Final Exam

Question 1

Under the Building and Personal Property policy, the mortgagee is entitled to:

Select one:

a.
Payment as per the mortgagee’s interest at the time of loss

b.
45 days notice of cancellation for nonpayment of premium

Answer 1

Payment as per the mortgagee’s interest at the time of loss

Question 2

The Building and Personal Property policy covers:

Select one:

a.
money, stocks and bonds

b.
outdoor furniture

c.
autos held for resale

d.
pets

Answer 2

Outdoor furniture

Question 3

The other insurance clause upholds the principle of:

Select one:

a.
indemnification

b.
risk

Answer 3

Indemnification

Question 4

Molly’s state requires 25/50/10 auto liability insurance. Molly is involved in an accident with an at-fault driver who only has 15/30/5 coverage. Molly is protected by her:

Select one:

a.
underinsured motorist

b.
uninsured motorist

Answer 4

Uninsured motorist

Question 5

Which of the following CANNOT be covered with a CPP?

Select one:

a.
Products Liability

b.
Independent Contractors Liability

c.
Employer’s Liability

d.
None of the above

Answer 5

Employer’s liability

Question 6

If my building has been vacant for more than 60 days, my Building and Personal Property Policy will cover:

Select one:

a.
glass breakage.

b.
sprinkler leakage.

c.
fire.

d.
vandalism.

Answer 6

Fire

Question 7

A tenant is wrongfully evicted. This is an example of:

Select one:

a.
bodily injury

b.
personal injury

Answer 7

Personal injury

Question 8

The Inside the Premises - Robbery or Burglary of Other Property policy covers:

Select one:

a.
fire damage to the building resulting from a burglary.

b.
damage to the building resulting from a burglary.

Answer 8

Damage to the building, resulting from a burglary

Question 9

Claims arising from failure to meet the expected standard of care are covered by:

Select one:

a.
Property insurance

b.
Professional Liability

Answer 9

Professional liability

Question 10

A person who owns jewelry worth over $50,000 should get a:

Select one:

a.
Personal Articles Floater

b.
Personal Effects Floater

Answer 10

Personal articles floater

Question 11

The purpose of the National Flood Insurance Program is to:

Select one:

a.
provide flood insurance at subsidized rates.

b.
require all Americans to have flood insurance.

Answer 11

Provide flood insurance at subsidized rates

Question 12

Al has his home insured for full value, $200,000. He owes his mortgage banker $60,000. If the property is totally destroyed, the Insurer will pay:

Select one:

a.
$140,000 to Al and $60,000 to the mortgage banker.

b.
$200,000 to the mortgage banker.

c.
$60,000 to Al and $140,000 to the mortgage banker.

d.
$200,000 to Al.

Answer 12

$140,000 to Al and $60,000 to the mortgage banker

Question 13

Liability for the destruction of property is covered by:

Select one:

a.
Physical Damage Coverage

b.
Property Damage Coverage

Answer 13

Property damage coverage

Question 14

The deductible under an earthquake policy is:

Select one:

a.
$100.

b.
$250.

c.
$500.

d.
a percentage.

Answer 14

A percentage

Question 15

Mike gets a grizzly bear to keep as a pet at his home. This results in a type of liability known as:

Select one:

a.
vicarious liability.

b.
strict liability.

c.
absolute liability.

d.
professional liability

Answer 15

Absolute liability

Question 16

Important sources of insurability information used by an underwriter may include each of the following EXCEPT:

Select one:

a.
a physical inspection.

b.
the applicant’s marital status.

c.
the application.

d.
credit reports.

Answer 16

The applicant’s marital status

Question 17

Personal Articles Floaters cover which of the following?

Select one:

a.
Inherent Vice

b.
Intentional or expected loss

c.
Flood

d.
War

Answer 17

Flood

Question 18

The “other than collision” section of a personal auto policy will cover which of the following?

Select one:

a.
The car’s diesel engine is damaged when the owner mistakenly fills it with gas.

b.
The car is destroyed in an earthquake

c.
A purse is stolen from the car.

d.
A new tire is damaged by a pothole.

Answer 18

The car is destroyed in an earthquake

Question 19

Which policy is purchased by a business to cover completed operations and products liability?

