WebCE Life and Health Insurance Final Exam Latest Questions and Answers (2024 / 2025) (Verified by Expert)

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Webce Life and Health Insurance Final Exam
Questions and Answers
(Verified Answers)
1.Rory’s parents offered to buy him a new car to take to college, but Rory
turned them down because he was afraid the car would be stolen or
damaged if he parked it on campus. In deciding not to own a car, what risk
management technique did Rory employ
ANS
: risk avoidance
2.Which of the following is most likely to be an insurable risk
ANS
: The chance that a fire will destroy a building
3.Theodore pays an annual premium to the insurance company that
covers many of the risks associated with Theodore’s business. What risk
manage- ment technique is Theodore using
ANS
: risk transfer

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4.The possibility that a fire will damage Fay’s store building is a pure
risk. Why
ANS
: It involves only the chance of a loss.
5.Esther, an underwriter for QRS Insurance Company, is not able to
provide the coverage requested in Benny’s insurance application. Esther
can reject the application, or she can
ANS: Make a counteroffer
6.When applying for a businessowners insurance policy, Brandy did not
mention that hazardous and illegal activity that goes on in the backroom of
her shop because she realized no insurer that knew about it would insure
her business. What is Brandy’s failure to disclose this activity considered
ANS
: Con- cealment
7.Haze’s store has an automatic sprinkler system that will be activated by a
fire. In exchange for the reduced fire insurance premium, she signs a document stating that the automatic sprinkler system will always be in
operating condition. What is this statement

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ANS
: A Warranty
8.Tom’s insurance company wanted to deny Tom’s claim based on an exclusion in Tom’s policy, but Tom and his lawyer convinced the court that the
exclusion was ambiguous and did not clearly apply to Tom’s case. Because
the policy is a contract of adhesion, what will the court do
ANS
: Rule in Tom’s favor
9.Evangeline bought he home with 20 percent down payment and mortgagefrom Trevor Bank. She had not yet paid off the mortgage when the home wasbadly damaged in an explosion. Who had an insurable interest in the homeat the time of the loss
ANS
: both Evangeline and Trevor Bank
10.For an insurer to pay a property or casualty claim, when must the
policy- holder have an insurable interest in the insured risk
ANS
: At the time of the loss

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11.In the context of a property or casualty insurance policy, which of
the following is considered to be personal property
ANS
: Gas Grille
12.An owner of a property or casualty insurance policy is required to have
an insurable interest in the insured risk at the time of the.
ANS: Loss of the insured property or occurrence of the insured event
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Rory’s parents offered to buy him a new car to take to college, but Rory turned them down because he was afraid the car would be stolen or damaged if he parked it on campus. In deciding not to own a car, what risk management technique did Rory employ?
risk avoidance

Which of the following is most likely to be an insurable risk?
The chance that a fire will destroy a building

Theodore pays an annual premium to the insurance company that covers many of the risks associated with Theodore’s business. What risk management technique is Theodore using?
risk transfer

The possibility that a fire will damage Fay’s store building is a pure risk. Why?
It involves only the chance of a loss.

Esther, an underwriter for QRS Insurance Company, is not able to provide the coverage requested in Benny’s insurance application. Esther can reject the application, or she can
Make a counteroffer

When applying for a businessowners insurance policy, Brandy did not mention that hazardous and illegal activity that goes on in the backroom of her shop because she realized no insurer that knew about it would insure her business. What is Brandy’s failure to disclose this activity considered?
Concealment

Haze’s store has an automatic sprinkler system that will be activated by a fire. In exchange for the reduced fire insurance premium, she signs a document stating that the automatic sprinkler system will always be in operating condition. What is this statement?
A Warranty

Tom’s insurance company wanted to deny Tom’s claim based on an exclusion in Tom’s policy, but Tom and his lawyer convinced the court that the exclusion was ambiguous and did not clearly apply to Tom’s case. Because the policy is a contract of adhesion, what will the court do?
Rule in Tom’s favor

Evangeline bought he home with 20 percent down payment and mortgage from Trevor Bank. She had not yet paid off the mortgage when the home was badly damaged in an explosion. Who had an insurable interest in the home at the time of the loss?
both Evangeline and Trevor Bank

For an insurer to pay a property or casualty claim, when must the policyholder have an insurable interest in the insured risk?
At the time of the loss

In the context of a property or casualty insurance policy, which of the following is considered to be personal property?
Gas Grille

An owner of a property or casualty insurance policy is required to have an insurable interest in the insured risk at the time of the.
Loss of the insured property or occurrence of the insured event

The building and personal property used in Greg’s business are covered by an open perils property insurance policy, but he is concerned that the policy excludes coverage for the flood and earthquake losses. What might Greg be able to purchase to obtain flood and earthquake coverage?
difference-in-conditions policy

Elias’s store is covered by a property insurance policy that provides named perils coverage. When Elias enters the store on Monday morning, he discovers that much of the merchandise was damaged over the weekend, and he submits a property insurance claim. Which of the following statements correctly describes the burden of proof with respect to this claim?
Elias has the burden of proving that the damage was caused by a covered peril

While Connie is out of town on an extended vacation, a group of teenagers break into her house, throw a beer party, and damage the interior. Connie’s resulting property insurance claim will be covered if her policy covers what perils?
vandalism or malicious mischief

Elaine’s property insurance policy lists and describes eight covered causes of loss. These causes of loss may also be referred to as:
Perils

Which one of the following legally qualifies as an attractive nuisance?
An unfenced swimming pool in Kris’s backyard is used by neighborhood children while she is at work

Rosalie was attacked by her neighbor’s dog. As a result, she was hospitalized for ten days and spent another painful month at home recovering from her injuries. In addition to paying her an amount as compensation for her pain and suffering, the neighbor’s insurer was required to pay for her medical expenses and lost wages. What is the money paid for Rosalie’s lost wages considered?
special damages

Yesenia was seriously injured when Elbert’s and Yesenia’s cars collided at an intersection. A court determined that the accident was 60 percent Yesenia’s fault, so Yesenia was entitled to recover only 40 percent of her damages from Elbert. The defense on which this court’s determination was based involves:
comparative negligence

Harding Paint Store mixed a gallon of paint with custom color Meghan requested. However, the store clerk failed to tighten the lid on the paint can, which came open while Megan was driving home with the can in her car. Harding was required to pay for the expensive damage to Megan’s car that resulted from the paint spill under:
tort law

Coworkers who live near her residence ride to work in Felicia’s car and help pay for her gas and other expenses. An exclusion in Felicia’s auto insurance policy says it does not cover a vehicle while it is carrying persons for a fee but then seems to contradict that statement by saying the exclusion does not apply to a share-the-expense carpool. What is the apparent contradiction?
an exception to an exclusion

Victoria’s full name appears on the declarations page of her insurance policy where she is the only person identified as a named insured. Within the body of the policy, what word or phrase refers specifically to Victoria?
You

Lucas’s commercial property policy, like many other policies that cover buildings, contains an “Ordinance or Law” exclusion. What does this exclusion most likely deal with?
extra expenses required to comply with current building codes when repairing damaged property

Many endorsements are attached to Bettie’s policy, If she examines them closely, she will probably find one or more endorsements that do all the following Except.
Cancel the policy

