Insurance Coverage and Exceptions, Exams of Insurance law

Download Insurance Coverage and Exceptions and more Exams Insurance law in PDF only on Docsity! Texas all lines adjuster exam (380 Questions and Answers). All of the following are criteria for an accident to have occurred "in the course of" the employment under a workers' compensation policy, EXCEPT: - Correct Answers While performing a task that a fellow worker requested, that was unusual to the employee's job description, but occurred on the employer's premises during working hours. Which of the following statements is NOT TRUE regarding the implied warranties of an Ocean Marine policy? - Correct Answers The implied warranties are attached to the policy as an endorsement.. Parmelia is covered under two separate standardized Personal Automobile policies, with Part C limits under both policies set at $200,000. Parmelia is involved in an accident with an uninsured motorist and she sustains bodily injury damages for $262,320. How much will Parmelia receive when she submits a claim for these damages - Correct Answers $200,000 Which of the following endorsements must be attached to a standard Businessowners policy for coverage to apply to a businesses freezer that was damaged by the interruption of a power source - Correct Answers Utility Services - Direct Damage endorsement. After completing an inspection of an insured's pressure equipment and fire suppression systems, the inspector determines that the pressure equipment needs to be repaired and the suppression systems have not been cleaned and inspected in the time frame required by the policy. The insurer will: - Correct Answers Suspend coverage immediately by red tagging the items until they are repaired, cleaned and pass reinspection To be eligible for coverage under a standardized Dwelling policy, the insured must not allow more than _______ boarders to live on the premises. - Correct Answers 5 All of the following are "Perils of the Sea" under an Ocean Marine policy, EXCEPT: - Correct Answers Pirates The amount of insurance countersigned, issued, or sold by an agent or producer to cover immediate family members, an employer, or employees is known as: - Correct Answers Controlled business Which of the following standardized Dwelling insurance forms provides coverage for loss of rental income - Correct Answers The DP-1, DP-2, and DP-3 forms The "Part B - Medical Payments" coverage of a personal automobile policy covers injuries for all of the following, EXCEPT: - Correct Answers A passenger who is injured in another vehicle that is struck by the insured's vehicle in an accident Which of the following are the Texas Workers' Compensation benefits that are increased by a cost-of-living adjustment (COLAs) - Correct Answers Lifetime Income Benefits (LIBs) only Hannah must take time away from work to help assist in the investigation of a claim that was made against her BOP policy. The policy will pay for Hannah's actual loss of earnings up to: - Correct Answers $250 per day. Surplus Lines companies in Texas have _____ to acknowledge the receipt of a claim. - Correct Answers 30 days. All of the following are characteristics of a principal that a surety will scrutinize during the underwriting process, EXCEPT: - Correct Answers Consideration. Under Section II of a Homeowners policy, a cemetery plot owned by the insured is considered to be: - Correct Answers An insured location. Which of the following is NOT one of the four major coverages of an Ocean Marine policy? - Correct Answers Seaworthiness. A ship has suffered damage and sunk. Which of the following would respond to cover the loss of the ship? - Correct Answers Hull Insurance. Which of the following statements is TRUE regarding the coverage extension of the standard Businessowners policy for "Business Personal Property Temporarily in Portable Storage Units"? - Correct Answers Coverage will not apply if the storage unit has been on the insured premises for longer than 90 days, even if the business personal property has only been stored there for less than 90 days. Which of the following would be considered a Part D - Other Than Collision claim under a Personal Automobile claim? - Correct Answers A load of bricks falling from an apartment building onto the car. The Section I Additional Coverage of the standard Businessowners policy provides coverage for "Debris Removal". Which of the following statements best describes the limit for this coverage? - Correct Answers The total limit may be up to 25% of the policy limit for the loss payable with the deductible included, plus up to an additional $25,000 if the policy limits are exhausted An agent, insured or claimant has intentionally deceived an insurer for financial gain. Such an act is known as: - Correct Answers Fraud Which of the following losses would be covered under a Commercial Property policy with the special cause of loss form attached? - Correct Answers A fire that breaks out in an office building and causes damage to two of the offices.. If the Navigational Limits or Lay-Up period shown on the Declarations page of a standardized Yacht policy is breached because of something out of the control of the insured: - Correct Answers The insurer must be notified within 10 days after the breach and any additional premium that is due must be paid. Which of the following is NOT eligible for a coverage under a Homeowners insurance policy? - Correct Answers Owner-occupants of a 5 to 6-family dwelling Cameron has his home covered under a Homeowners policy and his limit for bodily injury is $100,000. He also purchased a Personal Umbrella policy with a $1,000,000 limit of liability. Cameron is sued and a judgement was made against him for $500,000. To trigger his Umbrella policy, his Homeowners policy must pay $100,000, but he finds that the insurance company from which he purchased his Homeowners policy has become insolvent. How will the Umbrella insurer pay the claim (disregarding any retention limit)? - Correct Answers The Umbrella policy will not become primary when the insurer carrying the underlying insurance becomes insolvent, but will pay the $400,000 as if the underlying insurer had paid its $100,000 limit of liability.. The additional coverage for debris removal under the standardized Building and Personal Property coverage form will only be paid if: - Correct Answers The insured reports the debris removal expenses to the insurance company in writing within 180 days of the loss.. The insured is covered under a Watercraft policy and asks the agent about a lay-up period credit to get a reduction in the premium. The dates of the lay-up period are specified in the policy. There is an emergency and the insured must use his boat in a life saving event. The boat is damaged and sinks. Under what circumstances would coverage apply? - Correct Answers Only if the insurance company is notified within 10 days of the emergency use Which of the