Insurance MCQ

____________ is an intentional misrepresentation or concealment of material fact made by one party in order to cheat another party out of something that has economic value. (a.) Fraud b. Concealment c. Recission d. Subrogation Answer: A

Which legal interpretation is represented by the following: roadside assistance is provided in an automobile policy, so it is reasonable for the insured to expect that the insurer will cover the cost of changing a flat tire? a. Ambiguities in a contract of adhesion (b.) Reasonable expectations c. Utmost good faith d. Indemnity Answer: B

Benefits under a life insurance policy are provided through which of the following methods? a. Cash payment b. Valued (c.) Both of the above d. Neither of the above Answer: C

Jude completes an application for a health insurance policy. His statements on the application were made to the best of his knowledge and are: a. Warranties b. Misrepresentations (c.) Representations d. Concealment Answer: C

Timothy is trying to understand the difference between a warranty and a representation. He is concerned that he might inadvertently give a false statement on his insurance application. A representation is: a. Any statement made on the application is absolutely true without any deviation (b.) Any statement made is true to the best of the applicant's recollection, but facts may not be exact c. An insurance company guarantees that all benefits will be paid promptly d. An insurance company will refund all premiums if the policyholder is not satisfied. Answer: B

A health insurance contract may be any of the following types of contracts, EXCEPT: a. An indemnity Contract b. A reimbursement contract (c.) A valued contract d. Limited benefit contract Answer: C

Which of the following terms is best defined as voluntarily surrendering a known right? a. Recission b. Subrogation c. Concealment (d.) Waiver Answer: D

All of the following statements are true regarding subrogation, EXCEPT: a. Subrogation is the right of the insurer to assume the rights of the insured. (b.) Subrogation applies primarily to life and health insurance, and seldom to property and casualty insurance. c. Subrogation is the right of the insurer to sue the responsible third party for damages inflicted upon the insured. d. Subrogation allows the insurer to sue for damages of negligence. Answer: B

Judy purchases a life insurance policy for her brother, James. The insurance agent, Jacob, uses Judy's premiums to pay his credit card bill. Who has committed fraud? a. Judy b. James (c.) Jacob d. Jacob and James Answer: C

Another term that means to void an insurance policy is: a. Subrogation b. Waiver and estoppel (c.) Recission d. Parol evidence rule Answer: C

What is the consequence for an applicant who makes an unintentional misrepresentation on a life insurance policy? a. The insurer will pay the entire death benefit. b. The insurer will void the policy. (c.) The insurer will pay the death benefit as long as the misrepresentation is not material to the risk. d. The insurer will pay one-half the death benefit. Answer: C

Insurance contracts sometimes contain ambiguities. Which of the following has not been taken to court for further interpretation? a. Reasonable expectations b. Ambiguities in a contract of adhesion c. Utmost good faith (d.) Subrogation Answer: D

The insurer does not include the suicide exclusion on Bob's policy. Bob commits suicide three months later, and the insurer refuses to pay the death benefit. Which of the following terms describes the insurer's inability to reclaim a waived right, and consequently the insurer's duty to pay the death benefit? a. Parol evidence rule b. Recission c. Waiver (d.) Estoppel Answer: D

John purchases a life insurance policy for his wife Jean. Which of the following best describes who is legally bound to the policy's promise of benefits? a. The insurer, John and Jean b. The insurer and John c. The insurer and Jean (d.) The insurer Answer: D

All of the following are required components of a legal contract, EXCEPT: (a.) Invitation to offer b. Acceptance c. Offer d. Consideration Answer: A

The __________ section of the contract states what the insurer will not do. This includes the risks that the insurer will not cover. a. Conditions b. Policy face c. Insuring clause (d.) Exclusions Answer: D

Benefits under a medical expense policy are provided through which of the following methods? (a.) Indemnity b. Cash payment c. Valued d. None of the above Answer: A

