P&C Insurance Exam - FINAL Flashcards
According to the businessowners policy (BOP) definitions, which of the following does NOT mean valuable papers and records?
A. Manuscripts
B. Inscribed deeds
C. Drawings and maps
D. Securities
D. Securities
Money and securities are not included
All of the following people would be considered insureds under the liability section of a homeowners policy
EXCEPT
A. The legal representative of a deceased insured.
B. A 15-year-old foster child residing in the premises.
C. The mother of the insured who is residing in the household.
D. The 22-year-old niece of the insured who is visiting.
D. The 22-year-old niece of the insured who is visiting.
Relatives of the insured of any age are considered insureds only if they are residents of the household.
Under contributory negligence, when an individual is found to have contributed to their own loss in any way, another party
A. May not be held liable.
B. May be held liable only in the case of vicarious liability.
C. May be held liable, but to a reduced extent.
D. May be held liable for full damages despite the other party’s negligence.
A. May not be held liable.
Contributory negligence is a common law defense that denies recovery to an injured party who contributed to the loss by failing to meet standards required for self-protection.
Coverage under the builders risk form will end in all of the following situations EXCEPT
A. 60 days after the building became occupied.
B. Construction has been abandoned.
C. The insured has sold the property.
D. 60 days after the construction has ended.
D. 60 days after the construction has ended.
It ends 90 days after construction has completed.
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called
A. Blanket coverage.
B. Schedule coverage.
C. Described coverage.
D. Specific coverage.
D. Specific coverage.
One location is insured for a specific amount of insurance on the structure and contents.
The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property is called
A. Proportionate.
B. Contributing.
C. Pro rata liability.
D. Excess.
C. Pro rata liability.
All of the following are true regarding deposit premium EXCEPT
A. It is 50% of the actual premium.
B. It must be paid in advance.
C. It is an estimated premium paid at the policy issue.
D. It could be adjusted by the audit.
A. It is 50% of the actual premium.
It is 100% of the estimated premium.
Under businessowners policy Section I, if an insurer wants to cancel a policy for any reason except nonpayment of premium, how many days before the effective cancellation date must the insurer notify the mortgageholder?
A. 20 days
B. 15 days
C. 10 days
D. 30 days
D. 30 days
The Employee Theft crime policy form includes a coverage extension that applies to employees temporarily outside the coverage territory for up to
A. 30 days.
B. 60 days.
C. 120 days.
D. 90 days.
D. 90 days.
Which of the following statements is true regarding the premium computation for workers compensation insurance?
A. A premium auditor has the right to examine the insured’s compensation records at the end of the policy period to determine the actual premium basis.
B. The premium basis for workers compensation insurance varies by the type of industry in which the insured is involved.
C. The premium is set at the beginning of the policy period and will not change.
D. The insured pays a guaranteed premium based on an estimated value of the annual income received.
A. A premium auditor has the right to examine the insured’s compensation records at the end of the policy period to determine the actual premium basis.
Which of the following floaters will be used to insure personal effects carried or worn by the insured while traveling?
A. Personal property floater
B. Personal articles floater
C. Personal effects floater
D. Temporary coverage floater
C. Personal effects floater
Under a DP-1 form, Coverage C - Personal Property is
A. Limited to 50% of the amount of insurance that is written as Coverage A.
B. Limited to covering a servant’s property while at the insured location.
C. Automatically provided as 50% of Coverage A.
D. A prohibited coverage in the dwelling form.
B. Limited to covering a servant’s property while at the insured location.
All of the following are excluded under the business liability and medical payments coverage of a businessowners policy EXCEPT
A. Injuries caused by mobile equipment attached to an insured auto.
B. Injuries arising from intoxication during the sale of alcoholic beverages.
C. Damages to property owned by the insured.
D. Damages caused by nonowned watercraft that is less than 51 feet long.
D. Damages caused by nonowned watercraft that is less than 51 feet long.
The pro rata liability clause is designed to protect the principle of
A. Indemnity.
B. Subrogation.
C. Insurable interest.
D. Waiver and estoppel.
A. Indemnity.
An insured is a member of the neighborhood association, and has become liable for damage to a third party. Each member of the association has been assessed a portion of the loss equal to $2,000. How much will the Loss Assessment additional coverage of the insured’s homeowners liability policy pay?
