Comprehensive Test Questions - Kansas Included

Question 1

Which term describes the situation that occurs when two policies covering the same property contain different policy periods?

A. Blanket coverage
B. Coinsurance
C. Concurrent causation
D. Nonconcurrency

Answer 1

D. Nonconcurrency

***A policy is nonconcurring with another policy when its policy period does not overlap exactly.

Question 2

Vandalism and malicious mischief losses are excluded under the Homeowners Policy:

A. When cemetery plots or burial vaults of an insured are damaged
B. During times of riot or civil disorder
C. When the property has been vacant for 65 consecutive days
D. While the insured is on vacation and away from the premises

Answer 2

C. When the property has been vacant for 65 consecutive days

***Since vacant property possesses a higher susceptibility to being vandalized, the policy excludes vandalism coverage when insured homes are vacant for more than 60 days.

Question 3

Of the Dwelling Policy forms, which one would cover an owned mobile home permanently affixed to a foundation?

A. DP-3
B. DP-1
C. DP-1, 2, or 3
D. DP-2

Answer 3

B. DP-1

Question 4

Which of the following describes both the premium paid by the insured and the promise by the insurer to pay a covered loss and defend the insured in a lawsuit?

A. Consideration
B. Acceptance
C. Legal Purpose
D. Offer

Answer 4

A. Consideration

***Consideration is the term used to describe the rights, money, promises, or property exchanged between the parties as part of a contract transaction.

Question 5

B has two policies on a property. Policy A is for $20,000; Policy B is for $40,000. If Policy A has a pro rata provision, how much will it pay for a covered loss of $15,000?

A. $5,000
B. $15,000
C. $7,500
D. $10,000

Answer 5

A. $5,000

***The total amount of coverage is $60,000. Policy A provides 1/3 of that total, so Policy A’s pro rata contribution would be one-third, or $5,000. Policy B provides $40,000, or 2/3 of the total coverage, so Policy B pays two-thirds.

Question 6

All of the following are true of Section II of a Homeowners Policy, except:

A. Loss assessment charges against the insured by a property owner’s association are excluded
B. Medical expense coverage is payable to guests
C. Medical payments coverage would apply if the family dog were to bite someone 3 blocks from home
D. First aid expenses are automatically included

Answer 6

A. Loss assessment charges against the insured by a property owner’s association are excluded

***Loss assessment charges against the insured by a property owner’s association are covered up to $1,000.

Question 7

Which of the following is false regarding Dwelling policies?

A. Mobile homes are eligible if written on a DP-1
B. Farm dwellings are not eligible
C. Trees, shrubs, and plants are covered for up to $2,500 total
D. Incidental business occupancies are permitted

Answer 7

C. Trees, shrubs, and plants are covered for up to $2,500 total

***The limit for trees, shrubs, and plants is 5% of Coverage A, and no more than $500 for any one item.

Question 8

All of the following statements about the powers of the Commissioner regarding Department of Insurance hearings are correct, except:

A. The Commissioner has subpoena power
B. The Commissioner does not have the power to issue a cease and desist
C. The Commissioner can serve a person a statement of charges and conduct a hearing
D. The Commissioner can examine witnesses and evidence

Answer 8

B. The Commissioner does not have the power to issue a cease and desist

***If the Commissioner believes that a person has violated any Kansas insurance statute, rule, or regulation and determines that the violation involves an immediate danger to the public health, safety, or welfare, they may issue an emergency temporary cease and desist order before a hearing is conducted.

Question 9

Which of the following would not be covered under Coverage B?

A. Grain silo
B. Shed
C. Swimming pool
D. Pole barn

Answer 9

A. Grain Silo

***No coverage is provided for other structures used for farming purposes.

Question 10

When firefighters extinguish a house fire with water, the water damage is considered a(n):

A. Consequential Loss
B. Loss that will be subrogated to the fire department
C. Direct loss
D. Indirect loss

Answer 10

C. Direct Loss

***Water damage is a direct loss to the property.

Question 11

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 broke her leg during an accident that occurred during a demolition derby
B. J was using her car as a taxi when the vehicle overturned
C. J slid into a tree while driving her company car on a personal errand
D. J was driving her own car from the Post Office after retrieving her employer’s mail

Answer 11

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

***Business use of private passenger cars is NOT excluded under Medical Payments Coverage.

Question 12

All of the following are true of subrogation, except:

A. It prevents the insured from collecting twice for the same loss
B. It allows the insurer to attempt collection from a third party to reimburse a loss
C. It helps the insurer control expenses and premiums
D. It allows the insurer to file suit against the insured

Answer 12

D. It allows the insurer to file suit against the insured

***The principle of subrogation requires the insured to transfer its right of recovery against any party causing a loss to the insurer, after it accepts payment from the insurer for a loss. Subrogation allows the insurer to recover from the third party that caused a loss any amounts paid to an insured. It also prevents the insured from collecting twice for the same loss. It does not allow the insurer to sue the insured.

Question 13

Which statement is true of medical payments in a Personal Auto Policy?

A. Medical payments are provided by Part A
B. Expenses for medical services sustained by the insured are covered
C. Medical expenses are paid only when the insured is legally liable
D. Medical expenses include insured’s injuries that result from racing activity

Answer 13

B. Expenses for medical services sustained by the insured are covered

***Coverage applies to any occupant of the insured vehicle and also to members of the insured’s household as pedestrians when struck by a motor vehicle or as an occupant of another person’s vehicle.

