Property Insurance Exam
What is WIP's maximum limit of coverage for a fire policy on personal property at one location? a)$1,000,000 b)$1,500,000 c)$100,000 d)$500,000
$100,000
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? A)$1,000 B)$100 per violation C)Revocation of license D)$2,500
$2,500
Which of the following includes information regarding a person's credit, character, reputation, and habits? A)Agent's report B)Consumer report C)Consumer history D)Insurability report
Consumer report
What term includes damage where the insured peril was the proximate cause of loss? A)Consequential loss B)Negligent loss C)Direct loss D)Indirect loss
Direct loss
All of the following are purposes of insurance EXCEPT to a)Limit the adverse effects of competition on the cost of insurance. b)Regulate insurance marketing practices. c)Earn commissions. d)Protect the best interests of the public.
Earn commissions.
Which of the following causes of loss would NOT be covered under a BOP form? a)Earth movement, power failure, and flood b)Riot, sprinkler leakage, or sinkhole collapse c)Fire or lightning d)Tornado
Earth movement, power failure, and flood
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has been depreciating at $200 per year and the insured's policy is written on the actual cash value(ACV), how much will the policy pay toward the insured's new roof? A)$1,000 B)$4,000 C)$5,000 D)$6,000
$5,000
If a person does not comply with an order issued within 2 weeks after the Commissioner has given notice, for each day that the violation continues, the Commissioner may issue a fine of up to A)$2,000. B)$3,000. C)$5,000. D)$1,500.
$5,000.
The insurer decided to cancel an insurance policy prior to its expiration due to nonpayment of premium. When can cancellation take place? A)10 days after the decision was made B)10 days after the notice was delivered to the policyholder C)10 days after the notice is sent out to the policyholder D)Immediately
10 days after the notice was delivered to the policyholder
Which of the following is correct regarding the amount of insurance that a lender may require as a condition to a loan on a property insured against risks to improvements? a)100% of the stated value b)100% of the replacement value c)100% of the actual cash value d)100% of the functional replacement cost
100% of the replacement value
An intermediary has just placed insurance on himself. He can receive compensation for this transaction only if he has placed insurance on other individuals with the same insurer within the last A)3 months. B)6 months. C)12 months. D)18 months.
12 months.
An insurer terminates an agent's appointment. Within how many days of termination must the intermediary be notified? A)15 B)20 C)30 D)10
15
An intermediary holding a Wisconsin insurance license in any major line of insurance must complete how many credit hours of continuing education every 2 years? A)12 B)20 C)22 D)24
24
When the appointment of an individual agent is terminated, the insurer must notify the Office of the Commissioner with appropriate forms within how many days after the termination date? A)20 B)30 C)10 D)15
30
How long are oral contracts valid in Wisconsin? a)30 days b)Oral contracts are not valid. c)48 hours d)3 business days
30 days
In this state, insurers must pay a claim within how many days of receiving proof of loss? A)10 days B)15 days C)30 days D)90 days
30 days
Jean owns a craft store. The protective safeguards endorsement of her BOP requires the store to have a functional automatic sprinkler system. A winter storm freezes the pipes to the sprinkler system, causing the system to shut down. How many hours does Jean have to restore the system before she must notify her insurer? a)12 hours b)24 hours c)36 hours d)48 hours
48 hours
During a house fire, an insured moves an antique chair listed on the policy to a storage unit. In the Standard Fire Policy, how many days will the antique chair be covered at the new location? a)3 days b)5 days c)15 days d)30 days
5 days
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A)5 days B)7 days C)10 days D)3 days
5 days
An insurer decides to renew a life policy but at a higher premium rate, starting on the renewal date. How many days in advance must the insured be notified? A)30 B)60 C)90 D)100
60
An insurance policy is considered a "new policy" if it has been in effect for what maximum time period? A)10 days B)30 days C)60 days D)90 days
60 days
Which of the following would NOT be classified as personal property for insurance purposes? A)Equipment B)Furniture C)A house D)A vehicle
A house
Which of the following persons is NOT required to complete CE? a)A property insurance intermediary with 40 years of continuous licensure b)Any licensee over 65 with more than 25 years of continuous licensure c)A limited lines intermediary with 40 years of continuous licensure d)A life insurance intermediary with 18 years of continuous licensure
A limited lines intermediary with 40 years of continuous licensure
A tornado that destroys property would be an example of which of the following? A)A peril B)A pure risk C)A loss D)A physical hazard
A peril
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?a)Exclusions b)Declarations c)Insuring agreement d)Additional coverage