A. Up to $1,000
B. Nothing
C. Up to $500
D. $2,000
A. Up to $1,000
Per occurance.
Which of the following does the term proximate cause refer to?
A. Negligence that leads to an injury
B. Reason for filing a lawsuit
C. Injury that leads to monetary compensation
D. Duty of the defendant to act
A. Negligence that leads to an injury
Most insurance policies exclude losses by
A. Theft.
B. Burglary.
C. Mysterious disappearance.
D. Robbery.
C. Mysterious disappearance.
While an insured’s covered auto is in the repair shop following damage caused by a collision, the insured would have coverage for which of the following vehicles under a personal auto policy?
A. Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair
B. Any vehicle while located inside a racing facility for the purpose of racing
C. Any auto furnished for the insured’s regular use, but not named on the policy
D. Any vehicle used by the insured without the reasonable belief that the insured is entitled to use such vehicle
A. Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair
Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?
A. $10,000
B. $5,000
C. $25,000
D. $1,000
B. $5,000
Per occurence.
Which of the following statements is true concerning the special form dwelling policy?
A. Both Coverage A and Coverage C are provided for the broad form perils.
B. Both Coverage A and Coverage C are provided on an all-risk basis.
C. Coverage A is for all-risk perils, and Coverage C is for basic perils only.
D. Coverage A is for all-risk perils, and Coverage C is for the broad form perils.
D. Coverage A is for all-risk perils, and Coverage C is for the broad form perils.
The all-risk coverage applies to property insured under Coverages A and B only.
The Gramm-Leach-Bliley Act was passed to
A. Define insurance as interstate commerce.
B. Allow insurance companies access to medical information for underwriting purposes.
C. Allow consumers access to credit and private consumer reports.
D. Protect private customer information filed with a financial institution.
D. Protect private customer information filed with a financial institution.
Customers must be given two disclosure notices (one at the onset of business and one before information is disclosed), as well as a yearly updated disclosure notice.
A mortgage company is named as a loss payee on the insured’s homeowners policy, under the standard mortgage clause. If the insured suffers a loss due to a fire, which of the following is true?
A. The entire loss is payable to the mortgagee.
B. The entire loss is payable to the insured.
C. The loss is payable to the insured and the mortgagee.
D. The mortgagee should submit a claim to its insurer, and the insured should submit a claim to the HO policy.
C. The loss is payable to the insured and the mortgagee.
Loss is payable to the insured and mortgagee to protect the mortgage company’s interest. This prevents the insured from cashing the check and not completing repairs.
Which of the following may be covered by electronic data processing coverage form under an inland marine policy?
A. Computer hardware that is specifically scheduled.
B. Extra expense the insured incurs to continue the business following a loss.
C. Data processing media, including magnetic tapes or paper tapes, punch cards and discs
D. All of these are covered.
D. All of these are covered.
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?
A. General
B. Normal
C. Tort
D. Special
D. Special
The two classes of compensatory damages that may be awarded are special and general damages.
Special damages are tangible damages that can be specifically measured in dollar amounts (such as out-of-pocket expenses for medical, miscellaneous expenses, and loss of wages).
Which federal act provides benefits to injured civilians who are employed by the federal government?
A. U.S. Longshore and Harbor Workers Compensation Act
B. Federal Employees Compensation Act
C. The Jones Act
D. Federal Employers Liability Act (FELA)
B. Federal Employees Compensation Act
A builder’s risk form is most often written as which of the following?
