Practice Questions MS Adjuster

What are the 6 sections of the PAP

Six Sections: 1. Part A Liability - no dedcutables 2. Part B Medical Payments 3. Part C Uninsured Motorist 4. Part D Coverage for Damage to Your Auto 5. Part E Duties After an Accident or Loss 6. Part F General Provisions

When an Umbrella policy covers a loss that is not covered in the base policy, there is a "deductible" called _____________________

When an Umbrella policy covers a loss that is not covered in the base policy, there is a "deductible" called Self-Insured Retention.

What does FECA offer?

Provides insurance for civilin employees of federal government

Which policies use ACV /RC? BOP - HO- Standard Fire Insurance policy- DP- PAP- BAP- CP - CPP- Ocean Marine- Inland Marine-

- Home Owners: Dwelling RC with 80% insured /Personal property ACV - Standard Fire Insurance policy - ACV - DP 2 & 3 - Coverage A and B are at RC if 80%. - PAP- Part D - coverage for damage to your auto ACV - BAP Business auto policy - Physical damage ACV - Commercial Property - ACV - Coverage C - PP of others only 2500$ - Commercial Package Policy (BOP - business owner package) - commercial property CP RC + CGL (occurrence only when in BOP and x2 aggregate limit)+ and income protection . - Ocean Marine - valued, unvalued, agreed valued - Inland Marine - PAF property at a chosen agreed value coverage

Dwelling coverage: dp -1 dp -2 dp -3

1. DP-1 "Basic Form" - 3 named perils (fire, lightning, internal explosion) + extended avilable WC SHAVER (v- vehicle minus fence , driveway, etc ) 2. DP-2 "Broad Form" 3. DP-3 "Special Form" - all peril + broad form *DP doesn't cover theft, just burglary. thats HO Coverage A- Principal dwelling + Attached structures: garages, apartments, etc. + building materials (but not construction equipment) Coverage B - Other Structures: Appurtenant Physical Structures (APS): structures that are not attached to dwelling and can claim a limit to coverage A . DP -1 is 10% of A and DP 2/3 is 10% on top of

Which of the following is NOT one of the requirements that adjusters must meet in order to handle NFIP claims? A. Complete NFIP continuing education every three years B. Have at least four consecutive years of adjusting experience C. Inform claimants that only the NFIP Servicing Agent or WYO company can make a final decision on their claim D. Become NFIP certified

A. Complete NFIP continuing education every three years Certified adjusters must complete continuing education about NFIP claims every year, not every three years.

Jane caused an auto accident while driving the company vehicle for work. Unfortunately, the van she ran into was carrying 6 passengers, all of whom were injured in the accident. The total of everyone's injuries comes to $210,000. Jane's company's business auto policy only covers up to $100,000 in bodily injury per accident. Which of the following might help cover the remaining liability caused by Jane's accident? A. Excess liability policy B. Extended liability policy C. Commercial general liability policy D. Business owners policy

A. Excess liability policy

Which of the following is NOT true of Personal Injury Protection? A. PIP is usually secondary coverage. B. PIP restricts the policyholder's right to recover losses in civil court. C. PIP is primary coverage. D. PIP provides no-fault protection.

A. PIP is usually secondary coverage.

A fire burns down Jenny's Hardware, leaving virtually nothing salvageable. Which of the following items would NOT be covered under Coverage B of the Building and Personal Property Coverage Form in her commercial property policy? A. A portable table saw used to cut lumber to a customer's specifications B. Inventory for sale C. Computers purchased by the business D. A paint mixer permanently affixed to the floor

B ? This was under the no feedback quiz Machinery that is permanently affixed to the building would be covered under Coverage A - Buildings and Structures. The other items would fall under Coverage B - Business Personal Property.

Sam is a claimant seeking damages from XYZ Insurance. The XYZ adjuster comes to meet with Sam to hear the circumstances of her injury. The adjuster determines that Sam played an active role in her own injuries, and therefore XYZ Insurance will pay her nothing at all for her injuries. What defense is the adjuster using? A. No negligence B. Contributory negligence C. Comparative negligence D. Full negligence

B. Contributory negligence Contributory negligence is a rule that prevents an injured party from collecting any damages after a car accident if they were careless and partially to blame for the wreck. Comparative negligence, on the other hand, allows blame to be shared and damages to be awarded based on each individual's share of the fault.

A typical workers' compensation policy combines two basic forms of coverage. They are: A. Workers' Compensation and Products Liability B. Workers' Compensation and Employers Liability C. Professional Liability and Medical Payments D. Bodily Injury and Health

B. Workers' Compensation and Employers Liability

Jim drops his car off at ABC Garage to have his exhaust system repaired and takes the train to work. When he returns, he finds that his car has been vandalized. Jim has comprehensive coverage, but feels the garage is responsible for the damage since Jim entrusted the car to ABC Garage. Which coverage type under ABC's garagekeepers policy would cover any part of the loss that Jim's policy does not cover? A. Direct Primary Coverage B. Excess Comprehensive Coverage C. Direct Excess Coverage D. General Liability Coverage

C. Direct Excess coverage operates without regard to liability.

The Write Your Own program allows private insurers to: A. write their own flood policies. The Write Your Own program lets private insurers sell standardized NFIP policies, collect premiums, adjust claims, and pay losses. B. give policyholders the opportunity to design their own policies. C. sell standardized NFIP policies. D. underwrite losses.

C. sell standardized NFIP policies. The Write Your Own program lets private insurers sell standardized NFIP policies, collect premiums, adjust claims, and pay losses.

Recall that auto liability insurance pays for third party injuries caused by the insured. But what if the insured also suffers injuries in the same accident? Since he is the policyholder, his liability insurance won't cover him. This is where ________________ ____ comes in.