What are the basic elements of a legal contract? (a.) Offer, acceptance, consideration, competent parties and legal purpose b. Acceptance and consideration c. Policy face, insuring clause and adhesion d. Competent parties, acceptance and reasonable expectations Answer: A

Which of the following is not a primary component of an insurance contract? a. Policy exclusions b. Policy face c. Policy conditions (d.) Aleatory contrac Answer: D

Janice applies for a life insurance policy. She submits the application with the initial premium for $100,000 whole life. The agent returns the policy with a higher premium and hazardous occupation exclusion. What has the insurer made? a. Agreement b. Offer c. Invitation to offer (d.) Counter-offer Answer: D

Why are life and health insurance contracts said to be contracts of adhesion? (a.) Because the insurer writes the contract, to which the insured must adhere b. Because only the insurer is bound to the promises made in the policy c. Because one party has the potential to receive more than the other d. Because certain conditions must be met by all parties of the contract in order for it to be a legally binding contract Answer: A

Maria buys a life insurance policy for her husband, Fred. Of the following, which correctly describes the party legally bound to fulfill the policy's promise of paying benefits? a. The insured (b.) The insurer c. The insurer and Maria d. The insurer and Fred Answer: B

Insurance policies are based on: Select one: a. Tort law (b.) Contract law c. Negligence law d. Legal liability law Answer: B

Defamation occurs when: (a.) An individual or entity makes false, derogatory statements about an insurer's financial condition that are calculated to injure the insurer's business b. An individual or entity acts to create a general action that in any way to intimidate an insurer in order to gain a monopoly in business c. An individual or entity refuses to insure or limit the amount of coverage only because another insurer has cancelled an existing policy on that person d. An individual or entity takes legal action against an insurer or producer Answer: A

The practice of using misrepresentation to induce a policyholder to replace a policy issued by the insurer the producer represents is called: a. Twisting b. Misrepresentation (c.) Churning d. Intimidation Answer: C

An example of an unfair claim settlement practice would include: a. Denying the payment of a claim because it does not meet the conditions of the insurance contract b. Delaying the payment of a claim while it is investigated for possible fraud (c.) Advising a claimant of the possibility that, should the claimant reject a settlement offer, an arbitration award might be less than the offer d. Denying the claim because it occurred after the cancellation of the policy Answer: C

Leo, a producer, sat down with a prospective client to discuss a long-term care policy. He used a computer program to outline and emphasize his remarks. The visual presentation contained the principal benefits of the policy he was trying to sell. Although he mentioned that it also had, the usual, conditions, he did not include those in his visual presentation or specify what they were. The producer was engaging in: a. Twisting (b.) Misrepresentation c. Coercion d. Rebating Answer: B

In the underwriting of insurance policies, some amount of discrimination is: (a.) Present in many cases, because of differing levels of risk b. Illegal in all cases c. Forbidden by federal statutes d. Permissible only when two people of equal risk are charged different rates Answer: A

In discussing a potentially lucrative group policy with a business owner who had purchased a business and just moved into the community, an established producer jokingly remarked, "Well, would it sweeten the pot if I could assure you membership in the country club?"The producer added, "I'm on the membership committee and while we're not accepting new application right now, I'm sure something could be worked out." These remarks constituted: a. Nothing more than an effort to establish a warm relationship with the potential client b. Misrepresentation (c.) Rebating d. Intimidation Answer: C

All of the following, if performed frequently enough to indicate a general business practice, are unfair claims settlement practices, EXCEPT: (a.) Requiring submission of preliminary claim report and formal proof of loss before paying a claim. b. Threatening a client in order to discourage their effort to recover a loss. c. Failing to acknowledge with reasonable promptness communications regarding claims. d. Knowingly misrepresenting to claimants pertinent facts relating to coverages. Answer: A

