Practice Test 10

An "other insurance" clause is included in insurance policies to deal with the problem of: a. Overinsurance b. Excess insurance coverage c. inadequate coverage d. conditional coverage

a. Overinsurance

An insured has purchased a claims made CGL policy to replace and occurrence policy that was previously carried. The new claims made policy contains a retroactive date of 01/01/14. A claim that occurred 12/15/13 would be denied under the claims made form which of the following reasons? a. the retroactive date eliminates coverage for claims occurring before the date b. claims made coverage has more exclusions c. the previous occurrence form should provide the coverage for the claim d. the insured would have to purchase the laser beam endorsement for coverage to apply

a. the retroactive date eliminates coverage for claims occurring before the date

Which of the following states is TRUE regarding a Government Crime Policy? a. the policy cannot be written to cover employee theft b. the policy can be written only a Loss Sustained Basis c. the policy can be written on a Discovery basis d. the policy permits the limits for employee theft to apply on either a "per occurrence" or "per employee" basis

d. the policy permits the limits for employee theft to apply on either a "per occurrence" or "per employee" basis

Under a standardized DP-2 or DP-3 policy, what is the maximum that would be paid for additional living expenses if Coverage A was $60,000? a. $12,000 b. $6,000 c. $7,000 d. $9,500

a. $12,000

George Wilson is covered under a standard Personal Auto policy. Which of the following policy coverages would apply when a deer leaps onto Mr. Wilsons car and causes extensive damage? a. Part D- Other than Collision b. Part A- BI and PD Liability c. Part D- Collision d. Part C- Uninsured Motorists Coverage

a. Part D- Other than Collision

Under a surety bond, the owner of a project is called the: a. obligee b. surety c. principal d. administrator

a. obligee

Which of the following is true regarding pure and speculative risks? a. with speculative risk the end result is always known b. with pure risk there is only the possibility of a loss c. speculative risks always result in a financial loss d. pure risks aways result in a financial gain

b. with pure risk there is only the possibility of a loss

Heathers house is fully insured with a DP-3 with a limit of $85,000. One day, the house is struck by lightning, and despite the fire departments efforts, burns to the ground. She still had a balance of $20,000 left on her mortgage at the time of the fire. What is the maximum indemnification that would go to heather, the fire department, and her mortgage lender respectively? a. $64,500; $500; $20,000 b. $84,500; $1000; $20,000 c. $65,000; $500; $20,000 d. $85,500; $1000; $85,000

c. $65,000; $500; $20,000

The standard Personal Auto policy provisions state that the insurance company has subrogation rights against any person permitted to use a covered auto, under all coverages, EXCEPT: a. Part C b. Part A c. Part D d. Part B

c. Part D

Benefits are not normally payable to an injured employee covered under workers compensation coverage unless reported within ______ days a. 30 b. 45 c. 60 d. 90

d. 90

Which of the following is not an "additional coverage" under Homeowners Liability- Section II coverage? a. Damage to "property owned by the insured" b. interest accruing after a legal judgement is entered c. first aid d. damage to "property of others"

a. Damage to "property owned by the insured"

An adjuster's report that contains all the facts, evidence and disposition of the claim and is considered to be the final report is known as the: a. Full Report. b. Field Report. c. Interim Report. d. Settlement Report.

a. Full Report.

Font Masters Printing Company has a printing press that suffers a covered total loss. The company paid $25,000 ten years ago for the press. Actual cash value is $40,000 and the replacement cost is $55,000. The company has had to cancel several contracts for printing due to the loss of the press and they are anxious to resume full production. Font Masters is covered under a BOP> How much will the insurer pay for this claim? a. $25,000 b. $55,000 c. $40,000 d. $20,000

b. $55,000

Under the Farm insurance forms, the maximum amount payable for a loss to a satellite dish is: a. $250 b. ACV c. $500 d. $750

b. ACV

Mikes Moonshine, Inc. is located in a state that permits Mike to decide whether he would like to provide workers compensation coverage to his employees or not. Mike lives in a(n): a. pro-choice state b. elective state c. obligatory state d. compulsory state

b. elective state

A covered commercial auto requires $700 in repairs because of damage done by a limb from a dead tree that fell on it. The autos BAP physical damage coverage has a $100 comprehensive deductible and a $250 collision deductible. Assuming that the ACV and replacement cost of the vehicle is $700, the insurer will pay: a. $0 b. $450 c. $600 d. $700

c. $600

How is personal property of a dwelling covered under a farm policy? a. actual cash value b. stated amount basis c. agreed amount basis d. replacement cost basis

