practice final p&c
Which of the following would NOT be included in a commercial package policy? 1 equipment breakdown coverage 2 commercial crime coverage 3 dwelling coverage 4 farm coverage
Dwelling coverage - a commercial package policy may include coverage for exposures of a business, but not the personal exposure of the insured. the dwelling policy is a personal lines policy and would not be in a commercial package policy
Which of the following is the other major coverage provided by the business owners liability coverage form? 1 personal Liability 2 Auto liability 3 Employer's liability 4 Medical payments
Medical payments - Every businessowners liability coverage form includes business liability and medical payments ( to others ) coverage
What method do insurers use to protect themselves against catastrophic losses?
reinsurance - insurers use reinsurance to protect themselves from catastrophic losses. this is a method where the reinsurer indemnifies
Statements of the applicant on an insurance application are considered
representations - applicant's statements are considered representations, and are true to the best of the applicant's knowledge
Which of the following is NOT a cause of loss form for commercial property coverage? 1 basic 2 specific 3 special 4 broad
specific - commercial property coverage can be written with one of 3 causes of loss forms ; basic, broad, or special
Under the HO-4 and HO-6 homeowners policy forms, property is insured against
Broad form perils - HO-4 and HO-6 provide the same level of coverage as Coverage C in the HO-2 and HO-3
Which of the following property coverages would provide protection to contents damaged by fire? 1 coverage c 2 coverage a 3 coverage b 4 coverage d
Coverage C - personal property provides coverage for the contents of an insured dwelling
When does the coverage begin under the builders risk form?
On the date construction start
In a DP-1, if the insured elects to apply Coverage B to a detached garage, coverage A will be
Reduced by 10% - coverage b (other structures) applies 10% of coverage a to a detached structure
Property insurance that provides coverage for both a building and personal property at one location is
Specific coverage - one location is insured for a specific amount of insurance on the structure and contents
On what basis is a professional liability policy written?
claims made basis
Which provision defines how the policy will respond if there are multiple valid insurance policies written on the same risk 1 coinsurance 2 concurrent coverage 3 other insurance 4 over insurance
other insurance - a provision in an insurance policy that defines how the policy will respond if there is other valid insurance written on the same risk
Which of the following is a consideration on the part of an insurer? 1 paying a claim 2 underwriting 3 decreasing premium amounts 4 paying the premium
paying a claim - the binding force in any contract is consideration. consideration on the part of the insurer is the promise to pay in the event of loss
In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for
uninsured motorists coverage - trailers, while being towed by an insured auto, are covered automatically for BI/PD and U/M under part A of a personal auto policy
A general liability policy will respond to claims against an insured when bodily injury or property damage is caused by
An insured's negligence - Liability insurance responds to actions claiming an insured's negligence caused injury or damage to another
The commercial general liability coverage Part A - Bodily Injury and Property Damage provides coverage for
Premises - operations, products, and completed operations coverage are included in a general liability coverage part
In the personal Auto policy, owned trailers being towed by an insured auto are automatically covered for
Uninsured motorists coverage - Trailers, while being towed by an insured auto, are covered automatically for BI/PD and U/M under Part A of a personal auto policy
In a Personal Auto Policy, a covered auto could include all of the following EXCEPT 1 a van used in the delivery business 2 a nonowned temporary substitute vehicle 3 a trailer owned by the insured 4 a farm implement being towed behind the insured's pickup
a van used in the delivery business - if used primarily for deliveries, a PAP cannot insure the vehicle
Which statement best describes agreement as it relates to insurance contracts? 1 the intent of the contract must be legally acceptable to both parties 2 one party accepts the exact terms of the other party's offer 3 all parties must be capable of entering into a contract 4 each party must offer something of value
One party accepts the exact terms of the other party's offer - in insurance contracts, there must be a definite offer by one party, and this offer must be accepted in its exact terms by the other party. Agreement includes both an offer and its acceptance.
The HO-3 homeowners policy provides
Open peril coverage on the dwelling and broad form coverage on personal property. - the open peril coverage applies to property insured under Coverages A and B only
The HO-3 homeowners policy provides
Open peril coverage on the dwelling and broad form coverage on personal property. - the open peril coverage applies to property insured under Coverages A and B only.
To which of the following must insurance producers report changes of business or residence address? 1 the insurer 2 the policy holders 3 the department of insurance 4 the NAIC
The department of insurance - all licensed producers must notify the department of insurance in writing of any change of address within the period of time specified in the state insurance code
The most the insurer will pay for a loss under a business owners policy is
The limit of insurance after the deductible - for losses covered under a business owners policy, the insured must pay a deductible, after which the insurer must pay up to the limit of insurance.
