Insurance Contract
Contract of adhesion.
One party (the insurer) prepares the contract and presents it to the second party (the insured), who must accept it on a 'take-it-or-leave-it' basis.
Case Reserve Method
A loss reserve established for each claim when reported
Which kind of agent enters into agreements with more than 1 insurer?
Independent
Fair Credit Reporting Act
Protects a consumers right to privacy, making certain data is confidential & properly used
Transfer, Enhancement, Retention, Avoidance..All of the following are risk management techniques, except?
Enhancement
Risk Retention Groups (RRG)
group-owned insurer that primarily assumes and spreads the liability related risks of its members & Owned by its policyholders
What risks may be protected against by insurance?
Pure Risk
A potential cause of loss, such as fire, explosion, flood, or theft is considered to be a(n):
Peril, a cause of potential loss to property
Experience Rating
Rates based upon employers prior loss experience
The Principle of Indemnity helps avoid which of the following?
Overpayment of a claim
When an insurance policy is not clear, the court will usually interpret in favor of the insured because of which characteristic?
The policy is a contract of adhesion
Parol Evidence Rule
A written contract is the final expression of agreement and may not be altered by prior or simultaneous oral or written negotiations without the written consent of both parties
An agent has authority to do all of the following, except:
Represent the insured's interest
Voidable Contract
A valid contract that may be set aside by one of the parties for reasons satisfactory to a court
Fraternal Benefit Societies
Non profit organizations that generally sell insurance only to members
An agent for ABC Insurance company is representing an insured in an insurance transaction. The principal in the agency relationship is:
ABC Insurance Company, it authorizes the agent to transact business with the insured
Valued Contract
contract that pays a stated amount in event of a total loss
All of the following are considered part of the consideration of an insurance contract, except:
Issuance of the policy
Merchant Marine Act (Jones Act)
Allows insured seamen to make claims for injuries suffered during the course of employment, regulates maritime commerce in U.S. waters
Each participant of a Lloyds association
Is individually liable for each risk they assume
Loss
A reduction in, decrease, or disappearance of value
4 Elements of a Legal Contract
(1) Competent Parties
(2) Legal Purpose
(3) Agreement
(4) Consideration
What is an example of risk reduction?
Taking action to minimize the severity of a potential loss
Risk Reduction involves reducing the severity or frequency of potential loss, without eliminating the risk exposure entirely (t/f)
TRUE
A state requiring that the commissioner agree that a company's rates are appropriate before they are made effective uses which type of rating approval?
Prior approval, it requires that the rates cannot be used until the commissioner approves the rate, or until a set time period has expired after the filing
3 Insurable Interests
(1) Life and Health
(2) Property
(3) Casualty
Insurer
insurer is the source of the authority in which the producer/agent must abide
Who do producers represent when transacting the business of insurance?
The insurer
Loss Ratio
Determined by dividing paid losses plus loss reserves by total earned premiums
Paid Losses + Loss Reserves Total Earned Premiums
Which insurance company department determines the probability of loss and sets the premium rates?
Actuarial Department, interprets the statistical information used in rate making
Expense Ratio
Determined by dividing an insurer's total operating expenses by total earned premium
Total Operating Expenses / Total Earned Premium
What is not true about insurance?
It eliminates risk
Which of the following is not a function of insurance?
To act as an investment vehicle for the insured
Risk Management
determination of what types of protection are required to meet an insured's needs.
Survey of an insured's operations, assets, exposures, that could give rise to losses
Contract of Adhesion
One party prepares a contract (insurer) and submits it to the other party on a take-it-or-leave-it basis (insured).
Loss Exposure
The extent to which one may be affected by a peril
Assignment
Specifies that the insured may not transfer rights of ownership/interest in an insurance policy to another party without the insurer's written consent
Joint Underwriting Association
Requires insurers writing specific coverage lines in a given state to assume the profits/losses accruing their share of the total voluntary market premiums written in that state, Participating insurers accept every eligible risk, and then may choose to re
Alien Insurer
insurer organized under laws outside of the United States
Pure Risk
Situations where only the chance of loss and no chance for gain exists
Indemnity
restore individual to the same financial or economic condition that existed prior to a loss
Premium Assumptions
Must charge an adequate premium for the risk based on the same factors used in evaluating the risk, Premium rates are considered inadequate when they do not cover projected losses and expenses, Rates must not be excessive
Stock Insurance Company
Owned by stockholders.
Dividends, if declared are taxable as profits
Terrorism Risk Insurance Extension Act of 2005 and 2007 (TRIA)
provides a temporary program in the event of major terrorist attack, allows the insurance industry and federal government to share losses according to a specific formula
Motor Carrier Act
of 1980
Motor carriers and private motor carriers that transport property are required to establish evidence of financial responsibility in the form of insurance, a bond, a guarantee, or qualification as a self-insurer
Domestic Insurer
insurer organized under the laws of this state, whether or not it is admitted to do business in this state
Aleatory Contract
Parties to a contract exchange unequal amounts of money, Insured's premium paid is less than the potential benefit to be received in the event of loss
Career Agency System
Agents are recruited, trained and supervised by either a managing employee or General Agent who is contracted with the insurance company
Moral Hazard
Dishonesty
Endorsement
A form changing the provisions of a policy
National Association of Insurance Commissioners (NAIC)
Association of all insurance commissioners, No legal authority over insurance regulations, Promotes uniformity & recommendations for state policy
Peril
cause of a potential loss
Lapse Date
date when insurance coverage ends
Exclusive or Captive Agency System
Agent represents solely one company or group of companies having common ownership, Insurer retains ownership rights to the business written by the agent, Insurer may or may not provide office and agency support services
Contract Law
Law that pertains to the formation and enforcement of contracts
Hold Harmless Agreement
A contractual agreement removing the liability of one party from a second party
Retrospective Rating
Initial premium is charged, then adjusted at end of policy period to reflect actual loss experience
Contract of
Utmost Good Faith
Both parties bargain in good faith in forming the contract, and rely upon the statements and promises of each other
Reciprocal Insurance Company
A group owned insurer, Each subscriber assumes a part of the risk of all other subscribers, Pro rata sharing of risk (assessment is possible), managed by attorney-in-fact
Individual Rating
A rate used for a policyholder because a large enough pool of similar risks is not available to any other type of rate, Primarily used for commercial and specialty risks because of the number of unique variables involved
Average Value Method
loss reserve established based on average settlements of particular claim types
Personal Producing General Agent
Does not recruit career agents, Sells insurance for carriers it is contracted with, Maintains its own office and staff
Express
Written in a producer contract
Non-Personal Contract
Owner may transfer or assign ownership of a life or health insurance policy to another person
Insurable Events
Any event, whether past or present, that may cause loss or damage to a person having an insurable interest or create a liability against him/her
What term describes coverage that applies only to loss by the perils stated in a policy?
Named peril, provides coverage for only the perils listed in the policy
The rules and procedures to be followed by the insured and the insurer are found in which section of an insurance policy?
Conditions
All of the following are methods of writing property insurance limits, except:
Concurrent coverage, applies to separate policies covering a risk, such as a primary policy and an umbrella policy & It does not indicate a type of insurance limit.
All of the following statements regarding coinsurance are true, except:
coinsurance clause increases the policy's deductible amount
All of the following statements regarding property insurance terminology are true, except:
Proximate cause a secondary cause of loss
When filing a claim, the insured is required to do all of the following, except:
Hire an appraiser
When the insurance company and insured cannot agree upon the amount of the loss, the person selected to help the two hired appraisers is called a(n):
Umpire
Which of the following statements about a property policy is false?
...
Which of the following statements regarding types of property loss is false?
Direct losses include additional living expenses
In property insurance, the principle that gives the insurer the right to take possession of damaged property after paying the loss is known as:
Right of Salvage
The insured is not required to do which of the following in the event of a property claim?
Notify police, whether or not a law has been broken
A secondary loss that occurs as a result of a direct loss from a covered peril is considered:
Consequential Loss
Additional Coverage's part of a property insurance policy provides:
Coverage that supplements the basic coverages in the insuring agreement which is automatically included without an additional premium
When a loss occurs as a result of two perils, one of which is excluded and the other of which is insured against, the situation is known as:
Concurrent Causation
When coverage applies to losses from all perils except those specifically excluded, the policy is said to be written on which of the following basis?
Open Perils
What regarding deductibles is true?
Deductibles help reduce the number of frivolous or small claims
Which of the following best describes the situation when a property has neither contents nor occupants?
Vacancy, s empty of both contents and occupants
All of the following statements regarding property insurance are correct, except:
The owner of clothing left in the care of a dry cleaner is called a bailee
Which of the following is used to resolve differences between the insured and the insurer?
Arbitration, provides a method of settling disputes between the insurer and the insured as an alternative to legal action
All of the following statements regarding a property policy are correct, except:
insuring agreement personalizes the policy, specifying the exact property being insured
Which of the following statements about a property policy is false?
coinsurance clause makes the policy more costly
Which of the following is not included in the Declarations of a Property Policy?
The perils that are not insured against
Which of the following is the broad term for an accident that also includes a continuous and repeated exposure?
Occurrence
All of the following statements regarding the property policy structure are correct, except:
Additional coverages are added to the policy for an additional premium
The standard policy structure for insurance policies includes all of the following sections, except:
Duties
All of the following are insured's duties after a loss under a property policy, except:
Abandoning the property to the insurer
The insuring agreement of a policy describes:
Perils that are covered
When a building has physical contents but no occupants, the building is said to be:
Unoccupied
The taking of property from inside the premises by a person committing forcible entry defines a:
Burglary
Which property condition requires the insurer broaden coverage during the policy period without an increase in premium?
Liberalization
The following are all found on the Declarations Page, except:
The exclusions
The termination of an insurance policy at the expiration of its term is known as:
Nonrenewal
Which of the following is not true about an insurance policy?
insuring agreement includes the name of the insured
Short rate cancellation occurs when:
insured cancels the policy mid-term
All of the following are duties of an insured after a loss, except:
Determining the valuation method the insurer will use to pay the loss
Which of the following is the best definition of Actual Cash Value in property insurance?
Replacement cost minus depreciation
Which provision specifies that no coverage applies if the loss benefits a person who has care, custody, or control of the insured's property?
No Benefit to Bailee
Which of the following best describes a hostile fire?
A fire caused by a spark escaping from a fireplace and igniting a carpet
Which of the following most accurately describes the abandonment condition?
insured cannot abandon damaged property to the insurer
All of the following are true of subrogation, except:
It allows the insurer to file suit against the insured
When property is valued on a replacement cost basis, losses will be paid:
At today's costs, without any deduction for depreciation
Which section lists the perils insured against by a property insurance policy?
Insuring Agreement
Which property insurance condition states that a suit may not be filed by the insured against the insurer under certain circumstances?
Legal Action Against Us
If the insured and insurer do not agree on the value of a property loss, what condition would apply?
Appraisal, a dispute resolution method used when the insured and insurer do not agree on the amount of the loss
An insured owns a home with a replacement cost of $300,000 and a market value of $250,000. What is the most a valued policy will pay in the event of a total loss without a deductible?
