Prepare for the Property and Casualty insurance license exam with these practice test questions. This covers property insurance, liability, auto, and commercial lines.
Q: An exclusion that states that an insurer will not pay any claim in which an individuals property is damaged as a result of an earthquake, mudslide, landslide, or sinkhole.
Answer: an Earth movement exclusion
Q: An exclusion that states that an insurer will not pay any claim in which an individuals property is damaged as a result of the fact that the individual did not maintain the property.
Answer: Neglect exclusion
Q: Which Home Owner’s form covers damage to a condo owner’s PROPERTY that occurs as the result of any event that is not specifically excluded in the policy.
Answer: HO-6 Unit Owner’s Form
Q: Which Home Owner’s form covers damage to a TENANT’S property that occurs as a result of an aircraft, civil commotion, explosion, fire, nail, lightning, smoke, theft, vandalism, vehicles and/or wind.
Answer: HO-4 Content’s Broad Form
Q: Which HO form covers damage to the DWELLING that occurs as the result of any event that is not specifically excluded in the policy and damage to the property inside the dwelling that results of an aircraft, civil commotion, explosion, fire, hail, lightning, smoke, theft, vandalism, vehicles, and/or wind.
Answer: HO-3 Special Form
Q: Which HO Form covers damage to the DWELLING & PROPERTY inside the dwelling that occurs as an result of any event that is not specifically excluded in the policy.
Answer: HO – 5 Comprehensive Form
Q: What means conducting business in accordance with current rules and laws set by government regulatory agencies and the courts.
Answer: Compliance
Q: Standards of conduct and moral judgement.
Answer: Ethics
Q: Legal term that describes the relationship between parties.
Answer: Agency
Q: What is the term to describe how an insurer appoints an individual to act on its behalf.
Answer: Agency Contract
Q: An individual whose position and responsibilities involve a high degree of trust and confidence (trustees, guardians, and executors).
Answer: Fiduciary
Q: The name for the fact a producer must sell the kind of policies that best fit the prospects needs and in amounts that the prospects can afford.
Answer: Needs Selling
Q: What is given when the applicant pays the initial premium at the time the application for a policy is signed.
Answer: Conditional Receipt
Q: What is the term for informing the prospect or client of all facts involving a specific policy or plan so that an informed decision can be made.
Answer: Full Disclosure
Q: What is the name for the watchdog group whose member companies agree to adhere to and enforce ethical principles.
Answer: Insurance Standards Association (IMSA)
Q: What Act deals with the inappropriate use of advertising.
Answer: Unfair Trade Practices Act
Q: Any written or oral statement that does not accurately describe a policy’s features, benefits, or coverage.
Answer: Misrepresentation
Q: Any false, maliciously, critical or derogatory communication that injures another’s reputation, fame, or character.
Answer: Defamation
Q: What is the term if the buyer of an insurance policy receives any part of the producers commission or anything else of significant values as an inducement to purchase a policy.
Answer: Rebating
Q: The unethical act of persuading a policy owner to drop a policy solely for the purpose of selling another policy without regard to the possible disadvantages to the policy owner.
Answer: Twisting.
Q: A resident producers license must meet what 2 requirements?
Answer: 1.) May either reside in PA -or-2.) Have their principal place of business in PA
Q: In what 2 situations is it not required to be a licensed as a manager or exclusive general agent?
Answer: 1.) The licensee who has limited underwriting authority – or-2.) A manager or agent who has started before Dec. 22, 1965
Q: Which of the following can not be issued a temp license?
Answer: A person selling insurance for the estate of a deceased producer.
Q: Which is NOT a reason for a licensed to be suspended or revoked?a.) Making factual by subjective comparisons of 2 policies.b.) Intentionally violating a cease and desist order.c.) Making false statements in a license application.d.) Violating an insurance regulation.
Answer: A.