Coverage B comes in. - MEDICAL PAYMENTS A - liability B - Medical Payments C - UM D - Coverage for Damage to Your Auto

Jeremy owns a business with several machines covered under an Equipment Breakdown Protection Coverage Form with a $500,000 limit. He has three deductibles on his policy: 1) a percentage deductible of 3% per loss, 2) a minimum deductible of $500, and 3) a maximum deductible of $10,000. After experiencing a covered loss of $85,000, how much will Jeremy have to pay out of his own pocket for the loss? A. $10,000 B. $500 C. $15,000 D. $2,550

D. $ 2,550 First, apply the 3% percentage of loss deductible to the $85,000 loss ($85,000 x .03 = $2,550). The minimum is 500 The maximum deductible limit is 10,000. The $2,550 is more than the minimum and less than the maximum, so Jeremy will have to pay $2,550 and his insurer will cover the rest.

Sam, who has a typical HO-3 policy, is forced to evacuate his home by civil authorities due to rising flood waters in his neighborhood. It takes a month before Sam is allowed to come back to his home. During this time, he has spent $3,000 in hotel expenses, on top of his monthly mortgage payment of $850. When he files a claim, how much will Sam receive under Coverage D - Loss of Use? A. $3,000 B. $3,850 C. $850 D. $0

D. $0 Coverage D will pay for loss of use when the insured is prohibited to use the dwelling by Civil Authority, but only if the cause is a covered peril. Flood is excluded in a typical HO-3 policy.

Peter works as a real estate agent and uses the internet extensively for sales leads and advertising. One day, he finds another realtor's ad online and copies it, using his own information as the contact info. This generates a lot of business for Peter, but unfortunately Peter gets a call one day and is informed that he is being sued for copyright infringement. This is an example of what type of claim covered under Peter's Commercial General Liability policy? A. Libel and Slander B. Wrongful Entry C. Malicious Prosecution D. Advertising Injury

D. Advertising Injury

Which Business Auto Policy endorsement covers employees while using their personal cars for business purposes? A. Mobile Equipment B. Individual Named Insured C. Drive Other Car D. Employee as Additional Insured

D. Employee as Additional Insured

What is difference between dwelling and HO? Which one do motorhomes get?

Residential dwellings fall under personal lines and are insured by either HO or Dwelling HO insurance is for individuals who both OWN and Occupy their residence. Dwelling insurance is for property not inhabited by the insured (rental property, vacation home, etc) HO is only available with HO if it has the correct endorsement and DP gets it if they are primary residence.

How many weeks of WC do you get for: eye: thumb:

eye: 100 thumb : 60

How much of a limit is included for Credit Card Fraud or Forgery, an additional coverage in a homeowners policy?

500$ Many losses a homeowner can suffer do not fall neatly into Coverages A (dwelling), B (other structures), C (personal property), or D (loss of use). The next several pages will list and explain the Additional Coverages page or pages of an HO policy's large Property section.

Scott lived in a mobile home before it was completely destroyed in a recent flood. The mobile home is large enough to qualify for a special loss settlement under his flood policy, which has a limit of $28,000. Before the flood, the mobile home was worth $15,000, but it would cost $25,700 to buy a new one today. How much indemnification will Scott receive for this loss? A. $22,500 B. $15,000 C. $28,000 D. $25,700

A Special Loss Settlements will pay the lowest of the following: -the dwelling's replacement cost -1.5 times the dwelling's actual cash value, or the policy limit. In Scott's case, the lowest of these three amounts is 1.5 times the ACV of his mobile home ($15,000 x 1.5 = $22,500). A

Frank purchased a $150,000 insurance policy for his home, which is valued at $125,000, with the hopes of making a $25,000 profit in the event his home is destroyed. After Frank burns his house down, he files a claim against his homeowners policy. Assuming that Frank's policy includes an overinsurance provision, how much will his insurer indemnify Frank for his loss? A. $0 B. $125,000 C. $25,000 D. $150,000

A. $0 By purchasing extra insurance with intentions to defraud the insurer, Frank voided his insurance policy and he will receive nothing.

Which statement about the Federal Employers Liability Act is TRUE? A. It protects only interstate railroad workers and their families. B. It protects injured seamen by allowing them to sue for damages and to choose a jury trial. C. It provides federal government insurance for civilian employees. D. It provides benefits in the form of monthly payments and medical coverage to coal miners.

A. It protects only interstate railroad workers and their families. The Federal Employers Liability Act protects only interstate railroad workers and their families.

After Tony, the owner of XYZ Cleaners, accidentally starts a fire, XYZ Cleaners burns to the ground, taking all the garments with it. Afterwards, Tony has to rent a new building and purchase new equipment and supplies. He is also responsible for all the clothing that was in his care. Which type of coverage in his commercial property policy could help Tony with the cost of paying for his customers' destroyed clothing? A. Legal Liability Coverage B. Extra Expense Coverage C. Dry Cleaners Risk Coverage D. Leasehold Interest Coverage

A. Legal Liability Coverage commercial poperty insurance packages cover direct and indirect losses related to business property. There are many types of coverage forms that a business can choose from that would best fit their business. A policy can contain just one or several types of the coverages. One of the coverages that Bailee's need is Legal Liability Coverage

The Severability of Interests condition states that: A. coverage applies to each insured separately, as if no other insured existed. B. when an insurer pays a total loss settlement, policy coverage may terminate and any unearned premiums will be refunded to the insured. C. an insurer has the right to cancel an insurance policy at any time. D. an insured has the right to cancel an insurance policy at any time.

A. coverage applies to each insured separately, as if no other insured existed.

All of the following are typical exclusions in an insurance policy, EXCEPT: A. explosion. B. flooding. C. nuclear hazards. D. earthquakes.

A. explosion

Melanie's $300,000 home suffers $90,000 in damage from a fire. The adjuster finds the home's value since 2008 has depreciated 25%, making the ACV loss $67,500. Although Melanie's policy covers repairs at their replacement cost, she receives $67,500 at the time of loss. Repairs to her home end up totaling $79,500. How much, if any, further indemnification may Melanie receive from the loss? A. $10,500 B. $12,000 C. $22,500 D. $0

B. $12,000 The Recoverable Depreciation provision allows the insurer to pay ACV up front, and then the remainder of the actual cost to repair or replace the damaged property after repairs have been completed. The difference between the actual cost of repair ($79,500) and the initial ACV payment ($67,500) is $12,000.

