Test 2

What monetary penalty may be imposed if a producer is transacting insurance business and is not licensed to do so?

$1,000 per violation

Todd has a large gun collection and his wife, Tina, has several items of valuable jewelry. How does the homeowners policy limit coverage for these types of property?

$1,500 for jewelry; $2,500 for theft of firearms

Business property is covered under the homeowners policy, subject to a limit of ___________ on the premises and ________ away from the premises

$2,500; $1,500

Coverage for money is typically limited to __________ and ______________ for securities on homeowners policy.

$200 and $1,500

BOP 3 sections:

1 - property 2- liability 3- common conditions

Businesses not eligible for BOP are

Banks, self-storage facilities that store motorized vehicles outdoors, and places of amusement

Of the three dwelling policies, which would cover loss by falling objects; weight of ice, snow, or sleet; and accidental discharge from a plumbing system?

DP 2 and DP 3

Endorsements to the BOP usually does not

Eliminate coverage

The state legislature writes the insurance laws for Iowa where the commissioner

Enforces them

A farm policy defines livestock as

cattle, sheep, swine, goats, horses, mules, and donkeys.

As a business, the maximum available limits under the NFIP are:

$500,000 for the structure and $500,000 on the contents. Single family house limits would be $250,000 for the structure and $100,000 for the contents

What pollution-related claim would an ISO businessowners policy cover?

carbon-monoxide fumes from a detective furnace that make motel guests ill

An insurer may not refuse to renew a personal lines insurance policy unless written notice of nonrenewal is given to the insured within how many days before the end of the policy period?

30 days

A commercial line insurance policy or contract, which has not been previously renewed, may be canceled by the insurer if it has been in effect for less than how many days at the time notice of cancellation is mailed?

60 days

Who regulates all insurers and producers conducting insurance business in Iowa?

Commissioner of Insurance

A person who administers an employee benefits program for his or her employer

Does not need a producer license

may not enforce a right it has voluntarily waived by its past conduct, due to the legal principale known as

Estoppel

Due to the catastrophic nature of a major flood, standard residential and commercial property policies typically exclude coverage for flood losses you would need to purchase

Flood Insurance

How the value of property is determined after a loss is found in the

Policy's valuation provision

What is the basic principle underlying the law of large numbers?

Prediction becomes more accurate as the number of exposure units increases.

Who is primarily responsible for ensuring that applicants receive the appropriate notices about their rights under the Fair Credit Reporting Act?

Producer

What is the term used in a property insurance policy to describe damaged property?

Salvage

Which of the following types of liability holds an insured legally responsible if another party is injured or damaged because its operations, or other conditions pertaining to the insured, are considered inherently dangerous?

Strict Liability

Approximately what percentage of flood losses occurs in moderate-to-low-risk flood zones?

about 20 percent

The abandonment condition states that the insurer is not required to

accept abandoned property

Lightning is one of the basic perils covered in the DP 1 form, along with fire and internal explosion. The loss for all damaged property is adjusted on an

actual cash value basis, with a deduction for depreciation

Aleatory contracts involve:

an exchange of unequal amounts, and in an insurance contract, one party may receiver a benefit that is entirely out of proportion to the premium they are giving.

Assignment provision states:

any assignment of the policy will be invalid unless the insurer provides its written consent.

What must an insurance company do to make a producer its agent?

appoint the producer as its agent

Office buildings are eligible for BOP coverage if they

are not over six stories tall or exceed 100,000sq ft.

The homeowners insurance policy provides no liability coverage for

bodily injury or property damage arising out of sexual molestation

the fact that insurance policy language is written by an insurance company and is nonnegotiable makes insurance policies:

contracts of adhesion

Coverage of $1,000 is provided for loss due to the insured having accepted

counterfeit money

Bailees' customers insurance is typically bought by a bailee to cover

customer property

An invitee is an example of

driver for a parcel delivery service; they are invited onto the premises for the owner's benefit

In a DP3 form

dwelling property is covered on an open peril's basis, and it's valued on a replacement cost basis.