Q: Increases a chance for loss
Answer: Hazard (i.e. leaving a door unlocked)
Q: Chance of a loss
Answer: Risk
Q: A means of transferring the risk of loss
Answer: Insurance
Q: The cause of the loss
Answer: Perils (i.e. Fire, Flood, Collision, Theft)
Q: States that there must be an adequate spread of risk for insurance to be effective.
Answer: Law of Large #s
Q: Installing an automatic sprinkler system is an example of
Answer: Reduction (can not avoid risk but can reduce it)
Q: Deciding not to produce a produce due to serious potential side effects.
Answer: Avoidance (avoid the risk of being sued)
Q: Person in good health cancels health insurance policy…What is risk management
Answer: Retention (retaining the risk)
Q: Under what regulation in PA does it state that insurers must maintain a specific minimum levels of capital stock and surplus?
Answer: Regulation of Insurer Solvency.
Q: Who regulates insurance rates to avoid excessive, inadequate, or unfairly discriminatory rates?
Answer: Casualty & Surety Rate Regulatory Act
Q: Who must an insurer notify when they terminate a producer’s appointment?
Answer: The Commissioner and producer.
Q: Which of the following is not a power and duty of the insurance commissioner?
Answer: Issuing a cease and desist order, prosecuting producers who violate state insurance laws, conducting complaint hearings, appointing examiners.
Q: What unfair practices is when a producer offers, promises, allows, gives, sets off, or pays a rebate on the contract of insurance.
Answer: Rebating
Q: What unfair insurance practice is the purchase of insurance from a financial institution or from a designated insurer or producer as a condition of any loan or deposited transaction.
Answer: Tie-In Sales
Q: Non-public personal financial information about individuals.
Answer: Privacy of Consumer’s Financial information
Q: Term for instruction by the consumer to the licensee no to disclose non-public personal financial information about the consumer to a non-affiliated third party.
Answer: opt-out
Q: When a producer shares a commission with an unlicensed person.
Answer: If a license was held at a time of sale; Referring a person can receive a one time nominal set fee
Q: When a personal fire insurance policy is cancelled because the insured’s acts increased the hazard insured against, how many days notice must be provided to the insured.
Answer: 30 days
Q: When a auto policy is cancelled for a reason other than non-payment of premium, how many days notice must be provided to the insured?
Answer: 30 days
Q: If an insured’s drivers license has been suspended, the insurer may cancel the auto insurance policy by giving how many days notice?
Answer: 15 days
Q: What are the minimum limits of liability any individual must provide for bodily injury and property damage?
Answer: 15/30/5$15,000 per person bodily injury$30,000 per accident for bodily injury$5,000 per accident for property damage
Q: Purchased in the normal of standard market.
Answer: PA Fair Plan Act
Q: After an accident, what is the waiting period before the insured can apply for income loss benefits?
Answer: 5 working days
Q: What must occur in order to pay for funeral expenses?
Answer: Death within 24 hours of accident
Q: An insurer must notify an insured at least how many days before increasing the premium on a commercial casualty insurance policy.
Answer: 30 days
Q: Which agency provides motor vehicle coverage insurance to those who would be otherwise un-insurable?
Answer: PA Auto Assigned Risk Plan
Q: When an employer must provide worker’s compensation insurance but is unable to do so through normal channels, which organization can provide the required coverage?
Answer: State Worker’s Insurance Fund
Q: What term describes a producer who converts premiums for his own use?
Answer: Breach of Fiduciary Duty
Q: What insurance option lets the insured seek recovery for all medical and other out-of-pocket damages, pain & suffering, and other non-monetary damages as a result of injuries caused by other drivers?
Answer: Full Tort Option
Q: What percent can crops be insured of their expected value?
Answer: 75%
Q: A car crashes into a storage container which holds industrial waste materials located at a factory. As a result, a large amount of industrial waste ends up being released onto the property. The cost to clean up the waste totals $23,000. If the owner of the factory has a commercial property policy with additional coverage for pollutant clean-up and removal, how much does the insurance policy pay out to insured?
