical Payments coverage provides for injuries sustained by other people injured in your business. The store owner and the employee would be covered by Workers' Compensation.
In a monopolistic state, an employer purchases Workers' Compensation insurance from A) a state fund. B) a compulsory company. C) an elective company. D) an assigned risk plan.
Answer A is correct. Monopolistic states do not allow employers to purchase Workers' Compensation insurance from a private insurance company. An employer must obtain coverage from a state fund.
Offering to give a prospect anything of value not specified in the contract to persuade the prospect to purchase the insurance is: A) rebating. B) twisting. C) allowed. D) encouraged.
Answer A is correct. Offering anything of value not specified in the contract to induce a sale is called rebating and is illegal.
Which part of the Workers' Compensation and Employers Liability policy pays all compensation and other benefits required by the state's Workers' Compensation law? A) Part One - Workers' Compensation B) Part Two - Employers Liability C) Both A and B D) Neither A nor B
Answer A is correct. Part One - Workers' Compensation is the compensation part of the Workers' Compensation policy. This is the part of the policy that promptly pays the compensation benefits due as a result of a work-related injury or illness. Part Two covers the insured's obligations under common law to pay for work-related injuries and occupational diseases. Obligations under common law means the insured/employer must be proven legally liable.
Part Two - Employers Liability has which of the following occupational limits"? A) a minimum of $100,000 per accident B) A minimum of $100,000 per person C) $200,000 per accident D) $200,000 per person
Answer A is correct. Part Two is the Employers Liability section of the policy. Liability covers all claims the employer is obligated to pay according to common law. Liability always has established limits. The minimum limit required in Workers' Compensation is $100,000 per accident for injuries.
Which of the following is an Additional Coverage in a Commercial Property contract? A) Pollution clean up and removal B) Equipment Breakdown C) Business Income coverage D) Extra Expense coverage
Answer A is correct. Pollution Clean Up and Removal is an additional coverage provided at no additional cost. Equipment Breakdown, Business Income and Extra Expense may be added to the CPP, each of which would act as its own coverage form.
Do Supplementary Payments add to the general aggregate limits of a Commercial General Liability policy? A) No, they pay in addition to the limits of liability and do not affect the aggregate limits at all. B) No, they are not available in Commercial General Liability. C) Yes, they increase the general aggregate limits of the policy and may be used on a per occurrence basis. D) Yes, they increase the general aggregate limits of the policy and may be used on a per person basis.
Answer A is correct. Supplementary Payments are paid in addition to the policy's limits of liability. However, they do not increase the policy's General Aggregate Limits that apply to the other coverage parts.
Business personal property moved to a new location to protect it from a covered peril is covered by the Business Owners Policy for up to how many days? A) 30 B) 60 C) 90 D) 120
Answer A is correct. The Preservation of Property Additional Coverage will cover property that is temporarily stored at another location for up to 30 days.
How are "Additional Coverages" provided by the Business Owners Policy (BOP)? A) Automatically included in the package B) Added by endorsement C) By paying additional premium D) By picking and choosing the additional coverages
Answer A is correct. The BOP provides all of these additional coverages automatically in this pre-packaged policy whether you need them or not as long as you purchase and maintain at least 80% replacement value in coverage.
What is the primary difference between a Commercial Package Policy and a Business Owners Policy? A) With a CPP, the insured can pick and choose the coverages included in the policy. B) The Business Owners Policy is designed for very large companies. C) The CPP is always considered an excess policy over any other collectible insurance. D) The Business Owners Policy offers more coverage options than the CPP.
Answer A is correct. The CPP allows the insured to pick and choose the coverages to be included in the CPP. The Business Owners Policy prepackages a group of coverages desirable to small businesses. These coverages are automatically included in the plan and cannot be changed. The Business Owners Policy is always excess coverage over any other collectible insurance, not the CPP. The CPP offers many more coverage options than the Business Owners Policy.
Which of the following IS true regarding the Causes of Loss Forms that are available in a Commercial Policy? A) There may be more than one Cause of Loss Form attached to the coverage part with different causes applying to different locations or classes of property. B) You are required to select only one Cause of Loss Form that applies to the entire package policy. C) Either A or B D) Neither A nor B
Answer A is correct. The CPP is a custom built policy and therefore can provide different peril coverage to different parts of the policy as needed.
The Commissioner may do all of the following except: A) Change insurance laws for the good of the general public. B) Enforce insurance law. C) Examine and investigate insurance matters. D) Manage and supervise the department of insurance.
Answer A is correct. The Commissioner does not change or create insurance law, state law makers do this, however, he does have the authority to supervise the department, to enforce insurance law and examine insurance matters.
In the Equipment Breakdown coverage form, coverage for business income, spoilage damage and utility interruption is A) provided if the insured has selected these coverages in the Declarations. B) automatically provided if the insured maintains at least 80% coinsurance throughout the policy period and at the time of loss. C) provided as an extension of coverage, but for coverage to apply the insured must maintain 80% coinsurance and the coverage must be indicated on the declarations page. D) not provided at all.
Answer A is correct. The Equipment Breakdown coverage form provides many additional coverages including Business Income, Spoilage Damage, Utility Interruption, provided either a specified limit or the word INCLUDED is shown for that coverage in the policy's Declarations page. There is no coinsurance requirement specified and these additional coverages are not automatically included.
Which Federal Workers' Compensation law covers railroad workers? A) Federal Employee Liability Act B) U.S. Longshoremen and Harbor Workers Compensation Act C) Jones Act D) Outer Continental Shelf Lands Act
Answer A is correct. The Federal Employee Liability Act covers Federal employees such as railroad workers.
The Nationwide Marine Definition does which of the following? A) Generally distinguishes Marine risks from Property risks. B) Generally distinguishes Commercial liability risks from Personal liability risks. C) Defines that Inland Marine insurance covers everything on water only. D) Defines that Ocean Marine insurance covers cargo transported on land only.
Answer A is correct. The Marine definition defines the types of risks that are marine risks and transportation risks as opposed to those that are considered to be a typical property or fire risk. Ocean Marine covers cargo on water, Inland Marine covers property on land.
Under the Motor Carrier Act of 1980, what is the minimum limit of liability required when transporting non-hazardous materials? A) $750,000 B) $1,000,000 C) $2,500,000 D) $5,000,000
Answer A is correct. The Motor Carrier Act of 1980 states that the minimum liability limits required are $750,000 for non-hazardous materials, $1,000,000 for oil or other hazardous materials, and $5,000,000 for large quantities of certain types of explosive or very dangerous hazardous materials.
Which one of the following covers a carrier for liability for loss to cargo while it is being transported in a truck? A) Motor Truck Cargo policy B) Annual Transit policy C) Garagekeepers coverage form D) Shipper's form
Answer A is correct. The Motor Truck Cargo policy consists of three forms: Trucker's Form which insures public truckers for liability for damage to cargo while in their possession, Shipper's Form which provides coverage protecting the owner of the goods that have been shipped by an independent trucker in the event of the loss of goods and Owner's Form which provides coverage for a business that owns trucks with which it transports its own goods. Annual transit is a type of transit coverage form. Garagekeepers is part of Commercial Auto.
The Causes of Loss - Special form of the Commercial Property coverage part insures against A) all risks of direct physical loss unless specifically excluded. B) basic named perils only. C) a broader list of named perils. D) commercial property named peril losses only.
Answer A is correct. The Special form is open peril coverage also known as all risk coverage, which covers any loss not specifically excluded by the policy. Basic form and Broad form coverages are both named peril coverage only. There is no such form as commercial property named peril form.
Which of these losses would be covered under the Personal Auto policy's Physical Damage coverage? A) The on-board computer system used to monitor the operation of the insured auto was destroyed in a fire. B) Theft of an insured's radar detector mounted inside the car. C) A vehicle the insured uses to conduct his/her limousine service is involved in an accident causing physical damage to the vehicle. D) The insured, while competing on a local race track with his/her personal auto is involved in an accident causing physical damage to the auto.
Answer A is correct. The exclusion for damage to audio, visual and data electronic equipment does not apply to equipment necessary for the normal operation of the auto. Loss to radar detectors, vehicles used as a public livery or conveyance (vehicle for hire), and vehicles used in racing activities are all excluded from coverage.
Under the claims-made Commercial General Liability coverage form, the first date that a loss may occur and still be covered under the policy is the A) retroactive date. B) mini-tail date. C) reporting date. D) policy effective date.
Answer A is correct. The retroactive date is a date in the past; anything that occurred before that date will not be covered. It serves as a way to back date the policy to cover any claims that may have occurred after the retroactive date and during the policy period or an extended reporting period provided.
Which of the following is not a level of disability recognized by most state Workers' Compensation statutes? A) Partial total B) Temporary partial C) Temporary total D) Permanent partial
Answer A is correct. There is no such term as Partial total. Cannot be both Partial and Total!
Under the National Flood program, which is true? A) The deductible can be applied twice, once to the building and again to the contents. B) If your community fails to participate in the flood program, you can still buy flood insurance. C) Building losses are settled ACV and contents are settled as Replacement cost. D) You must live in a flood plain to buy a Flood policy.
Answer A is correct. There is one deductible for structures and another for contents. If the community is in a flood zone, the Community must participate in the flood program to buy flood insurance. Losses are all ACV except 1-4 family residences. You don't have to live in a flood plain to buy a flood policy.
Which one of the following is a coverage extension that is available in the Building And Personal Property coverage form? A) Property off-premises B) Earthquake form C) Time element coverage D) Legal liability coverage form
Answer A is correct. This coverage extension provides up to $10,000 in additional coverage for property that is temporarily off the premises. Extensions of coverage require the insured to maintain 80% coinsurance. earthquake coverage, time element coverage, and legal liability coverage are all additional coverage forms that may be purchased. These are not available as coverage extensions.
The Protective Safeguards Endorsement requires which of the following? A) The insured must notify the insurer if the automatic sprinkler system is off for more than 48 hours. B) The insured must notify the insurer if the automatic sprinkler system is off for more than 72 hours. C) The insurance company must pay for a fire loss regardless of whether the insured has notified the company that the required safeguards were suspended or impaired. D) All of the above.
Answer A is correct. This endorsement is often placed on a policy by the insurer requiring that the insured maintain protective safeguards as listed in the endorsement. Such as: fire alarms, sprinkler systems, security services, etc. The insured MUST notify the insurer if the sprinkler system is off for more than 48 hours or coverage would be voided. Fire loss is covered under property coverage.
An insured who needs coverage for medical instruments while they are on and off premises could obtain it by purchasing the A) Physicians and Surgeons Equipment coverage form. B) Errors and Omissions Insurance. C) Professional Liability Insurance. D) Scheduled Personal Property Endorsement.
Answer A is correct. This is similar to a Personal Articles Floater except it is for Commercial Property. Commercial Inland Marine Equipment form provides coverage for medical instruments while on and/or off the premises. Errors and Omissions is a type of Professional Liability Insurance. Scheduled Personal Property Endorsements are available on H homeowners policy.
To receive a license as a resident insurance producer, an applicant must be at least: A) 18 years old. B) 19 years old. C) 20 years old. D) 21 years old.
Answer A is correct. To receive a resident insurance producer license, unless exempted, a resident individual must be at least 18 years old when making application.
Trailer Interchange coverage is a part of the A) Truckers coverage form and Motor Carrier coverage form. B) Garagekeepers coverage form. C) Specified causes of loss form. D) Hired auto coverage form.
Answer A is correct. Trailer Interchange Coverage form provides physical damage coverage for those trailers that the insured does not own but has in his/her possession along with a trailer interchange agreement. Motor Carrier Coverage is a variation of Truckers Coverage and in many ways provides even better coverage and therefore also includes this coverage.
