Insurance Coverage and Exclusions for Commercial Buildings and Property, Exams of Insurance law

Download Insurance Coverage and Exclusions for Commercial Buildings and Property and more Exams Insurance law in PDF only on Docsity! Florida 6-20 All Lines Adjuster Test (276 Questions and Answers). A public adjuster represents the interest of: A. The insurer B. The Insured C. The employer D. The interest of the general public - Correct Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers C. The insurer. An adjuster's license will usually be revoked for which of the following reasons: A. Denying claims that are not covered. B. Failing to report a change of address. C. Having been convicted of a misdemeanor. D. Having been convicted of a felony. - Correct Answers D. Having been convicted of a felony. The insured has been involved in an automobile accident and has sustained bodily injuries and damage to the insured vehicle. The adjuster will usually: A. Withhold any payment until all the bills have been reviewed for payment. 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers D. None of these are exclusions. Earth movement is covered under which of the following Cause of Loss forms? A. None B. Basic C. Broad only D. Basic and Broad - Correct Answers A. None 4. Volcanic action is covered under which of the following Cause of Loss forms? A. None B. Basic C. Broad only D. Both Basic and Broad - Correct Answers D. Both Basic and Broad Sprinkler leakage is covered under which of the following Cause of Loss forms? A. Basic B. Broad C. Special D. All of the above - Correct Answers D. All of the above All of the following provide an additional amount of insurance under the Commercial Building and Personal Property form, except: A. Lottery Tickets B. Newly acquired property C. Property off-premises D. Outdoor Property - Correct Answers A. Lottery Tickets Which of the following forms cover flood and earthquake damage? A. Building and Personal Property form B. Special form C. Broad form D. None of the above - Correct Answers D. None of the above The Earthquake and Volcanic Eruption endorsement provides coverage: A. Against earthquake from volcanic eruption B. For commercial buildings and other covered property when used in conjunction with another Cause of Loss forms C. For damage caused by shocks that occur within 168-hours after policy expiration if these shocks began during the policy period D. All of the above - Correct Answers D. All of the above D. Covers only the extra expense in replacing the boiler - Correct Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 C. Changes in temperature, humidity, or contamination resulting from a power outage on or off the premises D. All of the above - Correct Answers D. All of the above With Commercial Property insurance, how would the insured receive replacement cost loss settlement on damage (as a result of a covered peril) to the Personal Property of Others left in the insured's care custody and control? A. Request a separate replacement cost endorsement on the Personal Property of Others coverage on the policy, B. Request the Replacement Cost endorsement on Business Personal Property C. Insure the Property of Others for at least 100% of the cost to replace it. D. Send in periodic reports to the insurer on the value of the property of others left in the insured's care custody and control - Correct Answers A. Request a separate replacement cost endorsement on the Personal Property of Others coverage on the policy, Which of the following statements regarding aircraft insurance is incorrect? A. The physical damage coverage is written with a flat deductible. B. Coverage for passengers can be excluded. C. Special coverage must be arranged for Air Meet liability coverage. D. Wear and tear is excluded. - Correct Answers A. The physical damage coverage is written with a flat deductible. Most aircraft hull policies are written on a: A. Replacement cost basis B. Market value C. Valued basis D. Actual cash value basis - Correct Answers C. Valued basis A deductible that is commonly used in aircraft physical damage insurance is usually: A. A percentage of the value B. A flat deductible C. A disappearing deductible D. A franchise deductible - Correct Answers A. A percentage of the value The hull physical damage deductible applies to which of the following losses? A. Pilferage B. Fire C. Collision D. Fire and explosion (except when caused by collision) - Correct Answers C. Collision The covered territory for aircraft coverage does not apply to which of the following? A. United States B. Canada C. Mexico D. Puerto Rico - Correct Answers D. Puerto Rico Which of the following describes admitted aircraft liability? A. Negligence is not a factor B. Must prove legal liability C. Based on a board review D. Based on a limited threshold of damage - Correct Answers A. Negligence is not a factor What coverage under aircraft coverage can cover the injuries to crew members as an optional coverage? A. Liability coverage 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 Answers 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 Answers 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 property? A. A business owners policy B. A commercial property policy C. A bailee policy D. A trip transit policy - Correct Answers C. A bailee policy Global Electronics has a large piece of equipment that needs to be transported from their plant to their customer. They are using a rented U-Haul truck and one of their drivers is to make the delivery. What type of policy would be needed to cover this one time trip exposure? A. A trip transit policy B. An annual trip policy