Answer: $10,000
Q: Coverage E of a homeowners policy deals with which of the following?
Answer: Personal Liability
Q: How much does a Personal Injury endorsement attached to a homeowners policy add in loss assessment coverage for the named personal injury offenses?
Answer: $1000
Q: The insolvency of an insurer is one reason why a normally insured individual involved in a car accident will be considered to be…
Answer: an uninsured motorist
Q: Personal injury or advertising liability that arises from which of the following is not covered by a commercial general liability policy?
Answer: A breach of contract; Written material that was published before the insurance policy took effect; A product not living up to a statement of quality found in one of the insured’s advertisements
Q: Which of the following is not one of the six classes of property that can be covered under a marine policy?
Answer: Public property floater risks
Q: A bungalow that was purchased 12 years ago for $465,500 is nearly destroyed during a hurricane. The building was expected to depreciate by 9% each year. If the insurer determines that the actual cash value of the bungalow was $638,000 at the time of the loss, what was the replacement cost of the building? (Purchase Cost x Rate of Depreciation = Annual Depreciation) (Annual Depreciation x # of Years Owned = Total Depreciation) (Replacement Cost – Total Depreciation = Actual Cash Value)
Answer: 1140740
Q: The potential for an individuals house to light on fire is best classified as what type of risk?
Answer: Pure Risk
Q: The owner of courier service establishes an insurance policy for the vans used by the business. The insurer has a requirement that insurance for any vehicle used for commercial purposes should be insured for 75% of its value. The owner of the courier service decides to cut costs by purchasing a policy that only cover 60% of the van’s value. The van ends up in a major traffic accident that results in $25,000 in damage and liability costs. If the policy has a $15,000 deductible and the van was worth $80,000, how mush does the owner of the van end up paying out of pocket? (Value of the Policy = .6 x $80,000) (Required Value of the Policy = .75 x $80,000) (Insurer’s Reimbursement = (Value of the Policy / Required Value of the Policy) x (Total Loss – Deductible)) (Out of Pocket Payment = Total Loss – Insurer’s Reimbursement)
Answer: $17,000
Q: What is the primary intent of the Special Coverage Form (DP-3)?
Answer: To offer a broadened contract that will include miscellaneous and undefined incidents that cannot be anticipated
Q: In addition to the limits of bodily injury liability set forth in the policy declarations, the policy will also pay out up to _____ for the cost of bail bonds required because of an accident.
Answer: $250
Q: Which of the following is included as part of an insured building under a commercial property policy?Select one:
Answer: Outdoor fixtures
Q: The insurer of a homeowners policy will pay, on replacement cost basis, up to ____________ for property damage to the property of others caused by an insured.
Answer: $1,000 per occurrence
Q: Which of the following is affected by the general aggregate limit associated with commercial general liability coverage?
Answer: Medical expenses
Q: A homeowners HO-4 form does not offer coverage for which of the following?
Answer: Structures
Q: What does commercial crime insurance primarily protect an insured from?
Answer: The dishonesty of others
Q: In regards to a commercial property policy with a mortgage holder condition, what happens if the insurer pays the whole principal on the mortgage, plus any accrued interest, to the mortgage holder?
Answer: The named insured’s mortgage and note will be transferred to the insurer and the named insured will pay the remaining mortgage debt to the insurer
Q: _______________ of a homeowners policy includes other buildings that are rented to tenants as dwellings or for use by a non-tenant as a private garage.
Answer: Coverage B
Q: A dwelling policy lacks which of the following?
Answer: An occupancy requirement
Q: In regards to a personal auto policy, what is comprehensive coverage?
Answer: Open perils coverage that provides coverage for damages to a vehicle as a result of any peril
Q: If a commercial property policy has a replacement cost endorsement, damage to or loss of which of the following will be valued on a replacement cost basis?Statuary; Personal property of others; The contents of a residence?
