Insurance Policy Coverages: Claims, Retention, Loss Sustained, and Personal Liability, Exams of Insurance Economics

Download Insurance Policy Coverages: Claims, Retention, Loss Sustained, and Personal Liability and more Exams Insurance Economics in PDF only on Docsity! LOUISIANA PROPERTY AND CASUALTY INSURANCE EXAM ACTUAL EXAM 2024 | ALL QUESTIONS AND CORRECT ANSWERS WITH RATIONALES | ALREADY GRADED A+ | LATEST EDITION Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? a) Insuring agreement b) Additional coverage c) Exclusions d) Declarations ------CORRECT ANSWER--------------b) Additional coverage The additional coverage portion of a policy provides an additional amount of coverage for specific loss expense, at no additional premium. Which of the following would not be a violation of Louisiana insurance regulations? a) Producer B charges his clients, in addition to the premium, a consulting fee. b) Producer C uses her license to write uncontrolled business only. c) Producer D collects premiums due on policies and deposits the funds in his own personal account. d) Producer A uses her license to write only insurance for herself and her immediate family. ------CORRECT ANSWER--------------b) Producer C uses her license to write uncontrolled business only. The purpose of a license is to primarily write non-controlled business. A claim is considered to have been made a) When notice is received and recorded by the insurer. b) When notice is received and recorded by any insured or the insurer, whichever comes first. c) When received in writing or telephonically by the insurer. d) When notice is received by any insured. ------CORRECT ANSWER--------------b) When notice is received and recorded by any insured or the insurer, whichever comes first. This is a standard claims-made condition. When Commercial Crime Coverage Form M - Safe Depository Liability is written, what must be attached to the policy? a) The Robbery and Safe Burglary Provisions b) The General Provisions c) The Safe Depository General Provisions d) The Safe Depository Direct Loss Provisions ------CORRECT ANSWER--------------c) The Safe Depository General Provisions When this coverage is written, the Safe Depository General Provisions must be attached to the policy instead of the general provisions. Which of the following is NOT a goal of risk retention? a) To increase control of claim reserving and claims settlements b) To fund losses that cannot be insured c) To minimize the insured's level of liability in the event of loss d) To reduce expenses and improve cash flow ------CORRECT ANSWER--------------c) To minimize the insured's level of liability in the event of loss Retention usually results from three basic desires of the insured: to reduce expenses and improve cash flow, to increase control of claim reserving and claims settlements, and to fund losses that cannot be insured. Workers compensation statutes require employers to meet capital reserves requirements sufficient to pay any claims that might arise. Employers can meet such obligations through all of the following EXCEPT a) Self-insurance plans. b) Assigned risk plans. c) Competitive state funds. d) Second injury funds programs. ------CORRECT ANSWER--------------d) Second injury funds programs. b) $75,000 c) $50,000 d) $25,000 ------CORRECT ANSWER--------------c) $50,000 Underinsured motorist coverage acts as excess over the at-fault motorist's coverage. It will pay the difference between the insured's UIM limits and the at- fault driver's bodily injury limits (in this scenario, $100,000 of the insured's coverage minus $50,000 of the other driver's). Because of the per person limits of Driver A's underinsured motorist coverage, the policy will pay the amount necessary to bring payment up to the per person limit. The policy will not pay more than the limits of liability. Because an insured owns a lot of expensive jewelry, her insurance agent has advised her to purchase a scheduled personal property endorsement. If the insured adds this endorsement to her homeowners policy, which of the following statements would be correct? a) The endorsement becomes primary coverage and the HO contract is secondary. b) Coverage C limits will no longer apply to the jewelry insured by the endorsement. c) The amount of coverage will be doubled. d) The endorsement becomes excess coverage. ------CORRECT ANSWER--------------b) Coverage C limits will no longer apply to the jewelry insured by the endorsement. When items are scheduled, they are excluded from Coverage C as insured items, and are covered only under the scheduled personal property endorsement. Which of the following terms refers to a person's ability to do some work or the need to do alternative work? a) Temporary total disability b) Temporary partial disability c) Permanent partial disability d) Permanent total disability ------CORRECT ANSWER--------------b) Temporary partial disability The insuring agreement is the part of the policy structure that describes the insured perils and the method of indemnification. Which of the following statements is NOT true regarding a personal umbrella liability policy? a) It provides excess liability coverage over underlying personal