Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
668 Cards in this Set
- Front
- Back
- 3rd side (hint)
|
Insurers can recoup payments under the Terrorism Risk Act (which was extended in 2007 to expire 12/31/14) by: |
A surcharge in the rates for insureds. |
Commercial property and casualty insurers will collect (by policyholder surcharge) the mandatory and discretionary recoupments and remit them to the federal government. Surcharges cannot exceed three percent of any policy's annual premium. The Treasury Secretary, however, has discretion to make certain adjustments to the surcharge and its timing.
|
|
|
When can two insurance companies arbitrate a subrogation question? |
When both companies consent to arbitration |
Both companies must consent to the arbitration
|
|
|
Who makes a declaratory judgement? |
The court |
The court makes the declaratory judgment.
|
|
|
An HO-2 form sets special coverage limits on all of the following items, EXCEPT: |
Television sets |
Furniture is not subject to the special limit provisions of the policy.
|
|
|
An insured's television set is damaged while at a repair shop. The interest of the repair shop is not covered because of which of the following clauses? |
No Benefit to Bailee |
The intent of the policy is to only cover the insurable interest of the insured. Bailees such as, a TV repair shop or a dry cleaners would not be an insured under the insured's policy. They must provide their own coverage.
|
|
|
Before an authorized/non-admitted company can begin selling policies in the state of New York they must: |
Become an admitted carrier in the state. |
Although this question seems to be contradictory in that an “authorized” carrier is usually considered “admitted” in the state to do business, this question specifically states they are “non-admitted” so they must become an admitted carrier before selling business in the state.
|
|
|
In a Homeowner Policy under the additional coverage of glass breakage, building glass is: |
Covered unless the insured premises has been vacant for 60 consecutive days immediately before a loss |
The Basic, Broad, and Special Homeowner's Forms provide glass coverage to some extent, but coverage is void if the premises have been vacant for more than 60 consecutive days.
|
|
|
In New York, no suit or action against the insurer for the recovery of any claim shall be sustainable in any court of law unless all of the requirements of the policy have been complied with, unless commenced within ______ months after inception of the loss. |
24 months |
The suit must be brought within 24 months next after the inception of the loss.
|
|
|
In ocean marine insurance, each of the following is considered to be an "implied warranty" EXCEPT: |
General Average. |
Implied warranties consist of seaworthiness, condition of cargo, legality and no deviation in voyage. A violation of any of these could void coverage.
|
|
|
Instead of revoking an adjuster's license because of a violation, the Superintendent of Insurance may invoke a penalty of up to ______ for each offense up to an aggregate penalty of ______ for all offenses. |
$500/$2500 |
The penalty can be up to $500 for each offense up to an aggregate penalty of $2,500 for all offenses.
|
|
|
Insurers must maintain a complaint record for ______ after all elements of the complaint are resolved and the file is closed. |
six calendar years. |
Insurers are required to maintain complaint records for six calendar years.
|
|
|
On a homeowner policy, Coverage A would include all of the following, EXCEPT: |
A storage shed connected to the dwelling by a utility line. |
Structures connected by a fence or utility line are considered to be "other structures" (Coverage B) under homeowner forms. Coverage A is dwelling coverage.
|
|
|
Richard Lanham has been advised by the superintendent of Insurance to cease and desist in the performance of certain infractions of the insurance code. He has had a hearing and been issued a cease and desist order. He continues to violate the cease and desist order. He can be fined a penalty of up to: |
$5,000 per violation. |
Richard is subject to a penalty of up to $5,000 for each violation.
|
|
|
The $1,000 for reasonable expenses incurred to remove property to another location to protect it from flood damage is available on flood insurance: |
for each flood loss occurrence. |
The policy will provide up to $1,000 of expenses incurred to remove property from the premises to protect it from damage for each flood loss occurrence.
|
|
|
The adjuster has uncovered some discrepancies in matters pertaining to the claim. He is unable to contact the insured to discuss these matters. What should the adjuster do? |
Send a reservation of rights letter to the insured's last known address. |
In this case the adjuster should send a reservation of rights letter to the insured’s last known address to preserve the rights of the insurer.
|
|
|
The BOP has limitations on the square footage in regard to eligible risks. What is the maximum square footage a building can contain and still be eligible for the policy? |
35,000 square feet. |
Eligible risks cannot exceed 35,000 square feet in total floor area, or exceed $6,000,000 in annual gross sales at each location. Incidental storage buildings not exceeding 35,000 square feet and occupied by the insured may be included.
|
|
|
The insured owns a 50 HP fishing boat covered under a watercraft policy for hull insurance. He also carries a homeowner policy. He ties his boat to a tree and goes ashore to camp. The next morning he discovers that his boat is stolen. Which policy would pay the claim? |
The watercraft policy |
The watercraft policy would pay the claim. The homeowner policy excludes property more specifically insured and also excludes any boat off the insured’s premises for the peril of theft.
|
|
|
Which of the following dwelling forms provides broad form coverage for personal property? |
DP-2 and DP-3 only |
The DP-1 provides very limited coverage for personal property. Both the broad (DP-2) and the DP-3 forms provide broad form perils for personal property.
|
|
|
Which of the following is not an "insured" under homeowner policies? |
A neighbor moves into the named insured's house with all of his belongings. |
Insureds under a homeowner policy include any person responsible for the named insured's domestic animals as well as the named insured's relatives and spouses who reside with the named insured.
|
|
|
Which of the following is not considered "covered property" under all homeowner forms? |
Animals and Birds |
Animals, birds, and fish are listed as "property not covered" in all the homeowner forms.
|
|
|
Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim is negotiated? |
Advance Payment |
Most adjusters are given the authority to make advance payments when liability is clear. This relieves the financial burden on the claimant when funds are needed immediately. The remainder of the claim is settled at a later date
|
|
|
A family takes their 50 horsepower power boat to the lake on a trailer towed behind their personal auto. The pleasure boat is adequately covered under which of the following policies? |
Watercraft. |
The boat is in transit and if physical damage should occur to the boat, the watercraft policy would provide the best coverage. A yacht policy would also provide this coverage.
|
|
|
A mutual insurance company is: |
Owned by its policyholders. |
Policyholders control a mutual company and stockholders control a stock company. Therefore, the differences between a mutual and stock companies lie in ownership
|
|
|
A New York insurance licensee must advise the insurance department of a change of address within: |
Thirty days of the change |
The insurance code requires that the licensee advise the insurance department within 30-days of the change.
|
|
|
A person, firm or corporation that, for compensation, acts on behalf of an insurer in investigating and adjusting claims arising under policies issued by an insurer and who performs any duties required by the insurer that are incidental to those claims is known as a/an: |
Independent adjuster. |
This is the definition of an independent adjuster.
|
|
|
All Homeowner policies provide "Property Removed" coverage for up to how many days? |
30 days |
These 30 days are standard for all homeowner forms. There are differences in the dwelling forms. For example, the basic dwelling form DP-1 provides only 5 days to cover property removed to protect it from the perils insured against.
|
|
|
All of the following statements about HO-8 are correct, EXCEPT: |
HO-8 covers the same named perils as the HO-2. |
The HO-8 Form provides named perils coverage in Section I. The perils are the basic perils. The HO-2 includes broad form perils which makes the HO-2 Form broader than the HO-8 Form.
|
|
|
An adjuster commits an act of insurance fraud addressed by the Federal Insurance Fraud Act. The fraud does not affect the financial stability of the company. What is the maximum time the adjuster may be confined to prison? |
10 years |
This type of offense carries up to a 10 year sentence. The sentence is increased to 15 years if it affects the financial stability of the insurer.
|
|
|
An innocent party relies on certain statements made by the adjuster and is damaged as a result. The guilty party may be legally prohibited from asserting that the fact does not exist because of: |
Estoppel |
If an adjuster advises a claimant to have an item repaired, that person relies on the assumption that the adjuster has the apparent authority to bind and obligate the company. If it is determined that the claim is not covered, the insurer is estopped from denying the claim at a later date. Estoppel is intentional or unintentional behavior on the part of one party that misleads another party and creates the impression that a certain fact exists.
|
|
|
An insured is covered under a homeowner policy with the HO-3 form and $500,000 for coverage A. The dwelling is a total fire loss. What is the extra coverage provided by the policy for debris removal if needed? |
The policy pays an extra 5% of the coverage A limit. |
The policy will pay an additional 5% of the coverage A limit for debris removal.
|
|
|
Before revoking or suspending a license, the Superintendent must first send _____ notice and give the accused an opportunity for a hearing. |
10 days |
New York state law mandates a 10 day advance notice to an accused licensee of a hearing. The hearing is held to enable any evidence or testimony to be presented to the hearing officer that will either prove laws were violated or prove the accused is innocent of any wrongdoing.
|
|
|
Brian Hendricks is adequately insured with a Homeowner Policy containing a requirement to carry at least 80% of replacement cost value. If he suffered a partial loss to his dwelling structure he would be able to collect which of the following percentages of loss? |
100% |
Since the insured is complying with the 80% clause, Brian is entitled to be paid for the entire loss less the deductible.
|
|
|
Coverage E under a farmowner policy covers which of the following? |
Scheduled personal property |
Coverage E covers scheduled farm personal property. Each item to be covered is listed and an amount of insurance is stated.
|
|
|
Crop insurance provides coverage for losses to: |
The marketable portion of growing crops. |
Most forms exclude damage to the trees, vines, bushes, plants and blossoms that produce the crops. Only the marketable portion of the crop is usually covered.
|
|
|
Dan insures a home for adequate limits under a DP-2. If a flood causes $1,000 in damage, what is the maximum the insurer will pay, disregarding deductibles? |
$0 |
Flood is an excluded peril under all the dwelling forms unless fire ensues and then only the loss caused by fire is covered.
|
|
|
Diane is fined by the Superintendent for a violation of the insurance law of New York. The fine is not paid within 20 days. What action may the Superintendent take? |
Suspend or revoke her license |
If the fine has not been paid within 20 days the Superintendent will suspend or revoke the license.
|
|
|
How are crop insurance premiums calculated? |
Number of acres |
Crop insurance is based on acreage for each crop
|
|
|
If a crop insurance policy does not cover loss of the first 10% of a crop's value, but does cover a fixed percentage of any additional loss, the policy is said to be written: |
On an excess over basis |
The term "excess over" means that the coverage applies as excess, and that the insurer has no liability until the loss exceeds a particular threshold.
|
|
|
If an insured desires broader coverage than provided under the homeowners program for camera equipment this coverage can be obtained through: |
Scheduled Personal Property Endorsement. |
In order to provide specific coverage for specified personal property the scheduled Personal Property Endorsement should be used. This provides "all risk" coverage that is broader than the coverage under the HO forms and has less exclusions.
|
|
|
If the insured carries a DP-2 dwelling form and insures the dwelling for 80% of its replacement cost value, what will he be paid if his 30 year old roof sustains $10,000 in damages(disregarding any deductible)? |
$10,000 |
If the insured carries 80% to value he would be entitled to full replacement cost coverage for his damaged roof.
|
|
|
In New York, if an insured and an insurer cannot agree on the value of a property loss, they each can select an appraiser. If the appraisers cannot agree, an umpire is selected by: |
A court of law. |
The appraisers are given an opportunity to select an umpire within 15 days. Upon failing to do so, the court will appoint one.
|
|
|
In New York, insurers must maintain records pertaining to claims, rating, underwriting, marketing and other pertinent information for a period of |
6 years |
The law requires that these records be maintained for inspection and/or review for at least six years.
|
|
|
In the property insurance field, a "friendly fire" is one which: |
Is intentionally set and remains within its intended limits. |
Conversely, an unfriendly fire is one that is not contained within its intended limits. A fire in a fireplace is a friendly fire until it spreads beyond the fireplace. Policies cover unfriendly fires.
|
|
|
Joann Larson, an adjuster, has had administrative action taken against her in another jurisdiction. What must she do? |
Report the final disposition of the matter to the Insurance Superintendent within 30 days |
Joann must report the results of final disposition of the matter to the Insurance Superintendent within 30 days.
|
|
|
John has commercial property coverage written on a value reporting form. The maximum limit of coverage for inventory values is $150,000. The insured has reported an inventory value of $75,000 when the actual value was $100,000. A $20,000 loss occurs. The insurer will pay: |
$15,000.00 |
The insured is required to carry a 100% coinsurance clause when the reporting form method is used. The insured is also required to report 100% of the actual inventory values. This insured reported less than the actual inventory by 25% and will only receive 75% of a partial loss or $15,000.
|
|
|
Losses caused by all of the following are covered under the National Flood Insurance Program, EXCEPT: |
Sewer backup. |
Most insurance carriers now offer sewer backup coverage. This type of loss is not considered to be a flood loss.
|
|
|
Mary has insured her one-family home under an HO-3 form with a limit of $100,000. What limit is she automatically entitled to for her unattached garage on the premises? |
$10,000 |
The HO-3 form provides 10% of the dwelling limit that applies to unattached structures. The most the insurance company can pay is $10,000 ($100,000 multiplied by 10%).
|
|
|
Medical payments coverage under the farmowners policy covers which of the following? |
Injuries sustained by an invitee |
Medical payments would pay for the injuries sustained by an invitee or guest. Coverage does not apply to members of the insured's family, roomers or boarders or tenants of the dwelling, or to farm employees.
|
|
|
Motels insured under the BOP may not exceed how many stories? |
3 stories |
Motels not exceeding three stories may be insured. There is no floor area restriction. Motels closed for more than 30 days are not eligible.
|
|
|
On an unendorsed special form BOP, how much coverage is there for theft of money & securities? |
Nothing |
Even though the special BOP is "open peril" coverage which includes theft, the loss of money and securities are still not a covered form of property. The endorsement for Money & Securities is necessary to cover this exposure.
|
|
|
Phil Smith, in helping his friend Tim Jones apply for a New York Casualty Insurance license, attests to Tim’s honesty on the application and competence to handle the duties of the license. Phil’s statement must: |
Submitted with all documentation and applications to the state |
Tim must provide statements from at least 5 members of his community attesting to his honesty on the application and to his abilities. This must be filed with the application for the license and any required supporting documentation.
|
|
|
Plumbing under the kitchen sink of an insured's condominium comes loose and leaks water all over the floor. The repair person has to tear out the floor under the sink to repair the hose. The cabinet is also damaged. What would the insured's HO-6 cover? |
All of the loss is covered except the hose |
The HO-6 would cover the water damage to the floor as well as the cost to repair the damaged floor. The repair to the hose is not covered.
|
|
|
Policies issued under the National Flood Insurance Program provide removal coverage for property which is moved to another location to protect it from a flood. This coverage applies for up to: |
45 days. |
Removal coverage is designed to avoid loss if the property can be moved elsewhere for protection against flood damage. This coverage is provided for up to 45 days.
|
|
|
Protection and indemnity coverage contained in an ocean marine policy covers:I. Liability against injuries to seamen.II. Injury to stevedores, longshoreman and harbor workers.III. Cargo, if lost or damaged through negligence. |
I, II and III. |
Protection and indemnity coverage would apply to all of these types of losses
|
|
|
Public adjusters in New York must maintain books, files and records for at least ____ years from the completion of the services rendered. |
3 |
These records must be maintained for at least 3 years from the completion of the services rendered
|
|
|
The ___ clause covers collision damage to another vessel. |
Running-Down |
The running-down clause covers collision damage to another vessel. It does not cover docks or injury to passengers.
|
|
|
The clause in an ocean marine policy that refers to "particular average" means: |
Only one party shares in the loss |
The particular average clause means only one party shares in the loss.
|
|
|
The custom farming endorsement is usually attached to a farmowners policy when receipts are at least: |
$5,000 |
The custom farming endorsement is used when a farmer is farming for others and the receipts exceed $5,000 per year.
|
|
|
The DP-2 broadens which of the following extended coverage (EC) perils? |
Explosion, Smoke and Vehicles |
When the extended coverage (EC) endorsement is attached to the DP-1 form, explosion, smoke and vehicular damages are included. The DP-2 form broadens these perils.
|
|
|
The first effort to provide insurance for land transportation risks involved an extension of ocean marine coverage known as the: |
“Warehouse to warehouse” clause. |
This is called the “warehouse to warehouse” clause. Coverage applies from the warehouse from which the goods are shipped to the warehouse of the recipient.
|
|
|
The insured has a barn on his premises. The dwelling is insured for $200,000 under a DP-2 dwelling policy. How much coverage applies to the barn? |
Nothing |
Farm property is not eligible under the dwelling policy. The barn is farm property and cannot be covered, however the dwelling can be insured under a DP-2 form.
|
|
|
The insured is covered under a Businessowners Policy. He operates a pharmacy. The building is destroyed by fire. After he re-opens, his business still has not returned to the pre-fire level. The BOP provides for “extended business” income coverage for: |
30 days |
The form would provide extended business income coverage for 30 days
|
|
|
The insured is insured under a DP-3 dwelling form and is remodeling the dwelling. He does not have a place to store the materials. His next door neighbor permits the insured to store the materials in his garage. The garage is destroyed by fire and the materials are also destroyed. Which of the following applies? |
This is included under the building coverage and coverage applies since the materials are next to the insured’s premises |
The policy would respond to pay the loss because the policy covers building materials located on or next to the insured’s premises.
|
|
|
The insured's dwelling has been vacant for 62 days. Vandals enter the home and do considerable damage. To cover up their act and to avoid detection, they set fire to the dwelling. The insurer will:
|
Deny the entire loss.
|
The entire loss will be denied because of the new changes in the coverage. Previously, fire would have been treated separately from V&MM. Now if the fire is caused by vandals when the dwelling has been vacant for more than 60 days the loss will be denied.
|
|
|
The Superintendent of Insurance believes a person has committed a violation or is engaging in a practice that could become a violation. The Superintendent believes a hearing is necessary. The hearing must be held within _____ days after the date the notice has been served.
|
Ten |
The hearing must be held within ten days after the date the notice has been served
|
|
|
The Superintendent of Insurance may approve the employment, appointment or participation of any person whose license has been revoked. Karen Jones had her license revoked and filed an application for relicensing and has waited over 120 days without a response from the Insurance Department. What should or can she do?
|
Assume the relicensing is approved
|
If the application for a license has not been approved or disapproved within the 120 days the relicensing is considered approved.
|
|
|
Under a dwelling policy (DP-2 or DP-3), what is the maximum that would be paid for additional living expenses if coverage A was $60,000? |
$12,000 |
The form provides 20% for additional living expenses and fair rental value. Therefore the policy would pay up to $12,000. Note: In North Carolina the percentage is 10%.
|
|
|
Under an Equipment Breakdown policy, all of the following are supplementary payments, except:
|
Expediting expenses. |
Expediting expenses are covered in the limit of the coverage. The other items are part of the supplementary payments, which are in addition to the policy limit.
|
|
|
Under an HO-4 which of the following are covered in Section I?
|
Personal property used by the insured in Switzerland
|
The HO-4 is designed for tenants. Section I of an HO-4 covers direct damage to personal property owned or used by an insured while it is anywhere in the world. It does not include dwellings or other structures. Some types of property are specifically excluded, such as animals.
|
|
|
Under homeowner policies personal property used for business purposes:
|
Is covered up to $2,500 on the premises and up to $1,500 off premises.
|
Most companies offer higher limits for an additional premium. Also the home business endorsement can be used.
|
|
|
Under the basic dwelling form DP-1, which of the following water damages would be covered?
|
Water used to put out a fire
|
The only water damage covered under the basic dwelling form would be from water used to extinguish a fire
|
|
|
Under the BOP, up to how many years can the insurer request to examine the books and records of an insured?
|
Three Years
|
The insurer has the right to examine the books and records of the insured for up to three years.
|
|
|
Under the DP-1, dwelling form, which of the following is true?
|
The extended coverage (EC) perils can be added by endorsement.
|
EC perils can be added by endorsement without adding the V&MM endorsement. Money and the like are excluded under Coverage C. The Broad Form DP-2 can be used instead of the Basic Form DP-1 but the broad form perils cannot be added by endorsement to the DP-1. There is no such endorsement.
|
|
|
Under the DP-2 and DP-3 dwelling forms, coverage for damage caused by vandals will be suspended, if at the time of loss the dwelling has been vacant for more than:
|
60 consecutive days. |
Vacant property creates a hazard for vandalism. The number of days was recently increased from 30 days to 60 days in practically all of the states. Coverage for vandalism and malicious mischief coverage must be added specifically to the DP-1 form. New York still uses 30 days.
|
|
|
Under the Federal Terrorism Risk Insurance Act of 2002 (extended in 2007 to now expire 12/31/14), who determines that an act of terrorism has occurred that would be covered under the Act?
|
The Secretary of the Treasury
|
The Secretary of the Treasury in concurrence with the Secretary of State, and the Attorney General.
|
|
|
Under the HO Policy Form HO-4, which of the following are covered?
|
The Insured's Contents and Personal Liability
|
The HO-4 is designed for apartment dwellers or those that live in a rented dwelling. Since they don't own the structures, no coverage is needed to cover the real property.
|
|
|
Under the livestock coverage form, how must livestock be covered?
|
80% to value.
|
The livestock form requires that the livestock must be insured at least 80% to value
|
|
|
What deductible applies to Additional Coverage–Fire Department Service Charge?
|
The policy deductible does not apply
|
Deductibles do not apply to the fire department service charge.
|
|
|
What does the property insurance term "improvements and betterment" apply to?
|
Real Property
|
When a tenant occupies a non-owned structure they may make improvements and betterments to the real property. While they are occupying the building they have an insurable interest in these items. When they move they must be left. The monies spent on improvements and betterments can be covered in property insurance.
|
|
|
What endorsement may be used under the dwelling policy to keep values current with the replacement cost of the buildings?
|
The Automatic Increase Endorsement
|
The Automatic Increase Endorsement is used to keep the coverage current as a result of inflation on construction costs.
|
|
|
What endorsement should an insured add to his or her homeowner policy to cover the replacement cost of personal property?
|
Personal Property Replacement Cost Endorsement
|
The Personal Property Replacement Cost Endorsement should be added to provide replacement cost coverage on covered personal property.
|
|
|
What is the difference between a Businessowners Policy and a Commercial Property Policy?
