P&c Exam Questions

Front 1

Prepared by an insurance company. "take it or leave it" basis.

Back 1

Adhesion Contract

Front 2

Restore the same financial condition

Back 2

Indemnity

Front 3

Exchange is unequal

Back 3

Aleatory

Front 4

Coverage E Homeowners policy

Back 4

per occurrence

Front 5

In CGL which of the following liability exposures has its own aggregate that is separate from the general aggregate?

Back 5

products-completed operations

Front 6

An insurer that is authorized to do business in a particular state is said to be:

Back 6

Admitted

Front 7

In insurance, when an applicant intentionally fails to make a material fact known, it is known as:

Back 7

Concealment

Front 8

A direct loss is best described as:

Back 8

Bursting of a water pipe that causes water damage

Front 9

defenses against negligence:

Back 9

Contributory negligence, comparative negligence, assumption of risk, intervening cause and statute of limitations are defenses against negligence.

Front 10

When a claimant can prove that a product caused the injury, the fact that the manufacturer will be held liable regardless of whether the product was defective or not, is considered which of the following?

Back 10

Strict Liability

Front 11

Bodily Injury coverage covers physical injury, sickness or disease sustained by a person including death resulting from

Back 11

Mental anguish,

Medical expenses,

and lost wages

Front 12

Personal Injury is injury to a person arising from

Back 12

wrongful conduct other than injury to the person's body.

Some examples would be libel, slander, and false arrest.

Front 13

Property Damage in Liability Insurance includes:

Back 13

Damage to tangible property, including loss of use of that property caused by the insured's negligence

Front 14

Which Statutory Law Defense states that damages are reduced in proportion to the degree of negligence?

Back 14

Comparative Negligence

Front 15

Of the Dwelling Policy Forms, which one does not cover Damage by Burglars?

Back 15

Basic Form DP-1

(Damage by burglars is only covered by broader forms Dp-2 and DP-3)

Front 16

Which is not eligible to be insured under a Dwelling Policy?

Back 16

Farms.

Insurance companies have developed special Farm Forms for farm property insurance.

Front 17

If an HO-3 has a coverage limit of $100,000 on a dwelling, how much coverage would automatically apply to cover the insured's personal property in Coverage C?

Back 17

$ 50,000

Coverage C - Personal Property of a H.O. policy provides up to 50% of the Coverage A - Dwelling Limit.

Front 18

The Personal Liability Coverage of a Homeowners Contract does the following:

Back 18

-Covers an insured's legal liability arising from non business activities

-The basic limit of coverage is $100,000

-generally written as a single occurrence limit

Front 19

What can be insured under an unendorsed Homeowners policy?

Back 19

Private residence in which the owner-occupant also maintains an office for her accounting business

Front 20

Under the Homeowners Policy, which coverage provides indirect loss coverage?

Back 20

Coverage D

Front 21

The Physical Damage section of the Personal Auto policy excludes:

Back 21

Mechanical Breakdown

Front 22

Uninsured Motorists coverage provides coverage for

Back 22

Bodily injury to an insured

Front 23

Value Reporting Form Endorsement:

Back 23

The insured must pay an advanced premium at the beginning of the policy period

Reports may be filed daily, weekly, monthly or quarterly. However, the final report MUST be made within 30 days of the end of the policy period. Reports must indicate 100% of the value of the property. There is no 80% coinsurance allowed here.

Front 24

The Commercial General Liability policy covers a business's liability for

Back 24

premises and operations exposure and products-completed operations exposure.

Front 25

If a restaurant serves a customer a bowl of clam chowder and later becomes ill, the customers illness would be covered by which of the following?

Back 25

Products exposure

Front 26

Third party administrators (TPAs) administer

Back 26

self-insured or self- funded plans.

Front 27

Alabama State Law states that uninsured motorist coverage is not required, but

Back 27

must be offered, and is automatically included unless the insured rejects it in writing. It provides coverage for bodily injury only. Some states allow property coverage to be included by an endorsement.

