Personal Insurance
A defined contribution plan that pays part of the firm's profits to participating employees and employer's annual contributions are discretionary defines a
Profit-sharing plan
Costs associated with premature death include all of the following, EXCEPT:
Social Security and income taxes for any IRA, 401(k), or similar retirement investments
The HO-3 policy Sections I and II - Conditions contain a liberalization clause that
Specifies how coverage is broadened for insureds when the insurer changes a current edition of a policy
Which one of the following best describes what is included in a loss payment under the Auto Loan/Lease Coverage endorsement to the Personal Auto Policy (PAP)?
The balance of the loan or lease amount for the vehicle
Harry has a Personal Auto Policy (PAP) with liability limits of $100/$300/$50 and medical payments limits of 45,000 insuring his SUV. Harry also has other than collision and collision coverages with deductibles of $250 and $500, respectively. The local taxicab drivers are on strike and harry decides to capitalize on the situation by transporting persons in his SUV for a fee. While transporting a businessman, Harry loses control of his SUV and hits a parked car. The damages are as follows:
$0
Olivia owns a car insured by a Personal Auto Policy (PAP) with the minimum liability limits required by her state, $10/$20/$5. While on vacation in another state where the minimum liability limits are $15/$30/$5, she causes an accident. For purposes of that loss, her liability limits under her PAP are
$15/$30/$5
Luis owns a mobile home at a permanent mobile home park in Florida. He rents the residence to retirees during the winter months for $3,000 per month. Luis insures the property under a DP-3 policy with limits of $40,000 for Coverage A, and $10,000 for Coverage B. A windstorm caused $10,000 in damage to the structure and Luis was unable to rent it for three months during his normal rental season while making repairs. Ignoring any deductible, how much will Luis recover from his insurere?
$18,000
Kourtney and Scott have a home with a $300,000 replacement cost and an HO-3 policy with a Coverage A limit of $270,000. Lightning strikes the central air conditioning unit and destroys it beyond repair. The unit has a replacement cost of $5,000, is five years old, and has a useful life of 10 years, plus, it never really worked well. Ignoring any deductible that might apply, how much will the insurer pay to replace the air conditioning unit?
$5,000
Joe purchased an individual disability income policy several years ago and continued to pay the annual premium with after-tax dollars. He recently was severely disabled and is not expected to ever return to work. His monthly benefit is $4,000, which represents 60 percent of his pre-disability earnings. The present value of his expected benefits is $240,000, and the aggregate premiums he has paid for the policy are $60,000. How much of each monthly benefit is subject to income taxation?
0
Gretchen purchases a small boat for $1,200 and a boat motor for $700. A fire destroys the boat and motor while they are parked in Gretchen's garage. Disregarding any deductibles, what amount will Gretchens' unendorsed HO-3 policy pay for the loss?
1,500
Hannah is an insured under an unendorsed HO-3 policy with a Coverage C - Personal Property limit of $100,000. She owns a secondary residence that contains $15,000 of personal property. Only her primary residence is listed on the declarations page of the HO-3 policy. A fire destroys all of Hannah's personal property at her secondary residence. How much of this loss will be paid by Hannah's HO-3 policy?
10,000
A mobile home endorsement can be added to which one of the following homeowners policies to satisfy the mobile home needs of an insured?
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Airic has an unendorsed HO-3 policy. Airic's swimming poll was drained by drunk vandals who opened the drain valve. The water was replaced at a cost of $2,500 to Airic, including labor to deliver and pump the water. The HO-3 policy
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Laura is a single mother of two small children and earns an annual salary of $65,000. She has been advised to evaluate the amount of life insurance she currently owns to see if it is adequate. She estimates her final expenses needs at $35,000, and estimates family living expenses needs to be $300,000. She also estimates special needs of $200,000 for her children's education fund and any unexpected events. Laura's total financial assets are $350,000, including $200,000 of life insurance. Using the needs approach, how much additional life insurance does Laura need
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Lil Jon owns three cars that are insured under a Personal Auto Policy (PAP). The three cars include a Ferrari, an Escalade, and stretch Hummer. Lil Jon was involved in a serious auto accident with his Escalade in which three people were seriously injured. Lil Jon was found completely liable for the $1.3 million in medical bills incured by the injured parties. Lil Jon is listed as the named insured on the following policies:
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The insuring agreement often contains policy provisions regarding the
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The risk associated with the nature of the industry in which the issuer of an investment operates and the management of the issuer itself is know as
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Which one of the following would be an exception to the Coverages E and F Business exclusion to the liability coverage provided by the HO-3 - Special Form (HO-3)?
