Insurance Quizzes

If the premiums for a policy will be increased by more than 15 percent, how much warning must the insured get?

45 days. A notice of increase in premiums that exceeds 15% of the current policy’s premium must be delivered or mailed to the insured at least 45 days before the effective date of such termination or change.

What is the max period of time a temp license can be in force?

15 months. A temp license is good for 6 months and can be renewed at 3 month intervals for a max of 15 months.

The Commissioner of Insurance is…

The chief officer of the Dep. of Insurance.

If the insurer pays an amount less than the amount insured under the policy in the event of a total loss to property, how much of the insured’s premium must the insurer return?

The amount of premium actually paid and the premium that would have been charged for a policy with an amount of insurance equal to the amount paid by the insurer for the loss.

Which type of liability insurance may an insured reject in writing?

Uninsured motorist coverage.

Which of the following is the closest term to an authorized insurer?

Admitted. Insurers who meet the state’s financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer.

If a policy has been in effect for at least 60 days or is due for renewal, a cancellation may only be effected for which of the following reasons?

A change in the risk that substantially increases the hazard insured against.

An agent license can be issued…

Only to individuals.

If a policy is cancelled due to nonpayment of premium, how many days’ advance notice must the insurer give the policyholder before cancellation?

10 days.

An insurer publishes intimidating brochures that portray the insurer’s competition as financially and professionally unstable. The insurer is hoping that this advertising will help to eliminate the competition and therefore create a monopoly. Which of the following best describes this act?

Illegal. It is illegal to be involved in any activity of boycott, coercion, or intimidation that is intended to restrict fair trade or to create a monopoly.

How many days before a policy is nonrenewed must an insurer deliver or mail written notice to the insured?
A15 days
B20 days
C30 days
D10 days

30 days.

Which of the following best describes an unfair trade practice of defamation?

Making derogatory oral statements about another insurer’s financial condition.

Which type of workers are NOT covered under Workers Compensation?

Domestic workers.

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured’s habits and lifestyle. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured’s habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.

Which of the following are the authorities that an agent can hold?

Expressed and Implied. The powers and authorities that an agent holds are express and implied. Apparent authority is the appearance of, or the assumption of, authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

Mutual. Funds not paid out after paying claims and other operating costs are returned to the policy owners in the form of a dividend. If all funds are paid out, no dividends are paid.

Which of the following is an example of an agent’s fiduciary responsibilities?

Forwarding premiums to the insurer. Fiduciary refers to a position of trust. When an agent is handling the premiums that belong to an insurance company, they are acting in a fiduciary capacity.

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?

Stock. Only stock insurance companies are owned and controlled by stockholders.

Which of the following is NOT true regarding a Certificate of Authority?

It is issued to group insurance participants. Before insurers may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state.

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination. Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.

How is the Commissioner of Insurance selected to be the chief officer of the Department of Insurance?

Elected to office. The Commissioner is elected to office for a term of 4 years.

Which of the following must an insurer obtain in order to transact insurance within a given state?

Certificate of authority. All insurers (domestic, foreign, or alien) must obtain a certificate of authority before transacting insurance within a given state.

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of…

Misrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and illegal.

Under workers compensation laws, injured workers are entitled to how many weeks of treatment from the date of the accident?

400 weeks. Medical treatment for injuries due to an on-the-job accident is limited to a maximum of 400 weeks of coverage from the date of the accident. Review ContentNext Question

If the insurer pays an amount less than the amount insured under the policy in the event of a total loss to property, how much of the insured’s premium must the insurer return?

The amount of premium actually paid and the premium that would have been charged for a policy with an amount of insurance equal to the amount paid by the insurer for the loss. In the event of a total loss to property, if the insurer pays an amount less than the amount insured under the policy, the insurer must return the amount of premium actually paid and the premium that would have been charged for a policy with an amount of insurance equal to the amount paid by the insurer for the loss.

Which of the following terms refers to the acts of soliciting insurance, making an insurance contract effective, and dealing with matters arising from that contract?

Transacting insurance. Any of the following acts is considered to constitute an act of "transacting insurance" in Georgia: solicitation and inducement to insurance, preliminary insurance negotiations, effectuation of an insurance contract, and transactions of matters subsequent to and arising out of effectuation of an insurance contract.

When do certificates of authority expire in Georgia?

June 30th of the year following insurance. All certificates of authority expire at midnight on June 30th of the year following insurance.

An insured must get advance warning if the premiums will be increased by more than…

15%. Written notice of an increase in premiums that exceeds 15% of the current policy’s premium must be delivered or mailed to the insured at least 45 days before the effective date of the change.

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of…

Rebating. When producers give or promise anything of value that is not specified in the policy, they are guilty of rebating.

A willful violation of an agent’s fiduciary responsibility that involved funds exceeding $500 will be considered…

A felony.

An insurance policy specifies that it will pay $600 for a specific loss. The policyowner suffers a loss of $535. How much will the policy pay?

$535. Applying the principle of indemnity, the insurer will pay the actual cost of the loss, up to the limit stated in the policy. In this case, the insurer will pay $535.

An insured’s roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today’s prices. If the roof has been depreciating at $200 per year and his policy is ACV, how much will it pay toward the insured’s new roof?

$5,000. ACV is calculated as replacement cost less depreciation.

The crime of forced entry into the premises of another by a person or persons with felonious intent, is defined as a…

Burglary. Insurance policies covering the peril of burglary require that following a loss, there are visible signs of forced entry or exit from the premises.

Insurable interest in the property covered in a policy must be proven…

At time of loss. Between the time a policy is issued and a loss occurs, ownership may have changed, mortgages may have been put into place, etc. Therefore, in property and casualty insurance, insurable interest must exist at the time of loss.

An insured owns a building that is valued at $400,000. To comply with the 80% coinsurance provision of his insurance policy, how much should he insure the property for?

80% of the property’s ACV or more. The coinsurance clause states that, in consideration of a reduced rate, the insured agrees to maintain a certain minimum amount of insurance on the insured property. Market value is affected by location. Insurance is designed to pay, in the event of a covered loss, replacement cost minus depreciation.

