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216 Cards in this Set

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Company A has 5,000 policyholders. Company B has 25,000 policyholders. Company B is able to make more accurate predictions concerning the number of claims it will have to pay than Company A because:
A. As the number of risks increases, the ability to make accurate predictions increase also.
B. The law of large numbers
C. Quality accumulation
D. Both A & B
D. As the number of risks increase, the ability to make accurate predictions increase also.
Which of the following terms means that the purchaser of insurance must be in a positon to lose money or something of value if the contingency insured against should happen?
A. Adhesion
B. Insurable interest
C. Indemnification
D. Indirect loss
B. Insurable interest.
The_______ _______ permits an insurer to transact insurance in North Carolina.
A. Agent's agreement
B. Certificate of authority
C. Agent's appointment
D. Binder
B. Certificate of authority.
Which of the following statements is true?
A. Agents can bind coverage
B. Agents brokers represent insurance companies
C. Brokers can bind coverage
D. Agents in the field of Property and Liability insurance issue conditional receipts.
A. Agents can bind coverage
Which of the following best defines "risk"?
A. The chance for gain or loss
B. The original cause of loss
C. The decrease in economic values.
D. The uncertainty of loss
D. The uncertainty of loss
Which of the following are defined as part of the consideration of an insurance contract?
I. Statements made in the application by the insured.
II. The payment of the premium
III. Assumption of responsibility by the insurer.
A. I and II
B. II and III
C. I, II and III
D. III only
C. I, II and III
Which of the following parts of an insurance contract would identify the nature of the coverage provided by the insurer?
A. Indorsements
B. Insuring agreements
C. Conditions
D. Exclusions
B. Insuring agreements
All of the following procedures would guard against adverse selection EXCEPT:
A. Inclusion of a deductible.
B. Rating-up substandard risks.
C. Common policy exclusions
D. Endorsements waiving a specific condition from the coverage.
A. Inclusion of a deductible
One of the following is considered to be a misrepresentation and is illegal:
A. Circulating any derogatory statement calculated to injure any person engaged in the business of insurance.
B. Issuing a true statement about the terms of a policy issued or to be issued.
C. Returning a portion of the premium to the insured on a basis not specified in the contract.
D. Issuing a statement that is not entirely true about the terms of a policy issued or to be issued.
D. Issuing a statement that is not entirely true about the terms of a policy issued or to be issued.
All statements given by applicants on an insurance application are considered:
A. Concealments
B. Warranties
C. Representations
D. Depositions
C. Representations
The practice of twisting:
A. Is perfectly leagal in this state
B. Involves writing insurance that is unacceptable by the company an agent is associated with.
C. Involves inducing any policyholder to lapse a contract of insurance for the purpose of replacing the policy with another to the detriment of the policyholder.
D. Occurs when an agent gives directly or indirectly to an insurance buyer any rebate of premiums as an inducement for the purchase of insurance.
C. Involves inducing any policyholder to lapse a contract of insurance for the purpose of replacing the policy with another to the detriment of the policyholder.
Rebating is:
A. Issuing any statement that is not entirely true about the terms of a policy issued or to be issued.
B. Committing any act that infringes on a purchaser's freedom to choose insurers.
C. Making untrue statements about a policyholder's present policy.
D. Offering any special inducements or valueable consideration, whatever, not specified in the contract.
D. Offering any special inducements or valueable consideration, whatever, not specified in the contract.
Which of the following is NOT an insurance company adverse underwriting decision under the "Insurance Information and Privacy Protection Act?
A. Canceling a policy
B. Charging a higher rate because of changing loss exposure at the insured's property.
C. Declining an application for insurance coverage.
D. Placing coverage in a residual market mechanism.
B. Charging a higher rate because of changing loss exposure at the insured's property.
Which of the followig practices are considered unfairly descriminatory?
A. Refusal to issue property coverage due to the occupancy (use) of the structure.
B. Adding a surcharge on automobile liability insurance due to the age of the operator.
C. Placing coverage in a residual market due to information supplied by a consumer reporting service.
D. Reducing rates for specific class of insureds without reducing rates for all insureds.
B. Adding a surcharge on automobile liability insurance due to the age of the operator.
A potential agent must have satified all of the following requirements prior to effectuating insurance coverage in this state EXCEPT:
A. Received an appointment from an admitted insurer.
B. Completed a 40-hour educational course from an approved school.
C. Posted a $50,000 surety bond.
D. Received an insurance license from the Department of Insurance.
C. Posted a $50,000 surety bond.
The standard fire policy without endorsements provides coverage for:
A. Fire, lightning and removal of endangered property.
B. Fire only
C. Fire and lightning only
D. None of the above
A. Fire, lightning and removal of endangered property.
The standard fire policy insuring agreement covers:
I. Lightning
II. Removal of contents from endangered premises
III. Indirect loss coverage by fire or lightning
A. I only
B. II only
C. I and II
D. I, II, III
C. I and II
In property insurance, an insurable interest:
A. Must be present at the time the policy is taken out and also at the time of the loss.
B. Must be present at the time the policy is written but is not necessary at the time of the loss.
C. It is not necessary at the time the policy is written but is necessary at the time of the loss.
D. Is not necessary at the time the policy is written or when the loss occurs.
C. It is not necessary at the time the policy is written but is necessary at the time of the loss.
Smith carries $60,000 fire insurance on his building with company "A", and $40,000 with company "B". He suffers a loss of $10,000 and "B" goes bankrupt. Smith will collet how much from company "A"?
A. Nothing
B. $4,000
C. $6,000
D. $10,000
C. $6,000
In order for two fire policies to be concurrent, they must cover:
A. All real and personal property, as well as liability of an individual.
B. The same interest against the same perils
C. All real and personal property of an individual.
D. For both direct and indirect losses.
B. The same interest against the same perils
Subrogation does all of the following EXCEPT:
A. Gives the insurance company whatever rights the insured possessed against responsible third parties.
B. Prevents the insured from collecting twice on the same loss
C. When paying an insured for a loss, allows the insurer to attempt collectionfrom the person whose negligence may have caused the loss.
D. Allows the insurer to file suit against the insured.
D. Allows the insurer to file suit against the insured.
Smith and Jones own a building with an actual cash value of $100,000. It is insured for $100,000 in the name of Smith only, and burns to the ground.
I. Smith gets all $100,000
II. Smith and Jones share equally in the $100,000.
III. Smith gets $50,000
IV. Jones gets nothing
A. I only
B. I and IV
C. III only
D. III and IV
D. III and IV
After a loss has occurred, proof of loss must be filed with the company within:
A. 30 days
B. 45 days
C. 60 days
D. no time limit
C. 60 days
The extented coverage endorsement:
A. Increases the recovery limits of the SFP.
B. Has a premium stated for the broadening of perils.
C. Suspends its coverage after 30 days of unoccupancy.
D. Covers any explosion
B. Has a premium stated for the broadening of perils.
Which of the following would NOT be considered a consequential loss?
A. Loss of rental income
B. Damage to personal property
C. Additonal living expenses incurred while the damaged property is being restored.
D. Loss of business income while a business is closed because of a fire loss.
B. Damage to personal property
A building, insured under a standard fire policy, is damaged by a fire for which another person is responsible. From whom will the insured receive payment for the loss?
A. The insured has to try to collect from the person responsible.
B. The insured can collect from the person responsible and also from the insurance company.
C. The company will pay the loss, and will then require the insured to assign to them his right of recovery from the person responsible for the loss, to the extent paid by the company.
D. The company will pay the insured the amount of the loss, and wille xpect the insured to collect from hte person responsible, and then reimburse the company.
C. The company will pay the loss, and will then require the insured to assign to them his right of recovery from the person responsible for the loss, to the extent paid by the company.
What procedure is prescribed by a fire policy when the insured and company fail to agree upon the amount of loss?
A. The disagreement must be settled by a court of law.
B. The loss must be submitted to an independent adjusting firm.
C. Each party selects an appraiser, who in turn, selects an umpire, and these three determine the amount of loss.
D. The agent shall act as intermediary and arbitrate the loss.
C. Each party selects an appraiser, who in turn, selects an umpire, and these three determine the amount of loss.
What is the meaning of actual cash value (ACV)?
A. Replacement cost (new for old) without any deduction for depreciation.
B. Replacement cost less depreciation
C. Today's appraisal value less depreciation
D. The appraised value
B. Replacement cost less depreciation
When property is insured under two standard fire insurance policies, payment of a loss is:
A. Shared proportionately according to the total amount of insurance.
B. Paid first by theintial policy and then any excess by the second policy
C. Paid independently according to the limits of each policy.
D. Shared equally until the limit of the lower policy is exhausted, then the other policy pays the remainder up to its face amount.
A. Shared proportionately according to the total amount of insurance.
When the extended coverage endorsement is attached to a standard fire policy:
A. It is not written for the same amount as the fire policy.
B. It does not apply to all items covered by the fire policy.
C. It must apply to all items covered by the fire policy.
