AD Banker Practice Flashcards
All of the following are risk management techniques, except:
Transfer
Retention
Enhancement
Avoidance
Enhancement.
Enhancement is not a risk management technique.
Which of the following is NOT a residence premises in the Homeowners Policy?
A 3-family dwelling where the named insured resides
Premises rented occasionally to the named insured for nonbusiness purposes
A 1-family residence where the named insured resides
Other structures on the Declarations if shown as the residence premises
Premises rented occasionally to the named insured for nonbusiness purposes.
Which of the following work-related injuries might not be covered by Workers’ Compensation insurance?
An employee is injured despite the extensive safety measures taken by the employer
An employee is injured when a fellow employee pushes him/her into heavy machinery
An employee suffers his/her second injury in the same year
An employee from accounting is injured while assisting an assembly line worker
An employee from accounting is injured while assisting an assembly line worker.
An covered injury does not include an injury to an employee performing duties he/she was not hired or trained to do.
Rates are referred to as which of the following when the insurance company files for approval and then implements the rates?
File and Use
Prior Approval
Mandatory
Open Competition
File and Use.
Under the Broad Form Dwelling Policy (DP-2), which peril is not included for coverage without an endorsement?
Theft
Damage to appliances by artificially generated electricity
Volcanic Eruption
Falling Objects
Theft.
only through endorsement
Which of the following is not one of the limits of liability provided by the CGL?
Personal and advertising injury limit
Bodily injury limit
General aggregate limit
Medical expense limit
Bodily injury limit
There is no unique limit for bodily injury losses, though payment for such losses would be subject to other policy limits, such as the per occurrence limit, the general aggregate limit, the products-completed operations aggregate limit, or the medical expenses limit.
Which of the following is true regarding the Medical Payments coverage under the Business Auto Policy?
Coverage is limited to medical expenses incurred in the first year after the accident
Medical Payments coverage pays loss of income during disability arising from a covered accident
Medical Payments coverage is designed to provide medical payments coverage for employees
The BAP does not automatically include Medical Payments coverage
The BAP does not automatically include Medical Payments Coverage
All of the following coverage forms may be added to the Commercial Property Coverage Part, except:
The Businessowners Policy
Legal Liability Coverage Form
Commercial Builders Risk Coverage Form
Building and Personal Property Coverage Form
The Business-owners Policy
The BOP is designed as an alternative to the CPP, and cannot be added to it as a coverage part.
Which of the following is true concerning monopolistic states regarding Workers’ Compensation insurance?
In Monopolistic states, Workers’ Compensation is only available through a state fund
In Monopolistic states, all coverage is written through a pool of insurance companies
Monopolistic states do not have Workers’ Compensation statutes
In Monopolistic states, only one insurance company, chosen by the state, is allowed to provide coverage
In Monopolistic states, Worker’s Compensation is only available through a state fund.
Which of the following describes the person that has care and custody of insured property outside the insured premises?
Custodian
Employee
Messenger
Watchperson
Messenger.
The term Messenger is used to describe a person who has custody of the property outside the premises.
Which insurance company department determines the probability of loss and sets the premium rates?
Claims
Underwriting
Sales
Actuarial
Actuarial.
The Actuarial Department interprets the statistical information used in rate making, whereas the Underwriting Department is responsible for risk selection.
During an inventory check, Company RST discovers a shortage of product and materials. No evidence of a crime is found either at the warehouse or in the electronic record. Which of the following describes Company RST’s likely course of action?
It files a claim with its insurance company seeking coverage under the mysterious disappearance clause of their burglary coverage
It files a computer fraud claim on the assumption that the computer system was flawed
It has to absorb the loss, since no evidence of a crime existed
It files a claim under the employee theft insuring agreement
It has to absorb the loss, since no evidence of a crime existed.
Mysterious disappearance is not covered by any of the standard crime coverage forms.
If other insurance also applies to a loss covered by a policy, which of the following will establish the method for determining how the insurance companies will pay the loss?
Limit of Liability
Pro rata liability
Claim Settlement
Subrogation
Pro rata liability
All of the following are true about extended reporting periods, except:
The basic extended reporting period allows a claim to be reported after the policy period for a specified number of days
The supplemental tail requires an annual premium
Under the supplemental tail, the insured must request coverage within 60 days after the end of the policy term
The basic extended reporting period does not increase the policy limits
The supplemental tail requires an annual premium.
