personal lines exam

With Property and Casualty insurance, insurable interest is the extent of your financial interest at the time of

loss. Insurable interest in Property and Casualty insurance is determined at the time of loss, reflecting your financial interest in the insured property at the moment the insured event occurs.

Where are the Rules of Conduct which govern the actions of the parties to an insurance contract found?

Conditions

The property valuation method paying the full policy amount listed on the declarations page in the event of a total loss, regardless of the actual cash value is called

valued policy.

The most a policy will pay for all losses arising out of any one occurrence, regardless of other policy limits is called the

per occurrence limit.

One of the criteria to determine an insurable risk is

calculable loss.

The six limits of liability on a commercial general liability policy are listed where?

declarations page

An indirect loss is also known as

a consequential loss.

Which of the following policy assignment rights occurs when the named insured dies?

The insured's legal representative takes over the policy.

Where are the Rules of Conduct which govern the actions of the parties to an insurance contract found?

Conditions

What are written changes to Property and Casualty policies called?

endorsements

Which of the following is TRUE for stated value?

the insured chooses the value of property

The property valuation method paying the full policy amount listed on the declarations page in the event of a total loss, regardless of the actual cash value is called

valued policy.

Which of the following describes why the insuring agreement is the heart of an insurance policy?

It describes property covered and perils insured.

One of the criteria to determine an insurable risk is

calculable loss.

Concerning the cancellation of a Commercial Lines policy, which statement is TRUE?

The insurance company may cancel for specified reasons with proper notice.

All of the following are methods of limiting liability EXCEPT

collective limit.

Which of the following gives a mortgagee rights at the time of loss?

insurable interest in the property

What is defined by the Policy Conditions section of a Property and Casualty policy?

the duties of the insured

The six limits of liability on a commercial general liability policy are listed where?

declarations page

Which of the following terms applies to a policy that pays first when two policies cover the same property?

primary

The most a policy will pay for all losses arising out of any one occurrence, regardless of other policy limits is called the

per occurrence limit.

If a company cancels a policy mid-term, how will the refund be made?

pro rata basis

Which is NOT necessary to establish negligence?

admission of guilt

What is defined by the Policy Conditions section of a Property and Casualty policy?

the duties of the insured

The property valuation method paying the full policy amount listed on the declarations page in the event of a total loss, regardless of the actual cash value is called

valued policy.

The six limits of liability on a commercial general liability policy are listed where?

declarations page

Which of the following describes why the insuring agreement is the heart of an insurance policy?

It describes property covered and perils insured.

The most a policy will pay for all losses arising out of any one occurrence, regardless of other policy limits is called the

per occurrence limit.

Which of the following terms applies to a policy that pays first when two policies cover the same property?

primary

Concerning the cancellation of a Commercial Lines policy, which statement is TRUE?

The insurance company may cancel for specified reasons with proper notice.

One of the criteria to determine an insurable risk is

calculable loss.

Which is NOT necessary to establish negligence?

admission of guilt

With Property and Casualty insurance, insurable interest is the extent of your financial interest at the time of

loss.

Which of the following is TRUE for stated value?

the insured chooses the value of property

Which of the following gives a mortgagee rights at the time of loss?

insurable interest in the property

Franco's business is destroyed by a journeyman plumber using a blowtorch. Franco's insurance compensates him, then sues the plumber. What is this process called?

subrogation

Absolute liability can be imposed by law and exist in the absence of

negligence.

Which is NOT required to establish negligence?

intentional act

What factor establishes negligence by connecting a person's negligent actions to the damage caused?

proximate cause, To establish negligence, it is essential to identify the proximate cause linking a person's negligent actions to the resulting damage.

What is defined by the Policy Conditions section of a Property and Casualty policy?

the duties of the insured, The Policy Conditions section of a Property and Casualty policy defines the duties of the insured, setting the guidelines for both the insured and the insurance company to follow in case of a loss.

