Property and Caustlty Prep Review

An unfair trade practice involving the commingling or misappropriation of premiums by a producer is referred to as what term?

larceny

The minimum limits of automobile liability insurance required by the state of Indiana is:

25/50/25

The minimum amounts of motor vehicle liability insurance coverage required in Indiana are?

$25,000 per person, $50,000 per accident, and $10,000 for property damage

Making or permitting any inequalities between individuals of the same class with regard to premium rates charged best describes which of the following?

unfair discrimination

An illegal practice to make any public statement or advertisement that contains false information or unsubstantiated criticisms about an insurance company is known as which term?

defamation

Which of the following is NOT true about the unendorsed personal auto policy containing Uninsured/Underinsured Motorist coverage?

1. roperty Damage caused by a hit skip driver is not covered

2. Property Damage to the insured's car is covered

3. Bodily Injury a family member is covered

4. Bodily injury to a passenger is covered

2. property damage to insured car is covered

The act of soliciting, inducement, preliminary negotiations, effectuation of an insurance contract, and all matters subsequent to and arising out of effectuation of an insurance contract is defined as which of the following types of insurance?

transacting insurance

A temporary insurance license may be issued to a producer by the Commissioner of insurance without requiring an examination for how many days?

180 days

The guaranty association is obligated to pay existing claims in effect before the order of liquidation or arising within how many days after the order of liquidation?

30 days

An applicant for a resident insurance producer license must file with the Commissioner on a form prescribed by the Commissioner a certification of completion certifying that the applicant has completed an insurance producer program of study certified by the Commissioner not more than how many months before the application for the license is received by the Commissioner?

6 months

All of the following are elements of an insurable risk, EXCEPT:

1. ascertainable losses.

2. catastrophic perils.

3. losses causing economic hardship.

4. non catastrophic losses.

2. Catastrophic perils

The amount of risk presented by the insured to the insurer is known as:

exposure

All of the following are a type of agent authority, EXCEPT:

1. express

2. reasonable inference

3. apparent

4. implied

2. reasonable inference

Which of the following is not an element of a legal contract?

1. risk

2. consideration

3. competent parties

4. legal purposes

1. risk

A Farm Policy includes all of the following coverages, EXCEPT:

1. Coverage B Other Private Structures automatically extends Coverage A by up to 10%.

2. Coverage A covers the residential dwelling occupied by the farmer.

3. Coverage D Loss of Use is similar to that provided on a Homeowner's Policy.

4. Crop and Hail Coverage.

4. Crop and Hail Coverage

What would NOT be covered under a Homeowners (HO) Policy?

1. a tornado shatters the glass in the insured's windows and storm doors

2. the insured's car slides off her icy driveway and runs over her valuable rose garden, causing $200 in damages

3. reasonable repairs to protect the property from further damage

4. someone steals the insured's checkbook and writes fraudulent checks on the insured's account

2. the insured's car slides off her icy driveway and runs over her valuable rose garden, causing $200 in damages

Rules have to be followed in order for an insurance contract to work. This is an example of a(n):

Conditional Contract

A reduction in the value of an asset is known as a(n):

loss

Vandalism to a vacant home would be excluded under the Homeowners (HO) Policy if the building had been vacant for over how many days?

60 days

The insured's answers on an insurance application are best described as

representations

Which of the following perils is not excluded under the Homeowners (HO) Policy HO-8 form?

1. theft

2. war

3. landslide

4. flood

theft

What is NOT included on any of the standard Dwelling Property (DP) forms?

1. rental value and contents

2. theft and loss of use

3. rental value and liability

4. theft of contents and liability

4. theft of contents and liability

An insured's statement that becomes part of the insurance contract is known as a(n):

warranty

Liability coverage is provided under which Ocean Marine coverage?

protection and indemity

Which of the following best describes the property covered under Coverage A - Dwelling of the Homeowners (HO) Policy?