following coverage parts would be eligible for inclusion in a Commercial Package policy? - Correct Answers Professional liability coverage. When an insurer files a declaratory judgement action with a court of law, all of the following questions will be resolved by the court, EXCEPT: - Correct Answers Will the insurer become insolvent if they pay the claim as submitted by the insured? An insured is covered under a CGL policy. He would like to purchase another policy to increase the limits of insurance for his commercial liability exposures. Which of the following statements is correct regarding the insured's situation? - Correct Answers The insured may purchase either a Commercial Umbrella or an Excess Liability policy to increase his liability insurance limits.. Which of the following statements defines a "bailee"? - Correct Answers Someone, other than the insured, to whom the insured property is entrusted temporarily. The crew of a ship is guilty of fraud with the intention of reaping gains at the expense of the owner. In ocean marine coverage, what is this called? - Correct Answers Barratry. Symbol 23 is designated on the insured's Garage Coverage form. This indicates that: - Correct Answers That owned private passenger autos only are covered.. An applicant fails to disclose known facts when completing an application for insurance. This act is known as: - Correct Answers Concealment All of the following are correct statements regarding the limits of liability under Part A of a Personal Auto policy, EXCEPT: - Correct Answers When the Part A limits are exhausted, any limits for Uninsured Motorists coverage can be used to pay the entire claim.. If a covered business is a limited liability company, the standard Businessowners policy provides coverage for all of the following "insureds", EXCEPT: - Correct Answers Executive director.. The HO-3 form insures for direct physical loss to covered property involving collapse of a building caused by all of the following, EXCEPT: - Correct Answers Settling. All of the following statements are TRUE if Builders' Risk coverage is written on a completed value basis, EXCEPT - Correct Answers All premiums must be paid up front before construction can begin.. A non-waiver agreement allows the insurer to: - Correct Answers Investigate a loss without implying that it is covered Which of the following sections of an Ocean Marine policy is very similar to the "Duties of the Insured" in other property policies? - Correct Answers The Sue and Labor clause Coverage under a standard Personal Watercraft policy extends to all of the following, EXCEPT: - Correct Answers The crew of the boat for medical payments neighbor may be covered under George's liability coverage. Which of the following is the most likely reason why? - Correct Answers Shooting the gun was an intentional act committed by George, but the consequences of act (his neighbor being shot) were not intended. Acme Corp. requested three bids from different contractors for the construction of its new office building. Acme accepted the lowest bid from Corbett's Contracting and entered into a contract to have the office building constructed. After construction was completed, Corbett's presented Acme with a bill for construction costs over and above the amount of the bid that was agreed to in the contract. Which of the following types of bonds would protect Acme from paying the additional costs? - Correct Answers A performance bond. Which of the following are NOT required to hold an adjuster license in Texas? - Correct Answers A person who works for an insurer and adjusts claims on losses that do not exceed $500 Which of the following is NOT covered under aircraft physical damage (hull) insurance? - Correct Answers Personal effects. An insured submits a claim to the insurer and their adjuster acknowledges receipt of the claim. The insured then hears nothing more after making repeated attempts to contact the adjuster. This is considered: - Correct Answers An unfair claims settlement practice. Which of the following best describes an "insurance producer"? - Correct Answers Someone who represents an insurance company in the soliciting and negotiation of insurance. When insurance is written on a Dwelling form, each of the following types of property would be insured under Coverage A, EXCEPT: - Correct Answers A detached garage. The Garage Coverage form can be used to cover dealers that sell all of the following, EXCEPT: - Correct Answers Jet skis. Ocean marine coverage for losses to the insured vessel caused by bursting boilers, latent defects in the vessel and negligence of the master or crew members are addressed by which of the following? - Correct Answers The Inchmaree clause. The part of a standard workers' compensation policy that contains the cancellation procedures is: - Correct Answers Part Six - Conditions The 1943 New York Standard Fire policy specifically excludes all of the following, EXCEPT: - Correct Answers Manuscripts. The standard Personal Automobile policy provisions state that the insurance company has subrogation rights against any person permitted to use a covered auto, under all coverages, EXCEPT: - Correct Answers Part D. Max was injured on the job in Texas. Max has reached MMI but will have a permanent limp while walking that was due to the compensable injury. Which of the following terms as defined by the Texas Workers Compensation code best describes how Max's injury will be classified? - Correct Answers Max's injury is now classified as an "impairment". All of the following is a function of the standard mortgage clause in a property insurance policy, EXCEPT: - Correct Answers Guarantees that the mortgage payments will be made by an insurance policy, if the insured does not make the payments. . The insured has liability coverage with a limit of $300,000 per occurrence. She purchases a $1 million Personal Umbrella to extend and broaden her coverage. The Umbrella policy includes a $10,000 retained limit. The insured becomes liable for $800,000 in damages that are excluded by the underlying liability policy, but is covered by the Umbrella policy. How would this case likely be settled? - Correct Answers The insured would pay $10,000 and the Umbrella policy would pay $790,000. Insurance adjusters have the "power to bind". Which of the following statements best describes what this means? - Correct Answers The principal is bound to the decisions of the adjuster. Which of the following types of bonds guarantees that all project materials will be paid in full by the contractor upon completion of the project? - Correct Answers Payment bond. Which of the following is NOT a "duty of the insured" after a loss? - Correct Answers To pay damages to any third-party claimant while waiting to be reimbursed by the insurer for the loss. All of the following are perils NOT typically covered by property cause of loss forms, EXCEPT: - Correct Answers Hail What