Insurance Coverage and Claims: Key Concepts and Scenarios, Exams of Insurance law

Download Insurance Coverage and Claims: Key Concepts and Scenarios and more Exams Insurance law in PDF only on Docsity! WV P&C Insurance Exam Study 100% correct answered solutions The insured auto dealer has opted to include part IV - garage physical damage coverage to her policy. Which of the following symbols must be indicated on the declarations page of the policy for physical damage coverage to apply? - ANS; Symbol 31 What is the West Virginia individual agent/producer license fee? - ANS; $50 Under a commercial property policy, all of the following types of outdoor property are covered under the additional coverage for collapse if they are damaged directly by the collapsed building, except A. A satellite dish. B. Awnings, gutters and downspouts. C. A septic system for the insured commercial building. D. A fence around the building. - ANS; C. A septic system for the insured commercial building. Which of the following is not a mobile equipment under the business auto policy? A. A self propelled vehicle was permanently attached street cleaning appointment. B. A caterpillar tractor. C. A forklift. D. And electric powered cart used solely for transportation within a large warehouse. - ANS; A. A self propelled vehicle with permanently attached street cleaning equipment. Gavin, the named insured under a personal auto policy, his daughter Tabatha, and two of her friends are riding in the covered auto when Gavin accidentally runs a stop sign, striking another vehicle. Everyone in Gavin's vehicle was injured as well as the driver and two passengers in the other car. How long do Tabatha's friends have to submit their medical expense claims for coverage under part B of Gavin standardized personal auto policy? A. Within six months of the date of the accident. B. Within two years of the date of the accident. C. Within three years of the date of the accident. D. Within 18 months of the date of the accident. - ANS; C. Within three years of the date of the accident. What type of bond is required when a person dies without leaving a will? A. Surety bond B. Fidelity bond C. Administrators bond D. A state bond. - ANS; C. Administrators bond. Which of the following would be considered vacant on in an endorsed commercial property policy? A. A building which is 25% vacant. B. A leased building in which less than 31% of the building is occupied C. A retail store located in a shopping mall which closed and has been completely vacant for 45 days. D. A building his utilities were turned off 31 days ago. - ANS; B. A leased building and watch less than 31% of the building is occupied. In order for a claim to be a products claim, which of the following must be satisfied? A. Injury sustained must have occurred on the insurance premises. B. The insured in most cases must have relinquished possession of the product to be the purchaser. C. A single limit of liability must be provided. D. And employee injury must have occurred. - ANS; B. The insured in most cases must have relinquished possession of the product to be the purchaser. The chief deputy of the county auditors steals $2.5 million from the county and gambles it away. What bond if any would The county need to have in place in order to try and recoup this loss? A. Employee dishonesty. B. Blanket public official bond. C. Fiduciary bond. D. Extortion commercial entities. - ANS; B. A blanket public official bond. A business covered by a standard business owners policy is shut down due to the acts of a civil authority. Which of the following additional coverages would not be subject to a waiting period before coverage would apply? A. Business income. B. Extra expense C. Extended business income D. Business income from dependent properties. - ANS; B. Extra expense. The doctrine that states an insurance policy should provide the coverage that is a sensible and prudent person would expect is A. The reasonable expectation doctrine. B. The applied principles doctrine C. The ambiguous language doctrine D. The limited liability doctrine - ANS; A. The reasonable expectation doctrine. C. Three months D. 30 days - ANS; A. 45 days Jenny holes and insurance license in West Virginia and has received an inquiry from the insurance commissioner in the mail. Which of the following statements is correct regarding Michaela's response to the commissioner? A. Jenny will respond in writing, making sure I have a sponsor I think 10 working days from the date of. On the inquiry itself. B. Jenny is quite busy and responds within 15 working days by telephone C. Jenny will respond in writing, making sure he'll respond to Mission or within 15 calendar days from the date. D. Jenny will respond in writing, making sure response within 15 working days from the date appearing on the inquiry itself. - ANS; D. Jenny will respond in writing, making sure her response reaches the commissioner within 15 working days from the date appearing on the inquiry itself. Be an a ice model unfair claim settlement practices that specifies that the