The policy limit
A spark that jumps from a fireplace and ignites a nearby rug would be deemed a hostile fire (t/f)
TRUE
In Property and Casualty Insurance, when a form is attached to alter or add to policy provisions or conditions, it is known as:
An endorsement, used to modify a policy
What is the term for the first event in the unbroken chain of events, that resulted in a loss?
The proximate cause, the primary cause of loss in a sequence of events resulting in a claim
The part of an insurance policy that states where the risk is located is the:
Declarations
The transfer of the right of recovery from the insured to the insurance company is called:
Subrogation
Which of the following methods of writing insurance is used to provide insurance on properties at different locations, using a single policy, and a single limit of insurance?
Blanket
What is not found on the Declarations Page?
Exclusions
Under the Other Insurance condition, when two property policies cover the same property, how is a loss apportioned?
Each policy will share proportionately according to the total insurance
If a fire burns the home and property of an insured, what must the insured provide?
An inventory of the damaged property, one of the Duties in the Event of Loss under the Conditions section of a policy
Which of the following is true of the Insuring Agreement?
The promise to indemnify an insured for a covered cause of loss
The Additional Coverage's part of a property insurance policy provides:
Coverage that supplements the basic coverages in the insuring agreement which is automatically included without an additional premium
For a loss to be covered under a standard property policy, the insured must do which of the following?
Protect property from further damage
The formal statement that verifies details so the insurer can determine liability is called:
A Proof of Loss
Most liability policies do not provide coverage for:
Punitive damages
In Liability Insurance, which of the following is the maximum amount that the coverage will pay for loss to any one person regardless of overall policy limits?
The Per Person Limit
B has two policies on a property. Policy A is for $20,000; Policy B is for $40,000. If Policy A has a pro rata provision, how much will it pay for a covered loss of $15,000?
$5,000, Policy A's coverage is 1/3 of the sum of all coverages on the property, so if the loss is shared on a pro rata basis, Policy A will pay 1/3 of the loss
Bodily injury is best described as:
Physical injury or death arising from the negligent acts of an insured
Liability Insurance is a two-party contract with payments made to which of the following?
A third party, the insurer will pay those sums owed by the insured to a third party, whom the insured may have negligently damaged by a tort
Which of the following is defined as the failure to act in a reasonable and prudent manner?
Negligence
A chain of events may be broken by what, thus freeing the defendant from liability?
Intervening cause, breaks a natural and continuous sequence of events that are necessary to establish negligence
Liability coverage is designed to:
Protect the insured from bodily injury and property damage they are legally obligated to pay
Liability insurance only provides coverage for legal liability arising from unintentional torts for bodily injury or property damage to others caused by an insured (T/F)
TRUE
What type of liability policy requires the injured party to collect benefits from his/her own insurance as if it were first-party coverage, eliminating the process of determining negligence?
No fault
no-fault liability policy definition
the injured party collects insurance benefits from his or her own insurance as if it were first-party coverage, thus eliminating the process of determining negligence or legal liability
Bodily Injury may include what?
Loss of Earnings
What is an example of general damages?
Pain
Which description applies to General Damages?
It is compensation to an injured party for pain, suffering, mental anguish, disfigurement and similar types of losses
P's liability policy has the following limits: $50,000 per person, $250,000 per occurrence, and $400,000 aggregate. During the policy period, the policy paid out $250,000 in liability claims. If P suffers another loss of $250,000 during the same policy pe
$150k, Because the policy has an aggregate limit of $400,000 during the policy period, and has already paid out $250k & the most it will pay for the remainder of the period is $150k regardless of the amount of loss
What is the best explanation of liability insurance?
It provides protection in the event the insured's negligence causes bodily injury or property damage to others and the insured becomes legally obligated to pay damages
If the amount of liability insurance coverage is divided between bodily injury and property damage claims, the policy limits are which of the following?
Split Limits
Policies with Split Limits provide a per occurrence limit of insurance for bodily injury claims and a separate limit for property damage claims (t/f)
TRUE
Negligence is what kind of tort?
An unintentional tort
Proximate cause refers to:
An unbroken chain of events leading to a loss, that were initiated in a negligent act of wrongdoing
H's liability policy has the following limits: $35,000 per person, $350,000 per occurrence, and $2,000,000 aggregate. This year, three claimants file in the amount $15,000, $30,000, and $45,000. How much will the policy pay?
$80,000
What reduces an award in proportion to the amount of negligence?
Comparative negligence
A primary liability policy is one that:
Pays first with respect to other policies
A primary insurance policy
pays the entire claim until its limits are exhausted, after which an excess or umbrella policy will pay the balance of the claim
An unintended and unforeseen event from which a loss results is called what?
Accident
If other insurance also applies to a loss covered by a policy, which of the following will establish the method for determining how the insurance companies will pay the loss?
Pro rata liability
When a claimant can prove that a product caused an injury, the fact that the manufacturer will be held liable regardless of whether the product was defective or not, is considered which of the following?
Strict Liability
What is not essential in determining if an action is due to negligence?
The injured party must prove the wrongdoer committed a criminal act
What statement regarding liability coverage and limits is false?
The per occurrence limit is the maximum amount recoverable during the policy period
Personal injury liability includes what?
Libel and slander
What is a legal liability imposed without demonstrated negligence?
Absolute Liability
A second negligent act that interferes with the chain of events leading to a loss is known as a(n):
Intervening cause
What defenses against negligence reduces damages in proportion to the degree of negligence?
Comparative Negligence
The formal statement an insured provides to an insurer including all the details an insurer needs to assess its liability following a loss is known as a:
Proof of loss
The equal sharing of a loss by two or more insurers until the loss is paid, or until each insurer has exhausted its limits of insurance, whichever comes first is the description of which of the following?
Contribution by equal shares
What defines a tort?
A wrongful act
Which of the following would be considered an attractive nuisance?
A trampoline
Damaged household and personal property in transit between the insured's old and new residences is covered by the Dwelling Policy under:
Coverage C, the coverage for Personal Property
Water damage caused by which of the following is a covered loss under the Dwelling policy?
Discharge caused by a plumbing failure
How much will the Dwelling Policy pay for living expenses after a dwelling insured for $100,000 Coverage A is damaged by a fire?
$20k, Coverage E limit of insurance is 20% of the Coverage A limit
Under the Broad Form Dwelling Policy (DP-2), which peril is not included for coverage without an endorsement?
Theft, Policy (DP-2) is available only through attachment of the Limited Theft
The Limited Theft Coverage endorsement to the DP is used under which of the following circumstances?
The insured dwelling is tenant-occupied
Under Coverage C of the Special Dwelling Form, all of the following are included, except:
The insured's golden retriever
Which of the following statements about the Dwelling Special Form is true?
Contents are covered on an actual cash value basis
Which of the following is true under the Dwelling policy?
The Basic Form covers the perils of fire, lightning and internal explosion
Sudden and accidental damage from artificially generated electrical current best describes a(n):
Power surge
Which of the following statements about the DP-3 Policy is false?
The dwelling and contents are both covered on an open perils basis
Which of the following losses would be covered under the Dwelling Policy?
Fire damage to building materials on the insured premises
Which of the following is true of a Dwelling Form?
The Special Form covers the building and other structures on an open perils basis
Which of the following perils is not covered under the Dwelling Broad Form?
Smoke damage from industrial operations
Policyholder N insures his owner-occupied home under a dwelling property policy (DP-3) with a limit of $100,000. If the dwelling is damaged in a fire, what is the limit of insurance that will apply to Coverage E, Additional Living Expense?
$20k, Coverage E is 20% of Coverage A
Which of the following claims would be covered under the DP-3?
Damage by vandalism to a dwelling vacant for 30 days before the loss
Which of the following is true of the Dwelling Under Construction Endorsement of a Dwelling Policy?
The premium is based upon the average amount of insurance during construction
All of the following are true about liability, except:
Liability policies pay costs incurred by an insured to sue negligent third parties
Under the Dwelling Policy, household and personal property, including property in transit between the insured's old and new residences, are covered under:
Coverage C, coverage for Personal Property
Which is true of the Dwelling policy Special Form?
Contents are covered on an actual cash value basis
Which of the following is true regarding coverage of trees, shrubs or plants under the Dwelling policies?
Damage to plants by wind, hail, weight of ice, snow or sleet is not covered
Under Coverage A of a Dwelling Policy, all of the following are covered, except:
Land, including the land on which the dwelling is located
Under a dwelling policy, an insured tenant may use up to what percentage of the Coverage C limit of insurance for a covered loss to improvements, alterations, and additions made at the insured's expense to that part of the described location occupied by t
10%
The Dwelling Broad Form (DP-2) insures against all of the following perils, except:
Theft
The Basic Form covers internal explosion (t/f)
TRUE
Which of the following is true regarding Coverage A under the Dwelling Policy?
The policy does not include coverage for wind loss of television antennas
The Dwelling and other structures are provided Open Perils coverage on a Replacement Cost basis (t/f)
TRUE
All of the following are true regarding the Broad Theft Endorsement on a Dwelling policy, except:
Only on-premises coverage is available
The abrupt falling down or caving in of a building disallowing it to be used for its intended purpose is the definition of:
Collapse
Where in the Dwelling policy is it stated that earth movement, landslide, mine subsidence, and mudflow are not covered unless resulting from direct loss by fire or explosion?
General Exclusions
Choose the claim that is not covered under the Dwelling Broad Form (DP-2).
Theft of personal property at the insured premises
After a lightning storm, the electrical transformer in B's town fails and she has no electricity for 3 days. The damage caused by the loss of electricity:
Is not covered
Of the Dwelling Policy Forms, which one does not cover damage by burglars?
Basic Form (DP-1), Damage by Burglars is covered only in the broader Forms DP-2 and DP-3
Policyholder M insures her owner-occupied single family residence under a dwelling property policy (DP-3) with a limit of $100,000. If the dwelling is damaged in a fire, what policy coverage will pay for M's extra costs to stay in a motel and board her pe
Coverage E, pays for the necessary increase in living expenses incurred by the insured if the building is rendered unfit for its normal use
Which of the following statements about Fire Department Service Charge coverage is not correct?
The policy will pay up to $1k for Fire Department Service Charge coverage
All of the following perils are included under the Dwelling Broad Form, except:
Smoke damage from industrial operations
Under all the Dwelling Forms, the dwelling described in the declarations is covered under:
Coverage A
What statement concerning the Dwelling Special Form is true?
The Dwelling and other structures are provided Open Perils coverage on a Replacement Cost basis
Under the Basic Dwelling Form, when is damage caused by vandalism included as covered peril?
When the V&MM endorsement is added to the DP-1
The DP-3 insures personal property against the same perils as:
DP-2 Personal Property Coverage
Which is true of Coverage C of the Dwelling Policy?
Coverage C provides coverage for the personal property of a guest
Under the Dwelling Broad Form, losses to an unattached garage are paid on which basis?
Replacement Cost
The Personal Liability endorsement does not provide coverage for which of the following?