C. Motor truck cargo D. Bailee policy - Correct Answers A. A trip transit policy The Equipment Dealers Form covers all of the following types of property, except: A. A farm tractor B. A Snow removal truck C. A customer's bulldozer in the insured's repair shop D. An inventory of hats and jackets - Correct Answers B. A Snow removal truck Which of the following statements regarding the Equipment Dealers Form is incorrect? A. Coverage is on an "open peril basis" B. Coverage applies on a world wide basis C. Contractor's equipment can be covered D. Covers similar property owned by others and on the insured premises - Correct Answers B. Coverage applies on a world wide basis In crime insurance, all of the following situations would be considered theft, except: A. A store's year-end inventory coming up short by 5%. B. Merchandise being stolen with evidence of forced entry. C. A clerk witnessing a customer shoplifting merchandise. D. A clerk being robbed at gunpoint. - Correct Answers A. A store's year- end inventory coming up short by 5%. A prospective insured wishes to protect her firm against criminals taking money from a messenger going from the firm to a bank. In this situation, the prospect should purchase coverage for: A. Fidelity B. Robbery C. Assault D. Burglary - Correct Answers B. Robbery Under a Fidelity Bond, which of the following parties receives protection? A. A subcontractor B. An employee C. An employer D. A creditor - Correct Answers C. An employer Which of the following losses would be covered under a Robbery and Safe Burglary coverage? A. Valuables kept in a locked safe are destroyed by fire. B. Cash disappears from a locked safe, with no explanation. C. Jewelry is stolen from a locked safe that shows no signs of forced entry. D. Rare manuscripts are stolen from a locked safe that shows signs of forced entry. - Correct Answers D. Rare manuscripts are stolen from a locked safe that shows signs of forced entry. Which of the following losses would be covered under a crime policy's "Inside the Premises 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 Answers 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 Answers 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 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. C. A casino suffers a theft of slot machine tokens. D. Cash that is taken by employees. - Correct Answers D. Cash that is taken by employees. In crime insurance terminology, an officer of the company having care and custody of insured property outside the insured premises is known as a: A. Scheduled executive B. Custodian C. Messenger D. Insured property executive - Correct Answers C. Messenger In crime insurance terminology, a salesperson having possession of the insured's property on-premises is known as a: A. Custodian B. Insured C. Messenger D. Watchperson - Correct Answers A. Custodian In Commercial Crime coverage, the "Inside the Premises Theft of Money and Securities" insuring agreement would cover loss of all the following, except: A. Currency B. Jewelry C. Tokens and tickets D. Checks and drafts - Correct Answers B. Jewelry Which of the following are parties to a contract bond? I. Principal II. Surety III. Obligee IV. Employee A. I, II, and III only B. I, II, III, and IV C. I and II only D. I and III only - Correct Answers A. I, II, and III only The Equipment Breakdown policy is designed to cover equipment ______ the insured. A. Owned by B. Leased to C. Operated by D. All of the above - Correct Answers D. All of the above If an initial "accident" to a boiler causes three other boilers to have accidents, under the insurance policy, all four events will be considered: A. One event. B. Two events. C. Three events. D. Four events. - Correct Answers A. One event. An "accident" under an Equipment Breakdown policy includes: A. Sudden breakdown of an object. B. Gradual breakdown of an object. C. Leakage of a valve. D. All of the above. - Correct Answers A. Sudden breakdown of an object. The maximum amount of coverage provided for spoilage to covered property caused by contamination under an Equipment Breakdown policy is: A. $5,000. B. $10,000. C. $25,000. D. The policy limits. - Correct Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 policy. An insured is covered under a BOP policy and has a piece of equipment insured separately under a floater policy. In case of a loss, what coverage will apply under the BOP policy? A. It policy will pay its fair percentage of the loss. B. The BOP will be excess over the floater policy. C. The loss is completely covered under the BOP. D. The loss is not covered under the BOP because it is separately insured. - Correct Answers B. The BOP will be excess over the floater policy. Under the BOP, which type of business would not normally be eligible for coverage? A. A shoe store B. A hair salon C. A small manufacturer D. A doctor's office - Correct Answers C. A small manufacturer The insured is covered under a BOP and sustains a direct loss to his building and contents. What is the period of time the policy provides loss of income and extra expense coverage? A. The policy pays for up to 12 months B. The policy pays for up to 6 months C. The policy pays for up to 9 months D. The policy pays for up to 14 months - Correct Answers A. The policy pays for up to 12 months The BOP contains liability coverage for the insured's business. On what basis is the coverage written? A. Claims made form B. Occurrence form C. Modified claims made form D. No aggregate limit basis - Correct Answers B. Occurrence form The insured carries the "open peril" BOP policy. On a weekend thieves enter the building and steal all of the