insurance company must provide the proper claim forms for reasonable explanation of how to use them to the claimant within A. 15 calendars days of the request B. 30 calendar days of the request C. 20 working days of D 10 calendar days of the request - ANS; A. 15 calendar days of the request Under the "inside the premises - theft of money & securities" insuring agreement of a crime policy, which of the following situations would not be covered A. Cash that is taken by employees B. Cash in the register is destroyed in a fire C. Travelers checks that have turned up missing D. A casino suffers a fact of slot machine tokens. - ANS; A. Cash that is taken by employees All of the following are excluded under the end earthquake endorsement to a homeowners policy, except A. Flood and title wave. B. Land shockwaves C. Waves and tsunami D. The cost of filling land - ANS; B. Land shockwaves. A non-admitted insurance company that insures property in West Virginia must a. Write coverage through an excess lines broker. B. Pay premium taxes directly to the state of West Virginia C. Become licensed before any claims are filed D. Become a member of the West Virginia insurance guaranty Association. - ANS; A. Write coverage through an excess lines broker John Smith has met just made his last car payment which concludes his contract. The finance company, for reasons not immediately apparent, has the car repossessed. If MR. Smith brings a suit, the court will allow Mr. Smith to read take possession of the car pending the courts final ruling as to ownership if Mr. Smith provide the court a A. Attachment bond B. Indemnity bond C. Performance bond D. Replevin bond - ANS; D. Replevin bond Isabell is covered under a standard capital oh capital H - six form and must vacate her condominium because an adjacent unit has suffered extensive fire damage. Isabella will need to collect additional living expenses from coverage D. How will this amount be calculated? A. Isabella will receive 50% of the coverage see limit she selected when she purchased the policy B. Isabella will receive 30% of the coverage same limit she selected when she purchased the policy C. The HO-6 specifies a coverage D limit of $5000 D. The HO-6 specifies a coverage D limit of $3000 - ANS; A. Isabell received 50% of the coverage C limit she selected when she purchased the policy Rihanna is applying for a new job at General Hospital. Which law limits how much information Brianna's bank and mortgage lender can share with General Hospital, guarding to Brianna's finances and credit score? A. The Gramm-Leach-Bliley Act B. Fair credit reporting act C. Insurance information and privacy protection protection act D. Health insurance portability and accountability act. - ANS; B. Fair credit reporting act A producer holding nonresident license in another state has been found guilty of violating that states insurance code. What is required of this producer in the state of West Virginia? A. Nothing, because the violation occurred in another state. B. Report the findings to the commissioner prior to license renewal C. Nothing because the NAIC notifies all interstate parties of violations D. Report the findings to the commissioner within 30 days of the final disposition of the matter - ANS; D. Report the findings to the commissioner within 30 days of the final disposition of the matter The terrorism risk insurance act and all of his extensions and re-authorizations is actually an agreement between A. Between the states and the federal government B. Between the insurance companies and the states C. Between the federal government and the insurance companies D. Between the federal government and foreign governments - ANS; C. Between the federal government and the insurance companies When determining if an injury or illness is come comp and supple under a Worker's Compensation policy, which of the following is the criteria used? A. What was the proximate legal cause of loss B. But the injury or illness arose out of the course of employment C. But the injury or illness arose out of and in the course of the employment D. The person or people at fault and causing the accident that led to the injury or illness - ANS; C. That the injury or illness arose out of and in the course of the employment The principle of indemnity is illustrated by which of the following? A. Restore as an insured to the same condition enjoyed before a loss B. Allows an insured to profit from a loss C. Limits recovery to actual cash value D. Requires an insured to assign any rights of recovery against a third-party - ANS; A. Restores and insured to the same condition enjoyed before a loss For restaurants to be eligible for coverage by the standard BOP policy, they cannot exceed blank and total floor area E. 7500 ft.² B. 25,000 ft.² C. 15% of the total floor area of the building D. 3000 ft.² - ANS; A. 7500 ft.