Simulate your exam

A producer licensed in Pennsylvania must notify the insurance department of any change of address in his or her residence or business address within how many days

30

Bob's neighbor will not stop parking his motorcycle in Bob's Rose garden no matter how many times he has been asked to quit parking there. Bob finally gets a court order requiring the neighbor to refrain from parking there. It turns out it was his neighbors property all along. What bond was Bob required to post guaranteeing his neighbors damages in his wrongful action will be paid?

Attachment

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted

What is the NAIC?

The "National Associates of Insurance Commissioners" which assists in administration of uniformed stat insurance laws and regulations by promoting efficiency to protect the interests of the policyholders.

Which item would not be covered under building coverage in a building and personal property policy?

The bulldozer being used as part of a business addition under construction that is parked 500 feet from the building

Which of the following circumstances would be excluded under medical payments coverage of a personal auto policy?

The insured is injured while driving his motorcycle on his resident premises

Which of the following is a statutory defense

comparative negligence

When a producer holding a certificate or a broker's license has a change in his/her residence or business address, he/her must notify the department of insurance and any company for which the producer holds an appointment within

15?

For how long after the death of the named insured must basic property insurance continue coverage?

180 days

In the split limit coverage and personal auto policies, which limit indicates the maximum amount the policy will pay for bodily injury per person

1st limit

If an insurer terminates a producer's appointment, the Commissioner must be notified within how many days?

30

Which of the following is not considered a misrepresentation as it pertains to unfair trade practices?

Making comparisons between different policies

Which coverage would a business owner need in a crime policy to cover money that may be stolen from a messenger?

Outside the premises

Which of the following types of agent authority is also called perceived authority

apparent

Transportation expenses are covered under a personal auto policy for

$20 per day, for a maximum of $600

An insured's building Has an actual cash value of $200,000 and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

$32,000

What is the maximum length of time that an employee who is partially disabled can receive loss of time benefits under Worker's Compensation?

156 weeks

Coverage for medical payments under a personal auto policy applies to expenses following a covered accident that are incurred and services rendered within what maximum time period?

3 years

What documentation grants express authority to an agent?

Agent's contract with the principal

How much is covered for debris removal under the HO property additional coverages?

All reasonable costs

Crime insurance is usually written on what basis?

All-risk or open peril

Which of the following risks would not be eligible for coverage under a homeowners policy?

An applicant who owns and lives on a commercial farm

Which of the following describes contributory negligence

Any degree of negligence by the injured party may bar recovery

In a personal auto policy, where is the insureds auto covered?

Any other state

A producers license must be renewed

Biennially every two years

Which of the following would be included in the farm liability coverage forms?

Bodily injury to a residence employee (just like HO liability, Farm liability forms will not pay for injuries of anyone normally at the insured location except residence employees not covered by workers comp

Which of the following statements regarding coverage for the flood and earthquake perils is true?

Both flood and earthquake are excluded perils in all property policies.

Which of the following would not be considered an exception to the national do not call list?

Calls based from outside of the United States

Which of the following best describes liberalization clause in a policy?

Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium.

The ABC corporation has $100,000 of coverage on it's building through insurance company A, and $50,000 of identical coverage on the same building through insurance company b. Assuming coinsurance is not an issue, when a $24,000 loss occurs and the pro rata method is used, how much will each insurer pay?

Company will pay $24,000 Company B will pay zero dollars

Farm fences (except field and pasture fences) are covered by which farm coverage form?

Coverage G damage to property to others

The designation symbols used in commercial auto policies can be found in which policy section?

Covered Auto

Which of the following is an example of unfair claims settlement practice? A. Making claims payments which clearly indicate under which coverage payment has been made B. Using arbitration when the Insured and Insurer cannot reach agreement C. Failure to promptly settle a claim when liability has been clearly established D. Denying coverage after a reasonable investigation has been conducted

D?

Which of the following terms describes making false advertisements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?

Dafamation

Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy?

Damage to the dwelling caused by ash or dust from a volcanic eruption

Which of the following is considered to be a morale hazard?

Driving recklessly

Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will

Either pay or defend as it decides

The Subsequent Injury Fund was established to

Encourage employers to hire workers who had suffered prior compensable injuries.

Individuals in the business of selling construction equipment and mobile equipment should insure with a/an

Equipment dealers coverage form

The section of an insurance policy that details what perils are not included against and what persons are not insured is known as the

Exclusions

Pass Insurance sells a lot of crop insurance. Because they sell crop insurance, they are reinsured by who?

