Property insurance

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monro84
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89959
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Property insurance
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2011-07-07 15:35:02
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insurance Property
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Property inurance questions from examfx
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  1. What is the term for the person who seeks insurance from an insurer?
    Applicant
  2. Insurance is the transfer of what?
    Risk
  3. Insurance is a contract by which one seeks to protect another from what?
    Loss
  4. what term describes a fee a person pays to receive coverage from an insurance company?
    Premium
  5. Insurance policies ensure that after a loss proceeds will go to_______.
    Beneficiary
  6. Insurable interest in the property covered in a policy must be proven when?
    At the time of the loss.

    (b/w the time the policy is issued and loss occurs, ownership may have changed, mortgages may have been put into place, etc...Therefore in property an casuality insurance insurable interest must exist at the time of the loss.)
  7. An insured carries a property policy on her house in the amount of 250k. A bank is shown as a mortgagor on the property. Last month the insured made her final mortgage payment but did not remover the mortgagor from the policy. In the event of a covered loss to her home how much will the bank receive?
    Nothing

    (b/c the bank does not have a financial interest in the house at the time of the loss)
  8. The insured has violated the contract with out the knowledge of the mortgage holder. After a loss who will or will not get paid?
    The insurer cannot collect but the mortgager will still get paid.

    (mortgagees have insurable interest in the property for which they loaned money on
  9. The risk of loss may be classified as what?
    Pure risk and speculatative risk
  10. Events in which the principal has both the chance of winning or loosing are classified as______.
    Speculative Risk
  11. A situation in which a person can only loose or have no change is _________.
    Pure Risk
  12. For the purpose of insurance risk is defined as:
    The uncertainty or chance of loss.
  13. Illegal use of narcotics would be an example of what hazzard?
    Moral hazzard.
  14. An owner of a samm business applies for a fire insurance policy with limits equal to 100% of the properties value. The owner has huge unsold invenories and a large personal gambling debt. From and underwriting stand point this might indicate what?
    A moral hazzard
  15. All the following are examples of hazzards except

    A. Trash or debre in the basement of a home

    B. Faulity wiring in a home.

    C. Broken step or hand railing on the pourch.

    D. A fire in the kitchen of a home.
    D (a fire is a peril)
  16. What hazzard would you be concerned about if you lived next to an explosive contractor?
    Physical
  17. Wagering on a sporting event is known as what type of risk?
    Speculative
  18. All of the following of causes of loss forms are "named peril" EXCEPT.

    A. Basic form

    B. Board form

    C. Earthquake form

    D. Special form
    (D) special form

    (named peril policies cover only the perils listed in them)
  19. Faulity wiring is an example of what?
    Hazzard

    (it would increase the chance of loss)
  20. If an insurance underwriter discovers that an applicant for a policy has been convicted of submitting a fradulent claim to an insurer in the past, the application may be rejected as a
    Moral Hazzard
  21. A policy which covers all causes of loss except for those specifically excluded is known as
    Special form also know as All Risk

    • (Those property policies w/ a title of
    • "special" form cover loss on an open peril basis)
  22. An additional loss that results in direct loss of property is call____.
    Indirect Loss

    (comes about as a result as a direct loss)
  23. Which DP/HO coverage is for indirect loss?
    Loss of use.

    (applies only after a direct loss caused by a covered peril has occured)
  24. An insured business is damaged due to a fire and he is forced to close the business temp for repairs. As a result the insured lost income. What type of loss is this?
    Consequential also know as indirect loss.
  25. What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy?
    Open peril (special) policy


    covers everything excpet what they say they don't
  26. In a property insurance policy what is the term for the amount of loss that the insured must cover out of his/her own pocket and the insurer will only pay for the additional amount of the loss above this limit?
    Deductable
  27. For the purpose of insurance, risk is defined as
    the uncertainty or chance of loss (basic reason for buying insurance)
  28. An insurance policy specifies that it will pay $600 for a specific loss. The policy ower suffers aa loss of $535. How much will the policy pay?
    $535

    applying the principle of indemnity, the insurer will pay the actual cost of the loss, up to the limited stated in the policy
  29. All of the following causes of loss are "named peril" forms except

    A. Earthquake Form

    B. Special Form

    C. Basic Form

    D. Broad Form
    B. Special Form
  30. Which of the following types of insurance companies is an incorporated insurer with out capital, stock, or shares?

    A. Reciprocal Insurers

    B. Stock Insurer

    C. Mutual Insurer

    D. Faternal Insurer
    C. Mutual Insurer
  31. Which DP/HO coverage is for indirect losses?

    A. Loss of use

    B. Dwelling

    C. Sturctures

    D. Contents
    A. Loss of use
  32. Replacement cost is defined as:
    Full replacement of property at its current cost, new with out reduction for depreciation
  33. In property insurance actual cash value is defined as which of following?

    A. The actual amount of a loss paayable less the policy deductible

    B. Replacement cost at time of loss, less depreciation.

    C. Market value of property at time of loss

    D. Stated value of property as shown in declaration
    B. Replacement cost at time of loss, less depreciation
  34. An insured has a liabilty policy that sets the amount for all claims that arise from a single incident at $50,000 which type of limit of liability does the insured's policy have.
    Per Occurance
  35. All the following attributes are found in stock insurance companies EXCEPT

    A. The board of directors is chosen by a state based electin board.

    B. The company is owned by the stockholders.

    C. The dividend paid to a stockholder is income taxable.

    D. The stockholders may receive a dividend at the end of the year.
    A. The board of directors is chosen by state based election board.
  36. What fundamental doctrine in property insurance holds thaat when there is an unbroken connection b/w and occurrence anad damage which grows out of the occurrence, then the resultant damage is all a part of the occurrence?
    Doctrine of proximate cause

    An example of proximate cause: A prpoerty insur. policy covers the peril of fire, and further damage is caused by a.)smoke for fire; b) water used to extinguish the fire; c) and the process of moving property out of the path fire. Fire would be considered the proximate cause of all the damage.
  37. Legal liability is when a person is considered liable for damages according to what?
    The law

    (a person is liable for insuries or damages to another based on negligence, as according to the law)
  38. A nonadmitted insurer who provides insurance coverages that are not available from an amitted insurer is called:
    Surplus lines insurer

    (are insurers that do not have a certificate of authority to transact business in the state, but are on the Commissioner's approved list to transact business under the state's surplus lines laws.
  39. In a property insurance policy whaat is the term for the amount of a loss which the insured must cover out of his/her own pocket and the insurer will only pay for the additional amount of the loss above this limit?
    Deductible

    (the amount of loss retained by the insured)

    in liability insurance it is called a retention.

    Most prop coverages include a deductibl

    most liability policies do not include a retention.
  40. Which of the following principles do insurance companies apply to predict losses w/in a group of similar exposures?

    A. Law of average

    B. Principle of indemnity

    C. Principle of adverse selection

    D. Law of large numbers
    D. law of large numbers

    (larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss.)
  41. Lloyd's Association in US operate mainly in what field?
    Property
  42. Losses caused by continuous or repeated exposure to conditions resulting in inujury persons or damage to property that is neither intended nor expected is the definition of which of the following terms?

    A. Peril

    B. Hazard

    C. Accident

    D. Occurrence
    D. Occurrence

    (includes those losses cuased by continuous or repeated exposure to conditions resulting injury persons or damge to property that is neither intended nor expected. )
  43. A $100,000 house insured on a policy with an 80% coinsurance requirement hasa a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss?
    $30,000

    for total amount of partial loss to be paid, a house must be insured for at least 80% of its value on the date of loss. In this case b/c the hosue is insured for only $60k (75% of minimum requirement) policy will only pay 75% of loss or $30k
  44. An insured's building has an ACV of $200,000 and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?
    $30,000

    Insured only carried 75% of insur. he agreed to carry ($120,000 of the agreed $160,000), the insurer pays only 75% of the loss, or $30,000. If the insured had carried the required amount of insurance partial losses would be pd in full. In the event of a total loss, the face of the policy would be paid. If the full amount is not carried, divide the actual amount carried by the amount that should be carried (the coinsurance amount), and multiply it by the loss.
  45. A stock insurer is defined as an insurer...
    with its capital divided into shares and owned by its stockholders.
  46. How does reinsurance benefit the insurer?

