Property and Casualty

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Property and Casualty
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  1. Builder's risk is most often written on which form?

    A. Completed value form

    B. Scheduled form

    C. Reporting form

    D. Specific value form
    A. Completed value form

    A building under contruction could be insured on reporting forms, but the value of the building should only increase during the policy period. To prevent all the administrative work required for reporting forms, most often completed value forms or used.
  2. An organization that, in addition to other activities, organizes a formal insurance plan providing insurance to its members is classified as a

    A. Stock company

    B. Reciprocal association

    C. Fraternal insurer

    D. Mutual company
    C. Fraternal insurer

    Fraternals operate on the basis of a lodge or charitable organization, but may also sell formal insurance plans for the benifit of their members
  3. Which of the following is an example of a protective safeguard in a businessowners policy?

    A. Professional liability endorsement

    B. Automatic sprinkler system

    C. Errors and omissions insurance

    D. Recordkeeping
    B. Automatic sprinkler system

    The protective safeguards endorsment adds a policy condition requiring the insured to maintain protective safeguards (automatic sprinkler system, fire alarm, etc.) as a condition for coverage
  4. The bankruptcy provision found in the personal auto policy states that bankruptcy of the insured:

    A. Will not relieve the insurer of its policy obligations

    B. Is one of the reasons an insurer can cancel the policy

    C. Will suspend the physical damage coverage

    D. Will waive all future premiums
    A. Will not relieve the insurer of its policy obligations

    The insurer must provide the coverage stated in the policy
  5. The transfer of money from inside a banking premises to a person other than a messenger outside those premises or to a place outside those premises is covered under which commercial crime coverage?

    A. Other crime coverage

    B. Outside primises

    C. Computer fraud

    D. Money orders and counterfiet paper currency
    C. Computer fraud

    The transfer of money from inside a banking priemises to a person other than a messenger outside those primises or to a place outside those primises is coverd by computer fraud.
  6. The type of crime policy under which coverage is triggered by a loss that happens during the policy period but is not necessarily discovered during the policy period is the:

    A. Retro form

    B. Reporting form

    C. Loss sustained form

    D. Discovery form
    C. Loss sustained form

    The loss sustained form is used for losses that happen during the policy period but may not have been discovered during th policy period. The loss sustained form is one of the conditions contained in the crime general provisions forms, which contains conditions and exclustions applying to all crime forms.
  7. Which of the following person auto coverages would pay for damage to a covered auto to contact with a deer?

    A. Collision

    B. Property damage liability coverage

    C. Bodily injury liability coverage

    D. Other-than-collision (comprehensive coverage)
    D. Other-than-collision (comprehensive coverage)

    Damage caused by contact with a bird or animal is paid under other-than-collision (comprehensive coverage)
  8. The commercial General Liability Coverage form excludes bodily injury or property damage that the insured has assumed under any contract or agreement. However, the exclusion does not apply to certain types of contracts, as long as the injury or damage occurs

    A. After the execution of the contract

    B. After the contract expires

    C. Before the execution of the contract

    D. Before the contract expires
    A. After the execution of the contract

    The commercial general liability coverage form excludes bodily injury or property damage that the insured has assumed under any contract or agreement. However the exclusion does not apply to certain types of contracts, a long as the injury or damage occurs after the execution of the contract
  9. An insured has a special form dwelling policy written for $100,000 on a dwelling. The dwelling's replacement cost is $115,000. Fire causes $75,000 in damage to the dwelling, $15,000 damage to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for the trees.

    A. $5,000

    B. $10,000

    C. $60,000

    D. $75,000
    A. $5,000

    In the broad and special form, Coverage B (other structures) is an additional amount of insurance , limited to 10% of Coverage A (in the example, $10,000). Trees, shrubs, and plants are covered, limited to not more the $500 for any one tree or plant, and not to exceed 5% of Coverage A in total (in this example, $5,000).
  10. The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit insurance are 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss?

    A. $200,000

    B. $80,000

    C. $120,000

    D. $75,000
    D. $160,000

    Extra expense coverage is written with a minimum of 3 applicable percentages that apply to the limit of insurance in the declarations. When the period of restoration is 30 days or less, the first percentage applies; when it is more than 30 days and not more than 60 days, the second percentage applies; when more than 60 days, the third  percentage applies.
  11. A policy holder has a boiler and machinery policy with a $200,000 limit. If a boiler caused $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?

    A. $175,000

    B. $180,000

    C. $200,000

    D. $100,000
    A. $175,000

    The limit of the equipment breakdown policy applies to property of the insured, property of others and expediting expenses in any combination as long as expediting expense does not exceed $25,000
  12. The homeowners policy covers collapse caused by all of the following EXCEPT

    A. Weight of too many people attending a party

    B. Foundation cracks

    C. Weight of snow

    D. Hidden insect or vermin damage
    B. Foundation

    Collapse must be caused by some sudden, unexpected reason. The foundation cracks would take years to cause collapse, meaning there would be plenty of time to find and repair them
  13. Which of the following is a characteristic of a Reciprocal Insurance Exchange?

    A. The attorney-in-fact manages the exchange

    B. It normally writes all lines of insurance

    C. Stock holders share in any profits

    D. It issues nonassessable polices
    A. The attorney-in-fact manages the exchange

    The reciprocal is administered by attorney-in-fact who is empowered to bind each subsciber to assume a share of the losses of the group
  14. Producers will be deemed to be using their license primarily to write controlled business if, during any 12 month period

    A. The total premiums on controlled business exceeds the total premiums on all other business written

    B. The licensees write more than 5 policies classified as controlled business

    C. The licensees write more than two policies on themselves or their property 

    D. The total premium on controlled business equals 15% or more of the total of all premiums on business written
    A. The total premiums on controlled business exceeds the total premiums on all other business written

    Producers will be deemed to be using their license primarily to write controlled business if, during any 12 month period the total premiums on controlled business exceed the total premiums on all other business written.
  15. Which of the following is a statutory defense?

    A. Comparative negligence

    B. Assumption of risk

    C. Intervening cause

    D. Contributory negligence
    A. Comparative negligence

    Many states, by statue, require that damages be apportioned based upon the negligence of each party in an accident
  16. ABC Trucking hauls products for Acme, Inc. as a contract carrier. On one shipment, the driver stopped at a truck stop for lunch. Leaving the truck in the parking lot, he made certain that the truck was locked before leaving it. Upon returning to the truck, he discovered that someone had broken into the truck and stolen the cargo. Is ABC legally liable for the loss?