REPLACEMENT COST QUESTION: Jerry is using an expensive video recorder near the family pool when he slips and falls in, destroying the camera. Jerry bought the camera three years ago for $4,000, and it depreciates at $500 per year. A new, similar camera costs $5,000 today. Assuming the loss is covered, if Jerry had a replacement cost policy, how much would Jerry's insurer indemnify Jerry for the destroyed camera? A. $2,500 B. $5,000 C. $4,000 D. $3,500

B. $5,000

Sam, who has a typical HO-3 policy, is forced to evacuate his home by civil authorities due to rising flood waters in his neighborhood. It takes a month before Sam is allowed to come back to his home. During this time, he has spent $3,000 in hotel expenses, on top of his monthly mortgage payment of $850. When he files a claim, how much will Sam receive under Coverage D - Loss of Use? A. $3,000 X B. $0 C. $3,850 D. $850

B. 0$ - probably because flood isn't included HO policies Coverage D: Coverage D - Loss of Use provides three coverages to address these types of losses. They are: - Additional Living Expenses, - Fair Rental Value, - Prohibited Use.

Bob has been paying his premiums, but his insurer has decided to cancel his dwelling policy. Because Bob has a mortgage on the house through Sunrise Bank, the bank is listed as a creditor loss payee on Bob's policy. Which of the following is TRUE? A. Bob's insurer may not cancel his policy without first getting permission from Sunrise Bank to do so. B. Bob's insurer may cancel his policy, but must notify both Bob and Sunrise Bank at least 30 days before the effective date of the cancellation. C. Bob's insurer may cancel his policy, but must notify Sunrise Bank at least 10 days before the effective date of the cancellation. D. Bob's insurer may not cancel his policy because Sunrise Bank also has an insurable interest in the property.

B. Bob's insurer may cancel his policy, but must notify both Bob and Sunrise Bank at least 30 days before the effective date of the cancellation. Answer C: answer C is for when/if bob HAS NOT been paying his premiums. In this scenario, he was.

Bonnie's PAP includes Comprehensive coverage. Which of the following losses could this coverage pay for? A. Bonnie rear-ends another vehicle. B. Bonnie's car catches fire. C. Bonnie rolls her vehicle in a one-car accident. D. Bonnie's car breaks down due to an engine malfunction.

B. Bonnie's car catches fire. Comprehensive coverage is also called OTHER THAN COLLISION so it would NOT cover a rollover, a fender bender, or breakdown due to engine malfunction A & C - D is a regular exclusion along with wear and tear, freezing, tire damage. etc. It would cover fire damage.

D'Anton spills coffee in his lap while driving, causing him to veer off the road and smash into a telephone pole. Which part of his Auto Insurance Policy will help him pay for the repairs to his car? A. Comprehensive Coverage B. Collision Coverage C. Liability Coverage D. McDowells Coffee Coverage

B. Collision Coverage Most auto policies only cover collision. If you want comprehensive , which covers anything other than collision and covers many perils

Which of the following does NOT apply to commercial property insurance? A. Because of their complexity, commercial policies only offer named-peril coverage. B. Commercial policies are generally not designed to cover farms and 1-4 family dwellings. C. A commercial policy typically provides some coverage for loss to personal property of employees. D. Commercial property coverages are usually paid on an actual cash value basis.

B. Commercial policies are generally not designed to cover farms and 1-4 family dwellings. Commercial policy forms are usually paid at ACV; they do not cover farms and 1-4 family dwellings; and they can cover loss to personal property of employees. But they are NOT named-peril only coverage. A Commercial policy form can include named peril and open peril forms.

Honey's Bakery is a local coffee shop run by two sisters. In a rush to leave one afternoon, their new employee forgets to turn off the gas stove. The leaking gas causes an explosion, destroying the kitchen. Which condition in their commercial property policy could help the sisters cover the cost of the damage? A. Non-Owner Condition B. Control of Property C. Legal Action Against the Insurer D. Other Insurance

B. Control of Property protects the property from the negligent acts of persons other than the policyholder.

Which of the following best describes how losses are valued under a Commercial Crime policy? A. Money is valued at face value; securities are set at their value on the day the settlement is paid; and other property is valued at the lesser of the cost to repair or replace. B. Money is valued at face value; securities are set at their value on the day the loss is discovered; and other property is valued at the lesser of the cost to repair or replace. C. Money is valued at face value; securities are set at their value on the day the loss is discovered; and other property is valued at actual cash value. D. Money is valued at face value; securities are set at their value on the day the settlement is paid; and other property is valued at replacement cost.

B. Money is valued at face value; securities are set at their value on the day the loss is discovered; and other property is valued at the lesser of the cost to repair or replace.

What BOP endorsement would cover a company's lost business income and extra expense due to loss of electrical service? A. This type of loss cannot be covered B. Utility Time Element C. Utility Services - Direct Damage D. Spoilage

B. Utility Time Element

Which of the following claims may be covered under an Equipment Breakdown Protection Coverage Form? A. A self-propelled machine used to transport heavy objects within the factory experienced a malfunction in its computer program, causing it to run into a wall, which damaged it to the point of needing repair. B. While adjusting a pressurized boiler, an employee accidentally set the calibrations to incorrect levels, which damaged the boiler to the point of needing repair. C. Hazardous material remediation was needed after a mechanical breakdown of the exhaust system's turbine caused ammonia to be released into the factory, contaminating the entire area. D. A severe hail storm damaged a company's air conditioning units.

