P & C Manual

Question 1

What is risk?

Answer 1

The uncertainty of loss.

Question 2

What is another term for risk?

Answer 2

Exposure

Question 3

What is a “pure” risk?

Answer 3

They involve only the possibility of loss, as opposed to speculative risks, which involve the possibility of loss or gain.

Question 4

What is meant by “insurable interest”?

Answer 4

Even if a risk is insurable in the general sense, you may not insure it unless you are the person who will suffer the financial loss.

Question 5

What is meant by the fact that insuring the Risk must be “affordable”?

Answer 5

The risk must not be so great that the premiums required to fund loss payments would be prohibitively high.

Question 6

What is meant by the fact that a loss must not happen to a large number of insureds at the same time?

Answer 6

If a great number of insureds were to suffer a loss at the same time, it would be catastrophic for the insurance company. A company would not want to insure every home in a small town because a fire or tornado might destroy the entire town. Instead, the company would insure homes in many towns and states to spread the risk.

Question 7

What is a peril?

Answer 7

A cause of a loss.

Question 8

What is a hazard?

Answer 8

Something that increases the chance of loss.

Question 9

What are the three types of hazards and describe

Answer 9

a. Physical–occupying property next to a hazardous site, having faulty brakes on your car, worn wiring in your home, lack of pride of ownership
b. Morale–This is someone with carelessness of attitude, someone who is irresponsible. They go through life saying, “Why should i worry, I have insurance?”
c. Moral–The most dangerous hazard. These are people who purchase insurance with intent to commit fraud.

Question 10

What are the four elements of a legally enforceable contract?

Answer 10

1. Competent parties–legal incompetency examples: insane, those under the influence of alcohol or drugs, and minors
2. Must be for legal purpose–they are not enforceable if they are illegal, immoral, or against public policy
3. Offer and Acceptance–must be an agreement between 2 parties
4. Consideration–each party must commit something of value. The insured’s consideration is the policy premium. The company’s consideration is its promise to pay losses subject to the conditions specified in the insurance contract.

Question 11

What is a principle of indemnity?

Answer 11

This means that when a loss occurs, insureds should be restored to the approximate financial condition they were in before the loss. They should not suffer financially from the loss, not should they be allowed to gain from it.

Question 12

What is a unilateral contract?

Answer 12

A contract that requires that a promise be exchanged for an act.

Question 13

What is a contract of utmost good faith?

Answer 13

This means that the parties have a duty to disclose to each other all material facts relating to the contract.

Question 14

What is a conditional contract?

Answer 14

It contains a number of conditions that both the insured and the insurer must comply with

Question 15

What are “conditions”?

Answer 15

The responsibilities and obligations of each party–what the insured must do in the event of a loss, etc.

Question 16

What is an endorsement?

Answer 16

These are attached to the policy in order to modify it in some way

Question 17

All of the following are techniques for handling risk EXCEPT:

a. avoidance
b. loss control
c. retention
d. speculation

Answer 17

d. speculation

Question 18

The law of large numbers states:

a. Future losses are unpredictable.
b. It is possible to precisely predict losses for groups of people.
c. The more examples used to develop a statistic, the more reliable the statistic will be.
d. A small sample of losses can be used to develop rates.

Answer 18

c. The more examples used to develop a statistic, the more reliable the statistic will be.

Question 19

All of the following are elements of insurability EXCEPT:

a. There must be an insurable interest
b. Insuring the risk must be affordable
c. The loss must happen to a large number of people at the same time.
d. The loss must be calculable

Answer 19

c. The loss must happen to a large number of people at the same time.

Question 20

Having worn tires is an example of:

a. A physical hazard
b. A moral hazard
c. A morale hazard
d. a peril

Answer 20

a. A physical hazard

Question 21

All of the following are elements of a legally enforceable contract EXCEPT:

a. a legal purpose
b. a signature of both parties
c. competent parties
d. consideration

Answer 21

b. a signature of both parties

Question 22

Being placed in the same financial positions after a loss as before the loss is an example of:

a. the principle of alienation
b. the principle of adherence
c. the principle of indemnity
d. the principle of personality

Answer 22

c. the principle of indemnity

Question 23

All of the following are parts of an insurance policy EXCEPT:

a. conditions
b. definitions
c. insuring agreement
d. binder

Answer 23

d. binder

Question 24

A form which modifies coverage is called:

a. an binder
b. a modification form
c. an endorsement
d. a change form

Answer 24

c. an endorsement

Question 25

What kind of company is organized as a corporation in the business of providing insurance, where the stockholders own the business and are entitled to its profits?

Answer 25

Stock Companies

Question 26

What kind of company is not incorporated and does not issue stock, but rather its policyholders, who also elect its managers, own the company?

Answer 26

Mutual Companies

Question 27

What kind of company is no incorporated but is managed by an attorney-in-fact, who assures that the loss-sharing agreements are carried out?

Answer 27

Reciprocal Companies

Question 28

In what kind of company are certain types of insurance are offered or subsidized by the state or federal government?

Answer 28

Residential Market Insurance (Government Insurers)

Question 29

What type of insurance insures against the economic loss caused when things we own are damaged or destroyed?

Answer 29

Property Insurance

Question 30

What is the formula for loss ratio?

Answer 30

losses/premium=loss ratio

Question 31

What is derived by comparing paid claims to premiums?

Answer 31

Loss Ratio

Question 32

What compares the company’s expenses to premiums?

Answer 32

Expense Ratio

Question 33

What is a person who stands in a special relationship of trust to another person?

Answer 33

A fiduciary

Question 34

What is giving a customer anything of value not specified in the policy in order to induce a sale?

Answer 34

Rebating–typical rebate is giving a customer part or all of the commission on a sale

Question 35

A company that is formed as a corporation and owned by investors is called a:

a. mutual company
b. stock company
c. residual company
d. fraternal company

Answer 35

b. stock company

Question 36

Policyholders are owners of which of the following type of company:

a. reinsurance company
b. mutual company
c. fire company
d. Lloyd’s company

Answer 36

b. mutual company

Question 37

Insurance offered by or subsidized by government entities is called the:

a. reciprocal market
b. residual market
c. refinancing market
d. reimbursement market

Answer 37

b. residual market

Question 38

All of the following are roles of an insurance agent EXCEPT:

a. interpret contracts for clients
b. countersign policies
c. provide a link between the policyholder and company
d. collect the initial policy premium

Answer 38

a. interpret contracts for clients

Question 39

Powers given to an agent in the agency contract are called:

a. implied authority
b. apparent authority
c. express authority
d. written authority

Answer 39

c. express authority

Question 40

Agents who are independent business people contracted to write only for one company are called:

a. direct writing agents
b. independent agents
c. exclusive agents
d. direct response agents