Front 28

If the offense charged in the indictment is a misdemeanor, the defendant must be discharged on giving sufficient bail, but the amount of bail must be at least:

Back 28

$ 50

Front 29

Every person engaged in the business of making and charging bail bonds (other than in Cullman County) must furnish a bond in the amount of:

Back 29

$ 25,000

Front 30

The Equipment Breakdown policy covers

Back 30

sudden and accidental loss.

Front 31

In Alabama, the Insurance Commissioner is:

Back 31

Appointed by the governor.

Front 32

An apartment dweller would need which of the following homeowner forms?

Back 32

HO-4

Front 33

If an employee accidentally turns off the restaurant’s freezer and the entire inventory of ice cream is ruined, does the Businessowners Coverage Form cover the loss?

Back 33

This loss is not covered.

It can be covered using BP 04 15–Spoilage Coverage endorsement.

Front 34

What workers compensation benefits, if any, can dependent children of an employee killed in an industrial accident expect to receive in most states?

Back 34

Income benefits until reaching the age of 18, or longer if enrolled in school.

EXPLANATION:Dependent children of an employee killed in an industrial accident generally receive income benefits until reaching the age of 18, or for a longer period (depending on the state) only while they remain enrolled in school.

Front 35

Which of the following is the amount of coverage provided on an attached garage of a home insured under an HO-3 for $100,000?

-NO ADDITION COVERAGE

-25,000

-50,000

-20,000

Back 35

No additional coverage.

EXPLANATION:A garage attached to a dwelling is considered to be one structure therefore, no additional coverage over and above the $100,000 is provided. If the structure were a separate structure it would be covered for an additional $10,000.

Front 36

What is the purpose of an installation floater?

Back 36

To cover property belonging to a contractor or others that is intended to become a part of a structure.

Front 37

Which of the following would be found in a yacht policy?

Back 37

Liability coverage.

EXPLANATION:A yacht policy is an ocean marine type policy which covers the main risks associated with watercraft. It also covers use on fresh water rivers and lakes. Yacht policies contain liability insurance. These policies also offer hull, medical payments and Longshore and Harbor Worker coverage to cover work related injuries to the captain and crew.

Front 38

In Alabama who can be exempted from workers compensation coverage?

Back 38

An officer of a of a corporation or LLC

EXPLANATION:Exemptions apply to employers with less than five employees and also to corporate officers. Officers and members are considered employees if the company is incorporated or is an LLC. If a business has more than four employees, it is required to carry workers compensation by law.

Front 39

Under the Motor Carrier Act of 1980, a vehicle hauling excess oil, explosives or nitrous gases is required to carry a minimum liability limit of:

Back 39

$5,000,000

Front 40

The verdict in a personal injury liability suit was higher than the insured’s underlying liability policy’s limit of insurance. In this situation:

Back 40

The insurance company providing the insured’s umbrella liability policy can appeal the case at its own expense even if the insured and the company providing the underlying policy do not appeal..

Front 41

A consumer reporting agency may not furnish a report containing:

Back 41

Medical information..

Front 42

The burial expense under workers compensation coverage is:

Back 42

$6500

Front 43

All of the following are standard exclusions in the H0-3 form, EXCEPT:

Inherent vice

Wear and tear

War

Breakage

Back 43

Breakage

Front 44

A company has been hired to determine the

extent of pollution damage and recommend methods of its removal. However, it fails to identify some of the pollutants. What coverage might this company need to cover their liability exposures?

Back 44

Environmental errors and omissions coverage.

Front 45

Which of the following would be covered under the "Other Than Collision" coverage of a personal auto policy?

lightening

punctured tire

wear and tear

breakage

Back 45

lightening

Front 46

Supplemental payments under liability policies are:

Back 46

In addition to the policy limits

Front 47

The insured carries a Businessowners Policy (BOP). If the premises become 69% or more vacant, what can the insurer do?

Back 47

The insurer can cancel the policy.

Front 48

Don Davis seeks coverage for his manufacturing company to include Premises Liability, Products Liability, Insured Contracts, and Completed Operations. Which of the following policies would cover all of these loss exposures?

