Exam practice questions 2

Question 1

51. Julie wants to submit a claim for all noneconomic expenses related to an auto accident caused by another driver. What tort option must she select when she purchases her personal automobile policy in PA ***

a. Full tort option
b. Limited tort option
c. Exclusive tort option
d. Mandatory tort option

Answer 1

a. Full tort option

Question 2

52. In a commercial general liability policy, which factor restricts the amount payable in the event of a loss ***

a. Number of insureds
b. Limit of the policy
c. Number of claims made
d. The state in which the suit is brought

Answer 2

b. Limit of the policy

Question 3

53. Loss settlement that takes a deduction for depreciation is called ***

a. Actual cash value
b. Expense incurred value
c. Replacement cost value
d. Repair cost

Answer 3

a. Actual cash value

Question 4

54. The primary purpose of the Fair Credit Reporting Act is ***

a. Forewarn an insurer about an applicant’s recent bankruptcy
b. Protect consumers from insurers who have filed for bankruptcy
c. Protect consumers with guidelines regarding credit reporting and distribution
d. Alert insurers regarding applicants who may have poor credit histories and may be adverse risks to the company

Answer 4

c. Protect consumers with guidelines regarding credit reporting and distribution

Question 5

55. A special limitation applies to business income losses under a businessowners policy. This limitation applies to losses resulting from loss or damage to

a. Security systems
b. Advertising restart cost
c. Electronic media and records
d. Foundations and retaining walls

Answer 5

c. Electronic media and records

Question 6

56. Boatowners policies are needed because

a. Homeowners policies do not cover boat equipment.
b. Homeowners policies limit property coverage on boats.
c. Most boats are over 300 feet and are ineligible under a homeowner’s policy.
d. There is no coverage on a boat under a homeowner’s policy if the boat is used on the Susquehanna River.

Answer 6

b. Homeowners policies limit property coverage on boats.

Question 7

57. All of the following are subject to false advertising regulations except
    a. Gifts
    b. Letters
    c. Circulars
    d. Settlements

Answer 7

d. Settlements

Question 8

58. For licensing purposes, the producer’s principal place of business or residence in any state determines the producers

a. Territory
b. Home state
c. License renewal date
d. Insurance transaction date

Answer 8

b. Home state

Question 9

59. The motor carrier act of 1980 requires trucking companies to provide proof of financial responsibility. What is the minimum limit of liability required if the company is transporting materials by a vehicle with a gross vehicle weight of 45,000 pounds ***
    a. $250,000
    b. $750,000
    c. $5,000,000

Answer 9

b. $750,000

Question 10

60. Forced entry was used to break into CJ engineer company after business hours and a company file cabinet was removed thieves. Under the commercial Crime Coverage Form, what type of loss occurred?
    a. Robbery
    b. Burglary
    c. Embezzlement
    d. Safe Burglary

Answer 10

b. Burglary

Question 11

61. What type of policy provides coverage for a four-unit apartment building that is fully occupied by tenants
    a. Homeowners HO-4 policy
    b. Homeowners HO-6 policy
    c. Condominium policy
    d. Dwelling policy

Answer 11

d. Dwelling policy

Question 12

62. The commercial inland marine conditions form, when attracted to the commercial inland marine coverage provides which of the following

a. The insureds party’s duties in the event of a loss
b. Transportation and communication coverage
c. Natural disaster coverage
d. Warranty of property packed cargo

Answer 12

a. The insureds party’s duties in the event of a loss

Question 13

63. The Pennsylvania insurance department has both the right and the duty to complete which task in regards to licensed insurers

a. Provide financial rehabilitation.
b. Modify insurance contract conditions.
c. Make periodic financial audits and market conduct examinations.

Answer 13

c. Make periodic financial audits and market conduct examinations.

Question 14

64. According to the Graham Leach Bliley Act an insurer must notify insurance consumers of its policies and procedures to customer
    a. Claims
    b. Privacy
    c. Services
    d. Signatures

Answer 14

b. Privacy

Question 15

65. A claims made form has an effective date of 01/01/06, an expiration date of 01/01/07, and a retroactive date of 01/01/05 which of the following would be covered ***

a. A claim filed on 11/01/07 for a loss that occurred on 11/01/05
b. A claim filed on 4/01/07 for a loss that occurred on 10/15/06
c. A claim filed on 12/01/06 for a loss that occurred on 12/31/04
d. A claim filed on 1/01/06 for a loss that occurred on 12/01/05

Answer 15

d. A claim filed on 1/01/06 for a loss that occurred on 12/01/05

Question 16

66. How does the owner of an automobile insure under a personal automobile policy in PA show proof of financial responsibility?

a. By signing a sworn statement that must be notarized.
b. With an ID card provided by the insurer.
c. By obtaining an endorsement to the owner’s driver’s license.
d. With a certificate issued by the department of transportation.

