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26 Cards in this Set
- Front
- Back
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Which of the following bonds are used by financial institutions? |
Standard form #24 is a commonly used financial institution bond used by banks and various financial oriented agencies. The other bonds are fidelity and surety bonds and are used to either guarantee performance of a task or that dishonest acts will not happen. The financial institution bonds are similar to the crime insurance policies used by businesses. |
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A licensed agent in Georgia has sold a policy for an insurer that has not obtained a Certificate of Authority in Georgia. What could occur if the insured suffers a covered loss and it is denied by the company because it is not licensed in Georgia? |
The company will be forced to pay the claim is incorrect. The correct answer is: The agent could be held personally liable for the claim to the same extent as the insurer. EXPLANATION:Violators of this Code section will be personally liable to the same extent as the insurer upon every contract of insurance made by the insurer with reference to a risk having a location in this state, if the violator participated in the solicitation, negotiation, or making of the contract or in any endorsement to the contract, in any modification of the contract, or in the collection or forwarding of any premium or portion of the premium relating to such contract. |
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The common definition of theft in commercial crime forms: I. Excludes mysterious disappearance II. Includes employee dishonesty. |
Your answer: Neither I nor II is incorrect. The correct answer is: I only. EXPLANATION:"Theft" is any act of stealing and includes burglary and robbery. It also includes the taking of property by stealth (action designed to escape notice), which is a form of mysterious disappearance. The presumption of theft must be evident; merely losing money is not covered. This becomes evident as we remember for a risk to be insurable the loss must be definite and definable. This means date of loss must be evident as well as method and value. |
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The term “undamaged stock” in Equipment Breakdown coverage refers to: |
Your answer: It means the insurer is not liable for any damage to the stock is incorrect. The correct answer is: Refers to the reduction in the value of the stock. EXPLANATION:This term applies to the reduction in value of undamaged stock parts that become unmarketable. |
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Which of the following would be covered under a dwelling policy? |
Your answer: Fire, lightning and removal is correct. A basic dwelling policy covers the dwelling for fire, lightning and the removal of property from the premises. The purpose of the removal clause is to protect the property from additional damage from these perils or other perils that may be covered by the policy. The removal clause appears in all property policies. When an insured does not take action to protect and preserve the property from further damage, he or she is considered to be guilty of neglect and this absence of care could affect the adjusting of a claim. The term neglect is found in the conditions of the policy, which specifies the duties of the insured in case of a loss. Question 39 of 100 |
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Which of the following statements concerning installation floaters is not true? |
Coverage is written on a named perils basis only. |
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What is the percentage of coverage for the "loss of use" under HO-3 form? |
30% (Coverage A) |
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The promise by one party that is conditioned on an uncertain event and where the value given by each party is unequal is called: |
Aleatory. The insured pays a small premium in exchange for something greater if a loss should occur. The value given by each party is unequal. |
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Under the "regular program" a flood insurance policy will insure a single family residence for up to: |
The limit under the regular flood program is $250,000. Under the emergency flood program the dwelling is covered for only $35,000. |
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What symbol is used for a hired auto in a commercial automobile policy? |
Symbol 8 is used to provide hired auto coverage in a commercial automobile policy. It also includes leased, rented or borrowed. |
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All of the following statements about the limits of insurance under the CGL policy are correct, EXCEPT: |
The "Damage to Premises Rented to You" limit applies to any direct damage the insured negligently causes to its rented building.. Damages to Premises Rented to You only extends to claims for damage to a leased building arising out of fire as a result of the insured's negligence. |
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Which of the following characterizes the fact that only the insurance company is the only party legally bound to perform its duties under the policy? |
An insurance policy is one-sided or unilateral because only the insurance company is legally bound to perform its part of the agreement. If an insured pays a premium and a loss occurs, the insurer is legally bound to pay for the loss under the terms of the policy. However, insureds are not legally obligated to pay premiums. If an insured stop paying premiums, the insurance company can cancel the contract but it cannot sue the insured for breaking the contract. On the other hand, if an insured fails to comply with conditions and duties specified in the contract, the insurance company may deny an insured’s claim. |
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Which of the following Commercial Inland Marine coverage forms covers payments that are due to the insured from customers when these payments cannot be collected due to loss or damage of records? |
