Texas Adjuster Exam 1 (118)

An insured is covered under a standard Businessowners Policy for replacement cost coverage and has sustained a fire loss to the building. Due to changes in the building codes in his town, it's going to cost $20,000 extra just to comply with the new building codes and make the repairs. How much, if any, will the BOP pay for these extra costs?

$10,000 - the limited amount. The policy will provide "Increased Cost of Construction" coverage through an "additional coverage," but these costs are limited to $10,000

The standard Businessowners policy extension of coverage for "Outdoor Property" provides _______ of coverage for any one tree, shrub, or plant that has been destroyed due to a covered cause of loss.

$1000

Joseph Jones purchased a new car stereo system from Dailey's Auto Enhancements. Daily's permanently installed the stereo system in the console area of the car, where he could access it easier while driving than the typical area in the dashboard. The cost of the new system, disregarding any installation costs, was $2000. One year after installation, Joseph's car was broken into and the stereo was stolen. At this point, the ACV of the system had fallen to $1700. Disregarding any deductible, how much will Joseph's policy pay on this claim?

$1000 - Part D provides for a $1000 limit for electronic equipment that is permanently installed in an auto, but not in the location typically used by the auto manufacturer.

Jerry's car is involved in an accident that has left him without a vehicle to drive. How much, if any, can he collect for his transportation expenses under Part D of his policy?

$20 per day after a 24 hour waiting period.

An insured carries property insurance with a limit of $25,000 and an 80% coinsurance requirement. the covered building, however, is worth $40,000. How much would she collect in the event of a total loss?

$25,000 as coinsurance only affects partial losses and not a total loss. In the event of a total loss when the limit of insurance is less than 80% of the value of the building, the insured will receive a claim payment equal to the policy limit. ($40,000)

The special cause of loss form of a Commercial Property policy imposes a limitation of the amount of coverage for the theft of jewelry of

$2500

When a covered loss disables the insured watercraft, the standard Watercraft policy provides for "towing and assistance" in the amount of

$500 for a single event and $1000 for the entire policy period

To be eligible for a standardized Watercraft policy, the insured watercraft must be used on inland or coastal waters within

12 miles of the shore or in the Great Lakes, but only when within the US and its territories, Puerto Rico, or Canada

Under the 1943 NY Standard Fire policy, the appraisal clause indicates that each party in a dispute must select an impartial appraiser within

20 days after the written demand of the other party.

If the insured purchases a new aircraft to replace a scheduled aircraft, there is automatic coverage provided the insurance company is notified within _________ days of the purchase and premium payment is made.

30 days

Under the 1943 NY Standard Fire Policy, how many days of coverage applies to the removal coverage when the insured property is endangered by the perils insured against?

5 days

The Texas Department issues emergency adjuster licenses in case of an emergency arising out of a disaster. An emergency license is valid for ____ days.

90 days and can be extended by the Commissioner for an additional 90 days.

How much coverage is provided by the "Personal Property Off-Premises" coverage extension of the Businessowners policy for the loss of accounts receivable records off the insured premises?

???$5000???

Homeowners policies cover all the following EXCEPT

A 2-family dwelling occupied by tenants who are renting the covered premises from the named insured.

All of the following perils are covered for collapse under the Commercial Property additional coverage, EXCEPT

A building that is in danger of collapsing

Which of the following is NOT excluded under Coverage C of a Dwelling policy?

A canoe used on the premises by the insured.

the standardized personal automobile policy considers a "newly acquired auto" to be

A covered auto for the first 14 days - this rule is included in the standard personal auto policy

Which of the following is NOT considered "your covered auto" under a standard Personal Auto policy?

A large truck used to transport manufactured goods for a corporation

Which of the following would be considered vacant on an unendorsed Commercial Property policy?

A leased building in which less than 31% of the building is occupied.

An additional coverage provided by Part D of the Personal Watercraft policy includes coverage for "salvage liability." This is best described as

A maritime law requiring watercraft owners to recover items that have gone overboard.

Which of the following could be considered "your covered auto" under a standard Personal Auto policy?

A newly acquired car reported to the insurer.

All of the following would be considered an "insured" on a Homeowners policy, EXCEPT

A non-related tenant living in the insured residence.

The aircraft physical damage (hull) deductible is normally expressed as

A percentage of the aircraft

Which of the following losses would be covered by the EC peril of "Windstorm or Hail" under a Dwelling policy?

A roof that suffered damage in a tornado bc a roof is the only property of the listed that is covered.