    A. it offers a way to differentiate policies.

    B. Reinnsurance fees the insurer of all liabilities.

    C. With reinsurance, premiums are higher

    D. It helps protect against catastrophic losses.
    D. It helps protect against catastrophic losses
  47. The type of liability that is imposed regardless of fault or negligence is called

    A. Contributory

    B. Intential

    C. Absolute

    D. Strict
    D. Strict

    Commonly applied in product liability cases. A person or business that manufactures or sells a product makes an implied warrenty that the product is safe. This makes business liable for defective products, regardless of fault or negligence. If the product causes injury and the claimant can prove the defect, the defendant will be held strictly lliable for he damage.
  48. Surplus lines insurance usually involves insurance for which type of inviduals?
    High risk individuals

    (placed w/ nonadmitted insurers whol specialize in offering insurance to the high risk market)
  49. A policy which coves all causes of loss except for those specifically excluded is known as_____.
    Special form

    (covers loss on an open peril basis, known as all risk)
  50. What type of insurance policy insures against all risk of loss that are not specifically excluded by the policy?
    Open peril Policy

    (Special policies) cover eveything except what they say they don't.
  51. Mutual insurance companies possess all of the following attributes EXCEPT

    A. They are woned by the policy holders

    B. They maintain high levels of capital stock.

    C. Dividends paid to policy owner are not income taxable.

    D. A board of Trustees manages the company.
    B. They maintain high leves of capital stock.

    (mutual insurance companies have no capital stock )
  52. What do individuals use to transfer their risk of loss to a larger group?

    A. Insurable interest

    B. Exposure

    C. Indemnity

    D. Insurance
    D. Insurance
  53. If an insurance company underwriter discovers that an applicant for a policy has been convicted of submitting a fraudulent claim to an insurer in the past, the application may be rejected as a ...

    A. Moral hazard

    B. Risk of loss

    C. Physical hazard

    d. Morale hazard
    A. Moral hazard

    dishonesty is classifed as a moral hazard
  54. Which of theses is defiend as "the maximum limit of coverage available under a liability policy during a year regardless of the number of claims that may be made or the number of accidents that may occur"?

    A. Aggregate limit of liability

    B. Combined single limit of liability

    C. Per occurrence limit of liability

    D. Split limit of liability
    A. Aggregated limit of liability
  55. The Declarations of the Homeowners policy provides all the following info. EXCEPT

    A. The amount of premium chared for each coverage

    B. The insured's address

    C. What deductible amount applies to each loss covered by the policy.

    D. A statement that earthquake damage is not covered.
    D. A statement that earthquake damage is not covered.

    Declarations provides info as to who is insured; where they are located; when the policy provides coverage; how much coverage and the amount of deductiible applied to a loss.

    The statment that earthquake damage is not covered is found in the policy form.
  56. Which of the following is a mandatory part of an insurance policy that varies w/ each individual policy?

    A. Exclusions

    B. Insuring Agreement

    C. Declarations

    D. Conditions
    C. Declarations

    Tell who, what, when, and where, this info is diff on each contract
  57. Which of the following describes the transfer of a legal right or interest in an insurance policy?

    A. Obligation

    B. Legal purpose

    C. Assignment

    D. Abandonment
    C. Assignment

    in prop and casualty insur assignments of policies are usually valild only with the prior written consent of the insurer.
  58. What term best describes the act of withhlding material information that would be crucial to an underwriting decisions?

    A. Breach of Warranty

    B. Concealment

    C. Withholding

    D. Utmost good faith
    B. Concealment

    (occurs when a person withholds a material fact that is crucial to making a decision. In insurance, this involves withholding info. that would be crucial to underwriting decisions.)
  59. The policy provision found in property insurance policies which prevents the insured from collecting twice for the same loss is called_____.
    Subrogation

    (when an insured accept loss payment from the insur. com. , they must transfer their rights to recovery to the insurer. This prevents the insured from collecting twice for the same loss, and allows the insurer to indemnify the insurance company.)
  60. If there is an investigation, settlement or defense of a claim covered in a policy, the terms of the policy require for the insured to cooperate with which of the following entities?

    A. Insurer

    B. Dept of insurance

    C. Adjuster

    D. Actuary
    A. Insurer

    Accoding to the terms of an insurance policy, the duties of the insured are to cooperate with the insurer in the investigatin, settlement, or defense of a claim covered under the policy.
  61. All of the following are conditions commonly found in the insrance policy, EXCEPT

    A. Subrogation

    B. Appraisal

    C. Insuring Agreement

    D. Cancellation and non-renewal
    C. Insuring Agreement provides info. on the policy;s coverages. conditions state the legal obligations and duties of the parties to the contract.
  62. The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the____.
    Exclusions
  63. All the following are found in the Declarations section of a policy, EXCEPT the..

    A. Limits of insurance

    B. Exclusions

    C. Policy premiums

    D. Name of the insured
    B. Exclusions

    Delcarations state who is insured, what is insured, where the prop is located, when the policy begins and ends, how much insurance and how much premium.

    the exlusions tell what is not covered.
  64. In return for premium, an insurance company must

    A. Give the insurer valuable consideration

    B. Be fair in underwriting and pay covered losses

    C. Provede the insured with coverage adequate for all potential losses

    D. Use standardized tables of coverage for specific risks to be excluded from coverage
    B. Be fair in underwriting and pay covered losses.

    an insurance com must be fair and impartial in underwriting of risks and must pay claims made for all coverd losses.
  65. The part of the policy which sets forth the rules of conduct, duties, and obligations of the parties is called the _____.
    Conditions.
  66. Which of the following is consideration on the part of an insured?

    A. Premium Paymet and asking an agent to clarify a rider

    B. Asking an agent to clarify a rider

    C. Submitting a statment of good health and premium payment

    D. Submitting a statment of good health
    C. Submitting a statment of good health and premium payment

    the binding force of any contract is called" consideration"

    consideration on part of insurer is the promise ot pay in event of loss.
  67. If a property is covered by Compay A for $20k and company B covers same prop for 40K how much will Company A pay on a 24k loss?
    $8k

    Pro rata liability applies. Each policy pays a precentage of the loss based on the precentage of coverage that policy provides. Company A carries 1/3 of the total coverage (20k + 40k = 60k) therefore it is responsible for 1/3 of the 24k loss which is 8k.
  68. Which of the following would NOT be considered a source of insurability info by an insurer?

    A. Applicant's marital status

    B. Interview w/ the applicant's neighbors and friends

    C. Motor vehical records

    D. Insurance history
    A. Applicant's marital status

    An insurer may inspect, with the applicant's written permission, the following: app form, motor vehical records, interview w/ neighbors, friends, and employers, inspection of property, and inspection of insur history.
  69. An applicant is purchasing a homeowners policy. A producer comes to her home, fills out the paperwork, and tells the applicant that her home will be covereed as soon she signs all of the paperwork, and that she will receive a new policy in the mail in 5 business days. Even though the policy is not issued, the applicant's home is temporarily covered until then. Which of the following makes that possible?

    A. A notice of claim

    B. A binder

    C. A loss settlement provision

    D. A mortgagee clause
    B. A binder

    a temp agreement issued, usually in writing, but may be oral, by a producer or insurer providing temp coverage until a policy can be issued.
  70. Tina has four separate, but identical policies written by diff insurers to cover her 100k building. Each policy is written for 100k and each has the pro-rata liability other insur clause. In the even of a total loss to the building, what whould each insurer pay?
    • Each policy will pay 25k of the loss
    • 100/4=25

    each policy will pay its pro rata share of the loss, but not more than the amount of loss in total.
  71. The part of the insurance contrac that describes the covered perils, and the nature of coverage of the contractual agreement b/w the insurer and the insured is called the _________.

    A. Exclusions

    B. Declarations

    C. Insuring Agreement

    D. Conditions
    C. Insuring agreement

    part of the policy structure that describes the perils insured and the method of indemnification.
  72. For a contract to be enforceable by law, the purpose of the contract must be

    A. For the benefit of the general public

    B. Of pure intent

    C. Legal and not against public policy

    D. For financial gain
    C. Legal and not against public policy
  73. The Other Insurance provision which limits the liability of the insurer to a portion of the loss no greater than the amount of the insurer beas to all the insurance covering the property is called
    _________.
    Pro rata liabilty

    to porserve the principle of indemnity, each policy pays a pro rata share based upon the share of the coverage. The insured cannot collect the full amount of loss from each policy.
  74. An insured owns a building that is valued at 400k. To comply with the 80% coinsurance provision of his insurance policy, how much should he insure the property for?
    80% of the property's ACV or more

    in consideration of a reduced rate, the insured agrees to maintain a certain minimum amount of insurance on the insured property. Market value is affected by location. Insurance is designed to pay, in the event of a covered loss, replacement cost minus depreciation
  75. What is the purpose of the coinsurance clause found in property insurance policies?