D. It does not cost additional premium.
C. It must apply to all items covered by the fire policy.
All of the following are methods of handling risk EXCEPT:
A. Risk elimination
B. Risk transfer
C. Risk retention
D. Risk reduction
A. Risk elimination
Something that increases the chance of a peril occurring is a:
A. Warranty
B. Deductible
C. Peril
D. Hazard
D. Hazard
A mutual insurance company is:
I. A full-fledged insurance organization organized on a non-profit basis
II. Owned by policyholders
III.Controlled by trustees and officers
A. I only
B. II only
C. III only
D. I, II and III
D. I, II and III
All of the following are true regarding a reciprocal insurance company EXCEPT:
A. If funds are insufficient to pay claims, the subscribers can be assessed for additional revenue.
B. It is managed by an attorney-in-fact.
C. Each subscriber assumes part of the risk of all other subscribers.
D. Members are grouped into syndicates.
D. Members are grouped into syndicates
Insurance companies incorporated under the laws of foreign countries are called:
A. Domestic companies
B. Foreign companies
C. Alien companies
D. None of the above
C. Alien companies
All of the following are true about "insurable risk" EXCEPT:
A. The law of large numbers should apply
B. The loss must not be definite and definable
C. The loss must not be catastrophic in nature.
D. The loss must be large enough to create hardship.
B. The loss must not be definite and definable
A peril can be defined as:
A. The transfer of pure risk
B. The cause of a loss
C. A one-time event definite in time and place
D. A condition increasing the chance of loss.
B. The cause of a loss
Each of the following possess a valid insurable interest EXCEPT:
A. A person who owns a home.
B. A bank holding a mortgage on someone's home.
C. A condominium unit owner.
D. A father concerned about insuring the home of his son.
D. A father concerned about insuring the home of his son.
All of the following are essential elements in an insurance contract EXCEPT:
A. Agreement
B. Consideration
C. Competent parties
D. Counter-offer
D. Counter-offer
An insurance contract is a unilateral contract which means that:
A. Only the insurer makes an enforceable promise.
B. Both parties must give up something of value.
C. Contract provisions are not required.
D. Both parties must perform with utmost good faith.
A. Only the insurer makes an enforceable promise.
Which of the following is the correct term when a contract is prepared by one party and submitted to the other party on a take-it or leave-it basis and where there is no bargaining power on the wording of the contract?
A. Adhesion
B. Aleatory
C. Conditional
D. Valued contract
A. Adhesion
A deductible in an insurance contract is an example of which means of handling risk?
A. Control
B. Avoidance
C. Retention
D. Transfer
C. Retention
Misrepresentation and concealment prevent recovery under an insurance contract if:
I Fraud is involved
II They are material to the acceptance of the risk
III The insurer would have declined the application had the facts been known.
A. I only
B. II only
C. II and III
D. I, II and III
D. I, II and III
The maximum allowable controlled business written by an agent (based on commissions) is:
A. 25%
B. 35%
C. 50%
D. 75%
C. 50%
Documentation required by an insurer from an insured to substantiate the specifics of a claim is known as a(n):
A. Certificate of authority
B. Endorsement
C. Proof of loss
D. None of the above
C. Proof of loss
When the Comissioner intentds to hold a hearing concerning an agent's trade practices, notice of the hearing must be given at least:
A. 5 days in advance
B. 10 days in advance
C. 20 days in advance
D. 30 days in advance
B. 10 days in advance
Under the Insurance Information and Privacy Protection Act, an authorization for information disclosure in property and liability insurance is in effect for:
A. One year
B. Two years
C. Three years
D. Four years
A. One year
A temporary license may be issued for a period of:
A. 30 days
B. 45 days
C. 60 days
D. 180 days
D. 180 days
The Commissioner has the power to:
A. Set Fire and Liability rates charged in North Carolina.
B. Revoke an agent's License(s) before a hearing
C. Issue subpoenas on behalf of individuals in order to conduct a hearing.
D. Issue verbal Cease and Desist orders.
C. Issue subpoenas on behalf of individuals in order to conduct a hearing.
The Notice of Information Practices indicates that the applicant has all of the following rights EXCEPT:
A: To know the reason for any adverse underwriting decision.
B. To have access to the underwriting standards of the company.
C. To dispute any information felt to be incorrect.
D. To know from whom pertinent information was gathered.
B. To have access to the underwriting standards of the company.
Obtaining information through a personal interview where the agent does not accurately identify themselves is known as a(n):
A. Consumer report
B. Pretext interview
C. Survey scam
D. Investigative consumer report
B. Pretext interview
A temporary contract of insurance is known as a(n):
A. Binder
B. Warranty
C. Endorsement
D. Rider
A. Binder
Examples of direct losses covered under the standard fire policy include:
I. Damage to the insured's home caused by lightning.
II. Damage to the insured's furniture due to fire caused by sparks from the fireplace.
III. Living expenses incurred after the dwelling is damaged by fire.
A. I only
B. II only
C. I and II
D I, II, III
C. I and II
The standard fire policy:
I. Is not a complete contract
II. Does not define fire.
III. Pays for indirect losses.
A. I only
B. II only
C. I and II
D. I, II, III
C. I and II
Which statement concerning the cancellation of a fire policy is true?
A. If an insured requests cancellation of a fire policy, the unearned premium calculated pro-rata will be returned upon return of the policy to the company.
B. When a company cancels a fire policy, it must give the insured 45 days notice before cancellation becomes effective.
C. When a company cancels a fire policy, the unearned premium will be returned to the insured on a short-rate basis.
D. When the company cancels a fire policy, the unearned premium calculated pro-rata will be returned to the insured.
D. When the company cancels a fire policy, the unearned premium calculated pro-rata will be returned to the insured.
If an insured cancels a SFP at the end of six months, what proportion of the premium must the company return to him?
A. The insured is not entitled to a return of premium.
B. The company will return exactly one-half of the annual premium.
C. The company will return less than one-half of annual premium.
D. The company will return more than one-half of annual premium.
C. The company will return less than one-half of annual premium.
Coverage under a vandalism and malicious mischief endorsement added to the standard fire policy is suspended if a building is left vacant for more than:
A. 15 consecutive days
B. 30 consecutive days
C. 60 consecutive days
D. 90 consecutive days
B. 30 consecutive days
The clause in the standard fire policy that specifies the amount of recovery when more than one policy exists on the same property is called:
A. Pro-rata liability
B. Co-insurance
C. Average loss
D. Pro-rata distribution
A. Pro-rata liability
How many days will a fire policy provide coverage on property moved to another location to protect if from further damage?
A. 5 days
B. 10 days
C. 15 days
D. 30 days
A. 5 days
Which of the following losses is covered under a SFP with the VMM endorsement?
I. Theft of a TV set by vandals.
II. Vandalism on February 1st of a property that has been vacant since January 1st.
III. The first $100 of a business interruption loss caused by vandalism, assuming the policy is written to cover business interruption.
A. I only
B. II only
C. III only
D. I and III
C. III only
The definition of rental values includes:
I. Gross rental income from tenant occupancy.
II. Fair rental value of property occupied by the insured.
III. Expenses charged to tenants that cease when vacant.
A. I only
B. I and II
C. I and III
D. I, II, III
A. I only
Under Coverage D of the basic dwelling form, how much can be recovered for one month on a $60,000 policy with a $100 deductible?
A. $400
B. $500
C. $5,900
D. $6,000
B. $500
$60,000
$6,000 10%
$500=1/2
no deductible on indirect loss
If two structures insured at the same premises and under the same dwelling policy were damaged in one windstorm, the deductible would:
A. Apply separately to each structure.
B. Apply as one loss
C. No deductible would apply.
D. None of the above.
B. Apply as one loss
A dwelling is insured under two fire policies. Policy A is for $12,000 and policy B is for $8,000. If a loss of $10,000 occurs:
A. Policy A pays the entire $10,000
B. Policy A pays $7,500 policy B pays $2,500
C. Policy A pays $5,000 policy B pays $5,000
D. Policy A pays $6,000 policy B pays $4,000
D. Policy A pays $6,000 policy B pays $4,000
12000/20000 12/20 6/10=3/5
Which of the following dwellings may NOT be covered under the Dwelling Program?
A. An apartment building with 3 apartments.
B. A frame structure considered too old to be insured on a homeowners policy.
C. A single family dwelling with a beauty parlor operated by the insured.
D. A single family dwelling on a farm of less than 30 acres.
D. A single family dwelling on a farm of less than 30 acres.
Which of the following homeowners policies provides all risk coverage on personal property?
A. HO 00 02
B. HO 00 03
C. HO 00 04
D. HO 00 05
D. HO 00 05
Which of the following losses would be covered under a HO 00 02?
A. Food spoilage due to power interruption that occurs away from the premises.
B. A garage damaged by the named insured backing a vehicle into it.
C. Theft of cassette tapes while in the insured's car.
D. First aid provided to an insured person injured on the premises.
B. A garage damaged by the named insured backing a vehicle into it.
Which of the following structures is NOT considered to be appurtenant (other structure)?
A. A garage connected to the dwelling by utility lines.
B. A tree house built in the back yard.
C. A free standing utility building
D. A gazebo connected to the dwelling by a wood deck.
D. A gazebo connected to the dwelling by a wood deck.
In regards to personal property coverage in the homeowners program, all of the following statements are correct EXCEPT:
A. Money and bullion are limited to $200
B. Scheduled personal property coverage of greater than HO-2000 limits is available through a Personal Articles Floater.
C. The special form (HO 00 03) provides all risk coverage on personal property.
D. Personal property coverage is usually 50% of the limit provided for Coverage A.
C. The special form (HO 00 03) provides all risk coverage on personal property.
The coverages provided by the various Homeowners forms are:
A. Named peril on the dwelling and all risk on the contents in the HO 00 03.
