Insurance Quiz Answers and Related Information, Exams of Insurance Economics

Download Insurance Quiz Answers and Related Information and more Exams Insurance Economics in PDF only on Docsity! Property and casualty insurance Exam test for 2024 candidates with best marking scheme 1. Which of the following are the authorities that an agent can hold? - Correct answer Express and implied 2. Which of the following terms refers to such disabilities the loss of a limb, hearing , or eye sight? - Correct answer Permanent partial disability 3. Who is NOT considered an employee in an commercial general liability (CGL) policy? - Correct answer Temporary worker 4. The major portion of the premium of an equipment breakdown policy pays? - Correct answer For inspections and examinations 5. An insured owns a building valued at $400,000. To comply with the 80% coinsurance provision of his insurance policy, how , much should he insure the property for? - Correct answer 80% of the property's replacement cost or more 6. Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must - Correct answer Respond to the consumer's complaint. 7. All of the following are found in the declarations section of a policy EXCEPT the - Correct answer Exclusions. 8. The cost of restoring farm records is an additional coverage offered under a farm policy. How much will the policy pay to restore the records? - Correct answer Up to $2,000 9. All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT - Correct answer Dividends from a mutual insurer. 10. Which of the following may be covered by electronic data processing coverage form under an inland marine policy? - Correct answer a) Computer hardware that is specifically scheduled. 11. b) Extra expense the insured incurs to continue the business following a loss. 12. c) Data processing media, including magnetic tapes or paper tapes, punch cards and discs 13. The party to a surety or fidelity bond who promises to fulfill the obligation is the - Correct answer Principal 14. The transfer of money from inside a banking premises to a person other than a messenger outside those premises or to a place outside those premises is covered under which commercial crime coverage? - Correct answer Computer fraud 15. Which of the following would NOT be covered under the liability section of a personal auto policy? - Correct answer Bodily injury is caused by the insured's negligence while driving a three-wheel all-terrain vehicle. 16. When a producer holding a certificate or a broker's license has a change in his/her residence or business address, he/she must notify the Department of Insurance and any company for which the producer holds an appointment within - Correct answer 30 days. insured under a personal auto policy if - Correct answer A joint ownership coverage endorsement is added. 35. Which of the following is defined as a covered cause of loss in businessowners property coverage? - Correct answer Leakage from fire-extinguishing equipment 36. The insured's mother-in-law broke her leg falling down the front steps of the insured's premises. The insured's homeowners medical payments coverage will - Correct answer Apply to injuries of any guests or visitors. 37. All of the following are exclusions under farm property coverage EXCEPT - Correct answer Loss of use. 38. Coverage for medical payments under a personal auto policy applies to expenses following a covered accident that are incurred and services rendered within what maximum time period? - Correct answer 3 years 39. Which of the following is an example of an unfair claims settlement practice? - Correct answer Failure to promptly settle a claim when liability has been clearly established 40. Which of the following definitions best defines the term "accident"? - Correct answer A sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage neither expected nor intended 41. An insured's accounts receivable records have been damaged. The loss may be covered with - Correct answer The accounts receivable coverage form. 42. Under the workers compensation system, who is responsible for the expenses resulting from work-related injuries and occupational diseases? - Correct answer The employer, regardless of whether it was at fault for the injury or disease 43. A person applying for a manager or exclusive general agent license must meet all of the following criteria EXCEPT - Correct answer Be responsible for at least 25% of total commissions collected by the office that he or she manages. 44. When a vehicle travels from one state to another, what happens to the limits of policy liability in a personal auto policy? - Correct answer They do not change. 45. In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called - Correct answer Self-insured retention. 46. Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy? - Correct answer The insured is injured while driving his motorcycle on his resident premises. 47. Which of the following is NOT an essential element of an insurance contract? - Correct answer Counteroffer 48. Which of the following persons is required to hold a producer license? - Correct answer A person who negotiates insurance contracts 49. If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's - Correct answer Ancestry 50. Which of the following would NOT be classified as personal property for insurance purposes? - Correct answer A house 51. Under the "limited tort insurance" option, an insured may not seek recovery for pain and suffering or other nonmonetary damages UNLESS - Correct answer The injuries fall within the definition of "serious injury." 