PSI Practice Test 3 (PA)

Which is included in the declaration page of a commercial general liability policy?

1. Policy effective date

2. Claim reporting

3. Warranties & limitations

4. Common policy

Policy effective date

Leah provides transportation to her client for their business lunch. The client closes that car door on her own hand. What type of coverage applied?

1. Physical damage

2. Liability

3. Medical payment

4. Health ins

liability

The Federal law that requires insurance company to explain their information-sharing privates to their customer

1. Fair Claim Act

2. Gramm-Leach-Bliley Act

3. Terrorism Risk Act

4. Patient Protection & Affordable Care Act

Gramm-Leach-Bliley Act

A commercial general liability occurrence form claim for?

1. occur within the policy period

2. occur outside the policy period

3. are reported within the policy period

4. are settled within the policy period

occur within the policy period

No active insurance license will be revoked until:

1. The producer has been afforded the right to a hearing on the changes

2. At least three violations have occurs

3. A jury has decided upon such action

4. A cease and desist order has been issued

The producer has been afforded the right to a hearing on the changes

A CGL occurrence form cover claim for ONLY:

1. occur within the policy period

2. occur outside the policy period

3. are reported within the policy period

4. are settled within the policy period

occur within the policy period

Under a personal automobile policy, Part A - liability coverage covers damages for which of the following?

1. Physical damages to the owner-insured automobile from an accident

2. Damages for medical injuries sustained by someone else as a result of a covered accident

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

4. Damages for liability or property damage to the owner-insured of the vehicle as a result of a covered accident

Damages for liability or property damage done to someone else as a result of a covered accident

Loss settlement that takes a deduction for depreciation is called:

1. actual cash value

2. expense incurred value

3. replacement cost value

4. repair cost value

actual cash value

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

1. by signing a sworn statement that must be notarized

2. with an ID card provided by the insurer

3. by obtaining an endorsement to the owner's driver license

4. with a certificate issued by the Department of Transportation

with an ID card provided by the insurer

An insured that is covered on a business automobile policy would like to get physical damage coverage for a.............business automobile policy can be used to insured this covered automobile?

1. Miscellaneous vehicle coverage

2. Mobile equipment endorsement

3. Drive other car endorsement

4. Garagekeeper coverage

Drive other car endorsement

An individual is shopping at the local supermarket and slips on a wet floor. The supermarket's GLP will cover payments EXCEPT?

1. first aid

2. lost wages

3. dental expense

4. ambulance service

lost wages

All of the following are examples of negligence EXCEPT:

1. damages

2. proximate cause

3. legal duty owed

4. nonpayment of premium

nonpayment

According to PA's Worker Compensation Law, a notice shall be posted:

1. Remember, safety first

2. Remember this is a WC facility

3. Remember it's important to be careful at all time

4. Remember, it's important to tell your employer about your injury

Remember, it's important to tell your employer about your injury

Which of the following is the purpose of the P&C insurance Guaranty Fact in PA?

1. establish and regulate rates

2. avoid excessive delay in payment

3. determine that an insurer is insolvent

4. provide for the payment of covered claim of an insolvent insurer

avoid excessive delay in payment

Difference in conditions policy are usually written on:

1. small risks with no deductibles

2. small risks with a coinsurance requirement

3. large risks with reinsurance requirement

4. large risks with unusual exposure

large risks with unusual exposure

Which would be eligible on a business automobile policy?

1. A hydraulic excavator

2. A riding lawnmower

3. A dump truck

4. A backhoe

A dump truck

The responsibility for regulating the insurance continuing education requirement.....

1. PA Insurance Commissioner

2. PA Department of Education

3. Guaranty Association Board of Directors

4. National Association of Insurance Commissioners

National Association of Insurance Commissioners

The coverage that continues beyond the expiration of a liability policy written on a claims-made basis is referred to as:

1. extended reporting periods

2. stop-loss provision

3. extension coverage

4. umbrella coverage

extended reporting periods

For licensing purposes, the producer's principal place of business or residence in any state determines the producer's:

1. territory

2. home state

3. license renewal date

4. insurance transaction site

home state

A deliberate lie by an insured to the insurer to obtain a lower premium is an example of:

1. fraud

2. estoppel

3. a warranty

4. concealment

fraud

Under worker's compensation, experience modification factor is based on:

1. insurer loss experience

2. employer's safety program

3. the statewide average rate

4. employer's individual loss experience

employer's individual loss experience

Which of the following is TRUE about the Terrorism Risk Insurance Act of 2007?