is the minimum limit for Coverage L of the Personal Liability Supplement that can be attached to a Dwelling Property policy? - Correct Answers $100,000 The "Medical Payments" section of the standard Yacht policy will provide coverage for all of the following, EXCEPT: - Correct Answers A scuba diving accident when diving from the insured boat.. Which of the following coverages would NOT be included in the liability section of the Businessowners policy? - Correct Answers Professional liability. An insured owns a set of six drawing pens designed and used by Benjamin Franklin. Each pen is worth $1,000 alone, but the set is worth $12,000. One pen is destroyed by a covered peril. Under the pair or set clause the insurance company will pay a maximum of which of the following amounts? - Correct Answers $7,000 Economic loss that is the consequence of a direct loss is known as: - Correct Answers An indirect loss. Which of the following is NOT TRUE of coverage for Business Personal Property and Personal Property of Others in a Commercial Property policy? - Correct Answers Coverage is provided while the property is located within a covered vehicle at any location as long as the vehicle is owned by the insured business. As a condition to gain entrance into Louisiana to conduct insurance business, a Texas domestic insurer makes a deposit with the Texas Comptroller. The amount of the deposit is sufficient to satisfy the Louisiana Department that the insurer can cover the claims submitted by the insureds in Louisiana. Who has jurisdiction to collect taxes on the interest earned on expense of having equipment repairs performed faster to get the insured back in business quickly. Which of the following would be excluded under Part A of the Personal Auto policy? - Correct Answers A person transports people from the airport to nearby hotels for a fee. . A Texas insurer has notified a claimant that all or part of a claim will be paid. The claim must be paid not later than the ____ business day after the date notice is made. - Correct Answers 5th The type of auto body frame that is most often used in today's automobile and is a single molded unit, is known as: - Correct Answers A unibody frame. A contractor in need of a bid bond to obtain a contract is an example of a(n): - Correct Answers Principal. When loss settlement under a policy is the "agreed value", which of the following is true? - Correct Answers The insurer will pay the value that was agreed upon and scheduled in the policy. The "control of property" condition of the Commercial Property policy: - Correct Answers States that a negligent act of someone beyond the insured's direction or control will not affect the coverage.. The insured has liability coverage with a limit of $300,000 per occurrence. She purchases a $1 million Personal Umbrella policy to extend and broaden her coverage. The Umbrella policy includes a $10,000 retained limit. The insured becomes liable for $800,000 in damages that are excluded by the underlying liability policy, but is covered by the Umbrella policy. How would this claim likely be settled? - Correct Answers The insured would pay $10,000 and the Umbrella policy would pay $790,000. The aircraft physical damage (hull) deductible is normally expressed as: - Correct Answers A percentage of the value of the aircraft. Ally's insurance agency has contracted with Indemnify Insurance to sell only those insurance products offered by Indemnify. Ally's is utilizing which of the following types of insurance marketing and distribution systems? - Correct Answers Exclusive agency system. In which of the following situations would trees, shrubs, and other plants be covered by the Homeowners additional coverages? - Correct Answers The insured's fruit trees are destroyed when an ember from a nearby brush fire lands on them and burns them. Aircraft liability coverage is very similar to auto insurance coverage with which of following exceptions? - Correct Answers Liability to passengers is treated as a separate exposure. All of the following would be eligible as "your covered auto" under a standard personal automobile policy, EXCEPT: - Correct Answers A motorcycle owned by the insured. All of the following are eligible risks for Commercial Inland Marine insurance, EXCEPT: - Correct Answers Goods manufactured in the United States for export to other countries. Which of the following would be covered under Coverage B of the Business and Personal Property coverage form? - Correct Answers The stock held for sale by the insured business. The "Business Income" additional coverage under the standard Businessowners policy includes all of the following in its definition of "ordinary payroll expenses", EXCEPT: - Correct Answers Executive payroll.. Coverage D - Loss of Use on the Homeowners forms provides coverage for "Civil Authority Prohibits Use" for: - Correct Answers No more than two weeks.. When a claims representative is collecting information from a third-party claimant, which of the following is the information that should be obtained first? - Correct Answers The nature and extent of the injuries or property damage claimed. Which of the following would be considered "economic losses" that could result in compensatory damages being awarded in a negligence case? - Correct Answers Medical expense and lost wages. A structure made of modified fire resistive materials has a fire resistive rating of: - Correct Answers At least 1 hour. A Commercial Property policy has the "Protective Safeguards endorsement attached indicating that the insured has protective safeguards installed such as a sprinkler system. Should the system become inoperative, how long does the insured have to report this fact to the insurer? - Correct Answers 48 hours. Under a DP-2 or DP-3 standardized policy what is the maximum that would be paid for one month for additional living expenses if Coverage A was $75,000? - Correct Answers $1,250 Alec goes to an amusement park and rides a roller coaster that was designed to flip the riders upside down. Alec is taller than the average person so when the roller coaster flips, he hits his head on the safety bar. After receiving medical care, Alec files a claim against the amusement park, seeking payment for his medical bills, pain and suffering. What defense against negligence would the amusement park most likely use to deny this claim? - Correct Answers Assumption of risk The type of claims investigation that looks at the possibility of a third-party being responsible for the loss is known as: - Correct Answers A subrogation investigation. The Commercial Property condition known as "Concealment, Misrepresentation, or Fraud" calls for the policy: - Correct Answers To be voided??? Which of the following Equipment Breakdown coverages applies to direct damage to covered property located at a premises described in the Declarations? - Correct Answers Property damage coverage. Which of the following