    A. No the driver has taken reasonable measures to protect the property by locking the truck

    B. Yes, ABC's liability is absolute for the cargo into its possession 

    C. The truck stop would be liable for the loss

    D. None of the above
    A. No, the driver had taken reasonable measures to protect the property by locking the truck

    ABC, as a contract carrier, would not be legally liable for this loss. If ABC were operating as a common carrier rather than a contract carrier, it would have been legally liable.
  17. HO policies provide coverage for

    A. The land under the residence

    B. Property of tenants, roomers, or boarders not related to any insured

    C. $2,500 for business property while on the residence premises.

    D. Losses caused by off-premises power failure.
    C. $2,500 for business property while on the residence premises

    Your contents coverage will cover up to $2,500 for loss of business property on premises
  18. Which of the following homeowners endorsements covers liability exposures arising from an incidental business conducted within a building on the residence premises?

    A. Special limit of liability

    B. Professional liability

    C. Business income-report of values

    D. Permitted incidental occupancies
    D. Permitted incidental occupancies

    A permitted incidental occupancies endorsement covers liability exposures arising from an incidental business conducted witin a building on the residence premises.
  19. Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?

    A. Normal

    B. General

    C. Special

    D. Tort
    C. Special

    Tangible damages that can be specifically measured in dollar amounts are specific damages
  20. A liability policy that covers all claims arising out of incidents occurring during the policy period, regardless of whether the policy is still in effect at the time of the claim, is known as

    A. An occurrence policy

    B. A claims made policy

    C. A limited policy

    D. An aggregate policy
    A. occurrence policy

    Under an occurrence policy, coverage is activated when a covered event occurs during the policy period. Coverage for the insured is found under the policy at the time of the event occurred.
  21. What is the purpose of the government crime coverage form?

    A. To protect state government building from vandalism

    B. To provide those who do not qualify for crime coverage in the normal market with crime insurance

    C. To protect the federal government form employee dishonesty

    D. To provide those who do not qualify for crime coverage in the normal market with extra crime insurance
    B. To provide those who do not qualify for crime coverage in the normal market with crime insurance

    For insureds who do not qualify for crime coverage in the normal market, there are federal and some state programs that provide limited coverage
  22. In addition to the common policy conditions, all of following apply to liability coverage EXCEPT

    A. Separation of insured

    B. Conditional lawsuit protection

    C. Bankruptcy 

    D. Financial responsibility  laws
    B. Conditional lawsuit protection

    The following conditions apply to the liability coverage in addition to the common policy conditions: bankruptcy, duties in event of occurrence, claim or suit, financial responsibility laws, legal action against insurer, and separation of insured.
  23. Which of the following symbols is available to an insured with vehicles subject to no-fault coverage?

    A. Symbol 6

    B. Symbol 5

    C. Symbol 7

    D. Symbol 9
    B. Symbol 5

    Symbol 5 covers owned autos subject to no fault coverage
  24. All of the following are perils covered under the broad form dwelling policy EXCEPT

    A. Lighting 

    B. Collapse

    C. Theft

    D. Fire
    C. Theft

    Theft is not a peril named in the policy
  25. The standard property deductible per occurrence on a CPP is 

    A. $100

    B. $500

    C. $1000

    D. $250
    B. $500

    Higher or lower deductibles may apply, but commercial property policies generally come with a $500 deductible
  26. An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force, This is am example of what type of agent authority?

    A. Express 

    B. Implied

    C. Assumed

    D. Apparent
    D. Apparent

    An agent who accepts a premium after the end of the grace period appears to the client to have the authority  to prevent the policy from lapsing. In fact, the agent has no such power.
  27. Which of the following risks would NOT be eligible for coverage under a homeowners policy?

    A. An applicant who owns and lives in a single-family dwelling that also contains incidental business activities.

    B. An applicant who owns and lives on a commercial farm

    C. An applicant who lives in a duplex that she does not own

    D. An applicant who owns and lives in a duplex.
    B. 

    Risk that contain a farming exposure are not eligible for homeowners insurance.
  28. CGL Coverage B (Personal Injury and Advertising Injury) will cover

    A. The failure of goods to conform to advertised quality or performance

    B. Oral or written publication of material the insured knows is false

    C. An offense committed by an insured whose business is advertising

    D. Inadvertent injury to others caused in the course of advertising the insured's product
    D. 

    Personal injury and advertising injury do not cover professional advertisers, do not cover intentional injury, and do not guarantee the product will perform as advertised.
  29. An insured is driving his or her automobile and strikes a large pothole, causing a flat tire. Which coverage of the insured's personal auto policy will pay for the repair?

    A. Comprehensive

    B. Collision

    C. Loss is not covered

    D. None of the above
    C.

    A flat tire that occurs from a cause other than vandalism is considered a road hazard and is specifically excluded from coverage in the policy.
  30. All of the following situations would be covered under a professional liability policy, EXCEPT

    A. The failure of an attorney to properly defend a client due to his personal dislike of the client

    B. Failure of a doctor to render the quality of care that is customary in the medical field

    C. An accountant's error that inflated a bid and caused a client to lose a major account

    D. Negligence of an architect who designed an unsafe building
    A.

    Intentional breach of duty would not be covered
  31. Which of the following types of insurers is NOT subject to the regulations that apply to insurers that offer coverage to the public at large?

    A. Stock Company

    B. Reciprocal exchange company

    C. Fraternal Association

    D. Mutual company
    C.

    Since fraternals sell only their members and are considered charitable institutions, they are not subject to all of the regulations that apply to insurers that offer coverage to the public at large.
  32. Which professional liability form provides coverage liability arising out of malpractice, error, or mistakes made in rendering professional services?

    A. Medical malpractice

    B. Physicians, surgeons, and dentist malpractice

    C. Lawyers professional liability

    D. Directors and officers liability
    B.

    The physicians, surgeons, and dentist malpractice form provides coverage for liability arising out of malpractice, error or mistakes made in rendering or failing to render professional services
  33. Which would NOT be covered by the inside the premises-robbery or safe burglary of other property coverage?

    A. Two men break a window during an attempted robbery

    B. Someone breaks in after business hours, pries open a wall vault and steals several valuable paintings.

    C. A store clerk is forced into the storage room and locked in whole the intruder steals high-value merchandise

    D. An employee is caught stealing cash from the register
    D.

    Dishonest or criminal acts of any employee or representative are specifically excluded
  34. If a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss?