In a conversation with an older family friend, an insurance agent, Sly, inquired with what company she had a Medicare supplement policy. When she told him, the agent was silent. Concerned by his silence, the woman asked if the company was a reliable company. The producer asked, "Have you received any financial statements regarding their solvency?" This producer was: a. Acting appropriately by refusing to comment personally on the competing insurance company b. Engaging in misrepresentation (c.) Engaging in defamation d. Engaging in churning Answer: C

When an insurer requests an investigative consumer report on an applicant, which of the following is true? a. The applicant can request further information about the report that must be provided to the applicant within 30 business days. (b.) The report includes information regarding the applicant's general reputation and personal characteristics. c. The credit report includes information about the applicant's account balances. d. The applicant must only be notified by phone about the report. Answer: B

With regard to an investigative consumer report, consumers must be informed that they have the right to request additional information about the report; such information must be provided to consumers within ____ day(s) if requested. a. Ten (b.) Five c. Three d. One Answer: B

All of the following policies and contracts are typically covered by state insurance guaranty associations, EXCEPT: a. A whole life insurance policy issued by a mutual insurer b. A term life insurance policy issued by a stock insurer c. An individually-owned annuity (d.) A universal life insurance policy issued by a fraternal benefit society Answer: D

The Fair Credit Reporting Act states that generally, consumer reports cannot contain the following information, EXCEPT: a. Adverse information about an individual that dates back over seven years b. Tax liens older than seven years (c.) An individual's character d. An individual's criminal history Answer: C

With respect to life and health insurance guaranty associations, what are agents prohibited from doing? a. Informing clients about the existence of the life and health insurance guaranty association (b.) Using the existence of the life and health guaranty association as an inducement to selling an insurance contract c. Letting prospective insureds know if an insurer or policy is covered by the guaranty association d. All of the above Answer: B

A person who is guilty of a fraudulent act may be subject to the following penalties: a. Misdemeanor b. Only a civil fine up to $10,000 c. Civil fine up to $10,000 and imprisonment for 20 years (d.) Civil fine up to $50,000 and imprisonment up to 10 years Answer: D

All of the following may not be included in a consumer report, unless the consumer credit report is requested for a life insurance policy with a face amount of $150,000 or more, EXCEPT: a. Civil suits and judgments dating back more than seven years b. Bankruptcies dating back more than 10 years (c.) Adverse information dating back more than three years d. Tax liens dating back more than seven years Answer: C

An agent is guilty of committing fraud. What must the person obtain in order to transact insurance? a. Certificate of authority from the state insurance department b. Waiver license (c.) Waiver of consent from the state insurance department d. Exception to transact from the Supreme Court Answer: C

The purpose of the Gramm-Leach-Bliley Act is to: a. Rule that insurance transactions crossing state lines are interstate commerce (b.) Allow financial entities to merge and accommodate greater competition c. Regulate the way credit information is collected and used d. Rule that insurance is primarily regulated on a state-level with minimal federal oversight Answer: B

All of the following are exemptions under the Privacy Act of 1974 upon which an individual's written consent is not required in order to release personally identifiable information, EXCEPT a. To a general accounting office. b. For routine uses within an agency. (c.) For a consumer poll. d. For circumstances affecting the health or safety of an individual. Answer: C

Which of the following ruled that insurance transactions are not interstate commerce and thus fall under state regulation is known as: (a.) Paul v. Virginia b. Privacy Act of 1974 c. McCarran Ferguson Act d. United States v. South-Eastern Underwriters Association Answer: A

Which of the following cases/laws overruled the court decision of Paul v. Virginia stating that insurance transactions crossing state lines are interstate commerce and subject to federal regulation? a. Privacy Act of 1974 (b.) United States v. South-Eastern Underwriters Association c. Public Law 15 d. Paul v. Virginia Answer: B

Under which of the following laws does an applicant for a life insurance policy have the right to question the validity of information contained in a consumer report? a. McCarran Ferguson Act/ Public Law 15 (b.) Fair Credit Reporting Act c. Fraud and False Statements Act d. Gramm-Leach-Bliley Act/ Financial Services Modernization Act of 1999 Answer: B