Select one:

a.
Commercial Liability

b.
Homeowner Policy

c.
Dwelling Policy

d.
Errors and Omissions

Answer 19

Commercial liability

Question 20

Under the CPP’s Inspection and Survey Provision:

Select one:

a.
the Insurer is obligated to inspect the property prior to the initiation of coverage.

b.
the Insured is required to complete a survey of the property’s boundaries within 60 days after coverage begins.

c.
the Insurer will reimburse the Insured for the cost of any survey requested by the Insurer.

d.
the Insurer does not guarantee that any recommendations it makes are the best course of action.

Answer 20

The insurer does not guarantee that any recommendations it makes are the best course of action

Question 21

The Insured’s sworn statement made to the Insurer regarding the time and cause of the loss is known as:

Select one:

a.
proof of loss

b.
certification

Answer 21

Proof of loss

Question 22

The primary concept behind insurance is:

Select one:

a.
risk elimination

b.
transfer of risk

Answer 22

Transfer of risk

Question 23

The Boiler policy covers:

Select one:

a.
wear and tear

b.
sudden and accidental breakdown

c.
improperly functioning safety device

d.
damage to an object during testing

Answer 23

Sudden and accidental breakdown

Question 24

Which is true regarding insurance companies?

Select one:

a.
Mutuals are owned by the policy holders, have the management members chosen by the policy holders, and pay dividends to the policy holders.

b.
Stock companies are owned by the policy holders but mutuals are owned by the stock holders.

c.
Stock companies and mutuals both pay dividends to the policy holders.

d.
Stock companies are managed by the policy owners.

Answer 24

Mutuals are owned by the policy holders, have the management members chosen by the policy holders, and pay dividends to the policy holders.

Question 25

Insurable losses will be listed in what section of the policy? Select one: a. Conditions b. Exclusions c. Declaration d. Insuring Agreements

Answer 25

Insuring agreements

Question 26

Work Comp premiums are based on: Select one: a. payroll b. state law

Answer 26

Payroll

Question 27

The maximum amount payable for all losses resulting from one event is known as the: Select one: a. aggregate limit b. occurrence limit

Answer 27

Occurrence limit

Question 28

Which of the following is a cause of loss form? Select one: a. Proof of Loss Form b. Basic Form c. Declarations Form d. Garage Keepers’ Form

Answer 28

Basic form

Question 29

If my van is driven by another person with my permission, my liability coverage will apply to an accident caused by each of the following EXCEPT: Select one: a. a neighbor who borrows the van to drive to work. b. a guest in my home who drives the car to the grocery store. c. a mechanic who test drives the car after making repairs. d. a buddy who borrows the car for a vacation trip.

Answer 29

A mechanic who test drives the car after making repairs

Question 30

Each of the following is an example of theft EXCEPT: Select one: a. mysterious disappearance. b. burglary. c. robbery. d. shoplifting.

Answer 30

Mysterious disappearance

Question 31

Under the pair or set rule: Select one: a. In no event will the loss of one item in the pair or set be considered to be the loss of all items in the pair or set. b. Both items in the pair or set must be insured for full replacement or actual cash value.

Answer 31

In no event will the loss of one item in the pair or set, be considered to be the loss of all items in the pair or set

Question 32

Molly has been driving a car which has tires that are severely worn and should be replaced. The tires are an example of a: Select one: a. loss b. hazard c. peril d. catastrophe

Answer 32

Hazard

Question 33

Water damage to a building resulting from fire fighting efforts is: Select one: a. a direct loss b. an indirect loss

Answer 33

A direct loss

Question 34

Employment Practices Liability will cover which of the following claims? Select one: a. the cost of complying with the Americans With Disabilities Act b. the expense of a union strike c. workers compensation d. discrimination claims

Answer 34

Discrimination claims

Question 35

The purpose of a Surety Bond is to: Select one: a. guarantee. b. prevent losses. c. rectify. d. coinsure.

Answer 35

Guarantee

Question 36

To be eligible for flood insurance, a community must have: Select one: a. a flood control program b. at least 20,000 inhabitants

Answer 36

A flood control program

Question 37

The Fair Credit Reporting Act: Select one: a. requires insurers to provide applicants with copies of all investigative reports. b. allows consumers to insert corrective statements in their consumer reports. c. prohibits insurers from obtaining credit reports without consent of the consumer. d. allows an insurer to obtain consumer investigative reports without notifying the consumers.

