Question 1

The insureds are retired and do not own a home. They live and travel extensively in their motor home. To cover their personal items what personal inland marine form would you suggest they purchase?

Accepted Answer

Personal property and personal articles floaters . Best is personal property jewelry,fine art,collectibles are best under personal article floater.

Question 2

For an agreement to be considered a contract, it must contain all of the following, EXCEPT:

Accepted Answer

The contract must be carefully considered by both parties. Contracting parties should carefully consider the agreement, but there is no legal requirement to do so. The other choices represent required elements of a contract.

Question 3

Under a homeowner HO-3, there is no coverage for loss resulting from "earth movement" except when endorsed using which of the following?

Accepted Answer

Earthqk endorsement.Insured may+earthqk as an NI peril for coverages A,B&C by adding the HO 04 54 endorsement.This endorsement is as a "single earthqk" all earthqk shocks occurring w/in a 72-hour period.Earthqke peril is defined to include land shock wave

Question 4

In the insurance industry, which of the following terms refers to continuous or repeated exposure to conditions that may result in bodily injury or property damage neither expected nor intended?

Accepted Answer

An occurrence.  The definition of "occurrence" includes accident which is bodily injury and/or property damage that is sudden and unforeseen.

Question 5

Which of the following would be a violation regarding the sharing of commissions?

Accepted Answer

Sharing commissions or paying a finders fee to an unlicensed person.An agent may not share commissions with an unlicensed person nor pay a finders fee.

Question 6

The Federal Terrorism Act covers property and casualty losses that exceed ______in the aggregate.

Accepted Answer

$100,000,000.The Federal Terrorism Act was amended in 2007 to this limit. The Act has was further amended& extended 2015. The trigger remains the same, but will increase each year by $20 million starting in 2016.

Question 7

Under the farm forms, the maximum amount payable for a loss to a satellite dish is:

Accepted Answer

$1,000. The pre-2000 policy forms provided $250 for a satellite dish. Under the newer forms, the limit has been increased to $1,000.

Question 8

When insurance is written on a dwelling form each of the following types of property would be insured under coverage A (dwelling coverage), EXCEPT:

Accepted Answer

A detached garage.  A detached garage, separated by a clear space, is considered to be a detached structure. Coverage B covers detached structures for 10% of the coverage A dwelling limit.

Question 9

A building with an actual cash value of $240,000 is insured for $200,000. The policy has an 80% coinsurance requirement. If there are no deductibles, how much would be paid for a $60,000 loss?

Accepted Answer

$60,000.The insured needs to be covered for at least 80% x $240,000 or $192,000 to avoid a penalty in case of a partial loss. In this case, the insured carries more than is required, and therefore, all the loss is covered.

Question 10

The form used to report the insured’s actual and estimated business income under an Equipment Breakdown policy is called:

Accepted Answer

Business income—Report of Values .This endorsement gives information to the insurer as to the actual values and estimated values of the insured's business income.This enables the insurer to charge a proper premium for the business income exposures that ar

Question 11

Which of the following is not reflected in a privacy report?

Accepted Answer

Categories of medical information.  Medical information is not a topic in a privacy report. It deals with financial issues only.

Question 12

A licensed surplus lines agent or producer may only place insurance with an unauthorized company, or surplus lines insurer, if:

Accepted Answer

The coverage is not available through authorized insurance companies..The agent may place insurance with a surplus lines company when coverage is not available through standard insurance markets.

Question 13

A fur coat that is insured by a personal articles floater is damaged by a pet. Coverage for the coat would be provided because the policy is written on:

Accepted Answer

An open perils basis. Personal article floaters insure against the open perils (all risk) method. The form does not list the perils. If not excluded, all losses are covered.

Question 14

The "outside the premises" policy insuring agreement covers:

Accepted Answer

Loss of money and securities and other property outside the premises.The outside the premises insuring agreement covers the loss of both money as well as other property when outside the premises. Sometimes a messenger is taking deposits to the bank and so

Question 15

What type of bond is required when a person dies without leaving a will?

Accepted Answer

Administrator’s bond. The court will appoint an administrator for the estate and that person is required to obtain an administrator's bond.

Question 16

Which of the following basic workers compensation benefits compensates for the cost of medical treatment resulting from a work-related injury?

Accepted Answer

Medical benefits. Medical benefits provide for the cost of treatment resulting from a work-related injury.