C. Hazardous material remediation was needed after a mechanical breakdown of the exhaust system's turbine caused ammonia to be released into the factory, contaminating the entire area. The Equipment Breakdown Protection Coverage Form will pay for losses related to ammonia contamination and cleanup of hazardous substances after a covered loss. It does not cover losses caused by improper calibration or losses other than breakdown (such as hail). And, self-propelled machines are not considered "covered equipment." This coverage only protects against ONE peril a "breakdown" . A breakdown is defired as a direct physical damage to covered equipment which necessitates repair or replacement and results from 1) accidental pressure failure of vacuum equipment, 2) mechanical failure, or 3) electrical failure. There are additional coverages that can be purchased: 1. ammonia contamination 2. hazardouse substances 3. consequential loss 4. water damage

Jared recently purchased a 25 foot watercraft with a 250 horsepower motor. While cruising on the lake, he accidentally runs into Gary's boat, causing $2,500 in damage to Gary's hull. How will Jared's insurer respond when Gary files a claim against Jared's homeowners policy for the damage he caused? A. The insurer will pay the claim because Jared's boat is covered by his homeowner's policy. B. The insurer will deny the claim because the policy excludes all watercraft from its liability coverage. C. The insurer will deny the claim because Jared's boat is excluded from his liability coverage. D. His insurer will deny the claim because the boat was not completely enclosed in a building.

C. The insurer will deny the claim because Jared's boat is excluded from his liability coverage. It is excluded because it has greater than 25 horsepower

If the Commissioner has reason to believe that a person or company is engaging in an unfair trade practice, he must give the person at least ____ notice before holding a hearing to review the case. A. 20 days B. 30 days C. 60 days D. 10 days

D. 10 days Before revoking, suspending, or refusing to renew a license, the commissioner will give the licensee notice by mail, and schedule a hearing to take place at least 20 days after the notice.

Hank has collision coverage with a $2,000 deductible on his 2010 truck. One dark, rainy night, Hank's truck slips off the road and rolls over down the embankment. The truck sustains $45,000 in damages, but the actual cash value of the vehicle is only $25,000. Which of the following statements is TRUE? A. Hank will be indemnified by his insurer for $25,000. B. Hank will be indemnified by his insurer for $43,000. C. Collision coverage will not indemnify Hank for this accident. D. Hank will be indemnified by his insurer for $23,000.

D. 23,000$ Collision coverage pays actual cash value for damages occurring in a covered accident. Since Hank's truck was worth $25,000 at the time of the accident, his insurer will pay him $25,000 minus the $2,000 deductible, which comes to $23,000.

Lucille owns her own woodworking business, building custom items such as dressers, wooden trunks, and mantelpieces. A fire destroys her entire operation and Lucille files a claim with her insurer. Which of the following would be covered under Coverage A of the Building and Personal Property Coverage Form in her commercial property policy? A. Lucille's computer in her office B. A hand-held circular saw C. The three wooden toy chests Lucille has completed for a client D. A bandsaw permanently affixed to the floor

D. A bandsaw permanently affixed to the floor "Building and Personal Property" is one of the main coverages in a Commercial Package policy and it has 3 coverages ● Coverage A - Buildings and Structures ● Coverage B - Business Personal Property ● Coverage C - Personal Property of Others ( would include a client's laptop what was stolen in the office) The question asks about Coverage A which includes building and anything perma attached to it.

A dwelling policy would NOT be appropriate for: A. a duplex owned by an individual. B. a single-family home wholly rented out. C. a four-plex owned by a corporation. D. a motorhome owned by an individual.

D. a motorhome owned by an individual.

A CGL can provide liability insurance coverage for all of the following persons, EXCEPT: A. stockholders. B. sole proprietors. C. volunteers. D. customers.

D. customers. That is incorrect. Generally speaking, CGL policies will cover the liability of executives, partners, employees, managers, volunteers, agents, stockholders and representatives of an insured business, but only when such individuals are performing under the scope of the insured's business activities.

As a requirement for getting her New York adjuster license, Alice is required to submit proof of bonding with her application. She purchases a surety bond from PBJ Bonds. In this contract, PBJ Bonds would be considered the: A. obligee. B. indemnitor. C. principal. D. surety.

D. surety. The principal (like a contractor) is the person agreeing to do something for an obligee (ie: owner of an apartment complex). The surety (aka guarantor) sells the bond, the guarantor will pay the obligee if the principal defaults. There is a fourth party called an indemnitor that agrees to pay the surety if

In an insurance policy, the summary of what the insurer will do in the event of a covered loss is called: A. the dec page. B. the conditions section. C. the definitions section. D. the insuring agreement.

D. the insuring agreement.

Exclusive Remedy for WC means what?

Exclusive remedy keeps employee from suing employer for covered injuries

What does FELA offer?

FELA is a federal program that protects interstate RR workers and their families by allowing workers who are not covered by WC laws to sue their employeers

In Equipment Breakdown insurance, an insured risk is called an ____________

In Equipment Breakdown insurance, an insured risk is called an "object."

What are DP policy Coverages? A B C D E

What are DP policy Coverages? Coverage A- Principal dwelling + Attached structures: garages, apartments, etc. + building materials (but not construction equipment) Coverage B - Other Structures: Appurtenant Physical Structures (APS): structures that are not attached to dwelling and can claim a limit to coverage A . DP -1 is 10% of A and DP 2/3 is 10% on top of Coverage C - Personal Property Dwelling insurance says if property is off premisis then it is 10% of coverage C if damaged. D - pays for lost rental income E - Additional living expense

Which endorsement to the Commercial Crime policy would protect a bank against its legal liability for burglary, robbery, destruction, or damage to customers' belongings kept in safe deposit at the bank? A. Safe Depository B. Securities Deposited with Others C. Deposit Box Liability D. Client's Property

A. Safe Depository

Which of the following is NOT a feature of a typical Business Owners Policy? A. Usually Actual Cost Valuation B. Extra Expense coverage C. Built-in inflation protection D. Liability protection for lawsuits from accidents or products

A. Usually Actual Cost Valuation

In a garagekeepers policy, PIP coverage is: A. available with an endorsement. B. included unless the insured declines it in writing. C. mandatory. D. not available.