Answer 16

b. With an ID card provided by the insurer.

Question 17

67. Using their own vehicle for commercial business pursuits, an employee ran a red light and hit another vehicle causing property damage and bodily injury to a third party. Under the hired auto and non-owned liability endorsement

a. Both property damage and bodily injury will be covered to the third party.
b. Only property damage to the thirds party’s vehicle will be covered
c. Only bodily injury will be covered
d. The claim will be denied

Answer 17

a. Both property damage and bodily injury will be covered to the third party.

Question 18

68. All of the following are functions of Risk Management Agency except to

a. Sponsor educational and outreach programs on the general topics of risk management
b. Promote sound risk management solutions to preserves and strengthen the economic stability
c. Develop and or approve the premium rate for the federal crop insurance corporation
d. Operate and manage the farm service agency of USDA

Answer 18

d. Operate and manage the farm service agency of USDA

Question 19

69. Which of the following endorsements would be attached to a personal automobile policy when a vehicle is registered to the insured and a relative other than the spouse?

a. Co ownership
b. Extended nonowner
c. Nonresident
d. Joint ownership

Answer 19

d. Joint ownership

Question 20

70. An insurance producer shall not act as a representative of an insurer until the producer has become

a. A verified producer of that insurer
b. A certified of that insurer
c. An appointment producer of that insurer
d. An independent producer of that insurer

Answer 20

c. An appointment producer of that insurer

Question 21

71. For a contract to be valid it must be for a legal purpose and involve an exchange of ***

a. An offer
b. Consideration
c. An implied warranty
d. Written documentation.

Answer 21

b. Consideration

Question 22

72. An insurer, in general business practice fails to promptly provide a reasonable explanation for the denial of a claim. This is considered to be

a. A contractual liability
b. An unfair claims act settlement practice
c. A violation of the grace period provision
d. A fraudulent insurance act

Answer 22

b. An unfair claims act settlement practice

Question 23

73. An HO4 can be issued to which of the following

a. An owner occupant of a dwelling
b. A non-owner tenant of an apartment
c. An intended owner occupant of a dwelling under construction
d. Co-owner of a two-family dwelling occupied by the co-owners

Answer 23

b. A non-owner tenant of an apartment

Question 24

74. In a personal automobile policy in PA, which of the following is a non-economic loss?
    a. Pain and suffering
    b. Property damage
    c. Loss of wages
    d. Loss of use

Answer 24

a. Pain and suffering

Question 25

75. Which would be eligible for coverage on a business automobile policy a. A hydraulic excavator b. A riding lawnmower c. A dump truck d. A backhoe

Answer 25

c. A dump truck

Question 26

76. Which is included in the declarations page of a commercial general liability policy *** a. Policy effective date b. Claim reporting procedures c. Warranties and limitations d. Common policy conditions

Answer 26

a. Policy effective date

Question 27

77. Purchasing groups may purchase liability insurance for its members who are residents of the commonwealth from all the following except a. An admitted insurer b. Another purchasing group. c. An eligible surplus lines insurer d. A PA chartered and licensed risk retention group

Answer 27

b. Another purchasing group

Question 28

78. The responsibility for regulating insurance continuing education requirements and approving insurance continuing education courses of instruction belongs to the *** a. PA Insurance Commissioner b. PA Department of Education c. Guaranty Association Board Directors d. National Association of Insurance Commissioners

Answer 28

d. National Association of Insurance Commissioners

Question 29

79. A homeowners policy debris removal clause covers a. All fall tress on the insured property b. Any fallen tree resulting from a natural disaster c. Fallen trees that cause up to $1,000 in property damage d. Tress that damage a covered building from a covered peril

Answer 29

d. Tress that damage a covered building from a covered peril

Question 30

80. All of the following losses are general exclusions under a dwelling policy except a. Neglect b. Debris removal c. Nuclear hazard d. Off premises power failure

Answer 30

b. Debris removal

Question 31

81. Within how many days must the department be notified when an insurance licensee changes his or her address? a. 10 b. 30 c. 60 d. 90

Answer 31

b. 30

Question 32

82. All of the following are elements of an agreement EXCEPT? a. An acceptance of the offer b. The definite terms c. Bilateral contract d. An offer

Answer 32

b. The definite terms

Question 33

83. When terminating a licensed producer’s appointment an insured must a. Stop paying existing commissions b. Notify the commissioner 30 days prior to the termination c. Notify the commissioner within 30 days following the termination. d. Provide the producer a copy of the PA insurance regulations

Answer 33

c. Notify the commissioner within 30 days following the termination.

