1st Test Flashcards
The unfair trade practice of offering inducements for the purchase of insurance is called.
a. misrepresentation.
b. controlled business.
c. rebating.
d. false advertising.
c. rebating.
The unfair trade practice of offering inducements for the purchase of insurance is called rebating. This practice is usually illegal, although insurance companies are allowed to pay dividends to policyholders Misrepresentation, in the context of insurance sales, is an intentionally inaccurate or incomplete communication to a policyholder or potential policyholder. Controlled business is defined as a situation in which an insurance provider’s personal income is greater than 25 percent of his or her gross commission from insurance. False advertising is considered an unfair trade practice with respect to all forms of communication.
How much of a property must be unoccupied for it to be defined as vacant by the standard commercial property policy?
a. 25 percent
b. 30 percent
c. 40 percent
d. 50 percent
b. 30 percent
In order for a property to be defined as vacant by the standard commercial property policy, 30 percent of it must be unoccupied. In addition, the building must be suitable for habitation. The definition of a building as vacant is important in the standard commercial property policy because vacant buildings are subject to special provisions. Buildings that have been vacant for more than sixty days previous to loss or damage will not receive payments for vandalism, sprinkler leakage, glass breakage, water damage, or theft. Any losses or damages caused by a covered cause of loss will be subject to a payment reduction of 15 percent.
An expense plan that indicates an employer will reduce benefits for persons over the age of 65 to the extent that they are payable under Medicare for the same expense is known as a:
a. Medicare secondary rule.
b. maturity value benefit.
c. Medicare carve-out.
d. Medicare supplement.
c. Medicare carve-out.
An expense plan that indicates an employer will reduce benefits for persons over the age of sixty-five to the extent that they are payable under Medicare for the same expense is known as a Medicare carve-out.
The Medicare secondary rules are a set of regulations that indicate when Medicare will be considered secondary to the employer’s medical expense plan for disabled employees, as well as active employees older than sixty-four. A maturity value benefit is a provision in a group term life insurance plan, in which the face value of a fully disabled employee’s life insurance benefit will be paid to the employee in monthly installments or a lump sum. Finally, a Medicare supplement is a medical expense plan provided by an employer to employees age sixty-five or older, in which benefits are provided for certain specific expenses not covered by Medicare. The expenses may not be paid by Medicare because of deductibles, copayments, coinsurance, or other expenses (for instance, prescription drugs) that are excluded by Medicare
Which of the following vehicles would NOT be defined as mobile equipment by the standard business auto policy?
a. Snowplow
b. Bulldozer
c. Forklift
d. Farm machinery
a. Snowplow
The standard business auto policy would not define a snowplow as mobile equipment. Any equipment designed primarily for snow removal, street cleaning, or road maintenance will be classified as an auto.
Bulldozers, forklifts, and farm machinery are all classified as mobile equipment. In addition, mobile equipment includes any vehicles designed to be used off public roads; any vehicles propelled by crawler treads, any vehicles that are used solely on the premises owned or rented by the insured party; and any vehicles maintained primarily for purposes other than the transport of cargo or people. Construction and resurfacing vehicles may be classified as mobile equipment.
Which of the following events would NOT be covered by the standard dwelling policy?
a. Losses caused by spacecraft
b. Smoke damage from fireplaces
c. Losses caused by volcanic eruption
d. Smoke damage from furnaces
b. Smoke damage from fireplaces
Smoke damage from fireplaces would not be covered by the standard dwelling policy. This policy will cover losses caused by spacecraft, as well as losses caused by aircraft and self-propelled missiles. Any losses caused by volcanic eruptions will be covered, though losses caused by tremors or earthquakes will not.
The smoke damage from furnaces and boilers will be covered, but not the smoke damage caused by fireplaces or agricultural or industrial operations.
Which of the following injuries would be covered by the standard farm liability policy?
a. Those suffered by residence employees while performing duties associated with their emplovment
b. Those that occur on locations owned by the insured but not named on the declarations page
c. Those suffered by people who are on the insured location for the purpose of providing professional services
d. Those that occur on locations rented by the insured but not named on the declarations page
a. Those suffered by residence employees while performing duties associated with their emplovment
injuries suffered by residence employees while performing duties associated with their employment would be covered by the standard farm liability policy. However, in general, injuries that occur on locations owned, rented, or controlled by the insured are not covered by the standard farm liability policy. Also, injuries suffered by people who are on the insured location for the purpose of providing professional services or engaging in business are not covered by the standard farm liability policy.
Which of the following is NOT an advantage of an umbrella policy?
a. Higher defense costs
b. Coverage for injuries that occur while at work
c. Gap coverage
d. Higher coverage limits for injuries and property damage caused by the policyholder
b. Coverage for injuries that occur while at work
Coverage for injuries that occur at work is not an advantage of an umbrella policy. Umbrella policies are meant to provide very broad liability coverage in excess of other underlying policies. In some cases, an umbrella policy will cover the risks that are not covered by the underlying policy. However, an umbrella policy typically excludes intentional acts, events covered by workers compensation, and events that occur while at work or in pursuit of business objectives.
