New York State General Adjuster 17-70 799 Questions and correct Answers latest 2023 /2024, Exams of Automobile Engineering

Download New York State General Adjuster 17-70 799 Questions and correct Answers latest 2023 /2024 and more Exams Automobile Engineering in PDF only on Docsity! New York State General Adjuster 17-70 799 Questions and correct Answers latest 2023 2024 An employee has been asked to use his own personal vehicle to perform certain tasks on behalf of his employer. What coverage is used under the business auto policy to protect the employer for lawsuits when the employee has an accident that causes legal action against the employer? - ✔✔️E️mployers non-ownership coverage. This coverage protects the employer and not the employee. The employee is covered under his own PAP policy. Replacement cost coverage is best defined as: - ✔✔️R️eplacement without deduction for depreciation.With replacement cost coverage, the insured is permitted to replace old with new at today's cost without a deduction for depreciation. Which of the following would be considered a "supplementary payment" coverage under a business auto policy? 1)All post-judgment interest in a suit defended by the insurer 2)Payment for an insured employee's truck being used by the employee on a business-related trip 3)Costs for a private investigator hired by an employee to prove he was not involved in a hit and run accident of which he has been accused 4)Up to $2,000 for the cost of bail bonds for an employee involved in an accident while he was on a trip to Mexico that he won for exceeding sales goals set by the company - ✔✔️1️) All post-judgment interest in a suit defended by the insurer. Supplementary payments do not include physical damages, nor personal expenses of employees. The bail bonds would be covered except that Mexico is outside the coverage area. Which of the following professional liability policies would cover a dishonest, fraudulent or criminal act of the manager of a LLC? 1)Fiduciary Liability 2)Malpractice Liability 3)Errors and Omissions 4)None of the policies cover these acts - ✔✔️4️) None of the policies cover these acts. When securing a recorded statement over the telephone, an adjuster must: 1 Identify him or herself. 2 Advise he or she would like to record the statement and request and receive permission to do so. 3 State the time and date. 4 All responses listed are correct. - ✔✔️4️ All responses listed are correct. The adjuster must identify him or herself, state the date and time and get permission to record the statement. Uninsured Motorist coverage includes the named insured's: I. Medical bills and pain and suffering. II. Lost wages. - ✔✔️B️oth I and II is correct. Coverage C (Uninsured Motorists) provides for payments to or on behalf of the named insured for injuries sustained through the negligence of an uninsured driver. Substitute services will provide: - ✔✔️$️25 per day for one year. Basic economic loss benefits will provide up to $25 per day for substitute services for a maximum of one year if the injured party is not gainfully employed. Which of the following is not a violation of the Unfair Trade Practices Act? 1 Not attempting in good faith to settle claims 2 Denying an uncovered claim 3 Failing to promptly settle claims under one portion of coverage in order to influence settlements under other portions of coverage 4 Not setting forth the coverage under which a claim payment is being made - ✔✔️D️enying a claim that is not covered is not a violation. In case of a total loss in an automobile accident, the adjuster can do the insured which of the following? I. Pay cost to replace the vehicle with like kind and quality if the vehicle is a current year model. II. Use the most recent publication of an "Official Used Car Guide." III. If not listed in the "Guide," obtain quotations from local automobile dealers. - ✔✔️I️, II and III depending on the circumstances All the responses listed can be options in settling a total loss claim. Personal umbrella liability policies usually cover liability as a result of: 1 Performing a professional service. 2 Serving as an officer or director of a nonprofit corporation or association. 3 For a work related activity 4 None of the activities are covered - ✔✔️2️ Serving as an officer or director of a nonprofit corporation or association.. Coverage is included while serving as an officer or director of a nonprofit corporation or association. The Now Company carries a special BOP policy with a liability limit of $500,000. The company is involved in an accident causing $200,000 bodily injury damage and $200,000 property damage. The total amount collectible under the policy is: 1 $500,000 2 $400,000 3 $200,000 4 $100,000 - ✔✔️2️ $400,000 BOP policies provide a single limit of liability. Both bodily injury and property damage coverage is provided. Since the amounts for bodily injury and property damage 1 Take reasonable steps after the loss to protect the property from further damage 2 Promptly notify the police if the vehicle is stolen 3 Allow the insurer to inspect and appraise the damaged property 4 Facilitate the repairs to the vehicle and submit the invoice to the insurer. - ✔✔️4️ Facilitate the repairs to the vehicle and submit the invoice to the insurer.. The insured is not permitted to make repairs on the vehicle until after the vehicle has been inspected and/or appraised and an agreement as to the damages has been reached with the insurer. The insured carries a Businessowners Policy (BOP). If the premises become 69% or more vacant, what can the insurer do? The insurer can cancel the policy. The insurer can non-renew the policy. The insurer can restrict coverage. The insurer can reduce coverage. - ✔✔️T️he insurer can cancel the policy. . The insurance company can cancel the policy if the risk is 69% or more vacant. How many years must a business be operational in New York before it can qualify as a self-insurer for workers compensation? 1 Three years. 2 Four years. 3 Five years. 4 Two years. - ✔✔️T️hree years A company must be in business for at least three years before it can make application with the state to become a qualified self-insurer. Which of the following would be covered under Coverage C of form HO-3? I. Property normally kept at the insured residence but in transit to a new principal residence II. Personal Property in Switzerland while the insured is on vacation - ✔✔️B️oth I and II. Coverage C provides protection for personal property owned or used by the insured anywhere in the world - with some exceptions. One is personal property normally stored off the premises - although this can be added by endorsement. (Property of away-from-home students is not "stored".) Cars driven by Sue Trent and Jim Higgins were involved in an automobile accident where Mr. Higgins was at fault. Sue Trent's car was a total loss and valued at $6,000, plus she sustained bodily injuries totaling $25,000. Scott Finley, Ms. Trent's passenger, was injured and incurred $6,000 in medical expenses. Mr. Higgins, the responsible party, carries Bodily Injury coverage with limits of $15,000 per person and $30,000 per accident, and Property Damage coverage of $5,000. His policy will pay a maximum of: 1 $26,000 2 $29,000 3 $35,000 4 $39,000 - ✔✔️1️ $26,000 Mr. Higgins' policy will pay a maximum of $26,000. The maximum per person limit that can be paid to anyone person as a result of Mr. Higgin's negligence is $15,000. Therefore, Sue Trent will receive only $15,000 and Scott Finley will receive $6,000. This amounts to $21,000 in bodily injury payments. The property damage limit carried by Mr. Higgins is only $5,000. Therefore, the most that can be paid for the total loss to Sue Trent's vehicle is $5,000 even though her vehicle is worth $6,000. The total of $21,000 plus the $5,000 is $26,000. If the insured is killed in an airplane accident, the accidental death benefit: 1 Applies if the plane is a regularly scheduled airline. 2 Does not apply under any circumstances. 3 Applies only if the aircraft is being flown by the insured. 4 Increases to triple indemnity. - ✔✔️1️ Applies if the plane is a regularly scheduled airline.. Accidental Death Benefits usually exclude payment if the insured was a pilot or crew member of a private aircraft. Which of the following would be covered under the mobile equipment endorsement? 1 Fork lift. 2 A motorcycle. 3 A company car. 4 A company truck with a snow removal plow attached. - ✔✔️1️ Fork lift Some types of mobile equipment that operates in a given state must be licensed, and evidence of liability insurance provided. Sometimes these are added to the commercial auto policy by using the mobile equipment endorsement. New York has been struck with a catastrophe and adjusters are desperately needed. The Superintendent of Insurance can issue a temporary adjuster permit in an emergency situation such as this for _____ days. 1 30 2 60 3 90 4 120 - ✔✔️4️ 120 The Superintendent can issue a temporary emergency adjuster permit for a period of 120 days to assist in the adjustment of claims arising from a common catastrophe. No fee is involved and the person merely completes the necessary paper work. A New York licensee subject to an administrative action in another jurisdiction or governmental agency must report such action to the Superintendent within: 1 6 months. 2 10 days. 3 90 days. 4 30 days. - ✔✔️4️ 30 days The Superintendent must be notified within 30 days of the final disposition of the matter. Vision care insurance policies most often cover: 1 The cost of lenses and frames. 2 Replacement lenses and/or frames due to breakage. 3 Sunglasses and safety glasses. 4 Eye surgery. - ✔✔️T️he cost of lenses and frames. Most vision policies cover corrective lenses and frames as well as contact lenses but do not cover replacement lenses, specialty lenses such as sunglasses or surgery. Vision does not cover eye surgeries that is under medical The Fit and Trim Fitness Center wants to reduce its carbon footprint. A covered loss destroys some treadmills, damages the roof and most of the interior walls. Fit and Trim finds replacement treadmills that generate and actually return energy to the power grid. The cost is 15% higher than standard equipment. Which of the following, if any, would pay the increase? 1 Ordinance and Law Coverage 2 Fungi, Wet and Dry Rot 3 Increased cost of loss and related expenses for "green" updates 4 Consequential Loss Coverage - ✔✔️3️ Increased cost of loss and related expenses for "green" updates The increased cost of loss and related expenses for green updates will pay an extra 25% of the property loss for the increased cost to "go green" up to $100,000 maximum. The Superintendent of Insurance may issue a _____ temporary permit to an individual to adjust claims while an adjuster's application is pending. 6-month 30-day 1-year 120-day - ✔✔️1️20-day Anne has been diagnosed with a disease characterized by degenerative and sometimes hypertrophic changes in the bone and cartilage of the joints and a progressive wearing down of apposing joint surfaces. Anne has been diagnosed with: 1 Tachycardia 2 Atherosclerosis 3 Osteoarthritis 4 Diabetes - No long-term care (LTC) policy may define preexisting conditions more restrictively than a condition for which medical advice or treatment was recommended by, or received from a provider of health services within _____ months before the effective date of coverage. 1 12 2 5 3 6 4 24 - ✔✔️3️ 6 This is a part of the NAIC Model Bill adopted by all states Pre-existing Condition Limitation. A long-term care insurance policy may not define a pre-existing condition more restrictively than a condition for which medical advice was given or treatment was recommended by, or received from, a physician within six months before the effective date of coverage. Many companies will sell a policy to someone with a pre-existing condition; however, treatment for that condition will not be covered for the first six months after the effective date of coverage. For example, if treatment for a pre-existing condition begins within the first six months of coverage, the company may deny the claim during the six-month period after the effective date but then must begin to cover that expense at the end of the pre- existing period. Some companies have shorter pre-existing periods and others have none. How many days does the liberalization clause provide for under the BOP prior to or during the policy? 1 55 days 2 30 days 3 45 days 4 35 days - ✔✔️4️5 days is correct The policy reads, "If we adopt any revision that would broaden the coverage under this policy without additional premium within forty-five days prior to or during the policy period, the broadened coverage will immediately apply to this policy." James purchases an outboard motor boat. He will have automatic coverage for the boat under his homeowner policy under which of the following circumstances? I. He reports the purchase of the boat to his insurer within 60 days. II. The boat is in storage on his premises. III. He reports the purchase of the boat to his insurer within 45 days. - ✔✔️I️I and III only The homeowner policy will cover a newly acquired boat as long as the insured reports it to the insurer within 45 days of the purchase or if it is in storage on his premises. However, be aware of the limitations on the hull value, horsepower limitations and size and use of the watercraft. A watercraft or yacht policy may be a better choice. Coverage F under the farm forms covers which of the following? - ✔✔️U️nscheduled personal property Coverage F covers unscheduled personal property on a blanket basis. One limit for all business personal property is stated. The items are not scheduled as they are under Coverage E. Diane is fined by the Superintendent for a violation of the insurance law of New York. The fine is not paid within 20 days. What action may the Superintendent take? 1 Put Diane in prison 2 Suspend or revoke her license 3 Add an additional fine 4 Ask her to reapply for a license and double the fees - ✔✔️2️ Suspend or revoke her license If the fine has not been paid within 20 days the Superintendent will suspend or revoke the license. No act will be certified by the Secretary of the Treasury as an act of terrorism under the Federal Terrorism Act unless: 1 the losses relate to life and health insurance. 2 the act is committed as part of the course of war declared by Congress. 3 the act is not one of terrorism as defined by the Act. 4 the losses that occur relate to commercial property and specified casualty risks. - ✔✔️4️ the losses that occur relate to commercial property and specified casualty risks.. The coverage would only apply to losses that relate to commercial property and certain casualty losses caused by an act of terrorism as defined by the Act. The Act has been revised and extended and is due to expire on December 31, 2020. What commercial auto form is used to cover taxis and bus companies? 1 Business auto form 2 Garage liability form 3 Trucker's auto form 4 Motor carrier form - ✔✔️4️ Motor carrier form The Motor Carrier form would be used to cover these types of vehicles. This form is used for a risk carrying persons or property. Under the Commercial Property form, the $1,000 additional coverage for Fire Department Service Charge is the maximum payable per loss to each premise: 1 regardless of the number of fire departments responding. 2 regardless of the number or types of services performed. 3 Neither response is correct. 4 Both responses are correct. - ✔✔️4️ Both responses are correct Coverage applies in either situation. Under the commercial property condominium association form, coverage is based on: 1 The commercial property form 2 The association agreement and bylaws 3 The special cause of loss form 4 State and local ordinances - ✔✔️2️ The association agreement and bylaws The coverage provided by the form will be based on the condominium association agreement and by laws. A farmer has unintentionally libeled a neighboring farmer by stating that the neighbor's dairy products are inferior to his. This is an example of: 1 Advertising/personal injury. 