Which Federal entity administers the Terrorism Risk Insurance Program Reauthorization Act?
Department of Treasury
A fire sprinkler system installed in a factory is considered which of the following methods of managing risk?
Reduction
The authority of a producer that is stated in his/her agency contract, are said to be
Express Power
Determining acceptable risks is the primary responsibility of the:
Underwriter
Taxable corporate dividends are received by which type of insurer's shareholders?
Stock
In an insurance contract, the value that each party gives the other is called the
Consideration
The insurance contract is said to be a contract of utmost good faith, because
Each party is entitled to rely upon the representations of the other that there is nothing concealed or dishonest
Which of the following is an example of risk reduction?
Taking action to minimize the severity of a potential loss
When writing an application for car insurance, Producer M asked her client, B, if he had been convicted of driving while intoxicated (DWI) in the past 10 years. B answered 'no,' although he had been convicted of a DWI last year. B is guilty of which of th
Misrepresentation
Insurance is designed to provide protection against which of the following?
Pure Risk
Wet leaves on a sidewalk are considered a
Physical Hazard
A contract that binds only one party to future performance, is a(n):
Unilateral Contract
If an insurer is incorporated in Rhode Island, but primarily does business in New York, what type of insurer would it be considered in New York?
Foreign
Which of the following is not a function of insurance?
To act as an investment vehicle for the insured
An insurer that is authorized to do business in a particular state is said to be:
Admitted
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
An applicant could purchase an insurance policy to cover losses from all the following, except:
An operation of drug smuggling
The uncertainty of loss from fire, wind or hail is a type of:
Pure Risk
The provision that the insured's interest in a property insurance policy may not be transferred to another person without the consent of the insurance company, is called:
Assignment
Which provision stipulates that coverage will not benefit a party that is holding, storing, or moving insured property for a fee?
No Benefit to Bailee
In property insurance, which clause prevents the insured from relinquishing ownership and leaving damaged property to the insurer and claiming a total loss?
Abandonment
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
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
Which of the following is not a condition found in an insurance policy?
Insuring Agreement
Which property condition requires the insurer broaden coverage during the policy period without an increase in premium?
Liberalization
Exclusions listed in the policy are typically based on any of the following, except:
The insurer is trying to recover from paying the agent's commision
Short rate cancellation occurs when:
The insured cancels the policy mid-term
The part of a property policy that gives basic information such as the named insured, a description of the property, the location of the property, and the amount of premium involved, is known as the:
Declarations
The Additional Coverages 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
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
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
D does not agree with the insurance company's value of his property damaged as a result of his recent property loss. Which of the following establishes the procedure D and the insurance company must use to settle this issue?
Appraisal Clause
The maximum amount that a coverage will pay for loss to any one injured party regardless of overall policy limits, is known as the:
Per Person Limit
The formal statement that verifies details so the insurer can determine liability is called:
A Proof of Loss
Which of the following is an example of vicarious liability?
An employer's liability for the acts of an employee
Which of the following best describes a liability policy that is written on a primary basis?
It is the policy that pays first with respect to other policies
Which of the following statements about medical payments is true?
Payments are made regardless of fault or negligence
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
Which of the following is true regarding a negligence claim?
The claimant must demonstrate that the actions of the insured were the direct or proximate cause of the claimed injury or damages
Which of the following defenses against negligence reduces damages in proportion to the degree of negligence?
Comparative Negligence
The person specifically designated in the policy as the person with whom the contract of insurance has been made, is considered to be the:
Named Insured
Bodily injury liability coverage includes all of the following, except:
Breach of Contract
What is the principle of liability that imposes legal liability for injury and damage by products?
Strict Liability
Bodily Injury may include which of the following?
Loss of Earnings
Personal Injury includes all of the following, except:
Bodily Injury
Which coverage always contains an occurrence limit?
Bodily Injury and Property Damage
Of the Dwelling Policy forms, which one would cover an owned mobile home permanently affixed to a foundation?
DP-1
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
Under the Dwelling policy, which is correct regarding coverage of trees, shrubs or plants?
Damage by wind, hail, weight of ice, snow or sleet is not covered
Under the Broad Form Dwelling Policy (DP-2), which peril is not included for coverage without an endorsement?