The supplemental extended reporting period has a one-time period.
T’s office condominium is covered under a Condominium Commercial Unit-Owners Coverage Form. Which of the following is not covered on a primary basis?
Fixtures owned by the Association
Business personal property
Furniture
Improvements
Fixtures owned by the Association.
In the event both the unit-owner’s policy and the association’s policy cover the fixtures, the unit-owner’s coverage will be excess.
Policyholder L has a DP-1 with a Coverage A amount of $300,000. Following a severe storm, L suffers a covered loss to the dwelling of $275,000 and a covered loss to a detached swimming pool of $30,000. How much will L’s policy pay?
$250,000
$305,000
$275,000
$300,000
$300,000
The pool is covered under Coverage B, which pays up to 10% of Coverage A, or $30,000. However, because L’s policy is written on the DP-1 form, the Coverage B limit is included in, not additional to, Coverage A limit. Therefore, the most the policy will pay is $300,000.
The insurer may cancel a BOP when an insured building has been vacant or unoccupied for how many days?
120
90
60
30
60.
The HO-8 form settles losses to the building on what valuation method?
Functional Replacement Value
Replacement value
Aggregate value
Agreed value
Functional Replacement Value
Within how many days must a producer notify the Director that the address of their business office has changed?
30
Which of the following is stated in the Insuring Agreement?
The perils excluded by the policy
The Other Insurance provision
The perils insured against
The location of insured property and the named insured’s mailing address
The perils insured against.
The Insuring Agreement states the insurance company’s promise to pay the insured, including the exact perils insured against by the policy.
Which of the following claims would be excluded under the Business Auto Policy?
Bail bonds required after a covered accident
Damage to property in the insured’s care, custody, or control
Bodily injury after a person is struck by a mechanical device attached to a covered truck
Injury to another motorist
Damage to property in the insured’s care, custody, or control.
Which form would cover a business owner who operates out of a temporary location during restoration?
Expediting Expenses
Extra Expense
Contingent Business Interruption
Business Income
Extra Expense
This provides coverage for extra expenses, such as operating out of a temporary location for up to 12 months after the date of physical loss or damage.
Which statement is true regarding the Personal Liability Supplement to the Dwelling policy?
The supplement covers damage to the insured’s personal autos
The supplement covers professional services rendered by the insured
The Limit of Liability is the same as the Coverage A amount
The supplement provides coverage for claim expenses
The supplement provides coverage for claim expenses.
The liability supplement provides coverage for claim expenses, first aid expenses, and damage to the property of others/
Endorsements that coordinate CPP coverages to avoid duplication are called:
Panel
Coordinating
Interline
Special
Interline.
These endorsement coordinate coverage contained in one coverage part of the policy with another coverage part.
Choose the false statement regarding the application of coverage under the Products Exposure Liability Coverage.
Coverage applies to property damage the product causes
Coverage applies to bodily injury the product causes
Coverage applies to bodily injury occurring away from premises the insured owns or rents
Coverage applies to damage to the product itself
Coverage applies to damage to the product itself.
Said to chose FALSE statement
Mobile Home Insurance includes all of the following, except:
Coverage B with a limit of 10% of Coverage A
Property Removal up to $500
Coverage A Dwelling coverage
Coverage C with a limit of 50% of Coverage A
Coverage C with a limit of 50% of Coverage A.
The Personal Property coverage limit is written at 40% of Coverage A for the Mobile Home policy, instead of at 50%.
Under a BOP, the insurer may examine and audit the insured’s books and records at any time during the policy period and up to what duration after policy expiration?
3 years
7 years
5 years
1 year
3 years.
J has a personal auto policy with Liability limits of 50/100/25, UM/UIM limits of 50/100, a Medical Payment limit of $5,000 and Comprehensive and Collision deductibles of $500. J’s vehicle slides on ice and hits a guardrail causing $9,500 in damage to the vehicle and $11,000 damage to the guardrail. J also sustains $1,000 in injuries. How much will the policy pay for all damages?