    A. $12,000

    B. $8,000

    C. $0

    D. $20,000
    B.

    Pro rata liability applies. Each policy pays a percentage of the loss based on the percentage of coverage that policy provides. Company A carries 1/3 of the total coverage ($20,000 + $40,000 = $60,000). Therefore, it is responsible for 1/3 of the $24,000 loss, or $8,000)
  35. All of the following conditions must exist for injury to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT

    A. Th injury or damage much occur after the insured has released physical possession of the product to another

    B. The injury or damage must occur within 1 year after the insured's work is completed

    C. The injury or damage must occur away from the insured premises

    D. The injury or damage must arise out of the insured's product or work
    B.
  36. In an auto policy, the medical payments coverage is similar to

    A. Bodily injury coverage, because it pays the insured's doctor bills

    B. Accident insurance, because it has the same limits

    C. Accident insurance, because it pays medical expenses regardless of fault

    D. Bodily injury coverage, because it provides legal protection if the insured causes injuries to others
    C.
  37. Which of the following statements is true concerning underinsured motorist coverage under a personal auto policy?

    A. Limits must equal the bodily injury limits of the policy

    B. Limits may differ from the limits for uninsured motorist coverage

    C. Coverage applies only to the extent that the underinsured motorists limits exceed the bodily injury limits carried by the operator of the other vehicle 

    D. It will pay up to the limits of insurance for any loss which involves an underinsured driver
    C.
  38. If an insurer decides to cancel an auto insurance policy due to the mechanical condition of the vehicle, what kind of notic to the insured is required?

    A. 10 days

    B. 20 Days

    C. 30 Days

    D. 60 Days
    B.
  39. Paul is a producer in Louisiana and wants to become a producer in Alabama. The Commissioner will waive certain examination requirements, provided that Louisiana would waive these same requirements if an Alabama producer sought licensure in Louisiana. What term is used to describe this phenomenon?

    A. Equanimity

    B. Reciprocity

    C. Equality

    D. Fair exchange
    B
  40. All of the following are supplemental payments found in liability policies EXCEPT

    A. Costs the insured incurred in hiring his or her own attorney

    B. Expenses and defense cost incurred by the insurer 

    C. Up to $250 a day for loss of income

    D. Limited amounts for bail bonds and other bonds related to a claim
    A
  41. What type of compensatory damages will pay for pain and suffering an disfigurement?

    A. Normal

    B. General

    C. Special (specific)

    D. Tort
    B.
  42. What method of premium computation related an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?

    A. Experience modification factor

    B. Workers classification factor

    C. Merit rating plan

    D. Arbitration
    A.
  43. What premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?

    A. Experience modifications factor

    B. Workers classification factor

    C. Merit rating plan

    D. Arbitration plan
    A.
  44. Jacob is the owner of Great Plains Paper Supply Company. The Company has a fleet of trucks it uses to deliver its products throughout the United States. Because Jacob's company uses its own trucks to carry its own goods, which commercial auto coverage form must be used to insure Great Plains' fleet of trucks?

    A. Motor carrier coverage form

    B. Business auto physical damage form

    C. Commercial carrier coverage form

    D. Truckers coverage form
    A.
  45. All of the following statements regarding parts used in the repair of an insured vehicle are true EXCEPT

    A. Parts used in the repair of an insured vehicle by other than the original manufacturer must use replacement parts from the manufacturer only

    B. All after market parts installed on the vehicle must be clearly identified on the repair estimate

    C. Insurers or repair facilities must disclose to the insured if used parts were installed on a vehicle

    D. Parts used in the repair of an insured vehicle by other than the original manufacturer must be at least equal in like kind and quality in terms of fit, quality and performace
    A.
  46. Which of the following statements is INCORRECT with regard to surplus lines insurance?

    A. Business placed with a surplus lines insurer is subject to a premium tax that must be collected by the broker

    B. Policies written by a surplus lines insurer typically contain standard coverages and forms

    C. To sell surplus lines insurance, the licensee must obtain a surplus lines broker license.

    D. Before coverage is placed with a surplus lines company, diligent effort must be made to place the risk with admitted insurers.
    B.
  47. First aid cost for others injured on your premises

    A. Are paid in addition to the liability limit

    B. Apply only if you are legally liable

    C. Also cover injuries to your family members

    D. Are deducted from the liability limit
    A.
  48. If a producer sold policies at the lost cost rate, the result would be

    A. Manual rates

    B. Low future rates

    C. Loss to the insurer 

    D. Rate discrimination
  49. The insured with a claim made CGL may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends, The insurer must provide the information

    A. Within 60 days

    B. As soon as practical

    C. Within 45 days

    D. With in 30 days
    C.
  50. Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

    A. Baiting

    B. Rebating

    C. Twisting

    D. Switching
    C.
  51. Under the commercial crime coverage inside the premises-robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?

    A. $10,000

    B. $25,000

    C. $1,000

    D. $5,000
    D.
  52. All of the following causes of loss forms are "named peril" forms EXCEPT

    A. Broad form

    B. Earthquake form

    C. Special form

    D. Basic form
    C.
  53. Coverage J under farm coverage agrees to pay reasonable medical expenses, regardless of fault, caused by an accident if the expenses are incurred and reported to the insurer with how many years of the accident date?

    A. 5 years

    B. 2 years

    C. 3 years

    D. 4 years
    C.
  54. Under which type of coverage does the insurer agree to pay for bodily injury or property damage liability which the insured has agreed to assume under a written contractual agreement?

    A. Contractual liability policy

    B. Personal liability policy

    C. Property damage liability policy

    D. Bodily injury liability policy
    A.
  55. A trucking company wants to continue to haul freight for the clients it has served for many years. The company recently purchased purchased a manufacturing company and wants the trucking division to transport the new company's freight. In regard to coverage, which of the following is true? 