With regards to worker's comp insurance, a "retroactive period" is

A specified number of days of disability after which compensation will be paid for each day since the date of the injury

Loss settlement for personal property that is covered under Coverage C of a standard unendorsed ISO Homeowners policy is on a

ACV - unless endorsed Coverage C settles losses on a ACV basis, but no more than the cost to repair or replace the property

Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim is negotiated?

Advance payment (when liability is clear)

Under a surety bond, the "principal" is the party that

Agrees to fulfill and obligation

All of the following statements are TRUE if Builders' Risk coverage is written on a completed value basis, EXCEPT

All premiums must be paid up front before construction can begin.

The tax code pertaining to unfair practices defines a "written communication" as all of the following, EXCEPT

An encrypted email that must be transcribed in order to be read

The Texas insurance code specifies that "misrepresentation" includes all the following, EXCEPT

Any false statement. The false/ untrue statement must be material.

A dwelling or building constructed of modified fire resistive materials has a fire resistance rating of

At lease 1 hour

The most common reason an insurer issues a resrvation of rights notice to an insured is

Because the insured failed to provide prompt notice of the loss.

Part One of the standard WC policy covers all of the following, EXCEPT

Bodily injury caused by the negligence of the insured employer

The standard BOP policy will provide coverage for all of the following incidental occupancies in a covered apartment building, EXCEPT

Cannot occupy more than 15%, so A contractor whose office occupies 20% of the floor area of the building

Samantha is renting an apartment and has just purchased a Homeowners policy using the HO-4 form. which of the following insuring agreements is NOT included on Samantha's policy?

Coverage A - Dwelling

Which of the following would be covered under Coverage A - Building of the Business and Personal Property coverage from if the damage was caused by a covered cause of loss?

Damage to the insured's lawn mower used by the company maintenance crew.

The perils most frequently covered by Difference in Conditions policy are

Earthquake and flood bc these are excluded under most property policies.

Which of the following coverages of an Equipment Breakdown policy will pay for the costs necessary to make temporary repairs to covered objects?

Expediting expenses

A business covered by a standard Businessowners policy is shut down due to the acts of a civil authority. Which of the following additional coverages would NOT be subject to a waiting period before coverage would apply?

Extra Expense are not subject to the normal 72 hour waiting period

Which of the following basic coverages are provided under a Standard Fire policy?

Fire, lightening, removal

Texas adjusters who have been "continuously licensed" for a long period of time in Texas are exempt from meeting the continuing education requirements. "Continuously licensed" means that the licensee has held a Texas adjuster license

For the entire period of time without any lapses in excess of 90 days.

Which of the garage policy coverages will pay for physical damage to a garage customer's auto regardless of legal liability?

Garagekeepers direct primary coverage will pay for damages to customer's vehicle regardless of fault. The legal liability form would require that the claimant prove negligence on the part of the garage.

Gavin, the named insured under a Personal Auto policy, his daughter Tabitha, and two of her friends are riding in the covered auto when Gavin accidentally runs a stop sign, striking another vehicle. Everyone in Gavin's vehicle was injured as well as the driver and two passengers in the other car. Who would be covered for their injuries under Part B of Gavin's policy?

Gavin, Tabitha, and Tabitha's friends

A Commercial Package Policy (CPP) always includes: I. A single Declarations page common to all coverages II. A single Conditions section common to all coverages III. A single Exclusions section common to all coverages

I and II only always

A public adjuster's fiduciary responsibility is to

Insured (their principal)

Liability policies require that the defendant's breach of their legal duty was the actual cause of the loss that was the basis for a third party lawsuit. any of the following terms may be used to refer to the "actual cause of the loss," EXCEPT

Intervening cause bc it actually interrupts the events that are the cause of the loss

The doctrine of utmost good faith

Is a legal obligation that requires both parties to the insurance contract act with honesty and integrity.

Recovery under the Standard Fire policy may be limited by the "pro rata" liability clause. All of the following statements are true about his clause, EXCEPT

It allows the insured to collect the full limit of liability under all policies covering the damaged property, in case of a loss.

All of the following statements are TRUE regarding the Federal Employers Liability Act (FELA), EXCEPT

It provides WC coverage for employees working in federal government buildings. It's similar to a WC package, but not actually a WC package.

Conrad is a contractor with Builders' Risk coverage written on a reported value basis on his current construction job. He started clearing the land on May 1st, digging the basement on May 13th, pouring the foundation on May 31st, blocking the basement walls on June 5th, flooring the first floor above the basement on June 15th, and constructing the walls of the first floor on June 30th. When did Conrad's Builders' Risk policy begin providing coverage?