2 Bodily injury. 3 Contractual liability. 4 Vicarious liability. - ✔✔️1️ Advertising/personal injury This is an example of personal/advertising injury. No bodily injury or property damage occurred Under the discovery clause in the loss sustained policy, which of the following is covered? 1 A loss discovered up to one year after the policy expired but that occurred during the policy period 2 A loss that is discovered two years after the policy has expired 3 A loss that occurred prior to the inception date of the policy 4 A loss that occurred during the policy period but was not discovered until five years after the expiration date - ✔✔️1️ A loss discovered up to one year after the policy expired but that occurred during the policy period. The discovery clause in the loss sustained form states that losses that occur during the policy period, but are not discovered for up to one year after the policy has expired, can be covered under the expired policy. The discovery clause in the discovery form provides coverage during the policy period or within 60 days after the policy expires for coverage to apply. An unendorsed Homeowner Policy provides no coverage for liability arising out of business related exposures, other than for permitted incidental occupancies. The ______Endorsement provides liability coverage for a business conducted away from or on the residence premises. 1 Home Day Care 2 Home Business Pursuits 3 Personal Injury 4 Permitted Incidental Occupancies - ✔✔️2️ Home Business Pursuits 3 Prior acts exclusion clause 4 None of the choices are correct - ✔✔️2️ Retro active date A retro active date is negotiated at the inception of the policy and would deny coverage for anything that occurred prior to that date even if the incident was reported during the current policy period. The DP-2 broadens which of the following extended coverage (EC) perils? 1 Explosion, Smoke and Vehicles 2 Explosion and Smoke Only 3 Smoke and Vehicles Only 4 Vehicles Only - ✔✔️1️ Explosion, Smoke and Vehicles. When the extended coverage (EC) endorsement is attached to the DP-1 form, explosion, smoke and vehicular damages are included. The DP-2 form broadens these perils. A valid contract must contain all of the following, EXCEPT: 1 Be a written instrument. 2 Competent parties. 3 Legal purpose. 4 Valuable consideration. - ✔✔️1️ Be a written instrument. Contracts do not have to be written or documented to be valid and enforceable; oral contracts are perfectly acceptable if they are between competent parties, have a legal purpose, represent an offer and acceptance, and some valuable consideration. The time period of coverage which is stated on the declarations is known as: 1 The policy territory. 2 The time limit of coverage. 3 The limits of liability. 4 The policy period. - ✔✔️4️ The policy period The policy period is stated on the declarations page representing the time limit coverage is in force as long as the premium is paid Which of the following events, arising out of the use of a covered auto, is covered under the Personal Auto Policy? 1 Damage to a private garage rented by the insured. 2 Intentional acts of an insured. 3 Damage to insured's property in the vehicle. 4 Damage to property of others in the vehicle. - ✔✔️1️ Damage to a private garage rented by the insured PAP liability coverage excludes property damage to property owned or being transported by that insured, or to property rented to, used by, or in the care of that insured. The exclusion does not apply, however, to property damage to a residence or private garage. Intentional acts are always excluded. When a homeowners policy has been in effect for 60 days in New York, an insurer can cancel at anytime for any of the following reasons, EXCEPT: 1 A large loss has occurred. 2 Acts that increase the risk. 3 Physical changes in the insured property that make it uninsurable. 4 Non payment of premium. - ✔✔️1️ A large loss has occurred The homeowners policy was purchased to indemnify against the occurrence of a large loss, therefore, this would not represent a reason for policy cancellation. What is the purpose of an adjuster's interim report? 1 Reports on the ongoing status of the claim 2 Renders a final opinion on the claim 3 Provides the status on all releases 4 Contains final estimates of damages claimed - ✔✔️1️ Reports on the ongoing status of the claim. An insurance broker is a person who represents: 1 An insured or prospective insured. 2 An insurance company. 3 More than one insurance company. 4 Both the insured and the insurer. - ✔✔️1️ An insured or prospective insured The broker represents an insured or prospective insured. Coverage under the livestock coverage form may be written on either a blanket or scheduled basis. When coverage is blanketed, a limit of liability is indicated for each applicable livestock class such as cattle, sheep, swine, goats, horses, mules or donkeys. A per animal limit is assigned. This coverage is subject to a/an ____ coinsurance clause. - ✔✔️8️0% is correct The coverage is subject to the 80% coinsurance clause. A professional liability policy can be: - ✔✔️P️urchased separately for an additional premium. The professional liability policy is a "stand alone" separate policy that can be purchased for an additional premium In order for a contract to be binding in a court of law, it must be designed for: 1 Two parties. 2 Legal purposes. 3 Res ipsa loquitor. 4 Easy interpretation. - ✔✔️2️ Legal purposes In order to be binding, contracts must be for a legal purpose The Fit and Trim Fitness Center wants to reduce its carbon footprint. A covered loss destroys some treadmills, damages the roof and most of the interior walls. Fit and Trim finds replacement treadmills that generate and actually return energy to the power grid. 1 The cost is 15% hOrdinance and Law Coverage 2 Fungi, Wet and Dry Rot 3 Increased cost of loss and related expenses for "green" updates 4 Consequential Loss Coverageigher than standard equipment. Which of the following, if any, would pay the increase? - ✔✔️3️ Increased cost of loss and related expenses for "green" updates The increased cost of loss and related expenses for green updates will pay an extra 25% of the property loss for the increased cost to "go green" up to $100,000 maximum. What coverage of the garage policy will pay for physical damage to a garage customer's auto regardless of legal liability? 1 Garage liability coverage (Section II) 2 Garage physical damage coverage (Section IV) 3 Garagekeepers coverage (Section III) 4 Garagekeepers direct coverage endorsement - ✔✔️4️ Garagekeepers direct coverage endorsement The garagekeepers direct coverage endorsement pays for damages to a customer's vehicle regardless of legal liability. The deductible under a homeowner policy does not apply to which of the following? 1 Liability coverage 2 Theft coverage 3 Glass coverage 4 Vandalism coverage - ✔✔️1️ Liability coverage Liability coverage as well as medical payments coverage are not subject to a deductible. How are workers compensation benefits determined for an injured employee in New York? 1 Federal guidelines. 2 National council on Compensation Insurance. 3 National Association of Insurance Commissioners. 4 State statutes. - ✔ ✔4️ State statutes. An unendorsed commercial property policy would deny coverage for items the insured did not have before the loss, in order to uphold the principle of indemnity. Sometimes, however, a local law or ordinance will require an insured who has suffered a property loss to rebuild/repair to new standards and require items (such as an extra exit, guardrail, sprinkler, etc) that were not required before the loss. The Ordinance or Law endorsement pays for these extras up to its limit. What is a Reporting Form policy? - ✔✔️A️ policy that requires the insured to report the value of the property insured at certain time intervals. A "Reporting Form" policy is one in which the policyholder is required to report the values of insured property to the company at certain intervals. A provisional (deposit) premium is charged initially and the final premium is determined by applying the rate to the average of the values reported. The insured is required to insure the property 100% to value. The insured is also required to report 100% of the value of the insured property. Employers in New York have _____days from the date of the initial penalty for failing to comply with the compliance provisions of workers compensation coverage for eligible employees to appeal the penalty. - ✔✔️T️he employer has 30 days to appeal the penalty for non-compliance in the providing of workers compensation coverage What is the main difference between a DP-1 and a DP-2? 1 The property covered 2 The perils insured against 3 The coverage territory 4 The eligibility requirements - ✔✔️2️ The perils insured against DP-1 and DP-2 are similar forms, both designed to provide property insurance for personally-owned residential buildings containing up to four living units without requiring the insured to reside there. These two forms are different in the "perils insured against" section. The DP-2 broad form covers all the perils included in the DP-1 plus several "broad" perils including burglary damage, ice or snow damage, falling objects, freezing of plumbing, heating, or air conditioning systems or household appliances, accidental discharge of water from a plumbing, heating, or air conditioning systems, and breakage of glass. Which of the following is not a purpose of interviewing witnesses in adjusting losses? 1 To assess how the witness will hold up if a formal trial is needed 2 To determine coverage issues 3 To determine the relationship between the witness and the insured 4 To delay payment of a claim - ✔✔️4️ To delay payment of a claim Witness interviews are not to be used to delay payment of a claim in any circumstance. A homeowner moves into a new house built by a contractor. Shortly after moving in, the roof leaks and damages the contents. What coverage might the contractor carry that could respond to cover some of this claim? 1 Completed operations coverage 2 Operations Coverage 3 Contractual Coverage 4 Personal Injury Coverage - ✔✔️1️ Completed operations coverage The damages for part of this claim could be covered under the contractors completed operations coverage. It provides coverage after the work has been completed and put to its intended use. If the contractor installed the roof it is not covered because it is the contractors "work" which is excluded. What legal principle states that an insurer would be prohibited from denying a claim that one of its adjusters said was covered? 1 Estoppel-A legal bar to changing or denying a fact because of one's own previous actions or words to the contrary 2 Indemnity rule-to compensate or reimburse. 3 Comparative payment-compare rates 4 Policy language- - ✔✔️1️ Estoppel-A legal bar to changing or denying a fact because of one's own previous actions or words to the contrary In legal terms, agents speak and act for the principals they represent. Since a company or staff adjuster is, legally speaking, an agent of the insurer, the statements, promises, and acts of the adjuster are considered to be the statements, promises, and acts of the insurer. Claimants rely on the statements made by adjusters. Estoppel would prohibit a principal (in this case the insurer) from denying the validity or truthfulness of statements made by its agent (in this case the adjuster). If a company or staff adjuster states that a claim is covered, the insurer would in all likelihood be prohibited (that is, be estopped) from denying the claim. The prefix "hypo" means: 1 Below. 2 Inside. 3 Insert. 4 Above. - ✔✔️1️ Below. The prefix "hypo" means "below", as an example in the condition hypoglycemia. This condition suggests an abnormally low level of glucose in the blood depriving the body cells of glucose. The low level is below the normal body level, therefore it is referred to as "hypoglycemic". The optional provision which automatically amends an existing policy to conform with changes in state law is called: 1 The conformity to state statute provision. 2 The illegal law provision. 3 The legal amendment provision. 4 The state law amendment provision - ✔✔️1️ The conformity to state statute provision This provision keeps existing policies in compliance with state law without compelling insurers to constantly refilling and reissuing contracts as state laws change. Fidelity bonds are typically written to be effective for a 1 Continuous term without an expiration date. 2 Term of one year. 3 Term of two years. 4 Term of three years. - ✔✔️1️ Continuous term without an expiration date The bond remains in effect until cancelled What is the limit of coverage provided under a mobile home policy for detached structures? 1 $2,000 2 10% of the Coverage A limit or $2,000 whichever is greater 3 $5,000 per structure 4 Coverage must be added by endorsement - ✔✔️2️ 10% of the Coverage A limit or $2,000 whichever is greater The limit is $2,000 or 10% of the Coverage A (dwelling limit), whichever is greater Gordon's personal umbrella liability policy will cover which of the following? 1 Vandals wrecked the interior of a house trailer owned by Gordon and parked near a lake for weekend vacations during the summer. 2 Gordon's wife left a candle burning on a counter while she went next door to talk with a neighbor. The candle fell over onto a tea towel, which caught fire. Gordon's home and its attached garage with a boat and car in the garage were destroyed. 3 Gordon rented a backhoe to dig a foundation for a large utility barn he planned to build on his property. The backhoe was severely damaged when Gordon left it in gear, and it rolled down a hill and into a tree. 4 Gordon was informed that a railing on his deck was loose and dangerous. He does nothing to repair the problem and a friend falls from the deck and is severely injured. - ✔✔️4️ Gordon was informed that a railing on his deck was loose and dangerous. He does nothing to repair the problem and a friend falls from the deck and is severely injured. None of these damages are covered. The damage to the dwelling caused by the candle is a homeowner policy claim. The backhoe is rented and it must be assumed that the rental company required collision coverage. The umbrella provides broad care, custody, or control coverage. While the ISO homeowners policy precludes coverage for property damage rented to, occupied or used by or in the care of an insured, the umbrella precludes coverage for such property only if the insured is required by contract (which can be either verbal or written) to cover the property. The exclusion does not apply to "property damage" caused by fire, smoke or explosion. Under the BOP, the building limit of insurance is $100,000 and the deductible is $1,000. The building loss amount is $110,000. Which of the following is the correct loss payment? 1 $89,000 2 $110,000 3 $99,000 4 $100,000 - ✔✔️4️ $100,000 The deductible is subtracted from the loss and not the limit of coverage. The loss exceeded the limit of coverage. Had the loss been less than the limit of the policy the deductible would still be deducted from the loss amount. The Now Company carries a special BOP policy with a liability limit of $500,000. The company is involved in an accident causing $200,000 bodily injury damage and $200,000 property damage. The total amount collectible under the policy is: 1 $500,000 2 $400,000 3 $200,000 4 $100,000 - ✔✔️2️ $400,000 BOP policies provide a single limit of liability. Both bodily injury and property damage coverage is provided. Since the amounts for bodily injury and property damage combined do not exceed the 500,000 occurrence limit, the total amount of the claim would be covered. Which of the following would not be covered under the specified cause of loss physical damage coverage under the commercial auto form? 1 Glass breakage 2 Fire 3 Lightning 4 Flood - ✔✔️1️ Glass breakage The specified cause of loss form covers the following perils: fire, lighting, explosion, theft, windstorm, hail, earthquake, flood, vandalism or mischief, transportation by a conveyance. The coverage does not include glass breakage, hitting a bird or animal nor falling objects or missiles. The insured has suffered a covered loss under his DP-3 dwelling form. He fails to protect the property from further loss. The additional loss that occurs as a result of his inactions may be denied because of what clause in the policy? 