Answer 40

c. exclusive agents

Question 41

An insurance agent primarily represents:

a. the customer
b. the broker
c. the company
d. a 3rd party

Answer 41

c. the company

Question 42

The insurance company department that evaluates applications for eligibility and determines proper pricing is:

a. claims
b. auditing
c. underwriting
d. legal

Answer 42

c. underwriting

Question 43

The insurance company department that uses data to develop rates is called:

a. actuarial
b. marketing
c. rating
d. investment

Answer 43

a. actuarial

Question 44

Insurance companies that share the risk with another company is called:

a. an intermediary company
b. a reinsurance company
c. a post-risk company
d. a financial guarantee company

Answer 44

b. a reinsurance company

Question 45

A company that is licensed to conduct business in the state is called:

a. an admitted company
b. a non-admitted company
c. an alien company
d. a reciprocal company

Answer 45

a. an admitted company

Question 46

All the following are considered “unfair trade practices” except:

a. rebating
b. twisting
c. unfair discrimination
d. representation

Answer 46

d. representation

Question 47

Requiring that forms and rates be filed before they can be used is called:

a. prior approval
b. file and use
c. use and file
d. open competition

Answer 47

b. file and use

Question 48

The ratio determined by comparing paid claims to premiums is called:

a. expense ratio
b. combined ratio
c. loss ratio
d. claims ratio

Answer 48

c. loss ratio

Question 49

Insurance departments review rates to determine they are all the following except:

a. adequate
b. fairly distributed
c. not excessive
d. fairly discriminatory

Answer 49

b. fairly distributed

Question 50

What is the withholding of material facts from the insurance company?

Answer 50

Concealment

Question 51

What is a written or verbal misstatement of a material fact involved in the contract on which the insurer relies?

Answer 51

Misrepresentation

Question 52

What is a deliberate misrepresentation that causes financial harm?

Answer 52

Fraud

Question 53

What is a specified agreement made between the insured and the insurer that certain conditions will be met?

Answer 53

Warranty

Question 54

What, in insurance terminology, is giving up a known right or privilege?

Answer 54

A waiver

Question 55

What does it mean when coverage will be continued through to a policy’s expiration date but not beyond?

Answer 55

Non-renewal

Question 56

What is termination of coverage in advance of the policy’s expiration?

Answer 56

Cancellation

Question 57

The insurance application represents the applicant’s:

a. offer
b. acceptance
c. counteroffer
d. consideration

Answer 57

a. offer

Question 58

A binder provides:

a. a guaranty that a policy will be issued
b. immediate and temporary coverage
c. free coverage until a policy is issued
d. an extension of permanent coverage

Answer 58

b. immediate and temporary coverage

Question 59

Which of the following information do underwriters use to determine eligibility of a risk:

a. inspection services
b. MVR’s
c. financial information
d. all of the above

Answer 59

d. all of the above

Question 60

The Fair Credit Reporting Act:

a. provides adverse information to a customer
b. requires disclosure of information to an insurance company
c. protects consumers
d. assures adverse selection

Answer 60

c. protects consumers

Question 61

Judgment rating is based on:

a. an underwriter’s past experience
b. a rate taken from a rating manual
c. information obtained form an application
d. a court judgment

Answer 61

a. an underwriter’s past experience

Question 62

The most common method of rating is called:

a. retrospective rating
b. manual or class rating
c. merit rating
d. unclassified rating

Answer 62

b. manual or class rating

Question 63

All of the following will void an insurance policy EXCEPT:

a. misrepresentation
b. concealment
c. fraud
d. providing an inaccurate middle name

Answer 63

d. providing an inaccurate middle name

Question 64

A warranty is:

a. a statement the applicant believes to be true
b. a statement that must be material
c. a guarantee that certain conditions will be met
d. a statement the company makes that guarantees the policy will not be cancelled

Answer 64

c. a guarantee that certain conditions will be met

Question 65

Giving up a known right is known as a:

a. waiver
b. stop gap
c. relinquishment
d. statement of estopped

Answer 65

a. waiver

Question 66

A cancellation method that allows an insurance company to keep part of the premium in excess of the earned premium is called:

a. pro rata
b. flat rate
c. short rate
d. comp rate

Answer 66

c. short rate

Question 67

Policies can be standardized by:

a. law
b. a rating organization
c. a company
d. all of the above

Answer 67

d. all of the above

Question 68

The property declaration page contains all the following information except:

a. name of the insured
b. conditions
c. property covered
d. policy period

Answer 68

b. conditions

Question 69

The part of the policy that describes what property and perils are covered is called:

a. insuring agreement
b. conditions
c. exclusions
d. provisions

Answer 69

a. insuring agreement

Question 70

Policies that cover all causes of loss not specifically excluded are called:

a. exclusive peril
b. deluxe peril
c. open peril
d. named peril

Answer 70

c. open peril

Question 71

Losses that occur as the result of a direct loss are called:

a. inconsequential losses
b. fortuitous losses
c. indirect losses
d. non-descript losses

Answer 71

c. indirect losses

Question 72

Common types of exclusions include:

a. non-accidental losses
b. controllable losses
c. catastrophic losses
d. all of the above

Answer 72

d. all of the above

Question 73

The most common property valuation method is:

a. market value
b. agreed value
c. actual cash value
d. original cost value

Answer 73

c. actual cash value

Question 74

The purpose of coinsurance is to do all the following except:

a. assure rate adequacy
b. encourage insurance-to-value
c. penalize the insured
d. guarantee that a loss will be paid in full

Answer 74

d. guarantee that a loss will be paid in full

Question 75

Appraisal and arbitration clauses:

a. help settle disputes about coverage
b. keep the insured and the company out of court
c. are called “alternative dispute resolution” methods
d. all of the above

Answer 75

d. all of the above

Question 76

If the company broadens a policy without requiring an additional premium, it is called:

a. liberalization
b. waiver
c. subrogation
d. rebating

Answer 76

a. liberalization

Question 77

What is proximate cause?

Answer 77

Proximate cause is the action, which produced the loss. The loss would not have occurred without the proximate cause.

