Prelicense Exam Prep
How many days' notice must an insurance company give to a policyholder before it will not renew a liability insurance policy? A. 60 B. 30 C. 10 D. 20
A. 60
Abby is planning to purchase a personal automobile insurance policy in Texas. Which statement about uninsured/underinsured motorist coverage is correct? A. Abby may reject uninsured/underinsured motorist coverage in writing B. Abby's policy must include uninsured/underinsured motorist coverage in her policy C. Abby's policy must include limits for uninsured/underinsured motorist coverage that are higher than the amounts required by the Texas Motor Vehicle Safety Responsibility Act D. Abby's policy will be canceled if she rejects uninsured/underinsured motorist coverage
A. Abby may reject uninsured/underinsured motorist coverage in writing
A neighbor's child enters Alice's backyard through a broken fence and drowns in her swimming pool. Unable to pay her mortgage, Alice declares bankruptcy before the child's parents sue her. What is true about Alice's coverage under her homeowner's policy? A. Alice's insurer must respond to the claim despite Alice's bankruptcy B. Alice's insurer must defend Alice but has no duty to pay a judgment against Alice C. The mortgage clause in Alice's policy protects the mortgage holder against any judgment D. Alice's insurer is released from liability because of Alice's bankruptcy
A. Alice's insurer must respond to the claim despite Alice's bankruptcy
Before buying a motorcycle, Luciano has the miscellaneous type vehicle endorsement added to his personal auto policy (PAP), but he excludes the passenger hazard. How does this affect his coverage? A. Bodily injury to a passenger is excluded B. Bodily injury to a passenger is covered to meet state requirements C. There is no coverage for other's property on the motorcycle D. Bodily injury to a passenger is excluded inly when the passenger is in a sidecar
A. Bodily injury to a passenger is excluded
Which individual would need to be licensed as a surplus lines agent? A. Henry, who negotiates and binds surplus lines contracts B. Ava, who underwrites insurance policies C. Benita, who works full-time an an assistant to an agent licensed as a surplus lines agent D. Maddy, who calls clients to get information needed to process applications for surplus lines insurance
A. Henry, who negotiates and binds surplus lines contracts
Barbara's car is in the dealer's garage when lightning strikes the building and ignites a fire that destroys it and its content. The dealer's garage policy includes garagekeepers coverage with the primary direct coverage option. How does the policy address the loss? A. It will pay for the loss to Barbara's car and other customers' cars, subject to the policy's limit and deductible B. It will pay for any of Barbara's loss that her personal auto insurance does not cover C. Coverage does not apply because the dealer is not responsible for a lightning strike D. It will pay any loss for which the dealer is legally liable to its customers
A. It will pay for the loss to Barbara's car and other customers' cars, subject to the policy's limit and deductible
Coverage under the Insurance Services Office, Inc. (ISO) pollution liability forms is written subject to which two policy limits? A. aggregate limit and "each pollution incident" limit B. aggregate limit and "each location" limit C. "each occurrence" limit and "each location" limit D. per claim limit and per occurrence limit
A. aggregate limit and "each pollution incident" limit
An ISO liquor liability coverage form includes two limits of insurance, called: A. an aggregate limit and an each common cause limit B. an aggregate limit and a per-occurrence limit C. a per-person limit and a per-occurrence limit D. a per-claim and an each common cause limit
A. an aggregate limit and an each common cause limit
Bill's children have grown up and moved away, but the tree house that he built for them now draws other neighborhood children despite his handmade "No Trespassing" sign. If a neighbor's child is injured by falling from the tree house, Bill might be held liable for the child's injuries under what legal doctrine or principle? A. attractive nuisance B. vicarious liability C. absolute liability D. contributory negligence
A. attractive nuisance
Elwood Terrace has residential and office condominium units. The buildings are owned by a condominium association to which all condominium unit owners belong. What is the most appropriate form for insuring the association's property? A. condominium association coverage form B. HO 6 C. condominium commercial unit owners coverage form D. legal liability coverage form