a. actual cash value

Which coverage of a Homeowners policy would pay for damage to a neighbors window caused by the insured? a. Coverage A b. Coverage E c. Additional Coverages d. This is an exception to an exclusion

b. Coverage E

The South Carolina Workers Compensation Uninsured Employers Fund: a. must maintain a minimum balance of at least $200,000 b. can place a lien on the assets of the employer c. in case of the bankruptcy of the employer, can become a secured creditor d. all of the responses are correct

d. all of the responses are correct

When the Personal Liability Supplement is purchased as a monoline policy, all of the following are required conditions, EXCEPT: a. assignment b. liberalization c. death d. bankruptcy

d. bankruptcy

Perry has his home covered under an HO-5 policy. He borrows a friends expensive camera and takes it on a vacation, where it is stolen. Coverage for the stolen camera is: a. excluded by the care, custody and control rule b. more appropriately claimed under the friends policy because he was the owner of the camera c. included for up to $500 d. included anywhere in the world

d. included anywhere in the world

Amelia has suffered a covered collision loss to her vehicle. The insurer requires that her vehicle be repaired at a repair shop of the insurer's choice. The insurer: a. is guilty of an unfair claims practice act b. can make this request c. waives the deductible, if any, in this case d. can usually get the work done for less and can help to reduce insurance costs

a. is guilty of an unfair claims practice act

Which of the following statements is FALSE concerning coverage under the BAP? a. medical payments coverage is automatically provided b. it may be used to cover specifically described autos only c. if written to cover any auto, non-owned and hired autos are automatically covered d. whether newly acquired autos are automatically covered depends upon the applicable coverage symbol

a. medical payments coverage is automatically provided

Under Employment practices liability, the coverage territory is worldwide as long as the suit is brought in: a. the US b. the US and Mexico c. the US and Puerto Rico d. the US and Canada

a. the US

Which of the following statements is TRUE regarding how the standard BOP additional coverage of "Collapse" becomes payable? a. the collapses must be such that the building cannot be used as intended b. the remaining part of the structure standing must be demolished c. the remaining part of the structure must be judged unsound to rebuild d. the building must be leaning, settling, or in danger of collapsing

a. the collapses must be such that the building cannot be used as intended

The major difference in Section I of an HO-2 and HO-4 form is: a. Coverage B b. Coverage D c. Coverage A d. Coverage C

c. Coverage A

When Chris' car is stolen from his apartment parking lot, he heads down to the local dealership and buys a new car. Three months later, Chris decides he may as well report the stolen car to his insurer, so he can get some money for it. What is the most likely reason the insurer might deny the claim? a. Chris did not promptly report the stolen vehicle b. Chris was not listed as an "insured" c. Chris didn't protect his vehicle from being stolen d. Chris already bought a new car

a. Chris did not promptly report the stolen vehicle

Which of the following contractors would be eligible for a Businessowners policy? a. a carpenter doing all of his own work building kitchen cabinets in peoples homes and earns $75,000 per year b. a general contractor who subcontracts about 5% of the business annual gross sales c. a roofing contractor with an annual payroll of $400,000 d. a contractor who constructs high rise apartment buildings up to six stories in height

a. a carpenter doing all of his own work building kitchen cabinets in peoples homes and earns $75,000 per year

All of the following statements are true regarding Public Law 15 (the McCarren Ferguson Act) EXCEPT: a. under the law, the federal government retains the right to approve insurance forms b. the law assigned authority to the federal government to regulate fair labor standards c. the law left insurance licensing up to the states d. under the law, states regulate the ethical conduct of its insurance licensees

a. under the law, the federal government retains the right to approve insurance forms

Symbol 23 is designated on the insureds Garage Coverage form. This indicates that: a. that owned autos other than private passenger autos are covered b. that owned private passenger autos are covered c. that only specifically described autos are covered d. that nonowned autos used in the garage business are covered

b. that owned private passenger autos are covered

Under a liability policy "supplementary payments" include all of the following, EXCEPT: a. pre and post judgement interest b. the negotiated settlement c. the insureds travel expenses when incurred at the insurers request in defense of a claim d. appeal and bail bonds

b. the negotiated settlement

Sam's home is located in a rural area and is covered by a standardized DP-2 Dwelling form with a $500 deductible form attached. He experiences a fire at his home and has to call the local volunteer fore department to extinguish the fire. He receives a bill from the fire department in the amount of $800. How much of the bill will Sam's DP-2 form cover? a. $0 b. $300 c. $500 d. $800