Question 78

Liability is defined as:

a. a moral responsibility for another’s loss
b. a legal responsibility for someone’s loss
c. an ethical responsibility for someone’s loss
d. an institutional responsibility for someone’s

Answer 78

b. a legal responsibility for someone’s loss

Question 79

All of the following are considered “torts” EXCEPT:

a. intentional torts
b. unintentional torts
c. unexceptional torts
d. strict liability torts

Answer 79

c. unexceptional torts

Question 80

A duty to others can be expressed in terms of degree of care. All the following represent degrees of care EXCEPT:

a. invitee
b. interloper
c. trespasser
d. licensee

Answer 80

b. interloper

Question 81

If someone’s own negligence contributes to a loss, it is called:

a. contributory negligence
b. statutory negligence
c. compounded negligence
d. comparative negligence

Answer 81

a. contributory negligence

Question 82

Which of the following are defenses against negligence?

a. contributory negligence
b. assumption of risk
c. statue of limitations
d. all of the above

Answer 82

d. all of the above

Question 83

When someone is liable for the actions of others, it is called:

a. verbatim liability
b. vindictive liability
c. virtual liability
d. vicarious liability

Answer 83

d. vicarious liability

Question 84

All the following are types of damages EXCEPT:

a. general
b. special
c. punitive
d. composite

Answer 84

d. composite

Question 85

Policies that have separate liability limits for bodily injury and property damage are called:

a. split limits
b. single limits
c. aggregate limits
d. divided limits

Answer 85

a. split limits

Question 86

All the following are dwelling policy forms EXCEPT:

a. basic
b. comprehensive
c. broad
d. special

Answer 86

b. comprehensive

Question 87

Coverage A in the dwelling form covers:

a. personal property
b. dwelling
c. other structures
d. rental value

Answer 87

b. dwelling

Question 88

All the following are listed on the dwelling form as “property not covered” EXCEPT:

a. money
b. animals
c. books of account
d. rowboats and canoes

Answer 88

d. rowboats and canoes

Question 89

When property is taken away from the described location the coverage is:

a. 20% of coverage A
b. 5% of coverage D
c. 10% of coverage C
d. 100% of coverage C

Answer 89

c. 10% of coverage C

Question 90

Coverage D in the dwelling form is:

a. additional living expense
b. loss of use
c. rental value
d. extra expense

Answer 90

c. rental value

Question 91

The minimum perils automatically covered by the basic dwelling form are:

a. fire, windstorm, and theft
b. fire, vandalism, and riot
c. fire, lightning and internal explosion
d. fire, hail, and volcanic eruption

Answer 91

c. fire, lightning and internal explosion

Question 92

The dwelling policy excludes all of the following except:

a. ordinance of law
b. earthquake
c. flood
d. unintentional losses caused by the named insured

Answer 92

d. unintentional losses caused by the named insured

Question 93

In the basic dwelling form, losses are valued at:

a. replacement cost
b. cost to repair
c. actual cash value
d. functional replacement cost

Answer 93

c. actual cash value

Question 94

The dwelling broad form covers all of the basic forms perils plus:

a. damage by burglars
b. weight of ice, sleet and snow
c. volcanic eruption
d. all of the above

Answer 94

d. all of the above

Question 95

Both the broad and special dwelling forms provide additional coverage NOT found in the basic form. All of the following are included in the additional coverage EXCEPT:

a. specified peril coverage for lawns, shrubs, trees and plants
b. breakage of glass
c. rental value
d. collapse of buildings

Answer 95

c. rental value

Question 96

Which of the following are dwelling endorsements?

a. automatic increase in insurance
b. broad form theft coverage
c. liability and medical payments to others
d. all of the above

Answer 96

d. all of the above

Question 97

Which of the following advantages are provided by a package policy?

a. helps prevent gaps in coverage
b. helps prevent overlaps in coverage
c. provides a broad policy at a better price
d. all of the above

Answer 97

d. all of the above

Question 98

Section I of the homeowners provides all the following coverage EXCEPT:

a. dwelling
b. liability and medical payments to others
c. personal property
d. loss of use

Answer 98

b. liability and medical payments to others

Question 99

The HO-2 broad form homeowners policy provides:

a. open peril coverage on all property
b. broad named perils on dwellings and basic perils on personal property
c. broad named perils on all property
d. open perils coverage on dwellings and broad named perils on personal property

Answer 99

c. broad named perils on all property

Question 100

The HO-3 policy is:

a. the most frequently used homeowners form
b. Provides open perils coverage on dwellings and broad named perils on personal property
c. is written for dwelling owners
d. all of the above

Answer 100

d. all of the above

Question 101

The HO-4 policy is used to provide coverage for:

a. dwelling coverage for homeowners
b. building coverage for apartment building owners
c. personal property of tenants
d. personal property of condominium owners

Answer 101

c. personal property of tenants

Question 102

The HO-6 policy has one type of property coverage not found in the HO-4 policy:

a. personal property coverage
b. loss of use coverage
c. limited dwelling coverage
d. other structures coverage

Answer 102

c. limited dwelling coverage

Question 103

The major advantage of the HO-5 policy is that:

a. it has no exclusions
b. it provides replacement cost coverage on dwellings, others structures and personal property
c. it provides open peril coverage on both buildings and personal property
d. it has broader liability coverage than the other forms

Answer 103

c. it provides open peril coverage on both buildings and personal property

Question 104

In the homeowners policy, Section I Coverage A provides coverage for:

a. personal property
b. liability
c. loss of use
d. dwelling

Answer 104

d. dwelling

Question 105

The limit for Coverage B – Other Structures is:

a. 20% of Coverage C – Personal Property
b. $25,000
c. 10% of Coverage A – Dwelling
d. Selected by the insured

Answer 105

c. 10% of Coverage A

Question 106

The Coverage C – Personal Property in the homeowners policy would cover all of the following except:

a. money
b. watercraft
c. animals
d. residence service vehicles

Answer 106

c. animals

Question 107

In the homeowners policy, the limit for theft of jewelry is:

a. $10,000
b. $500
c. $1500
d. The Coverage C – Personal Property limit

Answer 107

c. $1500

Question 108

All of the following is true regarding Coverage D – Loss of Use on the homeowners policy EXCEPT:

a. it pays loss of rental value for any part of the premises rented to others
b. it pays loss of business income for a home-based business
c. the limit for the coverage is 30% of Coverage A–Dwelling
d. It pays for additional living expenses in the event of a loss

Answer 108

b. it pays loss of business income for a home-based business

Question 109

The homeowners policy would cover all of the following losses EXCEPT:

a. fire damage to a front porch
b. wind damage to a detached garage
c. increased cost of construction due to ordinances or laws
d. freezing of plumbing as long as the heat is maintained

Answer 109

c. increased cost of construction due to ordinances or laws

Question 110

All of the following would be “insured locations” on the homeowners policy EXCEPT:

a. the described premises
b. a hotel room
c. a cemetery plot
d. the insured’s business office

Answer 110

d. the insured’s business office

Question 111

Homeowners Coverage F is sometimes called:

a. bodily injury coverage
b. guest medical coverage
c. property damage coverage
d. personal injury coverage

Answer 111

b. guest medical coverage

Question 112

The minimum limit for Coverage E – Liability is:

a. $500,000
b. $50,000
c. $100,000
d. $1,000,000

Answer 112

c. $100,000

Question 113

Coverage E – Liability would pay for all the following EXCEPT:

a. injury to a golfer hit by an insured’s golf ball
b. injury to a client visiting the insured’s business office
c. injury to a mailman bitten by the insured’s dog
d. the cost of defending the insured

Answer 113

b. injury to a client visiting the insured’s business office

Question 114

In the homeowners policy, watercraft liability is:

a. fully covered up to the Coverage E–Liability limit
b. completely excluded
c. covered if the watercraft is under a certain horsepower rating or length
d. only covered by endorsement

