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Insurance Exam Questions
Physical damage coverage under a garage policy is a blanket limit for covered auto, an accurate statement? - CORRECT ANSWERS ✔✔Yes; The dealer's physical damage limit would be done on a blanket limit basis. This would apply to comprehensive and collision losses to the auto inventory of the dealer. This is done because it is simply not practical to schedule each dealer owned vehicle for physical damage. This is generally accomplished by the use of a monthly reporting form. An insured owns a motorcycle, a moped and a motor home. What endorsement is added to the personal auto policy to provide coverage?
- CORRECT ANSWERS ✔✔Misc. Type Vehicle Endorsement; The "miscellaneous type vehicle" endorsement is added for these types of recreational vehicles. Note that ISO has a separate endorsement for snowmobiles. Investment consultants should purchase which of the following policies to protect themselves from errors and omissions? - CORRECT ANSWERS ✔✔Professional Liability; Errors and omissions coverage does not involve bodily injury or property damage, which is provided by other types of policies. This is why professional liability coverage is needed. Medical malpractice insurance does cover bodily injury. The negligent act of the agent is imputed to the principal if the act occurred within the course and scope of the agent's employment. This
Insurance Exam Questions
means that the principal becomes: - CORRECT ANSWERS ✔✔Directly liable for damages to a third party caused by the agent (employee)..This is sometimes referred to as "vicarious" liability. Which of the Homeowner's polices does not include coverage for flood?
- CORRECT ANSWERS ✔✔An HO-3 Policy; A homeowner policy specifically excludes flood coverage. The purpose of a Medicare Supplement policy, (aka Medi Gap), is to: - CORRECT ANSWERS ✔✔pay for services not covered by Medicare; Medicare coverage contains deductibles and coinsurance payments. Having a Medicare Supplement/Medi Gap policy, offered by commercial insurers, is designed to cover those coverage gaps. Under the Federal Insurance Fraud and False Statements Act, if someone is prohibited from doing business in a state, approval to resume transacting business must be granted by: - CORRECT ANSWERS ✔✔Insurance Regulatory Official; Only an insurance regulatory official, such as the Insurance Commissioner, can grant permission to resume business. What is not reflected in a privacy report? - CORRECT ANSWERS ✔✔Categories of medical information; Medical information is not a topic in a privacy report. It deals with financial issues only.
Insurance Exam Questions
What injury is covered under the medical payments section of an insured's CGL policy? - CORRECT ANSWERS ✔✔A shopper is injured while visiting a showroom owned by the insured; The coverage excludes injuries to employees, persons participating in an athletic event on the insured's premises and injuries to tenants. The shopper is the only third party that would be covered. Which type of HMO employs its own physicians on a salary basis? - CORRECT ANSWERS ✔✔Closed Panel; Closed panel plans aka Staff model plans, employ physicians, nurses and other health care professionals. What is an example of a privately run insurers? - CORRECT ANSWERS ✔✔The excess and surplus lines markets are privately run insurers that usually writes risks that the standard market does not want to write. Which of the dwelling forms provides broad form coverage for personal property? - CORRECT ANSWERS ✔✔DP-2 and DP-3 only; The DP- provides very limited coverage for personal property. Both the broad form (DP-2) and the special form (DP-3) provide broad form coverage for personal property.
Insurance Exam Questions
An insured purchases two homeowner policies from two different insurance companies. If a covered loss occurs, on what basis will the loss be settled by each of the insurers? - CORRECT ANSWERS ✔✔: Pro rata basis; Each company will pay its pro-rata share of the loss. This means the percentage of coverage (the total amount of insurance carried) that each company provides on the risk. The liberalization clause of a businessowners policy automatically applies favorable expansions of coverage, for which a premium is not charged if the changes are made during the policy period or within: - CORRECT ANSWERS ✔✔45 days prior to the effective date; A liberalization condition states that the insurer will automatically and immediately apply to the policy any revisions made during the policy period or within 45 days prior to the effective date if those revisions broaden the coverage without additional premium. What is insured under the HO-5 form? - CORRECT ANSWERS ✔✔Though typically "insured" refers to the policyholder and his or her spouse, relatives by blood, marriage or adoption who reside in the named insured's household are also covered. Also included are wards or foster children under the age of 21 as well as resident relatives who are attending college away from home and are under 24 years of age.