Structure on the premise and anything attached to it

Interstate transportation service providers would use which of the following Commercial Auto Coverage forms?

motor carrier

Which of the following is NOT an example of replacement cost loss valuation?

1. new for old

2. depreciated value

3. no depreciated value

4. paying the cost new for an item at today's prices

3. Depreciated value

Which of the following home-operated businesses is LEAST likely to be covered by the optional Homeowners (HO) Policy endorsement Permitted Incidental Occupancies?

1. bookkeeping service

2. art studio

3. tutoring service

4. law office

4. law office

A bond that allows a contractor to work at the jurisdiction providing he guarantees through the bond to do work according to building codes is known as a(n):

license and permit

A motor truck cargo coverage form would cover:

a trucker carrying freight

Shirley is injured on the job and is covered under Workers' Compensation. Can she elect to sue her employer under liability law?

1. No, because of the dual capacity doctrine.

2. No, because of the third-party-over doctrine.

3. Yes, if Part I Workers' Compensation benefits have failed or coverage is denied.

4. No, because of the exclusive remedy doctrine.

3. Yes, if Part I Workers' Compensation benefits have failed or coverage is denied.

What is true about the earthquake endorsement when added to the Homeowners (HO) Policy?

1. The endorsement includes loss caused by mine subsidence.

2. Earthquake rates for frame residences are more expensive than rates for masonry/brick residences.

3. The earthquake endorsement has a mandatory $500 deductible.

4. Earthquake rates for frame dwellings are less expensive than rates for masonry/brick dwellings.

4. Earthquake rates for frame dwellings are less expensive than rates for masonry/brick dwellings.

Torts involving such things as libel, slander, wrongful eviction, defamation of character, etc., are covered under the Homeowners (HO) Policy by utilizing what endorsement?

personal injury

In a property insurance contract, an insured's consideration is the:

payment of the premium

Transferring risk by accumulating funds BEST describes the concept of:

insurance

All of the following would be covered under a Businessowners Policy (BOP), EXCEPT:

1. damage due to a power outage

2. damage to fixtures

3. damage to machinery

4. damage to paneling

1. damage due to power outage

Al borrows a pickup truck to take some furniture to his summer cottage. Who is protected under Al's Personal Auto Policy (PAP) liability section when they are driving the truck?

1. Al and his wife only

2. no one

3. Al only

4. Al, his wife, and his son

4. Al, his wife, and his son

Interstate trucking operations are required to carry minimum commercial auto liability limits based on what is being transported. Which of the following is required to prove that the required limits are in force?

MCS-90 endoresment

All of the following are eligible for the Garagekeepers coverage form, EXCEPT

1. parking lots

2. car wash

3. painting contractor

4. used car dealer

3. painting contractor

Rita has a property policy covering her home and contents. After a heavy wind storm she wants to know if that peril is covered. She needs to review the:

cause of loss form attached to her policy

The concept of risk is BEST described as:

uncertainty of loss

In a Personal Auto Policy (PAP) with a $500 deductible, the deductible applies:

separately to each physical damage loss.

Banks, credit unions, and other financial institutions would purchase which of the following to protect themselves from loss stemming from their mismanagement of funds?

fiduciary liability

Under Ocean Marine insurance, which of the following would cover maritime liability?

protection and indemnity

All of the following statements are true of Medical Payments to Others coverage under a Homeowners (HO) Policy, EXCEPT:

1. It covers medical expenses incurred within four years of an accident.

2. It pays on a per-person basis.

3. Negligence does not have to be established.

4. The basic limit is $1,000.

1. It covers medical expenses incurred within four years of an accident.

A firm, or corporation that purchases dram shop liability insurance is securing protection against:

liquor liability

A business would rely on which type of coverage to protect itself from suits arising from injuries to people caused by guests drinking alcoholic beverages at the firm's Christmas party?

host liquor liabilty

Which Homeowners (HO) Policy form is also known as the Condominium Unitowners Form?

