Insurance Claims and Coverage: A Comprehensive Guide, Exams of Insurance Economics

Download Insurance Claims and Coverage: A Comprehensive Guide and more Exams Insurance Economics in PDF only on Docsity! Florida 6-20 All Lines Adjuster Exam Questions and Correct Answers 2023-204 A public adjuster represents the interest of: A. The insurer B. The Insured C. The employer D. The interest of the general public - Correct Answer: B. The insured Which of the following is the type of report that indicates the initial results of a claim investigation? A. Field Report B. Interim Report C. Full Report D. None of the above - Correct Answer: A. Field Report States have adopted statutes regarding claims adjusting. To avoid unfair treatment to a claimant the adjuster must not: A. Promptly investigate the claim. B. Follow the laws regarding the number of days in which to commence an investigation. C. Deny the claim until a fair and prompt investigation has commenced. D. Pay the claim within a reasonable number of days after the final proof of loss has been received. - Correct Answer: C. Deny the claim until a fair and prompt investigation has commenced. Which of the following is not a claim settlement option? A. Forcing the insured to sue by offering less than the claim is worth. B. Repairing property. C. Replacing with like kind and quality. D. Replace with new - Correct Answer: A. Forcing the insured to sue by offering less than the claim is worth. The giving up of a known right is called: A. Estoppel B. Violation of policy conditions C. Rebating D. Waiver - Correct Answer: D. Waiver An innocent party relies on certain statements made by the adjuster and is damaged as a result. The guilty party may be legally prohibited from asserting that the fact does not exist because of: A. Waiver B. Estoppel C. Duties of the adjuster D. Law of contract - Correct Answer: B. Estoppel Should an insured fail to report a claim in a timely fashion the adjuster will usually: A. Deny the claim. B. Send the insured a reservation of rights letter. C. Cease investigating. D. Seek the advice of the company's attorney. - Correct Answer: B. Send the insured a reservation of rights letter. A company adjuster primarily represents the interests of: A. The insured. B. The claimant. C. The insurer. D. The public. - Correct Answer: C. The insurer. An adjuster's license will usually be revoked for which of the following reasons: Which of the following is not a Business Auto endorsement? A. Drive Other Car. B. Change Other Driver. C. Individual Named Insured. D. Mobile Equipment. - Correct Answer: B. Change Other Driver. Under the Business Auto Policy, each of the following is true about classification of "covered autos," except: A. "Any auto" is the broadest coverage classification. B. An insured may select different classifications for different coverages. C. All classes of newly acquired autos are automatically covered. D. "Hired autos" includes autos the insured leases, hires, rents or borrows. - Correct Answer: C. All classes of newly acquired autos are automatically covered. According to the Business Auto definitions, an "accident": A. Includes continuous or repeated exposure to the same conditions. B. Must be sudden and unexpected. C. Must be unexpected and unpreventable. D. Is any event that causes injury or damage. - Correct Answer: A. Includes continuous or repeated exposure to the same conditions. Joseph Young, who is insured under a Business Auto policy, is involved in an accident. He and the insurance company disagree on the amount to be paid for the damage to his car. Under the terms of the policy, which of the following statements is true: A. Each party engages an appraiser, and the appraisers will select an umpire. B. Mr. Young must accept the insurance company's estimate. C. Each party engages an appraiser, and the appraisers will decide the amount. D. The estimates of both parties will be averaged. - Correct Answer: A. Each party engages an appraiser, and the appraisers will select an umpire Under Form MCS-90, a notice to the other party is required for cancellation of coverage on the part of either the insurer or insured. A. 10 day B. 72 hour C. 14 day D. 35 day - Correct Answer: D. 35 day Which of the following is considered a "garage operation"? I. Ownership, maintenance or use of garage premises. II. Sale of products or services in connection with garage operations. III. Ownership or maintenance of covered autos. IV. Production or support of racing or competitive operations. A. I and II only. B. I, II, and III only. C. I and III only. D. I, II, III, and IV. - Correct Answer: B. I, II, and III only. Which of the following would be covered under a Garage Liability Policy? A. Damage to property the insured is transporting to another location. B. The use of covered autos leased to another party except as a replacement for a car under repair. C. Products and completed operations. D. Covered autos used in organized racing. - Correct Answer: C. Products and completed operations. Which of the following pollution losses would be covered under the Garage Liability Policy? I. Escape of toxic sludge from a dumpsite the named insured utilizes to store garage waste. II. Pollution of a creek caused by a gasoline leak from the ruptured fuel tank of a covered truck following a collision with another vehicle. A. I only. B. Both I and II. C. Neither I nor II. D. II only. - Correct Answer: D. II only. Garagekeepers coverage excludes all of the following losses, except: A. Loss to a high-value stereo system permanently installed in a customer's auto. B. Loss to CDs from a covered auto. C. Faulty work performed by a mechanic. D. Theft of equipment from a covered auto by a garage employee. - Correct Answer: A. Loss to a high- value stereo system permanently installed in a customer's auto. Extra Expense insurance covers the cost of: A. Relocation. B. Temporary location. C. Research costs to replace lost information. D. All of the above. - Correct Answer: D. All of the above. The Special Cause of Loss form excludes all of the following, except: A. Loss of market. B. Loss due to artificially generated electric current. C. Agricultural smudging. D. None of these are exclusions. - Correct Answer: D. None of these are exclusions. Earth movement is covered under which of the following Cause of Loss forms? A. None B. Basic Sinkhole collapse is covered under which of the following Cause of Loss forms? A. Basic B. Broad C. Special D. All of the above - Correct Answer: D. All of the above A building valued at $100,000 was insured for $80,000 with a policy containing 80% Coinsurance clause. Disregarding any deductibles, what would the company pay on a $20,000 loss? A. $7,500 B. $5,000 C. $15,000 D. $20,000 - Correct Answer: D. $20,000 All of the following are excluded under the Commercial Building and Personal Property form, except: A. Furniture and fixtures. B. Petty cash and IOUs. C. A watch dog. D. The insured's panel truck. - Correct Answer: A. Furniture and fixtures. Which of the following is not covered property under a Commercial Property form? A. Accounts, bills and currency. B. Animals not held for sale. C. Cost of foundations. D. All of the above. - Correct Answer: D. All of the above. The insured has transported a portion of his property to an exhibition trade show. It is destroyed by a fire. What coverage would apply? A. Property off the premises is not covered B. Fire is not covered for this exposure C. A limit of $10,000 would apply to cover the loss D. Special coverage would have to be purchased to cover property off the premises - Correct Answer: C. A limit of $10,000 would apply to cover the loss The deductible under the revised Commercial Property forms is: A. $500 B. $1,000 C. $250 D. $750 - Correct Answer: A. $500 The insured has suffered a loss as the result of a cracked steam boiler. What coverage would apply under the Commercial Property Cause of Loss forms? A. The loss would be covered B. The loss is not covered C. Only part of the loss is covered D. Covers only the extra expense in replacing the boiler - Correct Answer: B. The loss is not covered Before legal action may be taken against an insurer, an insured must have complied with all terms of the policy. Any legal action must begin within following a loss. A. 6 months B. 5 years C. 2 years D. 12 months - Correct Answer: C. 2 years If the civil authority blocks access to the insured's premises because of a covered peril that has damaged a building down the street, what period of time will the Business Income forms pay the insured for loss of income at his/her premises? A. One week B. Two consecutive weeks C. Four consecutive weeks D. Three consecutive weeks - Correct Answer: C. Four consecutive weeks Under the Condominium Association form, coverage is based on: A. The Commercial Property form B. The association agreement and bylaws C. The Special Cause of Loss form D. State and local ordinances - Correct Answer: B. The association agreement and bylaws What is generally excluded on the Condominium Commercial Unit-Owners form? A. The improvements and betterments of the unit-owner B. Hostile fire damage C. Building coverage D. Inside appliances and fixtures - Correct Answer: C. Building coverage If both the Condominium Association form and the Condominium Unit-Owner form cover the same property, how will the loss be handled? A. Each policy will pay pro-rata B. The Association policy will be excess over the Unit-Owners C. Each policy will share equally in the loss D. The Unit-Owners policy will be excess over the Association policy - Correct Answer: D. The Unit- Owners policy will be excess over the Association policy Which of the following losses to perishable stock would be covered by the Spoilage Endorsement? A. Power outage B. Mechanical breakdown or contamination D. Workers compensation - Correct Answer: C. Medical payments What type of physical damage coverage is needed by a company that repairs aircraft for damage to customer's property? A. Garage liability coverage B. Hangarkeeper's liability C. General liability D. Garagekeeper's legal liability - Correct Answer: B. Hangarkeeper's liability Aircraft liability coverage is very similar to auto insurance coverage with the following exception: A. Usually written with a deductible B. Does not apply to property damage of others C. Liability to passengers is treated as a separate exposure D. Cannot exclude passenger liability - Correct Answer: C. Liability to passengers is treated as a separate exposure Which of the following is not covered under aircraft hull insurance? A. Personal effects B. Fuselage C. Wheels D. Propeller - Correct Answer: A. Personal effects Common carriers are responsible for damage to customer goods they transport except for damage resulting from: A. Acts of God B. Traffic Accidents C. Load shifting D. Poor vehicle maintenance - Correct Answer: A. Acts of God Which of the following commercial inland marine coverage forms covers sums due the insured from customers which are uncollectible due to loss or damage of records? A. Equipment dealers B. Electronic data processing C. Valuable papers and records D. Accounts receivable - Correct Answer: D. Accounts receivable The Commercial Inland Marine coverage form "jeweler's block" excludes loss resulting from: A. Earthquake B. Shortage found upon taking inventory C. Unexplained disappearance D. All of the above - Correct Answer: D. All of the above The Commercial Inland Marine coverage form "valuable papers and records" includes coverage for: I. Money and securities II. Deeds, drawings and maps III. Books, files and mortgages A. I and II B. I and III C. II and III D. II only - Correct Answer: C. II and III The is an ideal form of protection for the frequent shipper of goods. A. Trip transit policy B. Annual transit policy C. Monthly transit policy D. Common Carrier motor truck cargo policy - Correct Answer: B. Annual transit policy Mr. Jones owns a jewelry store. His wife takes a very valuable necklace and wears it to a party. It is stolen. How will the jeweler's block policy respond to cover this loss? A. The policy will cover the loss. B. The loss will be