B. All risk on both dwelling and contents in the HO 00 04.
C. All risk on the dwelling and named peril on contents in the HO 00 03.
D. All risk on contents only in the HO 00 04.
C. All risk on the dwelling and named peril on contents in the HO 00 03.
An insured has a HO 00 05 policy with $100,000 Coverage A limit, a $250 deductible and a $300,000 Coverage E limit. An individual has won a $500,000 bodily injury award from the insured with defense costs equalling $75,000. How much will the HO 00 05 policy pay?
A. $375,000
B. $374,750
C. $300,000
D. $175,000
A. $375,000
Coverage D in a homeowners policy:
A. Covers the necessary increase in living expenses incurred because of a covered peril.
B. Will pay maximum of 1/2 of the limit for each month the premises is untenable.
C. Provides the same limit of coverage in all forms.
D. All of the above.
A. Covers the necessary increase in living expenses incurred because of a covered peril.
The broad form homeowners policy restricts coverage of money and securities to:
Money Securities
A. $100 $500
B. $200 $1500
C. $500 $1500
D. $1000 $5000
B. $200 $1500
Mr Jones has a $50,000 HO 00 03 homeowners policy, He has a theft loss that results in $2,000 damage to his home and the theft of $250 in cash and $650 of plane tickets. How much will he collect?
A. $2,750
B. $2,800
C. $2,850
D. $2,900
C. $2,850
Under the broad form homeowners policy, all of the following are covered EXCEPT:
A. Unscheduled personal property
B. Liability in excess of the deductible
C. Additional living expenses
D. Medical payments to others.
B. Liability in excess of the deductible
(no deductible for Liability)
Which of the following forms have no (or very limited) amounts of Coverage A?
I. HO 00 02
II. HO 00 03
III.HO 00 04
IV. HO 00 06
A. I & IV
B. III & IV
C. II & III
D. II & IV
B. III & IV
Replacement cost coverage for partial structure losses is available on:
A. All dwelling policy forms
B. Only on the special dwelling forms.
C. Only on the basic and broad forms.
D. Only on the broad and special forms.
D. Only on the broad and special forms.
Which of the following is eligible to receive homeowners medical payments in the event of an injury at the insured's premises?
A. The named insured
B. A burglar injured while breaking into the insured's home.
C. A guest who was invited to a party.
D. All of the above.
C. A guest who was invited to a party.
A flood policy goes into effect at which of the following times?
A. When the agent binds coverage.
B. Upon the date of application.
C. Thirty days after the date of the application.
D. Sixty days after the date of the application.
C. Thirty days after the date of the application.
Your house has a replacement cost of $100,000. In order to have replacement cost coverage for partial structural losses, your homeowners policy must be written with a face amount equal to or greater than which of the following?
A. $50,000
B. $70,000
C. $80,000
D. $100,000
C. $80,000
John and Martha insured their home on a HO 00 02 for $100,00. A thief stole $15,000 worth of silverware. They could collect:
A. Nothing. This loss would be covered by a Scheduled Personal Property endorsement.
B. $10,000
C. $12,500
D. $15,000
B. $10,000
Which of the following losses would NOT be covered under the HO 00 02 policy?
A. Collapse of a building due to insect infestation.
B. Theft of $100 of business property from a vehicle owned by the named insured.
C. Damage to an appurtenant structure caused by a falling tree.
D. Theft of a boarder's jewelry
D. Theft of a boarder's jewelry
Covered items in a dwelling policy do NOT include:
A. TV aerials
B. Stock certificates
C. Materail and supplies on the premises intended for use in the construction of the dwelling.
D. Awnings
B. Stock certificates
Which of the following homeowners forms is tailored for apartment renters?
A. Unit-owners form
B. Broad form
C. Special form
D. Contents broad form
D. Contents broad form
Which of the following examples best describes a consequential loss?
A. A tree falling on the roof.
B. A TV antenna blown off a roof
C. A dwelling fire causing a loss of rental income.
D. A fire in a detached storeroom destroying accounts receivable records.
C. A dwelling fire causing a loss of rental income.
Which of the following is generally considered to be a definition of "vacancy" in respect to a dwelling?
A. A dwelling that contains furniture or contents, but is not being used by a person.
B. Property of the insured surrendered to the insurance company after a loss for demand of payment.
C. A dwelling from which the contents and occupants are removed.
D. Both A and B
C. A dwelling from which the contents and occupants are removed.
Dwelling forms provide limited coverage for:
I. Pets
II. Rowboats and canoes.
III.Aircrafts.
A. I only
B. II only
C. I and II
D. I, II and III
B. II only
Liability coverage (Section II) of the homeowners policy provides:
A. Different coverages in the broad and special forms.
B. Medical expense coverage to uninvited intruders due to its no-fault concept.
C. Medical expense coverage to an insured person.
D. Legal defense costs in excess of the liability limit.
D. Legal defense costs in excess of the liability limit.
Which of the following form of the homeowners program is tailored for condominium owners?
A. Unit-owners form
B. Broad form
C. Special form
D. Contents form
A. Unit-owners form
Which of the following homeowners forms are purchased by an amount of coverage A?
A. Forms 00 04 and 00 06
B. Forms 00 02 and 00 03
C. Forms 00 02 and 00 04
D. Forms 00 02 and 00 06
B. Forms 00 02 and 00 03
Territorial limits of the personal articles floater are:
A. Usually the United States and Canada
B. Usually worldwide
C. Usually the continental United States
D. Usually the continental United States and it possessions.
B. Usually worldwide
A dwelling and detached garage are insured under a homeowners policy wht a $250 Section I "all peril" deductible. In event both buildings are damaged by fire, which of the following statements would be correct?
A. One $250 deductible would apply since the deductible does not apply to each building separately.
B. The $250 deductible applies to each building separately.
C. No deductible applies unless the loss exceeds $500.
D. No deductible applies if the insurance carried is 80% of the building's value.
A. One $250 deductible would apply since the deductible does not apply to each building separately.
Under the various dwelling forms, permission is granted:
A. For such of the premises as is usual and incidental to a residence.
B. For the premises to be vacant or unoccupied without limit of time on all coverages.
C. To operate a small manufacturing venture of under 4 employees.
D. To use the premises for a small retail shop if operated by the insured.
A. For such of the premises as is usual and incidental to a residence.
A homeowners policy provides coverage for all of the following EXCEPT:
A. Medical payments for the insured.
B. Property damage to others
C. Medical payments to others.
D. Bodily injury to others.
A. Medical payments for the insured.
The homeowners policy may provide:
A. Monoline property coverage on property valued over $15,000.
B. Replacement cost for personal property without endorsement.
C. Property coverage for aircraft stored at the insured premises.
D. Coverage on a secondary dwelling located in the same state if the coverage is written on a separate policy.(owned second home- bad wording)
D. Coverage on a secondary dwelling located in the same state if the coverage is written on a separate policy.(owned second home- bad wording)
The personal article floater (PAF) is an insurance form used to insure individual personal property such as jewelry, furs, cameras, musical instruments, silverware, fine arts, golfer's equipment, stamps and coin collections, and outboard boats and motors, all on a(an):
I. Itemized basis
II. All-risk basis
III.Blanket basis
A. I only
B. II and III
C. I and II
D. I, II, III
C. I and II
I. Itemized basis
II. All-risk basis
All of the following statements regarding the HO 00 02 are correct EXCEPT:
A. The dwelling structure is covered.
B. This form insures against all risks of physical loss.
C. Other structures are covered.
D. Losses caused by vandalism are covered.
B. This form insures against all risks of physical loss.
John insured his home on a HO 00 02 for $100,000. In the case of a total loss, what would be the most he could collect under Coverages A,B,C, and D?
A. $100,000
B. $110,000
C. $150,000
D. $180.000
D. $180.000
Which of the following occurrences would be provided a benefit under Coverage E of the HO program?
A. An insured person injures another person while drivig a golf cart to the golf course from the insured premises.
B. An insured, with the Business Pursuits endorsement, damages someone's property while conducting their home improvement business.
C. The insured does property damage to another person's boat while operating his 20HP outboard motorboat at the lake.
D. An insured, while volunteering at at church day care center, spanks and injures a child who is in the care of the center
C. The insured does property damage to another person's boat while operating his 20HP outboard motorboat at the lake.
Dwelling forms may extend coverage to all of the following EXCEPT:
A. Personal property of an unrelated tenant.
B. Personal property of a servant.
C. Personal property of guests.
D. Personal property borrowed by the insured.
A. Personal property of an unrelated tenant.
Under Coverage D of the broad form dwelling policy, what is the maximum amount that could be recovered for one month on a $60,000 policy with a $100 deductible?
A. $500
B. $400
C. $5,900
D. $6,000
D. $6,000
Which of the following coverages are NOT found in all homeowners policies?
A. Personal Property (Coverage C)
B. Loss of Use (Coverage D)
C. Dwelling (Coverage A)
D. Personal Liability (Coverage E)
C. Dwelling (Coverage A)
Under a personal articles floater, a pair of antique salt and pepper shakers are insured for $1,000. When one of the shakers is broken, the remaining shaker is only worth $200. How much with the insured receive for this loss?
A. $200
B. $500
C. $800
D. $1,000
C. $800
All of the following property in a HO 00 02 homeowners policy has limited coverage caused specifically by the peril of theft EXCEPT:
A. Boats
B. Silverware
C. Jewelry
D. Manuscripts
D. Manuscripts
Which of following is covered by flood insurance?
A. Contents of a dwelling damaged in a mudslide.
B. Structual damage to a duplex caused by a landslide.
C. Growing crops and livestock destroyed when a river overflows its banks.
D. Looting of personal property in a flooded area.
A. Contents of a dwelling damaged in a mudslide.
Obtaining information through a personal interview where the agent does not accurately identify themselves is known as a(an):