A. available with an endorsement.

Which statement BEST describes a stand alone excess liability policy? A. Excess liability insurance that often covers more risks than the base policy B. Excess liability insurance that "follows" the base policy, but includes its own set of limitations and exclusions C. Excess liability insurance that "follows" the base insurance policy to the letter D. Insurance coverage for damages caused by an excess of any one peril

B. Excess liability insurance that "follows" the base policy, but includes its own set of limitations and exclusions There are two excess liability forms stand alone and follow form. -A stand alone excess liability policy covers the same risks as the base policy, but may have its own exclusions and limitations. -A follow uses all the same provisions, exclusions, and coverages as the base policy

The Insurance Commissioner is investigating a fire that destroyed Bernie's home, because there are indications that the fire may have been incendiary in nature. When Bernie's insurer refuses to hand over Bernie's premium payment records and claim history at the Commissioner's request, it is convicted of a misdemeanor. What is the most severe penalty that the insurer could face for this offense? A. $1,000 fine B. $500 fine and 90-day suspension of its license to do business in Mississippi C. $1,000 fine and revocation of its license to do business in Mississippi D. $500 fine

C. $1,000 fine and revocation of its license to do business in Mississippi

Sarah is playing with a basketball on the stairs at Bob's house. In doing so, she trips, falls, and breaks her leg. She files a claim against Bob's insurance policy for her injuries. The adjuster determines that Sarah was 50% responsible for her own injuries, and therefore should only receive indemnification for 50% of her medical bills. What defense is the adjuster using? A. Third-party negligence B. Assumption of risk C. Comparative negligence D. Contributory negligence

C. Comparative negligence

Wendy hires Jim to build an addition to her house. Jim takes the job and finishes it in good time. Unfortunately, as Wendy is walking across the threshold of the new addition, a floorboard gives way and Wendy falls into the crawl-space below, injuring her leg and back. Which commercial general liability coverage could help cover the cost of Wendy's injuries? A. Premises Liability B. Insured Contracts Liability C. Product Liability D. Completed Operations Liability

D. Completed Operations Liability This coverage applies to claims involving work that has already been completed off of the insured premises.

Lightning strikes one of Christy's trees in her backyard and starts a fire that spreads to two other trees before firefighters are able to put it out. The fire department charges her $600 for responding to her call. Christy's DP-2 policy has a Coverage A limit of $95,000. What is the maximum amount of indemnification that Christy can expect to receive for this loss (ignoring any deductible)? A. $2,000 B. $4,750 C. $1,500 D. $500

A. $2,000 500 per tree and 500 for the call

Jane has a $150,000 homeowners policy with a 3% percentage deductible. One night, an oven fire destroys her kitchen, causing $50,000 in damage. How much of the damage falls under Jane's responsibility? A. $4,500 B. $15,000 C. $3,600 D. $1,500

A. $4,500 Percentage Deductible The insured pays a percentage of the insured risk's value

Matthew works for Barry John Coal Company. One day, when all the work trucks are busy, Matthew's boss asks him to use his own truck to deliver a load of coal to a customer. On the way, Matt gets distracted looking at directions and swerves into oncoming traffic, causing a serious accident. Why might Matt's PAP liability insurer deny coverage for the damage Matt caused? A. Matt's accident occurred during employment-related activities, so it will be covered by the employer's liability policy. B. Matt didn't have the commercial license necessary to use his truck for work purposes. D. Matt broke the law when he drove distracted, making him at fault for the accident.

A. Matt's accident occurred during employment-related activities, so it will be covered by the employer's liability policy.

Which of the following is an example of a hazard? A. Sandra's home is in an area of Los Angeles that is often hit by earthquakes. B. Sandra buys a lottery ticket every day. C. Sandra's home is destroyed when a massive earthquake hits. D. Sandra owns an exotic car that is extremely valuable.

A. Sandra's home is in an area of Los Angeles that is often hit by earthquakes.

An insurance company might consider any of the following a risk, EXCEPT: A. a high crime neighborhood. B. an automobile. C. a home. D. a jewelry collection.

A. a high crime neighborhood What is risk? Define it.

IN MISSISSIPPI: Ophelia's auto policy covers two cars, and it includes UM coverage with limits of 25/50/25. When she is severely injured in an accident caused by an uninsured motorist, what is the most UM coverage that Ophelia can collect for her injuries? A. $25,000 B. $75,000 C. $50,000 D. $100,000

C. $50,000 In Mississippi, stacking is allowed, so Ophelia could stack the UM coverage for her two cars together, which would add up to $50,000.

Nancy and Drew borrow Joe's car so they can have a picnic at the old water tower. On their way to the picnic, Drew accidentally rear-ends Mr. Jackley, causing $2,900 in damage. Whose liability insurance will pay first for the damages? A. Drew's B. Nancy's C. Joe's D. Mr. Jackley's

C. Joe's

Thomas Building is asked by the local youth center to build a gym for the local community. As a condition of their contract, Thomas Building must secure a surety bond. Thomas Building finds ABC Surety Bonding and works out a suretyship for the project. Thomas Building gets Williams Construction Finance to co-sign on the bond, as required by ABC Surety Bonding. William's Construction Finance would be called: A. an indemnitor. B. collateral. C. a fidelity agent. D. a suretyship.

A. an indemnitor.

Liability coverage in a BOP is provided on: A. an occurrence basis, only. B. an occurrence basis for bodily injury and property damage, and on a claims-made basis for personal/advertising injury. C. a claims-made basis, only. D. either an occurrence or claims-made basis, depending on which form the insured chooses.

