Texas Practice Exam 2
John has commercial property coverage written on a value reporting form. The maximum limit of coverage for inventory values is $150,000. The insured has reported an inventory value of $75,000 when the actual value was $100,000. A $20,000 loss occurs. The insurer will pay: a. $15,000. b. $10,000. c. $20,000. d. $13,333.
a. $15,000. The insured is required to carry a 100% coinsurance clause when the reporting form method is used. The insured is also required to report 100% of the actual inventory values. This insured reported less than the actual inventory by 25% and will only receive 75% of a partial loss or $15,000.
An insured owns a set of six drawing pens designed and used by Benjamin Franklin. Each pen is worth $1,000 alone, but the set is worth $12,000. One pen is destroyed by a covered peril. Under the pair or set clause the insurance company will pay a maximum of which of the following amounts? a. $7,000 b. $1,000 c. $12,000 d. $2,000
a. $7,000 Since one pen was totally destroyed, there is no way to repair, replace, or restore the entire set. The second option is to pay the insured the difference between the actual cash value of the full set ($12,000) and the actual cash value of the undamaged part or parts. Each of the remaining pens is worth $1,000 for a total of $5,000 for the remaining five pens. The actual cash value of the full set ($12,000) less $5,000 leaves the insurer owing the insured $7,000.
Bob is purchasing a commercial property policy to cover contents of a building valued at $100,000. The policy includes an 80 percent coinsurance clause. To avoid a coinsurance penalty in the event of a partial loss, Bob should purchase a policy with minimum limits of at least: a. $80,000 b. $100,000 c. $90,000 d. $20,000
a. $80,000
What is the minimum weekly income benefit payable under the Texas Workers Compensation law? a. 15% of the state average weekly wage. b. 25% of the state average weekly wage. c. 66.66% of the employee's average weekly wage. d. 15% of the employee's average weekly wage.
a. 15% of the state average weekly wage.
A leased vehicle is considered to be a covered auto under the personal auto policy (PAP) if it is a private passenger auto leased for at least: a. 6 consecutive months. b. 48 hours. c. 30 consecutive days. d. 1 year.
a. 6 consecutive months.
The Commercial Building and Personal Property form suspends coverage for losses caused by vandalism or theft if, at the time of loss, the building has been vacant for more than: a. 60 consecutive days. b. 90 consecutive days. c. 30 consecutive days. d. 20 consecutive days.
a. 60 consecutive days.
If a building insured under a BOP has been vacant or unoccupied beyond _____ the insurer can send the insured a notice of cancellation. a. 60 days b. 30 days c. 45 days d. 90 days
a. 60 days
A business down the street from your insured has suffered an explosion loss from a hot water heating boiler. The civil authorities have blocked off the street and your insured's customers cannot get to his store, causing a loss of income. The insured carries an ISO standard Businessowners policy. Before his policy will pay any loss of income there is a _____ waiting period and the policy will then pay for loss of income up to _____ . a. 72-hour/four weeks. b. 24-hour/two weeks. c. 12-hour/four weeks. d. 48-hour/three weeks.
a. 72-hour/four weeks.
A personal auto policy provides coverage for all of the following drivers of an insured car, EXCEPT: a. A thief who steals the car. b. A neighbor who uses the car with the insured's permission. c. The insured's spouse. d. The insured's child who attends school in another state.
a. A thief who steals the car.
All of the following would be excluded by an unendorsed aircraft policy, EXCEPT: a. Air turbulence b. Hi-jacking c. Government confiscation d. Confiscation
a. Air turbulence
An insured sells heavy equipment to contractors. He needs coverage for the inventory on the premises and while it is off the premises on a trial basis. What type of policy would fit the insured's needs? a. An Equipment Dealers Inland Marine Form b. A Contractors Equipment Policy c. A Commercial Property Form d. A Businessowners Policy
a. An Equipment Dealers Inland Marine Form
Which one of the following is an "employee" under Texas workers compensation law and not exempt from the law? a. An employee temporarily assigned to do a job outside the employer's normal business. b. An independent contractor engaged in construction work. c. A longshoreman who unloads ships at the dock. d. A housekeeper employed by a home owner.
a. An employee temporarily assigned to do a job outside the employer's normal business.