c. $500

All of the following statements are TRUE regarding the standard BOP coverage extension for "Business Personal Property Temporarily in Portable Storage Units" EXCEPT: a. the coverage extension provides $10,000 of coverage b. the coverage is provided for 90 days c. the coverage is provided for rented storage units away from the premises d. the term portable storage unit can include detached trailers

c. the coverage is provided for rented storage units away from the premises

Any person who is a party to a disputed auto property damage claim may: a. request the court to appraise the claim b. request the court to arbitrate the claim c. demand the court to issue a declaratory judgment d. their only recourse is to sue the other party

b. request the court to arbitrate the claim

All of the following statements are true about Workers Compensation benefits, EXCEPT? a. the workers compensation laws of the state take precedence over the insurance policy b. rehabilitation benefits may be provided under certain conditions c. waiting periods apply to medical and disability benefits d. death benefits may include a burial allowance

c. waiting periods apply to medical and disability benefits

The insured owns a painting firm. He sends four of his employees to a clients house to paint the interior. While there an argument develops and a fist fight between the employees ensues. Considerable damage is caused to the clients residence during the altercation. Under the CGL policy, can the insured be held liable? a. no, the insured was not present to direct the work to prevent problems b. no, adult behavior is reasonably expected. the individual employees are responsible for the damages they created c. yes, the insured is responsible via vicarious liability for the actions of his employees, including intentional actions d. no, the insured is not responsible for the intentional actions of his employees

c. yes, the insured is responsible via vicarious liability for the actions of his employees, including intentional actions

Which of the following statements is true regarding a Commercial General Liability policy? a. a retroactive date applies only to bodily injury claims b. a retroactive date applies only to property damage claims c. a retroactive date is used only with occurrence policies d. a retroactive date is used only with claims-made policies

d. a retroactive date is used only with claims-made policies

Wyatt is a blasting contractor who set off a blasting charge damaging several buildings in the area and causing severe bodily injury to several people. Which of the following types of liability apply in this scenario? a. comparative liability b. contingent liability c. strict liability d. vicarious liability

c. strict liability

When the property covered under an insurance policy is destroyed beyond repair and nothing of value remains, this is known as: a. partial average loss b. constructive total loss c. general average loss d. actual total loss

d. actual total loss

Commercial Inland marine policies require the insured to submit a signed, sworn statement of loss: a. within 60 days of the date of loss b. within 30 days of the insurer requesting it c. within 30 days of the date of loss d. within 60 days of the insurer requesting it

d. within 60 days of the insurer requesting it

Which of the following situations would be considered an example of absolute (strict) liability? a. Wayne keeps a large police dog trained in jewelry store as a deterrent to burglars. During the time the store is open for business, the dog is confined to a back room. One day, the dog escaped into the showroom and bit a customer b. The roof of a grocery store blew off during a tornado. Pieces of the roof struck the side of the store next door, damage the siding and broke several windows c. Carl thinks of himself as a master handyman but is careless with his tools. A trespasser tripped on a hammer and was injured d. Alice deliberately hit Fred over the head with her heavy leather handbag after her remarked she was overweight

a. Wayne keeps a large police dog trained in jewelry store as a deterrent to burglars. During the time the store is open for business, the dog is confined to a back room. One day, the dog escaped into the showroom and bit a customer

Willies Widgets has leased a business location for a term of 10 years. In the 7th year of the lease, the location is destroyed by fire. As luck would have it, Willie had purchased "Leasehold Interest" coverage as part of his CPP. All of the following would be covered for Willie, EXCEPT: a. the damage that Willie caused to the parking lot by bringing large, heavy rigs into the lot, causing asphalt to buckle b. the difference between the amount of rent Willie was paying and the amount he will now have to pay to lease a new location c. the amount of rent that was prepaid by Willie but was unused due to the fire d. the amount of the loss of any remaining value of an improved loading dock that Willie paid to have built

a. the damage that Willie caused to the parking lot by bringing large, heavy rigs into the lot, causing asphalt to buckle

Which of the following statements describes an advantage that a Fidelity bond has over a Crime insurance policy is providing coverage for Employee Dishonesty? a. a fidelity bond allows the insured business to purchase higher limits of coverage than a Crime policy b. a fidelity bond can permit the insured business to immediately indemnify the customer for their losses caused by the dishonest acts by an employee, potentially sparing the businesses reputation c. a fidelity bond provides coverage for employee mistakes that cause a loss but a Crime policy does not d. a fidelity bond provides a fluctuating limit for employee theft but a Crime policy has a fixed limit

b. a fidelity bond can permit the insured business to immediately indemnify the customer for their losses caused by the dishonest acts by an employee, potentially sparing the businesses reputation