Insurance Exam Questions
Water damage to an insured building covered under the Commercial Property - Special form would be covered under all of the following circumstances, EXCEPT: - CORRECT ANSWERS ✔✔Water damage to the building caused by a pipe that has leaked over a period of 14 days; Water damage caused by a pipe that has been leaking beyond 14 days is excluded by this Commercial Property form. The insured owns a 50 HP fishing boat covered under a watercraft policy for hull insurance. He also carries a homeowner policy. He ties his boat to a tree and goes ashore to camp. The next morning he discovers that his boat is stolen. Which policy would pay the claim? - CORRECT ANSWERS ✔✔The watercraft policy; The watercraft policy would pay the claim. The homeowner policy excludes property more specifically insured and also excludes any boat off the insured's premises for the peril of theft. The medical payments coverage on the farm policy can be claimed for up to: - CORRECT ANSWERS ✔✔3 years; Similar to a homeowner policy, medical payment claims can be made up to three years from the date of the injury. The deductible under a homeowner policy does not apply to? - CORRECT ANSWERS ✔✔Liability coverage; Liability coverage as well as medical payments coverage are not subject to a deductible.
Insurance Exam Questions
Commercial Insurance coverage under the broad and special forms covers which of the following types of water damage? - CORRECT ANSWERS ✔✔A water pipe that bursts; The broad and special cause of loss forms provide coverage for all types of water related damage except that caused by flood, from surface water or water below ground which surfaces. When a homeowners policy has been in effect for 60 days in New York, an insurer can cancel at anytime for any of the following reasons, EXCEPT: - CORRECT ANSWERS ✔✔A large loss has occurred; The homeowners policy was purchased to indemnify against the occurrence of a large loss, therefore, this would not represent a reason for policy cancellation What are the lifetime dollar limits on the essential benefits provided under ACA? - CORRECT ANSWERS ✔✔There are no lifetime dollar limits on essential benefits; There is a ban on lifetime dollar limits for most covered benefits for every health plan whether individual plans or group plans. The doctrine of res ispsa loquitur relates to legal liability? Yes or no? - CORRECT ANSWERS ✔✔In the common law of negligence, the doctrine of res ipsa loquitur (Latin for "the thing speaks for itself")
Insurance Exam Questions
Which of the following bonds are used by financial institutions? - CORRECT ANSWERS ✔✔Standard Form 24 Bond; Standard form #24 is a commonly used financial institution bond used by banks and various financial oriented agencies. The other bonds are fidelity and surety bonds and are used to either guarantee performance of a task or that dishonest acts will not happen. The financial institution bonds are similar to the crime insurance policies used by businesses. The HO-3 policy covers loss to personal property caused by: - CORRECT ANSWERS ✔✔17 listed perils; With the HO-3 policy, personal property is covered against loss caused by any of the 17 named perils listed in the HO-2 policy. They are (1) fire or lightning; (2) windstorm or hail; (3) explosion; (4) riot or civil commotion; (5) aircraft; (6) vehicles; (7) smoke; (8) vandalism and malicious mischief; (9) theft; (10) breakage of glass; (11) volcanic eruption; (12) freezing of plumbing; (13) accidental discharge or overflow of water from an appliance or plumbing system; (14) weight of ice, snow or sleet; (15) damage from falling objects; (16) sudden and accidental tearing apart of systems or appliances and (17) damage from sudden surges from artificially generated electric current. A common carrier is not held liable for the loss of a shipper's goods when the loss results from: - CORRECT ANSWERS ✔✔An act of God; They are not responsible for acts of God such as floods, hurricanes or for the negligence of the shipper (poor packing).