Alec goes to an amusement park and rides a roller coaster that was designed to flip the riders upside down. Alec is taller than the average person so when the roller coaster flips, he hits his head on the safety bar. After receiving medical care, Alec files a claim against the amusement park, seeking payment for his medical bills, pain and suffering. What defense against negligence would the amusement park most likely use to deny this claim? a. Assumption of Risk b. Contributory Negligence c. Comparative Negligence d. Intervening Cause
a. Assumption of Risk
The coinsurance clause in commercial property policies encourages the insured to carry insurance: a. At the full value, or at least 80% to value of the property. b. At 70% of the full value of the property. c. At 60% of the full value of the property. d. At one-half the full value of the property.
a. At the full value, or at least 80% to value of the property.
Which of the following fit the category of court or litigation bond, which are sometimes called financial guarantee bonds? a. Bail bonds b. Fiduciary bonds c. Judicial bonds d. Fidelity bonds
a. Bail bonds
According to the nationwide marine definition as adopted in this state, which of the following structures may be written under an inland marine insurance form? a. Bridges and Piers b. Occupied Dwellings c. Oceangoing Hulls d. Warehouses
a. Bridges and Piers
The hull physical damage deductible, in aircraft coverage, applies to which of the following losses? a. Collision b. Pilferage c. Fire d. Mechanical Breakdown
a. Collision
Which of the following is the principal in a bond? a. Contractor doing the work b. Owner of the job c. The insurance company d. The surety
a. Contractor doing the work
What is the purpose of freight insurance? a. Covers shipper fees. b. Covers loss to the cargo. c. Covers the insurable interest of the shipper due to jettison of the cargo. d. Covers the cargo until it reaches the warehouse.
a. Covers shipper fees.
Which of the following losses is NOT excluded under the Physical Damage coverage of a personal auto policy? a. Damage to a covered auto while being used as part of a car pool. b. Damage to equipment designed for the detection of radar. c. Loss caused by freezing of the cooling system. d. Loss of custom furnishings in a customized van.
a. Damage to a covered auto while being used as part of a car pool.
Which of the following would be covered under Section II - Liability of the Homeowner policy? a. Damage to rented premises occupied by the insured caused by a fire accidentally set by the insured. b. Intentional acts of the insured. c. Operating a dirt bike off the insured's premises. d. Operating a 75-HP boat owned by the insured.
a. Damage to rented premises occupied by the insured caused by a fire accidentally set by the insured.
Jack Tate ignores the safety warnings and instructions when setting the controls of the steam boiler and as a result, the boiler explodes. Jack carries Equipment Breakdown coverage. The adjuster for Pressure R Us Insurance Company may do which of the following? a. Deny coverage under the intentional errors & omissions exclusion b. Settle the loss at Actual Cash Value c. Pay for the loss of the boiler, but deny any expediting expense coverage due to the error on Jack's part d. All of the responses apply
a. Deny coverage under the intentional errors & omissions exclusion
An "other insurance" clause is included in an insurance policy to deal with the problem of: a. Duplicate insurance coverage. b. Excess insurance coverage. c. Inadequate coverage. d. Conditional coverage.
a. Duplicate insurance coverage.
If the other insurance clause is by contribution, how would a loss be divided and paid between the various carriers? a. Each would pay the same until its limits are exhausted b. One would pay the primary, and the other would pay excess c. Each would pay its proportionate share d. Each would pay out the claim entirely
a. Each would pay the same until its limits are exhausted
Under an Equipment Breakdown policy, all of the following are supplementary payments, EXCEPT: a. Expediting expenses. b. Defense costs. c. Interest on judgment. d. Premiums on appeal bonds.
a. Expediting expenses.