A. Consumer report
B. Pretext interview
C. Survey scam
D. Investigative consumer report.
B. Pretext interview
A temporary contract of insurance is known as a(a):

A. Binder
B. Warranty
C. Endorsement
D. Rider
A. Binder
Examples of direct losses covered under the standard fire policy include:

III. Living expenses incurred after the dwelling is damaged by fire.

A. I only
B. II only
C. I and II
D. I, II, III
C. I and II

. Damage to the insured's home caused by lightning
II. Damage to the insured's furniture due to fire caused by sparks from the fireplace.
The Standard fire policy:

I. Is not a complete contract
II. Does not define fire
III.Pays for indirect losses.

A. I only
B. II only
C. I & II
D. I, II, III
C. I and II

I. Is not a complete contract
II. Does not define fire
Which statement concerning the cancellation of a fire policy is true?

A. If an insured requests cancellation of a fire policy, the unearned premium calculated pro-rata will be returned upon return of the policy to the company.
B. When a company cancels a fire policy, it must give the insured 45 days notice before cancellation becomes effective.
C. When a company cancels a fire policy, the unearned premium will be returned to the insured on a short-rate basis.
D. When the company cancels a fire policy, the unearned premium calculated pro-rata will be returned to the insured.
D. When the company cancels a fire policy, the unearned premium calculated pro-rata will be returned to the insured.
If an insured cancels a SFP at the end of six months, what proportion of the premium must the company return to him?

