Property and Casualty Comprehensive Exam Questions
A property purchased 10 years ago for $100,000 has a replacement value today of $200,000. It has depreciated 3% each year. What is today's actual cash value? A. $140,000 B. $100,000 C. $200,000 D. $70,000
A. $140,000 Current replacement cost of $200,000 minus 30% depreciation = $140,000.
Coverage B of a dwelling policy will not apply to a detached garage if which of the following is being stored? A. A helium tank used for the insured's business B. Ski equipment owned by the insured's 18 year old son C. A broken down farm tractor belonging to the tenant D. A tenant's lawnmower with a full tank of gas
A. A helium tank used for the insured's business No coverage is provided for other structures used in whole or in part for commercial, manufacturing, or farming purposes unless the property is only being stored and is owned by the insured or tenant and does not contain gaseous or liquid fuel located other than a fuel tank. The helium tank is not allowed for coverage to apply.
Under the Basic Dwelling Form, losses are paid on which basis? A. Actual Cash Value B. Replacement Cost C. Market Value D. Agreed Value
A. Actual Cash Value The DP-1 pays on an actual cash value, rather than replacement cost basis.
M has a liability policy insuring her flower shop. After M sells the shop, the buyer asks if she can transfer her liability policy as part of the sale. Which provision prevents M from making this transfer without the insurer's consent? A. Assignment B. Assumption of risk C. Subrogation D. Liberalization
A. Assignment The assignment provision states a policyholder cannot transfer policy ownership without the insurer's written consent. (Casualty (liability) Basics)
Property may be turned down for Kansas FAIR Plan coverage due to all of the following, except: A. Being unacceptable in the normal market due to environmental condition B. Vacancy C. Incompliance with building codes D. Poor housekeeping
A. Being unacceptable in the normal market due to environmental condition
Section III of the Businessowners Coverage Form includes: A. Common Policy Conditions B. Applicable endorsements C. Liability related coverages D. Property related coverages
A. Common Policy Conditions Section III of the Businessowners Coverage Form includes the Common Policy Conditions.
All of the following statements are correct regarding Coverage E, except: A. Coverage E is available under all Dwelling policy forms B. Additional living expense coverage is available if the dwelling is uninhabitable C. Additional living expenses include the boarding of pets D. Coverage applies to the extent of the insured's normal standard of living
A. Coverage E is available under all Dwelling policy forms Coverage E - Additional Living Expense is not included on the DP-1 form. (Dwelling Policy)
Which of the following claims would be covered under the DP-3? A. Damage by vandalism to a dwelling vacant for 30 days before the loss B. Theft to a dwelling under construction C. Wind damage to TV antennas D. Damage to a fence due to freezing and thawing of ice due to a winter storm
A. Damage by vandalism to a dwelling vacant for 30 days before the loss Loss from vandalism and malicious mischief is excluded if the dwelling has been vacant for more than 60 consecutive days immediately before a loss. A dwelling vacant for only 30 days would still be covered. (Dwelling Policy)
Which of the following is true regarding coverage of trees, shrubs or plants under the Dwelling policies? A. Damage to plants by wind, hail, weight of ice, snow or sleet is not covered B. The Limit of Liability is $1,000 for any tree, shrub, or plant C. All vehicle damage to trees, shrubs, or plants is covered D. Theft of shrubs and plants is covered
A. Damage to plants by wind, hail, weight of ice, snow or sleet is not covered Damage to outdoor plants by forces of nature other than lightning are so common that such damage is considered uninsurable. Coverage for certain other perils is provided, with a limit of $500 for any one tree, shrub, or plant. Only damage from vehicles unowned by the insured is covered.
Which of the following losses would be covered under the Dwelling Policy DP-1? A. Fire damage to building materials on the insured premises B. Land subsidence of the insured's land C. Collapse caused by insect damage D. Damage caused by a backup of the sewer pipes
A. Fire damage to building materials on the insured premises Coverage A includes materials and supplies located on or next to the Described Location used to construct, alter, or repair the dwelling on the Location.
Which of the following is correct regarding Other Insurance under Part A of the Personal Auto Policy? A. If there is other liability coverage applicable to the insured auto, the policy will pay the proportion that the limit of liability bears to the total of all limits B. There is no coverage for non-owned vehicles if there is other coverage applicable to such vehicles C. If there is other liability coverage applicable to the insured auto, the policy will share the loss with the other policy on an excess basis D. The Personal Auto Policy is the primary policy in all cases of duplicate coverage
A. If there is other liability coverage applicable to the insured auto, the policy will pay the proportion that the limit of liability bears to the total of all limits Coverage A of the Personal Auto Policy shares with other applicable liability insurance on a proportional basis. However, it is excess over other insurance on non-owned autos.