Answer: None
Q: Which of the following are included as “buildings” in a businessowners policy, as long as they are not covered by other insurance?
Answer: Alterations to a building
Q: What is the downside of managing risk through avoidance?
Answer: Avoiding risk may mean losing out on a gain that could have been achieved if the risk had been accepted
Q: Business liability coverage provided by a businessowners policy includes insurance for which of the following?
Answer: Supplementary payments, Damages claimed by an organization for loss of services that results from physical injuries, Personal injury
Q: If a person is off an insured location and suffers bodily injury from an animal owned by an insured, the insured’s liability for the person’s injuries can be covered by which of the following?
Answer: Coverage F of a homeowners policy
Q: Which of the following is not a type of auto covered under a trucker coverage form?
Answer: Owned private passenger autos
Q: The insurer of an equipment breakdown policy reserves the right to do which of the following if a piece of covered equipment is found to be in an unsafe condition?
Answer: Immediately suspend coverage on the unsafe piece of equipment
Q: Which of the following homeowners coverages are property coverages?Select one:a. Coverage Db. Coverage Ac. Coverage Bd. All of these are correct
Answer: D.
Q: An individual is injured during a white water rafting trip. The rafting company claims they are not liable for the injury because the individual signed a waiver relieving the rafting company of any responsibility for any injuries that happen while people are using their boats. This is an example of which of the following?
Answer: Expressed assumption of risk
Q: Which section of an insurance policy details the obligations of the insurer in the event of a covered loss?
Answer: The insuring agreement
Q: While on display at an industry convention, a business’s prototype of a new product is critically damaged. Which commercial property coverage extension would provide insurance protection for this situation?
Answer: Property off-premises
Q: Liability for property damage could be covered by coverage ___ of a homeowners policy.Select one:a. Gb. Ec. Fd. D
Answer: E
Q: What does an Individual Named Insured endorsement do to the standard policy language of a commercial auto policy?
Answer: Includes a spouse under the definition of “You” (the first named insured) and adds coverage for personal use vehicles owned by the insured and not used for business
Q: Why would a business need a business income coverage form with an extra expense section?
Answer: To minimize a suspension of business and allow operations to continue at another location after the business’s primary location has been damaged or destroyed
Q: A contract must have a legal purpose in order to be enforceable. What does it mean for a contract to have legal purpose?
Answer: The performance of the contract is not in and of itself unlawful, and the performance of the contract will not result in a violation of law
Q: When does coverage from a builder’s risk coverage form end?
Answer: The property is accepted by the purchaser
Q: If the salvage provision is invoked…
Answer: the insurer is allowed to take possession of damaged property and use that property to recoup some money
Q: What is the loss ratio of an insurance company that, in the span of a year, pays out $35,900 in benefits and collects $69,550 in premiums? (Loss Ratio = (Benefits Paid Out / Premiums Collected) x 100)
Answer: 51.6
Q: What happens when an actual cash value endorsement is attached to an equipment breakdown policy?
Answer: After a loss the insurer will pay the insured the lesser of the replacement cost or the actual cash value of the loss
Q: Which of the following is something that differentiates a motor carrier coverage form from a trucker coverage form?Select one:a. Motor carriers coverage can apply to a loss of a covered auto caused by someone tricking an insured to parting with the autob. Motor carriers coverage can apply to a loss to a covered auto left with an insured for repairc. All of these are correctd. Motor carriers coverage can apply to a commercial operation that transports passengers
Answer: Motor carriers coverage can apply to a commercial operation that transports passengers
Q: Which of the following is the formula use to determine risk?
Answer: Probability – Reduction
Q: If an individual causes property damage while working as a valet driver for a private parking garage, will her liability be covered by coverage B of her personal auto policy?
Answer: No
Q: In regards to “other insurance” situations, what is nonconcurrency?
Answer: The multiple policies covering the same risk do not match up in some way
Q: A Changes provision in a commercial package policy allows the first named insured to make alterations to the policy through which of the following?
