1)
Adequate coverage for large, powerful boats is provided by which of the following?
A homeowners policy
A homeowners policy with the Watercraft endorsement attached
Specialized personal watercraft policies, such as Outboard Motor and Boat, Boatowners, or Personal Yacht policies
The reinsurance component of FAIR Plans
FeedbackC is correct. A homeowners policy provides only limited coverage for watercraft. Property coverage is subject to a special limit of $1,500, and coverage can be totally excluded for certain perils. Liability coverage is excluded for boats with motors of more than specified horsepower or boats of more than a specified length. Insureds typically need more coverage for this exposure than that provided by a homeowners policy, particularly those who own larger or more powerful boats. This coverage can be provided through Inland Marine forms, Ocean Marine policies, or specialized policies.
Unanswered
35% got this correct
2) A typical Outboard Motor and Boat policy provides which of the following coverages?
Liability
Medical Payments
Physical Damage
All of the above
FeedbackC is correct. This insurance is written to cover the physical damage exposure of boats. It is commonly provided under open peril Inland Marine floaters.
Unanswered
47% got this correct
3)
Under a National Flood Insurance policy, losses to which of the following could be paid on a replacement cost basis?
Personal property
Single family homes
Mobile homes
Both A and B
FeedbackB is correct. Single-family dwellings (other than mobile homes) are the only buildings that can be insured on a replacement cost basis under a flood policy. All other losses are paid on an actual cash value basis.
Unanswered
65% got this correct
4)
Unless an exception applies, when does coverage under an NFIP policy begin?
As soon as the gross policy premium is received
Five days after the application and premium payment are mailed
Thirty days after the date of application
On the date the flood insurance application is mailed
FeedbackC is correct. Unless an exception applies, coverage does not take effect until after a waiting period of 30 days following the date of application. Binders may not be issued during the waiting period to provide Flood coverage.
Unanswered
59% got this correct
5)
Which of the following losses are excluded under most Yacht policies?
Injury suffered by a passenger in a waterskiing accident
Collision damage to another boat for which the insured is liable
Both A and B
Neither A nor B
FeedbackA is correct. The collision clause on a Yacht policy covers the insured’s liability for collision damage to other vehicles. The waterskiing clause commonly excludes coverage for any person skiing or otherwise being towed by the vessel until they are back on board or have landed safely somewhere.
Unanswered
34% got this correct
6)
Which of these statements concerning the CPP are correct?
Almost all commercial risks are eligible for coverage under the CPP. (Missed)
The insured can choose a variety of eligible commercial coverages to tailor the package to fit his or her specific business insurance needs. (Missed)
A complete CPP includes Common Policy Declarations, Common Policy Conditions, and two or more coverage parts. (Missed)
A CPP can include Ocean Marine and Aviation insurance.
FeedbackA, B, and C are correct. Ocean Marine and Aviation insurance are not eligible for the CPP.
Unanswered
67% got this correct
7)
Which of the following are contained in the Common Policy Declarations?
The policy period (Missed)
The name and mailing address of the insured (Missed)
Conditions specifying the insured's duties following a loss
The insured's premium for each coverage part purchased (Missed)
FeedbackA, B, and D are correct. The Common Policy Declarations contains information about who is insured, when he or she is insured, and for what lines he or she is insured. It includes the name and mailing address of the named insured, the policy period, and a summary of the premiums charged. Loss conditions are described in the policy form, not the declarations.
Unanswered
66% got this correct
8)
Who may cancel a CPP?
Any named insured.
The insurance company. (Missed)
The first named insured. (Missed)
None of the above; once a policy is issued, it can never be cancelled.
FeedbackB and C are correct. Under the Common Policy Conditions, certain responsibilities and obligations are assigned to the first named insured. One of these is cancellation of the policy. The insurance company may also cancel the policy under certain circumstances.
Unanswered
70% got this correct
9)
Under a CPP, how many days advance notice is required if the insurance company is cancelling the contract for nonpayment of premium?
10 days
21 days
30 days
60 days
FeedbackA is correct. When a CPP is cancelled by the insurer for nonpayment of premium, it is required to give notice at least 10 days in advance. In all other cases of permitted cancellation by the insurer, it must give notice at least 30 days in advance.
Unanswered
77% got this correct
10)
Under a CPP, how long after the end of the policy period can the insurance company examine the insured’s books and records?
10 days
3 months
1 year
3 years
FeedbackD is correct. The insurance company can examine an insured’s books and records up to three years after the end of the policy period.
Unanswered
82% got this correct
11)
Under a CPP, when does the Inspections and Surveys condition give the insurance company the right to inspect the insured’s premises?
At any time
Quarterly
Every six months
Once a year
FeedbackA is correct. The insurance company has the right to inspect the insured’s premises at any time.
Unanswered
56% got this correct
12)
What is required for an insured’s rights and duties under a CPP to be transferred while the insured is alive?
The written consent of the insured
The written consent of the insurance company
The verbal consent of the insured
The written consent of the insured's legal representative
FeedbackB is correct. The insured’s rights and duties under a CPP cannot be transferred without the written consent of the insurance company.
Unanswered
66% got this correct
13) What is the largest office building risk that might be eligible for a BOP?
Three stories and 50,000 square feet
Three stories and 75,000 square feet
Six stories and 75,000 square feet
Six stories and 100,000 square feet
FeedbackD is correct. Office buildings that are no more than six stories high and contain no more than 100,000 square feet are eligible for the BOP.
Unanswered
65% got this correct
14) In addition to maximum floor space, the BOP eligibility rules limit eligible risks to what maximum?
$5 million in annual sales
$3 million in annual sales
$1.5 million in annual sales
$750,000 in annual sales
FeedbackB is correct. Certain types of wholesale, processing, and service businesses are eligible for the BOP as long as gross annual sales do not exceed $3 million.
Unanswered
87% got this correct
15) Under the additional coverages of the Businessowners property coverage, property removed to protect it from loss will be covered at another location for up to how many days?
5 days
10 days
20 days
30 days
FeedbackD is correct. The preservation of property additional coverage covers loss from any cause of loss to property that was removed from the insured location to protect it from damage by a covered peril. Coverage applies for up to 30 days after the property is first moved.
Unanswered
69% got this correct
16) What is the standard deductible for the BOP property coverage?
A. $500
B. $1,000
C. $750
D. $250
$500
$1,000
$750
$250
FeedbackA is correct. The standard deductible is $500.
Unanswered
70% got this correct
17) Which of the following statements applies to Mechanical Breakdown coverage?
It is not available in a BOP.
It is automatically provided in a BOP.
It is an optional BOP coverage that is activated by an entry in the declarations.
It is specifically designed to cover insured objects while they are being tested.
FeedbackC is correct. Optional coverages are usually preprinted in the policy, but apply only if they are designated in the declarations. Losses involving an object during testing are specifically excluded.
Unanswered
58% got this correct
18) Which one of the following coverages is not included in the BOP?
Bodily injury and property damage liability
Personal and advertising injury liability
Medical expense
Professional liability
FeedbackD is correct. The Businessowners Liability coverage includes the following coverages: BI liability, PD liability, personal and advertising injury liability, and medical expense.
Unanswered
55% got this correct
19) Which of the following would be covered under the building coverage of a BOP?
A. Restroom fixtures
B. Photocopy machines
C. Furnishings in the insured’s private office
D. Carpets and floor tiles
Restroom fixtures (Missed)
Photocopy machines
Furnishings in the insured's private office
Carpets and floor tiles (Missed)
FeedbackA and D are correct. Property owned and used by the insured in the business, such as photocopy machines and furnishings in the insured’s private office, would be covered under Business Personal Property coverage.
Unanswered
30% got this correct
20) Which of the following would be covered under the business personal property coverage of a BOP?
Desks, filing cabinets, and other office equipment the insured uses in her business (Missed)
An enclosure around the front entry to a store that the insured tenant had built when he began leasing the building (Missed)
Cans of paint that are stacked near a newly constructed outer wall prior to painting the wall
Fire extinguishers located at various places on the inside walls of the building
FeedbackA and B are correct. Property owned and used by the insured in the business and tenants’ improvements and betterments made at the tenant’s expense that cannot be legally removed are covered under Business Personal Property coverage. Materials that are on or within 100 feet of the premises being used for alterations, such as the cans of paint in Choice C, are covered under Building coverage. Personal property used to maintain or service the building, such as the fire extinguishers in Choice D, are also covered under Building coverage.
Unanswered
35% got this correct
21) Which of the following losses would be covered under the property coverage of a BOP?
An insured moved inventory to another location to protect it from a tornado. Two days later, a sewer backup in the new location damaged that property. (Missed)
An explosion at the insured's business spewed toxic chemicals onto property belonging to another company. That company's owner sues the insured for the costs to clean up the chemicals.
When a tornado damaged a nearby business, authorities closed off the area for one week to clean up the damage. The insured lost business income during that period. (Missed)
Because of negligence of an employee, an explosion on the insured's premises damages a nearby building.
FeedbackA and C are correct. The Pollutant Cleanup and Removal additional coverage pays the costs to extract pollutants from the insured’s premises, not property belonging to others. Damage to a nearby building might be the basis for a liability claim against the insured, but is not insured by the BOP property coverage.
Unanswered
52% got this correct
22) Which of the following is not excluded under Businessowners Liability coverage?
Damages the insured causes intentionally
Liquor liability for those in the business of serving liquor
Liability assumed under an insured contract
Damage to the insured's own work
FeedbackC is correct. The exclusion for liability assumed under contract has some exceptions. One is liability assumed under an insured contract. All the other choices are specifically excluded.
Unanswered
42% got this correct
23) What is the time limit for Extended Business Income coverage under the BOP?
A. 30 days
B. 45 days
C. 60 days
D. 90 days
30 days
45 days
60 days
90 days
FeedbackA is correct. Extended Business Income coverage begins after the insured’s operations are resumed and continues until the insured is restored to the previous earning condition or for 30 consecutive days (unless a different length of time is specified in the declarations).
Unanswered
48% got this correct
24) For how long after the date of a direct physical loss will the insurance company pay for extra expenses under the extra expense additional coverage?
30 days
90 days
180 days
12 months
FeedbackD is correct. The insurance company will pay for extra expenses that occur within 12 consecutive months after the date of the direct physical loss.
Unanswered
40% got this correct
25) Unless a higher limit is shown in the declarations, what is the limit on coverage for business income from dependent properties?
$5,000
$10,000
$50,000
$100,000
FeedbackA is correct. The default limit for coverage of business income from dependent properties is $5,000.
Unanswered
48% got this correct
26) What is the discovery period for coverage of losses under the employee dishonesty optional coverage?
One year from the date of the dishonest act
One year from the end of the policy period
Three years from the date of the dishonest act
Three years from the end of the policy period
FeedbackB is correct. The discovery period during which a claim for this coverage can be filed ends one year from the end of the policy period.
Unanswered
78% got this correct
27) Which of the following is covered under personal and advertising injury liability coverage in the BOP?
Slander and libel
Malicious prosecution
Copyright infringement
All of the above
FeedbackD is correct. Personal and advertising injury covers all of the items listed plus false arrest, wrongful eviction, wrongful entry, invasion of the right of private occupancy, and use of another’s advertising idea in an advertisement.
Unanswered
57% got this correct
28) Under the Earthquake and Volcanic Eruption endorsement, all earthquake shocks or volcanic eruptions that occur within a certain number of hours constitute a single earthquake or volcanic eruption. What is that time period?
40 hours
72 hours
168 hours
24 hours
FeedbackC is correct. Under this endorsement, all earthquake shocks or volcanic eruptions that occur within any 168-hour period constitute a single earthquake or volcanic eruption.
Unanswered
70% got this correct
29) Which Causes of Loss form provides open peril coverage?
Basic
Broad
Special
Both Basic and Broad
FeedbackC is correct. The Basic and Broad Causes of Loss forms are named peril forms.
Unanswered
56% got this correct
30) Loss caused by sprinkler leakage is covered under which Commercial Property Causes of Loss forms?
Basic
Broad
Special
All of the above
FeedbackD is correct. All of the Causes of Loss forms cover sprinkler leakage.
Unanswered
49% got this correct
31) Which Commercial Property Causes of Loss forms cover collapse?
Basic
Broad (Missed)
Special (Missed)
All of the above
FeedbackB and C are correct. Collapse is not covered under the Basic Causes of Loss form.
Unanswered
23% got this correct
32) Which of the following would be covered under the building coverage of the Building and Personal Property coverage form?
Inventory stored at the insured's warehouse
An addition to the insured's store on which construction has just begun (Missed)
Fire extinguishers located in the insured's factory (Missed)
Office furniture and supplies kept in the insured's building.
FeedbackB and C are correct. Inventory, furniture, and supplies would be covered under business personal property coverage.
Unanswered
72% got this correct
33) The insured’s business sustains $25,000 damage in a fire. The fire department that was called to the scene billed the insured $1,000. The business is insured under the Building and Personal Property coverage form for $500,000 with a $5,000 deductible. How much will the insurance company pay for this loss?
$21,000
$20,000
$24,000
$26,000
FeedbackA is correct. Fire department service charges are paid in addition to the limit of insurance, with no deductible.
Unanswered
57% got this correct
34) Which of the following properties would not be excluded under the Building and Personal Property coverage form?
Lawn
Driveway
Private company jet
Animals held for sale
FeedbackD is correct. The first three choices are excluded, but animals are not excluded if they are boarded or held for sale.
Unanswered
58% got this correct
35) When are losses under the Building and Personal Property coverage form paid at replacement or repair cost?
Always
Never
If the insured meets the coinsurance requirements and costs are $2,500 or less
Whenever the total amount of loss does not exceed 25% of the policy limit
FeedbackC is correct. Most losses are paid at actual cash value. However, if the Coinsurance conditions are met and costs are $2,500 or less, the policy will pay the cost of building repair or replacement without taking depreciation into account.