liability. b) It provides errors and omissions coverage for an agency. c) It may cover certain exposures not provided under the primary layer. d) It may require the payment of a self-insured retention. ------CORRECT ANSWER------ --------b) It provides errors and omissions coverage for an agency. Personal umbrella policies cover the personal exposure of the insured. Errors and omissions coverage is provided only in a professional liability policy. A mortgage company is named as a loss payee on the insured's homeowners policy, under the standard mortgage clause. If the insured suffers a loss due to a fire, which of the following is true? a) The entire loss is payable to the insured. b) The loss is payable to the insured and the mortgagee. c) The mortgagee should submit a claim to its insurer, and the insured should submit a claim to the HO policy. d) The entire loss is payable to the mortgagee. ------CORRECT ANSWER--------------b) The loss is payable to the insured and the mortgagee. Loss is payable to the insured and mortgagee to protect the mortgage company's interest. This prevents the insured from cashing the check and not completing repairs. Under which type of coverage does the insurer agree to pay for bodily injury or property damage liability which the insured has agreed to assume under a written contractual agreement? a) Bodily injury liability policy b) Contractual liability policy c) Personal liability policy d) Property damage liability policy ------CORRECT ANSWER--------------b) Contractual liability policy With this coverage, the insurer agrees to pay for bodily injury or property damage liability which the insured has agreed to assume under a written contractual agreement. In a personal auto policy, the medical payments coverage is similar to a) Accident insurance, because it pays medical expenses regardless of fault. b) Accident insurance, because it has the same limits. c) Bodily injury coverage, because it pays the insured's doctor bills. d) Bodily injury coverage, because it provides legal protection if the insured causes injuries to others. ------CORRECT ANSWER--------------a) Accident insurance, because it pays medical expenses regardless of fault. Medical payments will pay for accidental bodily injury of an insured, regardless of fault or auto. It will pay medical expenses of others occupying the insured auto. The designation symbols used in commercial auto policies can be found in which policy section? a) Conditions b) Covered Auto c) Liability Coverage d) Definitions ------CORRECT ANSWER--------------b) Covered Auto Section I - Covered Auto of a commercial auto policy explains the designation symbols used in that coverage. Which of the following liability exposures is most likely for a small specialty clothing retail boutique? a) Operations liability exposure b) Product liability exposure c) Completed operations liability exposure d) Premises liability exposure ------CORRECT ANSWER--------------d) Premises liability exposure The premises liability exposure exists when there is use of the premises. Operations liability exposure relates to activities in addition to use. Product liability exposure is the possibility that the public might be injured by the product. Completed operations liability refers to liability for work already performed or completed. For a boutique retail store, the only possible liability would arise from customer injury while on the premises. All of the following are true of Coverage B - Other Structures EXCEPT a) It must be added by endorsement to a homeowners policy. b) Define insurance as interstate commerce. c) Allow consumers access to credit and private consumer reports. d) Allow insurance companies access to medical information for underwriting purposes. ------CORRECT ANSWER--------------a) Protect private customer information filed with a financial institution. The Gramm-Leach-Bliley Act was passed to protect private customer information that is filed with a financial institution. Customers must be given two disclosure notices (one at the onset of business and one before information is disclosed), as well as a yearly updated disclosure notice. An insured carries a property policy on her home in the amount of $250,000. A bank is shown as the mortgagor in the policy. Last month the insured made her final mortgage payment, but did not remove the bank from the policy. In the event of a covered loss to her home, how much will the bank receive? a) The standard minimum of 10% that is paid to lenders b) All of the payment would be made to the mortgagor shown in the policy. c) Nothing d) Up to the amount of debt that the insured has with the bank ------CORRECT ANSWER--------------c) Nothing Because the bank does not have a financial interest in the house at the time of loss, they will receive nothing. A building insured with commercial property insurance has been vacant 90 days. Which of the following is NOT true? a) Payment for unnamed perils is reduced by 15%. b) Payment for unnamed perils is reduced by 25%. c) The insured has no coverage for losses caused by theft. d) The insured has no coverage for losses caused by glass breakage. ------CORRECT ANSWER--------------b) Payment for unnamed