A. Completed value form
B. Scheduled form
C. Reporting form
D. Specific value form
A. Completed value form
A building under construction could be insured on reporting forms, but the value of the building should only increase during the policy period. To prevent all the administrative work required for reporting forms, most often completed value forms are used.
An insured owns a building that is valued at $400,000. To comply with the 80% coinsurance provision of his insurance policy, how much should he insure the property for?
A. $400,000
B. 80% of the property’s replacement cost or more
C. 100% of the market value
D. $32,000
B. 80% of the property’s replacement cost or more
In property and casualty insurance, what is the term for the amount of a loss that the insured must cover out of pocket, and the insurer will only pay for the additional amount of the loss above this limit?
A. Coinsurance
B. Self-insured retention
C. Deductible
D. Premium
C. Deductible
In property insurance, the amount of loss retained by the insured is called the deductible; in liability insurance, it is called retention. Most property coverages include a deductible; most liability policies do not include retention.
On a DP-3 Dwelling Property Special Form policy, the coverage provided for personal property is
A. The same as provided on the DP-2 Broad Form.
B. All risk.
C. Open peril.
D. The same as provided on the DP-1 Basic Form.
A. The same as provided on the DP-2 Broad Form.
Although Coverages A and B on a DP-3 are written on an open peril or all-risk basis, the coverage for personal property is written on a named or specified peril.
Which of the following is TRUE regarding TRIA?
A. It applies to personal and commercial property.
B. It applies to group life insurance.
C. It is a temporary federal program for insured terrorism losses.
D. It covers all types of commercial property and liability insurance.
C. It is a temporary federal program for insured terrorism losses.
The purpose of the Terrorism Risk Insurance Act (TRIA) was to create a temporary federal program that would share the risk of loss from future terrorist attacks with the insurance industry. TRIA applies to commercial property and liability insurance, including excess insurance, workers compensation, and directors and officers insurance. However, it excludes several types of property and casualty insurance, as well as life insurance.
What are the two types of compensatory damages?
A. Normal and punitive
B. Tort and general
C. Pure and speculative
D. Special and general
D. Special and general
Compensatory damages are intended to compensate someone for both tangible and intangible elements of a loss. Special damages are for the actual measurable losses, such as value of property or medical bills. General damages cannot be specifically measured in dollars, such as pain and suffering.
Which of the following could be covered by an HO policy?
A. Birds, fish, and animals
B. Property of a tenant not related to the insured
C. A sports car kept in an attached garage
D. An oriental rug in an on-premises apartment
D. An oriental rug in an on-premises apartment
Homeowners contents coverage does not apply to animals, cars, or property of those who pay to be at your house; it does provide up $2,500 for a loss of landlord’s furnishings in an on-premises apartment.
All of the following are true regarding physical damage coverage EXCEPT
A. 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.
B. The policy will pay up to $20 per day up to a maximum of $600 for rental transportation.
C. The insurer will pay for direct and accidental loss to a covered auto minus any applicable deductible.
D. 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. 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.
Persons covered under an insurance policy, whether named or not, are known as the
A. First named insureds.
B. Named insureds.
C. Additional insureds.
D. Insureds.
D. Insureds.
What type of liability would a person who owns wild animals have?
A. Direct
B. Vicarious
C. Absolute
D. Implied
C. Absolute
Any conduct that is inherently dangerous, such as using explosives or keeping wild animals, imposes absolute liability. The claimant does not have to prove anything.
Which of the following symbols is available to an insured with vehicles subject to no-fault coverage?
A. Symbol 5
B. Symbol 6
C. Symbol 7
D. Symbol 9
A. Symbol 5
Symbol 1: any auto
Symbol 2: owned private passenger vehicles
Symbol 5: no-fault
Symbol 6: uninsured
Symbol 7: specific vehicles listed
Symbol 8: hired vehicles
Symbol 9: non-owned vehicles
Which of the following types of insurance would be covered under the Terrorism Risk Insurance Act (TRIA)?