lost or damaged property is NOT covered when the Actual Cash Value endorsement is attached to an Equipment Breakdown policy? - Correct Answers Property that has reached obsolescence. receive per week while off work is approximately ____. - Correct Answers $1,070 / $580 Which of the following statements is NOT TRUE regarding the "period of restoration" for Business Income and Extra Expense coverage? - Correct Answers The period of restoration ends when the policy period ends. Part F of the standard Personal Automobile policy states that the policy can be terminated within the first 60 days for any reason other than non- payment of premium if: - Correct Answers At least 20-days' notice is provided to the insured.. Hannah is attending college and her family carries an HO-4 policy with $50,000 contents coverage. Hannah has about $15,000 of personal belongings consisting of clothing, musical instruments, electronic equipment, some appliances and other personal items in her dorm room. Which of the following statements is correct regarding coverage for Hannah's belongings? - Correct Answers The HO-4 form carried by Hannah's family would not provide enough coverage for Hannah's property, therefore a personal property floater should be purchased. An insured's car is damaged in an auto accident. While it is being repaired, the body shop loans the insured a replacement. From a coverage standpoint, this replacement vehicle is known as: - Correct Answers A temporary substitute??? If an insured carries Coverage C under a Dwelling policy, how much coverage applies off the insured premises (world-wide basis)? - Correct Answers 10% of the Coverage C limit. Part B of the personal automobile policy provides coverage, regardless of fault, for necessary medical and funeral expenses incurred within how many years of the date of the injury? - Correct Answers 3 Katherine lives in Texas. A third-party claim has been filed against her insurance policy by Joe, for an accident in which Katherine was liable. Joe's attorney contacts Katherine's insurance company and makes an initial offer to settle the claim. The insurance company must notify Katherine of the offer, in writing: - Correct Answers Not later than the 10th day after the date the initial offer was made. Texas insurance licensees must complete _____ hours of continuing education each reporting period. - Correct Answers 24 A home is insured under an HO-3 policy. One of the "other structures" on the same property is used by the insured for his business. The building burns in a fire. It would: - Correct Answers Not be covered because buildings used for business purposes are excluded.. What is the main purpose of government regulation of the insurance industry? - Correct Answers To protect the insurance consuming public. All of the following are duties of the insured after a loss, EXCEPT: - Correct Answers To provide the insurer with the amount they expect to be paid for the claim submitted. On a standard BOP policy, all of the following items have a limitation on the coverage amount if the cause of loss is theft, EXCEPT: - Correct Answers Computers. Sally's home is covered under an HO-3 policy. Coverage F of that policy will pay medical expenses for which of the following? - Correct Answers Anyone who is invited onto Sally's property and is injured while there. James owns a sedan, a truck, and an SUV. He carries Part C -- Uninsured Motorist Coverage on his SUV, but does not carry it on his sedan or truck. James' son is driving the truck one afternoon and accidentally strikes James who is driving the SUV, causing James to sustain bodily injury. How will Part C apply in this situation? - Correct Answers No coverage will apply for James' bodily injury.. Which of the following would NOT be included in an adjuster's initial / field / preliminary report? - Correct Answers The results of mediation. An insurance company is given a C++ rating by A.M. Best. This means: - Correct Answers The financial health of the insurance company is good.. Which of the following is one of the duties of the insured as specified in a Commercial Inland Marine policy? - Correct Answers Submit to an examination under oath if the insurer requests it. If the insured purchases a new aircraft to replace a scheduled aircraft, there is automatic coverage provided the insurance company is notified within ______ days of the purchase and premium payment is made. - Correct Answers 30 The giving up of a known right is called: - Correct Answers waiver Which of the following is the best definition of "fire"? - Correct Answers Combustion, accompanied by visible light. Which of the following is not an "additional coverage" under Homeowners Liability -- Section II coverage? - Correct Answers Damage to "property owned by the insured".. Which coverage of a Homeowners policy would pay for damage to a neighbor's window caused by the insured? - Correct Answers Coverage E On the way to Europe, heavy seas place a cargo ship in danger of sinking. The crew decides that if they dispose of the heavy equipment they are hauling the ship will not sink. They toss overboard 10 tractors owned by John Deere. The cartons of tissues owned by Kleenex Corporation are safe as is the whipped marshmallow cream being shipped for Kraft Foods. When they get to Europe, Kleenex and Kraft are asked to share in the loss that John Deere sustained. This is an example of: - Correct Answers General Average Clause. Brian owns a home that is covered by a DP-3 form. He rents this home to Taylor. Joe, the neighbor who lives next door to Brian's rental home, has been cooking methamphetamine for quite some time and selling it out of his house. One afternoon, Joe's "meth lab" exploded, spreading dangerous chemical to the houses around his. It also caused a fire that rendered the house unstable until it can be demolished. The civil authorities in the area have required that Taylor vacate her rental home, until the area next door can be cleaned up. Which of the following statements is true regarding how Brian will be compensated under his Dwelling policy for the loss of Taylor's rent during the time she must live elsewhere? - Correct Answers Brian will receive 20% of the Coverage A limit, for a maximum of 2 weeks. Morton loses control of his car and hits Jordan's car that was parked legally along the street where Morton was driving. The damage to Jordan's car is covered by which coverage of Morton's personal automobile policy? - Correct Answers Part A -- Liability Which of the following contractors would be eligible for a Businessowners policy? - Correct Answers A carpenter doing all of his own work building kitchen cabinets in people's homes and earns $75,000 per year. An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2,000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $500,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary underlying liability policy or the Umbrella policy. How