Question 17

Which of the following dwelling forms provides coverage for loss of rental income?

Accepted Answer

The Basic, Broad and Special Form. All of the forms provide for rental value coverage. In the DP-2 and DP-3, it is 20% of the Coverage A limit and is additional coverage. With the DP-1, the 20% coverage reduces the available Coverage A amount on the dwell

Question 18

Which of the following is true regarding pure and speculative risks?

Accepted Answer

With pure risk there is only the possibility of loss..Remember that pure risk is insurable because there is only the possibility of loss. Speculative risk is not insurable because either profit or loss is possible.

Question 19

When a policy is issued by a surplus lines company who later becomes insolvent, who pays the claims?

Accepted Answer

The insured must assume the loss..Surplus lines companies do not participate in the guaranty funds. Therefore, if a company becomes insolvent and cannot pay it's claims the policy holders must bear the loss.

Question 20

As used in the phrase property and casualty insurance, casualty refers to:

Accepted Answer

Liability loss or exposure. Casualty involves a liability loss or exposure creating a legal liability situation based on negligence.

Question 21

What is the name of the standard form for fire insurance in Hawaii?

Accepted Answer

The New York 1943 standard fire form.The New York 1943 standard fire form has been adopted by most of the states.

Question 22

Since the parties to an insurance policy rely on the honesty of the other, an insurance contract is considered to be based on:

Accepted Answer

Utmost good faith..Both parties must deal in good faith and rely on the honesty of each other.

Question 23

Which of the following types of policies sometime contain a “consent to settle” clause?

Accepted Answer

Malpractice insurance.Some medical malpractice policies contain the “consent to settle” clause on the part of the insured. This is also true of certain types of E&O policies.

Question 24

Strict liability is best described as:

Accepted Answer

Liability without fault..Strict liability is liability w/out fault.Strict liability is found in cases involving ultra-hazardous under -takings wherein the entity undertaking the activity or enterprise is, w/out the necessity of showing negligence,liable f

Question 25

Which of the following would not be covered under the specified cause of loss physical damage coverage under the commercial auto form?

Accepted Answer

Glass breakage.The specified cause of loss form covers the following perils: fire, lighting, explosion, theft, windstorm, hail, earthquake, flood, vandalism or mischief, transportation by a conveyance. The coverage does not include glass breakage, hitting

Question 26

Commercial property insurance essentially provides protection for: (choose the best answer)

Accepted Answer

: Direct or indirect loss..The commercial property forms can provide direct or indirect loss coverage separately or both together.

Question 27

What is not covered by “extra expense” coverage?

Accepted Answer

Loss of income.Extra expense coverage is a form of business interruption coverage. It covers all reasonable extra expenses incurred by the insured in order to continue as nearly as practical the normal operation of a business that has been damaged by an i

Question 28

Insurers can recoup payments under the Federal Terrorism Risk Act by:

Accepted Answer

A surcharge in the rates for insureds. Commercial property and casualty insurers will collect (by policyholder surcharge) the mandatory and discretionary recoupments and remit them to the federal government. Surcharges cannot exceed three percent of any p

Question 29

Mr. Smith carries a total limit of $20,000 on his home. He has 2 policies.One policy is with Company A w/a limit of $12,000 & another with Company B in the amount of $8,000. In case of a $10,000 covered loss, which of the following is true regarding the p

Accepted Answer

Company A will pay $6,000& Company B will pay $4,000. The total amount of coverage is $20,000. Company A has 60% of the coverage and Company B has 40% of the coverage. Company A has 60% of the loss and would pay $6,000. Company B has 40% of the loss so it

Question 30

Which of the following professional liability policies would also cover bodily injury damages?

Accepted Answer

Architects and Engineers E&O.Architects and Engineers Errors and Omissions would cover the financial damages as well as any bodily injury caused by an error or omission in the construction or design of a building or part of building which collapses

Question 31

Gloria’s Garment Gallery is sued, and found to be liable for damages equal to her general liability policy limits. In addition to the policy limit, the insurer will pay each of the following,

Accepted Answer

New safety equipment for Gloria’s Garment Gallery, costing $500, to avoid a future loss. The policy would not pay for the new safety equipment.