When a parent is required to pay for damages caused by his or her children, this is an example of…

Vicarious liability. When one party is held liable for act of another party, it is called vicarious liability. Employers are responsible for employees acting within the scope of their employment. Parents sometimes are held responsible for acts of their children.

Events or conditions that increase the chances of an insured loss occurring are referred to as…

Hazards are conditions or situations that increase the probability of an insured loss occurring.

All of the following statements describe the concept of strict liability EXCEPT…

It is imposed on defendants engaged in hazardous activities. Strict liability is commonly applied in product liability cases. The business is then liable for defective products, regardless of fault or negligence.

A situation in which a person can only lose or have no change represents

Pure risk. Pure risk is the only type insurance companies are willing to accept.

Which of the following is defined as the legal liability arising from physical damage to the belongings of others caused by the negligence of an insured?

Property Damage Liability.

An insured is applying for a casualty insurance policy. One of the conditions of the policy allows the insurance company to inspect the insured’s books at the end of the policy term to make sure sufficient premium has been collected for the exposure she plans to insure. Which condition is part of the insured’s policy?

Deposit premium audit. Deposit premium audit is a condition that allows an insurer to inspect the insured’s books at the end of the policy term to make sure sufficient payment has been collected for the exposure.

Which of the following would be covered under personal injury liability?

Slander. In insurance, personal injury includes injury to the character of another person caused by libel, slander, false arrest, invasion of privacy and other acts. The injury is less physical than those covered under bodily injury liability.

Wilber’s house is located 1 mile from the county’s new landfill and across the road from the entrance of a rock quarry. To rebuild the house if something happened to it would cost $150,000. But when Wilber tried to sell it, the best offer he received was $80,000. His insurance company will insure the house for only $80,000. How is Wilber’s house insured?

Market Value. When insured for market value, it is insured for what a willing buyer would pay prior to a loss. This is different from ACV or replacement cost.

A policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal do not agree is known as…

Appraisal. Loss valuation is a factor in determining the premium charged and the amount of insurance required.

The risk of loss may be classified as…

Pure risk and speculative risk. Pure risks involve the probability or possibility of loss with no chance for gain. Pure risks are generally insurable. Speculative risks involve uncertainty as to whether the final outcome will be gain or loss. Speculative risks are generally uninsurable.

Which of the following policies does NOT contain an automatic reinstatement provision?

General liability written with an aggregate limit An aggregate limit is reduced by the payment of claims. It is possible for an insured to run out of coverage before the expiration of the policy. Aggregate limits are restored on the anniversary date of the policy.

Which of the following is most likely to occur if it is determined by the audit that the deposit premium was too high?

The insured will receive a return premium. If the audit shows that the initial (deposit) premium to the insured was too high (the exposures were over-estimated), the insured will receive a return premium.

The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as

Subrogation. A provision found in most insurance policies that gives the insurer, after payment of a loss caused by a third party, the insured’s rights to recovery against that third party. The insurer’s rights are only to the extent of the loss payment.

A man is working on the roof of his house, and his neighbor is watching from the ground. When roof shingles are thrown off the roof, they hit the neighbor in the face, injuring his eye. Which best classifies the homeowner’s legal liability?

Bodily injury. The legal liability arising from physical trauma to a person or death arising from the negligent or purposeful act and omissions by an insured.

Negligence may be defined as…

The failure to use reasonable and prudent care. Just because something bad happens does not mean there was negligence. Negligence is when the failure to use proper care results in injury or damage.

An insured carries a property policy on her home in the amount of $250,000. A bank is shown as the mortgagor in the policy. Last month the insured made her final mortgage payment, but did not remove the bank from the policy. In the event of a covered loss to her home, how much will the bank receive?

Nothing. Because the bank does not have a financial interest in the house at the time of loss, they will receive nothing.

An insured’s business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this?

Consequential loss, also known as indirect loss, is a second financial loss caused by a covered direct loss.

All of the following are examples of risk retention EXCEPT…

Premiums Retention is a planned assumption of risk, or acceptance of responsibility for the loss by an insured through the use of deductibles, copayments, or self-insurance.

Sally has a property insurance policy that is not subject to any coinsurance requirements. Her policy has a set amount of insurance scheduled for her property. What loss valuation method does her policy use?

A stated amount is an amount of insurance scheduled in a property policy which is not subject to any coinsurance requirements in the event of a covered loss.

Peril is most easily defined as…

The cause of loss insured against.

Three years ago, an insured moved to an unfurnished apartment. She bought new furniture that cost $9,000. Last week, there was a fire in the apartment that destroyed the furniture. Replacement cost is $10,500. The adjuster told the insured her furniture depreciated $2,500. If insurance is written on an actual cash value basis, how much will it pay for the loss?

$8,000.

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant’s

Ancestry. The Fair Credit Reporting Act regulates what information may be collected and how the information may be used. Consumer Reports include written and/or oral information regarding a consumer’s credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources. Ancestry is not a relevant factor assessed in these reports.

Which of the following is a method of claim settlement used when the insured and insurer cannot agree on how to settle a claim?

Arbitration. A method of claim settlement used when the insured and insurer cannot agree on how to settle a claim. The arbitrator’s decision is binding to both parties.

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following terms best describes what the insurer has violated?

Consideration. The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.

In insurance, an offer is usually made when…

The application is submitted.

When a disagreement occurs as to how to settle a loss in a "fender bender" between two cars, what procedure is followed?

Arbitration through the court. Arbitration is a low-cost alternative to a full-blown lawsuit.

All of the following are conditions commonly found in the insurance policy EXCEPT…

Insuring agreement provides information on the policy’s coverages. Conditions state the legal obligations and duties of the parties to the contract.

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties, but representations. Representations are statements that are true to the best of the applicant’s knowledge.

Under what conditions would a contract between an insurer and prospective insured be legal?