1 Intentional loss 2 Removal clause 3 Neglect 4 Fraud - ✔✔️3️ Neglect The policy contains a "neglect" exclusion. When the insured fails to protect the property from further loss and use all reasonable means to save the property at and after the time of loss the insurer may invoke this exclusion. An ECM is: 1 a federal code within the Environmental Protection Agency (EPA). 2 a component of the exhaust system. 3 an electronic control module. 4 a voltage and alternator regulator. - ✔✔️3️ an electronic control module. An ECM is an "electronic control module" and can be found throughout a vehicle. They are used to monitor and control everything from engine performance to supplemental restraint systems and even air conditioning. Mr. Jones is sitting on his front porch swing. Mr. Smith runs his automobile into the porch injuring Mr. Jones. All the following would cover Mr. Jones medical bills, EXCEPT: 1 Mr. Jones medical payments from his automobile policy. 2 Mr. Jones medical payments from his homeowner policy. 3 The liability from Mr. Smith's automobile policy. 4 Mr. Jones Medicare coverage. - ✔✔️2️ Mr. Jones medical payments from his homeowner policy. Medical payments under a homeowner policy cover only invitees and not any occupant of the residence. If the owner's pet bites his son, then coverage would not apply since he is a resident of the household. The same is true of a tenant or boarder that sustains bodily injury on the premises. The only exception is coverage for a residence employee who is not covered under workers compensation coverage The insured has his home insured on a HO-2 policy. Lightning has struck the home and causes a fire. The insured takes as much property out of the house as possible awaiting arrival of the fire department that assists him. Some of the property is damaged by the fire department and some friends while moving the property into a pickup truck not owned by the insured. What coverage and under what clause could the insured pursue coverage for his damage? 1 Debris Removal Clause 2 Removal Clause 3 Impaired Property Clause 4 Reasonable Repair Property Clause. - ✔✔️2️ Removal Clause This damage is covered under the removal clause. It is designed to cover the property that is damaged during the course of attempting to protect it from the perils insured against. When can two insurance companies arbitrate a subrogation question? - ✔✔️W️hen both companies consent to the arbitration Both companies must consent to the arbitration. An insured has reported a claim late that occurred over one year ago and now seeks defense representation and coverage under his automobile policy. What should the adjuster do? 1 Deny the claim 2 Investigate the claim 3 Issue a reservation of rights letter to the insured 4 Advise the insured to seek his own legal counsel - ✔✔️3️ Issue a reservation of rights letter to the insured In this case since the facts are not clear and probably no witnesses or police reports and a lack of physical evidence, the adjuster should issue a "reservation of rights" letter to the insured. Farm Employers Liability and Farm Employees Medical Payments Insurance - ✔✔️T️his endorsement adds coverage for farm employee's medical coverage where workers compensation may not apply. Custom Farming Liability Coverage - ✔✔️T️his form adds coverage for custom farming, which is generally excluded if receipts exceed $5,000 in the previous What is the definition of "Custom farming"? - ✔✔️F️arming for others The "custom farming" endorsement is usually attached to a farmowners policy when receipts are at least $_______ for farming for others. - ✔✔️$️5,000 A farmer has accidentally libeled a neighboring farmer by stating that his dairy products are inferior to his. This is an example of: - ✔✔️A️dvertising/personal injury NFIP National Flood Insurance - ✔✔️F️ederal program for flood insurance. Flood, as used under the NFIP - ✔✔️A️ general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of tow or more properties from: -overflow or inland or titdal waters -unusual and rapid accumulation or runoff of surface water from any source -mudflow Collapse or subsidence of land. Flood Insurance Emergency Program - ✔✔️g️oes into effect as soon as a community has met its land use control requirements stipulated by the federal law. Rates are subsidized by the federal government under the Emergency program. Flood Insurance Regular Program - The occurrence Form - ✔✔️i️s the most popular form because of the issues that can arise when a claims- made form is non-renewed. This form is triggered by bodily injury or property damage that occurs during the policy period. The claims made form - ✔✔️i️s commonly written on hospitals for professional liability, on doctors and lawyers for their professional liability and on insurance agents for errors and omissions coverage. Most professional liability and on inusrance agents for errors and omissions coverage. Most professional liability policies are issued on a claims-made basis. With claims made insurance, we are interested in the fact that the insurance was in place when the claim occurred. Operations Liability Coverage - ✔✔️N️ormally applies to a contractor. The retroactive date which can be used in the Claims-made version of the CGL policy: - ✔✔️T️he earliest date an injury can occur for coverage to apply. There are two versions of the commercial general liability policy. They are known as: - ✔✔️C️laims-made and Occurrence Professional Liability Insurance - ✔✔️p️rotects the insured against legal liability resulting from negligence, errors and omissions, poor workmanship and other aspects of rendering or filing to render professional services. Most professional liability polices are triggered by a claim made against the insured, alleging a "wrongful act" as defined by the policy. Non-medical professional lability Insurance is known as: - ✔✔️E️rrors and Omissions Insurance Businessowners Policy BOP - ✔✔️c️ommercial package policy containing property and liability Business Income Extra Expense - ✔✔️T️he coverage starts after a 72 hour waiting period which is also when the period of restoration begins What coverage is provided under the BOP for a steam boiler explosion? - ✔✔️S️team boiler explosion is excluded under the BOP An insured has purchased a Businessowners Policy. He insures both the real and personal property under the policy. Assuming no endorsements apply, will losses be adjusted on an actual cash value basis or on a replacement cost basis? - ✔✔️R️eplacement Cost Basis Under the additonal coverages of the businessowners property forms, property removed to protect it from loss will be covered at another location for up to: - ✔✔️3️0 days Other Insurance - ✔✔️I️f there is other insurance covering the same loss or damage, the insurer, (under the BOP) will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance. Hired and Non-OWNED AUTO Liability Endorsement - ✔✔️P️rovides either or both non-owned or hired auto coverage for the named insured. Non-owned auto liability provides coverage for any auto that is not owned, borrowed or hired by the insured. It does not cover the owner of a non-woned or hired cehicle. Hired auto liability provides coverage for autos leased, hired or borrowed by the insured. This endorsement is not available to insureds who have a policy covering other commercial automobile exposures and does not require a mandatory audit by the insurance company. The Businessowners policy provides loss of income on an "actual loss" sustained bases for up to _____ months. - ✔✔️1️2 months The Now Company carries a special BOP policy with a liability limit of $500,000. The Company is involved in an accident causing $200,000 bodily injury damage and $200,000 property damage. The total amount collectible under the policy is: - ✔✔️$️400,000 The insured carries a BOP policy with protective systems such as a sprinkler system. If the system becomes inoperative, the insured must advise the insurance company of the problem within ______ hours if the system cannot be restored. - ✔✔️4️8 The liberalization clause of a businessowners policy automatically applies favorable expansions of coverage, for which a premium is not charged, if the changes are made during the policy period or within. - ✔✔️4️5 days prior to the effective date. IS A Janitor a custodian? - ✔✔️n️o Surety bond - ✔✔️g️uarantees that ceratin acts will happen, that someone will faithfully perform the act that they have agreed to perfom Under a surety bond, the "principal" is the party that: - ✔✔️A️grees to fulfill an obligation A major difference between surety bonds and insurance contract is: - ✔✔️B️ond underwriters expect few, if any, losses What is the purpose of hired car coverage under the BAP policy? - ✔✔️I️t protects the employer for the use of hired, leased, rented, or borrowed autos. An employee has been asked to use his own personal vehicle to perform certain tasks on behalf of his employer. What coverage is used under the Business Auto policy to protect the employer for lawsuits when the employee has an accident that causes legal action against the employer? - ✔✔️E️mployers non-ownership coverage Under a business auto policy, which of the following types of physical damage loss is not covered? - ✔✔️L️oss to radar detection equipment Under a commercial auto policy, which of the following endorsements can be used to family members - ✔✔️I️ndividual named insured. Pollution coverage is normally excluded under commercial auto coverage. Under which of the following situations would coverage apply without endorsement - ✔✔️A️ truck has an accident and gasoline escapes form the gas tank. Which of the following endorsemetns can be used under the BAP to extend coverage to individuals such as the owner of the business who do not carry personal auto insurance - ✔✔️D️rive other car coverage. Garage Policy - ✔✔️G️arage coverage applies only to those auto that are identified as "covered autos" in the Declarations of the form. The "covered Auto" symbols in the Garage policy are similar to those used for the Business Auto policy. PIP, UM and Medical payments - ✔✔️a️re not standard in the garage policy but may be added by endorsement Drive other car coverage - ✔✔️i️s an endorsement that is commonly attached to the policy to cover the liability of an owner of the business and the family members when driving a non owned vehicle. Often times the owner does not own a vehicle but routinely drives a vehicle held for sale with a dealers tag 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. II. Ownership or maintenance of covered autos. IV. Production or support of racing or competitive operations. - ✔✔️I️, II, and III only. Which of the following losses would be paid under a garage policy with comprehensive and collision coverages for covered autos? I. Hail damage to a 4- door van. II Damage when paint is accidentally spilled on a truck. III. Fender damage when a sports car hits a steel post. IV. Damage to a covered cehicle caused by a customer vehicle - ✔✔️I️, II, III, and IV Which of the following best describes the term "disappearance" under the definitions of an aircraft policy? 1 Disappears from a known location 2 There is the presumption of a crash or a theft after no contact for 24 hours 3 Missing and not reported for sixty days after a flight begins 4 No contact within the last 72 hours - ✔✔️3️ Missing and not reported for sixty days after a flight begins Disappearance—missing and not reported for sixty days after a flight begins. Loss of consortium - ✔✔️i️s a claim for damages suffered by the spouse or family member of a person who has been injured or killed as a result of the defendant's negligent or intentional, or otherwise wrongful acts. Economic loss - ✔✔️i️s a term of art which refers to financial loss and damage suffered by a person such as can be seen only on a balance sheet rather than as physical injury to the person or destruction of property. Which of the following would be considered "economic" losses? Disfigurement Loss of consortium Pain and suffering Medical expense and lost wages - ✔✔️M️edical expense and lost wages All of the following items have a built in limit (maximum) of coverage if the cause of loss is theft, EXCEPT Patterns Furs Jewelry Computers - ✔✔️C️omputers Although computers may have limitations of coverage if the cause of loss is electrical, viruses or hacking, there is no built in THEFT limit for these items. The other three have a built in $2,500 limit for theft losses. A long term care insurance policy must include a provision that provides for reinstatement of coverage in the event of lapse if the insurer is provided proof of cognitive impairment or the loss of functional capacity. This provision must be available for_______, and must allow for the collection of any past due premiums. 1 3 months after termination 2 5 months after termination 3 6 months after termination 4 12 months after termination - ✔✔️2️ 5 months after termination Which one of the following is considered part of the cowl? Vent panel Quarter panel Grille Fender - ✔✔️V️ent panel The fender and grille are part of the front end. The quarter panels form the rear sides of the auto. The vent panel is part of the cowl. A car's cowl - ✔✔️i️s the front part of the automobile's frame that supports the rear of the hood, windshield, dashboard, pedals and instrument panel. The cowl separates the passenger compartment from the engine A steam boiler insured under an Equipment Breakdown policy explodes and causes severe damage to the building and the contents. If a fire ensues as a result of the explosion, what coverage will the policy pay? 1 Only the damage caused by the explosion 2 The entire loss 3 Business Income loss from the fire 4 Damage to property of the insured and property of others caused by the fire - ✔✔️O️nly the damage caused by the explosion The Equipment Breakdown policy would only pay for the damages caused by the explosion. A commercial property policy would pay for the resultant fire damage. When an insurance company broadens coverage under a homeowners policy, that change automatically applies to those policies currently in effect under what provision? 1 Waiver of Change of Policy Provisions 2 Liberalization Clause 3 Severability of Insurance 4 Insurable Interest and Limit of Liability - ✔✔️2️ Liberalization Clause Surety bonds deal with which of the following? 1 The performance by another party of an obligation or undertaking 2 (On Premises) employee dishonesty 3 The theft of a third parties goods by an employee 4 Burglary of a night watchman - ✔✔️1️ The performance by another party of an obligation or undertaking The Federal Terrorism Act covers property and casualty losses that exceed ______in the aggregate. - ✔✔️$️100,000,000 The Act covers losses from a certified terrorism act that exceed $100,000,000 (the trigger) in the aggregate. The Federal Terrorism Act was amended in 2007 to this limit. The Act has was further amended and extended 2015. The trigger remains the same, but will increase each year by $20 million starting in 2016. Please refer to your testing vendor outline to determine if it is testing on the prevous amendment or if it is testing on the 2015 extension of the Act. The answer to this question is correct for either year. Which of the following dwelling forms provides broad form coverage for personal property? 