A. The insured is not entitled to a return of premium.
B. The company will return exactly one-half of the annual premium.
C. The company will return less than one-half of annual premium.
D. The company will return more than one-half of annual premium.
C. The company will return less than one-half of annual premium.
Coverage under a vandalism and malicious mischief endorsement added to the standard fire policy is suspended if a building is left vacant for more than:

A. 15 consecutive days
B. 30 consecutive days
C. 60 consecutive days
D. 90 consecutive days
B. 30 consecutive days
The clause in the standard fire policy that specifies the amount of recovery when more than one policy exists on the same property is called:

A. Pro-rata liability
B. Co-insurance
C. Average loss
D. Pro-rata distribution
A. Pro-rata liability
Which of the following losses is covered under a SFP with the VMM endorsement?

I. Theft of a TV set by vandals
II. Vandalism on February 1st of a property that has been vacant since January 1st.
III. The first $100 of a business interruption loss caused by vandalism, assuming the policy is written to cover business interruption.

A. I only
B. II only
C. III only
C. I and III
C. III only

III. The first $100 of a business interruption loss caused by vandalism, assuming the policy is written to cover business interruption.
The definition of rental value includes:

I. Gross rental income from tenant occupancy.
II. Fair rental value of property occupied by the insured.
III. Expenses charged to tenants that cease when vacant.

A. I only
B. I and II
C. I and III
D. I, II ,III
B. I and II

I. Gross rental income from tenant occupancy.
II. Fair rental value of property occupied by the insured.
Under Coverage D of the basic dwelling form, how much can be recovered for one month on a $60,000 policy with a $100 deductible?

A. $400
B. $500
C. $5,900
D. $6,000
A. $400

60,000
6.000 = 10%
500=1/2
deductible = 4
*No deductible on indirect loss
If two structures insured at the same premises and under the same dwelling policy were damaged in one windstorm, the deductible would:

A. Apply separately to each structure.
B. Apply as one loss
C. No deductible would apply
D. None of the above
B. Apply as one loss
A dwelling is insured under two fire policies. Policy A is for $12,000 and policy B is for $8,000. If a loss of $10,000 occurs:

A. Policy A pays the entire $10,000
B. Policy A pays $7,500 policy B pays $2,500
C. Policy A pays $5,000 policy B pays $5,000
D. Policy A pays $6,000 policy B pays $4,000
D. Policy A pays $6,000 policy B pays $4,000

12000/20000 12/20 6/10 3/5
Which of the following dwellings may NOT be covered under the Dwelling Program?

A. An apartment building with 3 apartments.
B. A frame structure considered too old to be insured on a homeowners policy.
C. A single family dwelling with a beauty parlor operated by the insured.
D. A single family dwelling on a farm of less than 30 acres.
D. A single family dwelling on a farm of less than 30 acres.
Which of the following homeowners policies provides all risk coverage on personal property?

A. HO 00 02
B. HO 00 03
C. HO 00 04
D. HO 00 05
D. HO 00 05
Which of the following losses would be covered under a
HO 00 02?

A. Food spoilage due to a power interruption that occurs away from the premises.
B. A garage damaged by the named insured backing a vehicle into it.
C. Theft of cassette tapes while in the insured's car.
D. First aid provided to an insured person injured on the premises.
B. A garage damaged by the named insured backing a vehicle into it.
Which of the following structures is NOT considered to be appurtenant (other structure)?

A. A garage connected to the dwelling by utility lines.
B. A tree house built in the back yard.
C. A free standing utility building.
D. A gazebo connected to the dwelling by a wood deck.
D. A gazebo connected to the dwelling by a wood deck.
In regards to personal property coverage in the homeowners program, all of the following statements are correct EXCEPT:

A. Money and bullion are limited to $200
B. Scheduled personal property coverage of greater than HO-2000 limits is available through a Personal Articles Floater.
C. The special form (HO 00 03) provides all risk coverage on a personal property.
D. Personal property coverage is usually 50% of the limit provided for Coverage A.
C. The special form (HO 00 03) provides all risk coverage on a personal property.
The coverages provided by the various Homeowners forms are:

A. Named peril on the dwelling and all risk on the contents in the HO 00 03.
B. All risk on both dwelling and contents in the HO 00 04.
C. All risk on the dwelling and named peril on contents in the HO 00 03.
D. All risk on contents only in the HO 00 04.
C. All risk on the dwelling and named peril on contents in the HO 00 03.
An insured has a HO 00 005 policy with a $100,000 Coverage A limit, a $250 deductible and a $300,000 Coverage E limit. An individual has won a $500,000 bodily injury award from the insured with defense costs equaling $75,000. How much will the HO 00 05 policy pay?

A. $375,000
B. $374,750
C. $300,000
D. $175,000
A. $375,000
Coverage D in a homeowner policy:

A. Covers the necessary increase in living expenses incurred because of a covered peril.
B. Will pay a maximum of 1/2 of the limit for each month the premises is untenable.
C Provides the same limit of coverage in all forms.
D. All of the above
A. Covers the necessary increase in living expenses incurred because of a covered peril.
The broad form homeowners policy restricts coverage of money and securities to:

Money Securities
A. $100 $500
B. $200 $1500
C. $500 $1500
D. $1000 $5000
Money Securities
B. $200 $1500
Mr. Jones has a $50,000 HO 00 03 homeowners policy. He has a theft loss that results in $2,000 damage to his home and the theft of $250 in cash and $650 of plane tickets. How much will he collect?

A. $2,750
B. $2,800
C. $2,850
D. $2,900
C. $2,850
($200, $650)
Under the broad form homeowners policy, all of the following are covered EXCEPT:

A. Unscheduled personal property
B. Liability in excess of the deductible.
C. Additional living expenses.
D. Medical payments to others.
B. Liability in excess of the deductible.
(no deductible for liability)
All of the following coverage extensions are provided in the various HO policies EXCEPT:

A. Coverage for plant, tree and shrubs up to a maximum of 5% of the Coverage A limit.
B. Additions and alterations made by a tenant are covered up to $1,000.
C. Business structures on the premises are covered for up to 50% of Coverage B limits.
D. Expenses incurred to provide temporary protection of the property is covered.
C. Business structures on the premises are covered for up to 50% of Coverage B limits.
If a boat does damage to another vessel's hull, which coverage indemnifies for the loss?

A. Protection and indemnity.
B. Inland marine
C. Hull insurance
D. Medical payments
A. Protection and indemnity.
The National Flood Insurance Program (NFIP) contains all of the following requirements and benefits EXCEPT:

A. Provides all risk dwelling coverage to property owners unable to purchase property insurance in the normal market due to the increased risk of flood.
B. Provides back-up reinsurance through FEMA allowing private insurers to provide the coverage at subsidized rates.
C. Eligibility for the regular plan is restricted to communities meeting FEMA's requirement for flood control practices.
D. Rates paid by insureds for flood insurance will vary in accordance with the location of the property on the Flood Insurance Rate Map.
A. Provides all risk dwelling coverage to property owners unable to purchase property insurance in the normal market due to the increased risk of flood.
All of the following are true concerning the Medical Payments to Others coverage found in the homeowners policy EXCEPT:

A. It pays on a per person per occurrence basis.
B. It is part of the Section II coverage found in all homeowners policies.
C. It has a standard limit of $1,000 per person.
D. It covers injuries to family members of the named insured residing at the insured premises.
D. It covers injuries to family members of the named insured residing at the insured premises.
Under a homeowners policy, what is the maximum amount that will be paid for the theft of manuscripts on all forms?

A. $250
B. $1,000
C. $1,500
D. $2,500
C. $1,500
Which of the following forms have no (or very limited) amounts of Coverage A?