The applicant has been convicted of a felony. When an insurer and insured enter into a contract, both parties must be of legal age and mentally competent. It is legal for a person convicted of a felony to buy an insurance contract. An intoxicated person, however, may not be mentally competent, and a 12-year-old student is considered to be underage in most states.

Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as…

Cancellation is the termination of an in-force insurance policy by either the insured or the insurer prior to the expiration date shown in the policy. Termination may be voluntary, involuntary, or in mutual accordance with provisions contained in the policy.

The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the…

Exclusions.

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

Material misrepresentation will affect whether or not a policy is issued. If the insured had been truthful, it is very likely that the policy would not be issued.

The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property is called…

Pro rata liability. To preserve the principle of indemnity, each policy pays a pro rata share based upon the share of the coverage. The insured cannot collect the full amount of loss from each policy.

The part of a policy that clarifies terms in the policy is the…

Definitions.

When would a misrepresentation on the insurance application be considered fraud?

A misrepresentation would be considered fraud if it is intentional and material. Fraud would be grounds for voiding the contract.

Which of the following is NOT consideration on the part of an insured?

Promise to submit timely claims.

What is the max penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

$2,500.

The ABC Corporation has $100,000 of coverage on its building through insurance Company A, and $50,000 of identical coverage on the same building through insurance Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs, how much will each insurer pay?

Company A will pay $16,000; Company B will pay $8,000 Each policy pays its pro rata share of the loss based upon each policy’s share of the total amount of coverage.

A homeowner sells his house to a friend. The friend wants to keep the homeowner’s current policy in effect. Under the assignment provision, which of the following is most likely?

The homeowner will need to get written consent from the insurer before the policy can be reassigned. In property and casualty insurance, assignments of policies are usually valid only with the prior written consent of the insurer.

Under the professional liability loss settlement provision, what must an insurer do before offering to pay a claimant to settle a claim?

Get the insured’s consent. If a claim has been filed under a professional liability policy, an insurer MUST get the consent of the insured before offering to pay to settle a claim. If the insured’s professional reputation is at risk, and the insured feels he or she is not negligent, the insured can require the insurer to defend the action in court.

What term best describes the act of withholding material information that would be crucial to an underwriting decision?

Concealment. Concealment occurs when a person withholds a material fact that is crucial to making a decision. In insurance, this involves withholding information that would be crucial to underwriting decisions. For instance, if someone omitted a 10-year smoking history from a health insurance application, this person would be guilty of concealment.

Before an insurer will pay any loss under a policy, what is usually required from the insured?

Proof of loss. A sworn statement, called proof of loss, must usually be furnished by the insured to an insurer before any loss under a policy can be paid.

Which of the following would NOT be considered a source of insurability information by an insurer?

The applicant’s marital status. An insurer may inspect, with the applicant’s written permission, the following: application form, motor vehicle records, interviews with neighbors, friends and employers, inspection of property, and inspection of insurance history.

Within how many days of requesting an Investigative Consumer Report must an insurer notify the consumer in writing that the report will be obtained?

3 days.

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair Credit Reporting Act.

The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the…

Conditions.

When a mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy…

A. The loss reimbursement will be paid to the mortgagee as their interest may appear. B. The mortgagee’s rights of recovery will not be defeated by any act or neglect of the insured. C. The mortgagee may bring a suit in their own name to recover damages to covered property. ALL OF THE ABOVE ARE TRUE.

What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?

Other insurance. A provision in an insurance policy that defines how the policy will respond if there is other valid insurance written on the same risk.

Which of the following describes the transfer of a legal right or interest in an insurance policy?

Assignment. The transfer of a legal right or interest in an insurance policy. In property and casualty insurance, assignments of policies usually are valid only with the prior written consent of the insurer.

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured. Consideration is something of value that is transferred between the two parties to form a legal contract.

The broad theft coverage endorsement on the dwelling form specifies all of the following limitations EXCEPT…

$1,000 on silverware. The real limit is $2,500.

All of the following statements regarding a boatowners policy are true EXCEPT…

Automatic coverage is provided on replacements for the boat listed in the declarations provided the insured notifies the insurer within 45 days of purchase and pays any additional premium required.

Which of the following is NOT true about earthquake coverage?

Coverage is commonly provided through a federally-funded program. It is a peril excluded by most standard property forms. Coverage for the peril of earthquake may be added by endorsement to most property policies, or coverage may be written in a Difference in Conditions policy.

The homeowners policy covers collapse caused by all of the following EXCEPT

Foundation cracks. Collapse must be caused by some sudden, unexpected reason. The foundation cracks would take years to cause collapse, meaning there would be plenty of time to notice and repair them.

Which of the following perils is covered by flood insurance?

Mudslide caused by accumulations of water under the ground. Flood policies exclude losses caused by landslides, sinkholes, and falling water. Rising water or excessive runoff is covered.

Section I of a boatowners policy covers…

Physical damage.

An insured invites his neighbors out for a day on the water in his boat powered with a 150 hp outboard motor. While attempting to tie the boat to dock, his neighbor’s hand is broken when caught between the boat and dock. What coverage would apply to the broken hand?

The insured’s boat owners policy. Outboard boat and motor policies are property coverage only. Homeowners liability does not apply to outboards with more than 25 hp. Boatowners policies contain property, liability, and medical payments coverage.

Which of the following is true regarding personal liability coverage?

It must be added as a supplement or written as a separate policy. Unlike the homeowners policy, the dwelling policy does not include any coverage for personal liability. The personal liability supplement can be added to the dwelling policy or written as a separate policy. The coverage form includes 2 major coverages: personal liability and medical payments to others.

An insured suffers a windstorm loss in which the insured’s driveway is blocked by 2 of the insured’s trees and 2 of the neighbor’s trees. The total amount of the removal adds up to the following: 3 trees at $300 per tree, and one tree at $600. How much will the insurer pay for the loss?

Answer: $1,000 It is important to pay particular attention to coverages that have a maximum amount of coverage and an additional sublimit for one particular item. The most the policy will pay for this loss is $1,000.