June 15th - bc the building includes a basement, coverage begins on the date construction begins on the lowest floor that will be located above the basement.

All of the following are examples of forms used to cover cargo in Ocean Marine insurance, EXCEPT

Load form

Which of the following would be considered "economic losses" that cold result in compensatory special damages being awarded in a negligence case?

Medical expense and lost wages (out of pocket damages, not disfigurement, pain and suffering or loss of consortium (general damages)

All of the following situations involve misrepresentation, EXCEPT

Michael manages an insurance agency and posts the sales numbers of all agents publicly each month, to promote competition

Paolo carries a personal watercraft policy covering his 25 foot pontoon boat for Parts A through D in the standard coverage territory. Paolo takes his boat 20 miles out to sea where it capsizes and is destroyed. Which of the following personal watercraft coverages would respond to cover the boat?

No coverage would apply bc the insured went outside the territorial limit of 12 miles

Coverage A of the HO-2 form would cover which of the following items?

Paint to be used on the building

Any policy limits expressed on a standard NCCI WC policy, relate to

Part 2 - all other limits relating to WC coverage are set by state law.

Physical damage coverage to an insured's car is covered by which of the following insuring agreements of the Personal Auto policy

Part D

Which of the following types of bonds guarantees that all project materials will be paid in full by the contractor upon completion of the project?

Payment bond

Under Part A of a Personal Automobile policy, "supplementary payments" refer to which of the following?

Payment of defense and other expenses by the insurance company beyond the limits of liability. Any expense the insurance co incurs in the processing of a claim is outside the limits of coverage.

All of the following sections are included on the Business and Personal Property coverage form, EXCEPT

Perils Insured Against - as this is included on a cause of loss form and attached to this Business and Personal Property form.

A contractor in need of a bid bond to obtain a contract is an example of a

Principal. The bond company is the guarantor and the owner (receiving the benefit of the bond, would be the obligee.

Which of the following best describes a "competitive" state when it comes to WC coverage?

Private insurance companies write WC coverage, but the state also writes coverage that competes with the coverage offered by private carriers.

Which of the following statements is TRUE regarding an "open peril" property insurance policy?

Provides coverage for all perils, unless that peril is specifially excluded.

Which of the following Ocean Marine implied warranties is considered to be the most important?

Seaworthiness

Which of the following statements is TRUE regarding the sections of a Homeowners policy

Section 1 coverages vary greatly between the different HO forms

Sondra, who is covered under a Standard Fire policy, has a fire break out in her house. She begins moving all the property that she can, outside into the yard. After the fire department extinguishes the flames and things have calmed down on the scene, she discovers that some of her personal property that she moved to her lawn is missing. Which of the following statements is TRUE in this scenario?

Sondra's property will be covered bc the peril of "removal" can result in theft or disappearance of property. Removal is a covered peril under the SFP

Which of the following is one of the duties of the insured as specified in a Commercial Inland Marine policy?

Submit to an examination under oath if the insurer requests it.

Which of the following losses would be paid under Part D - Other Than Collison coverage of the Personal Auto policy?

The INSDs car was stolen and never recovered.

A public adjuster represents the interest of

The insured

Which of the following statements is TRUE if an insured would like to include Commercial Inland Marine forms to a Commercial Package Policy?

The insured must select CONTROLLED Commercial Inland Marine forms to add to a Commercial Package Policy so the common declarations and conditions sections will apply.

The insured has liability coverage with a limit of $300,000 per occurrence. She purchases a $1 million Personal Umbrella policy to extend and broaden her coverage. The Umbrella policy includes a $10,000 retained limit. the insured becomes liable for $800,000 in damages that are excluded by the underlying liability policy, but is covered by the Umbrella policy. How would this claim likely be settled?

The insured would pay $10,000 and the Umbrella policy would pay $790,000 bc the insured has an Umbrella policy limit of $1M, after the insured pays the retained limit of $10,000, the Umbrella policy would cover the remainder of the claim.

An insured does not carry enough insurance to comply with the coinsurance clause of his Homeowners policy. If this insured would have a loss to his covered home, how will the insurer settle the loss?

The insurer will either settle the loss at ACV, or pay the proportion of the cost to repair or replace the part of the building that was damage, based on the amount of insurance the insured carried.

Ocean marine insurance contracts rely heavily on the principle of utmost good faith because

The insurer's underwriters are usually not in a position to thoroughly investigate the risk

Insurance adjusters have the "power to bind." Which of the following statements best describes what this means?

The principal is bound to the decisions of the adjuster.