    A. Truckers coverage form is needed

    B. A truckers coverage is needed along with the business auto coverage form

    C. Motor carrier coverage is needed

    D. The company must choose between being a private carrier and a common or contract carrier
    C.
  56. The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT

    A. The insured's infant daughter sustains injuries when the car she is occupying accidentally rolls down a hill.

    B. A friend is injured while driving the insured's vehicle with permission

    C. A pedestrian is struck by the insured while crossing in from of the vehicle

    D. The insured is injured by a motor vehicle while crossing the street
    C.
  57. An insured was offered a job that required her to move to another city, Her house, which she still owns and insures, has had no one living in it for 3 months. However, the insured is storing some of her furniture and cloths in the house. From an insurance standpoint, the insured's house is considered

    A. Unoccupied 

    B. Condemned

    C. Under repair

    D. Vacant
    A.
  58. With respect to commercial auto policies , the Garage Coverage Form provides liability protection for all of the following EXCEPT

    A. The insured's business auto

    B. The insured's business products and work performed

    C. The insured's business income losses due to personal injury

    D. The insured's business premises
    C.
  59. In addition to obtaining and insurance producer license, a business entity, in order to transact insurance , must have at least 

    A. One individual licensed insurance producer

    B. Certificate stating the kinds of insurance they currently offer

    C. Membership in a state or local insurance association

    D. None of the above
    A.
  60. All of the following are special personal property limits under a homeowners policy EXCEPT

    A. $1,500 for trailers not used with watercraft

    B. $2,500 for theft of firearms

    C. $500 for business personal property on the insured premises

    D. $1,500 for securities, accounts, deeds, and evidences of debt
    C.
  61. Which of the following dwelling coverage forms would pay replacement cost for the dwelling?

    A. DP-2 and DP-3

    B. DP 3 only

    C. All dwelling property coverage forms 

    D. DP-1
    A
  62. The insurer must be able to reply on the statements in the application, and the insured must be able to reply on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as

    A. Implied warranty

    B. Utmost good faith

    C. Reasonable expectations

    D. A warranty
    B
  63. The removal coverage that is included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long?

    A. 5 days

    B. 15 days 

    C. 30 days

    D. 60 days
    C.
  64. What common carriers required to issue to every shipper that it transports goods for?

    A. A transit coverage form

    B. A motor truck cargo form

    C. A common bill of lading liability notice

    D. A uniform bill of lading
    D.
  65. Which for the following claims would be included under the dwelling policy?

    A. Fire damage to a garage located on the insured premised used as an auto repair shop

    B. Theft of the insured's auto stolen from the detached garage

    C. Death to the insured's cat due to smoke inhalation

    D. Fire damage to the insured's rowboat located in the attached garage
    D.
  66. An insurance producer who by contract is bound to write insurance for only one company is classified as a/an 

    A. Independent producer

    B. Captive agent

    C. Broker-agent

    D. General agent
    B.
  67. All of the following are other coverages under the dwelling policy EXCEPT

    A. Other structures

    B. Debris removal

    C. Improvements, alterations, and additions

    D. Earth movement
    D
  68. Under which type of coverage does the insurer agree to pay for bodily injury or property damage liability which the insured has agreed to assume under a written contractual agreement?

    A. Property damage liability policy

    B. Bodily injury liability policy

    C. Contractual liability policy

    D. Personal liability policy
    C.
  69. Which of the following could be covered by a HO policy?

    A. A sports car kept in an attached garage

    B. Property of a tenant not related to the insured

    C. An oriental rug in an on premises apartment

    D. Birds, fish and animals
    C
  70. What documentation grants express authority to an agent?

    A. Agent's contract

    B. Agent's insurance license

    C. Fiduciary contract

    D. State provisions
    A.
  71. Subrogation rights under a personal auto policy apply to all coverages EXCEPT

    A. Physical damage

    B. Uninsured motorist

    C. No fault medical payments

    D. Liability
    A
  72. The insured with a homeowners policy has had damage to his property caused by a volcano. Which of the following is true?

    A. All eruptions are considered separate occurrences no matter how close together

    B. All volcanic eruptions within 36 hour period will be considered on occurrence 

    C. All volcanic eruptions within a 72 hour period will be considered one occurrence

    D. None of the damage is covered
    C
  73. When a replacement auto is acquired during the policy period, what coverage will apply to it automatically under a personal auto policy?

    A. Physical damage coverage only

    B. No coverage applies automatically

    C. Whatever coverage applied to the vehicle being replaced

    D. Liability coverage only
    C.
  74. In applying for an original certificate of authority, an insurer must submit an application with the appropriate fees and the following information, EXCEPT

    A. State or country of domicile

    B. The amount of insurance it intends to write

    C. Name of the company

    D. A copy of its last financial statment
    B.
  75. All of the following types of property are covered by a standard builders risk form EXCEPT

    A. Tools 50 feet away from the building 

    B. The building itself

    C. Temporary structures

    D. Machinery that will be permanently attached to the building
    A.
  76. Which type of authority is based on the actions, words, or deeds of the principal?

    A. Implied

    B. Apparent

    C. Express

    D. Lingering implied
    B.
  77. Which bond is required by a court before allowing one to take the assets of another to satisfy a legal obligation?

    A. Attachment bond

    B. Bail bond

    C. Cost bond

    D. Injunction bond
    A.
  78. Coverage for water backup or sump pump overflow is excluded from the dwelling policy. However, with the purchase of the water backup and sump pump overflow endorsement, coverage for up to $5,000 in loss or damage can be provided for an additional premium. What is the deductible associated with this coverage?

    A. $300

    B. $350

    C. $200

    D. $250
    D.
  79. Which of the following statements is true regarding physical damage coverage in a garage form?

    A. No coverage is provided for autos stored for more than 45 days at a location not shown in the declarations

    B. Collision coverage is provided only for dealers

    C. Autos held for sale by a dealer are listed individually in the policy

    D. Specific causes-of-loss coverage is not available for physical damage coverage
    A.
  80. Contracts that are prepared by one party and submitted to the other party on a "take it or leave it" basis are classified as 

    A. Binding contracts

    B. Contracts of Adhesion

    C. Unilateral contracts

    D. Aleatory contracts
    B.
  81. Which of the following is a requirement that must be satisfied before an application can receive an insurance producer license in Alabama?

    A. Be at least 21 years old

    B. Be a resident of Alabama

    C. Complete prelicensing classroom instruction,unless otherwise exempt by the commissioner

    D. Agree to solicit insurance sale to members of his or her immediate family
    C.
  82. Which coverage applies to losses caused by larceny, embezzlement, misappropriation, wrongful abstraction and other acts of theft by an employee?

    A. Inside the Premises - Robbery or Safe Burglary of other property

    B. Employee Theft

    C. Forgery or Alteration

    D. Inside the Premises - theft of money and securities
    B.
  83. Which of the following would NOT be considered an "insured" under a business auto coverage form?

    A. A partner of the named insured for any covered auto owned by that person or a member of his/her household

    B. Anyone while using a covered auto with the named insured's permission

    C. The owner from whom the named insured hires or borrows a covered auto

    D. Employee in the business of selling, servicing, or parking autos
    C.
  84. The ABC Corporation has $100,000 of coverage on its 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, how much will each insurer pay?