Which Commercial Crime insuring agreement includes coverage for defense costs? A) Forgery or Alteration B) Employee Theft C) Theft, Disappearance and Destruction D) All of the above
Answer A is correct. Under Forgery or Alteration, if the insured is sued for refusing to pay a forged or altered instrument and obtains the insurer's written permission to defend the suit, the insurer will pay reasonable defense costs incurred by the insured in addition to the limits of liability. The other choices do not provide this coverage.
Property Damage for Uninsured Motorists coverage is: A) Optional. B) Mandatory. C) Automatically included. D) None of the above.
Answer A is correct. Uninsured Motorists provides Bodily Injury only without endorsement. Insureds can add a limited amount of Property Damage by endorsement.
If the required minimum auto liability limits are 25/50/25, a driver with limits of 15/30/10 is considered to be A) An uninsured motorist. B) An underinsured motorist. C) Both A and B D) Neither A nor B
Answer A is correct. Uninsured is someone with less coverage than what is required by law. Underinsured could have an amount required by law but just simply not enough to cover all of the damages.
All of the following are considered to be a covered auto in an insured's Personal Auto Policy, except: A) A borrowed auto. B) An auto named in the declarations. C) A newly purchased replacement auto. D) A trailer owned by the insured.
Answer A is correct. With a borrowed auto, the insurance follows the car, therefore the insurance belonging to the owner of the car would provide coverage.
Under the Equipment Breakdown coverage form, what is the most the insurer will pay to clean up an ammonia spill causing damage to property? A) $10,000 B) $25,000 C) $50,000 D) $100,000
Answer B is correct. A $25,000 limit applies to the following types of losses: Ammonia Contamination, Consequential Loss (Indirect), Data and Media, Hazardous Substance, and Water Damage.
Which of the following losses would be covered by a Flood policy? A) Additional living expenses incurred as a result of flood damage caused to a house by a hurricane. B) Heavy rains cause a lake to overflow and flood the basement and first floor of a house. C) A storm causes a tree to fall on the house and heavy rain continues causing water damage in the house. D) A storm causes the river to rise and destroys the pier overlooking the waters edge.
Answer B is correct. A Flood policy covers direct loss to insured property (such as a structure or contents) as a result of overflow of inland waters by a hurricane, unusual rapid accumulation of runoff waters, mudflow, collapse of land along a shoreline resulting from erosion. It does not cover any indirect loss coverage or loss to piers or structures on or over water, etc. Water damage caused as a result of an otherwise covered peril would not be covered under a flood policy.
Which Commercial Crime form provides coverage for securities against loss caused by theft, disappearance, or destruction while inside a custodian's premises or while being transported by a custodian? A) Safe Depository B) Outside the Premises - Money and Securities C) Robbery and Safe Burglary Money and Securities D) Lessee's Safe Deposit Boxes
Answer B is correct. Anytime a custodian has possession of the money and/or securities, they are outside the premises of the owner. A custodian could be a Bank, Fed Ex, Brinks, etc..
All of the following are indirect loss coverages available under the Equipment Breakdown coverage form, EXCEPT: A) Spoilage. B) Bodily Injury. C) Business income. D) Expediting expenses.
Answer B is correct. Bodily injury is liability coverage and is not referred to as an indirect loss. Spoilage, Business income, and Expediting expenses all occur as a result of a direct loss to property, therefore are considered indirect or consequential losses.
Forgery or Alteration covers Commercial Crime losses that involve which of the following? A) Forgery or alteration of Incoming checks. B) Forgery or Alteration of outgoing checks. C) Both A and B D) Neither A nor B
Answer B is correct. Covers outgoing checks only!
All of the following are considered burglary, except: A) Theft occurs and there is evidence of a forced entry. B) Theft occurs by stealth. C) Theft occurs and there is evidence of a forced exit. D) A thief hides inside the store until closing and then commits theft and breaks a window to get out.
Answer B is correct. Definition of Burglary - There must be evidence of forced entry or exit.
Which of the following provide coverage for vehicles leased or rented by a company for employees to use for personal use? A) Employees as Additional Insureds Endorsement B) Drive Other Car Coverage Endorsement C) Individual Named Insured Endorsement D) Symbol 9 Coverage Endorsement
Answer B is correct. Drive Other Car Coverage is similar to Symbol 8 for Hired or leased autos. It is most commonly used when a company executive is furnished a company car and does not carry a Personal Auto policy because he/she does not own a personal vehicle.
Equipment Breakdown coverage losses are settled on what basis? A) ACV B) Replacement Cost C) Market Value D) Machine Value
Answer B is correct. Everything is paid at Replacement Cost in the Equipment Breakdown coverage form, unless the ACV endorsement is attached to change the valuation to ACV.
All of the following may be covered under a Motor Truck Cargo policy, except: A) Trucks you own B) Trucks you hire C) Cargo you own D) Pre-paid freight charges
Answer D is correct. A Motor Truck Cargo policy includes Owner's form, Trucker's form and Shipper's form. It has nothing to do with Pre-Paid Freight Charges.
Which of the following provides auto liability and physical damage coverage, as well as general liability for businesses engaged in the sale, service and storage of automobiles? A) Business auto coverage B) Garage coverage C) Garagekeepers coverage D) Motor carrier coverage
Answer B is correct. Garage Coverage provides physical damage and auto liability as well as general liability for the businesses engaged in sales, service and storage of automobiles.
Garagekeepers coverage insures against A) direct physical loss to the structure itself. B) liability for damage to autos of others that are in the care, custody or control of the insured. C) Both A and B D) Neither A nor B
Answer B is correct. Garagekeepers coverage is written specifically to cover the property of others in the insured's care, custody or control. It does not provide any coverage to the building or structure. That would be covered under property coverage.
Who is authorized to request changes in the Business Owners Policy? A) Any insured B) First named insured C) First named insurer D) Insurance Commissioner
Answer B is correct. In any Commercial policy or Business Owners Policy the First Named Insured is the only person authorized to request changes, to pay premiums, to receive premium refunds, etc.
The required coverage limits under Georgia's mandatory automobile liability insurance law are A) $20,000/$50,000/$20,000. B) $25,000/$50,000/$25,000. C) $50,000/$100,000/$25,000. D) $50,000/$100,000/$50,000.
Answer B is correct. Mandatory Automobile Liability Insurance Laws require that no person may operate a vehicle in the State of Georgia without maintaining a minimum amount of liability insurance. This amount is $25,000 Bodily Injury Per Person / $50,000 Bodily Injury Per Accident / $25,000 Property Damage of others Per Accident.
Under the Business Auto coverage form, the nonowned auto category represents A) autos leased by the insured to be used in the insured's business. B) autos owned by employees but driven in the insured's business. C) autos rented by the insured to be used in the insured's business. D) any auto used in the insured's business.
Answer B is correct. Non-owned autos are autos that employees own and operate in the course of the insured's business. This is referred to as Symbol 9 coverage, for example, pizza delivery person using their car to deliver pizza's.
Under the NFIP's Regular Program, how much coverage is provided to a residential homeowner in the event of flood damage? A) $100,000 dwelling / $100,000 contents B) $250,000 dwelling / $100,000 contents C) $250,000 dwelling / $250,000 contents D) $500,000 dwelling / $250,000 contents
Answer B is correct. Once a community has adopted flood control measures they may then enter the "Regular Program" which is the federal government's "NFIP" program that has limits of $250,000 for the dwelling and $100,000 for contents for residential homeowners.
Which of the following is not considered to be an insured under the Commercial General liability coverage form? A) An individual, partnership including spouse, joint venture named in the declarations. B) An individual, partnership including spouse, joint venture not named in the declarations. C) Volunteer workers, employees, operators of mobile equipment. D) Person acting as the insured's real estate manager and the insured's legal representative in the event of the insured's death.
Answer B is correct. Partnerships including spouses, joint ventures, LLC's, must be named in the Declarations to be an insured under the Commercial General Liability. Individuals, volunteer workers, employees, mobile equipment operators, etc. need not be named in the Declarations.
Which of the following describes the Peak Season Limit of Insurance Endorsement? A) Coverage limits keep pace with inflation. B) Coverage limits can fluctuate for businesses that are seasonal. C) The company and the insured must agree on the value before a loss occurs and must be recalculated on a seasonal basis. D) All of the above.
Answer B is correct. Provides a specified increase in coverage of personal property during a peak season for seasonal businesses.
Under the Business Owners Policy, additional coverages and the Extensions of coverage A) Must be purchased by endorsement. B) Are provided automatically. C) Are only included if indicated on the declarations page. D) Are not available with a Business Owners Policy.
Answer B is correct. The Business Owners Policy is a pre-packaged policy that includes many extra coverages automatically if you maintain 80% coinsurance. However, it does not require coinsurance. If you don't maintain it you simply won't have all of the additional coverages. No endorsement is needed for Additional Coverages or Coverage Extensions. Optional coverages are available and must be indicated on the Declarations page.
Which of the following Federal Workers Compensation laws applies to the crews of ocean vessels? A) Outer Continental Shelf Lands Act B) Jones Act C) Longshoremen and Harbor Workers Act D) Federal Employees Compensation Act
Answer B is correct. The Jones Act applies to the crews of ocean vessels.
Premium rates must be approved by: A) The State Legislature. B) The Department of Insurance. C) The Industrial Fire Marshall. D) The State Senate.
Answer B is correct. The State DOI is responsible for approving all insurance rates that operate in the state.
Which of the following would be covered under a Jewelers Block Coverage Form? A) Property in showcases away from the premises. B) Property in a glass display in the store. C) Property being worn by a salesperson employed by the insured. D) All of the above.
Answer B is correct. This form covers the insured's stock on the premises of the insured, consisting of jewelry, precious stones, metals, and similar property of others in the care of the insured. This includes property in a display case on premises, but not off premises, nor would it cover property being worn by an employee.
All of the following are considered Other than Collision coverage, except: A) A bird hitting a windshield. B) Upset. C) Theft of the Auto. D) Flood.
Answer B is correct. Upset is Collision. All of the other choices are considered Other than Collision (Comprehensive).
Without an endorsement, a Commercial Property policy pays losses on what basis? A) Replacement cost B) Actual cash value C) Stated value D) Limited Value
Answer B is correct. Valuation of a Commercial Property policy always pays on an Actual Cash Value basis unless a Replacement Cost Optional coverage is purchased.
A producer is subject to maintain continuing education requirements and must complete _________ classroom hours of continuing education or its equivalent on a biennial basis, 3 of which must be in ethics.
Answer C is correct. 24 credit hours are required on a biennial basis, 3 of which must be in ethics or business practices.
Which statement concerning a binder is true? A) A binder must be issued in writing to be valid B) A binder is valid for a maximum of 60 days C) A binder is valid for a maximum of 90 days D) A binder provides only partial coverage of a risk
Answer C is correct. A Binder is valid for up to 90 days or until the policy is issued, whichever is shorter. The binder is temporarily the policy until it is issued and the policy effective date is the same as the effective date of the binder. It does not guarantee the issue of the policy and may be given orally or in writing.
Which of the following is/are required by the insured following an accident? A) When seeking uninsured motorists coverage, the insured must promptly notify the police if a hit and run driver is involved. B) The insured must protect the property from further damage and/or notify the police if the vehicle is stolen. C) Both A and B. D) Neither A nor B.
Answer C is correct. Both are required duties after a loss.
Which of the following would be covered under the building coverage of the Building and Personal Property coverage form? A) Farm house B) Personal Property of Others C) Fixtures D) Stock held for sale
Answer C is correct. Building coverage provides coverage for the structure as well as items that are considered part of the structure, such as additions, fixtures, outdoor fixtures, permanently installed machinery and equipment, etc.. A farm house is covered under the Farm Property Coverage form. Personal Property of Others is not part of the building coverage. stock held for sale is part of Business Personal Property.