1 DP-2 and DP-3 only 2 DP-1, DP-2, and DP-3 3 DP-1 and DP-2 only 4 DP-3 only - ✔✔️1️ DP-2 and DP-3 only The DP-1 provides very limited coverage for personal property. Both the broad form (DP-2) and the special form (DP-3) provide broad form coverage for personal property. A third party can bring a legal action against an employer when the employee was injured on the job and has suffered: 1 A broken leg 2 Loss of an eye 3 A broken back 4 A grave injury - ✔✔️4️ A grave injury The injured worker can bring an action as a result of a "grave injury". This is defined as death, permanent and total loss of use or amputation of a limb or member, paraplegia or quadriplegia and several other serious injuries. Under farmowners liability coverage, which of the following is covered under advertising injury coverage? 1 An insured farmer who unknowingly disparaged the crops grown by another farm. 2 Advertising the wrong price of the goods 3 Advertising the wrong description of the goods 4 Intentionally making disparaging remarks about another's farm products. - ✔✔️1️ An insured farmer who unknowingly disparaged the crops grown by another farm. Which of the following statements is true about additional coverages under the homeowner policy? 1 They are automatically included only if medical payments coverage is purchased. 2 They are optional on the part of the insured. 3 They are included at no extra cost. 4 They are included for a minimum premium. - ✔✔️3️ They are included at no extra cost. An example would be the collapse hazard included in both the broad and special cause of loss forms at no extra charge. A commercial umbrella policy would, in most cases, provide which of the following coverages? 1 Excess coverage over an insured auto liability claim 2 Primary coverage for liability claims 3 Underlying coverage for liability claims 4 Primary liability coverage for auto claims - ✔✔️1️ Excess coverage over an insured auto liability claim The main purpose of the commercial umbrella policy is to provide excess coverage over the primary or underlying liability coverages. In the rare event that an umbrella policy covered a claim that the underlying policies did not, the umbrella would provide its limits over $0 of primary coverage (and may impose a self-insured retention, sometimes called a deductible, on the insured). Which of the following events would require a change on a homeowner policy? 1 A change in mailing address 2 The birth of a child 3 The purchase of a second car 4 A change in occupation - ✔✔️A️ change in mailing address would have to be reported to the insurer and would require a change in the policy. The insured has a building worth $500,000 and insures it for $300,000. The policy contains an 80% coinsurance clause. In case of a total loss, what will the insured receive? $240,000 $500,000 $300,000 Nothing because the insured was not in compliance with the coinsurance clause. - ✔✔️$️300,000 The coinsurance clause is an agreement between the insured and the insured. In exchange for a lower rate the insured must carry at least 80% of the value of the property to be insured. In case of a total loss to the covered property the coinsurance clause is not a factor. The insured receives payment up to the limit of the policy. In this case the insured would receive $300,000. A bailment is: - ✔✔️A️ temporary entrustment of the property to another 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. - ✔✔️I️, II, and III only. Garage operations includes auto and business liability for covered autos, the premises and its associated operations, but specifically excludes all forms of racing. Coverage for goods in transit is usually provided by which of the following types of insurance? Inland Marine Casualty Surety Automobile - ✔✔️I️nland Marine In New York the workers compensation program is administered by the Workers Compensation Board which establishes guidelines for the program. Notice of injury or death to a worker is required to be submitted to the employer within what period of time? - ✔✔️T️he employer must be notified within 30 days. . When someone dies without a will they are said to have died: 1 In Replevin. 2 Testate. 3 Without a Principal. 4 Intestate. - ✔✔️4️ Intestate. An independent adjuster represents the interest of: 1 The insurer. 2 Both the insured and the insurer. 3 The insured. 4 The public. - ✔✔️T️he insurer. . Independent adjusters operate as independent contractors, typically contracting with adjusting firms. Adjusting firms in turn contract with insurance companies that may require claims support beyond the capabilities of their staff adjusters. Independent adjusters work to settle claims on behalf of the insurance company. With an Equipment Breakdown policy, the loss settlement is: 1 ACV all of the time 2 Replacement cost all of the time 3 Replacement cost if the repair or replacement is made within 18 months 4 Replacement cost if the repair or replacement is made within 24 months - ✔✔️4️ Replacement cost if the repair or replacement is made within 24 months. The insured must repair or replace the damaged property within 24 months after the date of the breakdown (unless the time period is extended by the insurer in writing), or recovery of the loss is limited to the lesser of the cost it would have taken to repair the damaged property or the actual cash value of the property at the time of the breakdown. Usually coverage is on a replacement cost basis unless the insured or company endorses the policy to cover losses on an Actual Cash value bases. If replacement cost coverage applies, then the 24-month period is a factor if the insured is to receive replacement cost coverage for the loss. Inland marine insurance is commonly used to insure all of the following, EXCEPT: 1 Automobiles. 2 Stamps. 3 Camera equipment. 4 Jewelry. - ✔✔️1️ Automobiles. The insured has a barn on his premises. The dwelling is insured for $200,000 under a DP-2 dwelling policy. How much coverage applies to the barn? - ✔✔️N️othing. Farm property, including farm dwellings are not eligible under the dwelling policy. The barn is farm property and cannot be covered. Farm property forms must be used. Which of the following incidents of property damage would be covered by BAP liability coverage? 1 Damage to a computer that was in a covered auto at the time of a collision. The computer was being returned by the named insured, who rented it. 2 Damage to the named insured's building when a covered auto ran into it. 3 Damage to a neighbor's auto parked on the street. A covered auto hit the parked auto. 4 Damage to a radar detector caused by theft. - ✔✔️3️ Damage to a neighbor's auto parked on the street. A covered auto hit the parked auto.. Damage to a neighbor's auto parked on the street. A covered auto hit the parked auto.. With long-term care insurance, the ability to transfer from a bed to a chair without assistance or from a chair to a bed is considered: - ✔✔️A️ normal activity of daily living. Transference is one of six activities of daily living (ADLs)that trigger benefits in LTC policies. The others are mobility, eating, dressing, bathing and continence. Which of the following is not an implied warranty under an ocean marine policy? 1 Seaworthiness of the vessel 2 Legality 3 No deviation in the voyage 4 Protection and indemnity - ✔✔️4️ Protection and indemnity -is a form of ocean marine liability coverage and is not an implied warranty. Technician A says that measurements that are the same on both sides of the vehicle are known as asymmetrical. Technician B says that the dimension manual should be checked to see how asymmetrical dimensions are noted. Who is right? - ✔✔️T️echnician B is correct. Asymmetrical measurements are different on opposite sides of the vehicle. Symmetrical measurements are the same on both sides. hearing. If there's an action against the producer, he must notify the super within 30 days. You cant go into another state and start practicing either Appointment and Termination of Appointment - ✔✔️A️ll insurers must file a certificate of appointment in order to appoint insurance agents. Then you have 15 days to appoint a producer from the date the agency contract is executed. If you've been fired, you have 30 days to tell the super why you were fired and then the super has 15 days to send the info back to you confirming it, Change of Address time frame - ✔✔️a️ licensee has 30 days to inform dept of insurance Reporting of Action - ✔✔️m️ust report to dept of insurance w in 30 days of any administrative action agency contract - ✔✔️a️ contract that is held between insurer and an agent/producer containing the expressed authority given to the agent/producer, and the duties/responsibilities to the principal, any agent in violation of the agency contract may be held personally liable to the insurer agent - ✔✔️l️egal representative of a an insurance company that acts for another person or entity known as the principal with regard to contractual arrangements death benefit - ✔✔️t️he amount paid when a claim is issued against policy of insurance risk - ✔✔️r️isk is the uncertainty or chance of loss occurring only two types of risks exist which are speculative and pure and only one is insurable pure risk - ✔✔️i️s the the certainty that loss or no change will occur with no financial gain to be sought only this type of risk is insurable speculative - ✔✔️t️he type that may either lead to loss or gain. example gambling. these are NOT insurable exposure - ✔✔️t️he unit of measure used to determine the premiums for insurance coverage hazards - ✔✔️b️roken into 2 subtypes (physical, moral, morale); conditions that increase the probability of the insured to experience a loss loss - ✔✔️i️s defined as the reduction , decrease, or disappearance of value of property or person insured in the policy caused by a name peril Pure Death protection - ✔✔️(️Term/temporary protection) if the insured dies during this term, the beneficiary receives the pay out; if policy is cancelled/expires prior to insured death, there is nothing payable at the end; NO cash value; maximum age that coverage is not offered is 80 Level Term Insurance - ✔✔️r️efers to most common type of temporary protection in which death benefit does not change throughout duration of policy Annually Renewal Term -ART - ✔✔️t️he purest form of term insurance, in which death benefit remains level and the policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to attained age , as the probability of death increases Actual Cash Value (ACV) - ✔✔️T️he required amount to pay damages or for property loss. This amount is calculated based on the property's current replacement value minus depreciation. Actuary - ✔✔️A️ person trained in the technical aspects of insurance and related fields, particularly in the mathematics of insurance; a person who, on behalf of the company, determines the mathematical probability of loss. Adhesion - ✔✔️A️ contract offered on a "take-it-or leave-it" basis by an insurer, in which the insured's only option is to either accept or reject the contract. Any ambiguities in the contract will be settled in favor of the insured. Adjuster - ✔✔️A️ representative of an insurance company who investigates and acts on the behalf of the company to obtain agreements for the amount of the insurance claim. Admitted (Authorized) Insurer - ✔✔️A️n insurance company authorized and licensed to transact business in a particular state. Adult Day Care - ✔✔️A️ program for impaired adults that attempts to meet their health, social, and functional needs in a setting away from their homes. Adverse Selection - ✔✔️T️he tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability. Agent's Authority - ✔✔️S️pecial powers granted to an agent by his or her agency contract. Aleatory - ✔✔️A️ contract in which participating parties exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss. Ancillary - ✔✔️A️dditional, miscellaneous services provided by a hospital, such as x-rays, anesthesia, and lab work, but not hospital room and board expenses. Annual Statement - ✔✔️A️ detailed financial report that an insurance company must submit every year to the insurance department of state(s) in which it conducts business. Annuity - ✔✔️A️ contract that provides income for a specified period of years, or for life. Nonrenewal - ✔✔️A️ termination of a policy by an insurer on the anniversary or renewal date. Mutual Companies - ✔✔️I️nsurance organizations that have no capital stock, but are owned by the policyholders. Misrepresentation - ✔✔️A️ false statement or lie that can render the contract void. Estoppel - ✔✔️A️ legal impediment to denying a fact or restoring a right that has been previously waived. Errors and Omissions Policy (E&O) - ✔✔️A️ professional liability insurance that protects the insurer from claims by the insured for errors or oversights on the part of the insurer. Excess Insurance - ✔✔️I️nsurance that pays over and above or in addition to basic policy limits. Apparent Authority - ✔✔️T️he appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. Authorized (Admitted) Insurer - ✔✔️A️n insurance company authorized and licensed to transact business in a particular state. Binder (Binding Receipt) - ✔✔️A️ temporary contract that puts an insurance policy into force before the premium has been paid. Broker - ✔✔️A️uthority created when the producer exceeds the authority expressed in the agency contract. This occurs when insurer does nothing to counter the public impression that such authority exist.(Ex: company supplied signs, business cards and letter head.) Producer's responsibility to the insurer: - ✔✔️1️) Fiduciary duty to the insurer in all respects, especially when handling premium funds. 2) Must keep premium funds in a trust account separate from other funds and forward to insurer promptly. 3) Must report any material facts that may affect underwriting. 4) Responsible for soliciting, negotiating, selling, and cancelling the insurance policies with the insurer. 5) Duty to only recommend the purchase of only suitable policies. Producer's responsibilities to the insured: - ✔✔️1️) Forward premiums to insurer on a timely basis. 2) Seek and gain knowledge of the applicants insurance needs. 3) Review and evaluate the applicant's current insurance coverage, limits and risks. 4) Serve the best interests of the applicant or insured, although producers represent the insurer. 5) Recommend coverage from the perspective of the producer. Peril - ✔✔️T️he cause of loss Loss Exposure - ✔✔️C️ondition of being at risk of a loss. Purely by existing, property and people are at risk for loss. Managing Risk - ✔✔️M️inimize the possibility of a loss. Ways to manage risk: STARR- Sharing, Transfer, Avoidance, Reduction, Retention STARR - ✔✔️m️anaging risk: Sharing- Investments of a large number of people may be pooled by use of a corporation or partnership. Transfer- Transferring the risk from one party to another, such as from consumer to insurance company. Avoidance- Elimination of risk, avoid the activity that gives rise to the chance of loss. Reduction- Minimizing the chance of loss, but not preventing the risk. Retention- Assume the responsibility for loss, self insure the entire loss or a portion of the loss by choosing deductibles is a method of retention. 4 Elements of a legal Contract - ✔✔️1️) Competent parties- Insurer and insured must have legal capacity to enter into a contract. Those without legal capacity include: A. Minors *Exceptions do exist such as for the purchase of auto insurance. B. The mentally incompetent or incapacitated. C. Persons under the influence of drugs or alcohol. 2) Legal Purpose- All parties must enter in good faith and all parties to a contract must enter it for a legal purpose; public policy cannot be violated by a legal contract. 