missed Questions Flashcards
Under a dwelling policy, which of the following clauses applies if an insured has lost one of two matching silver candlesticks?
Pair or set
Rita drops off her wedding gown at Vicky’s Dry Cleaners for a final pressing. The store’s press breaks, so Vicky takes Rita’s dress to her other store across town. On the way to the other store, Vicky is held at gunpoint until she gives the man the wedding dress. What crime coverage form would pay for the loss of the gown in this situation?
Extortion
Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective?
12:01 am the day after the application and premium payment are mailed
All of the following are other coverages included in both the broad and special form dwelling policy EXCEPT
Theft of personal property.
Which of the following best describes liberalization clause in a policy?
Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium.
How much coverage can be available for watercraft damage in the homeowners policy?
Up to $1,500
Which of the following statements regarding coverage for the flood and earthquake perils is true?
a) Flood and earthquake coverage is available in all policies.
b) Flood and earthquake coverage is available only through government insurance.
c) Flood insurance is usually provided in property policies, but earthquake coverage is available by endorsement only.
d) Both flood and earthquake are excluded perils in all property policies.
Both flood and earthquake are excluded perils in all property policies.
What is the name of the entity developed to assign risk and provide the equitable apportionment among workers’ compensation insurers
The Department of Consumer and Business Services
All of the following are conditions commonly found in the insurance policy EXCEPT
a) Appraisal.
b) Insuring agreement.
c) Cancellation and nonrenewal.
d) Subrogation.
Insuring agreement.
Who is NOT considered an employee in a commercial general liability (CGL) policy?
Temporary Worker
Rental Reimbursement is only available if the policy includes which coverage?
Other Than Collision Coverage
The individual named insured endorsement under a commercial auto policy provides coverage for which of the following?
a) The sole proprietor of the business and his or her employees
b) The sole proprietor of the business and his or her spouse only
c) The sole proprietor of the business and his or her family members
d) The sole proprietor of the business only
The sole proprietor of the business and his or her family members
Which of the following is used in the formula for calculating the actual cash value of a property?
a) Stated value
b) Fair market value
c) Agreed value
d) Replacement cost
Replacement cost
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called
Described coverage.
Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy?
Damage to the dwelling caused by ash or dust from a volcanic eruption
An insured is driving her car through a residential area when she loses control and crashes into a neighbor’s front porch. The neighbor, who was sitting on the porch, is injured. The insured’s liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have?
Combined single
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto?
a) A vehicle rented for the insured’s personal use
b) A vehicle that is titled to another person, but is being used with permission by an insured
c) A vehicle leased to the named insured for 12 months by a leasing company
d) A vehicle that is titled and insured by the named insured, but is driven principally by the named insured’s son, who is resident of the household
A vehicle that is titled to another person, but is being used with permission by an insured
Which of the following is a statutory defense?
Comparative negligence
What authority issues a Cease and Desist Order?
The Director of the Department of Consumer and Business Services
What are the two types of compensatory damages?
Special and general
All of the following are examples of risk retention EXCEPT
a) Self-insurance.
b) Premiums.
c) Deductibles.
d) Copayments.
Premiums.
Which of the following statements about the FAIR Plan is true?
a) A prime goal of the FAIR Plan is to assure the availability of essential property insurance to owners of insurable property.
b) One purpose of the Plan is to ensure fair and adequate rates for fire insurance.
c) Members of the FAIR Plan’s Board of Directors are appointed by the Governor.
d) The FAIR Plan seeks to guarantee the availability of auto insurance to eligible drivers.
A prime goal of the FAIR Plan is to assure the availability of essential property insurance to owners of insurable property.
All of the following are true regarding physical damage coverage EXCEPT
a) The policy will pay up to $20 per day up to a maximum of $600 for rental transportation.
b) The insurer will pay for direct and accidental loss to a covered auto minus any applicable deductible.
c) The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle.
d) Losses to nonowned autos will be covered the same as the broadest coverage available for any covered auto, except nonowned trailers are limited to $1,500.
The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle.
The purpose of a joint underwriting association is to create a mechanism that
Requires authorized insurers to provide commercial liability insurance.