Question 14

Producers may not transact insurance business in Kansas unless:

A. There is reciprocity
B. The licensee has an endorsement by another producer
C. The Commissioner is notified within 90 days of the appointment
D. There is a certification from at least 1 insurer

Answer 14

D. There is a certification from at least 1 insurer

Question 15

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

A. Additional Coverages are added to the policy for an additional premium
B. The Declarations Page lists other parties having an insurable interest in the property
C. The insured’s duties and obligations are listed in the Conditions section
D. The Insuring Agreement describes the perils that are covered under the policy

Answer 15

A. Additional Coverages are added to the policy for an additional premium

***Additional Coverages are automatically included without an additional premium.

Question 16

When an auto has two auto policies with the same insurer, the insurer’s liability would not exceed:

A. The highest limit of the two policies
B. The limit of the first one purchased
C. The limit of the last one purchased
D. The combined limit of the two policies

Answer 16

A. The highest limit of the two policies

***Coverage will not be duplicated, so the policy with the highest limit applies.

Question 17

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 17

D. The policy limit

***A total loss under a valued policy is payable based on the policy limit listed on the declarations page.

Question 18

Regarding Medical Payments under the Personal Auto Policy, the liability limit shown in the Declarations is the maximum the policy will pay for which of the following?

A. Each person injured in any one accident
B. All persons injured in any one accident
C. All claims during the policy term
D. Each person injured during the policy term

Answer 18

A. Each person injured in any one accident

***The Medical Payments limit is a per person limit that applies to each accident.

Question 19

Which of the following defenses against negligence reduces damages in proportion to the degree of negligence?

A. Comparative Negligence
B. Statute of Limitation
C. Assumption of Risk
D. Contributory Negligence

Answer 19

A. Comparative Negligence

***Comparative negligence provides that the damages recoverable by each party to the suit be reduced in proportion to that party’s degree of negligence.

Question 20

Choose the false statement about Medical Payments coverage under the Personal Auto Policy.

A. The named insured and family members are covered if injured as pedestrians
B. Persons other than the named insured and family members must be occupying the insured auto in order to be covered
C. The policy limit is applied on a per occurrence basis, not per person
D. The named insured and family members are covered if injured while occupying any auto

Answer 20

C. The policy limit is applied on a per occurrence basis, not per person

***Auto medical payments coverage applies a per person limit.

Question 21

All of the following are insured’s duties after a loss under a property policy, except:

A. Abandoning the property to the insurer
B. Furnishing inventory of damaged property
C. Submitting to examination by insurer
D. Giving notice of loss as soon as possible

Answer 21

A. Abandoning the property to the insurer

***The insured may not abandon property to the insurer.

Question 22

Under a PAP, liability resulting from the insured’s use of a non-owned auto is:

A. Provided on an excess basis
B. Shared pro rata between the insured’s policy and the policy on the vehicle
C. Not covered because of the Care, Custody and Control Clause
D. Provided on a primary basis

Answer 22

A. Provided on an excess basis

***The owner’s coverage is primary and the driver’s coverage is excess.

Question 23

In Kansas, the licensing examination is waived for all of the following, EXCEPT:

A. An individual previously licensed in Kansas, whose license lapsed less than 2 years prior
B. Nonresident producers who are currently licensed in their home state
C. Excess lines producer
D. Travel producer

Answer 23

C. Excess lines producer

***Excess lines producers are not exempt from the licensing examination. Property and casualty agents may write excess lines by obtaining an excess lines license.

Question 24

A certificate of insurance includes which of the following?

A. The expiration date, name of the insurer, the premium, and limits of liability
B. The effective date, the named insured, the premium, and the limits of liability
C. The effective date, name of the insurer, the named insured, and limits of liability
D. The name of the insurer, the amount and type of insurance, and the perils insured against

Answer 24

C. The effective date, name of the insurer, the named insured, and limits of liability

***A certificate of insurance is a document stating that an insurance policy is in force. It is used to provide proof of insurance to property owners, contractors, and others who may require liability insurance. Perils would be included in a binder, not a certificate of insurance. The premium amount appears only in the policy, not on the certificate of insurance or binder.

Question 25

The Commissioner of Insurance has the power to do all of the following, except:

A. Issue producer licenses
B. Make insurance laws
C. Issue certificates of authority to insurers
D. Enforce insurance laws

Answer 25

B. Make insurance laws

***The Commissioner of Insurance has the power to regulate the insurance industry and to make any rules necessary to enforce the state laws, but the laws themselves are passed by the state legislature.

Question 26

Which of the following is not an exemption from the licensing examination requirement?

A. The individual is applying for a travel insurance producer license
B. The individual passed the examination, but was not properly certified due to clerical error by the insurer
C. The individual is applying for an insurance producer license for credit life and health
D. The individual was previously licensed in Kansas and it has been less than 2 years since such license lapsed

Answer 26

C. The individual is applying for an insurance producer license for credit life and health

***An individual applying for a license to transact credit insurance is subject to the licensing examination requirement.

Question 27

Losses covered by Kansas FAIR Plan policies are:

A. Paid using federal funds
B. Distributed among the member insurers
C. Paid by the state
D. Paid from premiums collected from insureds

Answer 27

B. Distributed among the member insurers

***Losses covered by the FAIR Plan are paid by the insurance industry in the private sector, fairly distributed among the insurers who have elected to participate in the Plan.

Question 28

Which of the following is NOT an example of unfair discrimination in property/casualty insurance issued in Kansas?

A. Limiting the amount of coverage available because of the applicant’s sex
B. Refusing to issue a homeowner’s policy because of the zip code of the property’s location
C. Charging higher premiums for a property in a certain geographic area based on sound underwriting and actuarial data
D. Offering a lower premium to one of two individuals of the same class and risk

Answer 28

C. Charging higher premiums for a property in a certain geographic area based on sound underwriting and actuarial data

***In property and casualty underwriting, geographic location is an allowable factor only when based on sound underwriting and actuarial data.