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A traditional individual retirement account (IRA) is designed for retirement income. If IRA funds are withdrawn before age 59 1/2 for purposes of fianancing an automobile purchase,
A penalty tax must be paid on the amount of the distribution
Homer and Marge have their family insured under a plan that allows them to select their own health care provider without any restrictions. The plan then reimburses them for a percentage of their medical expenses after the satisfaction of a deductible. This an example of
An indemnity plan
Which one of the following statements is accurate with regard to state automobile insurance plans?
Applicants must show evidence that they have been denied auto liability insurance within a certain number of days
Collision coverage under the Personal Auto Policy (PAP)
Applies to damage to a parked insured vehicle resulting from a passenger in another parked vehicle opening its door
Beau (spelled correctly) owns two cars, a sedan and a coupe, each insured with a Personal Auto Policy (PAP) from a different insurer. She is inured while driving the sedan when it is involved in an accident with an at-fault uninsured driver. Both polices include uninsured motorist (UM) coverage, and Beau (still spelled correctly) makes claims for UM coverage under both policies. Which one of the following statements is true?
Beau should receive UM coverage from the sedan's policy but not the coupe's
In general, a loss prevention measure is implemented to
Break the sequence of events that leads to a loss
When determining the amount of life insurance to own using the needs approach, final expenses needs include
Cash needed immediately for funeral expenses, uninsured medical bills, estate taxes and probate
Chase has an HO-3 policy covering his home. A neighbor jumped Chase's fence to use his yard as a shortcut to a store, tripped over a small shovel left on the lawn, and was injured. The neighbor sued Chase. Chase's insurer defended and won the lawsuit on the theory that the neighbor was a trespasser to whom no duty was owed by Chase. The insurer's defense included $20,000 in legal fees. Who is responsible for these fees?
Chase's HO-3 insurer is responsible for the legal fees
All of the following are steps in the risk management process, EXCEPT:
Combine loss exposures
An insurance policy states that the insured must report losses promptly to the insurer. This an example of a policy
Condition
Under a defined contribution plan, the employer's
Contribution rate is defined, but the retirement benefit is variable
All of the following are true regarding the HO-6 policy, EXCEPT:
Coverage B - Other Structures is included in the HO-6 subject to a basic limit
Underinsured motorist coverage is
Coverage that provides additional limits of protection when a negligent driver's insurance limits are insufficient to pay for the damages.
The purpose of a probationary period in a group life insurance plan is to
Eliminate coverage of temporary employees and those who are terminally ill when hired
Personal umbrella policies usually cover the insured's liability for personal injury. Under the ISO Personal Umbrella Liability Policy, which one of the following is inscluded under the definition of personal injury?
False arrest
A general type of annuity is a combination plan. Combination plans combine features of
Fixed-dollar and variable annuities
The temporary map that is designed to identify flood prone areas in the community is referred to as a(n)
Flood hazard boundary map
The water damage exclusion in the HO-3 policy eliminates coverage for losses caused by
Flood, surface water, and water or water-borne material such as sewage that backs up through sewers and drains
A sinkhole causes the partial collapse of a wall of Alejandro's residence. The home is insured under an unendorsed DP-3 policy. Where would the question of whether this loss is covered be answered?
General exclusions
Ben recently purchased a long-term disability income policy. The policy states that he can renew the coverage until age 65 as long as he is gainfully employed. However, the insurer reserves the right to raise the premium at renewal. This policy is considered
Guaranteed renewable
Which one of the following statements is true regarding cancellation of the Personal Auto Policy (PAP)?