All of the following are classes of inland marine risks EXCEPT…

Common Carrier Cargo Liability. The 4 classes are 1. Domestic shipments and transportation risks 2. Bridges, tunnels, and other instrumentalities of transportation of communication. 3. Commercial property floater risks 4. personal property floater risks.

What type of property does a Personal Floaters policy cover?

Movable personal property, wherever it may be located.

With regards to a homeowners policy, which coverage provides for indirect or consequential losses?

Coverage D covers indirect or consequential losses.

Which of the following losses would most likely NOT be covered under Coverage A in the dwelling policy?

Theft of a renter’s lawnmower used to service the premises.

Which of the following homeowners policies covers those who rent their dwelling?

HO-4

According to the Nationwide Marine Definitions, risks that may be the subject of inland marine insurance include all of the following EXCEPT…

Large pleasure boats

Which type of workers are NOT covered under Workers Compensation?

Domestic workers

An applicant who knowingly fails to communicate a fact that would help an underwriter make a sound decision regarding coverage is guilty of

Concealment

When an insured makes truthful statements on the application for insurance and pays the required premium it is known as…

Consideration

Which of the following is a mandatory part of an insurance policy that varies with each individual policy?

Declarations. It’s also the part of a property policy that shows the amount of insurance premium

Which of the following property clauses allows the extension of a major coverage, applying to specific losses not already insured?

?

In return for premium, an insurance company must…

?

Events in which a person has both the chance of winning or losing are classified as…

Speculative risk (?)

Representations are written or oral statements made by the applicant which…

Are considered true to the best of the applicant’s knowledge.

A professional who wants coverage for all liability exposures should purchase what form of liability insurance?

commercial general and professional

Who is entitled to the salvage of property after a total loss has been paid under the terms of an insurance policy?

The insured (?)

Which of the following definitions best defines the term "accident"?

A sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage neither expected nor intended.

The HO-3 homeowners policy provides…

Open peril coverage on the dwelling and broad form coverage on personal property.

An insurance agency could purchase an errors and omission insurance policy, which would provide protection in the event of any of the following events EXCEPT…

B. The agency loses commission income from policies that were not insured by the insurer.

The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called

Subrogation

The valued policy statue applies in which of the following events?

In the event of a total loss by a fire to a one or two family residential building or structure.

an insurance contract must contain all of the following to be considered legally binding EXCEPT…

beneficiary’s consent

Apassengerinafriend’scarisinjuredwhilegettingintothecar.Whichofthe following statements would apply if both the passenger and the driver had medical payments coverage under a Personal Auto Policy?

The driver’s policy will pay.

If a consumer requests additional information concerning an Investigative Consumer Report, how long does the insurer or reporting agency have to comply?

5 days

If a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will company A pay on a $24,000 loss?

$8,000

Claim related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses are covered by which part of a policy?

Additional coverage

WhenanUmbrellaPolicyisbroaderthanunderlyinginsuranceanditpaysa loss that is not covered by the underlying policy, it usually only pays

The excess over the self-insured retention.

When the insured’s car was totaled in a recent accident, the ownership of the car was transferred to the insurer. The insurer then sold off the wrecked car to recover some of the loss it paid to the insurer. What is the term for this action.

Salvage

All of the following are found in the declarations section of a policy EXCEPT the

Exclusions

when the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss the coverage is said to be written

stated amount

The Declarations of the Homeowners policy provides all of the following information EXCEPT

A statement that earthquake damage is not covered.

An insured’s home is mortgaged by the local bank. The insured us required to carry insurance on the home, showing the bank as the mortgagee. If the home is damaged by a covered peril, which of the following is true?

Losses will be paid to the mortgagee and mortgagor as their interest appears.

AllofthefollowingaretrueregardingdepositpremiumEXCEPT

It is 50% of the actual premium

In a dwelling policy, which of the following other structures would be covered?

A structure rented to a neighbor for use as a private garage.

What is true of dwelling policy coverage?

Dwelling policy forms contain several general exclusions that define the actual extent of coverage provided. These exclusions are found in all 3 dwelling forms; basic, broad, and special.

The NFIP (National Flood Insurance Policy) emergency program…

Provides limited amounts coverage at subsidized rates. It also provides more coverage than the normal program.

A boat owners policy does NOT cover…

Nuclear Hazards

All of the following people would be considered insureds under the liability section of a homeowners policy, EXCEPT…
A. The legal representative of a deceased insured.
B. The 22-year old niece of the insured, who is only visiting.
C. A 15-year old foster child residing in the premises.
D. The mother of the insured who is residing in the household.

B. Relatives, any age, are considered insureds only if they are residents of the household.

What is the purpose of the NFIP?

To fill the gap left by the private insurers in flood coverage.

Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value?
A. They are excluded from the flood insurance policy.
B. They are subject to a $1,000 deductible.
C. They are automatically provided with replacement cost coverage.
D. They qualify for maximum compensation under the flood insurance program.
Correct!

Answer: C. Single-family dwellings are automatically provided with replacement cost coverage if insured to at least 80% of the replacement value, or the maximum allowed under the regular flood insurance program.

Which of the following perils is covered by the HO-2 and HO-3?
A. Loss due to power interruption that occurs off the premises
B. Flood
C. War
D. Sudden and accidental rupture of a heating system

Answer: D. Off-premises power failure, flood, and war are all excluded from all DP and HO policies.

The dwelling insured on HO-2, HO-3, or HO-5 forms is covered for replacement, provided that it is insured for at least what percentage of replacement cost on the date of loss?
A. 25%
B. 40%
C. 75%
D. 80%

D. 80% Correct! HO-2, -3, and -5 provide replacement cost coverage if the house is insured for at least 80% of its value on the date of the loss.

Who would participate in a WYO program?
A. Lloyd’s associations
B. Government insurance companies that write and service National Flood Insurance policies
C. Businesses requiring National Flood Insurance policies
D. Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis

Answer: D A WYO (write your own) program is made up of private insurers that write and service National Flood Insurance policies on a no risk-bearing basis through a special arrangement with the Federal Insurance Administration. WYO programs retain part of the flood insurance premium to pay for commissions and administrative costs. The remaining premiums, plus investment, are used to cover losses.