Unanswered
37% got this correct
36) Which of the following have special loss valuation requirements under the Building and Personal Property coverage form?
Buildings
Furniture and fixtures
Glass (Missed)
Valuable papers and records (Missed)
FeedbackC and D are correct. Stock, glass, valuable papers and records, and tenants improvements and betterments all have special valuation requirements.
Unanswered
49% got this correct
37) Which of the following losses would be excluded under the Building and Personal Property coverage form if the insured building had been vacant for more than 60 days before the loss occurred?
Attempted theft (Missed)
Prinkler leakage when the insured had protected the system against freezing
Vandalism (Missed)
Glass breakage (Missed)
FeedbackA, C, and D are correct. Damage because of attempted theft, vandalism, or glass breakage is excluded after 60 days of vacancy. Damage in a vacant building because of sprinkler leakage is covered if the system was protected against freezing.
Unanswered
77% got this correct
38) Which of the following is covered under the Builders Risk coverage form?
Building under construction
Foundation of the building under construction
Fixtures, machinery, and equipment used to service the building if they will become a permanent part of the building and are located within 100 feet of the building
All of the above
FeedbackD is correct. The Builders Risk coverage form covers the building under construction and its foundation. Fixtures, machinery, equipment used to service the building, and the insured’s building materials and supplies can be covered if they will become a permanent part of the building and are located within 100 feet of the building.
Unanswered
49% got this correct
39) Up to what percent of the amount paid for direct loss will the insurance company pay for debris removal expense under the Business and Personal Property coverage form?
5
10
20
25
FeedbackD is correct. Under the Business and Personal Property coverage form, the insurance company will pay up to 25% of the amount paid for a direct loss for debris removal expense. An additional $10,000 of coverage is available if the debris removal expense exceeds the 25% limit or the total loss exceeds the policy limits.
Unanswered
63% got this correct
40) What is the limit on Pollutant Cleanup and Removal coverage under the Business and Personal Property coverage form?
$10,000
$20,000
$25,000
$50,000
FeedbackA is correct. The policy will pay up to $10,000 for pollutant cleanup and removal if the pollution was caused by a covered peril.
Unanswered
63% got this correct
41) What is the per-year policy limit for coverage of electronic data under the Business and Personal Property coverage form?
$1,000
$2,500
$5,000
$7,500
FeedbackB is correct. The Business and Personal Property coverage form will only pay up to $2,500 in any one policy year for losses to electronic data.
Unanswered
80% got this correct
42) A voluntary action to rid the ship of cargo to prevent further damage is called what?
Jettison
Particular average
Barratry
General average
FeedbackJettison is permitted if the action is taken to save the remaining property. The loss incurred by sacrificing a portion of the cargo will be reimbursed.
Unanswered
56% got this correct
43) The Motor Truck Cargo policy does which of the following?
Insures a truck carrier for liability arising out of the transportation of cargo
Covers any loss to cargo in transit, regardless of whether the carrier is liable for damage
Insures the shipper for all incoming or outgoing shipments during the policy term
Provides coverage for a shipper on a single shipment of goods
FeedbackThis form protects the carrier, instead of the shipper, for liability for loss to domestic shipments in transit.
Unanswered
35% got this correct
44) If the insurance company requests a proof of loss on a Commercial Inland Marine claim, the insured must submit it within how many days?
10 days
30 days
60 days
90 days
FeedbackThe Commercial Inland Marine Conditions form states that the insured must send a signed, sworn statement of loss within 60 days after the insurer requests it.
Unanswered
35% got this correct
45) Which of these statements about the Mail coverage form are correct? Select all that apply.
It covers bonds, securities, and checks when they are sent by first class or certified mail. (Missed)
Food stamps and money are always excluded under the policy.
Property is covered on a named peril basis.
Losses are valued on the basis of the property's actual value, but not less than its market value, on the date of mailing. (Missed)
FeedbackThe Mail coverage form provides open peril coverage against loss to property in transit by registered, first class, certified, or express mail. Food stamps and money can be covered when sent by registered mail.
Unanswered
61% got this correct
46) Which of the following can be covered under the Physicians and Surgeons Equipment coverage form? Select all that apply.
Medical instruments that are on the premises (Missed)
Dental instruments that are off the premises (Missed)
Radium
All of the above
FeedbackThis form covers medical and dental instruments on and off the premises, furniture and fixtures at the office, and the insured’s interest in improvements and betterments. Radium is not covered.
Unanswered
52% got this correct
47) Which of the following losses could be covered under the Theatrical Property coverage form?
Theft of costumes from an unlocked vehicle
Damage to a vehicle used as a prop in the production
Destruction of admission tickets for the production in a fire
All of the above
FeedbackVehicles are covered if they are actually used on the stage in the covered production. Admission tickets are not covered property. Loss by theft from an unlocked, unattended vehicle is excluded.
Unanswered
41% got this correct
48) Which of the following properties can be covered under the Film coverage form? Select all that apply.
Positive prints
Motion picture film (Missed)
Soundtrack (Missed)
Unused footage
FeedbackThe Film coverage form covers exposed motion picture film, soundtracks, videotapes, and magnetic tapes used in the production scheduled in the declarations and that the insured owns or has in his or her custody or control. It does not cover cutouts, unused footage, positive prints or films, or library stock.
Unanswered
49% got this correct
49) Which of these losses is covered under the Signs coverage form? Select all that apply.
The electric sign above the insured's business is destroyed when it is blown down in a thunderstorm. (Missed)
The insured's neon sign is damaged when vandals throw rocks at it. (Missed)
A power surge blows out several tubes in the insured's fluorescent sign.
All of the above.
FeedbackLoss caused by artificially generated current that creates a short circuit or other electrical disturbance within a covered item is not covered.
Unanswered
57% got this correct
50) Which of these losses is covered under the Jewelers Block coverage form, assuming that the insured has purchased all available optional coverages? Select all that apply.
Theft of money from a locked vault on the insured's premises (Missed)
Theft of money from an unlocked vault on the insured's premises
Theft of covered property from an unattended auto
Theft of items on display in a show window when the window is smashed (Missed)
FeedbackThe Show Windows optional coverage covers theft of stock from a show window when the window is cut or smashed. Money coverage covers theft of money from locked safes or vaults on the insured’s premises. Theft from any vehicle is excluded unless the insured, an employee, or other person whose only duty is to attend the vehicle is actually in or on the vehicle when the theft occurs.
Unanswered
54% got this correct
51) How often is the insured required to submit reports of values under the Floor Plan coverage form?
Quarterly
Monthly
Annually
Weekly
FeedbackCoverage under the Floor Plan form is written on a reporting basis. The insured must file reports of values within 30 days after the end of each month.
Unanswered
53% got this correct
52) Which of these losses would be covered under the Camera and Musical Instrument Dealers coverage form?
When the insured plugs in an electric guitar to demonstrate it for a customer, there is a short circuit that damages the guitar's wiring.
A clerk drops a camera when arranging digital cameras in a show window. The lens shatters.
Both A and B.
Neither A nor B.
FeedbackThis form excludes loss arising out of artificially generated current that creates a short circuit or other electrical disturbance within an item covered under the policy.
Unanswered
23% got this correct
53) The Electronic Data Processing Equipment floater covers what? Select all that apply.
Computer hardware, but not software or data.
Property in transit. (Missed)
It does not cover computer equipment that is in the insured's care, custody, or control.
It can contain breakdown coverage. (Missed)
FeedbackThe Electronic Data Processing Equipment floater provides open peril coverage for computer hardware, software, and data that is owned by the insured or in the insured’s care, custody, or control. Property in transit is covered. Optional breakdown coverage insures against damage to the equipment caused by mechanical breakdown, electrical disturbances, and temperature changes.
Unanswered
32% got this correct
54) Which of the following are true about the 60-day basic extended reporting period? Select all that apply.
It becomes effective automatically if needed when a claims-made policy expires. (Missed)
The insured must request it in writing within 60 days after the policy expires.
It does not require an additional premium. (Missed)
No separate endorsement is required to provide this extended reporting period. (Missed)
FeedbackWhen a claims-made policy is terminated, a 60-day basic ERP automatically becomes available. The insured does not have to apply for it, and no premium is charged. It provides automatic coverage for any valid claim made during the 60 days after the policy expires, as long as the incident occurred between the expiring policy’s retroactive date and its expiration date.
Unanswered
75% got this correct
55) What is the purpose of a retroactive date in the claims-made form?
Extends the period of time in which a claim can be covered under the policy
Stipulates a date as the first date on which an event can occur and be covered by the policy if a claim is filed
Extends the policy period
Stipulates a date after which any loss that occurs will not be covered
FeedbackThe retroactive date provides some protection against losses that occurred before the claims-made form was written.
Unanswered
90% got this correct
56) Which of the following is a personal and advertising injury?
Broken leg
Death
Calling a client a cheat and a fraud
Dog bite
FeedbackThe other answer choices are examples of bodily injury.
Unanswered
31% got this correct
57) Which of the following are usually excluded under Coverage A of the Commercial General Liability policy? Select all that apply.
Property damage to property owned by the insured (Missed)
Property damage to property in the care, custody, or control of the insured (Missed)
Bodily injury sustained by an insured while using the insured's product
Bodily injury to a customer who is injured in an accident on the insured's premises
FeedbackCoverage A excludes property damage to property owned by the insured and property damage to property in the care, custody, or control of the insured. Because Coverage A provides third-party liability coverage, injury to an insured is not covered.
Unanswered
44% got this correct
58) All of the following reduce the CGL’s General Aggregate Limit except which of the following?
Medical Payments sublimit
Personal and Advertising Injury limit
Fire Damage limit
Products-Completed Operations limit
FeedbackThere is a separate Products-Completed Operations Aggregate limit that is not subject to the General Aggregate limit.
Unanswered
85% got this correct
59) A woman is injured when she breaks a tooth on a rock that mysteriously found its way into a box of cereal. This is an example of which of the following?
Premises and operations exposure
Products-completed operations exposure
Contingent liability exposure
Contractual liability exposure
FeedbackThe products-completed operations hazard includes all BI and PD occurring away from the premises owned or rented by the insured, and arising out of the insured’s product or work, other than products that are still in the insured’s physical possession and work that has not yet been completed or abandoned.
Unanswered
37% got this correct
60) Which of the following business liability exposures are either excluded altogether from the CGL or covered only in certain circumstances? Select all that apply.
Premises and operations
Indirect/contingent liability
Pollution (Missed)
Work-related injuries to employees (Missed)
FeedbackBusinesses face a number of liability exposures, including work-related injuries to employees; pollution; contractual agreements in which the insured assumes liability; and ownership, maintenance, or use of autos, watercraft, and aircraft. However, because of the unique nature of these liability exposures, they are either excluded outright from the CGL policy or may be covered only in certain circumstances or for limited amounts. More complete protection for these liability exposures is available under contracts specifically designed to cover them.
Unanswered
63% got this correct
61) Which one of the following is not required in a CGL coverage part?
CGL declarations
One or more CGL coverage forms
Causes of Loss form
Common Policy Conditions
FeedbackCauses of Loss forms are not used with the CGL coverage part.
Unanswered
46% got this correct
62) Which of the following would be considered mobile equipment under the Commercial General Liability coverage form? Select all that apply.
Truck used to transport personnel to construction sites
Road construction grader (Missed)
Bulldozer (Missed)
Self-propelled vehicles designed for snow removal
FeedbackBoth of these items are specifically listed in the policy’s definition of mobile equipment. An auto is a land motor vehicle, trailer, or semitrailer designed for travel on public roads, including any attached machinery or equipment.
Unanswered
68% got this correct
63) Which of the following are excluded under Coverage A of the CGL?
Damage the insured causes intentionally
Pollution losses caused by the insured
Liquor liability for those in the business of serving liquor
All of the aboveUnanswered
20% got this correct
64) Which of the following would be excluded under Coverage C of the CGL? Select all that apply.
A shopper is injured in the insured's retail store when a box falls on him from an overhead shelf. (Missed)
The insured sponsors a foot race on the land surrounding his retail store. A participant is injured during the race.
An individual hired by the insured to paint her business office falls off a ladder and is injured. (Missed)
One of the insured's employees is injured while on the job. (Missed)
FeedbackCoverage C excludes injuries to the insured’s employees and injuries that occur while participating in athletics.
Unanswered
64% got this correct
65) If an insurer decides to not renew the CGL policy, how many days notice of nonrenewal must be provided to the first named insured?
10 days
7 days
20 days
30 days
FeedbackThe nonrenewal condition states that if the insurer decides to not renew the CGL policy, it must mail or deliver written notice of nonrenewal to the first named insured at least 30 days before the expiration date of the policy.
Unanswered
16% got this correct
66)
Which of the following coverages are provided by Business Auto Physical Damage coverage?
Collision (Missed)
Transportation Expenses (Missed)
Comprehensive
Garagekeepers Insurance (Missed)Unanswered
62% got this correct
67)
Which portion of the Garage coverage form covers liability for damage to property of others in the insured’s care, custody, or control?
Liability
Garagekeepers
Physical Damage
Both A and B
FeedbackB is correct. The Liability section of the Garage coverage form excludes liability for damage to customers’ autos in the insured’s custody. Coverage for this exposure is provided under the Garagekeepers section of the Garage form.
Unanswered
50% got this correct
68) Trailer Interchange coverage is included in which of the following forms?
All Commercial Auto coverage forms
The Truckers coverage form (Missed)
The Motor Carrier coverage form (Missed)
The Garage coverage form
FeedbackB and C are correct. Trailer Interchange coverage covers damage to a specific trailer under the policy of the trucker who has possession of the trailer at the time of loss, as long as certain conditions are met. It is included in the Truckers and Motor Carrier coverage forms.
Unanswered
54% got this correct
69)
The Garage coverage form covers liability arising out of which of the following?