Which of the following is generally intended to cover property that moves from one location to another? a. Floaters b. Endorsements c. Riders d. Binders
a. Floaters
An agent, insured or claimant has intentionally misled an insurer for financial gain. Such an act is known as: a. Fraud. b. Misrepresentation. c. Concealment. d. Malfeasance.
a. Fraud.
The intentional misrepresentation or concealment of known facts for the purpose of gaining an advantage over another party is known as: a. Fraud. b. Malfeasance. c. Waiver. d. Concealment.
a. Fraud.
An adjuster's report that contains all the facts, evidence and disposition of the claim and is considered to be the final report is known as the: a. Full Report. b. Field Report. c. Interim Report. d. Settlement Report.
a. Full Report.
Which of the following is considered an uninsured motorist under a standard personal automobile policy: I. A hit and run in which the driver cannot be identified. II. The insured's neighbor who backs out of his driveway into the fender of the insured's car. a. I only b. II only c. Neither I nor II d. Both I and II
a. I only
Which of the following are additional coverages under a Businessowners policy with the named peril form attached? I. Debris removal. II. Pollutant cleanup and removal. III. Exterior glass. IV. Collapse. a. I, II, and III only b. I and II only c. III and IV only d. I, II, III and IV
a. I, II, and III only
Which of the following best characterizes the difference between captive agents and independent agents? a. Independent agents can represent more than one insurer, whereas captive agents represent only one insurer. b. Captive agents only solicit applicants, while independent agents can also collect the premium and negotiate coverages. c. Captive agents have strict sales quotas, while independent agents do not. d. Independent agents are free to write any line of insurance they desire, while captive agents are restricted to certain lines.
a. Independent agents can represent more than one insurer, whereas captive agents represent only one insurer.
Which of the following would not be considered a "first party" coverage under the personal auto policy? a. Liability b. Collision c. Other than collision d. Uninsured Motorist Coverage
a. Liability
Which of the following is not essential in determining if a salvage award is to be made? a. Life-saving efforts. b. The effort must be successful. c. The salvage service must be voluntary. d. The property involved must be in peril from some hazard.
a. Life-saving efforts.
For the insured dwelling and other detached structures, the DP-3 provides: a. Open peril coverage. b. Broad perils coverage. c. Basic perils coverage. d. Fire, lightning, extended coverage and vandalism & malicious mischief coverage.
a. Open peril coverage.
All of the following are violations of "good faith duty" by the adjuster, EXCEPT: a. Paying a settlement within 30 days after an agreement is reduced to writing. b. Denying coverage or attempting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of, the insured. c. Failing to pay the amount of any claim due any person insured by the contract within 60 days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause. d. Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.
a. Paying a settlement within 30 days after an agreement is reduced to writing.
The principle of indemnity is illustrated by which of the following? a. Restores an insured to the same condition enjoyed before a loss b. Allows an insured to profit from a loss c. Limits recovery to actual cash value d. Requires an insured to assign any rights of recovery against a third party
a. Restores an insured to the same condition enjoyed before a loss
The Homeowner policy excludes liability coverage for which of the following owned by an insured while being operated off the insured location? a. Snowmobile b. Service vehicle used for the insured's premises c. Motorized wheelchair d. A vehicle on the insured's premises in dead storage
a. Snowmobile
What is the definition of "agent"? a. Someone who represents an insurance company in the soliciting and negotiation of insurance. b. Someone who shops and obtains insurance for the insured. c. Someone with a certificate of authority. d. Someone who only handles claims for an insurer.
a. Someone who represents an insurance company in the soliciting and negotiation of insurance.