Theft
All of the following perils are included under the Dwelling Broad Form, except:
Smoke damage from industrial operations
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
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
Of the Dwelling Policy Forms, which one does not cover damage by burglars?
Basic Form (DP-1)
Which of the following is true regarding the Personal Liability Supplement?
It provides coverage for claim expenses, first aid expenses and damage to property of others
Medical Payments under Section II of the Homeowners Policy would cover all of the following, except:
Loss of Income of an injured person
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
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:
The Residence Premises
Liability for use of which of the following vehicles is not covered by the Homeowners policy?
Dune buggy used on a public beach
First Aid Expenses under the Homeowners Policy would cover:
A neighbor who gets injured while helping the insured install a carpet
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
All of the following are covered under Section II of the Homeowners Policy, except:
Property of the insured
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
Limit for watercraft and trailers is $1500, the standard deductible is $250
In respect to Section II of a Homeowners Policy, all of the following are true, except:
Section II losses are subject to a standard $250 deductible
Which form is designed for the unit-owner of a condominium?
HO-6
Most of H's jewelry is covered under the Coverage C special limits except for her $10,000 necklace inherited from her mother. Which of the following endorsements might H's agent recommend?
Scheduled Personal Property
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
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
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?
$60,000
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 unendorsed Homeowners Policy, jewelry is covered up to what amount?
$1,500 for loss by theft
Policyholder S has a HO-5 policy with a $250,000 Coverage A limit. After a strong wind blows a mailbox into S's front picture window, causing $2,500 damage, S immediately buys $250 of wood and plastic sheeting to cover the damaged window and prevent furth
$2,750
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
Coverage E of a Homeowners Policy would cover which of the following?
Bodily Injury to a guest caused by the insured's pet dog
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
Under the PAP, a temporary substitute would be covered if used:
While an insured auto needs servicing
Which type of standard policy includes coverage options that would not exclude damage by flood?
Personal Auto
Under Part F of the Personal Auto Policy, the Legal Action Against Us provision states that:
Legal action may not be brought against the insurer until the insured has complied with all the terms of the policy
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
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
$120,000
Collision Coverage under Part D of the Personal Auto Policy would cover which of the following?
Damage to the insured auto's bumper sustained when the auto crashed into a tree
Other Than Collision coverage would cover losses to an insured vehicle caused by all of the following, except:
Driving into a tree
Under the Personal Auto Policy, a family member is defined as which of the following?
A person who is a resident of a household and related by blood, marriage or adoption
A personal umbrella policy will not provide coverage for which of the following?
Property damage liability to property in the insured's care
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
Which of the following is true regarding Personal Inland Marine Insurance?
Since moveable property is also known as floating property, the policies are sometimes known as floater policies
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
Multi-Peril crop insurance covered causes of loss include all of the following, except:
Pollution
B is traveling to Europe for a month's vacation. Which of the following coverages might her agent recommend to cover personal items?
Personal effects floater
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 true of the value reporting form under a Commercial Property policy?
The insured is only required to report up to 80% of value of the property
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
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 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
The Outdoor Property Extension under the Building and Personal Coverage Form insures against which perils?
Fire, lightning, explosion, riot, civil commotion and aircraft
The Commercial Property Basic Causes of Loss Form insures against all of the following perils, except:
Mechanical breakdown
Which of the following conditions under a Building and Personal Property Coverage Form determines how losses will be paid?
Valuation Clause
Which statement is correct concerning the Agreed Value optional coverage under the Building and Personal Property Coverage Form?
Agreed Value coverage suspends the coinsurance requirement
All of the following are correct in regards to Extra Expense coverage, except:
Extra Expense coverage cannot be included in the Business Income Coverage Form
All of the following are considered liability assumed under insured contracts, except:
Ordinance or Law
Which of the following is not one of the limits of liability provided by the CGL?
Bodily injury limit
Advertising Injury Coverage includes all of the following, except:
Wrongful entry
In addition to conducting accounting business in his own office, Tom also goes to client's offices for appointments, which represents which type of exposure?
Premises and Operations
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
Which injury would be covered by a CGL policy?
A customer injured while standing in an area marked 'For Employees Only'
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
Company Z's CPP has a Products and Completed Operations aggregate limit of $100,000, with a $20,000 limit for each occurrence. Following an occurrence that results in $25,000 in damages, and second occurrence that results in $15,000, how much of the aggre
$65,000
What is the difference between the Commercial General Liability Occurrence and Claims-Made forms?