The Collision coverage of a Personal Auto policy pays claims on what basis? A) Actual cash value B) Replacement cost C) The lesser of Actual Cash Value and the amount required to repair or replace the auto D) Primary cost
Answer C is correct. Collision typically pays the lesser of ACV or the amount necessary to repair or replace the auto with another like kind and quality.
In states that have competitive Workers' Compensation funds, A) the employer is required to purchase insurance from an Assigned Risk type plan. B) the employer is not required to provide insurance; it is strictly voluntary. C) the employer may purchase insurance from either the state or a private insurer. D) the employer is required to purchase insurance only from the state because it is a monopolistic state.
Answer C is correct. Competitive state funds give employers a choice between purchasing Workers' Compensation insurance from a state fund or a private insurance company.
A contractor installs an air compressor system at a customer's business. After the contractor leaves the premises the unit blows up causing injuries to their customers. The contractor's liability would be covered under which of the following coverages? A) Premises and operations B) Products liability C) Completed operations D) Contractual liability
Answer C is correct. Completed operations covers the contractor once the job is completed and the contractor is no longer at the location. Operations covers the contractor while on site doing the work in case they are liable for damages caused by their operation. Products liability covers manufacturers of products and Premises covers the business liability.
In most states, Workers' Compensation laws are A) voluntary. B) elective. C) compulsory. D) competitive.
Answer C is correct. Compulsory means required by law. Most states are compulsory. Elective states are where employers may accept or reject state Workers' Compensation laws These are considered voluntary. Competitive states are where states allow private insurance companies into the state to provide Workers' Compensation benefits. They compete for the business.
In the Commercial Crime forms, new employees and additional premises obtained through a consolidation or merger A) would be covered by adding a merger coverage endorsement. B) are automatically included, the new employees are covered immediately and the additional premises are added 10 days later. C) are automatically covered for 90 days. D) cannot be covered on the current policy at all.
Answer C is correct. Coverage is automatically covered for the first 90 days, by which time the insurer would be notified and the insured would pay any additional premium required.
The Builders Risk Reporting form insures a building under construction for A) liability. B) an agreed value determined by the insured and insurer. C) an amount that increases at intervals to correspond with the increasing value of the building. D) an amount that increases at intervals to correspond with the increasing value of the building as long as the insured maintains 80% coinsurance at the time of loss.
Answer C is correct. Coverage is provided on buildings under construction. The coverage is normally written on a reporting form basis, equivalent to 100% coinsurance. In other words, the insured reports as to the value of the project at specified intervals and is insured for 100% of the value indicated on the reporting form. There is no liability coverage at all. Agreed amount valuation is used for antiques and fine arts, etc.
Which of the following are considered to be covered property under an Equipment Breakdown coverage form? A) Property that the insured owns. B) Property that is in the insured's care, custody or control and for which the insured is legally liable. C) Both A and B D) Neither A nor B
Answer C is correct. Covered Property includes property that the insured owns or property that is in the insured's care, custody or control and for which the insured is legally liable.
Which of the following may only be added by endorsement in a Commercial Crime coverage? A) Employee Theft B) Forgery or Alteration C) Extortion D) Computer Fraud
Answer C is correct. Extortion is always excluded in Crime Insurance and is available only by endorsement. Employee Theft, Forgery or Alteration and Computer Fraud are all included in Crime coverage without the need for an endorsement.
A hardware store is insured under a Business Income coverage form with the Special Causes of Loss form. Which of the following losses would be covered? A) Income lost due to unemployment. B) Income lost while the store owner goes on vacation for two weeks. C) Income lost when the store closes for a week while damage from a burst water pipe is repaired. D) All of the above.
Answer C is correct. For Business Income coverage to apply, the loss of income must be due to a direct physical loss from a peril that coverage applies. The loss must cause the insured to suspend operations. Loss of income due to the insured being on vacation or unemployment would not be covered.
A Car Wash that wants protection from liability to damage to a customers car while in their care should purchase which of the following? A) Business Auto coverage form. B) Garage Liability coverage form. C) Garagekeepers coverage form. D) Symbol 9 coverage form.
Answer C is correct. Garagekeepers is used to provide protection from the liability for damage to a customers car in the insured's care.
A newly acquired vehicle under a Personal Auto policy will have which of the following type of coverage? A) Liability only. B) Bodily injury only. C) The broadest coverage that the insurer provides on any existing vehicle shown in the declarations. D) Property damage only.
Answer C is correct. If the newly acquired auto replaces one listed in the Declarations, the new auto automatically has the broadest coverage provided for any vehicle already listed in the Declarations.
The Inside the Premises - Robbery or Safe Burglary insuring agreement in the Commercial Crime policy covers A) loss of money and securities from inside the premises from a custodian. B) loss of money and securities from outside the premises from a messenger. C) loss of other property from a robbery of a custodian. D) None of the above
Answer C is correct. Inside the Premises - Robbery and Safe Burglary covers property losses other than money and securities against loss or damage by robbery of a messenger or custodian, burglary or safe burglary, inside the premises.
Most Flood insurance coverage is provided by A) non-admitted companies. B) reciprocal insurance companies. C) a federal government program. D) domestic insurance companies only.
Answer C is correct. Most Flood insurance is provided through the Federal National Flood Insurance Program. These policies can be sold through private insurers, however, they cannot bind coverage. Only the NFIP can bind coverage.
All of the following are true about a Business Owners Policy, except: A) The Business Owners Policy is a package policy for small, low risk businesses. B) The basic Business Owners Policy deductible is $500 C) The Business Owners Policy must be written on an open perils basis Only. D) Both the Additional Coverages and the Coverage Extensions are earned under a Business Owners Policy by maintaining 80% insurance to value.
Answer C is correct. Named perils can be added by endorsement. 80% Coinsurance is not required but all of the additional coverages and extensions are automatically included (or earned) if you maintain 80% insurance to value (coinsurance).
A producer must keep complete records pertaining to transactions under the producer's license for at least: A) three years B) six months C) one year D) five years
Answer D is correct. A producer is required to maintain client records for a period of at least five years.
Flood insurance A) is a state funded and state administered program. B) is reinsured by the state government emergency management agencies. C) is available from the federal government or private companies who are reimbursed for losses by the government. D) All of the above.
Answer C is correct. National Flood Insurance policies may be obtained through the federal government or through private insurance companies. The federal government is the reinsurer. The National Flood Insurance Program is a federal program, not a state program.
In Part-B Medical Payments of a Personal Auto Policy, all of the following are considered insureds, except: A) You. B) Your resident relatives. C) Persons occupying the other car. D) Pedestrians hit by a vehicle designed to be used on public roads.
Answer C is correct. Occupants in the other car would be covered by bodily injury / property damage. Medical Payments is for other people except for autos and boats! With auto, Medical Payments covers anyone in the auto including the insured as well as pedestrians hit on public roads.
Under the Commercial Builders Risk Coverage form, which of the following are covered? A) Liability coverage, materials, supplies, and equipment intended to become a permanent part of the building. B) Outside antennas, signs not attached to the structure. C) Foundations, materials, supplies, and equipment intended to become a permanent part of the building. D) Land, lawns, trees, shrubs, or plants.
Answer C is correct. Provides coverage on buildings while under construction including: foundations, materials, supplies, and equipment intended to become a permanent part of the building. Does not provide any liability coverage at all nor does it provide coverage for land, lawns, trees, antennas, etc.
Which of the following would NOT be covered under a Commercial Package policy with a spoilage endorsement attached? A) A power outage occurs causing a freezer unit to thaw allowing meat in the freezer to spoil. B) Changes in humidity and temperature causes mechanical failure of a refrigeration unit causing a loss of perishable goods in the unit. C) Eggs on the loading dock perish due to being left on the dock for a prolonged period of time. D) All of the above.
Answer C is correct. Spoilage endorsements are used to cover losses to perishable property in the care or control of the insured due to mechanical breakdown, power outage, changes in humidity or temperature as a result of power interruption. Eggs on a dock is a case of neglect.
A company that frequently rents autos and trucks for use in the business should include which symbol in the Business Auto policy Declarations? A) 1 B) 2 C) 8 D) 9
Answer C is correct. Symbol 8 - Hired Autos Only is used only for autos the insured has leased, hired, rented, or borrowed. Symbol 1 is used to cover any auto, Symbol 2 is used to cover owned autos only, Symbol 9 is Non-owned Autos Only (like pizza delivery autos, etc.).
In the Business Auto coverage form, employers that want to cover employees' use of their own cars in the employer's business should opt to have Liability coverage apply to which of the following groups of autos? A) Rented B) Any auto C) Nonowned D) Garagekeepers
Answer C is correct. Symbol 9, Nonowned autos are autos used in the insured's business that are not leased, hired, rented, or borrowed, such as autos owned by employees but used in the insured's business. (For example, A pizza delivery person using their own vehicle to deliver pizzas for the restaurant.)
Widget Enterprises wants property insurance for a new warehouse it is building. Widget also wants the policy's limit of insurance to gradually increase as the value of the building under construction increases. Which Commercial Property coverage form would best fit Widget's needs? A) Legal Liability Coverage Form B) Extra Expense Coverage Form C) Builders Risk Reporting Form D) Building and Personal Property Coverage Form
Answer C is correct. The Builders Reporting Form is specifically designed for buildings under construction. The insured is required to report either daily, weekly, monthly, or quarterly. The final premium is based upon the average values reported and is determined at the end of the policy year.
If there is other collectible insurance, the Business Owners Policy acts as what type of coverage? A) Pro Rata B) Primary C) Excess D) Over-insurance
Answer C is correct. The Business Owners Policy is always considered to be excess coverage over any other insurance that may cover a loss.
Which one of these Commercial Inland Marine forms cannot be included in the Commercial Inland Marine coverage part of the Commercial Package policy? A) Commercial Articles coverage form B) Valuable Papers and Records coverage form C) Commercial Builders Risk coverage form D) Signs coverage form
Answer C is correct. The Commercial Builders Risk coverage form is not included in the Inland Marine policy. It is its own coverage form that is provided on buildings while under construction. Commercial articles form, Valuable papers and records coverage form, and signs coverage form are all available under the Inland Marine Policy.
Which of the following would provide coverage for a commercial condominium clubhouse that is used by all tenants for recreation? A) HO-6 B) Condominium Commercial Unit-Owners Coverage Form C) Commercial Condominium Association Coverage Form. D) Other Structures Commercial Coverage Form
Answer C is correct. The Condominium Association form would be used because it is a common area for all tenants to use. HO-6 is for individual condominium owners and other structures coverage is part of the building and property coverage.
The Motor Carrier Act of 1980 requires which of the following limits of liability when transporting large quantities of certain hazardous materials? A) $750,000 B) $1,000,000 C) $5,000,000 D) $10,000,000
Answer C is correct. The Motor Carrier Act of 1980 states that the minimum liability limits required are: $750,000 for non-hazardous materials, $1,000,000 for oil or other hazardous materials, and $5,000,000 for large quantities of certain types of explosive or very dangerous hazardous materials.
According to the Nationwide Definition, imports and exports are A) eligible to be written under any part of the Commercial Package Policy. B) covered on a specific Import/Export Commercial Policy. C) eligible for Ocean Marine insurance. D) eligible for Inland Marine Policies only.
Answer C is correct. The Nationwide Marine Definition defines the types of risks that are marine risks and transportation risks as opposed to those that are fire risks. Imports and exports are considered to be marine risks and therefore would be covered on an Ocean Marine Policy only.
If a building insured under the Building and Personal Property coverage form was vacant for three months, A) a loss of any type would be fully covered. B) vandalism, sprinkler leakage, theft and water damage losses are covered but are subject to a 15% penalty. C) a vandalism loss would not be covered; a fire loss would be covered, subject to a 15% penalty. D) a fire loss would be fully covered; a theft loss would be subject to a 15% penalty.
