Claims Adjuster Exam questions with complete solutions Guaranteed Success Attained Grade A, Exams of Insurance Economics

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Claims Adjuster Exam questions with complete solutions Guaranteed Success Attained Grade A  Severability - Correct Answers Insurance applies separately to each insured as if other insureds did not exist. pg. 1  Abandonment - Correct Answers Property insurance policies usually contain a(n) __________ clause, *stating the insured cannot dump damaged property on the insurer and demand its full value.*  Insurable Interest - Correct Answers One wherein economic loss would be pg. 2  Actual Cash Value - Correct Answers The Loss Settlement Valuation that subtracts an allowance for depreciation  Warranty - Correct Answers A policy condition, either based on information in the insured's application or inserted by the insurer  Conditional Contract - Correct Answers The pg. 5 Insurer's responsibility to pay for a property loss may be conditioned on the insured having used reasonable means to avoid the loss, to protect the property against further loss, and to give the insurer proof of the loss is defined as?  Under Mechanical Breakdown Coverage, *new cars are eligible for service pg. 6 up to:* - Correct Answers 36 Months/36,000 Miles  Used vehicles: 12 Months/12,000 Miles  If financial responsibility doesn't exist at the time of an accident, what happens? - Correct Answers The legally valid claims of others must be satisfied (10/20/10) pg. 7 person, per accident limit. - Correct Answers 10,000  Used to insure businesses engaged in selling, servicing, repairing, parking or storing automobiles: - Correct Answers Garage Coverage Form  The following examples are referred to as __________ liability limits: pg. 10 25/50/25 or 10/20/10. - Correct Answers Split  10/20/10 =  10,000 per person injured  20,000 all injuries combined  10,000 property damage  Example of straight liability limit = $30,000  Jeremy has a not at fault accident. If he has PIP with a pg. 11 $1,000 deductible, how much can he expect his PIP coverage to pay toward his medical bills that total $3,000? - Correct Answers $1,600  3000 (bills) - 1000 (deductible) =  2000 x .80 (eighty percent)  Frank has a not-at-fault accident, he has basic PIP, no pg. 12  Examples include sheds, fences, pool houses, detached car ports, etc.  A lender has an insurable interest in a home and finds protection in the: - Correct Answers Mortgagee Clause  Mortgagee - Homeowner's policy  Loss Payee - Automobile policy pg. 15  Which of the following forms is "all-risk" on the dwelling policy? - Correct Answers DP-3, or the Special Form  When the basic liability limits provided by the policy are insufficient for an insureds needs, two coverage forms are used to provide pg. 16 the additional amounts of coverage:  Excess Liability  Umbrella  Both A & B  None of the Above - Correct Answers Both A & B  Which of the following is not covered under Coverage C, Personal Property? pg. 17  An apartment tenant  A condominium owner  Four-family dwelling owner-occupant  A business condo owned by a local insurance company - Correct Answers D. A business condo owned by a local insurance company pg. 20  Commercial property is not eligible for a Homeowner's policy.  Which of the following are characteristics of Homeowner's Insurance?  Protects against economic loss to residences and household property and legal liabilities pg. 21  Owner-occupants of 1-4 family dwellings  Renters who maintain residential occupancy in any type of building  All of the Above - Correct Answers D. All of the Above  Also included: personal, non-business risk, no more than 2 roomers/boarders, condominium unit owners pg. 22  An insured who wishes to purchase flood insurance, but is located in a moderate or low risk flood zone may do so by purchasing a: - Correct Answers Preferred Risk Flood Policy  Although Flood Insurance is provided by the Federal Government, those who are not in a "flood zone" may purchase a preferred risk pg. 25 policy to cover them for a flood claim.  Used only for Commercial Condominiums, it covers the unit-owners business personal property and the personal property of others in the insured's care, custody or control: - Correct Answers Condominium Unit Owners Form pg. 26  The Commercial Property Contract includes all of the following, except:  Common Policy Conditions  Commercial Property Conditions  Coverage Form  Commercial Loss Schedule - Correct Answers Commercial Loss Schedule pg. 27 four family dwellings and farm properties: - Correct Answers Commercial Property Insurance  (the question is the definition for this term)  Under Commercial Property Policies, Florida law requires an insurer to give the insured at least __________days advance pg. 30 written notice of non- renewal.  25  90  45  None of the Above - Correct Answers C. 45  Also, notice must state reasons the policy is not to be renewed.  When a business's personal property values pg. 31 fluctuate, a single, fixed amount of insurance could produce either over- or under-insurance at any given time. With this option, the limit of coverage is set at an amount somewhat higher than expected peak values. - Correct Answers Value Reporting  Replacement Cost is incorrect b/c it calculates pg. 32 structures built or assembled on site are also included if not covered by insurance.  