Injury caused to a regular resident of the dwelling
Which of the following best describes the Debris Removal coverage under the Homeowners policy?
policy will pay the insured's removing debris from a covered loss
Which of the following is not covered under Coverage A of the Homeowners Policy?
land on which the dwelling is located
In addition to the named insured in a property policy, coverage is automatically provided for:
insured's spouse
Which of the following is not covered under Section II of the Homeowners Policy?
Property of the insured
The HO-8 form settles losses to the building on what valuation method?
Functional replacement value
All of the following are considered to be insured under a Homeowners Policy, except:
A 25-year-old friend who is living with an insured, definition of insured does not include anyone over the age of 21 that is not a relative
Choose the correct statement regarding the HO-3
dwelling and other structures are written on an Open Peril basis
In the event an apartment attached to the insured's home is damaged and unlivable, what percentage of Coverage A does the HO-3 provide for the rental value?
Coverage D will pay up to 30% of Coverage A on the HO-3 for the fair rental value, less continuing expenses, of the apartment
All of the following are true of Section II of a Homeowners Policy, except:
Loss assessment charges against the insured by a property owner's association are excluded
Which of the following coverages is not included in a standard Homeowners policy?
Personal Injury liability
Which of the following would not be eligible to purchase a Homeowners Policy?
A person who owns and lives on a farm
Under the Homeowners Forms, Coverage C includes which type of coverage?
Contents and Personal Property, Coverage C
Under a Homeowners Policy, Coverage A includes coverage for:
dwelling on the premises plus structures that are attached to the dwelling
Select the person who is not considered an insured under an HO-3 policy?
A friend who is renting a bedroom in the insured's house since it is only three blocks away from work
Vandalism and malicious mischief losses are excluded under the Homeowners Policy:
When the property has been vacant for 60 consecutive days
Which coverage is not provided under Section II of a Homeowners Policy?
Medical expense of a boarder
Choose the true statement concerning Homeowners Policies
Section I deductible does not apply to property covered under the Scheduled Personal Property Endorsement
Which of the following claims would not be covered under Section II of a Homeowners Policy?
$500 a day for the insured's loss of earnings while defending a suit
Structures on the premises separated by clear space from the dwelling are covered under which part of the Homeowners Policy?
Coverage B, the coverage for 'other structures' that are separated/detached from the dwelling
The following are all additional coverages under a Homeowners Policy, except:
Governmental Action
An employee whose duties are related to the maintenance of the residence premises, is defined as which of the following under Section II of the Homeowners Policy?
Residence Employee
Which statement is true concerning Coverage D of the Homeowners Policy?
coverage will pay for any increase in living expenses required to maintain the insured's normal standard of living
A tenant should buy which of the following Homeowner Policy Forms?
HO-4
The HO-5 personal property coverages are insured on which basis?
Open perils
The amount of insurance provided to cover personal property of a Homeowners Policy is what percentage of Coverage A?
50% of the Coverage A Limit
Which property would be settled for its actual cash value even if the Personal Property Replacement Cost Loss Settlement Endorsement is attached to the HO-3 policy?
Antiques
The Homeowners Policy provides coverage for all of the following, except:
A motorized golf cart being driven to or from a golf facility
Choose the claim that would be covered under Coverage E of a Homeowners Policy
Bodily injury to a guest caused by the insured's pet dog
An insured has a homeowners broad form with a $200,000 limit on the dwelling and the standard deductible. If the insured's $2,500 boat and trailer are stolen from his driveway, what is the most the insured will collect from the policy?
$1,250
Choose the false statement about a Homeowners Policy
Earth movement is covered in all Homeowners policies
Which form is designed for the unit-owner of a condominium?
HO-6 Form, designed for the owner-occupant of a condominium unit
Which of the following Coverages is not found under Section I of the Homeowners Policy?
Liability
Under Section II of the Homeowners Policy, an employee whose duties are related to the maintenance or use of the residence premises, is defined as:
A residence employee
Which of the following is not true concerning Section II of the Homeowners Policy?
The Damage to Property of Others duplicates coverage that is included in Section I
Liability for use of which of the following vehicles is not covered by the Homeowners policy?
Dune buggy used on a public beach
An insured with a $500,000 HO-5 policy incurs $1,500 in damages due to a flood destroying the wood flooring. The policy will pay:
Zero, Flood is a Section I exclusion and is not covered
Up to what amount of coverage is provided for a $1,000 shed if the insured doesn't use an available fire extinguisher to put out a shed fire?
Nothing, neglect exclusion prevents coverage since the insured failed to use all reasonable means to save covered property
All of the following are true of the HO-2, except:
HO-2 pays for losses on an open peril basis
All of the following statements is correct about a Homeowners Policy, except:
Coverage D of a Homeowners Policy includes loss of income from an incidental business
Which of the following best describes the reason to purchase a HO-8?
When insuring an older home that might create a moral hazard when insurance is written at replacement cost
All of the following are defined as insured locations under the Homeowners Policy, except:
Farmland owned by the insured
The following coverages are all found under Section I of the Homeowners Policy, except:
Personal Injury Liability
Under the Homeowners Policy, Medical Payments coverage will apply to expenses that are incurred within what length of time following an accident?
3 years
Under an HO-3 policy, what is the coinsurance requirement?
80%
Under Section II of the Homeowners Policy, a one or two family dwelling where the insured resides in one of the units, including other structures and grounds at that location, is defined as:
Residence Premises
Under a Homeowners Policy, how much coverage is provided for theft or unauthorized use of a credit card?
$500
The Homeowners policy covers all of the following losses to trees, shrubs and plants, except:
A loss resulting from a windstorm
Section II of a Homeowners Policy covers which of the following for medical payments?
A guest of the insured on the residence premises
Under the HO-4 and HO-6, personal property is covered on which basis?
Broad perils coverage
Coverage E of a Homeowners Policy would cover which of the following?
Bodily Injury to a guest caused by the insured's pet dog
Which of the following is true regarding an unendorsed HO-4 (tenants form)?
It includes the Broad Form named perils on an actual cash value basis
Which of the following is false in regard to the Home Day Care endorsement?
A day care employee is covered
The Home Day Care endorsement does not provide which of the following?
Coverage for a day care employee
Which statement is false under a Homeowners Policy?
Money is covered up to $500 per occurrence
New home buyer S called his agent and told him that he wanted the broadest coverage available for his new home. Which policy would the agent be most likely to recommend?
HO-5
If the insured fails to use an available fire extinguisher to put out a shed fire that results in $1,000 damage, how much will an HO-3 Policy pay for the claim?
Zero, Neglect Exclusion prevents coverage since the insured failed to use all reasonable means to save covered property
All of the following are covered under Section II of the Homeowners Policy, except:
Property of the insured
Which of the following is true regarding the HO-4 and HO-6 forms?
They are used to insure the personal property and personal liability of the insured, but do not include the structure itself
Under the HO-8 policy, the dwelling is valued on which basis?
Functional Replacement Value
Section II of a Homeowners policy may cover which of the following incidents?
Bodily injury caused by an insured's activities while picnicking at a city park
Which of the following is not true about the Home Business endorsement?
Only property damage is covered
All of the following are true of a Homeowners Policy, except:
Section II provides coverage for damage to the insured's property
Which of the following is NOT a 'residence premises' in the homeowners policy?
Premises rented occasionally to the named insured for non-business purposes
Coverage for injury resulting from invasion of privacy is covered under which Endorsement?
Personal Injury
Which of the following would not be covered under Section II of the Homeowners Policy?
Property damage to property owned by an insured
All of the following are covered under a Homeowners Policy, except:
All living expenses incurred when a dwelling becomes uninhabitable after a covered loss
Coverage C of the Homeowners policy would cover which of the following?
A camera stolen while the insured is on vacation
Coverage A under the Homeowners Policy includes coverage for which of the following?
The dwelling on the insured premises, plus any structures that are attached to the dwelling
L owns a home covered under an HO-3 for $200,000. Under Coverage D, how much coverage does L have for lost income if his basement apartment becomes uninhabitable due to a fire loss?
For a covered loss, the Coverage D limit for additional living expense, fair rental value, and civil authority prohibited use is 30% of Coverage A. 30% of $200,000 is $60,000
Which statement is true concerning Section II of a Homeowners Policy?
Damage to Property of Others coverage is provided up to a specified limit regardless of negligence
Of the following boats, which can be added to the Homeowners Policy for liability protection?
20' sailing boat
The amount of insurance provided to cover personal property under Coverage C of a Homeowners Policy, is:
50% of Coverage A
Which of the following endorsements to the Homeowners Policy adds coverage for injury resulting from libel, slander, false arrest, defamation, invasion of privacy and other such offenses that could result in a personal liability suit?
Personal Injury Endorsement
Which of the following is true concerning the Home Day Care Coverage Endorsement to the Homeowners Policy?
It extends Section II coverages to the insured's home day care business
Under the Homeowners policy, which coverage provides indirect loss coverage?
Coverage D provides for the insured's additional living expenses necessitated by damage to the dwelling
Which form is designed for Tenants?
HO-4 form is intended for tenants of rental dwellings and apartments
All of the following are considered uninsured motor vehicles, except:
A vehicle that is being used as a residence
Company A's per person Limit of Liability is $100,000 and Company B's is $200,000 for the same insured. How much will Company B have to pay for a covered $6,000 loss caused by the insured?
$4k, If other auto liability insurance applies, each policy will pay its proportionate share of the loss. Company B's limit is 2/3 of the total coverage by both policies. 2/3 of the total loss of $6k = $4k
While driving in another state with higher coverage requirements, which of the following sections of the PAP automatically provides the required coverage?
Out of State Coverage
Which type of standard policy includes coverage options that would not exclude damage by flood?
Personal Auto
An insured has auto insurance with both Company A and Company B; how much will Company B have to pay for a covered loss of $3k if Company A's Limit of Liability is $100k and Company B's is $200k?
$2k, If other auto liability insurance applies, each policy will pay its proportionate share of the loss. Company B's limit is 2/3 of the total coverage by both policies. 2/3 of the total loss of $3k = $2k
Under Part A of the Personal Auto policy, which of the following would be covered?
Damage to a parked car, Liability coverage is not provided for: Damage to property owned, being transported, or in the care of the insured
Which statement is false regarding the Personal Auto Policy?
Theft is covered under property damage liability
Policyholder J hit a deer with his Honda. J has collision coverage with a $250 deductible and Other Than Collision coverage with a $50 deductible. The damage to J's car was $450. How much will the policy pay?
$400
Choose the true statement regarding Out of State Coverage in the Personal Auto Policy
The limit of liability will be the same as the coverage provided in the home state or the minimum liability requirements in the state where the covered auto is being used, whichever is greater
Liability coverage under the PAP will cover which of the following?
Non-owned golf cart, Vehicles designed mainly for use off public roads are excluded, except for non-owned golf carts
Claimant A has bodily injuries in the amount of $49,500; claimant B, $19,500; and claimant C $14,000 arising out of a 4-car accident caused by the insured, whose PAP carries limits of 25/50/10. What will the insurer pay?