Answer 114

c. covered if the watercraft is under a certain horsepower rating or length

Question 115

A homeowners endorsement that can be used to insure jewelry is called a:

a. Scheduled Personal Property Endorsement
b. All Risk Property Endorsement
c. Comprehensive Endorsement
d. Special Peril Endorsement

Answer 115

a. Schedule Personal Property Endorsement

Question 116

On a homeowners policy, earthquake damage is:

a. covered up to 10% of the dwelling limit
b. automatically covered by the policy
c. only covered by endorsement
d. never covered under any circumstances

Answer 116

c. only covered by endorsement

Question 117

The Personal Auto Policy makes available all of the following coverage EXCEPT:

a. Liability coverage
b. Medical payments coverage
c. Physical damage coverage
d. Liability coverage for injury to an insured

Answer 117

d. Liability coverage for injury to an insured

Question 118

In the Personal Auto Policy, the term “you” describes which of the following:

a. the named insured listed in the declarations page
b. a named insured’s spouse who lives in another city
c. a resident family member
d. a foreign exchange student

Answer 118

a. the named insured listed on the declarations page

Question 119

All of the following would be “insured’s” on the Personal Auto Policy EXCEPT:

a. the named insured’s resident son
b. a car thief
c. a foster child
d. a ward of the court

Answer 119

b. a car thief

Question 120

When an insured is using his personal auto on behalf of his employer, who is protected by liability coverage?

a. only the insured
b. only the employer
c. no on is an insured in this situation
d. both the insured and the employer

Answer 120

d. both the insured and the employer

Question 121

Bob has a Personal Auto Policy with limits of $100,000/$300,000 bodily injury and $50,000 property damage. These limits mean:

a. $100,000 bodily injury per accident and $300,000 bodily injury per occurrence, $50,000 medical payments
b. $100,000 bodily injury per occurrence and $300,000 aggregate per year, $50,000 uninsured motorists
c. $100,000 bodily injury per person and $300,000 bodily injury per accident, $50,000 property damage per accident
d. $100,000 property per year, $300,000 bodily injury per year and $50,000 property damage per year

Answer 121

c. $100,000 bodily injury per person and $300,000 bodily injury per accident, $50,000 property damage per accident

Question 122

The purpose of the “out of state” provision in the Personal Auto Policy is to:

a. Assure that the insured is always in compliance with the financial responsibility laws of other states
b. Guaranty physical damage coverage in all states
c. Allow the insured to purchase coverage in other states
d. Protect the insured against uninsured motorists in other states

Answer 122

a. assure that the insured is always in compliance with the financial responsibility laws of other states

Question 123

Judy borrows her neighbors car and is involved in an accident. How would Judy’s Personal Auto Policy respond to the accident?

a. it would not respond because the car does not belong to Judy
b. It would provide coverage on primary basis
c. It would provide excess coverage over the neighbor’s policy limits
d. Judy’s policy and the neighbor’s policy would share the loss equally

Answer 123

c. It would provide excess coverage over the neighbor’s policy limits

Question 124

Medical payments coverage:

a. only applies to occupants of other vehicle
b. only applies to the named insured
c. applies to the name insured, family members and occupants of the insured’s vehicle
d. only applies to the occupants of the insured’s vehicle

Answer 124

c. applies to the named insured, family members and occupants of the insured’s vehicle

Question 125

Uninsured motorists coverage:

a. provides coverage for injuries to the insured caused by an uninsured motorist
b. covers compensatory damages
c. requires the uninsured motorist to be legally responsible for the injuries
d. all of the above

Answer 125

d. all of the above

Question 126

The Uninsured Motorist definition of insured includes all of the following EXCEPT:

a. the named insured
b. relatives who reside with the named insured
c. the passengers in another vehicle
d. anyone entitled to recover damage for injuries to an insured

Answer 126

c. the passengers in another vehicle

Question 127

Other Than Collision (Comprehensive) coverage applies to all the following losses EXCEPT:

a. hitting a cow
b. theft
c. overturn of the vehicle
d. flood

Answer 127

c. overturn of the vehicle

Question 128

The Extended Non-Owned Coverage for Named Individual would be used for:

a. an insured who has a furnished company car
b. an insured who rents a car
c. an insured who borrows someone else’s car
d. an insured who does not own a car

Answer 128

a. an insured who has a furnished company car

Question 129

The purpose of Assigned Risk Plans is to:

a. provide an insurance market for drivers with bad driving records
b. provide coverage assigned to the vehicle owner by the state
c. distribute auto insurance equally among all of the auto insurers in the state
d. provide a superior policy for excellent drivers

Answer 129

a. provide an insurance market for drivers with bad driving records

Question 130

Flood coverage:

a. is never provided by insurance
b. can be purchased form a federally subsidized program
c. is only available for residential property
d. Is only available in non-flood prone areas

Answer 130

b. can be purchased from a federally subsidized program

Question 131

The NFIP flood policy excludes all the following property EXCEPT:

a. money
b. personal property
c. fences
d. underground structures

Answer 131

b. personal property

Question 132

Earthquake insurance:

a. can be purchased as a separate policy
b. can be endorsed to a policy
c. is excluded from standard property policies
d. all of the above

Answer 132

d. all of the above

Question 133

A Personal Articles form:

a. provides coverage on the same property as the homeowners schedule personal property endorsement
b. can be used to cover money
c. is only available if the insured does not have a homeowners policy
d. provides a blanket limit of insurance

Answer 133

a. provides coverage on the same property as the homeowners schedule personal property endorsement

Question 134

A watercraft package policy:

a. provides property coverage only
b. provides liability coverage only
c. is needed because watercraft is not properly covered on a homeowners policy
d. is only available to owners of outboard boats

Answer 134

c. is needed because watercraft is not properly covered on a homeowners policy

Question 135

Characteristics of Personal Umbrella insurance include:

a. provides broader coverage than an underlying policy
b. provides excess liability coverage
c. contains a retention limit
d. all of the above

Answer 135

d. all of the above

Question 136

FAIR Plans are:

a. available in some states to provide property insurance to those unable to obtain it in a standard market
b. markets for crime insurance
c. plans developed in the 1890’s as a response catastrophic fires
d. liability plans that provide fair insurance premiums to all insureds

Answer 136

a. available in some states to provide property insurance to those unable to obtain it in a standard market

Question 137

In order to have a package policy an insured must purchase:

a. ocean marine and aviation insurance
b. Any two coverage parts
c. property and liability coverage
d. Flood insurance

Answer 137

b. any two coverage parts

Question 138

In the Common Conditions form, the first named insured is the only insured who:

a. can cancel the policy
b. can change the policy
c. can pay policy premiums
d. all of the above

Answer 138

d. all of the above

Question 139

Transfer of rights and duties:

a. can be done with the insured’s signature
b. requires the insurance company’s written consent
c. is never permissible
d. does not cover a legal representative if the insured dies