Under which of the following conditions can broad theft coverage be added to a dwelling policy?
A. If the insured is owner-occupant of the dwelling
B. If permission is granted by the department of insurance
C. Broad theft coverage cannot be added to a dwelling policy.
D. If the policy has been in effect for 60 days

Answer: A. If the insured is owner-occupant of the dwelling

How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card?
A$100
B$500
C$1,000
D$5,000

$500 is provided automatically, and may be increased by endorsement.

Which of the following would NOT be considered a flood?
A. Overflow of tidal waters
B. Mudslides
C. Runoff of surface waters
D. Sewer backup

Answer: D. Sewer backup Flood is defined by the National Flood Insurance Program. It does not include sewer backup.

Which of the following would be covered under the Broad Form (DP-2) policy’s falling object peril?
ADamage to the building’s awnings
BDamage to outdoor television antennas if there is no interior damage
CExterior pavement and patio damage
DInterior building damage if the exterior was damaged first

Answer: D In DP-1 and DP-2 policy forms, loss or damage resulting from falling objects is covered, except for damage to awnings, fences, outdoor equipment, outdoor radio and television antennas or aerials, masts, or towers. Damage to the interior of the building is covered only if the exterior has been damaged first.

Which of the following losses would be covered by an unendorsed homeowners policy?
A. Collapse caused by earthquake
B. Fire or lightning
C. Faulty or defective zoning
D. Theft in a structure under construction

Answer: B Fire and lightning are included in the basic perils, which in turn are included in almost all homeowners policies. Earthquake coverage is only by endorsement. Theft in or to buildings under construction is not covered. If the insured’s own acts, decisions, or failure to act causes the loss, it is not covered.

The insured with a homeowners policy has had damage to his property caused by a volcano. Which of the following is true?
AAll eruptions are considered separate occurrences no matter how close together.
BCoverage for each volcanic eruption would require a separate deductible.
CAll volcanic eruptions within a 72-hour period will be considered one occurrence.
DNone of the damage is covered.

Answer: C All volcanic eruptions that occur within a 72-hour period will be considered one event.

In a dwelling policy, which of the following provides coverage for additional living expenses incurred by an owner-occupant in the event a covered peril makes the premises uninhabitable due to a covered loss?
A. Coverage B
B. Coverage C
C. Coverage E
D. Coverage A

Answer: C. Coverage E

Vandalism and malicious mischief would be covered if the insured’s premises have been vacant for no more than how many days?
A. 30
B. 60
C. 100
D. 365

Answer: B. 60 days Vandalism and malicious mischief will not be covered if the insured’s premises have been vacant for more than 60 days immediately prior to the loss.

Which loss listed below would be fully covered by a homeowners policy?
A. $5,000 firearm collection stolen
B. $2,000 silver tea set stolen
C. $1,200 pedigreed golden retriever stolen
D. $24,000 bass boat destroyed in a tornado

Answer: B. $2,000 silver tea set stolen Tea sets are covered with a special limit of $2,500 for the peril of theft; the firearm collection is covered for no more than $2,500 if stolen; boats are covered for no more than $1,500 for any peril the policy covers; the dog is not covered at all.

The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land
A. Owned or leased by a landlord who does not reside on the premises.
B. Owned by a landlord who does not use the mobilehome located on it.
C. Leased by the owner of the land.
D. Owned or leased by the resident of the mobilehome.

Answer: D. The mobile home endorsement alters the homeowners policy to cover a mobile home and other structures on land owned or leased by the resident of the mobile home.

All of the following statements regarding a boatowners policy are true EXCEPT
A Perils are insured on an open-peril basis, providing that the insurer will pay for direct and accidental loss to the property insured.
B. Replacements for the boat listed in the Declarations are automatically covered, if the insured notifies the insurer within 60 days and pays the additional premium.
C. Watercraft liability protects up to specified limits for claims against a "covered person" for damages due to bodily injury caused by a watercraft.
D. Physical damage coverage is provided on an actual cash value (ACV) basis.

Answer: B Automatic coverage is provided on replacements for the boat listed in the declarations provided the insured notifies the insurer within 45 days of purchase and pays any additional premium required.

Who is covered by an HO-4 policy?

Answer: Tenants

An insured has a special form dwelling policy written for $100,000 on a dwelling. The dwelling’s replacement cost is $115,000. Fire causes $75,000 in damage to the dwelling, $15,000 damage to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for the trees?
A$5,000
B$10,000
C$60,000
D$75,000

Answer: A. $5,000 In the broad and special form, Coverage B (Other Structures) is an additional amount of insurance, limited to 10% of Coverage A (in this example, $10,000). Trees, shrubs, and plants are covered, limited to not more the $500 for any one tree or plant, and not to exceed 5% of Coverage A in total (in this example, $5,000).

All of the following are true regarding flood insurance EXCEPT…
A. Coverage may be provided for growing crops and livestock.
B. Coverage is excluded for money and securities.
C. It is available in designated areas only.
D. Coverage is provided for dwellings or commercial property.

Answer: A. Coverage may be provided for growing crops and livestock. NFIP is available for buildings and their contents in designated geographic areas only.

Which of the following is NOT true of National Flood Insurance?
A. Emergency program limits are available to communities immediately.
B. Participating communities must agree to implement certain land use regulations.
C. National Flood Insurance provides coverage that is excluded from property insurance policies.
D. Insurance provided by the flood program also is available in standard property policies.

Answer: D The National Flood Insurance Program was created by the federal government to fill the gap left by the private insurance industry. When a community first enters the flood program, it is considered to be in the emergency program, and the amounts of insurance are limited. After the land use requirements are met and flood maps are available, the community will be placed in the regular program.

Under the dwelling policy, Coverage C – Personal Property is
A. Limited to covering a servant’s property while at the insured location.
B. Automatically provided as 50% of Coverage A.
C. A prohibited coverage in the dwelling form.
D. Limited to 50% of the amount of insurance that is written as Coverage A.
Correct!