$50k, Regardless of the individual claim amounts, because the total of the individual claims ($83,000) exceeds the per accident limit of $50,000, the insurer's liability is limited to $50,000 for all three claimants
Which coverage protects the insured against drivers who do not have auto liability insurance limits adequate to cover a loss?
Underinsured Motorist Coverage
Which of the following Part D claims would be denied under the Personal Auto Policy?
Loss to the covered auto caused by road damage to tires
Which of the following will be paid by Supplementary payments under Part A of the Personal Auto Policy?
$100 for bail bonds
Which of the following is true of supplementary payments under Part A of the Personal Auto Policy?
They are paid in addition to the liability limits of the policy
Part D of the Personal Auto Policy provides which of the following coverages?
Coverage for Damage to Your Auto
Which of the following statements is not true about a claim payment for a collision loss under the PAP?
If the insurer recovers and returns stolen property to the insured, no further payment is due
Under Part D - Coverage for Damage to Your Auto of the Personal Auto Policy, vehicle upset would be covered under:
Collision
The Limited Mexico coverage provides coverage for how many miles into Mexico?
25 miles
Which of the following is included in the Personal Auto Policy's coverage territory?
The U.S., its territories, Canada, and Puerto Rico
Choose the physical damage claim that would be covered under the Personal Auto Policy
Malicious mischief to the tires
Part E of the Personal Auto Policy states that after a loss the insured must:
Protect the auto from further damage
Which of the following is a covered auto under Personal Auto liability?
A new vehicle purchased 7 days ago to replace an old vehicle but not yet reported to the insurer
Which of the following is not true about a claim payment for a Part D under Personal Auto?
If the insurer returns stolen property to the insured, no payment for damages incurred will be made
Policyholder B has a BAP with limits of 100/300/50. In an accident for which B was liable, there were BI claims in the amounts of $80,000; $100,000; and $125,000; and PD claims of $20,000 and $35,000. How much will his policy pay?
$280,000 BI and $50,000 PD
Which statement is not correct about the Right to Recover Payment under the PAP?
The Right to Recover is an insured's right
The limit of liability of Coverage D, Damage to Your Auto, under the Personal Auto Policy states that:
The limit of liability is the lesser of the actual cash value (ACV) of the vehicle or the amount necessary to repair or replace the vehicle with another of like kind and quality
Policyholder J's PAP includes Other Than Collision coverage, but no Collision coverage, with a $200 deductible. After her parked car rolls downhill and hits a tree incurring $500 in damage to the car, $150 of which is from glass breakage, how much will he
Zero
Under the PAP, after a collision the insured is entitled to Transportation expenses up to:
$600
Regarding Medical Payments under the Personal Auto Policy, the liability limit shown in the Declarations is the maximum the policy will pay for which of the following?
Each person injured in any one accident
All of the following are true about a newly acquired additional vehicle, except:
It can be used to transport goods for hire if receipts are less than $10k
Uninsured Motorist Coverage under a Personal Auto Policy covers which of the following vehicles?
A vehicle owned by the named insured
Which of the following is covered under Part A of the Personal Auto Policy?
Injury to an employee while away from work
The Miscellaneous Type Vehicle Endorsement attached to a Personal Auto Policy allows eligibility of a motorcycle by:
Amending the definition of 'your covered auto' and 'newly acquired auto' to include any miscellaneous type vehicle
All of the following are correct regarding the Part A limit of liability under the Personal Auto Policy, except:
If the loss is covered under more than one Part of the policy, payment will be duplicated
Which of the following is true about the Insuring Agreement of Part D under the Personal Auto Policy?
It states that the policy will pay for direct and accidental physical loss to the covered auto regardless of fault
Under a Personal Auto Policy, which of the following is true of liability for bodily injury resulting from the insured's use of a non-owned auto?
Coverage is provided on an excess basis
All of the following are true of the Personal Auto Policy, except:
It is written only with split limits of liability
S carries a Personal Auto Policy with Liability limits of 50/100/25. What is the maximum the policy will pay if S struck another vehicle causing injury to the occupants as follows: Driver - $70,000; Passenger 1-$30,000; Passenger 2-$50,000 and property da
$120k
Which of the following best describes the Towing and Labor Costs endorsement to the Personal Auto Policy?
It provides payment for towing to a garage, or for labor that is performed at the site of a mechanical disablement
Which vehicle would not be covered under an unendorsed Personal Auto Policy?
A motorcycle
Which of the following vehicles is covered under Part B - Medical Payments of the personal auto policy?
Share-the-expense vehicle
Which of the following vehicles is covered by Liability coverage under the Personal Auto Policy?
Non-owned golf cart
M and C both have Personal Auto policies with liability limits of 20/30/10. If M borrows C's car and injures a pedestrian, causing injuries that will cost $5,000 to treat, which policy will provide coverage for the injured party?
C's policy
Which of the following would not be covered under a Personal Auto Policy?
A motorcycle
Which of the following is covered under a Personal Auto Policy?
A vehicle driven with permission by an unlicensed driver
If a bird hits a windshield and breaks it, which Personal Auto Policy coverage would pay the loss?
Other Than Collision coverage
Which of the following is a duty required of the insured in the event of a loss under the PAP?
Allow an inspection and appraisal of the damage before an auto is repaired
When an auto has two auto policies with the same insurer, the insurer's liability would not exceed:
The highest limit of the two policies
Physical damage to the insured auto that is not covered under collision, and is not otherwise excluded, would be covered under:
Comprehensive, provides coverage for damages not caused by collision and not excluded in the exclusions
A temporary substitute vehicle is not a covered auto if used to substitute for which of the following?
Rental car
Which of the following coverages under the Personal Auto Policy protects the insured against drivers who do not have adequate auto liability insurance limits?
Underinsured Motorist Coverage
Which of the following is not a Supplementary Payment under Part A of the Personal Auto Policy?`
Medical payments for an occupant of an insured vehicle
Which of the following does not pay regardless of fault?
Uninsured Motorist Bodily Injury
Of the following, which is covered under Part D - Coverage for Damage to Your Auto?
A newly acquired vehicle added to the policy within 14 days
Which of the following is true regarding the Difference in Conditions Policy?
There is no coinsurance clause or pro rata clause and it may be written for a different amount from the policy it complements
A personal umbrella policy will not provide coverage for which of the following?
Property damage liability to property in the insured's care
When his client's homeowners policy application is rejected by an insurance company due to underwriting rules, an insurance agent may request coverage under which of the following?
FAIR Plan, writes coverage for homeowners who cannot obtain coverage in the standard market or have been terminated in the voluntary market
Which description of the Personal Articles Floater is incorrect?
It covers claims on a replacement cost basis
All of the following statements about the Musical Instrument Floater are true, except:
No additional premium is required if instruments are played for hire
If personal injury coverage is not provided by an insured's homeowners policy, but is provided by the insured's umbrella policy, and the insured is sued for slander, which of the following statements is correct?
The insured must pay the umbrella policy's self-insured retention
A Mobile Home Insurance Policy is most similar to:
A Homeowners Policy
All of the following are true of an Umbrella Liability Policy, except:
Damage to property in the care and custody of the insured is covered
Section I of the Boatowners policy provides which type of coverage and settlement option?
It provides open perils coverage, and losses are settled on an actual cash value basis
Which of the following statements regarding flood insurance is not true?
No deductible applies to loss of contents
Which of the following losses would not be covered under a NFIP policy?
A water main in the street breaks, flooding the insured's basement
Under the personal earthquake endorsement, all earth movements are considered a single occurrence if they occur within:
72 hours
All of the following are true of the Personal Articles Floater, except:
Claims are settled on a replacement cost basis
Choose the false statement about an Umbrella Liability Policy.
Property in the care and custody of the insured is covered
A flood damages a home that is in a community in early stages of participation in NFIP, but are not yet considered a participating community. What is the maximum a resident may receive for damages to personal property?
$10k, home is covered under the Emergency Program and is eligible for contents coverage
An insurance agent would recommend which of the following floaters to his client who is traveling to Europe for a month's vacation?
Personal effects floater
Which of the following describes the Lay Up Warranty under the Yacht Policy?
It applies when the insured yacht is in storage and allows a return of premium due to the lower risk
When an underlying policy doesn't cover a particular loss, the umbrella will drop down and cover the entire loss, after payment by the insured of a:
Retention
Which statement is false regarding the National Flood Insurance Program?
The policy provides unlimited coverage for qualified property owners
Umbrella policies provide coverage on which basis?
Excess
K has a 10-piece antique fountain pen set that is insured with a pair and sets clause and is valued at $10,000. Each pen alone is only worth $500. If one pen is destroyed in a covered loss, how much will the policy pay?
$5,500
All of the following are true of the Fine Arts Floater, except:
Coverage is written on a replacement cost basis
Crop/Hail Insurance is a specialized policy that:
Protects against reduced yield because of a covered loss before crops are harvested
Which of the following is not covered by the Earthquake endorsement?
Flood
Which Statement is true regarding a Difference In Conditions Policy?
There is no standard form
For an antique insured under a Personal Articles Floater, coverage would not be provided for damage caused by:
Damage caused by the insured during a heated argument
The Scheduled Articles Floater provides which of the following coverages to described property?
Open Perils
The Boatowners Policy does not cover which of the following?
Personal Property
Choose the best answer regarding the details of the Yacht Policy.
It is an Ocean Marine Form and provides both property and liability coverage
Which of the following is not true of the National Flood Insurance Program?
Coverage becomes effective 24 hours after the applicant completes the application and pays the premium.
Which statement is true about Crop/Hail Insurance?
It covers only one growing season
All of the following are false concerning the National Flood Insurance Program, except:
Payment for losses are made by the federal government
Which of the following is not true about the FAIR plan?
It provides property coverage to both residential and farm dwellings
All of the following types of property may be covered by a Personal Articles Floater, except:
Buildings
Mobile Home Insurance includes all of the following, except:
Coverage C with a limit of 50% of Coverage A
Which of the following is true about the National Flood Insurance Program?
Property removed to protect it from flood is covered for 45 days at other locations
The Personal Articles Floater is similar to which of the following endorsements?
The Scheduled Personal Property Endorsement
An insured who has coverage under the NFIP with a $500 deductible for the dwelling and contents sustains flood damage to both their home and personal property. What is the maximum the insured will have to pay for damages assuming the loss is under the pol
deductible applies separately for the dwelling and the contents, therefore the insured is responsible for $1000 in deductibles
If property under a Personal Floater risk is insured at a $5,000 valued basis, how much would the insured receive if the item is a total loss, the actual cash value is $4,000, and an auction is selling the same item for $3,500?
$5k, If an item is insured on a valued basis, that is how much the policy will pay for a loss
Which of the following statements is true regarding the eligibility of flood insurance?
In order to qualify for a federal loan, the property owner must purchase flood insurance if the property is located in a flood area
Under the Cameras Floater, which of the following is true?