Answer 139

b. requires the insurance company’s written consent

Question 140

Inspections and surveys:

a. must be conducted by the insured
b. are required before an insurance policy can be issued
c. may be conducted by the insurance company
d. must be done every year

Answer 140

c. may be conducted by the insurance company

Question 141

A businessowners policy is best suited for:

a. a manufacturer
b. an auto repair shop
c. a bank
d. an apartment

Answer 141

d. an apartment

Question 142

For a business to be eligible for a BOP, none of its locations can exceed:

a. 3 million square feet and $50,000 in annual gross sales
b. 50,000 square feet and $100,000 in annual payroll
c. 25,000 square feet and $3 million in annual gross sales
d. 150 stories and $1,000,000 in net income

Answer 142

c. 25,000 square feet and $3 million in annual gross sales

Question 143

Businessowners coverage extensions include all the following EXCEPT:

a. property in transit or off premises
b. glass coverage
c. valuable papers and records
d. accounts receivable

Answer 143

b. glass coverage

Question 144

The BOP limits Business Income from Dependent Properties to:

a. $1,000
b. $25,000
c. $100,000
d. $5,000

Answer 144

d. $5,000

Question 145

Cause of loss forms:

a. are needed to describe covered perils
b. are included in the Commercial Building Property form
c. are not required because everything is covered
d. are optional

Answer 145

a. are needed to describe covered perils

Question 146

The commercial property coverage territory is:

a. Worldwide
b. United States and Canada
c. United States, Puerto Rico, and Mexico
d. United States, territories and possessions, Puerto Rico and Canada

Answer 146

d. United States, territories and possessions, Puerto Rico and Canada

Question 147

Liberalization applies to:

a. changes that broaden coverage without a premium charge
b. all risk policies only
c. coverage that is endorsed on the policy if the coverage changes
d. reduction of coverage that reduces the premium

Answer 147

a. changes that broaden coverage without a premium charge

Question 148

The Building and Personal Property form covers all the following EXCEPT:

a. building
b. Personal property
c. Bailees property
d. property of others

Answer 148

c. bailees property

Question 149

The Building and Personal Property form excludes all the following EXCEPT:

a. money
b. pets
c. contraband
d. furniture and fixtures

Answer 149

d. furniture and fixtures

Question 150

Which of the following are Additional Coverages in the Building and Personal Property form?

a. Debris removal
b. Preservation of property
c. Increased cost of construction
d. all of the above

Answer 150

d. all of the above

Question 151

All of the following are building and personal property form coverage extensions EXCEPT:

a. Newly acquired or constructed property
b. property off-premises
c. pollutant clean-up removal
d. non-owned, detached trailers

Answer 151

c. pollutant clean-up and removal

Question 152

Property insured on a Building and Personal Property form is valued at:

a. replacement cost
b. actual cash value
c. functional replacement cost
d. market value

Answer 152

b. cash value

Question 153

All of the following is true about the vacancy clause of the Building and Personal Property Coverage form EXCEPT:

a. all covered loss, except those excluded are reduced by 15%
b. vandalism losses are excluded
c. vacancy eliminates all coverage
d. the clause impacts buildings vacant more than 60 consecutive days

Answer 153

c. vacancy eliminates all coverage

Question 154

All of the following are optional valuation provisions in the Building and Personal Property Coverage form EXCEPT:

a. actual cash value
b. agreed value
c. inflation guard
d. replacement cost

Answer 154

a. actual cash value

Question 155

Which of the following is true about a Builders Risk Coverage form?

a. the form covers a building under construction
b. the coverage can end before the policy expiration date if construction is completed
c. the form covers damage to the building foundation
d. all of the above are true

Answer 155

d. all of the above are true

Question 156

Which is true about the Business Income Coverage form’s “period of restoration”?

a. coverage begins 72 hours after the direct loss and ends when the property is restored
b. There is no waiting period
c. Coverage begins on the date of the loss and ends 60 days after restoration
d. Coverage beings 48 hours after the loss and ends in 180 days

Answer 156

a. Coverage begins 72 hours after the direct loss and ends when the property is restored

Question 157

Additional Coverages on the Business Income form include all the following EXCEPT:

a. Extended Business Income
b. Order of Civil Authority
c. Extended Period of Indemnity
d. Alterations and New Buildings

Answer 157

c. Extended Period of Indemnity

Question 158

The Maximum Period of Indemnity option on the Business Income form:

a. limits coverage to 120 days
b. is subject to coinsurance
c. limits coverage based on a fraction of the limit
d. begins 120 days after the loss and provides coverage until the restoration is completed

Answer 158

a. limits coverage to 120 days

Question 159

The purpose of the Extra Expense Coverage form is to:

a. Cover non-continuing expenses after a direct loss
b. Cover loss of income after a direct loss
c. Cover all expenses after a direct loss
d. Cover only extra expenses of continuing to operate after a direct loss

Answer 159

d. Cover only extra expenses of continuing to operate after a direct loss

Question 160

All of the following Cause of Loss forms are “named peril EXCEPT:

a. Basic
b. Special
c. Broad
d. Earthquake

Answer 160

b. Special

Question 161

The Peak Season endorsement:

a. provides increased coverage during certain seasons when inventory is higher than normal
b. begins on the date listed on the endorsement and ends on the policy expiration date
c. requires a monthly report of values
d. guarantees that all losses will be fully covered during the season

Answer 161

a. provides increased coverage during certain seasons when inventory is higher than normal

Question 162

Three types of coverage available include:

a. Ocean Marine Hull Insurance
b. Ocean Marine Cargo Insurance
c. Ocean Marine Freight
d. All of the above

Answer 162

d. all of the above

Question 163

Protection and Indemnity Coverage provides:

a. liability coverage
b. property coverage on the hull of the vessel
c. coverage only when the insured is not at fault for an accident
d. indemnity to the insured for any losses

Answer 163

a. liability coverage

Question 164

“Perils on the Sea” include all of the following EXCEPT:

a. fire
b. wind and hail
c. stranding
d. smoking

Answer 164

c. stranding

Question 165

Jettison:

a. occurs when property is thrown overboard to save the ship
b. is a “peril of the sea”
c. is a “particular average” loss
d. covers property swept overboard by large waves

Answer 165

a. occurs when property is thrown overboard to save the ship

Question 166

A “general average loss” is:

a. paid solely by the owner of the ship
b. paid when jettison occurs
c. paid solely by the owner of the lost cargo
d. is paid by a 3rd party who is legally responsible for damage to cargo

Answer 166

b. paid when jettison occurs

Question 167

“Instrumentalities of communication” include:

a. bridges
b. tunnels
c. radio and TV antennas
d. docks

Answer 167

c. radio and TV antennas

Question 168

The purpose of the Nationwide Marine definition is to:

a. Identify the types of property eligible for inland marine coverage
b. Identify the types of property that can only be written on a commercial property form
c. Identify the types of property that can only be written on a casualty form
d. Define the term “marine”