perils is reduced by 25%. If the building has been vacant for more than 60 consecutive days before the loss, the insurer will not pay for damage caused by vandalism, sprinkler leakage, glass breakage, water damage, theft, or attempted theft. If the loss is caused by any other peril, the insurer will reduce the amount they would have otherwise paid by 15%. Personal property coverage under a homeowners policy would cover a) Property moved to a newly acquired residence after 60 days. b) A pet that the insured is temporarily keeping for a friend. c) The insured's camera if it is stolen while the insured is on vacation. d) A neighbor's fence if damaged by the insured. ------CORRECT ANSWER--------------c) The insured's camera if it is stolen while the insured is on vacation. Coverage C is provided on a worldwide basis. Coverage for medical payments under a personal auto policy applies to expenses following a covered accident that are incurred and services rendered within what maximum time period? a) 90 days b) 1 year c) 3 years d) 5 years ------CORRECT ANSWER--------------c) 3 years A coverage requirement in the policy states that medical expenses must be incurred within three years of the accident. The services also must be rendered within that time period. The Residential Condominium Building Association Policy (RCBAP) is used for residential condominium building associations to cover the entire building under one policy. Which of the following statements about RCBAP is true? a) It does not protect the individual owner from loss to personal property owned exclusively by the unit owner. b) It provides limited coverage for personal property owned exclusively by the unit owner. c) It is designed to provide exclusive coverage for the individual owner and provides not coverage for the unit owner. d) This policy form is not approved for use in the states of New York or New Jersey. ----- -CORRECT ANSWER--------------a) It does not protect the individual owner from loss to personal property owned exclusively by the unit owner. The Residential Condominium Building Association Policy (RCBAP) is used for residential condominium building associations to cover the entire building under one policy, all units, improvements within the units and personal property owned in common is covered with a contents policy. The RCBAP does not protect the individual owner from loss to personal property owned exclusively by the unit owner. With respect to commercial auto policies, the garage coverage form provides liability protection for all of the following EXCEPT a) The insured's business autos. b) The insured's business products and work performed. c) The insured's business income losses due to personal injury. d) The insured's business premises. ------CORRECT ANSWER--------------c) The insured's business income losses due to personal injury. The garage coverage form does NOT cover personal injury and loss of wages from those injuries. Such coverage would be provided by a commercial general liability (CGL) policy. All of the following are unfair claims settlement practices EXCEPT a) Failing to adopt and implement reasonable standards for settling claims. b) Failing to acknowledge pertinent communication pertaining to a claim. c) Suggesting negotiations in settling the claim. d) Refusing to pay claims without conducting a reasonable investigation. ------ CORRECT ANSWER--------------c) Suggesting negotiations in settling the claim. When settling claims, negotiation can come into play. Which of the following statements is true concerning underinsured motorist coverage under a personal auto policy? a) Coverage applies only to the extent that the underinsured motorist limits exceed the bodily injury limits carried by the operator of the other vehicle. b) It will pay up to the limits of insurance for any loss which involves an underinsured driver. c) Limits must equal the bodily injury limits of the policy. d) Limits may differ from the limits for uninsured motorist coverage. ------CORRECT ANSWER--------------a) Coverage applies only to the extent that the underinsured motorist limits exceed the bodily injury limits carried by the operator of the other vehicle. Underinsured motorist coverage will act as excess over the at fault motorist's bodily injury coverage. B. Putting the client's best interests before their own C. Making enough commissions to cover personal expenses D. Setting and meeting monthly production goals ------CORRECT ANSWER-------------- B. Putting the client's best interests before their own The needs of the client(s) are the priority to a highly ethical agent. Which of the following is NOT a goal of risk retention? A. To minimize the insured's level of liability in the event of loss B. To reduce expenses and improve cash flow C. To increase control of claim reserving and claims settlements D. To fund losses that cannot be insured ------CORRECT ANSWER--------------A. To minimize the insured's level of liability in the event of loss Retention usually results from three basic desires of the insured: to reduce expenses and improve cash flow, to increase control of claim reserving and claims settlements, and to fund losses that cannot be insured. Pertaining