Question 34

84. An individual purchased a vehicle and financed it through his credit union which party does not have an insurable interest a. The owner b. The insurer c. The title holder d. The credit union

Answer 34

b. The insurer

Question 35

85. After the hearing, the insurance commissioner has determined a licensee has committed a violation of PA insurance laws what can the insurance commissioner do? a. Impose an administrative penalty. b. Suspend the licensees premium accounts c. Immediately terminate insurer appointments d. Sentence the licensee up to 30 days in jail

Answer 35

a. Impose an administrative penalty.

Question 36

86. Which of the following situations is excluded in the homeowner’s policy? a. Hitting a swimmer with a sailboat under 26 feet b. Running over the neighbor’s fence in a fit of rage c. Breaking a neighbor’s window while playing basketball d. Accidentally hitting another golfer in the head with a ball while golfing

Answer 36

b. Running over the neighbor’s fence in a fit of rage

Question 37

87. Which of the following is in the common policy declaration of commercial package policy? a. A list of perils insured against b. A description of the business being covered c. The circumstances under which the policy may be canceled d. Conditions specifying the insureds duties following a loss

Answer 37

b. A description of the business being covered

Question 38

88. According to the PA assigned risk plan, all the following statements are true except a. All motor vehicle liability insurers shall subscribe and participate in the plan b. The rates for the plan shall not be inadequate excessive or unfair c. The plan may provide the transfer of individuals into the ordinary market at high rates d. The program was established to provide motor vehicle liability insurance for those who are entitles but unable to procure insurance through ordinary methods

Answer 38

c. The plan may provide the transfer of individuals into the ordinary market at high rates

Question 39

89. Under a personal automobile policy, Part A -liability coverage covers damages for which of the following a. Physical damage to the owner insured automobile from an accident b. Damages for medical injuries sustained by someone else as a result of a covered accident c. Damage for liability or property damage done to someone else as a result of a covered accident. d. Damage for liability or property damage to the owner-insured of the vehicle as a result of a covered accident

Answer 39

c. Damage for liability or property damage done to someone else as a result of a covered accident.

Question 40

90. The illegal act of an insurance policy replacement through intentional misrepresentation of benefits and advantages is a. Twisting b. Rebating c. Intimidation d. Defamation

Answer 40

a. Twisting

Question 41

91. Under a homeowner’s policy which of the following is not covered by personal injury coverage a. Liebl and slander b. Defamation of character c. Medical payment to others d. Medical expenses of the insured

Answer 41

c. Medical payment to others

Question 42

92. Which endorsement of an insured will add to their business automobile policy to cover the owner of the leased vehicle a. Employee as additional insureds endorsement b. Drive other car coverage endorsement c. Additional insured lessor endorsement d. Individual named insured endorsement

Answer 42

b. Drive other car coverage endorsement

Question 43

93. In PA, first party benefits include all of the following except a. Funeral expenses b. Rehab expenses c. Transportation d. Medical expenses

Answer 43

c. Transportation

Question 44

94. The primary function of a personal umbrella liability policy is providing coverage for *** a. Personal property damage cause by inclement weather b. Legal claims that exceed the policyholder’s primary liability insurance limits c. Multipole dwellings and vehicles under a single insurance policy d. Vehicles that are either rented or borrowed by the policyholder

Answer 44

c. Multipole dwellings and vehicles under a single insurance policy

Question 45

95. Concealment is defined as withholding a. Evidence b. A known fact c. A material fact d. An immaterial fact

Answer 45

c. A material fact

Question 46

96. What is the purpose of an insurance policy deductibles? a. Avoid the filing of small claims. b. Ensure the insurer is reimbursed for administrative costs. c. Ensure that a property owner obtains insurance on a property. d. Prevent a property owner from collecting more than 100 percent of the amount of a loss.

Answer 46

a. Avoid the filing of small claims.

Question 47

97. In Pennsylvania, an insured is considered a clean risk for personal automobile coverage when the period immediately preceding the date of renewal of the policy is a. 12 months b. 24 months c. 36 months d. 48 months

Answer 47

c. 36 months

Question 48

98. Which type of insurance covers good in transit over water a. Cargo b. Privacy c. Freight d. Protection and indemnity

Answer 48

a. Cargo

Question 49

99. Another term for an indirect loss is a. An unpaid loss b. A consequential loss c. A covered loss d. An apparent loss

Answer 49

b. A consequential loss

Question 50

100.What is the coverage territory for forgery coverage under the commercial crime policy? a. Domicile states b. North America c. United states d. Worldwide

Answer 50

d. Worldwide