An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2,000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $100,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary policy or the Umbrella policy. How will this loss likely be settled? a. The insured will pay the full $100,000 loss. b. The umbrella policy will pay the full $100,000 loss. c. The underlying policy will pay the full $100,000 loss. d. The insured will pay $2,000, and the umbrella policy will pay the remainder of the loss.
a. The insured will pay the full $100,000 loss. Because the insured allowed the required underlying policy to expire, he is responsible for the $100,000 loss.
Under a Commercial Package Policy, how many days does one have to notify the insurance company of a claim? a. The insurer must be notified promptly. The number of days is not specified b. 30 days c. 60 days d. 10 days
a. The insurer must be notified promptly. The number of days is not specified
Mrs. Vincent is covered on a PAP policy which covers her 2012 Ford SUV. She carries liability and full physical damage coverage. Her neighbor owns a 2002 Chevrolet pick up truck with liability coverage only. Mrs. Vincent borrows the truck to pick up lawn furniture, parks the truck at Home Depot and leaves the keys in the ignition. The truck is stolen and later found wrecked. Which of the following would apply? a. The loss is covered under Mrs. Vincent's "other than collision coverage." b. The loss would be covered under her neighbor's policy. c. The loss is covered under Mrs. Vincent's collision coverage. d. The loss would be covered under her neighbor's homeowners coverage.
a. The loss is covered under Mrs. Vincent's "other than collision coverage."
A common element that links inland marine and ocean marine risks is: a. Transportation. b. Ocean, rivers or water. c. Coverages which cannot be written by domestic companies. d. Coverages which are excluded by most property and casualty policies.
a. Transportation.
Equipment Breakdown coverage does not apply to which of the following losses? a. Vandals have destroyed a boiler. b. A boiler safety relief valve has malfunctioned and caused the boiler to crack. c. A boiler has exploded due to a water flow problem. d. An electric motor has self-destructed as a result of a broken part.
a. Vandals have destroyed a boiler.
A building valued at $500,000 is insured at $300,000 on a policy containing an 80% coinsurance clause. How much would be paid on a covered $200,000 loss? a. -0- b. $150,000 c. $160,000 d. $200,000
b. $150,000 Per the coinsurance clause, the required amount of insurance is 80% of $500,000, which equals $400,000. However, the insured's limit of $300,000 is only ¾ of the insurance required. That same fraction, ¾, is applied to the loss amount. ¾ of $200,000 is $150,000. Thus there is a "coinsurance penalty" of ¼ of the loss, or $50,000.
Oliver Dogwood was in an auto accident which destroyed his car. While investigating the accident, Adjuster Doright found that Mr. Dogwood paid $1,000 for the vehicle. After checking with others he found the same vehicle with an asking price of $1,700, a retail price of $2,150 and a dealer price of $1,750. What amount will Mr. Dogwood receive? a. $1,950 b. $2,150 c. $1,000 d. $1,700
b. $2,150
Jim Johnson has an automobile policy with a combined single limit of $50,000. He has an at-fault accident and incurs the following expenses: $30,000 bodily injury judgment; $30,000 property damage judgment; $5,000 damage to traffic light; $6,000 attorney's fees for his defense; $300 in premiums for appeal bond; and $75 in bail bond premiums for related traffic violations. What is the maximum amount his insurance company will pay? a. $50,000 b. $56,375 c. $65,000 d. $71,375
b. $56,375
All Texas adjusters are required to complete 24 hours of continuing education each reporting period. How many of those hours must cover the subject of "ethics"? a. 3 hours b. 2 hours c. 1 hour d. 4 hours
b. 2 hours
Surplus Lines companies in Texas have _____ to acknowledge the receipt of a claim. a. 15 days. b. 30 days. c. 10 days. d. 20 days.
b. 30 days.
Which of the following qualifies as a compensable injury under a Workers Compensation policy? a. A worker is involved in an accident while driving to work. b. A factory worker fractures an arm while working overtime at his/her job. c. An employee is struck by a car, and is seriously injured while walking back to work following a lunch break. d. An employee is injured in a bank robbery while depositing his/her paycheck.
b. A factory worker fractures an arm while working overtime at his/her job.