Answer: Endorsements
Q: Which of the following types of insurance is commonly found in a commercial package policy?
Answer: Equipment breakdown insurance
Q: Which of the following is an exclusion that applies only to auto dealers? Select one:a. The insurer will not pay for loss to any covered auto displayed or stored at a location not listed in the declarations, if the loss occurs more than 45 days after the insured begins using the location Correctb. The insurer will not pay for bodily injury that results from dispersal of any pollutantc. The insurer will not pay for property damage that is expected by an insuredd. The insurer will not pay for property damage that arises out of the named insured or another insured participating in a prearranged racing contest
Answer: A.
Q: Insurers do not offer coverage for anything defined as a _________ peril.
Answer: Special
Q: If a bar serves a person, and that person injures another patron in the bar after becoming intoxicated, does the bar’s commercial general liability policy cover the their liability for the bodily injury caused by the intoxicated customer?
Answer: No
Q: Do supplementary payments reduce the limits of a commercial general liability policy?
Answer: No
Q: A personal auto policy may have coverage for ________________ which the insured may end up incurring after a loss, up to $20 a day or $600 maximum.
Answer: transportation expenses
Q: Symbol 31 of a garage coverage form provides coverage for physical damage for autos owned by ______________________________ who have a financial interest in those autos.Select one:a. trailer dealersb. non-dealersc. All of these are correctd. auto dealers
Answer: C
Q: Which of the following is a condition that must be met for coverage from commercial general liability policy that is written as a claims-made form to take effect?
Answer: A claim must be made, during the policy period
Q: A storefront is vandalized. If it is determined that the storefront has been vacant for 65 days, will the insurer cover the damages caused by the vandalism?
Answer: No
Q: Which of the following is not one of the criteria a risk has to meet in order to be classified as an “insurable risk?”
Answer: Losses related to the risk must be predictable
Q: An insurance policy is which type of contract?
Answer: A contract of adhesion
Q: What is the term for an auto that the insured acquires because the auto described in the declarations page has been damaged to the point of being permanently unusable?
Answer: Replacement auto
Q: What kind of authority allows an agent to carry out duties that are not explicitly stated in the agency agreement but have to be completed if the agent is to complete tasks assigned by the principal party?
Answer: Implied authority
Q: A/an ____________ is designed to protect the owner of goods from loss when the goods have been shipped by a trucker who operates as a common or contract carrier.
Answer: shippers form
Q: An insurer will provide Uninsured Motorists Coverage for bodily injury sustained by any person if…
Answer: a bodily injury liability bond or policy applies to the relevant motor vehicle at the time of the accident but the bonding or insuring company denies coverage.
Q: Which commercial auto symbol applies to owned autos subject to a state’s compulsory uninsured motorist law?
Answer: 6
Q: Which of the following types of compensatory damages are designed to repay a party for intangible injuries?
Answer: General damages
Q: Which of the following would be defined as a breakdown?
Answer: A failure of vacuum equipment
Q: Coverage F of a homeowners does not cover watercraft liability if, at the time of an occurrence, the boat is…
Answer: used to carry cargo for a charge
Q: Is there a form of commercial crime coverage form which provides legal liability coverage for a loss to a customer’s property that was in a safe deposit box?
Answer: es, as long as the loss was caused by a robbery
Q: The commercial property broad form adds weight of snow to the list of covered perils. Which of the following is covered by the broad form if it is damaged by the weight of snow?Select one:a. A carb. A Smokestack Correctc. Underground pipesd. A bridge
Answer: B
Q: A contractor has ordered an air-conditioning unit. If the contractor is concerned about damage being done to the AC unit before it is fully installed, what kind of inland marine insurance would provide the right coverage for this situation?