How many hours of Ethics must a producer complete as part of continuing education every 2 years?
3
Which of the following statements is NOT true regarding mobile agricultural machinery and equipment coverage?
a) It covers detached parts and accessories of mobile devices.
b) It insures eligible equipment for open perils.
c) This coverage must be written as part of farm coverage.
d) It relates to devices used in the everyday farm operation.
This coverage must be written as part of farm coverage.
With respect to auto insurance, the term owned autos includes all of the following EXCEPT
a) A pickup or van titled to and used in the named insured’s business.
b) Any private passenger auto titled to the named insured.
c) A pickup or van acquired by the named insured during the policy period.
d) Any private passenger auto leased to the named insured for a period of more than 6 months.
A pickup or van titled to and used in the named insured’s business.
The extra expense coverage form provides
Coverage that will permit the insured to continue in business without interruption following a property damage loss.
Which of the following is NOT true regarding a Certificate of Authority?
a) It may be necessary for transacting business in a specific state.
b) It is equivalent to an insurance license.
c) It is issued by the state department of insurance.
d) It is issued to group insurance participants.
It is issued to group insurance participants.
Who would provide coverage through the FAIR Plan?
Authorized insurers only
Under the dwelling policy, Coverage C – Personal Property is
Limited to covering a servant’s property while at the insured location.
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
Which of the following types of property would be covered in homeowners coverage forms?
a) Structures rented to others who are not tenants of the dwelling
b) Animals, birds, or fish
c) Landlord furnishings in an on-premises apartment
d) Structures used for business purposes
Landlord furnishings in an on-premises apartment
Which of the following entities helps ensure availability and affordability of commercial liability insurance in the State of Oregon?
a) Oregon FAIR Plan Association
b) Joint Underwriting Associations
c) The Insurance Guarantee Association
d) The Workers’ Benefit Fund
Joint Underwriting Associations
A farmer is remodeling his 100-year-old farmhouse. He is in the process of painting the porch and hanging shutters. He keeps his ladder, paint, and other materials used to remodel his home under the porch. Which of the following provides coverage for his remodeling materials?
Coverage A
If the Director requests information regarding a claim, within how many days must the insurer provide a response?
21 days
The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period?
1 year
Which of the following endorsements is used by individual business owners who use company vehicles for personal use rather than purchasing a personal vehicle?
Individual named insured
Which of the following may be covered by electronic data processing coverage form under an inland marine policy?
All of these are covered.
Farm policy Coverage B – Structures would pay how much for loss of an outside antenna, tower, or satellite dish?
Up to $1,000
The FAIR Plan was created to
Promote stability in the property insurance market.
Which bond is required by a court before allowing one to take the assets of another to satisfy a legal obligation?
Attachment bond
An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage?
$14,000
A building insured with commercial property insurance has been vacant for more than 60 consecutive days. Which of the following is NOT true?
a) The insured has no coverage for losses caused by theft.
b) The insured has no coverage for losses caused by glass breakage.
c) Payment for unnamed perils is reduced by 15%.
d) Payment for unnamed perils is reduced by 25%.
Payment for unnamed perils is reduced by 25%.
Under the personal auto policy, liability for bodily injury resulting from the insured’s use of a nonowned automobile is
Provided by the insured’s policy on an excess basis.
A property insurance policy that insures a commercial building on a replacement cost basis includes the ordinance or law coverage endorsement. This endorsement will cover all of the following expenses EXCEPT
a) Ordinance with which the insured was required to comply prior to the loss.
b) Loss to the undamaged portion of the building.
c) Any increased cost of repairs or reconstruction.
d) Demolition and removal cost.
Ordinance with which the insured was required to comply prior to the loss.
All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT
a) The injury or damage must occur after the insured has released physical possession of the product to another.
b) The injury or damage must occur within 90 days after the insured’s work is completed.
c) The injury or damage must occur away from the insured premises.
d) The injury or damage must arise out of the insured’s product or work.
The injury or damage must occur within 90 days after the insured’s work is completed.
Which of the following defenses attests that if a person recognizes and understands that there is danger involved in an activity and voluntarily chooses to encounter it, he or she may be barred from seeking recovery for injuries due to negligence?
