3 - Practice Test Ques Flashcards
Under an Equipment Breakdown Protection policy with $500,000 in coverage, a covered “accident” resulted in the following:
I. $500,000 worth of damage to the property.
II. $10,000 damage to the property of another in the insured’s care.
III. $5,000 in legal fees to defend the insured in this case.
The policy will pay a total of:
$505,000.
$500,000.
$510,000.
$515,000.
$505,000..
The maximum that can be paid is the limit of the policy. Legal expenses are in addition to the limit of coverage
What does an employer’s non-ownership coverage under the BAP cover?
Covers the employer when the employee is using their vehicle on company business.
Covers the employee while using their vehicle on company business.
Covers hired employee autos.
Covers all non-owned vehicles.
Covers the employer when the employee is using their vehicle on company business.
(The purpose of the coverage is to protect the employer and not the employee when the employee uses his or her vehicle on company business and is involved in an at-fault accident that may bring the employer into a claim with the claimant)
Which of the following would be considered a consequential loss under a dwelling policy?
Water damage to a house as a result of a fire.
A tree falling on a roof and a branch breaks a window.
Food spoilage in a freezer as a result of a fire in the house.
Smoke damage to a detached garage as a result of a fire.
Food spoilage in a freezer as a result of a fire in the house..
(Food spoilage resulting from a covered peril cutting off the electricity would be an example of a consequential loss)
n the ocean marine insurance policy, the term “average” means:
Loss or damage.
The ACV of the ship.
The average value of the claim insured against by the perils of the sea .
That coverage is written on a named peril basis.
Loss or Damage!!!
An insured purchases a $1 million umbrella policy with a $1,000 self insured retention (SIR) and agrees to maintain the following underlying limits: auto liability - $100/300/50 and personal liability limits of $300,000. The insured is involved in an at-fault auto accident and the claimant is awarded $200,000 for his bodily injuries. What will the umbrella pay if the insured only carries $50/100/50 auto limits?
$100,000
$200,000
$50,000
Nothing because the insured violated the maintenance of the policy’s underlying provision.
$100,000
(When the insured does not maintain underlying limits as stated in the umbrella policy, the umbrella carrier pays as though those limits were in effect. The insured would have to pay $50,000, the underlying carrier would pay $50,000 and the umbrella carrier would pay the remainder)
What is the percentage that the insured can apply to coverage A of the DP-2 and DP-3 dwelling forms for ordinance or law coverage?
10%.
5%.
20%.
15%.
10%
Under the Personal Auto Form, Uninsured Motorist Coverage is excluded for claims settled without the insurer’s consent only if:
The claim was settled before an investigation could be completed.
The claim was adjusted by an unlicensed adjuster.
The claim settlement prejudiced the insurer’s subrogation rights.
The claim was settled for an amount that was more th
The claim settlement prejudiced the insurer’s subrogation rights.
Aircraft medical payments can be amended by endorsement to include injury to:
The crew.
The general public.
The officers of a corporation.
Non occupants.
The Crew!!!
A person asserting a right to payment under an insurance policy is referred to as:
A first party claimant
A third party claimant
An insurer
An agent
A first party claimant
A partner in a firm authorized to have custody of the insured property outside the premises would be called a:
Messenger.
Custodian.
Guard.
Watchman.
Messenger!!!
(A messenger is one who has custody of the insured’s property outside the premises. An example is a person going to the bank to make a night deposit)
An insured has a BOP and desires to add the endorsement that provides Utility Servises-Direct Damage coverage. What types of property must be listed for coverage to apply?
Overhead transmission lines
Water Supply Services
Wastewater Removal Property
All of the responses are correct
All of the responses are correct
Making false statements regarding anyone in the business of insurance is known as:
Misrepresentation
False Advertising
Defamation
Coercion
Defamation!!!
(Making any false statements regarding the financial status of an insurer or any false statements regarding anyone in the business of insurance is considered defamation)
The standard deductible for each coverage under the “emergency flood program” is:
$2,000
$500
$1,000
$250
$2000
When two or more persons are legally responsible for injuries to another party, collectively, the persons responsible are referred to as:
Co-Culpable
Co-Defendants
Joint Tort-Feasors
Class Action Defendants
Joint Tort-Feasors
An insurance company that permits different rate classifications for individuals of the same class and same hazard may be guilty of:
Unfair discrimination.
Boycotting.
Misrepresentation.
Defamation.
Unfair discrimination.
(Persons in the same underwriting group with equal or the same characteristics must be treated the same for the rating of premiums)
What is the purpose of an installation floater?
To cover property belonging to a contractor or others that is intended to become a part of a structure
To cover property to be installed at the insured’s location
To cover property that has been installed when the contractor has completed the job and the work has been accepted
To cover the insured’s machinery, tools and other equipment used to install property to become a part of a building
To cover property belonging to a contractor or others that is intended to become a part of a structure.
(The policy is used to supplement coverage provided by the commercial property forms. It covers property off an insured’s location and in transit or at the job site awaiting installation or when it has been installed. Coverage ceases when the property has been accepted by the purchaser)
If an insured has a hospital expense policy providing for room and board reimbursement on an “expense incurred” basis with a $245-a-day limit, and the daily rate charged is $230, how much will the insurance company pay?
$230.
$475.
$15.
$245.
$230
A valued policy is
A policy sold for less than the normal premium
What a policy becomes once coverages are confirmed
A guaranteed amount payable if a loss occurs
A policy which provides minimal coverage for a nominal premium
A guaranteed amount payable if a loss occurs
Homeowner policies have “special limits” on all the following losses, EXCEPT:
Fire damage to guns
Theft of coins
Theft of silverware
Theft of furs
Fire damage to guns
Which of the following is true regarding the HO-5 form?