Answer: A Dwelling Coverage C is limited to covering property owned by a guest or servant while the property is at the insured location. Under a homeowners policy, the property would be covered the same while on or off the premises.

Losses caused by vandalism and malicious mischief are excluded under a homeowners policy if the dwelling had been vacant for more than
A. 30 days.
B. 45 days.
C. 60 days.
D. 90 days.

Answer: C. 60 days V&MM is the first coverage suspended in the event of vacancy (vacant for more than 60 consecutive days).

If more than one person has an insurable interest in the property covered under a dwelling policy,
A. All insureds must decide which one will be liable for the loss.
B. The insurer will be liable for only the insured’s interest in the damaged property.
C. Liability will be split evenly among all people who have insurable interest.
D. All involved insurers must decide which one will be liable for the loss.

B. Insurer will be liable for only the insured’s interest in the damaged property. If more than one person has an insurable interest in a property, the insurer will be liable only for the insured’s interest in the loss.

All of the following are special personal property limits under a homeowners policy EXCEPT
A. $1,500 for trailers not used with watercraft.
B. $2,500 for theft of firearms.
C. $500 for business personal property on the insured premises.
D. $1,500 for securities, accounts, deeds, and evidences of debt.

Answer: B HO forms place a $2,500 limit for business personal property that applies on premises only. A limit of $500 applies to loss of business personal property while away from the premises.

Which of the following could be covered by a HO policy?
A. Property of a tenant not related to the insured
B. An oriental rug in an on-premises apartment
C. Birds, fish, and animals
D. A sports car kept in an attached garage

Answer: B Homeowners contents coverage does not apply to animals, cars, or property of those who pay to be at your house; it does provide up $2,500 for a loss of landlord’s furnishings in an on-premises apartment.

How much coverage can be available for watercraft damage in the homeowners policy?
A. Unlimited amount
B. No more than $1,000
C. Homeowners policies do not cover watercraft.
D. Up to $1,500

Answer: D

Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective?
A. 30 days after the application has been accepted
B. 12:01 pm on the 5th day after the endorsement request has been mailed
C. 5 days after the application and premium payment are mailed
D. 12:01 am the day after the application and premium payment are mailed

Answer: D During the first 30 days after a community enters the emergency or normal programs, coverage on a flood policy begins at 12:01 a.m. the day after application and premium payment have been mailed.

An insured owns a large dog. The first day he has to leave the dog home alone to go to work, the insured comes back to find his $400 couch torn apart, his $100 coffee table chewed up, his $50 window curtain shredded, and a $200 window pane shattered where his dog jumped through. The insured has personal property coverage under a special form dwelling policy. How much of this loss will the policy cover?
A. $0
B. $200
C. $250
D. $750

Answer: A. $0 Damage that results from domestic animals is excluded under the special form dwelling policy.

To be covered, which of the following exposures must be added by endorsement under a Dwelling Form?
ARental Value
BDwelling
CDetached garage
DPersonal liability

Answer: D. Personal liability

A passenger in a friend’s car is injured while getting into the car. Which of the following statements would apply if both the passenger and the driver had medical payments coverage under a personal auto policy?
A. Both policies would share equally in the loss.
B. The driver’s policy will pay.
C. The driver’s policy will act in excess of the passenger’s policy.
D. The passenger’s policy will pay.

Answer: B Medical payments coverage pays all necessary medical and funeral expenses incurred and services rendered to the insured or passengers in the insured’s vehicle, regardless of fault.

In a personal umbrella, the amount paid by the insured for certain losses not covered under the primary coverage is called
A. Self-insured retention.
B. Stop-loss.
C. Coinsurance.
D. Participation requirement.

Answer: A In casualty insurance, the portion of a claim not paid by insurance is called a retention. In property insurance, it is called a deductible.

A professional who wants coverage for all liability exposures should purchase what form of liability insurance?
A. Directors and officers
B. Fiduciary and employment practices
C. Employee benefits
D. Commercial general and professional

Answer: D

A common exclusion found under physical damage to your auto includes
A. Riot or civil commotion.
B. Towing and labor.
C. Mechanical breakdown.
D. Glass breakage.

Answer: C Damage due to wear and tear, freezing, mechanical or electrical breakdown and road damage to tires are common exclusions to the physical damage coverage section.

What is the deductible of a personal liability umbrella policy called?

SIR (self-insured retention)

Coverage for medical payments under a personal auto policy applies to expenses following a covered accident that are incurred and services rendered within
A. 90 days.
B. 1 year.
C. 3 years.
D. 5 years.

Answer: C. 3 years

Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy?
A. The insured would have to pay the self-insured retention limit.
B. The insured would be responsible for the amount required as underlying limits in the event of a claim.
C. It would have no effect on the umbrella policy.
D. The policy will be cancelled.

Answer: B The amount of insurance required as underlying limits in other policies is treated as a deductible amount to the umbrella for that particular exposure, so if underlying limits are not maintained; it is the insured’s responsibility.

Which of the following situations would NOT be covered by Connie’s uninsured motorists coverage?
A. Connie’s neighbor borrowed Connie’s car and is hit by an uninsured motorist.
B. Connie’s car is hit by someone whose auto insurer is insolvent and has bodily injury damages.
C. While jogging, Connie’s son is hit by a hit-and-run driver who cannot be identified.
D. Connie’s son’s girlfriend who was hit by the same hit-and-run driver while jogging with her boyfriend.

Answer: D Uninsured motorist coverage applies to the insured, resident relatives, and those occupying the covered car.

An insured was involved in an automobile accident for which the insured was at fault. Which of the following coverages would pay for damage to the insured’s automobile?
A. Other-than-collision
B. Property damage liability coverage
C. Comprehensive coverage
D. Collision

Answer: D The policy defines collision as the upset or impact of a covered vehicle with another vehicle or object.

Transportation expenses are covered under a Personal Auto Policy for
A$25 per day, for a maximum of $500.
B$50 per day, for a maximum of $500.
C$50 per day, for a maximum of $750.
D$20 per day, for a maximum of $600.