Ownership, maintenance, or use of covered autos (Missed)
Garage operations (Missed)
A trailer interchange agreement
Advertising injury
FeedbackA and B are correct. Trailer Interchange coverage and advertising injury are not included in the Garage coverage form.
Unanswered
28% got this correct
70)
Which of the following perils are included in the Business Auto coverage form’s Specified Causes of Loss coverage?
Collision
Earthquake (Missed)
Flood (Missed)
Theft (Missed)
FeedbackB, C, and D are correct. Specified Causes of Loss coverage is a limited type of Comprehensive coverage. It covers fire, lightning, explosion, theft, windstorm, hail, earthquake, flood, vandalism, or mischief, as well as sinking, burning, collision, or derailment of a conveyance transporting the covered auto.
Unanswered
14% got this correct
71)
Which of the following statements concerning Business Auto Liability coverage are correct?
It covers BI or PD caused by an accident.
It does not cover pollution losses.
It only covers sums for which the insured is legally liable. (Missed)
The BI or PD must result from the ownership, maintenance, or use of a covered auto. (Missed)Unanswered
31% got this correct
72)
Who of the following would be considered an insured under Business Auto Liability coverage?
The named insured (Missed)
Others while using a covered auto with permission (Missed)
The owner of a borrowed auto
Others who become liable for the conduct of an insured (Missed)
FeedbackA, B, and D are correct. The owner of a hired or borrowed auto is not an insured for Liability coverage while using the covered auto.
Unanswered
14% got this correct
73)
Which of the following are excluded under Business Auto Liability coverage?
Liability assumed under a contract that is considered an insured contract
Damage to the insured's own auto (Missed)
Injury to employees covered by workers compensation laws (Missed)
Liability for property in the insured's custody (Missed)
FeedbackB, C, and D are correct. The exclusion for liability assumed under contract or agreement does not apply to contracts that meet the policy’s definition of an insured contract.
Unanswered
62% got this correct
74)
Which of the following losses would be paid under the Business Auto coverage form’s Comprehensive coverage?
Gradual corrosion of the grillwork on a covered auto because of continuous exposure to salt air
Overturn of a covered auto
Collision damage to a covered auto
Theft of a covered auto
FeedbackD is correct. Losses from wear and tear are excluded. The other two losses are considered collision losses.
Unanswered
64% got this correct
75)
Which of the following businesses might be covered under a Garage coverage form?
Used car dealer (Missed)
Catering company
Auto body shop (Missed)
Service station (Missed)
FeedbackA, C, and D are correct. The Garage coverage form is designed to cover automobile-type businesses, such as car dealerships, gas stations, and parking garages. These types of businesses cannot be covered under the Business Auto coverage form.
Unanswered
33% got this correct
76)
Which of the following coverages are included in an unendorsed Garage coverage form?
Garagekeepers (Missed)
Uninsured Motorists
Liability (Missed)
Physical Damage (Missed)
FeedbackA, C, and D are correct. The Garage coverage form includes Liability, Garagekeepers, and Physical Damage coverage. Medical Payments, Uninsured Motorist, and Underinsured Motorists coverage may be added by endorsement.
Unanswered
46% got this correct
77)
Which of the following can be considered covered autos only under the Garage coverage form?
Customers' autos left with the insured for service (Missed)
Autos the insured has leased to use in the business
Autos held for sale by a dealer (Missed)
Autos owned by the insured and used in the insured's business
FeedbackA and C are correct. There are two covered auto symbols that are unique to the Garage coverage form. Symbol 30 is used for customers’ autos left with the insured for service, repair, storage, or safekeeping. Symbol 31 is used for Physical Damage coverage only for the dealers’ autos and autos held for sale by dealers, nondealers, or trailer dealers.
Unanswered
65% got this correct
78)
Which of the following Commercial Auto coverage forms does not offer liability coverage?
Business Auto
Business Auto Physical Damage
Garage
Trucker's
FeedbackB is correct. Business Auto Physical Damage covers losses to the insured’s own vehicles, not losses to other’s vehicles the insured might become liable for.
Unanswered
26% got this correct
79)
Which of the following would be included in an unendorsed Business Auto coverage policy? Select all that apply.
Liability coverage (Missed)
Physical Damage coverage (Missed)
Uninsured Motorists coverage
Medical Payments coverage
FeedbackA and B are correct. Uninsured Motorists and Medical Payments coverage are available only by endorsement.
Unanswered
88% got this correct
80)
George Hawthorn is employed by Moison Appliances as a shipping clerk. As he is stacking TVs in the storage room, he is surprised by two men, both carrying guns. They proceed to empty the warehouse of TVs. This is an example of what?
Burglary
Robbery
Mysterious disappearance
A fidelity loss
FeedbackB is correct. In Crime forms, robbery is defined as the unlawful taking of property from the care and custody of another person. The robber must have caused or threatened to cause bodily harm to the person being robbed or must have committed an obviously unlawful act that is witnessed by the person being robbed. Burglary is the taking of property by stealth rather than by force or threat.
Unanswered
62% got this correct
81)
Which of the following must be true in a burglary?
Property must be taken from a custodian or watchperson.
There must be no evidence of force or violence.
The burglary must involve unlawful entry or exit from the premises. (Missed)
There must be visible evidence of forcible entry or exit. (Missed)
FeedbackC and D are correct. Although burglary is not specifically defined in the Crime forms, it still has a specific meaning in the insurance industry. Burglary is the taking of property from inside the premises by a person unlawfully entering or leaving the premises. There must be evidence of forcible entry or exit, such as marks made by tools, explosives, chemicals, or electricity. There is no requirement that the property be taken from a custodian or watchperson.
Unanswered
79% got this correct
82)
Theft generally means which of the following?
Any act of stealing
Any act of stealing other than burglary or robbery
Burglary and robbery only
Employee dishonesty only
FeedbackA is correct. Theft means the unlawful taking of money, securities, or other property. This broad term includes burglary, safe burglary, and robbery.
Unanswered
42% got this correct
83)
Coverage for defense costs is included in which of the following?
Computer Fraud coverage
Forgery or Alteration coverage
All of the Crime coverages
None of the Crime coverages
FeedbackB is correct. Under Forgery or Alteration coverage, if the insured is sued for refusing to pay a forged or altered instrument and obtains the insurer’s written permission to defend the suit, the insurer will pay reasonable defense costs incurred by the insured.
Unanswered
47% got this correct
84)
Who of the following would be considered custodians while having care and custody of company property inside the premises?
A store clerk (Missed)
A company vice president (Missed)
A janitor
A night watchperson
FeedbackA and B are correct. A custodian is someone who has care or custody of property inside the premises. It includes the insured, the insured’s partners or members, or any employee. It does not include a watchperson or janitor.
Unanswered
59% got this correct
85)
In a Crime insurance policy, certificates of deposit are considered which of the following?
Other property
Money
Securities
Either money or securities
FeedbackC is correct. Securities are instruments or contracts that represent money or property. Checks, drafts, bonds, certificates of deposit, stock certificates, stamps, and credit card receipts are all considered securities.
Unanswered
58% got this correct
86)
What type of property is protected under Computer Fraud coverage?
Money
Securities
Other property
All of the above
FeedbackD is correct. Computer Fraud coverage covers loss of or damage to money, securities, and other property because of the use of a computer to fraudulently transfer that property from inside the premises or banking premises to a place or person (other than a messenger) outside the premises.
Unanswered
33% got this correct
87)
An insured must file a proof of loss within how many days after a loss?
90 days
30 days
120 days
60 days
FeedbackC is correct. If a loss occurs, the insured must provide a sworn proof of loss within 120 days.
Unanswered
93% got this correct
88)
Which one of the following injuries qualifies as a compensable injury under workers compensation laws?
A factory worker fractures her arm while working overtime on the assembly line.
A hotel maid falls down the stairs while cleaning her own home.
A secretary accidentally swallows his gum while in the company lunchroom and chokes when it gets lodged in his windpipe.
An office manager is injured in a traffic accident on his way to work.
FeedbackA is correct. Work-related injuries must arise out of employment and arise in the course of employment to be compensable. Time, place, and circumstances are all considered in making this determination.
Unanswered
68% got this correct
89)
Which of the following benefits are paid under workers compensation laws?
Medical (Missed)
Rehabilitation (Missed)
Disability income (Missed)
Pain and suffering
FeedbackA, B, and C are correct. Workers compensation laws pay benefits in four categories: disability/loss of income benefits, medical benefits, survivor/death benefits, and rehabilitation benefits. They do not pay benefits for pain and suffering.
Unanswered
76% got this correct
90)
In a competitive state, an employer can obtain workers compensation insurance from which of the following?
A private insurance company
The state fund
Either A or B
Neither A nor B
FeedbackC is correct. Competitive states give employers a choice between purchasing workers compensation insurance from a state fund or a private insurance company. The state fund competes with private insurance.
Unanswered
60% got this correct
91)
In most states, workers compensation laws apply to which of the following?
Only to workers in occupations that are considered extremely hazardous
To most workers except those specifically excluded by law
To full-time workers only
To all workers
FeedbackB is correct. Every state has some exempt classifications, but the majority of the nation’s employees are covered under workers compensation laws.
Unanswered
35% got this correct
92)
Under which part of a Workers Compensation and Employers Liability policy would you find a description of the insured’s obligations when an injury occurs?
Part One
Part Two
Part Three
Part Four
FeedbackD is correct. Part Four describes the insured’s duties when a worker is injured. Part One describes the general terms of the workers compensation policy. Part Two is Employers Liability Insurance. Part Three is Other States Insurance.
Unanswered
55% got this correct
93)
Under which part of a Workers Compensation and Employers Liability policy would you find a description of employers liability coverage provided?
Part One
Part Two
Part Three
Part Four
FeedbackB is correct. Part One describes the Workers Compensation coverage, and Part Two describes the Employers Liability coverage. Part Three is Other States Insurance, and Part Four describes the insured’s duties upon a loss.
Unanswered
87% got this correct
94)
George is a trash collector earning $35,000 a year who hurts his back on the job, so he can no longer go out with the collection trucks. However, he can still be a route coordinator in the office at a salary of $25,000 per year. To what extent is George industrially disabled?
$35,000 per year
$25,000 per year
$10,000 per year
$0 per year
FeedbackC is correct. Industrially disability measures the earnings an injured worker had before and after the injury. George’s industrial disability is found by subtracting his route coordinator earnings of $25,000 from his trash collector earnings of $35,000.
Unanswered
53% got this correct
95) Which of the following may be covered under a Farm coverage part?
Farm buildings, equipment, and livestock (Missed)
Liability arising out of farm operations (Missed)
Growing crops
Farm dwelling and its personal property (Missed)
FeedbackA, B, and D are correct. Growing crops are not covered under a Farm coverage part.
Unanswered
70% got this correct
96)
A breakdown of equipment covered under the Equipment Breakdown Protection coverage form results in the simultaneous breakdown of three other pieces of covered equipment. According to the form, how many “breakdowns” occurred in this loss?
One
Two
Three
Four
FeedbackA is correct. One breakdown means that if an initial breakdown causes other breakdowns, all are considered a single breakdown. All breakdowns at any one premises that manifest themselves at the same time and are the direct result of the same cause are considered “one breakdown.”
Unanswered
81% got this correct
97)
The insured knows that it might take several months for his damaged turbine to be fully repaired, so he authorizes $500 for temporary repairs so that production can resume. This expenditure would be covered under which coverage in the Equipment Breakdown Protection coverage form?
Spoilage
Errors or omissions
Expediting expense
Contingent business income
FeedbackC is correct. This coverage extension covers the reasonable cost of temporary repairs and expedition (speeding up) of permanent repairs.
Unanswered
56% got this correct
98) Under the Equipment Breakdown Protection coverage form, which of the following causes of damage to covered equipment would not be a covered “breakdown”?
Electrical failure, including arcing
Leakage at any valve, fitting, shaft seal, gland packing, joint, or connection
Failure of pressure or vacuum equipment
Mechanical failure, including rupture or bursting caused by centrifugal force
FeedbackB is correct. Under the Equipment Breakdown Protection coverage form, breakdown means the following types of direct physical loss that cause damage to covered equipment and necessitates its repair or replacement: failure of pressure or vacuum equipment, mechanical failure, including rupture or bursting caused by centrifugal force, and electrical failure, including arcing. Choice B is specifically excluded under this definition.
Unanswered
52% got this correct
99)
Which of the following statements apply to Professional Liability policies?
They cover the insured's liability arising out of rendering or failing to render services of a professional nature. (Missed)
They duplicate the coverage provided by the CGL policy.
They are tailored to fit specific occupational needs. (Missed)
They cover most general liability and automobile liability losses.
FeedbackA and C are correct. Liability arising out of rendering or failing to render services of a professional nature is excluded under CGL policies. Special Professional Liability policies have been developed for many professionals, such as physicians, lawyers, and insurance agents. Each policy is tailored to fit a specific occupational need.
Unanswered
43% got this correct
100)
A business that wants coverage for its liability for employment-related acts can obtain it by purchasing which of the following?
CGL insurance
Workers Compensation and Employers Liability insurance
Employment Practices Liability insurance
Any of the above
FeedbackC is correct. This coverage is provided by Employment Practices Liability insurance. The other policies listed specifically exclude losses arising out of employment-related practices.
Unanswered
85% got this correct
101)
Commercial insureds who need more Liability coverage than provided by a certain policy or want coverage for losses excluded by a certain policy should purchase which of the following?
Difference in Conditions policy
Commercial Umbrella policy
Surety bond
Fidelity bond
FeedbackB is correct. Commercial Umbrella policies provide catastrophic Liability coverage for business risks. Because the Umbrella is not designed to handle usual or everyday exposures, the insured must have underlying Liability coverage before an Umbrella will be issued. The Umbrella can cover certain losses that are excluded by the underlying insurance.
Unanswered
25% got this correct
102) Which of these statements regarding Difference in Conditions insurance are correct?