Question 32

The insured car dealer carries dealer’s physical damage coverage with comprehensive and collision coverage. One of the salesmen allows an old customer to test drive a van. The customer steals the car and it is later found heavily damaged in an accident. T

Accepted Answer

Deny the claim unless the insured carries “false pretense” coverage..False pretense coverage is an optional coverage purchased in addition to the other physical damage coverage. False pretense protection provides coverage when the insured voluntarily part

Question 33

What type of liability is imposed by law without regard to fault on those participating in certain activities or owning certain things that are considered especially hazardous?

Accepted Answer

Absolute.Absolute or strict liability is liability without fault. It is occasionally imposed by statute on those participating in specified activities that are considered especially hazardous. For example, in some states, ownership of certain dog breeds p

Question 34

An unendorsed claims made form CGL policy wil respond to claims reported during the policy period and up to _____days after the policy expires.

Accepted Answer

60.The claims made form CGL has an automatic extended reporting period of 60 days after the policy expires.

Question 35

What is the bond limit that is required for a public adjuster’s license?

Accepted Answer

$10,000.The applicant must file a bond in the amount of at least $10,000 to protect claimants with respect to money or other property handled by the adjuster.

Question 36

Which of the following loss valuations can be stated as "we agree to pay the cost to repair or replace without deduction for depreciation?"

Accepted Answer

Replacement cost.Replacement cost may be defined as "the cost to repair or replace without deduction for depreciation."

Question 37

Which of the following is NOT true regarding “Out of State” Liability coverage under the personal auto policy?

Accepted Answer

“Out of State Coverage” only applies in those states which have a reciprocal agreement with the insurance company. Any reciprocal agreements do not apply to the “Out of State Coverage”.

Question 38

Mr. Vickers lives close to a river that has, on occasion, flooded. On Friday morning he is watching the weather station and notes that there is a flood warning in his area. He calls his agent and asks the agent to bind flood coverage immediately. Which of

Accepted Answer

The application for coverage requires a 30-day waiting period before coverage applies. Flood insurance requires a 30-day waiting period. The exception to this rule is when the insured is required to provide coverage required by a mortgagee.

Question 39

Which of the following losses would be covered under a crime policy's "Inside the Premises - Robbery or Safe Burglary of Other Property?"

Accepted Answer

Broken windows and damage to a door.The insuring agreement covers damage to the insured premises or its exterior, resulting directly from an actual or attempted robbery or safe burglary of property OTHER than money and securities.

Question 40

Where is covered property listed and described on the BOP?

Accepted Answer

Property maintenance equipment.The dwelling policy bars coverage for the following items that ARE covered under the homeowner policy: accounts, bank notes, bills, currency of any type, any type of gold or silver (except eating utensils), manuscripts, meda

Question 41

Which of the following perils is included in the basic dwelling policy but not in the Standard Fire Policy?

Accepted Answer

Explosion.The dwelling policy includes the perils of fire, lightning and explosion. The Standard Fire Policy does not include the peril of explosion. An extra premium must be paid for vandalism for coverage to apply for explosion

Question 42

In Hawaii, how long will workers compensation death/income benefits be paid to the surviving spouse of an employee, when an industrial accident results in death to the employee?

Accepted Answer

Until death or remarriage of the spouse. Hawaii’s workers compensation law states that when an industrial injury results in death, the surviving spouse is entitled to weekly benefits until death or remarriage, whichever occurs first.

Question 43

Which of the following prevents someone from collecting payment for negligence under the laws of some states?

Accepted Answer

Contributory Negligence.There are a few states that still have the rule of contributory negligence. A person can be 2% negligent and be 98% damaged and receive nothing from the other party that caused the loss because the injured party was partially (2%)

Question 44

Under the definitions section of the CGL policy, the term "your product" does not include:

Accepted Answer

Vending machines rented to or located for use by others.A vending machine rented for use by others is not considered to be "your product." The other three choices are all considered to be "your product."

Question 45

Which of the following is not considered a "breakdown" under Equipment Breakdown coverage?

Accepted Answer

Lack of power, light, heat, steam or refrigeration. Breakdown is direct physical loss that causes damage to covered equipment requiring it to be repaired or replaced. It must be caused by a failure of pressure or vacuum equipment, a mechanical failure, in

Question 46

Products of a surplus lines company can only be sold by:

Accepted Answer

Licensed surplus lines agents.Products can only be sold by a licensed surplus lines agent.