A. condominium association coverage form
Max buys an expensive commercial lawn mower for his landscaping business. The contractors' equipment floater he purchased to cover this mower will most likely have all the following features EXCEPT: A. coverage for physical depreciation B. a coinsurance clause C. actual cash value coverage D. either named perils or open perils coverage
A. coverage for physical depreciation
Jordan converts her home's attached garage into an apartment that students rent year-round for $300 each month. A tenant accidentally starts a fire in the apartment, making it uninhabitable for three months while the damage is repaired. Which coverage in Jordan's homeowners insurance policy covers her rental income loss? A. fair rental value B. reasonable repairs C. additional living expense D. civil authority
A. fair rental value
Which of the following loss valuation methods is used with older buildings that have components no longer available only at a prohibitively high cost to repair or replace? A. functional replacement cost B. actual cash value C. replacement cost D. market value
A. functional replacement cost
In most state, when determining the exposure base for workers compensation insurance, payroll includes all of the following EXCEPT: A. group insurance benefits B. paid time off C. commissions D. wages and salaries
A. group insurance benefits
In a standard insurance sales transaction involving an applicant. a producer, and an insurance company, which party is the offeree? A. insurer B. applicant C. beneficiary D. producer
A. insurer
Brian is an insurance agent for ABC Insurers. When he meets with Sarah to discuss automobile insurance, Brian intentionally does not tell her that the policy has a cap on the amount of benefits that it will pay. Sarah buys the policy, thinking that it will cover all damages to her car and bodily injuries if she is ever in an accident. Based on this information, Brian has committed which of the following? A. misrepresentation B. providing false information C. coercion D. defamation
A. misrepresentation
Most of his neighbors keep their cars locked when they are parked outdoors overnight, but Cecil leaves his car unlocked with the keys in the ignition. Cecil says if his car is stolen, he'll just make a claim on his insurance policy. What is Cecil's indifference to loss an example of? A. morale hazard B. peril C. exposure unit D. physical hazard
A. morale hazard
Janet has been continuously licensed as an agent in Texas for the past 25 years. Her friend, Steven, is a nonresident licensee in Texas and every year completes his state's continuing education requirements. When they ask you for advice on meeting the Texas continuing education requirements, you inform them that: A. neither Steven nor Janet needs to comply with Texas's continuing education requirements B. Only Janet must complete Texas's continuing education requirements C. both Steven and Janet must comply with Texas's continuing education requirements D. only Steven must complete Texas's continuing education requirements
A. neither Steven nor Janet needs to comply with Texas's continuing education requirements
In which of the following communities would be the National Flood Insurance Program make flood insurance available? A. only in communities that participate in the National Flood Insurance Program B. only in communities that have previously suffered a major flood C. only communities in which all residents own flood insurance D. only in communities that have been turned down for flood insurance by private insurance companies
A. only in communities that participate in the National Flood Insurance Program
An insured plants trees at the edge of his property to reduce road noise and ensure privacy. His homeowners policy provides limited coverage to replace one or more of these trees if it any are destroyed or damaged by: A. passing motorists B. ice storm C. windstorm D. heavy snowfall
A. passing motorists
In connection with an upcoming construction project in which the firm hopes to participate, Roosevelt Construction is required to furnish a performance bond guaranteeing that Roosevelt will: A. perform the work in accordance with the contract B. deliver a completed project free of liens C. obtain the licenses and permits necessary to perform the work D. agree to do the work at the price quoted
A. perform the work in accordance with the contract
