2-20 Exam Questions 929

Question 1

Genevra’s furniture was lost in a fire at her business office. The fire spread rapidly because the fire alarm system was turned off. The insurance company denies her claim because Genevra, as owner of her business, had assured the insurance company the alarm system would always be in operation and she failed to honor her

Answer 1

Warranty

Question 2

Which of the following does not appear in the common conditions section of a commercial property policy? Cancellation
Policy period
Changes
Incorrec tInspections and surveys

Answer 2

Policy period The policy period appears on the Declarations page of a commercial property policy.

Question 3

In a liability policy, the insurer typically has two essential duties with regard to protecting the insured. They are the

Answer 3

Duty to pay damages and defend the insured.

Question 4

Tim doesn’t need glass breakage coverage for a motorized, self-propelled camper he uses in his business because the windows are made of plastic. What type of coverage might be more appropriate for him?

Answer 4

Specified causes of loss coverage

Question 5

Priscilla has a commercial general liability policy with policy dates from January 1 of this year to January 1 of next year and a retroactive date of January 1 two years ago. On what form is Priscilla’s CGL policy written?

Answer 5

Claims-made Form

Question 6

Ames Insurance Agency has an Equipment Breakdown policy with a $100,000 limit of liability. When Mr. Ames submits a claim for damage to his computer system, what sub-limit of liability applies to his data and media?

Answer 6

$25,000

Question 7

Which entity protects policyowners, insureds, and beneficiaries if an insurer cannot perform its contractual obligations because of impairment or insolvency?

Answer 7

Florida Life and Health Guaranty Association

Question 8

If an auto insurance suspects fraud in a claim investigation, how many additional days can the insurer have to complete the investigation?

Answer 8

60 days

Question 9

Sue buys a standard homeowner’s policy, but has some unique needs that may not be included within the scope of typical homeowner’s coverage. What options, if any, does she have to adapt the coverage to her specific needs?

Answer 9

She should consider buying an endorsement. By adding an endorsement to a standard policy, a policyholder can adapt coverage to address his or her specific insurance needs.

Question 10

Zahra has an umbrella liability policy with a limit of $1,000,000. Her underlying insurance includes a personal auto policy with a $500,000 limit. Zahra’s PAP lapses before she has an auto accident that seriously injures the passengers in both vehicles. The claims for personal injury total $1,000,000. Zahra files a liability claim for $1,000,000 under her umbrella policy. How much, if anything, will the umbrella policy pay?

Answer 10

$500,000, the difference between the PAP limit and the total claim

Question 11

The Health Insurance Portability and Accountability Act (HIPAA) affects property and casualty insurers because medical information may be used in each of the following situations EXCEPT:
Deny strict liability claims
IncorrectPay auto medical payments claims
Settle bodily injury claims
Settle workers’ compensation claims

Answer 11

Deny strict liability claims

Question 12

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

Answer 12

own occupation

Question 13

Florida law requires property insurers to provide premium credits or discounts for which one of the following?

Answer 13

Qualifying wind mitigation measures

Question 14

The night before her certification exam, Laura dreamed she was taking a lie detector test on insurance policy endorsements. She correctly identifies each of the following as true statements EXCEPT:
An endorsement may add exclusions to an insurance policy.
An endorsement may expand the coverage provided in the basic policy.
IncorrectAn endorsement may clarify the terms of an insurance policy by adding new definitions.
The wording in an insurance policy takes precedence over the wording in an endorsement attached to that policy.

Answer 14

The wording in an insurance policy takes precedence over the wording in an endorsement attached to that policy.

Question 15

Ryan operates an appliance repair shop. He usually has a dozen appliances from customers in the shop. What type of commercial inland marine policy should his agent recommend for him to be covered in the event he damages any of these appliances?

Answer 15

Bailees customer floater

Question 16

Under a homeowners policy, what is the effect of an insured’s bankruptcy or insolvency on the insurer’s contractual obligations?

Answer 16

The insurer is not released from its contractual obligations to the insured.

Question 17

Which one of the following is true of premium financing contracts? Premium financing contracts cannot be paid off early.
Premium financing contacts may include a service charge.
There is no limit to the amount a premium finance company may charge in fees.
IncorrectPremium finance contracts let the insured pay premiums on an annual basis instead of monthly.

Answer 17

Premium financing contacts may include a service charge.
Premium finance companies may charge a service change of up to $12 per $100 premium financed.

Question 18

Seamus, a commercial banking specialist with Metro National Bank, conspires with one of his less solvent accounts to give it a loan and get a kickback from the account. What type of bond will Metro need to cover a loss it suffers from this transaction?

Answer 18

Financial institution bond

Question 19

Your client’s basic health insurance policy will pay a $10,000 benefit if he were to die in an accident. At the client’s death, the policy instead pays a $30,000 benefit. Which type of rider did the policy include?

Answer 19

triple indemnity rider

Question 20

Bridget reported the theft of her Rolex watch to her insurance company. The insurance company says it will replace the watch instead of making a loss payment. An insurer has this option

Answer 20

because Bridget’s homeowners policy has a repair or replace option
The repair or replace option allows the insurer to repair or replace any damaged or stolen property instead of making a loss payment directly to the insured, so long as the insurer provides the insured written notice within 30 days after receipt of the insured’s signed, sworn proof of loss.