Choose the best answer regarding the details of the Yacht Policy. A. It is an Ocean Marine Form and provides both property and liability coverage B. Liability related exposure must be covered under a separate policy C. The policy provides coverage only for damage to the yacht itself D. The policy contains no navigational limits
A. It is an Ocean Marine Form and provides both property and liability coverage As an Ocean Marine Form designed for large, ocean-going vessels within a specific territory, a Yacht Policy includes Hull, Protection and Indemnity, Medical Payments, and Jones Act coverages.
Mobile equipment does not include which of the following? A. Motor vehicles designed for road use B. Vehicles that travel on crawler treads C. Resurfacing equipment mounted on a vehicle D. Farm machinery designed for off-road use
A. Motor vehicles designed for road use Mobile equipment does not include vehicles designed for road use. (Commercial Auto Coverage)
Neither the Computer Fraud nor Funds Transfer Fraud forms cover which of the following claims? A. Damage to physical computer incurred while a customer is trying to illegally transfer from the bank B. Loss of money transferred from a computer by a person who confiscated another person's banking online ID C. An electronic request to the bank computer to transfer money from a bank to an illegal account D. loss of funds when a person directs a bank's online check system be transferred to him
A. Physical damage to a computer in the commission of a crime is a property damage loss, not a crime loss. (Commercial Crime Part)
If other insurance also applies to a loss covered by a policy, which of the following will establish the method for determining how the insurance companies will pay the loss? A. Pro rata liability B. Limit of Liability C. Claim Settlement D. Subrogation
A. Pro Rata Liability This provision is found in the policy in the Other Insurance condition, and provides for claim settlement to be proportioned to the amount of other insurance. (Casualty (liability) Basics)
An agent has authority to do all of the following, except: A. Represent the insured's interest B. Countersign insurance contracts C. Solicit applications on the insurer's behalf D. Appoint a solicitor as his or her representative
A. Represent the insured's interest An agent is primarily the representative of an insurer.
An organization that writes liability insurance to cover the liability exposure for the mining engineers that belong to its associations is: A. A risk retention group B. A risk purchasing group C. A mine subsidence insurer D. The Industry Placement Facility
A. Risk Retention Group A risk retention group writes the liability coverage and retains the risk itself, as is the case here. A reciprocal insurance company has subscribers who assume a part of the risk of all other subscribers. Mine subsidence is property insurance, and a risk purchasing group buys insurance from another carrier for its members.
Which insurance provision prevents the insured from collecting twice for the same loss? A. Subrogation B. Appraisal C. Other insurance D. Liberalization
A. Subrogation Subrogation may take place when a negligent third party is the cause of a loss. Once the insurance company has paid the loss, it receives the insured's right of recovery from the third party, preventing the insured from collecting from both the insurer and the culpable party. (Property Basics)
An employee in Kansas is injured while working, and the injury creates a legal liability against a third party other than their employer. The employee may: A. Take Workers' Compensation and pursue legal action against the third party B. Choose to either take Workers' Compensation or pursue legal action against the third party, but may not pursue both C. Only take legal action against the liable third party D. Pursue legal action against the third party within 2 years
A. Take Workers' Compensation and pursue legal action against the third party When a third party is liable for a worker's injury, the worker (or their dependents or legal representative) has the right to take Workers' Compensation and pursue legal action against the liable third party. Action must be instituted within 1 year. (state Laws)
The Limited Theft Coverage endorsement to the DP is used under which of the following circumstances? A. The insured dwelling is tenant-occupied B. The dwelling has been vacant for more than 60 days C. Coverage is desired for off-premises property D. The insured dwelling is owner-occupied
A. The insured dwelling is tenant-occupied The Limited Theft Coverage endorsement may only be used if the dwelling is tenant occupied. Owner-occupied dwellings should use the Broad Theft endorsement.
Under which of the following circumstances would the Limited Theft Coverage endorsement be used? A. The insured dwelling is tenant-occupied B. Coverage against vandalism is needed for a dwelling vacant more than 60 days C. Coverage is desired for off-premises property D. The insured dwelling is owner-occupied
A. The insured dwelling is tenant-occupied The Limited Theft Coverage endorsement must be used if the dwelling is tenant occupied. No VMM coverage applies if the dwelling was vacant for more than 60 consecutive days immediately before the loss. There is no off-premises coverage under this endorsement.
Which of the following is TRUE of the Dwelling Under Construction Endorsement of a Dwelling Policy? A. The liability limit is a percentage of the finished building's value B. The premium is a percentage of the Coverage A limit C. The insurer does not need to be notified of building completion D. The insured has up to 90 days to notify the company that the dwelling is occupied
A. The liability limit is a percentage of the finished building's value The limit of insurance at any given time prior to completion is a percentage of the Coverage A limit that equals the proportion the actual value bears to the value on the date of completion. The insurer must be notified of completion so coverage may be adjusted.