Joan owns the car that struck and injured a pedestrian, but she insists that the car was being driven at the time by her neighbor Kurt who took the car without her permission. An exclusion in Joan’s policy precludes coverage for a driver that does not have permission to drive her car. The insurer’s investigation uncovers evidence that supports Joan’s position. Therefore, what will the insurer do?
defend Joan against the pedestrian’s claim at the insurer’s expense

Ralph’s car has been damaged beyond repair, and Ralph’s insurer pays him what the car was worth just before the accident. The insurer then takes possession of the car. What is the car considered in technical terms?
Salvage

When Chauncey lent Latasha money to buy a car, he insisted that he be listed as a loss payee on Latasha’s auto insurance policy. What does the loss payable clause in Latasha’s policy entitle Chauncey to?
to be included in any claims payment

Tori’s young son drives his motorized toy car into a neighbor’s child and knocks her down. Although Tori’s homeowners insurance policy specifically excludes liability coverage for motorized vehicles, she learns that one of the recent changes her insurer introduced adds coverage for “toy cars.” Tori’s renewal premium will not change because other changes will reduce her coverage. Her current policy’s liberalization clause provides that
Tori is not entitled to benefit from the latest policy edition because it includes both broadenings and restrictions in coverage

After receiving Shelton’s claim that a car his policy covers has been stolen, his insurance policy obligates his insurer to do all the following EXCEPT:
Pay the claim

Because he was watching his GPS instead of watching his driving, Gerry’s car rear-ended the vehicle in front of him. It will cost $15,000 to repair that vehicle, and the two injured occupants of that vehicle are awarded damages in the amounts of $30,000 and $20,000, respectively. No-fault laws do not apply. Jerry’s auto policy has combined single limits of $50,000. How much will his insurer pay?
$50,000

Amie thought she was correctly following the cooking instructions when she put a frozen turkey into the turkey fryer, but the resulting fire destroyed her neighbor’s wooden deck. After paying for the deck, the neighbor’s insurer attempts to recover from Amie by exercising its right of:
Subrogation

Ivy’s personal auto policy provides primary liability coverage with a $100,000 limit, while her personal umbrella policy provides excess coverage with a $1 million limit. If Ivy must pay $55,000 in damages because she is responsible for an auto accident,
her personal auto policy will pay $55,000.

When obtaining information about a claim, an adjuster is interested in.
collecting information about the claim that is needed to resolve it

To avoid the appearance of practicing law, a claims adjuster’s communications with an insured should always be.
limited to the wording of the policy

An adjuster typically completes his or her initial investigation of a claim within how many days of being assigned the claim?
15

During the first six months following the assignment of a claim, how often is an adjuster required to provide claim status reports?
At the 30th, 90th, and 180th day after assignment

Which of the following is a requirement to operate as an insurance agency in Florida?
obtaining a license or registration from the state

Sasha, Kendall, Adam, and Julio are licensed agents in Florida. The Department of Financial Services would NOT be able to suspend or revoke which agent’s license for engaging in the following acts?
Sasha, who sold insurance policies to family members and friends this year

Adjusters, agents, and insurers must maintain records of their insurance transactions for at least how long?
five years

Jeff is a licensed insurance agent in both New York and Florida. He is was charged with embezzlement in New York, and pleaded guilty to the charge on March 1. He must notify the Florida Department of Financial Services of the charge within how many days?
30

Octavio’s home and personal property are insured under a Dwelling Property 3—Special Form (DP 00 01) or DP 3 dwelling policy. Which one of the following losses would this policy cover?
A ceiling is damaged by water when a valve inside the upstairs toilet’s tank breaks and fails to shut off, causing the tank to overflow.

Angelina loves the little cottage in the woods where she and her cat reside but finds that she cannot buy a homeowners insurance policy on a building that can be replaced for less than $25,000. Angelina can probably get the coverage she desires by buying what kind of policy?
a dwelling policy

Cherie rents a hotel room because the temperatures in Cherie’s all-electric home drop below freezing during an ice storm that downed power lines in the area causing a massive power outage. Because Cherie’s Dwelling Property 3—Special Form (DP 00 01) or DP 3 policy covers additional living expenses, she makes a claim and then learns that
the power failure exclusion precludes coverage for power failure originating away from her residence premises

Hannah’s off-campus home and its contents are insured under a dwelling policy that provides no theft coverage. If Hannah has the broad theft coverage endorsement added to her current policy, she still will not have coverage if
her sorority sisters plot to remove the furniture from her house

Every dwelling policy must include coverage against what peril?
Lightning

What coverage that is automatically included in dwelling forms DP 2 and DP 3 is not also printed in the DP 1 basic form?
Coverage E

Although his wife wanted to save money and buy a DP 1 basic dwelling policy, Jerrold decided to purchase a DP 2 policy on his home and his personal property. Which of the following causes of loss does his DP 2 cover that would not also be covered if he had purchased a DP 1?
weight of ice, snow, or sleet

To reduce her insurance costs, Britney wants to replace her HO 3 homeowners policy with a standard dwelling policy. However, she reconsiders when she realizes that the premium for the policy she is considering does not include which of the following?
liability and theft coverage

Because she has sold her house, Josefa wants to stop the coverage on her homeowners insurance policy nine months before the end of the policy term and get a refund of the unused premium. What action must she take to end her coverage?
Cancellation

What does Section II of an Insurance Services Office, Inc. (ISO), homeowners policy provide?
liability coverages

Bernard’s homeowners insurance policy makes several references to an “insured location.” Which one of the following locations would not qualify as an “insured location”?
Bernard’s office in a downtown building owned by his employer

Because Jasper’s homeowners insurance policy includes sublimits or limited coverage on certain types of property he owns, Jasper buys a scheduled personal property endorsement under which he can specifically cover all the following items EXCEPT:
his gun collection

Dixie has been told that the business personal property coverage of her building and personal property commercial property form covers almost everything in her barbershop. However, what does it not cover?
cash in the cash register

Production at Wilfred’s manufacturing plant was interrupted by a paint booth explosion. Wilfred paid some employees overtime to repair the damage and get the plant back into operation as soon as possible. The overtime pay costs less than the income he would have lost without the overtime work. Wilfred’s business income insurance will cover the overtime pay if he had
either the business income and extra expense coverage form or the business income coverage form without extra expense

Graham is an architect. Various coverage extensions in Graham’s building and personal property coverage form cover property in Graham’s office that the form might not otherwise cover. Which of the following property items is not the subject of a coverage extension?
Graham’s dog Fido

Haley’s new law office is located in a commercial condominium unit she purchased. Which of the following forms would be appropriate for insuring Haley’s property exposures?
condominium commercial unit-owners coverage form

Although she had been told that she was getting the broadest possible property coverage, Earlene is disappointed to discover that the special causes of loss form attached to a building and personal property coverage form has exclusions for all the following perils EXCEPT:
Theft

Which of the following forms is not an essential part of a complete commercial property policy that uses ISO forms?
commercial general liability coverage form

Saul wants to know what dollar limits apply to the property at each of the locations that are covered by his commercial property policy. Where can Saul find this information?
the policy’s declarations page

Gerald’s ISO commercial property policy might include any of the following causes of loss forms EXCEPT the:
comprehensive causes of loss form

In an Insurance Services Office, Inc. (ISO), business owners policy, where do the definitions appear?
at the end of the property section and at the end of the liability section