    A. Company A will pay $24,000; Company B will pay $0

    B. Company A will pay $16,000; Company B will pay $8,000

    C. Company A will pay $20,000; Company B will pay $4,000

    D. Company A will pay $12,000; Company B will pay $12,000
    B.
  85. All of the following are excluded in the boiler and machinery basic policy EXCPET

    A. Loss of power, lights, heat, steam, or refrigeration

    B. Explosion of steam boilers

    C. Ordinance of law coverage

    D. Business interruption
    B.
  86. An insured is driving his or her automobile and strikes a large pothole, causing a flat tire. Which coverage of the insured's personal auto policy will pay for the repair?

    A. Comprehensive

    B. Collision

    C. Loss is not covered

    D. None of the above
    C.
  87. Richard owns and operates a commercial business. He has included a business income coverage form with his commercial package policy. When Richard's business is severely damaged by fire, the business income coverage will pay for

    A. Annual sales less the cost of merchandise

    B. Loss of total annual sales

    C. Net income plus continuing expenses of the business

    D. Sales value production less the cost of raw stock
    C.
  88. Which of the following is the correct formula for computing a loss ratio?

    A. (Incurred expenses + loss adjusting expenses)/earned premium

    B. (Incurred expenses - loss adjusting expense)/earned premium

    C. Loss adjusting expenses - incurred  expenses 

    D. (Incurred losses + loss adjusting expense) earned premium
    D.
  89. HMS Toys carries more inventory from October 1 to December 31. Which of these would provide higher coverage limits during those months and lower limits the rest of the year?

    A. Spoilage

    B. Inventory increase

    C. Peak season

    D. Value reporting
    B.
  90. Which of the following endorsements is used by individual business owners who use company  vehicles for personal use rather than purchasing a personal vehicle?

    A. Drive other car

    B. Additional insured - lessor

    C. Hired autos specified as covered autos you own

    D. Individual Named insured
    D.
  91. Which of the following losses would NOT be covered by a homeowner's policy?

    A. $800 outboard motor destroyed by hail

    B. A coin collection valued at $500 lost in a fire

    C. A $550 utility trailer blown away by a tornado

    D. A stolen silver tea set worth $2,000
    B.
  92. What kind of liability would a person who owns a swimming pool have?

    A. Absolute

    B. Vicarious

    C. Implied

    D. Direct
    A.
  93. Which of the following is NOT one of the available additional coverages in the builders risk form?

    A. Vandalism

    B. Debris removal

    C. Fire department service charge

    D. Pollutant cleanup
    A.
  94. Which of the following terms best describes what a person is doing when he takes a defensive driving course or installs deadbolt locks on the doors of his home?

    A. Risk transfer

    B. Loss Sharing

    C. Risk reduction 

    D. Loss avoidance
    C.
  95. A person convicted of willfully violating an insurance law of Alabama is subject to 

    A. A sentence to hard labor for a period of 2 years 

    B. A fine of up to $1,000 imprisonment, and a sentence to hard labor for a period of one year.

    C. A fine of up to $10,000, or a sentence of hard labor, determined by the violator

    D. 100 hours of community service
    B.
  96. Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

    A. Implied

    B. Apparent

    C. Assumed

    D. Express
    A.
  97. The individual Named Insured endorsement under a Commercial Auto Policy provides coverage for which of the following?

    A. The sole proprietor of the business and His/her family members

    B. The sole proprietor of the business only

    C. The sole proprietor of the business and his/or her employees

    D. The sole proprietor of the business and his/her spouse, only
    A
  98. Under a business policy, the inspections and surveys condition specifies all of the following EXCEPT

    A. The insurer does not make safety inspections for the insured

    B. The insurer does not guarantee that conditions are safe and healthful

    C. The insurer does not guarantee that the insured is meeting all required safety regulations

    D. The insurer does not have the right to inspect the insured's property and operations
    D.
  99. What is the basic limit for costs incurred at the place a vehicle is disabled provided by the towing and labor costs endorsement?

    A. $25

    B. $50

    C. $75

    D. $100
    B
  100. According to the appraisal condition of a homeowners policy, what procedure may be followed if the insurer and insured do not agree as to the size of a loss?

    A. full-blown lawsuit

    B. The policyholder is allowed to hire an appraiser, and will pay the amount he determines.

    C. Each side selects an appraiser to represent them, the appraisers select an umpire to settle any differences between the appraisers

    D. The insured is required to accept what the insurer is willing to pay
    C.
  101. Slick Oil Company owns a large fleet of trucks that transport oil across state lines. According to the financial responsibility requirements set by the Motor Carrier Act of 1980, what is the minimum amount of insurance Slick Oil Company must carry on its trucks that transport oil?

    A. $500,000

    B. $750,000

    C. $1 million

    D. $5 million
    C. $1 million
  102. A customer was injured in a supermarket parking lot when a grocery cart collided with the customer's leg. Coverage for this claim would be provided under

    A. Contractual liability

    B. Product liability

    C. Premises and operations

    D. Completed operations
    C.

    Premises and operations would cover claims arising from injuries that occur on the insured's premises or because of the insured's business operations
  103. Payment for medical expenses, loss wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?

    A. Special

    B. Tort

    C. Normal

    D. General
    A.
  104. In the event that an insurer terminates the appointment of a producer, the insurer must notify the Commissioner within

    A. 5 days

    B. 10 days

    C. 20 days

    D. 30 days
    D
  105. Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss?

    A. Comprehensive

    B. Collision

    C. Liability 

    D. Medical payments
    C.
  106. A small trucking company stops transporting hay for area farmers and begins to haul hay for its own farm exclusively. In regard to the coverage on it trucks, which of the following is true? 

    A. Any coverage from applies

    B. Coverage can continue under the truckers coverage form

    C. Farm liability coverage applies

    D. Business auto coverage form may apply
    D.
  107. After a loss, an insured covered by a business property coverage is NOT required to

    A. Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation

    B. Resume business operations as soon as possible

    C. Send the insurer a sworn proof of loss within 60 days

    D. Take all reasonable steps to protect property from further damage
    A.
  108. Which of the following statements is NOT true regarding mobile agricultural machinery and equipment coverage?

    A. It covers detached parts and accessories of mobile devices

    B. It insures eligible equipment for open perils

    C. This coverage must be written as part of farm coverage 

    D. It relates to devices used in the everyday farm operations
    C.
  109. All are true if a contractor defaults on a performance EXCEPT

    A. The surety may cancel the bond so as to avoid having to pay losses and expenses

    B. The obligee may hire another contractor to complete the job and have the surety repay the obligee

    C. The principals obligations end

    D. The surety will attempt to seek reimbursement from the contractor for any amounts it pays
    A.
  110. Which of the following dwelling policies insures a structure on a actual cash value basis?