will this loss likely be settled? - Correct Answers The insured will be liable for the full $100,000 loss. An insured has a $2 million limit of insurance under a Personal Umbrella policy with a $2,000 self-insured retention limit. The insured is sued for $1 million in personal injury damages and $1.5 million in property damages arising from the same occurrence. The insured's underlying liability policies exclude coverage in this case, but the claim is covered under the Umbrella policy. In this case, the umbrella policy will pay: - Correct Answers $1,998,000 of the damages. At which step in the adjusting process does the adjuster determine "who" or "what" is insured by the policy under which the claim was submitted? - Correct Answers Verification of coverage. Which of the following statements is TRUE regarding an "examination under oath"? - Correct Answers An EUO will only be requested by an insurer if they have reason to believe an insured has not been truthful in their account of the circumstances of the loss. In regards to Workers Compensation insurance, which of the following experience modification factors would indicate that an insured has sustained a relatively high frequency and severity of losses in the recent past? - Correct Answers 1.25 In insurance terms, the phrase "severability of insurance" means: - Correct Answers The insurance applies separately to each insured. Which of the garage policy coverages will pay for physical damage to a garage customer's auto regardless of legal liability? - Correct Answers Garagekeepers direct primary coverage. All of the following statements are true regarding the revocation or modification of a certificate of authority in Texas, EXCEPT: - Correct Answers The reason for the revocation or modification is not required to be stated in the notice to the insurer. Each of the following is considered to be an "implied warranty" in an Ocean Marine insurance policy, EXCEPT: - Correct Answers General Average. All of the following are listed in the common declarations of a Commercial Package policy (CPP), EXCEPT: - Correct Answers A list of perils insured against. Jim Johnson has an automobile policy with a combined single limit of $50,000. He is involved in an accident where he is at-fault and incurs the following expenses:$30,000 bodily injury judgment;$30,000 property damage judgment;$5,000 damage to traffic light;$6,000 attorney's fees for his defense;$300 in premiums for appeal bond; and$75 in bail bond premiums for related traffic violations.What is the maximum amount his insurance company will pay? - Correct Answers $56,375 Under a standardized DP-2 or DP-3 policy, what is the maximum that would be paid for additional living expenses if Coverage A was $60,000? - Correct Answers $12,000 A dead tree beside Jerry's home is best described as which of the following types of hazards? - Correct Answers Physical hazard. Chris is insured through Binders Keepers Insurance Company and his policy period ends in 12 months. However, Chris has decided that he wants to cancel his policy in order to purchase another one from a company that advertises with cute commercials on television. Chris calls his agent to cancel the policy and is informed that the unearned premium (UEP) on the cancelled policy will be returned to him by mail in a couple of weeks. When Chris receives the check, he is surprised to find that it's made out for less than the amount of unearned premium he should have received. What is the most likely reason for this? - Correct Answers Chris' policy had a provision stating that UEP must be returned on a short-rate basis In Texas, a doctor must certify that an injured employee has reached Maximum Medical Improvement (MMI) and will assign an impairment rating (IR) for the percentage of permanent impairment that the injured worker has experienced by using the rating criteria: - Correct Answers From the 4th edition of the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment The limit of a bond is known as its: - Correct Answers Bond penalty. Which of the following serves as a deterrent for an insured to cancel an insurance policy before its expiration date? - Correct Answers A short-rate penalty deducted from the unearned premium.. Which of the following would be covered by Section I of the Businessowners policy? - Correct Answers The seizure of the insured's building by the civil authorities in order to stop the spread of fire. Which of the following protects against legal liability for loss or damage to baggage? - Correct Answers Cargo Liability coverage. Which of the following coverages is included as "no-fault" coverage on the standardized Personal Auto policy? - Correct Answers Medical Payments and Physical Damage. Which of the following types of insurance companies is a non-profit organization? - Correct Answers A fraternal benefit society In order for a contract to be binding in a court of law, it must be designed for: - Correct Answers Legal purposes. Which of the following additional coverages provided by the Building and Personal Property coverage form applies only to buildings to which the replacement cost optional coverage applies? - Correct Answers Increased Cost of Construction. Which of the following statements would be a reason for an adjuster to conduct a "claimant investigation"? - Correct Answers To determine the extent of the claimants injuries and if those injuries were caused by the incident that gave rise to the claim. Which of the following is TRUE regarding coverage for a vegetated roof under the Building & Personal Property coverage form of a Commercial Property policy? - Correct Answers Damage to a vegetated roof is considered to be part of the building, therefore coverage is provided by Coverage A - Building. Which of the following is not a true statement regarding the use of non- original equipment manufactured replacement parts for vehicles? - Correct Answers Insurers specifying the use of non-original equipment manufacture replacement crash parts shall not be required to pay the cost of any modifications to the parts which may become necessary to affect the repair. The definition of "occupying" in the personal auto definitions means all of the following, EXCEPT: - Correct Answers Under a vehicle Which of the following statements is true regarding a stock insurance company? - Correct Answers Stock companies pay a portion of their earnings to their stockholders (shareholders) as dividends. Texas issues emergency adjuster licenses in case of an emergency arising out of a disaster. The application must be certified not later than the fifth day after the date on which the person begins works as an adjuster. An emergency license is valid for ______ days. - Correct Answers 90 Homeowners policies provide personal liability coverage that follows an insured anywhere in the world under: - Correct Answers Coverage E. The Builders' Risk form covers all of the following, EXCEPT: - Correct Answers Unattached signs. A loss reserving method that establishes aggregate reserves for all claims for a single line of insurance is known as: - Correct Answers Loss ratio method. The medical payments coverage of an Aircraft Liability policy provided coverage for bodily injury expenses incurred by accident: - Correct Answers Within one year of the accident. Under a standard Equipment Breakdown policy, the loss settlement is: - Correct Answers On a replacement cost coverage, if the repair or replacement, is made within 24 months of the loss. Which Garage Coverage form symbol is used to indicate that the covered automobile(s) is/are subject to a compulsory "no-fault" law? - Correct Answers Symbol 25. All of the following statements are true regarding state Guaranty Associations, EXCEPT: - Correct Answers The fund assists insurers in gaining new insurance business by allowing them to advertise their membership in the Guaranty Association. Which of the following types of property can NOT be covered under a Commercial Inland Marine form? - Correct Answers Property being manufactured and shipped to Europe for sale. Which of the following statements concerning the Earthquake and Volcanic Eruption Endorsement to a Commercial Property policy is NOT TRUE? - Correct Answers If the policy expires before the end of the 168-hour period, coverage will not apply to the time period following the expiration date of the policy. Loss settlement for personal property that is covered under Coverage C of a standard unendorsed ISO Homeowners policy is on a(n) - Correct Answers Actual cash value basis. All the following are covered under Section II of a Homeowners policy, EXCEPT: - Correct Answers Intentional bodily injury to others by the insured.. Adjusters in Texas must complete at least _____ of the continuing education required to renew their license in a classroom or classroom equivalent setting - Correct Answers 50% Molly is a staff adjuster who works for Indemnify Insurance. The evidence in the investigation has caused Molly to suspect that the claim is fraudulent. She is told to put the claim file in order and transfer it Meg, an adjuster who specializes in fraud. Which of the following reports should Molly prepare and send to Meg along with the claim file? - Correct Answers A summarized report. All of the following are included in the Businessowners policy coverage territory, EXCEPT: - Correct Answers Mexico. All of the following statements are TRUE regarding Section II - Liability of the Garage Coverage form, EXCEPT: - Correct Answers Provides coverage when an employee causes damage to a customer's vehicle. The "period of restoration" for the Extra Expense coverage included on the Business Income form is: - Correct Answers Immediately following the direct physical damage.. Willie's Widgets has been earning a large portion of their market share for 10 years. During Willie's 11th year in business, Wynonna's Widgets opens and her superior marketing practices leaves Willie unable to continue in business. Which of the following types of risk caused Willie's loss? - Correct Answers Dynamic Risk A gas line explodes outside of Mindy's Mending Shop, ruining her new landscaping. Which coverage extension of Mindy's Commercial Property policy would cover the cost of replacing the damaged trees and shrubs? - Correct Answers "Outdoor Property". Mrs. Vincent is covered under a standard PAP that covers her 2016 Ford SUV. She carries liability and full physical damage coverage. Her neighbor owns a 2002 Chevrolet pick-up truck with liability coverage only. Mrs. Vincent borrows the truck to pick up lawn furniture, parks the truck at the store, and leaves the keys in the ignition. The truck is stolen and later found wrecked. Which of the following would apply? - Correct Answers The loss is covered under Mrs. Vincent's "other than collision" coverage. Pete is covered under a Personal Auto policy with Indemnify Insurance when his car is stolen. Six months pass, Pete's car is never found and the policy period with Indemnify expires. Pete decides to purchase another EXCEPT: - Correct Answers The damage can be caused by a gradual wear and tear of parts within the equipment. Amelia has suffered a covered collision loss to her vehicle. The insurer requires that her vehicle be repaired at a repair shop of the insurer's choice. The insurer: - Correct Answers Is guilty of an unfair claims practice act.. All of the following are exclusions under the Standard Fire policy, EXCEPT: - Correct Answers Fire damage that is the result of a riot.. One of the Unfair Claim Settlement Practices is "failing to affirm or deny coverage of claims within a reasonable time after having completed its investigation related to such claim or claims". How is the length of time that is considered "reasonable" decided? - Correct Answers The state legislatures set the reasonable time period by statute. All of the following are reasons an IME may be requested by a workers' compensation insurer, EXCEPT: - Correct Answers When the injured worker's primary care provider charges higher rates than the insurer would like to pay. 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? - Correct Answers Issue a reservation of rights letter to the insured. In ocean marine insurance, each of the following is true about the term "general average", EXCEPT - Correct Answers Only the party having an interest in the lost property suffers a loss. All of the following statements are TRUE regarding automobile "no-fault" laws, EXCEPT: - Correct Answers Medical payments and physical damage claims are paid by the state assigned risk fund without determining fault to any party in the accident. On Monday afternoon, Carissa's boss requested that she finish updating the company website by Tuesday morning. Carissa did not want to stay at the office late into the evening so she took her work home to complete it there. On the way home, Carissa remembers that she left an external hard drive back at the office. This hard drive contained files that she needed to complete the website updates so she turns her car around and heads back to the office to retrieve it. Two blocks away from her office, another car runs a stop light and smashes into Carissa's car, severely injuring her. Which of the following statements would be TRUE in how Carissa would be handled by her employer's workers compensation coverage? - Correct Answers Carissa's injuries are not compensable as she was commuting to work and coverage does not apply in that case.. Paolo has an expensive boat and is purchasing insurance to cover it. He is discussing the deductible and his agent suggests a deductible amount that Paolo could pay if the Hull of his boat was severely damaged. Which of the following types of deductibles would be best for Paolo? - Correct Answers A percentage deductible. When determining if an injury or illness is compensable under a workers' compensation