Which court ruling in 1944 was a response to the court case in 1869 which ruled that insurance transactions crossing state lines are not interstate commerce? a. Privacy Act of 1974 b. Public Law 15 c. Paul v. Virginia (d.) United States v. South-Eastern Underwriters Association Answer: D

While insurance is primarily regulated in a state-by-state basis, what is the purpose of federal insurance laws? (a.) To oversee the operation of the insurance industry as a whole. b. To regulate other government agencies involved with the insurance industry. c. To assure that all states have mandatory seat belt laws. d. None of the Above Answer: A

All of the following cases/laws involve disputes of whether the insurance industry should be regulated on a state or federal level EXCEPT: (a.) The Privacy Act of 1974 b. Public Law 15. c. Paul v. Virginia. d. United States v. South-Eastern Underwriters Association. Answer: A

Which of the following cases/laws best describes the ruling that insurance transactions crossing state lines are not considered interstate commerce? a. Public Law 15 b. McCarran Ferguson Act (c.) Paul v. Virginia d. United States v. South-Eastern Underwriters Association Answer: C

On what level is insurance primarily regulated? a. Insurance is an unregulated industry b. Local level (c.) State level d. Federal level Answer: C

Insurance departments in each state began forming after the passing of what law/court ruling? a. South-Eastern Underwriters Association. b. Paul v. Virginia. (c.) McCarran Ferguson Act. d. Privacy Act of 1974 Answer: C

Jerry is able to bind coverage. This means that he is probably: a. A life agent b. A life broker c. A life and health insurance agent (d.) A property and casualty agent Answer: D

All of the following are false statements regarding authority of insurers, EXCEPT: a. Unauthorized insurers are admitted and hold a certificate of authority. (b.) A license, called a certificate of authority, must be held by all insurers intending to transact insurance in a jurisdiction unless they are exempt as excess and surplus lines insurers. c. All life and health insurance companies are admitted insurers. d. Property and casualty insurers are also called excess and surplus lines insurers, and hold a certificate of authority to act as nonadmitted insurers in a jurisdiction. Answer: B

Insurer XYZ has written an agency contract for Yuri to act as an agent. What type of authority is described here? a. Express (b.) Implied c. Lingering implied d. Apparent Answer: B

Janice has received a contract from the agency she plans to work for. The contract defines the agreement in very explicit terms. Signing the contract will allow her to represent the agency. This is an example of: a. Implied authority (b.) Express authority c. Apparent authority d. Presumptive authority Answer: B

When insurance agent Jake uses the insurance company's logo and letterhead for sales presentations and letters to his clients, this is which type of authority? a. Underlying (b.) Apparent c. Implied d. Express Answer: B

The _________ is the principal in the agent-insurer relationship. a. Insured b. Agent (c.) Insurer d. Policyowner Answer: C

Which of the following statements is true pertaining situations involving errors and/or omissions? a. Producer should document all conversations. b. Producer can purchase Errors and Omissions coverage. c. The insurer will defend the producer against lawsuits the policy covers. (d.) All of the above Answer: D

This employee cannot bind life and health insurance and works for the insurer: (a.) Agent b. Consultant c. Broker d. Solicitor Answer: A

Daniel was purchasing a life policy from his friend Marcus, an agent for MMC Agency. Even though Daniel had not yet paid a premium, Marcus told him that the policy was in force as of the date that they wrote the contract. Marcus did not have the authority to bind coverage immediately, but the MMC Agency could still be liable. This is an example of: a. Waiver and estoppel (b.) Apparent authority c. Implied authority d. Expressed authority Answer: B

The _________ represents the insurer. The __________ represents the insured. a. Broker, producer (b.) Agent, broker c. Producer, insurer d. Broker, broker Answer: B