Additional coverage
Which of these is defined as the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims that may be made or the number of accidents that may occur? a)Per occurrence limit b)Split limit c)Aggregate limit d)Per person limit
Aggregate limit
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a)Adhesion b)Consideration c)Good faith d)Representation
Consideration
Who must be a member of the Wisconsin Insurance Plan?a)Membership is voluntary b)All insurance companies authorized to write basic property insurance in the state c)All insurers authorized to write motor vehicle insurance in the state d)All insurance companies doing business in Wisconsin
All insurance companies authorized to write basic property insurance in the state
An insured works outside the home. The insured's sister lives with him and cares for his four children. When the insured's home is severely damaged by fire, the family moves into an apartment while repairs are being made. The largest apartment available in the area has two bedrooms, so the insured's sister has to stay at a motel. How much will the HO-3 form pay for these additional living expense? a)Nothing b)All of the expense up to the Coverage D limit c)The cost of renting an apartment, but not the cost of the motel room d)The cost of renting an apartment, and 50% of the cost of the motel
All of the expense up to the Coverage D limit
All of the following would be considered rebating EXCEPT a)An agent offers tickets to a baseball game as an inducement to buy insurance. b)An agent misrepresents policy benefits to convince a policyowner to replace policies. c)An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him. d)An agent offers to share his commission with a policyholder.
An agent misrepresents policy benefits to convince a policyowner to replace policies.
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does the describe?
Apparent
Under which of the following would the Commissioner grant a requested re-hearing? A)The aggrieved person files a claim against the Office of the Commissioner of Insurance's errors and omissions in insurance coverage. B)New evidence is discovered. C)The aggrieved person supplies a petition of 50 intermediaries licensed to transact insurance in Wisconsin. D)The Governor files an appeal.
B)New evidence is discovered.
Homeowners policies provide coverage for a)Property of tenants, roomers, or boarders not related to any insured. b)Business property while on the residence premises. c)Losses caused by off-premises power failure. d)The land under the residence.
Business property while on the residence premises.
An insurance producer who by contract is bound to write insurance for only one company is classified as a/an a)Captive agent. b)Solicitor. c)Broker. d)Independent producer.
Captive agent.
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as A)Rebating. B)Misleading advertising. C)Defamation. D)Coercion.
Coercion.
Which of the following terms describes a situation in which an agent and policyholder act together to defraud the insurer? A)Coercion B)Teaming C)Collaboration D)Collusion
Collusion
If an insurer develops a new policy form, which authority must approve it? A)Department of Insurance B)Federal Board of Insurance Regulation C)Commissioner D)None
Commissioner
What term best describes the act of withholding material information that would be crucial to an underwriting decision? A)Breach of warranty B)Concealment C)Withholding D)Leading
Concealment
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A)Aleatory. B)Personal. C)Unilateral. D)Conditional.
Conditional.
The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the A)Conditions. B)Exclusions. C)Declarations. D)Insuring clause.
Conditions.
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? A)Representation B)Adhesion C)Consideration D)Good faith
Consideration
All of the following actions can be described as twisting EXCEPT a)Making an incomplete comparison between the existing and proposed policies b)Explaining to client the advantages of permanent insurance over term and suggesting changing policies c)Misrepresenting the terms and conditions of the existing policy to make the new one more attractive d)Embellishing the terms of the proposed policy in order to convince the insured to switch
Explaining to client the advantages of permanent insurance over term and suggesting changing policies
All funds collected by an intermediary for prompt payment to insureds, insurers, or producers as entitled are received in what is known as A)Fiscal responsibility. B)Accepted accounting principal. C)Fiduciary capacity D)Premium accountability.
Fiduciary capacity
An ocean marine loss that occurs through the voluntary sacrifice of a part of the vessel or cargo to save the ship, crew, or other cargo is known as a)Particular average. b)Inchmaree clause. c)Protection and indemnity. d)General average.
General average.
The policy conditions define A)The amount of coverage. B)How parties to the contract must act following a loss. C)The basic underwriting information. D)The excluded perils.
How parties to the contract must act following a loss.