Insurance Exam Questions
Premise liability exposure is faced by: 1) Banks 2) Landlords 3) Retail Stores 4) Car Dealers - CORRECT ANSWERS ✔✔All is correct; All parties/businesses that occupy the covered premises, or have a financial stake in the premises, face liability exposure. The customer is the potential claimant. If a person is qualified to receive benefits from the Motor Vehicle Accident Indemnification Corporation and are injured by an owner of a vehicle that can be identified, how many days do they have to file a claim? - CORRECT ANSWERS ✔✔180 days; When the owner or operator of the vehicle is identifiable, this affidavit must be filed within 180 days of the accident date. If the claim was originally against an insured person whose insurance carrier denied the claim, then the affidavit must also be filed within 180 days after the receipt of the disclaimer or denial, provided that due diligence has been exercised to determine whether or not such insurance coverage existed. The parties to a bond include the surety, the principal, and: - CORRECT ANSWERS ✔✔The obligee; There are three parties to a surety or fidelity bond: the principal, whose performance is being guaranteed by the surety; the obligee, to whom the principal makes a promise to perform or to be honest, and the surety, which guarantees the principal's performance. If the principal fails, the surety will indemnify the obligee, up to the face amount.
Insurance Exam Questions
A department store has a large inventory of costume jewelry and watches. No single item is valued for more than $100.00. A customer steals most of the items and flees the scene. What theft coverage would be provided by an unendorsed BOP? - CORRECT ANSWERS ✔✔Full contents limit; An unendorsed BOP provides theft of jewelry and watches up to the full contents limit if the value per item does not exceed $100.00. For high-end jewelry and watches, the policy provides a maximum theft limit of $2,500 for the entire theft loss. Please keep in mind that these limitations would not apply to losses from the other insured perils. Offering anything of value to a perspective insurance client to induce the client to purchase insurance is called: - CORRECT ANSWERS ✔✔Rebating; this is considered an illegal act. Under a watercraft policy, which of the following would be covered? 1) Bodily Injury 2) Property Damage 3) Medical Payments to Others - CORRECT ANSWERS ✔✔All is correct; The boat-owners policy includes all. What autos are eligible for coverage under a business auto policy? - CORRECT ANSWERS ✔✔Basically any type of licensed motor vehicle is eligible for the business auto policy.
Insurance Exam Questions
In the rating of Workers Compensation coverage, a risk that has suffered a frequency of losses may be subject to what is termed "experience modification factors". Which of the following factors would indicate a relatively high surcharge on rates? - CORRECT ANSWERS ✔✔1.25; A risk that has suffered a frequency of losses will probably have their rates increased. The factor of 1.25 is a relatively high surcharge and indicates a high loss ratio. The circumstances under which a consumer reporting agency may furnish a consumer report include: 1) a credit transaction involving the consumer 2) for employment purposes 3) with the underwriting of insurance - CORRECT ANSWERS ✔✔All is correct; All of these are circumstances under which an investigative consumer report may be ordered. However, a person may not procure or cause to be prepared an investigative consumer report on any consumer unless it is clearly and accurately disclosed to the consumer that an investigative consumer report may be made. This disclosure must be made in writing and mailed, or otherwise delivered to the consumer, no later than three days after the date on which the report was first requested. An applicant has been advised by his insurer that something adverse appeared on his investigative consumer report. The information is in error. What can the applicant do? - CORRECT ANSWERS ✔✔Obtain the name of the reporting agency from the insurer and correct the error; The Fair Credit Reporting Act requires consumer reporting agencies to
Insurance Exam Questions