Personal article floaters provide coverage on what basis? a. Specified Perils b. All Risk c. Broad form d. Named Perils
b. All Risk
In the insurance industry, which of the following terms refers to continuous or repeated exposure to conditions that may result in bodily injury or damage neither expected nor intended? a. An incident b. An occurrence c. An event d. A condition
b. An occurrence
The chief deputy of the county auditor steals $2.5 million from the county and gambles it away. What bond if any would the county need to have in place in order to try and recoup this loss? a. Employee dishonesty b. Blanket Public Official Bond c. Fiduciary bond d. Extortion-Commercial entities
b. Blanket Public Official Bond
Elizabeth injured her back on the job in Texas. She has been receiving income benefits for 90 weeks but has not reached MMI. Elizabeth will be declared as reaching MMI at week 104, even though her treating doctor now recommends spinal surgery. Elizabeth knows that if she has spinal surgery now (at 90 weeks), she will need income benefits that extend beyond the 104th week. Elizabeth plans to apply to the Commissioner for an extension of the 104-week time limit. The Commissioner is required to make a ruling on Elizabeth's application by: a. Six months prior to the 104-week expiration date. b. By the 92nd week that income benefits have been received. c. Within 12 weeks following the 104-week expiration date. d. By the 100th week that income benefits have been received.
b. By the 92nd week that income benefits have been received.
An insurance company would be guilty of an Unfair Claims Practice violation if it: a. Paid claims quickly to avoid law suits. b. Failed to acknowledge within reasonable time, communications with respect to claims. c. Failed to pay an uncovered claim. d. Terminated an appraiser for filing fraudulent claims.
b. Failed to acknowledge within reasonable time, communications with respect to claims.
An orthotic device is a custom-fitted or custom-fabricated medical device that is applied to a part of the human body to: I. Correct a deformity. II. Improve a bodily function. III. Relieve the symptoms of an injury. IV. To wholly or partially replace an arm or a leg. a. I and II only. b. I, II and III only. c. I, II, III & IV. d. I, II and IV only.
b. I, II and III only.
Which of the Commercial Property causes of loss forms provides theft coverage? I. The Basic form. II. The Broad form. III. The Special form. a. II only b. III only c. I, II and III d. II and III only
b. III only
An insurance policy is a contract. If any part of the policy language is ambiguous, the court will generally rule: a. In favor of the insurer since the forms were filed and approved by the insurance department. b. In favor of the insured. c. That the policy can be rewritten. d. To refund the premium back to the insured.
b. In favor of the insured.
Which of the following would be found in a yacht policy? a. Cargo belonging to others coverage b. Liability coverage c. Sails, oars, and ballast d. Earth movement
b. Liability coverage
Which of the following is NOT an unfair claims settlement practice? a. Misrepresenting the terms of a policy. b. Not paying an unsubstantiated or unreported loss. c. Compelling the insured to file a lawsuit in order to recover amounts due under an insurance contract by offering substantially less than the amounts ultimately recovered in the action. d. Failing to confirm or deny coverage within a reasonable time after receiving proof of loss.
b. Not paying an unsubstantiated or unreported loss.
The insured is moving to a new location. Coverage for contents provided under a Homeowner Policy would be: a. The coverage limit at the old location. b. On a pro-rata basis between the two locations. c. Only apply at the new location. d. No coverage would apply once the move commences.
b. On a pro-rata basis between the two locations.
A building insured under a Commercial Property policy suffers a fire and it is obvious that the building is underinsured. The policyholder demands payment for the entire loss on a replacement cost basis. The insurance company can: a. Refuse to pay the claim due to the building being underinsured b. Pay only the actual cash value of the lost or damaged property or apply the coinsurance clause c. Refer the loss to an appraiser d. Ask the court for a declaratory judgment
b. Pay only the actual cash value of the lost or damaged property or apply the coinsurance clause
Under the terms of a Homeowners policy, which of the following is a mortgagee permitted to do if the insured fails to pay his or her Homeowners policy premium? a. Cancel the Homeowners policy. b. Pay the premium for the insured. c. Issue a new Homeowners policy for the insured. d. Foreclose on the insured's property.
b. Pay the premium for the insured.