Which of the following is an example of a protective safeguard in a businessowners policy 1 record keeping 2 automatic sprinkler system 3 professional liability endorsement 4 errors and omissions
automatic sprinkler system - the protective safeguards endorsement adds a policy condition requiring the insured to maintain protective safeguards (automatic sprinkler system, fire alarm, ect.) as a condition for coverage
A homeowner has misplaced some insured personal property. Which HO policy form would cover this loss?
HO-5 - covers misplacing or losing (mysterious disappearance) as a theft loss
A homeowner has misplaced some insured personal property. Which HO policy form would cover this loss?
HO-5 - covers misplacing or losing (mysterious disappearance) as a theft loss.
The business pursuits endorsement under section II of the homeowners policy will cover all of the following EXCEPT
Liability of the business owned by the insured - An insured may extend the section II liability coverage to certain business pursuits that occur away from the premises. The endorsement would cover the activities of the insured, but would not cover the liability of a business owned by an insured
All of the following are perils covered under the broad form dwelling policy EXCEPT 1 collapse 2 theft 3 lightning 4 fire
Theft
the party to a surety or fidelity bond who promises to do or not do a specific thing is
the oblige - the principal purchases the bond and promises to perform
How soon does the period of restoration for business income coverage begin after the direct loss?
72 hours - the period of restoration for business income coverage begins 72 hours after the direct loss, or immediately for extra expense coverage. It ends on the date the property has been repaired or business has resumed
The owner of an appliance repair shop wants a policy that will cover the shop itself, the equipment used to repair appliances, and any appliances that customers leave for repair. Which coverage form would the owner seek?
Building and personal property - the building and personal property coverage form covers buildings, business personal property, and property of others on the insured's premises.
how soon does the period of restoration for business income coverage begin after the direct loss?
72 hours - or immediately for extra expense coverage. It ends on the date the property has been repaired or business has resumed
With regards to a homeowners policy, which coverage provides for indirect or consequential losses?
Coverage D - provide for loss of use, which is an indirect loss
A business uses its own trucks to deliver their own products to the customer. Which commercial auto coverage form should the business buy to insure the trucks?
Motor carrier coverage - The motor carrier coverage form can cover anyone who transports goods
Which statement best describes agreement as it relates to insurance contracts? 1 one party accepts the exact terms of the other party's offer 2 the intent of the contract must be legally acceptable to both parties 3 each party must offer something of value 4 all parties must be capable of entering into a contract
One party accepts the exact terms of the other parties offer - in insurance contracts, there must be a definite offer by one party, and this offer must be acceptable in its exact terms by the other party. agreement includes both an offer an its acceptance
Which coverage would a business owner need in a crime policy to cover money that may be stolen from a messenger?
Outside the premises - (theft, disappearance, and destruction) coverage covers outside loss of money and securities
In a personal auto policy, which of the following describes the liability coverage?
Part A - part A of a personal auto policy describes the liability coverage, which protects the insured against loss arising from legal liability when an auto that the insured owns, operates, or maintains is involved in an accident
In personal auto policy, which of the following describes the medical payments coverage?
Part B - of a personal auto policy describes the medical payments coverage. it pays reasonable expenses associated with necessary medical and funeral expenses caused by an accident and sustained by an insured
Section I of a boat owners policy covers?
Physical damage
The type of professional liability coverage a medical doctor would need is
malpractice coverage
What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident?
per occurrence - a sublimit in a liability policy that puts a ceiling on the payment for all claims that arise from a single accident
Which of the following limits shown in the declarations of a business owners policy applies to medical expenses 1 per person 2 per accident 3 per injury 4 per occurrence
per person - a combined single limit of insurance is applicable for all bodily injury and property damage losses that arise from a single occurrence. Medical expenses are limited to the per person limit shown on the dec page
Coverage for all of the following is found in Section I of a homeowners policy EXCEPT 1 other structures 2 personal property 3 personal injury 4 dwelling
personal injury - it is an endorsement in section II- liability and provides protection in the event an insured is charged with libel or slander
What method do insurers use to protect themselves against catastrophic losses?
reinsurance - insurers reinsurance to protect themselves from catastrophic losses. this method where the reinsurer
Which of the following would assume risk that are generally unacceptable to the normal insurance market?
residual markets - they are insurance markets or facilities designed to assume risks that are generally unacceptable to the normal insurance market. Assigned risk plans would be considered a part of the residual market facilities
The amount an insurer will pay under Coverage D (loss of use) depends on
the amount of coverage on the dwelling - loss of use usually is limited to a percentage of the overall dwelling or personal property coverage (when dealing with HO-4 and HO-6)