What is the name for the one-year period between a typical insurance policy's inception date and its expiration date? A. policy period B. coverage territory C. retroactive period D. policy trigger
A. policy period
Nathans car has a flat tire. his personal auto policy (PAP) has towing and labor costs coverage with a $50 limit. The towing company charges $40 to change the tire in Nathan's driveway. What will Nathan's insurer do ? A. reimburse Nathan $40 for the charge B. pay Nathan $50 C. deny coverage because the car was not towed D. deny coverage because the service was rendered at Nathan's home
A. reimburse Nathan $40 for the charge
As part of its reforms, the federal Fair Credit Reporting Act; A. requires insurance applicants be informed in advance that the insurer might order a credit report B. requires insurers to obtain credit reports on all insurance applicants C. led to the establishment of FAIR plans that cover hard-to-insure property D. prohibits insurance companies from using credit reports to determine whether an applicant is eligible for insurance
A. requires insurance applicants be informed in advance that the insurer might order a credit report
The business auto policy (BAP) provides the broadest possible liability coverage when what symbol is used for liability? A. symbol 1 B. symbol 10 C. symbol 7 D. symbol 2
A. symbol 1
Vicky's business is located in a state that requires uninsured motorists coverage. What symbol will indicate this coverage in her business auto policy (BAP)? A. symbol 6 B. symbol 5 C. symbol 1 D. symbol 3
A. symbol 6
Linwood requires each of its public officials to furnish a public officials bond. These bonds will normally terminate: A. when the bonded public official leaves office B. a year from their date of issue C. when its aggregate limits are exhausted by payment of two or more settlements or judgments D. if Linwood does not pay the renewal premium
A. when the bonded public official leaves office
All automobile liability insurance policies issued or delivered in Texas must provide up to what amount of personal injury protection (PIP) to each insured? A. $5,000 B. $2,500 C. $10,000 D. $1,000
B. $2,500
It would cost $500,000 to replace Angel's home today with an identical home at the same location. According to her HO 3 policy, no depreciation will be deducted when settling a loss if she buys coverage of at least: A. $250,000 B. $400,000 C. $450,000 D. $500,000
B. $400,000
An insurer will consider an injured worker to have reached maximum medical improvement when: A. the occupational disease is cured B. 104 weeks have passed since the date income benefits were first due C. the condition can only be remedied by surgery D. three years after the time the employee notifies the insured of his or her injury
B. 104 weeks have passed since the date income benefits were first due
Terry is licensed in Texas a property casualty agent. To maintain his license, how many hours of continuing education must he complete annually? A. 24 B. 30 C. 10 D. 2
B. 30
Geraldo had been working at his own property and casualty agency when he died suddenly from a massive heart attack. The Department of Insurance issued an emergency property and casualty agent license to his surviving spouse to wrap up the agency's business. How long will the license be valid? A. 120 days B. 90 days C. 30 days D. 60 days
B. 90 days
Larry, Brian, Susan, and Jennifer just started working for AllPro Insurance Company in Pennsylvania. Based on their job descriptions below, which of them is NOT acting as a producer? A. Larry, who receives insurance applications from the public B. Brian, who is a vice president in AllPro's human resources department and does not receive commissions C. Susan, who collects insurance premiums for AllPro D. Jennifer, who advertises insurance policies for AllPro
B. Brian, who is a vice president in AllPro's human resources department and does not receive commissions
An employee's thumb was crushed in a printing press accident while working for his employer, Print Shop. The accident was a direct result of a design defect in a printing press recently bought from L&M Co. Which of the following statements accurately describes how Print Shop's workers compensation insurer will handle this case? A. It will pay benefits to the employee and take no further action B. It will pay benefits to the employee and subrogate against L&M Co. C. It will pay benefits to the employee and subrogate against Print Shop D. It will pay benefits to Print Shop and subrogate against L&M Co.