policy, which of the following is the criteria used? - Correct Answers That the injury or illness arose out of and in the course of the employment.. Under a Businessowners policy, the "Hired and Nonowned Auto Liability" endorsement would cover: - Correct Answers Vehicles borrowed by the insured. Which of the following would be covered under a Personal Umbrella policy? - Correct Answers An insured who commits an intentional act of violence to protect his family. All of the following would NOT be covered under any section of the Business and Personal Property coverage form, EXCEPT: - Correct Answers The cost to restore electronic data that was corrupted by a covered cause of loss.. What is the limit for the "Business Income" additional coverage under a standard Businessowners policy? - Correct Answers Actual loss sustained for up to 12 months. An agent with a surplus/excess lines license, will place insurance business with an unauthorized insurer when: - Correct Answers The coverage cannot be obtained from insurers authorized within the state. Which of the following are exempt from Texas workers compensation laws? I. a person employed as a domestic worker or a casual worker engaged in a personal residence;II. a person covered by a federal workers compensation law; orIII. a farm or ranch employee. - Correct Answers I, II and III An insured has her dwelling covered by an HO-3 form, with a $500,000 limit of liability for Coverage A. A fire breaks out and the dwelling is a total loss. The entire $500,000 limit is used to cover the direct physical damage to the dwelling. However, there is a large amount of debris from the burned structure covering the insured's property that will need to be removed. In this situation, how will the cost of the debris removal be paid? - Correct Answers When the entire Coverage A limit is used to cover the direct physical damage to the dwelling, an additional 5% of the Coverage A limit will be added to cover debris removal. The broad evidence rule is used when: - Correct Answers The actual cash value of property is being determined. Which of the following is most likely to be uninsurable? - Correct Answers The purchaser of a new home wants to protect herself from a possible drop in housing prices The major difference in Section I of an HO-2 and an HO-4 form is: - Correct Answers Coverage A Harvey's Hardware carries a CGL policy with a $2,000,000 "per occurrence" limit and a $4,000,000 "aggregate limit". Harvey's also carries a Commercial Umbrella policy with a $2,000,000 "aggregate limit" and a $300,000 self-insured retention (SIR). The hardware store has 7 bodily injury claims during the policy period, with no single occurrence totaling more than $2,000,000, but the total of the 7 occurrences is $8,000,000. How will this claim be paid? - Correct Answers The CGL policy will pay $4,000,000, the Umbrella policy will pay $2,000,000, leaving $2,000,000 of the claim uninsured.. A Texas adjuster may be subjected to a criminal penalty for all of the following, EXCEPT: - Correct Answers Not paying court mandated child support. What is the main difference between arbitration and mediation in dealing with coverage disputes in the claims adjusting process - Correct Answers Mediation is not binding on the parties involved, but with arbitration the decision is final and binding. Neil is a worker who has been injured on the job in Texas. He has been receiving temporary income benefits and he has reached MMI. Neil's treating physician has assigned an IR of 12% on his case. How many weeks of Impairment Income Benefits (IIBs) will Neil receive? - Correct Answers 36 weeks. Private, unincorporated mutual insurers that consist of associations that agree to equally share risks among its members are known as: - Correct Answers Reciprocal exchanges. Under Coverage F - Medical Payments in Section II of the standard Homeowners policies, medical expenses for the injured party will be paid as long as the claim is submitted: - Correct Answers Within three years of the date of the accident. State "financial responsibility" laws determine the amount of coverage that must be purchased and how insureds must prove coverage under which of the following Personal Automobile insuring agreements? - Correct Answers Part A Sam and Dan are working to clean out the gutters around the roof on Sam's house. Sam and Dan are standing at the top of separate ladders that are propped against the side of Sam's house, when Dan's ladder begins to wobble and ultimately falls into Sam's ladder. Both men and their ladders crash to the ground. Whose injuries will be covered by Sam's Homeowners policy under Coverage E - Personal Liability? - Correct Answers Only Dan's injuries would be covered. The insured carries a standard Yacht policy on his vessel registered in Florida. One of the crew members is injured while performing a work- related task on the yacht while sailing off the coast of Italy. What coverage would respond to the crew member's injuries? - Correct Answers The Jones Act ??? All of the following sections are included on the Business and Personal Property coverage form, EXCEPT: - Correct Answers Perils Insured Against. The standardized Dwelling forms allow the insured to bring legal action against the insurer if they have complied with all policy provisions and the action is brought within: - Correct Answers 2 years after the date of the loss. An "uninsured motor vehicle" under a personal auto policy does not include: - Correct Answers An abandoned car used as a residence. With regard to workers' compensation coverage, a "competitive" state is: - Correct Answers One where both private and government insurers write workers' compensation policies that compete against one another. Which of the following is a coverage that may be selected on an Equipment Breakdown form by showing a limit of liability amount next to the coverage? - Correct Answers Brands and labels. Paul had his roof inspected by a local contractor, after a strong storm with high winds and hail, passed through his neighborhood. The contractor found damage to the roof and gave Paul an estimate of $9,850 to replace it. Paul filed a claim with his insurance company, and the company promptly sent an adjuster to inspect the roof. The adjuster's estimate to repair the roof came to $9,650. How will the adjuster likely attempt to settle this claim? - Correct Answers Negotiate the claim in an attempt to persuade Paul to agree to the lesser amount. Which of the following would be covered under any of the Homeowners forms? - Correct Answers Explosion of a hot water heater that damages carpeting. Which of the following is a covered basic form peril of the Homeowners policies? - Correct Answers Volcanic Eruption The Texas Insurance Commissioner has suspended Marty's insurance license and informed him that the license will be suspended for the maximum amount of time allowed by law. The suspension