Which one of the following provisions is not found in the common policy conditions section of the Insurance Services Office, Inc. (ISO), business owners coverage form?
property loss settlement

A business owners policy combines coverages that might otherwise be written on all the following types of forms EXCEPT:
workers compensation

Edith would like to insure the office building she owns under a businessowners policy (BOP). According to ISO rules, Edith’s building is eligible for coverage under a BOP if it
is five stories tall with 80,000 total square feet in area

According to Insurance Services Office, Inc. (ISO), rules, which one of the following businesses would be eligible for coverage under a businessowners policy (BOP)?
Wilbur’s 24/7 Convenience Store

Only certain types of businesses are eligible for a businessowners policy (BOP). According to Insurance Services Office, Inc. (ISO) rules, BOP eligibility is based on the business’s:
size and type

Laurie’s businessowners insurance application is a little short on details. It merely indicates that Laurie wants coverage on her storefront business. Laurie’s storefront business is probably eligible for coverage unless it is a(n):
arcade with pinball machines and video games

According to the Insurance Services Office, Inc. (ISO), businessowners policy (BOP) eligibility rules, what type of business is ineligible for a BOP regardless of its size?
a parking garage

The building housing Kaitlin’s Antique Shop is as old as her merchandise, and she is not sure it will stand much longer. The building is insured under a businessowners policy (BOP) that includes additional coverage for collapse that will apply if the building
falls down because of an insured peril

Lara’s businessowners policy (BOP) shows a $500,000 limit on the covered building. What is the maximum amount she can recover for complete destruction of the building by a covered peril when the policy has been in force exactly six months?
$520,000

Alex’s Diner is covered under an Insurance Services Office, Inc. (ISO), businessowners policy (BOP) with no endorsements. The policy’s declarations page includes limits for the building coverage and for the business personal property coverage. What kind of perils coverage does Alex’s policy provide?
open perils coverage on the building and personal property

Clare, a convenience store owner, should have been suspicious when a customer asked her to make change from a $100 bill when he bought a pack of cigarettes. Now the bank tells her the $100 bill is counterfeit. Does Clare’s businessowners policy (BOP) provide any coverage for this loss?
Yes, because the BOP provides up to $1,000 coverage for loss due to the insured having accepted counterfeit money

For four years, Randolph has bought grain in bulk and packaged it for sale in pet stores. During the third year, pet owners complained that his grain sickened their pets. Randolph then discovered that he had been using seed grain that was treated with a poison. Randolph had BOPs during each of these four years. Which BOP(s) cover(s) his liability for the resulting products liability claims?
The first three BOPs; they were in effect from the time the damage began until the time he discovered it

Dora signed Shaun’s standard contract in which she agreed to pay Shaun to clean the terra-cotta tiles in her home’s foyer. Shaun did poor work, leaving Dora’s tiles in worse shape than they were to begin with. Dora sued Shaun to recover damages for the ruined tiles. According to Shaun’s businessowners policy (BOP),
no coverage applies to the part of real property Shaun worked on if the damage was caused by his work

In the normal course of business, Therese signs many contracts. Which one of the following qualifies as an insured contract as defined in Therese’s businessowners policy (BOP)?
the lease she signed in renting the space for her business

Josephine’s novelty store is protected by a businessowners policy (BOP) that covers her building and business personal property. In what situation will the personal and advertising injury liability coverage of Josephine’s BOP cover a claim?
Josephine detains a suspected shoplifter who turns out to be innocent

After learning that an imposter had run up bills by pretending to represent Barry’s business, Barry was glad that his businessowners policy (BOP) included an identity fraud expense coverage endorsement that covered all the following related losses EXCEPT
the cost of merchandise the identity thief ordered and charged to Barry

Which of the following losses could be covered by the utility services—direct damage endorsement of the businessowners policy (BOP)?
physical damage to inventory held for sale-The utility services

Oscar rents a car for a business trip and runs into a pedestrian who was crossing the street in a marked crosswalk. Oscar’s businessowners policy (BOP) includes a hired auto and nonowned auto liability endorsement. The endorsement’s schedule indicates coverage for hired autos but not nonowned autos. The pedestrian wants Oscar to pay her medical bills. Oscar’s BOP
covers this loss because the endorsement applies to a hired auto.

Cathy’s business does not own an auto, and she never has a reason to rent one. When necessary, Cathy or one of her employees uses a personal car to run business errands. Why should Cathy’s businessowners policy (BOP) include the hired auto and nonowned auto liability endorsement?
The nonowned auto coverage will protect Cathy’s business if an employee has an accident while using his or her personal car on company business.

After a flood severely damaged Serena’s home, floodplain management ordinances required her to reconstruct it at a higher elevation. Some or all of Serena’s expenses to comply with these ordinances may be available from what kind of coverage from her National Flood Insurance Policy?
increased cost of compliance coverage

Karina owns the four homes listed below. Which one of them is not eligible for flood coverage under the NFIP’s dwelling form?
The eight

As a result of flood damage to his store, Burt was out of business for several months, lost income, and incurred additional expenses to comply with a floodplain management ordinance requiring him to relocate the store to a higher elevation. Under some circumstances, Burt’s National Flood Insurance Policy might pay or reimburse him for
the increased cost of complying with floodplain management ordinance

Although the National Flood Insurance Policy (NFIP) is a single-peril policy that covers only flood, the peril as defined includes flooding of the insured’s property and at least one other property from all the following causes EXCEPT:
a broken water main

Which one of the following is not one of the three standard flood insurance policies available from the National Flood Insurance Program?
businessowners form

Amelia owns four homes. Which one of them is eligible for flood coverage under the NFIP’s general property form?
the eight-unit apartment building she bought as an investment

Marlene owns a small store with a replacement cost value of $500,000 and contents valued at $250,000. What are the maximum limits of insurance Marlene can purchase under a standard flood policy?
$500,000 on the building and $500,000 on the contents

Ina’s home is located in a special flood hazard area (SFHA). What does this mean with respect to the area’s tendency to flood?
It has a 1 percent chance of being flooded in any given year

Following an unusually heavy rainstorm, Polly’s building was damaged when flowing mud flowed down from the hillside above her home. According to the National Flood Insurance Policy (NFIP), what did Polly experience?
mudflow, which is a type of flood

Jaime purchased a home outside the high-risk flood zone where the mortgagee would have required her to buy flood insurance. What percentage of flood losses occurs in moderate- to low-risk flood zones where Jaime’s home is located?
Twenty-five percent of flood losses occur in moderate- to low-risk flood zones.

