Practice Exam 4.0 Flashcards
All of the following are principal rating factors for PAP except: (A) years of driving experience (B) annual miles driven (C) driver's safety record (D) number of listed drivers
(D) number of listed drivers
All of the following expenses are covered in addition to the limits of liability under coverage A of a PAP except:
(A) pre-judgement interest
(B) premium for appeal bonds
(C) loss of earnings to attend trials at the company’s request
(D) cost of bail bonds related to a covered accident
(A) pre-judgement interest
>refers to supplementary pay
If an insured with a liability-only PAP has an accident in a state that requires personal injury protection (PIP or medical payments), how does the policy respond?
(A) the insured may apply for the additional PIP coverage within 10 days of the accident
(B) PIP coverage is provided only for the medical providers in that state
(C) coverage automatically is broadened to provide PIP
(D) coverage remains as written
(C) coverage automatically is broadened to provide PIP
Under a personal umbrella policy, what underlying coverage must an insured typically maintain?
(A) auto & personal liability only
(B) auto, personal liability & professional liability
(C) personal liability only
(D) auto liability only
(A) auto & personal liability only
An applicant would like to buy a personal umbrella policy. Which of the following is true about purchasing an umbrella policy?
(A) there is no requirement for underlying policies
(B) the insurer may require he maintain underlying liability coverage by carrying auto liability coverage; personal liability coverage is not required
(C) the insurer may require that he maintain underlying liability coverage by carrying auto & personal liability policies
(D) the insurer may require that he maintain personal liability coverage; auto liability coverage is not required
(C) the insurer may require that he maintain underlying liability coverage by carrying auto & personal liability policies
If an insured timely requests coverage for a newly acquired auto under an existing PAP, what coverage is provided before the request is made?
(A) broadest coverage for any vehicle shown in the declarations
(B) minimum required coverage only (liability)
(C) average coverage for all vehicles shown on the declarations
(D) lowest coverage for any vehicle shown in the declarations
(A) broadest coverage for any vehicle shown in the declarations
The PAP “coverage for damage to your own vehicle” states that the limit of liability is the lesser of the amount necessary to repair or replace the property or the
(A) guaranteed replacement cost
(B) actual cash value of the stolen or damaged property
(C) replacement cost of the stolen or damaged property
(D)
(B) actual cash value of the stolen or damaged property
What steps need to be taken to terminate a licensee’s license that is in the possession of an employer?
(A) the employer must return the license to the licensee, who then must return the license to the insurance commissioner
(B) the licensee must give written notice to the employer who then sends the license to the insurance commissioner
(C) the license cannot be terminated prior to the expiration date; it becomes inactive
(D) the licensee needs to give written notice of the intent to the insurance commissioner
D) the licensee needs to give written notice of the intent to the insurance commissioner
What is the principal rating factor used for PAP? (A) credit record (B) year of the auto (C) driving record (D) make of the auto
(A) credit record
According to the definition of an ideally insurable risk, which of the following is not a requirement?
(A) loss must be accidental
(B) loss must be the result of a catastrophic event
(C) loss exposure must be a part of a similar group of exposures
(D) loss must be measurable in monetary value
(B) loss must be the result of a catastrophic event
Which of the following refers to the method whereby an insurance company must receive an official approval from the state DOI before it uses new rates? (A) file and use (B) mandatory rates (C) open competition (D) prior approval
(A) file and use
If an insurance company transfers part of the risk associated with a particular policy to another insurance company, this is known as: (A) surety ship (B) reinsurance (C) judgment rating transfer (D) post loss transfer
(B) reinsurance
Which department of an insurance company reviews the applications that have been completed and submitted by potential customers to determine whether or not the individuals qualify for the coverage being applied for? (A) underwriting (B) claims (C) legal (D) actuarial
(A) underwriting
Managing risk involves all of the following except:
(A) transferring the risk
(B) avoiding the risk
(C) identifying and increasing existing hazards
(D) decreasing the frequency of losses by following safety protocol
(C) identifying and increasing existing hazards
Living next to a factory that manufactures explosives would be known as what type of hazard? (A) physical (B) moral (C) morale (D) speculative
(A) physical