Back 48

Commercial General Liability

Front 49

Which of the following is NOT a type of “fiduciary” bond?

Administrator bond

Executor bond

Guardian bond

Appeal bond

Back 49

APPEAL BOND

Front 50

Which of the following is not needed for rating the premium in the BOP?

Back 50

Square foot area.

Front 51

Who are the parties to an appraisal clause in a property insurance policy?

Back 51

Two appraisers and an umpire.

Front 52

The full replacement cost of an insured building does not include the value of any:

Back 52

Underground pipes.

Front 53

Injuries in which of the following would NOT be covered for medical payments under the general liability policy?

Back 53

An office of the named insured in Acapulco,

Mexico.

EXPLANATION:Mexico is outside the covered territory.

Front 54

In a commercial crime coverage form with the computer fraud coverage, which of the following would be covered?

Back 54

Fraudulent instructions to a financial institution to pay money from a customer’s transfer account is correct.

EXPLANATION:Computer fraud coverage covers loss or damage to money, securities and other property due to the use of a computer to fraudulently transfer that property from inside the premises or banking premises to a place or person (other than a messenger) outside the premises.

Front 55

Coverage F under the farm forms covers which of the following?

Back 55

Unscheduled personal property

Front 56

What is the standard minimum limit for personal liability coverage on homeowners policies?

Back 56

$100,000 per occurrence

Front 57

With crop insurance policies, the coverage period is usually:

Back 57

Limited to the growing period for the particular crop being insured..

Front 58

An unendorsed blanket fidelity bond:

Back 58

Does not list the names of the employees

a type of fidelity bond covering an employer for dishonest acts by employees. The bond grants blanket coverage to all employees in the service of the employer during the term of the bond. Employee names do not need to be listed on the bond.

Front 59

"small grain" crop policy consists of

Back 59

wheat, barley, as well as oats.

Front 60

The covered territory for aircraft coverage does not apply to which of the following?

Back 60

Puerto Rico.

Front 61

Which of the following losses is NOT excluded under the Physical Damage coverage of a personal auto policy?

Back 61

Damage to a covered auto while being used as part of a car pool.

An exception is made in the policy to allow coverage while the vehicle is involved in a car pool. Coverage is excluded if the vehicle is used as a livery.

Front 62

Which of the following is an example of "assumption of risk."

Back 62

Fred was in a hurry to get to work. He took a shortcut over a bridge marked “condemned,” which collapsed under his weight.

EXPLANATION:When Fred took the shortcut across a condemned bridge he assumed the risk.

Front 63

What does “Transfer Of Your Rights And Duties Under This Policy” refer to in the BOP?

Back 63

The Subrogation Clause.

EXPLANATION:This is another way of referring to the subrogation clause wherein the insurance company assumes the rights and duties of the insured (unless the named insured has waived their rights) to seek reimbursement from a third party that caused the loss.

Front 64

What is the definition of custom farming?

Back 64

Farming for Others.

Front 65

What is a Reporting Form policy?

Back 65

A policy that requires the insured to report the value of the property insured at certain time intervals.

Front 66

Losses caused by all of the following are covered under the National Flood Insurance Program, EXCEPT:

Back 66

Sewer backup

Front 67

An insurance contract is considered:

I. Aleatory.II. Unilateral.III. Adhesive.IV. Conditional.

Back 67

ALL OF THESE

An insurance contract is also a personal contract, a contract of utmost good faith, and based on the principal of indemnity.

Front 68

Which of the following is not an implied warranty under an ocean marine policy?

Back 68

Protection and indemnity

EXPLANATION:Protection and indemnity is a form of ocean marine liability coverage and is not an implied warranty.

Front 69

Which of the following statements is true about the Automobile Assigned Risk Program?

Back 69

The program designates an insurance company as the insurer of a specific insured.

EXPLANATION:Neither the agent, nor the insured, can designate the insurer that will accept the risk. The program makes this determination. The agent can request a certain company and often his or her request will be accepted.