to insurance, what is the definition of a fiduciary responsibility? A. Helping insureds to file claims B. Performing reviews of insured's coverage C. Offering additional coverage to clients D. Promptly forwarding premiums to the insurance company ------CORRECT ANSWER- -------------D. Promptly forwarding premiums to the insurance company Fiduciary refers to a position of trust. When an agent is handling the premiums that belong to an insurance company, they are acting in a fiduciary capacity. Who might receive dividends from a mutual insurer? A. Stockholders B. Agents C. Policyholders D. Subscribers ------CORRECT ANSWER--------------C. Policyholders A mutual insurer has no stock, and is owned by the policyholders. Since they may receive a dividend (not guaranteed), such policies are known as participating policies. Dividends received by policyholders of a mutual insurer are not taxable. What documentation grants express authority to an agent? A. Fiduciary contract B. State provisions C. Agent's contract with the principal D. Agent's insurance license ------CORRECT ANSWER--------------C. Agent's contract with the principal The principal grants authority to an agent through the agent's contract. If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? A. Indemnity B. Reasonable expectations C. Cease and desist D. Nonforfeiture ------CORRECT ANSWER--------------B. Reasonable expectations If, because of advertising or sales literature or statements by an agent, an insured could reasonably expect the coverage, the courts have held that the insurer must provide that coverage. Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? A. Reduction B. Transfer C. Avoidance D. Retention ------CORRECT ANSWER--------------A. Reduction The insured's change in lifestyle and habits would likely reduce the chances of health problems. Which of the following does the term proximate cause refer to? A. Duty of the defendant to act B. Reason for filing a lawsuit C. Negligence that leads to an injury D. Injury that leads to monetary compensation ------CORRECT ANSWER--------------C. Negligence that leads to an injury Proximate cause is the reasonably foreseeable act or event that results in an injury or damage. Negligence may often be the proximate cause of the damage; without it, the accident would not have happened. This is also called direct liability. The policy conditions define A. The amount of coverage. B. How parties to the contract must act following a loss. C. The basic underwriting information. D. The excluded perils. ------CORRECT ANSWER--------------B. How parties to the contract must act following a loss. Conditions is an essential part of a policy structure. Conditions define what each party to the policy is required to do contractually in the event of a loss. All of the following are considered parts of the policy structure EXCEPT A. Conditions. B. Provisions. C. Exclusions. D. Insuring clause. ------CORRECT ANSWER--------------B. Provisions. Provisions is a broad term used to refer to the sections or clauses of an insurance policy that communicate the policy's benefits, conditions, etc. The essential parts of the policy are declarations, insuring clause, conditions and exclusions. What are the two types of compensatory damages? A. Special and general B. Pure and speculative C. Tort and general D. Normal and punitive ------CORRECT ANSWER--------------A. Special and general Flood and earthquake are both excluded perils in all property policies. However, coverage for both or either one usually can be purchased separately for an additional premium (by endorsement). Supplementary payments on a CGL provide all of the following EXCEPT (Choose from the following options) 1. Pre-judgment and post-judgment interest. 2. The cost of bonds to release attachment. 3. Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds. 4. $100 in gasoline costs by the insured driving a witness to and from court. ------ CORRECT ANSWER--------------3. Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds. Under the business auto coverage form, mobile equipment is covered for liability insurance (Choose from the following options) 1. When listed on the declarations. 2. When coverage is written as Symbol 1. 3. When being carried or towed by a covered auto. 4. On an excess basis. ------CORRECT ANSWER--------------3. When being carried or towed by a covered auto. In which of the following situations would off-premises coverage in a broad theft endorsement apply? (Choose from the following options) 1. The insured's live-in maid's quarters are burglarized. 2. The insured's jewelry is stolen from her vacation home after she returns home. 3. The insured's vacuum cleaner is stolen from her apartment. 