I. The Businessowners Policy automatically provides earthquake coverage whereas a Commercial Property Policy does not. II. The Businessowners Policy includes liability coverage, while a Commercial Property Policy would not. |
II Only
|
The Businessowners Coverage form automatically provides property and liability coverage. Neither a Businessowners nor a Commercial Property Policy would automatically provide earthquake coverage, although endorsements are available to add it.
|
|
|
What is the limit of insurance that applies to property in transit in the BOP?
|
$10,000
|
The BOP provides a $10,000 limit for property in transit
|
|
|
What is the limit under the Businessowners Policy for pollution clean up?
|
A maximum of $10,000
|
Coverage for clean-up of pollution is limited to $10,000 for all expenses to extract pollutants (a defined term) from land or water if the release of the pollutants is caused by a covered cause of loss and occurs during the policy period. The expenses must be reported in writing to the insurer within one hundred and eighty days of the earlier of the date of the loss or damage, or the end of the policy period. Note that the $10,000 is an aggregate amount for each separate twelve month period. The newer forms add the costs of testing for and the cost for testing performed, when pollutants are extracted. Monitoring, or assessing pollutants are not covered.
|
|
|
What is the percentage of coverage for the "loss of use" under HO-3, homeowner form?
|
30%
|
The percentage of Coverage A for this coverage is 30%.
|
|
|
Which of the following amounts would be paid on a covered auto suffering a total loss? The retail value is $1,250.00 and the average trade in value is $1,000.00.
|
$1,250.00 plus applicable taxes
|
In case of a total loss to a covered vehicle the insurer is required to pay the retail value of the vehicle plus any applicable sales taxes.
|
|
|
Which of the following cannot be covered under a BOP?
|
Credit Union
|
Credit unions, banks and savings and loan companies are not eligible for the BOP.
|
|
|
Which of the following is an obligation of the insured involving a covered property insurance loss?
|
Protect the property from further loss
|
The insured is obligated to protect the property from further loss or damage.
|
|
|
Which of the following is correct regarding HO-3 and an HO-5 coverages?
|
Personal property under an HO-3 is covered on a named peril basis, while personal property under an HO-5 is covered on an open peril basis.
|
The HO-3 and the HO-5 are the same in terms of dwelling exclusions, valuation on dwelling losses, and the type of personal property insured. They are different in terms of perils insured against for personal property losses.
|
|
|
Which of the following is covered property under the HO-3 form? I. Belongings of the insured's daughter while she is away at college II. The insured's garage III. The insured's dog IV. Personal property of a tenant
|
I and II only
|
Pets, no matter how valuable, are excluded under Coverage C, as is the property of boarders or renters.
|
|
|
Which of the following is not an endorsement under a homeowner policy?
|
Flood coverage
|
Flood insurance is not a homeowner endorsement
|
|
|
Which of the following would be covered under a multi-peril crop policy?
|
Low yields
|
The multi-peril crop insurance program provides protection against low yields and poor quality crops as well as prevented planting, late planting and replanting costs for most crops subject to the perils insured against. The coverage applies to income protection. Crop revenue insurance goes a step further than multi-peril crop insurance by guaranteeing farms a certain income, which allows them to manage both yield and price risk.
|
|
|
Which of the following would be eligible for a BOP?
|
A dental laboratory
|
A dental laboratory is the only one that is eligible for the BOP program.
|
|
|
While traveling in a rented car in Spain Mr. Brown has his personal property stolen. What kind of coverage should he have to cover this loss?
|
Homeowner Personal Property
|
This is covered under a homeowner policy. Personal property is covered on a worldwide basis. If a HO policy is not in force then a Personal Property Floater could be written.
|
|
|
Who is an insured under the liability section of a farm policy?
|
A farm stand employee
|
A farm employee is covered while acting within the scope of his duties. Farming includes the incidental operation of roadside stands where farm products principally produced by the "insured" are sold.
|
|
|
Crop insurance usually protects a proportion of the reduced yield following an insured loss. "Reduced yield" refers to:
|
Coverage will pay the determined percentage reduction in yield times the amount of insurance per acre, regardless of the actual crop loss.
|
The insured chooses the reduction in yield percentage. The higher the percentage the more coverage in case of a loss. Most companies prefer the insured share in the loss at least 25%.
|
|
|
A building insured under a Commercial Property policy suffers a fire and it is obvious that the building is underinsured. The policyholder demands payment for the entire loss on a replacement cost basis. The insurance company can:
|
Pay only the actual cash value of the lost or damaged property or apply the coinsurance clause
|
The insurer can pay the actual cash value of the loss or apply the coinsurance clause because the insured is underinsured. |
|
|
A common element that links inland marine and ocean marine risks is:
|
Transportation.
|
Ships transport the cargo over water. When unloaded, the transportation of the cargo continues inland. Hence the link of transportation.
|
|
|
A communication sent to an insured stating that the insurer will NOT give up a right is called:
|
Reservation of Rights Letter
|
The key word in the question is a communication sent to the insured. A Non-Waiver is agreed to by the insured and usually signed by the insured.
|
|
|
A crew member has been injured on a ship. When his medical expenses are paid, this is known as:
|
Cure
|
In ocean marine insurance this is called 'cure' and is paid under the Protection and Indemnity coverage.
|
|
|
A drug store has an ice cream counter and someone drops some of the ice cream on the floor. Both the employee and the store manager are aware of the situation. The store can be held legally liable when:
|
All of the responses are correct.
-Someone falls while the store employee is mopping the floor. -The floor is mopped but still wet. -No provisions for cleaning up have been made. |
All of the responses are correct. The store has a legal duty to protect invitees from sustaining injuries if possible.
|
|
|
A homeowner desires to have his personal property covered for losses not subject to depreciation. The insured would need: |
Replacement cost endorsement. |
The insured would need the contents Replacement Cost Endorsement.
|
|
|
A homeowner with personal property insured for $60,000 had a fire which destroyed everything. The total value of the personal property at the time of the loss was only $50,000. What principle would be violated if her insurer paid her more than $50,000?
|
Indemnity
|
Under the principle of indemnity insurance should not pay for more than the actual loss sustained by the insured, even if the policy limit is higher than the loss amount or if there is more than one policy applying to the loss.
|
|
|
A non-waiver agreement would allow the insurance company to do which of the following? |
Investigate the loss without verifying that the loss is covered |
Insurers can use a non-waiver agreement when there is a question about coverage or limits. In such a signed agreement, the claimant/policyholder stipulates and acknowledges that the insurer’s continued investigation into and the adjustment of the loss is not to be construed as an admission of coverage by the insurer.
|
|
|
A person, firm, or corporation that, for compensation, acts on behalf of an insured in negotiating the settlement of certain claims for loss or damage to property is known as a/an:
|
Public adjuster.
|
This is the definition of public adjuster.
|
|
|
A print shop is insured under a Businessowners Policy with a separate policy covering the press. If a loss occurs that is covered under both policies, how will the Businessowners Policy respond?
|
Excess coverage
|
The other insurance clause in the BOP is somewhat different than in other policies. The policy states that other coverage is considered primary (whether collectible or not) and that any coverage for the loss under the BOP will be considered EXCESS.
|
|
|
A proof of loss addresses all of the following, EXCEPT:
|
The insuring agreement in the policy that provides the coverage
|
The proof of loss does not address the insuring agreement in the policy that would provide the coverage in case of a claim.
|
|
|
A public adjuster represents the interest of
|
The insured
|
A public adjuster is an independent contractor representing solely the financial interests of the insured named in the policy.
|
|
|
A ship has negligently collided with another ship and caused severe damage. What coverage would apply to cover this claim?
|
Hull insurance with the "running down clause".
|
Hull insurance with the "running down clause" would respond to cover this claim.
|
|
|
A ship owner wanting coverage in case crew members bring liability suits for injuries sustained while working would purchase:
|
Protection and Indemnity
|
Coverage would be obtained by purchasing protection and indemnity coverage.
|
|
|
A slippery floor an example of:
|
A physical hazard.
|
This is an example of a physical hazard.
|
|
|
All of the following are covered under the Equipment Breakdown coverage form, except:
|
The breakdown of any structure or materials supporting the equipment.
|
The policy does not cover the structure or materials supporting the equipment. |
|
|
All of the following are exclusions under a DP-2, dwelling form, EXCEPT:
|
Tornado
|
Flood, earthquake, and mudslides are excluded perils. Coverage for flood and mudslides can be covered by purchasing a separate flood policy. Earthquake coverage can be purchased separately. Tornado is covered by the wind peril.
|
|
|
All of the following are exclusions under Section I - Forms HO-2 and HO-3, EXCEPT:
|
Collapse
|
The HO-8 form does not include the peril of collapse. However, the broader forms HO-2 and HO-3 include collapse. The other 3 answers are excluded under all of the HO forms.
|
|
|
All of the following are exclusions under the standard BOP form, EXCEPT:
|
Transportation
|
Transportation is a covered peril in the BOP.
|
|
|
All of the following are true regarding the "write your own" program under flood insurance, EXCEPT:
|
Insurers must participate in the program.
|
Insurers voluntarily participate in the program; they are not required to do so.
|
|
|
All of the following would not be eligible for coverage under a businessowners policy, EXCEPT:
|
Small retail store
|
The BOP is intended for small, owner-operated light businesses. Bars and taverns and auto body and repair shops are almost always excluded. The branch bank would not meet the general criteria.
|
|
|
An act of terrorism under the Terrorism Act of 2002 (TRIA) is defined as:
|
All of the responses listed are correct.
|
All of the responses are correct and are considered to be terrorism as defined by the Act. Note: The Act was extended in 2007 to expire 12/31/14.
|
|
|
An adjuster has just completed taking the statement of a witness. Which of the following must be done?
|
The witness must sign each page and have his or her signature witnessed.
|
The witness should sign each page and have his or her signature witnessed.
|
|
|
An adjuster should refrain from using derogatory remarks and abbreviations in a report because
|
The report is part of the discovery process from the plaintiff’s attorney
|
If the first or third party claimant brings suit against the insurer, all claim reports and supporting documentation is part of the discovery process.
|
|
|
An applicant for an adjuster’s license must be approved by five reputable citizens of the community where the adjuster resides. This documentation must be:
|
Included with the application for license
|
The application for the license must be approved by at least five reputable citizens of the community where the applicant resides. They must certify that they have known the applicant for at least five years and that they believe the statements in the application are true. The statements must be included with the application for the license.
|
|
|
An HO-5 form provides which of the following coverages for dwellings and their contents?
|
Open peril coverage for buildings and personal property.
|
The HO-5 form is the broadest HO form and provides open peril coverage on both covered buildings and the insured's personal property.
|
|
|
An independent adjuster represents the interest of:
|
The insurer.
|
The independent adjuster adjusts claims on behalf of the insurer and therefore, represents the interest of the insurer.
|
|
|
An individual who is needed to provide testimony for either the plaintiff or defendant in a court proceeding is served with a:
|
Subpoena
|
A subpoena directs the individual to whom it is served serves to appear before the court and provide to the court testimony regarding the matter at hand.
|
|
|
An insured can assign the policy to another only if the insurer agrees. In most cases, the insurer will not agree because an insurance policy is considered to be a:
|
Personal contract
|
An insurance policy is a personal contract and does not automatically pass to the new owner of the policy even if the insured would like it to.
|
|
|
An insured is covered under a BOP policy. He insures a piece of equipment separately under a floater policy. In case of a loss what coverage will apply under the BOP policy?
|
The BOP will be excess over the floater policy
|
The BOP would be excess subject to the policy limits if the floater does not cover the entire loss.
|
|
|
An insured is covered under a Businessowners Policy. A fire has occurred to a business a block away and the civil authorities have blocked off the street. The insured's customers cannot gain entrance to his business location. What coverages would apply to the insured's loss of income?
|
After a waiting period of 72 hours the policy would pay for loss of income of up to three weeks.
|
After a 72 hour waiting period the policy would pay for loss of income for a period of three weeks.
|
|
|
An insured's wife is wearing a diamond ring while on vacation in Europe. The ring valued at $1,500 is stolen. What coverage would apply under their Homeowner Policy?
|
The policy will pay the loss less the deductible.
|
Personal property is covered anywhere in the world. The theft limit for jewelry is $1,500. The loss less the deductible is covered.
|
|
|
An insurer fails to respond to a letter from a claimant requesting information. This is in violation of:
|
The Standards for the Acknowledgment of Pertinent Communications.
|
The insurer shall reply within a specified number of working days to all pertinent communications from a claimant that reasonably suggests that a response is expected. |
|
|
An insurer whose place of incorporation is Toronto, Canada would be identified as a/an?
|
Alien insurer.
|
Insurance companies located outside the boarders of the U.S. are known as alien insurance companies.
|
|
|
Any insurance adjuster whose license has been revoked for cause will not be entitled to apply for any other insurance license in New York until at least:
|
One year after the revocation.
|
The person must wait for one year to be eligible to reapply. There is no assurance that the Superintendent would consider a reissue of license due to the previous revocation.
|
|
|
As used in the phrase property and casualty insurance, casualty refers to
|
Liability loss or exposure
|
Casualty involves a liability loss or exposure creating a legal liability situation based on negligence.
|
|
|
Bob is purchasing a commercial property policy to cover contents of a building valued at $100,000. The policy includes an 80 percent coinsurance clause. To avoid a coinsurance penalty in the event of a partial loss, Bob should purchase a policy with minimum limits of at least:
|
$80,000
|
The value of the covered property is ($100,000) times 80% = $80,000.
|
|
|
Cause of loss forms refer to what type of coverage under a farm policy?
|
Property
|
There are three causes of loss provisions in the property coverage under a farm policy: basic, broad and special. The insured chooses which provision is to apply and pays the premium accordingly. Obviously, the special is the broadest coverage.
|
|
|
Choose from the following situations the example of assumption of risk.
|
Fred was in a hurry to get to work. He took a shortcut over a bridge marked “condemned,” which collapsed under his weight.
|
When Fred took the shortcut across a condemned bridge he assumed the risk.
|
|
|
Commercial Property Insurance usually imposes a penalty if, at the time of loss, the insured failed to maintain a minimum amount of coverage. This penalty may apply because of the:
|
Coinsurance clause
|
Commercial property forms contain an 80% coinsurance clause. This means the insured must insure the property for 80% of its value or risk a penalty in case of a partial loss.
|
|
|
Coverage G under a farmowner policy covers which of the following?
|
Covers barns, silos, fences
|
Coverage G covers barns, outbuildings such as silos, fences, radio equipment and other farm structures that are not related to the dwelling
|
|
|
Coverage under the livestock coverage form may be written on either a blanket or scheduled basis. When coverage is blanketed, a limit of liability is indicated for each applicable livestock class such as cattle, sheep, swine, goats, horses, mules or donkeys. A per animal limit is assigned. This coverage is subject to a/an ____ coinsurance clause.
|
80%
|
The coverage is subject to the 80% coinsurance clause.
|
|
|
Dwelling forms provide what amount of coverage for grave markers and mausoleums?
|
Nothing
|
The dwelling forms do not provide any coverage for these items. The homeowners forms provide a limit of $5,000.
|
|
|
Each of the following is true about the National Flood Insurance Program, EXCEPT
|
Eligibility requirements are set by private insurance carriers.
|
The Federal Emergency Management Agency (FEMA) sets the eligibility requirements for the communities.
|
|
|
Equipment Breakdown coverage does not apply to which of the following losses?
|
Vandals have destroyed a boiler
|
Coverage does not apply to loss outside the equipment (often referred to as the insured object or objects). An explosion outside the equipment is not covered whereas an explosion inside the equipment is covered.
|
|
|
Extra expense insurance covers which of the following?
|
The additional cost of continuing a business after a direct loss
|
Extra expense coverage, if written alone, would not cover loss of income. Its purpose is to cover "any" extra expense necessary to restore the business in order to continue operations.
|
|
|
Extra expense under the Business Interruption coverage is: |
Coverage to pay all of the insured’s reasonable expenses incurred in continuing normal operations as a result of a covered direct loss |
In case of a covered claim it covers basically any expense incurred by the insured to enable the insured to continue normal operations.
|
|
|
Following the payment of a claim, the salvaged property becomes the property of:
|
The insurer.
|
Unless other arrangements are made and agreed upon, after the claim has been paid, the property will belong to the insurer.
|
|
|
For the insured dwelling and other detached structures the DP-3 provides:
|
Open peril coverage.
|
The DP-3 provides open perils protection for the Dwelling and Other Structures, and named perils protection for Personal Property. The DP-1 and DP-2 forms provide named peril protection only, for the Dwelling, Other Structures, and Personal Property.
|
|
|
Harry Jones wants to apply for a temporary adjuster’s permit to act as an independent adjuster in New York. Which of the following is NOT true?
|
He must pass an interim examination
|
Harry does not have to take an interim examination to obtain a temporary adjuster’s license.
|
|
|
Homeowners Coverage C (personal property) excludes all of the following types of property, EXCEPT:
|
Property belonging to the insured's 13-year-old son while he is away at summer camp.
|
The Homeowners forms exclude certain types of property. Animals/birds/fish, property of tenants, and property that is more specifically insured are not covered.
|
|
|
How are household personal property claims settled under the farm policy?
|
Actual cash value
|
Claims under farm policies for household personal property will be settled on an actual cash value basis similar to the homeowner policy. An endorsement for replacement cost settlement is available for additional premium.
|
|
|
How are losses evaluated for payment under the Watercraft and Yacht policies?
|
Actual cash value at the time of the loss
|
Losses are evaluated on an “actual cash” value at the time of the loss.
|
|
|
How do eligibility requirements of homeowner and dwelling policies differ?
|
Homeowner's policies require that the named insured reside at the described premises while dwelling policies do not.
|
The named insured must be a resident of the policy's insured premises under the HO program.
|
|
|
How do you change the property causes of loss from risks of direct physical loss to named perils coverage under the BOP?
|
Attach the Named Perils form
|
The named peril endorsement must be attached to the policy
|
|
|
How is personal property of a dwelling covered under a farmowner policy?
|
Actual Cash Value Basis
|
The property is covered on an actual cash value basis. Like a homeowners policy, the replacement cost endorsement may be attached for an additional premium.
|
|
|
How much is covered under a Homeowner Policy for charges made as a result of a stolen credit card?
|
$500
|
The policy provides a limit of $500 for credit card forgery and counterfeit currency.
|
|
|
If a building insured under a BOP has been vacant or unoccupied beyond ____ the insurer can send the insured a notice of cancellation.
|
60 days
|
If the risk has been vacant or unoccupied beyond 60 consecutive days, the insurer can send the insured a notice of cancellation. Buildings with 69 percent or more of their rental units or floor area remain vacant or unoccupied are considered unoccupied under this provision.
|
|
|
If a loss is valued using functional replacement cost, which of the following would apply?
|
The coinsurance clause is not applicable
|
The coinsurance clause is not applicable because the coverage limit is based on the market value of the property which is probably below the 80% cost to replace it. This has been agreed to in the contract when functional replacement cost is the basis for loss settlement. Used particularly in losses involving antique, ornate or custom construction with less expensive, but functionally equivalent materials.
|
|
|
If an insured carries Coverage C under a dwelling form, how much coverage applies on a worldwide basis?
|
10% of the Coverage C limit
|
Whereas homeowners forms provide the FULL limit of personal property coverage anywhere in the world, dwelling forms cover only 10% of the personal property limit on a worldwide basis. The remainder of the personal property is covered only while on the designated premises.
|
|
|
If an insured desires additional amounts of coverage above the "Special Limits" under the Homeowners program for jewelry or firearms it can be obtained through the use of:
|
A scheduled personal property endorsement.
|
Standard Homeowners policies have "special limits" on certain types of property like jewelry, firearms, gold and silverware, etc. These special limits are relatively low. If an insured seeks higher limits than the "Special Limits" they can purchase a separate policy OR they can attach the scheduled personal property endorsement to their Homeowners policy.
|
|
|
If an insured fail to report a claim in a timely fashion the adjuster will usually:
|
Send the insured a reservation of rights letter
|
Failure to report a claim in a timely fashion denies the insurer of the opportunity to promptly investigate the circumstances of the claim. Valuable information from witness could be lost as well as other physical evidence. When this occurs, the insurer will normally send the insured a reservation letter to protect the rights of the insurer.
|
|
|
If one is found guilty of federal insurance fraud, who can permit the guilty individual to return to the insurance business?
|
Only an insurance regulatory official.
|
Only an insurance regulatory official, such as the Superintendent of Insurance, can allow the individual to return to the insurance business.
|
|
|
In a farmowner’s policy, the maximum amount payable for a loss to a satellite dish is:
|
$1,000.00
|
The pre-2000 policy forms provided $250 for a satellite dish. Under the newer forms, the limit hsa been increased to $1,000.
|
|
|
In a policy with replacement cost to damaged carpet and countertops, if replacement will not match up in quality and appearance with the undamaged property, what must the adjuster do?
|
Replace the damaged carpet and countertops and some of the undamaged property within reasonable site lines.
|
Replace the damaged carpet and countertops and some of the undamaged property within reasonable site lines.
|
|
|
In a property loss the insured is required to do all of the following, EXCEPT:
|
Repair the property within 20 days of notifying the insurer
|
The insured should not repair the property until agreed upon by the insurer.
|
|
|
In case of a total loss in an automobile accident, the adjuster will pay the insured which of the following?