Which type of claims adjuster handles property and liability claims?
a. Multiline
b. All-lines
c. Both A and B
d. Neither A nor B
c. Both A and B
Both multiline and all-lines claims adjusters handle property and liability claims. A multiline claims adjuster handles both property and liability claims, while an all-lines claims adjuster handles these claims as well as professional liability, excess liability, bond loss, boiler and machinery damage, and other claims
Which of the following people would NOT be covered by the standard business auto policy?
a. A person who is liable for the conduct of the insured party
b. An employee who is moving property from a covered automobile
c. A person who is using a covered automobile with the permission of the named party
d. A person from whom the named insured borrows a covered auto
d. A person from whom the named insured borrows a covered auto
A person from whom the named insured borrows a covered auto would not be covered by the standard business auto policy. Similarly, the employees of the insured party are not covered if the covered automobile is owned by that employee or a member of his or her household. However, any person liable for the conduct of the insured party is covered, though only up to the limit of his or her liability. Employees, partners, lessees, and borrowers are covered when moving property to or from a covered automobile, but all other people are not. Finally, in most cases any person who is using a covered automobile with the permission of the named insured is covered by the standard business auto policy.
Which of the following must be true in order for towing charges to be covered under the physical damage section of the standard business auto policy?
a. The towing must be performed by an approved service.
b. The towing charges must exceed the limit published in the declarations
c. The labor must be performed within twenty-four hours.
d. All of the labor must be performed at the site of the breakdown.
d. All of the labor must be performed at the site of the breakdown.
In order for towing charges to be covered under the physical damage section of the standard business auto policy, all labor must be performed at the site of the breakdown. If this condition is met, the insurance company will pay up to the limit published in the declarations for any towing and labor costs incurred when a covered auto is disabled. There is no list of approved service providers, and it is not necessary for the towing charges to exceed the limit published in the declarations. Finally, it is not necessary for the labor to be performed within twenty-four hours of the accident.
Which type of coverage relates to damage to or destruction of detached structures in a typical homeowners policy?
a. Coverage A
b. Coverage B
C. Coverage C
d. Coverage D
b. Coverage B
Coverage B relates to damage to or destruction of detached structures in a typical homeowners policy.
Specifically, this coverage applies to any structures located on the residence premises but separated from the dwelling by a clear space. Any structures that are connected to the dwelling by a fence or utility line are included under Coverage B. In the standard homeowners policy, Coverage A applies to dwellings Coverage C applies to personal property, and Coverage B applies to loss of use
In which type of group life insurance policy may the holder allocate the net premiums to one or more of several investment accounts?
a. Comprehensive long-term care insurance
b. Group universal life insurance
c. Yearly renewable term insurance
d. Group variable universal life insurance
d. Group variable universal life insurance
In group variable universal life insurance, the holder may allocate the net premiums to one or more of several investment accounts. In this arrangement, the investment risk is borne by the holders of the certificates. A comprehensive long-term care insurance policy includes benefits for home health care and facility care in a single contract. A group universal life insurance policy has flexible premiums and separates the pure protection and cash value accumulations. These policies have variable interest rates credited to cash value accumulations, though it is standard for there to be a minimum guaranteed interest rate
Which of the following distinguishes the conditions of the standard business owners’ policy from those of the standard commercial package policy?
a. Many of the coverages that are automatic for the standard commercial package policy are optional
for the standard business owners’ policy.
b. Many of the coverages that are automatic for the standard business owners’ policy are optional for the standard commercial package policy.
c. The standard commercial package policy extends automatic business income and peak season
coverage
d. The standard business owners’ property coverage form is different than the building property coverage form
b. Many of the coverages that are automatic for the standard business owners’ policy are optional for the standard commercial package policy.
Many of the coverages that are automatic for the standard business owners policy are optional for the standard commercial package policy. This is the only major distinction between the conditions of the standard business owners policy and the standard commercial package policy. Business income and peak season coverage are automatic for the business owners policy, but are only optional for the commercial package policy. The business owners property coverage form is exactly the same as the building property coverage form
With regard to horneowners insurance, business is defined as any activity that has
a. revenue.
b. continuity.
c. Both A and B.
d. Neither A nor B
c. Both A and B.
With regard to homeowners insurance, business is defined as any activity that has revenue and continuity.
In other words, it is any activity that the homeowner earns money from and pursues repeatedly or consecutively through time
Which of the following structures would be covered by Coverage B of the standard farm property policy?
a. Grain silo
b. Cabins rented by non-employees
c. Barn
d. Private garage
d. Private garage
A private garage would be covered by Coverage B of the standard farm property policy. Coverage B applies to private structures appurtenant to dwellings. However, this policy does have some common exclusions, such as any structures that are rented or held by individuals who are not tenants of the covered dwelling. Similarly, Coverage B does not apply to any structures that are primarily used by the policyholder for farming. The only exception to this rule, as a matter of fact, is for private garages