Which part of an insurance contract describes a loss for which the insured will not be indemnified?

exclusions

Deductibles serve all of the following purposes EXCEPT to

serve as an incentive to insure to value. (Deductibles serve various purposes, such as reducing the price of coverage, controlling policy overuse, and eliminating small claims. However, they do not serve as an incentive to insure to value, which is the role of coinsurance).

Deductible

reduces the price of coverage, controlling policy overuse, and eliminating small claims.

Which of the following methods are losses settled on an actual cash value (ACV) basis?

less depreciation, To settle losses on an actual cash value basis, the appropriate method is to consider the replacement cost of an item and subtract depreciation, thus reflecting the item's current value.

Which of the following is attached to and used to modify or change the original policy in some way?

endorsement

With a Personal Lines policy, who does the insurance company deal directly with on issues like claims, renewals, and policy changes?

named insured

All of the following are examples of insurable interest EXCEPT

intentional destruction of property of another.

A small bar owner has been convicted of arson after burning the business in hopes of collecting the insurance. The insurer settles the loss by paying the mortgage lender according to which third party provision?

standard mortgage clause

All of the following are responsibilities of the insured listed in the loss provisions for most property insurance contracts EXCEPT

to determining adequate indemnification, The insured's responsibilities in property insurance contracts include protecting the property from further damage, providing prompt notice of a claim, and submitting to examination under oath. Determining adequate indemnification, however, is not a responsibility of the insured.

The National Football League is being sued by a number of former players for head injuries. What is one defense available to the NFL?

assumption of risk

Which document would a lender ask an insured for as evidence that a policy has been written?

certificate of insurance

One of the criteria to determine an insurable risk is

calculable loss.

Which policy provision provides that an insurer can take possession of damaged property?

salvage

As a broker, you must identify which element is crucial in connecting an individual's negligent act to the damage incurred in order to establish negligence.

proximate cause

what activities require absolute liability coverage

involving dangerous materials, hazardous operations, or dangerous animals

As an agent, you have a client who has insured their commercial building with two different companies, each providing different types of coverage: one with a Basic Cause of Loss form and another with a Broad Cause of Loss form. The building experiences a $30,000 loss due to the weight of ice and snow. What term describes this situation?

Non concurrency

Which of the following is NOT a valid defense against negligence for an insurance agent?

Denying claim validity

In which scenario would an insured be held responsible due to vicarious liability?

Child's sports injury to friend.

Which statement about torts is NOT true?

(Always unintentional), A tort is a civil wrong that can be either intentional or unintentional, and it involves private relationships between individuals.

As an insurance agent, you are valuing a one-of-a-kind antique painting for a client's policy. Which valuation method should you use to establish coverage?

Agreed Value

Which of the following scenarios does NOT display insurable interest?

Insuring a neighbor's valuable artwork

In the context of property and casualty insurance, what term refers to the legal responsibility for damages resulting from the failure to fulfill a duty?

liability

An insurer's right to cancel a policy is often limited by state laws but is generally permitted under which of the following conditions?

non-payment of premium

Assume Terrance purchases a one-year BOP in January which provides $1,000 to cover any Fire Department Service charges he might incur. Further assume that in March, the company changes its BOP to limit Fire Department Service charges to $500. If he has a Fire Department Service charge claim of $800 in June, the company pays $800. Which policy provision dictated this outcome?

liberalization

An insured is involved in an automobile accident. The adjuster declares the insured's car to be a total loss and authorizes payment to the insured for the actual cash value of the car. The salvage belongs to the

insurer.

In a Commercial Line policy, the individuals allowed to alter coverage, settle claims, and pay premiums are known as the

first named insureds.

The insured has several duties to perform after a loss, what are they?

submitting to examination, and providing proof of loss.

In insurance policies, the element of chance and unpredictability regarding potential losses and payouts make them classified as

aleatory.

In an insurance contract, which principle ensures that the insured is compensated for their financial loss and returned to the state they were in before the loss occurred?