Answer: D Other than Collision coverage provides $20 a day for up to 30 days following the theft of the entire auto, providing the auto is not recovered within 48 hours.

Which of the following would NOT be considered a misrepresentation on the part of the insurer?
A. Backdating policies to secure a lower premium for the insured
B. Implying that term insurance has cash value
C. Embellishing the benefits provided in the policy
D. Overstating returns on policy dividends
Correct

Answer: A It is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, or the payment of dividends. Demonstrating conservative returns in the illustrations would not be a violation.

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?
A. Defamation
B. Undercutting
C. Twisting
D. Slandering

Answer: A. Defamation Defamation is making statements which are false as to the financial condition of any insurer and which are calculated to injure any person engaged in the business of insurance.

If an agent changes his residence address, within how many days must the agent notify the Commissioner of the change?
A. 10 days
B. 15 days
C. 30 days
D. 60 days

Answer: C. 30 days

All of the following are examples of transacting insurance in Georgia EXCEPT
A. Insurance solicitation.
B. Preliminary insurance negotiations.
C. Making an insurance contract go into effect.
D. None of the above. All are examples of transacting insurance.

Answer: D. None of the above. All are examples of transacting insurance.

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
A. Unfair claim practice.
B. Rebating.
C. Misrepresentation.
D. Concealment.

C. Misrepresention

In an auto policy, the medical payments coverage is similar to
A. Bodily injury coverage, because it pays the insured’s doctor bills.
B. Accident insurance, because it has the same limits.
C. Accident insurance, because it pays medical expenses regardless of fault.
D. Bodily injury coverage, because it provides legal protection if the insured causes injuries to others.

Answer: C Medical payments will pay for accidental bodily injury of an insured, regardless of fault or auto. It will pay medical expense of others occupying the insured auto.

To be covered, which of the following exposures must be added by endorsement under a Dwelling Form?
A. Detached garage
B. Personal liability
C. Rental Value
D. Dwelling

Answer: B personal liability The personal liability supplement to the dwelling policy was designed to allow personal liability insurance to be written with a dwelling form. When written with the dwelling form, a personal liability schedule is used to show the appropriate limits of liability.

With respect to auto insurance, the term owned autos includes all of the following EXCEPT
A. A pickup or van acquired by the named insured during the policy period.
B. Any private passenger auto leased to the named insured for a period of more than 6 months.
C. A pickup or van titled to and used in the named insured’s business.
D. Any private passenger auto titled to the named insured.

Answer: c For eligibility, the personal auto policy will insure as covered autos those vehicles owned by the named insured and not used primarily for a business, other than farming. Vehicles leased to the named insured for periods of 6 months or longer also are classified as owned for insurance purposes.

With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto?
A. A vehicle leased to the named insured for 12 months by a leasing company
B. A vehicle that is titled and insured by the named insured, but is driven principally by the named insured’s son, who is resident of the household
C. A vehicle rented for the insured’s personal use
D. A vehicle that is titled to another person, but is being used with permission by an insured

Answer: D Because the personal auto policy provides coverage on both owned and nonowned autos, situations will exist in which two or more policies will apply in a given situation. If the auto is owned and insured by someone other than the operator, then that policy will be primary coverage for that auto, and the operator’s insurance would act as excess.

When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays
A. The amount specified in the policy under the additional coverage provisions.
B. The amount in excess of the underlying policy deductible.
C. A percentage of the loss as described on the declarations.
D. The excess over the self-insured retention.

Answer: D Retention is the equivalent of a deductible in property insurance.

Which of the following situations would NOT be covered by Connie’s uninsured motorists coverage?
A. Connie’s son’s girlfriend who was hit by the same hit-and-run driver while jogging with her boyfriend.
B. Connie’s neighbor borrowed Connie’s car and is hit by an uninsured motorist.
C. Connie’s car is hit by someone whose auto insurer is insolvent and has bodily injury damages.
D. While jogging, Connie’s son is hit by a hit-and-run driver who cannot be identified.

Answer: A Uninsured motorist coverage applies to the insured, resident relatives, and those occupying the covered car.

While Jake was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of Jake’s auto policy would pay for the damage to the store?
A. This loss would not be covered.
B. Property Damage Liability
C. Collision Coverage
D. Other than Collision Coverage

Answer: B The auto policy provides liability coverage to a trailer being towed by a covered auto.

Which of the following statements is NOT true regarding a personal umbrella liability policy?
A. It provides excess liability coverage over underlying personal liability.
B. It provides errors and omissions coverage for an agency.
C. It may cover certain exposures not provided under the primary layer.
D. It may require the payment of a self-insured retention.

Answer: B

What type of coverage do umbrella policies provide?
A. Property coverage for the basic perils of fire, wind, and hail
B. Primary coverage for risks that are difficult to insure
C. Excess coverage over an underlying or primary policy
D. Property coverage for those who do not qualify for homeowners insurance

Answer: C Umbrella policies, sometimes called catastrophe insurance, provide excess coverage over the underlying or primary liability policy.

Under the Personal Auto Policy, liability for bodily injury resulting from the insured’s use of a nonowned automobile is
A. Provided by the insured’s policy on an excess basis.
B. Provided by the insured’s policy on a primary basis.
C. Not covered.
D. Shared on a pro rata basis.

Answer: A Automobile insurance follows the insured auto, so the coverage written on the auto is primary. Automobile insurance also follows the insured as excess over other collectible insurance.

An insurance producer fails to obtain automobile insurance for client after agreeing to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. The damage to the other vehicle totals $5,000. Which statement regarding the producer’s errors and omissions liability policy is true?
A. It will provide coverage because punitive damages have been awarded.
B. It will provide coverage because the damage to the client resulted from the producer’s negligence.
C. It will not provide coverage; such physical damage to property is not covered.
D. It will not provide coverage because the property damage resulted from the client breaking the law.

Answer: B Errors and omissions coverage protects insurance producers and brokers from financial losses they may suffer if an insured sues to recover his or her financial loss due to the producer giving incorrect advice or not informing the insured of important issues.