An agent's statements made to an insured are considered to be: a. Apparent authority b. Lingering implied authority (c.) Implied authority d. Expressed authority Answer: C

ABC insurer is incorporated in Texas. Which of the following is true? a. ABC insurer is foreign in Texas. b. ABC insurer is domestic in Louisiana. (c.) ABC insurer is alien in Great Britain. d. ABC insurer is domestic and foreign in Texas. Answer: C

Agents who own the policies they sell and can work for multiple insurers are known as: a. Captive agents b. Exclusive agents (c.) Independent agents d. Managing general agents Answer: C

A foreign insurer is: a. An insurance company conducting business in a foreign country b. An insurance company conducting business in the state in which it is incorporated (c.) An insurance company conducting business in a state in which it wasn't incorporated d. Always unauthorized Answer: C

There are three types of private insurers. Which of the following is a true statement about the different insurers? a. An insurer that conducts business in states other than the state in which it was incorporated is an alien insurer. (b.) An insurer that conducts business in countries that it was not incorporated in is an alien insurer. c. An insurer that conducts business in countries that it was not incorporated in is a foreign insurer. d. An insurer that conducts business in a foreign country is a domestic insurer. Answer: B

LMO Insurer is incorporated in New Hampshire, conducts business in all of the eastern seaboard states and in Germany. How is LMO Insurer classified in Germany? a. Excess and surplus lines (b.) Alien c. Foreign d. Domestic Answer: B

Which of the following terms means the ways insurance products are marketed and sold to the public? (a.) Distribution system b. Premium c. Contract d. Insurable interest Answer: A

Agents are appointed to work on behalf of: (a.) Insurance companies b. Insureds c. Beneficiaries d. None of the above Answer: A

An excess and surplus lines insurer is categorized as a(n): (a.) Unauthorized insurance company b. Authorized insurance company c. Domestic insurer d. Admitted insurer Answer: A

All of the following statements regarding unauthorized insurers are true, EXCEPT: (a.) Excess and surplus lines insurers must apply for a certificate of authority to become admitted. b. Unauthorized insurers are insurers that are unlicensed because they have not yet applied for a certificate of authority, have applied and been denied licensure, or are excess and surplus lines insurers. c. All excess and surplus lines insurers are unauthorized. d. Unauthorized insurers are also referred to as nonadmitted insurers, and do not hold a certificate of authority. Answer: D

A domestic insurer is: a. An insurance company conducting business in a foreign country. (b.) An insurance company conducting business in the state in which it is incorporated. c. An insurance company conducting business in a state in which it wasn't incorporated. d. Always unauthorized Answer: B

DEF insurer is nonadmitted. All of the following are possible explanations for why DEF insurer cannot sell insurance in a state EXCEPT: a. DEF has been denied licensure. (b.) DEF sells excess and surplus lines insurance. c. DEF has not applied for a license. d. DEF is not licensed. Answer: B

Which of the following is a group of companies that collectively assumes and spreads its own risk? a. Stock insurer b. Reciprocal exchange (c.) Risk retention group d. Fraternal benefit society Answer: C

A reciprocal exchange is characterized by which of the following? a. It cannot be administered by an attorney-in-fact. (b.) It consists of an unincorporated group of individuals. c. It is the same as a mutual insurer. d. The insured acts only as an insured. Answer: B

Which of the following best describes an insurer that is a charitable organization providing insurance only to its members? a. Stock and mutual companies b. Mutual company (c.) Fraternal benefit society d. Stock company Answer: C

Which of the following is another term for reciprocal exchange? a. Reinsurer (b.) Insurance exchange c. Risk purchasing group d. Risk retention group Answer: B

A market where individuals and groups of people gather to exchange insurance is a: a. Risk retention group b. Noncommerical insurer c. Lloyd's of London (d.) Lloyd's association Answer: D

All of the following are OASDI benefits EXCEPT: a. Disability (b.) Medicaid c. Retirement d. Survivor's Answer: B