4. The insured's camera is stolen from his vacation home while he is there. ------ CORRECT ANSWER--------------4. The insured's camera is stolen from his vacation home while he is there Which of the following coverages will respond if a claim is made or a suit is brought against an insured for damages due to bodily injury or property damage caused by an occurrence to which the coverage applies? (Choose from the following options) 1. Coverage C - Personal Property 2. Coverage D - Loss of Use 3. Coverage E - Personal Liability 4. Coverage F - Medical Payments to Others ------CORRECT ANSWER--------------3. Coverage E - Personal Liability Unless the insured has rejected Uninsured Motorist Coverage, the insurer must provide coverage for damage to the insured auto caused by an uninsured auto in the amount of (Choose from the following options) 1. The actual cash value of the insured auto or $10,000, whichever is less. 2. A stated amount determined by the insured. 3. The replacement cost of the insured auto. 4. The market value of the insured auto. ------CORRECT ANSWER--------------1. The actual cash value of the insured auto or $10,000, whichever is less. All of the following statements concerning coinsurance are true EXCEPT a) It is used to help adequacy and equity in rates. b) The insured agrees to maintain insurance equal to some specified percentage of the value of the property. c) If the insurance carried is less than required, the insurance may not cover the whole loss. d) The coinsurance formula will also be applied to total losses. ------CORRECT ANSWER--------------d) The coinsurance formula will also be applied to total losses. In the event of a total loss, the coinsurance clause does not operate and the face amount of the policy is paid. The penalty to an insurance producer who issues a binder for an insurer for whom he or she does not hold an appointment is (Choose from the following options) 1. Imprisonment in the state penitentiary. 2. Imprisonment at Penn State. 3. Suspension or revocation of license. 4. Imprisonment in the county jail. ------CORRECT ANSWER--------------3. Suspension or revocation of license. A couple bought tickets to a college hockey tournament. At the game, a stray puck flies into the stands and hits the wife in the face, breaking her nose. Which legal defense may bar her from recovering damages for the injury she received at the hockey game? (Choose from the following options) 1. Comparative negligence 2. Contributory negligence 3. Defense against negligence 4. Assumption of risk ------CORRECT ANSWER--------------4. Assumption of risk While an insured's covered auto is in the repair shop following damage caused by a collision, the insured would have coverage for which of the following vehicles under a personal auto policy? (Choose from the following options) 1. Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair 2. Any vehicle used by the insured without the reasonable belief that the insured is entitled to use such vehicle 3. Any auto furnished for the insured's regular use, but not named on the policy 4. Any vehicle while located inside a racing facility for the purpose of racing ------ CORRECT ANSWER--------------1. Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair An insured has a personal auto policy with both comprehensive (other-than-collision) and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20 per day, how much will his policy pay? (Choose from the following options) 1. $45 A deli owner has a businessowners liability policy. When a customer slipped and hurt herself at the deli, the liability policy paid for medical expenses. The customer, however, is now suing the business owner because she claims there was no caution sign warning her that the floor was wet. What is the insurer obligated to do? (Choose from the following options) 1. Automatically renew the owner's policy, but they have nothing to do with the lawsuit 2. Provide legal aid to the elderly woman suing the policyowner 3. Nothing, they have paid the claim and their responsibility ends there. 4. Pay to defend the policyowner in the lawsuit because liability coverage contains a duty-to-defend provision ------CORRECT ANSWER--------------4. Pay to defend the policyowner in the lawsuit because liability coverage contains a duty-to-defend provision Which of the following best describes the aleatory nature of an insurance contract? (Choose from the following options) 1. Ambiguities are interpreted in favor of the insured 2. Policies are submitted to the insurer on a take-it-or-leave-it basis 3. Exchange of unequal values 4. Only one of the parties being legally bound by the contract ------CORRECT ANSWER--------------3. Exchange of unequal values Under Crime Coverage Form I - Lessees of Safe Deposit Boxes, securities are only covered in the event of a) Robbery b) Vandalism c) Burglary d) Theft ------CORRECT ANSWER--------------d) Theft Securities are only covered for theft, disappearance or destruction What is surplus lines insurance? a) Any insurance on items worth more than $25,000 b) Insurance in excess of a standard policy's coverage c) Insurance placed with an unauthorized insurer d) Additional insurance placed on itemized risks ------CORRECT ANSWER--------------c) Insurance placed with an unauthorized insurer Insurance obtained from or placed with an unauthorized insurer is surplus lines insurance. If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? (Choose from the following options) 1. 5 days 2. 7 days 3. 10 days 4. 3 days ------CORRECT ANSWER--------------1. 