Which of the following would be paid under the Business Income form of a standardized Commercial Property policy? a. coverage for repairing the physical damage to the property b. coverage for continuing operating expenses while damaged property is being repaired c. coverage for planned upgrades to damaged property d. coverage for the cost of goods sold while the damaged property is being repaired

b. coverage for continuing operating expenses while damaged property is being repaired

The common conditions of a Commercial Package policy: a. states the premium amount for all coverage parts b. states that to properly rate the policy, the insurer has the right to examine the books and records of the insured company c. who is insured d. a list of endorsements attached to the coverage parts of the package policy `

b. states that to properly rate the policy, the insurer has the right to examine the books and records of the insured company

Which of the following buildings is considered to be vacant? a. a house whose occupants have been on vacation for over 90 days b. a commercial office building in which 50% of the square footage is not leased c. a house with no furnishings or occupants for over 60 days d. a commercial building used for storage purposes with no employees stationed there

c. a house with no furnishings or occupants for over 60 days

All of the following statements are TRUE regarding a Commercial Inland Marine policy, EXCEPT: a. coverage is not dependent on the property being located at a "specific premises" at the time of the loss b. the coverage moves with the property being covered c. coverage is most often written on a named peril basis d. the controlled forms may be used as part of a Commercial Package Policy

c. coverage is most often written on a named peril basis

Which of the following statements is NOT correct under Part A of a standardized Personal Automobile Policy? a. part A of the PAP protects only those who are considered to be insureds by the policy b. named insureds are covered under Part A for liability claims caused by an accident that took place in Canada c. the aggregate limit of liability for supplementary payments is $250 d. after the part A limits of liability have been exhausted by claims payments, there is not further duty to defend against other claims from the same auto accident

c. the aggregate limit of liability for supplementary payments is $250

When the triggering event threshold has been met under the Terrorism Risk Insurance Program Reauthorization Act of 2015, the insurers deductible amount: a. is 20% of the total amount of commercial losses paid in the previous calendar year b. is 10% of the total amount of losses the insurer has paid from the date the insurer entered the program c. the insurers deductible is calculated at 20% of the insurers direct earned premiums for commercial insurance d. the insurers deductible is calculated at 20% of the insurers earned and unearned premiums for all insurance policies delivered

c. the insurers deductible is calculated at 20% of the insurers direct earned premiums for commercial insurance

Which of the following losses would be covered by the EC peril of "Windstorm or Hail" under a Dwelling Policy? a. an awning covering a patio b. a canoe that was stored on the driveway of the covered dwelling c. a television antenna on the roof of a covered dwelling d. a roof that suffered damage in a tornado

d. a roof that suffered damage in a tornado

Loss Settlement for personal property that is covered under Coverage C of a standard unendorsed ISO Homeowners policy is on a(n): a. market value basis b. appraised value basis c. replacement cost basis d. actual cash value basis

d. actual cash value basis

You purchase a new car and as the terms of your auto policy require, you contact your agent and notify him of the purchase. He states to you, "No problem, you're covered". Two months later you are involved in an accident. When you report the claim to your agent he says "oh no, I forgot to notify the company! I'm afraid you're not covered" You can: a. file a claim with the insureds auto insurance carrier to cover the insureds damages as a result of the accident and provide defense and payment for damages claimed by the other driver if it is claimed the insured was negligent b. file a claim against the agents errors and omissions coverage for damages if the auto insurer denies coverage for the auto accident because the agent failed to notify the automobile insurance carrier c. file a claim against the other driver if the facts of the accident support this action and negligence is proven on the part of the other driver d. file a claim against the auto insurer and advise the agent that there is the possibility of an error and omissions claim for failure to properly notify the insurer of the acquisition of an automobile

d. file a claim against the auto insurer and advise the agent that there is the possibility of an error and omissions claim for failure to properly notify the insurer of the acquisition of an automobile

Which of the following statements is NOT TRUE of the Loss Payment condition of the Building and Personal Property Coverage form? a. the insurer may elect to pay the value of the property that was lost or damaged b. the insurer may elect to pay to repair, rebuild, or replace the property with like kind and quality c. the insurer may elect to pay to repair or replace the damaged property d. the insurer may elect to take possession of the property and pay the insured 15% above the appraised value

d. the insurer may elect to take possession of the property and pay the insured 15% above the appraised value