The Spouse of which named is not eligible as an insured under the BOP ? A. Trustee B. Partner C. Sole Proprietor D. Party to a joint venture
A. Trustee In a sole proprietorship, joint venture, or partnership, spouses of named insureds are considered insured parties. Spouses of trustees are not considered an insured. (Business owners Coverage Form)
Which form would not insure against external explosion? A. Unendorsed DP-1 B. DP-2 C. DP-3 D. Endorsed DP-1
A. Unendorsed DP-1 The basic perils covered by the DP-1 form (without the extended coverage perils endorsement) are: fire, lightning, and internal explosion.
Physical damage coverage under a Business Auto Coverage Form includes all of the following, except: A. Uninsured Motorist Coverage B. Specified Causes of Loss C. Collision Coverage D. Comprehensive Coverage
A. Uninsured Motorist Coverage The three types of physical damage coverage under the BAP are collision, comprehensive, and specified perils. Uninsured Motorist is a separate coverage added by endorsement.
All of the following are true about a newly acquired vehicle, except: A. It can be used to transport goods for hire if the receipts are less than $10,000 B. Coverage is as broad as the broadest coverage on any vehicle under the policy C. it may be used on a farm D. it must be reported to the insurer within 14 days of the purchase
A. it can be used to transport goods for hire if receipts are less than $10,000 Vehicles used to carry goods for hire cannot be insured under a Personal Auto Policy (Personal Auto Policy)
Policyholder L owns a dwelling, and rents the detached garage to tenants. The premises are insured under a DP-3 with a Coverage A limit of $100,000. How much is the detached garage insured for if damaged by a covered claim? A. $50,000 B. $10,000 C. $5,000 D. $20,000
B. $10,000 The Coverage B limit of insurance is 10% of the Coverage A limit.
How much will the Dwelling Policy pay for living expenses after a dwelling insured for $100,000 Coverage A is damaged by a fire? A. $50,000 B. $20,000 C. $10,000 D. $30,000
B. $20,000 The Coverage E limit of insurance is 20% of the Coverage A limit.
Product liability would cover: A. Product recall B. A restaurant customer who contracts food poisoning C. Contractual liability D. A vending machine that injured a customer's hand
B. A restaurant customer who contracts food poisoning Product liability applies to bodily injury the product causes away from the insured's premises. A customer contracting food poisoning is a perfect example of product liability. (Commercial General Liability Coverage)
All of the following statements regarding the property policy structure are correct. except: A. The insured's duties and obligations are listed in the conditions section B. Additional coverages are added to the policy for an additional premium C. The Declarations page lists other parties having an insurable interest in the property D. The insuring agreement describes the perils that are covered under the policy
B. Additional Coverages are added to the policy for an additional premium additional coverages are automatically included without an additional premium (Property basics)
Which of the following is not an element of negligence? A. Duty owed B. Assumption of risk C. Proximate cause D. Foreseeable consequence
B. Assumption of risk The elements of negligence are: Duty of care, violation of the duty of care, proximate cause, and damages that are foreseeable. Assumption of risk is a defense against negligence, rather than an element of it. (Casualty (Liability) Basics)
An insured accidentally backs into the neighbor's son on his skateboard. The son has medical expenses and there is damage to the skateboard. Which sections of the insured's policy will pay? A. Bodily injury and collision B. Bodily injury and property damage C. Personal injury and property damage D. Medical payments and collision
B. Bodily injury and property damage Bodily injury liability coverage would pay the medical expenses and property damage liability would pay for the skateboard. (Personal Auto Policy)
Which is true regarding Dwelling policies? A. Coverage C includes coverage for personal property of tenants and boarders B. Coverage C applies while insured property is located at the described location C. Coverage B would cover an attached garage D. Coverage D is considered a direct loss coverage
B. Coverage C applies while insured property is located at the described location Coverage C may be extended to cover property of guests and servants. Coverage D, Fair Rental Value, is an indirect coverage.
Which of the following is true regarding Extra Expense Coverage under a BOP? A. Extra Expense coverage is provided until the Property Limit of Insurance is exhausted B. Coverage is for 12 months after the direct loss C. There is a monthly limitation equal to 1/12th of the Property Limit of Insurance D. Extra Expense coverage is not available to commercial tenants
B. Coverage is for 12 months after the direct loss As with Business Income, there is no limit for coverage on Extra Expense that is incurred within 12 consecutive months of the date of the direct physical loss or damage. (Business Owners Coverage Form)
Of the Dwelling Policy forms, which one would cover an owned mobile home permanently affixed to a foundation? A. DP-3 B. DP-1 C. DP-1, 2, or 3 D. DP-2
B. DP-1 A mobile home is only eligible for coverage under the DP-1.
Which of the following crime coverages is not one of the insuring agreements provided by the standard commercial crime coverage form ? A. Computer Fraud B. Extortion C. Money Orders and Counterfeit Money D. Forgery or Alteration
B. Extortion Extortion coverage can be added by endorsement to the commercial crime coverage form
Losses that cannot be calculated objectively, such as pain and suffering or mental anguish, are considered: A. Physical damages B. General damages C. Special damages D. Punitive damages
B. General Damages General damages are awarded to an injured party for pain, suffering, mental anguish, disfigurement, and similar losses. These losses cannot be calculated objectively and are assigned a specific dollar value.
