AZ State Exam
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| Errors & Omissions | The professional liability that a producer would need should they be sued by their client for making a mistake while working in a professional capacity.
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| Liberalization | The policy clause that states the insurer can change the policy, only if they make it broader (more beneficial for the insured), and charge no additional premium.
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| Collision Loss | If an insured accidentally backed up their car into a mailbox, the damage caused to their car would be covered.
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| Vandalism or malicious mischief or breakage of glass is included in most basic homeowner and commercial policies except when | Dwelling has been vacant for 60 days
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| Functional Replacement Cost | Valuation would most likely be used on the valuation of the loss of an antique dresser
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| Wear to tires by road conditions | PAP (personal auto policy) will not cover
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| Personal Article Floater or Scheduled Personal Property Floater | If insurer wants additional coverage for specific items already covered under a Homeowners policy
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| Personal Injury Liability on HBO policy | Defamation, libel, slander is not included under the definition of bodily injury, and generally must be added as an endorsement in order to be covered.
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| Personal Umbrella | Policies that provide higher limits of personal liability over multiple properties.
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| Define Fraud | Fraud is the intentional misrepresentation;false statement with the intention to deceive insurer. Induced with something of value or surrender of legal rights. May void policy
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| What does the Purpose of co-insurance (share that insured pays) guarantee | it ensures that the insured carries adequate policy limits.
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| Blanket insurance | Written to provide one coverage limit for multiple properties (does not provide coverage for comforters and sheets)
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| What does the Property & Casualty Guarantee Fund do | It is responsible for covering valid claims.
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| Who determines the insurance insolvency of an Insurer | The insurance Director
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| Give an example of Vicarious liability | A situation where ______ _______ would be present is when an employee is representing an employer
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| What does a DP-3 (dwelling policy) cover | A policy used to insure private dwelling residential properties.
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| Reasonable repairs | Pays reasonable costs incurred by the insured for the necessary measures taken solely to protect covered property damaged by a peril insured against from further damages.
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| What is a Hardware store covered under | It is not covered by a Business Pursuits Endorsement, but is available with an HO policy
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| How are Insurance rates determined | Value measures premium charged for the coverage provided such as a rate per $100 to be insured (rate times # of units purchased)
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| What does Transportation expense cover under personal auto policy | PAP provides $20 a day and up to $600 coverage for loss of auto use while having repairs done to insured vehicle
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| If a producers wants to do business under another name | They must notify the Director on a form prescribed by the director before using the assumed name.
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| Reinsurance | Is a form of insurance between individuals designed to reduce risk of catastrophic loss.
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| Fraud or material misrepresentation | If insured commits _____ or ______ ______, it could void the policy.
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| Fair Credit Reporting Act (FCRA) | Regulates the collection, dissemenation, and use of consumer information, includes consumer credit; establishes guidelines related to consumer reports.
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| Contract of Adhesion | Where one party is unable to modify the contract language
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| What does "Doctrine of utmost good faith" State | States that the insurer can rely on true statements made by the insured and in return the insured can rely on the insurer paying covered claims.
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| Consideration | The exchange of values.
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| The insurer promises to indemnify or restore the insured meaning what? | To restore in whole or in part, to the position insured enjoyed before the loss, no better, no worse.
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| Hazard | That which increases the probability of an occurrence of loss arising from peril, or influence the extent of the loss.
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| How long must producers keep records | 3 years
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| 12 months, and fines of not more than $250 for each unintentional violation $2,500 aggregate/$2,500 for intentional, $15,000 aggregate | A producer found guilty of a class 5 felony may have fines and license suspended or revoked by the Director for up to
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| The Director retains authority to impose penalty against person under investigation or charged with a violation even if person surrenders license or license has lapsed including up to $__ total aggregate for unintentional acts, or $ __ total aggregate | $2,500 and $15,000
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| The Director may not issue any license to person who has had license revoked until after | 12 months
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| Certificate of Authority may be issued by Director if applicant is | 18 years of age, has not committed any act that is ground for denial, suspension, or revocation; has paid the prescribed fees, and has successfully passed the respective exam
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| These are not Insurance Adjusters | •Licensed Attorney-at-Law
•Salaried employees of insurer, compensation is not contingent on outcome of claim determination
•Licensed insurance producers who adjust or assist in the adjustment of losses arising under policies procured through producer
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| What does the Standard Fire Policy cover (aka Personal Property)? | New York Standard 165-Line Fire Policy is the standard policy sold exactly the same by most states, however premium may differ. Covers only a building structure; only the contents (personal property), or both may be purchased in the same policy.