Answer 37

Allows consumers to insert corrective statements in their consumer reports

Question 38

The owner of a new office building is unable to move in for 80 days. Which provision will restrict coverage? Select one: a. abandonment b. vacancy c. indemnity d. coinsurance

Answer 38

Vacancy

Question 39

Boiler policies cover losses due to: Select one: a. Corrosion b. Accidental breakdown

Answer 39

Accidental breakdown

Question 40

Under a Business Income policy, the period of restoration ends when: Select one: a. the project should have been completed with reasonable speed and quality. b. the policy expires. c. the building permit expires.

Answer 40

The project should have been completed with reasonable speed and quality

Question 41

Before the policy is issued, the insurance agent may provide a written document to prove that insurance is already in effect. This is: Select one: a. an endorsement b. a binder

Answer 41

A binder

Question 42

A car is destroyed by a hurricane. This is: Select one: a. an accident b. an occurrence

Answer 42

An accident

Question 43

Employee Dishonesty covers: Select one: a. Disappearance of inventory which can be proven only by a profit and loss computation. b. Dishonest actions of the insured. c. Disappearance of inventory which can be proven only by an inventory. d. None of the above.

Answer 43

None of the above

Question 44

If a criminal hides in the business storeroom until closing, then steals merchandise and leaves through a fire door, this is an example of: Select one: a. burglary b. robbery c. theft d. mysterious disappearance

Answer 44

Theft

Question 45

For a business, Extra Expense would cover: Select one: a. payment of normal payroll b. rental of substitute space c. rebuilding the structure d. lost business income

Answer 45

Rental of substitute space

Question 46

Personal Injury Liability covers each of these EXCEPT: Select one: a. malicious prosecution b. slander c. discrimination d. wrongful eviction

Answer 46

Discrimination

Question 47

The Business Income coinsurance requirement to maintain the Coverage Extensions is: Select one: a. 20% b. 50% c. 80% d. 90%

Answer 47

50%

Question 48

An Earth Movement policy covering a shopping mall would most likely cover a claim involving: Select one: a. flood b. war c. nuclear d. volcanic eruption

Answer 48

Volcanic eruption

Question 49

Under the Federal Fair Credit Reporting Act, the Insured has NO right to: Select one: a. require that the insurer supply a copy of the report. b. be told the name and address of the consumer reporting agency c. demand that an incorrect report be corrected. d. insert a corrective statement in the report.

Answer 49

Require that the insurer supply a copy of the report

Question 50

Auto med pay: Select one: a. pays regardless of coverages in other policies b. pays medical and funeral expenses for the insured and any passengers in the insured’s auto c. is required by both federal and state law d. covers any pedestrians hit by the insured’s auto

Answer 50

Pays medical and funeral expenses for the insured and any passengers in the insured’s auto

Question 51

Each of the following will be paid by a CGL EXCEPT: Select one: a. bodily injury liability b. employer’s liability c. legal expenses d. property damage liability

Answer 51

Employer’s liability

Question 52

Which policy is designed to cover tenants? Select one: a. HO-3 b. HO-8 c. HO-6 d. HO-4

Answer 52

HO-4

Question 53

Which section of the HO Policy covers personal liability? Select one: a. Section I b. Section II

Answer 53

Section II

Question 54

Contracts require each of the following EXCEPT: Select one: a. legal purpose b. competent parties c. consideration d. notarization

Answer 54

Notarization

Question 55

Which of the following is an example of vicarious liability? Select one: a. A store owner is held liable for carelessly dropping a box on a customer's foot. b. A store owner is held liable when a store employee carelessly drops a box on a customer's foot.

Answer 55

A store owner is held liable with a store employee carelessly drops a box in a customer’s foot

Question 56

A liability policy will pay which of the following ONLY if the insured is liable? Select one: a. supplementary b. bonds c. medical payments d. bodily injury

Answer 56

Bodily injury

Question 57

Which of the following is covered by a Commercial Package Policy (CPP)? Select one: a. Ships b. Crime c. Aircraft d. Partners' Accounting

Answer 57

Crime

Question 58

An auto policy CANNOT be canceled if the Insured: Select one: a. returns the policy b. obtains another auto policy on the same vehicle from another insurer c. makes a written request to cancel d. fails to make the premium payments

Answer 58

Obtains another auto policy on the same vehicle from another insurer

Question 59

The Law of Large Numbers: Select one: a. Prohibits a particular Insurer from issuing more than its fair share of the policies in any particular market. b. Is used to determine premiums based on historical loss figures.

