Practice Exam Questions VI Flashcards
The insured is moving to a new primary residence. Coverage under a Homeowners policy for the personal property being moved between the old and new location is:
Answer Choices: Select the Correct Answer
Provided for the coverage limit at the old residence.
Provided on a pro-rata basis.
Provided for the coverage amount the insured has selected for the new residence.
No coverage would apply once the move commences.
Provided on a pro-rata basis.
EXPLANATION:
Coverage would apply at both locations on a pro-rata basis for 30 days.
The “Refrigerated Property Coverage” endorsement provides up to ______ of coverage with a ______ deductible.
Answer Choices: Select the Correct Answer
$500 / $50
$500 / $100
$5,000 / $1,000
$1,000 / $100
$500 / $100 is correct.
EXPLANATION:
The “Refrigerated Property Coverage” endorsement provides up to $500 of coverage with a $100 deductible.
Which of the following best describes the purpose of the “insuring agreement(s)” contained in an insurance policy?
Answer Choices: Select the Correct Answer
It contains the insurer’s promise to pay in case of a loss.
It identifies the named insured who is bound by the contract.
It explains the duties of the named insured in case of a loss.
It sets forth the conditions and exclusions.
It contains the insurer’s promise to pay in case of a loss.
EXPLANATION:
The insuring agreement section of the policy contains the insurer’s promise to pay. This is the section where the “contractual agreement” is located.
Chris is insured through Binders Keepers Insurance Company and his policy period ends in 12 months. However, Chris has decided that he wants to cancel his policy in order to purchase another one from a company that advertises with cute commercials on television. Chris calls his agent to cancel the policy and is informed that the unearned premium (UEP) on the cancelled policy will be returned to him by mail in a couple of weeks. When Chris receives the check, he is surprised to find that it’s made out for less than the amount of unearned premium he should have received. What is the most likely reason for this?
Chris’ policy had a provision stating that UEP must be returned on a short-rate basis.
EXPLANATION:
Many policies require that UEP be returned on a short-rate basis if the insured cancels the policy mid-term. This allows the insurer to keep a greater percentage of the UEP, than if the insured cancelled after the policy period or if the UEP was returned on a pro-rata basis.
Philip has several vehicles that are all covered under Personal Automobile policies. He has several acres of land with a barn and chicken coup on the property. To drive around on the acreage, Philip has a very old truck that is not licensed or insured. One afternoon, Philip is driving out to check on his cows when he hits a rut and his head slams down on the steering wheel, injuring him severely. How will Part B - Medical Payments provide coverage for Philip’s injuries?
Answer Choices: Select the Correct Answer
Part B covers the named insured and any family member who is injured while occupying ANY motor vehicle, so Philip’s injuries would be covered up to the limit of Part B.
Bodily injury sustained while occupying an uninsured auto owned by the insured is excluded under Part B, therefore no coverage would apply.
Philip’s injuries would not be covered because Part B of the policy covers injuries sustained by third parties.
Philip’s injuries would not be covered under Part B, but would be covered under Part A of Philip’s policy.
Bodily injury sustained while occupying an uninsured auto owned by the insured is excluded under Part B, therefore no coverage would apply.
EXPLANATION:
Part B would not cover Philip’s injuries because bodily injury sustained while occupying an uninsured auto owned by the insured is excluded under Part B.
All of the following statements regarding eligibility of self-storage facilities for a standard BOP policy are true, EXCEPT:
Answer Choices: Select the Correct Answer
The facility cannot exceed two stories in height.
The facility cannot exceed more than 500 individual self-storage units.
The facility cannot be used to store items at a specific cold temperature to avoid spoilage.
The facility cannot be used to store industrial chemicals.
The facility cannot exceed more than 500 individual self-storage units.
EXPLANATION:
The Businessowners policy DOES NOT require a self-storage unit to be limited to no more than 500 individual self-storage units to be eligible for coverage. All of the other answer choices are eligibility requirements of the BOP for coverage of self-storage facilities.
The minimum limit for Medical Payments coverage on an automobile liability policy in California is:
$2,000.
EXPLANATION:
The minimum limit for Medical Payments coverage on an automobile liability policy in California is $2,000.
The authority that is specifically provided to an adjuster (orally or in writing) by the insurance company who has appointed that adjuster is known as:
Answer Choices: Select the Correct Answer
Apparent authority.
Implied authority.
Express authority.
Inferred authority.
Express authority.
EXPLANATION:
Express authority is specifically provided to an appointed adjuster by the principal (the insurance company). This authority may be granted either orally or in writing.
Which of the following describes a moral hazard?
An arsonist applying for property insurance.
EXPLANATION:
A moral hazard is presented by applicants or insureds who would cheat, lie or commit other crimes to benefit from insurance coverage. Faulty wiring and overuse of electrical outlets are physical hazards. Laziness and apathy are morale hazards.
Uninsured motorist coverage and medical payments coverage under a Business Automobile policy:
Answer Choices: Select the Correct Answer
Are not covered by the policy unless added by endorsement.
Are covered by Section IV of the policy.
Are covered by the policy but only for Symbols 1 through 5.
Are covered by Section II of the policy.
Are not covered by the policy unless added by endorsement. is correct.
EXPLANATION:
Uninsured motorist coverage and medical payments coverage under a Business Automobile policy are not covered by the policy unless added by endorsement.
Which of the following is NOT included in the definition of “impaired property”?
Answer Choices: Select the Correct Answer
Tangible property.
Incorporates the insured’s product that is defective.
Electronic data that is corrupted.
Incorporates the insured’s work that failed to meet the contract terms.
Electronic data that is corrupted.
EXPLANATION:
Impaired property is “tangible property” that can incorporate the insured’s product that is defective or the insured’s work that does not meet the contract terms. Electronic data is NOT tangible property, therefore it cannot be included in the definition of “impaired property”.
Adverse selection occurs when:
Applicants are accepted by the insurer with little or no attention given to underwriting.
EXPLANATION:
Insurers must carefully underwrite all risks to avoid being the victim of adverse selection. With adverse selection, the insurer is confronted with the probability of loss due to risks not factored in at the time of sale.
Which of the following Ocean Marine implied warranties is considered to be the most important?
Answer Choices: Select the Correct Answer
Condition of Cargo.
Legality.
Seaworthiness.
No Deviation in Voyage.
Seaworthiness. is correct.
EXPLANATION:
If the vessel is not seaworthy, the entire voyage is at risk.
All of the following are exceptions to the workers’ compensation exclusive remedy, EXCEPT:
An on-the-job injury caused by worker fatigue from working an excessive number of over-time hours.
EXPLANATION:
An on-the-job injury would be covered, whether or not it was caused by worker fatigue. All of the other answer choices are exceptions to the exclusive remedy provided by workers’ compensation.
When determining if an injury or illness is compensable under a workers’ compensation policy, which of the following is the criteria used?
Answer Choices: Select the Correct Answer
What was the proximate (legal) cause of the loss.
That the injury or illness arose out of the course of employment.
That the injury or illness arose out of and in the course of the employment.
The person or people “at-fault” in causing the accident that led to the injury or illness.
That the injury or illness arose out of and in the course of the employment. is correct.
EXPLANATION:
Workers’ compensation is no-fault coverage, so the only criteria we want to find when determining if an injury or illness is compensable is that it arose out of and in the course of the employment. And both of those criteria must be present for the injury or illness to be compensable.