It excludes coverage for basic perils such as fire, lightning, and windstorm. (Missed)
It is written in conjunction with policies that cover basic perils. (Missed)
It does not have a deductible requirement.
It covers property and liability exposures.
FeedbackA and B are correct. Difference in Conditions insurance is written to exclude the basic fire and extended coverage perils, but to include most other insurable perils that are not covered under Commercial Property coverage. Consequently, it is written in conjunction with policies providing the basic coverage excluded by the DIC policy. DIC policies are usually written on large risks with a high deductible.
Unanswered
82% got this correct
103)
Which one of the following answer choices lists all of the parties to a Surety bond?
Principal and obligee
Principal, obligee, surety
Surety and obligee
Principal and surety
FeedbackB is correct. There are three parties to a Surety bond: the principal, the obligee, and the surety.
Unanswered
43% got this correct
104)
All of the following types of losses may be covered by the Equipment Breakdown Protection coverage form except which of the following?
Business income losses and/or extra expenses
Expediting expenses
Losses because of spoilage damage
Damage caused by fire or combustion explosion
FeedbackD is correct. Business income and/or extra expense losses, expediting expenses, and spoilage damage are all coverage options in the Equipment Breakdown Protection coverage form. Damage caused by fire or combustion explosion is excluded because it is covered under Commercial Property insurance.
Unanswered
61% got this correct
105) How do deductibles apply in the Equipment Breakdown Protection coverage form?
Deductibles apply separately for each applicable coverage unless the deductibles are shown as "combined" for any two or more coverages.
A single deductible applies to all applicable coverages.
Deductibles are always stated as a specific dollar amount.
There are no deductibles under this coverage.
FeedbackA is correct. Deductibles apply separately for each applicable coverage unless the deductibles are shown as “combined” for any two or more coverages. Depending on the coverage, the deductible might be expressed as a dollar amount, a time limit, a percentage of loss, or a multiple of daily value.
Unanswered
63% got this correct
106)
Under the terms of the Suspension provision in the Equipment Breakdown Protection coverage form, coverage on dangerous equipment can be suspended when?
On 30 days' advance notice to the insured
At the end of the policy period
Immediately on delivery of written notice to the insured
On 15 days' advance notice when sent by certified mail
FeedbackC is correct. The insurer can immediately suspend coverage whenever covered equipment is found to be in or exposed to a dangerous condition. Suspension applies only to that particular object and takes effect as soon as written notice is delivered to the insured.
Unanswered
54% got this correct
107) Which type of insurer consists of an unincorporated group of members who share losses and provide insurance to each other?
Lloyd's Association
Reciprocal exchange
Mutual company
Multi-line insurer
FeedbackAnswer B is correct. Reciprocal insurers consist of members who are unincorporated and collectively share losses and provide insurance to themselves. Lloyd’s Associations are syndicates of insurance underwriters, and mutual and multi-line insurers are examples of traditional insurance companies.
Unanswered
61% got this correct
108) Medical payments under a homeowners policy are available for expenses resulting from an injury to which of the following?
The named insured
A residence employee
A person who is on the insured location without permission
Any regular resident of the insured's household who pays rent
FeedbackAnswer B is correct. Under homeowners coverage for medical payments to others, injuries to the named insured, family members, and any other regular residents are specifically excluded. However, although residents are not usually covered, an exception is made for “resident employees” and they are covered.
Unanswered
67% got this correct
109)
Some property insurance policies provide for payment of the full policy limit in the event of a total loss by a covered peril, regardless of the actual value of the property. These policies are known as which of the following?
Indemnity policies
ACV policies
Valued or agreed amount policies
Market value policies
FeedbackAnswer C is correct. For certain hard-to-value items, the insurance company may issue a valued or agreed amount contract for a specified amount agreed to by both parties. If the item is lost or completely destroyed, the insurer will pay this amount as settlement.
Unanswered
69% got this correct
110) Which part of an insurance policy sets the rules of conduct, duties, and obligations of the insured and insurer under the terms of the contract?
Declarations
Insuring agreement
Conditions
Exclusions
FeedbackAnswer C is correct. The conditions state the ground rules for the contract and spell out the responsibilities and obligations of both the insurance company and insured.
Unanswered
80% got this correct
111)
When an uninterrupted chain of events resulting from a negligent act causes a loss, that act is considered to be which of the following?
An assumption of risk
An intervening cause
The proximate cause of loss
A matter of strict liability
FeedbackAnswer C is correct. To establish that one person’s actions toward another were negligent and caused injury or damage, the negligent act and the damage must be tied together. If there was no intervening cause and the negligent act led directly to the loss in an unbroken sequence of events, the negligent act was the proximate cause of loss.
Unanswered
36% got this correct
112) Policies issued under the National Flood Insurance Program provide removal coverage for property removed to protect it from flood. This coverage applies at another location for up to how many days?
60 days
45 days
30 days
15 days
FeedbackAnswer B is correct. Under flood policies, property is also covered at another place, either above ground or outside of the special flood hazard area, for 45 days when removed by the insured to protect it from flood.
Unanswered
77% got this correct
113) In legal terms, the actions by one party might have the effect of giving up a known right. When this occurs, the party has created which of the following?
Unilateral contract
Representation
Warranty
Waiver
FeedbackAnswer D is correct. The legal definition of “waiver” is the intentional relinquishment of a known right. Sometimes an insurer or its agent might overlook a provision that might have been grounds for denying coverage or increasing the premium. By doing so, the insurer might have relinquished its right to deny coverage or exercise options at a later date by creating a waiver. A representation is a statement believed, but not guaranteed, to be true, whereas a warranty is a statement guaranteed to be true. A unilateral contract is one in which only one party is obligated to perform its part of the agreementfor example, an insurance contract is unilateral because an insured might choose not to enter the agreement by paying the premium, but if the insured pays the premium, the insurance company is obligated to pay for covered losses.
Unanswered
73% got this correct
114)
When the special causes of loss form is attached to a commercial property coverage part, coverage for theft of furs and fur garments is limited to how much?
$2,500
$2,000
$1,500
$1,000
FeedbackAnswer A is correct. The special form is the only causes of loss form for commercial property coverage that provides theft coverage. However, for certain classes of property, various limitations apply, and coverage for theft of furs and fur garments is limited to $2,500.
Unanswered
55% got this correct
115)
Claims-made general liability coverage does not apply to bodily injury or property damage that occurs when?
On the policy's retroactive date
Before the policy's retroactive date
After the policy's retroactive date
Before the effective date, if there is no retroactive date
FeedbackAnswer B is correct. A retroactive date on a claims-made liability policy marks the date on which coverage for reported claims begins. An occurrence on the retroactive date would be covered, but there would be no coverage for bodily injury or property damage that occurred prior to the retroactive date.
Unanswered
69% got this correct
116) Under liability insurance policies, what does an “aggregate limit” mean?
It is the most the insurer will pay for any one accident.
It is the most the insurer will pay for all losses during any one policy period.
It is the maximum limit for each claim when multiple claimants are arising out of the same occurrence.
It is the single largest limit that applies when a loss is covered by two or more policies issued by the same insurer.
FeedbackAnswer B is correct. An aggregate limit is a maximum limit that applies to all losses during a policy period. Each individual loss is subtracted from the aggregate limit and reduces the remaining coverage. At each policy anniversary or renewal, the aggregate limit is reinstated in full.
Unanswered
79% got this correct
117) Something that might increase the likelihood that a loss will occur, is called what?
Peril
Hazard
Risk
Catastrophe
FeedbackAnswer B is correct. A hazard is something that increases the chance of loss, such as a loose step or flammable materials. A peril is the cause of loss, such as a fire. Risk is any outcome that involves uncertainty. A catastrophe is an unexpected event, such as an earthquake or flood, which is not considered a hazard.
Unanswered
55% got this correct
118)
Tom Baxter has an automobile insured by a personal auto policy. He trades in his car and purchases a new private passenger auto as a replacement vehicle. If he does not notify the insurance company, the liability coverage for his replacement vehicle will apply automatically for how long?
10 days
30 days
60 days
Until the end of the policy period
FeedbackAnswer D is correct. Under a personal auto policy, if a newly acquired auto replaces another auto, the new vehicle automatically has the broadest coverage for liability, medical payments, and uninsured motorists coverage for any auto shown in the declarations until the end of the policy period.
Unanswered
86% got this correct
119) A device that is used to minimize small nuisance claims and that helps to keep insurance premiums down is called what?
Arbitration
Deductible
Valued policy
Coinsurance
FeedbackAnswer B is correct. Many property insurance policies have a deductible, which is the amount of a claim the insured has to absorb before the insurance applies. Deductibles reduce the cost of insurance by eliminating small claims. The amount of the deductible is stated in the declarations. Arbitration is a means of settling claims disputes when the insured and the company disagree on the value of property. A valued policy is one under which a certain value for property is stated in the policy, regardless of its value at the time of any loss. Coinsurance is a means by which insureds share in partial losses if they have not insured their property for full value.
Unanswered
56% got this correct
120) Homeowners coverage for loss of personal property because of “mysterious disappearance” is provided by what?
The special form (HO-3) only
The broad and special forms (HO-2 and HO-3) only
The comprehensive form (HO-5) only
All homeowners forms
FeedbackAnswer C is correct. The comprehensive form (HO-5) is the only homeowners policy that insures loss of personal property items by what is known as “mysterious disappearance” because it covers loss by “theft, misplacing, or losing.” The other policy forms only cover loss because of damage, destruction, or theft of property. The broad form (HO-2) covers only named perils, and mysterious disappearance is not one of them. The special form (H0-3) offers only broad form coverage for personal property.
Unanswered
44% got this correct
121)
Which of the following is not excluded under commercial general liability coverage for bodily injury and property damage liability?
Injury or damage caused by the operation of mobile equipment
Damage to property rented to the named insured
An injury that is also covered by a workers compensation law
Liability resulting from the accidental escape of pollutants
FeedbackAnswer A is correct. BI and PD coverage for the ownership, operation, or use of mobile equipment is covered by CGL policies. All of the other answer choices are specifically excluded.
Unanswered
65% got this correct
122)
Most liability claims are based on negligence that results in injury or damage. An act of negligence is considered to be a tort. What does the term “tort” mean?
A tort is a criminal act committed with the intent to cause injury.
A tort is a civil wrong that violates the rights of another.
A tort is any act that has the potential to cause financial loss to another person.
A tort is an act that can be prosecuted by the state or federal government even if no injury or damage occurred.
FeedbackAnswer B is correct. A tort is a civil wrong that violates the rights of another. Unlike the commission of a crime, in which the government may prosecute the wrongdoer, torts are a part of civil law that is concerned with private relationships between people.
Unanswered
77% got this correct
123)
Claims that are paid by general liability coverage are charged against the aggregate policy limits and reduce the amount of insurance remaining to pay future claims. However, CGL aggregate limits will be reinstated in full
If there are more than five claims during a policy period.
On the next policy anniversary date.
If the insured pays an extra premium for reinstatement.
As soon as the aggregate is actually exhausted.
FeedbackAnswer B is correct. Claims paid under general liability coverage are charged against the applicable aggregate policy limits and reduce the amount of insurance remaining to pay future claims during the policy period, but they apply separately to each consecutive policy period and are reinstated on each policy anniversary date.
Unanswered
79% got this correct
124) Under the dwelling property forms, personal property moved to a new principal residence will be automatically covered at the new location (subject to policy expiration) for a period of how long?
60 days
30 days
20 days
10 days
FeedbackAnswer B is correct. Coverage is provided for personal property moved from the described location to a new principal residence. This coverage applies only for 30 days and not beyond the policy expiration date.
Unanswered
60% got this correct
125)
Under the NCCI workers compensation and employers liability policy form, the basic, or minimum, limit for employers liability coverage is how much per accident?
$50,000 per accident
$100,000 per accident
$250,000 per accident
$500,000 per accident
FeedbackAnswer B is correct. Employers liability insurance provides coverage for sums the insured becomes legally obligated to pay under common law because of work-related injuries or occupational diseases. A minimum limit of $100,000 per accident applies.
Unanswered
64% got this correct
126)
Which dwelling policy forms are named peril forms?
All dwelling forms
The basic form only
The basic and broad forms
The special form only
FeedbackAnswer C is correct. The basic and broad dwelling forms provide coverage on a named peril basis. The special form provides open peril coverage.
Unanswered
74% got this correct
127)
The only significant difference between the occurrence and claims-made forms of general liability insurance is found in which of the following?
The coverages provided by the policy
The policy's exclusions
The "trigger," or the way in which coverage is activated under the policy
The policy's conditions
FeedbackAnswer C is correct. There are two primary CGL coverage forms: the occurrence form and the claims-made form. Although the two forms contain basically the same coverages, exclusions, and conditions, they only differ in how the coverage under the form is activated, or “triggered” for Coverages A and B.
Unanswered
52% got this correct
128)
If general liability “claims-made” coverage is renewed by “occurrence” coverage and the insured purchases a supplemental extended reporting period (ERP), the period for reporting claims under the policy will be extended for how long?
Indefinitely
5 years
3 years
60 days
FeedbackAnswer A is correct. A supplemental extending reporting period provides an unlimited extension of the time for reporting covered claims. However, in order for a claim to be covered, it must not have occurred before the retroactive date and not after the policy expiration date.
Unanswered
74% got this correct
129)
Under a homeowners policy, in addition to any payments for damages awarded against an insured, the insurance company will reimburse the insured for reasonable expenses incurred at the company’s request, including loss of earnings of up to how many days?
$500 a day
$300 a day
$250 a day
$100 a day
FeedbackAnswer C is correct. As part of the additional liability coverages, a homeowners policy will reimburse an insured for reasonable expenses incurred at the company’s request, including loss of earnings of up to $250 a day.
Unanswered
32% got this correct
130)
An insurer has subrogation rights under all personal auto policy coverages except which of the following?