Answer 59

Is used to determine premiums based on historical loss figures

Question 60

A document outlining the coverage with evidence that coverage is in effect is known as a/an? Select one: a. certificate of insurance b. endorsement

Answer 60

Certificate of insurance

Question 61

A Performance Bond is an example of a ________ bond. Select one: a. bail b. bid c. judicial d. surety

Answer 61

Surety

Question 62

Auto med pay: Select one: a. pays medical and funeral expenses for the Insured and any passengers in the Insured’s auto b. covers any pedestrians hit by the Insured’s auto c. pays regardless of coverages in other policies d. is required by both federal and state law

Answer 62

pays medical and funeral expenses for the Insured and any passengers in the Insured’s auto

Question 63

Which is correct regarding subrogation? Select one: a. It lists the losses covered by the policy. b. It is a method for insurers to recover from responsible third parties.

Answer 63

It is a method for insurers to recover from responsible third parties

Question 64

The minimum flood insurance deductible is: Select one: a. $100 b. $250 c. $500 d. $1000

Answer 64

$1,000

Question 65

Pollution over a long period of time is: Select one: a. an accident b. an occurrence

Answer 65

An occurrence

Question 66

A Mobile Home policy covers a detached garage: Select one: a. only by a rider, endorsement, separate policy b. with no limit c. to 10% of A (with at least $2,000 coverage) d. to 20% of A

Answer 66

To 10% of A (with at least $2,000 coverage)

Question 67

An employer’s obligation to pay for the negligence of an employee who injures a customer is an example of: Select one: a. professional liability b. strict liability c. absolute liability d. vicarious liability

Answer 67

Vicarious liability

Question 68

Restoring the Insured to the financial condition prior to a loss is: Select one: a. direct loss b. indemnification c. illegal d. peril

Answer 68

Indemnification

Question 69

If I want Replacement Cost coverage on my $200,000 home, I need to purchase how much insurance? Select one: a. $60,000 b. $100,000 c. $160,000 d. $200,000

Answer 69

$160,000

Question 70

Payment based on the fact that the Insured owns the property involved is: Select one: a. Insurable interest b. Indemnity c. Replacement cost d. Actual cash value

Answer 70

Insurable interest

Question 71

If I have a $100,000 HO policy, my personal property is covered to: Select one: a. $100,000 on a replacement cost basis. b. $100,000 on an actual cash value basis. c. $50,000 on a replacement cost basis. d. $50,000 on an actual cash value basis.

Answer 71

$50,000 on an actual cash value basis

Question 72

The HO’s Personal Liability section covers: Select one: a. Damage to the property of other persons. b. Medical expenses of the Insured's children. c. A tenant’s suit for wrongful eviction. d. Damage to the insured’s home.

Answer 72

Damage to the property of other persons

Question 73

A Work Comp policy may cover each of these EXCEPT: Select one: a. Health Coverage for the worker’s family. b. Employer's Liability. c. Death Benefit. d. Rehabilitation Benefit.

Answer 73

Health coverage for the workers family

Question 74

A Broad Form policy covers: Select one: a. sewer backup b. earthquake c. inherent vice d. volcano

Answer 74

Volcano

Question 75

An Excess Liability policy: Select one: a. eliminates the need for the underlying policy. b. deepens but does not broaden coverage.

Answer 75

Deepens but does not broaden coverage

Question 76

A lawnmower manufacturer is liable if a blade flies off the mower. This is an example of: Select one: a. vicarious liability. b. strict liability. c. absolute liability. d. professional liability.

Answer 76

Strict liability

Question 77

Molly has her pet shop insured with a Special Form BOP. Her shop was burglarized and the thief stole 7 Golden Retriever puppies (each worth $500) plus $17,000 cash. Her $250,000 BOP (which has a $500 deductible) will pay how much on this claim? Select one: a. $3,000 b. $20,000 c. $20,500 d. $250,000

Answer 77

$3,000

Question 78

Concealment involves: Select one: a. intentionally failing to disclose a material fact. b. unintentionally failing to disclose a material fact. c. unintentionally failing to disclose an immaterial fact. d. intentionally failing to disclose an immaterial fact.

Answer 78

Intentionally failing to disclose the material fact

Question 79

Which section of the policy determines the coverage? Select one: a. Exclusions b. Insuring agreements c. Conditions d. Declaration

Answer 79

Insuring agreements

Question 80

Which of the following is designed to provide property coverage while a structure is under construction? Select one: a. Pre-Occupancy Insurance b. Temporary Insurance c. Builders Risk d. Construction Coverage

Answer 80

Builders risk

Question 81

My Homeowner Policy covers: Select one: a. commercial liability. b. flood. c. earthquake. d. theft.