Front 70

During a tornado a barn is destroyed when a section of its wall is blown down, knocking over a heater, which sets the barn on fire and creates smoke. The proximate cause of this loss is:

Back 70

TORNADO

EXPLANATION:Proximate cause is an unbroken chain of events that leads to the loss. In this question the tornado started the chain of events that lead up to the fire in the barn and the smoke.

Front 71

The insured has a primary liability policy with a limit of $300,000 per occurrence and a $1 million umbrella liability policy with a $10,000 self-insured retention limit. The insured became liable for $800,000 in damages that are excluded by the underlying policy, but not by the umbrella policy. How would this case likely be settled?

Back 71

The insured would pay $10,000, and the umbrella policy would pay $790,000.

EXPLANATION:Since the underlying policy excludes coverage and assuming the umbrella provides the coverage, the umbrella policy would pay the claim less the $10,000 self insured retention limit.

Front 72

In every state, some employees or employments are exempt from workers compensation laws. Which of the following is most true about workers compensation benefits for these employees?

Back 72

Coverage may be made available voluntarily by the employer

EXPLANATION:For employments falling outside the scope of workers compensation laws, employers may voluntarily make benefits available to these employees through self-insurance of by purchasing standard workers compensation insurance.

Front 73

The insurance company does not pay for certain damaged property under an Equipment Breakdown policy. Identify the property.

Back 73

OBSOLETE PROPERTY

EXPLANATION:The insurance company does not pay for damaged property that is obsolete and useless to the named insured.

Front 74

A steam boiler insured under an Equipment Breakdown policy explodes and causes severe damage to the building and the contents. If a fire ensues as a result of the explosion, what coverage will the policy pay?

Back 74

Only the damage caused by the explosion.

EXPLANATION:The Equipment Breakdown policy would only pay for the damages caused by the explosion. A commercial property policy would pay for the resultant fire damage.

Front 75

A furrier customers policy does not cover:

Back 75

Loss in excess of the value of the property as declared by the owner.

Front 76

As respects flood insurance the RCBAP (residential condominium building association policy) will settle claims on what basis?

Back 76

The RCBAP settles losses on a replacement cost basis.

Front 77

The insured is a large super market and maintains a large checking account balance. An employee has a friend that was told in confidence that the “transfer account” contained $200,000. The friend, without the employee’s knowledge, pretends that he is the employee with the authority to conduct transactions on behalf of the insured and sends a fraudulent electronic request to the bank to transfer the funds with the intent of stealing them. What coverage would the insured need to cover this claim?

Back 77

Insuring Agreement 7 "Funds Transfer Fraud"

EXPLANATION:Insuring Agreement 7 is a new agreement that provides additional coverage that was previously available as an endorsement. Coverage is provided for a loss of funds as a result of a fraudulent instruction upon which an institution relied in order to transfer funds from the transfer account.

Front 78

Liability Coverage under the Personal Auto Policy includes:

Back 78

Both bodily injury and property damage coverage

Front 79

An item is covered on a personal articles floater. Under which of the following circumstances would the item be covered?

Back 79

Breakage.

EXPLANATION:The floaters provide "all risks" of loss coverage subject to exclusions. Some of the property that is covered under the floaters includes the peril of breakage.

Front 80

Under a directors and officers policy, when can the insurance company reimburse the corporation for reimbursement to directors and officers for defense and damages paid in legal proceedings?

Back 80

When allowed by its bylaws.

EXPLANATION:These expenses and costs are covered if provided in the bylaws of the corporation.

Front 81

Under the HO-3 form if an insured and an insurance company cannot agree on the amount of a loss, the insurance company may take which of the following actions?

Back 81

Demand an appraisal of the loss

EXPLANATION:This is one of the conditions in dwelling and homeowner policies in case of a dispute between the insured and the insurer as to the value of the loss.

Front 82

The intentional misrepresentation or concealment of known facts for the purpose of gaining an advantage over another party is known as:

Back 82

Fraud.

The key is "intentional misrepresentation for the purpose of gaining an advantage." Fraud is an intentional act designed to deceive and induce another party to gain an advantage or to part with something of value.

Front 83

An Alabama licensee who is subject to the continuing education requirement must complete ______ hours each year.