Answer 168

a. Identify the types of property eligible for inland marine coverage

Question 169

A CGL policy is designed to cover:

a. liquor liability
b. premises liability
c. aircraft liability
d. pollution liability

Answer 169

b. premises liability

Question 170

The two types of CGL coverage forms are:

a. basic and broad
b. occurrence and discovery
c. occurrence and claims made
d. claims occurred and known loss

Answer 170

c. occurrence and claims made

Question 171

A supplemental Extended Reporting Period:

a. pays losses that occur after the policy period
b. is only available on an occurrence form
c. is automatically provided for free
d. extends the time to report claims arising out of occurrences that took place while the policy was in force

Answer 171

d. extends the time to report claims arising out of occurrences that took place while the policy was in force

Question 172

The primary coverage territory of a CGL policy is:

a. US and the Bahamas
b. US and Mexico
c. Anywhere in the world
d. US territories and possessions, Puerto Rico and Canada

Answer 172

d. US, territories and possessions, Puerto Rico and Canada

Question 173

The CGL policy excludes:

a. bodily injury and property damage
b. personal & advertising injury
c. medical payments
d. excess liability

Answer 173

a. bodily injury and property damage

Question 174

The definition of Personal & Advertising Injury includes all the following EXCEPT:

a. libel
b. slander
c. bodily injury
d. wrongful eviction

Answer 174

c. bodily injury

Question 175

The Coverage C – Medical Payments:

a. provides coverage on a “no fault” basis
b. has a separate “per person” limit
c. excludes injuries covered by workers compensation insurance
d. all of the above

Answer 175

d. all of the above

Question 176

The General Aggregate on the CGL:

a. applies to all losses except products-completed operations
b. limits the amount paid for any one occurrence
c. applies only when the occurrence limit is exhausted
d. cannot be reinstated when the policy renews

Answer 176

a. applies to all losses except products-completed operations

Question 177

The “other insurance” “contributions by equal shares” provision provides:

a. each policy pays equally until the limit of the smallest is reached
b. each policy pays its proportional share of the loss
c. one policy will be primary and the other will be excess
d. each policy shares the loss until it is totally paid

Answer 177

a. each policy pays equally until the limit of the smallest is reached

Question 178

The Commercial Auto Coverage form contains the following two coverages:

a. liability and medical payments
b. liability and physical damage
c. liability and uninsured motorists
d. liability and personal injury protection

Answer 178

b. liability and physical damage

Question 179

Symbol 1 provides coverage for:

a. owned autos
b. borrowed autos
c. any auto
d. leased autos

Answer 179

c. any auto

Question 180

Symbol 7 provides coverage for:

a. non-owned autos
b. autos subject to no-fault laws
c. mobile equipment
d. specifically described autos

Answer 180

d. specifically described autos

Question 181

The “who is an insured” provision includes all the following as insured’s EXCEPT:

a. anyone responsible for the actions of an insured
b. the named insured
c. bodily injury to a 3rd party
d. all of the above

Answer 181

d. all of the above

Question 182

The liability section of the Commercial Auto form covers which of the following losses?:

a. liability assumed in an “insured contract”
b. loading and unloading of an auto
c. bodily injury to a 3rd party
d. all of the above

Answer 182

d. all of the above

Question 183

“Specified Causes of Loss” physical damage coverage:

a. is an alternative to comprehensive coverage
b. provides coverage for towing and labor
c. includes transportation expense coverage
d. covers only collision losses

Answer 183

a. is an alternative to comprehensive coverage

Question 184

The physical damage section of the Commercial Auto form excludes all of the following losses EXCEPT:

a. freezing
b. flood
c. mechanical breakdown
d. road damage to tires

Answer 184

b. flood

Question 185

The Garage Coverage form:

a. is an auto coverage form
b. is a combination of auto and CGL-type coverage
c. is available to cover auto dealerships
d. all of the above

Answer 185

d. all of the above

Question 186

The Motor Carrier Act of 1980:

a. Requires trucking companies to certify they can meet financial responsibility if they become responsible for injury or damages
b. does not require coverage for damage to cargo
c. is addressed through the use of the MSL-60 endorsement
d. Never applies to pick up trucks

Answer 186

a. requires trucking companies to certify they can meet financial responsibility if they become responsible for injury or damages

Question 187

If an employee uses his own personal vehicle on behalf of his employer, the employer’s Commercial Auto policy can be endorsed to provide excess liability by adding the:

a. driver other car coverage endorsement
b. employees as Insureds endorsement
c. Individual named insured endorsement
d. employee hired auto endorsement

Answer 187

b. employees as insureds endorsement

Question 188

All of the following coverage may be endorsed to a Commercial Auto policy:

a. medical payments coverage
b. uninsured motorists coverage
c. rental reimbursement coverage
d. all of the above

Answer 188

d. all of the above

Question 189

What covers loss sustained during the policy period and discovered during the policy period or up to one year after the policy expires?

Answer 189

Loss Sustained Form

Question 190

What is the taking of property by someone unlawfully entering or leaving the premises, evidenced by visible signs of forcible entry or exit?

Answer 190

Burglary

Question 191

What is the taking or attempted taking of property by the threat or use of bodily harm, or by someone who has committed a witnessed, obviously unlawful act?

Answer 191

Robbery

Question 192

What is any unlawful taking of property? (includes burglary, robbery, and taking by stealth)

Answer 192

Theft

Question 193

The Loss Sustained Form covers:

a. loss sustained during the policy period and discovered during the policy period or up to one year after policy expiration
b. loss sustained at any time and discovered during the policy period
c. loss sustained in the prior policy only
d. loss sustained up to two years after policy expiration

Answer 193

a. loss sustained during the policy period an discovered during the policy period or up to one year after policy expiration

Question 194

Burglary requires:

a. a witness act
b. signs of forcible entry or exit
c. the loss of money
d. a threat of violence

Answer 194

b. signs of forcible entry or exit

Question 195

The broadcast crime definition is:

a. burglary
b. robbery
c. larceny
d. theft

Answer 195

d. theft

Question 196

A custodian is:

a. a janitor
b. a person who has care of property inside the premises
c. a watch person
d. a person who has care of property outside the premises

Answer 196

b. a person who has care of property inside the premises

Question 197

A crime form can cover all the following EXCEPT:

a. money
b. other property
c. securities
d. contraband

Answer 197

d. contraband

Question 198

A computer fraud form:

a. provides worldwide coverage
b. covers property at the listed location only
c. covers property in the US
d. covers property only outside of the United States

Answer 198

a. provides worldwide coverage

Question 199

Money is valued at:

a. actual cash value
b. replacement cost
c. the face value of the currency
d. a stated amount

Answer 199

c. the face value of the currency

Question 200

In a Fidelity Bond, the principal is:

a. the party that agrees to pay the loss
b. the person protected by the bond
c. the person on whom the bond is written
d. the same as the obligee