$11,000
$21,500
$9,500
$21,000
$21,500
The policy will pay $11,000 in Property damage under liability, $1,000 for injuries under medical payments, and $9,000 for physical damage after the deductible is met, totaling $21,000.
Which of the following is not a coverage extension under the Building and Personal Property Coverage Form?
Newly acquired or constructed property
Outdoor property
Inflation guard
Personal effects and property of others
Inflation Guard.
Inflation Guard is an optional coverage, not a coverage extension.
Which of the following is false about Livestock Coverage Form?
Mules are considered livestock
Classes of animals may be subject to a sublimit
Livestock are covered while in transit by common carrier
Poultry is not considered a type of livestock
Livestock are covered while in transit by common carrier.
Livestock are not covered when being transported by common carrier.
All of the following are true, except:
A Homeowners Policy will not cover theft of a boat away from premises
Coverage D of a Homeowners Policy includes loss of income from an incidental business
Coverage D of a Homeowners Policy covers additional living expenses
Home schooling is permitted under a Homeowners Policy
Coverage D of a Homeowners Policy includes loss of income from an incidental business.
Coverage D does not cover loss of income from an incidental business.
Choose the item that is not covered under the BOP.
Insured’s property located in common areas
Satellite dish located on the premises
Customer’s property in the insured’s control
Leased property
Satellite dish located on the premises.
Outdoor fences, radio or television antennas, satellite dishes, and its lead-in-wiring, masts or towers are excluded under the BOP.
Inland Marine Insurance is not typically used to insure which type of property?
Jewelry
Autos
Stamps
Cameras
Autos
Autos are not a covered class of property
Policyholder M insures an owner-occupied, single-family residence under a Special Form Dwelling Policy (DP-3) with a limit of $100,000. If the dwelling is damaged in a fire, what policy coverage will pay for M’s extra costs to stay in a motel and board M’s pets while the fire damage is being repaired?
Coverage B
Coverage E
Coverage C
Coverage D
Coverage E.
Coverage E pays for the necessary increase in living expense incurred by the insured if the building is rendered unfit for its normal use.
Which of the following claims would be covered under the DP-3?
Damage by vandalism to a dwelling vacant for 30 days before the loss
Theft to a dwelling under construction
Wind damage to TV antennas
Damage to a fence due to freezing and thawing of ice due to a winter storm
Damage by vandalism to a dwelling vacant for 30 days before the loss.
60 days is the amount.
Which of the following conditions would not be found in a CGL policy written on the occurrence form?
Duties in the Event of Occurrence, Claim, or Suit
Severability
Representations
The Insured’s Right to Claim Information
The insured’s right to claim information.
the condition is found in the claims-made form only.
The National Flood Policy defines all of the following as floods, except:
Leakage of underground water systems
Unusual and rapid accumulation or runoff of surface water
Overflow of inland or tidal waters
Mudflow caused by accumulation of water
Leakage of underground water systems
NOT a definition of flood.
Inland Marine Policies are primarily designed to insure:
Exclusively for property being transported on inland waters
Property that is mobile in nature and may be away from insured’s premises
Overseas shipments
Buildings and contents used for manufacturing
Property that is mobile in nature and may be away from insured’s premises.
Inland Marine insurance is designed for property that is portable, or that is being shipped from place to place. Generally, fixed property is not eligible.
Which of the following is not an additional coverage under the BOP?
Forgery or alteration
Personal effects
Collapse
Business income
Personal Effects
Personal effects is a coverage extension, not an additional coverage.
In which of the following circumstances would the insured be required to pay a self-insured retention on an umbrella policy?
There is a substantial change in the risk
The limits of the underlying policy have been exhausted
The umbrella drops down to act as the primary policy
The insurance carrier is declared insolvent
The umbrella drops down to act as the primary policy.
This happens when the underlying policy doesn’t cover a loss.
Construction material having a fire-resistance rating between 1 and 2 hours for walls, floors, and roofs is classified as:
Modified Fire Resistive
Joisted Masonry
Noncombustible
Fire Resistive
Modified fire-resistive.
Modified Fire Resistive construction has a fire-resistance rating of at least 1 hour, but less than 2 hours. To be considered Fire Resistive, the building and roof must be constructed of reinforced concrete and steel and have a fire-resistance rating of at least 2 hours. Joisted Masonry construction includes exterior walls of masonry or fire-resistive construction rated for no less than 1 hour and with combustible floors and roofs.