B. It will pay benefits to the employee and subrogate against L&M Co.
Jones, a producer, offers potential clients courtside tickets to a professional basketball game in exchange for purchasing a life insurance policy. Which statement is correct? A. Jones's conduct is not unlawful if the value of the tickets is less than $1,000 B. Jones has engaged in unlawful conduct C. Jones can offer tickets as an inducement to purchase insurance, if approved by the insurer he represents D. Jones has not engaged in unlawful conduct
B. Jones has engaged in unlawful conduct
To verify that reported payroll amounts are accurate, a workers compensation insurer has the right to audit the insured's payroll records: A. under no circumstances can it ever audit the insured B. anytime during regular business hours, up to three years after the policy period ends C. with the insured's permission, and only if it has evidence of fraud D. anytime during regular business hours, before the end of the policy year
B. anytime during regular business hours, up to three years after the policy period ends
When applying for a businessowners policy, Brandy did not mention the hazardous and illegal activity that goes on in the backroom of her shop because she realized no insurer that knew about it would insure her business. What is Brandy's failure to disclose this activity considered? A. misrepresentation B. concealment C. estoppel D. a waiver
B. concealment
While on a construction site, Dustin's dump truck strikes a rock that makes a hole in the engine's oil pan, releasing motor oil into the soil. The owner of the site wants Dustin to pay for removal of the oil. Dustin's business auto policy (BAP) will" A. not cover this release of a lubricant B. cover the cost of the removal C. not cover this discharge of a pollutant D. cover only the repair to the oil pan
B. cover the cost of the removal
Dewitt Brothers insures its workers compensation liabilities under a standard workers compensation insurance policy . Luther, an employee is injured on a job site by a falling brick. What component of the state workers compensation act precludes Luther from filing a lawsuit against Dewitt for his injury ? A. eminent domain provision B. exclusive remedy provision C. exempt employer provision D. employees as insureds provision
B. exclusive remedy provision
Which of the following employers would most likely have the highest workers compensation rate classification? A. schools B. factories C. retail merchants D. radio stations
B. factories
Joe is the newly appointed Commissioner of the Texas Department of Insurance. A former assistant state's attorney, he is known to vigorously prosecute insurance fraud cases. Which of the following remedies may he NOT invoke at the end of a hearing to determine whether a party committed insurance fraud? A. license suspension or revocation B. imprisonment C. cease and desist order D. fine
B. imprisonment
An insurer can use the CGL policy's limited fungi or bacteria coverage endorsement to: A. eliminate its exposure to property damage liability claims for mold damage B. limit its exposure to mold-related bodily injury or property damage liability claims C. eliminate its exposure to mold-related bodily injury liability claims D. limit its exposure to property damage liability claims for mold damage
B. limit its exposure to mold-related bodily injury or property damage liability claims
The swimming pool in the atrium of the Highland Court Apartment Building creates a humid environment that encourages mold growth. To limit exposure to mold-related claims, what kind of endorsement should be added to the building's CGL policy? A. limited pollution liability extension B. limited fungi or bacteria coverage C. fungi or bacteria exclusion D. pollution liability exclusion
B. limited fungi or bacteria coverage
In the context of a property or casualty insurance policy, which of the following is considered to be personal property? A. heating, ventilation, and air-conditioning (HVAC) system B. moveable gas grill C. tool shed D. in-ground garden fountain
B. moveable gas grill
Alex's Diner is insured by an unendorsed businessowners policy. The policy's declarations page specifies limits for the building coverage and for the business personal property coverage. What kind of perils coverage does Alex have? A. named perils coverage on the building but open perils coverage on personal property B. open perils coverage on both the building and personal property C. open perils coverage on the building but named perils coverage on personal property D. named perils coverage on both the building and personal property
B. open perils coverage on both the building and personal property
Which of the following licensees writes property and casualty insurance that is used primarily for personal or household purposes by individuals? A. surplus lines agent B. personal lines agent C. risk manager D. insurance service representative
B. personal lines agent
When will weekly income benefits begin to accrue if the disability continues for linger than one week? A. the 30th day after the injury B. the 8th day after the injury C. the 9th day after the injury D. the 15th day after the injury