FCIC

Which of the following regulatory authorities participated in creating the national do not call registry?

FTC

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair Credit Reporting Act

Which of the following statements would be an example of a product liability claim?

Faulty packaging of a cereal caused spoilage that resulted in someone getting sick.

Which of the following criminal activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance producers a license?

Forgery Upon conviction of a felony, a producer's license will be revoked by the Commissioner.

The insured owns an older farm with lath and plaster walls. Following a kitchen fire, the insurance company pays to have the wall replaced with drywall that is just as functional, but costs less than lath and plaster. Which loss valuation allows the insurance company to have plaster replaced with drywall?

Functional replacement cost

Which of the following endorsements is used by individual business owners who use company vehicles for personal use rather than purchasing a personal vehicle

Individual named insured

What is the FAIR plan?

Insure high risk homes ?

Which of the following statements concerning the builders risk coverage form is correct

It may be written on a reporting form for the completed value of the structure

In the dwelling policy which of the following is true regarding personal liability coverage?

It must be added as a supplement or written as a separate policy

An insurance producer fails to obtain automobile insurance for a client after agreeing to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. The damage to the other vehicle totals $5000. Which statement regarding the producers errors and omissions liability policy is true?

It will provide coverage because the damage to the client resulted for the producers Negligence

If an employer in a state with elective workers compensation laws chooses not to be subject to those laws, what does the employer lose?

Its common law defenses against liability suits

Crews of Ships are covered by the

Jones Act

Dwelling Coverage includes all of the following except

Land on which the dwelling is located

What type of property would not be covered under the dwelling policy special form coverage a dwelling

Land on which the dwelling is located

Which of the following types of property would be covered in homeowners coverage forms?

Landlord furnishings in an on-premises apartment

According to the nationwide marine Definitions, risks that may be the subject of inland marine insurance include all of the following except

Large pleasure boats

Which of the following is defined as a covered cause of loss in business owners property coverage?

Leakage from fire-extinguishing equipment

Which of the following best describes the unfair trade practices of dafamation

Making derogatory oral statements about another insurers financial condition

The livestock coverage form covers which of the following losses?

Named peril coverage for death of livestock

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Not taxable since the IRS treats them as a return of a portion of the premium paid

A property insurance policy that insures A commercial building on a replacement cost basis includes the ordinance or law Coverage Endorsement. This endorsement will cover all of the following expenses except

Ordinance with which the insured was required to comply prior to the loss

Which of the following terms of refers to such disabilities as a loss of a limb, hearing, or eyesight

Permanent Partial disability

Who might receive dividends from a mutual insurer?

Policyholders A mutual insurer has no stock, and is owned by the policyholders. Since they may receive a dividend (not guaranteed), such policies are known as participating policies. Dividends received by policyholders of a mutual insurer are not taxable.

What method do insurers use to protect themselves against catastrophic losses?

Reinsurance. Insurers use reinsurance to protect themselves from catastrophic losses. This is a method where the reinsurer indemnifies the ceding insurer for part or all of the losses it sustains related to a policy issued previously.

In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called

Self-insured retention

The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as

Subrogation

Which of the following symbols is available to an insured with vehicle subject to no-fault coverage

Symbol five

How much is the premium for the dwelling under construction Endorsement under the dwelling policy

The average amount of insurance during construction

Functional Replacement Cost

The cost to replace damaged property with less expensive and more modern construction or equipment.

Which of the following losses would be covered under the property damage liability coverage of a personal auto policy?

The insured damages a rented garage when he failed to stop in time.

All of the following are valid reasons for an insurer to cancel an auto Insurance policy, except

The name insured obtains a divorce

Who is NOT an insured for liability on a BAP?

The owner of a car the insured borrows

If another governmental agency takes real action against a licensee, who's responsibility is it to report the action?

The person/entity requesting the action

The cost of restoring farm records is an additional coverage offered under a farm policy. How much will the policy pay to restore the records?