Answer C is correct. The Vacancy condition states that if a building has been vacant for more than 60 consecutive days before the loss, the insurer will not pay for loss due to vandalism, water damage, theft, glass breakage or sprinkler leakage. It will pay for a covered loss such as fire, lightning, smoke, etc. but the loss settlement will be reduced by 15%.
Tom is driving with auto limits of 100/300/100 when he causes an accident injuring two people in the amounts of $60,000 and $125,000. What is the maximum his policy will pay for the accident? A) $60,000 B) $125,000 C) $160,000 D) $185,000
Answer C is correct. The answer to this question is $160,000. The second number in this example 100/300/100 is the maximum bodily injury Per Accident that the policy will pay. The $125,000 claim exceeded the Per Person Limit of $100,000 and therefore only pays $100,000. The other claim of $60,000 was under the Per Person Limit and therefore pays it all. The two combined did not exceed the total Per Accident amount permitted by this policy so the policy would pay $100,000 + $60,000 = $160,000.
What is the difference between the loss sustained and discovery versions of the Commercial Crime coverage forms? A) Types of crimes eligible B) Coverage amounts available C) Coverage trigger D) All of the above
Answer C is correct. The difference between the loss sustained and discovery versions of the Commercial Crime forms is the coverage trigger. A loss sustained form covers losses that are sustained during the policy period and discovered within one year after the policy expires. A discovery form covers losses that are sustained at any time and discovered up to 60 days after the policy expires.
Under the BOP, the insurer may examine and audit the books and records at any time during the policy period and up to how long after the policy period? A) One year B) Two years C) Three years D) Four years
Answer C is correct. The insurer may audit the books and records at anytime and up to 3 years after the policy period has ended.
A Loss Sustained type of crime coverage will pay for losses that occur during the policy period and is discovered no more than how long after the policy period has expired? A) 60 days B) 90 days C) 1 year D) 2 years
Answer C is correct. There are 2 types of Crime coverage triggers. The Loss Sustained Type has a 1 year coverage trigger and the Discovery type has a 60 day coverage trigger.
The Business Auto coverage form provides all of the following Physical Damage coverages, except: A) Specified Causes of Loss B) Comprehensive C) Basic perils coverage D) Collision
Answer C is correct. There are 3 Coverage Types in the Business Auto Coverage Form: Comprehensive, Collision, and Specified Causes of Loss (aka) Named Peril.
The Workers' Compensation policy provides coverage for A) amounts the employer is required to pay under state Workers' Compensation laws. B) amounts for which the employer becomes legally obligated to pay for an employee's work-related injuries. C) Both A and B D) Neither A nor B
Answer C is correct. These are the primary coverages provided by the Workers' Compensation and Employers Liability policy.
The maximum that a Commercial General Liability policy will pay in any one policy period is known as which of the following? A) Per Person limit B) Per Occurrence limit C) Aggregate limit D) Full Policy limit
Answer C is correct. Think of the aggregate limit as The Bank. As long as there is coverage remaining in the aggregate, there is coverage remaining. Once the aggregate is exhausted, the bank is empty. Coverages A, B, and C all share in the general aggregate.
Which of the following is covered under Robbery and Safe Burglary of Other Property Crime coverage? A) Money B) Flashlight that was shoplifted C) Safe taken after the business has closed D) Power tool taken off the shelf after the business closed
Answer C is correct. This Crime Coverage provides coverage for Robbery and Safe Burglary of Property Other than Money and Securities only. Money is not covered. The flashlight and the power tool theft are not robbery or burglary.
Which of the following is not a characteristic of the Transportation Expense coverage of the Personal Auto Policy? A) Requires no deductible and covers $20 per day up to $600 for a rental vehicle. B) Provides coverage due to a collision or comprehensive loss. C) Provides coverage if the insured's vehicle is being serviced at a garage. D) Provides coverage after 48 hours in the event of a loss caused by theft of the auto.
Answer C is correct. Transportation Expense provides coverage for the insured to rent a car in the event the covered vehicle is out of use due to a Collision or Other Than Collison loss. It requires no deductible and provides $20 per day up to $600 and has a 48 hour waiting period if theft is involved. It does not provide coverage if the insured's auto is down due to servicing.
Which of the following provides coverage for a semi tractor pulling an empty trailer called "bobtailing"? A) Motor Truck Cargo Policy B) Inland Marine Form C) Truckers coverage form D) Trip transit coverage form
Answer C is correct. Truckers coverage form is a type of Commercial Auto that covers a trucker including a tractor with no trailer called deadheading or a tractor pulling an empty trailer called bobtailing. A Motor truck cargo policy is an inland marine policy that covers cargo liability. Inland Marine forms also cover cargo. Trip transit is a marine transit form.
Under the Workers Compensation system, who is responsible for the expenses resulting from work-related injuries and occupational diseases? A) The State B) The employee C) The employer, regardless of whether it was at fault for the injury or disease D) None of the above
Answer C is correct. When Workers Compensation Laws were passed, they were based on the idea that the cost for injuries and diseases would be charged to the employer, regardless of fault. The cost is then passed on to the consumer as a cost of production. In other words, the employer/business increases consumer prices to absorb the costs incurred by the work-related injury.
When replacing a Commercial General Liability Claims Made policy with a new policy, when should you set the retroactive date so that there is no loss in coverage? A) One year earlier than the prior policy retroactive date. B) One year after the prior policy retroactive date. C) The same as the prior policy retroactive date. D) 60 days earlier than the new policy effective date.
Answer C is correct. When replacing a Claims-Made policy you should always establish the coverage timeline identical to the replacing policy to cover all incidents that may result in a claim.
Medical benefits under the Workers' Compensation policy are A) limited per accident. B) limited per policy period. C) not subject to time or dollar limits unless they are specified in the state law. D) paid once the employer has been proven legally liable for the injury.
Answer C is correct. Workers' Compensation benefits are determined by state law. Medical benefits are normally unlimited unless state law specifies otherwise. They are not limited per policy period nor per accident. Medical benefits are paid regardless of negligence by the employee or employer.
All of the following businesses would need Garagekeepers coverage to provide coverage for physical damage to a customers car that is in the care of the insured, except: A) Valet Parking B) Public Car Wash C) Public Parking Lot D) Dry Cleaners
Answer D is correct. A Dry Cleaner would simply purchase Bailees Customers Inland Marine form. All other choices would need Garagekeepers coverage which is basically the same as Bailees form but covers autos specifically in the care of a bailee.
All of the following are considered to be common exclusions throughout a Personal Auto policy, except: A) Road damage to tires, wear and tear, and mechanical or electrical breakdown. B) Vehicle being used as a public livery or taxi. C) Intentional loss, nuclear hazard or war. D) Vehicle used with permission.
Answer D is correct. A vehicle used with permission is not excluded. A vehicle used without permission is excluded.
All of the following are the insured's duties after an accident, except: A) Insured must notify the insurer promptly of how, when and where the accident happened. B) Cooperate with the investigation and submit proof of loss as required by the insurer. C) Submit to a physical exam as required by the insurer. D) Must appraise the damage to the vehicle before notifying the insurer of the accident.
Answer D is correct. All are the insured's duties following a loss except the appraisal to the damaged vehicle would not need to be done before notifying the insurer of the accident.
Which of the following is true regarding Transit Coverage Forms? A) Annual transit forms are used to protect all kinds of property being shipped to others or received from others during the year using a common carrier. B) Trip transit forms are used by those that do not make regular shipments all year long, but wish to insure a single shipment. C) Single shipment transit forms are used by those that do not make regular shipments all year long, but wish to insure one single shipment. D) Both A and B are correct.
Answer D is correct. Annual Transit forms insure shipments back and forth all year long, where trip transit insures on single shipment only. There is no such form as a Single shipment form.
Which of the following would not be covered by Equipment Breakdown coverage? A) Steam boilers B) Refrigeration equipment C) Computers, Data and Media equipment D) Bathroom fixtures
Answer D is correct. Bathroom fixtures like toilets, sinks, etc. would be covered under Property coverage, not Equipment Breakdown coverage. Steam boilers, air conditioners and other refrigeration equipment, and data and media equipment like computers would all be covered.
Which of the following would provide Earthquake coverage for your home? A) HO-2 B) HO-3 C) HO-5 D) An Earthquake Endorsement
Answer D is correct. Earth movement or earthquake is excluded unless added by endorsement.
The Employee Theft insuring agreement in the Commercial Crime policy covers loss of what type of property? A) Money B) Securities C) Property other than money and securities D) All of the above
Answer D is correct. Employee Theft coverage pays for loss of or damage to money, securities and other property resulting from theft committed by an employee.
All of the following are ways of funding Workers' Compensation benefits except: A) private insurance. B) a monopolistic or competitive state fund. C) self insurance. D) employee paid premiums.
Answer D is correct. Employees do not contribute to the premium cost of Workers' Compensation. Premiums are paid by the employer. Workers' Compensation may be funded through private insurance companies, self insurance, monopolistic or competitive state funding.
Which of the following can be covered as business personal property under the Business Owners Policy? A) Outdoor fences B) Satellite dishes C) Land D) Exterior building glass
Answer D is correct. Exterior building glass is covered as business personal property for insureds who are tenants and do not have building coverage. Property Not Covered includes land, outdoor fences and satellite dishes among others.
Which of the following is not considered to be a flood under a flood policy? A) Tidal wave B) Mudslide C) Water runoff D) Sewage overflow
Answer D is correct. Flood insurance covers natural type flood disasters, such as tidal wave, mudslide, rapid accumulation of water run off, etc.. Sewage back up or overflow would not be a natural disaster and is not considered to be a flood and therefore is not covered under a flood policy.
Which Commercial Auto form would you use as bailee coverage for autos in your care? A) Business auto coverage form B) Motor carrier coverage form C) Bailees auto coverage form D) Garagekeepers coverage form
Answer D is correct. In Commercial Auto Garagekeepers coverage is "Bailees" coverage for businesses engaged in servicing or repairing autos belonging to others in the insured's care.
Under the Commercial General Liability coverage form, liability assumed under contract is A) never automatically included. B) included in completed operations exposure. C) included in products exposure. D) excluded, except for contracts specifically defined as insured.
Answer D is correct. Insured contracts include leases, sidetrack agreements, easement agreements, elevator maintenance agreements and contracts relating to the insured's business under which the insured assumes another's liability.
The Physical Damage section of the Personal Auto policy excludes A) hail, water, flood or flash flood. B) explosion or earthquake. C) theft or larceny. D) mechanical breakdown.
Answer D is correct. Loss caused by mechanical or electrical breakdown is excluded under the Physical Damage section of the Personal Auto policy. All of the other answers are considered covered perils under the Other Than Collision coverage part of the Personal Auto Policy.
What type of insurance covers cargo? A) Personal property policy B) Business personal property policy C) Business policy D) Marine policy
Answer D is correct. Marine policies are used to insure moving property such as cargo being shipped. Inland Marine and Ocean Marine are both considered Marine policies.
Under the Commercial General Liability policy, a separate Aggregate Limit applies to the A) medical expense coverage. B) personal and advertising injury coverage. C) bodily injury and property damage liability coverage. D) products and completed operations hazard.
Answer D is correct. Product and completed operations has its own separate aggregate limit. This limit does not reduce the general aggregate limit. Medical expense, Personal and Advertising Injury and Bodily Injury / Property Damage all share in the general aggregate.
If a fire occurs, which of the following does a BOP provide coverage? A) Business personal property located in or within 100 feet of the covered buildings. B) Property the insured owns that is used in the insured's business. C) Property of others that is in the insured's care, custody, or control. D) All of the above.
Answer D is correct. Property owned by the insured, Property of others in the insured's care, and Business personal property within 100 feet of the building is all covered.