B. the 8th day after the injury
Because Ivan's DP 1 policy provides coverage against the peril of internal explosion, he is covered if: A. the pressure valve on a hot water heater sprays water that damages the basement B. the house is damaged by an explosion caused by a leaking gas pipe C. the steam boiler that heats the house explodes D. a fuse box is damaged by electric arcing
B. the house is damaged by an explosion caused by a leaking gas pipe
Pierre's homeowners policy often refers to "we." He correctly determines that "we" means: A. the insurance industry B. the insurance company C. Pierre and his family D. the insurance agent who sold the policy
B. the insurance company
An agent's license remains in effect for how long after the date it was insured? A. one year B. two years C. three years D. five years
B. two years
How can an employer that is not legally required to provoke workers compensation benefits to a certain class of its employees ensure that they have access to statutory workers compensation benefits? A. There is no way to provide workers compensation benefits to employees considered to be exempt B. Add the Waiver of Our Right to Recover from Others Endorsement to its workers compensation policy C. Add the Voluntary Compensation and Employers Liability Coverage Endorsement to its workers compensation policy D. Add a workers compensation endorsement to its commercial general liability (CGL) policy
C. Add the Voluntary Compensation and Employers Liability Coverage Endorsement to its workers compensation policy
The head of Simone's insurance agency tells her it is important to be aware of the financial strength of the insurance companies she represents. Simone can obtain insurers' financial ratings from all of the following organizations EXCEPT: A. Standard and Poor's B. A.M. Best Company C. American Express D. Moody's
C. American Express
Steve's car is in the dealer's garage when a tornado destroys the building and its contents. The dealer's garage policy includes garagekeepers coverage with the excess direct coverage option. How does the policy address the loss? A. Coverage does not apply because the dealer is not responsible for a windstorm B. It will pay for the loss to Steve's car and other customers' cars, subject to the policy's limit and deductible C. It will pay for any of Steve's loss that his personal auto insurance does not cover D. It will pay any loss for which the dealer is legally liable to its customers
C. It will pay for any of Steve's loss that his personal auto insurance does not cover
Kathie is the only person named in the declarations of her homeowners insurance policy. When her policy refers to an "insured" it does NOT include: A. Kathie's father-in-law who lives in her house B. Kathie C. Kathie's next-door neighbor D. Kathie's husband
C. Kathie's next-door neighbor
The impressions embedded in their neighbor's new concrete driveway are those of the Walker's seven-year-old daughter Margie. Will the Walker's homeowners policy pay for the driveway's repair? A. No; intentional damage B. The medical payments to others coverage applies to this claim regardless of fault C. The damage to property of other coverage will pay up to $1,000 D. Property damage liability coverage applies up to the policy limit
C. The damage to property of other coverage will pay up to $1,000
Marty drives to Ritzy Restaurant. After parking in a nearby lot, he slips on the icy pavement and breaks his ankle. Two months later, he submits his $1,000 medical bill to Ritzy Restaurant for payment. Why might Ritzy's commercial general liability insurer refuse to pay this claim under Coverage C-medical payments? A. The injury was caused by Marty's negligence B. Ritzy's negligence caused the accident C. The injury occurred off the insured premises D. The injury involved a member of the public
C. The injury occurred off the insured premises
Glenn was painting trim over the entry to the apartment building he owns when his scaffold collapsed. Several people were injured. Who can recover medical expenses under Glenn's businessowners policy? A. Glenn B. an employee who was working under the scaffold C. a guest who was entering the building D. a tenant who was walking under the scaffold when it collapsed
C. a guest who was entering the building
Andy just moved to Texas and is not sure what type of proof of financial responsibility is acceptable in the state. You inform him correctly that he can use all of the following EXCEPT: A. a surety bond certificate B. a Texas liability insurance card C. a valid driver's license D. an insurance binder
C. a valid driver's license
The lessees of safe deposit boxes endorsement to a commercial crime policy is most likely to be used to cover: A. a gym that has lockers where patrons keep their secret clothes and valuables B. a bank against claims by customers who rent safe deposit boxes C. an insured's property that is kept in a bank safe deposit box D. hotel employees
C. an insured's property that is kept in a bank safe deposit box