Physical damage coverage
Uninsured motorists coverage
Medical payments
Liability coverage
FeedbackAnswer A is correct. Under a personal auto policy, an insurer has subrogation rights against third parties who might be responsible for a loss, such as other drivers or uninsured motorists. However, under physical damage coverage, the insured might be the only one responsible for a loss or nobody might be responsible. It would make little sense to pay an insured for a collision loss and then try to recover from the insured. So the policy specifically states that subrogation rights do not apply to physical damage coverage.
Unanswered
65% got this correct
131) Under liability insurance policies, what does the term “personal injury” usually mean?
Injury for such things as libel, slander, false arrest, or invasion of privacy
Only bodily injuries that are suffered by individuals
Any form of injury that affects a person, including bodily injury, property damage, financial injury, and damage to one's reputation
Injuries suffered by named insureds or family members who are insured under personal lines policies
FeedbackAnswer A is correct. Some policies cover an insured’s exposure for “personal injury,” which means liability for such things as slander, libel, false arrest, and invasion of privacy. In the insurance business “bodily injury” and “personal injury” have different meanings and are not used interchangeably. The term “bodily injury” is limited to physical injury.
Unanswered
67% got this correct
132) Which of the following coverages may be attached to a homeowners policy only by endorsement?
Coverage for a mobile home
Coverage damage to the property of others
Personal property coverage
Medical payments
FeedbackAnswer A is correct. Mobile homes may be covered only when the Mobile Home endorsement is attached. All of the other answer choices are included in every homeowners policy.
Unanswered
87% got this correct
133)
Under the supplementary payments provided by general liability coverage, when a vehicle to which the bodily injury insurance applies is involved in an accident and bail bonds are required, the insurer will pay up to what amount?
$250 for the cost of the bail bonds
$200 for the cost of the bail bonds
$150 for the cost of the bail bonds
$100 for the cost of the bail bonds
FeedbackAnswer A is correct. Under the supplementary payments provided by CGL coverage, when a vehicle to which the bodily injury insurance applies is involved in an accident and bail bonds are required, the insurer will pay up to $250 for the cost of the bail bonds.
Unanswered
70% got this correct
134)
Under a personal auto policy, if an insured already has physical damage coverage for at least one vehicle, a new vehicle will be automatically covered from the date it is acquired as long as the insured notifies the insurer and requests the coverage within how many days?
30 days
14 days
10 days
7 days
FeedbackAnswer B is correct. If an insured already has physical damage coverage for at least one vehicle under a personal auto policy, a new vehicle will be automatically covered from the date it is acquired as long as the insured notifies the insurer and requests the coverage within 14 days. It doesn’t matter if the new auto is a replacement or additional vehicle.
Unanswered
67% got this correct
135)
If Coverage C (personal property coverage) is written on a dwelling form, the Other Coverages section of the policy will extend the insurance to provide worldwide personal property coverage for an amount up to which of the following?
10% of the Coverage C limit
25% of the Coverage C limit
40% of the Coverage C limit
50% of the Coverage C limit
FeedbackAnswer A is correct. In addition to the major coverages written, if personal property coverage is included, a dwelling policy will provide up to 10% of the Coverage C limit for personal property located anywhere in the world. This would include such things as clothing, personal effects, cameras, and luggage taken on vacation.
Unanswered
81% got this correct
136) The name of the coverage that provides legal liability insurance for damage to customers’ autos that are left with the insured for service, repair, or storage is which of the following?
Garage physical damage
Garage errors and omissions
Garage liability
Garagekeepers coverage
FeedbackAnswer D is correct. The liability section of a garage policy excludes coverage for damage to property of others in the insured’s care, custody, or control. For garages, this leaves a significant uninsured exposure, but the specific coverage for this exposure can be purchased under the garagekeepers coverage section of the policy.
Unanswered
35% got this correct
137)
Which of the following is not true about difference in conditions (DIC) insurance?
DIC policies provide property and liability coverages.
Traditional perils (such as fire, lightning, and so on) are usually excluded by DIC policies.
DIC supplements other coverages and fills insurance gaps.
DIC can provide considerable protection at a reasonable cost.
FeedbackAnswer A is correct. DIC policies do provide broad property coverage intended to supplement other coverages and fill insurance gaps. For this reason, DIC policies typically exclude coverage for traditional perils such as fire, lightning, and the extended coverage perils. DIC policies do not provide any liability coverage
Unanswered
60% got this correct
138)
If coverage for personal liability and medical payments is attached to a dwelling policy, what basic limit of coverage applies to medical payments unless a higher amount is purchased?
$500 per person
$1,000 per person
$2,500 per person
$5,000 per person
FeedbackAnswer B is correct. Under a dwelling policy, if the endorsement is included, the basic limit of coverage is $1,000 per person for medical payments to others. However, this is a minimum limit, and higher limits can be purchased.
Unanswered
63% got this correct
139)
Which of the following is not true about workers compensation insurance?
A few states have monopolistic state funds, and employers are required to purchase coverage from the fund.
Most states allow an employer to self-insure for the required benefits.
If an employer has coverage in one state, any operations started in other states will be automatically covered.
Workers compensation benefits are only available for work-related injuries that arise out of and in the course of employment.
FeedbackAnswer C is correct. States where coverage applies must be listed on the information page. Coverage for other states is not automatically provided. In order to have coverage in other states, the states need to be listed on the policy and the insured must notify the insurer as soon as operations begin.
Unanswered
61% got this correct
140)
Under which type of marketing system do agents or agencies operate as independent businesses but agree to represent only one insurance company?
Direct writer system
Exclusive of captive agency system
Direct response system
Independent agency system
FeedbackAnswer B is correct. In the exclusive of captive agency system, the insurance company contracts with agencies, which are independent businesses, to represent and sell insurance only for that insurance company.
Unanswered
74% got this correct
141)
Under a personal auto policy, which of the following is not a collision loss?
Impact between a covered auto and a deer
Impact between a covered auto and a stationary object
Impact between a covered auto and another vehicle
Upset of a covered auto, resulting in damage
FeedbackAnswer A is correct. Collision is defined as the impact of a covered auto with another object or vehicle. The policy specifically lists contact with a bird or animal as an “other than collision” loss.
Unanswered
85% got this correct
142) Which of the following represents a pure risk?
Terry places a bet on the outcome of a basketball game.
Margaret's dog is temperamental. She's afraid that it will bite a neighbor someday and she will be held responsible.
Sam transfers all of his retirement funds into a stock that he expects to rise in value.
Cindy, along with 32 others, puts $100 into an Indy 500 race pool at work. The person holding the name of the winning driver will win the entire $3,300.Unanswered
60% got this correct
143)
A commercial property coverage part with the basic causes of loss form attached covers all of the following perils except which one?
Windstorm
Explosion
Volcanic eruption
Sprinkler leakage
FeedbackAnswer C is correct. The commercial property basic causes of loss form specifically lists windstorm, explosion, and sprinkler leakage as covered perils. It provides some coverage for volcanic “action,” which might mean cleaning up ash and dust, but there’s no coverage for direct damage because of volcanic eruption. The earthquake and volcanic eruption form must be attached in order to have this coverage.
Unanswered
82% got this correct
144) What does the law of large numbers state?
That there must be a narrow spread of risk for insurance to be effective.
Requires all members of society with insurance exposures to purchase insurance.
That the more examples used to develop a statistic, the more reliable the statistic will be.Unanswered
71% got this correct
145)
Which of the following situations would be covered by liability insurance under a personal auto policy?
An insured causes injuries while operating a taxi cab
An auto mechanic has an accident while road testing a customer's vehicle.
An insured damages another vehicle while driving a motorcycle.
Bodily injuries and property damage occur when an insured is involved in an accident while driving co-workers to their job as part of a share-the-expense car pool.
FeedbackAnswer D is correct. Although the PAP excludes liability arising out of operation of a public or livery conveyance, such as a taxi business, an exception is made for share-the-expense car pools that are covered. The other answer choices are specifically excluded.
Unanswered
82% got this correct
146)
LaTonya purchases a house from John. She borrows $75,000 from First City Bank that, along with her $25,000 down payment, equals the $100,000 purchase price of the home. Who has an insurable interest in this home? Choose all that apply.
LaTonya (Missed)
John
LaTonya's son, who would like to inherit the home some day
First City Bank (Missed)Unanswered
43% got this correct
147)
Which of the following is not true about homeowners personal property coverage?
The basic form does not include personal property coverage.
Personal property of a guest may be covered.
Special sublimits apply to some types of personal property.
The full limit applies to personal property anywhere in the world.
FeedbackAnswer A is correct. All homeowner policy forms include personal property coverage. Personal property coverage applies worldwide; at the insured’s request, the property of guests can be covered; and special sublimits apply to certain classes of property on all policies.
Unanswered
82% got this correct
148) Highpoint Industries has an automatic sprinkler system installed in its office building. This is an example of which risk management method?
Avoidance
Reduction
Retention
TransferUnanswered
69% got this correct
149) To avoid problems with underinsurance and overinsurance, a business that has fluctuating inventory values during the year should consider coverage written on
The value reporting form.
A replacement cost basis.
The business income form.
A blanket basis.
FeedbackAnswer A is correct. The value reporting form is an endorsement specifically designed for businesses with fluctuating inventory values because of seasonal variations in business or shifting inventory between different locations. When this coverage applies, the insured must report values periodically, such as monthly, and the actual amount of insurance in effect will be adjusted accordingly. The final premium will be adjusted at the end of the policy year based on average values.
Unanswered
89% got this correct
150) Benson Pharmaceutical Company decides not to manufacture a new drug after determining that it has serious potential side effects. This is an example of which risk management method?
Transfer
Retention
Avoidance
ReductionUnanswered
92% got this correct
151)
The name of a liability insurance policy that provides high limits of coverage above underlying coverage and may fill a number of insurance gaps is
A general liability policy.
An umbrella policy.
An errors and omissions policy.
A difference in conditions policy.
FeedbackAnswer B is correct. Umbrella policies provide high limits of liability coverage above underlying policy limits and might fill a number of insurance gaps. Both Personal and Commercial Umbrella policies are available.
Unanswered
64% got this correct
152)
The term “time element coverage” is used when the amount of loss depends on which of the following?
The time between the date of loss and the policy expiration date
The time between the policy effective date and date of loss
The time of year when a seasonal business suffers a loss
The time it takes to repair, rebuild, or restore damaged property
FeedbackThe term “time element coverage” is used for many indirect losses, such as a business income loss, because the amount of loss might not be directly related to the amount of property damage that occurred, yet it is related to the time it takes to repair, rebuild, or restore the damaged property. Many factors can influence the ultimate loss, including the availability of supplies and replacement parts.
Unanswered
41% got this correct
153)
Which of the following is not one of the common law defenses against an employer’s liability?
Assumption of risk
Fellow servant rule
Proximate cause
Contributory negligence
FeedbackAssumption of risk, contributory negligence, and the fellow servant rule are the traditional common law defenses against employer liability. Proximate cause is a concept applied to determine which peril or event actually caused a loss.
Unanswered
94% got this correct
154)
Which of the following is a hazard as opposed to a peril?
Fire
Lightning
Wet pavement
FloodUnanswered
68% got this correct
155)
Vehicles that might be insured by a personal auto policy are described in the eligibility rules and the policy definitions. Each of the following is true about vehicles eligible for PAP coverage except
Vehicles with fewer than four wheels are not eligible.
Vehicles owned by an individual or married couple may be insured
Private passenger autos, pickup trucks, and vans used for personal transportation may be insured.
Vans used in a delivery business are eligible for coverage.
FeedbackGenerally, four-wheel private passenger autos, pickups, and vans owned by an individual or married couple are eligible if used for pleasure or general transportation. Pickups and vans used in a business, other than farming or ranching, are not eligible.
Unanswered
74% got this correct
156) Businessowners policies provide an additional coverage for preservation of property when it is removed from the premises to protect it from loss by a covered peril. The coverage will apply at other locations for up to
60 days
30 days
20 days
15 days
FeedbackThe preservation of property additional coverage under a businessowners policy covers direct physical loss or damage from any cause if the property has been removed to another location in order to protect it from loss by a covered peril. Coverage applies while the property is being moved and while it is temporarily stored at another location, but only for 30 days after the property is first moved.
Unanswered
84% got this correct
157)
What is meant by a contract of adhesion?
Both parties are required to provide services for the other.
One party draws up the contract provisions, and the other party adheres to the terms.
The contract can be revoked by any party at any time for any reason.
A contract that is formed without any consideration by either party.
FeedbackB is correct. Insurance policies are contracts of adhesion because the insurance company drafts the policy provisions and the insured adheres to the policy terms.
Unanswered
68% got this correct
158) Which of the following losses is not excluded under the physical damage coverage of a personal auto policy?
Loss of custom furnishings in a customized van
Loss caused by freezing of the cooling system
Damage to equipment designed for the detection of radar
Damage to a covered auto while being used as part of a car pool
FeedbackDamage to a covered auto while being used as part of a car pool is not excluded. All of the other answer choices are specifically excluded.
Unanswered
92% got this correct
159)
Which of the following describes the principle of indemnity?
After a loss, an insured should be restored to approximately the same condition that existed before the loss.
Every insured will receive full compensation for all losses in all cases.
When property is damaged or destroyed, the insurance company must pay the full replacement cost.
In the case of bodily injuries, liability coverage must be available without regard to any policy exclusions.
FeedbackA is correct. The principle of indemnity states that when a loss occurs, an individual should be restored to the approximate financial condition he or she was in before the loss.
Unanswered
55% got this correct
160) Under the business auto coverage part, liability insurance applies to mobile equipment while which of the following occurs?
It is being operated on public roads.
It is being carried or towed by a covered auto.
It is being operated away from the insured's premises and work sites.