Choose the false statement about a newly acquired additional vehicle under the PAP:
It may be used on a farm
It may be used to transport goods for hire if receipts are less than $10,000
Coverage will be as broad as the broadest coverage on any insured vehicle in the household
It must be reported to the insurer within a specified period
It may be used to transport goods for hire if receipts are less than $10,000
Vehicles used to carry goods for hire cannot be insured under a Personal Auto Policy
A producer may share commissions with another producer:
After permission is granted by the insured
Only if they represent the same insurer
As long as there is a contract between the producers
Only if they are both licensed in the same line of insurance
Only if they are both licensed in the same line of insurance.
Which of the following is true about the Builders Risk Floater?
Fixtures that will become part of the building are not covered until they are installed
The floater covers the building for named perils
Coverage can be provided for farms
Scaffolding is excluded from coverage
Coverage can be provided for farms.
The Builders Risk floater covers commercial, residential, and farm buildings, fixtures are covered until installed, and the coverage is open peril with some limits for theft and vandalism coverage.
Which of the following is correct regarding coverage under the Farm Property Coverage Form?
Coverage B - Other Private Structures includes farm buildings and silos
The limit for Coverage G is the same as the limit of Coverage A
Coverage G includes loss of use
For coverage to apply, there must be a limit shown in the Declarations
For coverage to apply, there must be a limit shown in the Declarations.
For coverage to apply to Coverage A through G, there must be a limit of insurance shown in the Declarations for each of these coverages.
Which Ocean Marine insurance provision protects against direct damage caused by bursting of boilers?
Mechanical Failure Clause
Running Down Clause
Boiler & Machinery Clause
Inchmaree Clause
Inchmaree Clause
The Inchmaree Clause covers direct damage caused by the bursting of boilers breaking of propeller shafts, or loss due to faults or errors in navigation by the crew.
The implied warranty of seaworthiness is understood to mean which of the following?
The ship has a full complement of emergency navigation equipment
The crewmembers are all certified
The ship must be seaworthy and have a competent crew
The ship must have undergone a comprehensive inspection by the insurer
The ship must be seaworthy and have a competent crew.
The Farm Liability Coverage Form provides all of the following coverages, except:
Bodily injury
Advertising injury
Contractual liability
Property damage
Contractual liability.
Contractual liability is specifically excluded.
Livestock does not include which of the following animals?
Poultry
Goats
Donkeys
Horses
Poultry.
Livestock includes cattle, horses, goats, sheep, swine, donkeys, and mules
An employer that is self-insured for Workers’ Compensation insurance must purchase a guaranty bond in the amount of ___________.
$250,000
$100,000
$50,000
$500,000
$100,000
Choose the false statement about paying and sharing commissions:
An unlicensed person cannot accept a commission for negotiating insurance
An insurer must pay commissions for selling insurance to only licensed persons
Commissions paid to producers are negotiated with the insurers that they represent
Renewal commissions cannot be paid to a person who is no longer licensed on the renewal date
Renewal commissions cannot be paid to a person who is no longer licensed on the renewal date.
Renewal or other deferred commissions can be paid to a person for selling, soliciting, or negotiating insurance in Arizona if the person was properly licensed at the time of sale, solicitation, or negotiation of insurance occurred.
Which of the following is true about the Dwelling Policy Special Provisions – Arizona endorsement?
The insurer can subrogate against the person who caused domestic violence
Fire department service charges are covered
Intentional loss to property applies to a loss caused by domestic violence
The insurer has 60 days to pay a covered property loss
The insurer can subrogate against the person who caused domestic violence.
An insured receiving payment for a loss caused by domestic violence cannot waive the insurer’s right to subrogation against the perpetrator of the violence.
Under the AZ Miscellaneous Type Vehicle endorsements, all of the following coverages can be added by endorsement, except:
Motorhomes
Dune buggies
Golf carts
Motor boats
Motor boats.
Provides for coverages of golf carts, motorcycles, motorhomes, and recreational vehicles to be added as endorsements to the PAP. This does not include motor boats.