Private insurers that sell National Flood Insurance Policies on their own “paper” participate in the:
Write-Your-Own (WYO) program

In what specific communities does the National Flood Insurance Program make flood insurance available?
participating communities

Even though his wife’s expensive cocktail ring is covered by his homeowners insurance policy, Ollie insures the ring under a separate personal articles floater because he realizes the homeowners policy provides only $1,500 of coverage if the ring is lost due to what peril?
Theft

Patrick was able to jump off of his backhoe before it plunged into a canyon. His backhoe is now damaged beyond repair and lying at the bottom of a deep canyon on somebody else’s property. Patrick tells the insurer it may have the backhoe after paying for it under his contractors’ equipment floater. What policy condition does not permit him to do this?
Abandonment

Christopher has become so proficient at playing his violin that he has been paid to perform at special events. He decides to insure the instrument under a personal articles floater. What extra-cost coverage option should he be sure to include?
the performance for pay coverage option

When taking its monthly physical inventory, Agricultural Equipment Dealer (AED) discovered that a new tractor was missing from the lot where it should have been parked. Its insurer promptly paid AED’s theft claim. AED later found the missing tractor on the sales lot at its other location. What does the “recovered property” condition in AED’s inland marine policies require AED to do?
notify the insurer

When the Brianna collided with the Tania, marine experts determined that the captain of the Brianna was at fault. What provision in the Brianna’s ocean marine policy protects the shipowner or operator against the Tania’s property damage liability claim?
running down clause, also known as a collision liability clause

When fire broke out in the ship’s forward hold, the crew flooded all cargo in that area to keep the fire from destroying the entire vessel. AC Company’s cargo was in a different hold, so it was not damaged. Yet, the company is being asked to pay for some of the cargo that was damaged because that loss is considered to be a(n):
general average

A wide variety of products owned by various shippers are transported aboard the Alejandra, an oceangoing vessel. In the language of ocean marine insurance, what are these goods aboard the Alejandra collectively referred to as?
Cargo

Twenty percent of Aubrey’s cargo was damaged when the ship transporting it encountered a violent storm in the Bermuda triangle. In terms of ocean marine insurance, what is this partial loss to Aubrey’s cargo called?
a particular average

Dr. Castillo enjoys designing, building, and flying small aircraft. He builds a two-seat fixed-wing single-engine experimental airplane in his garage. What classification is his airplane?
general aviation

In buying aircraft insurance, Joanne finds that she must select among several types of hull coverage. Which one of these provides the broadest coverage?
ground and flight

The liability coverage of an aviation insurance policy may show separate bodily injury limits for:
persons outside the aircraft and passengers

The Goodyear Blimp counters the force of gravity by using:
a static lift

Lupe has to replace all four tires on her car. Why will her personal auto policy’s physical damage coverage (both collision and other-than-collision coverage) cover the expense if she is replacing the tires?
They have been slashed by vandals

Regina rents a car to use while the collision damage to her own car is being repaired at her insurer’s expense. Unless other limits are provided in an endorsement, Regina’s personal auto policy (PAP) will cover her car rental expenses up to what amount?
$20 per day with a $600 maximum

Floyd just had his first auto accident. He realizes there are probably some things his insurer would want him to do, but what is one of the things his personal auto policy (PAP) does not require him to do?
Negotiate a settlement with the other driver.

Because his job requires local travel, Cody’s employer furnishes a company car for both business and personal use. Cody’s wife Deanne has her own car, but she sometimes drives the company car, and Cody sometimes drives her car. Adding the extended nonowned coverage endorsement to the PAP on Deanne’s car
modifies the liability and medical payments coverages to apply when Cody is driving the company car.- The Extended Non-Owned Coverage

Tia and her sister Kara hate riding the bus to school, so they pool their summer earnings to buy a car and pay for a personal auto policy (PAP). Does the PAP need to be modified in any way to reflect the fact that their car has two owners?
Yes; the joint ownership coverage endorsement should be added

Kendrick insures his convertible under a personal auto policy (PAP), but he is not sure how best to get insurance for the motorcycle he is buying. What should Kendrick do?
have the miscellaneous type vehicle endorsement added to his PAP

What are the personal auto policy’s collision and other-than-collision coverages collectively called?
physical damage coverage

Charmaine carries other-than-collision coverage but has no collision coverage on her auto. During the past three years, Charmaine has made four claims for physical damage to her auto. Which of them did her policy not cover?
Her car skidded into a snow bank and rolled over

Charlene’s personal auto policy (PAP) provides coverage not only in her home state but also when she is driving her car in all the following areas EXCEPT:
Mexico

When he discovers that his car has a flat tire, Nathan is glad that his agent convinced him to add the towing and labor costs endorsement with a $50 limit to his personal auto policy (PAP). Nathan calls a towing company that charges $40 to come to Nathan’s home and change the tire in his driveway. What will Nathan’s insurer do?
It will reimburse the $40 charge

When Damien moved to a different state, his insurer issued a different personal auto policy. On reviewing the new policy, Damien notices that it includes a personal injury protection endorsement that his old policy did not have. What is the purpose of this endorsement?
It adds no-fault coverage that is available or required in Damien’s new state

Because she plans to drive her car across the border for a two-week stay in Mexico, Martha asks her agent to add the necessary coverage to her personal auto policy. Her agent adds the limited Mexico coverage endorsement and explains that
symbol 9

Most of Cyril’s deliveries can be made with his van, but he occasionally borrows another company’s box truck when handling a large order. Cyril’s business auto policy (BAP) will cover his use of the box truck for any coverage that uses symbol 1 or:
symbol 8

Which part of the business auto policy (BAP) reflects information the policyholder provided in the application for the purpose of tailoring coverage to meet the policyholder’s specific needs?
business auto declarations

The state where Vicky’s business is located requires that every auto have uninsured motorists coverage. What symbol will the uninsured motorists coverages in Vicky’s business auto policy probably use?
symbol 6

Unless one of two direct coverage options applies, when does the garage policy’s garagekeepers coverage provide coverage?
when the insured is legally liable for the loss

Steve’s Mustang was undergoing maintenance in the Ford dealer’s shop when lightning struck the building and caused it to burn to the ground. Because the dealer has a garage policy that includes liability coverage, physical damage coverage, and garagekeepers coverage with the excess direct coverage option,
the dealer’s insurer will pay any portion of Steve’s loss that his personal auto insurance does not cover

In a trailer interchange agreement, what does a motor carrier agree to?
to exchange trailers with another carrier

Although the physical damage coverage of Arnold’s garage policy protects him against loss or damage to many different vehicles, it does not protect him against loss to a vehicle that he:
is painting for a customer

Trucking Company is the named insured under a motor carrier policy. Which one of the following parties is not an insured under this policy’s liability coverage?
Georgia, whose peaches are being transported on one of Trucking Company’s trucks, is not an insured.

What does the Motor Carrier Act of 1980 require some motor carriers to do?
carry liability insurance at limits that vary depending on the property they transport

Rocky sometimes transports hazardous materials by truck. Which of the following requires him to carry certain minimum limits of insurance coverage for doing so?
Motor Carrier Act of 1980

According to the Insurance Services Office, Inc. (ISO), motor carrier policy, a trucker is a person or organization
engaged in the business of transporting by auto for hire

An equipment breakdown policy does not cover which of the following?
damage from smoke

Which of the following is not defined as a breakdown of equipment covered under an equipment breakdown policy?
A retention tank leaks and floods a compartment

Like many other policies that cover property, the equipment breakdown policy that covers the steam boiler in Pauline’s church contains a flood exclusion. Why is this an important exclusion?
Cold water striking a hot boiler can cause an explosion

Roslyn owns a small manufacturing plant that contains the following items. Which does not qualify as covered equipment in her equipment breakdown coverage form?
boiler room

Over time, the water runoff from Sam’s air conditioner stains the expensive tile blocks in his next-door neighbor’s patio. Unless an exclusion applies, Sam’s homeowners insurance policy will cover the neighbor’s property damage liability claim if it involves an occurrence. Is it an occurrence?
Yes, because “occurrences” include continuous or repeated exposure to the same harmful conditions