denied C. The policy will pay the loss on an actual cash value basis D. The policy will pay replacement cost less depreciation - Correct Answer: B. The loss will be denied XYZ Road Construction Company has a fleet of equipment that consists of bulldozers, backhoes, and road scrapers. The owner desires physical damage coverage to cover the equipment. Which of the following types of insurance contracts would be appropriate to provide the proper coverage? A. Commercial property coverage B. General liability coverage C. Auto physical damage coverage D. Contractors equipment floater - Correct Answer: D. Contractors equipment floater Savage Construction Company has delivered and installed a large boiler in a commercial building. The owner has not yet accepted nor paid for the work. What type of policy should Savage Construction purchase to cover the work until accepted? A. Builders risk B. Installation floater C. Dealer floater D. Transportation floater - Correct Answer: B. Installation floater Community Cleaners is a new dry cleaning and laundry service business. They have vehicles that pick up customer's property to be processed and then delivered back to the customer. What type of policy would you recommend they purchase to cover the customer's Robbery or Safe Burglary of Other Property" coverage? A. Broken windows on the insured premises caused by a burglar. B. Theft of money and securities. C. Fire damage to the insured building caused by a burglar. D. Vandalism to a trailer on the insured premises caused by a burglar. - Correct Answer: A. Broken windows on the insured premises caused by a burglar. In crime insurance, which of the following individuals is NOT considered to be a "custodian"? A. Sales clerk B. Janitor C. Partner D. Named insured - Correct Answer: B. Janitor To be defined as a burglary, an event must include which of the following conditions? A. Robbery B. Fear or threat of violence C. Visible signs of forced entry or exit D. Mysterious disappearance - Correct Answer: C. Visible signs of forced entry or exit The Dye's host a party. When the guests arrive, they place their coats in the bedroom. Two days later, Mr. Dye discovers that his ring is missing from the bedroom dresser. This loss is referred to as a: A. Mysterious disappearance B. Burglary C. Robbery D. Theft - Correct Answer: A. Mysterious disappearance In crime insurance, a "custodian" is described by which one of the following? A. Any authorized person outside the premises B. An authorized person having care of insured property inside the premises C. An authorized person outside the premises in charge of money D. An authorized person going to the post office - Correct Answer: B. An authorized person having care of insured property inside the premises Which of the following terms provides the broadest definition of criminal activity? A. Burglary B. Robbery C. Theft D. Extortion - Correct Answer: C. Theft The Forgery or Alteration insuring agreement protects the insured from losses resulting from forgery or alteration of: I. Outgoing checks II. Drafts III. Promissory notes IV. Financial instruments drawn against the insured A. I, II, III and IV B. I and II only C. I and III only D. I, II, and III only - Correct Answer: A. I, II, III and IV Surety bonds guarantee the fulfillment of specific obligations. Each of the following may be the subject of a Surety bond, except: A. Payment of debt B. Protection of funds handled by employees C. Meeting contractual commitments D. Completing a construction job - Correct Answer: B. Protection of funds handled by employees Under a Surety bond, the "Principal" is the party who: A. Agrees to pay damages if default occurs B. Provides the bond in exchange for a fee C. Will be paid damages if default occurs D. Agrees to fulfill an obligation - Correct Answer: D. Agrees to fulfill an obligation A contractor has borrowed funds from a bank in order to finance a construction project. A Surety bond which guarantees the lender that the contractor will use the borrowed funds to finish the contract free and clear of liens is known as: A. A Performance bond B. Bid bond. C. Completion bond D. Labor and materials bond - Correct Answer: C. Completion bond Sue Green has a Commercial Crime Policy on her restaurant, but she only chose the insuring agreement "Inside the Premises Robbery or Safe Burglary of Other Property." If an employee steals some equipment by breaking into the premises during the daytime on a holiday, the policy would: A. Cover the loss B. Not cover the loss, since acts by employees are excluded C. Not cover the loss, since daytime burglaries are excluded D. Not cover the loss, since only loss of merchandise is covered - Correct Answer: B. Not cover the loss, since acts by employees are excluded Under the "Inside the Premises Theft of Money and Securities" insuring agreement of a Crime Policy, which of the following situations would NOT be covered? A. Cash in the register is destroyed in a fire. B. Traveler's checks that have turned up missing. D. The policy limits. - Correct Answer: C. $25,000. The purpose of Equipment Breakdown insurance is: A. To fill the gaps left by property insurance policies. B. To cover the maintenance of boilers and machinery C. To cover damage done to boilers and machinery only D. To cover the explosions of boilers in non-owned buildings that may cause damage the insured's property. - Correct Answer: A. To fill the gaps left by property insurance policies. The insured has suffered a boiler explosion and desperately needs a replacement as soon as possible. What coverage would respond to assist the insured? A. Replacement coverage B. Expediting expenses C. Extra expense coverage D. Loss of income coverage - Correct Answer: A. Replacement coverage If a boiler explodes and damages a building, contents and property of others, what coverage would apply? A. Only the damage to the boiler is covered. B. Only the building coverage is provided. C. Only the insured's contents are covered. D. If proper limits are in place the entire loss is covered. - Correct Answer: D. If proper