Which of the following is best described as an insurance marketplace where people gather to exchange insurance? (a.) Lloyd's association b. Risk retention group c. Noncommercial insurer d. None of the Above Answer: A

BlueCross pays: a. Surgical costs b. Medical costs (c.) Hospital costs d. Surgical, medical and hospital costs Answer: C

Mutualization occurs when: a. A mutual insurer becomes a stock insurer (b.) A stock insurer becomes a mutual insurer c. A nonprofit insurer becomes a mutual insurer d. A nonprofit insurer becomes a stock insurer Answer: B

Which of the following insurers/organizations are not technically insurance companies? (a.) Noncommercial organizations b. Commercial insurers c. Stock insurers d. Mutual insurers Answer: A

Which of the following insurers cannot be categorized as commercial? a. Mutual insurer b. Stock insurer c. Demutualized insurer (d.) BlueCross BlueShield Answer: D

A nonparticipating insurer is: (a.) A stock insurer b. A mutual insurer c. BlueCross BlueShield d. A noncommercial organization Answer: A

All of the following are false regarding stock insurers, EXCEPT: a. Stock insurers do not have a capital fund and are financially supported by policyholders. b. Stock insurers do not pay dividends to stockholders, instead policyholders receive dividends as a return of overcharged premium. (c.) Stock insurers are managed by a board of directors, who are chosen by the company stockholders. d. A stock insurer may transform into a mutual insurer via the process of demutualization. Answer: C

A mutual company pays dividends to: a. Stockholders (b.) Policyholders c. Insureds d. Debtors Answer: B

What are the two distinct characteristics that distinguish mutual insurers from stock insurers? (a.) Mutual insurers lack capital stock and profits are distributed among the members. b. Mutual insurers are not governed by a board of directors and are owned by stockholders. c. Mutual insurers have capital stock and are owned by stockholders. d. Mutual insurers do not have policyholders and have capital stock. Answer: A

Fraternal benefit societies are described by all of the following, EXCEPT: a. They provide insurance to their members. b. They can be religion-based. c. They include ethnic or charitable organizations. (d.) They include stock and mutual companies. Answer: D

ABC company pays its stockholders dividends. ABC undergoes a change in company ownership and begins to pays its policyholders dividends, instead of its stockholders. What is the term that describes the transformation that ABC company has undergone? a. Demutualization (b.) Mutualization c. Transfer to a noncommercial insurer d. Transfer to a nonprofit insurer Answer: B

The Business Pursuits Endorsement under section II of a homeowners policy will cover all of the following EXCEPT: A: All business pursits B: Business liability C: Insured's activity D: Bodily injury to the insured Answer: B: Business liability

All of the following would be eligible for coverage under the dwelling policy EXCEPT A: a Tenant-occupied dwelling B: A dwelling in the course of construction C: A duplex with one primary owner D: A house that has 5 families in it Answer: A house that has 5 families in it

Which of the following is true of dwelling policy coverage? A: There are no exclusions in basic forms B: Special forms only have special exclusions C: Exclusions apply to all 3 policy forms D: Exclusions only apply to broad policy forms Answer: Exclusions apply to all 3 policy forms

Under the additional living expenses coverage, if a civil authority prohibits the insured from using the dwelling because of direct damage to a neighboring location from a peril covered in the insured's direct policy, loss would be covered for up to A: 1 month B: 90 days C: 2 weeks D: 1 week Answer: 2 weeks

Which of the following dwelling coverages would provide coverage to a garage not attached to the primary insured dwelling? A: Coverage C B: Coverage E C: Coverage A D: Coverage B Answer: Coverage B

What is the maximum number roomers or boarders for properties insured under the dwelling policy A: 2 B: 3 C: 5 D: 6 Answer: 5