First developed as an extension of Ocean Marine coverage, to provide coverage for cargo traveling over land, instead of by sea. - Correct Answers Commercial Inland Marine Coverage pg. 35  Definition: to help identify kinds of risks which are eligible for either Ocean or Inland Marine insurance.  Protects against *loss of business income* that results from damage to covered property from a covered cause of loss. (BIIC) - Correct Answers Business Income Insurance Coverage pg. 36  Period of restoration begins 72 hours after date of direct damage. In effect, coverage has a 72 hour deductible.  Coverage ends on either 1. date when damaged property could be repaired, rebuilt, or replaced 2. date business resumes operations at new, permanent location (whichever comes first) pg. 37  Coverage excludes liabilities under Workers Comp or similar law or arising from injuries to employees of the insured. The employees would have to file through Workers Comp.  Which of the following can be found in a Commercial General Liability Contract?  Declarations pg. 40  Common Policy Conditions  Occurrence and Claims- Made Forms  All of the Above - Correct Answers D. All of the Above  Also included: Nuclear Energy Liability Exclusion endorsement (other endorsements may be attached) pg. 41  There is __________ coverage for injury, damage or clean-up costs caused by pollutants, subject to minor exceptions. - Correct Answers 0%  Under a Commercial General Liability Policy, a basic limit of __________ per person applies to Medical Payments: - Correct Answers $5,000 pg. 42  Toxic wastes escaped from a gas station disposal tank. The insured operator discovers the leak and cleans up the spill. Unfortunately, the waste quickly seeped into the ground and has caused illness among the residents of a neighboring community This is an example of? - Correct Answers Known Loss pg. 45  Insurer should have been notified and further investigation of the spill and effective clean-up would have been observed.  Applies to BI or PD which occurs during the policy period, regardless of any later time at which a claim is made: - Correct Answers Occurrence Form pg. 46  vs. Claims-Made: applies only to BI or PD occurring on or after retroactive date for which claim is received/recorded during policy period  Applies only to a BI or PD which occurs on or after the retroactive date, and for which the claim is received or recorded by an insured or the company during the pg. 47 accident or if it follows disability within five years of accident.  The following are classes of disability, except: - Correct Answers Temporary Full  Also included: Temporary Partial pg. 50  The measure to determine disability benefits is the __________ of the employee at the time of injury: - Correct Answers Average Weekly Wage  Disability - incapacity due to injury to earn same or any other employment wages that employee was receiving at time of injury. pg. 51  Mandatory for risks exceeding certain annual premiums, recognizes the prior loss experience of the risk and applies either a debit for unfavorable experience or a credit for better-than- expected loss results. This is defined as: - Correct Answers The Experience Rating Plan  This, along with Retrospective Rating Plan, is pg. 52  Promptly provide any legal papers  Cooperate and assist as insurer requests  All of the Above - Correct Answers All of the Above  Also included: immediate contact with insurer, providing immediate medical or other services, do nothing to interfere with insured's right of recovery, make no pg. 55 voluntary payments or assume any obligation except at employer's own cost.  Under Workers Compensation, Employers Liability includes:  Claims by others for the liabilities to insureds employees pg. 56  Claims by relatives of injured employees for consequential damages  Claims made by employees that are not subject to Workers Comp Laws  All of the Above - Correct Answers All of the Above  Samantha eats uncooked chicken at a local barbecue joint and becomes violently pg. 57 premium to the insurer to which is added the actual losses incurred by the insured. This is defined as: - Correct Answers Retrospective Rating Plan  Under Employer's Liability, the minimum limits of liability are: - Correct Answers A. 100/100/500 pg. 60  $100,000 for all claims in each accident  $100,000 per employee for disease  $500,000 for all disease claims  Under Inside The Premises - Robbery or Safe Burglary of Personal Property, a special limit of __________ per occurrence applies to articles whose principal value is pg. 61 precious metals, precious or semiprecious stones, pearls or furs, and to the physical or intrinsic value of manuscripts, drawings or records: - Correct Answers $5,000  Under Crime Insurance, losses must be discovered within 1 year. This is defined as: - Correct Answers The Discovery Period pg. 62 that were discovered during current policy year, as long as crime coverage had continued w/o interruption  Any loss discovered during the policy period or within 60 days after its expiration (one year after expiration for losses connected with employee benefit plans) is covered regardless of when it pg. 65 occurred. This is defined as: - Correct Answers Discovery  If XYZ restaurant discovers stolen goods taken over a year ago, this is within 2 years of inception date and found within policy period so it's covered.  