Insurers can usually cancel a new policy that has been in force for less than a certain number of days (such as 60 days)
Beachfront and windstorm plans will not insure property that
Is poorly maintained or has unrepaired damage
Which of the following statemenst about whole life insurance is true?
It develops a cash value that, with some limitations, is available to the insured during the life of the policy
Social Security retirement, survivors, and disability benefits are a function of a worker's primary insurance amount (PIA). How is PIA determined?
It is determined by a formula that considers a worker's average monthly earnings over a specified number of years
Which one of the following is a warranty commonly applied to personal watercraft insurance
Lay-up period
Personal umbrella policies usually cover the insured's liability for personal injury. Under the ISO Personal Umbrella Liability Policy, which one of the following is included under the definition of personal injury?
Libel
Martin, who has multiple sclerosis, is concerned about needing assistance with activities of daily living if his health deteriorates. Which type of insurance best provides benefits for this exposure?
Long term care
Which one of the following statements is true regarding no-fault automobile insurance?
MOST no fault laws apply only to bodily injury and not to property damage
Mary owns two vehicles that are insured under her Personal Auto Policy (PAP). One of the vehicles is covered for both collision and other than collision (OTC). The other is covered only for OTC. The collision deductible is $500, and the OTC deductible is $250. Mary borrowed her neighbor Lizzy's vehicle one day to run an errand while bother of her vehicles were unavailable. On her way home, she lost control of the vehicle and hit a tree. There were no serious injuries, but the damage to the vehicle was $5,000. Lizzy's PAP covers the vehicle for OTC coverage only, subject to a $250 deductible. Which one of the following statements regarding this scenario is true?
Marys PAP insurer will pay 4,500 for this loss
Which one of the following causes of loss is covered under the other than collision (OTC) section of the Personal Auto Policy (PAP)?
Missiles or falling objects
Lori has a company car with insurance coverage provided by her employer and does she does not own a car. On occasion, Lori helps her elderly grandmother, Beatrice. Lori occasionally drives Beatrice's car to pick up medical marijuana for Beatrice. Lori knows that Beatrice has low limits of liability and is afraid Beatrice might allow the insurance on her car to lapse. What coverage can Lori purchase to provide insurance for herself when she drives Beatrice's car?
Named Non-Owner Coverage endorsement attached to a PAP
Kanye owns a vacation home on a lake, and has insured it under an unendorsed DP-3 policy with a Coverage A limit of $120,000 and a Coverage C limit of $40,000. Kanye discovered the a rowboat he keeps tied to his dock on the lake has been stolen. He field a claim under his dwelling policy for $700, the actual cash value of the rowboat. Would theft of the rowboat be a covered loss?
No, theft is not a covered peril
Nick has an unendorsed HO-3 policy. While cleaning the closet where he stores his stamp and coin collection, Nick spilled cleaning solution on one of the albums of stamps. The accident resulted in the loss of stamps valued at $500. Is this loss covered by Nick's HO-3 policy?
No, this is not a covered peril
A personal injury protection (PIP) endorsement is an endorsement added to an auto policy to provide
No-fault benefits
Barack and Michelle own a single family home insured to value under an unendorsed HO-3 policy with a limit of $350,000 for the Coverage A - Dwelling with a $500 deductible. The garage apartment is rented to a local college student. Lightning strikes the garage and it burns to the ground. The replacement cost of the garage is $45,000. The loss to the detached garage is
Not covered since a Coverage B exclusion applies
Greg had a collection of CDs worth $250 in his car. martin discovered one morning that his car had been broken into and his radio, CD player, and CDs were all taken. Greg insures his car under an unendorsed Personal Auto Policy (PAP). Disregarding any deductibles, what amount will Greg's auto insurer pay for the CDs?
Nothing
On the Personal Auto Policy (PAP), the vehicle identification number (VIN) can be found
On the Declarations page
An occurrence as defined in the HO-3 - Special Form (HO-3) may include
One accident involving injury to more than one person
The HO-5 - Comprehensive Form is designed to meet the risk management needs of
Owner - occupants of dwellings who would like the BROADEST coverage available among ISO's forms for their property
A homeowners policy premium is determined by first developing the base premium. Then base premium is influenced by certain factors, including which of the following?