In which of the following situations would off-premises coverage in a broad theft endorsement apply? A: The insured's jewelry is stolen from her vacation home after she returns home B: The insured's vacuum cleaner is stolen from her apartment C: The insured's camera is stolen from his vacation home while he is there D: The insured's liv-in maid's quarters are burglarized Answer: The insured's camera is stolen from his vacation home while he is there

A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the following statements is true? A: Damage to glass building blocks is not covered B: Loss of theft is covered C: Loss by vandalism and malicious mischief is excluded D: Glass breakage as a result of vandalism is covered Answer: Loss by vandalism and malicious mischief is excluded

In dwelling policy which of the following is true regarding personal liability coverage? A: It does not cover medical payments to others B: It is included in all dwelling policies C: It is the same as in homeowners policies D: It must be added as a supplement or written as a separate policy Answer: D: It must be added as a supplement or written as a separate policy

In dwelling policies automatic increases in insurance is A: coverage for newly acquired property B: coverage by endorsement C: automatic coverage D: coverage without additional premium Answer: B: coverage by endorsement

Under the dwelling policy coverage C personal property is? A: Automatically provided at 50% of coverage A B: A prohibited coverage in the dwelling form C: Limited to 50% of the amount of insurance that is written as coverage A D: Limited to covering a servants property while at insured location Answer: Limited to covering a servants property while at insured location

Which of the following is not true concerning the fair rental value coverage provided in a dwelling policy? Answer: Loss or expense caused the by cancellation of a lease is covered

In dwelling policies automatic increase in insurance is? Answer: Coverage by endorsement

Which of the following covers a carrier for liability for loss to cargo while it is being transported in a truck? A: Trip transit policy B: Truckers coverage form C: Motor truck cargo policy - truckers form D: Motor truck cargo policy - owners form Answer: Motor truck cargo policy - truckers form

A building insured with a commercial property insurance has been vacant for 90 days. Which of the following is NOT true? A: Payment for unnamed perils is reduced by 25% B: The insured has no coverage for losses caused by theft C: The insured has no coverage for losses caused by glass breakage D: Payment for unnamed perils is reduced by 15% Answer: Payment for unnamed perils is reduced by 25%

The type of crime policy under which coverage is triggered by a loss that happens during the policy period but is not necessarily covered during the policy period is the A: Reporting form B: Loss sustained form C: Discovery form D: Retro form Answer: Loss sustained form

Retroactive dates in claims made CGL policies apply to A: BI and PD, PIL and advertising liability and med pay B: PIL and Advertising Liability only C: BI and PD only D: Both BI and PD and PIL and Advertising Liability Answer: Both BI and PD and PIL and Advertising Liability

All of the following statements concerning liability coverage are true EXCEPT A: Liability policies normally include supplementary payment provisions B: Liability policies defend the insured against claims real or alleged C: The policyholder can sue the insurer whether or not conditions and provisions of the policy have been met D: The insurer cannot refuse to pay a claim even if the insured is bankrupt Answer: The policyholder can sue the insurer whether or not conditions and provisions of the policy have been met

Which would NOT be covered by the inside of the premises - robbery or safe burglary of other property coverage? A: A store clerk is forced into the storage room and locked in while the intruder steals high-value merchandise B: An employee is caught stealing cash from the register C: Two men break a window during attempted robbery D: Someone breaks in after business hours, pries open a wall vault and steals several valuable paintings Answer: An employee is caught stealing cash from the register

Which of the following would be covered under the crime coverage inside the premises - theft of money and securities? A: Loss or damage to a locked safe, vault or cash register B: Loss resulting from the surrendering of property in any exchange or purchase C: Dishonest acts of employees, directors, trustees or representatives D: Accounting or arithmetic errors or omissions Answer: Loss or damage to a locked safe, vault or cash register

Which of the following statements would be an example of a product liability claim? A: The insured's product has to be recalled because of an expiration date B: Faulty packaging of a cereal caused spoilage that resulted in someone getting sick C: An insured, while delivering product to a customer, hits another car with the delivery truck causing bodily injury and property damage D: Someone tampers with the insured's product causing the insured to have to recall all products on the shelf Answer: Faulty packaging of a cereal caused spoilage that resulted in someone getting sick