The coverage trigger point
The endorsement providing evidence of financial responsibility for motor carriers is know as:
Form MCS-90
Comprehensive Coverage under Physical Damage Coverage of the Business Auto Coverage Form, includes all of the following, except:
Wear and tear
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 true regarding the Business Auto Coverage Form?
The main distinction between a hired auto and a non-owned auto is whether or not the auto is owned by an employee
Which of the following is a necessary element of robbery?
A face to face confrontation
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
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
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 is covered under Aircraft Liability Insurance?
Liability claims arising from the ownership, maintenance or use of an aircraft
Inland Marine policies generally cover property that is:
On land only
Which of the following coverage forms covers equipment during transportation, unloading and installation until control is given to the purchaser?
Installation Floater
According to the Nationwide Marine Definition, all of the following risks may be insured by inland marine insurance, except:
Commercial Buildings
In surety bonding, the party whose obligation is guaranteed is called the:
Principal
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
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
What is the purpose of an Umbrella Liability Policy?
To cover large and catastrophic losses
In Surety bonding, the party to whom the surety is answerable is the:
The Obligee
Which of the following is true regarding Trip Transit Forms?
They are used to insure single shipments
Under Marine Policies, the term uncontrolled means forms that:
Are not standardized by any rating bureau
The Collision or Running Down Clause in Ocean Marine Insurance covers:
Collision damage to another vessel when the shipper is liable
Which of the following describes the term General Average under Ocean Marine Insurance?
A partial loss where the loss is shared
An Aircraft Hull Policy provides all the following coverage, except:
Passenger Liability Coverage
Ocean marine Hull Coverage and Cargo Coverage are written on which basis?
Full valued basis
Which of the following is NOT a type of coverage provided under a farm liability policy?
Professional liability
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
A person wanting to insure a single shipment would use:
A Trip Transit Form
What type of policy might cover an insurance producer's failure to renew a policy?
The producer's errors and omissions policy
The Businessowners Liability Coverage Form includes coverage for bodily injury, property damage, personal injury and advertising injury to which coverage applies, plus:
Liability assumed under an insured contract
The outdoor property coverage extension will not pay for which of the following?
Up to $5,000 for fences
A Businessowners policy would cover which of the following?
The insured is sued for injury to a competitor caused by one of their advertisements
Which of the following is true regarding business personal property under a BOP?
It is covered when located in or on the building at the described premises, or in the open within 100 feet of the premises
Under the Earthquake Endorsement to the BOP, if an earthquake begins before the policy expiration, coverage continues for up to how many hours?
168
Which of the following is true regarding Business Income Coverage under a BOP?
Coverage is provided for up to 12 months after the direct loss, with no limit on the amount of monthly indemnification, and no limit of insurance
Under the Businessowners Coverage Form, how much time is allowed for medical expenses to be incurred and/or reported?
1 year
Which of the following would be an eligible risk under the BOP?
Fast food restaurant
Liability coverage under the BOP includes coverage for:
Bodily injury or property damage
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 of the following workers would be covered by The Federal Employees Compensation Act?
An employee of the Federal government
Most states provide Workers' Compensation medical benefits coverage up to what limit?
Unlimited coverage
In which section of the Workers' Compensation and Employer Liability policy would the premium amount be found?
Part Five
Employers Liability Insurance will pay all the following claims, except:
An employee is injured while attending a company picnic at a nearby park
The Workers' Compensation Policy Conditions Section includes which of the following?
The cancellation policy
Which of the following is false with respect to pure comparative fault?
Only one party may be at fault
Which of the following is incorrect about insurance company appointments?
An agent must be appointed for property and casualty insurance separately
In the event of the total loss of a building, the insurer's liability under the policy if caused by a covered peril will be the amount of money for which the property was insured. This describes which of the following?
Valued Policy Law
If cancelation or nonrenewal of a homeowners policy is to be effective during the duration of a hurricane, the effective date of cancellation or nonrenewal is:
Extended until the end of the duration of the hurricane
A hurricane warning is issued _______ hours before the anticipated onset of tropical storm force winds of 74 mph or higher, and will stay in effect when dangerously high water or a combination of dangerously high water and waves continue.