Answer: An installation floater
Q: Which of the following is a personal injury protection benefit made available through Coverage C – Medical Payments Coverage?Select one:a. Advertising Injuryb. Rental Vehicle Expensesc. Fire and Smoke Damaged. Loss of Income
Answer: D
Q: Which of the following statements about non-admitted insurers is correct?Select one:a. Non-admitted insurers must file their rates with state governmentsb. Non-admitted insurers do not have flexibility with pricingc. Non-admitted insurers are licensed by the state in which they are operatingd. A state government will not help pay the claims of a non-admitted insurer that becomes insolvent
Answer: D
Q: Coverage for loss of business personal property that is caused by the dishonest acts of the insured’s employees is…
Answer: an optional coverage in a business owners policy
Q: A car covered by a personal auto policy with collision coverage is damaged when it crashes into a telephone pole. If the policy has a $5,000 deductible, the cost to repair the vehicle is $16,000, and the actual cash value of the auto is $21,000, how much does the insured receive in reimbursement from the insurer?
Answer: 11000
Q: When does the physical damage coverage in a personal auto policy apply?
Answer: The loss was caused by a collision
Q: An act or neglect of someone, other than the named insured, which is outside of the named insured’s direction or control, will…Select one:a. increase the deductible associated with a commercial property policy.b. not affect the coverage found in a commercial property policy.c. reduce the coverage provided by a commercial property policy.d. immediately cancel the coverage provided by a commercial property policy.
Answer: B
Q: Marine Insurance operates based on…Select one:a. named peril.b. all peril.c. closed peril.d. open peril.
Answer: D
Q: HO-2 is a broad coverage form, which means it covers which of the following perils?Select one:a. Explosionsb. Warc. Power failured. Neglect
Answer: A
Q: What does it mean if a party is held absolutely liable?
Answer: The party is held responsible for damages regardless of whether the party actually caused or intended the harm
Q: A business owner establishes an insurance policy that provides commercial crime coverage. During an inventory, it is discovered that some of the businesses product had been stolen from one of the store rooms. After an investigation, it becomes clear that the theft took place a month before the commercial crime coverage was established. Which crime general provision form, if any, would provide insurance for this situation?
Answer: A discovery form
Q: Which of the following is a condition that has to be met in order for homeowners insurance to cover a power failure?
Answer: The power failure is the result of a loss on the insured’s premises
Q: How does the National Flood Insurance Program define a flood? Select one:a. The collapse of land that sits along the shore of a body of water which is caused by waves or currents of waterb. A complete inundation of two or more acres of dry landc. All of these are correctd. An unusual and rapid accumulation of surface water
Answer: C
Q: To be eligible for coverage under a businessowners policy an office building has to conform to which of the following limitations?Select one:a. The office building cannot have seasonal operationsb. Sales brought in from operations that take place off-premises cannot be more that 25% of the office building’s gross salesc. The office building cannot be more than 6 stories tall or more than 10,000 square feet in total aread. The office building cannot contain apartments
Answer: C
Q: In regards to commercial crime coverage, what is the term for the interior of a building which a business uses to conduct business?
Answer: premises
Q: If a party that is bringing a civil suit against another seeks to freeze the other party’s assets, which of the following types of surety bonds can be utilized to achieve that goal?
Answer: A litigation bond
Q: Why does it matter if an individual has an insurable interest in the object or person he or she wants to insure?Select one:a. An individual’s insurable interest affects the amount of money an individual receives in reimbursement after a lossb. The insurable interest is primarily used to determine the value of an insurance policyc. Insurable interest is largely irrelevant in the modern era of insuranced. The individual’s insurable interest in the object or person is a way of ensuring that the individual will not damage the insured object or person in order to collect money from the policy
Answer: D
Q: Which of the following is not considered to be impaired property?Select one:a. Property that incorporates a product that is known to be defectiveb. The insured’s productc. Property than can’t be used because the insured failed to fulfill the terms of a contractd. All of these are correct
Answer: B
Q: What differentiates a morale hazard from a moral hazard?