    A. Encourage higher standareds of care by requiring the insured to pay a portion of every loss

    B. Ensure that insureds do not over-insure their property

    C. Prevent insured from profiting from a loss

    D. Encourage insurance to value
    D. Encourage insurance to value

    In return for the insured's promise to insure the property to some certain percent of it value, the insurer agrees to give the insured a reduced rate per hundred on the insurance and pay partial losses in full.
  76. Which of the following is NOT an element of negligence?

    A. Breach

    B. Unbroken Chain

    C. Liabel

    D. Duty
    C. Liabel

    • 4 essential element of negligence:
    • duty
    • breach
    • injury
    • unbroken chain

    Libel is a type of intentional tort.
  77. All of the following are factors in the determination of "ACV" EXCEPT

    A. Replacement cost

    B. Original cost,new

    C. Kind and quality of property

    D. Age of the property
    B. Original cost, new


    ACV is valuation method where the value of property is determined using the preplacement cost for property of like kind and quality, minus depreciation. New is not a factor.
  78. Illegal use of narcotics would be an example of what kind of hazard.
    Moral hazard

    Tendencies of an applicant to break laws or be untruthful are examples of "moral" hazards
  79. Lilly is driving her car though a residential area. She loses control of the car, crashes into Max's front porch. Max, who was sitting on the porch, is injured. Lily's liability insurance policy has a limit set at $500,000. This amount applies to the total of damages for any bodily injury and porperty damage resulting from one accident. Which type of limit of liability does lily have?
    Combined single

    a dollar limit of liability applying to the total of damages for bodily injury and property damage, combined, resulting from one accident or occurrence.
  80. An insured has a liability policy that sets the amount for all claims that arise from a single incident at 50k. Which type of limit of liablity does this insured's policy have?
    Per occurrence
  81. An insured's roof cost 4k when installed 5 yrs ago. It has been damaged by hail and must be replaced. The new roof will cost 6k at todays prices. If the roof has been depreciating at $200 per yr and hsi policy is ACV, how much will it pay toward the insured's new roof?
    5k

    ACV is replacement cost less depreciation
  82. If a libility policy had split limits of 100k/300k/100k what is the max amount that would be payable in the event of injury to a single person?
    100k

    the first limit shown is the most the policy will pay for bodily injury to any one person
  83. Definatin of "theft" encompasses both

    A. Breaking and entering and committing a felony

    B. Robbery and burglary

    C. Stealing and violence

    D. Mysterious disappearance and robbery
    B. robery and burglary

    theft is the act of removing property from its rightful owner.
  84. All of the following policies does NOT contain an automatic reinstatment provision which, after a loss is paid, restores the limits of coverage?

    A. Business automobile liability

    B. Personal auto liability with split limits

    C. Homeowners

    D. General liability written with an aggregate limit
    D. General liability written with an aggregate limit

    An aggregate limit is reduced by the payment of claims. It is possible for insured to run out of coverage before the expiration of the policy. Aggregate limits are restored on the anniversary date of the policy
  85. What is reinsurance?
    An agreement between a ceding insurer and assuming insurer.


    originating company that procures insurance on itself in another insurer is called the "ceding insurer". The other insurer is called "assuming insurer."
  86. Which provision states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?
    Indemnity

    stipulate that insureds can only collect the amount of their loss, in the event that their policy would allow for greater benefit to be collected.

    Ex. if healt insur policy allows for 2500 for a given surgery and only 2k is spent the insured can only collect 2k
  87. What kind of liability would a person who owns a swimming pool have?
    Absolute
  88. Which one of the following lists all the required elements for establishing a charge of negligence?

    A. Legan duty owned, proximate cause, intervening cause, damages

    B. Legal duty owned, deliberate attempt to cause harm, damages

    C. Breach of reasonable person rule and proximate degree of care

    D. Legal Duty owned, breach of legal duty owned, proximate cause, damages
    D. legal duty owned, breach of legal duty owned, proximate cause, damages
  89. An insurance policy is a legal contract. Each of the following elements is necessary for formation of a valid contract EXCEPT

    A. competent parties

    B. Signatures of each party

    C. Consideration

    D. Agreement
    B. Signatures of each party

    The essential elements of all contracts are agreement, consideration, competent parties, and legality. Oral contacts are legally enforceable.
  90. Those statements in an app for insurance that will not void the policy if incorrect, unless material or fraudulent, are classified as
    Representations

    Applicant believes to be true but not guaranteed.
  91. An insurer neglets to pay a legitmate claim that is covered under the terms of the policy. Which of the following terms best describes what the insurer has violated?

    A. Adhesion

    B. Consideration

    C. Good Faith

    D. Representation
    B. Consideration

    Binding force in any contract

    insured- payment of premiums and health representations made in the app.

    Insurer- promise to pay in event of loss
  92. The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as_______.

    A. Declarations

    B. Endoursements

    C. Conditions

    D. Exclusions
    D. Exclusions.
  93. Which of the following is NOT a consideration in a policy?

    A. The promise to pay covered losses

    B. The application given to a prospective insured

    C. Something of value exchaged between parties

    D. The premium amount paid at the time of app.
    B. The application given to a prospective insured
  94. If a property is covered by Compayn A for 20k and Company B covers same property for 40k, how much will Company A pay on a 24k loss?
    8k

    Pro rata liability applies.

    Each policy pays a precentage of the loss based on the percentage of coverage that policy provides. Company A carries 1/3 of the total coverage therefore it is responsible for 1/3 of the 24k loss

    (20k + 40k =60k)

    20/60 = .3333333

    24k X .3333333= 7999.99 round up 8k
  95. The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as
    Subrogation

    gives insurer, after payment of a loss caused by 3rd pty, the insured's rights to recovery against that third pty. The insurer's rights are only to the extent of the loss payment.
  96. After an insurer's underwriter apporoves an app, an agent deliveres the policy to the applicant, who then submits and initial premium and accepts the terms of the policy. Which of the following terms best describes what the applicant has done?

    A. Consideration

    B. Acceptance

    C. Offer

    D. Initiation
    B. Acceptance

    Acceptance is contingent upon receiveing an approved policy and paying the initial premium
  97. The failure to disclose all known facts is called

    A. Twisting

    B. Misrepresntation

    C. Waiver

    D. Concealment
    D. Concealment

    Withholding info that is marterial to the risk to be insured is concealment and makes policy voidable.
  98. When mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy

    A. The loss reimbursement shall be paid to the mortgagee as their interest may appear.

    B. The mortgagee's rights of recovery shall not be defeated by any act or neglect of the insured.

    C. The mortgagee may bring a suit in their own name to recover damages to covered property.

    D. All the above
    D. All the above

    When a mortgagee is named in a mortgagee clausee attached to a fire or other direct damage policy, the loss reimbursement shall be paid to the mortgagee as their interest may appear, and, the mortgagee's rights of recovery shall not be defeated by any act or neglect of the insured. The mortgagee is also given other rights, such as bringing a suit in their own name to recover damages.
  99. Representations are written or oral statements made by the applicant which

    A. Are immaterial to the actual acceptability of the insurance contract

    B. Are considered true to the best of one's knowledge.

    C. Are guaranteed to be true

    D. Are founded to be false after further investigation.
    B. Are considered true to the best of one's knowledge.

    In the absence of fraud, statements in apps are not guaranteed, unless they affect the premium charged, such as a statment that the insured has installed smoke detectors, which would be considered a warrenty.
  100. A__________ is a statement to the insurer by the insured upon which the validity of the insurance policy depends.
    Warranty

    Contract is not binding unless warranty statements are literally true.
  101. What insurance policy provisions defines how the policy will respond if there is more than one insurance policy written on the same risk?

    A. Primary and Excess

    B. Other Insurance

    C. Valid Insurance

    D. Nonconcurrency
    B. Other Insurance
  102. Because an insurance policy is a contract b/w the isurer and the insured, it must conform to the state laws govening contracts which require all of the following elements EXCEPT

    A. Legal Purpose

    B. Competent parties

    C. Offer and acceptance

    D. Conditions
    D. Conditions

    It is part of the policy structure.

    Consideration is an essential part of a contract.
  103. A homewoner sells his house to a friend. The friend wants to keep the homeowner's current policy in effect. Under the assignment provision, which of the following is most likely?