Assumption of risk
Which of the following is NOT a goal of risk retention?
To minimize the insured’s level of liability in the event of loss
The designation symbols used in commercial auto policies can be found in which policy section?
Covered Auto
Which of the following entities is in charge of making sure that producers follow the Insurance Code properly?
Director
Under the HO-4 homeowners policy form, property is insured against
Broad form perils only.
Adverse selection is a concept best described as
Risks with higher probability of loss seeking insurance more often than other risks.
Under Coverage C of a farm policy, what is the limit payable on business property located away from the premises?
$500
If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT
a) Physical damage.
b) Uninsured motorist.
c) No-fault medical payments.
d) Liability.
Physical damage.
A passenger in a friend’s car is injured while getting into the car. Which of the following statements would apply if both the passenger and the driver had medical payments coverage under a personal auto policy?
a) Both policies will share equally in the loss.
b) The driver’s policy would be primary.
c) The driver’s policy will act in excess of the passenger’s policy.
d) The passenger’s policy would be primary.
The driver’s policy would be primary.
What is the name of the entity developed to assign risk and provide the equitable apportionment among workers’ compensation insurers?
The Oregon Workers’ Compensation Insurance Plan
Business personal property coverage form covers all of the following EXCEPT
a) Automobiles held for sale.
b) Furniture and fixtures.
c) Machinery that is not permanently installed.
d) Stock.
Automobiles held for sale.
An individual’s construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it?
Contractors equipment floater
If a guest’s property is lost or damaged while on an insured’s premises or in their control, Guests’ Property coverage covers the insured’s
Legal liability.
In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property’s appreciation or depreciation?
Agreed value
A loss has occurred before the first report has been filed on a value reporting coverage form. Which is NOT true?
a) Full amount of loss up to the policy limit is paid if the loss occurs before the first report due date.
b) 75% of the loss is paid if the loss occurred after the first report due date.
c) Never more than 75% of the loss is paid.
d) Provisional premium is based on 75% of the full amount of coverage.
Never more than 75% of the loss is paid.
Which of the following best describes the amount of loss assessment coverage included under a homeowners policy liability coverage section?
a) Up to $10,000 aggregate for the policy period
b) Up to $5,000 aggregate for the policy period
c) Up to $1,000 per occurrence
d) Up to $2,500 per occurrence
Up to $1,000 per occurrence
All of the following would be covered under the medical expense coverage of a businessowners policy EXCEPT
a) X-ray services.
b) First aid when the accident occurred.
c) Mental health counseling.
d) Ambulance services.
Mental health counseling.
All of the following statements describe the concept of strict liability EXCEPT
a) It is imposed on defendants engaged in hazardous activities.
b) Claimants may need to provide proof that a product defect caused an injury.
c) It is imposed regardless of fault.
d) It is applied in product liability cases.
It is imposed on defendants engaged in hazardous activities.
The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information within…
Within 45 days.
Which of the following types of valuation works best for property whose value does not fluctuate much?
Agreed value
Which of the following describes contributory negligence?
a) Any degree of negligence by the injured party may bar recovery.
b) The time period in which a claim must be filed
c) Negligence is apportioned between both parties in an accident.
d) The voluntary assumption of exposure to risk
Any degree of negligence by the injured party may bar recovery.
Which of the following exposures is insured under Coverage I – Personal and Advertising Injury Liability?
a) Statements made by an insured during their farm radio show
b) Breach of a written contract
c) Unintentional acts arising from the operation of a farming business
d) Failure of goods to perform
Unintentional acts arising from the operation of a farming business
Which of the following would provide coverage for loss of income when an insured rental dwelling is rendered uninhabitable because of a covered loss?
a) Coverage C
b) Coverage D
c) Coverage A
d) Coverage B
Coverage D
Which inland marine coverage condition says that an insurer will settle with the actual owners of property involved in a loss?
a) Reinstatement of limit
b) Legal action against the insurer
c) Privilege to adjust with the owner
d) Transfer of rights of recovery
Privilege to adjust with the owner
An employee is injured while visiting the employer’s out-of-state site. How will the workers compensation benefits be determined?
a) Benefits will be provided if the state was listed on the policy information page.
b) The legal system will determine which state’s benefits apply to this particular loss.
c) The state’s benefits that pay the lowest amount will be selected by the insurance company.
d) The employee may elect to receive benefits from both the home state and the state in which the injury occurred.