Up to $2,000

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?

additional coverage

A policy that insures all property at multiple locations for a single amount is referred to as

blanket

General-cargo ships are used to transport

break-bulk cargo

The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the

conditions

An additional loss that results from a direct loss of property is called a/an

indirect loss

A deliberate act that causes harm to another person, regardless of whether the harm is intended is called a

intentional tort

Which of the following lists all the required elements for establishing a charge of negligence?

legal duty owed, breach of legal duty owed, proximate cause, damages

Which of the following liability coverages must be added by endorsement to a homeowners policy in order to apply

personal injury

If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT

physical damage

If the insured owns a watch valued at $10,000, full coverage can be provided on a homeowners policy by purchasing the

scheduled personal property endorsement

Which of the following is a formal program developed by an employer to fund its losses as an alternative to the purchase of insurance

self-insurance

Who is not considered an employee in a commercial general liability policy?

temporary worker

robbery is

the taking of property from a person's possession by using force or threats

All of the following are other coverages included in both the broad and special form dwelling policy except

theft of personal property

A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint, the building is considered

vacant

What is the civil penalty for violating a cease and desist order of the commissioner

$10,000

Tom's truck service's vehicle is stolen. The policyholder may obtain coverage for transportation expenses subject to which of the following limits?

$20 per day $600 maximum

A premium discount is the term that describes when an insured owes a total standard premium greater than

$5,000

An insured hit a deer and crashes his car into a tree. The total damage to the vehicle is $6000. How will this loss be covered?

$6000 would be paid under other than collision coverage

To avoid violations of unfair claims settlement regulations, insurers are required to acknowledge the receipt of a claim within how many days?

10 days

How long does a temporary producers license last for the surviving spouse of a deceased producer?

180 days

Twisting

A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.

Which of the following statements is incorrect?

A licensee is barred from charging a fee in addition to a commission to a person for the sale, solicitation or negotiation of a contract of insurance for commercial business.

A business owners policy is

A self-contained prepackaged policy.

What is a binder?

A temporary insurance contract that goes in effect prior to the policy issue

An individual was just caught acting as an exclusive general agent - even though he is not properly licensed. Assuming that this occurred in a single day, what is the maximum penalty he faces?

A third degree misdemeanor and a $1,000 fine

Defamation

Act of harming or ruining another's reputation

A recent college graduate bought a car and is trying to get automobile insurance on it as required by the lienholder. After being rejected by several insurance companies due to his driving record, he finally talk to an agent who can get them coverage. His agent called him a residual market risk. From which type of automobile insurance plan can the applicant purchase insurance?

Assigned risk

Which of the following is a mandatory part of insurance policy that varies with each individual policy?

Declarations

When a direct chain of events resulting from a negligent act causes injury or damage, the act is considered to be

Direct direct cause

All of the following actions can be described as twisting except

Explaining to client the advantages of permanent insurance over term and suggesting changing policies

A producer sold an insurance policy. Subsequently, the license was suspended. In this case, how much of the commission will the producer receive?

All

Which of the following entities establish the Do-Not-Call Registry?

FTC Federal trade commission

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?

Fair Credit Reporting Act

In insurance transactions, fiduciary responsibility means

Handling insurer funds in a trust capacity

In order to satisfy the Pennsylvania Motor Vehicle Financial Responsibility Law, an auto liability policy issued for delivery in the state must have bodily injury and property damage limits not less than

$15,000/$30,000/$5,000 . (comment -The Financial Responsibility Law requires minimum limits of $15,000 of bodily injury liability for one person injured in an accident; $30,000 of bodily injury liability for two or more people injured in a single accident; and $5,000 of liability for damage to property of others in a single accident.)

A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy?

$175,000

In the computer fraud crime coverage form, what limit is placed on each occurrence of the loss of manuscripts, drawings, or records?

$5,000

A covered watercraft was damaged in an accident. The actual cash value of the damaged property was assessed at $10,000. The cost of repairs for the watercraft was assessed at $5000. The insured's watercraft policy is written with a $25,000 limit. How much will the insurer pay for coverage for damage to the watercraft?

$5000

A grave marker was damaged by vandals. It would cost $3,000 to have the damage repaired. Under these circumstances, how much would a homeowners policy pay?

($3,000) Homeowners 2000 policy will pay up to $5,000 for grave markers, including mausoleums, on or away from the premises for loss caused by a peril insured against under Coverage C.

Which surety bond guarantees that bills for labor and materials will be paid by the contractor as they are due?

Payment Bond

What is a certificate of insurance a) A written document obligating the insurer to the person to which the insurance was issued b) A written document naming the insured's beneficiary c) A written document allowing the insurer to inspect the insured's books d) A written document showing the types and amounts of insurance that have been issued to the insured

A written document showing the types in amounts of insurance that have been issued to the insured

Which of the following would be considered an insured under a business auto coverage form?