Which of the following would NOT be included in an adjuster's initial/ field/ preliminary report?

The results of mediation

Which of the following statements is TRUE regarding controlled commercial inland marine forms?

These forms are usually issued according to published rules and rates.

An insured has a $1000 insurance claim and is able to prove his loss and it value. The insurer's adjuster offers $500, knowing that the claimant would probably take the offer to avoid incurring the cost of an attorney to sue for the actual amount of the claim. The offer made by the adjuster is considered

To be an unfair claims settlement practice

Which of the following statements would be a reason for an adjuster to conduct a "claimant investigation:?

To determine the extent of the claimants injuries and if those injuries were caused by the incident that gave rise to the claim.

All of the following are reasons that an adjuster should keep very detailed log notes, EXCEPT

To produce notes that will support a fraudulent denial of claims.

What is the main purpose of an adjuster's interim or status report?

To report on the ongoing status of the claim.

The date of "maximum medical improvement" in Texas is the earlier of the date that further medical improvement to an injury can no longer reasonable be anticipated, or what pre-set time limit?

Two years (or 104 weeks) from the date income benefits begin to accrue

the Builders' Risk form covers all of the following, EXCEPT

Unattached signs

Which of the following vehicles would NOT be eligible for coverage under a personal automobile policy?

Vehicle leased for 4 months - to be eligible, a vehicle must be lease for 6 mo or longer.

Under a Businessowners policy, the "Hired and Nonowned Auto Liability" endorsement would cover

Vehicles borrowed by the insured.

A Personal Automobile policy provides liability coverage on a single limit basis for $100,000. A covered accident caused by Mr. Jones involves a $75,000 liability judgement to Mr. Allen for his injuries and $25,000 liability judgment for the damage to his car. In addition, $20,000 in legal bills are incurred defending the insured. The company will pay

$120,000 - Legal expenses are in addition to the limit of liability. the single limit covers both bodily injury and property damage liability. The policy will pay the total cost of damages and defense in the lawsuit.

Dan insures a home for adequate limits under a DP-2. If a flood causes $1000 in damage, what is the maximum the insurer will pay, disregarding deductibles?

$0

An insurer that was chartered under the laws of a Canadian province but conducting business in Minnesota, would be considered a _______ insurer by the Minnesota Department of Insurance

Alien, not foreign

Pete is adding Commercial Property coverage to his Commercial Package policy. Which of the following coverages CANNOT be added to a package policy using Commercial Property coverage forms?

Coverage for negligence of the insured.

The authority that is specifically provided to an adjuster (orally or in writing) by the insurance company who has appointed that adjuster is known as

Express authority

Which of the following types of property can NOT be covered under a Commercial Inland Marine form?

Property being manufactured and shipped to Europe for sale.

All of the following are duties of the insurer in case of a loss as specified by insurance policies, EXCEPT

To pay amounts to the insured or a third party claimant that are at least as high as the national average of similar claim settlements. Settlement amounts are determined by a policy's limit of liability.

If the standard Fire policy is issued with the extended coverage endorsement attached, coverage will be provided for all the following EXCEPT

Law and Ordinance

Under a DP-2 or DP-3 standardized policy what is the maximum that would be paid for one month for additional living expenses if Coverage A was $75,000?

$1250. 20% of Coverage A for additional living expense. $75,000 X 20% = $15,000 and this amount divided by 12 months = $1250

A requirement that a plaintiff file a lawsuit within a specific period of time after the cause of the lawsuit has occurred, which is oftentimes when the injury occurred or was discovered is known as

Statute of limitations

Which of the following initiates a lawsuit to deal with liability insurance claim disputes?

A complaint

All of the following statements are TRUE regarding the coverage of mobile or trailer homes under a Dwelling insurance policy, EXCEPT

Mobile or trailer homes can be owner or tenant occupied.

The principle of indemnity is illustrated by which of the following?

Restores an insured to the same condition enjoyed before a loss.

Roger accidentally hits a tree in his owned vehicle and it is a total loss. His car was three years old and in pristine condition with an actual cash value of $12,250. to replace the care with a new one of the same make and model, it would cost $19,400. To purchase a used car of the same make and model that is also 3 years old with similar mileage, it would cost $11,200. Disregarding any deductible, how would Roger's claim be settled under part D of his standard Personal Auto policy?

Roger will receive a check for $11,200 to purchase a used car of like kind and quality to the vehicle that was wrecked.

Which of the following types of investigations would an adjuster undertake to determine if the medical treatment a claimant is receiving is appropriate for the injuries claimed?

medical investigation