Answer: A morale hazard is a result of an insured’s neglect or indifference toward protecting something that is covered by on of his or her insurance policies
Q: What does an errors and omissions provision in an equipment breakdown coverage form provide coverage for?
Answer: Losses or damage, which would not have been insured under this coverage part, solely due to an error or unintentional omission done by the insured which happens to cause a cancellation of a premise insured by the policy
Q: What does Coverage I of a farm liability coverage form address?
Answer: Personal and advertising injury
Q: Say an ordinance requires the owner of a business to indemnify the city before erecting a sign promoting the business. In regards to commercial liability insurance, the agreement in which the business owner agrees to indemnify the city would be known as…
Answer: an insured contract
Q: Commercial crime coverage form L provides coverage for…Select one:a. the property of guests which is in the insured’s possession.b. the contents (not money) of an insured’s safe deposit box, while it is in a depository premises.c. losses related to robbery and safe burglary of money and securities that are in the care and custody of a custodian.d. loss of property (not money or securities) inside the premises caused by burglary.
Answer: A
Q: To receive reimbursement for medical payment expenses covered by a boatowners policy, the insured must report the expenses within ___________ of an accident.
Answer: 3 years
Q: A house suffers damage from a hail storm. If the house was under a mortgage and the holder of the mortgage is a named in the policy, who receives the insurance payment?
Answer: Both the holder of the mortgage and the insured
Q: Who owns a mutual company?
Answer: The holders of insurance policies issued by the mutual company
Q: Which of the following is considered a “covered auto” with the addition of a Miscellaneous Type Vehicles endorsement?Select one:a. Motorcyclesb. Golf cartsc. Motor homesd. All of these are correct
Answer: D
Q: What makes an interline endorsement different from a regular endorsement?Select one:a. An interline endorsement affects more than one coverage part of a package policyb. An interline endorsement cannot be removed or canceledc. If a policy with an interline endorsement lapses or is canceled, the interline endorsement can be applied to a replacement policyd. An interline endorsement adds a type of coverage found in one coverage part to another coverage part
Answer: A
Q: Which of the following is not a primary rating factor which is used for commercial auto coverage?Select one:a. Territory where the vehicle is principally garagedb. Radius of operationc. The current value and original cost of the vehicled. The number of people who use the vehicle
Answer: D
Q: Coverage from a commercial general liability that is written as an occurrence form comes into effect…Select one:a. when the insurer approves a claim.b. when a claim is made, regardless of when the claim is filed.c. when a claim is made, as long as the claim is made during the lifetime of the policy.d. when damage or an injury occurs, as long as it happens during the life time of the policy.
Answer: D
Q: __________________________ insurance principally protects parties that act as trustees from suits that allege wrongful acts in the handling of invested funds.
Answer: Fiduciary liability
Q: A severe storm disables the phone lines for a company that primarily does telemarketing. The sales income that is lost while the phone lines are out of commission is considered to be what kind of loss?
Answer: A consequential loss
Q: Worker’s compensation insurance is “no fault” insurance. What does this mean?Select one:a. A worker’s compensation policy cancels any obligation, on the part of the insured, to pay damages related to an injury that occurred before the workers compensation policy was establishedb. The insured is never held at fault for the occurrence of a covered lossc. Worker’s compensation insurance only covers losses that are outside the insured’s controld. If a loss occurs, it is covered by the workers compensation insurance regardless of who or what caused the loss
Answer: D
Q: In regards to worker’s compensation insurance, would an injury suffered by an employee who breaks into his place of employment after hours be covered by worker’s compensation insurance?
Answer: No
Q: _____________ is defined as the voluntary relinquishing of legal right or privilege.
Answer: Waiver
Q: A policyholder wishes to broaden the coverage of her homeowners policy to cover liability related to the use of a sailboat. What would allow this expansion of coverage?