Your answer: Valuable Papers and Records is incorrect. The correct answer is: Accounts Receivable. The purpose of accounts receivable coverage is to protect the insured when their records have been destroyed or damaged by a peril insured against. It pays to reconstruct the records and it also pays for the losses sustained by the insured due to the destruction of the accounts receivable records. |
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Errors and omissions claims may be brought against insurance agents by: |
Your answer: Their clients and the agent's insurers is correct. |
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The form used to report the insured’s actual and estimated business income under an Equipment Breakdown policy is called: |
Your answer: Earnings reporting form is incorrect. The correct answer is: Business income—Report of Values . This endorsement gives information to the insurer as to the actual values and estimated values of the insured's business income. This enables the insurer to charge a proper premium for the business income exposures that are covered under the boiler and machinery program. |
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When an insured is liable for causing an intentional injury, under what circumstances, if any, will an umbrella liability policy usually cover such a loss? |
Your answer: Never, because the injury was intentional is incorrect. The correct answer is: Only when the injury is bodily injury, and the insured used reasonable force to protect persons or property. EXPLANATION:The exclusion reads as follows: Expected or Intended Injury - "Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property. |
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Mrs. Vincent is covered on a PAP policy which covers her 2012 Ford SUV. She carries liability and full physical damage coverage. Her neighbor owns a 2002 Chevrolet pick up truck with liability coverage only. Mrs. Vincent borrows the truck to pick up lawn furniture, parks the truck at Home Depot and leaves the keys in the ignition. The truck is stolen and later found wrecked. Which of the following would apply? |
Your answer: The loss would be covered under her neighbor's policy. is incorrect. The correct answer is: The loss is covered under Mrs. Vincent's "other than collision coverage.". EXPLANATION:The loss is covered under Mrs. Vincent's policy under the "Other Than Collision" coverage because the damage resulted from the theft. Since the neighbor did not carry Physical Damage coverage Mrs. Vincent's policy would be primary. If the neighbor carried full Physical Damage coverage then Mrs. Vincent's policy would be excess. |
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In connection with the bonding business which of the following statements is NOT true? |
Your answer: A surety bond protects the obligee from sustaining a loss. is incorrect. The correct answer is: A surety bond protects the principal from sustaining a loss.. EXPLANATION:The purpose of a surety bond is to protect the obligee from sustaining a loss. A contractor provides the bond, which is issued by the surety for the benefit of the obligee who would be the party contracting with the contractor to perform under a contract. |
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Georgia has a valued policy law that applies to insurance on a one or two family dwelling. If a total loss occurs to the dwelling after the policy has been in effect for 30 or more days, the insurance company must: |
Pay the full amount of insurance on the dwelling. is correct. EXPLANATION:Under the Georgia valued policy law, the full limit of the policy must be paid for a total loss regardless of the actual cash value of the property. |
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An insured’s house and its contents are damaged by fire. Under the conditions section of a homeowner policy, the insured is required to take all of the following actions in order to collect from his or her insurance company, EXCEPT: |
Your answer: Submit a sworn statement of loss to the insurer within 60 days after the loss. is incorrect. The correct answer is: Replace the damaged property within 60 days after the loss.. EXPLANATION:The policy does not contain a provision that the property must be replaced within 60 days after a loss. |
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All of the following are true regarding the "write your own" program under flood insurance, EXCEPT: |
Insurers voluntarily participate in the program; they are not required to do so. |
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Which of the following is true in bonding? |
Both a fidelity bond and surety bond promise to do something. is correct. EXPLANATION:A fidelity bond promises to cover an employer when the employee steals from the company or organization and a surety bond is a promise that something, usually a project (example would be constructing a building), will happen as agreed. |
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The insured is covered under a BOP and sustains a direct loss to his building and contents. What is the period of time the policy provides coverage for the loss of income? |
The BOP automatically includes loss of income on an actual loss sustained basis for up to twelve months after the loss even if the policy was set to expire in the meantime. |
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Dwelling forms provide what amount of coverage for grave markers and mausoleums? |
The dwelling forms do not provide any coverage for these items. The homeowners forms provide a limit of $5,000. |
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An insurance company that generally fails to affirm or deny coverage of claims within a reasonable period of time after receiving proof of loss may be found guilty of: |
Most states have passed laws outlining time restrictions regarding claim payment. A violation can cause an insurer to be guilty of unfair claims settlement practices. |
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In crime insurance, a custodian is described as which one of the following? |
Your answer: An authorized person outside the premises in charge of money. is incorrect. The correct answer is: An authorized person inside the premises. . |