Under the Business Auto coverage form, which of the following is NOT considered to be mobile equipment? A) Forklift B) Farm machinery C) Bulldozer D) Self propelled Power cranes and snow plows
Answer D is correct. Self propelled vehicles with permanently attached equipment are considered autos, not mobile equipment. The Mobile Equipment Endorsement normally provides coverage to equipment while it is being transported by a covered auto, such as forklifts, bulldozers, farm or construction equipment.
Each of the following kinds of property may be covered under a Building and Personal Property coverage form EXCEPT: A) permanently installed fixtures and machinery. B) the insured's stock held for sale. C) an insured's tenant's interest in improvements and betterments. D) money and securities.
Answer D is correct. The Building and Personal Property coverage form provides coverage for the Building which includes any permanently installed fixtures or equipment, business personal property such as the insured's stock held for sale (inventory), any improvements made by the insured's tenant. Items not covered include: money, securities, account records, etc.
Which statement is not true concerning a Business Owners Policy? A) Business Income and Extra Expense coverage is provided for 12 months. B) Buildings insured at least 80% to value would have losses settled on a Replacement Cost basis. C) The Business Owners Policy does not have a coinsurance requirement. D) The Business Owners Policy is written on a named peril basis only.
Answer D is correct. The Business Owners Policy is written as a special form which is open peril. It can be changed to named peril by endorsement only. Coinsurance in not required, but recommended. Buildings insured at 80% to value settle losses at replacement cost. Business Income and Extra Expense coverages are automatically included for up to 12 months.
The Commercial General Liability coverage part can be used to insure against all of the following exposures except: A) Premises liability. B) Products liability. C) Completed Operations liability. D) Liquor Liability.
Answer D is correct. The Commercial General Liability policy covers a business's liability for premises and operations exposure and products-completed operations exposure. Liquor Liability is for those that sell liquor and is always excluded unless added by endorsement.
Which one of the following is not one of the components of a Commercial Package Policy? A) Coverage parts B) Common Policy Conditions C) Common Policy Declarations D) Value Reporting Form
Answer D is correct. The Commercial Package Policy contains 4 key components: Common Policy Declarations, Common Policy Conditions, Interline Endorsements, and Coverage parts. A value reporting form is an endorsement that is used to provide coverage for business personal property that fluctuates in value.
Contingent liability covers the insured for liability A) arising out of products exposure. B) arising out of damage to impaired property. C) arising out of contractual liability exposure. D) arising out of the operations of independent contractors or subcontractors.
Answer D is correct. The Contingent Liability Exposure (Independent Contractors Liability) is specifically designed to cover the insured's liability for operations of independent contractors. For example, a building owner may become vicariously liable for the actions of a painting contractor or sub-contractor they have hired because they did not give adequate instructions and the contractor painted the wrong building.
Which of the following losses to covered equipment would be covered under the Equipment Breakdown coverage form? A) Damage caused by hail B) Damage caused by nuclear hazard C) Damage caused by wind D) Damage from an explosion caused by the centrifugal force of moving parts
Answer D is correct. The Equipment Breakdown coverage form excludes most explosions; however, an exception is made for explosions caused by centrifugal force. Wind, Fire, and Nuclear Hazard are all considered exclusions.
The Nationwide Marine definition specifically includes all of the following, except: A) Imports. B) Exports. C) Domestic shipments. D) Yachts and Cruise Ships
Answer D is correct. The Marine definition defines the types of risks that are marine risks and transportation risks as opposed to those that are considered to be fire risks. Imports, Exports and Domestic shipments are among the 6 classes of property defined under this contract. Yachts and Cruise ships would be covered by a Yacht policy which covers large vessels.
Under the Personal Auto policy, who of the following is an insured for Liability coverage? A) The named insured and family members for the use of any auto B) Anyone who uses the insured's covered auto with the named insured's permission C) Anyone else occupying the insured's auto at the time of an accident. D) Both A and B
Answer D is correct. The insured's passengers would not be considered insureds for liability coverage. Occupants in the insured's auto would be covered under the insured's medical payments coverage. Liability is for damage or injuries to others.
Under the Business Owners Policy, the insurer has the right, but is not obligated, to make inspections and surveys: A) Annually. B) Quarterly. C) Monthly. D) At any time.
Answer D is correct. The insurer has the right but is not obligated to make inspections and surveys of the company anytime, particularly if the insurer suspects any misreporting of claims or premium audits.
Under the claims-made Commercial General Liability, the supplemental extended reporting period A) provides a 60 day period for the reporting of an incident that results from an occurrence that took place before the end of the policy period. B) provides a 5 year period for a claim arising from an occurrence that took place before the end of the policy period, provided the insurer was notified of that occurrence. C) provides an unlimited extension for making claims for losses that occurred during the policy period. This extension is provided automatically without any additional charge. D) provides an unlimited extension for making claims for losses that occurred during the policy period, but the insured must pay an additional premium.
Answer D is correct. The supplemental extended reporting period is an optional reporting period of unlimited duration that may be purchased by endorsement if requested within 60 days of the end of the policy term. It has a one time charge. The Basic Extended Reporting Period is automatically included in the claims-made form without charge.
A building insured under a Business Owners Policy loses vandalism coverage after it has been vacant for how many days? A) 10 B) 20 C) 30 D) 60
Answer D is correct. The vacancy condition states that if a building has been vacant for more than 60 consecutive days before the loss, the insurer will not pay for loss due to vandalism, water damage, theft, glass breakage or sprinkler leakage. It will pay for a covered loss caused by a covered peril, but will be reduced by 15%. This 60 day Vacancy Condition is common throughout all commercial type policies, not just the Business Owners Policy.
When does a flood policy become effective? A) The day the application is signed. B) The day that the NFIP accepts the application. C) 10 days following the date of application. D) 30 days following the date of application.
Answer D is correct. There is a 30 day waiting period following the date the application is signed and the premium is collected.
Which one of the following accidents would not be covered under the Uninsured Motorists coverage of the Personal Auto Policy? A) An accident in which a hit-and-run driver hits the insured's covered auto B) An accident with a motorist who has less Liability insurance than required by the state's financial responsibility law C) An accident with an at-fault driver whose insurance company declines coverage D) An accident occurs with a motorist who has coverage that satisfies the minimum liability limits that are required by law, but not enough to cover the damages.
Answer D is correct. This driver would be considered to be an underinsured motorist, not an uninsured motorist. Underinsured motorist is not automatically included in Uninsured Motorist Coverage, but can be added by endorsement. Underinsured motorists coverage pays the difference between the insured's actual damages for bodily injury and the amount of Liability insurance carried by the driver who was at fault.
Hal borrows Ben's car and has an at fault accident injuring Carl. Both Hal and Ben have a Personal Auto policy. How is the claim paid? A) Only Hal's policy will pay. B) Only Ben's policy will pay. C) Hal's policy is primary and Ben's policy is excess. D) Ben's policy is primary and Hal's policy is excess.
Answer D is correct. This is due to the Primary/Excess Rule! The insurance follows the car and therefore the car owner's policy pays first and yours then picks up the balance.
When a producer/agent misleads a person when comparing policies in order to induce the client to lapse, forfeit, surrender, exchange or convert an existing policy, the producer/agent is engaging in an unfair trade practice known as A) intimidation. B) coercion. C) rebating. D) twisting.
Answer D is correct. Twisting is Policy Replacement. It usually includes some coercion tactics and pressure to exchange a policy in order to purchase a new policy. It is usually not in the insured's best interest. Replacement is not illegal, but it is not recommended and is highly scrutinized. If replacement is done to the insured's detriment, the agent would be guilty of twisting.
Which one of the following types of benefits is generally not provided by a state's Workers' Compensation law? A) Rehabilitation B) Disability C) Medical D) Mental anguish
Answer D is correct. Workers' Compensation generally provide four types of benefits: Disability/loss of income, Medical, Survivor/Death, and Rehabilitation.
The insured's property insurance policy has a deductible clause. This means that A) every claim settled will be deducted from the overall limits of insurance. B) the insured must maintain a certain percentage of the property value in coverage in order to meet an insurer deductible. C) the insured must pay a certain amount for each loss incurred under the policy. D) claim settlements will pay current replacement cost less a deduction for depreciation.
Grade Exam Answer C is correct. A deductible is a dollar amount the insured must pay on each loss to which the deductible applies. The insurer pays all remaining costs up to the policy limits.
Under a Commercial General Liability, Medical Payments provides coverage and will make payments for up to how long following a loss? A) Regardless of fault and up to 1 year. B) Only if found legally liable and up to 1year. C) Regardless of fault and up to 3 years. D) Only if found legally liable and up to 3 years.
Next Question Answer A is correct. Medical Payments will pay regardless of fault and for up to a specified limit, provided the accident and / or expenses occur within 1 year of the date of the acciden
Which part of an Auto Liability section of a policy applies to how the limits of insurance are applied in an accident that occurs in a state other than the one that the insured resides? A) Out of State coverage applies and automatically increases the limits of liability to the other states requirements. B) Out of State coverage applies and stipulates that the insureds resident state law requirements apply. C) Primary -Excess rules apply and stipulate that the insureds resident state limits are considered primary. D) Primary - Excess rules apply and stipulate that the other states limits are considered primary.
Next Question Answer A is correct. Out of State Coverage provides coverage for an auto while it is away from the state where it is normally garaged. The policy limits will increase to comply with any higher compulsory insurance or financial responsibility law in the state where the covered auto is being used. The Primary/Excess rule is not used to determine limits.
The Business Income coverage form applies to A) loss of revenue while operations are suspended due to property damage. B) loss of income due to unemployment. C) extra expenses incurred as the insured relocates as a result of a total loss to the property. D) loss of income as a result of computer fraud.
Next Question Answer A is correct. The Business Income coverage form pays for loss of net income that the insured sustains due to a direct physical loss from a peril insured against. It begins 72 hours after the time of loss and ends when the damaged property has been repaired or rebuilt. It does not cover unemployment, computer fraud, and extra expense.
The Commercial Inland Marine transportation form used to insure a carrier's liability for damage to cargo it is transporting is the A) Motor Truck Cargo policy. B) Bill of Lading. C) Trip Transit form. D) Annual Transit form.
Next Question Answer A is correct. The Motor Truck Cargo policy/form consists of three forms: Trucker's Form which insures public truckers for liability for damage to cargo while in their possession, Shipper's Form which provides coverage for the owner of goods that have been shipped by a public trucker and Owner's form which provides coverage for a business that owns the trucks in which it transports its own goods. A Bill of Lading is a receipt of the goods being shipped. Annual transit and Trip transit are specific transportation forms for single shipments or all shipments on an annual basis.
A Boatowners policy is usually written on what basis?
Next Question Answer B is correct. Losses are typically paid on an Actual Cash Value basis.
When an employee drives his own vehicle in an employers business, he is covered under which of the following Commercial Auto coverages? A) Drive other car coverage B) Individual named insured C) Employee as additional insured D) Uninsured motorists coverage
Next Question Answer C is correct. The Endorsement "Employees as additional insured's" is used in the same manner as Symbol 9 coverage which provides the business auto coverage for "Non-Owned Auto's".
Which of the following perils is covered by the HO-2 and HO-3?
Which of the following perils is covered by the HO-2 and HO-3?
A death caused by an insured either by negligence or purposefully would be covered by which of the following? A) Bodily Injury B) Property Damage C) Medical Payments D) Contributory Negligence
A death caused by an insured either by negligence or purposefully would be covered by which of the following? A) Bodily Injury B) Property Damage C) Medical Payments D) Contributory Negligence
A morale hazard A) arises through an individual's carelessness or irresponsible actions. B) is a physical condition that increases the probability of loss. C) is the extent to which one may be affected by a peril. D) is being dishonest on an application or claim form.