How soon after a direct loss does the period of restoration for extra expense coverage under businessowners property insurance begin?a)Immediately b)Within 24 hours c)Within 48 hours d)Within 72 hours
Immediately
All of the following are conditions commonly found in the insurance policy EXCEPT a)Subrogation. b)Appraisal. c)Insuring agreement. d)Cancellation and nonrenewal.
Insuring agreement.
The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the A)Conditions. B)Exclusions. C)Declarations. D)Insuring agreement.
Insuring agreement.
Which if the following is true regarding a risk retention group?
It is a liability insurance company owned by its members
All of the following statements describe the concept of strict liability EXCEPT a)It is imposed on defendants engaged in hazardous activities. b)Claimants may need to provide proof that a product defect caused an injury. c)It is imposed regardless of fault. d)It is applied in product liability cases.
It is imposed on defendants engaged in hazardous activities.
In a dwelling policy, which of the following is true regarding personal liability coverage? a)It does not cover medical payments to others. b)It is included in all dwelling policies. c)It is the same as in homeowners policies. d)It must be added as a supplement or written as a separate policy.
It must be added as a supplement or written as a separate policy.
Rates that are established based on the similarities of the risk with other risks are known as A)"A" rates. B)Merit rates. C)Manual rates. D)Experience rates.
Manual rates.
Which of the following coverages is included in an unendorsed homeowners policy? a)Medical payment to others b)Personal property replacement coverage c)Fungi, wet or dry rot, or bacteria d)Earthquake
Medical payment to others
Which of the following is the use of false, misleading, or deceptive statements to describe the terms or benefits of any policy? A)False advertisement B)Defamation C)Fraudulent disclosure D)Misrepresentation
Misrepresentation
An agent is selling a client a Variable Life Insurance policy and as an inducement shows the client a projection based upon shares or dividends paid on a similar policy. This is A)Misrepresentation. B)Twisting. C)Defamation. D)Unacceptable business practice.
Misrepresentation.
An agent who includes a statement or omits a statement which, when taken in context of the whole presentation, may tend to mislead or deceive the persons addressed has committed A)Twisting. B)Coercion. C)Misrepresentation. D)Defamation.
Misrepresentation.
Illegal use of narcotics would be an example of a a)Moral hazard. b)Physical hazard. c)Pure hazard. d)Morale hazard.
Moral hazard.
According to the standard mortgage clause, who has the right to bring a suit in their own name to recover damages, pay policy premiums, and submit a proof of loss? a)Policyholder b)Mortgagee c)Insurance company d)Governor
Mortgagee
Which of the following covers a carrier for liability for loss to cargo while it is being transported in a truck? a)Motor truck cargo policy - owners form b)Trip transit policy c)Truckers coverage form d)Motor truck cargo policy - carriers form
Motor truck cargo policy - carriers form
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report A)Must be advised that a copy of the report is available to anyone who requests it. B)May sue the reporting agency in order to get inaccurate data corrected. C)Must be informed of the source of the report. D)Are entitled to obtain a copy of the report from the party who ordered it.
Must be informed of the source of the report.
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? A)Reciprocal B)Nonprofit service organization C)Stock D)Mutual
Mutual
The livestock coverage form covers which of the following losses? a)Sheep died after an attack by the family dog b)A cow died after it ran into a moving tractor c)All risk coverage for death of livestock by any cause except those excluded d)Named peril coverage for death of livestock
Named peril coverage for death of livestock
Which of the following homeowners endorsements covers liability exposures arising from an incidental business conducted within a building on the residence premises?a)Professional liability b)Business income - report of values c)Permitted incidental occupancies d)Special limit of liability
Permitted incidental occupancies
What type of coverage is Coverage E in homeowners policies? a)Personal liability b)Additional coverage c)Loss of use d)Personal property
Personal liability
Section I of a boatowners policy covers a)Liability. b)Medical payments. c)Death. d)Physical damage.
Physical damage.
What is the term for the entity that an agent represents regarding contractual agreements with third parties? A)Client B)Designee C)Insured D)Principal
Principal
Which of the following statements is an accurate comparison between private and government insurers? A)Private insurers provide insurance in areas where the government will not. B)Private insurers may be authorized to transact insurance by state insurance departments. C)Insurance provided by the government is called federal insurance. D)Private insurers offer fewer lines of insurance than government insurers.