3) Agreement- One party must make and communicate an offer to the party and the second party must accept that offer. A. offer- the offer for entering an insurance contract is the application submitted by the applicant. B. Acceptance- The acceptance of an insurance contract takes place when the insurance company agrees to issue insurance. A counteroffer by the insurance company is not acceptance until the applicant accepts the counteroffer. 4) Consideration- something of value is exchanged the exchange of an act for a promise. (Ex: The consideration made by the applicant is the premium and the consideration made from the insurer is its promise to pay for covered losses.) Aleatory Contract - ✔✔️T️he exchange of value is unequal. Insured's premium payment is less than the potential benefit to be received in the event of a loss. The insured's payment in the event of a loss may be much greater, or much less (Ex: $0 in the event a loss doesn't occur), than the insured's premium payment. Valued Contract - ✔✔️A️ contract that pays a stated amount in the event of a loss. *Most insurance policies are NOT valued contracts unless they are endorsed. means an insurer formed under the laws of the United States or of another state of the United States. - ✔✔️️ Indemnity Contract - ✔✔️A️n agreement to pay on behalf of another party under specified circumstances, such as when a loss occurs. Representation - ✔✔️S️tatements made by the applicant on the application that are believed to be true to the best of the knowledge and belief of the applicant; may be withdrawn prior to policy issuance. Concealment - ✔✔️T️he willful holding back or secretion of material facts pertinent to the issuance of insurance (or claim). Concealment results in denial of coverage and may void the policy. Schedule Rating - ✔✔️A️ method of rating property and liability risk by using charges and credits to modify a class rate based on the nature of the particular risk being rated. Reciprocal Insurance Company - ✔✔️T️his is an aggregate who under a common name engage in business of inter insurance which means they Insure themselves and each other. (Ex: Physicians Reciprocal Insurance) When can two insurance companies arbitrate a subrogation question? - ✔✔️W️hen both companies consent to arbitration Who makes a declaratory judgement? - ✔✔️T️he court An HO-2 form sets special coverage limits on all of the following items, EXCEPT: - ✔✔️T️elevision sets Furniture is not subject to the special limit provisions of the policy. An insured's television set is damaged while at a repair shop. The interest of the repair shop is not covered because of which of the following clauses? - ✔✔️N️o Benefit to Bailee The intent of the policy is to only cover the insurable interest of the insured. Bailees such as, a TV repair shop or a dry cleaners would not be an insured under the insured's policy. They must provide their own coverage. In a Homeowner Policy under the additional coverage of glass breakage, building glass is: - ✔✔️C️overed unless the insured premises has been vacant for 60 consecutive days immediately before a loss In New York, no suit or action against the insurer for the recovery of any claim shall be sustainable in any court of law unless all of the requirements of the policy have been complied with, unless commenced within ______ months after inception of the loss. - ✔✔️2️4 months The suit must be brought within 24 months next after the inception of the loss. In ocean marine insurance, each of the following is considered to be an "implied warranty" EXCEPT: - ✔✔️G️eneral Average. Insurers must maintain a complaint record for ______ after all elements of the complaint are resolved and the file is closed. - ✔ ✔I️nsurers are required to maintain complaint records for six calendar years. Richard Lanham has been advised by the superintendent of Insurance to cease and desist in the performance of certain infractions of the insurance code. He has had a hearing and been issued a cease and desist order. He continues to violate the cease and desist order. He can be fined a penalty of up to: - ✔✔️$️5,000 per violation. The $1,000 for reasonable expenses incurred to remove property to another location to protect it from flood damage is available on flood insurance: - ✔✔️T️he policy will provide up to $1,000 of expenses incurred to remove property from the premises to protect it from damage for each flood loss occurrence. ✔✔️C️overage E covers scheduled farm personal property. Each item to be covered is listed and an amount of insurance is stated. Crop insurance provides coverage for losses to: - ✔✔️T️he marketable portion of growing crops. Most forms exclude damage to the trees, vines, bushes, plants and blossoms that produce the crops. Only the marketable portion of the crop is usually covered. Dan insures a home for adequate limits under a DP-2. If a flood causes $1,000 in damage, what is the maximum the insurer will pay, disregarding deductibles? - ✔✔️$️0 Flood is an excluded peril under all the dwelling forms unless fire ensues and then only the loss caused by fire is covered. Diane is fined by the Superintendent for a violation of the insurance law of New York. The fine is not paid within 20 days. What action may the Superintendent take? - ✔✔️I️f the fine has not been paid within 20 days the Superintendent will suspend or revoke the license. How are crop insurance premiums calculated? - ✔✔️C️rop insurance is based on acreage for each crop If a crop insurance policy does not cover loss of the first 10% of a crop's value, but does cover a fixed percentage of any additional loss, the policy is said to be written: - ✔✔️O️n an excess over basis The term "excess over" means that the coverage applies as excess, and that the insurer has no liability until the loss exceeds a particular threshold. If an insured desires broader coverage than provided under the homeowners program for camera equipment this coverage can be obtained through: - ✔✔️S️cheduled Personal Property Endorsement. In order to provide specific coverage for specified personal property the scheduled Personal Property Endorsement should be used. This provides "all risk" coverage that is broader than the coverage under the HO forms and has less exclusions. If the insured carries a DP-2 dwelling form and insures the dwelling for 80% of its replacement cost value, what will he be paid if his 30 year old roof sustains $10,000 in damages(disregarding any deductible)? - ✔✔️$️10,000 If the insured carries 80% to value he would be entitled to full replacement cost coverage for his damaged roof. In New York, if an insured and an insurer cannot agree on the value of a property loss, they each can select an appraiser. If the appraisers cannot agree, an umpire is selected by: - ✔✔️A️ court of law. The appraisers are given an opportunity to select an umpire within 15 days. Upon failing to do so, the court will appoint one. In New York, insurers must maintain records pertaining to claims, rating, underwriting, marketing and other pertinent information for a period of - ✔✔️T️he law requires that these records be maintained for inspection and/or review for at least six years. In the property insurance field, a "friendly fire" is one which: - ✔✔️I️s intentionally set and remains within its intended limits. Conversely, an unfriendly fire is one that is not contained within its intended limits. A fire in a fireplace is a friendly fire until it spreads beyond the fireplace. Policies cover unfriendly fires. Joann Larson, an adjuster, has had administrative action taken against her in another jurisdiction. What must she do? - ✔✔️R️eport the final disposition of the matter to the Insurance Superintendent within 30 days John has commercial property coverage written on a value reporting form. The maximum limit of coverage for inventory values is $150,000. The insured has reported an inventory value of $75,000 when the actual value was $100,000. A $20,000 loss occurs. The insurer will pay: - ✔✔️$️15,000.00 The insured is required to carry a 100% coinsurance clause when the reporting form method is used. The insured is also required to report 100% of the actual inventory values. This insured reported less than the actual inventory by 25% and will only receive 75% of a partial loss or $15,000. Losses caused by all of the following are covered under the National Flood Insurance Program, EXCEPT: - ✔✔️S️ewer backup. Most insurance carriers now offer sewer backup coverage. This type of loss is not considered to be a flood loss. Mary has insured her one-family home under an HO-3 form with a limit of $100,000. What limit is she automatically entitled to for her unattached garage on the premises? - ✔✔️T️he HO-3 form provides 10% of the dwelling limit that applies to unattached structures. The most the insurance company can pay is $10,000 ($100,000 multiplied by 10%). Medical payments coverage under the farmowners policy covers which of the following? - ✔✔️I️njuries sustained by an invitee Medical payments would pay for the injuries sustained by an invitee or guest. Coverage does not apply to members of the insured's family, roomers or boarders or tenants of the dwelling, or to farm employees Motels insured under the BOP may not exceed how many stories? - ✔✔️M️otels not exceeding three stories may be insured. There is no floor area restriction. Motels closed for more than 30 days are not eligible. On an unendorsed special form BOP, how much coverage is there for theft of money & securities? - ✔✔️N️othing Even though the special BOP is "open peril" coverage which includes theft, the loss of money and securities are still not a covered form of property. The endorsement for Money & Securities is necessary to cover this exposure. Phil Smith, in helping his friend Tim Jones apply for a New York Casualty Insurance license, attests to Tim's honesty on the application and competence to handle the duties of the license. Phil's statement must: - ✔✔️T️im must provide statements from at least 5 members of his community attesting to his honesty on the application and to his abilities. This must be filed with the application for the license and any required supporting documentation. Plumbing under the kitchen sink of an insured's condominium comes loose and leaks water all over the floor. The repair person has to tear out the floor under the sink to repair the hose. The cabinet is also damaged. What would the insured's HO-6 cover? - ✔✔️A️ll of the loss is covered except the hose The HO-6 would cover the water damage to the floor as well as the cost to repair the damaged floor. The repair to the hose is not covered. Policies issued under the National Flood Insurance Program provide removal coverage for property which is moved to another location to protect it from a flood. This coverage applies for up to: - ✔✔️R️emoval coverage is designed to avoid loss if the property can be moved elsewhere for protection against flood damage. This coverage is provided for up to 45 days. Protection and indemnity coverage contained in an ocean marine policy covers:I. Liability against injuries to seamen.II. Injury to stevedores, longshoreman and harbor workers.III. Cargo, if lost or damaged through negligence. - ✔✔️I️, II and III. Protection and indemnity coverage would apply to all of these types of losses Public adjusters in New York must maintain books, files and records for at least ____ years from the completion of the services rendered. - Under the DP-2 and DP-3 dwelling forms, coverage for damage caused by vandals will be suspended, if at the time of loss the dwelling has been vacant for more than: - ✔✔️V️acant property creates a hazard for vandalism. The number of days was recently increased from 30 days to 60 days in practically all of the states. Coverage for vandalism and malicious mischief coverage must be added specifically to the DP- 1 form. New York still uses 30 days. Under the Federal Terrorism Risk Insurance Act of 2002 (extended in 2007 to now expire 12/31/14), who determines that an act of terrorism has occurred that would be covered under the Act? - ✔✔️T️he Secretary of the Treasury in concurrence with the Secretary of State, and the Attorney General. The Secretary of the Treasury in concurrence with the Secretary of State, and the Attorney General. - ✔✔️T️he Insured's Contents and Personal Liability The HO-4 is designed for apartment dwellers or those that live in a rented dwelling. Since they don't own the structures, no coverage is needed to cover the real property. Under the livestock coverage form, how must livestock be covered? - ✔✔️T️he livestock form requires that the livestock must be insured at least 80% to value What deductible applies to Additional Coverage-Fire Department Service Charg - ✔✔️T️he policy deductible does not apply What does the property insurance term "improvements and betterment" apply to? - ✔✔️R️eal Property When a tenant occupies a non-owned structure they may make improvements and betterments to the real property. While they are occupying the building they have an insurable interest in these items. When they move they must be left. The monies spent on improvements and betterments can be covered in property insurance. What endorsement may be used under the dwelling policy to keep values current with the replacement cost of the buildings? - ✔✔️T️he Automatic Increase Endorsement is used to keep the coverage current as a result of inflation on construction costs. What endorsement should an insured add to his or her homeowner policy to cover the replacement cost of personal property? - ✔✔️P️ersonal Property Replacement Cost Endorsement The Personal Property Replacement Cost Endorsement should be added to provide replacement cost coverage on covered personal property. What is the difference between a Businessowners Policy and a Commercial Property Policy? I. The Businessowners Policy automatically provides earthquake coverage whereas a Commercial Property Policy does not. II. The Businessowners Policy includes liability coverage, while a Commercial Property Policy would not. - ✔✔️I️I Only The Businessowners Coverage form automatically provides property and liability coverage. Neither a Businessowners nor a Commercial Property Policy would automatically provide earthquake coverage, although endorsements are available to add it. What is the limit of insurance that applies to property in transit in the BOP? - ✔✔️T️he BOP provides a $10,000 limit for property in transit What is the limit under the Businessowners Policy for pollution clean up? - ✔✔️C️overage for clean-up of pollution is limited to $10,000 for all expenses to extract pollutants (a defined term) from land or water if the release of the pollutants is caused by a covered cause of loss and occurs during the policy period. The expenses must be reported in writing to the insurer within one hundred and eighty days of the earlier of the date of the loss or damage, or the end of the policy period. Note that the $10,000 is an aggregate amount for each separate twelve month period. The newer forms add the costs of testing for and the cost for testing performed, when pollutants are extracted. Monitoring, or assessing pollutants are not covered. What is the percentage of coverage for the "loss of use" under HO-3, homeowner form? - ✔✔️T️he percentage of Coverage A for this coverage is 30%. Which of the following amounts would be paid on a covered auto suffering a total loss? The retail value is $1,250.00 and the average trade in value is $1,000.00. - ✔✔️$️1,250.00 plus applicable taxes In case of a total loss to a covered vehicle the insurer is required to pay the retail value of the vehicle plus any applicable sales taxes. Which of the following cannot be covered under a BOP? - ✔✔️C️redit unions, banks and savings and loan companies are not eligible for the BOP. Which of the following is an obligation of the insured involving