limits are in place the entire loss is covered. Automatic coverage is provided for newly acquired equipment for: A. 30 days B. 60 days C. 90 days D. 120 days - Correct Answer: C. 90 days A steam boiler has been inspected and found to be in serious need of repairs. The inspector "red tags" the item. This means: A. A 30 day grace period is provided until repairs are made after the coverage is suspended B. Coverage is suspended until repairs are made C. The entire facility must be shut down until repairs are made D. The company will cancel the entire insurance applicable to all property insured - Correct Answer: B. Coverage is suspended until repairs are made The term "undamaged stock" in Equipment Breakdown coverage refers to: A. The fact that the insurer is not liable for any damage to the stock B. The salvage value of the stock C. The reduction in the value of the stock D. Losses that are not adjusted on a replacement cost basis - Correct Answer: C. The reduction in the value of the stock The BOP is designed to cover all of the following, except: A. Gas stations. B. Small apartment houses. C. Medium size clothing stores. D. An office complex with 7,500 square feet in total floor area. - Correct Answer: A. Gas stations. All of the following are exclusions under the standard BOP form, except: A. Governmental action. B. Building ordinance C. Earth movement. D. Transportation. - Correct Answer: D. Transportation. The Now Company carries a special BOP policy with a liability limit of $500,000. The company is involved in an occurrence causing $200,000 bodily injury damage and $200,000 property damage. The total amount payable as damages under the policy is: A. $100,000 B. $200,000 C. $400,000 D. $500,000 - Correct Answer: C. $400,000 The BOP policy form does not cover: A. Personal property of the insured B. Debris removal. C. Cracking of a steam boiler D. Personal property of others. - Correct Answer: C. Cracking of a steam boiler Businessowners policies provide "Preservation of Property" coverage when property is removed from the premises to protect it from a covered cause of loss. The coverage will apply at other locations for up to: A. 10 days. B. 30 days. C. 20 days. D. 60 days. - Correct Answer: B. 30 days. An apartment buildings may be covered by a Businessowners Policy (BOP) if it does not have more than: A. 15,000 square feet B. 10,000 square feet C. 35,000 square feet D. 30,000 square feet - Correct Answer: C. 35,000 square feet D. The entire loss would be denied by the insurer. - Correct Answer: B. The loss by burglary and loss of income would apply. The insured's building is protected by a sprinkler system. The system develops a problem and is inoperative. When does the insured have to report to the company the fact that the system does not work? A. Immediately B. After 24 hours C. After 48 hours D. After 60 hours - Correct Answer: C. After 48 hours An insured carries a DP-2 with $10,000 contents coverage. He owns a canoe and stores it at a lake in a private non-owned garage. Fire destroys the garage and the boat. How much coverage will his policy provide? A. Up to $1,000. B. Up to $500. C. Nothing D. $1,500 - Correct Answer: C. Nothing An insured's home is covered by the DP-3 form. The policy provides $20,000 in coverage on a home that would cost $50,000 to replace. When high winds destroy the roof, it is determined that it will cost $2,000 to replace it. Assuming the actual cash value of the roof is $750, how much will the insured collect for this loss? A. $2,000 B. $1,600 C. $1,000 D. $1,750 - Correct Answer: C. $1,000 Mr. Simpson owns a dwelling in a rural area close to a small wooded area. He is covered under a DP-3 form. A deer sees it's reflection in a picture window and jumps through and enters the dwelling causing significant wall and floor damage. Some of the furniture is damaged and must be replaced. He is covered for $100,000 on the dwelling and $50,000 on the contents. Which of the following would apply to this loss? A. The entire loss would be denied. B. Pay replacement cost on the dwelling and ACV for the contents loss. C. Pay replacement cost on the dwelling and the contents. D. Deny the contents claim and pay the dwelling loss on a replacement cost basis. - Correct Answer: D. Deny the contents claim and pay the dwelling loss on a replacement cost basis. The insured is covered under a DP-1 Dwelling Policy with coverage on the dwelling in the amount of $100,000. He has a detached garage valued at $10,000. Both structures are destroyed by a fire. What is the total amount recoverable under the policy? A. $110,000 B. $100,000 C. $95,000 D. $105,000 - Correct Answer: B. $100,000 An insured lived close to Mount St. Helens and carried a DP-2 policy. When the volcano erupted, the movement of the earth caused his home to collapse. He reported the claim as a volcanic eruption loss. What do you feel would be the result of this claim? A. The claim would be covered under the peril of volcanic eruption B. A portion of the claim based on a deductible percentage would be paid. C. The claim would be denied. D. The claim would be paid for ACV only under these circumstances. - Correct Answer: C. The claim would be denied. A water pipe has burst and the insured has suffered floor and ceiling damage in his two-story home. He is covered under a DP-2 form with dwelling and contents coverage. The building codes now require that special piping installation is needed at an additional cost of $500 over and above the normal cost to repair. His dwelling limit is $100,000. What will the policy pay if the normal cost to repair is $400? A. The policy will pay a total of $400. B. The policy will pay a total of $900 C. The policy will pay $500. D. The policy will pay $700. - Correct Answer: B. The policy will pay a total of $900 Mr. Jones purchased a policy on the dwelling in the amount of $40,000. His wife also purchased a policy in the amount of $20,000 unbeknown to her husband from another company. In case of a $15,000 loss, what will her company pay on the loss? A. $5,000 B. $15,000 C. $10,000 D. $7,500 - Correct