Private insurers may be authorized to transact insurance by state insurance departments.
Which of the following is an example of a producer's fiduciary responsibilities? A)Offering additional coverage to his client B)Promptly forwarding premiums to the insurance company C)Helping clients to file claims D)Doing a review of their client's coverage
Promptly forwarding premiums to the insurance company
Which of the following is NOT an optional coverage built into the condominium association coverage form? a)Replacement cost b)Real estate tax liability c)Agreed value d)Inflation guard
Real estate tax liability
All of the following are true regarding rebates EXCEPT a)Dividends are not considered to be rebates. b)Rebates are allowed if it is in the best interest of the client. c)Rebates are only allowed if specifically stated in the policy. d)Rebating can be anything of monetary value given as an inducement to purchase insurance.
Rebates are allowed if it is in the best interest of the client.
Which of the following insurance options would be considered a risk-sharing arrangement? A)Reciprocal B)Stock C)Mutual D)Surplus lines
Reciprocal
Carl's application for a life policy was rejected because of information disclosed in an inspection report. Carl reviewed the consumer reporting agency's file and found they had incorrect information concerning his personal life. Carl can legally require the reporting agency to A)Provide him with a written apology. B)Reinvestigate. C)To cease and desist. D)Delete the incorrect information.
Reinvestigate.
Which method of loss valuation is contrary to the basic concept of indemnity? a)Market value b)Agreed value c)Replacement cost d)Functional replacement cost
Replacement cost
Which of the following is used in the formula for calculating the actual cash value of a property? a)Replacement cost b)Stated value c)Fair market value d)Agreed value
Replacement cost
Which of the following is NOT a mandatory provision for property policies issued in the state of Wisconsin? a)A mortgagee clause b)Obligations in the event loss occurs c)Replacement cost coverage d)A description of the location of the property covered
Replacement cost coverage
Which of the following statements is INCORRECT? a)Replacing insurance policies for the purpose of making commissions is legal. b)Misrepresenting the true nature or facts of a policy or its benefit in order to induce a policyholder to surrender one policy and replace it with another is illegal. c)It is illegal to be involved in any activity of boycott, coercion, or intimidation that is intended to restrict fair trade or to create a monopoly. d)Discrimination in rates, premiums, policy benefits, etc. for persons within the same class or with the same life expectancy is illegal.
Replacing insurance policies for the purpose of making commissions is legal.
Events in which a person has both the chance of winning or losing are classified as a)Retained risk. b)Speculative risk. c)Insurable. d)Pure risk.
Speculative risk.
When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as a)Actual cash value. b)Specific insurance. c)Stated amount. d)Replacement cost.
Stated amount.
Which of the following perils is covered by the HO-2 and HO-3? a)Flood b)War c)Sudden and accidental rupture of a heating system d)Loss due to power interruption that occurs off the premises
Sudden and accidental rupture of a heating system
The Commissioner conducts an examination of a domestic insurer and believes that the costs of examination places an unreasonable financial burden on the insurer. Which of the following will happen? a)The federal government will absorb the full cost. b)The federal government will absorb part of the cost, and the state government will absorb the rest of the cost. c)The costs will be reduced to the amount that the examinee can reasonably pay; the rest will be paid by the federal government. d)The Commissioner's office may pay all or part of the costs.
The Commissioner's office may pay all or part of the costs.
When an insurer is given an order of liquidation, which of the following will protect the insureds' unpaid claims? A)The Office of the Commissioner of Insurance B)The Wisconsin Insurers Association C)A reinsurance company D)The Wisconsin Insurance Security Fund
The Wisconsin Insurance Security Fund
As a condition to issuing a fire insurance policy, the Wisconsin Insurance Plan may require all of the following EXCEPT a)The applicant to make specific improvements on the property. b)The applicant to agree to a large or special deductible. c)The applicant to pay the cost of the property inspection. d)All are exceptions.
The applicant to pay the cost of the property inspection.
When the condominium association coverage form and the condominium commercial unit-owners form both cover the same loss, a)The association coverage form will be considered primary and pay the loss. b)The unit-owners coverage form will be considered primary and pay the loss. c)Each coverage form will pay a pro rata share. d)Neither will pay.
The association coverage form will be considered primary and pay the loss.
Peril is most easily defined as A)The cause of loss insured against. B)An unhealthy attitude about safety. C)The chance of a loss occurring. D)Something that increases the chance of loss.