Provides open peril coverage on the buildings and their contents.
Provides open peril coverage on buildings and broad form peril coverage on their contents.
Provides broad form peril coverage on the buildings and their contents.
Provides broad form peril coverage on the
buildings and named peril coverage on their contents.
Provides open peril coverage on the buildings and their contents.
A personal auto policy provides liability coverage on a single limit basis for $100,000. A covered accident caused by Mr. Jones involves a $75,000 liability judgment to Mr. Allen for his injuries and $25,000 liability judgment for his car. In addition, $20,000 in legal bills are incurred defending the insured. The company will pay:
$120,000.
$25,000.
$75,000.
$100,000.
$120,000.
(Legal expenses are in addition to the limit of liability. The single limit covers both bodily injury and property damage liability. Therefore, the policy can pay the $120,000)
The requirement included in a health policy enabling an insured to review an issued policy for a specific period of time, permitting the insured to return that policy for a full refund of the paid premium, if desired, is called:
The free look/right to return provision..
(The free look provision in health insurance, also known as the “right to return” provision, allows for a 10 day review of the issued policy. The exceptions are long-term care insurance, and medicare supplement insurance, whose “free look periods” are 30 days)
Aircraft liability coverage is very similar to auto insurance coverage with the following exception:
Usually written with a deductible
Does not apply to property damage of others
Liability to passengers is treated as a separate exposure
Cannot exclude passenger liability
Liability to passengers is treated as a separate exposure
Coverage E under the farm forms covers which of the following?
Unscheduled personal property
Scheduled personal property
Scheduled real property coverage
Blanket real property coverage
Scheduled personal property
There are two versions of the commercial general liability policy. They are known as:
Claims-made and occurrence.
Claims-made and claims-paid.
Claims-paid and occurrence.
Occurrence and acceptance.
Claims-made and occurrence!!!
Which of the following time periods is ordinary payroll coverage limited to in case of a business income loss under the BOP?
30 days
60 days
90 days
180 days
60 days
To minimize adverse selection in dental plans, a company may do all of the following, EXCEPT:
Choose not to write contributory coverage.
Impose longer probationary periods.
Increase the minimum percent of participation to 80% or 85%.
Eliminate coverage for original participants.
Eliminate coverage for original participants.
Which of the following would be found in a yacht policy?
Cargo belonging to others coverage
Liability coverage
Sails, oars, and ballast
Earth movement
Liability coverage
In New York, automobile insurers are required to offer supplementary uninsured motorists coverage (SUM) but are not required to provide more than a maximum limit of:
$250,000 per person/$500,000 each accident.
$100,000 per person/$300,000 each accident.
$50,000 per person/$100,000 each accident.
$200,000 per person/$500,000 each accident.
$250,000 per person/$500,000 each accident.
The three parties to a contract bond are:
Principal, obligee, surety.
Obligor, principal, surety.
Principal, obligee, employee.
Employee, obligor, principal.
Principal, obligee, surety.
What is required when a company wants to self insure for workers compensation?
A property bond with a financial statement.
Employers liability.
Excess limits workers compensation policy.
A security bond.
A security bond!!!
The personal liability section of the homeowner policy forms covers which of the following?
Bodily injury or property damage caused by the personal activities of an insured.
Damage to an insured’s property caused by a visitor.
Bodily injury to a resident caused by a neighbor’s dog.
Bodily injury or property damage caused by war.
Bodily injury or property damage caused by the personal activities of an insured.
A document that temporarily obligates an insurance company to provide coverage while the issuance of a policy is pending is known as:
A binder.
An application.
An endorsement.
A rider.
A binder.
(A coverage binder provides temporary coverage and will usually include such items as the insured’s name and address, any additional insureds or mortgagees, property description, amount of coverage, effective date of coverage, and identity of the insurer)
Who of the following people would be considered as “family members” under a personal umbrella liability policy?
A parent of the insured who resides in another state
The divorced wife of the insured who no longer resides with the insured
The insured’s father-in-law who lives next door
A foster child who lives with the insured
A foster child who lives with the insured
Nixon Construction Company carries a CGL policy that has a $500,000 per occurrence limit, $1,000,000 general aggregate limit and a per person medical payments limit of $25,000. Employees cause $200,000 property damage and $400,000 bodily injury when persons are injured and property is damaged in connection with a construction project. Two of the employees suffer medical expenses of $15,000 each. How much will the insurer pay on behalf of Nixon Construction?
$500,000
$630,000
$610,000
$600,000
$500,000
(The most the policy can pay is the occurrence limit of $500,000. The employees are not covered under medical payments. They would collect under workers compensation coverage. Remember that the policy cannot pay more than the per occurrence on any one claim. Therefore, in this question the insured would have to pay the remaining $100,000 of this claim because the insurer will only pay $500,000 of this $600,000 claim)
hich of the following would be considered a “supplementary payment” coverage under a business auto policy?
All post-judgment interest in a suit defended by the insurer
Payment for an insured employee’s truck being used by the employee on a business-related trip
Costs for a private investigator hired by an employee to prove he was not involved in a hit and run accident of which he has been accused
Up to $2,000 for the cost of bail bonds for an employee involved in an accident while he was on a trip to Mexico that he won for exceeding sales goals set by the company
All post-judgment interest in a suit defended by the insurer