Automatic coverage is provided on newly acquired items for 30 days, up to 25% of the policy amount
Which of the following is a false statement about the National Flood Insurance Program?
There is no deductible
Personal Article Floater claims are normally settled on a(n):
Actual cash value basis with some exceptions
The Personal Umbrella Policy does not provide coverage for which of the following?
Property damage liability to property in the insured's care
Under Personal Inland Marine Insurance, the Personal Articles Floater is:
Used to insure individual personal property on an itemized or scheduled basis
The Lay Up Warranty under the Yacht Policy is best described by which of the following?
It applies when the insured yacht is in storage and allows a return of premium due to the lower risk
Which statement is false regarding the National Flood Insurance Program (NFIP)?
It provides coverage for direct and indirect loss to covered property as the result of flooding
The Building and Personal Property Coverage Form does not cover which of the following?
Liability
All of the following are Causes of Loss forms under the Commercial Property Coverage Part, except:
The Standard Form
Which of the following is not a coverage extension under the Building and Personal Property Coverage Form?
Inflation guard
Following a large fire that requires several weeks of down time due to rebuilding, the Business Income Coverage Form will pay for:
Net income plus continuing expenses of the business
The Basic Cause of Loss form covers damage caused by bacteria during what period of time following policy inception?
12 months
The Builder's Risk Coverage Form will not cover which of the following?
Roof antenna
Under the Vacancy Clause of a Building and Personal Property Coverage Form, losses caused by vandalism are not covered if the damaged property has been vacant for how many days?
60 days
A building valued at $200,000 is insured for $150,000 with an 80% coinsurance requirement and a $1,000 deductible. After the building is totally destroyed, incurring debris removal expenses of $10,000, how much will the Building and Personal Property Cove
$159,000
A Building and Personal Property Coverage Form, will pay up to what percentage of the building coverage for debris removal?`
policy will pay up to a maximum of 25% of the coverage applying to the loss, and in the event of a total loss, the policy will pay up to an additional $10,000 for debris removal
Endorsements that coordinate CPP coverages to avoid duplication are called:
Interline
The Commercial Property policy applies a limit of what dollar amount for business personal property temporarily away from the premises?
limit of $10,000 of coverage is extended for the insured's covered property (other than stock) while it is temporarily at a location the insured does not own, lease, or operate
How long after a loss before the Period of Restoration begins for Business Income coverage?
72 hours
Choose the false statement about the Building and Personal Property Coverage Form.
Tenant's improvements that are not legally removable are included in the Personal Property of Others Coverage
Which of the following statements about the CPP is incorrect?
The insured's rights and duties may be transferred to another party without insurer approval
Under the Builders Risk Coverage Form, all of the following are true, except:
Coverage includes trees, plants, outside antennas and signs that are not attached to the building
Which of the following losses would the Building and Personal Property Coverage Form NOT pay on an actual cash value basis?
A loss of $2,500 or less to a building
All of the following are common policy conditions under the CPP, except:
Interline endorsement
Which of the following is true regarding the Broad Form under the Commercial Property policy?
After 60 days of vacancy, coverage for glass breakage is suspended
Which of the following property is not covered under the Building and Personal Property Coverage Form?
Electronic data, including information, facts, and computer programs and the cost to replace or restore the electronic information is not covered
Under the Commercial Building and Personal Property Coverage Form, the building is considered vacant, unless at least what percentage of the square footage is rented or is used to conduct operations?
31%
The Legal Liability Coverage Form would not cover which of the following losses?
Fire damage to the cash register
Which statement about commercial property policies is not correct?
The insurer has the obligation to inspect the property
Which of the following is not included in the Personal Effects and Property of Others Extension under the Building and Personal Property Coverage Form?
Loss by theft of personal effects
Under the Building and Personal Property Coverage Form, a building is considered vacant, unless at least what percentage of square footage is rented or used to conduct operations?
31%
Under a Building and Personal Property Coverage Form, up to what percent of a partial loss would be available for debris removal?
25%
Which of the following is true regarding Property Off Premises coverage under the Building and Personal Property Coverage Form?
Property in a motor vehicle or in the care, custody, and control of a salesperson is included
Under the Business Income form, the period of restoration begins how many hours after the time of loss?
72 hours
Which of the following conditions under a Building and Personal Property Coverage Form determines how losses will be paid?
Valuation Clause
Which of the following is covered on a Basic Cause of Loss Form?
Windstorm
Losses caused by vandalism are not covered under the Vacancy Clause of a Building and Personal Property Coverage Form if the property has been vacant for how many days?
60 days
Which of the following is not covered under the Building and Personal Property Coverage Form?
Accounts, bills, currency, deeds, evidence of debt, money or securities
Under the Building and Personal Property Coverage Form, coverage applies to all of the following, except:
Windstorm damage to outdoor signs not attached to the building
Which of the following is found in the Common Policy Declarations of the CPP?
The deductible
Which Cause of Loss form for the Commercial Property Coverage Part will cover loss of sales merchandise due to a burglary?
The Special Form
All of the following are additional coverages under the Building and Personal Property Coverage Form, except:
Peak season
Which statement is false about Commercial Property insurance?
Time element losses and direct losses are the same
The Outdoor Property Extension under the Building and Personal Coverage Form insures against which perils?
Fire, lightning, explosion, riot, civil commotion and aircraft
Which of the following statements about the CPP is incorrect?
The insurer has the obligation to perform safety inspections
Collapse is not covered under which of the following property forms?
Commercial Basic Cause of Loss Form
Which statement is false regarding the Building and Personal Property Coverage Form?
The standard deductible is $100
T's office condominium is covered under a Condominium Commercial Unit-Owners Coverage Form. Which of the following is not covered on a primary basis?
Fixtures owned by the Association
Which of the following forms provide coverage for indirect loss?
Business Income Coverage Form
The Commercial basic Cause of Loss Form does not cover which of the following perils?
Earth Movement
Under the Commercial Property policy, debris removal and fire department service charge coverage are examples of:
Additional Coverages
___________ is not covered by the CGL Coverage B - Personal and Advertising Injury
Breach of contract
Under the CGL, which of the following would exclude from coverage the legal liability associated with a product?
Expected or intended injury
Under a CGL, at what point in time is the earned premium determined by the premium audit?
At the end of the policy period
Which of the following is false about the CGL's two coverage forms?
Coverage under the occurrence form is based on when the loss is reported
Choose the false statement regarding the application of coverage under the Products Exposure Liability Coverage
Coverage applies to damage to the product itself
Which of the following is considered an insured's product?
Goods sold by the insured at a trade show
All of the following are considered an insured under the Commercial General Liability Coverage Part to the Commercial Package Policy, except:
Members of a past partnership not shown as a Named Insured in the Declarations
Which of the following is not a provision found in Section IV of the CGL?
Inspection and surveys
Which of the following would be considered an insured's product?
Goods sold by the insured at a trade show
All of the following are true about extended reporting periods, except:
The supplemental tail requires an annual premium
All of the following are true of Supplementary Payments under the Commercial General Liability Coverage Forms, except:
Supplementary Payments apply to all Section I coverage
Which of the following is not covered under the Limited Pollution Liability coverage and Pollution Extension endorsement?
Clean up costs
Which of the following would not be covered under Coverage A of the CGL?
An insured's employee is injured when a bookcase in the office falls on her
Damages from which of the following would apply to the per occurrence limit under a Commercial General Liability policy?
Professional malpractice
What is the date after which an occurrence can take place and be covered under the claims-made form?
The Retroactive Date
Which of the following is NOT excluded under Part A of the CGL form?
Operation of mobile equipment
An insured who goes to client's offices and homes for appointments would need coverage for which liability exposure?
Premises and Operations
What are the territorial limits of the Commercial General Liability Coverage Part of the Commercial Package Policy?
United States, its territories and possessions, Puerto Rico and Canada
Choose the false statement about the CGL policy
A Products and Completed Operations Liability claim will reduce the General Aggregate Limit
What type of insurance indemnifies the legal liability of an insured for the actions of the insured's subcontractors?
Contingent Liability Insurance
Which of the following is false about the CGL policy form?
The limits of the policy stated in the Declarations are the maximum amounts payable for the life of the policy
To which injury would CGL Medical Payments apply?
A volunteer worker handing out company coupons during a sale
Which of the following scenarios would be covered under Personal Injury coverage?
A storeowner falsely detains a young child believing the child egged the store
A chemical manufacturer requires protection for pollution liability and clean up costs. Which of the following pollution liability coverages should the business purchase?
Pollution Liability Coverage Form
Which of the following is an insured under the CGL policy?
Spouse of a partner
Which type of reporting period is provided automatically under the CGL written on a claims-made basis?
Basic Extended Reporting Period
Choose the false statement about the coverage under the Businessowners Policy
Products and completed operations coverage under the Commercial General Liability Coverage Forms will cover damage to the insured's products
Which of the following is not one of the liability exposures of the CGL?
Advertising injury
Which of the following is not a type of personal and advertising Injury under the CGL?
Breach of contract
An insured's CGL has a Products and Completed Operations Aggregate Limit of $100,000 with a $20,000 limit per occurrence. Following claims for two separate occurrences in the amounts of $35,000 and $25,000, how much of the aggregate remains for all other
$60k
ABC Industries contracts with municipal governments to build bridges, viaducts, and similar engineering projects. If workers from ABC Industries cause damage to a taxicab while pouring the foundation for a new overpass, which kind of liability exposure wo
Premises and operations
Which of the following is correct regarding products liability under the CGL?
Coverage applies to the bodily injury (BI) and property damage (PD) the product causes, but not to the product itself
Under the CGL policy, the earned premium used in a premium audit to compute the final premium is determined at what point in time?
At the end of the policy period
ABC Industries contracts with municipal governments to build bridges, viaducts, and similar engineering projects. If a bridge completed in the prior year by ABC Industries were to collapse, which kind of liability exposure would this be an example of?
Completed operations
Which of the following is true regarding Completed Operations coverage?
The coverage will pay for bodily injury and/or property damage caused by negligent or faulty work by the insured, but not for the cost of replacing the work that caused the loss
An insured contract includes all of the following, except:
Pollution liability
What is the difference between the Commercial General Liability Occurrence and Claims-Made forms?
The coverage trigger point
Which of the following is excluded under both the Limited Pollution Liability coverage form and Pollution Extension endorsement?
Clean up costs
Which of the following conditions would not be found in Section IV of the CGL?
An insured's insolvency relieves the insurer of any obligations under the policy
Which of the following is not considered a type of advertising injury?
Extortion
Who is not an insured under the Commercial General Liability policy?
Members of a past partnership not listed in the Declarations
Which of the following is true regarding the Supplemental Extended Reporting Period?
The premium is a one-time charge
All of the following are considered liability assumed under insured contracts, except:
Ordinance or Law
Which of the following is not an example of personal injury?
A broken leg
Which country is not included in the CGL coverage territory?
Mexico
All of the following about the CGL's products liability coverage are correct, except:
Damage to the product itself is covered
Which of the following is not true of the supplemental extended reporting period under the Claims-Made Form of the CGL?