A. Workers compensation insurance
B. Burglary and theft insurance
C. Commercial auto insurance
D. Crop insurance
A. Workers compensation insurance
Which of the following is a mandatory part of an insurance policy that varies with each individual policy?
A. Conditions
B. Exclusions
C. Insuring agreement
D. Declarations
D. Declarations
Because the declarations tell who, what, when and where, this information is different in each contract.
In forming an insurance contract, when does acceptance usually occur?
A. When an insured submits an application
B. When an insurer’s underwriter approves coverage
C. When an insurer delivers the policy
D. When an insurer receives an application
B. When an insurer’s underwriter approves coverage
In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer’s underwriter approves the application and issues a policy.
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are
A. Not taxable since the IRS treats them as a return of a portion of the premium paid.
B. Guaranteed.
C. Paid at a fixed rate every year.
D. Taxable as ordinary income.
A. Not taxable since the IRS treats them as a return of a portion of the premium paid.
If an agent does not notify the insurer of an address change, what is the maximum penalty that can be imposed for a one-time offense?
A. $500
B. $250
C. $180
D. $1,500
B. $250
For subsequent offenses, either a minimum fine of $500 will be imposed or the agent’s license will be suspended or revoked.
An agent’s client needs additional insurance which the agent’s own insurer cannot provide. The agent has to solicit additional coverage from another authorized insurer. This coverage is known as
A. Controlled business.
B. Rejected.
C. Excess.
D. Authorized.
C. Excess.
Excess business is that portion of a risk above the limits of that which the agent’s own insurer will accept.
If the cancellation of a property or casualty policy is for nonpayment of premium, how many days’ written notice of cancellation must be given to the policyowner?
A. At least 45 days
B. At least 90 days
C. At least 20 days
D. At least 10 days
D. At least 10 days
All of the following are characteristics of limited sinkhole coverage EXCEPT
A. Coverage for repairs is limited to professional engineer recommendations.
B. Coverage is mandatory under catastrophic ground cover collapse.
C. It may only be issued by an authorized insurer.
D. It covers personal residences only.
B. Coverage is mandatory under catastrophic ground cover collapse.
For cancellation of a commercial property policy during the first 60 days, for a reason other than nonpayment of premium, the insurer must give the insured advance written notice of at least how many days?
A. 10 days
B. 30 days
C. 20 days
D. 45 days
C. 20 days
Which of the following is a separate account of the Florida Insurance Guaranty Association?
A. Ocean marine
B. Workers compensation
C. Auto liability and physical damage
D. Surplus lines
C. Auto liability and physical damage
The association has 2 separate accounts: the auto liability and physical damage account, and the account for all the other types of property and casualty insurance covered by the association. The association’s liability does not cover workers compensation, surplus lines, and ocean marine claims.
The Office of Insurance Regulation is responsible for all of the following insurer activities EXCEPT
A. Viatical settlements.
B. Policy forms.
C. Issue of securities.
D. Premium financing.
C. Issue of securities.
Which is the responsibility of the Office of Financial Regulation.
Under what circumstances can an agent’s appointment be transferred to another person?
A. If the agent’s license has been temporarily suspended
B. With the Commissioner’s written approval
C. Under no circumstances
D. When another person works for the same appointing insurer
C. Under no circumstances
Which of the following types of property are covered in any of the homeowners coverage forms?
A. Structures rented to others who are not tenants of the dwelling, other than a garage.
B. Animals, birds or fish.
C. Landlord furnishings in an on-premises apartment.
D. Structures used for business purposes.
C. Landlord furnishings in an on-premises apartment.
Which are covered up to $2500.
Equipment breakdown coverage is written with a single limit of insurance per accident. However, what is the sublimit for hazardous substance cleanup, or repair or replacement of contaminated property?
A. $25,000
B. $50,000
C. $15,000
D. $20,000
A. $25,000
And $25,000 for expediting expenses; $25,000 for hazardous substance cleanup, or repair or replacement of contaminated property; $25,000 for ammonia contamination damage; $25,000 for water damage.