36
Which of the following is NOT correct with regard to the Chief Financial Officer?
The Chief Financial Officer is appointed by the Governor
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 renewable option provides the greatest degree of protection for the insured?
Noncancellable
The Florida Motorcycle Safety Education Program establishes and administers motorcycle safety courses for a minimum of ________ hours of instruction with at least _____ hours of actual motorcycle operation.
12 / 6
Which of the following statements is correct with respect to mature drivers?
A person age 55 or older may qualify for a reduction of insurance rates for 3 years by completing and passing a 6-hour motor vehicle accident prevention course
Under disability income insurance, a monthly benefit will be ________ of the insured's monthly income.
66 2/3%
Which agent may be compensated for commissions and additional compensation for providing advice?
Health insurance agent
An agent willfully violated a requirement in the Insurance Code and his penalty was which of the following?
Imprisonment up to 60 days
Catastrophic ground cover collapse must meet four requirements. Which of the following is NOT one of those requirements?
Structural damage to the covered building
An applicant must complete ______ hours of prelicensing life and health insurance education in order to be licensed.
40
An agent for ABC Insurance company is representing an insured in an insurance transaction. The principal in the agency relationship is:
ABC Insurance Company
An applicant makes a statement on the insurance application which becomes part of the contract that she has an alarm system which qualifies her for a premium discount. This statement is considered a:
Warranty
If a fire burns the home and property of an insured, what must the insured provide?
An inventory of the damaged property
Which of the following is a legal liability imposed without demonstrated negligence?
Absolute Liability
When damages are reduced in proportion to the degree of negligence, this is an example of:
Comparative Negligence
Under the Basic Dwelling Form, losses are paid on which basis?
Actual Cash Value
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
Which is true of Coverage C of the Dwelling Policy?
Coverage C provides coverage for the personal property of a guest
All of the following are true regarding the Broad Theft Endorsement on a Dwelling policy, except:
Only on-premises coverage is available
The Basic (DP-1) Dwelling Form does not include which coverage?
Additional living expenses
Liability coverage under the PAP will cover which of the following?
Non-owned golf cart
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
Which of the following statements regarding Multi-Peril Crop Insurance is correct:
Multi-peril crop insurance is reinsured by the federal government by FCIC
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
The Extra Expense Coverage Form covers:
Necessary expenses incurred during the period of restoration
When a person has a business that experiences an increase in business personal property during a designated period, he/she might consider purchasing:
A Peak Season Endorsement
ABC industries has insured a factory building for $80,000. The replacement value is $150,000. If the commercial property policy insuring the building has an 80% coinsurance clause, how much will ABC's insurer pay for a $12,000 covered loss?
$8,000
Which of the following regarding the value reporting form is true?
Late reporting or under-reporting will result in a penalty in the event of a loss
The CGL's general aggregate limit does not cover which of the following?
Product recall
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 an example of contingent liability exposure?
Premises liability exposure
All of the following are general conditions of the BAP, except:
Duties in the event of an accident
All the following terms describe a loss covered by a commercial crime policy, except:
Mysterious disappearance
Which of the following is correct regarding Umbrella Liability policies?
They are designed to cover losses excluded by the underlying policy
Under the BOP, which of the following types of property is not covered?
Vehicles subject to motor vehicle registration
All of the following are excluded under the BOP, except:
Increased cost of construction
All of the following are covered under a BOP, except:
Money and securities
When a proper entry is made on the Declarations Page of a BOP, the optional coverage for outdoor signs would be:
Covered on an open perils basis
Which of the following is true regarding the Self-Insured Workers' Compensation Program?
Sometimes large employers are attracted to self-insurance plans because losses can be predictable and benefits are capped by statute
Which of the following statements is NOT correct with respect to premium financing?
The service charge allowed for a premium finance company is the same as the service charge allowed for an agent
The Division of Financial Services also has the power to do the following, except:
Regulate the state Medicaid program
Which of the following statements is false regarding Certificates of Authority?
Any person who acts as an insurer, transacts insurance, or otherwise engages in insurance activities in this state without a Certificate of Authority commits a misdemeanor
Which of the following is not a duty of the Department of Financial Services?
Enforces the Insurance Code by administering criminal penalties
Unlicensed entities is a regulatory concern due to which of the following issues?
Potential for criminal activity
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