1. It's direct insurance coverage provided by the government for any act committed by any terrorist anywhere in the US

2. It ensures the availability of Commercial Property and Casualty Coverages from described acts of terrorism

3. It provides coverage for the World Trade Center and Pentagon in the event of future terrorist activities

4. It can be offered for any type of insurance written, or not offered if the insurer....

It's direct insurance coverage provided by the government for any act committed by any terrorist anywhere in the US

Under an Equipment Breakdown coverage form, a breakdown would include:

1. wear and tear

2. leakage of valves

3. explosion of a pressure vessel

4. failure of a safety device

explosion of a pressure vessel

According to PA law, upon notification of a claim an insurer must acknowledge receipt........

1. 10 working days, unless no response is required

2. 30 working days, unless no response is required

3. 45 working days, unless no response is required

4. 90 working days, unless no response is required

10 working days, unless no response is required

The PRIMARY purpose of the Fair Credit Reporting Act is to:

1. forewarn an insurer about an applicant's recent bankruptcy

2. protect consumers from insurers who have filed for bankruptcy

3. protect consumers with guidelines regarding credit reporting and distribution

4. alert insurers regarding applicants who may have poor credit histories and may be adverse risks to the company

alert insurers regarding applicants who may have poor credit histories and may be adverse risks to the company

If a named insured elects the limited tort option in PA, the insured can seek recovery for pain and suffering for the following scenarios EXCEPT, if the at-fault driver

1. causes the insured to sustain serious injury

2. has automobile policy limits greater than $500k

3. is operating a motor vehicle registered in another state

4. is convicted of driving under the influence of alcohol in the accident

Under commercial inland marine, transportation coverage does NOT include goods shipped by:

1. sea

2. air

3. land

4. rail

air

Coverage D of the farm property form provides additional coverage for which of the following?

1. Poultry and livestock incidental to farm use

2. Growing crops beyond 250 feet of the covered residence

3. Living expenses for the loss of use of living quarters in residence premises

4. Barns or farm outbuildings or structures other than private garage that are used primarily for .....

Living expenses for the loss of use of living quarters in residence premises

Purchasing groups may purchase liability insurance for its members who are residents of the Commonwealth for all of the following EXCEPT:

1. an admitted insurer

2. another purchasing group

3. an eligible surplus lines insurer

4. a PA chartered and license risk retention group

An insurance producer shall NOT act as representation of an insurer until that producer:

1. a verified producer of that insurer

2. a certified producer of that insurer

3. an appointed producer of that insurer

4. an independent producer of that insurer

an appointed producer of that insurer

What is the purpose of difference in conditions insurance on a commercial policy?

1. Provides named perils coverage to fill gaps

2. Provides personal injury liability coverage

3. Provides catastrophic liability coverage

4. Provides broad coverage to fill gaps

Provides broad coverage to fill gaps

Which of the following is in the common policy declaration of a commercial package policy?

1. A list of perils insured against

2. A description of the business being covered

3. The circumstances under which the policy may be canceled

4. Conditions specifying the insured duties following a loss

A list of perils insured against

When risk is transferred from one insurer to another, the insurer assuming the risk is called the:

1. primary insurer

2. reinsurer

3. risk retention group

4. reciprocal insurer

primary insurer

An insurance contract is a contract of utmost good faith because the insurer relies on the...........................to:

1. issue a policy

2. file reports with the insurance department

3. pay the claims

4. charge a fair premium

issue a policy

Toy stores typically stock up much more than usual during the holiday season, which types of endorsement would toy stores use to cover inventory?

1. peak season

2. excess inventory

3. brands and labels

4. fluctuating inventory

peak season

The PA Insurance Department is responsible for all of the following EXCEPT:

1. insurers

2. producers

3. shareholders

4. form approvals

shareholders

The location where coverage under a policy applies is referred to as the policy:

1. jacket

2. provision

3. territory

4. vicinity

territory

In PA law, personally identifiable financial information includes all of the following information EXCEPT:

1. information from a consumer report

2. account balance information and payment history

3. information a consumer provides to a license in an insurance application

4. information such as blind date that does not include names and addresses

information such as blind date that does not include names and addresses

Which of the following properties is NOT eligible for Business owners coverage?

1. a six-unit apartment building

2. an insurance agency

3. a municipality

4. an office

a municipality

In PA, what is minimum amount required for damages for liability

1. 5/10/3

2. 10/20/5

3. 15/30/5

4. 25/50/25

15/30/5

A producer who collects money from an insured and holds it for payment to the insurer is:

1. providing coverage

2. wrongfully withholding funds

3. commingling funds

4. acting a fiduciary capacity

acting a fiduciary capacity

What type of damages are awarded when the court determine the individual acted...... it causing the...........?