I. The cost to replace the vehicle with like kind and quality if the vehicle is a current year model. II. Use the most recent publication of an "Official Used Car Guide". III. If not listed in the "Guide", obtain quotations from automobile dealers. |
I, II and III depending on the circumstances
|
Any or all of the responses listed can be options in settling a total loss claim.
|
|
|
In casualty insurance, the other insurance clause would be applicable:
|
When 2 policies are in force and both cover the filed claim
|
When two or more policies are in force covering the same claim, the other insurance clause is in place.
|
|
|
In most states, which of the following most accurately describes an "admitted" insurer?
|
An insurer which can transact insurance in the state under its Certificate of Authority.
|
Admitted insurers are those which are authorized to sell insurance in the state according to its Certificate of Authority issued by the state insurance department.
|
|
|
In New York complaint records of claims must be maintained for ______ calendar years.
|
Six
|
Insurers must maintain complaint records for six calendar years after all elements of the complaints are resolved and the file is closed
|
|
|
In ocean marine, what is covered by protection and indemnity coverage?
|
All of the responses are correct.
|
The protection and indemnity coverage applies to all of the responses
|
|
|
In order to receive full replacement cost recovery on a covered loss under a BOP, the named insured must maintain insurance limits equal to at least what percentage of the covered property’s full replacement value?
|
80% of the property value
|
The insured must maintain at least 80% of the value of the covered property.
|
|
|
In settling a claim on a dwelling fire policy with a $10,000 loss, the following companies are involved, Company A - 50%; Company B - 45% and Company C - 5%. What will Company C pay
|
$500
|
In this situation, Company C will pay $500.
|
|
|
Mr. Cato carries a watercraft policy covering his 25 foot pontoon boat. The boat is powered by a 150 h.p. motor. He transports it to the Florida Keys and operates the craft 20 miles out to sea. The boat capsizes and is destroyed. What coverage would apply to the boat?
|
No coverage would apply
|
No coverage would apply to the boat because the insured went outside the territorial limit of 12 miles.
|
|
|
None of the following can be covered by the Federal Terrorism Act insurance program, EXCEPT:
|
Commercial Property and Casualty Risks.
|
Commercial property and casualty risk are eligible. Personal insurance, crop insurance and life and health insurance are not eligible for the program.
|
|
|
On the basic dwelling policy all of the following perils are excluded EXCEPT:
|
Volcano
|
The question is about the DP-1 Basic form. War, earthquake and landslide are not named perils and are therefore excluded.
|
|
|
On what basis are flood insurance claims usually paid?
|
Actual cash value
|
Flood insurance pays on an actual cash value basis with one exception. Dwellings that are insured up to 80% of their replacement cost or are insured for the maximum limit allowed under the flood insurance program are paid on a replacement cost basis.
|
|
|
On what date must an adjuster license be renewed?
|
December 31 – even numbered years
|
The adjuster license expires December 31 of even numbered years and may be renewed for the ensuing two calendar years.
|
|
|
One of the purposes of the coinsurance clause is to:
|
Encourage insureds to insure property for most if not all of its value.
|
For most property policies, if the insured carries a limit of at least 80% of a property's value, they will receive full settlement for any loss up to that limit, and there will be no coinsurance penalty. Carrying a limit lower than 80%-of-value would involve a penalty to the insured if there were a claim. This serves as an extra incentive for the insured to carry adequate coverage.
|
|
|
Other private structures on a farm policy are defined as:
|
Another private structure on the property separated from the dwelling by a clear space.
|
The key word is "private." Barns sheds, silos and such are covered under "other farm structures." A detached garage separated by a clear space from the dwelling and used as a "private" structure and not for business purposes would be covered by this section of the policy
|
|
|
Property and Casualty Insurance can be utilized to handle:
I. Pure risks. II. Speculative risks. |
I only
|
Insurance can only be utilized to handle or transfer pure risks, those in which there can only be a loss or indemnification (but no potential for gain).
|
|
|
States have adopted statutes regarding claims adjusting. To avoid unfair treatment to a claimant the adjuster must not:
|
Deny the claim until a fair and prompt investigation has commenced
|
It is an unfair claim practice if the adjuster denies a claim prior to a prompt and comprehensive investigation has been completed
|
|
|
The “period of restoration” that applies to business income coverage:
|
Ends on the date when the property should be repaired within reason.
|
The "period of restoration" is a defined term in the form. The form states: "Ends on the date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality." This period starts after a 72-hour waiting period.
|
|
|
The application for an adjuster license must be approved by at least ____ reputable citizen(s) of the community where the applicant resides.
|
five
|
The application for the license must be approved by at least five reputable citizens of the community where the applicant resides. They must certify that they have known the applicant for at least five years and that they believe the statements in the application are true.
|
|
|
The application for an adjuster’s license must be submitted with affidavits signed by five reputable citizens of the state. The affidavits must:
|
Be affirmed under penalty of perjury
|
The affidavits must be affirmed under penalty of perjury.
|
|
|
The BOP is designed to cover all of the following, EXCEPT:
|
Gas stations.
|
The list of eligible risks for the BOP is rather narrow. Gas stations, garages and repair shops would not qualify.
|
|
|
The Building and Personal Property Coverage Form includes which of the following Coverage Extensions?
|
Newly Acquired Property
|
There are five Coverage Extensions under this form. They are: Newly acquired or constructed property; personal effects and property of others; valuable papers and records; property off-premises, and outdoor property. Note that these are very limited in scope of coverage.
|
|
|
The business personal property limits will be increased by what amount in order to cover seasonal variations in stock in the BOP?
|
25%
|
The business personal property will increase by 25% to provide coverage for seasonal variations in stock but only if the insured had insured the property for at least 100% of its monthly average over the last 12 months.
|
|
|
The Businessowners Policy provides coverage on the buildings and contents. How is the coverage provided?
|
Either on an actual cash value basis or replacement cost basis
|
The BOP offers the option of covering the property on a "replacement cost" basis or "actual cash value" basis.
|
|
|
The CAN-SPAM act of 2003 requires which of the following
|
Senders of commercial electronic mail should not mislead recipients as to the source or content of such mail.
|
Senders of commercial electronic mail should not mislead recipients as to the source or content of such mail and recipients of commercial electronic mail have a right to decline to receive additional commercial electronic mail from the same source.
|
|
|
The crew of a ship is guilty of fraud with the intention of reaping gains at the expense of the owner. In ocean marine coverage, what is this called?
|
Barratry
|
Barratry means fraud by the master or the crew with the intention of reaping gains at the expense of the owner. Examples include setting the ship on fire, diverting the ship from its course, or embezzlement of the cargo.
|
|
|
The DP-3 dwelling form provides:
|
Open peril coverage on structures and broad form peril coverage on contents.
|
The other forms are named peril forms and are not as broad as the open peril form
|
|
|
The dwelling property program is designed to cover all of the following properties, EXCEPT:
|
A 1-story apartment house with eight roomers
|
Most states will not allow for more than five roomers and boarders.
|
|
|
The Federal Terrorism Act covers all of the following, EXCEPT
|
Crop Insurance.
|
The Act does not apply to crop insurance.
|
|
|
The Federal Terrorism Act covers property and casualty losses that exceed ______in the aggregate.
|
$100,000,000
|
The Act covers losses from a certified terrorism act that exceed $100,000,000 in the aggregate. This limit was amended in 2007. Previously the limit was $50,000,000. This is called the program "trigger".
|
|
|
The following losses would be covered under the HO-2 and the HO-3 homeowners forms, EXCEPT:
|
Flood damage to a home
|
Flood is not covered under any of the homeowners forms.
|
|
|
The HO-4 provides ____ coverage on the dwelling and ____ peril coverage on personal property.
|
no / broad
|
The HO-4 (Tenants form) insures tenants - people who do not own the building where they reside. It provides no coverage for the dwelling and broad peril coverage on the personal property.
|
|
|
The form used to report the insured’s actual and estimated business income under an Equipment Breakdown policy is called:
|
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.
|
|
|
The HO-6 provides ________ peril coverage on personal property.
|
broad
|
The HO-6 (Condominium form) provides broad peril coverage on the personal property of condominium owners.
|
|
|
The insured carries a BOP policy with a sprinkler system. If the system becomes inoperative the insured must advise the insurance company of the problem within ______ if the system cannot be restored.
|
48 hours
|
The insured must advise the insurance company within 48 hours of a protective device becoming inoperable.
|
|
|
The insured carries a yacht policy and is pulling a water skier. The skier is a family member and is injured. What coverage might apply to this accident?
|
Medical payments coverage
|
Medical payments coverage under the yacht policy would cover this loss up to its specified limit.
|
|
|
The insured carries an unendorsed DP-3 dwelling policy on his home and personal contents. While traveling abroad someone broke into the home and stole $200. in cash, a shotgun valued at $1,000. and other household items valued at $2,000. Damage caused by the burglars is $1,500. Assuming no deductible applies to their coverage how much would be paid?
|
$1,500.00
|
The DP-3 only provides damage to the covered property caused by the burglars. Theft is excluded under the DP-3 unless endorsed with the theft endorsement.
|
|
|
The insured has a communication failure at his premises due to a lightning strike at the phone company. The insured's phone system is damaged and he is out of business for four days. Which endorsement is necessary to provide coverage for the loss of business income?
|
Utility Services - Time Element
|
The Utility Services - Time Element endorsement would cover the loss of business income in this example if the phone system was listed on the endorsement and the cause of the loss was covered by the policy.
|
|
|
The insured has a one family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the garage?
|
$20,000
|
The policy provides for 10% of the dwelling limit. Therefore the garage is insured for $20,000 for the same perils that apply to the dwelling.
|
|
|
The insured has an HO–3 homeowner policy. During the night the water line in the wall to the upstairs bath room burst and water ruined the walls, floor and other furniture. In this situation all of the damaged will be covered except:
|
Replace the pipe that broke
|
The policy will not pay for the part of the pipe that broke. All of the other damage is covered.
|
|
|
The insured has several locations and desires to insure his contents coverage. His agent advises him to complete a statement of values form and issues a policy with one limit to cover all locations. This is an example of:
|
Blanket coverage.
|
This is an example of “blanket” coverage where all locations are covered under one limit.
|
|
|
The insured is covered under a BOP policy. Contents coverage is included. If the insured buys a separate piece of machinery and insures it separately, how will the BOP policy respond to a loss to this machinery?
|
The equipment policy will be primary and the BOP will be excess if the separate policy does provide adequate limits of coverage.
|
The BOP will only pay on an excess basis if the other coverage does not provide adequate limits of coverage.
|
|
|
The insured is covered under a Businessowners Policy. He owns a hardware store that suffers a loss from a covered peril. His loss of income is $50,000. How will the loss be paid under the BOP?
|
On an actual loss sustained basis ($50,000)
|
The policy pays for the actual loss of Business Income sustained due to the necessary suspension of "operations" during the "period of restoration." The suspension must be caused by direct physical loss of or damage to property at the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss. With respect to loss of or damage to personal property in the open or personal property in a vehicle, the described premises include the area within 100 feet of the site at which the described premises are located.
|
|
|
The insured is covered under a HO-5 Policy. What coverage does the insured have for contents coverage?
|
Open Peril Coverage
|
The HO-5 Form provides Open Peril Coverage on both structures and contents.
|
|
|
The insured is moving to a new location. Coverage for contents provided under a Homeowner Policy would be:
|
On a pro-rata basis between the two locations.
|
Coverage would apply at both locations on a pro-rata basis for 30 days.
|
|
|
The insured is operating his boat on a fresh water lake and runs over a water skier. What coverage would apply to this claim under the boatowners policy?
|
Liability coverage
|
The liability portion of the boatowners policy would pay the claim if the insured is held legally liable.
|
|
|
The insured is transporting his yacht on its trailer and pulling it with his truck. The trailer separates from the truck hitch and the boat strikes another vehicle. There is property damage and bodily injury to a third party. The yacht and trailer are a total loss. What coverage would apply under the yacht policy?
|
Only the damage to the yacht and trailer
|
The damage to the yacht and trailer would be covered. The bodily injury and property damage to a third party would be covered under an auto policy
|
|
|
The limit for the theft of jewelry under the Homeowners policy is:
|
$1,500.00
|
The limit for the theft of jewelry is $1,500.
|
|
|
The most comprehensive coverage provided by the dwelling property program is found in the:
|
DP-3.
|
The DP-3 form provides "open-peril" (all risk of loss) for the dwelling and other structures. The other forms provide named peril coverage.
|
|
|
The New York Superintendent of Insurance can issue a temporary adjuster permit in emergency situations for up to _____ to assist in the adjustment of claims arising from a common catastrophe.
|
120 days
|
A temporary permit may be issued for 120 days to adjust claims arising from a common catastrophe.
|
|
|
The New York Superintendent of Insurance may refuse to renew, suspend or revoke a license as a result of which of the following?
I. A violation of any provision of the New York Insurance Code. II. An adjuster making a material misstatement in application for license. III. An adjuster being found guilty of fraud or dishonest practices. |
I, II and III.
|
The violations illustrated reflect character, ethics and morality that are not wanted in the insurance industry.
|
|
|
The plumbing in Mrs. Jones' home suddenly burst and the ceilings were damaged by water. All of the following Homeowners forms would cover the loss, EXCEPT an:
|
HO-8 form
|
All current HO forms (except the HO-and HO-8) cover "Accidental Discharge or Overflow of Water or Steam" from a plumbing, heating, air conditioning, or fire protective sprinkler system or from within a household appliance.
|
|
|
The purpose of expediting expenses under the Equipment Breakdown policy is:
s provide adequate limits of coverage. |
To pay for repairs or replacement in a timely manner
|
Instead of revoking an adjuster’s license because of a violation, the Superintendent of Insurance may invoke a penalty of up to ______ for each offense up to an aggregate penalty of ______ for all offenses.
|
|
|
The Superintendent may refuse to renew, revoke, or suspend the license of any adjuster, if after notice and hearing, if it is determined that the adjuster has
|
All of the responses listed are correct
|
All of the reasons listed are cause for nonrenewal, revocation or suspension of an adjuster license
|
|
|
The term “open-ended” release pertains to:
|
A conditional or partial release
|
An example would be where the insurance company agrees to pay some additional bills when they become available. These additional bills are viewed as part of the settlement agreement. Open-ended releases are generally subject to specific time and monetary limits.
|
|
|
The Terrorism Act of 2002 has been extended and is an agreement between:
|
Between the Federal Government and the insurance companies
|
This is an agreement between the Federal Government and insurance companies to provide coverage for acts of terrorism.
|
|
|
The Terrorism Risk Insurance Act excludes all of the following EXCEPT:
|
Commercial Property
|
Commercial property losses would be covered by TRIA whereas the other three would be excluded.
|
|
|
To cover lawn mowing equipment under a HO form an insured must:
|
Do nothing since it is already covered.
|
Personal property is covered under a single limit. All personal property with some specific limitations is covered.
|
|
|
Traditionally, the most common type of crop insurance sold prior to the creation of the Multi-Peril Crop Insurance Program was:
|
Coverage for hail damage.
|
Hail damage to crops was the most popular form of crop insurance. Currently, the Multi-Peril Crop Insurance Program has surpassed Crop-Hail Insurance because of the broader coverage.
|
|
|
Under a homeowner HO-3, there is no coverage for loss resulting from "earth movement" except when endorsed using which of the following?
|
Earthquake endorsement.
|
An insured may add earthquake as an insured peril for coverages A, B and C by adding the HO 04 54 endorsement. This endorsement defines as a "single earthquake" all earthquake shocks occurring within a 72-hour period. The peril of earthquake is defined to include land shock waves or tremors accompanying a volcanic eruption.
|
|
|
Under a Homeowner Policy (HO-5), if the insured carries 80% to value, what does Replacement Cost Coverage NOT apply to?
|
Contents
|
Replacement Cost Coverage does not apply to contents unless the replacement cost for contents coverage is purchased by endorsement. Without endorsement, replacement cost coverage only applies to covered structures.
|
|
|
Under a watercraft or yacht policy how claims are settled:
|
Actual cash value
|
Like physical damage coverage on an auto policy, the watercraft and yacht policies provide for the adjusting of physical damage losses to covered property on an “actual cash value basis”.
|
|
|
Under Coverage C (personal property) of the homeowners program all of the following categories of property are limited, EXCEPT:
|
Recreational furniture
|
All of the HO forms contain a list of property subject to limitations. Recreational furniture is not included within this list.
|
|
|
Under farm liability coverage, which of the following would be covered?
|
Products liability for the insured’s products
|
Products liability for the insured’s products would be covered. The others are specifically excluded.
|
|
|
Under pollution clean up and removal coverage under the BOP, when must a loss be reported?
|
Within 180 days
|
The expenses will be paid only if they are reported to the insurer within 180 days of the date of the direct loss or the end of the policy period.
|
|
|
Under the broad peril dwelling form, which of the following losses would not be covered?
|
Damage to the dwelling that is suddenly caused by wild animals.
|
The broad form is a named peril form and does not list damage caused by wild animals as a covered peril.
|
|
|
Under the commercial building and personal property coverage form, which of the following is correct regarding the appraisal clause?
|
No time limits are required
|
There are no stipulated time requirements in any policy in regards to the appraisal clause.
|
|
|
Under the Commercial Property Liberalization Clause, if the insurer makes any coverage revision which broadens the coverage without an additional premium charge, it will automatically apply to existing policies if the revision is adopted during the policy term or within:
|
45 days prior to the effective date.
|
This is standard in Commercial Property Insurance.
|
|
|
Under the farm property form with replacement cost coverage, after the first $1,000 how is the claim paid?
|
ACV until repairs are completed and then the full replacement cost is paid
|
Like most property forms that provide replacement cost coverage, the insurer will not pay replacement cost until the repairs have actually been made.
|
|
|
Under the HO Policy, loss of use would cover which of the following?
|
Additional Living Expense and Fair Rental Value
|
Coverage D, covers the loss of use of a dwelling. Additional Living Expense is included in this coverage as well as the Fair Rental Value Coverage.
|
|
|
Under the HO-3 policy which of the following would not be covered?
|
Earthquake
|
Earthquake can be added by endorsement and is not automatically included in the unendorsed HO-3.
|
|
|
Under the HO-3, what percentage of Coverage A is written as the Coverage D limit (loss of use)?
|
30 percent
|
The HO-2, HO-3 and the HO-5 provides for 30% for Coverage D (additional living expense/fair rental value) under the HO Forms.
|
|
|
Under the Homeowners Policy, "theft" does not include:
|
Theft of building materials from a dwelling under construction.
|
Theft of building materials from a dwelling under construction is excluded. An inland marine form can be purchased to cover this exposure.
|
|
|
Under the livestock coverage form, within how many days must newly acquired livestock be added to the policy?
|
Within 30 days of purchase
|
Additional acquired livestock must be reported to the insurance company within 30 days of acquisition, at which time an additional premium will be charged the insured.
|
|
|
Under the terrorism risk insurance act of 2002, which of the following would be considered a certified act of terrorism?
|
An act committed by a foreign national causing more then 5 million in damages meant to intimidate and scare the citizens of the United States
|
In order to be a certified act of terrorism, the act must cause 5 million or more in damages and be committed by a foreign national. The department of the Treasury will make the certification decision, not the Senate or the President.
|
|
|
Upon discovering that an agent may have violated an insurance law, the insurance department is required to take which of the following actions?
|
Hold a hearing on the infraction
|
In most states, the head of the state's insurance department will hold a hearing and subpoena witnesses regarding a possible violation of insurance law. The agent would have the opportunity to present his or her side of the case at that hearing. After the hearing is completed, the department head will issue an order/conclusion (similar to a verdict in a criminal case).
|
|
|
Vandalism is not covered after a commercial building has been vacant for:
|
60-days
|
Vandalism is not covered after the building has been vacant beyond 60 consecutive days.
|
|
|
What does the term "unvalued basis" mean as it relates to ocean marine hull insurance?
|
A policy where the value is not declared until after the loss
|
This is a policy where the value of the property is not declared until after the loss. Some forms of ocean marine hull coverage are written on this basis.
|
|
|
What constitutes an "agreement" to enter into a valid contract?
|
A specific offer by one party and acceptance by the other.
|
It is the insured that makes the offer by submitting an application with the premium. The insurer can either accept or reject the offer. If the offer is accepted then a policy is issued which becomes a valid contract between the parties.
|
|
|
What is "break-bulk" cargo as respects ocean marine cargo coverage?
|
Loose cargo, such as cartons.
|
Break bulk cargo refers to loose cargo, such as cartons or boxes, that are stowed directly (or placed on pallets) in the ship’s hold, as opposed to containerized cargo or bulk shipments.
|
|
|
What is covered under the broad form farmowner's policy, that is not covered under the basic form?
|
Accidental shooting of livestock
|
Accidental shooting of livestock, as well as electrocution of covered livestock, drowning of livestock and accidents involving livestock while loading and unloading are things covered by the broad form and not covered by the basic form.
|
|
|
What is the definition of a non-resident agent?
|
Someone licensed in their state and obtains a license in another state to solicit insurance business in that state.
|
In order to obtain a non-resident insurance license the person must be licensed in their home state in order to make application for a non-resident insurance license in another state to solicit business in that state.
|
|
|
What is the definition of custom farming?
|
Farming for Others
|
Custom farming is farming for others for a fee under a contract or agreement. A special endorsement is required if the receipts are in excess of $5,000 per year.
|
|
|
What is the main difference between a DP 1 and a DP 2?
|
The perils insured against
|
DP 1 and DP 2 are similar forms, both designed to provide property insurance for personally-owned residential buildings containing up to four living units without requiring the insured to reside there. These two forms are different in the “Perils Insured Against” section. The DP 2 Broad Form covers all the perils included in the DP 1 plus several “broad” perils including burglar damage, ice or snow damage, falling objects, freezing of plumbing, heating, or A/C systems or household appliances, accidental discharge of water from a plumbing, heating, or A/C system, and breakage of glass.
|
|
|
What is the maximum period of time that coverage applies under civil authority business income coverage under the BOP?
|
4 weeks
|
The newer edition of the form of the BOP (2010) has extended the time for loss of income under an act of a civil authority to four weeks. Previously it was three weeks. Refer to the outline published by the testing vendor for the edition date they are using
|
|
|
What is the percentage that the insured can apply to coverage A of the DP-2 and DP-3 dwelling forms for ordinance or law coverage?
|
10%.
|
This change adds coverage to all the dwelling forms except the DP-1. The percentage is 10% of coverage A, dwelling.
|
|
|
What is the purpose of freight insurance?
|
Covers shipper fees.
|
Freight insurance is designed to cover the shipper’s fees charged to the shipper. It is the indirect loss/business interruption coverage which comes into play after a direct loss to the vessel.
|
|
|
When a homeowner policy is issued with $200,000 coverage on a dwelling, what is the automatic amount of insurance on personal property?
|
$100,000
|
Personal property is automatically covered for 50% of the amount of the dwelling limit. If replacement cost coverage is purchased on the personal property, the limit of insurance will be increased. The insured can always increase the contents limit for an additional premium.
|
|
|
When a homeowners policy has been in effect for 60 days in New York, an insurer can cancel at anytime for any of the following reasons, EXCEPT:
|
A large loss has occurred.
|
The homeowners policy was purchased to indemnify against the occurrence of a large loss, therefore, this would not represent a reason for policy cancellation.
|
|
|
When an insurer intends to non-renew a homeowners policy in New York, at least _____ advance notice of non-renewal must be sent to the insured.
|
45 days
|
In addition to this specific time of advance notice, specific reasons for the company's decision to not renew must accompany the notice.
|
|
|
When is it appropriate for an adjuster to secure a non-waiver agreement with the insured?
|
If there is a question of coverage
|
A properly executed non-waiver agreement allows the insurance company to complete a thorough investigation without implying that coverage is available for the loss.
|
|
|
When may an adjuster obtain a non-waiver agreement?
|
In dealing with a potential coverage dispute
|
In coverage dispute situations, an adjuster may want to make clear that a known right is NOT being waived by any party.
|
|
|
When the insurer makes a change that broadens coverage under an existing policy without additional premium, this is called the:
|
Liberalization Clause
|
This is called the Liberalization Clause. Under the Dwelling forms this implementation date must fall within 60 days prior to, or during the policy period stated in the Declarations.
|
|
|
Which of the following components MUST be included in the definition of a hostile fire:
I. Rapid oxidation accompanied by a flame or at least a glow. II. Must be sudden and unexpected. III. Must have been intentionally set by the insured. IV. Must spread beyond its intended place. |
I, II and IV only
|
This definition must include all three components expressed here. In addition, a hostile fire is one that is spread beyond its intended place or a place not intended for it.