    A. DP-6

    B. DP-1

    C. DP-2

    D. DP-3
    B.
  111. How long does a temporary producer's license last?

    A. 1 year

    B. 90 days

    C. 150 days

    D. 6 months
    D
  112. If a farm building or structure is vacant or unoccupied, which is true?

    A. If for 120 consecutive days, the limits applicable to the building and its contents are reduced by 50%

    B. If for 30 consecutive days, no coverage for vandalism and malicious mischief, glass breakage, or theft

    C. If for 60 consecutive days, no coverage for vandalism and malicious mischief, glass breakage, or theft 

    D. If for 60 consecutive days, amounts paid for covered losses is reduced by 15%
    A.
  113. How are surety bonds different from insurance?

    A. Surety bonds are issued by the government, insurance is issued by private companies

    B. Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses

    C. Insurance guarantees specific duties or obligations will be fulfilled; surety bonds pay for losses

    D. Surety bonds guarantee that losses will be paid; insurance pays for obligations to be fulfilled
    B
  114. All of the following are true regarding flood insurance EXCEPT

    A. Coverage is excluded for money and securities

    B. It is available in designed areas only

    C. Coverage is provided for growing crops and livestock 

    D. Coverage may be provided for growing crops and livestock
    D.
  115. Liability imposed on one party as a result of the actions of another person (i.e.,parent/child, employer/employee) is known as

    A. Strict liability

    B. Absolute liability

    C. Vicarious liability

    D. Comparative negligence
    C.
  116. 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?

    A. $200,000

    B. $100,000

    C. $175,000

    D. $180,000
    C.
  117. Which of the following statements would be an example of a product liability claim?

    A. The insured's product has to be recalled because of an expiration date 

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

    C. An insured while delivering product to a customer, hits another car with the delivery truck causing bodily injury and property damage

    D. Someone tampers with the insured's product causing the insured to have to recall all products on the shelf
    B
  118. All are true of the supplementary payments of a CGL EXCEPT

    A. They pay defense costs even after the aggregate limits has been reached

    B. They pay all expenses incurred by the insurer

    C. They pay pre-judgment and post judgement interest

    D. They pay all reasonable costs incurred by the insured in helping investigate or defend a claim
    A
  119. Under the provisions of the business income coverage form, all of the following are true, EXCEPT

    A. The insured is reimbursed for payroll that continues after the loss begins

    B. The insured is reimbursed for the loss from the date of loss to date of restoration or policy expiration date, whichever comes first

    C. If the insured and insurer are unable to come to agreement as to the value of the loss, either party may make a written demand for an appraisal

    D. The insured agrees to resume all or part of operations as quickly as possible
    B.
  120. Expenses that an organization would not have incurred if business interruption has not existed are known as

    A. Continuing expenses

    B. Additional expenses

    C. All inclusive expenses

    D. Extra expenses
    D
  121. What is a material misrepresentation?

    A. Any misstatement made by an applicant for insurance

    B. Any misstatement by the producer 

    C. Concealment

    D. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
    D.
  122. Directors and officers liability insurance defends actions against a corporation or its officers and directors alleging wrongful acts. With regard to the coverage provided, wrongful acts include any of the following EXCEPT

    A. Embezzlement

    B. Misstatements 

    C. Neglect

    D. Breach of duty
    A.
  123. If an individual insures his dwelling and contents under a DP-3, he would be protected against loss by all of the following perils EXCEPT

    A. Damage caused by vandals

    B. Damage caused by the weight of ice, snow or sleet

    C. Damage to the dwelling caused by burglars

    D. Theft of personal property located in the dwelling
    D.
  124. Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of property, EXCEPT 

    A. Aircraft

    B. Watercraft

    C. Credit cards

    D. Motor vehicles licensed for the road
    B.
  125. All of the following are additional causes of loss included in the broad form of a commercial property policy EXCEPT 

    A. Water damage

    B. Replacement cost

    C. Falling objects

    D. Weight of ice, snow, or sleet
    B.
  126. Which of the following would NOT be considered an "insured" under a business auto coverage form?

    A. A partner of the named insured for any covered auto owned by that person or a member of his/or her household

    B. Anyone whole using a covered auto with the named insured's permission 

    C. The owner from whom the named insured hires or borrows a covered auto

    D. Employee in the business of selling, servicing, or parking autos
    C.
  127. Which of the following statements is true concerning a bonded contractor who defaults on a construction performance contract?

    A. The obligee may engage another contractor and then seek reimbursement from the surety

    B. The surety may cancel the bond and avoid paying any losses or expenses

    C. The contractor will lose his license to operate in the state

    D. The principal has no obligation to complete any remaining work or pay for the expenses
    A.
  128. A specialized type of insurance that guarantees the faithful performance of a trustee of employee benefit plans is called 

    A. Employee benefit plan comprehensive coverage

    B. Fiduciary liability insurance

    C. Surety bond

    D. Directors and officers insurance
    B.
  129. Employee theft coverage may be written as 

    A. Blanket coverage 

    B. Named schedule coverage

    C. Position schedule coverage

    D. Any of the above
    D.
  130. All of the following are essential parts of the insurance contract EXCEPT 

    A. Conditions

    B. Provisions

    C. Exclusions

    D. Insuring clause
    B.
  131. La Casa Pizza Shoppe has a neon sign attached to its building that features a man playing a guitar. During a severe thunderstorm, the sign is damaged by wind and hail. What is the maximum amount La Casa's Building and Personal Property policy will pay for the damage to the sign?

    A. $5,000

    B. $500

    C. $1,000

    D. $2,500
    C.
  132. The party to a surety or fidelity bond who promises to do or not do a specific thing is the 

    A. Custodian

    B. Surety

    C. Obligee

    D. Principal
    D.
  133. Which of the following is true regarding the fire department service charge under the Builders Risk form?

    A. It is a high-deductible endorsement

    B. It is an additional coverage

    C. It is an automatic coverage for $500

    D. It is not available in this form
    B.
  134. According to the standard mortgage clause, who has the right to bring a suit in their own name to cover damages, pay policy premiums, and submit a proof of loss?

    A. Policyholder

    B. Mortgagee

    C. Insurance company

    D. Governor
    B.
  135. Which of the following is true regarding personal liability coverage?

    A. It is the same as in homeowners policies

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

    C. It does not cover medical payments to others

    D. It is included in all dwelling policies
    B.
  136. Which of the following personal auto coverages would pay for damage to a covered auto due to contract a deer? 