merchandise in the store. What coverages would apply? A. The loss caused by burglary would not be covered. B. The loss by burglary and loss of income would apply. C. The loss of income would not apply. D. The entire loss would be denied by the insurer. - Correct Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 The standard deductible for the Regular Program under a Flood Insurance policy is: A. $1,000 B. $250 C. $750 D. $500 - Correct Answers A. $1,000 Which of the following is not covered under the Flood Insurance policy? A. Livestock B. Motor Vehicles C. Outdoor Swimming Pools D. All of the above - Correct Answers D. All of the above What forms the basic eligibility requirements for all of the residual markets in Florida? A. Location B. Construction of the risk C. Fire protection of the risk D. Risk is unable to find a market for the required coverage. - Correct Answers D. Risk is unable to find a market for the required coverage. Which of the following must occur before a risk is eligible for the Florida Workers Compensation Joint Underwriting Association? A. The risk has suffered heavy losses B. The cost of the current rates are prohibitive C. The employer has been declined by at least two carriers D. None of the above - Correct Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Under the Florida automobile no-fault law, there are certain rights that are retained where the claimant can seek relief regardless the threshold. These include which of the following? A. Medical expenses B. Doctor visits C. Loss of income D. Pain and suffering - Correct Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers C. II only. An incorporated insurance company with its capital divided into shares is the definition of: A. A Mutual Company. B. A Domestic Company. C. A Stock Company. D. A Foreign Company. - Correct Answers C. A Stock Company. The Insurance Department has been advised that an agent is guilty of an insurance code violation. The Commissioner will: D. Health and life insurance policies. - Correct Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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. D. Personal Transportation Floater. - Correct Answers C. Personal Property Floater. The Inland Marine coverage form which provides open peril insurance for specific classes of personal property on an itemized and scheduled basis is called a: A. Personal Articles Floater. B. Personal Property Floater. C. Personal Effects Floater. D. Personal Transportation Floater. - Correct Answers A. Personal Articles Floater. The Inland Marine coverage form which covers clothing, cameras and other portable property worn or carried by tourists and travelers is a: A. Personal Effects Floater. B. Personal Articles Floater. C. Camera and Musical Instrument floater. D. Theatrical Property Floater. - Correct Answers A. Personal Effects Floater. Sue Stokers owns an expensive collection of jewelry. She is worried about the fluctuating values of gold, silver and diamonds. She has the collection appraised. Her 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers A. Life-saving efforts What is the purpose of freight insurance? A. Covers loss to the cargo B. Covers shipper fees C. Covers the insurable interest of the shipper due to jettison of the cargo D. Covers the cargo until it reaches the warehouse - Correct Answers B. Covers shipper fees In case of a loss, how many days' notice does the insured have after notification of a claim to submit the claim to the underwriters of the Ocean Marine coverage? A. 90 days B. 60 days C. 180 days D. 30 days - Correct Answers C. 180 days The insured is hit in the rear while stopped at a traffic light. The insured's company pays for his repairs then seeks reimbursement from the responsible party. This is described as: A. Subrogation. B. Reimbursement. C. Arbitration. D. Appeal. - Correct Answers A. Subrogation. 2. Damage to a windshield by a bird would be covered under: A. Collision B. Comprehensive C. Liability D. All of the above. - Correct Answers B. Comprehensive The Personal Auto Policy provides coverage in all of the following locations, except: A. Hawaii B. Mexico C. Canada D. Alaska - Correct Answers B. Mexico that needed to pay for the insured's injuries. D. Provide coverage when the at-fault driver's insurance company denies the claim. - Correct Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 D. $20,000 - Correct Answers B. $5,000 An auto liability policy with a single limit of $30,000 would pay which of the following amounts in the event of a $10,000 loss to the insured vehicle and a $25,000 bodily injury settlement to a third party? A. $10,000 B. $25,000 C. $30,000 D. $35,000 - Correct Answers B. $25,000 Under the PAP, a covered auto includes all of the following, except: A. Temporary substitute B. Non-owned auto C. Private passenger auto listed in the Declarations D. An owned trailer - Correct Answers B. Non-owned auto Leased vehicles can be covered under the PAP if they are leased for a minimum of: A. 30 consecutive days. B. 60 consecutive days. C. 6 consecutive months. D. 1 year. - Correct Answers C. 6 consecutive months. A deer crashes into the side of the insured's car. Which of the following PAP coverages would cover this damage? A. Property damage liability. B. Collision. C. Uninsured motorist property damage. D. Comprehensive. - Correct Answers D. Comprehensive. Which of the following would be covered under a PAP? A. A truck the insured rented that is over 10,000 gross vehicle weight. B. A three wheeled vehicle used in a medical emergency. C. A motor cycle. D. A large rented motor home. - Correct Answers B. A three wheeled vehicle used