|
|
|
Which of the following dwelling forms provides broad perils coverage for personal property?
|
DP-2 and DP-3 only
|
The DP-1 includes only the perils of fire, lightning, and internal explosion. A DP-1 policyholder can add the extended coverage and vandalism perils by indicating this choice on the declarations page, but the broad perils (damage by burglars, etc) is NOT available. Both the DP-2 and the DP-3 forms automatically provide fire, lightning, EC, vandalism, and the broad perils for personal property.
|
|
|
Which of the following dwelling forms provides removal coverage for 30 days?
|
The Broad and Special Forms only
|
All of the dwelling forms provide removal coverage when the covered property is endangered by the perils insured against. Under the DP-1 form, the coverage is limited to only 5 days. The two broader forms provide 30 days coverage.
|
|
|
Which of the following homeowner forms provide the least amount of peril coverage?
|
HO-8
|
The HO-8 form provides only limited peril coverage similar to the DP-1 dwelling form except the HO-8 form provides theft coverage.
|
|
|
Which of the following is not a claim settlement option in a property loss?
|
Pay only market value for the loss
|
Offering market value only is not a claim settlement option. If the insured carries replacement cost coverage then the adjuster needs to address the payment of the claim accordingly
|
|
|
Which of the following is not a duty of an adjuster in a property loss?
|
Prepare an appraisal of the loss
|
The insured is obligated to obtain estimates of the loss and present them to the adjuster
|
|
|
Which of the following is not an optional property coverage under a homeowner policy?
|
Coverage for loss of use of the premises
|
Coverage for loss of use is an included coverage in the homeowner policy without additional premium.
|
|
|
Which of the following is not considered to be a consequential loss coverage?
|
Replacement Cost Coverage
|
A consequential loss occurs as the result of a direct loss to the insured property. Replacement cost coverage is used to determine the amount of the loss. If replacement cost coverage is not selected then actual cash value applies.
|
|
|
Which of the following is not eligible for coverage under a homeowner policy form?
|
A residence on a farm
|
Farm property is not eligible for the homeowner program. Separate farm programs are available.
|
|
|
Which of the following is not required to obtain an adjuster license in New York?
|
None of these individuals is required to be licensed
|
None of those listed is required to be licensed.
|
|
|
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 additional coverage
|
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.
|
|
|
Which of the following is true regarding the Fair Credit Reporting Act?
|
It requires the insurance companies to notify an applicant in advance that an inspection report may be ordered
|
The Fair Credit Reporting Act was created by the wave of consumerism type laws. The applicant must be advised in writing prior to an insurer ordering a report since this report is used in the underwriting process. Often times, the report contains inaccurate or misleading information that could adversely affect the insured and the insured has the right to contact the reporting agency to correct or dispute that information.
|
|
|
Which of the following perils is not covered under the Commercial Property Basic Cause of Loss form:
|
Collapse (other than sinkhole collapse).
|
The Basic Form does not cover collapse except sinkhole collapse.
|
|
|
Which of the following phrases best defines a hazard?
|
A condition that increases the chances of a loss
|
Poor wiring, oily rags, bad housekeeping or maintenance are hazards that increase the opportunity for a loss to occur.
|
|
|
Which of the following policies do not include flood coverage?
|
A Homeowner HO-3 Policy
|
A homeowner policy specifically excludes flood coverage.
|
|
|
Which of the following statements best describes a representation in an insurance application?
|
A representation is a statement made by the insured that he believes to be true when made, but which might prove to be false.
|
A representation the truth to the best of the person’s knowledge and belief. It is an honest statement of supposed fact. A misrepresentation is a knowingly false statement. A warranty is a statement guaranteed as factual.
|
|
|
Which of the following statements is correct?
I. Both DP-2 and DP-3 settle losses to covered personal property at actual cash value (ACV). II. Both DP-2 and DP-3 settle partial losses to covered dwellings at replacement value in all situations. |
I only
|
Both DP-2 and DP-3 cover partial dwelling losses at replacement value only if adequate insurance to value is in force. (Adequate insurance to value must be 80 percent or more of the replacement cost value of the structures)
|
|
|
Which of the following statements is correct?
I. Unendorsed DP-2 and DP-3 settle all losses to personal property at actual cash value. II. Unendorsed DP-2 and DP-3 settle all partial losses to dwellings at replacement cost if insured 80% to value |
Both I and II
|
Both DP-2 and DP-3 settle all personal property losses on an ACV basis. They settle partial dwelling losses at replacement value ONLY if adequate limits are carried. That is, the dwelling limit must be at least 80% of a dwelling's replacement value in order to receive a replacement cost settlement for a partial dwelling loss.
|
|
|
Which of the following statements is true about additional coverages under the homeowner policy?
|
They are included at no extra cost.
|
An example would be the collapse hazard included in both the broad and special cause of loss forms at no extra charge.
|
|
|
Which of the following types crops would a "small grain" crop policy cover?
|
Barley
|
Small grain consists of wheat, barley, as well as oats.
|
|
|
Which of the following terms would describe a situation where a building is not a total loss but the cost to repair the building is greater than the value of the building?
|
A constructive total loss.
|
This is an example of a constructive total loss. The loss is too great to rebuild the structure.
|
|
|
Which of the following watercraft would be covered for liability under Section II (liability)of the homeowner policy?
|
None of the responses listed are correct.
|
A sailboat must be less than 26 feet in length, the rented jet ski must be less than 50 HP and an outboard motor boat must be less than 25 HP.
|
|
|
Which of the following words would be closely associated with estoppel?
|
Waiver
|
Under estoppel, a principal waives the right to assert a fact that is inconsistent with a fact asserted by its agent. Retroactive is part of the term “retroactive date” found in claims-made liability policies. Subrogation is more closely associated with substitution than estoppel. Release is not relevant to estoppel.
|
|
|
Which of the following would be a cause of loss property coverage under a Farm policy?
|
Special
|
There are three causes of loss provisions in the property coverage under a Farm policy. They are basic, broad and special. The insured chooses which provision is to apply and pays the premium accordingly. Obviously the special is the broadest coverage.
|
|
|
Which of the following would be covered by the advertising injury coverage under a Farmowner's Policy?
|
An insured farmer who unknowingly disparaged the crops grown by another farm.
|
The coverage would cover a farmer who unknowingly disparages the crops grown by another farm. Intentional acts, advertising incorrect prices or descriptions are not covered.
|
|
|
Which of the following would be covered under Coverage C of form HO-3? I. Property normally kept at the insured residence but in transit to a new principal residence II. Personal Property in Switzerland while the insured is on vacation
|
Both I and II
|
Coverage C provides protection for personal property owned or used by the insured anywhere in the world - with some exceptions. One is personal property normally stored off the premises - although this can be added by endorsement. (Property of away-from-home students is not "stored".)
|
|
|
Which of the following would be found in a yacht policy?
|
Liability coverage
|
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.
|
|
|
Who signs the declaration page on the Equipment Breakdown policy?
|
An Authorized Inspector
|
An authorized representative of the company signs the policy Declarations page. This would be the agent.
|
|
|
With crop insurance policies, the coverage period is usually:
|
Limited to the growing period for the particular crop being insured.
|
Crops have different growing periods. The policies may be written on an annual policy form, a three season form or a five season form. Regardless of the policy terms, the coverage period is almost always limited to the growing season.
|
|
|
Mr. Jones has injured a claimant in an auto accident. The claimant has sustained medical expenses, loss of wages, and the loss of use of his vehicle. These types of expenses are called:
|
Special Damages.
|
These are called Special Damages. These involve expenses where the costs are known or can easily be determined.
|
|
|
If a dwelling insured under an HO-3 is destroyed by fire, what amount should the insured expect to be paid for their loss?
|
Up to the policy limits.
|
An insurance company cannot pay in excess of the policy limits. There are 22 states that have a valued policy law in which the company is required to pay the full limit in case of a total loss. For partial losses the insurance company can only pay up to the limits of the policy. The insured would have to prove their loss for the contents damage.
|
|
|
The unfair claim settlement laws and regulations in New York provide that a violation in each instance will be treated as a separate violation. A fine in the amount of _____ will be imposed against the insurance company for each violation.
|
$500
|
The fine is $500 for each violation in the violation of an unfair claim practice law.
|
|
|
All of the following are exclusions under Equipment Breakdown coverage, except:
|
Sudden and accidental loss.
|
The Equipment Breakdown policy covers sudden and accidental loss. It can be modified to cover indirect loss (loss of income) as a result of a direct loss. The commercial property forms would cover a fire loss as a result of a boiler explosion since this would be an ensuing loss.
|
|
|
If an insured desires additional amounts of coverage above the "Special Limits" under the Homeowners program for jewelry or firearms it can be obtained through the use of:
|
A scheduled personal property endorsement.
|
Standard Homeowners policies have "special limits" on certain types of property like jewelry, firearms, gold and silverware, etc. These special limits are relatively low. If an insured seeks higher limits than the "Special Limits" they can purchase a separate policy OR they can attach the scheduled personal property endorsement to their Homeowners policy.
|
|
|
When is it allowed for a telemarketer to call to a person's home?
|
8 a.m. to 9 p.m.
|
Unless a telemarketer has a person's consent to do otherwise, it is a violation to make outbound telemarketing calls to a person's home outside the hours of 8 a.m. and 9 p.m.
|
|
|
family takes their 50 horsepower power boat to the lake on a trailer towed behind their personal auto. The pleasure boat is adequately covered under which of the following policies?
|
Watercraft.
|
The boat is in transit and if physical damage should occur to the boat, the watercraft policy would provide the best coverage. A yacht policy would also provide this coverage
|
|
|
"Sinkhole collapse" is a peril covered under which of the following Commercial property Cause of Loss forms?
|
The Basic, Broad and Special forms.
|
Even the Basic Form provides this coverage.
|
|
|
A homeowner desires to have his personal property covered for losses not subject to depreciation. The insured would need
|
Replacement cost endorsement.
|
The insured would need the contents Replacement Cost Endorsement.
|
|
|
A 36 foot ocean sailing vessel with auxiliary power would best be covered under what type of policy?
|
Yacht Policy
|
Since the watercraft is used for ocean travel, the yacht policy would be the best choice.
|
|
|
A boat damaged out of the water and at a lake would be covered under the Homeowners Policy for:
|
$1,500.00
|
The policy limits physical damage to only $1,500. Also, theft that occurs off the insured's premises is not covered. Watercraft is covered for the perils of wind and hail only while in a fully enclosed building.
|
|
|
A brand new house costing $500,000 to build would need to be covered for what minimum limit according to the "insurance to value" clause, in order for the insured to receive full replacement cost coverage in the event of a $50,000 fire loss?
|
$400,000
|
The "insurance to value" clause requires a home to be covered with a limit of at least 80% of the home's full replacement value.
|
|
|
A building valued at $500,000 is insured at $300,000 on a policy containing an 80% coinsurance clause. How much would be paid on a covered $200,000 loss?
|
$150,000
|
The answer is $150,000. Per the coinsurance clause, the required amount of insurance is 80% of $500,000, which equals $400,000. However, the insured’s limit of $300,000 is only ¾ of the insurance required. That same fraction, ¾, is applied to the loss amount. ¾ of $200,000 is $150,000. Thus there is a “coinsurance penalty” of ¼ of the loss, or $50,000.
|
|
|
A building with an actual cash value of $240,000 is insured for $200,000. The policy has an 80% coinsurance requirement. If there are no deductibles, how much would be paid for a $60,000 loss?
|
$60,000
|
The insured needs to be covered for at least 80% x $240,000 or $192,000 to avoid a penalty in case of a partial loss. In this case, the insured carries more than is required, and therefore, all the loss is covered.
|
|
|
A business adjacent to an insured's business is damaged by fire. Because of the damage to the adjoining property, the insured is denied access to his business by the fire department. The insured's Commercial Property policy contains a Business Income coverage form, the insurance company will cover the loss of business income
|
For a maximum of four weeks.
|
Coverage is limited to only four weeks, after a waiting period of 72 hours. In some cases, the insurer will extend this provision for an additional premium.
|
|
|
A business owner who is careless about property left in his care may be guilty of which of the following hazards:
|
Morale
|
Under the Commercial Property Policy, the Pro-rata Liability Clause means:
|
|
|
A commercial property policy specifies which of the following responsibilities as a duty of the insured?
|
To provide a proof of loss statement following a loss if requested by the company.
|
If the insured reports a covered loss, the insurer may request the insured to complete a proof of loss statement. If this request is made, the insured must complete the proof of loss relatively quickly. Some policies give the insured only 60 days to complete the proof of loss after the insurer makes its request.
|
|
|
A company adjuster primarily represents the interests of:
|
The insurer.
|
A company adjuster is an adjuster representing the interests of the insurer.
|
|
|
A covered loss has damaged the property belonging to the owner. Property belonging to a customer is also damaged. The customer brings suit against the insured for this damage. The insurer may do which of the following?
|
Negotiate the settlement of the property of others directly with the owners of that property and pay the defense costs incurred in the suit against the insured
|
The insurer may negotiate the settlement of the property of others directly with the owner of that property. The will also pay the defense costs incurred in defending the insured in the suit brought by the customer.
|
|
|
A document that temporarily obligates an insurance company to provide coverage pending issuance of a policy is called:
|
A binder.
|
A binder of coverage creates temporary coverage and usually will include such items as the insureds name and address, any additional insureds or mortgagees, property description, amount of coverage, effective date of coverage, and identity of the insurer
|
|
|
A dry cleaner wants to insure the pressure boilers used in the business. They also would like to cover some equipment and accessories that can be used in the boilers but have not yet been installed. Which of the following, if any, can be used to cover this exposure?
|
Spare Parts and Equipment Coverage |
Endorsement EB 99 58, Spare Parts and Equipment can be used to schedule the values of this extra equipment and accessories.
|
|
|
A fire in an insured's restaurant burns the kitchen walls and causes smoke damage to the entire interior. Water used to extinguish the fire causes extensive damage to floors and furnishings. The water damage is BEST described as:
|
A direct loss.
|
The water damage is considered a direct loss to the property as well as other damage the fire fighters may cause to the premises.
|
|
|
A fire starts in the rear of Paws & Such Veterinary Care. Four cats belonging to clients as well as the owner's dog are treated for smoke inhalation. What if any is covered by the BOP for the clinic?
|
The cats belonging to clients are covered but not the owner's dog
|
Although animals are excluded from coverage on the BOP, the exception is any animal that is considered stock for sale or animals that belong to others that the insured is boarding. So in this case the cats belonging to clients would be covered but not the injury to the owner's dog.
|
|
|
A Homeowners Form has a $50,000 personal property limit. Disregarding any deductibles, what is the most the insured can collect if a boat valued at $1,500 is stolen from the premises?
|
$1,500
|
The insured can collect up to $1,500 because of the "special limits" that apply to watercraft. An insured could collect this full amount even when the deductible is factored in. For example, if a policyholder had a deductible of $500 and a covered loss to watercraft valued at more than $2000, they could collect a maximum of $1500. Theft of watercraft off the insured's premises is covered only under the HO-5 form.
|
|
|
A licensee must report to the Superintendent of Insurance any administrative action taken against the licensee in another jurisdiction or by another governmental agency in this state within _____ of the final disposition of the matter.
|
30 days
|
A report of any administrative action must be made within 30 days of the final disposition of the matter.
|
|
|
A main street business has suffered an explosion loss from a hot water heating boiler. The civil authorities have blocked off the street and the insured’s customers cannot get to his store. The insured carries a Businessowners Policy. He sustains a loss of income. Before his policy will pay any loss of income there is a ______hour waiting period and the policy will then pay for loss of income up to _____weeks.
|
72/four
|
The policy has a 72 hour waiting period before coverage will pay. It will pay for loss of income for up to four weeks or until the expiration date of the policy. The previous form provided for three weeks of coverage. The newer forms also require that the business suffering the damage must be located one mile or less from the insured's location.
|
|
|
A method of replacing property with something not exactly like the damaged item but will function the same is known as:
|
Functional Replacement Cost
|
Functional replacement cost will replace the damaged item with something that will function like the damaged property but might not be exactly the same.
|
|
|
A monetary award to a plaintiff in a tort action in excess of the cash value of the economic loss as a punishment to the wrongdoer and as a deterrent to similar conduct by others is called:
|
Punitive damages
|
The question is providing the definition of “punitive” damages.
|
|
|
A new definition of collapse has been included in the commercial property forms that provide this coverage. The main change is:
|
The collapse must involve an abrupt falling down or caving in of the structure, rather than a gradual sequence of damage.
|
The collapse must involve an abrupt falling down or caving in of the structure or a part of the structure, rather than a gradual or sequence of damage.
|
|
|
A New York licensee subject to an administrative action in another jurisdiction or governmental agency must report such action to the Superintendent within:
|
30 days.
|
The Superintendent must be notified within 30 days of the final disposition of the matter.
|
|
|
A non-admitted company sells insurance in the state of New York. This is known as:
|
Surplus lines insurance
|
Non-admitted insurers selling coverage in New York are known as surplus lines insurers and can only sell products through licensed surplus lines agents.
|
|
|
A non-wavier issued by an insurance company is:
|
A coverage issue
|
Non waiver agreements and reservation of rights letters both serve the following general purposes: 1.To advise the insured that any action taken by the insurance company in investigating the cause of loss or in ascertaining the amount of loss is not intended to waive or invalidate any policy condition. 2.To clarify that the intent of the agreement is to permit an investigation of the claim and that neither the insured nor the insurer will thereby waive any respective rights or obligations.
|
|
|
A person acting in a catastrophe or emergency situation and registered with the insurance commissioner for that purpose:
|
Does not have to obtain an adjuster’s license.
|
No regular adjuster's license is required for a person acting in a catastrophe or emergency situation.
|
|
|
A person asserting a right to payment under an insurance policy is referred to as:
|
A first party claimant
|
The insured is the first party claimant.
|
|
|
A person who violates a cease and desist order issued by the Superintendent of Insurance is subject to a penalty of up to _____ for each violation.
|
$5,000
|
This person is subject to a penalty of up to $5,000 for each violation. A willful violation must be taken into consideration in determining the amount of the penalty.
|
|
|
A policy's appraisal clause is used to:
|
Settle disputes concerning the amount of loss.
|
The appraisal clause is used where the insured and the insurer do not agree on the value of the loss. Either party can demand an appraisal of the loss
|
|
|
A primary obligation of an insurance company is to:
|
Pay the claims covered under the policy.
|
This statement is self-explanatory. The insured has paid a premium and now the insurance must act on its promise in the future.
|
|
|
A Pro Rata Liability Clause is included in an insurance policy to deal with the problem of:
|
Conditional coverages.
|
The purpose of this clause is to illustrate the method to determine each insurer's liability in case of a loss. Each insurer pays its fair share determined by the percentage that the carrier's limit bears to the total coverage carried.
|
|
|
A producer who offers a prospect one-half of the commissions as an inducement to purchase insurance is guilty of:
|
Rebating.
|
Offering a financial inducement to a consumer to buy insurance defines rebating.
|
|
|
A Property Policy is issued to an insured with the Standard Mortgagee Clause. Which of the following is not true?
|
The property suffers a fire loss due to an increase in hazard known to the mortgagee but the mortgagee is still paid up to the amount of their insurable interest.
|
If the mortgagee knew of an increased hazard and failed to report this to the insurer, coverage could be voided for the mortgagee. Even if the insured sets fire to their own property intentionally, the mortgagee is still covered.
|
|
|
A public adjuster represents the interests of:
|
The insured.
|
Public adjusters are retained by and paid by an insured and therefore, represent the insured in negotiating claim settlements.
|
|
|
A release becomes “good” when:
|
When the settlement check is cashed
|
This is based upon the premise that a release is essentially a contract and to be effective it must be supported by valuable consideration which only occurs when the check is cashed
|
|
|
A ship has suffered damage and sunk. Which of the following would respond to cover the loss of the ship?
|
Hull Insurance
|
Hull insurance would cover the loss
|
|
|
A steam boiler has been inspected and found to be in serious need of repairs. The inspector “red tags” the item. This means:
|
Coverage is suspended until repairs are made
|
This means that coverage is suspended until repairs are made.
|
|
|
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?
|
Only the damage caused by the explosion |
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.
|
|
|
A suit against an insurance company must be commenced within ____ after the claim.
|
24 months
|
No suit or action on a policy for the recovery of any claim will be sustainable in any court of law or equity unless all the requirements of the policy have been complied with, unless commenced within 24 months next after inception of the loss.
|
|
|
A third party can bring a legal action against an employer when the employee was injured on the job and has suffered:
|
A grave injury
|
The injured worker can bring an action as a result of a “grave injury”. This is defined as death, permanent and total loss of use or amputation of a limb or member, paraplegia or quadriplegia and several other serious injuries.
|
|
|
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.
|
II only
|
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.
|
|
|
Additional Coverages" in a Homeowner Policy would cover:
|
Debris removal
|
Debris removal is included as an extension of coverage. It is not an additional amount of coverage. However, if the combined loss and debris removal exceed the policy limit for damaged property, an additional 5% of the property coverage limit will be allowed for debris removal.
|
|
|
Adverse selection occurs when: |
Applicants are accepted by the insurer with little or no attention given to underwriting. |
When insurers accept all applicants, ultimately the applicants choose their insurer, which is against normal industry practice. Typically insurers carefully choose applicants, not the other way around.
|
|
|
After a claim has been paid under a policy, any recovery rights applying to the amount paid by the insurance company belong to:
|
The insurance company.
|
Recovery rights after a claim has been paid belong to the insurance company.
|
|
|
After a fire loss, which of the following is the duty of the adjuster?
|
Obtain salvage of the damaged property
|
After the loss has been adjusted the adjuster should take possession of the salvage.
|
|
|
After an auto collision loss an insurance company may elect to pay the insured's claim and take possession of the vehicle. This practice is referred to as:
|
Salvage.
|
Once the insurer has paid a total loss on an auto the salvage belongs to the insurer.
|
|
|
All of the following are claim settlement options for property, EXCEPT
|
Value as established by the insurer.
|
The value of the property must be established per the terms of the policy. Some policies provide for replacement cost coverage and others pay on the basis of actual cash value.
|
|
|
All of the following are duties of the New York Superintendent of Insurance EXCEPT:
|
To establish insurance laws.
|
State laws are made by the New York legislature and the Superintendent is responsible for their enforcement.
|
|
|
All of the following are elements of insurability, EXCEPT:
|
The risk must be unpredictable.
|
Insurance risks must be unexpected, but calculable for large groups of persons in similar circumstances, to be transferred to a third party. This element is the application of the law of large numbers.