Policy form
In addition to general duties under a Personal Auto Policy (PAP), a person seeding coverage under Part D - Coverage for Damage to Your Auto must perform additional duties. Which one of the following is one of these additional duties?
Promptly notify police if a covered auto is stolen
The purpose of the suicide clause in a life insurance policy is to
Provide the insurer with some protection against an insured who purchases a life insurance policy with the intention of committing suicide
Which one of the following statements is true regarding watercraft liability coverage under the HO-3 - Special Form (HO-3)?
Sailboats shorter than 26 feet owned by the insured are covered
Long term care insurance typically covers
Skilled nursing home and custodial care
Which of the following is a characteristic of universal life insurance?
The cash value is guaranteed to earn at least a minimum interest rate
Which one of the following best describes "double indemnity" regarding a life insurance policy?
The death benefit doubles if the death is the result of an accident
Trenton is a recent homeowner and is considering the insurance coverages he needs for his home and contents. If damaged by a peril covered by a Homeowner's policy, which one of the following would be considered part of John's real property?
The detached garage
Which one of the following best describes contributions made to a thrift plan
The employee contributes up to a certain percentage of his or her salary. The employer contributes a percentage of the employee's contribution
All of the following could lead to a liability loss for a family, EXCEPT:
The father is drunk and breaks his ankle while attempting a back flip off a tree stump in the back yard
The Suit Against Us condition in Section II of the HO-3 policy provides for all of the following EXCEPT:
The insurer must first meet all of its obligation under section II before the insurer can bring legal action against the insured
All of the following are included as insureds under the Section II - Liability Coverages of a homeowners policy, EXCEPT:
The named insured's separated spouse who resides and works in another state
Which one of the following statements is true regarding public or livery conveyances and the liability coverage provided under the Personal Auto Policy (PAP)?
The public or livery conveyance exclusion applies when a conveyance is indiscriminately offered to the public
Uninsured motorists coverage, as an approach for compensating automobile accident victims, has all of the following disadvantges, EXCEPT:
The victim must prove that he or she has no other source of compensation before coverage applies
Which one of the following statements about Medicare Advantage (Part C) plans are true?
They can take several forms, including managed care and fee-for-service plans
In states that apply the damages trigger in underinsured motorist (UIM) coverage situations, the UIM endorsement applies:
When the negligent driver carries liability limits that are lower than the insured party's actual damages
An insured has a Personal Auto Policy (PAP) that includes medical payments coverage. The insured crashed his car while trying to be the first car to pull away from a stop at a red light when the light turned green. The insured
Would be eligible for medical payments under the Personal Auto Policy (PAP) as the occupant of a covered auto
Joe and Kitty Clements have a Personal Auto Policy (PAP). Their granddaughter, Savannah, lives with them. does Savannah qualify as a "family member"?
Yes, as long as Savannah is a resident of the household
Jasmine insures her home with an HO-3 policy. she operates a seamstress service from her home. A customer was picking up some altered pants, tripped on a loose floorboard on her porch, and was injured. Is there coverage for this claim?
Yes, if Jasmine's policy was endorsed with the Home Business Insurance Coverage endorsement
What is the Section I standard deductible in the HO-3 policy?
$500
Which one of the following is an expense payable under the Part B - Medical Payments Coverage of the Personal Auto Policy (PAP)?
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A multiple policy discount on personal auto insurance is justified because
Administrative costs are reduced
Uninsured motorist (UM) coverage under the Personal Auto Policy (PAP) does not apply to a claim that the insured settles without the insurer's consent if such settlement prejudices the insurer's right to recover payment. In this context, "prejudice" means
To injure or damage another party's rights
Personal proerty coverage for watercraft is
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The HO-5 policy special limits for jewelry and furs, firearms, and silverware apply to all of the following items, EXCEPT:
Intentionally lost items