Back 83

12 classroom.

Front 84

Which of the following policy provisions would be found in a standard workers compensation policy’s conditions section?

Back 84

Certain rights of the insurer and insured

EXPLANATION:The "conditions" section of the standard workers compensation policy contains five clauses: the insurer’s right of inspection, the long-term policy condition, transfer of the insured’s rights and duties, the right of cancelation by either party, and the first-named-insured condition.

Front 85

What personal auto endorsement is needed when two persons living in the same household, other than husband and wife, who jointly own a private passenger auto or pickup or van?

Back 85

Joint Ownership Endorsement

EXPLANATION:The endorsement can be issued to cover two or more persons who live in the same household or two or more individuals who are related in a way other than husband and wife.

Front 86

Which of the following losses would be covered under garagekeeper's legal liability coverage?

Back 86

Theft of a customer's AM/FM stereo radio permanently installed..

EXPLANATION:Losses caused by the dishonest acts of employees are excluded under this coverage. Losses caused by faulty work are covered under garage liability coverage. CD’s are excluded under garage keeper’s legal liability coverage.

Front 87

The broad and special dwelling forms (DP-2 and DP-3) will provide replacement cost coverage for buildings if the amount of insurance written on the building is at least:

Back 87

80% of the full replacement cost at the time of the loss.

EXPLANATION:If the insured carries less then 80% of the replacement cost of the dwelling, the insured will be penalized in case of a partial loss.

Front 88

Which of the following pollution losses would be covered under the garage liability policy?

I. Escape of toxic sludge from a dump site the named insured utilizes to store garage waste.

II. Pollution of a creek caused by gasoline leaking from the ruptured fuel tank of a truck following a collision with another vehicle.

Back 88

II only. .

EXPLANATION:Only escaped pollutants that are needed for the proper operation of the vehicle (such as fuel, oil, or battery) are covered.

Front 89

Information about the premium and policy limits, the identity and address of the named insured, and the policy period is found in which part of an insurance policy?

Back 89

Declarations

EXPLANATION:The declarations page is usually the first page in an insurance policy. The conditions clause spells out the duties of the insured and insurer in case of a claim. The insuring agreement contains the promises of the insurer. Exclusions are items not covered in the policy.

Front 90

The insured carries Insuring Agreement 4 "Inside the Premises-Robbery or Safe Burglary of Other Property" coverage. A night watchperson and a janitor are carrying around some of the property belonging to the store and they are robbed. Will this insuring agreement provide coverage?

Back 90

Neither a night watchperson nor a janitor is considered custodians and the loss would be denied.

Front 91

How is personal property of a dwelling covered under a farm policy?

Back 91

Actual Cash Value Basis

EXPLANATION:The property is covered on an actual cash value basis. Like a homeowner policy, the replacement cost endorsement may be attached for an additional premium.

Front 92

The ocean marine coverage which insures either prepaid shipping charges or the income to be earned for moving cargo is:

Back 92

Freight insurance

Front 93

Fly-By-Night Construction Company has a general aggregate limit of $500,000 and a per occurrence limit of $250,000. Fly-By-Night is determined to be liable for a total amount of $1,000,000 in an accident involving five people. The maximum the insurer will pay is:

Back 93

$250,000 and the costs to defend defend the suit. .

EXPLANATION:The insurer cannot pay more than the occurrence limit for all claims as a result of an accident. The insured is underinsured because the limit is $250,000. The costs to defend are in addition to the limits of liability.

Front 94

If your insurance company cancels your commercial insurance, whom must they notify?

Back 94

They must notify the first named insured listed on the policy.

Front 95

If a building insured under a BOP has been vacant or unoccupied beyond ___ the insurer can send the insured a notice of cancellation.

Back 95

60 days.

Explanation:

If the risk has been vacant or unoccupied beyond 60 consecutive days, the insurer can send the insured a notice of cancellation. Buildings with 65 percent or more of their rental units or floor area remain vacant or unoccupied are considered vacant under this provision.

Front 96

The commercial auto policy can be used to cover which of the following?