Which of the following would not be covered under Coverage B? A. Pole barn B. Grain silo C. Swimming pool D. Shed
B. Grain silo No coverage is provided for other structures used for farming purposes.
The Kansas Workers' Compensation Insurance Plan is designed to do all of the following, except: A. Provide coverage for applicants who are unable to obtain Workers' Compensation insurance through normal markets B. Include any Workers' Compensation insurer who volunteers to participate in the plan, but the plan does not require insurers to participate C. Equitably distribute policies between insurers D. Set rules regarding rates and rate modifications for plan policies
B. Include any Workers' Compensation insurer who volunteers to participate in the plan, but the plan does not require insurers to participate All Workers' Compensation insurers and rating organizations must participate in the plan. (State Laws)
Which of the following is true regarding the Personal Liability Supplement? A. The Limit of Liability is the same as the Coverage A amount B. It provides coverage for claim expenses, first aid expenses and damage to property of others C. It covers the insured's personal autos D. It covers Professional Services rendered by the insured
B. It provides coverage for claim expenses, first aid expenses and damage to property of others The Claim Expenses, First Aid Expenses, and Damage to Property of Others are Additional Coverages that supplement Coverage L, Personal Liability, and Coverage M, Medical Payments.
Which clause broadens coverage of an existing policy with no increase in premium ? A. Assignment B. Liberalization C. Subrogation D. Loss Payable
B. Liberalization The Liberalization clause specifies that the broadening of coverage will apply to existing policies without the need for an endorsement. (Property Basics)
Bodily Injury may include which of the following? A. Invasion of Privacy B. Loss of Earnings C. Slander D. False Arrest
B. Loss of Earnings Bodily injury includes such items as medical expenses, lost wages, mental anguish, death and disfigurement.
The Commercial Property Basic Causes of Loss Form insures against all of the following perils, except: A. Sprinkler Leakage B. Mechanical Breakdown C. Riot or Civil Commotion D. Sinkhole Collapse
B. Mechanical Breakdown Equipment breakdown coverage is separately available under the equipment breakdown form (Commercial Property Insurance)
All of the following are true regarding the Broad Theft Endorsement on a Dwelling policy, except: A. It may be added to any of the Dwelling forms B. Only on-premises coverage is available C. It applies only to owner-occupied structures D. It also includes vandalism resulting from theft
B. Only on-premises coverage is available The Broad Form Theft endorsement is attached to owner-occupied Dwelling policies to provide theft coverage for the owner-occupant's Personal Property. On-premises and off-premises coverage is available.
Which of the following is not a contingent liability exposure? A. Contractual liability exposure B. Premises liability exposure C. Owners and Contractors Protective liability exposure D. Liability exposure of insured's sub-contractors
B. Premises liability exposure Contingent liability exposures exist when the insured is held liable for the actions or failure of actions of others.
Which of the following is NOT a type of coverage provided under a farm liability policy? A. Personal and Advertising injury B. Professional Liability C. Medical Payments D. Bodily injury and property damage liability
B. Professional Liability A farm liability policy does not provide coverage for professional liability (Miscellaneous Commercial Policies)
All of the following are true of the HO-2, except: A. The HO-2 covers the broad form perils B. The HO-2 pays for losses on an open peril basis C. The HO-2 pays for losses to the dwelling on a replacement cost basis D. The HO-2 covers owner-occupied dwellings
B. The HO-2 pays for losses on an open peril basis The HO-2 pays all losses on a broad form (Named Perils) basis. (Homeowners Policy)
Coverage B of the CGL would cover which of the following claims? A. A new business misappropriates the insured's slogan B. The insured was accused of causing a business associate to be falsely arrested C. A competitor illegally uses the insured's copyright material D. A customer falls on the insured's premises and breaks his leg
B. The insured was accused of causing a business associate to be falsely arrested False arrest is included in the definition of Personal Injury. The copyright and slogan infringement claims would be covered under the wrongdoer's policy, not the person who was wronged.