It is being used for the purpose for which it was designed
FeedbackAlthough mobile equipment exposures are usually covered by CGL insurance, it is covered by business auto insurance while being carried or towed by a covered auto because in such cases it is considered an extension of the covered auto
Unanswered
61% got this correct
161)
Which part of an insurance policy describes what property and/or perils will be covered by the contract?
Definitions
Exclusions
Insuring agreement
Conditions
FeedbackC is correct. The insuring agreements state what types of losses the insured will be indemnified for. This section also describes the type of property covered and the perils against which it is insured.
Unanswered
77% got this correct
162) Insurance is a mechanism used to manage which of the following types of risk?
Pure risks
Speculative risks
Both pure and speculative risks
Neither pure nor speculative risks
FeedbackInsurance is only used to manage pure risks that involve only the possibility of loss and no opportunity for gain.
Unanswered
79% got this correct
163)
What is the consideration that an insurer gives to the insured under an insurance contract?
Stated benefits and the dates on which they are to be paid
The premium
A promise to pay for certain losses if they occur
A promise to be conscientious about the customer's situation
FeedbackC is correct. Consideration is the thing of value exchanged under a contract. The insured’s consideration is the premium; in return, the insurer promises to pay for certain losses if they occur.
Unanswered
70% got this correct
164) Under the 1989 dwelling policy forms, if coverage for vandalism and malicious mischief is attached to a policy, it will be suspended whenever the building has been vacant for more than how many days?
45 consecutive days
30 consecutive days
20 consecutive days
10 consecutive days
FeedbackIf a dwelling policy includes the extended coverage (EC) perils, coverage for vandalism and malicious mischief (V&MM) may also be added. However, this coverage will not apply whenever the building has been vacant for more than 30 consecutive days.
Unanswered
68% got this correct
165)
Under an insurance contract, the uncertainty of events can lead to unequal financial results for the two parties. This means that insurance is what kind of contract?
Unilateral
Aleatory
Conditional
Utmost good faith
FeedbackB is correct. If no loss occurs, the insured will receive no benefits although he or she paid premiums, but if a large loss occurs, the insured might receive benefits that far exceed the premium payments.
Unanswered
52% got this correct
166) Commercial general liability coverage provides medical expense payments for accidental injuries if the expenses are incurred and reported to the insurer within what date?
Six months after the accident date
One year after the accident date
Two years after the accident date
Three years after the accident date
FeedbackCGL insurance policies provide coverage for medical expense payments for accidental injuries if the expenses are incurred and reported to the insurer within one year after the accident date.
Unanswered
74% got this correct
167)
The “ground rules” are described in which part of an insurance policy?
Definitions
Exclusions
Insuring agreement
Conditions
FeedbackD is correct. The conditions describe the responsibilities and obligations of the insurer and the insured.
Unanswered
52% got this correct
168) An employer purchases a fidelity bond to protect against potential losses by employee dishonesty. In this situation, each of the employees covered by the bond is considered which of the following?
A fiduciary
A principal
A guarantor
An obligee
FeedbackFidelity bonds are contracts between three parties. The employees who are required to act honestly are the principals. The surety or guarantor, which is usually an insurance company, agrees to be responsible for a loss if a principal violates the terms of the bond. The obligee, the employer, is the party who is being protected by the bond and who will be paid if a loss occurs.
Unanswered
74% got this correct
169) A mutual insurance company
Is managed by an attorney-in-fact.
Pays dividends to its stockholders.
Is owned by its insureds.
Is a voluntary association of individuals that shares in writing insurance contracts for a variety of risks.
FeedbackC is correct. In a mutual company, insureds are also owners of the company. They can vote to elect the management of the company. Profits are returned to insureds in the form of dividends or reductions in future premiums.
Unanswered
69% got this correct
170)
When insurance is written on a dwelling form, each of the following types of property would be insured under Coverage A (dwelling coverage) except which one?
A storage shed connected to the dwelling by a utility line
A laundry room attached to the dwelling
A laundry room attached to the dwelling
Materials and supplies used for construction or repair of the dwelling
FeedbackA storage shed connected to the dwelling by a utility line would be considered an “other structure” available for insurance under Coverage B. All other answer choices are specifically described in the policy as being part of Coverage A, insurance for the dwelling.
Unanswered
83% got this correct
171) A nonexclusive agent
Represents a single insurance company.
Works for a direct writer.
Is an independent businessperson.
Does not collect commissions.
FeedbackC is correct. A nonexclusive, or independent, agent represents more than one company. This type of agent collects commissions on the policies sold, but collects no salary from the companies he or she represents.
Unanswered
57% got this correct
172) On homeowners policies, “insured location” is a broad term describing where liability coverages apply. It includes each of the following except which one?
Family cemetery plots
Any newly acquired premises
Structures on farm land owned by an insured
A nonowned premises used as a temporary residence by an insured
FeedbackFamily cemetery plots, newly acquired premises, and premises used as a temporary residence by an insured are all included in the policy definition of “insured location.” Farm exposures are specifically excluded by the homeowner eligibility rules.
Unanswered
64% got this correct
173) Solicitors may not
Issue or countersign policies.
Sell insurance.
Collect premiums.
Sign an application.
FeedbackA is correct. A solicitor, who often works with or for an agent, has more limited authority than the agent. A solicitor sells insurance and might even be authorized to collect premiums. However, a solicitor cannot issue or countersign policies.
Unanswered
73% got this correct
174)
The most common definition of actual cash value (ACV) in the property insurance field is which of the following?
Original cost, plus depreciation
Original cost, less depreciation
Replacement cost, plus depreciation
Replacement cost, less depreciation
FeedbackMany losses are reimbursed on an actual cash value (ACV) basis. Actual cash value is usually calculated by determining an item’s replacement cost and subtracting an amount for depreciation.
Unanswered
56% got this correct
175)
At DEF Insurance Company, agents are employees of the company who are paid a salary plus commissions. This is an example of what type of insurance marketing system?
Captive
Independent
Direct writer
Direct response
FeedbackC is correct. In the direct writer system, the insurer’s agents are actually employees. They can receive a salary, be paid on commission, or both.
Unanswered
53% got this correct
176)
Each of the following is true about the National Flood Insurance Program except which one?
There are maximum limits on the amount of coverage available.
Coverage may be written by private insurance carriers.
Eligibility requirements are set by private insurance carriers.
The federal government reimburses insurance companies for losses that exceed premiums collected.
FeedbackThe Federal Insurance Administration sets rates, eligibility requirements, and coverage limitations for flood insurance. Maximum limits do apply to the amount of coverage available, coverage may be written by private insurance carriers, and the FIA reimburses insurance companies for losses that exceed premiums collected.
Unanswered
93% got this correct
177)
Which insurance company department is responsible for accepting and rejecting applications based on company standards?
Underwriting
Loss Control
Claims
Agency
FeedbackA is correct. Underwriting is the process of selecting certain types of risks and rejecting others so that the insurer will have a profitable book of business.
Unanswered
66% got this correct
178)
What is meant by the term “adverse selection”?
Underwriting practices that discriminate against applicants in certain geographical areas
Selling types of insurance to applicants who do not need that particular kind of coverage
Agency marketing practices that promote only the policies that pay the highest commissions
The tendency of people with greater than average exposure to loss to purchase insurance
FeedbackAdverse selection means the tendency of people with a greater than average exposure to loss to purchase insurance coverage. For example, if insurers only sold earthquake coverage to applicants in earthquake-prone areas, or flood insurance only to those in flood-prone areas, the situation known as adverse selection would exist. Insurers and underwriters guard against adverse selection by trying to sell broad ranges of coverages to a large cross-section of the population in order to increase the premium base and spread the risk of loss.
Unanswered
95% got this correct
179)
Which insurance company department is responsible for paying insureds’ covered losses?
Audit
Claims
Underwriting
Reinsurance
FeedbackB is correct. The claims department sees that the company’s insureds are adequately indemnified for their losses. Claim adjusters determine the cause of loss, whether the loss is covered by the policy, the value of the loss, and the amount of loss payable by the policy.
Unanswered
58% got this correct
180)
A commercial building valued at $300,000 is insured for $200,000. If the policy is written with an 80% coinsurance percentage and a standard deductible, how much would be paid for a $60,000 loss?
$60,000
$49,500
$40,000
$39,500
FeedbackThe coinsurance requirement is for the insured to carry 80% of the $300,000 building value, or $240,000 of coverage. Because the insured only has $200,000 of coverage, a penalty applies. The formula is that the amount actually carried ($200,000) is divided by the amount required ($240,000) to produce a fraction that will be multiplied by the loss. In this case, the fraction is 5/6 and the loss was $60,000, so the result is a $50,000 covered loss. However, the standard deductible is $500 per occurrence, so the net amount paid will be $49,500.
Unanswered
91% got this correct
181)
Who is responsible for licensing insurance agents?
Lloyd's Associations
State insurance department
Interstate Commerce Commission
Insurance Services Office
FeedbackB is correct. State insurance departments devote much of their time to working with insurance agents. One of their most important duties is agent licensing.
Unanswered
54% got this correct
182)
Under homeowners coverage for medical payments to others, necessary medical expenses for treating an accidental injury will be covered if it incurred within how many days?
90 days of the accident date
1 year of the accident date
3 years of the accident date
5 years of the accident date
FeedbackCoverage for medical payments to others under a homeowners policy applies to necessary medical expenses incurred within three years of an accident that causes bodily injury.
Unanswered
90% got this correct
183) Agent Blondell is offering a free television to every applicant who agrees to buy insurance through his agency. In most states, this is an illegal practice known as
Rebating.
Twisting.
Misrepresentation.
Failure of fiduciary responsibility.
FeedbackA is correct. Rebating is giving or offering some benefit other than those specified in the policy, such as cash, gifts, or securities, to induce a customer to buy insurance. Rebating is illegal in all but two states.
Unanswered
49% got this correct
184)
Under a Personal Umbrella policy, a self-insured retention is an amount that
Is in effect a deductible for insured losses.
Reflects the maximum the insurer will pay for a particular loss.
Applies between underlying coverage and the umbrella coverage.
Reduces the amount of underlying coverage available to cover insured losses.
FeedbackA Personal Umbrella may cover losses that are excluded by underlying insurancein which case, a self-insured retention limit applies. This operates similar to a deductible because it is the out-of-pocket amount the insured must absorb before the umbrella coverage applies.
Unanswered
86% got this correct
185) J&M Industries does not have a group health insurance plan for its employees. Instead, it pays employees’ medical expenses out of a fund specifically created for this purpose. This is an example of
Fraternal insurance.
Self-insurance.
Reinsurance.
Government insurance.
FeedbackB is correct. With self-insurance, part or all of the risk of loss is borne without the benefit of insurance coverage to fall back on if a loss occurs.
Unanswered
33% got this correct
186)
Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following except which one?
Cargo lost or damaged through negligence
Damage to other vessels when caused by collision
Damage to or loss of the insured ship
Job-related injuries to sailors
FeedbackOcean marine protection and indemnity (P&I) coverage provides liability coverage for job-related injuries to sailors, cargo lost or damaged through negligence, damage to other vessels when caused by collision, and a few other things. Damage to the insured ship is not covered under P&I, but the insurance is available under hull coverage.
Unanswered
87% got this correct
187)
Which of the following statements concerning regulation of the insurance industry is correct?
The insurance industry is regulated exclusively by the federal government.
The insurance industry is very loosely regulated.
The state insurance department is responsible for controlling insurance matters within the state.
The state insurance department serves only the interests of the insurance industry.
FeedbackC is correct. Insurance is regulated primarily by the states. It is closely regulated for the good of the insurance industry and the general public.
Unanswered
65% got this correct
188)
National flood insurance is available for which of the following?
Private residences only
Private residences and residential contents only
Residential and nonresidential buildings only
Residential and nonresidential buildings and contents
FeedbackAlmost any building that is walled and roofed, is principally above ground, and is fixed to a permanent site is eligible to be covered by a flood policy. A policy may cover a building, its contents, or both.
Unanswered
84% got this correct
189)
Which of the following is not one of the duties of an agent?
Making appropriate coverage recommendations to prospective customers
Writing the provisions of a customer's policy
Helping prospective customers complete the application
Assuring that customers understand the coverage they are purchasing
FeedbackB is correct. Agents have a responsibility to interact effectively with customers in regard to the insurance transaction, but they do not determine the provisions of the policies the insurer issues.
Unanswered
71% got this correct
190)
The written agency contract between an insurer and an agent constitutes the agent’s
Express authority.
Implied authority.
Assertive authority.
Apparent authority.
FeedbackA is correct. The specific provisions of the written agency contract constitute the authority expressly given to the agent by the insurer.
Unanswered
86% got this correct
191)
The Excel Insurance Company is incorporated in the state of Tennessee. It is also authorized to do business in Georgia. In Georgia, Excel is known as what type of company?
Alien
Foreign
Domestic
Non-admitted
FeedbackB is correct. Insurance companies are known as domestic companies in their home states, foreign companies in other states in which they are admitted to do business, and alien companies if their home office is located in a country other than the United States.
Unanswered
81% got this correct
192)
Can states require insurance companies to use certain forms or rates in connection with certain types of insurance?
No, that would be a violation of the principle of open competition.
No, they can only require that forms and rates be subject to prior approval.
No, insurers can always begin using forms and rates as soon as they are properly filed with the state.
Yes, some states have mandatory forms or rates for certain coverages.
FeedbackD is correct. In addition to open competition, prior approval, and file-and-use rules, some states mandate the forms or rates for certain coverages.
Unanswered
66% got this correct
193)
Which of the following statements concerning binders is correct?
They guarantee that a policy will be issued.
They can be issued by insurance companies, but not agents.
They expire on the effective date of the policy to which they apply, or on the expiration date of the binder if the policy is not issued.
They show an intent to consider issuing insurance, but do not include any commitment to provide coverage.