Which of the following is the correct description of the medical expenses limit in the liability section of the Businessowners policy? a. Per accident b. Per person, per occurrence c. Per incident d. Per location, per occurrence
b. Per person, per occurrence
Under the medical payments coverage of Ben Green's personal auto policy, each of the following would qualify as a "family member" EXCEPT: a. Alice Green, Ben's sister, who lives in Ben's household. b. Susan Green, Ben's wife. Susan maintains a separate residence although she and Ben are not divorced. c. Ben Green, Jr., Ben's 16- year-old son, living with his father. d. Patty Green, Ben's 28-year-old daughter. She also lives with her father.
b. Susan Green, Ben's wife. Susan maintains a separate residence although she and Ben are not divorced.
The insured sets a fire to his home and is found to be guilty of arson. There is a lien on the burned property by a mortgage company in the amount of $150,000. The property is insured for $300,000 and is a total loss. The personal property of the insured, covered separately by a Homeowners policy for $150,000, is also a total loss. How will this claim most likely be paid? a. The insured is paid a total of $300,000. b. The mortgagee is paid $150,000. c. The insured is paid $150,000 for the personal property loss. d. Since the loss is from an intentional act of the insured the entire loss is denied.
b. The mortgagee is paid $150,000.
What is the purpose of establishing loss reserves? a. To determine the exact amount the company expects to pay. b. To establish an estimate of the total amount the insurer expects to pay on a claim. c. To determine ultimate legal liability. d. To estimate the legal expenses to be incurred in a claim situation.
b. To establish an estimate of the total amount the insurer expects to pay on a claim.
A Businessowners policy has a $500,000 occurrence limit for liability, and a $1,000,000 aggregate limit. If claims for $600,000 and $400,000 have been filed in two separate incidents, how much coverage remains, if any, for future claims submitted during the policy term? a. $500,000 b. $0 c. $100,000 d. $1,000,000
c. $100,000 The most the policy will pay for any one single occurrence is $500,000, therefore that amount would be payable for the first loss. Once paid that amount must be subtracted from the Aggregate Limit (the most available for all claims in the policy year) leaving $500,000 remaining in the aggregate. The second claim is within the occurrence limit and because there is enough left in the aggregate, the entire $400,000 is payable. After subtracting the $400,000 loss from the remaining aggregate, $100,000 is left to pay any and all future claims for the remainder of the policy term.
Under the Homeowners Coverage C, business personal property is covered for: a. $2,500 on and off the premises. b. $2,500 off the premises and $500 on the premises. c. $2,500 on the premises and $1,500 off the premises. d. $2,500 anywhere in the world.
c. $2,500 on the premises and $1,500 off the premises.
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 from the policy? a. Nothing as it was not stolen. b. $20 per day after a 48 hour waiting period. c. $20 per day after a 24 hour waiting period. d. $30 per day after a 48 hour waiting period.
c. $20 per day after a 24 hour waiting period.
How many days does the liberalization clause provide for under the ISO standard BOP policy form prior to, or during the policy period? a. 55 days b. 30 days c. 45 days d. 35 days
c. 45 days
What is a "proof of loss"? a. A full release of all claims. b. A statement made by the insurer as to the coverage that may apply on a claim. c. A formal statement made by the insured to the insurance company regarding a loss. d. Special requirements made to the insured by the insurance company in case of a claim.
c. A formal statement made by the insured to the insurance company regarding a loss.