Benefits will be provided if the state was listed on the policy information page.
The purpose of insurance regulation is to
a) Promote the public welfare.
b) Make insurance statutes uniform between states.
c) Keep producers honest.
d) Make insurance companies pay taxes.
Promote the public welfare.
Which of the following limits, shown in the declarations of a policy, applies to medical expenses?
a) Per occurrence
b) Per injury
c) Per incident
d) Per person
Per person
Which of the following is NOT a contract bond?
a) Maintenance bond
b) Bid bond
c) Litigation bond
d) Performance bond
Litigation bond
Under which of the following conditions can broad theft coverage be added to a dwelling policy?
a) Broad theft coverage cannot be added to a dwelling policy.
b) If the policy has been in effect for 60 days
c) If the insured is owner-occupant of the dwelling
d) If permission is granted by the department of insurance
If the insured is owner-occupant of the dwelling
When other insurance is written on the same basis as a commercial property policy, the obligation of the insurer is to cover
a) The loss on a primary basis.
b) A share of the loss.
c) All of the loss.
d) The loss on an excess basis.
A share of the loss.
When an individual purchases insurance, what risk management technique is he or she practicing?
a) Retention
b) Transfer
c) Avoidance
d) Sharing
Transfer
All of the following statements are true regarding employee dishonesty optional coverage under the businessowners policy (BOP) EXCEPT
a) Coverage includes all property, including money and securities owned or held by the insured.
b) It provides coverage for all employees, even those employees who were terminated in the past 90 days.
c) It provides coverage for direct loss or damage to business personal property.
d) Losses result from dishonest acts of any of the insured’s employees.
It provides coverage for all employees, even those employees who were terminated in the past 90 days.
On a DP-3 Dwelling Property Special Form policy, the coverage provided for personal property is
a) All risk.
b) Open peril.
c) The same as provided on the DP-1 Basic Form.
d) The same as provided on the DP-2 Broad Form.
The same as provided on the DP-2 Broad Form.
A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss?
a) $20,000
b) $30,000
c) $40,000
d) $60,000
$30,000
A business owner whose inventory changes significantly throughout the year should consider having coverage written on what type of form?
a) Comprehensive form
b) Reporting form
c) Fluctuating inventory form
d) Blanket form
Reporting form
Which of the following would be considered an insured under a business auto coverage form?
a) A partner of the named insured for any covered auto owned by that person or a member of his or her household
b) Anyone while using, with permission, a covered auto owned by the named insured
c) The owner or anyone else from whom the named insured hires or borrows a covered auto
d) Anyone using a covered auto while working in a business of selling, servicing, repairing, or parking autos if it is not the named insured’s business
Anyone while using, with permission, a covered auto owned by the named insured
Liability imposed on one party as a result of the actions of another person is known as
a) Absolute liability.
b) Vicarious liability.
c) Comparative negligence.
d) Strict liability.
Vicarious liability.
If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT
a) No-fault medical payments.
b) Liability.
c) Physical damage.
d) Uninsured motorist.
Physical damage.
In a farm policy, which of the following coverages would reimburse the insured for loss of rental income following damage to the insured dwelling by an insured peril?
a) Coverage A
b) Coverage C
c) Coverage D
d) Coverage E
Coverage D
Which of the following dwelling coverages would provide coverage to a garage not attached to the primary insured dwelling?
a) Coverage E
b) Coverage A
c) Coverage B
d) Coverage C
Coverage B
Additional coverages in the liability section of a homeowners policy cover all of the following EXCEPT
a) Damage to a third-party property for which the insured is legally liable.
b) Claims expense.
c) Expenses the insured incurs rendering first aid for bodily injury to third parties.
d) Damage to the property of others.
Damage to a third-party property for which the insured is legally liable.