Which of the following parties may assign a standard property policy? A. The First Named Insured B. The insured with prior written permission of the insurer C. The Insurer D. The Bailee
B. The insured with prior written permission of the insurer The insured can only assign or transfer rights of ownership with prior written consent of the insurer. (Property Basics)
Which of the following statements about Fire Department Service Charge coverage is not correct? A. Coverage does not apply if the property is located within the limits of the jurisdiction furnishing the fire department response B. The policy will pay up to $1,000 for Fire Department Service Charge coverage C. Fire Department Service Charge coverage is included under all Dwelling policy forms D. The policy deductible does not apply to this coverage
B. The policy will pay up to $1,000 for Fire Department Service Charge coverage A typical dwelling policy will pay up to $500 for liability assumed for fire department charges when the fire department is called to save or protect covered property from an insured peril. Coverage does not apply if the property is located within the limits of the jurisdiction furnishing the fire department response.
Which of the following will be paid by Supplementary Payments under Part A of the Personal Auto Policy? A. Medical expenses when the insured's daughter is injured in an auto accident B. A $250 bail bond C. A judgment against the insured up to 10% above liability limits D. $1,000 for loss of earnings when the insured is disabled
B. a $250 bail bond Of these choices, only bail bonds is a Supplementary Payment. The policy limit is $250. (Personal Auto Policy)
Policy A provides liability coverage to Fred's Grocery up to $500,000. Policy B provides coverage for the same risks up to $1.5 million. Both policies pay on a pro rata basis. If Fred's Grocery is determined to have a legal liability of $400,000 to a claimant who was injured on the property, how much will Policy A pay? A. $400,000 B. $500,000 C. $100,000 D. $50,000
C. $100,000 Pro rata liability requires that each policy pays no more than its share of the loss. The total insured amount carried by Fred's Grocery is $2 million ($500,000 + $1.5 million). Policy A's share of that amount is 25% ($500,000 ÷ $2 million). Therefore, its share of any loss would be 25% of the loss amount. 25% of $400,000 is $100,000.
Under the BOP, if coverage for business property equals 100% of the average monthly values for the preceding 12 months, an automatic increase of what amount is provided to offset seasonal variations in stock values? A. 10% B. 5% C. 25% D. 15%
C. 25% The Businessowners Policy includes an automatic seasonal increase business personal property of 25% if the insured maintains insurance equal to 100% of the average monthly values for the preceding 12 months.
Under the Dwelling Policy, household and personal property, including property in transit between the insured's old and new residences, are covered under: A. Coverage D B. Coverage B C. Coverage C D. Coverage A
C. Coverage C Coverage C is the coverage for Personal Property. 10% of the Coverage C limits apply to the Insured's Personal Property away from the premises anywhere in the world.
Which of the following statements best describes the Other Insurance condition on a standard property insurance policy, when two separate property policies provide coverage for the same loss? A. Neither policy will make payment for the loss B. One policy pays up to its limits and the other policy pays the balance C. Each policy pays its pro rata share of the loss D. Each policy pays an equal share
C. Each policy pays its pro rata share of the loss The Other Insurance condition specifies the process to be followed when more than one policy covers the same loss. For property insurance, losses are settled on a pro rata basis, where each policy pays no more than its pro rata share of the loss. (Casualty (liability) Basics)
Which of the following powers describes the authority stated in an agent's agency contract? A. Implied B. Assumed C. Express D. Apparent
C. Express The agency contract, which exists between an insurer and a producer, sets forth the powers that are granted to the producer. These powers are referred to as express because they are directly stated in the contract.
The Voluntary Compensation Endorsement under Workers' Compensation Insurance is best described as: A. It provides coverage for independent contractors B. It provides coverage for unpaid volunteer workers C. It provides coverage to employees or other persons that are not otherwise required to be covered D. It provides coverage for employees who opt out of coverage under the standard Workers' Compensation policy
C. It provides coverage to employees or other persons that are not otherwise required to be covered Employers who do not come under the Workers' Compensation law of their state may elect to provide Workers' Compensation coverage for their employees through the Voluntary Compensation Endorsement. (workers' Compensation Insurance)
All of the following are true about liability, except: A. A loss may take place over a period of time rather than all at once B. Breach of contract is not considered an act of negligence C. Liability policies pay costs incurred by an insured to sue negligent third parties D. The burden of proof is on the injured party to prove that the other party was negligent
C. Liability policies pay costs incurred by an insured to sue negligent third parties Liability policies pay the cost to defend the insured against suits by third parties. They do not cover the costs of lawsuits initiated by the insured against negligent third parties. (Dwelling Policy)
Which commercial crime policy will cover any occurrence that took place during policy period, even if it was not immediately discovered? A. Claims-made form B. Occurrence form C. Loss-Sustained form D. Discovery form
C. Loss-Sustained form The Loss-Sustained Form provides coverage for losses that both take place and are discovered during the policy period, or that are discovered within one year of the termination of the policy period.