became effective on April 19th, 2020. Which of the following is the date in which Marty's license will no longer be suspended? - Correct Answers April 19th, 2021 All of the following statements are TRUE regarding the perils of the Homeowners forms, EXCEPT - Correct Answers Fire or lightning is a named peril covering the buildings and other structures under an HO-4 form.. Requiring a claimant to travel a long distance to have his or her automobile repaired violates which of the following standards for prompt investigations and fair and equitable settlements? - Correct Answers Unreasonable Travel The authority the general public believes an insurance professional possesses based on their actions is known as: - Correct Answers Apparent authority. The "Pollution Clean-Up and Removal" coverage under the Building and Personal Property coverage form of a CPP: - Correct Answers Is an additional coverage.. A contractor's bid bond is used: - Correct Answers As a promise from the surety that if the principal is awarded the contract, the principal will enter into the contract for the bid amount and provide required performance bonds. When the Personal Liability Supplement is purchased as a monoline policy, all of the following are required conditions, EXCEPT: - Correct Answers Bankruptcy Which of the following statements is TRUE regarding the Personal Effects Floater? - Correct Answers It can be purchased either on a permanent basis for frequent travelers or for a single trip. While inspecting a recently insured building, an insurance company representative notices a loose handrail on a stairway. When writing to the agent, the company official would refer to this situation as which of the following? - Correct Answers A hazard If an employee is eligible to receive impairment income benefits, what is payment based on? - Correct Answers 70% of the employee's average weekly wage. An insured has a $1,000 insurance claim and is able to prove his loss and its value. The insurer's adjuster offers $500, knowing that the claimant would probably take the offer to avoid incurring the cost of an attorney to sue for the actual amount of the claim. The offer made by the adjuster is considered - Correct Answers To be an unfair claims settlement practice. What is generally excluded on the Condominium Commercial Unit-Owners form? - Correct Answers Building coverage.. Marcus has two Commercial Property policies covering his warehouse. Policy A is the primary policy and has a $200,000 limit, and Policy B is an excess policy with a $100,000 limit. After a fire causes $140,000 damage to his warehouse, how will each of Marcus' policies respond (disregarding any deductible)? - Correct Answers Policy A will pay $93,333 and Policy B will pay $46,667.. Heather's house is fully insured with a DP-3 with a limit of $85,000. One day, the house is struck by lightning, and despite the fire department's efforts, burns to the ground. She still had a balance of $20,000 left on her mortgage at the time of the fire. What is the maximum indemnification that would go to Heather, the fire department, and her mortgage lender respectively? - Correct Answers $65,000; $500; $20,000 The penalty for failure to satisfy a coinsurance requirement of a property insurance policy is: - Correct Answers Only a portion of a partial loss will be paid.. Which of the following is true regarding pure and speculative risks? - Correct Answers With pure risk there is only the possibility of loss. Which "conditions" form in a complete Commercial Property policy specifies how a disagreement on the value of damaged property is handled? - Correct Answers The Building and Personal Property Conditions form. The Section II - Additional Coverages of Homeowners policies, damage to the property of others (whether or not in the insured's custody and regardless of fault) is covered up to: - Correct Answers $1,000 per occurrence Which of the following statements is TRUE regarding the DP-3 special form? - Correct Answers It provides open peril coverage on the structure and named peril coverage on the personal property. "Experience rating" provides employers with the incentive to: - Correct Answers Prioritize safety and control hazards in the workplace. Which of the following types of insurance companies must charge a premium tax to be remitted to the state each time a policy is sold? - Correct Answers Surplus Lines company. Mark is injured at work in a state that provides a TTD benefit at 66 2/3%, the state minimum is $40 and the state maximum is $540. The waiting period is 3 days and the retroactive period is 15 days. Which of the following is Mark's TTD benefit if he earns $20 per hour and usually works a 40-hour week. Mark is injured on July 14th and does not return to work until September 3rd. Which of the following is the amount of TTD benefit he would have received? - Correct Answers $3,809.50. An independent adjuster acts on behalf of his or her principal. Which of the following is the principal for an independent adjuster? - Correct Answers The insurer. Jerry is fishing from his 22-foot boat on Lake Norman when he is caught in a sudden hail storm. His boat suffers extensive hail damage. When he files a claim against his Homeowners policy, the most likely reason his claim is denied because: - Correct Answers The boat was not fully enclosed inside a building during the hail storm. A new home that cost $500,000 to build, would need which of the following coverage amounts under a Homeowners policy for the insured to receive full replacement cost coverage in the event of a $50,000 fire loss? - Correct Answers $400,000. Coverage for all reasonable expenses incurred by an insured in order to continue as nearly as practicable the normal operation of his/her business after a loss is: - Correct Answers Extra Expense Coverage The insured has her fur coat specifically covered under a Personal Articles policy. It has been stored in a plastic garment bag in her closet during the summer months. She decides to take the coat out and hang it outside to freshen up. The next door neighbor's dog sees the coat and attacks it and ruins the garment. The insurer will: - Correct Answers Pay the claim because the loss is not excluded There are several different Commercial Property coverage forms that can be added to a Commercial Package policy. Which of the following is NOT described on a Commercial Property coverage form? - Correct Answers The number of buildings the insured owns that are not covered by the policy.. All of the following statements are TRUE regarding the standard Businessowners policy coverage extension for "Business Personal Property Temporarily in Portable Storage Units", EXCEPT: - Correct Answers The coverage is provided for rented storage units away from the insured premises. All of the following statements are true regarding Difference in Conditions insurance (DIC), EXCEPT: - Correct Answers Covers losses due to windstorm..