The insurer may void it after the premium has been paid by the insured
Coverage B of the CGL would cover which of the following claims?
The insured was accused of causing a business associate to be falsely arrested
All of the following are true of the supplemental extended reporting period, except:
The insurer may cancel it after the premium has been paid by the insured
All of the following are true of medical payments under the Commercial General Liability Coverage Forms, except:
Coverage applies to the insured's injuries
Which statement is correct regarding the Supplemental Extended Reporting Period?
The premium is a one-time charge and fully earned at issuance
Which of the following is covered by Medical Payments under the CGL?
Bodily injury to an insured's customer while shopping on the insured's business premises
Which of the following is true concerning the Premium Audit condition of the Commercial General Coverage Part to the Commercial Package Policy?
Premium audit determines what the earned premium will be at the end of the policy period
Product liability would cover:
A restaurant customer who contracts food poisoning
Which of the following is not a contingent liability exposure?
Premises liability exposure
Which of the following is not one of the limits of liability provided by the CGL?
Bodily injury limit
Which of the following would be an insured under the CGL policy?
Spouse of a partner
Which of the following carries people and property for a fee from one place to another?
common carrier, a business, individual, or organization that carries persons or property for a fee, from one place to another. The persons or property being transported are, or belong to, the general public
The limit of insurance that the insurer will pay for a physical damage loss is the:
Lesser of the ACV or the cost to repair or replace with like kind and quality
Which Business Auto Symbol is the most broad of all Symbols?
Symbol 1 includes any auto, whether owned or not by the insured if it is used in the insured business
The Garagekeepers Coverage of the Garage Coverage Form covers the liability of:
Physical damage to a customer's car that is in the care and custody of an insured
The Truckers Coverage Form is designed for:
Firms in the business of transporting goods or commodities
Which source of liability would a trucker be liable for under a Motor Carrier Coverage Form?
Cargo damage from overturn
The Garage Liability section of the Garage Coverage Form covers which of the following?
Property damage for which the insured is legally responsible
All of the following regarding Commercial Auto coverage are true, except:
Section II of the Garage Coverage Form does not include completed operations coverage
Which statement regarding the Medical Payments Coverage of the Business Auto Policy is true?
The BAP does not automatically include Medical Payments Coverage
Section II of the Garage Coverage Form does not cover:
Damage to the customer's car in the insured's care
For which of the following persons is the Drive Other Car endorsement intended?
Individuals who do not own an auto
Choose the false statement about commercial auto coverage
Specified Peril Coverage pays for damage to an insured vehicle from almost any cause except collision
Section II (Liability) of the Garage Coverage Form covers which of the following?
Property damage for which the insured is legally responsible
The Business Auto Coverage Form is intended for which of the following businesses?
Owned, leased, hired or borrowed private passenger autos, trucks, trailers and semi-trailers
Which of the following is designed for a firm that transports goods of others, rather than its own goods?
Truckers Coverage Form
Which type of Commercial Auto policy would be best suited for a company whose employees used their own vehicles to make sales calls?
Business Auto Coverage Form
What is the maximum the Supplementary Payments coverage of a BAP will pay for the cost of bail bonds?
$2k
Which of the following businesses would not be eligible for coverage under the Garage Coverage Form?
Rental car agency, Garage Coverage Form provides automobile liability and physical damage coverage, as well as General Liability Protection for businesses in the sale, service, or storage of automobiles
Which of the following would not be eligible for coverage under the Business Auto Coverage Form?
An employee injured using the employee's personal auto in insured's business
Which of the following is not included in the definition of mobile equipment?
3/4 ton pickup
Which vehicle would not be eligible for a Business Auto Coverage Form?
A forklift used in the business
Specified Causes of Loss under Physical Damage Coverage of the Business Auto Coverage Form includes all of the following, except:
Glass breakage
Which type of Commercial Auto policy would be best suited for a parking garage business?
Garage Coverage Form
All of the following are loss conditions of the BAP, except:
Examination of Your Books and Records
Which of the following would not covered by a Business Auto Policy?
An employee is injured while driving a covered auto
Which of the following is true concerning the Limit of Liability under the Business Auto Coverage Form?
The Limit of Liability is the most the policy will pay for any single accident
Which 1980 regulation deregulated the trucking industry?
Motor Carrier Act
Which section of the Garage Coverage Form provides coverage for autos in the care, custody and control of the insured?
Section III, know as Garagekeepers coverage, provides insurance for amounts the insured is legally obligated to pay for loss or damage to a customer's vehicle and/ or equipment while it's in the insured's care for servicing, repair, parking, or storing
A mandatory deductible of what amount applies to completed operations claims under Section II of the Garage Coverage Form?
$100
Which section of the BAP provides auto medical payments coverage?
This coverage is available by endorsement only
BAP liability coverage would not apply to which of the following?
Damage to property in the insured's care
ACV is generally used for which of the following types of claims?
Auto Physical Damage
Which Commercial auto symbol is unique to the Garage Coverage Form?
30
Garagekeepers Coverage will cover which of the following claims?
Physical damage to a customer's car that is in the care and custody of an insured
All of the following regarding the Garage Coverage Form are correct, except:
It provides coverage for product recall
Which of the following would be needed by trucking company that hires independent truckers who may hold the insured liable for their accidents?
Trailer Interchange Coverage
Which of the following is true regarding the Medical Payments coverage under the Business Auto Policy?
The BAP does not automatically include Medical Payments coverage
Section III of the Garage Coverage Form provides which coverage?
Garagekeepers coverage
Which of the following would not be a covered auto under the Business Auto Policy Mobile Equipment endorsement?
Truck operated on public roads
The Garage Coverage Form may be written for all of the following, except:
car rental agency, not eligible under this form, which is intended for businesses that sell, service, or store automobiles
Under the Motor Carrier Coverage Form, Trailer Interchange Coverage would cover which of the following losses?
Joe's company is legally liable for physical damage sustained by a non-owned trailer
All of the following are general conditions of the BAP, except:
Duties in the event of an accident
What is the name for insurance covering the amount an insured is legally obligated to pay for loss to a customer's vehicle in the insured's care?
Garagekeepers coverage
Which would be covered under the Business Auto Coverage Form?
A borrowed truck used in the insured's business
Which of the following is not automatically included in a Garage Coverage Form?
Contractual Liability
When an employee is injured in an auto accident while on company business, he/she would be covered under:
Workers' Compensation Insurance
Physical damage coverage under a Business Auto Coverage Form includes all of the following, except:
Uninsured Motorist Coverage
How is lost or damaged property valued under the BAP?
Lesser of ACV. or the cost to repair or replace
Which of the following claims would be excluded under the Business Auto Policy?
Damage to property in the insured's care, custody, or control
Which of the following is true of the Towing coverage provided under Section III of the BAP?
Labor must be performed at the place of disablement
The endorsement providing evidence of financial responsibility for motor carriers is know as:
Form MCS-90
Which type of Commercial Auto policy would be best suited for a business that wished to cover its owned and hired autos against property damage only?
Auto Physical Damage Coverage Form, only provides physical damage coverage
Choose the statement that is false regarding the Business Auto Coverage Form
Coverage may be written on owned private passenger autos
Which section of the Garage Coverage Form provides physical damage coverage for the insured's covered autos?
Section IV, provides physical damage coverage for covered autos the named insured owns, hires, rents, leases, or borrows in the same fashion the business auto coverage form provides coverage
A firm that transports goods of others, rather than its own goods, would purchase a:
Truckers Coverage Form
A person with the responsibility of taking bank securities to a sister bank every morning would be known as which of the following?
messenger, any person who has care and custody of property outside the premises.
At a trade show, a plumbing supplier discovers it has accepted payment for its new line of faucets in the form of counterfeit money orders. Under which Commercial Crime insuring agreement would this loss be covered?
Money Orders and Counterfeit Money, insuring agreement covers the insured's acceptance in good faith of money orders and counterfeit money received in exchange for merchandise or services during the course of conducting regular business activities
A travel agency discovers that it has been charged for payments to a print shop drawn on checks written by an unknown third party masquerading as the travel agency comptroller. Under which Commercial Crime insuring agreement would this loss be covered?
Forgery/Alteration, insures against the forgery or alteration of checks, drafts, promissory notes, and similar items regarding the payment of a sum of money that are made or drawn by the insured or someone acting on behalf of the insured
Which of the following could be a 'custodian' under the terms of a commercial crime property policy?
Partner
Which of the following is not included in the definition of Money under Commercial Crime Coverage?
Evidence of debt
Under a Commercial Crime policy written on a Loss Sustained Form, what is the latest date that a covered loss can be discovered?
1 year following policy expiration
Which of the following losses would be covered by a commercial crime policy?
Vandalism occurring in the course of a burglary
A wine store discovers that someone has vandalized their display shelves, causing $1,500 in damage to inventory. Further inspection reveals evidence of forcible entry to the store safe, causing another $500 in damage, and the loss of $5,000 in currency. H
$7k
In which capacity would a bank teller have the responsibility of taking bank securities to a sister bank every morning?
Messenger
Which of the following would not be covered by a commercial crime policy with an extortion endorsement?
A bank teller has a chance to report a threat to coworkers or the police, but declines to do so before the ransom is paid
Which of the following is true regarding commercial crime?
Theft includes any act of stealing, including burglary and robbery
The Commercial Crime policy Form A for Employee Theft would not cover which of the following?
An employee alters a bonus check to read $1,000 instead of $100
Which of the following crime forms requires the use of a Retroactive Date?
Discovery Form, covers losses that are discovered during the policy period but did not necessarily occur during the policy period. Claims-made and occurrence forms are used with Commercial General Liability policies
During a company golf retreat, the property of several guests is stolen from the golf resort's safe deposit boxes. Under the resort's commercial crime policy, which insuring agreement or endorsement would pay for this loss?
Guests' Property
After noticing the disappearance of office supplies from within a private office facility, which coverage might an insured add to a commercial crime policy?
Employee theft/dishonesty
A sandwich shop discovers that someone has vandalized their customer bathrooms, causing $2,500 in damage. Under the shop's commercial crime policy, which insuring agreement or endorsement would pay for this loss?
The insured would need to file a claim for this loss under their commercial property or businessowners policy
The Discovery Form covers losses that are:
Discovered during the policy period, regardless of when they occurred
Which of the following terms best describes the crime of taking of property from inside the premises or a locked safe or vault by a person who commits forcible entry?
Burglary
An insured's employee who has custody and care of property inside the premises is called a:
Custodian
How many days after an employee's termination by an insured would a crime loss committed by the former employee be covered under a Commercial Crime policy?
a person remains an employee for a period of 30 days after termination
After Company B's computer network is damaged during an intrusion by hackers, which coverage would indemnify the loss?
No crime coverage is available for this loss
A consumer electronics business discovers that someone has used computer software to fabricate security passes, which were then used to gain access to their warehouse and steal several cases of smart phones. Under which Commercial Crime insuring agreement
Computer Fraud
Under a Commercial Crime Coverage Form, which of the following is not included in the definition of money?