5 days Extended nonowned coverage endorsement in a PAP broadens which of the following coverages? (Choose from the following options) 1. Uninsured motorists 2. Physical damage 3. Liability and medical payments 4. Duties after an accident or loss ------CORRECT ANSWER--------------3. Liability and medical payments Which of the following businesses would be eligible for a businessowners policy? a) Family Fun Time Amusement Park b) Joe's Bar And Grill c) Hometown Bank & Trust d) Hill & Morton Funeral Home ------CORRECT ANSWER--------------d) Hill & Morton Funeral Home Specifically excluded from eligibility on a businessowners policy (BOP) are bars and grills, financial institutions, and amusement places. In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for a) Comprehensive (other-than-collision) coverage. b) Collision coverage. c) Uninsured motorist coverage. d) Towing coverage. ------CORRECT ANSWER--------------c) Uninsured motorist coverage. Trailers, while being towed by an insured auto, are covered automatically for bodily injury (BI), property damage (PD) and uninsured motorist (U/M) under Part A of a personal auto policy. While an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of the insured's auto policy would pay for the damage to the store? (Choose from the following options) 1. Property damage liability 2. Collision coverage 3. Other-than-collision coverage 4. This loss would not be covered. ------CORRECT ANSWER--------------1. Property damage liability Which of the following would NOT be considered part of the insured location under the liability section of a homeowners policy? (Choose from the following options) 1. Vacant farmland owned by the insured 2. A residence where an insured is temporarily residing 3. A family cemetery plot 4. A lakeside cabin rented by the insured for vacation ------CORRECT ANSWER--------- -----1. Vacant farmland owned by the insured If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to a) Coverage A b) Coverage B c) Coverage E d) Coverage G ------CORRECT ANSWER--------------d) Coverage G Fences, except pasture and field fences, are considered other farm structures and are covered by Coverage G - Other Farm Structures Personal business property out in the open is covered under commercial property policy only while a) Specifically described on the declarations. b) Within 150 feet of the described premises. c) Within 100 feet of the described premises. d) Located on the described premises. ------CORRECT ANSWER--------------c) Within 100 feet of the described premises. Business personal property is defined in the policy as property located in the insured structure or within 100 feet of that structure. Which of the following coverages is included in an unendorsed homeowners policy? a) Personal property replacement coverage b) Fungi, wet or dry rot, or bacteria c) Earthquake d) Medical payment to others ------CORRECT ANSWER--------------d) Medical payment to others Medical payment to others is automatically included in Section II of all HO policies. Which commercial crime form would provide coverage for a loss that did not necessarily happen during the policy period but was revealed during the policy period? a) Discovery form b) Retro form c) Reporting form d) Loss sustained form ------CORRECT ANSWER--------------a) Discovery form The discovery form is used for losses that are discovered during the policy period but may not have happened during the policy period. The discovery form is one of the conditions contained in the crime general provisions forms, which contain conditions and exclusions applying to all crime forms. The discovery period is normally 1 year. Professional photographers and musicians may insure their equipment with a) A commercial articles floater. b) A theatrical property coverage form. c) A contractors equipment floater. d) An installation floater. ------CORRECT ANSWER--------------a) A commercial articles floater. The commercial articles form covers photo equipment or musical instruments used commercially, such as by a professional band. Within how many years of a loss may an insured bring a lawsuit against an insurer, according to the dwelling policy? a) 2 years b) 3 years c) 5 years d) 7 years ------CORRECT ANSWER--------------a) 2 years If an insured wants to bring a suit against an insurer, the insured must comply with all policy conditions and start action against the insurer within 2 years of the loss. What type of information would be found in a policy's insuring agreement? a) Insurer's address b) Renewal dates c) Location of premises d) Policy limits ------CORRECT ANSWER--------------b) Renewal dates An Insuring Agreement establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy. The insuring agreement lists the parties to the contract, effective and renewal dates, the description of coverage provided, and perils (among other things). Location of premises, policy limits, supplemental representations, and insurer's name and address can all be found in the Declarations. An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it? a) Bailee's customers form b) Builders risk form c) General property form d) Contractors equipment floater ------CORRECT ANSWER--------------d) Contractors equipment floater The contractors equipment floater covers equipment left unattended on a job site until