All of the following are true regarding rebates EXCEPT
a) Rebates are only allowed if specifically stated in the policy.
b) Rebating can be anything of monetary value given as an inducement to purchase insurance.
c) Dividends are not considered to be rebates.
d) Rebates are allowed if it is in the best interest of the client.
Rebates are allowed if it is in the best interest of the client.
An insured’s roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today’s prices. If the roof has been depreciating at $200 per year and the insured’s policy is written on the actual cash value(ACV), how much will the policy pay toward the insured’s new roof?
a) $1,000
b) $4,000
c) $5,000
d) $6,000
$5,000
What is the business auto coverage territory for?
a) United States and its territories, Canada, or worldwide for private passenger hired autos
b) Only for the specific location of the business
c) United States only
d) United States and Mexico
United States and its territories, Canada, or worldwide for private passenger hired autos
A repair facility used after-market parts in the repair of a customer’s automobile, and did not notify the customer of this. Which of the following is true?
a) The repair facility must provide a warranty for the after-market parts.
b) The repair facility has engaged in an unfair trade practice.
c) The repair facility did nothing wrong.
d) It is a common business practice.
The repair facility has engaged in an unfair trade practice.
Which of the following statements about the FAIR Plan is true?
a) Members of the FAIR Plan’s Board of Directors are appointed by the Governor.
b) The FAIR Plan seeks to guarantee the availability of auto insurance to eligible drivers.
c) A prime goal of the FAIR Plan is to assure the availability of essential property insurance to owners of insurable property.
d) One purpose of the Plan is to ensure fair and adequate rates for fire insurance.
A prime goal of the FAIR Plan is to assure the availability of essential property insurance to owners of insurable property.
If a farm building or structure is vacant or unoccupied, which is true?
a) If for 120 consecutive days, the limits applicable to the building and its contents are reduced by 50%.
b) If for 30 consecutive days, no coverage for vandalism and malicious mischief, glass breakage, or theft.
c) If for 60 consecutive days, no coverage for vandalism and malicious mischief, glass breakage, or theft.
d) If for 60 consecutive days, amount paid for covered losses is reduced by 15%.
If for 120 consecutive days, the limits applicable to the building and its contents are reduced by 50%.
The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information
a) As soon as practical.
b) Within 45 days.
c) Within 30 days.
d) Within 60 days.
Within 45 days.
Professional liability coverage protects the insured against legal liability resulting from
a) Liability assumed under a contract.
b) Dishonest acts.
c) The unprofessional conduct of an employee.
d) Errors and omissions.
Errors and omissions.
In Businessowners policies, which of the following additional coverages will require a deductible?
a) Debris removal
b) Extra expenses
c) Business income
d) Fire department service charge
Debris removal
Which bond is required by a court before allowing one to take the assets of another to satisfy a legal obligation?
a) Cost bond
b) Injunction bond
c) Attachment bond
d) Bail bond
Attachment bond
Which of the following covers a carrier for liability for loss to cargo while it is being transported in a truck?
a) Trip transit policy
b) Truckers coverage form
c) Motor truck cargo policy - carriers form
d) Motor truck cargo policy - owners form
Motor truck cargo policy - carriers form
The HO-3 homeowners policy provides
a) Open peril coverage on the dwelling and basic form coverage on personal property.
b) Basic coverage for the dwelling and broad form coverage for personal property.
c) All-risk coverage for both the dwelling and personal property.
d) Open peril coverage on the dwelling and broad form coverage on personal property.
Open peril coverage on the dwelling and broad form coverage on personal property.
The FAIR Plan assigned Ariel’s application for property insurance to Fickel Fire and Casualty Insurance. Fickel subsequently went bankrupt and was unable to cover a fire loss to Ariel’s property. Ariel sued the members of the Board of Directors for negligence in assigning his application to Fickel. What is the rule governing the liability of members of the Board?
a) Board members are liable only to the extent of their annual renumeration.
b) Board members are jointly liable for injuries arising out of their errors and omissions.
c) The liability of Board members is limited to $1,000 per person.
d) Board members have immunity for liability from any cause of action arising out of the execution of their duties.