Answer: A. $5,000 The insured has purchased a DP-3 form to cover his dwelling that is valued at a replacement cost of $100,000. He insures it for $60,000 and has a $30,000 fire loss. What can he expect to be paid? A. $30,000 B. $25,000 C. $22,500 D. $15,000 - Correct Answer: C. $22,500 The insured has forgotten to close an upstairs window. A strong storm blows through and wind and water severely damage the contents and floors of the dwelling. The insured carries a DP-2 dwelling form. What will be the outcome of this loss? A. The loss will be paid under the peril of wind. B. The loss will be paid on an actual cash value for the contents damage. D. None of the above - Correct Answer: C. The employer has been declined by at least two carriers limit an insurer's liability. A. Provisions B. Reinstatements C. Exclusions D. None of the above - Correct Answer: C. Exclusions What is Florida's law pertaining to mechanical breakdown coverage limits? A. Minimum deductible is $250 B. Coverage must be on an "all risk" basis C. Flood coverage must be included D. None of the above - Correct Answer: D. None of the above The stacking of uninsured motorist (UM) limits in Florida is subject to choices made by the insured. Those choices are: A. The insured can reject the coverage B. The insured can elect lower limits than his/her liability coverage C. The insured can elect "non-stacked" UM coverage D. All of the above - Correct Answer: D. All of the above A health policy affords the greatest degree of continued protection to an insured. A. Guaranteed renewable B. Non-cancellable C. Optionally renewable D. Conditionally renewable - Correct Answer: B. Non-cancellable Which of the following would not be a basis for the avoidance of performance in a claim adjustment? A. Investigating a claim that might be covered B. Allowing an insured to profit from an intentional claim C. Paying a claim on a vehicle loaded with illegal drugs D. An insured is guilty of concealment, fraud or misrepresentation - Correct Answer: A. Investigating a claim that might be covered Churning is best described as: A. Failing to pay a claim due to late reporting B. Forcing the insured to accept less than the claim is worth C. Using policy values in an existing life policy to purchase additional coverage with the same company for the purpose of earning additional compensation D. Churning is not considered an unfair or deceptive practice. - Correct Answer: C. Using policy values in an existing life policy to purchase additional coverage with the same company for the purpose of earning additional compensation In the state of Florida, a Medicare supplement policy cannot limit coverage for more than because of pre-existing conditions. A. one year B. three months C. six months D. 30 days - Correct Answer: C. six months Under Florida law, the minimum deductible allowed for comprehensive claims involving broken windshields is: A. $50 B. $100 C. $75 D. No deductible applies - Correct Answer: D. No deductible applies Under a disability income policy, the time between the beginning of a covered injury or sickness and the beginning of income payments is known as the: A. Double indemnity B. Waiting period C. Waiver of premium D. Cancellation period - Correct Answer: B. Waiting period In Florida, the death benefit under personal injury protection (PIP) is: A. $1,000 B. $2,000 C. $5,000 D. $2,500 - Correct Answer: C. $5,000 A person sustains $4,000 in medical expenses and $5,000 for lost wages under PIP. This person dies as a result of his injuries. How much death benefit would be paid? A. $10,000 B. $5,000 C. $1,000 D. $2,500 - Correct Answer: C. $1,000 A(n) is a group of hospitals and physicians who have joined together in an effort to reduce medical costs. A. HMO B. PPO C. Medicare Supplement D. None of the above - Correct Answer: B. PPO Under what circumstances would PIP coverage not be considered primary coverage? A. The "at fault" drivers does not have auto coverage. D. Pain and suffering - Correct Answer: D. Pain and suffering Which of the following is not an exclusion under the PIP automobile coverage? A. Coverage does not apply while occupying an uninsured vehicle B. Injuries to persons operating the vehicle without the insured's consent are covered C. Coverage only applies while occupying an insured vehicle D. Intentional acts or injuries while committing a felony are covered - Correct Answer: C. Coverage only applies while occupying an insured vehicle Which of the following is an incorrect statement regarding uninsured motorist coverage in Florida? A. This coverage can be rejected by the insured B. The insured can elect lower limits than his/her liability coverage limits C. The coverage cannot be rejected D. Non-stacked um coverage differs from stacked um coverage in several ways - Correct Answer: C. The coverage cannot be rejected When cancellation of an automobile policy is permitted, the insurer must send to the insured a notice at least days prior to the effective date of the cancellation. A. 10 B. 20 C. 30 D. 45 - Correct Answer: D. 45 The responsibility to regulate the insurance industry belongs to: I. The state government. II. The federal government. III. The state insurance department. A. I only. B. III only. C. I and II only. D. I, II, and III. - Correct Answer: C. I and II only. The responsibility of the federal government in regulating the insurance industry is limited to: A. Monitoring the ethical conduct of individual insurance adjusters. B. Fair labor standards and anti-trust matters. C. Monitoring the financial solvency of insurance companies. D. Reviewing and approving insurance rates, policies, and forms. - Correct Answer: B. Fair labor standards and anti-trust matters. An insurance company that is formed and domiciled under the laws of a particular state is an example of a (n): A. Domestic Insurer. B. Foreign Insurer. C. Domiciled Insurer. D. Alien Insurer. - Correct Answer: A. Domestic Insurer. Which of the following is a requirement for obtaining an agent's or adjuster's license? A. Must be 21 years of age. B. Must have completed