Ethel is a registered nurse who volunteers at a local clinic. Which exclusion in Ethel’s homeowners insurance policy precludes coverage for any claims that might result if someone in the clinic is injured because of medical treatment Ethel gives or fails to give?
professional services exclusion

According to the “motor vehicle” definition in Donnell’s homeowners insurance policy, all of the following would be considered motor vehicles EXCEPT:
Donnell’s bicycle

The footprints and “artwork” permanently embedded in their neighbor’s brand new concrete driveway belong to the Gramble’s seven-year-old daughter Margie, and obviously were not put there by accident. Will any coverage in the Grambles’ homeowners insurance policy pay for repairing the neighbor’s driveway?
The damage to property of others coverage will pay up to $1,000

Chris did not pay the premium to renew his insurance policy at the end of the policy term. At the end of the policy term, what will happen with Chris’s policy?
It will automatically terminate

When the front fenders of Bobbie’s Chevrolet coupe were damaged in an auto accident, his insurer arranged to have the damage repaired with non-original equipment manufacturer parts. Why does the insurer use non-OEM parts?
to help minimize the cost of repairs and the cost of insurance

To settle an uninsured motorists claim, Osvaldo agrees to submit the dispute to arbitration as provided in his personal auto policy. A typical arbitration
involves a panel of three experts

The rear fenders of Misty’s Mazda were damaged in an auto accident, and her insurer wants to have the damage repaired with non-original equipment manufacturer parts. Before using non-OEM parts, the state law is most likely to require the insurer to do all of the following EXCEPT
waive the deductible in Misty’s policy and provide first-dollar coverage

The cries of Jodie’s young daughter distracted Jodie while she was driving the child to school. Jodie collided with Emanuel’s car, pushing it into a telephone pole. Emanuel’s car was damaged, and the telephone pole was destroyed. The resulting traffic jam delayed other drivers from getting to work on time. As defined in Jody’s personal auto policy, all the following claims involve property damage EXCEPT
claims for lost wages by the other drivers who were late to work

Riley’s Chrysler coupe is insured under a personal auto policy (PAP) that includes only liability, uninsured motorists, and other-than-collision coverages. Riley did not dispose of the Chrysler or change his PAP when he bought a new Honda sedan. According to Riley’s PAP, what kind of coverage does he have?
automatic collision coverage on the Honda if he reports it to the insurer within four days

Which of the following is NOT typically part of a complete Personal Auto Policy?
Coverage audit

Which of the following is least likely to be considered a “covered auto” for purposes of the Personal Auto Policy (PAP)?
commercial tractor-trailer combination

Darrel’s car is insured under a personal auto policy (PAP) that includes liability, collision, and other-than-collision coverages. Darrel did not dispose of his car or change his PAP when he bought a heavy duty pickup truck with a 12,000-pound gross vehicle weight rating and brought it home. According to Darrel’s PAP, what kind of coverage does Darrell have (or not have)?
no automatic coverage for the pickup because of its high weight rating

complete Personal Auto Policy (PAP) consists of all of the following major parts EXCEPT:
key definitions

Some of the coverages in Carmella’s personal auto policy (PAP) apply only to vehicles that fall within her policy’s definition of “your covered auto.” What vehicles does this definition include?
the boat trailer that she sometimes tows with her station wagon

Because Leanne’s personal auto policy (PAP) provides liability coverage on temporary substitute autos, Leanne’s PAP will protect her against a liability claim if she is driving
a pickup truck she borrows from a friend while Leanne’s car is in the body shop

Mary lost control of her car, which rolled onto the sidewalk and injured Wilmer, a pedestrian. Katharine witnessed the incident and had to engage a psychiatrist for her resulting mental anguish. Mary’s personal auto policy covers liability resulting from bodily injury, which would include
Wilmer’s doctor bills and Katharine’s psychiatrist bills

Eliza’s car is insured under a personal auto policy (PAP) that includes liability, collision, and other-than-collision coverages. Eliza did not get rid of her car or change her personal auto policy when she bought the Chevrolet pickup truck with a 5,000 pound gross vehicle weight (GVW) rating that she just brought home. According to Eliza’s PAP, Eliza has
automatic liability coverage on the pickup if she reports it to the insurer a week from today

Which of the following is NOT typically part of a complete Personal Auto Policy?
Coverage audit

Which of the following is least likely to be considered a “covered auto” for purposes of the Personal Auto Policy (PAP)?
commercial tractor-trailer combination

What is part of a complete personal auto policy.
The typical parts of a PAP include the declarations page, the personal auto coverage form, and any applicable endorsements.

To earn extra money, Neal approaches travelers arriving at the airport to offer them inexpensive transportation in his sedan to local destinations. If any of these airport passengers are injured while Neal is transporting them, the medical payments coverage of Neal’s personal auto policy
will not respond because his unregistered taxi service is an excluded livery conveyance

In states with a no-fault law, what coverage may replace the personal auto policy’s medical payments coverage?
personal injury protection (PIP) coverage

The driver’s side air bag saved Archie’s life in an auto collision, but it also broke his nose. Four years after the accident, Archie’s doctor told him that surgery was necessary to correct a serious sinus problem. Archie submitted a claim under the medical payments coverage of his personal auto policy (PAP). Why is his claim denied?
Archie’s medical expenses were incurred more than three years after the date of his accident

In which of the following incidents would Elba’s personal auto policy’s medical payments coverage provide no protection for the person who was injured?
Elba’s car strikes a jaywalking pedestrian

As part of his sales training program, Tyler accompanies Janelle in her calls on their employer’s accounts. Janelle’s company car has liability coverage under their employer’s business auto policy (BAP). Janelle collides with a lamppost, and Tyler is injured. His subsequent bodily injury claim against Janelle
is not covered by the BAP because of the fellow employee exclusion

Sandy requires her employees to use their personal autos to make customer calls. Sandy is protected by her business auto policy’s $1 million liability limit, but her employees must rely on their personal auto policies. If Sandy adds the employees as insureds endorsement to her BAP, employees who are using their personal cars in her business will have
excess coverage for losses that exceed their personal auto liability limits.