1. special

2. punitive

3. excessive

4. compensatory

punitive

What is the effect on a personal automobile policy in PA if an insured switched from a $250 physical damage deductible to $500?

1. the physical damage premium is reduced

2. the physical damage limits are increased

3. there is no deduction for depreciation when losses are settled

4. the policy no longer satisfied the Commonwealth's Financial Responsibility Law

the physical damage premium is reduced

A patron of Smith's Deli died from food poisoning because the chicken salad was not properly cooked. Which type of insurance would cover?

1. Bodily injury

2. Property damage

3. Health injury

4. Personal injury

Property damage

Which one of the following is an optional coverage under the BOP?

1. Nuclear hazard

2. Employee dishonesty

3. Earth movement

4. Wera and tear

Employee dishonesty

Which endorsement may be added to the Personal Automobile Policy to provide coverage for....

1. named non-owner coverage

2. extended non-owned coverage

3. joint ownership vehicles

4. miscellaneous type vehicles

extended non-owned coverage

What must a party have before applying for insurance?

1. property title

2. insurable interest

3. ownership contract

4. financial agreement

insurable interest

In the case where laptop computers in an office go missing to be considered a claim of burglary under a Commercial Policy, what has to be true?

1. Admission to the office after hours is not permitted

2. The computer must be owned and not leased

3. Office supplies were missing

4. Forcible entry was evident

Forcible entry was evident

According to the PA Assigned Risk Plan, all of the following are true EXCEPT?

1. all motor vehicle liability insurers shall subscribe and participate in the plan

2. the rates for the plan shall not be inadequate, excessive, or unfairly discriminatory

3. the plan may provide for the transfer of individuals into the ordinary market at higher rate

4. the program was established to provide motor vehicle liability insurance for those are.......

all motor vehicle liability insurers shall subscribe and participate in the plan

What type of insurance covers goods in transit over water?

1. cargo

2. piracy

3. freight

4. protection and indemnity

cargo

An employee was severely injured in a work-related accident that required four weeks of hospitalization. During 4 weeks in the hospital, this disability would be classified as

1. permanent total

2. permanent partial

3. temporary total

4. temporary partial

temporary total

What does the Fair Credit Reporting Act give the consumer the right to do?

1. deny the insurer access to their credit report

2. ask the producer for a copy of their credit report with an explanation

3. decide which credit agency the insurer can pull their information from

4. question the validity and source of any credit information collected and retained by the insurer

deny the insurer access to their credit report

An individual purchased a vehicle and financed it through his credit union. Which party does NOT have an insurable interest?

1. the owner

2. the insurer

3. the title holder

4. the credit union

the insurer

Which of the following types of policies would cover a chief executive for suits by stockholders?

1. Directors and officers insurance

2. Trustees professional liability insurance

3. Fiduciary liability insurance

4. Malpractice insurance

Directors and officers insurance

An example of the insured's consideration is?

1. an insurance application

2. a paid premium

3. a contract signing requirement

4. a notice of beneficiary

a paid premium

An insurance licensee must do all of the following in order to renew an insurance license EXCEPT?

1. pay the required renewal fee

2. hold active insurer appointment

3. submit to the department a completed renewal form

4. complete the continuing education requirements, if applicable

hold active insurer appointment

When the Commissioner believes a producer has violated an insurance law, the Commissioner has ability to:

1. increase the producer's continuing education requirement

2. terminate the producer's appointment

3. cancel the producer's fiduciary responsibility

4. issue a cease and desist order against the producer after a hearing

issue a cease and desist order against the producer after a hearing

A type of commercial policy that provides two or more property and liability insurance coverage:

1. Blanket policy

2. Monoline policy

3. Narrative policy

4. Package policy

Blanket policy

Under a homeowner policy, which of the following is NOT covered by personal injury coverage?

1. libel and slander

2. defamation of character

3. medical payment to others

4. medical expenses of the insured

medical expenses of the insured

Which of the following benefits are NOT paid under worker's compensation law?

1. medical

2. rehabilitation

3. pain and suffering

4. disability income

pain and suffering

Why is the homeowners policy considered a multiline policy?