A. an occurrence basis, only. Liability coverage is provided on an "occurrence form" basis. The "claims-made" option is not available with the BOP. BOP is a package that includes commercial property, liability,, professional liability, crime. etc. You can purchase them separately in monoline policies. Commercial General liability insurance is designed to protect businesses from many financial hazards with products and services and comes in two forms occurrence and claims made. Operations liability are for contractors like plumbers and product liability

Jones' Auto in Dallas, Texas buys 50 cars from ABC Auto in Tokyo, Japan. They sign a contract whereby Jones' Auto assumes the risk of any damages to the cars until they are delivered. What term of sale have they agreed to? A. Cargo, Insurance, and Freight B. Cost and Freight C. Cost, Insurance, and Freight D. Free on Board, Dallas

B. Cost and Freight If the buyer is assuming risk it is cost and freight and if it is the sell it is C

Stan has a personal auto policy to cover his two vehicles, but he recently purchased a custom built motorcycle as well. Which type of endorsement will Stan need to cover the motorcycle? A. Customized Equipment Endorsement B. Miscellaneous Vehicle Endorsement C. Motorcycle Endorsement D. Two-wheeled Vehicle Endorsement

B. Miscellaneous Vehicle Endorsement

Gail's restaurant is doing more business than ever, so Gail decides to add more dining space. Three weeks into the project, a hurricane blows through town, reducing the new construction to rubble. Gail maintains commercial property insurance coverage valued at 70% of her property's replacement cost, although her policy says she must maintain at least 80% to be fully insured. Which coverage on her policy could pay to rebuild her restaurant at replacement cost? A. Increased Construction Costs coverage B. None C. Outdoor Property extension D. Replacement Cost endorsement

B. None In a commercial property policy, the Replacement Cost endorsement would change the loss settlement option from ACV to RC, but it requires the policyholder to meet the minimum level of coinsurance. Since Gail's policy does not meet this requirement, she will NOT be indemnified at replacement cost.

When Acme Paper Mill was struck by lightning, the resulting damage included a burst waste pipe, which began leaking chemical-laden waste water into the county aquifer. Acme Paper Mill discovered the leak 2 weeks later and reported it to their insurer immediately. Which additional coverage could help Acme with the expense of cleaning up the contaminated water? A. Valuable Papers Business Insurance B. Pollutant Cleanup and Removal Insurance C. Environmental Hazard Coverage D. Law and Ordinance Insurance

B. Pollutant Cleanup and Removal Insurance Everything on this list except for environmental hazard coverage is on the additional coverages

Bill has just been convicted of acting as an insurance adjuster without a license. Which of the following is TRUE? A. This is a felony, and Bill can be fined up to $250, be sentenced to 6 months in prison, or both. B. This is a misdemeanor, and Bill can be fined up to $250, be sentenced to 6 months in prison, or both. C. This is a felony, and Bill can be fined up to $2,500, be sentenced to 1 year in prison, or both. D. This is a misdemeanor, and Bill can be fined up $2,500, be sentenced to 1 year in prison, or both.

B. This is a misdemeanor, and Bill can be fined up to $250, be sentenced to 6 months in prison, or both.

Which of the following statements applies to replacement cost valuation? A. Replacement cost valuations take into account the depreciated value of an item. B. Under replacement cost valuation, insurers may safeguard the principle of indemnity by requiring policyholders to replace insured items before making full reparations. C. Replacement cost valuations provide cheaper premiums for the policyholder than an actual cash value insurance policy. D. An actual cash value policy will pay out more than a replacement cost value policy.

B. Under replacement cost valuation, insurers may safeguard the principle of indemnity by requiring policyholders to replace insured items before making full reparations. This idea is Recoverable Depreciation 2.F - This condition supports the principle of indemnity in RC policies by allowing the insurer to pay only the ACV at first, then once the repair or replacement is complete, the insurer will indemnify the insured for the rest of the cost.

XYZ Insurance is a private insurer that sells flood insurance policies. Which of the following statements is FALSE? A. XYZ Insurance is responsible for paying claims. B. XYZ Insurance participates in the NFIP Direct Program. C. XYZ Insurance is responsible for adjusting all flood claims made by its policyholders. D. XYZ Insurance receives expense allowances from the federal government.

B. XYZ Insurance participates in the NFIP Direct Program. The NFIP Direct Program is what the federal government uses to issue policies and handle the resulting claims directly. As a private insurer, XYZ Insurance is participating in the Write Your Own (WYO) program.

Herb owns a processing plant outside of town that services all the local farmers. He's been using over-the-road transportation but wants to streamline his business by using the railroads. He contacts ABC Railway Transport and the two come to an agreement: ABC Railway will run a sidetrack onto Herb's business premises, if Herb agrees not to hold ABC Railway responsible for certain liabilities that could result from the sidetrack's use. This agreement would fall under __________ in Herb's Commercial General Liability policy. A. premises liability B. insured contracts C. operations liability D. product liability

B. insured contracts Herb is assuming some of the liability from ABC Railway through a written contract. This sidetrack agreement meets the insurer's definition of an "insured contract", so Herb's CGL may cover claims based on this agreement.

Lucy has insurance on an expensive necklace she likes to wear to work every day. After work, she takes it off and leaves it in her car's cupholder so she can put it back on in the morning on her way to work. Lucy's behavior would be considered a: A. moral hazard. B. morale hazard. C. hazard. D. physical hazard.

B. morale hazard.

For loss settlement purposes, most homeowners policies: A. pay for damages to structures at actual cash value, and damages to personal property at replacement cost. B. pay for damages to personal property at actual cash value, and damages to structures at replacement cost. C. pay for damages to structures and personal property at actual cash value. D. pay up to 80% of the value of the damaged item, leaving the remaining 20% to be paid by the in

B. pay for damages to personal property at actual cash value, and damages to structures at replacement cost.

Disability payments through workers' compensation insurance are primarily based on: A. the employee's W-2 from the previous year. B. the employee's average weekly wage. C. the employee's most recent paycheck. D. the amount of time the employee has worked for the company.

B. the employee's average weekly wage.

In order to qualify for an insurance policy, Lydia's Fine Jewels must agree to have a security guard on the premises 24/7. This is called a: A. representation. B. warranty. C. waiver. D. binder.