Which of the following losses would most likely NOT be covered under Coverage A in the dwelling policy?
A. Fire damage to building material on the premises
B. Outdoor personal property of the insured
C. Theft of a renter’s lawnmower used to service the premises
D. Supplies used for repair of the dwelling
C. Theft of a renter’s lawnmower used to service the premises
Coverage A on the dwelling includes all attached structures and outdoor personal property or equipment used to maintain or service the premises if not covered elsewhere, NOT renter’s property.
The insured rented a car while her regular vehicle was being repaired after an accident. The rented car is considered a
A. Hired vehicle.
B. Nonowned vehicle.
C. Temporary substitute.
D. Covered auto.
C. Temporary substitute.
A hired auto is a broader term for any vehicle borrowed or rented other than to use while the regular vehicle is being repaired.
Replacement cost is defined as
A. Full replacement of property at its current cost, new and without reduction for depreciation.
B. Full replacement of property with like kind and quality, less an allowance for physical deterioration and depreciation.
C. Payment of the full policy limits in the event of a total loss.
D. The market value of property of like kind and quality.
A. Full replacement of property at its current cost, new and without reduction for depreciation.
Supplementary payments on a GL provide all of the following EXCEPT
A. Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds.
B. Pre-judgment and post-judgment interest.
C. $100 in gasoline costs by the insured driving a witness to and from court.
D. The cost of bonds to release attachment.
A. Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds.
Supplementary payments will cover only $250 for these.
What term includes damage where the insured peril was the proximate cause of loss?
A. Negligent loss
B. Indirect loss
C. Consequential loss
D. Direct loss
D. Direct loss
What term INCLUDES…
Which of the following will be covered by the contractors equipment floater in an unfiled inland marine insurance?
A. Mobile equipment owned by construction equipment dealers
B. Any type of mobile equipment
C. Mobile equipment only while it is located on the job site
D. Mobile equipment during transportation to and from the job site
D. Mobile equipment during transportation to and from the job site
As opposed to a personal floater policy which covers movable personal property, wherever it may be located
What type of property does a personal floaters policy cover?
A. Permanently attached property located on the insured’s premises
B. Moveable personal property located exclusively outside of the insured’s home
C. Movable personal property located in the insured’s home, only
D. Movable personal property, wherever it may be located
D. Movable personal property, wherever it may be located
As opposed to a contractor’s equipment floater which only covers equipment while in transit.
Losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected is the definition of which of the following terms?
A. Occurrence
B. Accident
C. Peril
D. Hazard
A. Occurrence
What are the two meanings of subrogation?
The policy provision that:
1) prevents the insured from collecting twice for the same loss
2) grants insurers the legal right to sue those at fault to recover some or all of the insured’s claim
All of the following would be covered under the medical expense coverage of a businessowners policy
EXCEPT
A. First aid when the accident occurred.
B. Mental health counseling.
C. Ambulance services.
D. X-ray services.
B. Mental health counseling.
This coverage includes accidental bodily injury only; it does not cover any counseling.
The declarations page of the homeowners policy provides all of the following information EXCEPT
A. The insured’s address.
B. What deductible amount applies to each loss covered by the policy.
C. The amount of premium charged for each coverage.
D. A statement that earthquake damage is not covered.
D. A statement that earthquake damage is not covered.
This is covered in the policy form
Duties of the insurer found in property policy conditions include all of the following EXCEPT
A. Pay covered losses.
B. Notify the insured in the event of financial difficulty.
C. Return any premiums to the insured.
D. Provide advance notice of cancellation.
B. Notify the insured in the event of financial difficulty.
The insurance department monitors the financial conditions of insurers. The insurers report to the state, not to policyholders.
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?
A. Aggregate
B. Per occurrence
C. Split
D. Combined single
D. Combined single
How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy?