K owns several buildings at different locations with each one insured on a separate policy. Which of the following methods of writing insurance does this describe? A. Agreed Value B. Blanket C. Specific Limit D. Scheduled
C. Specific Limit Since each property is covered under a separate policy, each with a unique coverage limit, each property is written on a specific limit basis. A loss to any one property would not affect the policies covering the other properties. (Property Basics)
The type of absolute liability that applies to products is called: A. Vicarious liability B. Comparative liability C. Strict liability D. Assumption of risk
C. Strict liability Strict Liability Applies to Products If a claimant can prove that a product caused the injury, the manufacturer will be held liable whether or not the product was defective. (Casualty (Liability) Basics)
Which of the following is false about the CGL policy form? A. Section III of the Commercial General Liability Coverage Forms describes the limits of insurance B. The per occurrence limit is the most company will pay for damages under coverage A and coverage C, arising out of any one occurrence C. The limits of the policy stated in the Declarations are the maximum amounts payable for the life of the policy D. The general aggregate limit is the most the company will pay for all damages under C, except for products and completed operations claims
C. The limits of the policy stated in the Declarations are the maximum amounts payable for the life of the policy The limits stated in the policy apply separately to each claim (and/or aggregate) within a policy period (Commercial General Liability Coverage)
All of the following must be listed on Form MCS-90, except: A. The names of the motor carrier and the insurance company B. The limits of liability provided by the policy C. The policy premium amount D. The policy number and policy dates
C. The policy premium amount Form MCS-90 must be carried in the cabin of the vehicle and must show: The names of the motor carrier and the insurance company; The policy number and policy dates; Whether the insurance providing coverage is primary or excess; and The limits of liability provided by the policy. (Commercial Auto Coverage)
Which statement is true regarding the Personal Liability Supplement to the Dwelling policy? A. The supplement covers professional services rendered by the insured B. The Limit of Liability is the same as the Coverage A amount C. The supplement provides coverage for claim expenses D. The supplement covers damage to the insured's personal autos
C. The supplement provides coverage for claim expenses The liability supplement provides coverages for claim expenses, first aid expenses, and damage to the property of others. Limits of liability are provided under Coverage L and Coverage M, to whatever limits the insured wishes to be indemnified for. Professional services are excluded.
The Dwelling Broad Form (DP-2) insures against all of the following perils, except: A. Damage caused by burglars B. Accidental discharge or overflow C. Theft D. Breakage of glass that is a part of a building, storm door or window
C. Theft There is no theft coverage in a Dwelling broad Form policy.
Under the Broad Form Dwelling Policy (DP-2), which peril is not included for coverage without an endorsement ? A. Falling Objects B. Damage to appliances by artificially generated electricity C. Theft D. Volcanic Eruption
C. Theft Theft Coverage for the Broad Form Dwelling Policy (DP-2) is available only through attachment of the Limited Theft or the Broad Theft endorsements. (Dwelling Policy)
In Kansas, which of the following is exempt from licensing examination requirements? A. Title producer B. Pre-need producer C. Travel producer D. Life producer
C. Travel producer Travel insurance license applicants are exempt from examination requirements. Other applicants for a producer license who are exempt from licensing requirements include one who was previously licensed in Kansas and the license lapsed less than two years ago, the applicant wants to write insurance on growing crops and has been continually licensed, the applicant passed the exam but was not appointed in error, and the applicant was previously licensed in good standing in another state. (State Laws)
What are the Section I Homeowners Coverages ?
Cov A - Dwelling Cov B - Other Structures Cov C - Personal Property Cov D - Loss of Use
What are the Dwelling Coverages ?
Cov A - Dwelling Cov B - Other Structures Cov C - Personal Property Cov D - Fair Rental Value Cov E - Additional Living Expenses
What are the Section II Homeowners Coverages ?
Cov E - Personal Liability Cov F - Medical Payments to Others
What does DP-3 (Special Form) cover ?
Coverage for the dwelling and other structures is provided on an open perils basis, meaning coverage is provided for all causes of loss except for those perils specifically excluded. Losses to the dwelling and other structures are paid on a replacement cost basis, and losses to personal property contents are paid on an actual cash value basis to the insured.
Which of the following is an example of vicarious liability? A. The liability of any group of people, acting together B. The liability of a negligent party whose identity cannot be determined C. Liability of members of the clergy D. An employer's liability for the acts of an employee
D. Vicarious liability is the liability assigned to one party for the conduct of another, based solely on a relationship between the two. Examples include employer/employee relationships and parent/child relationships.