² A blanket employee dishonesty bond will A. Name the individuals B. Does not mean the individual individuals C. Excludes certain individuals D. Exclude certain type of occupations - ANS; B. Does not name the individuals Wholesalers can be covered by the BOP if no more than blank of their total for area is open to the public E. 25% B. 10% Section I of the business owners policy places limitations on coverage for certain losses if they are not caused by a specific cause of loss. All of the following are specified causes of loss under the policy, except A. Fire lightning. B. Sinkhole collapse C. Water gauge D. Building glass breakage - ANS; D. Building glass breakage Which of the following coverage symbols would be designated on the declarations of a commercial auto policy to cover a customers auto left with the insured to be serviced? A. Symbol 30 B. Symbol 31 C. Symbol 32 D. Symbol 33 - ANS; A. Symbol 30 Which of the following contractors would be eligible for a business owners policy? A. a Carpenter doing all of his own work building kitchen cabinets and peoples homes and earn $75,000 per year B. A general contractor who subcontracts about 5% of the business annual gross sales C. A roofing contractor with an annual payroll a $400,000 capital D. A contractor who constructs hi Risa apartment buildings up to six stories and height - ANS; A. A Carpenter doing all of his own work building kitchen cabinets and peoples homes and are in $75,000 per year Last settlement for personal property that is covered under coverage C of a standard and unendorsed ISO homeowners policy is on an A. Market value basis B. Appraised value basis C. Replacement cost basis D. Actual cash value basis - ANS; D. Actual cash value basis Which of the following sentence which best describes the term fiduciary A. A person who submit the claim to their insurance company B. A person who has been bonded at as honest and trustworthy C. A person who is entrusted with the assets of another D. A person who holds a Fiduciary license - ANS; C. A person who has entrusted with the assets of another If a producer knew or should have known that his or her actions were in violation of the West Virginia insurance code, the penalty imposed by the commissioner may be 8A. A fine of $5000 and a suspension or revocation of the producers license B. Licenses suspension or revocation and a fine of up to $1000 for each violation not to exceed $10,000 C a fine of $10,000 for each and every violation D. penalty of six months in jail and the county in which the violation occurred - ANS; A. A fine of $5000 and a suspension or revocation of the producers license. What is the retained limit of a personal umbrella policy that must be paid on the umbrella policy covers a claim by the underlying policy A. The cost of defending the insured and the lawsuit B. Supplementary payments coverage C. The insured must pay when the person that was excluded by the under online liability policy D. A percentage of policy limits - ANS; C. A deductible that the insured must pay when the person on Bralla policy covers it for you that was excluded by the underlying liability policy Which of the following garage policy coverages will pay for the physical damage to a garage customers auto regardless of legal liability? A. Section 2 garage liability coverage B. section 4. Garage physical damage coverage C. Garage keepers legal liability coverage D. Garage keepers direct primary coverage. - ANS; D. Garage keepers direct primary coverage And insured has purchased ADP - three policy to cover his dwelling that is valued at a replacement cost of $100,000. He insures it for $60,000 and later suffers a $30,000 fire loss. Which of the following amounts will be paid by the policy if no deductible form is attached? A. $30,000 B. $25,000 C. $22,500 D. $15,000 - ANS; C. $22,500 A warranty and insurance is best described as which of the following A. I guarantee that the statements made by the applicant are completely true and untrue statements can void the coverage B. A statement made the represents the honest recollection is that the applicant C. A material misrepresentation which is an untrue statement D. A statement that does not involve misrepresentation - ANS; A. I guarantee that the statements made by the applicant are completely true and I'm sure statements can void the coverage The HS reform insurance for direct physical loss to cover property involving collapse of a building caused by all of the following, except A hidden decay B settling C weight of contents D use of defective materials - ANS; B. Settling Commercial inland coverages can be written as a stand-alone policy and not included in the commercial package policy, this would be called... - ANS; A Monoline Policy Under the personal articles floater, a loss is covered when it occurs A. Anywhere in the world, except for fine arts. B. In the United States only. C. In the United States and Canada only. D. In the United States, Canada, and Mexico only. - ANS; A. Anywhere in the world, except for fine arts. The insured is covered under a standard business owner policy. She has several computers used in the business and the electronica data stored on them becomes corrupt as a result of lightning. The cost to research and restore this data is $20,000. How much will the policy pay for the electronica data? A. $10,000 B. $20,000 C. Nothing D. $2500. - ANS; A. $10,000. Physical damage to a contractors bulldozer is best covered under which of the following? - ANS; A commercial inland marine contractors equipment floater When a West Virginia insurance is covered by uninsured motorist coverage, the insurer is required to pay the insured all sons he is legally entitled to recover up to the required limits of financial responsibility. However, the insurer is permitted to deduct... - ANS; The first $300 for property damage resulting from the negligence of an uninsured motorist. Which of the following statements describes the coverage provided under coverage C of the ordinance or law endorsement to a commercial policy policy? - ANS; Provides coverage for the increased costs to repair or rebuild to comply with current building, zoning, or land use ordinances or laws. What is the definition of a surety bond? - ANS; Guarantees the performance of a duty. Which of the following statements is true concerning a commercial package policy? - ANS; It can be written for a specific policy term not to exceed three years. The estimated annual premium for a Worker's Compensation policy will be based on all of the following, except... A the experience modification factor. B a schedule rating. C a premium discount. D the average premium of insurance in the same area out working in the same industry. - ANS; D the average premium of insurance in the same area working in the same industry. A married couple have applied to a mortgage company for a mortgage loan. The loan officer told them everything was in order and the loan would be processed pending the purchase of insurance to cover the loan from a certain insurance agent. When the borrowers stated they would prefer to purchase the insurance through their own agent, the loan officer indicated they would not be able to borrow as much as they needed. Under West Virginia state law, the mortgage company is violating which unfair trade practices? A coercion B rebating C unfair discrimination D there is no violation. - ANS; A coercion Under a surety bond, the owner of the project is called the... A. Obligee. B. Surety. C. Principal. D. Administrator. - ANS; A. Obligee The CGL policy contains coverage for... A. Directors and officers liability. B. Errors and omissions liability. C. Completed operations liability. D. Liquor liability. - ANS; C. Completed operations liability. Coverage B of an unendorsed standard BOP policy provides how much coverage for theft of money and securities? A. $5000 on the premises only. B. $5000 on the premises but only $2500 off premises. C. $1000 on and off the premises. D. None. - ANS; D. None. The insured carries and 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 $1000, and other household items valued at $2000. Damage caused by the burglars is $1500. Assuming no deductible applies to their coverage how much would be paid? A $3200 B. $4500 C. $1500 D. $2000 - ANS; C. $1500 because the DP - 3 only provides damage to covered property caused by the burglars. Theft is excluded under the DP - 3 unless endorsed with the theft endorsement. According to the West Virginia insurance code," to exchange a contract of insurance by any means, for money or it's equivalent, on behalf of an insurance company", is the definition of... A. Placing insurance. B. Soliciting insurance. C. Negotiating insurance. D. Selling insurance. - ANS; D selling insurance. The West Virginia insurance code defines selling insurance as to exchange a contract of insurance by any means, for money or it's equivalent, on behalf of the insurance company. When a loss occurs and coverage is provided by reciprocal exchange, which of the following is responsible to cover the loss? A. The "name". B. They will reinsure. C. The member insurers. D. The attorney in fact. - ANS; C the member insurers. The private, unincorporated mutual ensures who are members of the reciprocal are responsible to cover the loss. A commercial property policy has the protective safeguards endorsement attached indicating that the insured has protective safe guards installed such as a sprinkler system. Shut the system become an operative, how long does the insured have to report this facts and the insurance? A. 48 hours. B. 24 hours. C. 36 hours. D. Two weeks. - ANS; A. 48 hours. If repairs cannot be completed within 48 hours, the insurer must be notified in order to comply with the conditions of the form. Harry Smith is a minor under the age of 18 and has been employed in violation of the laws of West Virginia. If he is injured in a job related accident, how will this affect Worker's Compensation coverage? A. He will be covered for Worker's Compensation benefits. B. He will not be covered because he is a minor and employed illegally. C. He will have to bring a lawsuit against his employer and prove legal liability. D. Worker's Compensation coverage will not apply and the ploy will be held personally liable for his work related injuries. - ANS; A he will be covered