Question 47

With Commercial Property Insurance, replacement cost coverage may be written for:

Accepted Answer

Buildings, personal property of the insured, and property of others.Replacement cost coverage for building, contents and personal property of others is optional. However, if the insured chooses this option, coverage equal to at least 80% of the replacemen

Question 48

Theft generally means:

Accepted Answer

The unlawful taking of money, securities or other property to the deprivation of the insured.The newer forms have re-defined the term of theft. It is now defined as: the unlawful taking of money, securities or other property to the deprivation of the insu

Question 49

What is "express" authority under the law of agency?

Accepted Answer

The authority given to the agent by the company in a written contract or orally.Express authority is the authority specifically given to the agent either in writing or orally.

Question 50

What is the percentage of coverage for the "loss of use" under an HO-3 form?

Accepted Answer

: 30%.The percentage of Coverage A for loss of use is 30%.

Question 51

The "personal property replacement cost" endorsement does not apply to which of the following types of property?

Accepted Answer

The endorsement does not apply to the replacement value of fine arts, antiques, paintings and other rare items which cannot be replaced.

Question 52

How long are adjusters required to maintain records for inspection by the Insurance Commissioner?

Accepted Answer

Five years All the records as to any particular transaction must be kept in the licensee's office and must be available and open to the inspection of the Commissioner during business hours during the five years immediately after the date of the completion

Question 53

Which of the following statements is true about "additional coverages" in most insurance policies?

Accepted Answer

They are included at no extra cost.Examples of "additional coverages" would be debris removal and reasonable repairs which are automatically included in most property forms.

Question 54

The insured carries a BOP policy with a sprinkler system. If the system becomes inoperative the insured must advise the insurance company of the problem within ______ if the system cannot be restored.

Accepted Answer

48 hours.The insured must advise the insurance company within 48 hours of a protective device becoming inoperable.

Question 55

Rita’s house has an 80% replacement cost value of $200,000. She has it insured for $100,000 under an HO-3 form and suffers a fire loss of $50,000. How much will Rita receive for the loss?

Accepted Answer

$25,000. Rita is 50% insured per the terms of the policy so she will receive only 50% of the loss or $25,000. The company could also offer to pay the claim on an "actual cash value" basis.

Question 56

Which of the following conditions is not found in the commercial inland marine conditions form?

Accepted Answer

Maintenance of Security Systems.Maintenance of security systems is not part of the conditions in the commercial inland marine conditions form

Question 57

The deductible under the "regular" flood insurance program for each coverage (building and contents) is:

Accepted Answer

: $1,000.The flood program deductibles have recently been revised. It should also be noted that the deductibles apply separately to each coverage per loss.

Question 58

Which of the following is true regarding the payment of benefits for permanent total or partial disability after the death of an employee

Accepted Answer

The unpaid balance of benefits will be paid to the employee's spouse and dependents as long as death was not a result of the injury to which benefits are being paid..

Question 59

If an insured carries Coverage C (contents) under a dwelling (not homeowners) form, how much coverage applies on a worldwide basis?

Accepted Answer

10% of the coverage C limit.The DP Forms have a 10% limitation of the coverage C amount when personal property is OFF the premises. The homeowners forms provide the full limit of coverage C anywhere in the world for personal property.

Question 60

The insured owns a two-family dwelling and rents out one of the dwelling units. If a fire occurs what coverage could the insured look to for his loss of rental income under the DP-3?

Accepted Answer

Fair Rental Value.The dwelling policy provides coverage for loss of rental income. The policy will pay 20% of coverage A for this coverage. (Note: In North Carolina the percentage is 10%.)

Question 61

Under the auto medical payments coverage of Ben Green’s PAP, each of the following would qualify as a “family member”, except:

Accepted Answer

Susan Green, Ben’s wife. Susan maintains a separate residence although she and Ben are not divorced.Susan Green is no longer a member of the insured’s residence and would not be covered

Question 62

What is the limit of insurance that applies to property in transit in the BOP?

Accepted Answer

$10,000 .The BOP provides a $10,000 limit for property in transit.

Question 63

Disregarding defense and settlement costs (supplementary payments), a general aggregate limit:
Your answer

Accepted Answer

Is the most that will be paid for the sum of Bodily Injury and property Damage Liability coverage and Personal and Advertising Injury Liability coverage. .A general aggregate limit is the most the policy will pay for the sum of bodily injury, property dam

Question 64

Which of the following is NOT considered an unfair claims practice act?

Accepted Answer

The defamation of character of an insurance company. Defamation of character is an unfair method of competition. The others are examples of unfair claims acts.

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