A. It broadens the coverage.
B. It has no effect on this coverage.
C. It removes the coverage.
D. It limits the coverage.
C. It removes the coverage.
What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?
A. Valid insurance
B. Primary and excess
C. Nonconcurrency
D. Other insurance
D. Other insurance
The limited theft endorsement is intended for which type of property?
A. A building used for commercial purposes in which the owner operates a business
B. A house in which the owner resides
C. An apartment building in which the owner does not reside
D. A building used for commercial purposes which the owner rents to a business
C. An apartment building in which the owner does not reside
Which coverage form would provide coverage for all incoming and outgoing shipments?
A. Motor truck cargo
B. Mail coverage
C. Trip transit
D. Annual transit
D. Annual transit
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 glass breakage.
B. Payment for unnamed perils is reduced by 25%.
C. The insured has no coverage for losses caused by theft.
D. Payment for unnamed perils is reduced by 15%.
B. Payment for unnamed perils is reduced by 25%.
It will be reduced by 15%.
Professional photographers and musicians may insure their equipment with
A. A theatrical property coverage form.
B. An installation floater.
C. A commercial articles floater.
D. A contractors equipment floater.
C. A commercial articles floater.
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?
A. Contractors equipment floater
B. Bailee’s customers form
C. General property form
D. Builders risk form
A. Contractors equipment floater
What type of information would be found in a policy’s insuring agreement?
A. Location of premises
B. Renewal dates
C. Insurer’s address
D. Policy limits
D. Policy limits
As defined in commercial auto policy forms, mobile equipment includes all of the following types of land vehicles EXCEPT
A. Self-propelled vehicles used for snow removal.
B. Vehicles that provide mobility to permanently mounted power cranes.
C. Bulldozers and forklifts.
D. Vehicles that travel on crawler treads.
A. Self-propelled vehicles used for snow removal.
Which of the following is covered under the Mail floater of a Commercial Inland Marine policy ONLY if is sent by registered mail?
A. Bonds, stocks, stock certificates, coupons attached to bonds
B. Postage and revenue stamps
C. Money orders, checks, drafts, notes
D. Currency and unsold travelers checks
D. Currency and unsold travelers checks
Which method of loss valuation is contrary to the basic concept of indemnity?
A. Replacement cost
B. Agreed value
C. Market value
D. Functional replacement cost
A. Replacement cost
Indemnity = ACV. Replacement cost is the only one that could exceed it.
All of the following are true statements regarding the supplementary payments of a commercial general liability policy EXCEPT
A. They pay defense costs even after the aggregate limit has been reached.
B. They pay pre-judgment and post-judgment interest.
C. They pay all reasonable costs incurred by the insured in helping to investigate or defend a claim.
D. They pay all expenses incurred by the insurer.
A. They pay defense costs even after the aggregate limit has been reached.
Once the aggregate has been reached, the insurer will not be responsible for paying further claims;
therefore, the insurer no longer pays to defend.
In Businessowners policies, which of the following additional coverages will require a deductible?
A. Business income
B. Debris removal
C. Extra expenses
D. Fire department service charge
B. Debris removal
According to the standard mortgage clause, who has the right to bring a suit in their own name to recover damages, pay policy premiums, and submit proof of loss?
A. Insurance company
B. Governor
C. Mortgagee
D. Policyholder
C. Mortgagee
All of the following coverages are included in the BOP without requesting coverage extensions EXCEPT
A. Debris removal.
B. Pollutant cleanup and removal.
C. Newly acquired or constructed property.
D. Civil authority.
C. Newly acquired or constructed property.
Which of the following is an additional coverage that is covered by the broad causes of loss form?
A. Ordinance or law
B. Collapse
C. Lightning
D. Settling
B. Collapse
The extra expense coverage form provides
A. Payment for unforeseen expenses an insured may incur while the business is shut down following property damage or loss.