Back 96

A semi-trailer.

Explanation:

The semi trailer is the only one that fits the definition of vehicle under the commercial auto policy. Mobile equipment must be added by endorsement.

Front 97

Transportation expenses under the auto physical damage coverage would be considered:

Back 97

An indirect loss.

Explanation:

Transportation expenses in case of a physical damage loss to a covered auto would be considered an indirect loss. The direct loss is the damage to the vehicle.

Front 98

Commercial glass coverage will not pay for damages caused by:

Back 98

War

Front 99

Which of the following is not an "additional coverage" under homeowners liability Section II coverage?

-Payments made by the insurer to settle a claim -Interest accruing after a legal judgment is entered -Insurer’s costs in investigating a claim -Damage to Property of Others

Back 99

Payments made by the insurer to settle a claim.

Explanation:

Settlements paid by the insurer come from the limits of liability shown on the declarations page and are not an "additional coverage."

Front 100

Which of the following watercraft losses are excluded under a Homeowners policy?

I. Theft off the residence premises.
II. Windstorm damage while the insured's boat is docked at the marina.
III. Fading of the canvas tarp which covers a boat.
IV. Earthquake damage.

Back 100

I, II, III, and IV

Explanation:

Homeowner's policies have specific limits and exclusions applying to watercraft. Whereas earthquake damage to and fading of ANY property would be excluded (because fading is inevitable and not accidental) theft of watercraft off-premises and windstorm damage to a boat that is not in an enclosed building are specifically excluded.

Front 101

An insurance agent represents the interest of:

Back 101

The insurance company.

Explanation:

Insurance agents are appointed to act as representatives of insurance companies. Brokers represent the insured.

Front 102

Agent Rice informs the insured that he needs to secure motor vehicle records on all of the drivers in the household based on company requirements. This is an example of Agent Rice's:

Back 102

Implied Authority.

Explanation:

Implied authority is the authority the agent believes he has in order to do his job properly. In order to write auto insurance, the agent needs to know what is on the motor vehicle driving record of all the drivers in the household.

Front 103

Which of the following is true regarding debris removal under the dwelling forms?

Back 103

Coverage is included in the dwelling and contents coverage.

Explanation:

Debris removal is part of the limit of coverage. It does not have a specific limit and is tied to the overall limits of the dwelling and contents coverage. Coverage is limited to "reasonable expenses" to remove the debris.

Front 104

In the ocean marine insurance, which of the following is considered to be the most important implied warranty?

I. Seaworthiness.
II. Condition of the cargo.
III. Legality.

Back 104

I only.

Explanation:

All of the responses are implied warranties in ocean marine insurance. The most important is considered to be the seaworthiness of the vessel.

Front 105

Which crime coverage would cover embezzlement?

Back 105

Forgery and alteration

Explanation:

Forgery is defined as any false writing with intent to defraud. The act of signing someone else's name with the intent to deceive is considered forgery. Signing your own name with intent to deceive

Front 106

Which of the following may be eligible for a FORTIFIED Home Hurricane Designation?

Back 106

Single-family homes.

Explanation:

To qualify, the home must be a single-family, detached structure built on a permanent foundation. Townhomes, duplexes, and other multi-unit buildings will not qualify.

Front 107

A common carrier is not held liable for the loss of a shipper’s goods when the loss results from:

Back 107

An act of God.

Explanation:

They are not responsible for acts of God such as floods, hurricanes or for the negligence of the shipper (poor packing).

Front 108

Which of the following injuries would be covered by Medical Payments Coverage?

Back 108

Injuries sustained by members of a car pool while riding in the insured’s car

Front 109

The insured owns a two family dwelling and is covered under a homeowner policy. One of the units is rented. The insured also maintains a small incidental business in the structure. In case of a covered loss, which of the following would NOT be paid under Coverage D (loss of use)?

Back 109

Loss of income from the incidental business

Explanation:

Loss of use coverage would not apply to the loss of income from the business. It would cover the loss of rental income and the additional living expenses of the insured.

Front 110

The hull coverage in an aircraft policy does not cover which of the following?