for Worker's Compensation benefits. The West Virginia code states that the right to Worker's Compensation coverage will not be affected because he is a minor and employed in violation of the laws of West Virginia. A couple recently borrowed money to do some major renovations to their home. While they were renovating their home, they decided to make some changes in their estate planning as well. The couple had their attorney draft papers naming two of their three sons, Bill and Drew, owners of the property with the parents retaining a life estate in the property. The third son Rick, understood when he reached legal age he would be named as an owner as well. In May, a tornado destroyed the house. Which of the following does not have any insurable interest in the house? A. The son, Rick B. The mortgage holder. C. The parents. D. The sons Bill and Drew. - ANS; A. The son Rick-who is the youngest son who has not reached legal age, cannot be a property owner. In West Virginia, when an insurer has received notification of a claim, that insure must acknowledge having receive that notification within A 10 days B. 15 days C. 20 days D. Immediately. - ANS; B. 15 days. Taking longer than 15 days to acknowledge receipt of a claim is considered an unfair claims practice. Pollo has an expensive boat and is purchasing insurance to cover it. He is discussing the deductible and his agent suggests a deductible amount the polo could pay if the hull of his boat was severely damaged. Which of the following types of deductibles would be best for polo? A a percentage deductible. B a flat deductible. C. A specified deductible. D. A stated deductible. - ANS; A. A percentage deductible. A percentage deductible is used with boats that are very expensive. This type of deductible as a percentage of the total amount it would take to repair the hull of the boat if it was severely damaged. The per occurrence limit under a commercial general liability policy also contains a sublimit for A. Medical payments. B. The completed operations aggregate limit. C. The general aggregate limit. D. The products aggregate limit. - ANS; A. Medical payments. The occurrence limit under AC GL policy is the most the policy will pay for each occurrence. This limit is also subject to specific supplements for personal and advertising injury, medical payments, and damage to property of others. A. A van being driven by Bill. The van is owned by Kathy Webster. B. A station wagon being driven by Tonya Walters, Bill's wife. She and Bill live together and she owns the station wagon. C. A pick up Being driven by Bill as part of his job in a repair garage. The truck is owned by Ted Arbor, Bill's boss. D. A sedan being driven by Bob Walther's, Bill's son. The car belongs to Bill. - ANS; A. A van being driven by Bill. The van is owned by Kathy Webster. Bill is covered while driving the van owned by Kathy Webster. He specifically named on the endorsement. The purpose of this endorsement is to extend the business auto coverage for Bill while he's operating a non-owned auto for personal reasons. The other situations would not be covered. Bella and Tonya should have vehicles they own insured under their own personal auto policy. Ted Armour should have a business auto policy on the vehicle he owns and in this case it is being used for business. And insured under and unendorsed homeowners policy can be all of the following, except: A. A 14-year-old niece of HOME the name insured has custody. B. A childhood friend of the named insured who is visiting for a month from England. C. The named insured 22-year-old daughter who is a full-time graduate student. D. The spouse of the name insured who is also a resident of the insured's location. - ANS; B. A childhood friend of the named insured who is visiting for a month from England. A childhood friend of a named insured would not be considered an insured under a homeowners policy. Shawn is covered under a standard, unendorsed personal auto policy. He has an external hard drive connected to the manufacture Dash installed stereo system of the car, with thousands of digital music files stored there. The vehicle was broken into and the hard drive is stolen. However the insurance company handle the claim for the hard drive? A. Deny the claim in for because this loss is excluded by a part D of the policy. B. Pay the claim in for because part of the policy provides (coverage. C. Pay the claim because the drive was being used with A stereo system that was permanently installed by the manufacture. D. Pay the claim up to the part D specified amount limit of $1000. - ANS; A. Deny the claim in full because this loss is excluded by party of the policy. These items are specifically excluded under the policy claim, therefore the claim would be denied. There is an endorsement that can be added to the policy for an additional premium to cover these types of items, but the question did not specify that this endorsement was carried in our example. And insurance contract is considered to be aleatory contract. All of the following are characteristics