Comp Test Questions

Question 1

If Policyholder J has no added endorsements, under which of the following scenarios will Policyholder J’s injuries be covered by her Personal Auto Policy under Medical Payments Coverage?

A
J was driving her own car from the Post Office after retrieving her employer’s mail

B
J slid into a tree while driving her company car on a personal errand

C
J was using her car as a taxi when the vehicle overturned

D
J broke her leg during an accident that occurred during a demolition derby

Answer 1

A

Question 2

Which of the following relationships involves vicarious liability?

A
Husband and wife

B
Teacher and student

C
Employer and employee

D
Wholesaler and retailer

Answer 2

C

Question 3

What is the name for an insurer organized in the same state in which it is authorized to do business?

A
Foreign

B
Domestic

C
Admitted

D
Alien

Answer 3

B

Question 4

Crop/Hail Insurance is a specialized policy that:

A
Will replace any lost yield with like produce when reduced by a covered loss

B
Protects against reduced yield because of a covered loss before crops are harvested

C
Guarantees there will be an abundant yield

D
Protects against reduced yield because of conditions after harvesting

Answer 4

B

Question 5

An agent has authority to do all of the following, except:

A
Represent the insured’s interest

B
Appoint a solicitor as his or her representative

C
Solicit applications on the insurer’s behalf

D
Countersign insurance contracts

Answer 5

A

Question 6

Which of the following is covered under Section II of a Homeowners Policy?

A
An injury to the insured’s employee

B
An injury to a guest of the insured

C
Liability arising from a business pursuit

D
An injury to the insured’s 10-year-old son

Answer 6

B

Question 7

Which of the following statements is true regarding the eligibility of flood insurance?

A
Banks and Savings and Loan Associations may exempt an individual from purchasing the flood insurance that is required for a federal loan

B
In order to qualify for a federal loan, the property owner must purchase flood insurance if the property is located in a flood area

C
All property located in a flood area must be insured against flood by law

D
Industrial buildings are not eligible for flood insurance

Answer 7

B

Question 8

If the amount of liability insurance coverage is divided between bodily injury and property damage claims, the policy limits are which of the following?

A
Combined

B
Per Person Limits

C
Per Occurrence

D
Split Limits

Answer 8

D

Question 9

Under which of the following circumstances would the Limited Theft Coverage endorsement be used?

A
The insured dwelling is tenant-occupied

B
Coverage against vandalism is needed for a dwelling vacant more than 60 days

C
Coverage is desired for off-premises property

D
The insured dwelling is owner-occupied

Answer 9

A

Question 10

The Named Non-owner endorsement:

A
Provides only liability coverage

B
Covers only the person named on the endorsement

C
Does not supply coverage to meet a state’s financial responsibility law requirements

D
Does not apply to a rented vehicle

Answer 10

B

Question 11

Which of the following coverages is not included in the Basic Dwelling Form?

A
Fair Rental Value

B
Additional Living Expenses

C
Property moved to a Newly Acquired Residence

D
Personal Property Coverage on a World-Wide basis

Answer 11

B

Question 12

Which of the following vehicles is not considered an uninsured vehicle?

A
A vehicle that disappears after it hits and runs

B
A vehicle insured for less than the state’s minimum required coverage

C
A vehicle owned by the government

D
A vehicle whose coverage is denied by its insurer

Answer 12

C

Question 13

What is the purpose of a Certificate of Authority?

A
It authorizes an insurer to pay claims

B
It authorizes a producer to sell insurance

C
It authorizes a producer to sell surplus lines insurance

D
It authorizes an insurer to transact insurance business

Answer 13

D

Question 14

How many days’ notice must the Commissioner provide before revoking an insurer’s Certificate of Authority?

A
30 days

B
5 days

C
No notice is required

D
10 days

Answer 14

10 Days

Question 15

The purpose of the Texas Fair Plan Association is to do which of the following?

A
Provide coverage to those who were cancelled by previous insurers

B
Mediate claim disagreements between the insurer and insured

C
Handle insurance complaints

D
Review the homeowner insurance rates in Texas to evaluate discrimination

Answer 15

A

Question 16

Which of the following is not a valid reason to cancel a personal auto policy after the first 60 days of coverage?

A
Claims history

B
Driver’s license suspension

C
Material misrepresentation

D
Non-payment of premium

Answer 16

A

Question 17

The time period in which a lawsuit may be filed after the occurrence of a claim is referred to as:

A
Common law defenses

B
Limit of liability

C
Statutory law

D
Statute of limitations

Answer 17

D

Question 18

Losses that cannot be calculated objectively, such as pain and suffering or mental anguish, are considered:

A
Punitive damages

B
General damages

C
Special damages

D
Physical damages

Answer 18

B

Question 19

If a fire burns the home and property of an insured, what must the insured provide?

A
Pictures of the damage

B
An inventory of the damaged property

C
Proof that they called the fire department

D
Receipt for the fire extinguisher in the garage

Answer 19

B

Question 20

All of the following statements regarding property insurance are correct, except:

A
A property that contains neither occupants nor personal property is deemed vacant

B
A binder is a temporary proof of insurance

C
The owner of clothing left in the care of a dry cleaner is called a bailee

D
The insurer may cancel a policy, after providing proper notice

Answer 20

C. The owner of clothing taken in for cleaning would be a bailor. The dry cleaner in custody of the clothes is the bailee.

Question 21

Which of the following is not an element of negligence?

A
Proximate cause

B
Duty owed

C
Forseeable consequence

D
Assumption of risk

Answer 21

D

Question 22

The formal statement an insured provides to an insurer, including all the details an insurer needs to assess its liability following a loss, is known as a:

A
Certificate of Insurance

B
Binder

C
Notice of loss

D
Proof of loss

Answer 22

D

Question 23

The transfer of the right of recovery from the insured to the insurance company is called:

A
Indemnity

B
Subrogation

C
Assignment

D
Hold harmless

Answer 23

B

Question 24

Z is a distributor of natural gas. While connecting gas to B’s house, an explosion occurs and the house is destroyed. Z’s defense is that B did not turn off the pilot light on her furnace before the hookup as instructed by the company. The court ruled that the activities of connecting gas lines were so dangerous that Z’s defense did not relieve its liability. What legal principle is applicable in this case?

A
Assumption of risk

B
Comparative negligence

C
Contributory negligence

D
Absolute liability

Answer 24

D

Question 25

An insured owns a home with a replacement cost of $300,000 and a market value of $250,000. What is the most a valued policy will pay in the event of a total loss without a deductible?

A
$250,000

B
$300,000

C
$240,000

D
The policy limit

Answer 25

D

Question 26

Which one of the following is not true regarding the Texas Automobile Insurance Plan Association?

A
The Association assesses members for its operation in proportion to the volume of auto insurance premiums written by each member

B
The Governor may discipline a member for failing to pay an assessment

C
It provides auto insurance to eligible individuals who are unable to obtain insurance through standard insurance markets

D
Each auto insurer authorized in Texas must be a member of the Association to transact insurance business in the state

Answer 26

B

Question 27

In Texas, policy forms and endorsements must be filed for approval how many days before they are issued?

A
30

B
20

C
60

D
10

Answer 27

60

Question 28

Which of the following is not required of an agent to do in order to be able to transact insurance business in Texas?

A
Pass an exam

B
Pay a fee for a Certificate of Authority

C
Has not committed an act for which a license may be denied

D
Appointment by insurer

Answer 28

B

Question 29

A new policy form must be submitted to the Commissioner at least _____ days before the date the policy form will be used.

A
120

B
90

C
60

D
45

Answer 29

60