I. HO 00 02
II. HO 00 03
III. HO 00 04
IV. HO 00 06

A. I & IV
B. III & IV
C. II & III
D. II & IV
B. III & IV

III. HO 00 04
IV. HO 00 06
Replacement cost coverage for partial structural losses is available on:

A. All dwelling policy forms.
B. Only on the special dwelling form.
C. Only on the basic and broad forms.
D. Only on the broad and special forms.
D. Only on the broad and special forms.
Which of the following is eligible to receive homeowners medical payments in the event of an injury at the insured's premises?

A. The named insured.
B. A burglar injured while breaking into the insured's home.
C. A guest who was invited to a party.
D. All of the above
C. A guest who was invited to a party.
A flood policy goes into effect at which of the following times?

A. When the agent binds coverage.
B. Upon the date of application.
C. Thirty days after the date of the application.
D. Sixty days after the date of the application.
C. Thirty days after the date of the application.
Your house has a replacement cost of $100,000. In order to have replacement cost coverage for partial structural losses, your homeowners policy must be written with a face amount equal to or greater than which of the following?

A. $50,000
B. $70,000
C. $80,000
D. $100,000
C. $80,000
John and Martha insured their home on a HO 00 02 for $100,000.
A thief stole $15,00 worth of silverware. They could collect:

A. Nothing. This loss would be covered by a Scheduled Personal Property endorsement.
B. $10,000
C. $12,500
D. $15,000
B. $10,000
Which of the following losses would NOT be covered under the HO 00 02 policy?

A. Collapse of a building due to insect infestation.
B. Theft of $100 of business property from a vehicle owned by the named insured.
C. Damage to an appurtenant structure caused by a falling tree.
D. Theft of a boarder's jewelry.
D. Theft of a boarder's jewelry.
Which of the following homeowners forms is tailored for apartment renters?

A. Unit-owners form
B. Broad form
C. Special form
D. Contents broad form
D. Contents broad form
Which of the following examples best describes a consequential loss?

A. A tree falling on the roof
B. A TV antenna blown off a roof.
C. A dwelling fire causing a loss of rental income.
D. A fire in a detached storeroom destroying accounts receivable records.
C. A dwelling fire causing a loss of rental income.
Which of the following is generally considered to be a definition of "vacancy" in respect to a dwelling?

A. A dwelling that contains furniture or contents, but is not being used by a person.
B. Property of the insured surrendered to the insurance company after a loss for demand of payment.
C. A dwelling from which the contents and occupants are removed.
D. Both A and B
C. A dwelling from which the contents and occupants are removed.
Dwelling forms provide limited coverage for:

I. Pets
II. Rowboats and canoes.
III. Aircrafts

A. I only
B. II only
C. I and II
D. I, II and III
B. II only

II. Rowboats and canoes.
Liability coverage (Section II) of the homeowners policy provides:

A. Different coverages in the broad and special forms.
B. Medical expenses coverage to uninvited intruders due to its no-fault concept.
C. Medical expenses coverage to an insured person.
D. Legal defense costs in excess of the liability limit.
D. Legal defense costs in excess of the liability limit.
Which of the following form of the homeowners program is tailored for condominium owners?

A. Unit-owners form
B. Broad form
C. Special form
D. Contents form
A. Unit-owners form
Which of the following homeowners forms are purchased by an amount of Coverage A?

A. Forms 00 04 and 00 06
B. Forms 00 02 and 00 03
C. Forms 00 02 and 00 04
D. Forms 00 02 and 00 06
B. Forms 00 02 and 00 03
Territorial limits of the personal articles floater are:

A. Usually the United States and Canada.
B. Usually worldwide
C. Usually the continental United States
D. Usually the continental United States and it possessions.
B. Usually worldwide
A dwelling and detached garage are insured under a homeowners policy with a $250 Section I "all peril" deductible. In event both buildings are damaged by fire, which of the following statements would be correct?

A. One $250 deductible would apply since the deductible does not apply to each building separately.
B. The $250 deductible applies to each building separately.
C. No deductible applies unless the loss exceeds $500.
D. No deductible applies if the insurance carried is 80% of the building's value.
A. One $250 deductible would apply since the deductible does not apply to each building separately.
Under the various dwelling forms, permission is granted:

A. For such use of the premises as is usual and incidental to a residence.
B. For the premises to be vacant or unoccupied without limit of time on all coverages.
C. To operate a small manufacturing venture of under 4 employees.
D. To use the premises for a small retail shop if operated by the insured.
A. For such use of the premises as is usual and incidental to a residence.
A homeowners policy provides coverage for all of the following EXCEPT:

A. Medical payments for the insured.
B. Property damage to others.
C. Medical payments to others.
D. Bodily injury to others.
A. Medical payments for the insured.
The homeowners policy may provide:

A. Monoline property coverage on property valued over $15,000.
B. Replacement cost for personal property without endorsement.
C. Property coverage for aircraft stored at the insured premises.
D. Coverage on a secondary dwelling located in the same state if the coverage is written on a separate policy.
D. Coverage on a secondary dwelling located in the same state if the coverage is written on a separate policy. (second home)
The personal article floater (PAF) is an insurance form used to insure individual personal property such as jewelry, furs, cameras, musical instruments, silverware, fine arts, golfer's equipment, stamps and coin collections, and outboard motors, all on a(an):

I. Itemized basis
II. All-risk basis
III. Blanket basis

A. I only
B. II and III
C. I and II
D. I, II, III
C. I and II

I. Itemized basis
II. All-risk basis
All of the following statements regarding the HO 00 02 are correct EXCEPT:

A. The dwelling structure is covered
B. This form insures against all risks of physical loss.
C. Other structures are covered.
D. Losses caused by vandalism are covered
B. This form insures against all risks of physical loss.
John insured his home on a
HO 00 02 for $100,000. In the case of a total loss, what would be the most he could collect under Coverages A,B,C and D?

A. $100,000
B. $110,000
C. $150,000
D. $180,000
D. $180,000
Which of the following occurrences would be provided a benefit under Coverage E of the HO program?

A. An insured person injures another person while driving a golf cart to the golf course from the insured premises.
B. An insured, with the Business Pursuits endorsement, damages someone's property while conducting their home improvement business.
C. The insured does property damage to another person's boat while operating his 20 HP Outboard motorboat at the lake.
D. An insured, while volunteering at a church day care center, spanks and injures a child who is in the care of the center.
C. The insured does property damage to another person's boat while operating his 20 HP Outboard motorboat at the lake.
Dwelling forms may extend coverage to all of the following EXCEPT:

A. Personal property of an unrelated tenant.
B. Personal property of a servant.
C. Personal property of guests.
D. Personal property borrowed by the insured.
A. Personal property of an unrelated tenant.
Under Coverage D of the broad form dwelling policy, what is the maximum amount that could be recovered for one month on a $60,000 policy with a $100 deductible?

A. $500
B. $400
C. $5,900
D. $6,000
D. $6,000
Which of the following coverages are NOT found in all homeowners policies?

A.Personal
Property(Coverage C)
B.Loss of Use (Coverage D)
C.Dwelling (Coverage A)
D.Personal
Liability(Coverage E)
C.Dwelling (Coverage A)
Under a personal articles floater, a pair of antique salt and pepper shakers are insured for $1,000. When one of the shakers is broken, the remaining shaker is only worth $200. How much will the insured receive for this loss?