Evidence of Debt
Which of the following is a necessary element of robbery?
A face to face confrontation
Which of the following is an example of burglary?
The taking of property by a person who hid inside a storeroom during the day and broke a window to get out at night
Loss of money due to a fraudulent instruction to a bank to pay funds would be covered under which crime insuring agreement?
Fund Transfer Fraud
An employee carrying documents detailing his employer's trade secrets is assaulted and robbed of the documents on his way to a meeting. Which Commercial Crime insuring agreement would cover the loss?
Outside the Premises
In order for a commercial crime loss to be covered under a Discovery Form, the loss must:
Be discovered during the policy period
The Inside The Premises Theft of Money and Securities insuring agreement will cover all of the following losses, except:
Attempted robbery of a custodian
If a messenger has insured property stolen by a pickpocket on a subway, this is an example of what kind of crime?
Theft
A commercial crime policy form written with the Robbery or Safe Burglary of Other Property insuring agreement would cover which of the following?
Jewelry store windows and glass display cases are destroyed during a burglary
Under a Commercial Crime policy written on a discovery form, what is the latest date that a covered loss can be discovered?
The policy expiration date
Which of the following is not covered by commercial crime insurance?
The mysterious disappearance of property
Which of the following types of property would be covered by the Guests' Property endorsement to a commercial crime policy?
Property stored in a hotel safety deposit box by someone renting a room
Property stolen from inside the premises by a person forcibly entering or leaving the premises is considered which type of crime?
Burglary
principal difference between burglary and other forms of dishonesty, is that burglary involves the forcible entry into or exit from premises from which money or property is taken (t/f)
TRUE
Which bond guarantees the contractor will proceed with the contract?
a Bid, guarantees that the contractor making the bid will, upon acceptance of the bid by the customer, proceed with the contract and replace the Bid Bond with a Performance Bond, or be in default
Which of the following perils is not covered by Crop/Hail insurance?
Pollution
All of the following are true of the Equipment Breakdown Protection Coverage Form, except:
Malfunction is included in the definition of breakdown
The Annual Transit Form is designed for which of the following?
Protecting property being shipped to others or being received from others on multiple occasions throughout the year
The Mobile Agricultural Machinery and Equipment Coverage Form does not include coverage for:
Irrigation equipment
FOB (Free on Board) point of destination is best described as which of the following?
The seller is responsible for the property being transported until it has been delivered
Which of the following statements about the Commercial Umbrella Liability policies is false?
Policies generally cover first-party claims
Which of the following is correct about aircraft liability insurance?
A passenger may be covered by a sublimit
An entity who owns a fleet of trucks and hauls its own goods should purchase:
A Motor Truck Cargo Owners Form
Bonds that are used in court proceedings are called:
Judicial bonds, includes bonds on executors, administrators and guardians of estates; and appeal, injunction and attachment bonds
Inland Marine policies generally cover property that is in which of the following locations?
On land only
Which statement is true regarding the Accounts Receivable coverage form?
It covers the insured's uncollectibles from customers due to a direct physical loss of the insured's business records
The party for whose benefit a surety bond is written is the:
obligee, the beneficiary of a surety bond and is protected against the default of the principal
Which of the following scenarios would be covered by E&O insurance?
An agent neglects to renew a customer's policy after they paid the premium
The implied warranty of seaworthiness is understood to mean which of the following?
The ship must be seaworthy and have a competent crew
Farm property loss conditions include which of the following?
Loss to pairs or sets
Ocean marine hull insurance covers a vessel for:
Physical damage
The Nationwide Marine Definition specifies risks that may be written under Marine Insurance. All of the following may be insured under marine policies, except:
Commercial Buildings
A common carrier would need to purchase Common Carrier Cargo Liability to protect against:
Legal liability for loss or damage to property in their custody
Which of the equipment is covered under the Equipment Breakdown Protection Coverage Form?
Electrical and mechanical equipment used in the utilization of energy
Which of the following would not be covered under a Valuable Papers and Records Floater?
Securities
A value limitation for a shipment is not included in which type of bill of lading?
Straight, doesn't contain a value limitation for the cargo being shipped, meaning the carrier is legally responsible for the full value of transported goods while it is in the carrier's care
A bond that protects an employer against loss caused by the employee's dishonesty is called a:
Fidelity bonds, provide protection against the dishonesty of employees
Which statement is true of The Equipment Breakdown Protection Coverage Form?
The form automatically includes Business Income and Extra Expense Coverage
Which of the following is excluded under the Farm Property Coverage Form?
Ordinance or law
All of the following are true of Protection and Indemnity, except:
It does not cover injuries to sailors from the vessel's lack of seaworthiness
Which of the following covers equipment during transportation, unloading and installation up to the point control is given to the buyer?
Installation Floater, designed to cover contractors for the equipment they are installing on contracted jobs while that equipment is being transported or being installed on the job site
Which of the following forms is designed to insure a single shipment of goods?
Trip Transit Policy, only covers a single shipment
Which of the following is not covered under the Valuable Papers and Records Floater?
Securities
Which of the following would not be covered under an Installation Floater?
Construction equipment
Which type of cargo policy would cover a person who owns his/her own truck and hauls his/her own goods?
The Motor Truck Cargo Owners Form
All of the following are considered implied warranties, except:
General Average
The Equipment Dealer's Coverage Form covers which of the following?
The equipment dealer's stock, primarily consisting of mobile agriculture and construction equipment, such as forklifts
Which of the following is correct regarding coverage under the Farm Property Coverage Form?
For coverage to apply, there must be a limit shown in the Declarations
In surety bonding, the party whose obligation is guaranteed is called the:
Principal
Which of the following is true regarding Trip Transit Forms?
They are used to insure single shipments
Inland Marine Policies are generally written on what basis?
Open Perils
Which statement is true of the Equipment Breakdown Protection Coverage Form?
The form automatically includes Business Income and Extra Expense Coverage
The Farm Liability Coverage Form provides all of the following coverages, except:
Contractual liability
Regarding inland marine policies, which of the following statements is false?
The Bailees Customers Form covers the insured's property
What is the purpose of an Umbrella Liability Policy?
To cover large and catastrophic losses
An Aircraft Hull Policy provides all the following coverage, except:
Passenger Liability Coverage
Which statement is false regarding the Farm Property Coverage Form?
Losses from nuclear damage are covered
All of the following are types of Professional Liability Insurance, except:
Commercial umbrella insurance
In bonding, the surety is also known as the:
Guarantor
Goods being transported would be covered by which of the following types of insurance?
Inland marine insurance, protects goods in transit over land
Ocean marine Hull Coverage and Cargo Coverage are written on which basis?
Full valued basis
Which of the following provisions in an Ocean Marine policy covers direct damage caused by bursting of boilers?
Inchmaree Clause
Property eligible to be insured under the Nationwide Marine Definition does not include:
Personal property at the insured residence
All of the following are covered under the Basic Causes of Loss to the Farm Property Coverage Form, except:
Electrocution of Livestock
According to the Nationwide Marine Definition, all of the following risks may be insured by inland marine insurance, except:
Commercial Buildings
Which of the following coverage forms covers the cost of replacing or reproducing documents that are important for the continuation of business such as books, files, and maps?
Valuable Papers and Records Coverage Form
Which of the following is not correct about the Crop/Hail policy?
The policy coverage begins at 12:01 a.m. on the day before the crop breaks through the ground
Which of the following covers equipment during transportation, unloading and installation up to the point control is given to the buyer?
Installation Floater, designed to cover contractors for the equipment they are installing on contracted jobs while that equipment is being transported or being installed on the job site
Which of the following is correct regarding Umbrella Liability policies?
They are designed to cover losses excluded by the underlying policy
All of the following are types of Professional Liability Insurance, except:
Commercial umbrella insurance
The Equipment Breakdown policy would not cover which of the following?
An air conditioning unit intentionally disabled by an employee
Livestock is not eligible for coverage on which Farm policy?
Special Cause of Loss Form
FOB (Free on Board) point of destination is best described as which of the following?
The seller is responsible for the property being transported until it has been delivered
The Annual Transit Form is designed for which of the following?
Protecting property being shipped to others or being received from others on multiple occasions throughout the year
Ocean Marine Insurance may become void if which of the following happens?
The vessel does not comply with safety regulations
What type of policy can broaden coverage and increase the limits of the underlying insurance?
Umbrella
Which statement is true of the Equipment Breakdown Protection Coverage Form?
The form automatically includes Business Income and Extra Expense Coverage
A common carrier would need to purchase Common Carrier Cargo Liability to protect against:
Legal liability for loss or damage to property in their custody
Farm property loss conditions include which of the following?
Loss to pairs or sets
Which of the following would not be covered under a Valuable Papers and Records Floater?
Securities
Which of the following statements about the Commercial Umbrella Liability policies is false?
Policies generally cover first-party claims
Choose the correct answer regarding Coverage F of the Farm Property Coverage Form.
It will cover farm machinery both on and away from described premises
Which statement is false regarding inland marine policies?
The Bailees' Customers Form covers the insured's property when he/she has property of others in his/her care, custody and control
An insurance policy that protects an insurance producer is known as which of the following?
Errors and Omissions coverage, a professional liability policy written to cover agent negligence or inadequacy
Which of the following is not an implied warranty in relation to Ocean Marine Insurance?
Full value
All of the following are true of Ocean Marine Insurance, except:
Policies are standardized
Livestock does not include which of the following animals?
Poultry, Livestock includes cattle, horses, goats, sheep, swine, donkeys, and mules
Ocean marine hull insurance covers a vessel for:
Physical damage
What type of insurance would an insurance agent buy to protect his/her liability risks?
Errors and Omissions
With respect to marine policies, the term uncontrolled means:
Forms that are not standardized by any rating bureau
Which of the following would be covered by a law firm's professional liability policy?
A client sues a lawyer for purposely losing his case
Under the Equipment Breakdown Coverage Form, which of the following describes expediting expenses?
Payment for repairs which accelerate the period of restoration
What type of policy might cover an insurance producer's failure to renew a policy?
The producer's errors and omissions policy
What is the purpose of an Umbrella Liability Policy?
To cover large and catastrophic losses
Which of the following is covered under Aircraft Liability Insurance?
Liability claims arising from the ownership, maintenance or use of an aircraft
Under Equipment Breakdown Insurance, which of the following is considered 'one breakdown'?
All breakdowns occurring at the same time that are the direct result of the same cause
Most states provide Workers' Compensation medical benefits coverage up to what limit?
Unlimited coverage
All the following injuries are covered under a Workers' Compensation policy, except:
An employee whose injury results from intoxication
Which statement is true regarding the Workers' Compensation Assigned Risk Plan?
Any employer who is unable to purchase coverage in the voluntary market can obtain coverage in the Assigned Risk Plan
Temporary Total Disability may be described as:
Inability to return to any employment while recovering
Which of the following is false regarding Temporary Partial Disability benefits?
The injured employee will never return to his/her previous employment
At what age will the child of an employee who died due to a work-related injury no longer be eligible to receive benefits from Workers' Compensation?