Answer A is correct. A morale hazard refers to a person's behavior, or a person's morale. It refers to an increase in the possibility of loss through an individual's carelessness or irresponsible actions. B is describing a physical hazard, C is describing exposure, and D is describing a moral hazard.
When applying for Homeowners insurance, Mr. Applebee tells his agent that the home is used strictly as a residence. Actually, he manufactures fireworks in the basement at the home. What will happen if the insurance company discovers Mr. Applebee's misrepresentation after the policy is issued? A) It will void the policy because Mr. Applebee misrepresented a material fact. B) Nothing, because the policy is considered a non-cancelable type policy C) Nothing, because the agent should have been more thorough in completing the application D) None of the above
Answer A is correct. An insured's misrepresentation of a material fact is grounds for the insurer to void the policy.
Negligence is A) an unintentional tort. B) an intentional tort. C) a deliberate act. D) an aleatory tort.
Answer A is correct. Another term for an unintentional tort is negligence. Negligence is the lack of reasonable care that is required to protect others from the unreasonable chance of harm.
Personal Injury includes all of the following, except: A) Bodily injury B) Libel C) Slander D) False arrest
Answer A is correct. Bodily Injury is physical injury, not personal injury. Personal Injury and Bodily Injury can never be used together. One is attacking the character and reputation and the other is physical injury to an individual.
Which Additional Coverage is found in the Homeowners Broad Form HO-2?
Answer A is correct. Collapse is the only Homeowners Additional Coverage listed. Earthquake and Scheduled Personal Property coverages require an endorsement. Theft of property is automatically included in a Homeowners covered perils.
Which of the elements of a legal contract does an insurance premium payment represent? A) Consideration B) Agreement C) Legal purpose D) Competent parties
Answer A is correct. Considerations are the values that each party to the contract exchange. For example, the insured will consider paying a premium and the insurance company will consider providing a promise to pay in the event of a loss. The considerations or the values exchanged are: Premiums and Promises.
If your carpet is damaged in your home it would be covered under which of the following coverages?
Answer A is correct. Coverage A Dwelling covers anything attached to the building including: carpet, built in appliances, etc.
Which of the following would be covered under Coverage B "Other Structures" of a Homeowners policy? A) A Ham Radio Station Tower located on the insureds property and not attached to the house. B) A Ham Radio Station Tower located on the insureds property attached to the house. C) A Television Antenna attached to the house. D) A Television Antenna attached to the garage which is attached to the house.
Answer A is correct. Coverage B provides coverage for detached structures on the insured's property. Nothing attached to the dwelling would be covered under coverage B "Other Structures".
Which of the following is true concerning defense costs in a liability contract? A) They pay in addition to the limits of liability. B) They are provided in the Medical Payments section of the policy only. C) They are only available by endorsement. D) They are subject to the liability limits of the policy.
Answer A is correct. Defense costs are included in the policy's "Additional Coverages" Claim Expenses (Supplementary Payments) section of the policy. The policy covers these in addition to the policy limits and are paid by the insurer regardless of fault. No endorsement is needed. Medical Payments to others would not require defense costs.
An individual who owns and lives in a condominium can obtain broad coverage for personal property in the condo under which Homeowners form?
Answer A is correct. HO-6 is for condominium owners, HO-5 is the comprehensive form, HO-8 is the modified form for older homes, and the HO-3 is the special form.
Which of the following would be covered under Personal Property Coverage C of a Homeowners policy?
Answer A is correct. Homeowners contents coverage provides for theft loss of fishing equipment on the insured's boat provided the boat is located on the insured's premises. Wind and Hail damage require the boat to be in an enclosed building at the time of loss. Theft is not covered away from the resident premises under a Homeowners policy content coverage.
Which of the following would be covered under your homeowners liability policy? A) You accidentally catch the neighbors house on fire. B) Your son accidentally backs his car into your garage causing damage to your garage. C) You intentionally set fire to your own house. D) Your neighbor accidentally catches your house on fire.
Answer A is correct. Homeowners liability provides coverage for loss or damage to other people's property or injuries, but not your own property. Intentional loss is always excluded. The neighbor's Homeowners liability would cover the loss to your house.
What is the purpose of the Fair Credit Reporting Act? A) To give the consumer recourse if the insurance is denied on the basis of a credit report B) To permit the insurer to report any past due premiums to the credit bureaus C) To protect the insurance company's right to privacy, not allowing an insured any access to information that the insurer has complied regarding the insured D) To allow the insurance company to share any information gathered on the insured with the credit bureaus
Answer A is correct. If the insured is denied coverage on the basis of a credit report, the Fair Credit Reporting Act states that the insured must be notified and allowed to obtain the information in the file. If the information is incorrect, the agency must correct it.
The purpose of insurance is to A) transfer risk from a person, business or organization to an insurance company that agrees to pay for losses in exchange for a premium. B) protect the insured against the certainty of a future loss. C) provide protection against speculative risks. D) eliminating the risk entirely by engaging in reinsurance.
Answer A is correct. Insurance is the transfer of risk. It protects against uncertainty and shares the loss. The principle of insurance is the substitution of a small certain expense (premium) for a large uncertain loss (claim payment).
What is it called when a manufacturer of a product is held responsible for any injuries or damages sustained by their products, regardless of whether the product was defective and where duty or guilt is not a factor? A) Strict liability B) Negligence C) Personal injury D) None of the above
Answer A is correct. Manufacturers of products are held strictly liable for the damages or injuries caused by their products regardless of guilt or duty.
What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? A) Open peril policy B) Named peril policy C) Content peril D) Special peril
Answer A is correct. Open peril covers any cause of loss that is not specifically excluded in the policy. Therefore it is also referred to as all risk coverage. Named peril specifically names the perils that are covered. There is no such thing as content peril or special peril.
Which of the following reasons may a mobile home owner move their mobile home under the Additional Coverage Property Removed condition? A) To protect from impending danger or to get out of harm's way. B) To relocate to a new mobile home park C) To remove the mobile home from a rental lot and to relocate it to land that the insured now owns. D) To relocate out of the state.
Answer A is correct. The Additional Coverage Property Removed is expanded to allow a mobile home to be relocated to get it out of harm's way if threatened by a covered peril.
Who of the following would have a need for the Personal Inland Marine Personal Property form? A) A condominium or apartment dweller who cannot obtain open peril coverage for personal property under the HO-4 or HO-6 B) An insured who needs more coverage to maintain a coinsurance requirement C) An insured who needs additional insurance to cover many cameras the insured uses to conduct his photography business D) An insured who owns many musical instruments that are used in the insured' s professional band
Answer A is correct. The Personal Property form provides open peril coverage on a blanket basis for most kinds of personal property found in a typical home. It is frequently used to change from named peril to open peril coverage on contents in a HO-4 and HO-6 policy. Musical instruments and cameras are considered scheduled personal articles. Additional coverage to maintain coinsurance is not provided under this form.
Which of the following is a correct definition of coinsurance? A) A requirement that the insured carry insurance equal to a specified percentage of the property's value to qualify for replacement cost coverage under the policy. B) The portion of the policy that both the insured and the insurer share in the loss, with the insurer bearing the greater portion of the loss. C) A condition that permits the insurer to go after the party that caused the damage and seek recovery of some or all of the damages. D) A situation where there are two causes resulting in a loss and one cause is excluded while the other cause is not excluded.
Answer A is correct. The coinsurance condition encourages policyholders to insure property for a specified percentage of the full value of the property. If maintained and a loss occurs, the insured is usually allowed the replacement value of the destroyed property.
The insured has two separate Dwelling policies that cover the same property. Policy A for $30,000 and Policy B for $60,000. The insured has a $12,000 loss. If both policies use the pro-rata method to handle other insurance, how much will Policy B pay for this loss?
Answer A is correct. The total amount of coverage combined is $90,000. Policy A provides $30,000 of coverage which represents 1/3 of that total and Policy B provides $60,000 of coverage which represents 2/3 of that total. Therefore Policy B's pro-rata share of the total loss would be 2/3 of $12,000 = $8,000.
If your $5000 gold watch is stolen, how would your Homeowners policy respond?
Answer A is correct. Theft of jewelry, watches, furs, precious and semi precious stones are all limited to $1,500 and a deductible. A scheduled personal property endorsement is an excellent method of covering these items and pays as primary coverage without deductibles.
Furniture that is destroyed when a building burns down is an example of what kind of loss? A) Direct B) Indirect C) Additional D) Unexpected
Answer A is correct. There are only two types of losses, Direct and Indirect. A direct loss results from loss to property. An indirect loss occurs as a result of the original direct loss. There is no such thing as additional or unexpected loss.
All of the following types of damages will indemnify the claimant in the event of a covered loss, except: A) Punitive damages. B) Special damages. C) General damages. D) Compensatory damages.
Answer A is correct. There are two types of compensatory damages: or specific damages and general damages. These compensate or indemnify (restore) an individual for actual damages. Punitive damages are punishment. These do not compensate and are considered to be non-compensatory damages.
An unforeseen and unintended event that happens at a known time in a known place is defined as which of the following? A) Accident B) Occurrence C) Inherent Vice D) Proximate cause.
Answer A is correct. This is the definition of an accident. Remember all accidents are considered to be occurrences but not all occurrences are considered to be accidents. Accidents are unintentional.
An insurance policy has a $25,000 per occurrence limit. If the insured has a $5,000 covered loss during the policy period, how much coverage is available for other covered losses that occur during the remainder of the policy period? A) $25,000 B) $20,000 C) $15,000 D) $10,000
Answer A is correct. With the exception of an aggregate limit, most policy limits are restored after payment of a loss. The per occurrence limit applies only for each separate occurrence. Therefore, the full $25,000 is reset and available for future occurrences.
Which of the following is a liability loss? A) A short in a light fixture ignites and causes a fire in the insured's storage shed. B) A fire that was caused by the insured's negligence burns a neighboring building. The owner of the building sues the insured. C) Materials located next to the building intended to be used for repair are stolen. D) A fire damages an insured's rental house and as a result, the renters are forced to relocate causing the insured to lose rental income.
Answer B is correct. A liability loss is one that arises out of a person's actions toward other people or their property. The losses described in the other answers involve the insured's own property.
A peril is A) the chance of a loss. B) the cause of a loss. C) an intentional loss. D) also called a hazard.
Answer B is correct. A peril is a cause of a loss. For example, Fire, Lightning, Wind, Hail, etc.. Risk is the chance of a loss. Intentional loss is not a peril and a hazard increases the chance of a loss occurring.
A demolition company is using dynamite to destroy an old downtown building. Which the following applies? A) Attractive Nuisance B) Absolute Liability C) Strict Liability D) Liberalization
Answer B is correct. Absolute liability is a doctrine that applies on activities that present an extreme likelihood of harm to others when mishaps occur. For example, contractors in blasting operations, owners of wild animals held in captivity, etc.
An insured's home is covered by the DP-3 form. The policy provides $20,000 in coverage on a $50,000 home. When high winds destroy the roof, it is determined it will cost the insured $2,000 to replace it. Assuming the actual cash value of the roof is $750, how much would the insured collect for this loss?
Answer B is correct. Actual Cash Value (ACV) does not apply at all. This is direct loss to the dwelling. The dwelling loss is paid based on Replacement Cost everywhere except the DP-1 Basic form. Therefore, the 80% coinsurance replacement rule applies. The dwelling must be covered for at least 80% of the replacement cost at the time of the loss. The value of the home is $50,000. 80% of $50,000 = $40,000. This is what they should have had. They only had $20,000, which is half or 50% of what they should have had. Therefore, the insured will receive half or 50% of the cost to replace the roof. Half or 50% of of $2,000 = $1,000.
Coverage E - Additional Living Expense is what type of coverage?
Answer B is correct. Additional living expenses incurred as a result of a direct loss are considered to be Indirect Losses or Consequential Losses.