An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the third passenger. How much will the policy pay under medical payments coverage?
A. $5,000 maximum for the accident
B. $5,000 minus the policy deductible
C. $14,000
D. $15,000

Answer: C The limit is not more than $5,000 per person per accident.

The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT
A. The insured’s child sustains injuries when the car she is in accidentally rolls down a hill.
B. A friend is injured while driving the insured’s vehicle with permission.
C. The insured is injured while exiting a friend’s mobile home.
D. The insured is injured by a motor vehicle while crossing the street.

Answer: C

A meteorite hits the insured’s car, causing damage. Under which of the following coverages in a personal auto policy would this loss be paid?
A. Liability
B. Uninsured motorist
Collision
D. Other-than-collision

Answer: D. Other than collision Damage caused by a falling object would be covered under other-than-collision.

In the Personal Auto Policy, owned trailers being towed by an insured auto are automatically covered for
A. Towing Coverage.
B. Comprehensive (other than collision) Coverage.
C. Collision Coverage.
D. Uninsured Motorists Coverage.

Answer: D. Uninsured Motorist Coverage Trailers, while being towed by an insured auto, are covered automatically for BI/PD and U/M under Part A of a Personal Auto Policy.

When would UM coverage apply?
A. Only when the insured drives an uninsured car
B. Any time the insured is involved in an accident with an uninsured driver
C. Only when the insured is legally liable
D. Only when the other party is legally liable but has no insurance

Answer: D Uninsured motorist coverage would not apply if the insured was at fault; only if the other driver is at fault but has no coverage.

All of the following are true regarding physical damage coverage, EXCEPT
A. The policy will pay up to $20 per day up to a maximum of $600 for rental transportation.
B. The insurer will pay for direct and accidental loss to a covered auto minus any applicable deductible.
C. The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle.
D. Losses to non-owned autos will be covered the same as the broadest coverage available for any covered auto, except non-owned trailers are limited to $500.

Answer: C 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.

Other than collision would cover financial losses due to
A. Damage to your car in an accident for which you were found at fault.
B. Legal action brought against you for an accident.
C. Damage to your car caused by wind or hail.
D. Damage to your neighbor’s mailbox which was caused by your pickup.

Answer: C Other than collision includes losses caused by falling objects, fire, theft, windstorms, hail, and vandalism.

In the Personal Auto Policy, owned trailers being towed by an insured auto are automatically covered for
A. Comprehensive (other than collision) Coverage.
B. Collision Coverage.
C. Uninsured Motorists Coverage.
D. Towing Coverage.

ANSWER: C Trailers, while being towed by an insured auto, are covered automatically for BI/PD and U/M under Part A of a Personal Auto Policy.

Skip’s home contains two apartments. Because it does not qualify for a homeowners policy, Skip has purchased a Dwelling Policy, Form 3. What other coverage would Skip need to cover his exposure of owning and maintaining this home?
A. Landlords Broad Form Coverage
B. Renters Insurance
C. Non-owned property coverage
D. Comprehensive Personal Liability coverage

Answer: D Because the Dwelling Form does not automatically include Personal Liability, it must be added by supplement or written as a stand alone policy.

Which of the following would NOT qualify as a hired auto?
A. An auto leased from a commercial rental company
B. An auto rented for personal use
C. An auto borrowed from an employee
D. An auto hired by an employer

Answer: C Hired automobiles include those that are leased, hired, rented, or borrowed, excluding autos that are owned by employees.

The type of professional liability coverage a medical doctor needs is
A. Druggists’ liability.
B. Ordinance and law coverage.
C. Malpractice coverage.
D. Errors and omission coverage.

Answer: C The type of professional liability insurance written to protect those in the medical field is called medical malpractice.

The employee theft crime policy includes a coverage extension that applies to employees temporarily outside the coverage territory for up to
A. 120 days.
B. 30 days.
C. 60 days.
D. 90 days.

Answer: D. 90 days The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 90 days.

According to the common policy conditions for a commercial package policy, if the insured dies, the policy rights and duties
A. Die with the insured.
B. Are suspended until probate is completed.
C. Automatically transfer to a legal representative.
D. Transfer to a legal representative after court appointment.

Answer: C The ISO common policy conditions for the commercial package policy states that in the event of the insured’s death, rights and duties are automatically transferred to the insured’s legal representative.

What Personal Auto Coverage would pay for the insured’s injuries sustained when struck by a hit-and-run driver while crossing a busy street?
AComprehensive (other than collision)
BCollision
CLiability coverage
DMedical payments
Correct!

Answer: D. medical payments Medical Payments would pay for injuries arising out of an auto event, regardless of fault.

Prior to state-directed workers compensation statutes being enacted, employees had
A. No right to sue their employers for their work-related injuries.
B. Limited payments for their work-related injuries.
C. Guaranteed protection for their work-related injuries.
D. To sue an employer for the "loss" and prove that the employer was at fault.

Answer: D. To sue an employer for the "loss" and prove that the employer was at fault. Prior to workers compensation statutes being enacted, workers had to sue employers for damages, and few lawsuits resulted in ANY compensatory payments.

All of the following statements concerning liability coverage are true EXCEPT
A. The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met.
B. The insurer cannot refuse to pay a claim even if the insured is bankrupt.
C. Liability policies normally include supplementary payment provisions.
D. Liability policies defend the insured against claims real or alleged

Answer: A. The legal action against the insurer condition states that the policyholder cannot sue the insurer unless he or she has met all conditions of the policy.

Which of the following statements concerning a personal auto policy is true?

Medical payments coverage applies per person, per accident.

A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the
A. Face value.
B. Stated amount.
C. Limit of liability.
D. Penalty.

Answer: D. Penalty A bond is written for a set limit, sometimes called the penalty. If the principal’s obligation exceeds the limit, the surety will be liable only for the amount of the limi

B&B Market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be the meter reader. Which coverage would apply to this suit?
A. Crime coverage part
B. Personal and advertising injury liability
C. Bodily injury liability
D. Property damage liability

Answer: B. Personal and advertising injury liability This suit would fall under the coverage of personal injury, damage to the character of the claimant.