    A. Bodily injury liability coverage

    B. Other-than-collision (comprehensive)

    C. Collision coverage

    D. Property damage liability coverage
    B.
  137. Rita drops off her wedding gown at Vicky's Dry Cleaners for a final pressing. The store's press breaks, so Vicky takes Rita's dress to her other store, Vicky is held at gunpoint until she gives the man the wedding dress. What crime coverage form would pay for the loss of the gown in this situation?

    A. Funds Transfer Fraud 

    B. Extortion - Commercial Entities

    C. Miscellaneous Crime

    D. None of these
    B
  138. How much is the premium for the dwelling under construction endorsement under the dwelling policy?

    A. The average amount of insurance during construction

    B. 75% of the gross premium

    C. The full value of the house

    D. 50% of the actual premium
    A.
  139. The extra expense coverage form provides

    A. Extra money for an insured whose accounts receivable records have been damaged

    B. Additional money to pay for property damage losses at a covered location

    C. Payment for unforeseen expenses an insured may incur while the business is shut down following a property damage loss

    D. Coverage that will permit the insured to continue in business without interruption following a property damage loss.
    D
  140. Which of the following coverages would provide protection for the liability of an auto repair garage to owners of vehicles destroyed in the garage by fire?

    A. Motor carrier

    B. General Liability premises and operations

    C. Garagekeepers

    D. Product liability
    C.
  141. Rates that are established based on the similarities of the risk with other risk are known as

    A. "A" rates

    B. Merit rates

    C. Manual rates

    D. Experience rates
    C
  142. Under the Commercial Crime coverage part, loss resulting from employee theft is

    A. Always covered

    B. Always excluded

    C. Always covered provided the employee has not been previously responsible for such a loss

    D. Excluded unless a limit of insurance is shown in the Declarations for Employee Theft coverage
    D
  143. Which of the following is NOT a characteristic of an insurable risk?

    A. The loss must be predictable

    B. The loss must be catastrophic

    C. The loss must be due to chance

    D. The loss must be definite and measurable
    B.
  144. The common policy condition is a modular part combined with other parts to create the contract. The "common policy condition" section contains provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy?

    A. The first named insured may cancel the policy at any time by giving written notice to the insurer

    B. Prior to the insurer making inspections, surveys and reports relating to the insurance, approval from the insured must be obtained

    C. Request fro any changes in the policy requested by the insured may be made by the second named insured

    D. The insurer is granted the right to audit books and records of the insured relating to the policy for a period of up to 5 years after the end of the period
    A.
  145. Which of the following clauses under an Open Cargo Policy is the MOST restrictive?

    A. Transportation Clause

    B. With Particular Average Clause

    C. All Risk Form

    D. Free of Particular Average clause
    D
  146. Coverage under the builders risk form will end in all of the following situations EXCEPT

    A. The insured has sold the property

    B. 60 days after the construction has ended

    C. Construction has be abandoned

    D. 60 days after the building became occupied
    B
  147. One advantage of claims-made liability forms from the insurer's point of view is that

    A. The insurer will always know when to expect the claim to be filed

    B. It allows stacking of limits

    C. It prevents stacking of limits

    D. The insurer does not pay claims years after the occurrence causing the damage
    C
  148. An insured runs a day care in her home. She has purchased the home day care endorsement under her homeowners policy. Which of the following losses would her coverage cover?

    A. A child has bruises on her legs from receiving a spanking from the insured and must be seen by her pediatrician

    B. A child riding the insured's horse falls off, breaking his collar bone

    C. A child trips over a toy in the driveway, cuts her knee, and requires stitches 

    D. A child is playing in the insured's car, puts it in drive, and backs into the neighbor's mail box
    C
  149. Which of the following describes contributory negligence?

    A. Any degree of negligence by the injured party may bar recovery

    B. The time period in which a claim must be filed

    C. Negligence is apportioned between both parties in an accident

    D. Th voluntary assumption of exposure to risk
    A
  150. In a personal auto policy, Coverage C: Uninsured Motorist defines an insured person as any of the following persons EXCEPT

    A. Occupying a covered auto

    B. Injured in an auto accident

    C. Member of the named insured

    D. Member of the insured being struck as a pedestrian
    B
  151. A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the 

    A. Face limit

    B. Stated amount

    C. Limit of liability 

    D. Penalty
    D
  152. Retroactive dates in claim made CGL policies apply to

    A. BI and PD only

    B. Both BI and PD and PIL and Advertising Liability

    C. BI and PD, PIL and Advertising Liability , and Med pay

    D. PIL and Advertising Liability only
    B
  153. Which of the following terms refers to other insurance that is written on the same risk, but not on the coverage basis?

    A. Pro rata

    B. Contribution by equal shares

    C. Nonconcurrency 

    D. Primary and excess
    C.
  154. How does reinsurance benefit the insurer?

    A. It helps protect against catastrophic losses

    B. It offers a way to differentiate policies

    C. Reinsurance frees the insurer of all liabilities 

    D. With reinsurance, premiums are higher
    A
  155. Which of the following statements concerning a personal auto policy is true?

    A. Medical payments coverage applies per person, per accident

    B. Coverage applies while the insured is on a vacation to Mexico.

    C. Coverage for temporary substitute vehicles will not be handled as excess

    D. Uninsured motorist's coverage applies only to the named insured and family members
    A
  156. Supplementary payments on a CGL, provide all the following EXCEPT

    A. The cost of bonds to release attachment

    B. Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds

    C. $100 in gasoline costs by the insured driving a witness to and from court

    D. Pre-judgment and post judgement interest
    B
  157. Because an insured owns a considerable amount of expensive jewelry, her insurance agent has advised her to add a scheduled personal property endorsement to her homeowners policy. If the endorsement is added, which of the following statements is correct?

    A. The coverage is doubled

    B. It becomes excess coverage

    C. It becomes primary coverage and the HO contract secondary

    D. Coverage C will no longer apply to the jewelry insured by the endorsement
    D
  158. What is the maximum period of time for a binder?

    A. 30 days

    B. 45 days

    C. 90 days

    D. 6 months
    C
  159. A producer holds both a Life and Health and a Property and Casualty licenses. How many hours of continuing education will the producer be required to complete in 2 years?

