APA 92 Practice Exam Flashcards
State regulatory laws include
File and use, flex rating, prior approval, use and file, mandatory law.
The ideal exposure base is
Difficult for the insured to manipulate, sensitive to inflation, and socially acceptable. It is also easily determined.
The NCCI does?
Function directly in many jurisdictions, acts as a statistical agent to state rating bureaus, and calculates file loss costs for its members
A business consideration in rate making is that the rate .
is sensitive to loss exposures
An employer might commonly demonstrate its financial ability to pay any WC claim by
having a WC insurance plan, state fund, or self insure
The insurer;s rights regarding when a premium audit can be conducted include
within three years of expiration, using records only relating to the policy, and during the policy period
Worker’s compensation benefits include
medical, disability, and death. it does not cover unemployment
What are the standard limited of liability under employers’ liability coverage for bodily injury by accident and bodily injury for disease?
100/100/500
Part four of WC and ELI policy covers
your duties if injury occurs
Part 6 - conditions of WC and ELI policy provides rights and obligations relating to
inspection, cancellation, and sole representative
Care and loss of employee services, including the loss of consortium is covered under?
Employers Liability Insurance
The prominent reasons payroll is used as a premium base in WC is that
it variance with exposure, easy to determine and verify, and it is not readily manipulated by the insured
When uninsured subcontractors are used, to calculate payroll you can use
payroll, full subcontract price, or 90% of contract price for contracts with labor only.
The authorized rate is
the manual rate or any rate authorized by the regulatory authority
Business can be considered multiple enterprises when
the other operation is not within the scope of insured’s principal business, operation could still exist if insured’s other operations cease, and the insured maintains separate financial records for each business.
Parts of the basic manual include
Rules, classifications, and conditions
The Scopes Manual derived the description for each classification from
NCCI classification files, NCCI underwriting committee decisions, and NCCI underwriting staff interpretations
Standard exception classifications include
clerical office employees, clerical telecommuter employees, and automobile salespersons
The Davis-Bacon Act prohibits federal government from funding any construction project on which
wage rates are below the prevailing wage for the area
On a construction project, the person primarily responsible for work quality and timely performance is the
general contractor
the basic stages of the construction process include
installing utilities, enclosing the superstructure, and landscaping the site
What are flashings?
The material strips used for sealing joints
In construction, a temporary yard can become a permanent yard when it is
used after project completion
The Jones act applies to?
an occupational injury to a crewmember of a seagoing cargo vessel injured while the vessel is at sea
The FELA (federal employers liability act) applies to?
an occupational injury to an employee of an interstate railroad who would be injured in a train accident
A state workers’ compensation law
would apply to an occupational injury when an employee of a commercial painting firm is injured while temporarily working at a dockyard painting the warehouse used to store cargo for seagoing vessils.
LHWCA covers
the operator of a crane used to load and unload seagoing vessels.
The stevedoring industry wage rate structure contains penalty rates for handling
ammunition, explosives
GL gross sales premium base exclusions include
royalty income from patent rights or copyrights that are not product sales, sales taxes collected and submitted to governmental division, and finance charge for items sold on installment
The Commercial Lines Manual includes
comissions but not tips, intercompany sales, and severence pay
The Commercial lines manual includes payroll for GL insurance such as
fees paid to employment agencies, payments for allowances for hand or power tools, and value of store certificates or merchandise. It does not include rewards for invention or discovery
The classification table in the commercial lines manual contains raiting and classification information for
boiler and machinery, general liability, and farm. It does not include workers’ compensation
The amount of an employers WC obligation depends on
a state statute, not judges decision, jurys decision, or tort law.
in the CLM classification table, the symbol “m” denotes
Admissions
An operation excluded from the scope of a classification is
amusement centers
An inclusion for governmental subdivision audits are
operating expenditures
NPD stands for
no payment division
NOC means
not otherwise classified
The insured is an auto parts store. The insured’s van is used by employees to deliver parts to auto dealers and repair shops in the area. The correct auto business use classification is
commerical. it is not wholesale, service, or retail
the primary classification in motor carrier insurance for van pools is
seating capacity
for public audits, other than car basis or composite rating could be
gross receipts and mileage basis
According to CLM, truckers eligible for coverage include
contractual gravel dealers, furniture movers, and building contractors hauling supplies
Item five in schedule for non-ownership liability in the truckers coverage from declarations include
number of employees or partners
Item six of trailer interchange coverage in truckers coverage form declarations include
the daily rate and estimated premium for the physical damage coverages provided under the trailer interchange coverage
the covered auto symbol covers owned auto onlys under the truckers coverage form?
Symbol 42
Which covered auto symbol covers hired autos only?
Symbol 47
A typical garage policy has
auto physical damage, auto liability, and garage keepers coverage
the 2005 garage coverage form helps meet insurance needs of
auto dealers
item one of garage coverage form declarations include information regarding
policy period
The liability premium for the Garage Coverage Form-Auto Dealers Supplementary Schedule is based on
number of employees
Most property insurance contracts settle losses based on the propertys
actual cash value
Bailees insurance includes coverage for
laundries and dry cleaners, furriers customers, and warehouse operators legal liability. It does not cover bonds for jailed individuals
The purpose of an internal control survey is to
measure the value of mangement controls, discourage theft by employees, and to provide early detection of theft.
Transportation insurance on domestic shipments that covers the carriers liability is provided by
a motor truck cargo insurance policy
a general control for a fidelity audit is
physical security measures
a narrative report for an auditor reporting on crime and fidelity losses include
audit prcedures and findings, method of alleged discrepancies, and settlement proposal schedule
embezzlement is
the principal cause of employee losses
in crime and fidelity loss auditing, the narrative report includes
information used for final claim negotiation, information developed from the insured’s books and records, and schedules in case a court decision is necessary for a claim settlement
an underwriter may request an internal control curvery for an insured or a prospect for
insured’s request, fidelity claims for the insured line are unacceptably high, and limits requested eceed predertined amount
Pure Premium =
Loss and loss adjustment expenses/earned exposure units
gross rate =
pure premium/loss and loss adjustment expense
loss and loss adjustment expense percentage =
100% - Total aquisition costs - all other expenses (except loss and loss adjustment expenses)
Ocean marine insurance covers
Hull insurance, protection and indemnity, and cargo insurance.
An open cargo policy is an insurance policy that covers oversea shipments that are
either exports or imports or both, by vessel or aircraft.