B. warranty. is a guarantee that certain conditions will be met. if the policyholder violates a warranty, the insurer can void the policy

Diana is insured under a DP-2 policy with the following coverage limits: Coverage A - $150,000, Coverage B - $15,000, and Coverage C - $25,000. She and her fiancé have planned a destination wedding, but their hotel catches fire shortly after their arrival. Smoke from the fire damages all of their belongings, including Diana's $4,000 wedding dress. Diana's loss totals $5,200. When she files a claim with her insurance company, how much can she expect to receive for this loss under her DP-2 (ignoring any deductible)? A. $5,200 B. $0 C. $2,500 D. $1,500

C. $2,500 In a dwelling policy, the coverage for damage to off-premises personal property is limited to 10% of the Coverage C limit. In Diana's case, this limit is $2,500 ($25,000 x 10% = $2,500). A - dwelling B - other structures C- Personal property: 10% of coverage c if off premises

Frederick was earning $550 per week installing windows when he fell and broke his right arm and his left leg. He is unable to work for the first 4 months after his injury, but after he recovers the use of his right arm, he works limited hours in the office preparing invoices. He earns $200 per week in the office. Frederick's workers' compensation benefits will pay ____ for the first 4 months, and ____ thereafter (round to the nearest dollar). A. $450; $350 B. $133; $67 C. $367; $233 D. $367; $200

C. $367; $233 For the first 4 months, Frederick will receive temporary total disability benefits, which pay 2/3 of the injured worker's pre-injury average weekly wage ( 2/3 of $550 = $367). Once he starts working limited hours in the office, he will receive 2/3 of the difference between his pre-injury and post-injury average weekly wage (in this case, $500-$200 = $350. 2/3 of $350 = $233).

Mark is on vacation in Italy when his luggage is stolen, including a $2,000 laptop, a $500 suitcase, and $400 in clothes.Mark has an HO-3 homeowners policy. Excluding any applicable deductible, which of the following statements is TRUE? A. Mark's homeowners policy will not cover any of this loss because he was outside the US. B. Mark's homeowners policy will cover the entire $2,900 loss. C. Mark's homeowners policy will cover $2,400 of this loss. D. Mark's homeowners policy will cover $2,000 of this loss.

C. 2,400$ In a HO policy Personal property (Coverage C) is covered anywhere in the world. It is covered up to full limits of coverage C as long as it USUALLY stays at the residence, in this case, clothes normally do. However, some things are excluded and have its own limit such as electronics which has a special limit of $1,500.

Which of the following statements regarding Commercial Package Policies (CPP) is TRUE? A. A CPP is an example of a monoline policy. B. A CPP requires a separate declarations page for each coverage. C. A CPP is an elective-based policy. D. Workers' compensation insurance is automatically included with a CPP.

C. A CPP is an elective-based policy. A Commercial Package Policy is an elective-based, multi-line ("package") policy with a single, combined declarations page that provides both liability and property coverage, but not workers' compensation, for businesses and other organizations.

On January 27, 2004, Ryan was using an exercise bike from NusquamCycle when the chain broke, causing him to fall and bruise his knee. Seven years later, on January 25, 2011, Ryan's knee gave out while jogging. His doctor told him that he'll need surgery and that this deterioration was probably caused by his bruise from the exercise bike. Assuming NusquamCycle is no longer in business, which CGL policy would cover Ryan's claim filed on January 25, 2011? A. Claims-Made policy from Jan 1 2003-Jan 1 2004 with a basic extended tail B. Claims-Made policy from Jan 1 2001-Jan 1 2002 with a supplemental extended tail C. Claims-Made policy from Jan 1 2003-Jan 1 2004 with a supplemental extended tail D. Claims-Made policy from Jan 1 2001-Jan 1 2002 with a basic extended tail

C. Claims-Made policy from Jan 1 2003-Jan 1 2004 with a supplemental extended tail Claims made - accidents themselves have to happen durring policy period except when there is a basic or extended reporting period called a tail. -The basic tail extends coverage for occurrences 60 days after and reporting window at 5 years -The supplemental tail also has a 60 day occurrence coverage but extends the claim window to forever.

A dryer fire scorches the interior of Bill's home, forcing him to move out while repairs are made. In addition to paying for temporary housing, he also loses the rental income he received from his roommate Frank. Which two Dwelling policy coverages could help Bill with the lost rental income AND his additional living expenses? A. Coverage A & Coverage E B. Coverage C & Coverage D C. Coverage D & Coverage E D. Coverage A & Coverage D

C. Coverage D & Coverage E Direct losses A - Dwelling B - Other Structures term-117C - Personal Property Indirect losses D - FRV - fair rental value E - ALE - additional living expenses

Dr. Adams is in the middle of a malpractice lawsuit. Her insurer decides it will be more cost effective to simply settle the suit rather than draw the process out over several months. Assuming Dr. Adams holds a Professional Liability Policy, which of the following statements is TRUE in regards to settling the claim? A. The insurer has the right to settle the claim anyway it finds advantageous to its interests. B. An umpire must be employed to settle the claim through arbitration. C. Dr. Adams' insurer must seek her consent before settling the claim. D. Dr. Adams must pay all her own legal expenses.

C. Dr. Adams' insurer must seek her consent before settling the claim. Professional liability policies contain a consent to settle clause, which says that an insurer must ask the policyholder's permission before settling a claim to avoid a lawsuit.

Which statement BEST describes Umbrella coverage? A. Excess liability insurance that "follows" the base insurance policy to the letter B. Insurance coverage that doesn't have deductibles C. Excess liability insurance that can also provide additional coverages not provided by the base policy D. Excess liability insurance that "follows" the base policy, but includes its own set of limitations and exclusions

C. Excess liability insurance that can also provide additional coverages not provided by the base policy

One morning, Jill arrives to open the bank, only to find the door already unlocked. Upon entering the bank, she sees the vault door has been blown open and a large amount of money has been burned when an explosive charge went off. Which commercial crime insurance coverage might cover the loss? A. Forgery B. Computer Fraud C. Inside the Premises: Theft of Money and Securities D. Inside the Premises: Robbery or Safe Burglary

C. Inside the Premises: Theft of Money and Securities Inside the Premises: Theft of Money and Securities would cover the stolen money and securities, as well as the damage to the property resulting from the theft, and any damaged money that resulted from blowing open the vault door. Inside the premises - robbery or safe burglary : Property OTHER THAN money and securities.