Property insurance policies contain an earthquake exclusion and only offer coverage by

endorsement

What may be used with the standard fire policy to insure against property perils other than fire and lightning?

endorsements

contractors equipment floater covers

equipment and tools from earth movers and tunneling equipment wrenches to hammers

Tim, an insurance producer, tells you his is concerned about liability that may arise if he fails to fulfill his duties to his insurers or customers. What kind of insurance would you suggest he buy to protect him from this liability?

errors and omissions insurance

If a covered property loss makes it impossible to live in a portion of te residence premises that is rented out, the insurer covers the

fair rental value

The DP 3 excludes coverage for water damage due to flood, sewer backup, or underground seepage, but does cover loss by

fire or explosion that results from water damage

Limited property insurance coverage is available with the DP 1 because

fire, lightning, and internal explosions are the only standard perils under this form

Common property insurance exclusions

flood, earthquake, and nuclear hazard

Livestock is not covered property when

in the custody of a common or contract carrier, public stockyards and sales barns or yards, slaughterhouses, and packing plants

The permitted incidental occupancies endorsement is used for

incidental types of businesses that are conducted on the residence premises

The state legislature writes the

insurance laws

To be able to predict the number of future losses occurring among their insureds, insurers rely on which of the following?

law of large numbers

An insured with a combined ration greater than 100 percent has a underwriting

loss

commercial property insurance excludes coverage for

loss caused by mechanical or electrical breakdown. Would need to purchase equipment breakdown

The three components of an insurance rate are

loss costs expenses allowance for profits

in the event of a covered loss to a building; ordinance or law endorsement provides three separate coverages

loss to the undamaged portion of the building (Coverage A), the cost of demolishing the undamaged portion of the building (Coverage B), and the increased cost of reconstruction or repairs to comply with current ordinances or laws (Coverage C)

For a business to be eligible for a BOP,

none of its locations can exceed 35,000 square feet and $6 million in annual gross sales

Many commercial earthquake policies are written on a difference in conditions (DIC) form that covers the exposures

not covered under the underlying commercial property policy.

"Farming"

operation of an agricultural or aquacultural enterprise, including the operation of roadside stands on the farm premises that sell products produced by the farm and farm processing operations. "Farming" does not include mechanized canning operations or retail activity

What type of business is ineligible for a BOP regardless of its size?

parking garage

the loos costs reflect

past claims and estimated future claims

A reinsurance company accepts risks that:

primary insurers cede to it

Nationwide Inland Marine Definition states that

property qualifying for inland marine insurance must be in transit or bear some relationship to transportation or communication.

The businessowners policy is a package policy that combines coverage for

property, liability, crime, and inland marine risks.

false advertising

publication of untrue, deceptive, or misleading statement

The Insurance Services Office (ISO) is not a

rating organization. It provides information, products, and Servies to insurance companies

Under a DP 3 form, coverage for the dwelling (including walls) and other structures is provided on

replacement cost basis

Surplus lines brokers work with

retail agents and nonadmitted insurers to procure insurance for the retail agents' clients. The do not have underwriting or binding authority

The term ___________ is sometimes to refer to the person, property, or activity that is insured under a policy

risk

"Motor vehicle" is defined as

self-propelled land or amphibious vehicle or any trailer connected with it. Broad enough to include motorcycles, self-propelled lawn mowers and motorized wheelchairs

An insured has the right to cancel an insurance policy if he or she pays the

short rates and any costs of action

Most Insurance regulation is conducted by the:

state government agencies

adverse selection is the:

tendency of persons who are more likely to have a claim to buy and maintain insurance.

Actions by the insured that change or increase the risk insured is only a valid reason for cancellation if

the insured's actions substantially change or insure the risk insured.

While no coverage applies to most motor vehicles, including their equipment and parts, vehicles are covered under property of homeowners policy when:

they do not need to be registered for use on public roads.

Which of the following causes of loss would typically be covered under a standard property insurance policy?

tornado

Who has the authority to act on behalf of members of the FAIR Plan to cause insurance policies to be issued?

underwriting association of the FAIR Plan

Most business-related exposures are excluded or limited under an

unendorsed homeowners form

A nonresident person can obtain a nonresident producer's license if he or she has a

valid producer's license in the home state and has paid the application fees, and if the home state grants nonresident producer licenses to Iowa residents on the same basis

Esther has just bought an expensive painting. She wants to be sure there will be no dispute with the insurer in the event it is damaged or stolen. What type of policy would you recommend Esther purchase?

valued contract

Vicarious liability

when one party is legally responsible for the acts of another

A commercial articles floater is designed to insure either camera equipment or musical instruments used commercially or by nonprofit organizations. Open perils coverage, which includes theft, applies

wherever the property is located; there are no limitations on the coverage territory.

A business entity does not need to file its articles of incorporation

with the Insurance Commissioner