in a medical emergency. An uninsured motorist vehicle under the Personal Auto Policy includes all of the following, except: A. Hit and run vehicle whose driver cannot be identified. B. A vehicle newly acquired by the named insured. C. A vehicle insured by the company that is insolvent. D. A vehicle to which no liability bond or insurance policy provides coverage at the time of the accident. - Correct Answers B. A vehicle newly acquired by the named insured. What is the limit for damage to a non-owned trailer under the Personal Auto Policy? A. $500 B. $1,000 C. $1,500 D. $2,000 - Correct Answers C. $1,500 All of the following are covered under Coverage A of a Homeowner Policy, except: A. Attached garage. B. Construction materials used in building an addition to the dwelling. C. Detached garage. D. A central air conditioning system. - Correct Answers C. Detached garage. 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 Answers 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 Answers 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 Answers A. Short rate. All of the following are exclusions under the Homeowner Policy, except: A. Intentional loss. B. Flood. C. Earth movement. D. Volcanic eruption. - Correct Answers D. Volcanic eruption. A Homeowner Policy may be cancelled by the insured: A. For any reason. B. At any time. C. Both A and B. D. Neither A nor B. - Correct Answers C. Both A and B. Homeowner Medical Payments Coverage does not apply to bodily injury to which of the following? A. The insured's seven-year old son who fell down the front stairs. B. An appliance repairman working on the insured premises. C. An insured boarder who trips in her apartment over a rug. D. All of the above. - Correct Answers D. All of the above. Watercraft excluded from coverage under Section II of the Homeowner Policy includes all of the following, except: A. Inboard owned by the insured. B. Outboard owned by the insured of 25 horsepower. C. 30-foot sailboat rented to the insured. D. Inboard-outboard of 80 HP owned by the insured. - Correct Answers B. Outboard owned by the insured of 25 horsepower Under the Damage to Property of Others coverage of a Homeowner Policy, section II, property damage caused intentionally by an insured is excluded if the insured is: A. 13 years old. B. 18 years old. C. 21 years old. D. Any of the above. - Correct Answers D. Any of the above. Under Section II - Additional Coverages of the Homeowner Policy, the insurer agrees to pay: A. The cost of a legal defense. B. Premiums on bonds connected with liability suits. C. Investigation cost. D. All of the above. - Correct Answers D. All of the above. A condominium owner-occupant would be in the market for a: A. HO-2. B. HO-3. C. HO-4. D. HO-6. - Correct Answers D. HO-6. A Homeowner Policy can be purchased by: A. A person buying a home under the installment plan. B. An individual who owns a home under the course of construction. C. The owner of a seasonal dwelling who is insured under a Homeowner Policy for her primary dwelling. D. All of the above. - Correct Answers D. All of the above. A homeowner has a fire that totally destroys a $200 typewriter before the fire is extinguished. If the fire coverage on contents contains a $250 deductible, the insured will receive: A. $200 B. $50 C. $250 D. $ 0 - Correct Answers 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 Answers C. Policy limits. Methods of risk management include: A. Transfer B. Sharing C. Avoidance D. All of the above. - Correct Answers 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 Answers 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? C. Proximate cause. D. Damage. - Correct Answers B. There is a breach of protection. In liability insurance, policy limits that apply one limit to each person injured, another for bodily injury claims of all persons injured in a single accident, and a separate limit for all property damage arising out of a single accident is: A. Aggregate limits B. Split limits C. Single limit D. Total limits - Correct Answers B. Split limits An insurance contract that is contingent on an uncertain event is referred to as? A. Executory B. Aleatory C. Contract of adhesion D. Conditional - Correct Answers B. Aleatory Mr. Jones is involved in an at-fault accident. The other party was also at fault. The method to determine damages due each party based on a percentage of negligence is known as: A. Contributory negligence B. Intervening cause C. Comparative negligence D. Assumption of risk - Correct Answers C. Comparative negligence The insured owns a filling station and an employee causes bodily injury to a third party. The insured is held legally liable for the employee's acts. This is called: A. Contributory negligence B. Joint and several C. Contingent liability D. Vicarious liability - Correct Answers C. Contingent liability One characteristic of an insurance contract is that both parties must perform certain acts to make the contract legally enforceable. This is called: A. Personal aspect B. Aleatory C. Executory D. Utmost good faith - Correct Answers D. Utmost good faith A church has hired a painting contractor to stain and varnish the woodwork in the building. He leaves the rags and brushes used to apply the painting materials in a small storage area. This is an example of: A. A peril B. A hazard C. Assumption of risk D. Direct loss - Correct Answers B. A hazard The insurance company is the author of the insurance policy. The insured buys what is offered by the company and accepts it as is. This is called: A. Executory B. Conditional C. Contract of adhesion D. Aleatory - Correct Answers C. Contract of adhesion