B. Additional money to pay for property damage at a covered location.
C. Extra money for an insured whose accounts receivable records have been damaged.
D. Coverage that will permit the insured to continue in business without interruption following property damage or loss.
D. Coverage that will permit the insured to continue in business without interruption following property damage or loss.
If a crime policy includes the extended reporting period in the discovery form, general losses must be reported within how many days of policy cancellation?
A. 20 days
B. 90 days
C. 60 days
D. 30 days
C. 60 days
Which of the following will a businessowners property coverage form pay for?
A. Steam pipes, water boilers, or other water-heating equipment
B. Mysterious disappearance
C. Property transferred to others based on unauthorized instructions
D. Outdoor signs attached to buildings
D. Outdoor signs attached to buildings
In which of the following situations would the jewelers block extension cover a loss?
A. An employee of a jewelry store is wearing a cameo brooch and ring set to display to customers.
During the day, she discovered the brooch has fallen off, and she can’t find it.
B. A jewelry store is robbed while displaying bracelets and necklaces at a public exhibition.
C. A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged.
D. A jeweler agrees to exhibit a necklace and earrings set in a showcase away from the premises. The case is broken into, and the set is stolen.
C. A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged.
Property in transit by registered mail is covered under the jewelers block extension.
Which of the following is a statutory defense?
A. Comparative negligence
B. Intervening cause
C. Assumption of risk
D. Contributory negligence
A. Comparative negligence
An insured’s driver’s license was revoked 90 days after his auto insurance policy was issued. If the insurer chooses to cancel the auto insurance policy, it must give the insured a minimum of how many days’ notice?
A. 30 days
B. 60 days
C. 10 days
D. 45 days
D. 45 days
Florida has a compulsory No-Fault Motor Vehicle Law that requires that PIP insurance be carried by the owners of motor vehicles, and imposes penalties for failing to do so, unless specifically exempt. PIP provides all of the following benefits EXCEPT
A. Replacement services.
B. Medical.
C. Work loss.
D. Third party death benefit.
D. Third party death benefit.
What is the maximum number of roomers or boarders for properties insured under the dwelling policy?
A. 3
B. 5
C. 2
D. 6
B. 5
A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint, the building is considered
A. Unoccupied.
B. Vacant.
C. Condemned.
D. Closed.
B. Vacant.
> 60 days with no people or property = vacant
Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of property EXCEPT
A. Motor vehicles licensed for the road.
B. Aircraft.
C. Watercraft.
D. Credit cards.
C. Watercraft.
Canoes have limited coverage.
An insured owns a large dog. The first day he has to leave the dog home alone to go to work, the insured comes back to find his $400 couch torn apart, his $100 coffee table chewed up, his $50 window curtain shredded, and a $200 window pane shattered where his dog jumped through. The insured has personal property coverage under a special form dwelling policy. How much of this loss will the policy cover?
A. $0
B. $200
C. $250
D. $750
A. $0
Damage that results from domestic animals is excluded under the special form dwelling policy.
An insured has a special form dwelling policy written for $100,000 on a dwelling. The dwelling’s replacement cost is $115,000. Fire causes $75,000 in damage to the dwelling, $15,000 damage to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for the trees?
A. $5,000
B. $10,000
C. $60,000
D. $75,000
A. $5,000
In the broad and special form, Coverage B (Other Structures) is an additional amount of insurance, limited to 10% of Coverage A (in this example, $10,000). Trees, shrubs, and plants are covered, limited to not more the $500 for any one tree or plant, and not to exceed 5% of Coverage A in total (in this example, $5,000).
In a personal auto policy, the medical payments coverage is similar to
A. Bodily injury coverage, because it pays the insured’s doctor bills.
B. Accident insurance, because it has the same limits.
C. Accident insurance, because it pays medical expenses regardless of fault.
D. Bodily injury coverage, because it provides legal protection if the insured causes injuries to others.
C. Accident insurance, because it pays medical expenses regardless of fault.
The part of a property policy that shows the amount of insurance, premium, and policy term is the
A. Endorsements.
B. Declarations.
C. Insuring clause.
D. Conditions.
B. Declarations.
Who, what, when, where, and how much insurance and premium all are stated in the policy Declarations.