Anyone while using, with permission, a covered auto owned by the named insured

A builder's risk form is most often written as which of the following?

Completed value form

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?

Consideration The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.

Representations are written or oral statements made by the applicant that are

Considered true to the best of the applicant's knowledge

When an insured has multiple autos insured, what effect does the stacking of UM and UIM coverage have in terms of the benefits available?

Increases the limit of bodily injury coverage available to an insured to a total equal to the sum of the bodily injury available on all autos insured

The Pennsylvania property and casualty insurance guaranty Association provides protection to insurance in the event of

Insurance company insolvency

Which of the following does a producer not have the authority to do?

Issue policies

Extended nonowned coverage endorsement in a PAP broadens which of the following coverages?

Liability and medical payments

A policy condition that states if a policy is broadened with No additional premium, then the expanded coverage will be automatically applied to all policies of the same type is known as

Liberalization clause

Which of the following terms describes a reduced or Limited amount of coverages, other than the combined single limit, that is available to play claims resulting from passenger bodily injury? Lower limit Limited liability Sub limit Smooth limit

Limited liability

Coverage A - Bodily Injury and Property Damage in the commercial general liability policy will cover

Losses due to the insured's negligence

An insured unintentionally accepted forged currency during the course of regular business. Which of the following crime coverages protects against such a loss?

Money orders and counterfeit paper currency

B&B Market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be the meter reader. Which coverage would apply to this suit?

Personal and advertising injury liability

When ABC Appliance's marketing stated that its mowing machine was the only safe mower available for purchase in town, ABC was sued by XYZ Lawn and Garden. ABC's coverage would come from which part of its general liability coverage?

Personal and advertising injury liability

Who would participate in a Write Your Own flood insurance program?

Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis

Crunchy Flakes Cereal Company shipped some of its product in faulty containers that caused spoilage. This resulted in some consumers becoming ill. If the company is sued for this event, it would be an example of a

Product liability claim

Pertaining to insurance, what is the definition of a fiduciary responsibility?

Promptly forwarding premiums to the insurance company

While an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of the insured's auto policy would pay for the damage to the store?

Property damage Liability

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?

Reasonable expectations

Installing deadbolt locks on the doors of the home is an example of which method of handling risk?

Reduction. Steps taken to prevent losses from occurring are called risk reduction.

The Federal Fair Credit Reporting Act

Regulates consumer reports

All of the following statements concerning liability coverage are true except

The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met.

All of the following are essential elements of a commercial package policy except

Valuations and/or settlement provisions

How is Worker's Compensation insurance premium determined?

Varies by job classifications Employers payroll size Claim history

Which authority is not stated in an agents contract But is required for the agent to conduct business

implied-it exists because not every single detail of an agent's authority can be written in a contract

A home is insured under an HO-2 policy. The homeowner decides to replace the roof on the house. He wasn't able to complete the roof in one day and left a portion of it unfinished overnight. A heavy rainstorm caused $20,000 of damage to the interior of the house and some furniture. In this situation, the policy will pay

nothing

Which of the following losses would not be covered by the dwelling policy if the dwelling is vacant for over 60 days

vandalism

Under the business auto coverage form, mobile equipment is covered for liability insurance

when being carried or towed by a covered auto

Which of the following would be considered causes for flood conditions covered by the national flood insurance program?

*Overflow of inland or tidal waters *Unusual and rapid accumulation or runoff of surface waters from any source *A mudflow All of the above

Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to

10 years

When an insurer cancels an auto policy For an allowable reason, they must give notice to the named insured Of possible eligibility for coverage through the Pennsylvania auto insurance plan, unless the reason for cancellation is

Nonpayment of premium

Where is the policy period stated?

On the declarations page of the policy

A producer has successfully completed 52 hours of continuing education. How many hours can the producer apply to her current reporting period, and how many hours can be carried toward the next reporting period?

Only 24 hours of the 50 to earned may apply to this reporting period

When is a hired and nonowned auto liability endorsement available in a businessowners policy (BOP)?

Only if the insured does not have commercial auto coverage

All of the following may be covered by the miscellaneous type Vehicle and Endorsement except

Rented recreational vehicles

If a licensee wants to transact insurance under a different name than that listed on his or her producers license, which of the following must occur?

The change must be reported to the Commissioner.

Under the limited tort insurance option, an insured may not seek recovery for pain and suffering or other non-monetary damages unless

The injuries fall within the definition of serious injury