An insured of an insolvent insurance company has homeowner coverage of $450,000. The insured submits a fire claim to the Kansas Insurance Guaranty Association for $350,000. How much will the Association pay for this loss? A. $450,000 B. $0 C. $350,000 D. $300,000
D. $300,000 The maximum amount the Association will pay for a covered claim is the lesser of the amount of the loss, the limits of the policy, or $300,000. For this insured, the Association will pay $300,000. (State Laws)
Under the Homeowners Policy, Medical Payments coverage will apply to expenses that are incurred within what length of time following an accident? A. 2 years B. 4 years C. 1 year D. 3 years
D. 3 Years Medical Payments Coverage will pay for necessary medical expenses that are incurred or medically ascertained within 3 years from the date of an accident causing bodily injury. (Homeowners Policy)
Payroll is covered for how long under Business owners Business Income coverage? A. 12 months B. 6 months C. Payroll is not covered D. 60 days
D. 60 days Payroll losses are only paid for 60 days, while the loss sustained will be covered for 12 months. (Business Owners Coverage Form)
Which of the following workers would be covered by the Jones Act? A. An employee of the Federal government B. A railroad worker C. A shipbuilder D. A sailor injured by the negligence of others
D. A sailor injured by the negligence of others The Jones Act or Merchant Marine Act of 1920 applies to sailors injured by the negligence of others. (Workers' Compensation Insurance)
In Kansas, which of the following is correct regarding a temporary license? A. The duration of a temporary license may not exceed 80 days B. A temporary license may not be renewed C. A temporary license may be issued up to 180 days after successfully completing the licensing examination D. A temporary license may be issued to the surviving spouse of a disabled or deceased producer
D. A temporary license may be issued to the surviving spouse of a disabled or deceased producer A qualifying circumstance for a temporary license includes the surviving spouse of a disabled or deceased producer. The duration of a temporary license may be for up to 180 days without an examination, and a temporary license may be renewed. (State Laws)
Which insurance company department determines the probability of loss and sets the premium rates? A. Sales B. Underwriting C. Claims D. Actuarial
D. Actuarial The Actuarial Department interprets the statistical information used in rate making, whereas the Underwriting Department is responsible for risk selection.
In Kansas, all of the following may self-insure Workers' Compensation coverage, except: A. A board of county commissioners B. A city's governing body C. A school district or community college D. An employer who purchases a fidelity bond
D. An employer who purchases a fidelity bond Employers are required to purchase a surety bond in order to qualify for self-insuring Workers' Compensation. (Sate Laws)
D does not agree with the insurance company's value of his property damaged as a result of his recent property loss. Which of the following establishes the procedure D and the insurance company must use to settle this issue? A. Claim Settlement Clause B. Loss Payable Clause C. Definitions Clause D. Appraisal Clause
D. Appraisal Clause The Appraisal Clause of the insurance policy provides a method of settling disputes between the insurer and the insured as an alternative to legal action. (Property Basics)
Of the Dwelling Policy Forms, which one does not cover damage by burglars? A. Broad Form (DP-2) B. None of the Dwelling Policies cover Damage done by Burglars C. Special Form (DP-3) D. Basic Form (DP-1)
D. Basic Form (DP-1) Damage by Burglars is covered only in the broader Forms DP-2 and DP-3.
Comprehensive Coverage under Physical Damage Coverage of the Business Auto Coverage Form, includes all of the following, except: A. Glass Breakage B. Lightning C. Theft D. Collision
D. Comprehensive Coverage under the Business Auto Coverage Form is a broad open perils coverage that covers damage from perils not excluded. Collision is excluded under the policy. (Commercial Auto Coverage)
When a loss occurs as a result of two perils, one of which is excluded and the other of which is insured against, the situation is known as: A. Bilateral Causation B. Supplemental Causation C. Proximate Causation D. Concurrent Causation
D. Concurrent Causation Concurrent Causation is the legal doctrine that states that when a property loss is due to two causes, one that is excluded and one that is covered, the loss is covered. (Property Basics)
Which of the following coverages is not included in either of the Utility Services endorsements? A. Direct loss to covered property B. Indirect loss due to Business Income loss C. Loss due to interruption of water supply coverage D. Direct loss to electronic data
D. Direct Loss to Electronic Data The Utility Services Direct Damage endorsement covers a direct loss due to the interruption of water supply, and the Time Element version covers Business Income or Extra Expense coverage for the same type of loss. (Business Owners Cov Form)
Medical benefits covered by Workers' Compensation in Kansas must follow all of the following regulations, except: A. A health care provider's bill must be paid within 60 days if not in dispute B. Employers may designate the health care provider for the injured employee's necessary medical treatment C. An appointed medical administrator oversees the provision of health care services to injured employees D. Employers must pay for the entirety of necessary medical treatment, even if the employee uses an unauthorized provider
D. Employers must pay for the entirety of necessary medical treatment, even if the employee uses an unauthorized provider If an injured employee uses an unauthorized provider instead of the designated provider, the employer is liable for charges and fees up to $500. (State Laws)
The following are all additional coverages under a Homeowners Policy, except: A. Loss Assessment B. Collapse C. Property Removed D. Governmental Action
D. Governmental Action Governmental action is an exclusion; not an additional coverage. (Homeowners Policy)
An automobile policy issued in Kansas may be cancelled after it has been in force for 60 days if the insured was guilty of which of the following in the past 3 years? A. Being a passenger in a car while intoxicated B. Making false statements on the vehicle registration C. 2 moving violations in the past 3 years D. Leaving the scene of an accident without stopping to report
D. Leaving the scene of an accident without stopping to report The policy may also be cancelled if the insured had a 3rd violation within a period of 18 months, made false statements in the application for a driver's license, or operated a motor vehicle in an intoxicated condition or under the influence of drugs. (State Laws)
Which type of construction material has a fire-resistance rating between one and two hours for walls, floors and roofs? A. Joisted Masonry B. Non-Combustible C. Fire Resistive D. Modified fire-resistive
D. Modified Fire-Resistive To be classified Modified Fire Resistive, the materials used in the walls, floors, and roof of a structure must have a fire resistive rating of at least 1 hour, but less than 2 hours.