18 if not a full-time student
What is the primary objective of Workers' Compensation?
To provide a payment of benefits to employees for injuries that arise out of their employment
Which of the following workers would be eligible for Workers' Compensation?
Part-time worker
Which of the following is not a characteristic of the employer-employee relationship as it related to Workers' Compensation coverage?
The employer signs a contract with the employee
A disability that prevents an employee from doing any work, and from which the employee is not expected to recover is known as a:
Permanent total disability
Which of the following best describes a Temporary Total Disability?
A disability which makes the employee unable to return to any employment while recovering
All of the following statements regarding a Workers' Compensation policy are correct, except:
Part Two of a Workers' Compensation Policy provides unlimited coverage
Which of the following is true concerning Workers' Compensation benefits?
Benefits are be paid to employees for their on-the-job injuries, regardless of negligence an anyone's part
Under which circumstance could an employee sue his/her employer for a work-related injury?
The employer fails to provide Workers' Compensation insurance
Which of the following are found in the Workers' Compensation Policy Conditions section?
The cancellation policy
Under the Workers' Compensation policy, vocational training benefits are a type of:
Rehabilitation benefit
What is the coverage territory for bodily injury claims under the Employers Liability coverage?
The United States, its territories, and Canada
In what kind of state is Workers' Compensation insurance only available through a state-operated fund?
Monopolistic
Under the Workers' Compensation policy, physical therapy benefits are a type of:
Rehabilitation benefit
Private Insurers are not allowed to write Workers' Compensation Insurance in which of the following states?
Monopolistic
The insured would be required to pay which of the following in the event of a Workers' Compensation claim?
Any excess amounts incorrectly paid by the insurer
Which statement is the primary objective of Workers' Compensation?
To provide a payment of benefits to employees for injuries that arise out of their employment
Which of the following is true regarding the Workers' Compensation Assigned Risk Plan?
Any employer who is unable to purchase coverage in the voluntary market can obtain coverage under the Assigned Risk Plan
The Voluntary Compensation Endorsement under Workers' Compensation Insurance is best described as:
It provides coverage to employees or other persons that are not otherwise required to be covered
In which section of the Workers' Compensation and Employer Liability policy would the policy conditions be found?
Part Six
The Workers' Compensation Policy Conditions Section includes which of the following?
The cancellation policy
An injury would not be covered by Workers' Compensation under which of the following circumstances?
The injury occurs on the way to work
Which of the following work-related injuries might not be covered by Workers' Compensation insurance?
An employee from accounting is injured while assisting an assembly line worker
Under the Voluntary Compensation Endorsement to a Workers' Compensation Policy, an employer must provide which of the following?
The class of employees to be covered
Which statement is true regarding the Employers Liability Insurance Part of Workers' Compensation?
It provides coverage for employment-related liability outside of Workers' Compensation statute
Under which section of the Workers' Compensation and Employers Liability policy would the insured's duties be found?
Section IV
Which of the following statements is false regarding Workers' Compensation law?
Employers are liable for injuries occurring outside the course of employment
All of the following are methods of complying with Workers' Compensation laws, except:
Employee contribution plans
All of the following are excluded from the Workers' Compensation Law, except:
Part time employees
The purpose of Part Two of the Workers' Compensation Policy is to:
Handle suits against the employer for damages arising from an injury to an employee when those damages are not covered by Workers' Compensation
The Part of the Workers' Compensation Policy that includes States that are listed in the Information Page, is called:
Part Three - Other States Insurance
Under which of the following circumstances will Workers' Compensation Insurance provide benefits to a worker due to a work-related injury?
Regardless of negligence by the employee or employer
Under most states' Workers' Compensation laws, medical benefits are:
Unlimited
Which of the following claims would not be covered under Workers' Compensation Insurance?
An employee who contracts a cold in the winter
An insurer will not pay which of the following in the event of a Workers' Compensation claim?
Loss of insured's earnings because the insurer requested the insured come to court
Which statement is false regarding Workers' Compensation?
The premium is paid by the employee
The part of the Workers' Compensation Policy that defines how coverage applies in other states is:
Part Three
Which of the following Federal Workers' Compensation Laws applies to ship workers that load, unload, build and repair ships?
The U.S. Longshoremen and Harbor Workers' Compensation Act
An insurer may exclude benefits under an auto policy for all of the following reasons, except:
The insured is a nonresident who is injured as a pedestrian in an auto accident that occurs in Maryland
Which of the following statements is correct with regard to deductibles for collision coverage?
Deductibles must be offered from $50 to $250 in $50 increments
Which of the following statements is false regarding coverage for water backup from sewers and drains?
Coverage for water backup from sewers may not be excluded due the insured's negligence
Which of the following statements is false with regard to cancellation and nonrenewal?
An insurer may not refuse to issue or renew a contract of motor vehicle insurance, property insurance, or casualty insurance solely due to the insured's geographic location under any circumstances
With regard to financial examinations by the Commissioner, the Commissioner:
Must conduct a financial examination of an insurer at least once every 5 years
Which of the following statements is true concerning producer regulation?
It is a fraudulent insurance act for a person to act as a producer if the person is not licensed as such
The following qualifications are required for a producer license, except:
Be at least 21 years of age
Which of the following statements is false concerning reinstatement?
If a producer's license lapses he/she may apply for reinstatement for up to 60 days
Who among the following is not exempt from continuing education requirements?
Individuals who hold only a life lines license
Which of the following statements is correct with respect to the Fraudulent Insurance Acts?
All applications for insurance and all claim forms must contain the required fraud statement
'Personal Insurance' includes:
Property insurance or casualty insurance issued to an individual
Which of the following statements is correct regarding fees?
An agreement between an adviser and a client must state the fee to be paid
Which of the following statements is correct with regard to cancellation and nonrenewal?
An insurer may cancel a policy midterm due to the revocation or suspension of the insured's driver's license
Personal information may not be disclosed about an individual pursuant to an insurance transaction without the individual's written authorization, unless:
The information is needed to determine eligibility for an insurance benefit
An insurance producer applying for reinstatement within 60 days after his/her license expires, will have his/her license effectively reinstated:
As of the date the license expired
All of the following statements are false regarding covered employees, except:
A minor may be a covered employee even if the minor is employed unlawfully
The Maryland Automobile Insurance Fund provides auto coverage for:
Individuals rejected by at least 2 insurers for reasons other than nonpayment of premium
Which of the following is NOT correct regarding the licensing of a business entity?
Only the designated producer may transact business on behalf of the business entity
Who among the following is considered to be a person at risk for lead poisoning?
Children under 6 years of age who spend at least 24 hours per week in a property affected by lead-contaminated dust
Which of the following is NOT a reason for which rates may be excessive?
The rate is needed to enhance the insurer's profit margins
Which of the following statements is correct concerning an insurer who terminates coverage for lead poisoning?
The insurer must give the insured 30 days from the posting date to correct the violation and get a certificate of the correction in order to keep the coverage
Which of the following statements is correct concerning the Maryland Automobile Insurance Fund?
For appointment as a Fund producer, an applicant must file a $10,000 bond with the Fund
Which of the following statements is NOT correct concerning commissions?
A producer who is no longer licensed or appointed may not receive renewal commissions
Which of the following statements is true regarding public adjusters?
A public adjuster acts on behalf of an insured
Which of the following correctly describes the practice of Twisting?
Misleading and convincing an insured to surrender, lapse, or exchange an existing policy for a different one, to the insured's detriment
Which of the following statements is NOT correct concerning Workers' Compensation laws and regulations?
An employer's bankruptcy or insolvency relieves the insurer from payment of compensation for injury or death of a covered employee
Withdrawals may be made from the Premium Account only for the following, except:
To pay claims
Which of the following is false regarding the Property and Casualty Insurance Guaranty Corporation?
Cover claims that exist before, and arise within, 90 days after the insurer becomes insolvent
Which of the following statements is NOT correct with regard to farm workers?
Other than a migrant farm worker, an individual is covered if he/she provides his/her own equipment, materials, and tools
Which of the following is part of the legal responsibility of maintaining an insurance license?
A producer must inform the Administration of any change in address, felony conviction or prosecution of crime within 30 days
A personal policy may not be cancelled:
Due to the insured changing his/her occupation
Who among the following is NOT considered to be a producer?
A person who receives a salary to enroll individuals for group insurance
Which of the following statements is false regarding examination of books and records?
The expenses related to an examination are borne by the Insurance Administration
What is the cancellation notice requirement if an insurer is cancelling an auto policy for other than nonpayment of premium?
At least 45 days' written notice of cancellation
When demanded, Hearings are held:
Within 30 days after the date a hearing is demanded
In order to nonrenew a homeowner's policy, the insured must provide written notice:
At least 45 days prior
Which of the following statements is NOT correct with regard to cancellation and nonrenewal?
Whenever an insurer cancels or refuses to renew a motor vehicle liability policy the insurer is not required to provide additional information in support of the proposed action
Which of the following statements is NOT correct regarding surplus lines?
Surplus lines insurance may be placed with any surplus lines insurer
Which of the following statements is correct with regard to the Joint Insurance Association (JIA)?
Each property insurer must be a JIA member as a condition of its authority to transact business
With regard to privacy regulation, a customer relationship is established when:
A consumer becomes a licensee's policyholder or agrees to pay for financial advice about insurance
Which of the following statements is correct with respect to appointments?
An appointment is an agreement between a producer and insurer under which the producer may sell or negotiate policies issued by the insurer
Which of the following is a valid reason for which a property insurance policy may be cancelled in midterm?
Misrepresentation or fraud
The respective minimum limits of auto liability must be at least:
$30,000, $60,000, $15,000
Which of the following is correct regarding a temporary license?
A temporary license may be issued to the surviving spouse of a disabled or deceased producer
Which of the following definitions is correct in relation to bail bonds?
'Surety' means a person, other than the defendant, that guarantees the appearance of the defendant by executing a bail bond
Which of the following is NOT correct with respect to approval of policy forms and rates?
The Commissioner has 30 days to disapprove the filing
Which of the following statements is NOT correct with regard to waivers of Personal Injury Protection?
An insurer may refuse to underwrite a person if he/she refuses to waive PIP coverage
The agency which carries out and enforces the provisions of the Maryland Fraudulent Insurance Acts is:
The Insurance Fraud Division
When is an insurer allowed to use an individual's credit history as a consideration for insurance?
An insurer may use the credit history of an applicant to rate a new policy of private passenger motor vehicle insurance
Which of the following statements is false with respect covered employees?
A prisoner may not be considered a covered employee
How many credit hours of continuing education must a producer complete every renewal period?
24 (with 3 hours in ethics)
Which of the following statements is true concerning termination of a commercial lines policy?
The notice of termination must include the address and phone number of the appropriate alternate plan, if any, and be sent at the same time as the first termination notice
Which of the following is an activity for which a person is NOT authorized under an Advisor license?
Adjusting losses under an insurance contract
Which of the following statements is true?
An applicant may not qualify for any kind of insurance not permitted by Maryland insurance laws