Board members have immunity for liability from any cause of action arising out of the execution of their duties.
Which of the following would be a proper choice of policy for a company that transports goods that are irreplaceable in nature?
a) Excess liabilities floater
b) Replacement cost rider
c) Lloyd’s policy
d) Valued policy
Valued policy
Section III of the business auto policy provides physical damage coverage. All of the following are physical damages that may be selected coverages EXCEPT
a) Specified causes of loss coverage.
b) Comprehensive coverage.
c) Collision coverage.
d) Limited peril coverage.
Limited peril coverage.
Which of the following would NOT be eligible for coverage under a personal auto policy?
a) A nonowned temporary substitute vehicle
b) A trailer owned by the insured
c) A vehicle purchased 90 days ago
d) A vehicle listed on the declarations page
A vehicle purchased 90 days ago
All of the following persons would be covered under a business auto policy EXCEPT
a) The owner from whom a trailer is borrowed and connected to an auto owned by the named insured.
b) An employee of the named insured operating an auto that is owned by the employee’s spouse.
c) A person operating an auto borrowed by the named insured, with permission.
d) A person operating a covered auto with the permission of the insured.
An employee of the named insured operating an auto that is owned by the employee’s spouse.
Which of the following terms means termination of an insurance policy at its expiration date by not offering a policy continuation or replacement?
a) Nonrenewal
b) Suspension
c) Cessation
d) Cancellation
Nonrenewal
An insured’s child ran into a neighbor’s planter on his bicycle and broke the planter and ruined the plants. The cost to replace the planter was $400, and the cost to replace the plants was $100. Which section of the insured’s homeowners policy would pay?
a) Section I, subject to the deductible
b) Section II, subject to the deductible
c) Section II with no deductible
d) Section I with no deductible
Section II with no deductible
Medical benefits under workers compensation statutes are provided
a) For up to $500,000 per injury or disease.
b) For a certain percentage of the worker’s annual income.
c) For up to $100,000 per injury or disease.
d) Without limit.
Without limit.
Which of the following is NOT true regarding the automatic increase in insurance endorsement in dwelling policies?
a) It does not require additional premium.
b) It increases the amount of coverage by an annual percentage.
c) It is optional.
d) It provides protection from inflation.
It does not require additional premium.
When the Director of the state’s insurance department leaves office, which of the following may occur?
a) All existing producers will need to reapply for a license.
b) Insurance rates are subject to change.
c) Temporary licenses will automatically be renewed for 180 days.
d) All of the above may happen when a new Director takes office.
Insurance rates are subject to change.
A scheduled personal property endorsement will be used to insure
a) High value items only within the U.S.
b) Personal vehicles used by travelers anywhere in the world.
c) Personal items at their actual cash value.
d) Higher limits of coverage for fine arts items.
Higher limits of coverage for fine arts items.
Which of the following risks would be eligible for coverage under a dwelling policy form?
a) A single-family dwelling that is located on farm premises
b) A duplex that is occupied by two families, each of which have a bedroom rented to a boarder
c) A single-family dwelling occupied by a single person who operates a business of buying and selling firearms in the basement
d) A single-family dwelling that contains a beauty shop that employs three full-time operators
A duplex that is occupied by two families, each of which have a bedroom rented to a boarder
When reviewing a standard workers compensation and employers liability policy, the limits of coverage are described in Part One of the policy. The dollar limits of the benefits provided are stated
a) In paragraph 1 of Part One as directed by law.
b) In the state workers compensation law itself.
c) On the face of the policy declarations page.
d) In Line Item 3(A) of the policy information page.
In the state workers compensation law itself.