by the liability section of the homeowners policy and are not considered "additional coverages." A main street business has suffered an explosion loss from a hot water heating boiler. The civil authorities have blocked off the street and the insured's customers cannot get to his store, causing a loss of income. The insured carries a Businessowners Policy. Before his policy will pay any loss of income there is a _____ waiting period and the policy will then pay for loss of income up to _____. - CORRECT ANSWERS ✔✔72- hour/four weeks; The policy has a 72-hour waiting period before coverage will pay. It will pay for loss of income for up to four weeks or until the expiration date of the policy. When an insurer cancels a dwelling policy for non-payment of premium, it must give the insured advance notice of at least: - CORRECT ANSWERS ✔✔10 days; This is standard in the insurance industry except where state variations apply by statute. For example, New York requires a 15 day notice. Which of the following would be considered a personal automobile comprehensive ("other than collision") claim? - CORRECT ANSWERS ✔✔A load of bricks falling from an apartment building onto the car; A load of bricks falling onto the vehicle would be an "other than collision" loss. This would be considered a "falling objects" claim. The others are considered collision coverage losses. The term "comprehensive" is used
Insurance Exam Questions
in commercial automobile coverage and the term "other than collision" is used in personal automobile coverage to reference the same coverage. What is the purpose of the Buyer's Guide for Medicare recipients? - CORRECT ANSWERS ✔✔The purpose of the Buyer's Guide is to improve the buyer's ability to select the most appropriate coverage and improve the buyer's understanding of Medicare.. Which of the following endorsements to a Commerical Crime policy affects employee theft coverage? 1) Name or position schedule 2) Client's property 3)Forgery 4)Safe despository - CORRECT ANSWERS ✔✔1 and 2 only; Employee theft coverage covers loss to the insured's property due to "theft" by an employee, whether identified or not. The name or position schedule endorsement requires that the guilty employee's name or position be named on the endorsement; the client's property endorsement extends coverage to property owned by a client, as long as the "theft" was by an "identified employee". The insured has primary bodily injury and property damage liability coverage with a $100,000 limit, and a $1 million umbrella liability policy with a $5,000 self-insured retention limit. In which one of the following situations would the insured's umbrella liability policy typically not provide defense coverage? - CORRECT ANSWERS ✔✔The insured was sued for $10,000 in bodily injury damages; The claim would fall under
Insurance Exam Questions
ANSWERS ✔✔$500 for any one tree, shrub or plant; Most HO polciies provide a maximum limit of 5% of Coverage A and a max of $500 for any one tree, shrub or plant. Personal umbrella liability policies usually cover liability as a result of: - CORRECT ANSWERS ✔✔Serving as an officer or director of a nonprofit corporation or association; Coverage is included while serving as an officer or director of a nonprofit corporation or association. Samantha misses three days from work because of a lawsuit against her, which requires her appearance incourt. She loses $80 in wages each day that she is in court. Her CGL insurance company will pay: - CORRECT ANSWERS ✔✔$240; the supplemary coverage within GL policy provides wage reimbursment of up to $250 per day The APEX Corporation purchases widgets from the Holly Company. The following statement is on the back of each invoice: "Purchaser shall hold seller harmless from liability arising out of the sale of these widgets." To cover this possible loss exposure, the APEX Corporation should obtain which type of insurance? - CORRECT ANSWERS ✔✔Commerical General Liability; includes contractual liability coverage for certain defined contracts that are considered to be "insured" contracts. Seldom, if ever, is contractual coverage written by itself.
Insurance Exam Questions
Which of the following would qualify for the Transportation Expense coverage: 1) Car rental fees incurred by the insured due to physical damage to his covered auto. 2) Loss of use expenses for which the insured is liable because of physical damage to his covered auto. - CORRECT ANSWERS ✔✔Both 1 and 2; Under coverage D, Transportation Expenses are paid at the rate of $20 a day, up to a max of $600. If the vehicle is stolen thre is a 48- hour waiting period. Personal Liability Coverage of the HO program covers the insured for Business Activities. True or False? - CORRECT ANSWERS ✔✔False; Personal Liability Coverage E provides liability protection for insureds anywhere int he world for their non-business activities. Of course coverage would be subejct to the policy exclusions. If th einsured has to take time off work to help assist in the investigation of the claim, the policy will pay for the actual loss of earnings up to: - CORRECT ANSWERS ✔✔$250 per day; the most the policy will pay for actual loss earnings is $250 per day if the insured is asked by the comapny to take time off of work to help assist in the investigation and/or defense of the claim. With a Commerical Package Policy, interline endorsements are endorsements that: - CORRECT ANSWERS ✔✔Could apply to more than one coverage part; More than one line of insurance can be written