Which of the following expenses would not fall within those covered by a business auto policy paying a claim for “property damage,” as that term is used in a BAP?
damage to property being transported in a covered auto

Which of the following would not fall within the definition of “bodily injury” for purposes of coverage by the business auto policy (BAP)?
mental trauma

Because her CGL policy from QDP Insurance Company recently expired, Lisa is surprised to find QDP’s premium auditor at her office door asking to review her records as provided for by the CGL policy’s premium audit condition. What is the purpose of this premium audit?
to determine the actual exposures on which Lisa’s premium is based

When Leona rents the storefront space to open a store, she signs a lease in which she assumes responsibility for liability to anybody who is injured inside her store, even if the injury is her landlord’s fault. What kind of general liability exposure that she would not otherwise have does Leona assume as a result of this lease?
contractual liability

The commercial general liability (CGL) policy’s limited fungi or bacteria coverage endorsement is usually used when an insurer wants to
limit its exposure to mold-related bodily injury liability claims

The swimming pool in the atrium of the Highland Court Apartment Building provides for a humid environment that encourages mold growth. To limit its exposure to mold-related claims, what kind of endorsement could the insurance company providing the CGL coverage add?
a limited fungi or bacteria coverage endorsement-

When Eduardo sold a piano to Sheri through an online auction service, he included assurances that he would deliver it in good condition after the transaction had been completed. However, the moving company van that carried the piano was involved in an accident en route to Sheri’s house, and the piano was damaged. Eduardo’s CGL policy
does not cover this loss because of the contractual liability exclusion

Some of Patricia’s sales can be attributed to the public’s confusing her product with a competitor’s more popular product. If Patricia wrongfully appropriates the competitor’s business or product name and makes it part of her e-mail address or Web domain name, the personal and advertising injury coverage of Patricia’s commercial general liability (CGL) insurance policy will
not cover claims filed against Patricia

Jonathan runs a shoe repair business as a sole proprietor, and his wife Laura keeps the books for the business. Jonathan is the only named insured listed under the shoe shop’s commercial general liability (CGL) insurance policy, and he has no other business activities. Laura and her sister Amy also operate a fish restaurant as a partnership. Who is an insured under the shoe shop’s CGL policy?
Jonathan and Laura are insureds, but only with respect to the shoe business

When it replaces the liability exclusion in the CGL insurance policy, what does the limited pollution liability extension endorsement do?
provides significantly broader coverage

Josiah runs a luggage repair business as a sole proprietor, and his wife Bonnie keeps the books. Josiah is the only named insured listed under the shop’s commercial general liability (CGL) insurance policy. Bonnie’s sister Ruth is a part-time employee of Josiah’s business. Who is covered as an insured under the luggage repair shop’s CGL policy?
Josiah, Bonnie, and Ruth with respect to any business activities

Coverage under Insurance Services Office, Inc. (ISO), pollution liability forms is written subject to which two policy limits?
an aggregate limit and an “each pollution incident” limit

Nicolas, an electrician, accidentally shorts out a live wire in a fuse box he is working on. The resulting sparks destroy the fuse box and set fire to the adjacent wall. What will Nicolas’s CGL policy cover?
fire damage to the wall but not to the fuse box

A nearby chemical factory’s explosion damaged the siding of Quincy’s home. Smoke and fumes from the burning chemicals also destroyed the manuscript for his latest novel on his computer’s hard drive. Several families had to relocate for a week while the fumes dissipated, and five autos had to be repainted. As defined by the commercial general liability (CGL) policy, which of the following does not qualify as property damage?
destruction of the manuscript

Within the Coverage A insuring agreement of the CGL, what does the insurer promise to do?
It promises to pay “sums” that the insured becomes legally obligated to pay “as damages” because of “bodily injury” or “property damage” covered by the policy

Because Sergio’s insurer was willing to add the limited pollution liability extension endorsement to his CGL insurance policy, Sergio would now have coverage for bodily injury or property damage claims resulting from any of the following incidents EXCEPT where
pollutants seeping from Sergio’s leaky underground storage tank contaminate a neighbor’s well water

Soup Company produced a defective quantity of mushroom soup, and many customers who ate it had to be treated in hospital emergency rooms as a result. Anticipating claims, Soup immediately ordered retailers to remove its mushroom soup from store shelves. Soup also notified its commercial general liability (CGL) insurer and asked the insurer to cover its expenses in removing the product to minimize future liability losses. Soup’s CGL policy will
cover liability claims from consumers who eat the defective soup but not recall expenses

For the past four years, Cheryl’s business has been insured by four different insurers under commercial general liability (CGL) insurance policies with an occurrence trigger. For a claim to be covered by Cheryl’s current policy:
The injury or damage must have occurred during the current policy period

Although Alicia’s farm liability coverage form provides fairly broad coverage, she is also aware of its numerous exclusions. Which one of the following activities is covered?
Alicia operates a mower mounted on a diesel-fueled tractor in her own hay field

The Farm Liability Coverage Form (FL 00 20) has three basic coverages. Which is not one of them?
pollution liability

Al’s farm does not produce enough income to support his family, so he supplements his farming income by working as a veterinarian. Which exclusion in Al’s farm liability coverage form precludes coverage for any loss resulting from his veterinary activities?
professional services

The farm liability coverage form contains exclusions for all the following EXCEPT:
personal and advertising injury

Colin hires Sal, a retired farmer, to help him with the harvest. Sal is seriously injured when he falls off the tractor he was operating in Colin’s field. Colin’s farm liability coverage form
covers Sal’s injuries unless state law requires Colin to provide workers compensation benefits

Vito’s farm does not produce enough income to support his family, so he works as a self-employed carpenter during the winter months. Which exclusion in Vito’s farm liability coverage form precludes coverage for any loss resulting from his side business as a carpenter?
business pursuits

As defined in the farm liability coverage form, which of the following does farming not include?
mechanized processing operations

The standard farm liability coverage form covers claims arising from all of the following EXCEPT:
farm retail activity

Rebecca has a $1 million personal umbrella policy with a $500 retained limit (deductible) for slander and defamation, and a personal auto policy (PAP) with a $500,000 limit. She is at fault in an auto accident that is settled for $600,000. How will this settlement amount be paid?
Rebecca will pay nothing, the PAP insurer will pay $500,000, and the umbrella insurer will pay $100,000

Physicians professional liability insurance is designed to cover all the following exposures a medical practitioner faces EXCEPT
failing to meet continuing education requirements

Tonya owns and operates a neighborhood sports bar where she sells sandwiches, beer, and other alcoholic beverages to her patrons. In addition to auto and workers compensation insurance, what liability insurance policy or policies would protect Tonya against most liability claims arising out of this business?
both a commercial general liability (CGL) policy and a liquor liability insurance policy

Many states have enacted laws holding businesses that serve alcohol responsible for monitoring their patrons’ alcohol consumption. What are these laws called colloquially?
dramshop acts

Which one of the following entities is most likely to purchase a crime policy with the safe depository endorsement?
a hospital

Black Company’s insurance policies include a crime policy that includes blanket coverage on employee theft. Because they are considered employees, Black’s policy would apply to theft of covered property by any of the following individuals EXCEPT
Alton, an independent contractor who writes advertising copy for Black

As an accounts receivable clerk, Teresa often receives checks through the office mail. Last month, Teresa took one of the larger checks that was payable to her employer, endorsed it by printing her employer’s name, and deposited the check to her own account. The forgery coverage in the employer’s crime policy
does not cover the claim because Teresa is an employee

Rusty’s employer, following the kidnapper’s instructions, sent a messenger to deliver $250,000 to the kidnapper who promised to release Rusty unharmed. However, the messenger was ambushed and the ransom payment was lost. Which coverage of the employer’s kidnap/ransom and extortion policy will reimburse the employer for its $250,000 loss due to the ambush?
in-transit delivery of property

The lessees of safe deposit boxes endorsement to a commercial crime policy is most likely to be used to cover:
an insured’s property that is kept in a bank safe deposit box

Private School’s headmaster was distressed when he learned that Agnes, a full-time teacher, helped students cheat on a college entry exam. He scolded Agnes privately but, to avoid a scandal, did nothing further. A few months later he caught Agnes stealing school equipment and made a claim under the school’s employee dishonesty coverage. Is the loss covered?
No, because the termination as to any employee provision ended coverage for Agnes once the headmaster learned of her first dishonest act