What does the term "unvalued basis" mean as it relates to ocean marine hull insurance? a. A policy wherein the amount of coverage is stated b. A policy designed to cover open lands c. A policy where the value is not declared until after the loss d. A policy where the value is determined by the exposure
c. A policy where the value is not declared until after the loss
The New York Standard Fire Policy covers which of the following types of personal property? a. Money b. Evidences of debt c. Appliances d. Securities
c. Appliances
Virtually all inland marine named perils forms include coverage for: a. Theft. b. Gradual deterioration. c. Fire and lightening. d. Dampness and extremes of temperature.
c. Fire and lightening.
Under a watercraft policy, which of the following would be covered? I. Bodily Injury II. Property Damage III. Medical Payments to Others a. I and II b. II and III only c. I, II and III d. I, and III
c. I, II and III
Which of the following are exempt from Texas workers compensation laws? I. a person employed as a domestic worker or a casual worker engaged in a personal residence; II. a person covered by a federal workers compensation law; or III. a farm or ranch employee. a. I only b. I and III only c. I, II and III d. II and III only
c. I, II and III
When a liability policy is contested, which of the following entities ultimately determines legal liability? I. The insurance company. II. A court of law. III. The claimant. a. I or II b. I only c. II only d. III only
c. II only
Which of the following would NOT be found in the conditions section of a homeowner insurance policy? a. Subrogation rights b. Duties of the insured c. Insurance premium d. Mortgagee clause
c. Insurance premium
All license application and state licensing exam fees in Texas are deposited: a. Into the State Guaranty Fund. b. Into the Subsequent Injury Fund. c. Into the Texas Department of Insurance operating account. d. With the state treasurer.
c. Into the Texas Department of Insurance operating account.
Which of the following would be considered "compensatory" or "special damages?" a. Pain and suffering b. Loss of consortium c. Medical expenses d. Disfigurement
c. Medical expenses
Driver 1 and Driver 2 are in an accident. Driver 2 has the following damages: Property Damage - $1,000 Rental Car Expense - $500 Emergency Room Expense - $400 Lost Wages - $300 The extent of the bodily injury will not be known for six months. How should the adjuster on this claim pay damages for Driver 2? a. Pay all damage to date, provide a full and final release has been signed by Driver 2. b. Pay nothing until total of all damages has been determined. c. Pay the property damage and rental car expense and settle the bodily injury at a later time. d. None of the responses listed are correct.
c. Pay the property damage and rental car expense and settle the bodily injury at a later time.
As a condition to gain entrance into Louisiana to conduct insurance business, a Texas domestic insurer makes a deposit with the Texas Comptroller. The amount of the deposit is sufficient to satisfy the Louisiana Department that the insurer can cover the claims submitted by the insureds in Louisiana. Who has jurisdiction to collect taxes on the interest earned on this deposit? a. The state of Louisiana. b. The state of Texas. c. The county and municipality in Texas where the principal business office of the insurer making the deposit is fixed by the insurer's charter. d. The interest will only be subject to federal taxes.
c. The county and municipality in Texas where the principal business office of the insurer making the deposit is fixed by the insurer's charter.
If your insurance company cancels your commercial insurance, whom must they notify? a. They must notify all Insureds listed on the policy. b. They must notify whoever is listed first on the policy. c. They must notify the first named insured listed on the policy. d. They must notify whoever is responsible for premium payments.
c. They must notify the first named insured listed on the policy.
Property with no occupants or contents is considered to be _____ whereas property with no occupants but with contents is considered: a. Occupied/Unoccupied b. Rented/Unrented c. Vacant/Unoccupied d. Unrestricted/Restricted
c. Vacant/Unoccupied
The insured carries an HO-3 Homeowners policy. He has complied with the coinsurance provision for replacement cost dwelling coverage. He suffers a fire loss. Which of the following property is NOT covered on a replacement cost basis? a. Interior paint. b. Wallpaper. c. Wall to wall carpeting. d. Roof.
c. Wall to wall carpeting.