Which of the following elements of an insurance contract requires payment of premium?
a) Competent parties
b) Offer and acceptance
c) Consideration
d) Legal purpose
Consideration
The insured’s product under a commercial general liability policy does NOT include which of the following?
a) Vending machines rented to others
b) Containers furnished in connection with the product
c) Warranties made with respect to the fitness or quality of the product
d) Any goods or products manufactured by the insured
Vending machines rented to others
The garage coverage form is written to cover the insurance needs of an insured in the business of selling, repairing, servicing or storing automobiles. Which of the following coverages are not included in a garage policy?
a) Premises and operations liability
b) Product liability
c) Physical damage on a customer’s auto
d) Auto liability
Physical damage on a customer’s auto
Which of the following would be considered a covered auto on your personal auto policy?
a) Your farm wagon being towed by your pick up truck
b) Your pickup truck used for deliveries of your retail business
c) Your farm tractor
d) Your farm wagon being towed by your tractor
Your farm wagon being towed by your pick up truck
The personal property off-premises extension of dwelling forms provides limits of coverage up to
a) 10% of Coverage C anywhere in the world.
b) 10% of Coverage A anywhere in the U.S. or Canada.
c) 10% of Coverage A anywhere in the world.
d) 10% of Coverage C anywhere in the U.S. or Canada.
10% of Coverage C anywhere in the world.
An insured’s diner suffered a fire loss. In addition to the damage caused by the fire, the floor covering had to be replaced because of the water damage. It took 4 weeks for the repairs to be completed. The insured was without income for that period of time. The insured’s policy includes both direct and indirect loss coverage. What part of the loss would be paid as indirect loss?
a) The cost of replacing the floor covering due to the water damage
b) Both the loss of income and the cost of the floor covering
c) The entire loss would be paid as direct loss by fire
d) The loss of income for the time the diner was closed
The loss of income for the time the diner was closed
When an employee got her new job, she was told that the local government required her to get a bond to guarantee that she would follow the city laws and regulations associated with her job. What kind of bond does the employee need?
a) A judicial bond
b) A fiduciary bond
c) A contract bond
d) A license and permit bond
A license and permit bond
What sublimit in a liability policy sets the maximum amount that will be paid for all claims arising from a single accident?
a) Per person
b) Combined single
c) Aggregate
d) Per occurrence
Per occurrence
Which of the following is NOT part of Section II of the boatowners policy?
a) Watercraft damage
b) Watercraft liability
c) Medical payments
d) Uninsured boaters
Watercraft damage
An insured has decided to never drive another vehicle and wants to transfer his auto insurance policy to his wife. What does the insured need to transfer the policy?
a) The written consent of all other insureds covered by the policy
b) The written consent of the insurer
c) An auto policy cannot be transferred.
d) Nothing, because the wife is automatically included as an insured
The written consent of the insurer
The purpose of the Fair Credit Reporting Act is to
a) Protect the insurer from adverse selection.
b) Ensure the consumers receive a copy of investigative consumer reports.
c) Ensure coverage for all applicants.
d) Protect consumers against the circulation of inaccurate or obsolete personal or financial information.
Protect consumers against the circulation of inaccurate or obsolete personal or financial information.
An insured has a personal umbrella with a $2,000 self-insured retention (SIR). Assuming no other policy is involved, how much would the umbrella pay after a $12,000 personal injury liability claim?
a) $12,000
b) $2,000
c) $1,000
d) $10,000
$10,000
Which of the following is NOT true of the agent’s implied authority?
a) It is assumed by the agent in order to transact the business of insurance.
b) It is incidental to express authority.
c) It is given to an agent by the insurance company that is not specifically communicated.
d) It is specifically stated in the contract.
It is specifically stated in the contract.
What kind of coverage does Form DP-3 provide?
a) Broad peril
b) Open peril
c) Basic peril
d) Named peril
Open peril
Insured A is riding in Insured B’s auto when they are hit by a drunk driver. Both have basic personal auto policies with PIP coverage. Insured A’s medical bills are $17,000. How much will Insured A’s policy pay for her expenses?
a) $0
b) $2,000
c) $15,000
d) $17,000
$2,000
An insured has an automobile policy with limits of 100/300/50 and a deductible of $1,000. He is involved in an auto accident and crashes into another driver’s auto. The other driver is awarded $125,000 for his injuries and $25,000 for the damage to his car. The insured’s vehicle has damage in the amount of $1,200. The total payment made under the insured’s policy is
a) $150,200.
b) $125,200.
c) $126,200.
d) $100,200.
$125,200.
