Real exam questions

Under Business Personal Property Limit - Season Increase, if no percentage is specified in the declarations, seasonal fluctuations will automatically increase the limit for business personal property by what percent?

25%

In order to meet the continuing education (CE) requirements, producers in this state must complete?

3 hours of ethics as part of 24 hours of CE

Pat has held a temporary insurance license for 150 days. The license will be effective for how much longer?

30 days

An individual contracts with an insurer to handle workers compensation claims. What license does this person have?

Adjuster

All of the following are optional endorsements that may be added to the standard equipment breakdown coverage form EXCEPT?

Debris removal

Which of the following exclusions applies to both personal injury and advertising injury in the businessowners policy?

Willful violation of a penal statute or ordinance committed by the insured

Insureds covered under a Mobile Homeowners Policy move their mobile home to prevent it from being damaged by a fire. What is the maximum amount the policy will pay for this?

$500

A home is insured for $200,000 under an HO-3. Last week, the owner purchased a new home and began to move his personal property to the new residence. Last night, vandals did $8,000 of damage to the property that had been moved to his new residence. Disregarding any deductible, how much will the HO-3 pay?

$8,000

When cancelling a standard fire policy, the insurer must give the insured at least?

10 days' notice

Coverage C in homeowners policy forms offers all the following EXCEPT?

Coverage for loss of use

Which homeowners form provides open peril coverage for dwelling (Coverage A) and contents (Coverage C)?

HO-5

Which of the following terms refers to solicitation, negotiation, effectuation, or advising related to an insurance contract?

Insurance transaction

Which of the following is NOT true regarding the automatic increase in insurance endorsement in dwelling policies?

It does not require an additional premium

Which of the following statements is true regarding advertising that the Insurance Guaranty Association would ensure payment of benefits in the event of insurer insolvency?

It is an unfair trade practice to mention the Association in advertisements

Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?

Occupation

What kind of coverage does DP-3 provide?

Open

Which of the following is NOT available in a package policy?

Professional liability

Which of the following would NOT be covered by commercial inland marine policies?

Property lost due to a military action

Wagering on a sporting event is an example of what type of risk? (Evander Kane)

Speculative (gambling)

Which of the following actions does NOT constitute false advertising?

Stating that dividends are not guaranteed

Due to appreciation, the amount of insurance on a business is less than 80% of its actual value on the date of the loss. Which of the following is true?

The coinsurance penalty applies

An insured was having a new home built. While digging the footings for the foundation, the contractor struck a solid rock formation and found that it was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbor's home several blocks away. Who pays for this damage?

The contractor

If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true?

The insurer will be reimbursed for the excess costs by the NFIP

The insurer may cancel a personal auto policy for only certain stated reasons after it has been in effect for how many days?

60 days

What amount of coverage is provided on HO policies for watercraft?

Up to $1,500

Following an adjudicatory hearing, the Superintendent may issue a cease and desist order to any person found to have engaged in any act or practice in violation of any insurance law. A cease and desist order becomes effective when?

When issued

When nonrenewing a commercial property policy, the insurer must give the insured at least?

30 days' notice

How many licenses must a business entity designate as responsible for the entity's compliance with insurance laws?

At least one

Coverage E (Personal Liability) and/or Coverage F (Medical Payments to Others) would respond to a claim arising from all of the following situations EXCEPT?

An insured's 14 year old son was throwing rocks at the neighbor's house and broke several windows

Under Coverage B - Other Structures, a homeowners policy provides coverage for other structures on the residence premises. Which of the following statements is NOT true of this coverage?

Any loss paid under Coverage B reduces the Coverage A limit of liability

Which of the following is NOT an example of the company's location of incorporation?

Authorized

An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting from one accident, which may be used in any combination of amounts, not to exceed the single limit. What type of limit does this insured have?

Combined single

An insured's home catches fire. As a result, the insured's family must stay in a motel until the home is repaired. The cost of the motel stay would be considered a?

Consequential loss

Which of the following elements of an insurance contract requires payment of premium?

Consideration

Which peril is not covered by the DP-3?

Damage to birds, pets, or fish

In businessowners policies, a deductible does NOT apply to which of the following additional coverages?