Back 110

Transporting devices.

Explanation:

The policy does not cover transporting equipment like a trailer. The hull value includes instruments, radios, autopilots, wings, engines, and other equipment attached to or carried on the plane as described in the policy.

Front 111

Which of the following is a not a common exclusion in inland marine insurance?

Back 111

Earth movement.

Explanation:

Common exclusions in commercial inland marine include government action, nuclear hazard, war, loss of use and loss of market, dishonest acts by an insured or its employees, voluntary parting of property by false pretense, and unauthorized instructions to transfer property.

Front 112

Which of the following would be an example of a moral hazard?

Back 112

Embezzlement.

Explanation:

Embezzlement would be a deliberate act and therefore, be considered a moral hazard.

Front 113

Under the discovery clause in the loss sustained policy, which of the following is covered?

Back 113

A loss discovered up to one year after the policy expired but that occurred during the policy period.

Explanation:

The discovery clause in the loss sustained form states that losses that occur during the policy period, but are not discovered for up to one year after the policy has expired, can be covered under the expired policy. The discovery clause in the discovery form provides coverage during the policy period or within 60 days after the policy expires for coverage to apply.

Front 114

Which of the following is excluded on the commercial property special causes of loss form?

Back 114

Smoke from industrial operations

Explanation:

Smoke, vapor, or gas from industrial operations is excluded on the special causes of loss form. Personal property is a subject of the building and personal property coverage form. Fire damage is fully covered when a building is unoccupied. When a building is vacant 60 or more days, fire damage is covered, but settlement will be reduced by 15%.

Front 115

An insured covered under a homeowner policy is in the process of declaring bankruptcy. What are the insurer's obligations if the insured has a covered claim?

Back 115

All covered claims must be honored.

Explanation:

The fact that the insured has declared bankruptcy does not affect it's obligation to honor a covered claim.

Front 116

Under the commercial auto policy with respect to physical damage to a covered vehicle, which of the following is true regarding diminution of value?

Back 116

It is specifically excluded.

Explanation:

A decrease in the value because of an accident is not a covered loss in most states. The policy excludes this decrease in value when a covered vehicle has been damaged and causes a decrease in value even though it has been repaired.

Front 117

Under Coverage E - Scheduled Farm Property, how is the property covered?

Back 117

For the limit shown in the policy declarations.

Explanation:

The property is covered for the limit shown on the declarations page of the policy for the property specifically scheduled.

Front 118

The Commercial Inland coverages can be

included in:

Back 118

A commercial package policy.

Explanation:

When the Commercial Inland coverages are included in the Commercial Package policy, monoline endorsements are included which may apply to all sections of the policy. A CPP policy must include two or more coverage parts to qualify for this type of insurance contract.

Front 119

All the following are basic types of construction, except:

Back 119

Retro-sided

Explanation:

Retro-sided is not a type of construction. The other three are all types of construction that affect the insurance rates charged for property insurance.

Front 120

A watercraft policy would pay for which of the following losses?

I. A boat's motor is stolen before the insured reports its acquisition to the insurance company.
II. A boat that sank in 40 feet of water is refloated at a cost of $700.

Back 120

II only.

Explanation:

This additional coverage pays for reasonable costs to remove or dispose of the insured watercraft if it is wrecked or sunk. Generally, coverage applies if the loss is caused by an insured peril.

Front 121

Which of the following persons is EXEMPT from insurance licensing requirements?

Back 121

A personnel officer who enrolls agency employees in a group health insurance program.

Explanation:

Persons who do not come in contact (either in person or through another mode of communication) with the insured clients are usually exempt from insurance licensing requirements.

Front 122

John's next door neighbor, Sam, dumps hot ashes in John's trash dumpster starting a fire and causing severe damage to John's home. John's insurance company pays the loss and then looks to Sam for payment. This is an example of:

Back 122

Subrogation

Explanation:

When a insurance company pays a loss on behalf of their insured caused by a third party, they are entitled to assume the rights of the insured and pursue reimbursement from the party that caused the loss unless prevented by policy provisions.