|
|
|
All of the following are examples of government insurers EXCEPT:
|
The Excess & Surplus Lines Market
|
The Excess & Surplus lines markets are privately run insurers who usually write the risks that the standard market does not want.
|
|
|
All of the following are examples of insurable interest, EXCEPT:
|
The interest an individual has in the property her parents will someday leave to her.
|
In property and casualty insurance the insurable interest must exist at the time of the loss. Insurable interests that may be created in the future or based on certain events are not currently insurable interests.
|
|
|
All of the following are exclusions under the "Special Cause of Loss" form, EXCEPT:
|
Water damage caused by a sprinkler system
|
Water damage from a sprinkler system or accidental discharge from a plumbing or heating system is covered.
|
|
|
All of the following are true regarding the Mobile Agricultural Machinery and Equipment form, EXCEPT:
|
Combines and cotton pickers are eligible for coverage.
|
Combines and cotton pickers must be specifically scheduled and are not covered under the blanket coverage of this form
|
|
|
All of the following events are considered acts of terrorism, EXCEPT:
|
Acts of riot and civil commotion
|
Acts of riot and civil commotion are not covered by the Act. These are perils that are covered by property insurance policies.
|
|
|
All of the following would have an insurable interest in a home and be insurable under the homeowners program, EXCEPT:
|
A non-occupant realtor.
|
A non-occupant realtor would not have an insurable interest in the property.
|
|
|
An adjuster's license will usually be revoked for which of the following?
|
Having Been Convicted of a Felony
|
A requirement for licensing is that the applicant must not have been convicted of a felony. If the adjuster commits a felony after he/she has already been licensed, the license will be revoked.
|
|
|
An aleatory contract is most accurately described by which of the following?
|
It is a contract in which the performance of one party is contingent upon the occurrence of a fortuitous (accidental) event.
|
Examples of aleatory contracts include insurance policies and product warranties. The other choices are false. Note: "Contingent" means dependent on the occurrence of something not yet certain (conditional).
|
|
|
An apartment dweller would need which of the following homeowner forms?
|
HO-4.
|
All of the other forms (HO-2, HO-8, HO-6) cover buildings. The HO-4 form is designed to cover the property of tenants.
|
|
|
An incorporated insurance company with its capital divided into shares and owned by its shareholders is known as:
|
A stock company.
|
The shareholders own a stock insurance company. Mutual insurance companies are owned by policyholders.
|
|
|
An individual appointed by an insurance company to solicit applications for a policy of insurance or to negotiate a policy on its behalf is known as:
|
An insurance adviser
|
This statement is the definition of an insurance agent.
|
|
|
An initial premium charged the insured under a reporting form type of policy is called the:
|
Deposit premium
|
This is called a "deposit" premium which is usually 75% of the estimated annual premium. The insured reports either monthly or quarterly their values of inventory and a final adjustment is made at the end of the policy period.
|
|
|
An insurance adjuster is allowed to enter a privately owned building when:
|
If the adjuster has the consent of the owner
|
The adjuster should have the consent of the owner of the property before entering the building.
|
|
|
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:
|
An unfair claims settlement practice.
|
Most states have passed laws outlining time restrictions in regards to claimant contact and claim payment. A violation can cause an insurer to be guilty of unfair trade and claim settlement practices.
|
|
|
An insurance professional that is accused of dishonesty or breach of trust involving interstate commerce under the Federal Fraud and False Statement Regulation of the United States Code (USC 1033) will be prosecuted by:
|
The U.S. Attorney general
|
This breach of trust or dishonesty involving interstate commerce is a violation of USC 1033 and therefore prosecuted by the United States Attorney General's office.
|
|
|
An insured has a HO-5 Homeowner Policy; they have insured the wife's diamond ring and the husband's guns on a personal articles floater. All of the items are stolen. What policy and deductibles would apply?
|
The homeowner policy would not pay and the personal articles floater would pay without a deductible.
|
Once coverage is purchased on a more specific basis, the coverage no longer applies under the homeowner policy. The floater would pay the claim. Floaters seldom contain deductibles.
|
|
|
An insured has an HO-3 policy. They have insured the wife's diamond ring and the husband's gun collection on a personal articles floater. All of the items are stolen. What policy and deductibles would apply?
|
The homeowner policy would not pay and the personal articles floater would pay without a deductible.
|
Once coverage is purchased on a more specific basis the coverage no longer applies under the homeowner policy. The floater would pay the claim. Floaters seldom contain deductibles.
|
|
|
An insured has damaged his vehicle by striking a tree. He can: I. Take the car to a repair garage recommended by the insurer. II. Take the car to a garage of his choice. III. Accept payment based on the adjuster's estimate.
|
I, II and III
|
The choice belongs to the insured.
|
|
|
An insured has fabricated a claim that would appear to be legitimate. What kind of hazard would this act represent?
|
Moral hazard.
|
A fabricated claim would be considered a moral hazard.
|
|
|
An insured has purchased a personal watercraft policy with liability limits of $300,000 and medical coverage in the amount of $5,000. The boat accidentally tips over and both the insured and a friend are injured. Who would be covered under the medical payments coverage?
|
The insured and the friend
|
The medical payments coverage applies to all occupants of the boat, including the insured and family members.
|
|
|
An insured has suffered a covered collision loss to her vehicle. The insurer has insisted that the insured have the vehicle repaired at a repair shop of the company’s choice. The insurer:
|
Is guilty of an unfair claims practice act.
|
The insurer can recommend a repair shop but cannot insist that a particular shop be used.
|
|
|
An insured owns a set of six drawing pens designed and used by Benjamin Franklin. Each pen is worth $1,000 alone, but the set is worth $12,000. One pen is destroyed by a covered peril. Under the pair and set clause the insurance company will pay a maximum of which of the following amounts?
|
$7,000
|
The company is obligated to repair, replace, or restore the set as one option. Since the pen was totally destroyed, there is no way to repair, replace, or restore the set. The second option is to pay the insured the difference between the actual cash value of the full set ($12,000) and the actual cash value of the undamaged part or parts. Each remaining pen is worth $1,000. This times 5 equals $5,000. The $5,000 subtracted from the $12,000 leaves the insurer owing the insured $7,000.
|
|
|
An insured owns very old equipment. Much of it is no longer manufactured but is still functional. The insurer may wish to insure the equipment under an Equipment Breakdown policy by attaching the:
|
Actual cash value endorsement
|
The insurer may wish to cover the equipment on an actual cash value basis. The endorsement that converts the coverage from replacement cost to actual cash value is called the actual cash value endorsement.
|
|
|
An insured purchased a 10-year-old building for $50,000 that would cost $100,000 to rebuild today. If the physical value of the building has depreciated $2,000 each year, the building's present actual cash value is:
|
$80,000
|
In this situation, the building's present actual cash value is $80,000.
|
|
|
An insured's boat is struck by another boat. He and his family are injured. His boat sinks because of the damage. An investigation determines that the party that caused the accident is not insured. If the insured carries a watercraft policy, what coverages would apply?
|
Uninsured boater’s coverage and hull insurance
|
The standard watercraft policy provides uninsured boaters coverage. This coverage only pays for the bodily injuries of the insured and his family. The damage to the insured’s boat must be covered under the hull insurance.
|
|
|
An insured's loss payment is reduced by depreciation. Which of the following best describes this situation?
|
Actual Cash Value
|
Actual cash value is the current replacement cost less depreciation
|
|
|
An insurer has decided to non-renew a Homeowner policy which has a mortgagee clause. Who must be notified of this action?
|
The Insured and the Mortgagee
|
The insurer must notify both the insured and the mortgagee in case of a cancellation or non-renewal of the policy.
|
|
|
An insurer that avoids writing insurance in a specific area or cancels or nonrenews policies because of the location of the property is guilty of:
|
Boycotting.
|
A company may not cancel, refuse to renew, or refuse to provide homeowners or renters insurance solely because of the geographical location of the named insured's or applicant's residence, unless the refusal is for a business purpose that is not a mere pretext for unfair discrimination.
|
|
|
An Optional Commercial Property Coverage which automatically increases the limit of insurance by an annual percentage shown in the form is called:
|
Inflation guard coverage.
|
This is self explanatory. The extra premium for this endorsement is minimal.
|
|
|
An unendorsed commercial building and personal property form, loss valuation is based on
|
Actual cash value.
|
Losses are settled at ACV (Actual Cash Value). If the insured desires replacement cost settlement, a separate endorsement must be purchased.
|
|
|
Any misinformation provided by an applicant which is such that the insurance company would not have issued a policy if the true facts were known is:
|
Material misrepresentation
|
Th is statement defines material misrepresentation, which is deliberately withholding an important fact that would have a bearing on the acceptability and/or pricing of the risk. If a policy is issued and a claim occurs as a result of material misrepresentation within the first 2 years of issue, the insurer can deny payment of the claim under incontestability clause of the policy.
|
|
|
Businessowners policies provide "Preservation of Property" coverage when property is removed from the premises to protect it from a covered cause of loss. The coverage will apply at other locations for up to:
|
30 days
|
If an insured moves property from a covered location in order to preserve it from a loss by a covered peril, that property will be covered for ANY direct loss while it is being moved or is temporarily stored at another location for the next 30 days.
|
|
|
Businessowners policies provide removal coverage when property is removed from the premises to protect it from loss. The coverage will apply at other locations for up to:
|
30 days
|
30 days is somewhat the standard in the insurance industry under the BOP
|
|
|
Coinsurance does not apply when:
|
The insured suffers a total loss of the property
|
Coinsurance does not apply to total losses. The clause is activated when a partial loss occurs and the insured has not complied with the coinsurance clause.
|
|
|
Commercial property insurance covers what kind of losses?
|
Direct or indirect loss
|
Commercial property insurance provides both direct (i.e. physical) losses AND indirect (i.e. loss of income/business interruption resulting from direct damage) losses. The Building and Personal Property Coverage form covers direct losses; Business Income covers indirect losses.
|
|
|
Compensation payable for the delaying a vessel carrying freight:
|
Is called demurrage.
|
The compensation payable for delaying a vessel carrying freight as by failing to load/unload cargo is called demurrage.
|
|
|
Convenience stores selling gasoline must have a minimum of ______ square feet in total floor area in order to qualify for the BOP.
|
3,000
|
In the newer edition of the BOP, restaurants or convenience stores selling gasoline must have a minimum of 3000 square feet of total floor space in order to qualify as an acceptable risk.
|
|
|
Coverage D - Loss of Use on a farm policy will include coverage for: I. Additional living expenses incurred by the resident family. II. Loss of rental income of the owner for tenants who cannot live there due to a covered loss.
|
Both I and II
|
Similar to the Loss of Use coverage on the homeowner policy, Coverage D on the farm policy will pay both the additional living expenses of the owner occupant and any loss of rental income if a tenant is also unable to live there after a covered loss.
|
|
|
Coverage D - Loss of Use on a farm policy will include coverage for: I. Additional living expenses incurred by the resident family. II. Loss of rental income of the owner for tenants who cannot live there due to a covered loss.
|
I only
|
Similar to the Loss of Use coverage on the homeowner policy, Coverage D on the farm policy will pay both the additional living expenses of the owner occupant and any loss of rental income if a tenant is also unable to live there after a covered loss.
|
|
|
Coverage F under a farmowner policy covers which of the following?
|
Unscheduled personal property
|
Coverage F covers unscheduled personal property on a blanket basis. One limit for all business personal property is stated. The items are not scheduled as under Coverage E.
|
|
|
Coverage provided by the basic dwelling form (DP-1) automatically includes which of the following perils?
up to: |
Fire, Lightning and Internal Explosion
|
The DP-1 form does not include the extended coverage perils nor vandalism unless indicated on the declarations page.
|
|
|
Coverage under the National Flood Insurance Program may be written:
|
Only in participating communities.
|
To be a participating community, FEMA guidelines must be accepted. Once accepted, the community can first be covered under the emergency flood program. Then the regular flood program.
|
|
|
Crop insurance policy limits are usually written as a:
|
Percentage of the maximum possible loss.
|
When an insured loss occurs, the policies will pay the determined percentage reduction in yield times the amount of insurance per acre, regardless of the actual crop value
|
|
|
Difference-in-conditions insurance:
|
Must be written in conjunction with other commercial property coverage.
|
This coverage is written in conjunction with other commercial property coverage. It is used to provide coverage for perils that may otherwise be excluded or limited.
|
|
|
Driver 1 and Driver 2 are in an accident. Driver 2 has the following damages: Property Damage - $1,000 Rental Car Expense - $500 Emergency Room Expense - $400 Lost Wages - $300 The extent of the bodily injury will not be known for six months. You are acting as an adjuster on the claim. How would you pay for the damages for Driver 2?
|
Pay the property damage and rental car expense and settle the bodily injury at a later time.
|
In this case the adjuster should pay for the parts of the claim where he can easily determine its value. He sould seek a partial release for these items. He can then settle the bodily injury claim and get a release at a later time.
|
|
|
Dwelling forms include a liberalization clause. It says that any revision of coverage which broadens the insurance without an additional premium charge will be automatically applied to existing policies, if the revision is adopted during the policy period or within:
|
60 days prior to the effective date.
|
This provision is slightly broader on personal lines than on commercial coverages. On most commercial policies, the time period is 45 days. Except where a state exception applies, 60 days is correct for dwelling forms.
|
|
|
Dwelling forms may be used to insure residential structures which:
|
Contain no more than 4 occupancy units
|
This will vary to some extent by state. The industry standard is no more than 4 occupancy units.
|
|
|
Each of the following is a feature of Business Income Coverage, EXCEPT:
|
Deductibles.
|
Business Income Coverage does not contain deductibles.
|
|
|
Each of the following is true about the Multi-Peril Crop Insurance (MPCI) program, except:
|
Coverage is available only in large agricultural states.
|
Coverage is available in all states, not just the larger agricultural ones.
|
|
|
Even when extended coverage perils are added to a DP-1, not all of these perils are as broad as they are under the DP-2. The extended coverage perils which are more broad under the DP-2 are:
|
Explosion, smoke and vehicles.
|
Three extended coverage perils granted in the DP-2 are more broad than they are in the DP-1. They are explosion, smoke, and vehicles.
|
|
|
Every licensee must notify the Insurance Department of any change in the business or residence address within ____ of the change.
|
10 days
|
Licensees must make notification of a change of address within 30 days of the change.
|
|
|
Extra expense coverage under the commercial property insurance provides:
|
All of the responses are correct
|
All of the responses are correct. Extra Expense coverage is designed to indemnify the insured for any additional costs he/she incurs during the normal operation of the business that result from a covered peril.
|
|
|
Farm liability coverages include all of the following, EXCEPT:
|
Professional Liability
|
Professional liability coverage is provided by other types of policies.
|
|
|
Following the payment of a claim, the salvaged property becomes the property of:
|
The insurer
|
Unless other arrangements are made and agreed upon, after the claim has been paid, the property will belong to the insurer
|
|
|
For successful negotiation, the adjuster must develop strong technical expertise in all of the following areas, EXCEPT:
|
Appraising property at a lower rate than Fair Market Value.
|
The adjuster needs expertise in all of the areas listed but appraising property at a lower rate.
|
|
|
Generally a consumer reporting agency does not need to furnish a report containing
|
Medical information
|
A report containing medical information does not need to be disclosed unless the consumer consents to it.
|
|
|
How is property covered under an unendorsed BOP form?
|
Coverage is written on an open peril basis
|
The forms were revised to provide open peril coverage on buildings and contents. Coverage can be amended to named peril basic coverage by endorsement.
|
|
|
How long will the Businessowners Policy pay for “extra expense coverage” used to reduce the loss of income when the insured has suffered a loss from a covered peril?
|
Until the repairs are complete and the business re-opens, Until the repairs are complete and the business re-opens, subject to a 12 consecutive month limitation .
|
The coverage for extra expense is limited to twelve consecutive months after the date of direct physical loss or damage. Coverage also ceases when repairs are complete and the business re-opens.
|
|
|
How many days does the liberalization clause provide for under the BOP prior to or during the policy?
|
45 days
|
“If we adopt any revision that would broaden the coverage under this policy without additional premium within forty-five days prior to or during the policy period, the broadened coverage will immediately apply to this policy.”
|
|
|
If a Condo Association policy and a Condominium Unit Owners Policy are in force on the same property, how would the claim be handled?
|
The Condo Association policy is primary
|
The association coverage is primary irrespective of a unit owners coverage.
|
|
|
If a named insured acquires additional property after the watercraft policy period begins, that property is covered for a maximum of ____ days after the date it came into the insured’s possession.
|
14
|
The coverage applies for 14-days.
|
|
|
If an insured carries Coverage C (contents) under a dwelling (not homeowners) form, how much coverage applies on a worldwide basis?
|
10% of the coverage C limit
|
The DP Forms have a 10% limitation of the coverage C amount when personal property is OFF the premises. The homeowners forms provide the full limit of coverage C anywhere in the world for personal property.
|
|
|
If the insured has to take time off work to help assist in the investigation of the claim, the policy will pay for actual loss of earnings up to:
|
$250 per day
|
The most the policy will pay for actual loss of earnings is $250 per day if the insured is asked by the company to take time off of work to help assist in the investigation and/or defense of the claim.
|
|
|
If the other insurance clause is by contribution, how would a loss be divided and paid between the various carriers?
|
Each would pay the same until their limits are exhausted
|
“Contribution by equal shares”, is a type of other insurance clause. It requires each insurer involved in a loss to contribute EQUALLY toward payment. If the loss depletes a carrier’s limit, the other carriers pay the remaining loss proportionally until all insurance is exhausted or the loss is fully paid.
|
|
|
In a farmowner’s policy, the maximum amount payable for a loss to a satellite dish is:
|
$1,000.00
|
The pre-2000 policy forms provided $250 for a satellite dish. Under the newer forms, the limit hsa been increased to $1,000.
|
|
|
In a Homeowners Policy, under the Additional Coverage of glass breakage, building glass is:
|
Covered unless the insured premises have been vacant for more than 60 consecutive days immediately before a loss.
|
Homeowners Forms provide glass coverage, but claims are excluded if the premises have been vacant for more than 60 consecutive days (unless caused by earth movement).
|
|
|
In case of a disagreement regarding a property loss under the appraisal clause, who pays the cost of the umpire?
|
Both the insured and the insurer
|
The costs of an umpire are shared by both parties.
|
|
|
In case of a loss, how many days notice does the insured have after notification of a claim to submit the claim to the underwriters of the ocean marine coverage?
|
180 days.
|
In case of a loss, the insured must notify the lead insurance company before it takes any action. There is no coverage for the loss unless the notification is made within 180 days after the loss occurs, unless the insurance company has agreed to a different notification period.
|
|
|
In commercial property coverage, the Utility Service - Time Element Coverage Endorsement covers loss due to the interruption of all of the following, EXCEPT:
|
Transportation.
|
Loss due to transportation is not a covered loss under this endorsement
|
|
|
In commercial property insurance, how would the insured receive replacement cost lost settlement on damage (as a result of a covered peril) to the personal property of others left in the insured’s care custody and control?
|
Request a separate replacement cost endorsement on the Personal Property of Others coverage on the policy.
|
Even if the replacement cost endorsement is attached to the building and business personal property coverage, a separate endorsement is necessary for replacement cost settlement on the property of others left in the insured’s care custody and control.
|
|
|
In Coverage A – Building under the BOP, which of the following is NOT included?
|
Valuable papers and records
|
Valuable papers and records are NOT included in Coverage A-Building. If business personal property is insured there is a limited amount of coverage ($10,000) provided under the extentions of coverage.
|
|
|
In insurance language, the party who has been wronged is called the ______ party, and the person causing the injury is the ______ party.
|
third / first
|
The third party would be the claimant and the person committing the wrongful act would be the first party.
|
|
|
In insurance terminology which of the following most accurately describes an indirect loss?
|
After a loss, an insured homeowner sustains hotel bills while the house is being repaired.
|
Indirect losses are expenses designed to temporarily replace the use of the item damaged in a direct, physical loss. The other answer choices describe consequential, but still direct losses.
|
|
|
In New York, an appraiser is prohibited from performing which of the following?
|
Appraising loss of use of a vehicle
|
An appraiser does not evaluate the loss of use of a vehicle
|
|
|
In New York, continuing education requirements for agents must be satisfied:
|
Biannually
|
Licensees(agents)must complete 15 credits of continuing education (CE) during each two year licensing period. All courses must be completed through a Provider Organization (Provider) approved by the New York State Insurance Department. Independent adjusters (resident or nonresident) are not subject to the continuing education requirements of New York.
|
|
|
In ocean marine insurance, what is the purpose of the IVEL clause?
|
To provide excess hull and collision liability coverage.
|
The purpose of the IVEL clause is to provide excess hull and collision liability coverage
|
|
|
In order to issue a written binder for a commercial property policy what is the minimum consideration an agent must secure from an applicant?
|
A Promise to Pay the Premium
|
A binder of insurance can be made verbally or in writing. It can be made without collecting a premium. It is assumed that a premium payment will be made when the policy is actually issued to replace the binder, which is merely temporary evidence of coverage.
|
|
|
In the Commercial Property Cause of Loss Forms, which of the following perils is covered by broad form but is not covered by the basic form?
|
Weight of ice and snow
|
The basic form does not include loss coverage for the weight of ice and snow
|
|
|
In the event of a loss under a Personal Auto Policy, an insured is required to submit to the insurance company all of the following information, EXCEPT:
|
An appraisal of the damaged property.
|
Obtaining an appraisal of damaged property is not a required duty of the insured. Verification of the damage is the duty of the auto appraiser.
|
|
|
In the ocean marine insurance policy, the term "average" means:
|
Loss or damage.
|
The term "average" in ocean marine insurance refers to loss or damage. In order to protect the ship, its cargo and passengers, some of the cargo may be jettisoned (thrown overboard) to save the ship and cargo. Particular average means only one party pays for the loss. General average means all parties share in the loss.
|
|
|
In the property and casualty insurance field what is the function of loss reserves?
|
To set aside monies to pay for the expected future obligations of existing policies.
|
Loss reserves, which are regulated by government, provide security for policyholders and claimants. If reserves are underestimated a company could become insolvent after paying claims in excess of the reserves.
|
|
|
In which of the following situations should a non-waiver agreement be used?
|
An insured’s house shows rot damage, and it appears there is a long-term plumbing leak
|
Non-waivers should be executed when there are unresolved questions regarding coverage, limits or both. The adjuster would be wise to present such of waiver to the claimant/insured during the initial site visit.
|
|
|
It is essential that operations at some businesses be continued regardless of circumstances. In the event of property damage to the main facilities, arrangements could be made for use of other facilities. What type of coverage would be most appropriate to protect this business against consequential losses?
