Insurance Coverage: Understanding Endorsements, Limits, and Exclusions, Exams of Insurance law

Download Insurance Coverage: Understanding Endorsements, Limits, and Exclusions and more Exams Insurance law in PDF only on Docsity! Louisiana Property and Casualty Insurance Exam Questions with 100% correct Answers. Driver A has a personal auto policy with Part C: UM/UIM limits of 100/300. He is injured by Driver B who has Part A: Bodily Injury Liability limits of 50/100. It is determined that Driver B is at fault for the accident. Driver A has $125,000 in medical expenses. How much will his Part C: UM/UIM coverage pay? a) $125,000 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. d) Up to $250 for bail bonds required because of a covered accident. - Correct answer a) Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident. A personal auto policy does not pay the cost of the release of a vehicle impounded by a law enforcement agency. A large antenna is damaged when a tree branch hits an insured farm dwelling during a storm. Coverage A of a farm property coverage form would insure damages for this occurrence up to a) $1,000. b) $2,000. c) $3,000. d) $4,000. Antennas, towers, and satellite dishes attached to the dwelling are covered under Coverage A, but have a special limit of insurance of $1,000 in any 1 occurrence. - Correct answer a) $1,000. Antennas, towers, and satellite dishes attached to the dwelling are covered under Coverage A, but have a special limit of insurance of $1,000 in any 1 occurrence. Charla wants to serve as a producer for Commissions Galore Insurance Company. In addition to obtaining her producer's license, what else must happen before she can officially transact insurance for CGIC? a) She must submit a list of 5 references to CGIC. b) She must be appointed by the Commissioner. c) She must be appointed specifically by CGIC. d) She must get a certificate of authority. - Correct answer c) She must be appointed specifically by CGIC. Before a producer can serve as an agent for a given insurance company, the producer must first be appointed by the company. The main difference between an HO-4 and an HO-6 is a) HO-6 provides limited dwelling coverage as well as contents coverage. b) HO-4 does not cover additional living expenses. c) HO-6 does not cover additional living expenses. d) HO-4 provides limited dwelling coverage as well as contents coverage. - Correct answer a) HO-6 provides limited dwelling coverage as well as contents coverage. HO-4 provides no dwelling coverage because a tenant does not own the dwelling; the condo owner does own the condo and is provided with coverage for improvements. Both HO-4 and HO-6 cover theft and additional living expenses. 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. b) Open peril coverage on the dwelling and broad form coverage on personal property. c) Open peril coverage on the dwelling and basic form coverage on personal property. d) Basic coverage for the dwelling and broad form coverage for personal property. - Correct answer b) Open peril coverage on the dwelling and broad form coverage on personal property. The open peril coverage applies to property insured under Coverages A and B only. The Gramm-Leach-Bliley Act was passed to a) Protect private customer information filed with a financial institution. 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. A material misrepresentation will affect whether or not a policy is issued. If the insured had been truthful, it is very likely that the policy would not be issued. On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are A. Paid at a fixed rate every year. B. Taxable as ordinary income. C. Guaranteed. D. Not taxable since the IRS treats them as a return of a portion of the premium paid. - Correct answer D. Not taxable since the IRS treats them as a return of a portion of the premium paid. With participating policies, policyowners are entitled to dividends, which, in the case of mutual companies, are nontaxable because they are considered a return of excess premiums. In what way can an agent demonstrate a high standard of ethics? A. Recommending qualified retirement plans to each client 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. a) 15/30/25 b) 20/20/20 c) 10/30/15 d) 15/30/50 - Correct answer a) 15/30/25 Which workers compensation conditions states that the first named insured will act on behalf of all insureds under the policy? 1. Cancellation 2. Sole representative 3. Transfer of your rights and duties (assignment) 4. Inspection - Correct answer 2. Sole representative Which of the following statements regarding coverage for the flood and earthquake perils is true? a) Flood insurance is usually provided in property policies, but earthquake coverage is available by endorsement only. b) Both flood and earthquake are excluded perils in all property policies. c) Flood and earthquake coverage is available in all policies. d) Flood and earthquake coverage is available only through government insurance - Correct answer b) Both flood and earthquake are excluded perils in all property policies. 