Which of the following is a third party contract? A) Property B) Casualty C) Both A and B D) Neither A nor B
Answer B is correct. Casualty or Liability is considered to be a third party contract. 1st party is the insured (defendant), 2nd party is the insurance company, and the third party is the claimant (plaintiff). Property insurance is a two party contract.
Knowingly withholding material information on an application is A) Waiver. B) Concealment. C) Misrepresentation. D) Fraud.
Answer B is correct. Concealment is the withholding of known facts that are material to the acceptance of risk, a willful or intentional failure to disclose material facts.
On what basis are losses to dwellings and other structures paid under the DP-2 and DP-3?
Answer B is correct. Dwellings and Other Structures are paid based on Replacement Cost everywhere except DP-1 Basic form, where it is paid based on ACV. Market value is used to cover items whose values fluctuate according to the market conditions. Agreed value is used to cover fine arts, antiques, etc.
Assume the following items were stolen from the insured's home. Which one of these losses would be fully covered under Coverage C of the Homeowners policy, assuming the loss was for the full value of the property described?
Answer B is correct. Each of these items are subject to special sublimits of liability. These limits are: $2500 for firearms, $1500 for jewelry, watches, furs, $2500 for silverware, pewter ware, and $2500 for property used for a business while on the residence premises.
The insured's home is covered by a DP-3. Two years ago, the insured bought the home for $58,000. Today its replacement value is $60,000. How much Coverage A does the insured need to qualify for replacement cost coverage? A) $45,000 B) $48,000 C) $58,000 D) $60,000
Answer B is correct. For replacement cost coverage to apply the insured must have at least 80% of the home's replacement value in coverage at the time of loss. $60,000 X 80% = $48,000.
If a homeowners insured carries an amount of insurance on his home equal to at least 80% of the replacement cost of the dwelling, then what is the rule of indemnification that applies if the home is destroyed? A) The insured may be indemnified for the entire replacement value of the property, regardless of the policy limits. B) The insured may be indemnified for the replacement value of the property, up to the policy limits. C) The insured will be indemnified 80% of the actual cash value of the property, regardless of the policy limits. D) The insured will be indemnified for 80% of the depreciated value of the property.
Answer B is correct. In the Homeowners policy, losses to the dwelling and other structures are paid at replacement cost as long as the insured carries an amount of insurance equal to or greater than 80% of the building's replacement cost at the time of loss, but only up to the limits of liability.
What is the term used to describe an insurance company terminating an insurance relationship at the end of the policy period? A) Cancellation B) Nonrenewal C) Reinstatement D) Grace Period
Answer B is correct. Nonrenewal is the term used to describe an insurance company terminating an insurance contract at the end of the policy period.
The Homeowners form that provides open peril coverage on the dwelling and broad form coverage on personal property is the
Answer B is correct. Open peril coverages are found only in HO-3 and HO-5. HO-3 the dwelling is open peril with personal property being broad form, named peril. HO-5 everything is open peril. HO-2 is all broad form, named peril and the HO-8 is for older homes and is basic form named perils.
In Liability policies, Supplementary Payments are A) provided only in the event that the insured is found to be legally liable for the loss or damages that have occurred. B) payable in addition to the policy limit of liability. C) subject to a specified percentage of the overall limit of liability. D) paid in addition to the limits of liability for intentional torts only.
Answer B is correct. Supplementary payments are paid in addition to the limits of liability that apply for bodily injury or property damage. They apply to both intentional and unintentional torts. It pays regardless of whether or not legal liability is proven.
A Basic Dwelling Policy automatically provides coverage against fire, lightning and
Answer B is correct. The Basic Dwelling policy automatically covers only fire, lightning and internal explosion. Hail and smoke are among the perils that may be added by extended coverage. Theft is not covered under a DP-1 Basic Dwelling policy at all.
The insurer will pay the insured's necessary costs to clean up following a property loss. These costs are automatically included in the policy's Other Coverages section of the policy. Which of the following Other Coverage would cover this clean up cost?
Answer B is correct. The Debris Removal (Other Coverage) of a Dwelling policy will pay the insured's reasonable expenses for the removal of debris of covered property following a loss by a covered peril.
Which of the following principles states that in forming an insurance contract, both parties have a responsibility to the other?
Answer B is correct. The Doctrine of Utmost Good Faith is where both parties bargain in good faith making full, fair and honest disclosure. The applicant is honest on the application and the insurer is providing full, fair disclosure of the policy terms.
Which part of the policy would you find the insurance company's promise to pay? A) Declarations B) Insuring Agreement C) Conditions D) Exclusions
Answer B is correct. The Insuring Agreement (Clause) is the part of the policy that describes the Insurer's Promise to Pay and the description of covered perils.
Once an insurance company has restored the insured following a covered loss, which of the following has the right of salvage of the destroyed property? A) Insured B) Insurer C) Both A and B D) Neither A nor B
Answer B is correct. The insurance company always retains the right of salvage. They may sell you the right but ultimately the right belongs to the insurer.
What is the primary objective of the Medical Payments to Others coverage in Section II of a Homeowners policy? A) Provide first aid coverage for the family members. B) To avoid negligence claims. C) To pay if the insured is negligent. D) To offset the liability deductible.
Answer B is correct. The intent of the Medical Payments benefit is to avoid lawsuits!
Additional Living Expense coverage that is included under the Broad and Special Dwelling forms protects the insured against
Answer B is correct. This coverage pays for additional living expenses the insured incurs after a covered loss, including reasonable motel, dining, laundry, and transportation expenses, etc.
Lightning damages several valuable trees on the insured's property. This loss is
Answer B is correct. Trees, Shrubs and Other Plants are one of the additional coverages added to a Homeowners policy at no additional cost. The coverage limits are up to 5% of the Coverage A limit in the HO-2, HO-3, HO-5, and HO-8 and up to 10% of Coverage C limit in the HO-4 and HO-6 with a maximum of $500 for any one tree, shrub or plant. No endorsements are necessary to include this coverage. This is not covered under Loss of Use coverage.
All of the following would normally be included with the insured's "proof of loss" when being submitted to the insurer, except: A) The time and cause of loss. B) A signed and authorized estimate by an approved contractor. C) Any other insurance that may cover the loss. D) Any appropriate receipts, evidence, or affidavits to support the loss.
Answer B is correct. When submitting proof of loss, the insured would be required to provide the time and cause of loss, indicate any other insurance that covers the loss, and submit receipts, evidence, or affidavits supporting the loss.
The insurance contract is considered a contract of indemnity because A) parties to the contract exchange unequal amounts of money. B) only one party is legally bound to contractual obligations after the premium is paid to the insurer. C) an insured may collect no more than the amount required to restore him or her to the same financial condition that existed prior to the loss. D) only one party prepares the contract and submits it to the other party on a "take-it-or-leave-it" basis (without negotiation)
Answer C is correct. A contract of indemnity restores an individual to approximately the same financial condition he or she was in before a loss, not to profit-not to gain.
Which of the following describes the process where disputed claims between insured's and insurer's are decided by a neutral third party without a jury trial? A) Liberalization B) Subrogation C) Arbitration D) Assignment
Answer C is correct. A process where disputed claims are decided by a neutral third party between an insured and an insurer.
An insured purchased new furniture for $6,000. At the time of a fire loss, it has depreciated $2,000. The same furniture will cost $7,000 to replace. What is the actual cash value of the destroyed furniture? A) $7,000 B) $6,000 C) $5,000 D) None of the above
Answer C is correct. Actual Cash Value (ACV) is determined by taking the property's current replacement cost and subtracting the depreciated value of the destroyed furniture. In this case the current replacement cost of $7,000 - $2,000 depreciated value = $5,000.
An additional loss that results from a direct loss to property is called a/an A) vicarious loss. B) absolute loss. C) indirect/consequential loss. D) general loss.
Answer C is correct. An indirect loss occurs as a result of a direct loss. For example, a fire on the premises causes a power outage and as a result, meat in a freezer spoils. The fire on the premises is the direct loss and the meat spoilage in the freezer is an indirect loss that occurs as a result of the direct loss.
Insurance binders are A) Valid for 30 days. B) Limited to personal lines risks. C) Temporary or interim insuring agreements. D) required to be written.
Answer C is correct. An insurance binder is considered to be an interim insuring agreement, which is basically a temporary policy. It may be oral or written and is generally valid for up to 90 days. It does not guarantee the issue of the policy and may be cancelled at anytime by the insurer.
What is the difference in the way a DP-1 settles a claim on Coverage A as compared to DP-2 and DP-3?
Answer C is correct. Coverage A is the Dwelling. The Dwelling is paid at Replacement Cost everywhere except the DP-1. The DP-1 Basic Form policy is the only one that pays at ACV on the Dwelling. The DP-2 and 3 both pay at Replacement Cost, but the 80% Coinsurance requirement must always be met at the time of loss to get Replacement Cost.
For which of the following losses would you have coverage under a DP-3?
Answer C is correct. Dwelling policies cover property only and provide no theft coverage. Whether it is a DP-1, 2, or 3, it would require a Personal Liability Supplement or a Broad Theft Coverage Endorsement to cover liability or theft. Ice blocking the gutters causing water damage would be covered.
Who has the right to cancel a policy? A) Insured B) Insurer C) Both A & B D) Neither A nor B
Answer C is correct. Either one may cancel a policy.
In a liability loss, the person to whom the insured caused damage is referred to as the A) first party B) second party C) third party D) fourth party.
Answer C is correct. Liability insurance is considered a third party contract. The insured or defendant is the first party, the party that is considered liable for the loss. The insurance company is the second party, and the plaintiff or claimant is the third party.
Which of the following would be covered under Coverage A - Dwelling of a Homeowners policy? A) Vandalism of a vacant dwelling occurring after 90 days of vacancy. B) Damage to land on which the dwelling is located. C) Materials and supplies used to repair, alter or construct the dwelling located within 100 feet of the dwelling. D) Theft from a dwelling under construction before the dwelling is occupied. Next Question
Answer C is correct. Materials within 100 feet of the building is covered. Vacancy of more than 60 days suspends coverage for vandalism. There is no land coverage. Theft from a dwelling under construction would be the contractors liability.
Which one of the following lists all the required elements for establishing a charge of negligence? A) Assumption of risk, intervening cause, standard of care, proximate cause B) Legal duty, assumption of risk, statute of limitations, actual damages C) Legal duty owed, breach of legal duty owed, proximate cause, damages D) Comparative negligence, statute of limitations, damages, legal duty
Answer C is correct. Negligence is the failure to exercise the degree of care required to protect others from an unreasonable risk of harm. To establish negligence, four factors must be involved: legal duty owed, breach of legal duty owed, proximate cause, and damages.
What type of policy would you purchase to provide coverage for everything that is not excluded? A) Basic Form B) Broad Form C) Special Form D) Named Form
Answer C is correct. Open perils covers anything that is not specifically excluded in the policy.
The Dwelling Special form provides
Answer C is correct. The Dwelling Special form (DP-3) provides the broadest coverage of the dwelling forms. It provides open peril coverage on the dwelling and other structures and named peril coverage on personal property.
Under a Personal Articles floater, a pair of antique bookends is scheduled for $1000. When one of the bookends is destroyed by a covered peril, the remaining bookend is worth only $250. Assuming that the destroyed bookend cannot be replaced and disregarding any deductible, how much will the insured receive for the loss?
Answer C is correct. The Pair and Sets Clause indicates that in no case will the loss of one article be considered the loss of the whole set. But, since it cannot be replaced, the balance of the value of the set is paid out. The Value was $1,000 - $250 = $750.