at least two years of college coursework. C. Must have an insurance producer's license in the state. D. Must satisfy the Insurance Commissioner of trustworthiness. - Correct Answer: D. Must satisfy the Insurance Commissioner of trustworthiness. The unethical act of persuading a policyowner to drop a policy solely for the purpose of selling another policy is known as: A. Twisting. B. Rebating. C. Defamation. D. Misrepresentation. - Correct Answer: A. Twisting. An insurer that refuses to pay claims without conducting a reasonable investigation based upon all available information is guilty of: A. Twisting. B. Unfair Claim Settlement Practices. C. A felony. D. Misrepresentation. - Correct Answer: B. Unfair Claim Settlement Practices. An insurer that distributes a statement that misrepresents the benefits, advantages, conditions, or terms of any insurance policy would be guilty of: A. Unfair Claim Settlement Practices. B. Misrepresentation and False Advertising. C. Defamation. D. Coercion. - Correct Answer: B. Misrepresentation and False Advertising. Should an agent or adjuster have a change of address, the obligation to notify the Insurance Department lies with: I. The company that employs the adjuster or company that appoints the agent. II. The licensee. III. The licensee's supervisor. A. I and II. B. I only. C. II only. D. I, II, and III. - Correct Answer: C. II only. An incorporated insurance company with its capital divided into shares is the definition of: In order to be certified as an act of terrorism under the Federal Terrorism Act, property and casualty losses must exceed for any one event: A. $500,000 B. $1,000,000 C. $3,000,000 D. $5,000,000 - Correct Answer: D. $5,000,000 None of the following can be covered by the Federal Terrorism Act insurance program, except: A. Most commercial property and casualty risks. B. Federal crop insurance. C. Personal insurance policies. D. Health and life insurance policies. - Correct Answer: A. Most commercial property and casualty risks. No act will be certified by the Secretary as an act of terrorism under the Federal Terrorism Act if: A. The act is not committed as part of the course of war declared by Congress. B. The act is one of terrorism as defined by the Act. C. The losses that occur relate to commercial property risks. D. The losses that occur relate to life insurance. - Correct Answer: D. The losses that occur relate to life insurance. All of the following are considered acts of rebating, except: A. An agent provides an all-expenses paid cruise to a client and his wife in exchange for writing the coverage on his national chain of restaurants. B. An agent sends holiday greeting cards to all the clients on his mailing list. C. An adjuster receives a monthly check from an auto body repair shop for recommending the repair shop to clients who have a claim. D. All of these situations are considered acts of rebating. - Correct Answer: B. An agent sends holiday greeting cards to all the clients on his mailing list. Under the extension of the Terrorism Risk Insurance Act the federal government will share in the losses for a certified act of terrorism if: A. Total losses for all insurers exceed $100 million dollars B. An insurer is responsible for the first 20% of losses as a deductible, and then the government will pay 85% of remaining claim amounts. C. The total certified acts of terrorism for the program year have not exceeded $100 billion dollars D. All of the above - Correct Answer: D. All of the above The federal law enacted to control the ways financial institutions and insurance companies deal with the private information of individuals is: A. The FAIR Plan B. The Gramm-Leach-Bliley Act C. The CAN-Spam Act D. The Fair Credit Reporting Act - Correct Answer: B. The Gramm-Leach-Bliley Act An incorporated insurance company owned by its policyholders is: A. A Stock Company. B. A Reciprocal Insurer. C. A Mutual Company. D. A Self Insurer. - Correct Answer: C. A Mutual Company. The federal government sometimes provides insurance that is not ordinarily available from private insurers. Which of the following is provided by the federal government? A. Nuclear energy liability insurance B. Federal flood insurance C. Federal crop insurance D. All of the above - Correct Answer: D. All of the above In addition to any administrative action, a person who violates the Federal Fraud and False Statements regulation will be subject to a civil penalty of up to: A. $5,000 B. $10,000 C. $25,000 D. $50,000 - Correct Answer: D. $50,000 The Pair and Set clause in property insurance contracts notes that the loss to one item in a pair or set: A. Constitutes a total loss. B. Pays the difference between ACV of the property before and after the loss. C. Does not constitute a total loss. D. Does not constitute a partial loss. - Correct Answer: B. Pays the difference between ACV of the property before and after the loss Inland Marine insurance is commonly used to insure all of the following, except: A. Stamps B. Camera Equipment C. Jewelry D. Automobiles - Correct Answer: D. Automobiles The Inland Marine coverage form which provides open perils insurance on a world-wide basis for unscheduled personal property is a: A. Personal Effects Floater. B. Personal Articles Floater. C. Personal Property Floater. about fire and theft. What coverage would you recommend? A. Personal Articles Floater B. Personal Property Floater C. Personal Effects Floater D. Reduce the Homeowner deductible temporarily - Correct Answer: C. Personal Effects Floater An insured has her fur coat specifically covered under a Personal Articles Floater. It has been stored in a plastic garment bag in her closet during the good weather months. She decides to take the coat out and hang it outside to freshen up. The next door neighbor's dog sees the coat and attacks it and ruins the garment. The insurer will: A. Decline the claim because damage by domestic animals is excluded B. Decline the claim because damage by any animal is excluded C. Pay the claim because the loss is not excluded D. Deny the claim because of neglect