1. It provides fire and theft insurance in a single policy

2. It provides coverage on multiple homes an a single policy

3. It provides property and auto insurance in a single policy

4. It provides property and liability insurance in a single policy

Aviation Hull Comprehensive Coverage includes all of the following EXCEPT:

1. loss of use

2. wear and tear on the aircraft

3. collision with another aircraft

4. fire damage while in flight

wear and tear on the aircraft

The National Flood Insurance Program (NFIP) policies cover:

1. property against all direct loss from a flood

2. water damage caused by a burst pipe

3. sewer backup into a dwelling

4. loss of use

property against all direct loss from a flood

An HO-4 can be issued to which of the following?

1. An owner-occupant of a dwelling

2. An non-owner tenant of an apartment

3. An intended owner-occupant of a dwelling under construction

4. Co-owner of a two-family dwelling occupied by the co-owners

An non-owner tenant of an apartment

Which of the following water damage losses are NOT covered by an unendorsed dwelling policy special form?

1. Sewer backup

2. Broken water pipes

3. Appliance overflow

4. Leaky fire sprinkler heads

Leaky fire sprinkler heads

What type of policy providers coverage for a four-unit apartment building that is fully occupied by tenants?

1. homeowner HO-6 policy

2. homeowner HO-4 policy

3. condominium policy

4. dwelling policy

homeowner HO-6 policy

A producer's fiduciary responsibility includes which of the following activities?

1. Properly remunerating persons who furnish leads on prospects

2. Recording the receipt and remitting of premium due to an insurer

3. Guaranteeing payment to insureds for losses covered by policies that the producer sold

4. Providing needed insurance to prospective insureds through any sources that are available

Recording the receipt and remitting of premium due to an insurer

Which of the following is an excluded cause of loss under the general exclusion section of the Dwelling Basic Form Policy?

1. Earth movement

2. Aircraft

3. Fire

4. Riot

Earth movement

Returning part of the commission or giving anything of value to the insured for purchasing a policy is:

1. coercion

2. rebating

3. defamation

4. controlled business

rebating

In a commercial automobile policy in PA, which of the following is a noneconomic loss?

1. loss of use

2. medical expense

3. property damage

4. pain and suffering

pain and suffering

Which of the following is an example of a consequential loss?

1. A home theater system is stolen from a family room

2. A manufacturing plant is unable to operate because one of its suppliers lost its production plant in a fire

3. The roof of a movie theater is blown off by a windstorm

4. The foundation of a newly constructed home is damaged by an earthquake

Which is NOT an exclusion from a commercial automobile insurance policy?

1. work-related injuries to employees, including those covered under worker's compensation

2. operating a covered vehicle at a speed deemed reckless by authorities

3. war or war-like activities

4. intentional injuries

work-related injuries to employees, including those covered under worker's compensation

On a Commercial General Liability Policy, Bodily Injuries and Property Damage Liability covers bodily injury as a result of:

1. an intentional injury

2. a work-related injury

3. pollution liability

4. a premises exposure

a premises exposure

An intentional false written or oral statement made by a producer for the purpose of replacing an existing policy?

1. twisting

2. defamation

3. misrepresentation

4. illegal inducement

twisting

Which endorsement can an insured add to their business automobile policy to cover the owner of the leased vehicle?

1. Employees as additional insureds endorsement

2. Drive other car coverage endorsement

3. Additional insured-lessor endorsement

4. Individual named insured endorsement

Drive other car coverage endorsement

The entity that has the power to revoke an insurance license is the:

1. attorney general

2. insurance company

3. insurance commissioner

4. NAIC

insurance commissioner

*A claims-made form has an effective date of 1/1/06, an expiration date of 1/1/07, and a retroactive date of 1/1/05. Which of the following would be covers?

1. A claim filed on 11/1/07 for a loss that occurred on 11/1/05

2. A claim filed on 4/1/07 for a loss that occurred on 10/15/06

3. A claim filed on 12/1/06 for a loss that occurred on 12/31/04

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

A claim filed on 4/1/07 for a loss that occurred on 10/15/06

A commercial inland marine coverage form for valuable papers does NOT cover:

1. manuscript

2. maps

3. deeds

4. securities

securities

A binder for a new homeowners policy MUST include all of the following EXCEPT?

1. a paid receipt for the full amount of the premium

2. the name and address of the lender, if applicable

3. a provision regarding the cancellation of the binder

4. a description of the insured residential real property

a provision regarding the cancellation of the binder

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

1. a contractual liability

2. an unfair claim settlement practice

3. a violation of the grace period provision

4. a fraudulent insurance act

an unfair claim settlement practice

In a dwelling policy, an unoccupied property refers to one that has no:

1. owner

2. inhabitants

3. furniture

4. lock or alarms

owner

The insurance commissioner may issue a temporary license if the insurance commissioner show that the temporary license is necessary to the insurance business in which one of the following cases?