Answer 200

c. the person on whom the bond is written

Question 201

The fidelity bond which applies the limit separately to each employee involved in the loss is called:

a. name schedule
b. commercial blanket
c. blanket position
d. position schedule

Answer 201

c. blanket position

Question 202

Before workers compensation, employers had all of the following defenses EXCEPT:

a. assumption of risk
b. comparative negligence
c. fellow servant
d. contributory negligence

Answer 202

b. comparative negligence

Question 203

The benefit of workers compensation laws is:

a. an employee does not have to sue to collect benefits
b. benefits are determined by statute
c. employers are less likely to have to defend against employee suits
d. all of the above

Answer 203

d. all of the above

Question 204

Workers compensation laws require payments for all the following EXCEPT:

a. medical expenses
b. death
c. care and loss of services
d. rehabilitation

Answer 204

c. care and loss of services

Question 205

Types of disability under workers compensation laws include:

a. permanent partial
b. temporary total
c. permanent total
d. all of the above

Answer 205

d. all of the above

Question 206

Workers compensation can be funded in the following ways:

a. private insurance
b. self-insurance fund
c. state funds
d. all the above

Answer 206

d. all the above

Question 207

Part One – Workers Compensation can be funded in the following ways:

a. private insurance
b. self-insurance
c. state funds
d. all the above

Answer 207

d. all the above

Question 208

Part One – Workers Compensation provides coverage:

a. that complies with all state laws
b. that pays benefits according to the states listed on the information page
c. for employee suits
d. for loss of consortium claims

Answer 208

b. that pays benefits according to the states listed on the information page

Question 209

Part three - Other States coverage provides:

a. Coverage in monopolistic states
b. Benefits for all states not listed under Part One
c. Coverage in listed states if the insured begins work there
d. Coverage as long as the work began prior to the policy period

Answer 209

c. Coverage in listed states if the insured begins work there

Question 210

All of the following would be excluded by employers liability coverage EXCEPT:

a. contractual liability
b. dual capacity claims
c. workers compensation obligations
d. intentional injury

Answer 210

b. dual capacity claims

Question 211

The Longshore & Harbor Workers Endorsement covers:

a. Injury to crewmembers of a ship
b. Injury to an independent contractor
c. Injury to maritime workers
d. injury to railroad workers

Answer 211

c. injury to maritime workers

Question 212

The Workers Compensation premium is:

a. a deposit premium subject to premium audit at the end of the policy period
b. based on payroll
c. subject to experience rating
d. all the above

Answer 212

d. all the above

Question 213

The following coverages are available on the Farm Coverage EXCEPT:

a. farm dwellings, appurtenant structures and personal property
b. scheduled Farm Personal Property
c. Pollution coverage for crop dusting
d. Barns, outbuildings and other farm structures

Answer 213

c. Pollution coverage for crop dusting

Question 214

The Farm Coverage form can cover all the following causes of loss EXCEPT:

a. electrocution of livestock
b. damage to growing crops
c. accidental shooting of livestock
d. attacks on livestock by wild animals

Answer 214

b. damage to growing crops

Question 215

The Farm Liability coverage part provides coverage for which of the following:

a. damage caused by pollutants
b. bodily injury to 3rd parties
c. injury to farm workers
d. damage to the insured’s products

Answer 215

b. bodily injury to 3rd parties

Question 216

The Equipment Breakdown Coverage form covers which of the following:

a. damage caused by equipment breakdown
b. steam boiler explosion
c. damage caused by electrical current
d. all of the above

Answer 216

d. all of the above

Question 217

Expediting expenses on the Equipment Breakdown Coverage form are limited to:

a. $5,000
b. $10,000
c. $25,000
d. $100,000

Answer 217

c. $25,000

Question 218

Aviation Insurance covers all the following EXCEPT:

a. personal effects
b. bodily injury
c. hull coverage
d. passenger liability

Answer 218

a. personal effects

Question 219

Professional Liability insurance:

a. is called “malpractice insurance” for medical providers
b. covers the insured for “rendering or failing to render” professional services
c. is a “claims made” form
d. all of the above

Answer 219

d. all of the above

Question 220

Which of the following is true about Employment Practices Liability insurance:

a. it cannot be part of a Directors and Officers Policy
b. It is usually covered by a CGL
c. It covers sexual harassment and wrong termination of employment
d. it covers mass layoffs of employees

Answer 220

c. it covers sexual harassment and wrongful termination of employment

Question 221

A Difference in Conditions policy is:

a. written to insure one or more causes of loss excluded by standard property forms
b. not standardized coverage
c. usually written on large risks with a high deductible
d. all of the above

Answer 221

d. all of the above

Question 222

The type of bond needed by an executor of a will is:

a. performance bond
b. court bond
c. fiduciary bond
d. permit bond

Answer 222

c. fiduciary bond

Question 223

Which of the following is NOT true about surplus lines insurance?

a. an agent can go directly to a surplus lines broker before going to a standard market company
b. surplus lines brokers deal with non-admitted carriers
c. coverage may not be obtained solely for getting a better contract or lower premium
d. an agent must attempt to obtain coverage from an authorized insurer

Answer 223

a. an agent can go directly to a surplus lines broker before going to a standard market company

Question 224

The Department of Insurance:

a. regulates insurance in the state
b. passes laws regarding insurance
c. cannot issue rules and regulations
d. establishes insurance rates

Answer 224

a. regulates insurance in the state

Question 225

The Insurance Commissioner:

a. is chosen in a general election
b. can hold any elected office
c. cannot examine insurance companies
d. enforces insurance laws

Answer 225

d. enforces insurance laws

Question 226

An aggrieved party can make a demand for a hearing and the commissioner must hold the hearing within:

a. 45 days
b. 6 months
c. 30 days
d. 60 days

Answer 226

c. 30 days

Question 227

An authorized company:

a. must receive a certificate of insurance form the department of insurance
b. is also known as an admitted carrier
c. may operate in several different states
d. all of the above

Answer 227

d. all of the above

Question 228

A certificate of authority can be suspended or revoked if:

a. the law requires the action
b. the company no longer meets the state requirements
c. the company’s authority to do business in its home state is revoked
d. all of the above

Answer 228

d. all of the above

Question 229

The two major lines of authority requiring licensing are:

a. property and casualty and life and health
b. rental insurance and bonding
c. casualty and life insurance
d. auto and property insurance

Answer 229

a. Property and Casualty and Life and Health

Question 230

To obtain a Property-Casualty license the applicant must:

a. be at least 21 years of age
b. be an Alabama resident for 30 days
c. Pass a written exam
d. Complete a 24-hour pre-licensing course

Answer 230

c. pass a written exam

Question 231

A person who passes a pre-licensing course must take and pass a written exam within:

a. 90 days
b. One year from the completion of the course
c. 6 months
d. there is no time limit once the course has been completed