52. Which of the following statements is true regarding the commercial general liability policy's Coverage C - Medical Payments? - Correct answer The coverage is considered good will because payments are made without regard to fault. 53. Homeowners policies provide coverage for - Correct answer Business property while on the residence premises. 54. Who will transport the property of anyone who hires them? - Correct answer Common carriers 55. In property and casualty insurance, what is the term for the amount of a loss that the insured must cover out of pocket, and the insurer will only pay for the additional amount of the loss above this limit? - Correct answer Deductible 56. A restaurant is out of business for 3 days after an insured's automobile hits an electrical pole. The pole falls and hits the building, knocking out all electrical power supply. Which of the following is NOT covered under the insured driver's auto policy? - Correct answer Lost revenues from the restaurant 57. How much is the premium for the dwelling under construction endorsement under the dwelling policy? - Correct answer The average amount of insurance during construction 58. With regards to the personal auto policy, in the event of a claim or loss, the insured is required to do all of the following EXCEPT - Correct answer Immediately report to an emergency room for medical examination. 76. A commercial property special form covers property in transit up to - Correct answer $5,000. 77. Bulk carriers are used to transport - Correct answer Loose cargo. 78. According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss? - Correct answer 60 days 79. In which of the following situations would punishment include imprisonment? - Correct answer Omission of a material fact with intent to embezzle funds 80. A producer licensed in Pennsylvania must notify the Insurance Department of any change of address in his or her residence or business address within how many days? - Correct answer 30 81. The legal liability coverage form provides coverage for damages for which the insured is legally liable arising from - Correct answer Direct physical damage to property of others in the insured's care. 82. Which of the following symbols is available to an insured with vehicles subject to no-fault coverage? - Correct answer Symbol 5 83. A type of policy that is used to provide a specific amount of replacement cost for a given risk after it has been destroyed is called a(n) - Correct answer Valued policy. 84. In terms of parties to a contract, which of the following does NOT describe a competent party? - Correct answer The person must have at least completed secondary education. 85. An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it? - Correct answer Contractors equipment floater 86. If an insured lives in a high-risk area and can't find an insurer that will cover his/her property, which of the following would most likely provide coverage? - Correct answer The FAIR Plan 87. If an insurer changes a form that it uses to transact insurance, it must do which of the following? - Correct answer File the form with the Commissioner for approval 88. Which of the following is NOT a duty of the employer/insured if an injury occurs at the workplace? - Correct answer Make voluntary payments for treatment of the worker's injury 89. An insured has a personal property replacement cost endorsement under her homeowners policy. If an expensive painting and an antique chair are stolen from the insured's home, what will the insured receive on the claim under that endorsement? - Correct answer Nothing 90. Which inland marine form would provide the best protection for a dry cleaning company against loss or damage to their customer's property while in the care, custody, and control of the dry cleaners? - Correct answer Bailee's customer policy 91. The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT - Correct answer The insured is injured while exiting a friend's mobile home. 92. Under the Motor Vehicle Financial Responsibility Law, First Party Benefits would NOT be denied for which of the following injuries? - Correct answer Injury incurred while the person was under the influence of drugs or alcohol 93. A meteorite hits the insured's car, causing damage. Under which of the following coverages in a personal auto policy would this loss be paid? - Correct answer Other-than- collision 94. If an insurer terminates a producer's appointment, the Commissioner must be notified within how many days? - Correct answer 30 95. The other insurances clause of an ocean marine policy allows coverage for which reasons? - Correct answer To obtain coverage for war, strikes, and related risks not covered by the policy 96. Which of the following terms refers to other insurance that is written on the same risk, but not on the same coverage basis? - Correct answer Nonconcurrency 97. Damage to insured property caused by earth movement or earthquake is covered under which of the following homeowners forms? - Correct answer None 98. What is the limit for the forgery or alteration coverage in the businessowners policy? - Correct answer $2,500 99. The type of professional liability coverage a medical doctor needs is - Correct answer Malpractice coverage. 