    A. The homeowner will need to get wirtten consent from the insurer before the polciy can be reassigned.

    B. The policy will have to be cancelled

    C. The homeowner should let the friend take over the premium payments

    D. The friend will have to apply for coinsurance from another insurance company.
    A. The homeowner will need to get written consent from the insurer before the policy can be reassigned.
  104. Which of the following protects consumers against the circulation of inaccurate or obsolete info?

    A. The Inchmaree Clause

    B. The Fair Credit Reporting Act

    C. Loss Settlement Provison

    D. Commercial Package Policy
    B. The Fair Credit Reporting Act
  105. Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss?

    A. Valuation Clause

    B. Loss settlement clause

    C. Appraisal Clause

    D. Loss payment clause
    C. Appraisal clause

    Either insured or insurer can request an appraisal. Each hires an appraiser. The appraisers the select a disinterested third party (umpire). Disagreements b/w the appraisers are settled by the umpire whose decisions are usually binding on both parties.
  106. Before an insurer will pay any loss under a policy, what will it usually require the insured to produce?

    A. A Claims Made form

    B. Proof of Loss form

    C. Notice of Claim form

    D. A Binder
    B. Proof of Loss form

    A swarn statement, must usually be furnished by the insured to an insurer before any loss under a policy can be paid.
  107. The policy conditions define

    A. The amount of coverage

    B. How parties to the contract must act following a loss

    C. How the policy will respond following a loss

    D. The excluded perils.
    B. How parties to the contract msut act following a loss

    What each party to the policy is required to do contractually.
  108. An agreement that is enforcable by law is known as

    A. Legal contract

    B. Conditional Contract

    C. Contract of adhesion

    D. Unilateral contract
    A. Legal Contract

    contracts that contain all of the essential elements required by state are enforceable by law.
  109. The part of a property policy which shows the amount of insurance, premium, and policy term is the
    Declarations

    Who, What , When, Where, How much insurance, and How much premium
  110. The person named in an insurance policy tht is protected under the contract, whom the insurer reimburses for losses, pays benefits, or provides services to is called
    The insured
  111. The ABC corp has 100k of coverage on their building through insurance Company A, and 50k of identical coverage on the same buidling through insurance Company B. Assuming coinsurance is not an issue, when a 24k loss occurs, how much will each insurer pay?

    A. Company A will pay 16kp; Company B will pay 8k

    B. Company A will pay 20k; Company B will pay 4k

    C. Company A will pay 12k; Company B will pay 12k

    D. Company A will pay 24k; Company B will pay 0
    A. Company A will pay 16k; Company B will pay 8k

    Each policy pays its pro rata share of the loss based upon each policy's share of the total amount of coverage.
  112. All of the following are conditions commoly found in the insurance policy, EXCEPT

    A. Appraisal

    B. Insuring Agreement

    C. Canellation and non-renewal

    D. Subrogation
    B. Insuring Agreement
  113. The transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses?

    A. Appraisal

    B. Subrogation

    C. Arbitration

    D. Salvage
    B. Subrogation

    After an insured accepts payment from the insurer, they have been indemnified. Insurance policies required the insured to transfer any right to recovery to the insurer so that they may seek recovery up to the amount they paid as loss.
  114. The pro rata liability clause is designed to protect the principle of
    Indemnity

    If more then one policy is in force on the same property at the same time covering the same perils, this is concurrent coverage. The intent of insur. is restored to the condition they were in before the loss (indemnified). Each policy pays a percentage of a loss directly related to the amount of insurance it provides as compared to the total amount of coverage.
  115. If there is an investigation, settlement or defense of claim covered in a policy, the terms of the policy require for the insured to cooperate with which of the follow entities?

    A. Insurer

    B. Dept of insurance

    C. Adjuster

    D. Actuary
    A. Inusrer
  116. Under the professional liability loss settlement provision, what must an insurer do before offering to pay a claimant to settle a claim?

    A. Refuse new business

    B. Get the insured's consent

    C. Sue the claimant

    D. Cancel the isnured's policy
    B. Get the insured's consent

    If a claim has been filed under a professional liability policyk, an insurer MUST get the consent of the insured before offering to pay to settle a claim. If the insured's professional reputation is at risk, and the insured feels he or she is not negligent, the insured can requier the insuer to defend the action in court.
  117. All the following statements concerning coinsurance are ture, EXCEPT

    A. The coinsurance formula will alsob e applied to total losses

    B. It is used to help adequac and equity in rates.

    C. The insured agrees to maintain insurance equal to some specificed percentage of the value of the property
    D. If the insurance carried is less then required, the insurance may not cover the whole loss.
    A. The coinsurance formula will also be applied to total losses

    with total loss coinsurance does not operate and fafce amount of policy is paid.
  118. What coverage form would provide coverage for all incoming and outgoing shipments?
    Annual Transit policies

    provide coverage for a shipper's or receivers incoming and ouutgoing shipments during the year
  119. What is the basic limit for cost incurred at the place a vehicle is disabled provided by the towin and labor costs endorsement?
    $25
  120. Exteneded Non-owned coverage broadens which of the following coverages?

    A. Duties after an Accident or Loss

    B. Uninsured Motorists

    C. Physical Damage

    D. Liability and medical payments
    D. Liability and medical payments

    this endorsement can broaden the liability only, or liability and medical payments coverage provided in the policy for individuals specificallly named on the endorsement. It provides coverage for nonowned autos that are available for the regular use of the insured, the use of covered vehicles to carry persons or property for a fee, or use of the vehicle in other businesses
  121. All the following are true regarding phsicacl damage coverage, EXCEPT

    A The limit of liability is the greater of the actual cash value if the vehicle at the time of a loss or the amount necessary to repair or replace the vehichle.

    B. Losses to non owned autos will be covered the same as the broadest coverage available for any covered auto, except non owned trailers are limited to $1500.

    C. The policy will pay up to $20 per day up to max of 600 for rental of transportation.

    D. The insurer will pay for direct and accidental loss to a covered auto minus any applicable deductible.
    A. The limit of liability is the greater of the ACV of the vehichle at the tiem of loss or the amount necessary to repair or replace the vehicle.
  122. An advertising complany has its annual holiday party for employees and customers, after which a customer who had too much to drink is involvied in an auto accident. Occupants of other car sue company for serving customer to much alcohol. Will the company's businessowners policy provide coverage?
    Yes, Non of the exclusions will apply

    Liquor liability exclusion only applies to isnureds in the buusiness of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. In this case the company;s businessowners policy will most likely have to pay.
  123. Acccording to the dwelling policy, any volcanic activity will be considered part of one occurence if it all happens w/ in how many hrs.?
    72 hrs

    all eruptions will be considered one occurrence if they are w/ in one 72 hr period.
  124. The endorsement that provides coverage for losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formations is a/an __________.
    Sinkhole collapse endorsement.

    it does not cover collapse caused by made caverns.
  125. What type of property does a personal floaters policy cover?
    Movable personal prop. wherever it may be located

    refers to an inland amrine policy desigined to cover movable personal property, wherever it may be located.
  126. Which coverages applies to losses caused by larceny, embezzlement, misappropriation, wrongful abstraction and other acts of theft by an employee?
    Employee theft

    Applies to losses caused by theft or forgery.
  127. Which of the following would provide coverage to a garage not attached to the primary insured dwelling?

    A. coverage B

    B. coverage C

    C. coverage E

    D. coverage A
    A. Coverage B

    covers other sturctures not attached to the primary dwelling except by fence or utility line, or something similer..
  128. Coverage J under Farm Coverage agrees to pay reasonable medical expenses reagardless of fault, caused by an accident if the expenses are incurred and reported to the insurer w/ in how many years of accident date?
    3 years
  129. which of the following perils is coverd by flood insurance?

    A. Rain which enters through a defective roof and accumulates in the basement

    B. Sinkhole collapse

    C. Mudslide caused by accumulations of watter under the ground

    D. Landslide
    C. Mudslide caused by accumulations of waater under the ground.

    • flood policies exclude losses caused by landslidses, sinkholes, and falling water.
    • Rising watter or excessive runoff is coverd.
  130. Johanna purchased a National Flood Insurance policy 10 days after her community entered a emergency program. When would her coverage be effective?
    12:01 am the day after the application and premium payment are mailed


    During the first 30 days after a community enters the emergency or normal programs, coverages on a flood policy begins at 12:01 am the day after app and premium payment have been mailed.
  131. Which of the following is NOT a limitation under Mexico coverage?