1. A temporary license is automatically issued to the executor of a deceased licensed insurance producer

2. A temporary license may be issued to the surviving spouse of the licensed producer to allow

3. A temporary license may be issued to a person who failed the written insurance examination as long as

4. When a producer dies, a temporary license may be issued to those persons represented by the deceased

When a producer dies, a temporary license may be issued to those persons represented by the deceased

*A rate element is defined as the:

1. total cost for all units of insurance under the policy

2. ratio of all losses to the policy premium

3. limit of liability written on the policy

4. factor used in premium determination

factor used in premium determination

Forced entry was used to break into the CJ Engineering company after business hours and a company file was stolen by theft, under crime coverage form, what type of loss occurred?

1. robbery

2. burglary

3. embezzlement

4 safe burglary

burglary

Which of the following statement about uninsured motorist coverage for personal automobile insurance policies in PA is true?

1. it's mandatory in all personal automobile policies

2. it must be offered to an insured who can reject coverage by signing a waiver

3. it's available only if an insured signs a separate application for coverage and meets an insured's underwriting standards

4. it eliminates the need for an insurance applicant to purchase any type of liability insurance on an automobile that has such coverage

it's available only if an insured signs a separate application for coverage and meets an insured's underwriting standards

A temporary insurance producer license may be be initially issued for a maximum of:

1. 30 days

2. 90 days

3. 180 days

4. 365 days

180 days

Making a statement that is false or maliciously critical of the financial condition of an insurer is known as:

1. defamation

2. coercion

3. slander

4. boycott

defamation

Strict liability is BEST defined as:

1. liability without regard to fault

2. liability split between two offering parties

3. total liability attributed to the party most at fault

4. liability attributed to a party by a court decision or order

liability without regard to fault

Falsifying the terms, benefits, advantages, or conditions of an insurance policy is an example of which of the following?

1. Forgery

2. Coercion

3. Concealment

4. Misrepresentation

Misrepresentation

Lighting strikes a house and cause a fire. The fire department extinguisher the fire which results a water damage. Which type of loss is applied?

1. direct

2. excluded

3. indirect

4. residual

direct

An insurance contract states that when a loss occurs, an individual should be restored to the financial condition just prior to the loss is preferred:

1. Adhesion

2. Consideration

3. Warranty

4. Indemnity

Indemnity

The primary function of a personal umbrella liability insurance policy is to provide coverage for:

1. personal property damage caused by inclement weather

2. legal claims that exceed the policyholder's primary liability insurance limits

3. multiple dwelling and vehicles under a single insurance policy

4. vehicles that either rented or borrowed by the policyholder

legal claims that exceed the policyholder's primary liability insurance limits

A producer's action or deeds demonstrate what kind of authority?

1. Inherent

2. Apparent

3. Delegated

4. Express

Apparent

Which statement is true regarding the Motor Carrier Act of 1980?

1. The required liability are divided into four categories.........

2. Vehicles subject to the Motor Carrier Act of 1980 must provide limits of $500k......

3. Vehicles subject to the Motor Carrier Act of 1980 must provide limits of $700k......

4. It required trucking companies to certify that they are able to meet.....

It required trucking companies to certify that they are able to meet.....

A policy with an 80% coinsurance clause protects a building valued at $100k. The insured carried $85k of coverage, and a $30k loss occurred. What consideration of the deductible, how much will the insurer pay?

1. $15k

2. $24k

3. $26k

4. $30k

$24k

In PA, if an insurer withdraws from the market, a notice of non renewal for a commercial policy will be sent in advance of how many days?

1. 15

2. 30

3. 45

4. 60

30 days

For a contract to be valid it MUST:

1. be in written

2. be notarized

3. include a deposit and receipt

4. include an offer and an acceptance

include an offer and an acceptance

In all homeowner form, Coverage E- Personal Liability applies to which of the following:

1. Motor vehicle liability involving a vehicle registered

2. Watercraft owned by an insured and rented to others

3. Defense costs if a suit is groundless, false or fraudulent

4. Expected or intended injury

Defense costs if a suit is groundless, false or fraudulent

In PA, First Party Benefits Coverage includes all of the following EXCEPT:

1. Funeral expenses

2. Rehabilitation expenses

3. Transportation expenses

4. Medical expenses

Transportation expenses

Which type of insurance policy is characterized by the identification of ......

1. Specific

2. Blanket

3. Scheduled

4. Lump Sum

Specific