Frieda Hotel’s crime policy includes a guests’ property endorsement that covers all the following claims or losses EXCEPT
property is stolen from a guest’s car while it is parked in Frieda’s lot

Bert soon found a buyer for the delivery van his business no longer needed. The buyer paid him $5,000 in cash. When Bert tried to deposit the cash, his bank told him that the bills are not real money. What insuring agreement in Bert’s crime policy might cover his $5,000 loss?
money orders and counterfeit money

Blue Company’s crime policy includes these coverages: (1) inside the premises—theft of money and securities, (2) inside the premises—robbery or safe burglary of other property, and (3) computer fraud. While Blue’s office was open for business, somebody walked in from the street and stole a computer. Which of Blue’s coverages, if any, applies to this loss?
inside the premises

Upon learning that Bryant, a key executive, has been kidnapped, Bryant’s employer contacted the security firm listed in the declarations of its kidnap/ransom and extortion policy. The security firm was able to negotiate Bryant’s release and billed his employer $250,000 for its services. Which coverage of the employer’s kidnap/ransom and extortion policy will reimburse the employer for its $250,000 loss?
kidnap/ransom and extortion—expenses incurred

After successfully negotiating an emergency loan, Sally’s employer obeyed her kidnapper’s instructions to deliver $250,000 to the kidnapper. The kidnapper then released her without harm. Which coverage of the employer’s kidnap/ransom and extortion policy will reimburse the employer for its $250,000 loss?
kidnap/ransom and extortion—direct loss

Frederick Jewelers’ crime policy includes an extortion—commercial entities endorsement. Which of the following situations does this endorsement not cover?
Frederick makes no attempt to notify authorities before giving in to an extortionist’s demands to surrender his diamonds

Public officials in the village of Castle Heights are covered under the same public officials bond, and each of the bonded officials is identified by name within the bond. What kind of bond is Castle Heights’ public official bond?
a name schedule bond

Reba, First Bank’s loan officer, abuses her discretionary authority in more than one way. Which one of her actions would First Bank’s financial institution bond be most likely to cover?
Reba subtracts $25,000 from her son’s outstanding mortgage loan which had been higher than his home’s current value.-

In connection with an upcoming construction project in which his firm hopes to participate, Frank furnishes a performance bond. His firm’s bid is accepted, and the firm is awarded the project. If Frank should default in performing the contract, the surety’s options include all the following EXCEPT
place a mechanics lien on the project

Owen Corporation has a fidelity bond from Baker Company in which Baker guarantees to Owen that Gregg, who is Owen’s corporate treasurer, will not be dishonest. In this transaction,
Gregg is the principal

In connection with an upcoming construction project in which her firm hopes to participate, Fred’s Construction is required to furnish a contract bond guaranteeing that Fred’s will do the job at the quoted price if the contract is awarded to it. What kind of bond is this?
bid bond

Linwood requires each of its public officials to furnish a public officials bond. These bonds will normally terminate
when the bonded public official leaves office

When the court appointed Delia as guardian for her late sister’s children’s financial assets, it also required her to furnish a fiduciary bond. The fiduciary bond does not guarantee that Delia will
raise the children in their parents’ religious faith

Unlike an insurance policy, a surety bond
is a three-party contract

Dianne, a radio talk show host, loses her hearing as a result of job-related exposure to noise. The hearing loss is irreversible. How is Dianne’s condition categorized?
as a permanent total disability

Hal, a surveyor, severely sprained his ankle when his foot slipped into a hole while he was on a job site. His doctor did not put the ankle in a cast but advised him to remain home for two days with the ankle on ice and elevated. Which of the following statements best describes Hal’s eligibility for workers compensation benefits?
Medical expenses will be paid, but he probably has not met the waiting period necessary to qualify for disability benefits

Nearly all state workers compensation laws specify certain activities for which injuries are not compensable. Which of the following injuries would most likely be covered by a workers compensation policy?
Vinnie is walking across a newly shingled roof when a loose shingle gives way and he slides down the roof, breaking his ankle.

Russell fell from the roof where he was working, leaving him in a coma. As a result, he was unable to assist his wife Althea with household duties and unable to continue normal sexual relations with her. Workers compensation benefits paid only for Russell’s medical expenses and lost income. To recover for her loss, Althea could sue Russell’s employer on what basis?
loss of consortium

refers to the loss of a spouse’s services to which one is entitled.
loss of consortium

The Information Page of Jobfinders’ workers compensation policy lists as the insured “Les Smith and Hiram Jones, a partnership doing business as Jobfinders.” This employment agency is a new venture for Les and Hiram, both of whom also operate other businesses. For whom does Jobfinders’ workers compensation policy provide insurance?
Les and Hiram, but only for injuries to Jobfinders’ employees

Beau, a contractor on a large construction project, signs a contract in which, among other things, he agrees not to sue Mack if Mack is responsible for injury to any of Beau’s employees. Having signed the contract, how should Beau also modify his workers compensation policy?
add the Waiver of Our Right To Recover from Others Endorsement (WC 00 03 13)

Debbie is not legally required to provide workers compensation benefits to the commissioned real estate brokers she employs. What, if anything, can she do to ensure that these brokers have access to statutory workers compensation benefits if they are injured while working for her?
Debbie can add the Voluntary Compensation and Employers Liability Coverage Endorsement (WC 00 03 11 A) to her workers compensation policy

In most states, what agency serves as the filing agency and rating organization for workers compensation and employers liability insurance?
National Council on Compensation Insurance

Which of the following statements about Personal Injury Protection (PIP) insurance is correct?
covers the insured and his or her children and household

Holly routinely charges her clients an extra amount in addition to the premium stated in the insurance policy to cover her own personal administrative expenses. What is true about Holly’s actions?
They are unlawful

In which of the following cases would the applicant be eligible for coverage through an insurer in the residual insurance market?
The applicant is entitled to insurance but cannot buy it through the voluntary market

Personal Injury Protection (PIP) covers the insured owner of a motor vehicle under what conditions?
Without regard to fault in an accident with a motor vehicle

Delta Insurers typically affirms or denies claims within 120 days after it receives proof of loss statements. Which statement is correct?
Delta is engaged in unfair claims settlement practices

Residual markets systems provide a source of insurance coverage for individuals and businesses that
are entitled to it but cannot buy it through the voluntary market

What unfair trade practice has a person committed if he knowingly and with intent to defraud files an insurance claim that is false?
Fraud

Owners of motor vehicles with four or more wheels must carry Personal Injury Protection (PIP) and Property Damage Liability (PDL) coverage with at least which of the following limits?
$10,000 for PIP and $10,000 for PDL

With respect to penalties and fines for noncompliance with the coverage requirements of the Patient Protection and Affordable Care Act, all the following statements are correct EXCEPT
The penalty for non-coverage is the same for adults and children

Mike and Joyce’s health coverage is provided by their employer, Acme MFG, Inc. As such, how is their insurance provided?
on a group basis

Jake owns one life insurance policy, but has several different individual health insurance policies covering disability, medical expenses, and dental care, respectively. What is the reason for having multiple policies?
No one policy covers all health risks. Instead, a single policy or plan likely covers only a single risk

