Simulate Exam

Question 1

What is the purpose of a stated value contract?

Answer 1

To pre-establish the amount of coverage available for property items that are difficult to value

Question 2

What info would be found in a policy’s insuring agreement?

Answer 2

Renewal dates

Parties to contract, effective and renewal dates, and perils

Question 3

Which method of loss valuation is contrary to the basic concept of indemnity?

Answer 3

Replacement cost

because there’s a possibility the insured may get a settlement greater than the ACV

Question 4

If more than one person has an insurable interest in a property covered by a dwelling policy:

Answer 4

The insurer will be liable only for the insured’s interest in the damaged property

Question 5

Texas BI/PD limits?

Answer 5

30/60/25

Question 6

Dividends paid to policyholders insured by a mutual insurance company:

Answer 6

are not taxable by the IRS, they are return of a portion of the paid premium

Question 7

Insurers must file all rates and forms for commission’s approval within how many days prior to use?

Answer 7

60 days

Question 8

And insurer may cancel an auto policy if it’s been in effect for how many days?

Answer 8

60 days

Question 9

The endorsement that provides coverage for losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formations is a/an

Answer 9

Sinkhole collapse endorsement

Question 10

While cutting grass in your yard with your brother’s borrowed lawnmower, the fuel line ruptures and the lawnmower is destroyed in the fire. How will your HO liability react?

Answer 10

It will cover the damage

Question 11

According to the Insured Duties after a Loss provision in homeowners policies, if the insurer requires a signed, sworn proof of loss, the insured must provide within how many days?

Answer 11

60 days

Question 12

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?

Answer 12

Occurrence

Question 13

The part of a property policy that shows the amount of insurance, premium, and policy term is the

Answer 13

Declarations

Question 14

How much is covered for debris removal under the HO property additional coverages?

Answer 14

All reasonable costs

Question 15

Which of the following is NOT a possible penalty for a violation of the Insurance Code?

a) Payment of restitution
b) A cease and desist order
c) A fine up to $100,000
d) An administrative penalty

Answer 15

A fine up to $100,000

In addition to the suspension or revocation of a license, the Commissioner may impose any of all of the following penalties: issue a cease and desist order; order the payment of an administrative penalty; and order the licensee to make restitution. The penalty for a violation may not exceed $25,000.

Question 16

What is a required notice of cancellation of a Homeowners policy to the insured?

Answer 16

10 days

Question 17

An insurer may cancel a personal auto policy if the policy has been in effect for at least how many days?

Answer 17

60 days

Question 18

An insurer must acknowledge receipt of a Notice of Claim within how many days?

Answer 18

15

Question 19

Which dwelling coverage forms would pay replacement cost for the dwelling?

Answer 19

DP-2 and DP-3

DP-2 and DP-3 pay replacement cost as long as the house is insured for at least 80% of its value on the date of loss.

Question 20

Additional coverages in the liability section of a homeowners policy cover all of the following EXCEPT

Answer 20

Damage to a third-party property for which the insured is legally liable.

Legal liability coverage is a primary liability coverage, not an additional coverage.

Question 21

Why would a loss of A coin collection valued at $500 NOT be covered by a homeowners policy?

Answer 21

An HO policy will pay no more than $200 for coins.

Question 22

What is the limit of liability?

Answer 22

The limit of liability is the lesser of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle.

Question 23

A home is insured under an HO-2 policy. The homeowner decides to replace the roof on the house. He wasn’t able to complete the roof in one day and left a portion of it unfinished overnight. A heavy rainstorm caused $20,000 of damage to the interior of the house and some furniture. In this situation, the homeowners will pay

Answer 23

Nothing.

HO-2 is a named peril policy and rain is not a covered peril. It would pay for the damage caused by rain if the hole was caused by a covered peril (wind or hail).

Question 24

What is a required notice of cancellation of a Homeowners policy to the insured?

Answer 24

10 days

Question 25

An Insurance Service Representative may perform any of the assigned duties in the office of a property and casualty agent, EXCEPT

Answer 25

Solicit applications for insurance.

Question 26

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?

Answer 26

Making comparisons between different policies

Question 27

Guaranteeing future dividends is considered to be an unfair or deceptive act known as:

Answer 27

Misrepresentation

Question 28

What is the maximum period of time the Commissioner may revoke your agent’s license?

Answer 28

There is no maximum time period for revocations (suspensions are usually up to 12 months)