The cause of loss insured against.
All of the following are characteristics of the dwelling policy EXCEPT a)Dwellings up to four family units are eligible. b)The dwelling must be owner-occupied. c)Coverage includes the dwelling only, contents only, or both. d)Incidental occupancy of limited service-type exposure is permitted.
The dwelling must be owner-occupied.
Which of the following would the livestock coverage form NOT insure against? a)The euthanasia of livestock suspected of carrying mad cow disease b)Death of livestock caused by accidental drowning c)Death of livestock caused by a tornado d)The euthanasia of livestock after being hit by a vehicle
The euthanasia of livestock after being hit by a vehicle
What will happen if a house covered by a standard mortgage clause is a total loss? A)The insurer pays the mortgagee according to the mortgagee's interest in the property. B)The mortgagee retains no rights to any contracts involving the policy. C)The insured receives the full benefit and passes the mortgagee's share to the mortgagee. D)The mortgagee receives the full benefit and passes the insured's share to the insured.
The insurer pays the mortgagee according to the mortgagee's interest in the property.
The most the insurer will pay for a loss under a businessowners policy is a)80% of the loss. b)20% of the loss. c)The limit of insurance after the deductible is paid. d)The amount of the loss minus the deductible.
The limit of insurance after the deductible is paid.
The most the insurer will pay for a loss under a businessowners policy is a)The amount of the loss minus the deductible. b)80% of the loss. c)20% of the loss. d)The limit of insurance after the deductible is paid.
The limit of insurance after the deductible is paid.
A mortgage company is named as a loss payee on the insured's homeowners policy, under the standard mortgage clause. If the insured suffers a loss due to a fire, which of the following is true? a)The loss is payable to the insured and the mortgagee. b)The mortgagee should submit a claim to its insurer, and the insured should submit a claim to the HO policy. c)The entire loss is payable to the mortgagee. d)The entire loss is payable to the insured.
The loss is payable to the insured and the mortgagee.
Which of the following is NOT a characteristic of an insurable risk? A)The loss exposure must be large. B)The loss must be catastrophic. C)The loss must be due to chance. D)The loss must be measurable.
The loss must be catastrophic.
Which of the following best expresses the purpose of a stated value contract? a)To pre-establish the amount of coverage available for property items that are difficult to value b)To ensure that the principle of indemnification applies c)To establish the value of property subject to loss by theft or robbery d)To provide a maximum limit for which the insurance company may become liable in casualty losses
To pre-establish the amount of coverage available for property items that are difficult to value
What is the purpose of a binder of insurance? a)To ensure that the applicant will not apply for insurance with competing insurers b)To ensure that the insurer will accept the application for insurance with minimal underwriting c)Binders have no definite purpose d)To show the insurer's acceptance of the applicant's offer to buy insurance
To show the insurer's acceptance of the applicant's offer to buy insurance
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of a)Rebating b)Twisting c)Defamation d)Misrepresentation
Twisting
Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form? a)Works of art or antiques b)Valuable papers and records c)Property of others d)Manuscripts
Valuable papers and records
Which of the following is a statement made in an insurance application by the insured that is the absolute truth? A)Oath B)Claim C)Representation D)Warranty
Warranty
In forming an insurance contract, when does acceptance usually occur? A)When an insured submits an application B)When an insurer's underwriter approves coverage C)When an insurer delivers the policy D)When an insurer receives an application
When an insurer's underwriter approves coverage
According to the conditions of a hull policy after a loss, when would wages and maintenance be paid for the master, officers, and crew? a)When moving the vessel from one port to another b)While laid up in port awaiting repair c)Within 15 days after filing claim for damages d)While on shore leave
When moving the vessel from one port to another
Even though the Standard Fire Policy is a named peril contract, under which of the following circumstances would the policy provide "all risk of loss" coverage on insured property?a)Never b)Always c)When the loss is classified as an "act of God" d)When the loss is to insured property that has to be removed because of endangerment by a peril insured against under the policy
When the loss is to insured property that has to be removed because of endangerment by a peril insured against under the policy
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce A)Without receiving written consent from a Federal Judge. B)Without receiving written consent from an insurance regulatory authority. C)Under any circumstances. D)Unless they have served an appropriate prison sentence.
Without receiving written consent from an insurance regulatory authority.