    A. It applies only to accidents which occur w/ in 25 miles of the U.S. border

    B. It applies only if the insured is in Mexico for a trip of 10 days or less

    C. Suits may be brought by either U.S. or Mexican citizens.

    D. The insured must purchase separate coverage if they plan on driving in Mexico.
    C. Suits may be brought by either U.S. or Mexican citizens.
  132. What is the max amouunt an insurer will pay under the Equipment Dealers Pollution Clean Up and Removal extension of an Inland Marine Policy?

    A. 20k all expenses incurred during a tewelve month period

    B. 5k for all expenses incurred during a twelve month period

    C. 10 k for all expenses incured during a twelve month period

    D. 15k all expenses incurred during a twelve month period.
    C. 10k for all expenses incurred during a 12 month period
  133. Computer Fraud Crime Coverage Places what limit on each occurrence of the loss of manuscripts drawings, or records?
    5k
  134. Which would NOT be coverd by the Inside the Premises- Robbery or Safe Burglaary of Other Property coverage?

    A. A store cleark is forced into storage room and locked in while the bad guy steals high valuse merchandise.

    B. an employee is caught stealing cash from the register.

    C. Two men break a window during and attempted robery

    D. someone braks in after hrs, pries open a wall vault and steals several valuable paintings.
    An employee is caught stealing cash from register

    Dishonest or criminal acts of any employee or rep are excluded.
  135. The Physicians and Surgeons Equipment Floater in NOT intended for which of the following?

    A. Medical supplies located in a hospital

    B. Surgen's supplies located in the surgeon's office

    C. Waiting room furniture in a doctor's office

    D. Office equipment located in a destist's office
    A. Medical supplies located in a hospital

    This coverage form protects individuals in the medical or dental profession for loss to valuable medical and dental equipment materials and supplies, including office equipment and furniture, and similar property of others. coverage is not inteded for hosiptals, schools or other institutions.
  136. Which of the following would NOT be considered part of the "insurued location" under the liability section of the homeowners policy?

    A. a family cemetery plot

    B. a lakeside cabin rented by the insured for vacation

    C. vacant farmland owned by the insured

    D. a residence where an insured is temp residing.
    C. Vacant farmland owned by the insured.
  137. Farm fences (except field and pasture fences) are covered by which farm coverage form?
    Coverage G

    Fences, except pasture and field fences, are considered other farm structures and so are covered by coverage G-other farm structures
  138. Why don't Comerical Auto Coverage Forms automatically include medical payment coverage?
    Often any person occupying a commercial vehicle would be covered under a workers compensation policy .
  139. How does the mobilehome endorsement affect the coverage of the law of ordinance in a homeowners policy?
    It removes the coverage.
  140. Which of the following would the Live stock Coverage Form NOT insure against?

    A. the euthanasia of livestock suspected of carrying mad cow disease

    B. Death of live stock caused by accidental Drowning

    C. Death of livestock caused by a tornado

    D. The euthanasia of livestock after being hit by a vehicle.
    D. the euthanasia of livestock after being hit by a vehicle
  141. 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 ________.
    Loss sustained form

    used ofr losses that happen during the policy period, but may not hve been discovered during the policy period.

    The loss suustained form is one of the conditions contained in the Crime General Provisions forms which contain conditions and exclusions applying to all crime form.
  142. The basic dwelling form (DP1) provides all of the followng coverages w/ out endorsements EXCEPT

    A. Coverage for additional living expense

    B. Coverage for perosnal property

    C. coverage for the dwelling

    D. Coverage for other structures
    A. Coverage for additional living expense.

    The basic form (DP1) provides for coverage on the dwelling, other structures, personal property adn fair rental valusue by including a coverage limit on the declaration page and charging the appropriate premium. Additional liveing expense must be added by endorsement
  143. An insured unintentionally accepted forged cuurrency during the course of regular business. Which of the following Crime coverages protects agaainst such a loss?

    A. Inside the Premises- Theft of money or secureities

    B. Forgery or Alteration

    C. Money Orders and Counterfeit Paper Currency

    D. Employee Theft
    C. Money Orders and Couunterfeit Paper currency

    Provides coverage for loss resulting directly from the insured having accepted in good faith, money orders issued by any post office, express company, or bank that are not paid upon presentation.
  144. Which of the followin gendorsements under an Equuipment Breakdown policy is used for calculating the amount to be paid on a lost business claim after a direct loss?

    A. Refigeration Interruption Coverage

    B. Turbine Units Explosion Coverage

    C. Refrigeration Interruption- Report of Values

    D. Business Income - Report of Values
    D. Business Income- Report of Values.
  145. An installiation Floater is used to insure what?
    Appliances intended to become a permanent part of the building.
  146. Which commercial crime form would provide coverage for a loss that did not necessarily happpen during the policy period, but which is revealed during the policy period?
    Discovery form

    is used for losses that are discovered during the policy period, but may not have happened during the policy period. The discovery form is one of the conditions contained in the Crime Genereal Provisions forms which contain conditions and exclusions applying to all cirme forms. The discovery period is normally one year
  147. Under the conditions of a Film Coverage Form, how long must the insured maintain records of each production
    3 years after the polciy expires.
  148. Which of the following terms best describes a trembling or shaking of the earth that is volcanic or seismic in origin?
    Earthquake

    Earthquakes are excluded by most standard property forms, but coverage for may be added by endorsement to most property policies. Coverage may also be written in a Difference in conditions policy
  149. Which of the following is NOT covered under the Farm Coverage Policy?

    A. Raising fish at an aquiculture operation

    B. Raising Livestock in a commercial feed lot

    C. Growing of vegetables

    D. Marketing of field crops
    B. Raising livestock in a commercial feed lot

    Following are covered under a Farm policy; growing and marketing of field crops, fruits, mushrooms, veg, flowers, greenhouse or nursery stock or sod; raising or keeping of livestock (other than a commercial feed lot operation), poultry, fur bearing animals, bees, and aquiculture operations (fish farm)
  150. What effect does the Terrorism Risk Insurance Act of 2002 have on the "War and Military Action Exclusion" with regard to property and casualty insurance?
    Nullifies any exclusion of certified terrorist acts as covered by the Act.

    The terrorism risk insuruance act provides for the nullifiaction of any provision in a property and casualty policy that excludes coverage for losses resulting from acts of terrorism to the extent that such exclusions eliminate coverage for certified acts of terrorism as covered by the Act.
  151. In which of the following situations would the Jewelers Block extension cover a loss?

    A. Juulie, an employee for Antique Jewelers, is wearing a cameo brooch and ring set to display to customers. During the day she discoverd the brooch has fallen off and she can't find it.

    B. Maurice's Jewelers fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged.

    C. Jeana's Jewelry concepts is robbed while displaying bracelets and necklaces at a public exhibition.

    D. Diamond Fire Jewelry store agrees to exhibit a necklace and earrings set in a showcase away from the premises. The case if broken into, and the set is stolen.
    B. Maurice's Jewelers Fixes a Necklace and send it by a registered mail to the owner. When the necklace arrives, it has been damaged.


    Property in transit by registered mail is covered under the jewelers block extension.
  152. Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value?

    A. They are subject to a 1k deductible

    B. They are automatically provided w/ replacement cost coverage.

    C. they qualify for max compensation under the flood insurance program.

    D. They are excluded form the flood insurance policy.
    B. They are automatically proveided w/ replacement cost coverage

    Single family dewlling are automaticlly provided w/ replacement cost coverage if insured to at least 80% of the replacement value, or the max allowed under the reg. Flood insru prog.
  153. ABC Trucking hauls products for Acme, inc. as a contract carrier. On one shipment, the driver stopped at a truuck 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 this loss?
    No, the driver had taken resonable measures to protect the property by locking the truuck.

    If ABC was operating as a common carrier rather then a contract carrier, they would have been legeally liable.
  154. What is the coisnurance requirement for a theatrical property floater under an Inland Marine policy?
    80%
  155. Your accounts receiveable records ahave been destroyed or damaged. Your loss may be covered with _________.
    The accounts receivable coverage form

    reimburses the insured for amounts that can't be collected form customers dueus to damage to the company's records
  156. The regular Nationa Flood Insurance Program would insure an eligable single family dwelling for up to _______.
    • 250k
    • on a replacement cost basis
  157. Which of the following is NOT covered under Accounts Receiveable Coverage Form?