Nelly wants to be licensed as a surplus lines agent in Texas. Which action is she not required to take to receive a license? A. submit an apllication B. maintain a license as a general property and casualty agent or managing general agent C. be appointed by at least two authorized insurers in Texas D. pay the licensing fee
C. be appointed by at least two authorized insurers in Texas
Dixie's business personal property coverage of her building and personal property commercial property form covers almost everything in her barbershop, but NOT: A. the coffee pot B. electric clippers and other tools of her trade C. cash in the cash register D. chairs used for waiting customers
C. cash in the cash register
Leona rents a storefront space. She signs a lease in which she assumes responsibility for liability to anyone injured in her store, even if the injury is the landlord's fault. What kind of general liability exposure is she assuming under this lease? A. premises and operations liability B. independent contractor liability C. contractual liability D. products and completed operations liability
C. contractual liability
Which of the following is a peril? A. ice B. rain C. flood D. snow
C. flood
Blake's commercial automobile policy has been in effect for three years. For which of the following reasons can the insurer cancel the policy? A. submitting two claims under the policy B. paying the premium within the grace period C. fraud in obtaining the policy D. negligent misrepresentation in the application
C. fraud in obtaining the policy
The personal auto policy's coverage for collision and other-than-collision risks are collectively called: A. property damage coverage B. comprehensive coverage C. physical damage coverage D. third-party coverage
C. physical damage coverage
Which provision is NOT found in the common policy conditions section of a businessowners policy? A. other insurance B. cancellation C. property loss settlement D. fraud
C. property loss settlement
After several violations, Napoleon Bar and Grill's liquor license was revoked. Napoleon did not inform its insurer of this fact and continued to serve alcohol to its regular customers, including Brett. After a long night at the bar, Brett was involved in a serious auto accident and sued Napoleon under the applicable dram shop act. Napoleon's liquor liability insurance: A. provides no coverage because the accident occurred away from Napoleon's premises B. provides coverage if serving alcohol was incidental to Napoleon's primary business as a restaurant C. provides no coverage because Napoleon's required license was not in effect D. provides coverage because Napoleon was selling alcoholic beverages
C. provides no coverage because Napoleon's required license was not in effect
Earline's business auto policy (BAP) has comprehensive and collision coverage on owned autos. One of the company's trucks is damaged when road debris tears its oil pan, ruining the engine. Replacing the engine will significantly increase the truck's value. What, if anything, will the insurer pay? A. the cost of the new engine and its installation without adjustment for betterment or diminution in value B. the cost of the new engine and its installation after adjusting it for the decrease in the truck's value C. the cost of the new engine and its installation after adjusting it for the increase in the truck's value D. nothing because road debris is not a covered peril
C. the cost of the new engine and its installation after adjusting it for the increase in the truck's value
Luisa buys a dwelling policy to cover her personal property in the unfurnished house she rents. The policy includes Coverage C-Personal Property and Coverage E-Additional Living Expense. What does it NOT cover? A. her clothing in the bedroom closet B. her furniture throughout the house C. the driveway where she parks her car D. her computer in the study
C. the driveway where she parks her car
A pile of greasy rags in the attached garage of a wood farm house burst into flames, resulting in the total loss of the house by fire. Which of the following statements is correct? A. leaving a pile of rags in the garage was a peril B. the greasy rags were a peril C. the fire that destroyed the home was a peril D. owning a wood framed house was a peril
C. the fire that destroyed the home was a peril
With respect to property and casualty insurance policies, "subrogation" refers to: A. the requirement that an insured must sue the insurer to get a claim paid B. the requirement that insurers report losses to law enforcement if they suspect fraud C. the insurer's right to recover its claim payment from the party that was responsible for the loss D. the opportunity to double the size of a claim reimbursement by altering facts to make it look like the loss was someone else's fault
C. the insurer's right to recover its claim payment from the party that was responsible for the loss
An insurer can cancel a personal automobile insurance policy for all of the following reasons EXCEPT: A. the insured's driver's license being revoked B. the insured submitting a fraudulent claim C. the policy having been in effect less than 120 days D. nonpayment of premium