Which of the following liability policies is usually written on a “claims-made” form?
A. Professional liability insurance
B. Automobile liability
C. Personal liability
D. Umbrella liability
A. Professional liability insurance
All of the following are true of Coverage B - Other Structures in homeowners policies EXCEPT
A. This coverage is not applicable on the HO-4 policy form.
B. It must be added by endorsement to a homeowners policy.
C. The amount of coverage provided by Coverage B is an amount equal to 10% of Coverage A.
D. Land where the other structures are located is not covered.
B. It must be added by endorsement to a homeowners policy.
Homeowners policies automatically provide an amount of insurance in Coverage B that is equal to 10% of the amount written as Coverage A. This amount may be increased by endorsement.
Events or conditions that increase the chances of an insured loss occurring are referred to as
A. Exposures.
B. Hazards.
C. Risks.
D. Perils.
B. Hazards.
An insured hits a deer and crashes his car into a tree. The total damage to the vehicle is $6,000. How will this loss be covered?
A. $3,000 would be paid under other-than-collision; $3,000 would be paid under collision coverage.
B. This would not be a covered loss.
C. $6,000 would be paid under collision coverage.
D. $6,000 would be paid under other-than-collision coverage.
D. $6,000 would be paid under other-than-collision coverage.
Because the proximate cause of the loss was contact with an animal, all of the damage would be paid under other-than-collision coverage.
A dwelling policy has a standard deductible that applies to all property coverage, except fair rental value, additional living expense, and the fire department service charge. How much is this deductible?
A. $500
B. $250
C. $100
D. $1,000
B. $250
Which of the following would NOT be included in a commercial package policy?
A. Dwelling coverage
B. Equipment breakdown coverage
C. Farm coverage
D. Commercial crime coverage
A. Dwelling coverage
A commercial package policy may include coverage for exposures of a business, but not the personal exposure of the insured. The dwelling policy is a personal lines policy and would not be in a commercial package policy.
Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form?
A. Manuscripts
B. Valuable papers and records
C. Property of others
D. Works of art or antiques
B. Valuable papers and records
Valuable papers and records are valued at the cost of blank materials for reproducing the records and labor to copy the records.
An insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for
A. 5 days.
B. 90 days.
C. 30 days.
D. 60 days.
C. 30 days.
Which of the following is used in the formula for calculating the actual cash value of a property?
A. Agreed value
B. Replacement cost
C. Stated value
D. Fair market value
B. Replacement cost
The actual cash value (AC) method of valuation reinforces the principle of indemnity because it recognizes the reduction of value of property as it ages. To calculate ACV, depreciation is subtracted from the current replacement cost.
Replacement cost is defined as
A. Full replacement of property at its current cost, new and without reduction for depreciation.
B. The market value of property of like kind and quality.
C. Full replacement of property with like kind and quality, less an allowance for physical deterioration and depreciation.
D. Payment of the full policy limits in the event of a total loss.
A. Full replacement of property at its current cost, new and without reduction for depreciation.
The Federal Fair Credit Reporting Act
A. Protects customer privacy.
B. Regulates consumer reports.
C. Regulates telemarketing.
D. Prevents money laundering.
B. Regulates consumer reports.
What is the amount of coverage that would be available for a detached garage under the Coverage B - Other Structures of a homeowners policy?
A. No coverage
B. A flat amount listed in the policy Declarations
C. 20% of Coverage A
D. 10% of Coverage A
D. 10% of Coverage A
The pro rata liability clause is designed to protect the principle of
A. Insurable interest.
B. Waiver and estoppel.
C. Subrogation.
D. Indemnity.
D. Indemnity.
Within how many days must a property insurer pay on a claim after the settlement is reached?
A. 10 days
B. 20 days
C. 30 days
D. 60 days
B. 20 days