on the part of the insured - Correct Answer: C. Pay the claim because the loss is not excluded The insureds are retired and do not own a home. They live and travel extensively in their motor home. To cover their personal items which of the following would you suggest they purchase? A. Personal Effects Floater B. Personal Articles Floater C. Personal Property Floater D. Both the Personal Property Floater and the Personal Articles Floater - Correct Answer: D. Both the Personal Property Floater and the Personal Articles Floater An insured has an extensive gun collection. Which of the following would not cover his collection in case of a flood? A. The Personal Articles Floater B. The Personal Effects Floater C. The Personal Property Floater D. None of the forms would cover flood - Correct Answer: C. The Personal Property Floater In Ocean Marine Insurance, which of the following is considered the most important implied warranty? A. Seaworthiness B. Condition of the cargo C. Legality D. All of the above - Correct Answer: A. Seaworthiness 2. In Ocean Marine Insurance, the term "average" means: A. The ACV of the ship B. The annual premium for the insurance policy C. Loss or damage D. That coverage is written on a named peril basis - Correct Answer: C. Loss or damage Protection and Indemnity Coverage contained in an Ocean Marine policy covers: A. Liability against injuries to seamen. B. Injury to stevedores, longshoreman and harbor workers C. Cargo, if lost or damaged through negligence D. All of the above - Correct Answer: D. All of the above Protection and Indemnity Coverage contained in an Ocean Marine policy covers: A. Guarantees the purpose of the voyage B. Loss of the shipper' fees. C. Marine legal liability for damages caused by the ship D. Damage to another vessel caused by collision - Correct Answer: C. Marine legal liability for damages caused by the ship Although Ocean Marine Hull and Cargo coverages are usually written on an open peril basis, they exclude losses caused by inherent vice. The term "inherent vice" means: A. The potential of property to self-destruct. B. Negligence by masters or members of the crew. C. Losses caused by the dishonesty of crewmembers. D. Any loss resulting from illegal activities. - Correct Answer: A. The potential of property to self-destruct. In Ocean Marine Insurance, what is the purpose of the IVEL clause? A. To pay for the loss of shipper's fees B. To require the insured to take all reasonable steps to protect the property from further loss. C. To provide excess hull and collision liability coverage D. To cover bulk shipments - Correct Answer: C. To provide excess hull and collision liability coverage What is meant by "break bulk" cargo? A. Cargo shipped in a tanker ship B. Cargo that is loosely packed such as ores C. Loose cargo such as cartons D. Containerization cargo - Correct Answer: C. Loose cargo such as cartons Which of the following is not essential in determining if a salvage award is to be made? A. Life-saving efforts B. The property involved must be in peril from some hazard C. The salvage service must be voluntary D. The effort must be successful - Correct Answer: A. Life-saving efforts What is the purpose of freight insurance? A. Covers loss to the cargo B. 48 hours. C. 72 hours. D. 96 hours. - Correct Answer: B. 48 hours. Under the PAP, the insurer will pay for transportation expenses up to which of the following amounts? A. $10 per day; $300 maximum. B. $20 per day; $500 maximum. C. $15 per day; $300 maximum. D. $20 per day; $600 maximum. - Correct Answer: D. $20 per day; $600 maximum. A car, traveling at high speed, skids at a turn and rolls over. The damage incurred would be covered under which of the following personal auto coverages? A. Collision B. Comprehensive C. Uninsured motorist D. P.D. liability - Correct Answer: A. Collision A stolen car is covered under which of the following personal auto coverages? A. Collision B. Comprehensive C. Uninsured motorist D. P.D. liability - Correct Answer: B. Comprehensive As a result of an auto accident, the insured sustains bodily injury worth $50,000. The responsible party carries auto liability insurance in the amount of $15/30/5. The insured's $100,000 underinsurance coverage would pay: A. $15,000 B. $35,000 C. $50,000 D. $100,000 - Correct Answer: B. $35,000 The purpose of "underinsured motors" coverage is to: A. Provide coverage for a "hit-and-run" driver. B. Pay for injuries sustained by insureds who have been injured when the at-fault driver carries auto limits less than the financial responsibility of the state in which the insured was injured. C. Provide coverage for the insured when the at-fault driver carries less coverage than that needed to pay for the insured's injuries. D. Provide coverage when the at-fault driver's insurance company denies the claim. - Correct Answer: C. Provide coverage for the insured when the at-fault driver carries less coverage than that needed to pay for the insured's injuries. An uninsured motor vehicle includes: A. An insured vehicle whose insurer denies coverage. B. An insured vehicle whose insurer becomes insolvent. C. A "hit and run" vehicle. D. All of the above. - Correct Answer: D. All of the above. The PAP Medical Payments cover: A. The insured as driver. B. A passenger. C. The insured as pedestrian. D. All of the above. - Correct Answer: D. All of the above. Under the PAP Medical Payments, the time limit for incurring medical expenses is: A. 6 months. B. 1 year. C. 2 years. D. 3 years. - Correct Answer: D. 3 years. The PAP liability coverage excludes all of the following, except: A. Intentional injury. B. Damage to insured property. C. Damage to property of others in the insured's care. D. Damage to property of others due to the insured's motor vehicle negligence. - Correct Answer: D. Damage to property of others due to the insured's motor vehicle negligence. All of the following are considered insureds under the PAP, except: A. Any person using the insured auto. B. A family member using the insured auto. C. Any organization the insured represents. D. Any