C. the policy having been in effect less than 120 days
Car Dealer was offering a free TV with the purchase of any new car. When a man in the showroom picked up a TV and carried it out of the showroom, the sales manager held the door open, assuming the man had just bought a car. He had not. What is Car Dealer the victim of? A. burglary B. robbery C. theft D. embezzlement
C. theft
Why do insurance policies use quotation marks with certain words and phrases? A. to recognize copyrighted material that was taken from another source B. to call attention to words and phrases that are especially important C. to identify words and phrases that are defined in the policy D. to show that these words and phrases are slang terms
C. to identify words and phrases that are defined in the policy
After paying a vandalism claim under Sam's commercial inland marine policy, the insurer exercised its rights under the policy and attempted to recover all or part of its loss from the person who caused the covered damage and was apprehended by police. What condition in the inland marine common conditions form gives the insurer these rights? A. control of property B. loss payment C. transfer of rights of recovery D. concealment, misrepresentation, or fraud
C. transfer of rights of recovery
How many days is a temporary license valid for? A. 15 days B. 30 days C. 60 days D. 90 days
D. 90 days
Dawn is the only person named in the declarations of her homeowners insurance policy. References to an "insured" in her policy do NOT include: A. Dawn's minor children living in her home B. Dawn C. a neighbor hired to walk Dawn's dog D. Dawn's next-door neighbor
D. Dawn's next-door neighbor
Graham is an architect. Various coverage extensions in Graham's building and personal property coverage form cover property in Graham's office that the form might not otherwise cover. Which of the following property items is not the subject of a coverage extension? A. personal effects of employees B. shrubbery around the building C. blueprints D. Fido, his dog
D. Fido, his dog
Colleen's business does not own an auto, but an endorsement to her businessowners policy (BOP) provides nonowned auto liability coverage. Daily business-related trips to the post office are made by employees who use their own cars. En route to the post office, Bernice, one of Colleen's employees, has an accident. The injured party sues Bernice and Colleen. How will the BOP address this claim? A. It will not cover this claim because the employee's car is a hired auto, not a nonowned auto B. It will cover both Colleen and Bernice C. It will cover Bernice but not Colleen D. It will cover Colleen but not Bernice
D. It will cover Colleen but not Bernice
What does the "No Benefit to Bailee" provision in a property and casualty policy make clear? A. Only baliees that can show an insurable interest in the insured's property can be covered B. Baliees can be covered only for the value of the insured's property being held by the baliee C. Bailees must wait until all other parties are reimbursed for a loss before they can be covered D. The policy does not cover bailees
D. The policy does not cover bailees
How much advance notice must an insurance company give its policyholder if it does not intend to renew a personal auto policy? A. at least 14 days B. at least 10 days C. at least 7 days D. at least 20 days
D. at least 20 days
Under the Farm Property-Barns, Outbuildings, and Other Farm Structures coverage form (Coverage G), which of the following types of farm property is NOT covered? A. outbuildings B. portable buildings C. building materials and supplies used in building or repairing farm buildings D. below-ground foundations of buildings
D. below-ground foundations of buildings
Which of the following provides insurance coverage for up to 30 days, pending the issuance of a permanent policy? A. endorsement B. rider C. receipt D. binder
D. binder
Jill is an insurance agent who represents XYZ Insurance Company. With what authority does Jill's agency agreement with XYZ explicitly permit her to perform certain functions? A. public authority B. implied authority C. apparent authority D. express authority
D. express authority
Underinsured motorists (UIM) coverage protects an insured in an accident caused by a motorist who: A. is not legally responsible for causing the accident B. is driving a rental car C. has no auto liability insurance D. has coverage limits that are lower than the insured's UM/UIM limits
D. has coverage limits that are lower than the insured's UM/UIM limits
The two things that an insurance company's loss ratio compares are: A. paid claims and expenses B. profits and incurred losses C. profits and expenses D. incurred losses and earned premiums
D. incurred losses and earned premiums
Two matching gas lampposts stand at the end of Hiram's driveway. A car damages one of the lampposts. The Loss to a Pair or Set condition in Hiram's HO 3 policy will not permit his insurer to: A. pay the difference between the pre-loss and post-loss actual cash value of the pair of matching lampposts B. repair the damaged lamppost to restore it to its pre-loss condition C. replace the damaged lamppost with one that matches the remaining lamppost D. pay Hiram half the value of the pair of lamppost