100. An insured hits a deer and crashes his car into a tree. The total damage to the vehicle is $6,000. How will this loss be covered? - Correct answer $6,000 would be paid under other-than-collision coverage. 101. In the computer fraud crime coverage form, what limit is placed on each occurrence of the loss of manuscripts, drawings, or records? - Correct answer $5,000 118. Which of the following would be covered under the crime coverage inside the premises - theft of money and securities? - Correct answer Loss or damage to a locked safe, vault, or cash register 119. One of the primary benefits to the insured in selecting the "full tort option" under their auto insurance coverage is - Correct answer Unrestricted ability to sue for pain and suffering. 120. All of the following are true regarding physical damage coverage EXCEPT - Correct answer The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle. 121. What are common carriers required to issue to every shipper that it transports goods for? - Correct answer A uniform bill of lading 122. A ranchowners policy is most similar to which of the following? - Correct answer Homeowners 123. When transacting business in this state an insurer formed under the laws of another country is known as a/an - Correct answer Alien insurer. 124. All of the following are other coverages under the dwelling policy EXCEPT - Correct answer Earth movement. 125. Which of the following regulatory authorities participated in creating the National Do Not Call Registry? - Correct answer FTC 126. Installing deadbolt locks on the doors of a home is an example of which method of handling risk? - Correct answer Reduction 127. The members of a limited liability company are insureds under a businessowners policy (BOP) if - Correct answer The limited liability company is designated as the named insured. 128. What fundamental principle in property insurance holds that when there is an unbroken connection between an occurrence and damage that grows out of the occurrence, then the resultant damage is all a part of the occurrence? - Correct answer Proximate cause 129. How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card? - Correct answer $500 130. When the Commissioner suspects that a person is violating an insurance law or other regulation, what can be issued that would order the person to stop committing the act of violation? - Correct answer Cease and Desist Order 131. In property insurance, actual cash value is defined as which of the following? - Correct answer Replacement cost at the time of the loss, less depreciation 132. Under a personal auto policy, in which of the following locations would a vehicle primarily garaged in California be covered? - Correct answer Any other state 133. An insured couple owns a pontoon boat. Which situation would NOT be covered by their watercraft endorsement under their homeowners policy? - Correct answer A friend rents their boat and runs it into a neighbor's dock. 134. A person who is not named as an insured on the declarations page of a policy but is protected by the policy is known as the - Correct answer Additional insured. 135. Which of the following is NOT an optional coverage available in a businessowners policy? - Correct answer Workers compensation 136. All of the following statements describe the concept of strict liability EXCEPT - Correct answer It is imposed on defendants engaged in hazardous activities. 137. What is the purpose of increased value and excess liability (IVEL) clauses? - Correct answer To provide extra coverage for the same losses covered by an underlining policy 138. Which of the following would NOT be considered an unfair and deceptive practice? - Correct answer Controlled business 139. An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined? - Correct answer Benefits will be provided if the state was listed on the policy information page. 140. All of the following people would be considered insureds under the liability section of a homeowners policy EXCEPT - Correct answer The 22-year-old niece of the insured who is visiting. 141. An individual was just caught acting as an exclusive general agent - even though he is not properly licensed. Assuming that this occurred in a single day, what is the maximum penalty he faces? - Correct answer A third degree misdemeanor and a $1,000 fine 142. Losses caused by vandalism and malicious mischief are excluded under a homeowners policy if the dwelling had been vacant for more than - Correct answer 60 days. 143. If an insurer appoints a producer, which authority must be notified? - Correct answer Department of Insurance 162. In addition to income benefits, how much will a dependent survivor receive as a funeral benefit for a deceased employee covered under Workers Compensation? - Correct answer $3,000 163. An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay? - Correct answer $30,000 164. Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? - Correct answer Discrimination 165. Which of the following risks would NOT be eligible for coverage under a homeowners policy? - Correct answer An applicant who owns and lives on a commercial farm 166. Within the first 60 days of coverage under a dwelling policy, how much notice is required for the cancellation of a policy? - Correct answer 10 days 167. The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property is called - Correct answer Pro rata liability. 168. Which of the following best describes liberalization clause in a policy? - Correct answer Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium. 169. Which of the following would be considered false advertising? - Correct answer Implying that the agent is the insurer 170. If an employer in a state with elective workers compensation laws chooses not be to subject to those laws, what does the employer lose? - Correct answer Its common law defenses against liability suits 171. Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? - Correct answer Defamation 172. Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? - Correct answer Making comparisons between different policies 173. In addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT - Correct answer Employers liability. 174. In accordance with American Institute Hull Clauses, a pro rata return of premium will be given for all the following reasons EXCEPT - Correct answer If the policy is cancelled by the insured. 175. A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of - Correct answer Coercion. 176. In the event of a claim under a commercial general liability policy, the insured has all of the following duties to the insurer EXCEPT - Correct answer Submitting to a medical exam when requested. 177. Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis? - Correct answer DP-1 178. For the purpose of examination by the department, insurers must keep a record of all financial files for at least - Correct answer 5 years. 179. A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT - Correct answer Workers compensation coverage 180. Which of the following licensees is classified as a representative of the insurance company and not allowed to represent an insured or claimant? - Correct answer Producer 181. All of the following are true of Coverage B - Other Structures EXCEPT - Correct answer It must be added by endorsement to a homeowners policy. 182. A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint, the building is considered - Correct answer Vacant. 183. When an individual purchases insurance, what risk management technique is he or she practicing? - Correct answer Transfer 184. Which of the following would NOT be considered an exception to the National Do Not Call List? - Correct answer Calls based from outside of the United States 185. The standard property deductible per occurrence on a commercial package policy is - Correct answer $500. 186. What is the deductible of a personal liability umbrella policy called? - Correct answer The SIR 201. The designation symbols used in commercial auto policies can be found in which policy section? - Correct answer Covered Auto 202. In a commercial package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer? - Correct answer First named insured 203. A participating insurance policy may do which of the following? - Correct answer Pay dividends to the policyowner 204. Which of the following endorsements is used by individual business owners who use company vehicles for personal use rather than purchasing a personal vehicle? - Correct answer Individual named insured 205. Which of the following is NOT found in a commercial package policy? - Correct answer Certificate of authority 206. Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT - Correct answer The insurer does not have the right to inspect the insured's property and operations. 207. A trucking business swaps trailers with other carriers. What coverage is necessary to cover loss to the other's trailer while in the borrower's possession? - Correct answer Trailer interchange coverage 208. Which coverage form would provide coverage for all incoming and outgoing shipments? - Correct answer Annual transit 209. A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? - Correct answer Morale 210. What other term is used to refer to unintentional torts? - Correct answer Negligence 211. Which of the following statements is true concerning the special form dwelling policy? - Correct answer Coverage A is for all-risk perils, and Coverage C is for the broad form perils. 212. An apartment occupant's personal property would be insured under which homeowners form? - Correct answer Tenant broad form (HO-4) 213. What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? - Correct answer Open peril policy 214. Which inland marine coverage condition says that an insurer will settle with the actual owners of property involved in a loss? - Correct answer Privilege to adjust with the owner 215. After a hearing, if the Commissioner finds that a licensee is in violation of the state insurance laws, the Commissioner can do any of the following EXCEPT - Correct answer Imprison the licensee. 216. Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of - Correct answer Twisting. 