A. $200
B. $500
C. $800
D. $1,000
C. $800
All of the following property in a HO 00 02 homeowners policy has limited coverage caused specifically by the peril of theft EXCEPT:

A. Boats
B. Silverware
C. Jewelry
D. Manuscripts
D. Manuscripts
Which of the following is covered by flood insurance?

A. Contents of a dwelling damaged in a mudslide.
B. Structural damage to a duplex caused by a landslide.
C. Growing crops and livestock destroyed when a river overflows its banks.
D. Looting of personal property in a flooded area.
A. Contents of a dwelling damaged in a mudslide.
All of the following are included in the definition of personal injury EXCEPT:

A. Slander
B. Defamation
C. Bodily injury
D. Libel
C. Bodily injury
The basic form Dwelling policy provides all of the following coverages EXCEPT:

A. ACV recovery without an endorsement.
B. Loss of rental value coverage in the amount of 1/12th of Part D limits per month.
C. All risk removal coverage of 5 days.
D. Single limit liability coverage on a per occurrence basis.
D. Single limit liability coverage on a per occurrence basis.
All of the following statements regarding watercraft or yacht coverage are correct EXCEPT:

A. Protection and indemnity provides liability coverage to owners of watercraft.
B. Liability arising out of towing a person behind a boat of skis may be provided by an endorsement.
C. Coverage on certain types of watercraft can be obtained by endorsing the coverage to a homeowners policy.
D. Hull insurance protects against damage to the hull of the insured's boat or another vessel damaged by the insured.
D. Hull insurance protects against damage to the hull of the insured's boat or another vessel damaged by the insured.
Which of the following perils would NOT be covered under a DP-1?

A. Falling objects
B. Explosion
C. Vandalism
D. Lightning
A. Falling objects
What is the purpose of the National Flood Insurance Program?

A. To provide all-risk property insurance in flood prone areas.
B. To encourage communities to implement flood control measures and plan future growth.
C. To enable property owners to purchase basic property insurance at unsubsidized rates.
D. To allow federal intervention in the regulation of property insurance rates.
B. To encourage communities to implement flood control measures and plan future growth.
Coverage B of the homeowners program would apply to which of the following losses?

A. Damage to building materials to be used to remodel the kitchen of the dwelling.
B. Damage to a heat pump unit located on a concrete pad next to the dwelling.
C. Damage to an in-ground swimming pool.
D. Damage to a wood deck connected to the dwelling.
C. Damage to an in-ground swimming pool.
Which of the following occupancies would NOT be acceptable under a homeowners policy?

A. An office for the insured inside the dwelling.
B. the daughter of the insured providing baton lessons for a fee.
C. A beauty parlor operated by the next door neighbor.
D. A part-time computer typesetting service operated by the insured.
C. A beauty parlor operated by the next door neighbor.
A party claiming that a child was injured by an abusive action of the insured has been awarded a judgment in a civil action. Section II of the homeowners policy would pay:

A. Nothing
B. Legal defense costs only
C. The medical payment limit only.
D. Up to the full limit of liability coverage afforded by the policy
A. Nothing
Which of the following items would be covered under a broad form homeowners policy?

A. A neighbor's lawnmower borrowed by the insured.
B. Property of an unrelated tenant.
C. A detached garage damaged during an earthquake.
D. Cassette tapes in the trunk of the insured's vehicle.
A. A neighbor's lawnmower borrowed by the insured.
The Personal Articles floater provides:

A. All-risk, scheduled coverage on personal property anywhere in the world.
B. All-risk, blanket coverage on limited amounts of personal property.
C. All-risk, itemized coverage on personal property anywhere in the United States, Canada or Puerto Rico.
D. Broad form, named peril coverage on scheduled personal property anywhere in the world.
A. All-risk, scheduled coverage on personal property anywhere in the world.
The minimum split limits of liability on a automobile required by the State of North Carolina are:

A. 15/30/10
B. 10/20/5
C. 25/50/15
D. 30/60/25
D. 30/60/25
All of the following statements regarding the personal automobile policy are false EXCEPT:

A. Liability coverage excludes non-owned automobile.
B. Liability coverge is usually written with a single limit.
C. Under medical payments, family members are covered as pedestrians.
D. Business use of a van by a distributor is covered.
C. Under medical payments, family members are covered as pedestrians.
An insurer may cancel a personal automobile liability policy for non-payment of premium by giving the insured how many days notice?

A. 10
B. 15
C. 30
D. 60
B. 15
Under a personal auto policy, liability for bodily injury resulting from the insured's use of a non-owned auto is:

A. Provided by the insured's policy on primary basis.
B. Provided by the insured's policy on excess basis.
C. Shared proportionally between insured's policy and the policy covering the auto.
D. Not covered because of the care, custody and control exclusion.
B. Provided by the insured's policy on excess basis.
All of the following are true for loss of use from theft under the automobile policy EXCEPT:

A. Will pay $15 a day
B. Will pay a total of $450
C. Payments start immediately.
D. Such transportation expenses are provided automatically with the purchase of O.T.C.
C. Payments start immediately.
Under an automobile policy with liability limits of $50,000/$100,000/$50,000, what would be the extent of the company's liability arising out of an accident where claimant A sustains injuries in the amount of $50,500; claimant B, $40,000; and claimant C, $9,000.

A. $50,000
B. $99,000
C. $99,500
D. $100,000
B. $99,000
The definition of an uninsured motor vehicle under the personal auto policy includes all of the following EXCEPT:

A. A hit and run vehicle whose drive cannot be identified.
B. A vehicle newly acquired by the named insured that has not been reported to the insurer.
C. A vehicle to which no liability bond or insurance policy provides coverage at the time of the accident.
D. A vehicle insured by a company that is insolvent.
B. A vehicle newly acquired by the named insured that has not been reported to the insurer.
When insurance rates come under the jurisdiction of the North Carolina Rate Bureau and an Insure wishes to change those rates, the insured must be given written notice of this change at least:

A. 5 days in advance
B. 10 days in advance
C. 15 days in advance
D. 20 days in advance
C. 15 days in advance
The Post Assessment Guaranty Association protects policyholders from financial loss due to:

A. Insolvency of insurers
B. Insolvency of insureds
C. Insolvency of agents.
D. Insolvency of brokers
A. Insolvency of insurers
The North Carolina Reinsurance Facility:

A. Assigns substandard drives to insurers.
B. Is done voluntarily by insurers.
C. Takes only substandard drivers of private passenger cars.
D. Makes motor vehicle insurance available for hard to place risks.
D. Makes motor vehicle insurance available for hard to place risks.
If the Commissioner disapproves a rate filing made by the Rate Bureau, The Bureau may:

A. Ignore the disapproval with support from the majority of Bureau members.
B. Implement the proposed rates pending a judicial appeal.
C. Re-file after a twelve-month waiting period.
D. Implement the proposed rates after winning a judicial appeal.
B. Implement the proposed rates pending a judicial appeal.
The named insured wants to cover an additional auto under an existing personal auto policy. They must notify the company:

A. Immediately
B. Within 30 days of purchase
C. Within 30 days of inception of the policy.
D. Anytime during the policy period.
B. Within 30 days of purchase
An insured person has property valued at $500,000 insured with a company that has become insolvent. The policy value is $450,000 with a $1,000 property deductible. How much recovery may this insured expect from the Guaranty Association upon a total loss?

A. $300,000
B. $450,000
C. $449,000
D. $500,000
A. $300,000
(Limit)
Where must property be located to receive coverage through the Essential Property Insurance for Beach Area Property plan?

A. Anywhere within the territorial boundaries of the North Carolina.
B. Anywhere within North Carolina east of the Piedmont.
C. Anywhere within North Carolina East and/or South of the intracoastal waterway.
D. Anywhere in North Carolina within 5 miles of the coast.
C. Anywhere within North Carolina East and/or South of the Intracoastal Waterway.
All of the following violations could result in surcharges under the Safe Driver Incentive Plan EXCEPT:

A. Driving while impaired.
B. Illegal parking in a designated fire lane.
C. Speeding in excess of 15 MPH over the posted speed limit.
D. Death by vehicle
B. Illegal parking in a designated fire lane.
What are the maximum limits obtainable through the Facility?