What Personal Inland Marine form is used to provide open peril coverage on a blanket basis for personal property? A) Fine Arts Floater B) Musical Instruments Floater C) Personal Property Form D) Personal Jewelry Floater
Answer C is correct. The Personal Property Form is a blanket policy designed to cover most types of personal property typically found in a home. It pays on a blanket basis, not scheduled. Musical Instrument floaters, Fine Arts floaters and Personal Jewelry floaters are purchased as individual floaters on a scheduled or valued basis.
If a home has a mortgage, the lenders "insurable interest" would be covered under which of the following policy conditions? A) Appraisal B) Subrogation C) Mortgage Clause D) Assignment
Answer C is correct. The condition that specifies and protects the mortgagee's (lender's) financial interests in the property is called the "Mortgage Clause" condition.
What part of an insurance policy personalizes the policy as to who and what are insured? A) Conditions B) Endorsements C) Declarations D) Considerations
Answer C is correct. The declarations are the who, what, where, when and how much of the policy. This serves as the policy cover page providing a personal description of the insured, location, effective and expiration dates of the policy, amounts of coverage, etc.
The principle that states that an insured should be restored to approximately the same financial position after a loss as before is known as A) insurable interest. B) reinsurance. C) indemnity. D) adhesion.
Answer C is correct. The principle of indemnity is to restore the insured to the same financial condition as before the loss occurred, not to profit, not to gain.
When the insurance company chooses to broaden coverage with no increase in premium, the broadened coverage automatically applies to all existing policies without the need for an endorsement. The company is exercising which of the following? A) Generosity clause B) Appraisal clause C) Liberalization clause D) Non Endorsement clause
Answer C is correct. This is the definition of the Liberalization clause. The insurer has liberalized and broadened coverage out of the kindness of their heart.
In which of the following would you have an insurable interest? A) The house you own but have rented to a tenant B) The car on which you are still paying C) Both A and B D) None of the above
Answer C is correct. To have an insurable interest, a party must have a chance of financial loss or a financial interest in the property.
The right to request an appraisal belongs to A) the insured. B) the insurance company. C) Both A and B D) Neither A nor B
Answer C is correct. When the insured and the insurer cannot agree on the amount of indemnification/claims settlement, either party may demand an appraisal of a loss.
Both the structure and the contents of a mobile home can be insured by purchasing A) an HO-6 policy. B) an HO-8 policy with no endorsements attached. C) a Commercial Package policy. D) either HO-2 or HO-3 with the Mobile Homeowners endorsement.
Answer D is correct. A Mobile Home endorsement added to an HO-2 or HO-3 both provides structure and contents coverage. An HO-6 is a Unit Owners form and provides contents coverage for condominium owners. An HO-8 is a Modified form used to insure older homes and a Commercial Package policy does not cover mobile homes at all.
The action which in a natural and continuous sequence, produces a loss is known as the A) primary cause. B) inherent cause. C) direct cause. D) proximate cause.
Answer D is correct. A proximate cause is a cause that sets other causes in motion when multiple causes combine to produce loss or damage. For example, a fire that causes an explosion to occur. The fire was the proximate cause which caused the explosion to occur, causing the extensive damage.
It will cost Gary $5,000 to put a new roof on his home to replace a roof destroyed in a windstorm. Assume that the original roof, which Gary paid $3,500 for 10 years ago, depreciated $300 per year. What was the actual cash value of the roof that was destroyed? A) $5,000 B) $3,500 C) $3,000 D) $2,000
Answer D is correct. Actual Cash Value is current replacement cost less depreciation. Replacement costs $5,000 minus the depreciated value of the existing roof ($300 x 10 years) = $3,000) = $2,000 ACV.
Which of the following would not generally be included in the Supplementary Payments portion of a Liability policy? A) Loss of earnings B) First aid to others at the time of an accident C) Expenses the insured incurs at the company's request as part of an investigation or defense D) Bodily Injury caused by the insured
Answer D is correct. Additional Coverages/Supplementary Payments cover claims-related expenses incurred in the defense of a claim, including loss of earnings, first aid to others, expenses incurred at the insurers request. Bodily Injury is not covered under supplementary payments. It is a primary coverage type.
What constitutes an agreement to enter into a valid contract? A) The values exchanges by both parties. B) Both parties in the contract must have an insurable interest. C) The parties to the contract must have the legal capacity to enter into a contract. D) A specific offer by one party and acceptance by the other.
Answer D is correct. An Agreement consists of the "Offer and Acceptance". Offer is the application submitted and Acceptance is the issued policy. This is one of the four elements of a legal contract. "A" describes considerations, "B" describes the principle of insurable interest, and "C" describes competent parties.
Which of the following can be insured under an unendorsed Homeowners policy?
Answer D is correct. An unendorsed Homeowners policy is simply a Homeowners policy with no endorsements. In order to qualify for a Homeowners policy, the residence must be occupied by its owner. You must include an endorsement to provide coverage for a home being used as a Home Day Care. Permitted incidental occupancies are allowed provided the owner is occupying the residence. Farm is provided in commercial policies only.
Which of the following coverages are included in the Dwelling Policy? Assume there are no endorsements attached to the policy.
Answer D is correct. Broad theft coverage is only available by endorsement. Property coverages for homes, other structures, and personal property are all covered under a Dwelling policy under coverages A,B, and C.
Carl's home sustains $50,000 damage in an electrical fire. The home is insured under a Homeowners policy for $75,000. At the time of the loss, the home's replacement cost is $125,000. How much will Carl's Homeowners policy pay for this loss? A) $50,000 B) $60,000 C) $93,750 D) $37,500
Answer D is correct. Carl did not maintain the required 80% of the value of the home in coverage to qualify for full replacement cost. The value of the home at the time of loss was $125,000. 80% of $125,000 is $100,000. Had he maintained the required $100,000 (80%), he would receive the full payment of the claim. But since he had $75,000 in coverage at the time the loss occurred, he will be penalized for not maintaining the 80% required. Therefore, the amount of actual coverage,$75,000, is 3/4 or 75% of the $100,000 in coverage that he should have had, therefore he will only receive 75% of the amount of loss: $50,000 x 75% = $37,500.
Which of the following would provide Replacement Cost coverage for Contents under Coverage C in a Homeowners policy? A) HO-2 Broad form B) HO-3 Special form C) HO-5 Comprehensive form D) Replacement Cost endorsement
Answer D is correct. Contents are paid based on Actual Cash Value unless changed to Replacement Cost by endorsement.
If an HO-3 has a coverage limit of $100,000 on a dwelling, how much coverage would automatically apply to cover the insured's personal property in Coverage C?
Answer D is correct. Coverage C - Personal Property of a Homeowners policy provides up to 50% of the Coverage A - Dwelling Limit.
Of the four coverages provided under Section I of the Homeowners policy, which one provides coverage against an indirect loss?
Answer D is correct. Coverage D pays the additional living expenses and loss of rental value that arise out of a covered property loss. Since these expenses arise as a result of a direct loss, they would be considered an indirect loss.
All of the following are "your duties in the event of a loss" except: A) The insured should give prompt notice of the loss to the insurer. B) The insured should notify the police if a law has been broken. C) The insured should protect damaged property from further loss and separate damaged property from undamaged property. D) The insured should seek legal council and file a law suit against the party that caused the claim.
Answer D is correct. Legal action against the insurer or the claimant is not one of your duties after a loss. Providing prompt notice, notifying the police, protecting property from further loss are all considered to be the insured's duties in the event of a loss.
Which of the following is not negligence? A) Ignorance B) Inaction C) Carelessness D) A deliberate act.
Answer D is correct. Negligence is considered to be any Unintentional Tort or Act. Anything deliberate would be considered an intentional tort.
All of the following are Extended Coverage perils except:
Answer D is correct. The Extended Coverage endorsement includes: wind, hail, aircraft, riot, vehicles, volcanic eruption, explosion, and smoke. Lightning is one of the perils that is automatically included in the Basic form DP-1 (Fire, Lightning, Internal explosion)
All of the following are true regarding the Fair Credit Reporting Act, except: A) Protects consumers right to privacy making certain data is confidential and properly used and requires the agent provide a notice at application that they can review the files. B) Credit report may be used to obtain financial and moral status of an applicant. C) If a person has been denied insurance because of the credit report they have recourse and can review the report for accuracy and demand it be corrected. D) If the report had corrections made, the insurer is required to issue the application.
Answer D is correct. The Fair Credit Reporting Act protects consumers who are rejected for coverage on the basis of a credit report and protects consumers right to privacy. It may be used to obtain the moral status of an applicant and if denied insurance on the basis of the report, they have recourse and can review the file for accuracy and demand it be corrected. It cannot require an insurer to issue a policy.
If a homeowner wants the maximum protection for home and contents, which form should be purchased?
Answer D is correct. The HO-5 Comprehensive form, provides open peril coverage on everything. This is considered to be the deluxe or comprehensive policy.
The condition that provides a means to settle the amount of a loss when the insured and the insurance company cannot agree is the A) liberalization clause condition. B) claim settlement condition. C) cancellation condition. D) appraisal condition.
Answer D is correct. The appraisal condition states that either party may demand an appraisal. Each party selects an appraiser and if necessary they jointly hire an umpire. An agreement by any two of the three parties is binding and is considered settled. Each party pays for their own appraiser and both share t he cost of the umpire. This condition is used to settle claims disputes.
Which one of the following is not one of the required elements of a legal contract? A) Legal purpose B) Offer and acceptance C) Competent parties D) Declarations
Answer D is correct. The declarations are part of the policy structure, (DICE). The elements of a legal contract must have the following: Agreement, which is the Offer and acceptance, Consideration, Competent parties, and Legal Purpose.
All of the following are parts of an insurance contract except: A) Insuring Agreement. B) Conditions. C) Exclusions. D) Indirect Loss.
Answer D is correct. The policy structure acronym to remember is DICE which consists of the following parts: Declarations, Insuring agreement, Conditions and Exclusions. Indirect loss is not part of the policy structure. It defines one of the types of property losses.
Which of the following coverages can be found in all Homeowners forms but would not be found in an unendorsed Dwelling Policy?
Answer D is correct. Theft is not included in a Dwelling Policy without an endorsement. Wind, Hail, and Aircraft are all part of the Extended Coverage Endorsement that covers the additional perils spelled out in this acronym - W H A R V V E S.
An insured may not transfer rights of ownership or interests in an insurance policy to another party A) Without the written demand by a court of law. B) Without the written consent of the policy owner. C) Without the insured's written consent. D) Without the insurer's written consent.
Answer D is correct. This is describing the Assignment Condition whereby an insured may not transfer rights of ownership or interests in a policy to another party without the insurer's written consent.
Coverage for which of the following is excluded by a Dwelling Policy?
Answer D is correct. This type of personal property is specifically excluded under coverage C.
A parent is responsible for the acts of their children just as an employer is responsible for the acts of their employees is an example of which of the following? A) Attractive nuisance B) Loss of Consortium C) Strict Liability D) Vicarious Liability
Answer D is correct. Vicarious liability is when one person is liable for the acts of another. For example, a parent is vicariously liable for the acts of their children and employers are liable for the acts of their employees.
Statements on insurance applications that must represent the absolute truth are: A) Representations B) Guarantees C) Material statements D) Warranties
Answer D is correct. Warrantied statements are guaranteed statements, however; there is no such term as guaranteed statements. Representations are statements believed to be true to the best of your knowledge. Material statements pertain to whether the statements made on application are material to the acceptance of risk.
Which of the following would not be found in the policy declarations page? A) A description of the property to be insured. B) A legal representative in the event of the insured's death. C) Limits of insurance, deductibles, amount of premium. D) Insurer's promise of protection.
Next Question Answer D is correct. The insurer's promise of protection would be found in the policy's Insuring Clause, not the Declarations. Remember, the Declarations describe the: Who, What, Where, When and How Much parts of the policy. It is the policy cover page providing a quick overview of the policy.