    A. interest on loans requierd to offset uncollectible amount pending payment of the insurance proceeds

    B. Sums due the insured which are uncollectible due to a covered loss

    C. Expenses to reestablish the records, if possible, and collection expenses which are in excess of normal costs

    D. Any loans required to offset uncollectible amounts
    D. any loans required to offset uncollectible amounts

    Loan principal amounts are not coverd under the form, howevr other expenses such as interest on necessary loans are covered.
  158. The difference in the contents coverage on an HO-3 and HO-5 is ___________.
    Contents are covered open peril on HO-5 and named peril on HO-3
  159. The broad theft coverage endorsemet on the dwelling form sepcifies all of the following limitations EXCEPT

    A. 1500 on securities

    B. 1500 on jewelry

    C. 1k on silverware

    D. 200 on money
    C. 1k on silverware.
  160. All of the following property is insured under Coverage A of a Farm Policy EXEPT

    A. The dwelling descreibed in the declarations page

    B. Personal Lawnmower of a tenant used to service the described location

    C. Material on premises to be used for repair or alter the insured structure

    D. A snowblower owner by the insured used to service the premises
    B. Personal lawnmower of a tenant used to service the described location

    Property belonging to a tenant is not covered
  161. Where are the definitions of advertising injury; bodily injury; coverage territory; insured contract; and mobile equipment found?

    A. The producer's report

    B. The application

    C. The glossary

    D. The coverage form
    D. the coverage form

    contains definitions of aadvertising injury, coverage territory, insured contract; mobile equipment; personal injury, products completed operation hazard; insured product, etc. all of which are similar or the sme as those discussed in the general liability coveage form.
  162. An individual's construction company leaves mobile equipment and construction machinery on the job site until until the project is completed. What could this individual use to isnrue it?

    A. Builders Risk form

    B. General Property form

    C. Contractors Equipment floater

    D. Bailee Customers form
    C. contractors Equipment floater
  163. Risks which may be the subject of inland marine coverage, according to the nationwide marine definition, included all the following EXCEPT

    A. Property while stored at a warehouse

    B. Shipments made by freight train

    C. Cargo transported by truck

    D. Large pleasure boats
    D. Large Pleasure boats

    will not be included in inland marine coverage.

    They would instead be covered in a boatowners policy, or, if large enough, under yacht insurance.
  164. In a Farm policy, any cost incurred by the insurer for the investigation or defense of a claim will be paid by________.
    The insurer

    Limits state that the most the isurer will pay in the result of a judgment against an insured is the limit stated in the policy. Any cost incurred by the insurer for the investigation or defense of a claim or suit will be paid by the insurer, over and above the limits shown in the policy.
  165. The inland marine coverage form for Outdoor Signs provides "open peril" coverage and excludes coverage for breakage only during

    A. Transportation

    B. Repairing

    C. Installation or dismantling

    D. Any of the above
    D. Any of the above

    the open peril coverage provided under Outdoor Signs excluudes damage done while transporting, repairing, installing, or dismantling the sign.
  166. A business using its own trucks to move its own cargo would insure the cargo using
    Motor Truck Cargo--Owners form
  167. In a dwelling policy, which provides coverage for additional living expenses incurred by an owner occupant in the event a covered peril made the premises uninhabitable due to a covered loss?
    coverage E
  168. In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for
    Uninsured motorists coverage.
  169. Which common policy condition prohibits the insured form changing the rights or duties as defiened under the policy to any other person or entity without the written consent of the insureance company?
    Transfer of rights and duties under the policy
  170. When the condo assoc coverage form and the condo commercial unit-owners form both cover the same loss the
    Assoc coverage form will be considered primary and pay the loss
  171. Under dwelling policy, if an inusrer chooses to repair or replace damaged or lost property, it must inform the insured w/ in how many days of receiving proof of loss?
    30 days
  172. What is the requireed limit of isur in the coinsur clause for coverage F- Unscheduled Farm Personal Property?
    80%
  173. Coverage I for suits alleging "personal injury" is most similar to the coverage found in which coverage form?
    General Liability
  174. Which of the following is NOT true of National Flood Insur?

    A. Participating communities must agree to implement certain land use regulations.

    B. National Flood Insurance provides coverage that is excluded from property insurance policies.

    C. Insurance provided by the flood program is also available in standard property policies.

    D. Emergency program limits are available to communities immediately
    C. Insurance provided by the flood program is also available in standard property policies.
  175. The unique thing abouut a bailee is that it covers
    customer's property whether or not the insured has been negligent.
  176. Which of the following IS covered under the theatrical prpoerty floater of an inlaand marine policy?

    A. Admission tickets

    B. Animals

    C. Jewelry made with percious stones

    D. Vehicles used on stage
    D. Vehicles used on stage

    Covered property includes the following scenery, costumes, theatrical property, and similar property of others

    Vehicles arae also covered if they are actually used on stage
  177. Who would participate in a WYO program?

    A. business requiring national flood inusrance policies

    B. private insurers that wish to write and service national flood insurance policies on a no risk-bearing basis

    C. Lloyd's assoc

    D. Gov. insur com. that write and service National Flood insur policies (NFIP)
    B. private insurers that wish to write and service NFIP on a no risk bearing basis
  178. Under a dwelling policy , the value of a loss is determined by all of the following Except

    A. the policy limit

    B. the amount reflecting the insrueds interest in the property at the time of loss

    c. the amount necessary to repair or replace the property

    D. The amount negotiated by the insured
    D. the amount negotiated by the insured
  179. Limited coverage is provided in the commerical prop coverage form for signs. What is the limit for attached outdoor signs?
    1k
  180. Commercial Package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP the business owner may select form all of the following types of coverage EXCEPT

    A. General liability coverage

    B. Workers comp covrage

    C. crime coverage

    D. Boiler and Machinery coverage
    B. Workers comp coverage
  181. Which of the following would NOT be considered to be a flood?

    A. Overflow of tidal waters

    B. Mudslides

    C. Runoff of surface waters

    D. Sewer backup
    D. Sewer Backup
  182. Additional coverage in the liability sectin of a homeowners policy cover all of the following EXCEPT

    A. Damage to a third party prop for which the insured is legally liable

    B. Claims expense

    C. Expenses the insured incurs rendering first aid for bodily injury to third parties

    D. Damage to the poroperty of others
    A. Damage to a third party property for which the insuured is legally liable.
  183. Which of the following personal auto coverages would pay for damage to a covered auto due to colliding with a deer?

    A. Bodily injury liability covearge

    B. Other than collision (comprehensive covaeg)

    C collision covarge

    D. Property damage liablility covareage
    B. Other than collision
  184. Which Item wouuld NOT be coverd under Building Coverage in a Building and Personal property policy?

    A. The building housing a dress shop

    B. The ice cream case permanently installed in an ice cream shop

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

    D. The tables and chairs used by a coffe shop as part of thir outdoor seating
    C. The bulldozer being used as apart of a business addition under cosntuructin that is parked 500 ft form the building.
  185. Both the brroad theft and limited theft endorsements on the dwelling program exclude all of the following types of property EXCEPT

    A. Credit cards

    B. Motor vehicles Licensed for the road
    C. aircraft

    D. water craft
    D. Water craft.
  186. The insured pruchased a 200k exttra expense policy. If the precentages applying to the limit of insuance are 40%, 80%, and 100% what would be the max payable for a 47 day loss?
    160k

    extra expense coveage is writeen w/ a min of three applicable precentages whcih apply to the limit of inusrance in the declarations. whne the period of restoration is 30 days or less, the first prectentage applies, when it is over 30 days and not more then 60 days, the second percentage applies, when over 60 days the third precentage applies.
  187. The Employee theft crime policy coverage includes a coverage extension that applies to employees temp outside the coverage territory for up to how many days?
    90 days
  188. What are common carriers required to issue to every shipper that it trasports goods for?
    A Uniform Bill of Lading
  189. Whic of the following statements is true regarding physical damage coverage in Garage form?

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

    B. Specific cuases of loss coverage is not available for physical damage coverage

    C. No coverage is provided for autos stored for more then 45 days at locations not shown in the declarations.

    D. Collision coverage is provided only for dealers
    C. No coverage is provided for autos stored for more than 45 days at a location not shown in the declaration.

    Collision coverage is not limited to a specific risk.

    Autos held for sale arae covered when auto designation symbol 31 (dealers autos) is shown on the declaration page.

    The "specific cause of loss" coverage is available for physical damage coverage.
  190. With regards to the Personal Auto Policy, in the event of a claim or loss, the insured is required to do all of the following EXCEPT

    A. Notify the insurer as soon as possible with a description of the accident

    B. Protect the insured auto from further damage

    C. Promptly contact the police if the accident was a hit and run

    D. Immediately report to an emergency room for medical examination
    D. Immediately report to an emergency room for medical exam.
  191. Which of the following homeowners polciy settlement options is NOT accurate?