Ho-6

In most states all employers are required to accept and comply with all provisions of the Workers' Compensation law. This is why Workers' Compensation is considered to be

compulsory

All of the following losses are excluded under Coverage A of a Commercial General Liability (CGL) Policy, EXCEPT:

1. Intentional Acts

2. Libel

3. Injury to others occurring unintentionally

4. Liquor Liability

3. injury to others occurring unintentionally

What type of endorsement CANNOT be added to a Businessowners Policy (BOP) contract?

1. premises and operations

2. hired auto

3. accounts receivable

4. valuable paper and records

1. Premises and operations

The insured pays a small premium and the insurer promises to pay a large amount if a covered loss occurs. This is an example of a(n)

aleatory contract

What is NOT a defense against negligence?

1. assumption of the risk

2. contributory negligence

3. vicarious negligence

4. comparative negligence

3. vicicarious negligence

Which of the following is not a requirement to prove negligence?

1. duty

2. proximate cause

3. damages

4. intervening cause

4. intervening cause

Since a leasing company still owns the vehicle, they will require which of the following on the Business Auto Policy (BAP) of the business leasing the vehicle?

lessor-additional insured

Phil bought an all risk policy and was told by his agent that everything was covered. After a loss, where does Phil look to see if in fact that loss will be covered?

exclusions selection

Fred is concerned about paying for a rental car if his car is in an accident. Which of the following Personal Auto Policy (PAP) coverages would provide this benefit?

substitute transportation coverage

A threat of bodily harm without a face-to-face confrontation BEST describes:

EXTORTION

A certain state requires employees to purchase Workers' Compensation from a state fund instead of from private insurers. This is an example of what type of funding method?

monopolistic state funding

On Surety Bonds, the insurer (surety) has the right to set terms and conditions for issuance of the bond. Which of the following is NOT true?

1. A principal has no responsibility or obligation once the bond is issued.

2. Surety has a right of recovery from the Principal.

3. The Surety may require an Indemnification Agreement.

4. The Surety provides the written guaranty to the Obligee.

a principal has no responsibility or obligation once the bond is issues

The two additional coverages provided by Broad and Special Dwelling Property (DP) forms are:

building collapse and damage to lawns, trees, and plants

The clause in a property or auto policy protecting the lender for their interest in your property that is not a building is known as the:

LOSS payable clause

A sworn statement by the claimant stating the facts and damages in a claim is a(n):

proof of loss

A bank demanding to be listed as an insurable interest on a property policy is an example of:

mortgagee rights

A claims made policy form would be best exemplified by the

1. personal auto policy.

2. businessowners policy (BOP).

3. doctor's professional liability policy.

4. building and business personal property form.

3. doctor’s professional liability policy

The authority the agent believes he has in order to do his job correctly for the company is known as:

implied authority

A deductible in an insurance policy is an example of what risk management technique?

retention

On a Personal Auto Policy (PAP), which of the following policy features is NOT a Supplementary Payment?

1. loss of earnings up to $200 a day

2. cost of defense

3. accrued interest on an appeal bond

4. cost of a bail bond, up to $250

2. cost of defense

Part II--Employer's Liability of a Commercial General Liability (CGL) Policy provides coverage to the insured for sums the insured is legally liable to pay under common law because of a work-related injury or occupational disease. The minimum liability limit is:

100,000

A risk that involves only the possibility of a loss is known as a(n):

pure risk

When property is present within a dwelling, but there is no occupant, it is an example of:

unoccupancy

Adverse selection is best characterized by what phrase?

1. selection against an individual

2. making no selection at all

3. selection against the company

4. selection against both the company and the individual

3. selection against the company

If a liability coverage has an occurrence limit, what happens if there is another occurrence?

the occurrence limit is restored

What best describes "insurable interest?"

having a financial stake in the preservation of property

As a method of valuation, functional replacement cost is usually used when functional replacement cost is:

higher than ACV, but lower than the cost of replacement with identical property

What best describes the endorsement used in property policies that modifies building indemnification as a compromise between ACV and replacement cost?

functional replacement cost endoresment

The most common co-insurance percentage amount that appears in a property contract is:

80%

What statement about open peril coverage is true?