217. Insurable interest in the property covered in a policy must be proven - Correct answer At time of loss. 218. Which of the following risks is eligible for coverage under a businessowners policy? - Correct answer Condominiums 219. Pete wants to have separate insurance coverage for separate acreages. What kind of insurance should Pete get? - Correct answer Unit Insurance 220. According to the standard workers compensation and employer liability policy form, a state should be listed in Part Three - other states' insurance of the workers compensation and employers liability policy when - Correct answer The insured expects to extend operations to that state. 221. When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered - Correct answer Discrimination. 222. All of the following actions can be described as twisting EXCEPT - Correct answer Explaining to client the advantages of permanent insurance over term and suggesting changing policies 223. Professional photographers and musicians may insure their equipment with - Correct answer A commercial articles floater. 224. In the split limit coverage in personal auto policies, which limit indicates the maximum amount the policy will pay for bodily injury per person? - Correct answer 1st limit 225. An advertising company has its annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupants of the other car involved in the accident sue the company for serving the customer too much alcohol. Will the company's businessowners policy provide coverage? - Correct answer Yes, none of the exclusions will apply. 226. Which of the following homeowners policies covers those who rent their dwelling? - Correct answer HO-4 while involved in the settlement process of a covered loss? - Correct answer Liability coverage 244. In the event of a loss covered by the policy, if the insurer requests a signed sworn proof of loss, the named insured is required to submit it within - Correct answer A specified time. 245. The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to - Correct answer $250,000. 246. During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes - Correct answer Misrepresentation. 247. All of the following are essential elements of a commercial package policy (CPP) EXCEPT - Correct answer Valuations and/or settlement provisions 248. Personal property coverage under a homeowners policy would cover - Correct answer The insured's camera if it is stolen while the insured is on vacation. 249. Which of the following would the livestock coverage form NOT insure against? - Correct answer The euthanasia of livestock after being hit by a vehicle 250. In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for - Correct answer Uninsured motorist coverage. 251. ABC Trucking hauls products for Acme, Inc. as a contract carrier. On one shipment, the driver stopped at a truck stop for lunch. Leaving the truck in the parking lot, he made certain that the truck was locked before leaving it. Upon returning to the truck, he discovered that someone had broken into the truck and stolen the cargo. Is ABC legally liable for this loss? - Correct answer No, the driver had taken reasonable measures to protect the property by locking the truck. 252. Which of the following insurance options would be considered a risk-sharing arrangement? - Correct answer Reciprocal 253. If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT - Correct answer Physical damage. 254. Loss of yield from which of the following causes would be covered under a Federal Crop Insurance policy? - Correct answer Any of the above 255. A recent college graduate bought a new car and is trying to get automobile insurance on it as required by the lienholder. After being rejected by several insurance companies due to his driving record, he finally talked to an agent who can get him coverage. His agent called him a residual market risk. From which type of automobile insurance plan can the applicant purchase insurance? - Correct answer Assigned risk 256. An insured who has coverage for all his personal property has his TV stolen from the shop of the repairman. The owner of the repair shop filed a claim under the insured's policy, but it paid nothing to the owner of the store. Which provision does the policy have? - Correct answer No benefit to bailee clause 257. Which of the following perils is covered by the HO-2 and HO-3? - Correct answer Sudden and accidental rupture of a heating system 258. Frank's Steaks furnishes meat to steakhouses. An accident on the premises causes the building to lose refrigeration for 32 hours. The state inspectors will not allow the meat in the refrigerating units to be sold for human consumption, and Frank loses $18,500 in disposing of the meat. What coverage under Frank's BOP policy will cover the loss? - Correct answer Utility service - direct damage 259. Professional liability coverage protects the insured against legal liability resulting from - Correct answer Errors and omissions. 260. The abandonment provision in property insurance policies states that - Correct answer The insured may not relinquish ownership of damaged property to claim a total loss, but must protect damaged property from further loss. 261. A business using its own trucks to move its own cargo would insure the cargo using - Correct answer Motor truck cargo - owners form. 262. Which of the following is NOT a duty of the employer/insured if an injury occurs at the workplace? - Correct answer Make voluntary payments for treatment of the worker's injury