Answer: An endorsement
Q: If a building insured under an HO-8 homeowners policy form suffers a total loss from a fire, how much does the insured owner of the building receive from the insurer?Select one:a. An amount equal to the replacement cost of the buildingb. An amount equal to the building’s equityc. An amount equal to the actual cash value of the buildingd. An amount equal to the building’s market value
Answer: D
Q: Which of the following are covered under a commercial general liability policy form?Select one:a. None of these are correctb. Property damage liability that comes from the maintenance of an aircraftc. Bodily injury liability resulting from injury to an insured’s employee if the injury was related to the injured party being employed by the insuredd. Liability from damage done to property occupied by the insured
Answer: A
Q: Forged incoming checks are covered by which commercial crime coverage form?Select one:a. Form Ab. Form Dc. Form Bd. None of these are correct
Answer: D
Q: The three parties to a surety bond are…Select one:a. the regular, the officiant, and the security.b. the client, the officer, and the grantee.c. the principle, the obligee, the surety.d. the primary, the beneficiary, and the grantor.
Answer: C
Q: What does the legal doctrine of “utmost good faith” require?
Answer: All parties involved in the formation of a contract to reveal any and all information that would have an effect on the decisions of either party
Q: What is the purpose of errors and omissions insurance?
Answer: To reimburse professionals, such as real estate agents, engineers, and lawyers for liability costs associated with negligent acts committed by the professionalWhat is the purpose of errors and omissions insurance?
Q: The owner of a small clothing store is examining expenses related to the workers compensation insurance for the 5 employees of the store. The job classification fund rate for retail is determined to be $2.58 for every $100 dollars of payroll. If the store paid $17,250 in payroll during the previous year policy period, and the worker’s compensation premium is estimated to be $391.64, what is the store’s experience modifier? (Classification Rate x Payroll x Experience Modifier = Premium)
Answer: 0.88
Q: Say a personal auto policy covers more than one auto. How does this effect the deductible and policy limits?
Answer: The deductible and policy limit apply to each auto separately
Q: Why is a personal contract different from any other type of contract?Select one:a. The contract does not extend to other parties, such as heirs or assigneesb. The contract is enforceable only if another agreement is performed or if another specific condition is satisfiedc. One party is legally obligated to carry out tasks outlined in the contractd. The signing party in not allowed to alter the contract or make a counter offer
Answer: A
Q: In regards to commercial crime coverage, what is a mysterious disappearance?
Answer: A situation where a piece of property goes missing and there is no identifiable cause for the disappearance
Q: Under Coverage D of a homeowners policy, if a damaged property is intended by the insured to be property rented to tenants, the insured may do which of the following, even if the unit was unoccupied at the time of the loss?
Answer: Make a claim under this coverage for loss of rents
Q: A National Flood Insurance Program dwelling form covers a building that is being constructed from direct physical loss from flood. If the structure does not have walls or a roof then coverage applies in which of the following situations?
Answer: For 90 days, if work is stopped
Q: In regards to a commercial general liability policy, which of the following is not an insured?Select one:a. A limited liability companyb. An employee of an insured in the case of property damage to property owned by an insuredc. An individuald. A partnership
Answer: B
Q: Coverage C of a homeowners policy has special limits on certain types of personal property. What is limit on reimbursement for a theft of firearms?
Answer: 2500
Q: A Contingent Liability / Limited Liability Coverage for Non-Trucking Use of an Automobile endorsement specifically excludes any liability…Select one:a. related to any vehicle with the exception of vehicles with attached trailers.b. related to passenger vehicles.c. associated with a trailer of any sort.d. associated with cargo vans.
Answer: C
Q: Which type of specialty commercial auto coverage form would be best for a trucker who is hired to transport another company’s product?
Answer: A trucker’s coverage form
Q: An insurance policy offers coverage for damage done to a boat but not damage done to any transported cargo. What kind of policy is this?
Answer: A specific policy
Q: _________ is not covered by a commercial auto policy if the loss is suffered by an employee of an insured and it arises out of the course of that employee’s employment by the insured.
Answer: Bodily injury