a covered property insurance loss? - ✔✔️T️he insured is obligated to protect the property from further loss or damage. Which of the following is correct regarding HO-3 and an HO-5 coverages? - ✔✔️P️ersonal property under an HO-3 is covered on a named peril basis, while personal property under an HO-5 is covered on an open peril basis. The HO-3 and the HO-5 are the same in terms of dwelling exclusions, valuation on dwelling losses, and the type of personal property insured. They are different in terms of perils insured against for personal property losses. Which of the following is covered property under the HO-3 form? I. Belongings of the insured's daughter while she is away at college II. The insured's garage III. The insured's dog IV. Personal property of a tenant - ✔✔️I️ and II only Pets, no matter how valuable, are excluded under Coverage C, as is the property of boarders or renters. Which of the following is not an endorsement under a homeowner policy? - ✔✔️F️lood coverage Flood insurance is not a homeowner endorsement Which of the following would be covered under a multi-peril crop policy? - ✔✔️L️ow yields The multi-peril crop insurance program provides protection against low yields and poor quality crops as well as prevented planting, late planting and replanting costs for most crops subject to the perils insured against. The coverage applies to income protection. Crop revenue insurance goes a step further than multi-peril crop insurance by guaranteeing farms a certain income, which allows them to manage both yield and price risk. Which of the following would be eligible for a BOP? - ✔✔️A️ dental laboratory While traveling in a rented car in Spain Mr. Brown has his personal property stolen. What kind of coverage should he have to cover this loss? - ✔✔️T️his is covered under a homeowner policy. Personal property is covered on a worldwide basis. If a HO policy is not in force then a Personal Property Floater could be written. Who is an insured under the liability section of a farm policy? - ✔✔️A️ farm employee is covered while acting within the scope of his duties. Farming includes the incidental operation of roadside stands where farm products principally produced by the "insured" are sold. Crop insurance usually protects a proportion of the reduced yield following an insured loss. "Reduced yield" refers to: - ✔✔️C️overage will pay the determined percentage reduction in yield times the amount of insurance per acre, regardless of the actual crop loss. The insured chooses the reduction in yield percentage. The higher the percentage the more coverage in case of a loss. Most companies prefer the insured share in the loss at least 25%. All of the following are covered under the Equipment Breakdown coverage form, except: - ✔✔️T️he breakdown of any structure or materials supporting the equipment. The policy does not cover the structure or materials supporting the equipment. The policy does not cover the structure or materials supporting the equipment. - ✔✔️T️ornado Flood, earthquake, and mudslides are excluded perils. Coverage for flood and mudslides can be covered by purchasing a separate flood policy. Earthquake coverage can be purchased separately. Tornado is covered by the wind peril. All of the following are exclusions under Section I - Forms HO-2 and HO-3, EXCEPT: - ✔✔️C️ollapse The HO-8 form does not include the peril of collapse. However, the broader forms HO-2 and HO-3 include collapse. The other 3 answers are excluded under all of the HO forms. All of the following are exclusions under the standard BOP form, EXCEPT: - ✔✔️T️ransportation Transportation is a covered peril in the BOP. All of the following are true regarding the "write your own" program under flood insurance, EXCEPT: - ✔✔️I️nsurers must participate in the program. Insurers voluntarily participate in the program; they are not required to do so. All of the following would not be eligible for coverage under a businessowners policy, EXCEPT: - ✔✔️S️mall retail store The BOP is intended for small, owner-operated light businesses. Bars and taverns and auto body and repair shops are almost always excluded. The branch bank would not meet the general criteria. An adjuster has just completed taking the statement of a witness. Which of the following must be done? - ✔✔️T️he witness must sign each page and have his or her signature witnessed. An adjuster should refrain from using derogatory remarks and abbreviations in a report because - ✔✔️T️he report is part of the discovery process from the plaintiff's attorney If the first or third party claimant brings suit against the insurer, all claim reports and supporting documentation is part of the discovery process. An applicant for an adjuster's license must be approved by five reputable citizens of the community where the adjuster resides. This documentation must be: - ✔✔️T️he application for the license must be approved by at least five reputable citizens of the community where the applicant resides. They must certify that they have known the applicant for at least five years and that they believe the statements in the application are true. The statements must be included with the application for the license. An HO-5 form provides which of the following coverages for dwellings and their contents? - ✔✔️O️pen peril coverage for buildings and personal property. The HO-5 form is the broadest HO form and provides open peril coverage on both covered buildings and the insured's personal property. An independent adjuster represents the interest of: - ✔✔️T️he insurer. The independent adjuster adjusts claims on behalf of the insurer and therefore, represents the interest of the insurer. An individual who is needed to provide testimony for either the plaintiff or defendant in a court proceeding is served with a: - ✔✔️A️ subpoena directs the individual to whom it is served serves to appear before the court and provide to the court testimony regarding the matter at hand. An insured can assign the policy to another only if the insurer agrees. In most cases, the insurer will not agree because an insurance policy is considered to be a: - ✔✔️P️ersonal contract An insurance policy is a personal contract and does not automatically pass to the new owner of the policy even if the insured would like it to. An insured is covered under a BOP policy. He insures a piece of equipment separately under a floater policy. In case of a loss what coverage will apply under the BOP policy? - ✔✔️T️he BOP will be excess over the floater policy The BOP would be excess subject to the policy limits if the floater does not cover the entire loss. An insured is covered under a Businessowners Policy. A fire has occurred to a business a block away and the civil authorities have blocked off the street. The insured's customers cannot gain entrance to his business location. What coverages would apply to the insured's loss of income? - ✔✔️A️fter a waiting period of 72 hours the policy would pay for loss of income of up to three weeks. An insured's wife is wearing a diamond ring while on vacation in Europe. The ring valued at $1,500 is stolen. What coverage would apply under their Homeowner Policy? - ✔✔️T️he policy will pay the loss less the deductible. Personal property is covered anywhere in the world. The theft limit for jewelry is $1,500. The loss less the deductible is covered. An insurer fails to respond to a letter from a claimant requesting information. This is in violation of: - ✔✔️T️he Standards for the Acknowledgment of Pertinent Communications. The insurer shall reply within a specified number of working days to all pertinent communications from a claimant that reasonably suggests that a response is expected. An insurer whose place of incorporation is Toronto, Canada would be identified as a/an? - ✔✔️A️lien insurer. Any insurance adjuster whose license has been revoked for cause will not be entitled to apply for any other insurance license in New York until at least: - ✔✔️O️ne year after the revocation. The person must wait for one year to be eligible to reapply. There is no assurance that the Superintendent would consider a reissue of license due to the previous revocation. As used in the phrase property and casualty insurance, casualty refers to - ✔✔️L️iability loss or exposure Casualty involves a liability loss or exposure creating a legal liability situation based on negligence. Bob is purchasing a commercial property policy to cover contents of a building valued at $100,000. The policy includes an 80 percent coinsurance clause. To avoid a coinsurance penalty in the event of a partial loss, Bob should purchase a policy with minimum limits of at least: - ✔✔️T️he value of the covered property is ($100,000) times 80% = $80,000. Cause of loss forms refer to what type of coverage under a farm policy? - ✔✔️P️roperty There are three causes of loss provisions in the property coverage under a farm policy: basic, broad and special. The insured chooses which provision is to apply and pays the premium accordingly. Obviously, the special is the broadest coverage. Choose from the following situations the example of assumption of risk. - ✔✔️F️red was in a hurry to get to work. He took a shortcut over a bridge marked "condemned," which collapsed under his weight. ✔✔️H️omeowner's policies require that the named insured reside at the described premises while dwelling policies do not. The named insured must be a resident of the policy's insured premises under the HO program. How do you change the property causes of loss from risks of direct physical loss to named perils coverage under the BOP? - ✔✔️A️ttach the Named Perils form The named peril endorsement must be attached to the policy How is personal property of a dwelling covered under a farmowner policy? - ✔✔️T️he property is covered on an actual cash value basis. Like a homeowners policy, the replacement cost endorsement may be attached for an additional premium. How much is covered under a Homeowner Policy for charges made as a result of a stolen credit card? - ✔✔️T️he policy provides a limit of $500 for credit card forgery and counterfeit currency. If a building insured under a BOP has been vacant or unoccupied beyond ____ the insurer can send the insured a notice of cancellation - ✔✔️I️f the risk has been vacant or unoccupied beyond 60 consecutive days, the insurer can send the insured a notice of cancellation. Buildings with 69 percent or more of their rental units or floor area remain vacant or unoccupied are considered unoccupied under this provision. If a loss is valued using functional replacement cost, which of the following would apply? - ✔✔️T️he coinsurance clause is not applicable The coinsurance clause is not applicable because the coverage limit is based on the market value of the property which is probably below the 80% cost to replace it. This has been agreed to in the contract when functional replacement cost is the basis for loss settlement. Used particularly in losses involving antique, ornate or custom construction with less expensive, but functionally equivalent materials. If an insured carries Coverage C under a dwelling form, how much coverage applies on a worldwide basis? - ✔✔️1️0% of the Coverage C limit Whereas homeowners forms provide the FULL limit of personal property coverage anywhere in the world, dwelling forms cover only 10% of the personal property limit on a worldwide basis. The remainder of the personal property is covered only while on the designated premises. If an insured desires additional amounts of coverage above the "Special Limits" under the Homeowners program for jewelry or firearms it can be obtained through the use of: - ✔✔️A️ scheduled personal property endorsement. Standard Homeowners policies have "special limits" on certain types of property like jewelry, firearms, gold and silverware, etc. These special limits are relatively low. If an insured seeks higher limits than the "Special Limits" they can purchase a separate policy OR they can attach the scheduled personal property endorsement to their Homeowners policy. If an insured fail to report a claim in a timely fashion the adjuster will usually: - ✔✔️S️end the insured a reservation of rights letter Failure to report a claim in a timely fashion denies the insurer of the opportunity to promptly investigate the circumstances of the claim. Valuable information from witness could be lost as well as other physical evidence. When this occurs, the insurer will normally send the insured a reservation letter to protect the rights of the insurer. If one is found guilty of federal insurance fraud, who can permit the guilty individual to return to the insurance business? - ✔✔️O️nly an insurance regulatory official. Only an insurance regulatory official, such as the Superintendent of Insurance, can allow the individual to return to the insurance business. In a farmowner's policy, the maximum amount payable for a loss to a satellite dish is: - ✔✔️$️1,000.00 The pre-2000 policy forms provided $250 for a satellite dish. Under the newer forms, the limit hsa been increased to $1,000. In a policy with replacement cost to damaged carpet and countertops, if replacement will not match up in quality and appearance with the undamaged property, what must the adjuster do? - ✔✔️R️eplace the damaged carpet and countertops and some of the undamaged property within reasonable site lines. In a property loss the insured is required to do all of the following, EXCEPT: - ✔✔️R️epair the property within 20 days of notifying the insurer The insured should not repair the property until agreed upon by the insurer. In case of a total loss in an automobile accident, the adjuster will pay the insured which of the following? I. The cost to replace the vehicle with like kind and quality if the vehicle is a current year model. II. Use the most recent publication of an "Official Used Car Guide". III. If not listed in the "Guide", obtain quotations from automobile dealers. - ✔✔️I️, II and III depending on the circumstances Any or all of the responses listed can be options in settling a total loss claim. In casualty insurance, the other insurance clause would be applicable: - ✔✔️W️hen two or more policies are in force covering the same claim, the other insurance clause is in place. In most states, which of the following most accurately describes an "admitted" insurer? - ✔✔️A️n insurer which can transact insurance in the state under its Certificate of Authority. Admitted insurers are those which are authorized to sell insurance in the state according to its Certificate of Authority issued by the state insurance department. In New York complaint records of claims must be maintained for ______ calendar years. - ✔✔️I️nsurers must maintain complaint records for six calendar years after all elements of the complaints are resolved and the file is closed In order to receive full replacement cost recovery on a covered loss under a BOP, the named insured must maintain insurance limits equal to at least what percentage of the covered property's full replacement value? - ✔✔️T️he insured must maintain at least 80% of the value of the covered property. In settling a claim on a dwelling fire policy with a $10,000 loss, the following companies are involved, Company A - 50%; Company B - 45% and Company C - 5%. What will Company C pay - ✔✔️$️500 Mr. Cato carries a watercraft policy covering his 25 foot pontoon boat. The boat is powered by a 150 h.p. motor. He transports it to the Florida Keys and operates the craft 20 miles out to sea. The boat capsizes and is destroyed. What coverage would apply to the boat? - ✔✔️N️o coverage would apply to the boat because the insured went outside the territorial limit of 12 miles. None of the following can be covered by the Federal Terrorism Act insurance program, EXCEPT: - ✔✔️C️ommercial property and casualty risk are eligible. Personal insurance, crop insurance and life and health insurance are not eligible