Which of these requirements must a mobile home meet in order to be eligible for coverage under the Mobile Home endorsement? A. It must have at least 800 square feet. B. The policyholder must live in the home for most of the year. C. It must be primarily used as a residence. D. It must be permanently affixed to the ground.

C. It must be primarily used as a residence. Mobile Home endorsement is part of a HO policy. Otherwise, it would probably fall under dwelling and only if perma installed

Jenny's Mississippi home is insured for $162,000 under a fire insurance policy. After a fire completely destroys the home, the insurer determines that, because of age and depreciation, the structure was only worth $120,000 at the time of the loss. Which of the following statements is TRUE? A. Jenny's insurer must pay the full $162,000 only if it is ordered to do so through the arbitration process. B. Jenny's insurer may pay the ACV of her home if it appeals to the commissioner to have an appraiser from the state come out and confirm its estimates and authorize the claim payment. C. Jenny's insurer must pay the full $162,000 listed on the policy. D. Jenny's insurer may pay the ACV o

C. Jenny's insurer must pay the full $162,000 listed on the policy. According to Mississippi Fire Insurance laws, if a home is insured for a specified amount, the insurer must pay that full amount in the event of a total loss caused by fire.

Babette crosses the street and is struck by a car, causing her to sustain injuries in the amount of $45,000. The driver has minimum coverage. Which coverage section of Babette's auto policy could help pay for her medical costs? A. Part C: Uninsured Motorist Coverage B. Part D: Comprehensive Coverage C. Part B: Medical Payments D. Part A: Liability

C. Part B: Medical Payments Part B - Medical Payments is no-fault coverage that can pay for the insured's injuries, no matter who caused them.

In which of these situations could a Mississippi insurer cancel a policy after 60 days with sufficient notice? A. The insured was arrested for a traffic violation but the charges were dropped. B. The policyholder causes an accident. C. The policyholder's son has his license suspended during the policy period. D. The insured had lower liability limits with a previous insurer.

C. The policyholder's son has his license

Sally has an HO-3 policy on her $150,000 home in the country. One day, a bear breaks down Sally's back door to get into her kitchen for a snack. When Sally comes home to find the damage, she files a claim with her insurance company. Will the damage to Sally's home be covered, and why or why not? A. No. "Bear-Entry" is not listed as a named peril in Sally's HO-3 policy. B. No. Since Sally did not take reasonable efforts to run the bear off, no damages may be covered. C. Yes. The HO-3 is an open-peril policy, without an exclusion for wildlife. D. Yes. Wildlife is a commonly named-peril found on all homeowner's policies.

C. Yes. The HO-3 is an open-peril policy, without an exclusion for wildlife.

During a storm, lightning strikes a tree in Harry's yard and starts a fire that spreads to his shed where he keeps all his equipment for his landscaping business. In addition to the shed, Harry has to purchase all new equipment to stay in business. The cost to replace the equipment would be considered: A. a peril. B. an indirect loss. C. a direct loss. D. an occurrence.

C. a direct loss. an indirect loss, in this case, would be the business or revenue lost until he could buy new tools Indirect loss- An economic loss that results from a direct loss (like hotel bills, car rental)

Joe (the principal) is handling the disbursement of a deceased executive's estate, and he is required to carry a bond guaranteeing such work. The surety company requires one of its accountants to be a second signer on the disbursement checks that Joe writes. In this case, the surety has established: A. penal sum guarantee. B. dual representation. C. joint control. D. collateral.

C. joint control. With "joint control," the surety establishes dual control over the contractual duty of the principal in order to ensure all disbursements are proper and relevant.

In a Commercial Crime policy, a "messenger" is defined as: A. the insured, a business partner, or an employee who has care or custody of insured property inside the premises, excluding anyone acting as a watchperson or janitor. B. someone hired by the insured to have no other duty but to transport insured property from the premises to another location. C. the insured or relative of the insured, a business partner, or an employee who has care and custody of insured property while outside the premises. D. someone hired by the insured to have no other duty but to maintain care and custody of insured property inside the premises.

C. the insured or relative of the insured, a business partner, or an employee who has care and custody of insured property while outside the premises. >>Inside the premises the custodian and watchpersons have care or custody (A & D) >>Outside the premises the messenger does.

When Emma is found guilty of arson for burning down her $175,000 home, her insurance policy is voided and she receives no indemnification for the loss. Emma still had $155,000 left on her mortgage at the time of the fire. Under the mortgagee clause, Emma's mortgage lender can recoup: A. the total amount of the loss - $175,000. B. HALF the total amount left on the loan - $77,500. C. the total amount left on the loan - $155,000. D. HALF the total amount of the loss - $87,500.

C. the total amount left on the loan - $155,000. That is incorrect. According to the Mortgagee Clause, the lender has the right to receive a portion of claim payments, based on their insurable interest in the property, even if the insured intentionally damages the property. In this case, Emma's lender has $155,000 of insurable interest - the amount left outstanding on the loan.

When a Mississippi worker dies from a work-related accident, the surviving spouse receives an immediate lump sum payment of: A. the equivalent of three months of the deceased worker's wages. B. the equivalent of one month of the deceased worker's wages. C. $5,000. D. $1,000.

D. $1,000.

In Ocean Marine insurance, this clause appropriates the loss to one company, rather than spreading the loss among all cargo owners. A. General Average B. Single Risk Form C. Sue and Labor D. Particular Average

D. Particular Average sue and labor is a provision that states the insured party is required to attempt to prevent further losses once damage occurs general avg- opposite of particular average

An insured may only add Utility Interruption coverage to her Equipment Breakdown policy if at least one of three other coverages are also present. Which of the following is NOT one of these other coverages? A. Business Income and Extra Expense B. Extra Expense Only C. Spoilage Damage D. Property Damage

D. Property Damage Utility Interruption coverage is only available if the insured has also selected Business Income and Extra Expense, Extra Expense Only, or Spoilage Damage coverage.

Which financial institution bond is designed for all types of insurance companies? A. Standard Form 15 B. Standard Form 24 C. Standard Form 23 D. Standard Form 25

D. Standard Form 25