Which 1980 regulation deregulated the trucking industry? A. Trailer Interchange Act B. Trucking Reform Act C. Motor Carrier Public Liability Act D. Motor Carrier Act
D. Motor Carrier Act This regulation requires certain vehicles carry minimum liability limits ranging from $750,000 to $5,000,000 depending on the type of merchandise transported. (Commercial Auto Coverage)
Section II (Liability) of the Garage Coverage Form covers which of the following? A. Injuries covered by Workers' Compensation B. Injuries to an employee that are caused by a fellow employee C. Property in the care and custody of the insured D. Property damage for which the insured is legally responsible
D. Property damage for which the insured is legally responsible Section II covers property damage liability for which the insured is legally responsible. (Commercial Auto Coverage)
Under the Dwelling Broad Form, losses to an unattached garage are paid on which basis? A. Actual Cash Value B. Functional Replacement Cost C. Agreed Value D. Replacement Cost
D. Replacement Cost The DP-2 provides for losses to the dwelling and other structures are paid on a replacement cost basis.
A manufacturer is held liable if a product caused an injury whether the product was or was not defective. This describes what type of liability? A. Contingent B. Direct C. Absolute D. Strict
D. Strict The doctrine of Strict Liability applies to products and their manufacturers. It holds that the manufacturer can be held responsible for an injury caused by a product, even if the product is not defective.
Which cause of Loss form for the Commercial Property Coverage Part will cover loss of sales merchandise due to a burglary ? A. There is no burglary coverage provided by the Commercial Property Policy B. The Broad Form C. The Broad From and the Special Form D. The Special Form
D. The Special Form The Perils of Burglary and Theft are not excluded under the Special Form (Commercial Property Insurance)
Actual cash value may be defined as: A. The agreed upon specific value determined before the policy was issued B. The cost to replace or repair the property C. The original purchase price of property, minus depreciation D. The cost to replace or repair property, minus depreciation
D. The cost to replace or repair property, minus depreciation Actual cash value is the cost to repair or replace (replacement cost), minus depreciation. (Property Basics)
In which scenario could an insurer cancel an automobile policy issued in Kansas without having to provide a 30 days' notice? A. The insured's teenager is cited for DUI B. The insured's spouse is convicted of robbery C. The insured has a suspended driver's license D. The insured fails to make a premium payment
D. The insured fails to make a premium payment 30 days' notice is not required if the cancellation is for nonpayment of premium. In all the other answer options, the insurer would still have the right to cancel the policy, but would have to provide 30 days' notice. (State Laws)
All of the following are true of the Business Auto Coverage Form, except: A. Coverage is primary on owned autos and excess on non-owned autos B. Medical payments coverage may be added by endorsement C. Coverage may be written on owned private passenger autos D. Uninsured Motorist Coverage is included in Section II
D. Uninsured Motorist Coverage is included in Section II Section II of the BAP provides liability coverage. Uninsured Motorist coverage is provide by optional endorsement. (Commercial Auto Coverage)
What does DP-1 (Basic form) cover?
The perils insured against are fire, lightning, and internal explosion. If an additional premium is paid for Extended Coverage (EC), the following perils are also included: - Wind storm or hail - Explosion - Riot or civil commotion - Aircraft, vehicles - Smoke - Volcanic eruption Losses to the dwelling, other structures, and contents are paid on an actual cash value basis.
What does DP-2 (Broad form) cover?
The perils insured against are the DP-1 perils, the EC perils, VMM and the following: - Damage by burglars - Falling objects - Weight of ice, snow, or sleet - Accidental discharge or overflow of water or steam - Sudden and accident tearing apart, cracking, burning, or bulging - freezing - sudden and accidental damage from artificially generated electrical current
What is Proximate cause ?
The proximate cause is the first event in an unbroken chain of events that caused the loss.