for the program. On the basic dwelling policy all of the following perils are excluded EXCEPT: - ✔✔️V️olcano The question is about the DP-1 Basic form. War, earthquake and landslide are not named perils and are therefore excluded. Barratry means fraud by the master or the crew with the intention of reaping gains at the expense of the owner. Examples include setting the ship on fire, diverting the ship from its course, or embezzlement of the cargo. The DP-3 dwelling form provides: - ✔✔️O️pen peril coverage on structures and broad form peril coverage on contents. The other forms are named peril forms and are not as broad as the open peril form The dwelling property program is designed to cover all of the following properties, EXCEPT: - ✔✔️A️ 1-story apartment house with eight roomers Most states will not allow for more than five roomers and boarders. The Federal Terrorism Act covers all of the following, EXCEPT - ✔✔️T️he Act does not apply to crop insurance. The Federal Terrorism Act covers property and casualty losses that exceed ______in the aggregate. - ✔✔️T️he Act covers losses from a certified terrorism act that exceed $100,000,000 in the aggregate. This limit was amended in 2007. Previously the limit was $50,000,000. This is called the program "trigger". The following losses would be covered under the HO-2 and the HO-3 homeowners forms, EXCEPT: - ✔✔️F️lood damage to a home Flood is not covered under any of the homeowners forms. The HO-4 provides ____ coverage on the dwelling and ____ peril coverage on personal property. - ✔✔️n️o / broad The HO-4 (Tenants form) insures tenants - people who do not own the building where they reside. It provides no coverage for the dwelling and broad peril coverage on the personal property. The form used to report the insured's actual and estimated business income under an Equipment Breakdown policy is called: - ✔✔️B️usiness income—Report of Values This endorsement gives information to the insurer as to the actual values and estimated values of the insured's business income. This enables the insurer to charge a proper premium for the business income exposures that are covered under the boiler and machinery program. The HO-6 provides ________ peril coverage on personal property. - ✔✔️b️road The HO-6 (Condominium form) provides broad peril coverage on the personal property of condominium owners. The insured carries a BOP policy with a sprinkler system. If the system becomes inoperative the insured must advise the insurance company of the problem within ______ if the system cannot be restored - ✔✔️4️8 hours The insured must advise the insurance company within 48 hours of a protective device becoming inoperable. The insured carries a yacht policy and is pulling a water skier. The skier is a family member and is injured. What coverage might apply to this accident? - ✔✔️M️edical payments coverage Medical payments coverage under the yacht policy would cover this loss up to its specified limit. The insured carries an unendorsed DP-3 dwelling policy on his home and personal contents. While traveling abroad someone broke into the home and stole $200. in cash, a shotgun valued at $1,000. and other household items valued at $2,000. Damage caused by the burglars is $1,500. Assuming no deductible applies to their coverage how much would be paid? - ✔✔️$️1,500.00 The DP-3 only provides damage to the covered property caused by the burglars. Theft is excluded under the DP-3 unless endorsed with the theft endorsement. The insured has a communication failure at his premises due to a lightning strike at the phone company. The insured's phone system is damaged and he is out of business for four days. Which endorsement is necessary to provide coverage for the loss of business income? - ✔✔️U️tility Services - Time Element The Utility Services - Time Element endorsement would cover the loss of business income in this example if the phone system was listed on the endorsement and the cause of the loss was covered by the policy. The insured has a one family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the garage? - ✔✔️T️he policy provides for 10% of the dwelling limit. Therefore the garage is insured for $20,000 for the same perils that apply to the dwelling. The insured has an HO-3 homeowner policy. During the night the water line in the wall to the upstairs bath room burst and water ruined the walls, floor and other furniture. In this situation all of the damaged will be covered except: - ✔✔️R️eplace the pipe that broke The policy will not pay for the part of the pipe that broke. All of the other damage is covered. The insured has several locations and desires to insure his contents coverage. His agent advises him to complete a statement of values form and issues a policy with one limit to cover all locations. This is an example of: - ✔✔️B️lanket coverage. This is an example of "blanket" coverage where all locations are covered under one limit. The insured is covered under a BOP policy. Contents coverage is included. If the insured buys a separate piece of machinery and insures it separately, how will the BOP policy respond to a loss to this machinery? - ✔✔️T️he equipment policy will be primary and the BOP will be excess if the separate policy does provide adequate limits of coverage. The BOP will only pay on an excess basis if the other coverage does not provide adequate limits of coverage The insured is covered under a Businessowners Policy. He owns a hardware store that suffers a loss from a covered peril. His loss of income is $50,000. How will the loss be paid under the BOP? - ✔✔️O️n an actual loss sustained basis ($50,000) The policy pays for the actual loss of Business Income sustained due to the necessary suspension of "operations" during the "period of restoration." The suspension must be caused by direct physical loss of or damage to property at the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss. With respect to loss of or damage to personal property in the open or personal property in a vehicle, the described premises include the area within 100 feet of the site at which the described premises are located. The insured is covered under a HO-5 Policy. What coverage does the insured have for contents coverage? - ✔✔️O️pen Peril Coverage The HO-5 Form provides Open Peril Coverage on both structures and contents. The insured is moving to a new location. Coverage for contents provided under a Homeowner Policy would be: - ✔✔️O️n a pro-rata basis between the two locations. Coverage would apply at both locations on a pro-rata basis for 30 days. The insured is operating his boat on a fresh water lake and runs over a water skier. What coverage would apply to this claim under the boatowners policy? - ✔✔️L️iability coverage The liability portion of the boatowners policy would pay the claim if the insured is held legally liable. Under Coverage C (personal property) of the homeowners program all of the following categories of property are limited, EXCEPT: - ✔✔️R️ecreational furniture All of the HO forms contain a list of property subject to limitations. Recreational furniture is not included within this list. Under farm liability coverage, which of the following would be covered? - ✔✔️P️roducts liability for the insured's products Products liability for the insured's products would be covered. The others are specifically excluded. Under pollution clean up and removal coverage under the BOP, when must a loss be reported? - ✔✔️T️he expenses will be paid only if they are reported to the insurer within 180 days of the date of the direct loss or the end of the policy period. Under the broad peril dwelling form, which of the following losses would not be covered? - ✔✔️D️amage to the dwelling that is suddenly caused by wild animals. The broad form is a named peril form and does not list damage caused by wild animals as a covered peril. Under the commercial building and personal property coverage form, which of the following is correct regarding the appraisal clause? - ✔✔️T️here are no stipulated time requirements in any policy in regards to the appraisal clause. Under the Commercial Property Liberalization Clause, if the insurer makes any coverage revision which broadens the coverage without an additional premium charge, it will automatically apply to existing policies if the revision is adopted during the policy term or within: - ✔✔️4️5 days prior to the effective date. This is standard in Commercial Property Insurance. Under the farm property form with replacement cost coverage, after the first $1,000 how is the claim paid? - ✔✔️A️CV until repairs are completed and then the full replacement cost is paid Like most property forms that provide replacement cost coverage, the insurer will not pay replacement cost until the repairs have actually been made. Under the HO Policy, loss of use would cover which of the following? - ✔✔️A️dditional Living Expense and Fair Rental Value Coverage D, covers the loss of use of a dwelling. Additional Living Expense is included in this coverage as well as the Fair Rental Value Coverage. Under the HO-3 policy which of the following would not be covered? - ✔✔️E️arthquake Earthquake can be added by endorsement and is not automatically included in the unendorsed HO-3. Under the HO-3, what percentage of Coverage A is written as the Coverage D limit (loss of use)? - ✔✔️3️0 percent The HO-2, HO-3 and the HO-5 provides for 30% for Coverage D (additional living expense/fair rental value) under the HO Forms. Under the Homeowners Policy, "theft" does not include: - ✔✔️T️heft of building materials from a dwelling under construction is excluded. An inland marine form can be purchased to cover this exposure. Under the livestock coverage form, within how many days must newly acquired livestock be added to the policy? - ✔✔️W️ithin 30 days of purchase Additional acquired livestock must be reported to the insurance company within 30 days of acquisition, at which time an additional premium will be charged the insured. Under the terrorism risk insurance act of 2002, which of the following would be considered a certified act of terrorism? - ✔✔️I️n order to be a certified act of terrorism, the act must cause 5 million or more in damages and be committed by a foreign national. The department of the Treasury will make the certification decision, not the Senate or the President Upon discovering that an agent may have violated an insurance law, the insurance department is required to take which of the following actions? - ✔✔️H️old a hearing on the infraction In most states, the head of the state's insurance department will hold a hearing and subpoena witnesses regarding a possible violation of insurance law. The agent would have the opportunity to present his or her side of the case at that hearing. After the hearing is completed, the department head will issue an order/conclusion (similar to a verdict in a criminal case). What does the term "unvalued basis" mean as it relates to ocean marine hull insurance? - ✔✔️T️his is a policy where the value of the property is not declared until after the loss. Some forms of ocean marine hull coverage are written on this basis. What constitutes an "agreement" to enter into a valid contract? - ✔✔️A️ specific offer by one party and acceptance by the other. It is the insured that makes the offer by submitting an application with the premium. The insurer can either accept or reject the offer. If the offer is accepted then a policy is issued which becomes a valid contract between the parties. What is "break-bulk" cargo as respects ocean marine cargo coverage? - ✔✔️L️oose cargo, such as cartons. Break bulk cargo refers to loose cargo, such as cartons or boxes, that are stowed directly (or placed on pallets) in the ship's hold, as opposed to containerized cargo or bulk shipments. What is covered under the broad form farmowner's policy, that is not covered under the basic form? - ✔✔️A️ccidental shooting of livestock, as well as electrocution of covered livestock, drowning of livestock and accidents involving livestock while loading and unloading are things covered by the broad form and not covered by the basic form. What is the definition of custom farming? - ✔✔️F️arming for Others Custom farming is farming for others for a fee under a contract or agreement. A special endorsement is required if the receipts are in excess of $5,000 per year. What is the main difference between a DP 1 and a DP 2? - ✔✔️T️he perils insured against DP 1 and DP 2 are similar forms, both designed to provide property insurance for personally-owned residential buildings containing up to four living units without requiring the insured to reside there. These two forms are different in the "Perils Insured Against" section. The DP 2 Broad Form covers all the perils included in the DP 1 plus several "broad" perils including burglar damage, ice or snow damage, falling objects, freezing of plumbing, heating, or A/C systems or household appliances, accidental discharge of water from a plumbing, heating, or A/C system, and breakage of glass. What is the maximum period of time that coverage applies under civil authority business income coverage under the BOP? - ✔✔️W️hat is the maximum period of time that coverage applies under civil authority business income coverage under the BOP? The newer edition of the form of the BOP (2010) has extended the time for loss of income under an act of a civil authority to four weeks. Previously it was three weeks. Refer to the outline published by the testing vendor for the edition date they are using What is the percentage that the insured can apply to coverage A of the DP-2 and DP-3 dwelling forms for ordinance or law coverage? - ✔✔️1️0%. ✔✔️T️he HO-3 does not list the perils for structures. The form provides open peril coverage. The contents coverage does list the covered perils. Which of the following dwelling forms provides coverage for loss of rental income? - ✔✔️T️he Basic, Broad and Special Form All of the forms provide for rental value coverage. In the DP-2 and DP-3, it is 20% of the Coverage A limit and is additional coverage. With the DP-1, the 20% coverage reduces the available Coverage A amount on the dwelling. (Note: in North Carolina the percentage is 10%.) Which of the following losses would be paid under the "other than collision" coverage of the Personal Auto Policy? 1 Gradual corrosion of the grillwork on the insured automobile due to continuous exposure to salty air 2 The insured automobile was stolen and never recovered. 3 The insured automobile skidded on icy pavement and overturned. 4 The insured automobile was damaged when it hit by another car failing to stop at a red traffic light. - ✔✔️2️ The insured automobile was stolen and never recovered. Comprehensive coverage provides theft coverage including damages that occur as a result of the theft. Under the Federal Insurance Fraud and False Statements Act, if someone is prohibited from doing business in a state, approval to resume transacting business must be granted by: - ✔✔️I️nsurance Regulatory Official.. Only an insurance regulatory official, such as the Insurance Commissioner, can grant permission to resume business. A statement of fact given by an applicant at the inception of a policy is a: Guarantee Stipulation Warranty Resolution - ✔✔️W️arranty A statement of fact is usually considered to be a warranty. In some types of insurance, coverage is voided if the statement of fact is not true. Ocean marine insurance is an example. How is property covered under an unendorsed BOP form? - ✔✔️C️overage is written on an open peril basis. The forms were revised to provide open peril coverage on buildings and contents. Coverage can be amended to named peril basic coverage by endorsement. Which crime coverage would cover embezzlement? - ✔✔️F️orgery and alteration. Forgery is defined as any false writing with intent to defraud. The act of signing someone else's name with the intent to deceive is considered forgery. Signing your own name with intent to deceive, in a place where it is not authorized to be or in place of an authorized signature is also considered forgery. For example, an employee signs a company check when he is not authorized to do so with the intent of cashing the check or giving it to someone else to cash. What is the additional penalty an employer could pay for failure to report a serious work related injury to the Board and insurer within 10 days of the incident? - ✔✔️$️2,500.. Failure to report within 10 days of an injury is a misdemeanor and punishable by a fine. In addition, the Board may impose a penalty of up to $2,500. Which of the following types of policies sometime contain a "consent to settle" clause? 