Answer 231

b. one year from the completion of the course

Question 232

Licensed agents moving to Alabama from another state must:

a. take the 40 hour pre-licensing course
b. apply for an Alabama license
c. pass the written exam
d. keep his or her license

Answer 232

b. apply for an Alabama license

Question 233

A temporary license:

a. is available to anyone
b. is good for one year
c. requires a 10 hour pre-licensing course
d. is available only under a couple of circumstances

Answer 233

d. is available only under a couple of circumstances

Question 234

An insurance producer’s license may be revoked for all the following reasons EXCEPT:

a. lying on the license application
b. getting a speeding ticket
c. failing to comply with a child support order
d. misappropriating funds

Answer 234

b. getting a speeding ticket

Question 235

A name or address change must be reported to the insurance department:

a. at the next license renewal date
b. at once
c. within 30 days
d. no reporting is necessary

Answer 235

c. within 30 days

Question 236

An insurance producer must keep all records:

a. for the policy term
b. for three years
c. until the statute of limitations expires
d. for one year

Answer 236

b. for three years

Question 237

Continuing education compliance requires:

a. 24 hours of continuing education credit every year
b. 10 hours of continuing education credit every year
c. 24 hours of continuing education (including 3 hours of ethics credit) every 2 years
d. 12 hours of continuing education (including 1 hour of ethics credit) every 6 months

Answer 237

c. 24 hours of continuing education (including 3 hours of ethics credit) every 2 years

Question 238

Customer Service Representatives who work inside the agency and who do not have a non-resident license in another state need:

a. 24 hours of continuing education credit every year
b. 10 hours of continuing education credit every year
c. 24 hours of continuing education (including 3 hours of ethics credit) every 2 years
d. 12 hours of continuing education (including 2 hours of ethics credit) every 2 years

Answer 238

d. 12 hours of continuing education (including 2 hours of ethics credit) every two years

Question 239

Producers may ask for a 3 month extension to complete the CE requirement. If the request is denied, the producer has __ days to complete the requirement:

a. 30
b. 60
c. 90
d. 120

Answer 239

a. 30

Question 240

All of the following are Unfair Trade Practices EXCEPT:

a. twisting
b. sharing commission with a licensed agent
c. rebating
d. boycott

Answer 240

b. sharing commission with a licensed agent

Question 241

An agent can charge extra fees for which of the following:

a. collecting surplus lines taxes
b. charging a fee for a medical exam
c. charging a collection fee on unpaid premium balances
d. all of the above

Answer 241

d. all of the above

Question 242

Binders are valid for up to ___ days unless extended with the commissioner’s approval:

a. 20
b. 30
c. 60
d. 90

Answer 242

d. 90

Question 243

The requirement(s) for holding a surplus license are:

a. be a licensed non-resident P&C agent and post a $75,000 bond
b. be a licensed resident P&C agent and post a $50,000 bond
c. pass a surplus lines licensing exam
d. pass a surplus lines licensing exam and post a $100,000 bond

Answer 243

b. be a licensed resident P&C agent and post a $50,000 bond

Question 244

The Insurance Guaranty Association will pay all claims:

a. in excess of $500 and less than $1,000,000
b. in excess of $1,000 and less than $50,000
c. in excess of $100 and less than $150,000
d. in excess of $250 and less than $100,000

Answer 244

c. in excess of $100 and less than $150,000

Question 245

Which of the following are subject to workers compensation:

a. employers with 5 or more employees
b. contractors building new dwellings with three or more employees
c. employers of any domestic employees or farm laborers
d. employers of real estate brokers

Answer 245

a. employers with 5 or more employees

Question 246

Workers compensation will not cover injury caused by:

a. mental disorders where there is no physical injury involved
b. self-inflicted injury
c. refusal to use a safety device
d. all of the above

Answer 246

d. all of the above

Question 247

The maximum payment for Temporary Total Disability is:

a. 100% of the lost income for 6 months
b. 66 2/3% of the state average workers wage for two years
c. 66 2/3% of the state average workers wage during the period of disability
d. 75% of the wage for that occupation for 5 years

Answer 247

c. 66 2/3% of the state average workers wage during the period of disability

Question 248

If an employee who has no dependents dies within three years of suffering an occupational injury, the following lump sum compensation will be paid to the estate:

a. $25,000
b. $10,000
c. $100,000
d. $7,500

Answer 248

d. $7,500

Question 249

The burial expense for workers compensation is up to:

a. $10,000
b. $5,000
c. $3,000
d. $1,000

Answer 249

c. $3,000

Question 250

No person may operate a motor vehicle without proof of financial responsibility. This can be accomplished by:

a. having insurance
b. posting a $50,000 motor vehicle liability bond
c. posting a $50,000 cash deposit with the state treasurer
d. all of the above

Answer 250

d. all of the above

Question 251

The minimum legal auto liability limit in Alabama is:

a. $10,000 per person for bodily injury, $20,000 per accident for bodily injury and $5,000 per accident for property damage
b. $30,000 per person for bodily injury, $60,000 per accident for bodily injury and $20,000 per accident for property damage
c. $25,000 per person for bodily injury, $50,000 per accident for bodily injury and $25,000 per accident for property damage
d. $100,000 per person for bodily injury, $100,000 per accident for bodily injury and $100,000 per accident for property damage

Answer 251

c. $25,000 per person for bodily injury, $50,000 per accident for bodily injury and $100,000 per accident for property damage

Question 252

Failure to show a law enforcement officer evidence of insurance is:

a. a class D felony
b. a class C misdemeanor
c. a class A felony
d. a class F misdemeanor

Answer 252

b. a class C misdemeanor

Question 253

Uninsured motorists coverage must be offered on all auto policies. The minimum limit for uninsured motorists coverage is:

a. 10/25 or $50,000 single limit
b. 50/100 or $200,000 single limit
c. 100/30 or $300,000 single limit
d. 25/50 or $75,000 single limit

Answer 253

d. 25/50 or $75,000 single limit

Question 254

Drivers age 55 or older who have taken an 8-hour accident prevention class will receive a rate reduction on their automobile insurance for:

a. 3 years
b. 6 months
c. 1 year
d. 2 years

Answer 254

a. 3 years

Question 255

Acceptable reasons for cancelling an auto policy include all of the following EXCEPT:

a. not paying the premium
b. having 2 moving violations in three years
c. having epilepsy
d. driving an unsafe vehicle

Answer 255

b. having 2 moving violations in three years

Question 256

Except for non-payment of premium, notice of cancellation must be mailed at least ____ days prior to the auto policy cancellation date:

a. 30 days
b. 10 days
c. 20 days
d. 60 days

Answer 256

c. 20 days

Question 257

The Automobile Assigned Risk Plan is:

a. for high risk drivers
b. for drivers over age 70
c. for preferred drivers
d. for drivers with any accidents or violations

Answer 257

a. for high risk drivers