|
Extra Expense Coverage
|
Some businesses cannot shut down. Hospitals, dairies and banks are a few examples. This coverage will pay for expenses needed to decrease the amount of time the insured's business is interrupted.
|
|
|
Jack Tate ignores the safety warnings and instructions when setting the controls of the steam boiler and as a result, the boiler explodes. Jack carries Equipment Breakdwon coverage. The adjuster for Pressure R Us Insurance Company may do which of the following?
|
Deny coverage under the intentional errors & omissions exclusion
|
If a loss occurs as a result of intentional error of the employee, coverage can be denied.
|
|
|
James purchases an outboard motor boat. He will have automatic coverage for the boat under his homeowner policy under which of the following circumstances? I. He reports the purchase of the boat to his insurer within 60 days. II. The boat is in storage on his premises. III. He reports the purchase of the boat to his insurer within 45 days.
|
II and III only
|
The homeowner policy will cover a newly acquired boat as long as the insured reports it to the insurer within 45 days of the purchase or if it is in storage on his premises. However, be aware of the limitations on the hull value, horsepower limitations and size and use of the watercraft. A watercraft or yacht policy may be a better choice.
|
|
|
Jerry Jones has suffered a property loss to his home. The adjuster has implied that the loss is covered when it is not. The insured has detrimentally relied on such assurances. The company may be ________ from denying the claim
|
Estopped
|
When the insured relied on the incorrect statements of the adjuster the company was “estopped” from claim denial.
|
|
|
Joe Smith operates a small manufacturing plant. Joe carries a Business Income form. His policy will cover which of the following?
|
His loss of profit while out of business as a result of a fire loss
|
The loss of income as a result of a "direct loss" is all the business income form will cover.
|
|
|
Lawful economic interest in the preservation of the subject of insurance, free from loss or destruction or monetary impairment is the definition of:
|
Insurable Interest
|
This is the definition of insurable interest. In property and casualty insurance, insurable interest must exist at the time of the loss.
|
|
|
Livestock, under a livestock floater, is covered while the property is in the custody of a common carrier for a limit of:
|
$1,000
|
The limit in the form is $1,000 and can be increased by paying an additional premium.
|
|
|
Making false or misleading statements about dividends or shares of surplus previously paid on an insurance policy is known as:
|
Misrepresentation.
|
Misrepresentation is intentionally making false statements designed to mislead
|
|
|
Many property policies contain some extra coverages at no additional premium. Liability policies may contain these as well. These extras are known as:
|
Additional/Supplementary coverages
|
Many policies contain additional/supplementary coverages that enhance the policy at no additional costs.
|
|
|
Medical payments coverage of a boatowners policy covers all necessary medical expenses incurred by a covered person up to ______ following a covered accident.
|
3 years
|
Coverage C (Medical Expense) of the boatowners policy covers all necessary medical expenses incurred by a covered person up to three years following a covered accident.
|
|
|
Misrepresentation is:
|
Leading a client to believe that an insurance policy provides benefits that it does not provide.
|
Leading a client to believe that an insurance policy provides benefits that it does not provide is an example of misrepresentation
|
|
|
Most crop insurance in the United States is written by:
|
Private stock and mutual companies.
|
The private sector now writes about 85% of the multi-peril crop coverage.
|
|
|
Mr. and Mrs. Smith own a building worth $100,000 and have it insured under three policies, each containing a pro-rata other insurance clause. Carrier A provides 10,000; carrier B provides 10,000, and carrier C provides 80,000. If there is a $20,000 fire loss, how will the claim be divided, if at all?
|
A will pay $2,000, B will pay $2,000, and C will pay $16,000
|
Since more than one policy covers the loss, the other insurance clause will be invoked, and each carrier will pay according to how its limit compares to the total amount of insurance in force. Carrier A writes 10% of the total, and would pay 10% of the loss, and so on.
|
|
|
Mr. Jamison owns a summer home in the woods that he rents to others. During his absence bears enter the home and do considerable damage. The insured reports the claim to his insurance company. The adjuster advises Mr. Jamison to report the claim as vandalism damage. The claim report is investigated by the insurance department. How should the Department of Insurance treat this action on the part of the adjuster?
|
Charge the adjuster with an unfair claims act
|
Advising the insured to misrepresent the facts of the claim would be an unfair claims practice act.
|
|
|
In a homeowners policy, "persons insured" would include all of the following, EXCEPT:
|
A non-related tenant living in the insured residence
|
A tenant would have to purchase their own personal property coverage as well as personal liability coverage. They may qualify for a tenants homeowner policy.
|
|
|
Negligence is what type of civil wrong?
|
An Unintentional Tort
|
A tort is a civil wrong (as opposed to a criminal wrong) other than a breach of contract. Negligence is an unintentional tort defined generally as "the failure to use the care that a reasonable and prudent person would have in order to protect others from harm."
|
|
|
New York residents securing any type of insurance adjuster license must meet all the following qualifications, except:
|
The applicant must be at least 21 years of age.
|
The applicant must be at least 18 years of age.
|
|
|
No act will be certified by the Secretary of the Treasury as an act of terrorism under the Federal Terrorism Act unless:
|
The losses that occur relate to commercial property risks..
|
The coverage would only apply to losses that relate to commercial property losses caused by an act of terrorism as defined by the Act
|
|
|
Ocean marine coverage for losses to the insured vessel caused by bursting boilers, latent defects in the vessel and negligence of the master or crew members are addressed by which of the following?
|
The Inchmaree clause.
|
Inchmaree was a steam ship that suffered a machinery loss that was not covered. A lawsuit followed, and future policies offered this coverage under what is commonly referred to as the Inchmaree clause.
|
|
|
Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following EXCEPT:
|
Damage to or loss of another ship caused by a negligent collision.
|
Hull coverage is required to cover the damage to the ship. P&I provides legal liability coverage for injuries and certain types of damages. Damage to another ship is not covered under the P&I coverage. Coverage can be provided under the hull coverage form for this coverage to other vessels. This is called the "running down clause".
|
|
|
Of the following businesses, which one is not eligible for a Businessowners Policy?
|
Auto dealer
|
Auto dealerships are not eligible for the BOP
|
|
|
On the way to Europe, heavy seas place a cargo ship in danger of sinking. The crew decides that if they dispose of the heavy equipment they are hauling the ship won’t sink. They toss overboard 10 tractors owned by John Deere. The cartons of cotton balls owned by Eli Cotton are safe as is the whipped marshmallow cream being shipped for Kraft Foods. When they get to Europe, Eli and Kraft are asked to share in the loss that John Deere sustained. This is an example of:
|
General Average Clause
|
This would be an example of the use of the general average clause where everyone shares in the loss to save and preserve the ship and its cargo.
|
|
|
Payment may be made if which of the following procedures has been executed?
|
A Walk-Away release
|
The walk-away release indicates the final disposition of the matter and relinquishes the claimant’s right to sue so payment may be issued. In some states the signing of the payment check indicates a walk-away release.
|
|
|
Prior to commencing subrogation, the insurer should
|
Obtain a signed subrogation agreement, trust agreement or loan receipt from the insured
|
The insurer should obtain a signed subrogation agreement, trust agreement or loan receipt from the insured.
|
|
|
Pro-rata cancellation occurs when:
|
An insurance company cancels a policy mid-term.
|
When a insurance carrier cancels the policy the insured is charged only for the time the coverage was in force. The remainder of the premium is returned to the insured without a penalty. In short-rate cancellations, which apply when the INSURED cancels the policy, there is typically a penalty deducted from the unearned premium.
|
|
|
Replacement cost coverage is best defined as:
|
Replacement without deduction for depreciation.
|
In replacement cost coverage, the insured is allowed to replace old with new at today's cost without a deduction for depreciation.
|
|
|
Resident adjusters in New York must maintain a _____ surety bond with the Superintendent for the purpose of assuring faithful performance of the licensee.
|
$1,000
|
A surety bond in the amount of $1,000 must be maintained by the adjuster.
|
|
|
Sally Roe's vehicle is rear-ended by John Doe. Sally and John are good friends. Sally tells John not to worry about the damage. She says she has insurance and will tell her insurance company to pay for the damage. She will waive her subrogation right so that John won't have to pay anything. Her insurer will:
|
Proceed with subrogation against John Doe and not honor the waiver
|
While Sally does not have to turn a claim in and can pay for the damage herself, if she chooses; she cannot ask her insurance company to pay for her damage without allowing it the right to subrogate. In insurance, subrogation is the substitution of one party (insurer) for another party (insured) to pursue any rights the insured may have against a third party liable for the loss paid by the insurer. Once the insurer has paid for its insured (Sally's) damage, it has the contractual right to recover not only Sally's deductible but the money it paid out for Sally's repairs from the at-fault party (John). Sally cannot "waive" this contractual right
|
|
|
Selling insurance to the public using captive agents, independent agents, or employees in a call center are examples of:
|
Marketing distribution systems
|
Many insurers will use one or more of these channels as a way to market and distribute their products.
|
|
|
Smoke damage to the insured premises caused by the sudden faulty operation of the insured's fireplace is covered under the:
|
DP-2.
|
The DP-2 and DP-3 forms cover this type of loss. The DP-1 form does not.
|
|
|
Sprinkler Leakage Insurance does not provide coverage for:
|
Damage to growing crops from malfunctioning sprinklers
|
The coverage does not apply to growing crops. Crop insurance is a separate line of insurance.
|
|
|
Subject to certain limitations, the Superintendent of Insurance may issue a _____ day temporary permit to an individual to adjust claims while an adjuster’s application is pending.
|
120
|
The permit can be issued for a period of 120 days subject to restrictions.
|
|
|
Telemarketers who transmit pre-recorded messages to consumers who have not agreed to accept such messages will be fined up to:
|
$16,000 per call
|
Beginning September 1, 2009 the penalty for transmitting pre-recorded messages to those who have not agreed to them is $16,000 per call.
|
|
|
The "other insurance clause" is included in insurance policies to deal with:
|
Duplicate policies.
|
Occasionally more than one policy is issued covering the same coverage on the same risk. This clause spells out the method of determining the liability of each.
|
|
|
The ABC Company has a printing press that suffers a total loss. The company paid $25,000 ten years ago for the press. Actual cash value is $40,000 and the replacement cost is $55,000. The company has had to cancel several contracts for printing due to the loss of the press and they are anxious to resume full production. ABC Company is covered under a Businessowner's Policy (BOP). How much will the insurer pay for this claim?
|
$55,000
|
The insurer will pay $55,000 to ABC Company for this claim.
|
|
|
The additional coverage for Debris Removal will now pay to clean up the debris of others on the insured premises even if the insured has no damage to their own property. The maximum payable to remove this debris of others is:
|
$5,000
|
The Debris Removal additional coverage now extends to $5,000 to cleanup debris of others on the insured premises even if the insured property has not been damaged
|
|
|
The adjuster bond required in New York is payable to:
|
The People of The State of New York
|
The bond is payable to the people of the state of New York.
|
|
|
The authority the public believes the agent has based on the agent’s actions is known as:
|
Apparent Authority
|
Apparent authority is the authority the public believes the agent which seems to be apparent by the agent’s actions.
|
|
|
The best definition of indemnify is:
|
To promise to restore the person to his/her pre-loss condition
|
To indemnify is to restore the party indemnified to the condition that was present prior to the loss. In a life insurance contract, the payment to the beneficiary is called indemnity.
|
|
|
The building limit of insurance is $100,000 and the deductible is $1,000. The building loss amount is $110,000. The insured is covered under a BOP. Which of the following is the correct loss payment?
|
$100,000
|
The deductible is subtracted from the loss and not the limit of coverage. The loss exceeded the limit of coverage. Had the loss been less than the limit of the policy the deductible would still be deducted from the loss amount.
|
|
|
The burden of proof in determining the value of property and the cause of loss lies with:
|
The insured.
|
The burden of proof initially lies with the insured. The insured is also obligated to produce estimates of loss.
|
|
|
The Businessowners policy provides loss of income on an "actual loss" sustained bases for up to:
|
12 months
|
The policy provides for loss of income for up to 12-months. There is a 72 hour period before coverage takes affect.
|
|
|
The Commercial Building and Personal Property Coverage form applies to all of the following, EXCEPT:
|
Personally-owned residences.
|
Dwelling forms are available for dwellings.
|
|
|
The conditions section of an insurance contract sets forth the:
|
Rules of conduct for the insured and the insurance company.
|
The rules of conduct by the insured include: reporting claims in a timely fashion, cooperating with the insurer, providing medical evidence, proof of loss, and any other items requested by the company affecting the investigation of the claim.
|
|
|
The declarations section of an insurance policy provides which of the following?
|
The Name and Address of the Insured and the Time Duration of the Policy
|
Usually the first page of an insurance policy, the declarations section, also includes other important information including the name of insurer, limits of coverage, policy period, endorsements, deductibles, etc.
|
|
|
The definition of collapse under the Homeowners program includes:
|
An abrupt falling down or caving in of the structure or a part of the structure.
|
The definition defines collapse as an "abrupt falling down or caving in of the structure or a part of the structure."
|
|
|
The Equipment Breakdown policy (formerly called boiler and machinery) provides for replacement cost coverage in case of a covered claim. Under what conditions would the insurer only pay actual cash value in case of a loss?
|
The policy pays replacement only if the repairs are made within twenty four months of the accident.
|
The valuation clause provides for replacement cost coverage on all property, except if repair or replacement is not made within 24 months of the date of the accident, actual cash value will be paid.
|
|
|
The Equipment Breakdown policy provides automatic coverage to equipment in use or connected for use at newly acquired or existing locations for ____ if the insured reports to the insurer in writing.
|
90 days
|
Automatic coverage is provided for 90-days if the newly acquired property is reported in writing to the insurer
|
|
|
The failure to do what a reasonably prudent person would do under the same circumstances is known as:
|
Negligence.
|
One who has committed a tort may be held legally liable under the rule of negligence.
|
|
|
The federal crop program that covers the revenue of the entire farm as opposed to a specific crop is called:
|
Adjusted Gross Revenue
|
Group Risk involves the average county revenue. Crop revenue compares the early market price of the crop to the harvest price and Income protection involves a combination of both low harvest prices and low yield. All of those can be tied to a specific crop depending on the farm. Adjusted Gross revenue insures the revenue of the entire farm as opposed to a specific crop.
|
|
|
The final loss report will contain all of the following regarding any advanced payments, except:
|
Return the advance payment receipts to the insured
|
The final loss report does NOT return any receipts to the insured. These receipts become part of the final report.
|
|
|
The Fit and Trim Fitness Center wants to reduce its carbon footprint. A covered loss destroys some treadmills, damages the roof and most of the interior walls. Fit and Trim finds replacement treadmills that generate and actually return energy to the power grid. The cost is 15% higher than standard equipment. Which of the following, if any, would pay the increase?
|
Increased cost of loss and related expenses for "green" updates
|
The increased cost of loss and related expenses for green updates will pay an extra 25% of the property loss for the increased cost to “go green” up to $100,000 maximum.
|
|
|
The giving up of a known right is known as:
|
Waiver.
|
The giving up a know right is known as a waiver. Known rights usually are not waived. However, a waiver can be intentional, unintentional, direct or indirect. Failure of a claimant to report a claim in a timely fashion can affect a person’s right to coverage.
|
|
|
The head of each state's insurance department (the Commissioner, Superintendent, Director, etc.) is empowered to:
|
Enforce state laws relating to insurance.
|
Only the legislature can write laws. The head of each state's insurance department can issue rules and regulations to enforce the laws. Insurance departments approve most policy forms and rates, but they don't write or develop them.
|
|
|
The HO-3 provides _____ coverage on the dwelling and ____ coverage on personal property.
|
open peril / broad peril
|
The HO-3 (Special form) provides open peril coverage for loss to the dwelling and other structures. It provides broad peril coverage for personal property.
|
|
|
The initial job for the adjuster in the investigation of a loss is to determine:
|
Coverage
|
The initial requirement of the adjuster is to determine if a loss is covered or not. Once the loss is considered to be covered, then negligence needs to be determined in liability situations.
|
|
|
The insurance company does not pay for certain damaged property under an Equipment Breakdown policy. Identify the property.
|
Obsolete property
|
The insurance company does not pay for damaged property that is obsolete and useless to the named insured.
|
|
|
The insured has a building worth $200,000 and insures it for $80,000. The policy contains an 80% coinsurance clause. What will the insured pay in the case of a $50,000 partial loss
|
$25,000
|
The insured should carry at least $160,000 ($200,000 X 80% = $160,000). He only carries $80,000 or one half of the required amount. Therefore the insured will receive $25,000 or 50% of the loss. In case of a total loss the insured would receive the $80,000 as the coinsurance clause only affects partial and not total losses.
|
|
|
The insured has a building worth $500,000 and insures it for $300,000. The policy contains an 80% coinsurance clause. In case of a total loss, what will the insured receive?
|
$300,000
|
The coinsurance clause is an agreement between the insured and the insured. In exchange for a lower rate the insured must carry at least 80% of the value of the property to be insured. In case of a total loss to the covered property the coinsurance clause is not a factor. The insured receives payment up to the limit of the policy. In this case the insured would receive $300,000.
|
|
|
The insured has an HO–3 homeowner policy. During the night the water line in the wall to the upstairs bath room burst and water ruined the walls, floor and other furniture. In this situation all of the damaged will be covered except:
|
Replace the pipe that broke
|
The policy will not pay for the part of the pipe that broke. All of the other damage is covered.
|
|
|
The insured has suffered a property loss and reported the claim promptly. Which of the following is NOT an immediate duty of the adjuster?
|
Immediately seek subrogation rights against a third party
|
Subrogation of a claim occurs after the claim has been paid. Afterwards, the adjuster may seek subrogation against a third party who may have caused the loss.
|
|
|
The insured has suffered a severe storm and some of his trees, shrubs, and plants are heavily damaged by the wind. How much coverage could the insured expect to receive for his claim under his form DP-3 dwelling policy?
|
A total of $500.00
|
The dwelling policy provides an additional coverage for trees, shrubs, and plants. The limit for this coverage is $500.00 for any one tree shrub or plant. However, the coverage applies for specified perils and wind is not included. The insured will not collect anything for his loss.
|
|
|
The insured has suffered roof damage as a result of a tornado. He makes temporary repairs until permanent repairs can be made. He spends $1,500 for this work. How much, if any, will the DP-2 dwelling policy pay?
|
$1,500
|
The policy will pay all of the costs due to the clause in the policy called “reasonable repairs”. This pays for the cost to make reasonable repairs to protect the property from further
|
|
|
The insured in a property loss is not obligated by the terms of the policy to:
|
Hire a public adjuster to assist the insured in the claim
|
The insured is not obligated to employ a “public adjuster” to assist in the claim against the insurance company. It is an option on the part of the insured.
|
|
|
The insured is advised by his insurer that something adverse appeared on his credit report. The information is in error. What can the insured do?
|
The insured can obtain the name of the credit reporting company from the insurer and correct the error
|
The insurance company is not responsible for correcting credit report errors. The insurer can advise the insured of the problem and the name of the credit reporting agency. Its up to the insured to have the report corrected.
|
|
|
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 policy pays for up to twelve months after the loss.
|
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.
|
|
|
The insured is covered under a Businessowners Policy. He has several computers and the electronic data is corrupted as a result of lightning. The loss is $20,000. How much will the policy pay for the damaged data?
|
$10,000
|
ISO introduced the electronic data additional coverage in the 2006 BP 00 03 01 06. The coverage provides up to an annual aggregate of $10,000. The cost to replace or restore electronic data is covered if the data is corrupted or destroyed by a covered cause of loss. The same covered causes of loss apply to this additional coverage as apply to business personal property.
|
|
|
The insured is covered under a watercraft policy and asks the agent about a “lay-up” period credit to get a reduction in the premium. The dates of the lay-up period are specified in the policy. There is an emergency and the insured must use his boat in a life saving event. The boat is damaged and sinks. Under what circumstances would coverage apply?
|
Only if the insurance company is notified within 10-days of the emergency use.
|
The company must be given notice within 10-days of the emergency to justify the need to violate the terms of the provision.
|
|
|
The insured owns a four family dwelling insured on a HO-5 Form. The dwelling is insured for $500,000. What is the percentage of Coverage A for contents?
|
25%
|
A four family dwelling is covered for 25% of Coverage A for contents. A three family dwelling is covered for 30% and a one or two family dwelling is covered for 50% of the Coverage A limit.
|
|
|
The insured's diamond ring valued at $10,000 has been destroyed in a fire. She is insured by a HO-3 policy. What is the responsibility of the insurance company with respect to this loss?
|
Pay the ACV of the ring
|
The policy contains a limitation for the theft of the jewelry. Since the ring was destroyed in the fire the insurer is responsible for the actual cash value of the ring unless the insured purchased replacement cost coverage.
|
|
|
The maximum payable for damage or loss to signs attached to the building covered under a BOP is:
|
$1,000
|
Damage or loss to a sign attached to the building is limited to $1000 even though it is attached to the building and considered part of the building
|
|
|
The medical payments coverage on the farm policy can be claimed for up to:
|
3 years
|
Similar to a homeowner policy, medical payment claims can be made up to three years from the date of the injury
|
|
|
The National Flood Insurance Program will pay which of the following amounts to assist with moving of property to safety when there is imminent flood danger?
|
$1,000
|
The NFIP provides $1,000 of coverage to move property to safety, but that amount decreases the coverage limit payable for damaged property.
|
|
|
The New York Insurance Code provides for a "general penalty." The general penalty is:
|
$500 per offense.
|
The general penalty is $500 per offense.
|
|
|
The New York Superintendent of Insurance is:
|
Appointed by the state senate.
|
The Superintendent is appointed by the governor, by and with the advice and consent of the senate, and holds office at the pleasure of the governor.
|
|
|
The ocean marine coverage which insures either prepaid shipping charges or the income to be earned for moving cargo is:
|
Freight insurance.
|
Freight insurance covers only the shipping fees. Damage to the cargo is covered under a cargo form. Some coverage is also included under the protection and indemnity coverage legal liability.
|
|
|
The only glass covered under the Commercial Building Property coverage is:
|
All of the responses are covered glass
|
All of these types of glass are covered property. -Windows -Skylights -Front doors |
|
|
The owner of a movie theater was held liable when the balcony in the theater collapsed and killed 12 people. This is an example of a:
|
Tort violation
|
This is an example of a tort violation. Tort basically consists of the following things: A legal duty is owed. There has been a breach of that duty owed. It is the proximate cause of the loss. Damages have been sustained by a third party.
|
|
|
The policy term of a flood insurance policy is:
|
One year term only
|
Flood insurance is written on a one-year term basis.