Indemnity

As an insurance agent, you know that underwriters can utilize various factors to assess the risk of a potential client. Which of the following factors is NOT allowed to be used in the underwriting process?

Disability

What is another term for Open Perils coverage in property insurance?

Special Peril coverage

As a broker, you are reviewing a negligence case and need to identify the elements that must be established for the claim. Which of the following is NOT an element of a negligent act?

Cost of damages

In the context of insurance, how is damage caused by dry rot categorized?

Occurrence

Why is the insuring agreement considered the core component of an insurance policy?

Outlines property covered and perils insured

As a broker, what do the Conditions within a Property and Casualty policy primarily outline?

insured's obligations

A company holds two separate liability insurance policies with different coverage amounts. In the event of a covered loss, how will the claim be handled?

Pro rata benefits based on policy limits.

What does the Standard Mortgage Clause in an Accident and Health Insurance policy signify?

It protects the mortgagee's right to receive loss payment even if the policyholder commits acts that violate the terms of the policy

Which scenario is NOT covered by the DP-3 dwelling policy?

Ice damage to outdoor antennas.

DP3 SPECIAL

provides open perils protection for homeowners, covering a wide range of losses except for specific exclusions, such as damage by ice to outdoor radio and television antennas and aerials.

What does Coverage A - Dwelling in Variable Life Insurance Policy typically cover?

It covers the cost to repair or rebuild the primary dwelling on the property

What is the primary feature of Coverage A - Dwelling in a Variable Life Insurance Policy?

It provides coverage for the insured's primary dwelling against specified risks

EXAMPLES OF Broad Perils

Volcanic action, Sprinkler leakage, and Sinkhole collapse

As an insurance agent, you are explaining Broad (HO-2) homeowner's policy coverage to a client. Which of the following should you NOT categorize as a Broad Peril?

Collapse

A swimmer is injured by Jackie's boat at the lake. Will her homeowners insurance policy cover the injuries?

only if Sailboat is under 26 feet long

Which injury is covered under Coverage F - Medical Payments to Others in a homeowner policy?

Neighbor's fall assisting

A $10,000 diamond engagement ring is scheduled on a Personal Articles floater for $10,000. If it is stolen, how will the company pay?

Personal Articles floater will pay $10,000.

As a broker, you are discussing the Earthquake endorsement with a client who is interested in adding it to their homeowners policy. What is NOT true about the Earthquake endorsement?

Uses Homeowners deductible

What is covered under the Businessowners Section II — Liability Policy?

Legal liability arising from damage to others caused by the business

As an insurance agent, you need to understand the correct format for a Personal Auto policy. Which of the following represents the proper arrangement of policy parts?

Legal liability arising from damage to others caused by the business

As an insurance agent, you need to understand the correct format for a Personal Auto policy. Which of the following represents the proper arrangement of policy parts?

Liability, Med Pay, Un/Underinsured, Damage

In the context of a personal auto policy's Part A - Liability, what do supplementary payments cover for the insured?

Defense attorney cost.

In a Personal Umbrella policy, the amount the insured must pay before coverage is provided when there is no primary coverage available is called

self-insured retention.

What is the primary role of the federal government in flood insurance?

To administer the National Flood Insurance Program

What is the primary purpose of flood insurance in the context of federal tax considerations for health insurance?

To provide coverage for loss or damage to property due to flooding, which may not be covered under standard health insurance policies

What is not a common dividend option in a life insurance policy?

Purchase of a watercraft

As an insurance broker, you know that certain risks are typically insured by government programs. Which of the following types of insurance is more likely to be provided by private insurers?

Employers liability insurance

One of the criteria to determine an insurable risk is

calculable loss.

With a Personal Lines policy, who does the insurance company deal directly with on issues like claims, renewals, and policy changes?

named insured

Which of the following methods are losses settled on an actual cash value (ACV) basis?

less depreciation

All of the following are responsibilities of the insured listed in the loss provisions for most property insurance contracts EXCEPT

to determining adequate indemnification.