The transfer of money from inside a banking premises to a person other than a messenger outside those premises or to a place outside those premises is covered under which commercial crime coverage? A: Money orders and counterfeit paper currency B: Other crime coverage C: Outside premises D: Computer fraud Answer: Computer fraud

The Legal Liability Coverage Form provides coverage for damages for which the insured is legally liable arising from A: Nuclear event B: Working being preformed by a contractor C: Direct physical damage to property of others in the insured's care D: Earthquake damage Answer: Direct physical damage to property of others in the insured's care

What is not a consideration when paying an inland marine claim? A: Cost to repair or restore the property B: Market value when the property was first purchased C: Cost to replace the property D: ACV on date of loss Answer: Market value when the property was first purchased

Which item would NOT be covered under building coverage in a building and personal property policy? A: The building housing a dress shop B: The ice cream case permanently installed in an ice cream shop C: The bulldozer being used as part of a business addition under construction that is parked 500 feet from the building D: The tables and chairs used by a coffee shop as part of its outdoor seating Answer: The bulldozer being used as part of a business addition under construction that is parked 500 feet from the building

A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT A: Boiler and machinery coverage B: General liability coverage C: Workers compensation coverage D: Crime coverage Answer: Workers compensation coverage

A business is using its own trucks to move its own cargo would insure the cargo using A: Motor truck cargo- owners form B: Motor truck cargo- truckers form C: Motor carrier form D: Trip transit coverage Answer: Motor truck cargo - owners form

A claim is considered to have been 'made' A: When notice is received by any insured B: When notice is received and recorded by the insurer C: When notice is received and recorded by any insured or the insurer, whichever comes first D: When received in writing or telephonically by the insurer Answer: When notice is received and recorded by any insured or the insurer, whichever comes first

A large antenna is damaged when a tree branch hits an insured farm dwelling during a storm. Coverage A of a farm property coverage form would insure damages for this occurrence up to A: $1,000 B: $2,000 C: $3,000 D: $4,000 Answer: $1,000

A plasterer has finished a job. What kind of liability would protect him if the plaster falls and hurts someone because he did not do the job correctly? A: Professional E & O B: Completed operations C: Medical payments D: Products Answer: Completed operations

The employee theft crime policy includes a coverage that applies to employees temporarily outside the coverage territory for up to A: 60 days B: 90 days C: 120 days D: 30 days Answer: 90 days

The inland marine coverage forms for outdoor signs provides "open peril" coverage and excludes coverage for breakage only during A: Transportation B: Repairing C: Installation and dismantling D: Any of the Above Answer: Any of the above

Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings or records? A: $5,000 B: $10,000 C: $25,000 D: $1,000 Answer: $5,000

Which of the following is NOT covered under Coverage E - Scheduled Farm Personal Property? A: Fish B: Turkeys C: Portable structures D: Livestock Answer: Turkeys

HMS Toys carries more inventory from October 1 to December 21. Which of these would provide higher coverage limits during those months and lower limits the rest of the year? A: Peak season B: Value reporting C: Spoilage D: Inventory increase Answer: Peak season

A liability policy that covers all claims arising out of incidents occurring during the policy period, regardless of whether the policy is still in effect at the time of the claim is known as A: An occurrence policy B: A claims made policy C: A limited policy D: An aggregate policy Answer: An occurrence policy

Coverage under the builders risk form will end in all of the following situations EXCEPT A: The insured has sold the property B: 60 days after the construction has ended C: Construction has been abandoned D: 60 days after the building became occupied Answer: 60 days after the construction has ended

Coverage F - Unscheduled Farm Personal Property is subject to a coinsurance clause of A: 50% B: 75% C: 80% D: 90% Answer: 80%