Fire department service charge

Which if the following criminal activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance agent's license?

Forgery

Which homeowners form insures both buildings and personal property on an open peril basis?

HO-5

Guaranteeing future dividends is considered to be an unfair or deceptive act known as?

Misrepresentation

A golfer slices a tee shot and the ball goes through the window of a house beside the fairway. The broken glass is paid for by?

The golfer's homeowners liability coverage

All of the following statements about mutual insurance companies are correct EXCEPT?

Policy dividends issued by mutual companies are guaranteed and not taxable

According to the law of agency, insurance producers represent?

Insurers

A structure may be eligible for coverage under the National Flood Insurance Program if it meets all of the following requirements EXCEPT?

It is entirely over water

The insurance company requires that an insured installs a fire alarm and an automatic sprinkler system as a condition for coverage. This is an example of what?

Protective safeguards endorsement

The equipment breakdown coverage form values loss on what basis?

Replacement cost

For an additional premium, the extended coverages written on the basic form dwelling policy would cover which of the following?

Riot

Which of the following types of property would be covered under Coverage C - Personal Property in a dwelling policy?

Rowboats

An insurer's right to take possession of property after having paid for the loss is referred to as the right to?

Salvage

Which of the following perils will be EXCLUDED from coverage under HO-4 Tenant Broad Form of a homeowners policy?

Sewer water backup

An agent who knowingly misrepresents material for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as?

Twisting

When the Superintendent holds a hearing for the purpose of examining evidence against a licensee charged with violation of Maine insurance laws, the licensee must receive how much prior notice of such hearing?

14 days

The Superintendent has a duty to examine each domestic insurer admitted to transact insurance in Maine at least once every?

3 years

An insurer who transacts insurance in this state but whose articles of incorporation are registered in Canada is considered what type of insurer?

Alien

Which of the following would be considered a nonresident agent?

An agent who resides in another state, but is licensed to write insurance in this state

Which of the following entities is eligible for a businessowners policy?

Convenience stores

What policy would a business owner whose business fills scuba tanks most likely need to insure unfired pressure vessels and compressors?

Equipment breakdown

According to the Section I - Property of the Businessowners policy definitions, what is the term for insured's business activities occurring at the described premises?

Operations

What sublimit in a liability policy sets the max amount that will be paid for all claims arising from a single accident?

Per occurrence

Preferred insurers have several policyholders who have additional coverage being added to their policies on a periodic basis which results in additional benefits and levels of coverage. The new elements of the policy are considered to be "pre-sold" and the policyholder is not making any additional approvals for the additions. Which of the following BEST describes this process?

Since the additional benefits were "pre-sold" to the client, preferred is using an approved method to increase the policy benefits as the policyholder previously requested

In contrasting stock insurers with mutual insurers, which statement is true?

Stock insurers are owned by the shareholders and issue nonparticipating policies

An insured was backing his car out of the driveway and hit a fire hydrant. The automobile sustained $1,300 of damage to the bumper. The insured's auto policy has a $500 deductible. Which of the following is true?

The insured is responsible for the first $500 of any claim that he makes on his policy

Under the common policy conditions of a policy, all of the following are TRUE about changes in a policy EXCEPT?

The insurer must obtain permission from all named insureds to make a change

An insured's diner suffered a fire loss. In addition to the damage caused by the fire, the floor covering had to be replaced because of the water damage. It took 4 weeks for the repairs to be completed. The insured was without income for that period of time. The insured's policy includes both direct and indirect loss coverage. What part of the loss would be paid as an indirect loss?

The loss of income for the time the diner was closed

All of the following are considered insured under the hired and nonowned auto liability endorsement added to a businessowners policy EXCEPT?

The owner of a nonowned vehicle

Under the property and casualty conditions of a homeowners policy, what may happen if it is discovered that the policyowner committed concealment or fraud?

The policy may be voided

If an insurance policy ahs the additional coverage provision, how does it affect the policy premium?

There is no additional premium

Surplus lines insurance may only be purchased from which of the following?

Unauthorized insurers

An insured has a standard fire policy. He suffers a covered loss, files a claim, and submits the proof of loss. How soon can he expect payment from the insurer?

Within 60 days