D. pay Hiram half the value of the pair of lamppost
Laurie applies for a businessowners policy to cover her small enterprise. What kind of business would make her ineligible for a BOP policy? A. discount retail store B. 24-hour diner C. doughnut shop D. pinball and video game arcade
D. pinball and video game arcade
The money that a property insurance policyholder pays for insurance covering his building is called a(n): A. exposure unit B. loss cost C. rate D. premium
D. premium
As an attorney, Ben has lawyers professional liability insurance that provides him with liability coverage for clients' claims arising out of all the following EXCEPT: A. client relations errors B. administrative omissions C. personal injury perils D. property damage liability
D. property damage liability
Which of the following is NOT a requirement in recommending the most suitable insurance product to a potential customer? A. recommend policies that meet the customer's needs and circumstances B. never mispresent any terms or conditions of the proposed policy C. fully disclose the terms and conditions of a policy D. propose the least expensive policies
D. propose the least expensive policies
Joel renews his homeowners insurance policy on January 15. He sells the house to Sandi on March 15. One week later a fire destroys the house. Joel makes a claim on the policy for the loss of the house. What will the insurance company do? A. pay the claim B. investigate the claim before paying it C. seek arbitration to settle the claim D. reject the claim
D. reject the claim
A covered auto listed in the personal auto policy's declarations page must be owned by the named insured, or the insured must have leased it for at least A. one month B. three months C. two months D. six months
D. six months
A stock insurance company is owned by it's: A. members B. board of directors C. policyholders D. stockholders
D. stockholders
Laura owns poisonous snakes on her property, which she uses for venom research purposes. One of the snakes escaped and within hours bit a neighbor who sued Laura. Though Laura was not negligent in her ownership of the snakes, the plaintiff easily won the suit based on the doctrine of: A. assumption of risk B. comparative negligence C. vicarious liability D. strict (absolute) liability
D. strict (absolute) liability
Carol owns a sports car and has received numerous traffic citations for exceeding the speed limit. She submits applications to buy auto insurance from several auto insurance companies, but none has accepted her application because: A. the car is exposed to specified perils B. the law of large numbers prohibits it C. it is a speculative risk D. the applicant is demonstrating adverse selection
D. the applicant is demonstrating adverse selection
Curt, age 40, has purchased a property insurance policy to cover an international shipment of firearms. The shipment is accidentally destroyed in transit, and during its investigation the insurer learns that the firearms were stolen. Which of the following correctly explains why the insurer would refuse to cover the loss? A. the contract is unenforceable because there was no offer and acceptance B. the contract is unenforceable because the parties did not exchange any consideration C. the contract in unenforceable because the policyowner is not legally competent D. the contract is unenforceable because it served an illegal purpose
D. the contract is unenforceable because it served an illegal purpose
Regarding the Farm Property-Farm Dwellings, Appurtenant Structure, and Household Personal Property Coverage Form (FP 00 12) policy, what does Coverage C-Household Personal Property of that form cover? A. farming supplies, but not the insured owner's household personal property B. the insured owner's household personal property and farming supplies C. neither the insured owner's household personal property nor farming supplies D. the insured owner's household personal property, but not farming supplies
D. the insured owner's household personal property, but not farming supplies
Why does an underwriter guard against adverse selection? A. to insure only persons who can afford the premiums B. to insure only persons with the least risk C. to prevent premium inflation D. to minimize insuring persons with the most risk
D. to minimize insuring persons with the most risk
Mandy is injured in a collision with a motorist who has no insurance coverage. Mandy's personal auto policy includes uninsured motorists coverage. However, she and her insurer cannot agree on the amount of compensation she is entitled to receive. The policy's arbitration provision will enable them to resolve their dispute over: A. whether settling the claim will affect Mandy's renewal premium B. the amount of damages alone C. whether Mandy is entitled to damages alone D. whether Mandy is entitled to damages and the amount of damages
D. whether Mandy is entitled to damages and the amount of damages