Policy limits are the maximum amount an insured may collect, or for which an insured is protected under the terms of the
a) Policy.
b) Insuring agreement.
c) Conditional receipt.
d) Application.
Policy.
For negligent liability to exist, which is NOT a requirement?
a) Injury or damage to another
b) An intervening cause
c) Proximate cause
d) A breach of a legal duty to act or not act
An intervening cause
The extended nonowned coverage provides protection to
a) The person named on the policy and all residence family members.
b) The person named and his or her spouse only.
c) Anyone who is given permission to drive by the named insured.
d) Only the person(s) named on the policy.
Only the person(s) named on the policy.
When Symbol 7 is provided, which of the following statements is true with regards to newly acquired autos?
a) They are covered only until the end of the policy term.
b) They are not covered until the insurer is notified.
c) They are automatically covered only for 30 days.
d) They are covered if they are used to replace previously owned autos with that coverage.
They are covered if they are used to replace previously owned autos with that coverage.
Which of the following exclusions applies to both personal injury and advertising injury in the businessowners policy?
a) The wrong description of the price of the goods, products, or services
b) Willful violation of a penal statute or ordinance committed by the insured
c) Breach of contract under an implied contract
d) An offense committed by an insured whose business is advertising
Willful violation of a penal statute or ordinance committed by the insured
Space Age Rockets makes model rocket supplies and has 12 employees. The company is located in Atlanta, GA. Georgia has compulsory workers compensation laws. Space Age’s owner thinks that his company is too small and unprofitable to carry the workers comp plan mandated by the state. Possible consequences of noncompliance include all of the following EXCEPT
a) Closure of the business as a public nuisance by state officials.
b) Payment for injuries in monetary amounts stipulated by the state with respect to workers compensation plans.
c) Payment of fines and penalties as dictated by state compliance authorities.
d) Forced payment of billing for services rendered by any private insurer that “binds” coverage based on an employee’s request for coverage.
Forced payment of billing for services rendered by any private insurer that “binds” coverage based on an employee’s request for coverage.
Which is NOT true of workers compensation coverage?
a) Medical payment benefits are unlimited.
b) It offers death benefits.
c) It offers rehabilitation benefits.
d) Medical payment benefits are limited.
Medical payment benefits are limited.
What is an insured contract?
a) Only those contracts that specifically name both parties to the contract in the policy
b) Those contracts that are automatically covered under the exposure of premises coverage in a general liability insurance contract
c) Those contracts for which specific individual policies are written
d) Only those contracts for which a specific premium is charged in the policy
Those contracts that are automatically covered under the exposure of premises coverage in a general liability insurance contract
The Second Injury Fund will pay the benefits in which of the following situations?
a) The same injury occurs to a different person
b) A person is injured twice in the same year, as long as neither injury affects the other injury
c) Workers compensation benefits for an employee who has been injured while working for a previous employer, in case injury would occur again
d) An employee with a previous injury suffers a second injury that causes the disability to be more serious
An employee with a previous injury suffers a second injury that causes the disability to be more serious
The obligation to compensate injured workers without regard to fault or negligence is known as
a) Absolute liability.
b) Employers liability.
c) Elective liability.
d) Compulsory liability.
Absolute liability.
If an applicant submits the initial premium with an application, which action constitutes acceptance?
a) The underwriters approve the application.
b) The applicant submits a statement of good health.
c) The producer delivers the policy.
d) The insurance company receives the application and initial premium.
The underwriters approve the application.
Other than perils, the difference in the three DP forms is in coverage provided. Which of the following coverage options is covered by the DP-2 and D-P3 but not DP-1?
a) Coverage B – Other Structures
b) Coverage D – Fair Rental Value
c) Coverage E – Additional Living Expense
d) Coverage A – Dwelling
Coverage E – Additional Living Expense
Which of the following situations would be covered by workers compensation?
a) A construction worker who refused to wear a hardhat gets hit on the head at a construction site.
b) A professional chef burns himself on his stove at home while preparing for a private dinner party.
c) A printer gets her hand crushed in a printing press at work.
d) A secretary chokes on an apple while on break in the break room
A printer gets her hand crushed in a printing press at work.