Question 21

Jack and Mel are involved in an intersection auto accident in which Jack is injured and incurs medical expenses. Jack sues Mel, and the trail court determines that Jack is 30 percent at fault and Mel is 70 percent at fault. If the state apportions liability under a comparative negligence law, what will happen?

Answer 21

Jack will recover 70 percent of his damages.

Question 22

A diligent effort to find coverage for a risk in the admitted market means receiving a rejection from how many different insurers?

Answer 22

Three

Question 23

Which covered auto symbol is used to designate owned autos on the business auto policy?

Answer 23

Symbol 2

Question 24

Which is not one of the 12 provisions that are required in all health insurance policies?

Answer 24

waiver of premium provision

Question 25

Which of the following entities is not eligible for the businessowners policy?

Answer 25

Valley Bank & TrustBanks and other financial institutions are not eligible for a businessowners policy, which is designed for small- to medium-sized businesses.

Question 26

James is a licensed agent who lives in Florida. He moves to Georgia. When must he notify the Department of Financial Services of his move?

Answer 26

within 30 days

Question 27

Which is the market of last resort for those unable to find property insurance in the admitted market in Florida?

Answer 27

CitizensThe Citizens Property Insurance Corporation of Florida (“Citizens”) is the insurer of last resort for Florida policyholders who are in good faith entitled to buy property insurance through the private insurance market but are unable to do so.

Question 28

Jordan, a local tax collector, uses tax receipts to buy a lake home. She is prosecuted for embezzling these funds and converting them her personal use. Although her official acts are guaranteed by a public official bond, what must happen before the bond will pay for the loss?

Answer 28

Jordan must be financially unable to pay a judgment against her.

Question 29

Which of the following is not an available covered peril under garagekeepers liability coverage?

Answer 29

Substitute Transportation

Question 30

During an interview with a newspaper reporter, Thomas, a prominent local businessman, falsely accuses a political candidate of using campaign money for personal needs. The article is published. Is Thomas covered under his commercial general liability policy when the candidate sues him for defamation?

Answer 30

No. Personal and advertising liability coverage excludes material published with knowledge of its falsity.

Question 31

Landry Office Supply provides your insured with financing to purchase a telephone system. It asks to be listed on your insured’s business property policy for its financial interest in the telephone system. Under what policy provision will you list Landry Office Supply’s financial interest?

Answer 31

Loss payable clause

Question 32

What is NOT characteristic of an employer’s prepaid dental plan? A fixed amount is paid to the service provider each month to cover dental care for covered employees.
IncorrectThe dental service provider provides the contracted services regardless of cost or frequency of use by the employees.
Employees do not pay a deductible.
Employees pay a co-payment for diagnostic and preventive services.

Answer 32

Employees pay a co-payment for diagnostic and preventive services.

Question 33

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

Answer 33

15

Question 34

Porter is the named insured in the declarations of a personal auto policy. He lives with his wife Anne, who also drives the insured auto. Anne is not a named insured in the declarations, but Porter understands that, as his spouse, she is also covered by this policy. Which statement is correct if Porter names her in the declarations??

Answer 34

She will no additional rights, privileges, or protection.

Question 35

Sam is a seaman who is injured on a freighter when high winds and turbulent seas almost sink the ship. What federal workers compensation law might apply to pay for medical expenses incurred by Sam?

Answer 35

Jones Act

Question 36

Samantha causes an auto accident. An injured party makes a claim against her for $30,000. She discovers that she has two concurrent policies that provide coverage. The limit of liability for the Company A’s policy is $50,000 while the limit of liability for Company B’s policy is $100,000. How will the companies pay the claim?

Answer 36

Company A pays $10,000 and Company B pays $20,000.
When two or more policies provide primary coverage, they often state that coverage applies on a pro rata basis. In these cases coverage may be shared by the policies in proportion to their limits. Each company’s limit is divided by the total for both limits, then multiplied by the amount of loss to determine the pro rata portion of each: Company A limit $50,000/$150,000(total limits) x $30,000 (loss) = $10,000 (1/3 of loss); Company B limit $100,000/$150,000(total limits) x $30,000(loss) = $20,000 (2/3 of loss).

Question 37

Harold’s property insurance policy is a contract of indemnity because

Answer 37

The benefit payable is related to the amount of loss.
Most property insurance policies are contracts of indemnity. Under a contract of indemnity, when a covered loss occurs, the benefit payable is related to the amount of the loss. The benefit cannot be greater than the actual loss incurred or greater than the applicable limit of liability shown in the policy, whichever is less.

Question 38

When considering depreciation in adjusting a claim, an adjuster considers all of the following factors EXCEPT:
physical deterioration
functional obsolescence
future life expectancy
loss of value for accounting purposes

Answer 38

loss of value for accounting purposesThe depreciation used is true depreciation, not depreciation for accounting purposes. True depreciation must consider physical deterioration, functional obsolescence, economic obsolescence due to causes independent of the property, effective age as compared with other properties considering renovations and reconstruction, and future life expectancy.

Question 39

BBX Insurers terminated Henry’s appointment as its life insurance agent on December 1. How long will Henry remain eligible to be appointed as a life insurance agent by another insurer?

Answer 39

48 months
If an agent’s appointment for a particular class of insurance has been terminated or not renewed, the agent remains eligible to be appointed as an agent for that line of business for 48 months. If the agent does not obtain an appointment during the 48-month period, then his or her qualification for that line of authority will expire.