    A. Replacement cost for buildings anad other structures if covered for at least 80% of its replacement cost

    B. Replacement cost for property damage less than 5% of the total amount of insur is not covered

    C. ACV for any structure or building

    D. ACV for personal prop and awnings, carpeting, household appliances, outdoor antennas, and equipment
    B. Replacement cost for prop damage less then 5% of the total amount of insur is not covered.

    HO policies excet HO-8 cover the dwelling and structures for replacement if insured for at least 80% of value on the date of the loss.

    Contents are covered ACV unless replacement cost endorsement has been added.
  192. Connor wishes to increase the limits for trasnportation expenses for his personal auto policy. What endorsment will raise the daily and total limit available under his policy?
    Extended Trasportation Expenses
  193. Replacement cost coverage is provided in both the vroad and special form dwelling policies when
    The amount of isnur on the dwelling is at least 80% of its replacement cost at the time of loss.
  194. What is the purpose of the Terrorism Risk Insur Act of 2002?
    To share the risk of loss from terrorsit attacks w/ the insur industry
  195. The type of crime policy under which coverage is triggered by a loss that happens during the policy period but is not necessaarily discovered duudring the policy period is the_________.
    Loss sustained form
  196. Which of the following is ineligible for a businesssowners policy?

    A. An apt building that is 4 stories high, and has 40 units

    B. An auto sales and servicing operations

    C. an office building 5 stories high and 50k sq ft

    D. a fast food restaurant thaat sells a small amount of alcohol that is 5500 sq ft.
    B. An auto sales anad servicing operations
  197. The NFIP emergency program

    A. goes into effect after the community has received a Flood hazarrd 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. Both A and B.
  198. Which of the following watercraft would be coverd under the homeowners policy?

    A. A motor boat used for busienss purpose

    B. a 40 ft sailing boat

    C. a motor boat that hasa been rented out

    D. A rented motor boat
    D. A rented motor boat.

    Homeowners policy provides automatic coverage for perosnal or rented watercraft that meets specific size and horsepower limits, unless it ahs been rented out or used for business purposes.
  199. Which inland Marine Form would porvide the best protectin for a dry cleaning company against loss or damage to their customers prop while in the care custody, and control of the dry cleaners?

    A. Bailees cuustomer policy

    B. Furriers Blcok policy

    c. Personal prop coverage part

    D. Vender's single Interest Policy
    A. Bailee's customer policy
  200. What is the purpose of NFIP?
    to fill the gap left by the private insurers in flood coverage'
  201. Folks in the buisness of selling construction equipment and mobile equipment should insure w/ a/an
    Equipment dealer coverage form.
  202. An installation floater is used to insure
    Appliances inteded to become a permanent part of the building.
  203. The common policy condition is a modular part combined w/ other parts to create the contract. The "common policy condition" sec contains provisions that are applicable to all lines of coverage thata may be included in the policy. Which of the following provisions would be found in the common policy conditions sec of the policy?

    A. The first name isured 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 isnurance, approval form th insured msut be obtained.

    C. REqquest for any change in the policy requeste 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 isnred relating to the policy for a period of up to 5 yrs after the end of the polciy.
    A. The first named isured
  204. The endorsement thata can be attached to an equipment brakdown policy to provide coverage for perishable prop for spoilage or damage cused by contact w/ refrigerant is called
    Refrigeration interruption coverage
  205. The extension of coverage under the commercial fine arts floater includes coverage for newly acuquired prop for max of
    10k

    for up to 30 days for up to 25% of total limit of insurance for max of 10k
  206. Subrogation rights under a Personal Auto Policy apply to all coverages EXCEPT
    A. Unisnured motorist
    B. No fault medical payments
    C. Liability

    D. Physical damage
    D. Physical damage

    they do not apply to physical damage coverage if the damage is caused by a person using the auto w/ a reasonable belief that they were entitled to do so.
  207. Which of the following IS covered under the camera and musical insturments dealers floaters?

    A. a customer's camera left at a camera shop for repair

    B. a musical instruement sold and delieverd to ca customer

    C. furniture, fixtures and office supplies in a music store

    D. money kept on premises of a camera shop
    A. a customer's camera left at a camera shop for repair.

    Covered prop includes customer's prop left for repair, cleaning or service
  208. Which policy consists of the declarations and conditions, edosrsemetns and other attachments applicable to a single line of insurance?
    monoline

    contains only one coverage part
  209. Under the HO-4 and HO-6 homeowners policy forms, property is insured against

    A. Special form perils

    B. Comprehensive form perils

    C. Broad form perils

    D. Basic form perils
    C. Broad form perils

    HO-4 and HO-6 provide the same level of coverage as coverage C in the HO-2 and HO-3
  210. Which of the following would be covered under the Crime covrage Inside the Premises- Theft of Money and securities?

    A. Loss reasulting form the surrendering of property in any exchange or purchase.

    B. Dishonest acts of employees, diretors, trustees or representatives.

    C. Accounting or arithmetic errors or omissions

    D. Loss or damage to a locked safe, vault, or cash register
    D. Loss or damage to a locked safe, vault or cash register
  211. Which of the following is true regarading single dwelings that are insured to at leaast 80% of the replacement value?

    A. They qualify for max compensation under the flood insur program

    B. They are excluded from the flood insurance policy

    C. They are subjact to a 1k deductible

    D. they are automaticlly provided w/ replacement cost coveage.
    D. They are automatically provided w/ replacement cost coverage

    Single family dwellings are

    and at least 80% of replacement or max allowed under the reg flood insur program
  212. A grave marker was damaged by vandals. It would cost 3k to repair. Under these cirumstances, how much would a homeowners policy pay?
    3k

    Homeowners 2000 policy will pay up too 5k for grave markers, including mausoleums, on or away from the premises for loss caused by a peril insured against under coverage C.
  213. The businessowners policy liability coveage will pay for necessaary medical expenses of others incurred w/in
    1 yr

    Medical paymetns coverage of a BOP will pay medical dental hospital and funeral services incurred w/ in one yr from date of accident to a person who suffers bodily injury by accident on or next to the insured;s premmises, or b/c of the insureds operations
  214. A business using its own trucks to move its own cargo would insure the cargo using
    Motor truck cargo- owners form
  215. Which of the following would NOT be covered under the liabilty section of a Personal Auto Policy?

    A. a friend of your son is using the insured vehicle with the named insured's permissin and causes an accident

    B. After a party, the insured causes an accident and is charged w/ driving under the influence of alcohol.

    C. Bodily injury caused by the insured's negligence while driving a three- wheel all-terrain vehicle

    D. A trailer the insured vheicle is towing accdientlly comes loose and causes injury to another person
    C. BI caused by the insured's negligence while driving a 3 wheel atv

    Vehicles w/ fewer then 4 wheels are not eligible for coverage under PAP
  216. Coverage for medical payments under a PAP applies to expenses following a covered accident that are incurred and services rendered w/in how long?
    3 yrs.

    A coverage requirement stated in the policy stating that the medical expenses must be incurred w/ in 3 yrs of the accident and also the services must be rendered w/ in that time period.
  217. Employment Practices Liability Insurance(EPLI) would NOT cover claims arising from

    A. Discrimination

    B. Deliberate law violation

    C. Sexual harassment

    D. Wrongful terminataion
    Claims arising because of intentional acts of the insured's are not covered.
  218. A businessowner has a liability policy for his business. Sometimes during the policy period, a loss occurs, but the businessowner does not become aware of the loss until several years after his policy expires. Which of the following types of policies would cover the loss?

    A. Claims-made policy

    B. Errors and Omissions policy

    C. Special Policy

    D. Occurrence Policy
    D. Occurrence Policy

    An occurrence policy covers loss that occurs during the policy period, regardless of when the claim is made.
  219. 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 coverage

    B. Collision coverage

    C. Liability coverarge

    D. Medical payment
    C. Liability coverage

    Supplementary payments, found in part A: liability include expenses incurred by the insured at the insurer's request, including $200 per day for attending trials or hearings.
  220. In a Personal Umberlla, the amount paid by the insured for certain losses not covered under the primary coverage is called_____.
    Self insured retention

    In a casuality insurance, the portion of a claim not paid by insurance is called a retention. In prop insurance, it is called a deductible.
  221. Retroactive dates in a claims made CGL policies apply to _________.
    Both BI and PD and PIL and Advertising Liability


    For medical payments to apply the expense must be insurred and reported w/ in 1 yr of the accident
  222. Under the Commerical Crime coverage inside the Premises- Robbery or safe burglary of other property, what is the special per occurence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?
    5k
  223. In the Personal Auto Policy, owned trailers being towed by an insured auto are automatically covered for_________.
    Uninsured motorists coverage

    Trailers, while being towed by an insured auto, are covered automatically for BI /PD and U/M under part A of a PAP.
  224. Which of the following is NOT considered an insured contract under the CGL policy?