the project is finished If more than one person has an insurable interest in the property covered under a dwelling policy, a) All involved insurers must decide which one will be liable for the loss. b) All insureds must decide which one will be liable for the loss. c) The insurer will be liable for only the insured's interest in the damaged property. d) Liability will be split evenly among all people who have insurable interest. ------ CORRECT ANSWER--------------c) The insurer will be liable for only the insured's interest in the damaged property. If more than one person has an insurable interest in a property, the insurer will be liable only for the insured's interest in the loss. Residential structures, including individual condominium units, and their contents are insured by what part of the National Flood Insurance Program? a) Dwelling policy form b) Basic coverage form c) Residential Condominium Building Association Policy (RCBAP) d) General property policy form ------CORRECT ANSWER--------------a) Dwelling policy form The dwelling policy form is used to insure residential structures and their contents including individual condominium units. 2. Other insurance 3. Coinsurance 4. Overinsurance ------CORRECT ANSWER--------------3. Coinsurance 39. Which of the following symbols in a business auto policy indicates that coverage for newly acquired vehicles applies if the insurer already covers all autos owned by the insured? (Choose from the following options) 1. Symbol 1 2. Symbol 2 3. Symbol 7 4. Symbol 19 ------CORRECT ANSWER--------------1. Symbol 1 40. If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true? (Choose from the following options) 1. Federal Insurance Administration will remove the insurer from the NFIP. 2. The insurer will be reimbursed for the excess costs by the NFIP. 3. The insurer must cover the loss out of its surplus. 4. The insurer must apply for disaster relief funds. ------CORRECT ANSWER-------------- 2. The insurer will be reimbursed for the excess costs by the NFIP 48. How is a professional liability policy written? (Choose from the following options) 1. Excess liability 2. Occurrence 3. Claims-made 4. Open peril ------CORRECT ANSWER--------------2. Occurrence 56. Which of the following is NOT part of Section II of the boatowners policy? (Choose from the following options) 1. Uninsured boaters 2. Watercraft damage 3. Watercraft liability 4. Medical payments ------CORRECT ANSWER--------------1. Uninsured boaters 57. When an insured had to have a tire replaced on his insured auto, he submitted a claim to the insurer. The company denied the claim as "wear and tear" and not insurable because (Choose from the following options) 1. It is a certainty. 2. It is not calculable. 3. It does not affect a large number. 4. It is subject to catastrophe hazard. ------CORRECT ANSWER--------------1. It is a certainty 61. What is the main distinction between a hired auto and a nonowned auto? (Choose from the following options) 1. The length of time the insured uses the auto 2. The amount of premium 3. Whether a payment is made for the use of the auto 4. Who owns the auto ------CORRECT ANSWER--------------3. Whether a payment is made for the use of the auto 67. Other than perils, the difference in the three DP forms is in coverage provided. Which of the following coverage options is covered by the DP-2 and D-P3 but not DP-1? (Choose from the following options) 1. Coverage E - Additional Living Expense 2. Coverage A - Dwelling 3. Coverage B - Other Structures 4. Coverage D - Fair Rental Value ------CORRECT ANSWER--------------4. Coverage D - Fair Rental Value 69. Which of the following perils is NOT covered the DP-2? (Choose from the following options) 1. Damage caused by the weight of ice and snow 2. Damage caused by falling objects 3. Damage to pets, birds, or fish 4. Damage caused by burglars ------CORRECT ANSWER--------------3. Damage to pets, birds or fish 73. Homeowners policies limit the amount of property and liability coverage available for boatowners. How much coverage is provided in the homeowners policy for damage to watercraft, accessories, equipment, and trailers? (Choose from the following options) 1. $2,500 2. $1,000 3. $1,500 4. $2,000 ------CORRECT ANSWER--------------1. $2,500 76. Which of the following would NOT generally be included in the supplementary payments portion of a liability policy? (Choose from the following options) 1. Cost of first aid to others at the time of an accident 2. Expenses the insured incurs, as part of defense, at the company's request 3. Loss of earnings due to the accident 4. Damage to property owned by the insured ------CORRECT ANSWER--------------4. Damage to property owned by the insured 85. A scheduled personal property endorsement will be used to insure (Choose from the following options) 1. Personal items at their actual cash value. 2. Higher limits of coverage for fine arts items. 3. High value items only within the U.S. 4. Personal vehicles used by travelers anywhere in the world. ------CORRECT ANSWER-------------- 89. Which of the following is the least amount of controlled business that would be considered illegal? (Choose from the following options) 1. 51% 2. 6%