of an aleatory contract, except A. The contract is contingent upon certain certain events. B. The contract allows them to her to receive from an individual insured, much more money in premiums that is paid out in claims. C. The contract allows the insured to receive a return and claims payment that is nearly equal to the amount paid and premium. D. The contract allows an individual individual insured to receive much Moran claims payment and was paid in premiums. - ANS; C. The contract allows the insured to receive a return and claims payment that is nearly equal to the amount paid in premium. An aleatory contract provides for an unequal transfer of value between the parties. The term inherent vice is used in inland marine insurance to refer to you: A. The tendency of shippers to be careless with cargo. B. A characteristic of some cargo to destroy itself. C. A characteristic of cargo to deteriorate due to shipping conditions. D. The tendency of shippers to claim that their target cargo was damaged when it reached its final destination. - ANS; B. A characteristic of some cargo to destroy itself. Inherent vice refers to the characteristics of some cargo to destroy itself this refers to items such as vegetables that spoil. Which of the following would be covered under the Jones act? A. Crew members of a ship B. Tourists on a cruise ship. C. Repairers of ships. D. Loaders of ships. - ANS; A. Crew members of a ship. The Jones act applies to crewmembers of a vessel operating on the waters. It allows injured employees or their survivors to sue the vessel owner for negligence that results in injury or death. Which of the following would not be covered under coverage B of the homeowners forms? A. A separate building on the insurance process used for business. B. A building connected to the main dwelling only by a fence. C. A private garage rented to a non-tenant. D. An inground swimming pool. - ANS; A. A separate building on the insured's promises he is for business. A building use for business purposes is not covered as another structure. However, there is an exception for buildings that are rented out as private garage. Buildings connected to the dwelling fire fans are considered detached and therefore our other structures. And inground swimming pool would also be considered a structure. Which of the following would be covered by the advertising injury coverage of the farm insurance forms? A. And insured farmer who unknowingly disparage the crops grown by another farm. B. Advertising the wrong price of the goods. C. Advertising the wrong description of the goods. D. Intentionally making disparaging remarks about another's farm products. - ANS; A. An insured farmer who unknowingly's just barged the crops grown by another farm. Advertising injury would cover a farmer who unknowingly disparages the crops grown by another farmer when advertising his own crops. Intentional acts, advertising and correct prices or descriptions are not covered. And insured is covered under an HO-2 form with a coverage a limit of $125,000 and I coverage C limit of $65,000. What amount will automatically be provided for coverage D? A. $37,500 B. $19,500 C. $32,500 D. $12,500 - ANS; A. $37,500. And HO-2 form provides 30% of the coverage a limit for coverage D - loss of use 30% of $125,000 is $37,500 Which of the following endorsements can be attached to the business auto policy to extend coverage to individuals such as the owner of the business who does not carry personal auto insurance? A. Drive other car endorsement. B. Named non-owned endorsement. C. Broad form named non-owned auto endorsement. D Driveaway liability endorsement. - ANS; A. Drive other car endorsement. The purpose of this endorsement is to provide coverage for the owner of a business that does not own a personal automobile and therefore, does not have coverage under a personal auto policy. The driver other car endorsement covers this business owner when here she is driving other cars not owned or leased by the business for personal use. If the owner had a personal auto policy, he or she would not need this endorsement to their business auto policy. The insured owns a one family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the detached garage? A. $10,000 B. $15,000 C. $20,000 D. None - ANS; C. $20,000. The policy provides for 10% of the dwelling coverage and limit. Therefore, the garage is insured for $20,000 for the same perils that apply to the dwelling. Each of the following is true about builders risk coverage, except A. Coverage terminates the day after construction is completed. B. The amount of risk increases over time. C. Land, lawns and trees are not covered. D. In effect, the coverage has a 100% coinsurance requirement. - ANS; A. Coverage terminates the day after construction is completed. Coverage normally terminates 90 days after the work has been completed or is been excepted. In addition coverage will cease once the building has been put to its intended use. The federal law that requires insurers to give customers written privacy notices is: A. TRIA.