FeedbackC is correct. An agent or an insurance company can issue a binder. A binder does not guarantee that a policy will be issued; it only guarantees temporary coverage. If the company decides to not issue the policy, coverage under the binder may be cancelled by a formal cancellation notice; however, if no formal cancellation is made, coverage remains in effect until the binder expires. If a policy is issued, coverage under the binder ceases as of the effective date of the policy.
Unanswered
65% got this correct
194)
What rating method makes modifications to manual rates to reflect the unique characteristics of each risk?
Judgment
Merit
Certification
Manual
FeedbackB is correct. Experience rating, retrospective rating, and schedule rating are all types of merit rating.
Unanswered
45% got this correct
195)
To void a policy, misrepresentation or concealment must be which of the following?
Concern material facts.
Be intentional.
Both A and B are correct.
Neither A nor B are correct.
FeedbackA is correct. Misrepresentation is a written or verbal misstatement of a material fact. It can be either intentional or unintentional.
Unanswered
73% got this correct
196)
An agreement between the insured and the insurer that certain conditions will be met is which of the following?
Misrepresentation
Warranty
Estoppel
Certificate of insurance
FeedbackB is correct. A warranty becomes part of the policy. If it is breached, the insurer can void the policy.
Unanswered
59% got this correct
197)
Which one of these statements about the Fair Credit Reporting Act is not correct?
Prenotification is required for both regular and investigative reports.
Postnotification is required when insurance coverage is denied because of adverse information in a credit report.
An agent who obtains information from a reporting agency under false pretenses can be sent to jail and fined.
Consumers have the right to challenge information in investigative reports and to have incorrect information removed.
FeedbackA is correct. The question asks for the statement that is not correct. Prenotification is required for investigative reports, but not regular reports. The other choices are provisions contained in the Fair Credit Reporting Act.
Unanswered
92% got this correct
198)
The insured’s policy is nearing the expiration date. The insurance company doesn’t want to continue the insured’s coverage, so it sends the insured a notice that the policy will not continue beyond the expiration date of the policy. This is considered which of the following?
Flat cancellation
Nonrenewal
Pro rata cancellation
Unearned renewal
FeedbackA8: B is correct. Nonrenewal occurs when the insured or the insurer decides to not continue coverage for another policy period after the current policy period expires. Flat cancellation means to cancel a policy on its effective date. Pro rata cancellation means to cancel a policy midterm so that a refund is made of unearned premium.
Unanswered
78% got this correct
199)
Walt and Joanna are co-owners of a bagel shop. Both Walt and Joanna are listed in the declarations of the policy that insures the business, with Joanna’s name appearing first. The declarations also list First State Bank, which has an outstanding loan on the business. Who is considered a named insured on the policy?
Walt only
Joanna only
Both Walt and Joanna
First State Bank
FeedbackC is correct. The named insured is the person, business, or other entity named in the declarations to whom the policy is issued. First State Bank has an insurable interest as the mortgagee, but is not a named insured.
Unanswered
92% got this correct
200)
Renata’s home is demolished in a fire that started when a neighbor misdirected the fireworks he set off to celebrate the Fourth of July. Renata’s insurance company pays her for the damage, and then files suit against the neighbor to recover the amount it paid for the loss. This is an example of the application of what policy condition?
Liberalization
Subrogation
Abandonment
Salvage
FeedbackB is correct. The subrogation condition transfers the insured’s right to collect from a responsible third party to the insurance company.
Unanswered
90% got this correct
201)
A heavy snowfall causes the roof over Amaya’s living room to collapse. The insurance company asks her to move her belongings out of the living room to protect them from further damage and put a tarp over the roof until it can be repaired. It also asks her to complete a proof of loss form listing the items that were damaged. This is an example of the application of what policy condition?
Appraisal
Arbitration
Duties after loss
Subrogation
FeedbackC is correct. Most insurance policies include conditions that specify what the insured and insurer must do when a loss occurs. The insured’s responsibilities after a loss include giving notice of claim to the agent or company, protecting property from further damage, and completing a proof of loss form.
Unanswered
69% got this correct
202)
Three policies, totaling $300,000 in coverage, apply to an $80,000 loss. Policy A’s limit of insurance is $100,000, policy B’s limit is $50,000, and policy C’s limit is $150,000. Use the pro rata method to determine how much policy C would pay for this loss.
$26,640
$40,000
$13.280
$60,000
FeedbackB is correct. Because total coverage is $300,000 and policy C provides 50% of this amount ($150,000) it is obligated to pay 50% of the loss.
Unanswered
61% got this correct
203)
Which of the following would not normally be excluded under a property insurance contract?
Catastrophic losses
Nonaccidental losses
Losses to personal property
Extra-hazardous perils
FeedbackC is correct. Property insurance policies typically exclude nonaccidental losses, losses controllable by the insured, extra-hazardous perils, catastrophic losses, and property covered in other policies.
Unanswered
82% got this correct
204)
An indirect loss is which of the following?
The cause of a direct loss
A type of loss that results from a direct loss
An insignificant property loss
Not a type of property loss
FeedbackB is correct. An indirect loss is one that comes as a result, or consequence, of the original loss.
Unanswered
88% got this correct
205) Consuela’s Homeowners policy has an 80% Coinsurance condition. Her home’s value is $125,000. What is the minimum amount of coverage she must carry to avoid a coinsurance penalty for partial losses?
$125,000
$100,000
$80,000
$75,000
FeedbackB is correct. A Coinsurance condition requires an insured to carry a certain amount of insurance, which is expressed as a percentage of the insured property’s value, in order to avoid a coinsurance penalty for partial losses. In this case, Consuela must carry insurance at least equal to 80% of the home’s value, or $100,000, in order to satisfy the requirement.
Unanswered
58% got this correct
206)
According to the terms of the Mortgage condition, which of the following does not apply to the rights and duties of the mortgagee?
The mortgagee might have to pay the premium if the insured doesn't.
The mortgagee can file a proof of loss when the insured fails to do so to protect its rights under the policy.
The mortgagee might have coverage under the policy even if something the insured does causes a claim to be denied.
The mortgagee has no insurable interest in the covered property.
FeedbackD is correct. Lenders or mortgagees do have an insurable interest in property. The Mortgage condition specifies the rights and duties of the mortgagee under the policy. For instance, if an insured fails to file a proof of loss, the mortgagee must do so after being notified by the insurer to protect its rights under the policy. In addition, the mortgagee might be expected to pay the premium if the insured fails to do so. The policy might provide that if some condition caused by the insured would result in the insurer denying coverage for a loss it would otherwise have covered, the mortgagee might still have protection under the policy.
Unanswered
80% got this correct
207)
Jake has two insurance policies on his house. They are issued by different companies, but they are otherwise identical. The term for this is
Concurrent causation
Fraud
Concurrent coverage
Double indemnity
FeedbackC is correct. Concurrent coverage refers to two policies that offer the same coverage against the same perils. Concurrent causation is when two perils contribute to the same loss. Having concurrent coverage is not fraudulent. Double indemnity is a provision of life insurance policies that pays an extra benefit if death results from an accident rather than an illness.
Unanswered
79% got this correct
208)
Under the Appraisal condition, the insured and the insurance company each chooses an appraiser. If the appraisers do not agree, the dispute is submitted to a third individual agreed upon jointly by the insured and the insurance company. That third party is called the
Attorney-in-fact
Judge
Super-appraiser
Umpire
FeedbackD is correct. The umpire is selected jointly by the insured and the insurance company and settles the dispute if the appraisers selected by the insured and the insurance company do not agree on the value of the loss.
Unanswered
93% got this correct
209)
Failure to use the care that is required to protect others from the unreasonable chance of harm is called what?
Proximate cause
Negligence
A criminal act
An intervening cause
FeedbackB is correct. Negligence is the lack of reasonable care that is required to protect others from the unreasonable chance of harm.
Unanswered
58% got this correct
210)
All of the following must be present to establish negligence except which one?
Proximate cause
Legal duty owed and breach of duty
Damages
Willful action
FeedbackD is correct. Negligence is the lack of reasonable care that is required to protect others from the unreasonable chance of harm. The factors used to establish negligence are legal duty owed, breach of legal duty owed, proximate cause, and damages.
Unanswered
65% got this correct
211)
An action that, in a natural and continuous sequence, produces a loss is the
Hazard.
Proximate cause.
Appraisal point.
Exposure.
FeedbackB is correct. Proximate cause is one of the elements required to establish a charge of negligence. It is an action that, in a natural and continuous sequence, produces a loss.
Unanswered
68% got this correct
212)
Liability that is imposed as a matter of law without regard to negligence is called what?
Vicarious liability
Absolute liability
Breach liability
Proximate liability
FeedbackB is correct. Absolute liability is imposed by law on those participating in certain activities that are considered to be especially hazardous. Individuals involved in such operations can be held liable for the damages of another even though the individual was not negligent.
Unanswered
77% got this correct
213)
Liability that an insured incurs because of the actions of others, such as employees, is called what?
Vicarious liability
Absolute liability
Breach liability
Proximate liability
FeedbackA is correct. Vicarious liability is liability that a person or business incurs because of the actions of others, such as family members or employees
Unanswered
85% got this correct
214)
Theresa, a spectator at a baseball game, is injured when an errant ball hits her in the head. She sues the stadium owners for negligence. Which one of the following defenses against negligence would the owners probably use?
Assumption of risk
Comparative negligence
Contributory negligence
Statute of limitations
FeedbackA is correct. Assumption of risk applies when a person knowingly exposes himself or herself to danger or injury. When a person assumes this risk, he or she might be prevented from recovering from a negligent party. This doctrine is frequently associated with injuries incurred by spectators at sporting events.
Unanswered
73% got this correct
215)
Which one of the following illustrates the concept of contributory negligence?. Martin buys a tanning bed for his home. Although he follows the manufacturer’s directions to the letter, he is severely burned after spending five minutes in the bed.
. Martin buys a tanning bed for his home. Although he follows the manufacturer's directions to the letter, he is severely burned after spending five minutes in the bed.
Jane goes to a hair salon to have her hair colored. The hairdresser mixes the color improperly and dyes Jane's hair purple.
Rosa is injured when her car is struck from behind while she is stopped at a red light.
Ben turns a corner too fast and strikes Reba's car, which was illegally parked in a fire lane.
FeedbackD is correct. In this case, both parties contributed to the accidentBen by driving too fast and Reba by illegally parking her car. In the other examples, the injured party’s own negligence did not contribute to the loss.
Unanswered
51% got this correct
216)
Lee sues Pat for injuries sustained in an auto accident. During the trial, it is determined that Lee’s negligence contributed to the loss. Under comparative negligence laws, what can Lee recover?
Lee cannot recover any damages from Pat.
Lee's damages will be reduced to the extent of her own liability for the loss.
Lee can recover the full amount of the loss from Pat.
Lee might only recover 50% of the damages she claims regardless of her degree of negligence.
FeedbackB is correct. Under a comparative negligence law, a finding of liability can be made even when both parties have contributed to the loss, with an award based on the extent of each party’s negligence.
Unanswered
77% got this correct
217)
As a result of a successful lawsuit, Agnes receives $10,000 to cover her specific losses, an additional $40,000 for pain and suffering, and because the defendant was considered to have acted with willful disregard for others’ safety, Agnes was awarded an additional $75,000. This additional $75,000 award can best be described as what type of damages?
General damages
Compensatory damages
Liability damages
Punitive damages
FeedbackD is correct. All of the described damages are for liability. General damages are a type of compensatory damages in which the injured party is compensated for his or her loss. Punitive damages are awarded over and above compensatory damages as a way of punishing the wrongdoer
Unanswered
73% got this correct
218)
George accidentally hits Elaine’s car with his car. The accident causes $3,000 of damage to Elaine’s car, plus Elaine is injured and her medical bills come to $1,000. George’s car also sustains $500 damage in the accident, but George isn’t hurt. What will George’s auto liability coverage pay for?
The damage to Elaine's car only
The damage to Elaine's car and Elaine's medical bills only
The damage to George's and Elaine's cars only
The damage to George's and Elaine's cars, and Elaine's medical bills
FeedbackB is correct. Liability coverage does not pay for property or bodily injury to an insuredone’s own property and medical insurance is needed for that
Unanswered
79% got this correct
219)
Which of the following could not be covered under a Dwelling policy?
A mobile home that is not permanently located
A single family home that is under construction
A three-unit townhouse
A home that is rented to another person
FeedbackA is correct. To be eligible, a mobile home must be permanently located.
Unanswered
54% got this correct
220)
Which of the following coverage provisions would not be found in an unendorsed Dwelling policy form?
Dwelling
Other structures
Liability
Personal property
FeedbackC is correct. A Dwelling policy automatically includes coverage provisions for the dwelling, other structures, personal property, and fair rental value. Liability and medical payments coverage may only be added by endorsement.
Unanswered
83% got this correct
221)
Which of these items of personal property would be covered under a Dwelling policy when Coverage C is written?
A motorcycle
A pet poodle
A pool table
A sailboat
FeedbackC is correct. Animals, motor vehicles, and most types of boats are excluded under Coverage C.
Unanswered
59% got this correct
222)
The Special Dwelling policy form provides which of the following?
Basic coverage for the dwelling and broad coverage for personal property
Broad coverage for the dwelling and basic coverage for personal property
Open peril coverage for the dwelling and broad coverage for personal property
Open peril coverage for both the dwelling and personal property
FeedbackC is correct. The Special form provides Broad form named peril coverage for personal property and open peril coverage for the dwelling and other structures.
Unanswered
63% got this correct
223)
Which of the following Other Coverages is not included in the Basic Dwelling coverage form?
Fire department service charge
Collapse
Debris removal
Reasonable repairs
FeedbackB is correct. Coverage for collapse is provided by the Broad and Special forms, but not by the Basic form.
Unanswered
62% got this correct
224)
Under which of the Dwelling policy forms may the insured be reimbursed for the replacement cost when the dwelling is destroyed?