person using an auto not owned by the insured. - Correct Answer: D. Any person using an auto not owned by the insured. An auto liability policy with split limits of 15/30/5 would pay what maximum amount in the event of a covered bodily injury loss to three people? A. $5,000 B. $15,000 C. $30,000 D. $45,000 - Correct Answer: C. $30,000 An auto liability policy with split limits of $10/20/5 would pay how much in the event of a $10,000 loss to the other person's damaged vehicle? A. $0 B. $5,000 C. $10,000 B. Named perils. C. Basic form. D. Comprehensive. - Correct Answer: B. Named perils. Under the Homeowner Policy, theft coverage does not cover theft of property: A. Committed by the insured. B. From a dwelling under construction. C. From the residence of the insured's tenant. D. None of the above are covered. - Correct Answer: D. None of the above are covered. An apartment dweller would be in the market for a: A. H0-2 B. H0-3 C. H0-4 D. H0-6 - Correct Answer: C. H0-4 The personal liability coverage for Mr. Jones' Homeowner Policy would cover Jones if: A. His dog bit his neighbor on the nose. B. His 14-year-old son burned down his house. C. He negligently bumped into his son while running to work. D. All of the above. - Correct Answer: A. His dog bit his neighbor on the nose. Coverage F of the Homeowner Policy applies to: A. The named insured. B. Resident relatives. C. Tenants of the insured. D. Social invitees. - Correct Answer: D. Social invitees. Coverage E of the Homeowner Policy involves: A. Premises liability. B. Personal activities. C. Acts of residence employees. D. All of the above. - Correct Answer: D. All of the above. Which of the following Homeowner forms provides the least amount of perils coverage? A. HO-5 B. HO-3 C. HO-2 D. HO-8 - Correct Answer: D. HO-8 Coverage D - Loss of Use provides which of the following percentages of Coverage A under the H0-2? A. 10 B. 30 C. 40 D. 50 - Correct Answer: B. 30 Under Coverage C of the Homeowner Policy, which of the following categories of property receive limited dollar coverage? A. Boats B. Trailers C. Furs D. All of the above. - Correct Answer: D. All of the above. The Homeowner Policy excludes which of the following types of personal property? A. The insured's dog. B. The insured's motorbike. C. Silverware scheduled under another policy. D. All of the above. - Correct Answer: D. All of the above. Under the H0-3, what percentage of the amount of insurance written for Coverage A applies to Coverage C for a one or two family dwelling? A. 10 B. 25 C. 50 D. 100 - Correct Answer: C. 50 Under Coverage B - Other Structures of the Homeowner Policy, which of the following structures are not covered? A. Structures used for business purposes. B. Structures rented to a non-tenant for other than a private garage. C. Attached garages. D. All of the above. - Correct Answer: D. All of the above. If the insurer cancels a Homeowner Policy, unearned premium is returned to the insured on what basis? A. Short rate. B. Pro rata. C. Discount. D. Experience. - Correct Answer: B. Pro rata. If the insured cancels a Homeowner Policy, unearned premium is returned to the insured on what basis? A. Short rate. B. Pro rata. C. Discount. D. Experience. - Correct Answer: A. Short rate. A. $200 B. $50 C. $250 D. $ 0 - Correct Answer: D. $ 0 The limit of liability of any property insurance contract in a given loss is the: A. ACV settlement. B. RC settlement. C. Policy limits. D. Market Value. - Correct Answer: C. Policy limits. Methods of risk management include: A. Transfer B. Sharing C. Avoidance D. All of the above. - Correct Answer: D. All of the above. An insured has suffered a fire loss to his or her dwelling. This insured is which party to the claim? A. Third party B. First party C. Second party D. Loss payee - Correct Answer: B. First party Mr. Jones, a pedestrian, was injured by Mr. Smith while driving his vehicle. Mr. Smith is insured by I Am Bogus Insurance Company. The insurance company would be which party to the claim? A. First party since it is the one that has to pay. B. The second party. C. The third party. D. Guarantor - Correct Answer: B. The second party. Which of the following is NOT included in the declarations section of an insurance contract? A. The identity of the named insured. B. The policy period. C. The covered perils. D. The policy premium. - Correct Answer: C. The covered perils. Which of the following is the section of an insurance contract that contains the provisions, rules of conduct, duties, and obligations of the parties? A. The Insuring Agreement. B. The Conditions. C. The Exclusions. D. The Limitations. - Correct Answer: B. The Conditions. A loss that is a direct consequence of a particular peril is called a(n): A. Indirect loss. B. Peril. C. Hazard. D. Direct loss. - Correct Answer: D. Direct loss Which of the following is a clause in property and casualty contracts which states that if policy or endorsement forms are broadened and no additional premium is required, then all existing similar policies or endorsements will be construed to include the broadened coverage? A. Liberalization B. Assignment C. Binder D. Coinsurance - Correct Answer: A. Liberalization Which of the following provides written evidence of coverage pending the issuance of a policy? A. Cause of Loss form B. Assignment C. Binder D. Blanket coverage - Correct Answer: C. Binder Which of the following is an example of a Loss Evaluation Method? A. Liberalization B. Cause of Loss form C. Stated amount D. Conditions - Correct Answer: C. Stated amount The cost of replacement minus depreciation is the definition of: A. Valued Policy B. Market Value C. Replacement Cost D. Actual Cash Value - Correct Answer: D. Actual Cash Value Which of the following is a method of requiring the insured to insure at least 80% of the value of the covered commercial property? A. Cause of Loss form B. Standard Mortgage clause C. Loss Payable clause D. Coinsurance clause - Correct Answer: D. Coinsurance clause Which of the following is a basis for insuring property that allows the insured to report the