1 Auto insurance 2 General liability 3 Commercial crime 4 Malpractice insurance - ✔✔️4️ Malpractice insurance Some medical malpractice policies contain the "consent to settle" clause on the part of the insured. This is also true of certain types of E&O policies. Which of the following is not covered under personal injury coverage provided by the commercial general liability policy? 1 Slander 2 False Arrest 3 Libel 4 Premises and Operations - ✔✔️4️ Premises and Operations Injury caused on the premises or due to the operations of the insured is considered to be bodily injury. What component forms the rear sides of the automobile? 1 Pillars 2 Fenders 3 Quarter panels 4 Rear quarter wheelhouses - ✔✔️3️ Quarter panels The fenders form the left and right front sides of the car. The rear quarter wheelhouses form the housing for the rear wheels. The pillars perform various functions, such as serving as the mounting posts for the door hinges. When is it appropriate for an adjuster to secure a non-waiver agreement with the insured? - ✔✔️I️f there is a question of coverage A properly executed non-waiver agreement allows the insurance company to complete a thorough investigation without implying that coverage is available for the loss. Which of the following coverages may be added by endorsement to an Equipment Breakdown Policy? 1Business Income 2 Expediting Expenses 3 Property Damage Liability 4 Damage to property of the insured - ✔✔️1️Business Income Business income coverage can be added to the Equipment Breakdown policy. All of the following perils are covered under a building and personal property coverage form with a basic cause of loss form, EXCEPT: 1 Earth movement. 2 Smoke. 3 Sprinkler leakage. 4 Sinkhole collapse. - ✔✔️1️ Earth movement. The earthquake endorsement would be required. Which of the following statements regarding aircraft insurance is incorrect? 1 The physical damage coverage is written with a flat deductible 2 Coverage for passengers can be excluded 3 Special coverage must be arranged for Air Meet liability coverage 4 Wear and tear is excluded. - ✔✔️1️ The physical damage coverage is written with a flat deductible The physical damage deductible is usually expressed as a percentage of the value of the aircraft. The root word "stomat" refers to: - ✔✔️M️outh. What workers compensation coverage would apply if the injured employee's spouse brings a wrongful death suit against the employer? - ✔✔️E️mployers liability coverage provides legal liability coverage for suits brought against the employer for gross negligence. The suffix "somatic" refers to: - ✔✔️T️he suffix somatic refers to the body. The opposing sides are called the plaintiff and defendant. The Superintendent of Insurance in New York is: 1 Appointed by the Governor with the consent of the New York state Senate. 2 An elected official. 3 Appointed by the Senate. 4 Nominated by the National Association of Insurance 4 Commissioners (NAIC). - ✔✔️1️ Appointed by the Governor with the consent of the New York state Senate. The New York state legislature empowers the governor to appoint the Superintendent making this position a cabinet position in the governor's administration. Which of the following would not be considered an occupational disease? 1 Black lung. 2 Mesothelioma. 3 Pulmonary fibrosis. 4 Bending over to pick up a box and hurting your back. - ✔✔️4️ Bending over to pick up a box and hurting your back. Bending over to pick up a box and causing an injury is a work related injury and not a disease. After inspecting an insured fire loss, it is a duty of the adjuster to: 1 Contract a contractor for a repair bid. 2 Assist the insured with the cleanup. 3 Remove the debris. 4 Assist the insured with information on separating the damaged from the undamaged property and how to inventory the damaged property. - ✔✔️4️ Assist the insured with information on separating the damaged from the undamaged property and how to inventory the damaged property. It is a duty of the adjuster is to assist the insured in explaining how to separate the damaged property from the undamaged property and how to inventory and determine values. Under a homeowner policy an insured is required to take all of the following actions when a covered loss occurs, EXCEPT: 1 Give prompt notice to the insurance company or it's agent. 2 Protect the property from further loss. 3 Hire an appraiser to determine the amount of the loss. 4 Notify the police if the loss is the result of theft. - ✔✔️3️ Hire an appraiser to determine the amount of the loss. The insured is required to prove the value of the loss. Hiring an appraiser may be helpful, but is not required. The insurer may hire appraiser(s) for certain types of losses. In settling a claim on a dwelling fire policy with a $10,000 loss, the following companies are involved, Company A - 50%; Company B - 45% and Company C - 5%. What will Company C pay? - ✔✔️I️n this situation, Company C will pay $500. In the event that a worker dies from an on-the-job injury, the New York workers compensation law provides for payment of income benefits to a surviving spouse for life, but if the spouse remarries: 1 A two-year lump sum benefit will be paid. 2 Benefits cease immediately. 3 Monthly benefits will continue to be paid for six months. 4 Future benefit amounts will be reduced by 50%. - ✔✔️1️ A two-year lump sum benefit will be paid. Financial responsibility on workers compensation is relieved as a result of remarriage and the 2 year award provides settlement and closure of the claim. Which of the following best describes the concept of risk? 1 Uncertainty of Loss 2 Result of Loss 3 Amount of Loss 4 Cause of Loss - ✔✔️1️ Uncertainty of Loss Risk is the chance that a loss might occur. It is not the cause of the loss. An award for pain and suffering to a claimant who was burned when a tractor engine malfunctioned and spewed boiling water would be considered what kind of damages? 1 Special Damages 2 General Damages 3 Punitive Damages 4 Other Damages - ✔✔️2️ General Damages General Damages - - ✔✔️C️asualty policies cover compensatory damages which include bodily injury and property damage caused by the insured as a result of his or her negligence. Compensatory damages are broken down into two categories; special and general. General damages are types of compensatory damages that reimburse the injured party for such things as pain and suffering and disfigurement, and life-altering issues such as loss of mobility and loss of consortium not readily defined by actual incurred expenses. These damages pay for so-called "non-economic losses." Special Damages- - ✔✔️C️asualty policies cover compensatory damages which include bodily injury and property damage caused by the insured as a result of his or her negligence. Compensatory damages are broken down into two categories; special and general. Special damages are types of compensatory damages the injured party receives for direct and specific expenses involved in the loss, such as medical expenses and loss of wages. These damages pay for so-called "economic losses." There are certain steps a claim representative takes in the evaluation of a liability claim. Which of the following is normally NOT a first option? 1 Review and apply relevant law 2 Determine the legal liability and defenses that might apply in the case 3 Send the claimant a reservation of rights letter 4 Determine what choices, if any, the claimant might have in applying the law - ✔✔️3️ Send the claimant a reservation of rights letter The sending of a reservation of rights letter is usually not the first option of an adjuster. Its purpose is to preserve the rights of the insurer and allow time for additional investigation when there could be a problem with the facts of the claim, such as the late reporting of a claim or a suspicion of a wrongful act of the insured. This could include fraud, concealment or material misrepresentation. The reservation of rights letter is not a denial of a claim. The adjuster will review and apply the relevant law to determine the legal liability and possible defenses of the insured if a liability claim. Defenses would include assumption of risk, contributory negligence or comparative negligence, depending on the laws of the state. The adjuster also must consider the defenses posed by the claimant should they seek legal counsel and the costs associated with a lawsuit. The reason to purchase an umbrella liability policy is: 1 To provide higher liability limits and broader coverage. 2 To provide coverage to cover everything that the underlying coverage might exclude. 3 To avoid deductibles on liability claims. 4 To reduce insurance costs. - ✔✔️1️ To provide higher liability limits and broader coverage. Umbrella policies provide excess limits over primary coverages and provides broader coverage than underlying policies. Medical payments coverage under the farmowners policy covers which of the following? 1 Injuries sustained by an invitee 2 Injuries sustained by a farm employee 3 Injuries sustained by the insured 4 Injuries sustained by a tenant living in the insured's dwelling - ✔✔️1️ Injuries sustained by an invitee Medical payments would pay for the injuries sustained by an invitee or guest. Coverage does not apply to members of the insured's family, roomers or boarders or tenants of the dwelling, or to farm employees. Which of the following could be covered under a BOP? 1 Bank 2 Hardware store 3 Bar I. The named insured intentionally answers "no" when asked on the application if he has had any speeding tickets in the past year. II. The named insured intentionally reports that all covered vehicles have a clear title when they are owned by others. III. The named insured submits a claim for fire damage that has been back-dated to a period before the policy's expiration date. IV. The named insured submits a claim for a total loss for a covered auto that he sold to an illegal auto chop shop. 1 I, II, III and IV 2 I and III only 3 II and IV only 4 I, II, and IV only - ✔✔️1️ I, II, III and IV All four actions are fraudulent. Each is an example of deliberate misrepresentation or concealment of a material fact for purposes of improper gain. Insurers typically retain the right to void ANY insurance policy if an insured commits fraud relating to a policy. A chemical company accidentally released toxic fumes into the air. The fumes reached two other businesses which eventually had to be evacuated for two business days while the air cleared. The evacuation caused loss of income to the businesses due to their inability to open their doors for business. This situation is an example of: 1 The insured's work. 2 Completed operations. 3 Property damage. 4 An intentional tort. - ✔✔️3️ Property damage. This is an example of a property damage loss which includes "loss of use". For this type of claim to be covered under a CGL policy the insured may have to add the pollution liability endorsement to the policy. Under the "Additional Coverages" of the liability section of HO policies, damage to property of others (whether or not in the insured's custody and regardless of fault) is covered up to: 1 $1,500 per occurrence 2 $5,000 per occurrence 3 $1,000 per occurrence 4 $2,500 per occurrence - ✔✔️3️ $1,000 per occurrence The limit is $1,000. This pays regardless of legal liability. The form says, "if caused by the insured." The deductible under the "regular" flood insurance program for each coverage (building and contents) is: 1 $1,000 2 $5,000. 3 $2,000. 4 $750. - ✔✔️1️ $1,000 The flood program deductibles have recently been revised. It should also be noted that the deductibles apply separately to each coverage per loss. What symbol is used for a hired auto in a commercial automobile policy? Symbol 8. Symbol 2. Symbol 5. Symbol 4. - ✔✔️S️ymbol 8. Symbol 8 is used to provide hired auto coverage in a commercial automobile policy. It also includes leased, rented or borrowed. Not all disabilities are covered by Social Security disability benefits. To be covered, a disability must be serious enough to be expected to be fatal OR to last at least: - ✔✔️1️2 months. . In addition, the disability must be total - meaning the claimant cannot work in any occupation whatsoever. There is also a 5-month waiting period before benefits can be paid once a total disability has been established. In terms of fidelity bonds, what does "position scheduled" refer to? 1 The bond covers anyone who works in a "scheduled position." 2 Employees listed as working in certain positions are not covered by the bond. 3 The bond only provides coverage during "scheduled" work hours. 4 The bond only provides coverage at "scheduled" locations. - ✔✔️1️ The bond covers anyone who works in a "scheduled position." Rather than schedule the individuals by name to be covered under the bond, their positions are scheduled. The Businessowners Policy provides coverage on the buildings and contents. How is the coverage provided? 1 Actual Cash Value Basis 2 Replacement Cost Basis 3 Either on an actual cash value basis or replacement cost basis 4 Only on an agreed amount basis - ✔✔️3️ Either on an actual cash value basis or replacement cost basis The BOP offers the option of covering the property on a "replacement cost" basis or "actual cash value" basis. What coverage under the BOP automatically applies if a customer slips and falls on the named insured's premises, regardless of legal liability? 1 Business liability coverage 2 Personal injury coverage 3 Medical expense coverage 4 Advertising injury coverage - ✔✔️3️ Medical expense coverage Medical expense coverage pays regardless of the insured's legal liability. It is a "good will" type of coverage where negligence is not a factor in the claim. The time period of coverage which is stated on the declarations is known as: 1 The policy territory. 2 The time limit of coverage. 3 The limits of liability. 4 The policy period. - ✔✔️4️ The policy period. The policy period is stated on the declarations page representing the time limit coverage is in force as long as the premium is paid. Smoke damage to the insured premises caused by the sudden faulty operation of the insured's fireplace is covered under the: 1 Both the DP-2 and the DP-3. 2 DP-1. 3 Both the DP-1 and the DP-2. 4 Both the DP-1 and the DP-3. - ✔✔️1️ Both the DP-2 and the DP-3. The DP-2 and DP-3 forms cover this type of loss. The DP-1 form does not. Under the farm forms, the maximum amount payable for a loss to a satellite dish is: 1 $250. 2 $1,000. 3 $500. 4 $750. - ✔✔️2️ $1,000. When may an adjuster obtain a non-waiver agreement? - ✔✔️I️n dealing with a potential coverage dispute In coverage dispute situations, an adjuster may want to make clear that a known right is NOT being waived by any party. When the insurer makes a change that broadens coverage under an existing policy without additional premium, this is called the: - ✔✔️T️his is called the Liberalization Clause. Under the Dwelling forms this implementation date must fall within 45 days prior to, or during the policy period stated in the Declarations. Which of the following dwelling forms provides broad perils coverage for personal property? - ✔✔️D️P-2 and DP-3 only