|
|
|
The principle of indemnity is designed to avoid:
|
Overpayment of a claim
|
The principle of indemnity is to restore the insured to the same position, if possible, prior to the loss. Overpayment of a claim violates this principle.
|
|
|
The program trigger for terrorist acts through December 2014 must cause collective damage in excess of:
|
100,000,000
|
From the year 2007 until December of 2014, a terrorist act must cause in excess of 100 million in damages to trigger the federal government involvement in paying claims.
|
|
|
The promise by one party that is conditioned on a fortuitous event and where the value given by each party are unequal is called:
|
Aleatory.
|
The insured pays a small premium in exchange for something greater is a loss should occur. The values given by both parties are unequal.
|
|
|
The property insurance term “improvements and betterment” applies to:
|
Real Property
|
When a tenant occupies a non-owned structure they may make improvements and betterments to the real property. While they are occupying the building they have an insurable interest in these items. When they move they must be left. The monies spent on improvements and betterments can be covered in property insurance.
|
|
|
The proximate cause of loss often involves a chain of events where the actual cause of loss is difficult to determine. What is the adjuster attempting to determine?
|
The cause that began the chain of events
|
The adjuster is attempting to determine the cause that began the chain of events that lead to the damage or negligence being claimed.
|
|
|
The purpose of a builder’s risk policy is
|
To cover a building under construction from accidental damage from the perils insured against
|
The purpose of the builder’s risk policy is to cover a building during the course of construction from accidental damage from the perils insured against.
|
|
|
The statement by an applicant on a personal automobile application that she has had no accidents within 3 years, but which she later corrects to include one claim 2 1/2 years ago is an example of:
|
A representation.
|
A representation is a statement that is believed to be true when made, which might prove to be false. A warranty is a statement that is guaranteed to be correct. In this case, the applicant made no apparent attempt to conceal or misrepresent a time distortion.
|
|
|
The Superintendent of Insurance in New York is:
|
Appointed by the Governor with the consent of the New York state Senate.
|
The New York state legislature empowers the governor to appoint the Superintendent making this position a cabinet position in the governor's administration
|
|
|
The Superintendent of Insurance may issue a _____ temporary permit to an individual to adjust claims while an adjuster's application is pending.
|
120-day
|
A temporary permit may be issued for 120 days
|
|
|
The term “subrogation” refers to:
|
Substitution
|
Subrogation, also known as Transfer of Right of Recovery, in effect substitutes the insured party (the one who received insurance recovery/claim check) with the insurer, which then attempts to collect from the responsible party the amount it paid to its insured.
|
|
|
The term “undamaged stock” in Equipment Breakdown coverage refers to:
|
Refers to the reduction in the value of the stock
|
This term applies to the reduction in value of undamaged stock parts that become unmarketable.
|
|
|
The time period of coverage which is stated on the declarations is known as:
|
The policy period
|
The policy period is stated on the declarations page representing the time limit coverage is in force as long as the premium is paid.
|
|
|
Tom Smith has a gun collection and he and his wife are covered under an HO-3 homeowner policy. His wife has an art collection that is covered under a scheduled personal property endorsement. A flood occurs and all of the insured's property is destroyed. What property, if any, is covered and what deductible would apply?
|
Only the art collection would be covered without a deductible
|
The personal articles form does not exclude flood coverage so the art collection is covered. Flood is excluded under the homeowner policy so all of the other property, including the gun collection, is not covered.
|
|
|
Under a commercial property policy, once the insured has submitted a properly executed proof of loss within 60 days of a loss as required by the policy, how long does the company have to pay the claim?
|
30 days
|
The insurer is required to pay the claim within 30 days. Note: This clause is in the form but the number of days may vary per state based on their laws.
1 |
|
|
Under a Commercial Property policy, which of the following is not a covered peril under the Basic Cause of Loss form?
|
Water damage
|
Water damage to extinquish a fire and the accidental leakage of water from a sprinker system would be covered. Other types of water damage would be excluded.
|
|
|
Under a dwelling broad or special policy, what is the maximum that would be paid for "loss of use" if coverage A was $60,000?
|
$12,000
|
The forms provides 20% of coverage A for fair rental value and additional living expense under the DP-2 and DP-3. Therefore $60,000 X 20% = $12,000.
|
|
|
Under a dwelling policy what is the maximum that would be paid for one month for additional living expenses if coverage A was $60,000?
|
$1,000
|
The form provides 20% of coverage A for additional living expense under the DP2 and DP3. Therefore $60,000 X 20% = $12,000. This figure divided by 12 = $1,000.00.
|
|
|
Under a farm policy, which of the following would be covered under Coverage A?
|
A structure attached to the dwelling
|
Coverage A covers the dwelling and any attached structures such as a garage.
|
|
|
Under a Homeowner Form with the Replacement Cost Coverage endorsement attached, what is the maximum amount that will be paid in case of a covered loss?
|
The Limit of Coverage
|
In property insurance the maximum the insurer will pay in case of a covered claim is the limit of the coverage. Deductibles are subtracted from the loss and not the limit of the coverage.
|
|
|
Under a watercraft policy, which of the following would be covered? I. Bodily Injury II. Property Damage III. Medical Payments to Others
|
I, II and III
|
The boatowners policy includes all of these coverages.
|
|
|
Under farmowner’s liability coverage, which of the following is covered under advertising injury coverage?
|
An insured farmer who unknowingly disparaged the crops grown by another farm.
|
The coverage would cover a farmer who unknowingly disparages the crops grown by another farm. Intentional acts, advertising incorrect prices or descriptions are not covered.
|
|
|
Under the "regular program" a flood insurance policy will insure a single family residence for up to:
|
$250,000.00
|
The limit under the regular flood program is $250,000. Under the emergency flood program the dwelling is covered for only $35,000.
|
|
|
Under the BOP, how much would be paid for any one tree, shrub, or plant in case of a covered cause of loss?
|
$500
|
The policy provides a limit of no more than $500 on any one tree, shrub, or plant with a total limit of $2,500.
|
|
|
Under the Commercial Building and Personal Property Coverage Form, the Valuable Papers Extension applies to:
|
The cost of restoring lost information.
|
Without this extension, the company would only pay for the blank paper. The limit of coverage is $2,500 unless increased
|
|
|
Under the Commercial Property Policy, the Pro-rata Liability Clause means:
|
Each insurer pays in accordance to the percentage of its coverage bears to the total amount of insurance
|
The insurer will not be liable for a greater proportion of a loss than the amount insured will bear to the whole insurance covering the property against the peril involved, whether collectible or not. This is often referred to as the “Other Insurance” clause.
|
|
|
Under the dwelling insurance program, there is an endorsement that is attached to the policy to cover dwellings in the course of construction. Once the dwelling is completed, occupancy is permitted for ____ days after completion.
|
30 days
|
The insurer must be advised when the dwelling is completed. Occupancy of the dwelling is permitted for 30 days after construction has been completed.
|
|
|
Under the Equipment Breakdown Protection form that covers boilers and machinery, what is considered to be one loss event?
|
The initial breakdown causes other breakdowns
|
The breakdown of one covered piece of equipment that causes other breakdowns of covered equipment will be considered one event.
|
|
|
Under the Fair Credit Reporting Act, an applicant for insurance has the right to: I. Be informed of the name and address of any consumer reporting agency consulted in underwriting. II. Challenge or correct any information in a consumer file maintained by a consumer reporting agency.
|
Both I and II
|
An insurance application is considered a consumer transaction and the FCRA applies. The applicant also has the right to obtain the file from reporting agency (but not the insurance company).
|
|
|
Under the farm policy, which of the following is not considered livestock?
|
Poultry
|
Poultry have two legs whereas livestock have four legs. Therefore, poultry is not eligible under the generic livestock form and requires a special coverage/endorsement to the farm policy.
|
|
|
Under the HO policy which of the following would NOT be covered under the HO-2 form?
|
The insured hits and damages his fence with his car.
|
The HO-2 policy is a named peril form and does not provide coverage for the insured damaging his own fence with his car. If someone else, who is not a resident of the household, strikes the fence with their vehicle there is coverage under the HO forms. The HO-3 and HO-5 would cover this loss because it is not excluded.
|
|
|
Under the HO-3 Policy if an insured suffers a fire loss to his residence, what extra amount of insurance is provided for debris removal if needed?
|
5% of the Coverage A limit
|
Coverage for debris removal is found under the Additional Coverages portion of the policy. In addition to the total limit indicated under the dwelling coverage an additional 5% of that amount is available for debris removal.
|
|
|
Under the HO-3 policy which of the following would not be covered?
|
Earthquake
|
Earthquake can be added by endorsement and is not automatically included in the unendorsed HO-3.
|
|
|
Under the insuring agreements relevant to Equipment Breakdown, coverage is provided for:
|
First party coverages and property damage to other’s property
|
An Equipment Breakdown Policy provides, in essence, loss or breakdown coverage for electrical, mechanical, heating/air conditioning and business equipment systems. This coverage is most noteworthy because it covers certain perils that are excluded by other policies. And, it's not just the physical damage caused by the explosion or breakdown that's of importance. Valuable time and profits which might normally be lost because the cause of loss was an excluded peril can, under this coverage, be reimbursed under Business Interruption and Extra Expenses coverage until repair of the damaged or broken boiler or machinery is completed. Damage to the personal property of others is also included.
|
|
|
Under the Multi-Peril Crop Insurance program, the policy providing the lowest amount of protection available is:
|
A Catastrophe Policy
|
A farmer purchasing MPCI has a number of coverage options. A Catastrophe (CAT) policy provides the lowest amount of protection available.
|
|
|
Under the National Flood Insurance Program, replacement cost coverage is available for:
|
Single family dwellings only.
|
Replacement cost coverage is available for single family dwellings only, provided the insured carries at least 80% to value. Contents are covered on an ACV (actual cash value) basis. Any other structures or their contents are covered on an ACV basis
|
|
|
Under the property coverage offered by the HO-3 policy which would not be covered?
|
A dog owned by the insured that is stolen.
|
The policy excludes animals and birds as covered property.
|
|
|
Under the provisions of the BOP, what happens when an insured fails to advise the insurance company that the insured's sprinkler system is inoperative beyond a 48 hour period?
|
Coverage for fire losses will be excluded
|
Coverage for fire losses will be excluded if the insurer is not advised that a sprinkler system is not working
|
|
|
Under the Terrorism Risk Insurance Act, what is the "trigger limit" before claims are paid?
|
$100,000,000
|
The trigger is now (effective 2007)$100,000,000. Previously the limit was $50,000,000. To be considered an act of terrorism, there must be at least $5,000,000 in damages caused by
|
|
|
Under the Yacht policy, what coverage applies to bodily injuries to the captain and crew?
|
Crew coverage under the Jones Act
|
Crew coverage would provide the coverage for the captain and crew. This is a provision under the Jones Act.
|
|
|
Under what circumstances may an adjuster contact a claimant who is represented by an attorney?
|
If permission is granted by the attorney.
|
Permission to contact a claimant represented by an attorney must be granted by the attorney representing the claimant.
|
|
|
Unfair settlement practices include all of the following, except:
|
Failing to pay a claim that is not covered under the terms and conditions of the contract.
|
Failing to pay an uncovered claim is not considered an unfair settlement practice. Any of the other acts by an insurer, if committed without just cause and performed with such frequency to indicate a general business practice, constitute unfair settlement practices.
|
|
|
Water damage to an insured building covered under the “special form” would be covered under the following circumstances, EXCEPT:
|
Water damage to the building caused by a pipe that has leaked over 14 days
|
Water damage caused by a pipe that has been leaking beyond 14-days is excluded by this commercial property form.
|
|
|
Watercraft liability, medical expenses and uninsured boaters are coverages provided under which of the following policies?
|
I. Watercraft
|
Watercraft policies are designed to cover boats used primarily on fresh water streams and lakes. It is a package policy providing several coverages including hull, motor and trailer coverage along with liability coverage
|
|
|
What are the fingerprinting requirements for an adjuster license in New York?
|
Both hands
|
Both hands must be fingerprinted.
|
|
|
What does an insurer do when the insured has possibly waived his or her rights in a liability claim?
|
Send a Reservation of Rights Letter
|
There are situations where the insured has waived the right to coverage under a liability policy. Failure to report a claim in a timely fashion could cause the insured to waive coverage. The insurer will normally issue a reservation of rights letter to the insured advising they will investigate the claim but will not commit to pay the claim.
|
|
|
What does the Leasehold Interest Endorsement provide?
|
Covers a building tenant, when a favorable lease is cancelled because of loss or damage.
|
Leasehold interest insurance protects against financial loss suffered by a building tenant, when a favorable lease is cancelled before expiration because of loss or damage to the building by an insured cause of loss.
|
|
|
What does the term “comparative negligence” mean?
|
The percentage of fault is shared by each driver in an accident in which both contribute to causing the accident.
|
The percentage of fault shared by each driver in an accident in which both contribute to causing the accident. Comparative negligence laws vary by state.
|
|
|
What endorsement may be used under the dwelling policy to keep values current with the replacement cost of the buildings
|
The Automatic Increase Endorsement
|
The Automatic Increase Endorsement is used to keep the coverage current as a result of inflation on construction costs.
|
|
|
What information would not normally be found on an insurance binder?
|
The Conditions and General Exclusions of the Insurance Contract
|
Conditions and general exclusions will be stated in the actual insurance policy. An insurance binder legally represents the policy while it is being prepared by the insurer. Binders typically contain only the policy specifications and insured parties.
|
|
|
What is “express” authority under the law of agency?
|
The authority given to the agent by the company in a written contract or orally
|
Express Authority is the authority specifically given to the agent either in writing or orally.
|
|
|
What is not considered a "breakdown" under Equipment Breakdown coverage?
|
Lack of power, light, heat, steam or refrigeration
|
Breakdown is direct physical loss that causes damage to covered equipment requiring it to be repaired or replaced. It must be caused by a failure of pressure or vacuum equipment, a mechanical failure, including rupture or bursting caused by centrifugal force, or an electrical failure, including arcing, provided the loss or damage is not excluded elsewhere in the coverage form. The lack of power, light, heat, steam or refrigeration is specifically excluded.
|
|
|
What is not covered by “extra expense” coverage in commercial property insurance?
|
Loss of Income
|
Extra Expense Coverage is a form of Business Interruption Coverage. It covers all reasonable extra expenses incurred by the insured in order to continue as nearly as practical the normal operation of a business that has been damaged by an insured peril. It does not cover the loss of income a business may suffer. Other forms like the “loss of income” forms would cover the loss of income.
|
|
|
What is not included with the calculations of a property loss negotiation?
|
The value of the salvage
|
The value of the salvage is not included in the estimate of damage. Salvage belongs to the insurance company after the loss has been adjusted and paid.
|
|
|
What is the amount of bond that must be posted with the state of New York to obtain an adjuster's license?
|
$1,000.00
|
A bond in the amount of $1,000 must be posted to maintain an adjuster's license in New York.
|
|
|
What is the difference between a Businessowners Policy and a Commercial Property Policy? I. The Businessowners Policy automatically provides earthquake coverage whereas a Commercial Property Policy does not. II. The Businessowners Policy includes liability coverage, while a Commercial Property Policy would not.
|
II Only
|
The Businessowners Coverage form automatically provides property and liability coverage. Neither a Businessowners nor a Commercial Property Policy would automatically provide earthquake coverage, although endorsements are available to add it.
|
|
|
What is the limit on the number of stories an office building risk can have and still be eligible for the Businessowners Policy?
|
Six stories
|
Office buildings, including office condominium associations, occupied principally for office purposes, are eligible. Buildings cannot exceed six stories in height or 100,000 square feet in total floor area. Eligible incidental occupancies are (1) apartments; (2) eligible wholesaler, mercantile, service or processing occupancies and contractors which in total do not exceed 35,000 square feet; and (3) contractors which do not occupy more than 7,500 square feet or more than 15 percent of the total area.
|
|
|
What is the maximum commission a public adjuster can charge for services to an insured?
|
12.50%
|
No public adjuster shall charge any insured a fee in excess of 12.5% of the recovery for services rendered by the adjuster.
|
|
|
What is the maximum that will be paid under replacement cost coverage under the HO forms for dwellings?
|
The total price to replace the dwelling up to the dwelling limit, if proper coverage is in place
|
The purpose of the replacement cost coverage is to pay replacement cost without depreciation on the dwelling. Obviously, the insured must be insured to at least 80% of the full replacement value of the dwelling to qualify for replacement cost coverage up to the coverage limit. Note, the HO-8 provides ACV only.
|
|
|
What is the standard deductible under an Equipment Breakdown policy?
|
$500.00
|
The standard deductible is $500.
|
|
|
What type of cargo consists of “bulk shipments” in reference to ocean marine cargo coverage?
|
Ores, coal, iron, grain etc.
|
Bulk shipments consists of ores, coal, iron and grain shipments. They are loaded directly into the ships hold.
|
|
|
What type of contract is binding on only one party?
|
Unilateral
|
Unilateral means "one-sided." An insurance policy is one sided because only the insurance company is legally bound to perform its part of the agreement.
|
|
|
What type of liability is imposed by law without regard to fault on those participating in certain activities or owning certain things that are considered especially hazardous?
|
Strict
|
Strict liability (also known as absolute liability) is liability without fault. It is occasionally imposed by statute on those participating in specified activities that are considered especially hazardous. For example, in some states, ownership of certain dog breeds places strict liability upon the owners in case of any damage or injury to others.
|
|
|
When a homeowner policy is issued with $200,000 coverage on a dwelling, what is the automatic amount of insurance on personal property?
|
$100,000
|
Personal property is automatically covered for 50% of the amount of the dwelling limit. If replacement cost coverage is purchased on the personal property, the limit of insurance will be increased. The insured can always increase the contents limit for an additional premium.
|
|
|
When an HO-3 is issued with a $75,000 dwelling limit on a one-family dwelling, what is the automatic amount of insurance on Other Structures?
|
$7,500
|
Other Structures (Coverage B) are automatically covered for 10% of the limit that applies to the dwelling. Insureds can request higher limits if the other structures on their premises are worth more than 10% of the dwelling limit.
|
|
|
When an insured is fulfilling his or her duties to prove a loss by inventorying the damaged property, who pays the expenses incurred by the insured?
|
The insured only
|
An insured has various duties in the event of loss: notify the insurer and police if a law may have been broken; give prompt notice to insurer of the claim; take reasonable steps to mitigate further damage; cooperate with the insurer, allowing inspection of the damaged property; and submitting a proof of loss within 60 days of its request. The insured is instructed to “keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim.” Reasonable expenses paid by the insured to protect the property from further loss are the obligation of the insurer. Thus any other expenses incurred by the insured are NOT paid by the insurer and the insurer will only pay the "reasonable expenses" to protect the property if the insured maintains an inventory of expenses paid. Until that time, the insured is responsible for all expenses.
|
|
|
When an insured shown on a Commercial Building and Personal Property Policy fails to pay the premium, the insurer is required to give advance written notice of cancellation to the insured and the mortgagee of at least:
|
10 days prior to cancellation.
|
There are two cancellation provisions. One requires a 10-day notice for non-payment of premium and the other requires a 30-day notice for all other reasons. This may vary by state.
|
|
|
When an insurer cancels a Commercial Package Policy (CPP) for non-payment of premium it must give notice to the first named insured at least:
|
10 days in advance
|
10 days notice of cancellation for non-payment of premium is standard in the insurance industry unless modified by state statue.
|
|
|
When an insurer cancels a dwelling policy for non-payment of premium, it must give the insured advance notice of at least:
|
10 days.
|
This is standard in the insurance industry except where state variations apply by statute. For example New York is 15 days.
|
|
|
When can an insured (first party) be paid more than the policy limits?
|
Bad faith on the Part of the Insurer
|
In cases of bad faith on the part of the insurer, the insured may be able to collect more than the policy limits by bringing a suit against the insurer.
|
|
|
When can an insured assign the policy to another?
|
With written consent of the insurer
|
The assignment clause states that the policy may only be assigned with the written consent of the insurer.
|
|
|
When can an insurer subrogate for an amount in excess of what they have actually paid (including their own insured’s deductible, if applicable)?
|
Never
|
Subrogation actions, if successful, allow an insurer to recover only what they have actually paid to claimants (including their insured’s deductible).
|
|
|
When canceling a compensation contract with a public adjuster, when can the insured terminate the agreement?
|
Three days after the agreement was signed
|
The insured may cancel any compensation agreement with a public adjuster until midnight of the third business day after the date on which the insured has SIGNED the compensation agreement.
|
|
|
When is a short-rate return premium applicable?
|
When the insured cancels the policy
|
When an insured cancels their policy they are penalized a percentage of the unearned premium.
|
|
|
When is a value reporting best used?
|
To provide fluid limits of coverage for fluctuating values of property at risk
|
The value reporting form is an option for commercial property insureds, used when insured values fluctuate frequently. The insured reports values periodically to the insurer, and policy limits are automatically adjusted to the values reported. This eliminates the chance of being underinsured, and also allows the insured to pay premiums commensurate with the changing values.
|
|
|
When is abandonment of insured property to an insurer permitted under a commercial property policy?
|
Never
|
Today’s property policies follow the tradition of the Standard Fire Policy by totally prohibiting abandonment of insured property by any party. The abandonment clause is brief: There can be no abandonment to this Company of any property.
|
|
|
When may an adjuster obtain a non-waiver agreement?
|
In dealing with a potential coverage dispute
|
In coverage dispute situations, an adjuster may want to make clear that a known right is NOT being waived by any party.
|
|
|
When may an insured sue an insurer?
|
Not until the insured has complied with all policy provisions
|
The insured cannot bring a successful action against the insurer unless he or she has complied with the policy conditions. Most policies also state that the suit must be brought within two years of the claim.
|
|
|
When the Agreed Value Option is used, the coinsurance requirement is:
|
Waived
|
The Agreed Value Provision removes the coinsurance requirement from the covered property for which it is designated and substitutes an agreement to cover any loss in the same proportion as limit bears to stated Agreed Value. The Agreed Value condition extends until the Agreed Value expiration date marked on the declarations or the actual expiration date of the policy, whichever occurs first. After expiration, if the provision is not renewed by the company, the coinsurance condition is reinstated.
|
|
|
When would a commercial property insured request the Value Reporting endorsement?
|
To report the value of a claim
|
A fixed limit for personal property coverage is not appropriate for an insured with fluctuating inventory values. To avoid being over or under-insured, the Value Reporting endorsement allow an insured to periodically report actual values to the insurance company within the policy term, and coverage limits will float with the values reported. Premiums are adjusted after policy expiration based upon the reported values.
|
|
|
When would a commercial property insured request the Value Reporting endorsement?