Under Crime Insurance, the insured is covered for loss by: pg. 66  Theft  Burglary  Robbery  All of the Above - Correct Answers D. All of the Above  Unless the loss is specifically excluded or limited pg. 67  Exclusions: accounting errors, giving/surrendering property, voluntarily parting, fire (except damage to safe/vault), vandalism, transferring property to someone based on unauthorized instructions or from threat to harm  Covers for all types of property, when surrendered pg. 70 away from the premises as a result of a threat to do bodily harm to the insured or an employee, or to a relative or invitee of either, who is (or allegedly is) being held captive. This is defined as: - Correct Answers Extortion  Also triggered by threats to damage the premises or property within the premises. pg. 71  Employee Theft Coverage may be written in the following ways:  Scheduled Persons Coverage  Scheduled Position Coverage  Blanket Coverage  All May Apply - Correct Answers D. All May Apply pg. 72  Guarantees the performance between the principle and the obligee: - Correct Answers Surety  aka Bonding Company; Surety is a "guarantee"  This bond guarantees indemnification to the obligee for any losses pg. 75 resulting from the principal's failure to complete the contract work in accord with specifications: - Correct Answers Performance  Considered a contract bond  One who undertakes to perform, to fulfill a contract or to meet an obligation is pg. 76 known as: - Correct Answers Principal  Obligee - needs guarantee principal will perform  Surety - guarantees performance between principal and obligee  This form of bond is required to accompany a bid for a contract which will require that the successful pg. 77  *Indemnitor - may act as additional party; agrees to reimburse surety for any loss  This type of bond covers streets, sidealks, sewers, etc.: - Correct Answers Subdivision  Falls under Maintenance Bond pg. 80  When a person has *lost* stock certificates, bonds or similar instruments, a bond is generally required by the issuing company to reissue the document. This is known as a: - Correct Answers Lost Instrument Bond  Also guarantees to save issuer from any loss growing out of lost instrument pg. 81  A __________ is a selected group of hospitals and medical practitioners in a given area who have joined together in an effort to reduce medical costs. - Correct Answers PPO  Most plans provide that emergency treatment will be paid even if treated party does not go to service provider on approved list. pg. 82 attempts, air travel injuries, accidents while committing felony, accidents while under the influence  This type of provision states the insurer can refuse to renew the policy only under certain conditions. The policy must state the conditions under which the policy will not be renewed. This is defined as? - Correct pg. 85 Answers Conditionally Renewable  vs. Optionally: company may not cancel during term but reserves right to non- renew upon expiration  vs. Guaranteed: insurer required to renew policy at stated age (typically 65); company reserves right to increase premium pg. 86  The coverage that is intended to afford protection against catastrophic losses is defined as? - Correct Answers Major Medical  Some forms designed to supplement basic policies; others provide both basic and catastrophic coverage  A policy may contain a provision which states a pg. 87  P - Insurance services to members through employed physicians  B - Broad coverage  C - Coinsurance provisions  Provides indemnification to the insured for basic hospitalization of room and board in the hospital, nursing care, laboratory fees, operating room, medical supplies, etc. This is defined pg. 90 as? - Correct Answers Hospitalization Expense  Associated with a daily limit, not to exceed specified maximum  A(n) __________ provides comprehensive health services to its members for a prepaid fixed fee, equivalent to an insurance premium. - Correct Answers HMO pg. 91  Referred to as an emerging and increasingly important non-insurance alternative to dealing with risk of health care costs  Established in 1973, this association was created for applicants who are unable to obtain insurance in the private market: - Correct Answers FAJUA pg. 92 Homeowner customer who calls or visits the office. The agent provides training on the new product. Although the Customer Representative does not have a Life License, he or she feels comfortable with the training and does as requested.  Which of the following is true? pg. 95  This practice is acceptable if done in the office under supervision of General Lines Agent  This practice is acceptable because adequate training and product knowledge was provided  This practice is unacceptable and may result in the suspension or pg. 96 revocation of the Customer Representative's license  This practice is only acceptable if the product training was certified by the Life Insurance Company - Correct Answers C. This practice is unacceptable and may result in the suspension or revocation of the Customer Representative's license pg. 97