All Dwelling forms
The Basic form only
The Broad and Special forms
The Special form only
FeedbackC is correct. The Broad and Special forms will pay for losses to the dwelling and other structures on a replacement cost basis if the buildings are insured for at least 80% of their replacement value. Under the Basic form, losses are paid on an actual cash value basis.
Unanswered
53% got this correct
225)
An insured has a DP-3 covering a home that has a replacement value of $100,000. The insured carries $60,000 of insurance. Following a loss, the determined is made that it would cost $12,000 to replace the damaged portion of the home. How much could the insured collect, assuming the ACV of the loss is $6,000?
$12,000
$9,000
$6,000
Nothing
FeedbackB is correct. To qualify for replacement cost coverage, the insured must carry insurance equal to 80% of the replacement cost of the building. Because the insured does not carry enough insurance, the loss will be paid at proportional replacement cost or ACV, whichever is larger. In this case, proportional replacement cost ($9,000) is larger than ACV ($6,000).
Unanswered
68% got this correct
226)
Which of the following would not be covered under Coverage A or Coverage B of a Dwelling policy?
A storage shed 100 feet in back of the insured's dwelling where she keeps various yard tools
A detached garage that has been altered to house a manufacturing operation
A stack of lumber placed at the edge of the insured's property that will be used to construct a storage shed
A water heater located in the insured's attached garage
FeedbackB is correct. A detached garage that is used for commercial, manufacturing, or farming purposes is not covered under a Dwelling policy.
Unanswered
49% got this correct
227)
Which of the following losses would not be excluded under a Basic Dwelling policy form?
While the insured is on vacation, a power failure that occurs away from the insured's home causes the electricity to go off in the insured's neighborhood for 10 hours. As a result, large amounts of food stored in a freezer are ruined.
When Languid Lake overflows, the first floor of the insured's home is flooded, causing extensive damage.
Following a fire, the insured suffers an additional loss because a city ordinance requires that he replace his frame dwelling with more expensive fire-resistant materials.
An earthquake causes a fire that destroys the insured's home.
FeedbackD is correct. Loss by fire that results from an earthquake is covered by all Dwelling forms.
Unanswered
90% got this correct
228) The Johnsons’ home is covered by a Special Dwelling policy. When a fire damages the home, the family is forced to stay at a motel for a month while repairs are made. What coverage might reimburse them for these expenses?
Dwelling coverage
Additional living expenses
Personal property coverage
Fair rental value coverage
FeedbackB is correct. Both the Broad and Special forms make coverage available for Additional Living Expense. This coverage pays for additional living expenses the insured incurs after a covered loss, including reasonable motel, dining, laundry, and transportation expenses. These expenses are covered for the time needed to repair or replace the damaged property or become settled elsewhere in permanent quarters.
Unanswered
70% got this correct
229)
Myrtle has a Dwelling policy with Broad Theft coverage applicable both on and off her premises. Which of the following theft losses would be covered?
A $400 handgun taken from a bureau in her home
Theft of personal property owned by a boarder who rents a room in Myrtle's home
Two credit cards taken from her desk in her home
A tape player removed from the dashboard of her car that was parked in her garage
FeedbackA is correct. Credit cards, motor vehicles and their equipment, and property owned by boarders or roomers are all excluded under the Broad Theft Coverage endorsement. However, up to $2,000 of coverage is available to cover theft of firearms.
Unanswered
74% got this correct
230)
A homeowner who wants the maximum protection for her home and personal property should purchase the
HO-4.
HO-2.
HO-3.
HO-5.
FeedbackD is correct. The HO-5, the Comprehensive form, provides open peril coverage for dwellings, other structures, and personal property.
Unanswered
81% got this correct
231)
An individual lives in an apartment. Which homeowners form should he purchase to cover his personal property?
HO-4
HO-6
HO-8
HO-3
FeedbackA is correct. The HO-4 is designed for tenants. It provides broad coverage for personal property and no coverage for the dwelling.
Unanswered
54% got this correct
232)
The Additional Coverage for collapse is included in which homeowners form(s)?
All forms
HO-4 only
HO-2 and HO-3
All forms except the HO-8
FeedbackD is correct. The Collapse additional coverage is included in all of the homeowners forms except the HO-8.
Unanswered
48% got this correct
233) Under a homeowners policy, which of the following classes of personal property have special limits for theft losses, but not for other types of losses?
Money
Firearms (Missed)
Silverware (Missed)
Jewelry (Missed)
FeedbackB, C, and D are correct. The following classes of property have special limits for theft losses, but not for other types of losses: jewelry, watches, furs, and precious and semiprecious stones; silverware, goldware, or pewterware; and firearms. The limit for the loss of money is $200 per occurrence regardless of the cause of loss.
Unanswered
79% got this correct
234)
Ann’s auto was damaged when it was struck by another car whose driver ran a stop sign. Which part of Ann’s Personal Auto policy will cover the damage to her car?
Collision Coverage of Part DCoverage for Damage to Your Auto
Other Than Collision Coverage of Part DCoverage for Damage to Your Auto
Part ALiability Coverage
Part CUninsured Motorists Coverage
FeedbackA is correct. This would be considered a collision loss under Part D of the Personal Auto policy because it involves the impact of an auto covered by the policy with another vehicle. Part ALiability coverage would not cover damage to the insured’s own car. Part CUninsured Motorists coverage applies only to bodily injury in most states.
Unanswered
79% got this correct
235)
Which of the following would be eligible for a Personal Auto policy?
McGuffin's Linen Service Company
Nancy Hardwicke (Missed)
John and Suzette Oglesby, a married couple who live together (Missed)
Don Wilson's 16-wheel big rig, which he owns
FeedbackB and C are correct. Choice A is not correct because the auto is owned by a business. Choice D is not correct because a PAP can only insure four-wheel vehicles.
Unanswered
59% got this correct
236)
Which of the following autos owned by the named insured could be covered under a Personal Auto policy?
Pickup truck used on the insured's farm (Missed)
Station wagon (Missed)
Chevrolet sedan (Missed)
Panel truck used to make deliveries for the insured's small manufacturing operation
FeedbackA, B, and C are correct. Choice D is not correct because the auto is used for business purposes.
Unanswered
80% got this correct
237)
If the named insured acquires a new car that does not replace a previously insured auto, what must the insured do to obtain liability coverage for the auto under her Personal Auto policy from the day it is acquired?
Nothingcoverage is automatic
Submit a new policy application
Notify the company of the new car within 14 days of the purchase
Notify the company immediately; no coverage applies until the company is notified
FeedbackC is correct. The Personal Auto policy considers newly acquired cars to be covered autos. How coverage applies depends on several factors, such as the policy coverage, whether the car is a replacement auto, and when the insurer is notified about the new car.
Unanswered
68% got this correct
238)
Which of the following could be covered under the Liability section of a named insured’s Personal Auto policy?
Injuries a named insured receives in a car accident
Injuries to a person struck by the named insured's auto
Injuries to a member of the named insured's family who was a passenger in the named insured's car when it overturned
Damage to personal property being transported when the car was involved in a collision
FeedbackB is correct. Part ALiability coverage covers damages for bodily injury or property damage that an insured becomes legally responsible for because of an auto accident. Injuries to the named insured or his or her family members would be covered under Part BMedical Payments coverage. Loss of personal property of an insured is not a matter of legal liability, and is not covered.
Unanswered
77% got this correct
239)
Which of the following individuals have Liability coverage under Mr. Stump’s Personal Auto policy?
Edna, Mr. Stump's wife, who resides with him (Missed)
Mr. Stump's 16-year-old son, who lives at home (Missed)
A neighbor who borrows Stump's car with Stump's permission (Missed)
A group of teenagers who steal Mr. Stump's car from a parking lot and take it for a joy ride
FeedbackA, B, and C are correct. Under Part A, the named insured, his or her spouse, or any family member is insured for the ownership, maintenance, or use of any auto or trailer. A family member is any person related to the named insured who is a resident of the insured’s household. An individual who uses a vehicle without permission is not covered under Part A, unless that person is a family member using a covered auto owned by the insured.
Unanswered
59% got this correct
240)
Medical Payments coverage provides protection for all of the following except which one?
The insured
The insured's family
Passengers in the insured's vehicle
Occupants of a vehicle that is struck by the insured's vehicle
FeedbackD is correct. Medical Payments coverage provides protection for the named insured, family members, and passengers in the named insured’s auto for injuries received in an accident, regardless of who was at fault. It is not a form of Liability coverage for injuries sustained by passengers in another auto involved in an accident with the insured.
Unanswered
38% got this correct
241)
Which of the following could be considered an uninsured motorist?
Motorist who has less insurance than required by the state's financial responsibility law
Driver whose insurance company is insolvent
Motorist who has enough insurance to meet the state's financial responsibility law, but not enough to fully reimburse the insured for his or her injuries (Missed)
Unidentified hit-and-run driver (Missed)
FeedbackA, B, and D are correct. Choice C is an example of an underinsured motorist.
Unanswered
52% got this correct
242)
Which of the following losses could be paid under Uninsured Motorists coverage? (Assume that there are no endorsements attached to the policy.)
Tabb, the insured, drives the wrong way down a one-way street and collides with another car. Tabb is seriously injured. The driver of the other car has no Liability insurance.
Barb, the insured, is hit by a drunk driver who is uninsured. She is not injured, but her car is totaled.
Leslie, the insured, is injured when she is struck by a car that runs a red light. The driver has no Liability insurance.
Bernard, the insured, is on his way to work when his vehicle is rear-ended by a car that was following too closely. Bernard suffers a back injury. The driver of the other car carries the minimum amount of insurance required in the state.
FeedbackC is correct. Choice A is not correct because the uninsured driver was not liable for the accident. Choice B is not correct because the loss does not involve bodily injury. Choice D is not correct because the driver who caused the accident is not an uninsured motorist.
Unanswered
72% got this correct
243)
Which of the following losses would be paid under the Other Than Collision coverage of the Personal Auto policy?
A radiator develops a leak after the car has 100,000 miles on it.
The insured's car is stolen and never recovered.
The insured's auto skids on icy pavement and flips over.
The insured's auto is damaged when it is hit by another car that runs a red light.
FeedbackB is correct. Choice A is not correct because mechanical breakdown is excluded by the policy. Choice C and Choice D are not correct because they are collision losses.
Unanswered
78% got this correct
244)
An Assigned Risk Plan covers which of the following?
Insureds who are uninsurable in the standard market
Insureds who do not own their own autos
Insurance companies for losses involving government-owned automobiles
Insureds who cannot afford standard rates
FeedbackA is correct. Assigned Risk Plans insure motorists with poor driving records who are unacceptable risks for most insurance companies.
Unanswered
32% got this correct
245) Which of the following losses would be excluded under Part D of a Personal Auto policy?
When the insured fails to pay his taxes, the IRS confiscates and sells his car. (Missed)
The insured's car is stolen on a cold winter day. The thieves run down the battery, and then abandon the car in a field. Before the car is discovered, the battery freezes and is ruined.
The insured's cell phone that she sometimes carries in her car is damaged in a collision. (Missed)
Custom carpeting that the named insured added to his van is damaged in a flood. (Missed)
FeedbackA, C, and D are correct. Damage due to freezing is normally excluded under Part D. However, an exception is made when the damage results from the total theft of the auto.
Unanswered
50% got this correct
246)
Mary’s Liability coverage limits are 50/100/50. A driver who was injured in an accident caused by Mary obtains a $75,000 judgment against her. Postjudgment interest of $5,000 accrues between the time the judgment was entered by the court and the time the insurer pays. What is the total amount Mary’s insurance company will pay for this loss?
$50,000
$55,000
$75,000
$80,000
FeedbackB is correct. The policy will pay up to its liability limit of $50,000 plus the postjudgment interest of $5,000.
Unanswered
80% got this correct
247)
Vanessa’s Liability coverage has split limits of 100/300/50. How much coverage does Vanessa have for property damage liability?
$5,000
$50,000
$100,000
$300,000
FeedbackB is correct. The last figure is the Property Damage limit.
Unanswered
60% got this correct
248)
What is the standard deductible under the regular program of the National Flood Insurance Program?
$1,000
$500
$250
$100
FeedbackB is correct. The standard deductible is $500 under the regular program and $1,000 under the emergency program. Higher deductibles are available.
Unanswered
73% got this correct
249)
Who administers the NFIP?
State insurance department
Federal government
Private insurance companies
The National Association of Insurance Commissioners
FeedbackB is correct. The federal government created the NFIP to make Flood insurance available to eligible communities through federal subsidization. It is managed by the Federal Insurance Administration.
Unanswered
53% got this correct
250)
What is the maximum amount of coverage that can be purchased for a single-family home under the emergency Flood insurance program?
$35,000 for buildings and $10,000 for contents
$250,000 for buildings and $100,000 for contents
$100,000 for buildings; contents coverage is not available under the emergency program
$100,000 for contents; building coverage is not available under the emergency program
FeedbackA is correct. When the regular program goes into effect, additional coverage can be purchased: up to $250,000 for building coverage and up to $100,000 for contents.
Unanswered
49% got this correct
251)
Coverage for earthquake losses is which of the following?
Included in an unendorsed Dwelling or homeowners policy
Provided by the federal government
Available by adding an endorsement to the Dwelling or homeowners policy (Missed)
Available by purchasing a separate policy (Missed)
FeedbackC and D are correct. Dwelling and homeowners policies do not cover the earthquake peril. This coverage is provided by adding an endorsement to the Dwelling or homeowners policy or buying a separate policy.
Incorrect
31% got this correct
252)
Mobile home policies include which of the following?
Include Liability coverage that is similar to Section II of the homeowners policy (Missed)
Might include collision coverage (Missed)
Cover the mobile home unit, but not its contents
Do not cover additional living expenses (Your Answer)
FeedbackA and B are correct. Mobile home policies include coverage for contents and additional living expenses.