A. 25/50/15
B. 30/60/25
C. 100/300/50
D. There is no maximum
C. 100/300/50
Which of the following results of an application would be considered an adverse underwriting decision?

A. Re-insuring the risk with another insurer.
B. Obtaining coverage through the FAIR plan.
C. Charging a higher premium for property insurance due to exposure changes to the property.
D. Providing for back-up protection through the Postassessment Guaranty Association.
B. Obtaining coverage through the FAIR plan.
All of the following coverages fall under the jurisdiction of the North Carolina Rate Bureau EXCEPT:

A. Residential property (less than 5 units)
B. General liability
C. Workers compensation
D. Non-fleet motor vehicles
B. General liability
Which of the following acts is legal concerning property insurance policies and business practices?

A. Providing a 10-year policy renewal period.
B. Listing the rates charged for specific types of property coverage.
C. Issuing a policy that insures property for amounts greater than the value of the property.
D. Adjusting losses according to company rules not stated in the policy.
B. Listing the rates charged for specific types of property coverage.
If a proposed automobile rate filing is not felt to be in compliance with the regulations of the State of North Carolina, the Insurance Commissioner must notify the North Carolina Rate Bureau within:

A. 30 days of the filing
B. 50 days of the filing
C. 60 days of the filing
D. 210 days of the filing
B. 50 days of the filing
Professional liability coverage is likely to be purchased by any of the following EXCEPT:

A. A doctor
B. An accountant
C. An insurance agent
D. A manufacturer
D. A manufacturer
All of the following are true about umbrella liability EXCEPT:

A. Certain losses excluded by the primary insurance are covered under an umbrella.
B. The umbrella provides insurance on an excess basis.
C. A deductible exists between primary policy and the umbrella.
D. Umbrella limits are not level at the top.
C. A deductible exists between primary policy and the umbrella.
A $1,000,000 Umbrella policy was issued over a homeowners policy with personal liability limits of $300,000. The umbrella could have been issued with a $1,000 self-insured retention (SIR). The Homeowners policy has canceled. However, the company issuing the umbrella does not become aware of the homeowners cancellation until an occurrence takes place. An award of $700,000 is granted to the injured party. How much will the umbrella policy pay?

A. $0
B. $400,000
C. $699,000
D. $700,000
A. $0
The purpose of liability insurance is:

A. To protect the insured against financial loss by reason of liability imposed by law, resulting from accidental bodily injury or property damage to another person for which the insured is held responsible.
B. To pay for injuries or property damage the insured received through no fault of their own.
C. To provide remuneration for jury trials.
D. None of the above
A. To protect the insured against financial loss by reason of liability imposed by law, resulting from accidental bodily injury or property damage to another person for which the insured is held responsible.
In the personal automobile policy, supplementary payments refer to which of the following?

A. Payments made by the insured for damages exceeding the policy limit.
B. Payments received by the insured directly from the person or persons who caused the loss.
C. Payments made by the insurance company for the insured's medical expenses to supplement any other medical insurance.
D. Payment of defense costs and other expenses by the insurance company beyond the limits of liability.
D. Payment of defense costs and other expenses by the insurance company beyond the limits of liability.
Uninsured motorists coverage:

A. Covers injuries caused by hit-and-run drivers.
B. Applies when the insured vehicle is used to carry persons for a fee.
C. Permits the insured to settle the claim without the insurer's consent.
D. Covers someone who steals the insured's vehicle.
A. Covers injuries caused by hit-and-run drivers.
John's automobile dealership loans him a car while his vehicle is being repaired. The "loaner" vehicle would be classified as a(n):

A. Nonowned
B Unisured
C. Underinsured
D. Temporary substitute
D. Temporary substitute
When Martha returned to her car after class, another driver who left no name or phone number had damaged the rear bumper. Damage to the car was $400. Under what coverage under her personal automobile policy could she collect?

A. Collision
B. Comprehensive
C. Uninsured Motorists
D. Property Damage
A. Collision
Under the personal auto policy, all of the following could be covered EXCEPT:

A. Property damage to the named insured's residence if struck by the insured's vehicle.
B. Medical payments to an insured person if struck as a pedestrian.
C. Repair of a window broken by a falling object.
D. Theft of the vehicle.
A. Property damage to the named insured's residence if struck by the insured's vehicle.
In North Carolina, the owner and the operator of any vehicle involved in an accident which results in property damage in excess of $500 or any bodily injury or death must furnish proof of financial responsibility by which of the following means?

A. Paying the loss and obtaining a release from the parties involved.
B. Filing a bond acceptable to the Department of Motor Vehicles.
C. Providing evidence of a valid automobile policy.
D. Any of the above
D. Any of the above
When operating a vehicle outside of the State of North Carolina, the PAP liability coverage will:

A. Suspend coverage
B. Maintain the same limits
C. Conform to the requirements of the other state.
D. Conform to the requirements of the other state if greater than the insured maintains.
D. Conform to the requirements of the other state if greater than the insured maintains.
Auto comprehensive covers all of the following EXCEPT:

A. Flood
B. Upset
C. Theft
D. Hail damage
B. Upset
Automobile limits of liability expressed as 50/100/50 means:

A. $50,000 bodily injury, $100,000 property damage, $50,000 medical payments per occurrence.
B. $50,000 bodily injury, $100,000 bodily injury per occurrence, $50,000 property damage per occurrence.
C. $50,000 property damage per occurrence, $100,000 bodily injury per occurrence, $50,000 bodily injury per person.
D. None of the above.
B. $50,000 bodily injury, $100,000 bodily injury per occurrence, $50,000 property damage per occurrence.
An insured driver is involved in an accident in which she avoids hitting an animal, loses control of the vehicle and hits a telephone pole. The damage to the insured's vehicle would be covered:

A. Under the comprehensive coverage since the loss involved an animal.
B. Under the property damage coverage.
C. Under the collision coverage.
D. There would be no coverage for this accident.
C. Under the collision coverage.
(didn't hit animal)
All of the following are eligible for a personal auto policy EXCEPT:

A. A farmer's pickup truck used for farming only.
B. A panel truck used to drive to and from work.
C. A pickup used by a distributor to make deliveries.
D. A station wagon that holds nine passengers.
C. A pickup used by a distributor to make deliveries.
Which of the following statement is correct regarding the Towing and Labor endorsement to the PAP:

A. The basic limit is $50
B. To be covered, the labor must be performed a the place of disablement.
C. The endorsement is provided without additional premium if comprehensive coverage is purchased.
D. Labor required to correct a mechanical breakdown is provided a benefit if conducted by a certified mechanic.
Which of the following statement is correct regarding the Towing and Labor endorsement to the PAP:

A. The basic limit is $50
B. To be covered, the labor must be performed a the place of disablement.
What type of insurance contract is prepared by one party, with little or no opportunity for bargaining by the other party?
Adhesion
What type of insurance contract is it when an insurer relies on insured's statements and insured relies on the insurer's ability to fulfull its promises?
Utmost good faith
What type of insurance contract is Dependent on a uncertain event?
Aleatory
What type of insurance contract insures a person?
Personal
In what type of insurance contract is an individual after a loss, restored to the approximate financial condition he or she was in before the loss?
Indemnity
What type of contract is One-sided and where only the insurer is legally bound to perform under the contract?
Unilateral
What type of contract includes conditions that both the insured and the insurer must comply with?
Conditional