    A. 48 

    B. 12

    C. 20

    D. 24
    D
  160. The NFIP emergency program

    A. Goes into effect after the community had received a Flood Hazard Boundary Map and ends when the normal program begins

    B. Provides limited amounts of coverage at subsidized rates

    C. Provides more coverage than the normal program

    D. Both A and B
    D
  161. Units with the same or similar exposure to loss are referred to as 

    A. Law of large numbers

    B. Homogeneous

    C. Catastrophic loss exposure

    D. Insurable risk
    B
  162. The Employee Theft crime policy coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 

    A. 60 days

    B. 90 days

    C. 120 days

    D. 30 days
    B
  163. Computer Fraud crime coverage places what limit on each occurrence of the loss of manuscripts, drawings, or records?

    A. $100,000

    B. $2,000

    C. $5,000

    D. $10,000
    C.
  164. What is the legal defense that can be used in most states in which proportionate damages may be rewarded when both the plaintiff and defendant were negligent?

    A. Contributory negligence

    B. Proximate cause

    C. Comparative negligence

    D. Relative degree of damage statute
    C
  165. A business owner whose inventory changes significantly throughout the year should consider having coverage written on what type of form?

    A. Comprehensive form

    B. Reporting form

    C. Fluctuating inventory form

    D. Blanket form
    B
  166. Should an insurer accept business from a producer who is not appointed as that insurer's agent, what penalty may be exacted?

    A. The insurer is fined 3 times the amount of the premium received on that business

    B. The producer is fined the amount of commission paid on the business

    C. The insurer is fined the amount of the commission paid to the unappointed producer

    D. Both the insurer and producer is fined $500 each
    A
  167. The occurrence form trigger is based on which of the following?

    A. The amount of claims made during the policy period

    B. The date when injury or damage occurs

    C. The place where the injury or damage occurs

    D. The amount of the insured's deductible
    B
  168. Events in which the principal has both the chance of winning or losing are classified as 

    A. Dual risk

    B. Pure Risk

    C. Retained risk

    D. Speculative risk
    D
  169. Besides the peril of earthquake, which peril is covered by the Earthquake Cause of Loss Form under a Commercial Property Policy?

    A. Hurricane

    B. Lightning

    C. Volcanic Eruption

    D. Tidal Wave
    C
  170. Which of the following would NOT be covered under the liability section of a personal auto policy?

    A. After a party, the insured causes an accident and is charged with driving under the influence of alcohol

    B. Bodily injury is caused by the insured's negligence while driving a three-wheeled all-terrain vehicle

    C. A trailer the insured vehicle is towing accidentally comes loose and causes injury to another person

    D. A friend of your son is using the insured vehicle with the named insured's permission and causes an accident
    B
  171. An insured is driving his or her automobile and strikes a large pothole, causing a flat tire. Which coverage of the insured's personal auto policy will pay for the repair?

    A. Comprehensive

    B. Collision

    C. Loss is not covered

    D. None of the above
    C
  172. What is a binder?

    A. A condition that allows the insurer to audit the insured's books or records at the end of the policy term to make sure adequate premium has been collected for the exposure

    B. Written evidence showing the amounts and types of insurance provided by an insurance policy or polices that have been issued

    C. A temporary contract of insurance by the insurer that places insurance in effect prior to the policy being issued 

    D. A contract for lease of premises
    C
  173. What method to insurers use to protect themselves against catastrophic losses?

    A. Pro rata liability

    B. Risk-management

    C. Reinsurance

    D. Indemity
    C
  174. The contents coverage on homeowners policy would pay how much after the loss of one of a pair of golden candlesticks?

    A. Nothing

    B. The difference in the actual cash value and as a single

    C. The replacement cost of the pair

    D. The actual cash value of the pair
    B
  175. A house insured under a dwelling policy becomes vacant for 70 consecutive days. Which of the following statements is true?

    A. Glass breakage as a result of vandalism is covered

    B. Damage to glass building blocks is no covered

    C. Loss by theft is covered

    D. Loss by vandalism and malicious mischief is excluded
    D
  176. An agent is acting ethically in all of the following situations EXCEPT

    A. Keeping customers' best interest in mind

    B. Always representing the insured

    C. Working within the conditions of his/her contract 

    D. Representing the insurer, not the insured
    B.

    An agent will always be deemed to represent the insurer, not the insured.
  177. Compared with other drivers in his age group, a driver has had more minor accidents and traffic violations. Which of the following rating types would most accurately reflect the driver's true insurance risk?

    A. Experience

    B. Retrospective

    C. Special

    D. Schedule
    B
  178. A basic dwelling policy automatically provides coverage against fire, lighting, and 

    A. Smoke

    B. Riot

    C. Windstorm

    D. Internal explosion
    D
  179. All of the following statements are true regarding fire department service coverage under the business policy EXCEPT

    A. This coverage limit pays in place of the limit of insurance shown in the declarations 

    B. The coverage limit is payable in addition to the limit of insurance shown in the declarations

    C. The coverage is not subject to any deductible

    D. This coverage provides an additional $2,500 amount of insurance ($1,000 under '02)
    A.
  180. Ro/ro ships are used to transport

    A. Motor vehicles

    B. Containerized cargo

    C. Coal, grain, phosphates, and other "loose" cargo

    D. Break-bulk cargo
    A
  181. Subrogation rights under a personal auto policy apply to all coverages EXCEPT

    A. Physical damage

    B. Uninsured motorist

    C. No-fault medical payments

    D. Liability
    A.
  182. Statements made by an applicant for a life insurance policy that are true to the best of the applicant's knowledge are referred to as

    A. Information

    B. Representations

    C. Facts

    D. Warrenties
    B
  183. The homeowners policy form that covers condominium unit owners is

    A. HO-2

    B. HO-3

    C. HO-4

    D. HO-6
    D.
  184. If a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss?

    A. $12,000

    B. $8,000

    C. $0

    D. $20,000
    B
  185. A liability policy that covers all claims arising out of incidents occurring during the policy period, regardless of whether the policy is still in effect at the time of the claim, is known as

    A. An occurrence

    B. A claims made policy

    C. A limited policy

    D. An aggregate policy
    A
  186. Which of the following types of insurer is NOT subject to the regulations that apply to insurers that offer coverage to the public at large?

    A. Fraternal Association

    B. Mutual Company

    C. Stock Company

    D. Reciprocal exchange company
    A
  187. All of the following are lines of insurance that may be transacted under a life and accident/health producer license EXCEPT

    A. Annuities

    B. Disability income insurance

    C. Group health insurance

    D. Consequential loss insurance
    D
  188. A premium discount is the term that describes when an insured owes a total standard premium greater than

    A. $10,000

    B. $15,000

    C. $1,000

    D. $5,000
    D.

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