Which of the following is NOT considered to be a hazard? a. Oily rags left by the hot water heater. b. Matches within reach of a small child. c. Wet leaves on the sidewalk. d. A fire started in a wastepaper basket.
d. A fire started in a wastepaper basket. The fire in the waste basket is a peril. The other three responses are all hazards.
The Texas Commissioner reasonably believes that a person has violated a cease and desist order. All of the following penalties may be imposed by the Commissioner, EXCEPT: a. An administrative penalty of $25,000 for each act. b. Order of complete restitution to all injured parties. c. A monetary penalty of $25,000 for each act and order complete restitution to all injured parties. d. A jail term of 30 days.
d. A jail term of 30 days.
When someone dies without a will, their assets will be handled by a court appointed: a. Arbitrator. b. Executor. c. Testator. d. Administrator.
d. Administrator.
The deductible on the Equipment Breakdown form can be stated in which of the following ways? a. Fixed dollar deductible b. Time deductible c. Percentage of loss deductible d. All of the responses are correct
d. All of the responses are correct
Business Income Protection is designed to: a. Provide continued income to the policyholder after a covered loss. b. Provide the same income the business would have received if there had been no loss. c. Pay what the net profit or loss before income taxes would have been. d. All of the responses are correct.
d. All of the responses are correct.
A commercial umbrella liability policy with a supplemental reporting period extends the period for reporting claims to: a. A period specified in the policy. b. 60 days following expiration of the policy. c. Five years or inception of a new policy, whichever comes first. d. An unlimited period following expiration of the policy.
d. An unlimited period following expiration of the policy.
Which of the following would be considered a "collision" peril under auto physical damage coverage? a. Riot b. Striking an animal c. Missiles or falling objects d. Hitting a pot hole
d. Hitting a pot hole
Which of the following is included in the definition of a first party claimant: I. An individual II. A corporation III. A partnership a. I only b. I and II only c. II and III only d. I, II, and III
d. I, II, and III
A Texas adjuster has adjusted a claim under a policy type for which he is not licensed. This is considered a: a. Misdemeanor and is punishable by a fine of not more than $1,000. b. Felony and is punishable by a fine of $10,000 and confinement in the federal penitentiary for not more than 1 year. c. Felony and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both. d. Misdemeanor and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both.
d. Misdemeanor and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both.
When is abandonment of insured property to an insurer permitted under a commercial property policy? a. When written prior notice is lawfully delivered to the insurer b. When the insured desires immediate settlement c. When the property is certain to be a total loss d. Never
d. Never
An insured has taken a physical inventory of his merchandise and discovers a substantial shortage of valuable stock. He turns a claim in to the insurance carrier that provides his coverage under a Businessowners Policy. What coverage is provided by the BOP for merchandise that has mysteriously disappeared? a. Full replacement cost coverage b. Full actual cash value coverage c. The loss is paid on an agreed amount basis d. No coverage would apply
d. No coverage would apply There is no coverage for missing property when there is no physical evidence to show the cause of loss. The only proof of loss is an inventory calculation.
The insured has an HO-3 homeowner policy. During the night, a water line in the wall to the upstairs bathroom burst and water ruined the walls, floor and furniture. In this situation all of the damages will be covered, EXCEPT: a. Damage to remove the wall and replace the wall to gain entrance to the pipe that broke. b. Damage to the floor. c. Damage to the furniture. d. Replace the pipe that broke.
d. Replace the pipe that broke.
Which of the following is included in the declarations page of the homeowner policy? a. Items subject to the policy's special limits of liability. b. The insured's occupation and annual income c. Definitions of terms used throughout the policy. d. The address of the insured location.
d. The address of the insured location.
Which of the following is not a purpose of interviewing witnesses in adjusting losses? a. To assess how the witness will hold up if a formal trial is needed b. To determine coverage issues c. To determine the relationship between the witness and the insured d. To delay payment of a claim
d. To delay payment of a claim