    A. an obligation as required by ordinance to indemnify a municipality, except for work for a municipality

    B. a written lease agreement on the insured premises

    C. an written agreement which indemnifies a person for fire damage to the premises rented to the insured

    D. an elivator maintenance agreement
    C. an written agreement which indemnifies a person for fire damage to the premises rented to the insured

    GL covering premises including automatic coverage for written lease of premises, sidetrack agreements, elevator maintence agreements, easement agreements, and municipality indemnification. Protection from claims arising from fire damage to non-owned property would need to be covered by Fire Damage (Legal) Liability.
  225. Which of the following would be covered by the physical damage coverage of your BAP?

    A. your car is damaged while being prepared for an organized racing event

    B. Freezing damaged the tuck's engine

    C. Your car's factory installed disc player was stolen

    D.The radioactive waste it was hauling damages your tuck
    C. Your car's factory installed disc player was stolen

    Excluded for coverage are nuclear, organized racing, freezing, but other than collision coverage will cover the factory installed disc player.
  226. (GT) An employee waqs injured on a job on May 1st. The Disability lastsed for 20 days. From What date will the workers comp benefit will be paid?

    A. may 1st

    B. may 6th

    C. may 15th

    D. may 21st
    A. may 1st

    If the injury results in disability of 14 days or more, compensation will be allowed from the date of disability.
  227. (GT) An individual's application was denied, and he requested a hearing. How soon will that hearing take place?
    with in 30 days
  228. (GT) A commercial policy has several named insureds. When servicing the policy, Whome does the insurer deal with?
    The first named insured

    In commercial, policiees, the first named insured has control of the policy and is the only insured having rights to cancel or change the policy and is responsible for paying premiums and reporting losses; therefore the insurer deals with the first named insured.
  229. (GT) A life insurance agent visits a potential client and explains varaious types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?
    Misrepresentation

    the act of portraying sales material that is false, misleading or decptive as to policy benefits or terms, the payment of dividends, etc. This refers to all forms of communication.
  230. (GT) How much notice is required for a hearing regarding an unfair trade practice?
    10 days

    There must be 10 day's notice given for hearings regarading the commission of unfair trade practices.
  231. (GT) Policy limits are the maximum amount an insured may collect, or for which an insured is protected under the terms of the______.
    Policy

    Policy limits are the max amount an insured may collect, or for which an isured is portected under the terms of the policy
  232. (GT) What is an insured contract?
    Those contracts that are automatically covered under the exposure of premises coverage in a general liability insurance contract.

    When a general liability policy is written to provide premises liability, it automatically covers the exposures of a written lease of those premises easement agreements, elevator maintence agreements, railroad sidetrack agreements, and municipality indemnification. These are referred to as "insured contracts" b/c they are covered whether or not identified.
  233. (GT) An individual's application for an insurance license was denied. How many days does the applicant have to request a hearing?
    10

    applicant may requrest a hearing w/ in 10 days of this notice.
  234. (GT) Which of the following statemens is true regarding advertising that the Insurance Guaranty Association would assure payment of benefits in the event of insurer insolvency?

    A. Insurers may choose whether to mention the Association in advertisements, but if they choose to do so, they must first pay a fee to the dept of insurance.

    B. If insureds join the Association, they will be protected financially if their insurers become insolvent.

    C. all advertisements of an insurer must mention coverage by the Association.

    D. It is illegal to mention the Association in advertisements.
    D. it is illegal to mention the Association in advertisements.

    It is a unfair trade practice to make any statment that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association.
  235. (GT) What is the term for an insurer's responsibility for payment, as stated in an insurance policy?
    Limits of Liability

    Limits of liability are the insurer's liability for payament as stated in an insurance policy.
  236. (GT) When an insured purchased his home 10 years ago for 80k, it had a replacemenet cost of 100k. Today the home has a replacement cost of 200k and has depreciated by 4% each year. The insured's home has an ACV of _______.
    $120k

    ACV is determined by taking today's replacement cost, minus depreciation (200k minus [(200k x 4%) x 10 yrs]=120k
  237. (GT) An insured has 5k medical coverage under a personal auto policy at the time of a covered accident. The insured anad 3 passengers are injured. The insured's medical expenses are 8k; the first passenger's total 4k; the second passenger's total 6500k; and the third passenger's total 1200K. How much will the policy pay under the medical payment coverage?
    15200k

    the medical payment coverage is provided by a limit of liability per person. In this example the limit for the policy is 5k per person. So, the policy will pay the max (10k) for the insured and passenger 2 since thir medical expenses exceed the limit. All of passenger 1 and passenger3's expenses would be paid(5200). The grand total paid under the medical expenses is 15200K.
  238. (GT) If an insurance policy has the additional coverage provision, how does it affect the policy premium?
    B. There is no additional premium.

    Additional coverage is a prvision in an insurance policy that provides an additional amount of coverage for specific loss expense, at no additional premium.
  239. (GT) What type of policy which may be added by endorsement or purchased seperately, may an insured purchase in order to provide coverage for other types of contacts?
    A contractual Liability Policy

    In order to provide coverage for other types of contracts, the insured may purchase a Contractual Liability Policy, which may be added by endorsement or purchased separately. With this coverage, the insurer agrees to pay for bodily insjury or porperty damage liability which the insured has agreed to assume under a written contractual agreement.
  240. (GT) An insurer may limit the extent of its coverage on the basis of_____.
    Age

    It is considered unfair discrimination to refuse to insure, continue to insure, limit the amount, extent or kind of coverage or change a different rate for the same coverage b/c of blindness or partial blindness.
  241. (GT) The obligation to compensate insured workers w/ out regard to fault or negligence is known as______.
    Absolute Liability

    is the obligation to compensate injured workers w/out regard to fault or negligence.
  242. A general Liability policy showing 100k limits per occurrence and 200k aggregate limits. Which of the following liability coverages is NOT subject to the aggregate limit?

    A. Fire legal liability

    B. Premises Operations

    C. Product/completed operatin

    D. perosnal and advertising
    A. Fire and legal Liability

    Fire damage Legal liability coverage pays for fire damage to property the insrued leases or temp occupies which is caused by the insured's negligence. The limit of insureance is shown on the declarations page and is the max limit the insurer will pay per occurrence.
  243. (GT) The main difference b/w occurrence and claims made liability policies is______.
    Trigger

    The coverage trigger is what makes a policy respond to a claim. The policy in force when the claim is first made responds if a claims made trigger and the policy in force when the event occured responds if an occurrence trigger.
  244. (GT) Bob McKinn has an auto policy w/ limits 100/300/50 and a deductible of 1k. Bob is involved in an auto accident and runs into steve. Steve is awarded 125k for his injuries and 25k for the damages to his ca. Bob's car has damage in the amount of 1200k as well. The total payemnt made under bob's policy is _______.
    125200k

    The amount of coveage for steve's injuries is limited to 100k. The damage to steves car is 25k is covered in full. The damage to bob's car is covered minus the 1k deductible. Thus the total payment is 125200k
  245. All the following are considerations in determing which state;s laws applies when a worker is required to travel into another stat and is injured while working in the other state EXCEPT?

    A. The insurer's charetered loacation or domicle.

    B place where the accident occured

    C. The normal location where the employee works

    D. The state where the employee was hired.
    A. The insurer's chartered location or domicile.

    The insurer's location is irrelevant to the processing of workers comp claims. The critical components relate to the EMPLOYER anad EMPLOYEE and their locations.
  246. (GT) A liability insuranc epolicy that coveras all claims arising out of incidents occuring during the policy period, regardless of whether the policy is still in effect at the time that the claim is made is called_____.
    Occurrence policy

    Only requires that the loss happened when the policy was in effect and that the insured was legally liable for the injury or damage to others.
  247. The commissioner is planning to schedule a hearing for a porducer who is believed to be engaged in unfair trade practices. what is the min. number of days for the notice of hearing to be given to the producer?
    10

    This hearing will take place 10 days after notice is give.
  248. The sec of treasury estiamates that recent terrorist attack caused lossed of more than 100 billion according to the 2007 reauthorization of the Terrorism Risk Insurance Program, how many days notice must the Sec provide Congrees?
    15 days of an act of terrorism

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