|
For fluctuating levels of personal property
|
A fixed limit for personal property coverage is not appropriate for an insured with fluctuating inventory values. To avoid being over or under-insured, the Value Reporting endorsement allows an insured to periodically report actual values to the insurance company within the policy term, and coverage limits automatically adjust with the values reported. Premiums are calculated after policy expiration based upon the reported values.
|
|
|
Whenever the Superintendent of Insurance believes that a person has committed a violation of an insurance law in New York, the Superintendent will serve on the person a statement of the charges and notice of a hearing. The hearing must be held at least ____ after the date the notice is served.
|
10 days
|
The hearing must be held within 10 days after notice is served.
|
|
|
Which of the following are true when an insurer denies or rejects a first party claim, in whole or in part?
|
All of the Responses Listed Are Correct
|
All of the responses are correct. - Must provide statement listing basis for rejection/denial. -Reference state specific statute if available |
|
|
Which of the following best describes "covered property" under the Equipment Breakdown coverage form?
|
Any property that the insured owns or is in the insured's care
|
The Equipment Breakdown coverage form covers "breakdown" to "covered equipment" that causes direct damage to "covered property" on the described premises. The latter term is defined as "any property owned by the insured, or property of others that is in the insured's care and for which the insured is legally liable."
|
|
|
Which of the following best describes the act of arson?
|
It is usually done as a motive for profit
|
Arson is usually motivated by a chance for financial gain
|
|
|
Which of the following businesses would be eligible for a businessowners policy? I. Doughnut shop. II. Wholesale florist. III. Barber shop. IV. Taxidermist.
|
I, II, III, and IV
|
Generally, businessowners policies are written to cover light businesses with limited locations and size. Most insurers would cover all of the ones in this question
|
|
|
Which of the following can be categorized as liability doctrines?
|
All of the responses are liability doctrines
|
All of these are considered to be liability doctrines. Res Ipsa Loquitur means the thing speaks for itself.
|
|
|
Which of the following can bind an insurance company by oral or written agreement?
|
Property and casualty producer
|
Used in property and casualty insurance, binders serve as temporary evidence that coverage is in effect until the policy is issued. They can usually be oral or written. However, some states require that they must be in writing.
|
|
|
Which of the following causes more property damage in the United States than any other natural disaster?
|
Floods
|
Floods cause more damage to more people than all other natural disasters combined.
|
|
|
Which of the following contractors would be eligible for a businessowners policy?
|
A carpenter doing all of his own work building kitchen cabinets in people's homes and earns $75,000 per year.
|
The BOP is a commercial package that provides property and liability insurance to certain types of small businesses. Some small businesses, such as tree removal services, are not eligible. General contractors and contractors with an annual payroll in excess of $300,000 are also ineligible.
|
|
|
Which of the following coverages are available in the ISO Equipment Breakdown protection coverage form?
|
All of the responses are correct
|
All of the responses are correct. There are ten coverages available under the form. They include: property damage, expediting expenses, business income and extra expense or extra expense only, spoilage damage, utility interruption, newly acquired premises, ordinance or law coverage, errors and omissions coverage, brands and labels and contingent business income and extra expenses or extra expense only.
|
|
|
Which of the following coverages are not automatically included in the BOP?
|
Employee dishonesty
|
Employee dishonesty coverage is not automatically included in the BOP, it must be added by endorsement for an additional premium.
|
|
|
Which of the following coverages can be included under a Commercial Package Policy?
|
All of the responses listed are correct
|
All of these coverages can be included in a Commercial Package Policy in addition to Commercial Property Coverage, Commercial Auto Coverage, Commercial Inland Marine Coverage, Boiler and Machinery Coverage, Professional Liability Coverage, and Employment Practices Liability Coverage.
|
|
|
Which of the following coverages may be added by endorsement to an Equipment Breakdown Policy?
|
Business Interruption
|
The policy provides for the expediting of expenses to replace the boilers as quickly as possible. However, other expenses would be incurred during the period of restoration. This form can cover these extra expenses.
|
|
|
Which of the following coverages provides payments to a third party, rather than to the named insured?
|
Bodily Injury and Property Damage Liability
|
The third party will be provided payment under the liability section of the policy.
|
|
|
Which of the following dwelling forms may provide replacement cost coverage for buildings?
|
The broad and special forms only
|
The broad and special forms provide replacement cost coverage on the structures if the insured carries at least 80% of replacement cost value on the structures. The basic form provides actual cash value coverage only.
|
|
|
Which of the following dwelling forms provides "open peril" coverage for dwellings and other detached structures?
|
The Special Form only
|
All the other forms are "named peril" coverage not open peril.
|
|
|
Which of the following dwelling forms provides coverage for loss of rental income?
|
The Basic, Broad and Special Form
|
All of the forms provide for rental value coverage. In the DP-2 and DP-3, it is 20% of the coverage A limit and it is additional coverage, but on the DP-1, the 20% available coverage reduces the available coverage A amount on the dwelling. Note: in North Carolina the percentage is 10%.
|
|
|
Which of the following dwelling forms provides replacement cost coverage for dwellings and "other structures"?
|
The Broad and Special Forms only
|
If the insured carries a limit of at least 80% of the replacement cost value on the dwelling and the other structures, the broad and special dwelling forms provide replacement cost settlement on the dwelling and other structures. The basic dwelling form provides actual cash value only.
|
|
|
Which of the following events would require a change on a homeowner policy?
|
A change in mailing address
|
A change in mailing address would have to be reported to the insurer and would require a change in the policy.
|
|
|
Which of the following insurance policy parts describes the covered perils, or the risks assumed, or the nature of coverage, or makes some reference to the contractual agreement between the insurer and the insured?
|
Insuring Agreement
|
The insuring agreement found in the property and casualty policies contains the coverage's provided by the company. These are the promises made by the insurer to the insured for which a premium has been paid. The other clauses have other purposes as mentioned in other questions.
|
|
|
Which of the following is a covered water peril under property insurance policies?
|
Breakage of pipes
|
Backup of sewers or tidal waves are not covered water perils.
|
|
|
Which of the following is a standard for a claim denial?
|
Refusing to Pay an Uncovered Claim
|
Refusing to pay an uncovered claim would be a reasonable standard for denying the payment of a claim.
|
|
|
Which of the following is commonly debited from a claims payment before that amount is remitted to the insured?
|
The Deductible
|
The deductible represents self-insurance and the amount of the claim for a loss that the insured is willing to bear himself.
|
|
|
Which of the following is considered to be a guarantee of truth throughout the duration of the policy?
|
Warranty
|
A warranty is something that becomes part of the contract and is a statement that is considered to be a guarantee of truth for the entire term of the policy.
|
|
|
Which of the following is generally not considered to be a legal defense against claims of negligence?
|
The loss to the plaintiff was caused intentionally by the defendant.
|
Intentional acts are excluded by all policies.
|
|
|
Which of the following is least likely to be considered "transacting insurance" under most state laws?
|
A person mails renewal policies to clients.
|
This is a clerical function requiring no special insurance knowledge and which is not listed under most state laws as falling within the definition of "transacting insurance."
|
|
|
Which of the following is legal for an adjuster to do when adjusting a claim?
|
Contact the claimant with the permission of the attorney
|
It is legal for an adjuster to contact a claimant with the permission of the attorney.
|
|
|
Which of the following is most likely to be uninsurable?
|
The purchaser of a new home wants to protect herself from a possible drop in housing prices.
|
This represents speculative risk. The other choices are pure risks. Speculative risks are generally uninsurable while many pure risks are insurable.
|
|
|
Which of the following is not a claim settlement option?
|
Forcing the insured to sue by offering less than the claim is worth.
|
An adjuster cannot deliberately offer less than what the claim is actually worth just to force the insured to sue.
|
|
|
Which of the following is not a correct statement in determining "cost of a comparable automobile?"
|
The cost of a comparable automobile as determined by a computerized automobile valuation service that produces statistically valid fair market values within the United States market.
|
The computerized method must use values that are fair market values in the local market areas and does not include markets in other parts of the United States.
|
|
|
Which of the following is not a duty of an insurer in case of a loss?
|
Separate the damaged property from the undamaged property and protect the property from further loss.
|
The insurance company is not required to separate the damaged property from the undamaged property nor to protect the property from further loss. This is the responsibility of the insured.
|
|
|
Which of the following is not a dwelling policy form?
|
Extended
|
The three dwelling policy forms are basic (DP-1); broad (DP-2); and special (DP-3).
|
|
|
Which of the following is not a part of a Commercial package policy?
|
Earthquake coverage
|
Earthquake coverage must be added by endorsement for coverage to apply.
|
|
|
Which of the following is NOT a responsibility of the insured?
|
Hire a public adjuster
|
The insured claimant is not required to hire a public adjuster in case of a claim.
|
|
|
Which of the following is not a type of rate approval by the insurance regulators of the various states?
|
Mandatory Competition
|
State departments of insurance approve policy forms, endorsements and rates using four broad methods. They are: prior approval; file and use; use and file; and, open competition
|
|
|
Which of the following is not essential in determining if a salvage award is to be made?
|
Life-saving efforts.
|
No salvage award is involved solely for life-saving efforts.
|
|
|
Which of the following is not specifically an Unfair Trade Practice under the Insurance Code?
|
Appointment of producers by unauthorized insurers
|
Although an unauthorized insurer cannot legally transact insurance in the state, there is no specific provision in the Code under Unfair Trade Practices which prohibits the appointment of producers by such an insurer.
|
|
|
Which of the following is the type of report indicating the initial results of a claim investigation?
|
Field report
|
The field report represents the initial findings of the claim investigation. This includes details of the loss, damages, and statements of the insured, witnesses and other pertinent information.
|
|
|
Which of the following is the type of report indicating the initial results of the investigation of a claim?
|
Full Report
|
This report can also be called the initial report and is the result of the initial investigation.
|
|
|
Which of the following is true about open perils protection?
|
It is limited by specific exclusions.
|
In "named peril" type policies the covered perils are named or specified. If they are not listed, then coverage does not apply. Conversely, in an "open perils" policy, ALL perils are covered unless specifically excluded. Open peril forms contain more exclusions than named peril forms for obvious reasons.
|
|
|
Which of the following loss valuations can be stated as “we agree to pay the cost to repair or replace without deduction for depreciation”?
|
Replacement cost
|
Replacement cost may be defined as “the cost to repair or replace without deduction for depreciation.”
|
|
|
Which of the following losses would be covered under the HO-3 form? I. The husband's shotgun is stolen from a hotel room while he is traveling to a skeet shoot. II. The wife's money roll is lost at an unknown location. III. An individual demands a reward for returning the insured's lost dog. IV. The family's lawn mower is destroyed in a garage fire.
|
I and IV only
|
The HO-3 covers theft of and fire to personal property while it is anywhere in the world. Property merely lost (where there is no evidence of theft or attempted theft) does not constitute theft. Rewards paid for the return of covered property are not covered under HO-3 form. Dogs are excluded property under the HO-3 form.
|
|
|
Which of the following perils is covered for earth movement under the DP-2 dwelling form?
|
None of the responses are correct
|
The dwelling forms exclude virtually all forms of earth movement. Earthquake coverage can be added by endorsement.
|
|
|
Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim can be negotiated?
|
Advanced Payment
|
Most adjusters are given the authority to make advance payments when liability is clear. This relieves the financial burden on the claimant when funds are needed immediately. The remainder of the claim is settled at a later date.
|
|
|
Which of the following results in immediate payment when the claimant signs a release relinquishing his or her right to sue?
|
Full Release Settlement
|
A full release brings to a conclusion the activity of a claim. The claimant when signing the full release relinquishes their right to bring further action.
|
|
|
Which of the following situations would be covered under Bodily Injury (BI) Liability Coverage?
|
Physical Impairment
|
Libel, slander, and suicide are not covered within the definition of bodily injury. Physical impairment is a form of bodily injury. Libel and slander are forms of "personal injury" coverage.
|
|
|
Which of the following statements about a mortgagee's rights under the dwelling property basic form (DP-1) is incorrect?
|
The mortgagee may abandon the insured property to the insurance company.
|
Neither the insured nor the mortgagee may abandon the insured property to the company in case of a loss.
|
|
|
Which of the following statements about risk is the most accurate?
|
Risk can be retained, shared, transferred, avoided, or reduced.
|
These are the methods used to manage risk.
|
|
|
Which of the following terms includes "continuous or repeated exposure to conditions that may result in bodily injury or damage neither expected nor intended by the insured?"
|
Occurrence
|
The definition of "occurrence" includes an accident (which tends to be sudden) and "continuous or repeated exposure to substantially the same general harmful conditions which results during the policy period in bodily injury or property damage."
|
|
|
Which of the following types of explosions would not be covered under the Businessowners Policy?
|
A steam boiler explodes
|
Steam boiler explosions are not covered unless the explosion is caused by or resulting from an explosion of gases or fuel within the furnace of any fired vessel or within the flues or passages through which the gases of combustion pass
|
|
|
Which of the following words most closely resembles “through another person”?
|
Vicarious
|
Vicarious means “through, or in place of another person.”
|
|
|
Which of the following would be considered a consequential loss under a homeowner policy?
|
Food spoilage in a freezer as a result of a fire in the house
|
The food spoilage as a result of a covered peril cutting off the electricity would be an example of a consequential loss.
|
|
|
Which of the following would be considered a deceptive act on the part of an adjuster?
|
Refusing to complete a claim until the insured has paid his/her renewal premium.
|
A claim under a current policy that is in effect has nothing to do with requiring the insured to pay the renewal premium on the policy before completing the adjusting of a claim.
|
|
|
Which of the following would be considered fraud and grounds for voiding an automobile policy? I. The named insured intentionally answers "no" when asked on the application if he has had any speeding tickets in the past year. II. The named insured intentionally reports that all covered vehicles have a clear title, when four are owned by others. III. The named insured submits a claim for fire damage that has been back-dated to a period before the policy's expiration date. IV. The named insured submits a claim for a total loss for a covered auto that he sold to an illegal auto chop shop.
|
I, II, III and IV
|
All four actions are fraudulent--the deliberate misrepresentation or concealment of a material fact for purposes of improper gain. Insurers typically retain the right to void ANY insurance policy if an insured commits fraud relating to their policy.
|
|
|
Which of the following would be covered by flood insurance?
|
Reasonable expenses to protect the property when endangered by flood
|
Flood insurance written through the National Flood Insurance Program covers direct damage caused by “flood” as defined in the policy. Coverage extends to certain costs an insured incurs to protect the property, when flood is imminent. Mudflow is covered and mudslides are not.
|
|
|
Which of the following would be covered under the Commercial Property Builders Risk Coverage Form?
|
All of the responses are correct
|
All of the responses are correct as regards the builders risk coverage. -Building under construction. -Foundation of building under construction. -Fixtures,machinery and equipment used to service the building if they become a permanent part of the building and are located within 100 ft of the premises. |
|
|
Which of the following would be covered under the DP-1 dwelling form?
|
Fire and Resultant Water damage
|
A file loss and resultant water damage to extinguish the fire would be covered under the DP-1 form
|
|
|
Which of the following would be eligible for the Businessowners Policy?
|
A funeral home
|
There are many classes that are not eligible for the businessowners program. Businesses connected with the auto business, such as repair or service stations, dealerships, or parking lots or garages are not eligible unless one of these is incidental to an eligible business. Bars and pubs are ineligible for coverage as well. A funeral home would be eligible. A credit union would not be eligible.
|
|
|
Which of the following would NOT be covered by a flood insurance policy?
|
Mudslides from recent heavy rain.
|
Damage caused by mudflow is covered under the policy. Mudslides are not.
|
|
|
Which of the following would not have the capacity to enter into a contract?
|
A person who is under the influence of drugs at the time of making the agreement
|
Legally speaking, a person must be an adult and not be under the influence of alcohol or drugs nor mentally impaired adult at the time of making the agreement for that agreement to be considered a contract.
|
|
|
Which one of the following is not a homeowner policy form?
|
DP-1
|
The DP-1 form is a Dwelling form. Dwelling forms, unless endorsed, do not cover theft and personal liability. The HO-4, HO-6, and HO-8 are homeowners forms and provide theft and personal liability without endorsement.
|
|
|
While in England an insured has their purse stolen and files a claim for $500 of money, $1,000 in airline tickets, $250 for miscellaneous items and $50 for the value of the purse. How much of this loss would be covered under a DP-1 dwelling form
|
Nothing
|
None of the dwelling forms provide theft coverage of personal property unless the theft coverage endorsement is purchased.
|
|
|
Who are the parties to an appraisal clause in a property insurance policy?
|
Two appraisers and an umpire
|
The three parties to an appraisal dispute would be two appraisers and one umpire.
|
|
|
Whose responsibility is it to see that a ship is seaworthy?
|
The Ship Owner
|
The ship owner is ultimately responsible to see that the ship is sea worthy. This is an implied warranty in ocean marine insurance
|
|
|
Who determines legal liability?
|
The court/jury/judge
|
In cases of litigation it is the court/jury/judge that determines legal liability.
|
|
|
With property insurance, insurable interest must exist at the:
|
Time of loss
|
Even though the correct insureds should be on the application for insurance, these can change during the policy period. For this reason the insurer pays on behalf of the insured's on the policy at the time of loss. If one is not correct, then they could not be covered for a loss.
|
|
|
You are the adjuster and you are contacted by a claimant and advised that he has fired his attorney and wants to proceed to negotiate the claim directly with you. As an adjuster, what should you do?
|
Request a “drop letter”
|
The adjuster should request a "drop letter" from the claimant evidencing that he is no longer represented by counsel.
|
|
|
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:
|
80% of the full replacement cost at the time of the loss.
|
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.
|
|
|
The deductible under the "regular" flood insurance program for each coverage (building and contents) is:
|
$1,000
|
The flood program deductibles have recently been revised. It should also be noted that the deductibles apply separately to each coverage per loss.
|
|
|
Under the HO Policy Form HO-4, which of the following are covered?
|
The Insured's Contents and Personal Liability
|
The HO-4 is designed for apartment dwellers or those that live in a rented dwelling. Since they don't own the structures, no coverage is needed to cover the real property.
|
|
|
Under a Commercial Property policy, which of the following is not a covered peril under the Basic Cause of Loss form?
|
Water damage
|
Water damage to extinquish a fire and the accidental leakage of water from a sprinker system would be covered. Other types of water damage would be excluded.
|
|
|
Which of the following would not be eligible for coverage under a livestock floater?
|
Poultry
|
Poultry is not eligible property under the livestock floater.
|
|
|
Mr. Jones stops at the corner café to have lunch. His lunch order includes green beans. Unbeknownst to the café, the freshly opened can of beans is tainted. Mr. Jones subsequently becomes very ill. He may bring an action for:
|
A breach of an implied warranty.
|
The restaurant is offering to its patrons an implied warranty as to the fitness of the food that it serves, regardless of the source from which it is purchased.
|
|
|
Which of the following coverages may be added by endorsement to an Equipment Breakdown Policy?
|
Business Interruption
|
The policy provides for the expediting of expenses to replace the boilers as quickly as possible. However, other expenses would be incurred during the period of restoration. This form can cover these extra expenses.
|
|
|
What does the Homeowner Endorsement "Identity Fraud Expense" cover?
|
Covers expenses up to $15,000. This includes attorney fees to cover defense costs.
|
Identify fraud only covers the expenses incurred by the insured up to a limit of $15,000 for actions brought against the insured by merchants and financial institutions.
|
|
|
The dwelling form on flood insurance will cover:
|
All of the responses listed are correct.
|
The dwelling flood form will cover residential structures up to four families or manufactured housing.
|
|
|
An insured under an insurance contract is the party the insurer attempts to:
|
Indemnity
|
The insured is the party the insurance company agrees to indemnify for losses and provides other benefits.
|
|
|
Under a Farm Owner's Policy under Coverage E - Scheduled Farm Property, how is the property covered?
|
For the limit shown in the policy Declarations
|
The property is covered for the limit shown on the Declarations page of the policy for the specifically scheduled property.
|
|
|
Which of the following would not be improvements or betterments?
|
Furniture
|
Improvements and betterments are items added to a tenant’s rented structure that are permanent in nature. The tenant has insurable interest in them during occupancy of the building, and therefore can insure them. Furniture is not an improvement or betterment; it is personal property.
|
|
|
A person purchasing the Dwelling Form DP-2 causes damage to the fence on his property amounting to $200 while driving his own auto. The policy will:
|
Deny the claim
|
The DP-2 dwelling form does not provide coverage to the insured’s fence damaged by his vehicle.
|
|
|
What is covered by a SP-23 protection and indemnity policy?
|
All of the responses are correct.
|
The protection and indemnity coverage applies to all of the responses.
|
|
|
Which of the following statements is NOT correct regarding Proof of Loss?
|
It is the insureds option to complete.
|
Providing a proof of loss is NOT the option of the insured. Sometimes the insurer provides the forms but a Proof of Loss is a sworn statement signed and presented by the insured for payment of a claim. Concealment or fraud in this statement can void claim payment. Accurate statements as to the time, cause of loss or other details in addition to items claimed are mandatory.
|
|
|
Which of the following is NOT provided by the farm employers liability and farm employees medical payments insurance endorsement?
|
Payment of statutory workers compensation benefits
|
This endorsement offers farm employers liability coverage and farm employees medical payments insurance. This endorsement does not provide statutory Workers Compensation Benefits.
|
|
|
In an application for marine insurance, a yacht owner states that the yacht will only be sailed on inland waters. If the insured subsequently sails the yacht on the seas, coverage may be denied because the insured has breached:
|
The Warranty
|
In marine insurance, and more often in ocean marine, the statement made by the insured may be a guarantee that all the information is correct. Warranties are much more restrictive than representations. Incidentally, Inchmaree was the name of a ship that suffered an uncovered machinery loss.
|
|
|
What is a "proof of loss"?
|
A formal statement made by the insured to the insurance company regarding a loss.
|
A proof of loss is submitted to the company in case of a claim. It provides the details of the claim and what is damaged or the details of an accident.
|
|
|
What does the Homeowner Endorsement "Identity Fraud Expense" cover?
|
Covers expenses up to $15,000. This includes attorney fees to cover defense costs.
|
Identify fraud only covers the expenses incurred by the insured up to a limit of $15,000 for actions brought against the insured by merchants and financial institutions.
|
|
|
Damage to a wall caused by a burglar stealing a painting.
|
Intentional acts.
|
V&MM covers intentional acts of damage or destruction by other than the insured or at the direction of the insured.
|
|
|
The ___ clause covers collision damage to another vessel.
|
Running-Down
|
The running-down clause covers collision damage to another vessel. It does not cover docks or injury to passengers.
|