Although Kevin is healthy and has not been diagnosed with cancer, many members of his family have been treated for one or more cancerous conditions. Consequently, Kevin is in the market for cancer insurance. Cancer insurance is what type of health insurance?
limited benefits policy

From an insured’s point of view, which definition of total disability is more advantageous?
own occupation

Under an income replacement disability insurance policy, what is the monthly benefit payable equal to?
the actual amount of income lost

When Jake borrowed $300,000 from ABC Capital Company, he also bought a credit disability insurance policy equal to the amount of the loan. During the second year of the loan period, Jake suffers an injury that prevents him from working. He is unable to pay back the loan. How will his credit disability insurance policy pay the policy’s benefit?
to ABC Capital Company only

Andrea was earning $3,000 a month as a nurse when she was injured in a train accident. Now she works part-time and earns $1,500 a month. Her disability income policy provides a $2,000 monthly benefit for total disability. The policy uses a flat rate to determine benefits for partial disability. How much will Andrea receive?
$1,000

Which of the following are examples of the kinds of health-care providers that contract with a PPO?
physicians, hospitals, and clinics-Physicians, hospitals, and clinics are examples of health

HMOs represent only one approach to the delivery and cost control of health services under managed care. What kind of managed care is distinct from HMOs?
PPOs

Which of the following cost-control efforts assesses the need for and appropriateness of health-care services for members or subscribers?
utilization reviews

Which statement about HMOs is NOT correct?
An HMO’s network of providers is limited to a town or city

Which of the following statements about the standard Medicare supplement plans is NOT correct?
Companies selling Medicare supplement policies do not have to sell Plan A, but they may sell any or all of the other plans

What is a Medicare supplement plan of an insurance company that offers the policy’s benefits through a network of doctors, hospitals, and health-care service providers called?
Medicare SELECT plan

Medicare supplement policies were designed mainly as supplements to reimbursements under Medicare. In practice, which of the following statements is true?
They help pay for the hospital, medical, or surgical costs of persons eligible for Medicare and provide funds to pay deductibles and coinsurance.

For Medicare Supplement plans K and L, which of the following statements is true?
Plans K and L pay 100 percent of Medicare coinsurance, co-pays, and deductibles after the insured’s annual out-of-pocket limit is reached.

Parts A and B have gaps in their coverage, where Medicare subscribers must pay the costs. Which of the following was done to fill these gaps in standard Medicare coverage?
To fill the gaps in standard Medicare coverage, the insurance industry created Medicare supplement policies.

Which of the following statements about Medicare supplement Plans K and L is correct?
Plans K and L can offer high-deductible options, which further decrease premium payments.

Grant’s Medicare SELECT plan offers the same benefits as the coverage provided under a standard plan. So why are Grant’s Medicare SELECT plan premiums lower than those for a standard Medicare supplement policy?
Grant must obtain covered services through the plan’s network. For this reason, his Medicare SELECT plan’s premiums are lower than those for standard Medicare supplement policies.

As Medicare adjusts its deductibles and co-payments, what must Medicare supplement policies do, and what can they NOT do?
Medicare supplement policies must align their benefits to match the adjustments, and they cannot drop people for health reasons.

All the following statements about Medicare supplement policies are correct EXCEPT
As Medicare adjusts its deductibles and co-payments, Medicare supplement policies can align their benefits to match the adjustments, but that is not required.

What is another name for Medicare supplement policies?
Medigap policies

Medicare supplement Plan A provides the co-payment for hospitalization from day 61 through day 90. Which of the other Medicare supplement plans also provide this coverage?
Plans A through N-All plans pay the 61st through 90th days’ co-payment for hospitalization, as well as the 91st through 150th days’ co-payment for each lifetime reserve day, and hospital costs up to 365 days.

Sally wants to qualify for a Medicare supplement policy. All of the following statements about her qualification are correct EXCEPT:
If Sally is at least 65 years old and applies for a Medicare supplement policy within six months of enrolling in Part B, she qualifies for the policy of her choice in her state as long as she meets the program’s health requirements.

Understanding practices that are considered unethical is the first step in
identifying, preventing, and resolving ethical dilemmas

The insurance company (principal) grants authority to its agent, the producer. Which of the following types of authority is usually granted via the agent/company contract?
Expressed

The Law of Agency is a legal concept governing a three-party relationship. Which of the following is not one of the three-parties to an agency relationship in the insurance industry?
insurance agency

The three parties to the legal agency relationship in the insurance industry are the Principal (insurance company), Agent (insurance producer/broker/agent), and the Third Party (insured).
insurance agency

The producer always owes his or her loyalty to the insured during the process of
selecting an insurance product

If a producer adheres to the legal and professional standards of the insurance industry, what type of behavior is being exhibited?
legal and ethical

A mode or standard of personal behavior based on moral or ethical principles defines which of the following?
Conduct

Producers owe all of the following duties to their insureds EXCEPT:
the terms under which the producer may sell, solicit, or negotiate insurance

What type of behavior conforms to accepted standards and is characterized by being suitable, right, and appropriate?
Proper

If a producer is in a situation that requires the producer to make a choice-and the two or more options he or she faces are equally unpleasant or undesirable and involve an ethical conflict-what type of situation does the producer face?
an ethical dilemma

If a producer considers who are the stakeholders and what are their rights, he or she is undertaking Step One of which of the following?
resolving an ethical dilemma

The motivation of stakeholders in an ethical dilemma involves all of the following EXCEPT:
honesty versus propriety

Which of the following would not be considered an accepted ethical standard in the insurance industry?
engaging in advertising practices that are not false, but may be misleading

When asking themselves questions that concern legal risks, control risks, ethical risks, and culture risk, what are producers doing?
preventing ethical dilemmas

Which of the following tools and resources would a producer not find useful when considering ethical dilemmas in insurance transactions?
S & P 500-Ethical standards, insurance industry standards, and the Global Business Standards Codex (GBS Codex) would all be useful tools and resources for the producer.

Which of the following would not be considered an accepted ethical standard in the insurance industry?
engaging in advertising practices that are not false, but may be misleading

engaging in advertising practices that are not false, but may be misleading
honesty versus propriety

A fiduciary responsibility requires the utmost in care and the highest standards of conduct with respect to the law or ethics. All of the following are qualities required by a fiduciary EXCEPT:
good communication skills

If a producer does not properly and thoroughly represent an insurance contract or product, his or her failure to do so may be construed as
Misrepresentation

What type of bank accounts are obtained, maintained, and held separate and apart from other funds for a specific purpose?
trust accounts

Who has the authority to determine insurance coverage or to settle insurance claims?
insurance companies

According to the Securities and Exchange Commission, which of the following allows one to invest in another person’s life insurance policy?
a viatical settlement

Which principles require producers to recommend the purchase of insurance contracts and coverages only if suitable for the individual consumer?
due diligence and competence

Protected health information includes all of the following EXCEPT:
information about financial status

Senior clients are more at risk than any other sector of the population in this country. Which of the following is not a practice to which seniors are vulnerable?
honesty, no matter how unpleasant the truth

Which of the following federal legislation does not require that a privacy notice be provided to consumers?
Federal Employees’ Compensation Act (FECA)

When does a false statement constitute fraud in the insurance industry?
when the false statement was about a material fact by a person intending to deceive

According to the Securities and Exchange Commission, which of the following allows one to invest in another person’s life insurance policy?
a viatical settlement

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