Answer 81

Theft

Question 82

Which of the following policies contains a consent to settle provision? Select one: a. E&O and Employment Practices Liability b. Commercial Auto and Employment Practices Liability c. Employment Practices Liability only d. CGL and Employment Practices Liability

Answer 82

E&O and employment practices liability

Question 83

Which covers lost profits and continuing expenses? Select one: a. E&O b. Business Income c. Extra Expense d. D&O

Answer 83

Business income

Question 84

Fidelity Bonds cover acts of: Select one: a. employees b. customers

Answer 84

Employees

Question 85

Self-insurers must comply with work comp regulations by: Select one: a. requiring the workers to pay for their work comp b. having a letter signed by the management team indicating solvency c. complying with state regulations d. having at least $10,000,000 in cash to pay claims

Answer 85

Complying with state regulations

Question 86

A BOP provides each of the following except: Select one: a. Coinsurance provisions b. Business Income coverage c. Peak season provisions d. Extra Expense coverage

Answer 86

Coinsurance provisions

Question 87

Under a crime policy, the insured who suffers a loss is required to: Select one: a. file a proof of loss form b. file criminal charges against any suspect

Answer 87

File a proof of loss form

Question 88

Representations are found in the: Select one: a. insuring agreements. b. policy conditions. c. declarations. d. application.

Answer 88

Application

Question 89

A CGL provides liability coverage for: Select one: a. False statements about a competitor made before the policy was issued. b. A person whose reputation is harmed by the insured’s innocent dissemination of information. c. A radio station held liable for statements made by a talk-show announcer. d. The quality of a service does not meet advertised standards.

Answer 89

A person whose reputation is harmed by the insured’s innocent dissemination of information

Question 90

The BOP provides a $200,000 limit of liability for business personal property. The most the policy will pay for a total loss of inventory is: Select one: a. $180,000 b. $200,000 c. $225,000 d. $250,000

Answer 90

$250,000

Question 91

Which deepens coverage only? Select one: a. excess liability b. umbrella

Answer 91

Excess liability

Question 92

The transportation expenses following a deer damaging the auto are covered under the Personal Auto Policy’s: Select one: a. Medical Payments coverage b. Supplementary coverage c. Comprehensive (Other Than Collision) coverage d. Collision coverage

Answer 92

Comprehensive (other than collision) coverage

Question 93

Which coverage applies under an Ocean Marine policy when cargo is jettisoned to save the ship? Select one: a. particular average b. general average c. sue and labor expense d. total loss

Answer 93

General average

Question 94

A policy covers leaky roofs. The insured’s roof leaked after a satellite dish installer improperly mounted a new satellite dish on the roof. The leak damaged the wall, the floor, and a couch. The policy will pay for each of the following EXCEPT: Select one: a. the couch b. the floor c. the damage to the wall d. repair of the leaky roof

Answer 94

Repair of the leaky roof

Question 95

A, B and C as partners own a business. They have a CGL providing a $100,000 occurrence limit. An injured customer sued after an accident and obtained three judgments; one against A for $50,000, a second against B for $50,000 and a third against C for $50,000. The CGL will pay: Select one: a. all three judgments in full because neither exceeds the occurrence limit. b. only $100,000.

Answer 95

Only $100,000

Question 96

Which type of Commercial Auto insurance is purchased to protect the employer against the vicarious liability that results when an employee causes an auto accident while driving the employee’s own vehicle? Select one: a. Uninsured Auto b. Non-owned Auto c. Rented Auto d. Employee Auto

Answer 96

Non-owned auto

Question 97

Which section of the policy specifies the Insured’s responsibilities? Select one: a. Exclusions b. Conditions c. Declaration d. Insuring Agreements

Answer 97

Conditions

Question 98

The Boiler Policy provides coverage for new locations for: Select one: a. 30 days b. 60 days c. 90 days d. 120 days

Answer 98

90 days

Question 99

The Insured has a home worth $150,000. The earthquake policy on the home has a limit of $100,000. The deductible on the Earthquake Policy is 5%. If an earthquake damages the home, the deductible for the incident will be: Select one: a. $5,000 b. $7,500 c. $50,000 d. $75,000

Answer 99

$5,000

Question 100

E&O forms cover: Select one: a. defense costs b. auto accidents c. fines d. penalties

Answer 100

Defense costs