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 Coverage E is a personal liability coverage. Which policy consists of the declarations and conditions, endorsements, and other attachments applicable to a single line of insurance? (Choose from the following options) 1. Casualty 2. Commercial package 3. Monoline 4. Insurance - Correct answer 3. Monoline Which of the following statements is NOT true regarding mobile agricultural machinery and equipment coverage? (Choose from the following options) 1. It relates to devices used in the everyday farm operation. 2. It covers detached parts and accessories of mobile devices. 3. It insures eligible equipment for open perils. 4. This coverage must be written as part of farm coverage. - Correct answer 4. This coverage must be written as part of farm coverage 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. A home is insured under an HO-2 policy. The homeowner decides to replace the roof on the house. He wasn't able to complete the roof in one day and left a portion of it unfinished overnight. A heavy rainstorm caused $20,000 of damage to the interior of the house and some furniture. In this situation, the policy will pay (Choose from the following options) 1. 80% of replacement cost. 2. Nothing. 3. The ACV of the damage. 4. Replacement cost of the damage. - Correct answer 2. Nothing. Which of the following endorsements under an Equipment Breakdown policy is used for calculating the amount to be paid on a lost business claim after a direct loss? (Choose from the following options) 1. Refrigeration Interruption Coverage 2. Turbine Units Explosion Coverage 3. Refrigeration Interruption - Report of Values 4. Business Income - Report of Values - Correct answer 4. Business Income - Report of Values Farm fences (except field and pasture fences) are covered by which farm coverage form? 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 1. An insured's boat stored in the garage slips off of its supports and injures a visitor. 2. An insured's dog left in the care of a friend bites a salesman. 3. An insured's 14-year-old son was throwing rocks at the neighbor's house and broke several windows. 4. While sweeping the floors, an insured's resident maid trips and falls down the stairs, breaking her leg. - Correct answer 4. While sweeping the floors, an insured's resident maid trips and falls down the stairs, breaking her leg. 21. According to the law of agency, insurance producers represent (Choose from the following options) 1. The public. 2. The State. 3. Insurers. 4. Insureds - Correct answer 3. Insurers 28. All advertisements, regardless of their source of creation, are the responsibility of the (Choose from the following options) 1. Department of Insurance. 2. Insurer. 3. Insured. 4. Advertising agency. - Correct answer 1. Department of Insurance 32. Which provision defines how the policy will respond if there is other valid insurance written on the same risk? (Choose from the following options) 1. Concurrent coverage 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) 2. Nonparticipating policies can pay out dividends to the policyholders. 3. Mutual insurers are owned by the shareholders and issue participating policies. 4. Stock insurers are owned by the shareholders and issue nonparticipating policies. - Correct answer 4. Stock insurers are owned by the shareholders and issue nonparticipating policies 108. An agent suspects that his insurer is committing insurance fraud. Within how many days of that discovery must the agent report the frau to the Department of Insurance? (Choose from the following options) 1. 10 days 2. 15 days 3. 30 days 4. 60 days - Correct answer 1. 10 days 112. The exact, direct, uninterrupted cause of loss is the (Choose from the following options) 1. Actual cause. 2. Intervening cause. 3. Absolute cause. 4. Proximate cause - Correct answer 4. Proximate cause 126. Which of the following losses would be excluded from coverage under the farm property special form? (Choose from the following options) 1. Theft of property from the insured's residence 2. Drowning of livestock 3. Fire caused by curing tobacco 4. Loss of livestock caused by attack by dogs or wild animals - Correct answer 3. Fire caused by curing tobacco 127. Among people in the same class and life expectancy, which of the following factors can be used to influence premium rates? (Choose from the following options) 1. Occupation 2. Ancestry 3. Marital Status 4. Race - Correct answer 1. Occupation 140. An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request? (Choose from the following options) 1. 3 days 2. 5 days 3. 10 days 4. 30 days - Correct answer 2. 5 days 142. How often must organizations consult the National Do Not Call Registry? (Choose from the following options) 1. Once a year 2. Every 31 days 3. Once every 6 months 4. On the first Monday of every month - Correct answer 4. On the first Monday of every month 144. The defendant being released on a surety bail bond is the (Choose from the following options) 1. Principal. 2. Surety. 3. Obligee. 4. Insured - Correct answer 4. Insured