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| What are the four parts in a Dwelling Policy with Standard Fire Coverage? | D-I-C-E
1.Declaration
2.Insurance Agreement
3.Conditions
4.Exclusions
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| A Dwelling policy is not a __________ _______ | A dwelling property is not a homeowners policy.The standard policy never covers theft of contents, and does not contain any liability coverage
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| The first page of the policy is the ______ _____ | Declaration Page
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| What does the Dec page include? | 1.Insurance Co. (always the first party named)
2.Name of Insured (2nd party named)
3.Location of insured property
4.Amount of coverage purchased
5.Premium
6.Policy period
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| Consideration Clause (to validate contract) | â¢Amount of premium paid and filled application by insured,insurer agrees to abide by the provisions contained in policy and pay covered claims
â¢Insured must be 18 years or older
â¢Insurer must be sane and not under the influence of drugs or alcohol
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| Effective Time and Location | Policy starts at 12:01 am of inception date, and expiration date shown on declaration. Usually written for the term of one year. Time is Standard, not daylight savings.
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| What is Policy Limits | A Policy Limit is that the insurer will never pay over the amount stated on the policy to the insured in the event of a claim
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| What is ACV (actual cash value) | Replacement Cost-Depreciation=Actual cost value (based on the age of the structure)
The policy pays insured in the event of a claim up to the policy limit or actual cash value,whichever is less.Buildings are depreciated at about 1% per year up to a maxim
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| True or false, on property insurance policies some insurance policies will pay claims on a Replacement Cost basis | True, although the Standard Fire Policy will not because by itself it is always based on ACV
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| Direct vs. Indirect Losses | Standard policy only covers direct losses, i.e. building damaged by fire is covered, loss of business use is not covered
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| True or False, the property Insurance policy must have insurable interest (based on insurer's equity position) | True, a mortgage company may be named on the policy to protect the bank's interest
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| Standard Fire Policy | Direct loss by Fire, Lightning,and Removal. It is an All-Risk coverage, which protects personal content from damage/destruction by fire, and is not automatically covered (must pay the extra premium) and contents must be listed on the Dec page of the polic
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| True or false Fire as a result of War is Excluded in the Standard Fire Policy | True
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| What are the three Dwelling Property forms? | 1. Basic-covers ACV structure & contents,Vandalism/Malicious Mischieve,indirect losses, i.e. rental value.
2.Broad-adds several perils incl. Basic coverage & Replacement cost (dwelling)
3.Special-All risk,covers all perils not excluded, & theft to struc
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| What are Dwelling Property Forms | They are endorsements used to broaden the coverage of a Standard Fire Policy and to describe the type of dwelling property
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| Do dwelling forms automatically include contents? | No, but it can be used to insure contents only. Insureds may describe the types of contents, business fixtures or equipment that the policy covers, which has to be included in the Dec page an extra premium applies.
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| For a Commercial Building a Personal policy is used to cover what? | It covers Commercial Structures and is used to describe the type of commercial structure and/or business equipment or fixtures to be covered, i.e. a five- plex is not covered by a dwelling type policy, but can be covered by this policy. Personal property
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| DP-1 Coverage A covers what? | As a dwelling policy, includes all attached structures such as garage, Building equipment such as A/C unit, and Fixtures and outdoor equipment.A Contents only policy is coverage for the personal belongings of renters.
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| DP-1 Coverage B covers what? | If policy covers a dwelling policy it automatically extends to other structures/outbuildings and insured may apply up to 10% of amount of coverage applicable of the dwelling structure to outbuildings.
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| DP-1 Coverage C (C is for contents) and covers who and what? | Contents coverage includes furniture, clothing,stereos,tvs, and many other personal items of the insured, fam. members, guests, servants (not roomers) are covered. Excludes: pets,aircraft,motor vehicles, boats. Off premises covers 10% which applies anywhe
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