1. Open peril contracts are also known as specified peril contracts.

2. Open peril coverage protects against losses from defined perils.

3. Open peril contracts cover losses resulting from unusual causes that are not excluded by the policy.

4. Open peril contracts cover losses resulting from perils specifically listed in the policy.

3. Open peril contracts cover losses resulting from unusual causes that are not excluded by the policy

What is NOT an example of risk avoidance?

1. removing a hazard

2. engaging in an alternative activity

3. eliminating a loss exposure

4. buying insurance

4. Buying insurance

What formula is used to calculate a claim payment when a policy contains a co-insurance clause?

insurance carried / insurance required x loss = amount paid

The Gramm-Leach-Bliley Act was enacted to:

protect privacy of consumer information

The insured optionally deciding to apply a deductible to their insurance policy is an example of:

risk retention

Underwriting guards against:

adverse selection

Stander deducible for Commercial property policy

$250

Stander deducible for BOP

500

A dwelling policy is a monoline property insurance policy. One type of dwelling policy is the Dwelling Property Special form that provides open-peril coverage. Which of the following situations is covered by this policy?

1. Damage that is caused by water that backs up through a sewer

2. Loss caused by a power failure off the premises

3. Legal costs incurred when an insured is liable for an injury to another.

4. Damage to covered property caused by a burglar

4. damange to coved property caused by a burglar

A Dwelling Property Basic form provides coverage for property removed. This means that the insurer will cover insured property against direct loss from any cause of loss when such property is removed from the dwelling when endangered by fire or any other covered peril for up to:

5 days

If the insured covers the dwelling for at least 80% of the cost to replace it, he will receive what settlement option for dwelling damage on the DP-1 dwelling property form?

actual cash value

Under a Business Auto Policy (BAP), the categories of covered autos are found in which part of the contract?

declaration

On a Business Auto Policy (BAP), insureds select coverage for various types of autos. Each coverage type has a numerical symbol. Which symbol adds UIM coverage in states that require it?

6

A has a commercial package policy (CPP)and would like to know which type of property is not protected against loss under the policy. The part of the contract that A should read is the:

exclusions for each coverage part

In a Commercial Package Policy (CPP), the premiums for the various coverage forms appear in the:

common declarations selection

Under the Commercial Package Policy (CPP) program, what allows an insurer to check the company books and records?

examination of books and records condition

H reads his Building and Business Personal Property coverage form and learns that his building is deemed vacant unless at least how much of the square footage is rented to conduct business operations or used by the owner to conduct business operations?

31%

If a business intends to claim debris removal under a Building and Business Personal Property coverage form, it must be reported to the insurer

within 180 days from the date of physical loss

What is the standard deductible under a Building and Business Personal Property form for all perils other than hurricanes?

$500

What is NOT an illustration of insured contracts as defined by a Commercial General Liability (CGL) Policy?

1. lease agreement

2. sidetrack agreement

3. easement

4. hold harmless agreement

4. hold harmless agreement

All of the following are covered by Coverage C in a Commercial General Liability (CGL) Policy, EXCEPT:

1. a salesman is injured on the insured's premises while making a sales call

2. prosthetic devices

3. necessary professional nursing and funeral services

4. a customer of an insured incurs first aid expenses after slipping on a wet spot on the premises

a salesman is injured on the insured premise while making a sale call

Company AX is sued by another company who feels that Company AX has infringed on one of it's copyrights. Which type of Commercial General Liability (CGL) Policy coverage would cover Company AX for this type of claim?

Coverage B

Coverage A of the Commercial General Liability (CGL) Policy form, excludes all of the following, EXCEPT:

1. Intentional Acts

2. Negligence

3. Libel

4. Liquor Liability

NEgligence