Insurance MCQ

Which of the following situations would NOT be covered by Connie's uninsured motorists coverage? A. Connie's neighbor borrowed Connie's car and is hit by an uninsured motorist. B. Connie's car is hit by someone whose auto insurer is insolvent and has bodily injury damages. C. While jogging, Connie's son is hit by a hit-and-run driver who cannot be identified. D. Connie's son's girlfriend who was hit by the same hit-and-run driver while jogging with her boyfriend. Answer: D

A professional who wants coverage for all liability exposures should purchase what form of liability insurance? A. Directors and officers B. Fiduciary and employment practices C. Employee benefits D. Commercial general and professional Answer: D

To be covered, which of the following exposures must be added by endorsement under a Dwelling Form? ARental Value BDwelling CDetached garage DPersonal liability Answer: D

How much coverage can be available for watercraft damage in the homeowners policy? A. Unlimited amount B. No more than $1,000 C. Homeowners policies do not cover watercraft. D. Up to $1,500 Answer: D

All of the following are special personal property limits under a homeowners policy EXCEPT A. $1,500 for trailers not used with watercraft. B. $2,500 for theft of firearms. C. $500 for business personal property on the insured premises. D. $1,500 for securities, accounts, deeds, and evidences of debt. Answer: B

An insured has a special form dwelling policy written for $100,000 on a dwelling. The dwelling's replacement cost is $115,000. Fire causes $75,000 in damage to the dwelling, $15,000 damage to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for the trees? A$5,000 B$10,000 C$60,000 D$75,000 Answer: A

The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land A. Owned or leased by a landlord who does not reside on the premises. B. Owned by a landlord who does not use the mobilehome located on it. C. Leased by the owner of the land. D. Owned or leased by the resident of the mobilehome. Answer: D.

Which loss listed below would be fully covered by a homeowners policy? A. $5,000 firearm collection stolen B. $2,000 silver tea set stolen C. $1,200 pedigreed golden retriever stolen D. $24,000 bass boat destroyed in a tornado Answer: B

Vandalism and malicious mischief would be covered if the insured's premises have been vacant for no more than how many days? A. 30 B. 60 C. 100 D. 365 Answer: B

The insured with a homeowners policy has had damage to his property caused by a volcano. Which of the following is true? AAll eruptions are considered separate occurrences no matter how close together. BCoverage for each volcanic eruption would require a separate deductible. CAll volcanic eruptions within a 72-hour period will be considered one occurrence. DNone of the damage is covered. Answer: C

Which of the following would be covered under the Broad Form (DP-2) policy's falling object peril? ADamage to the building's awnings BDamage to outdoor television antennas if there is no interior damage CExterior pavement and patio damage DInterior building damage if the exterior was damaged first Answer: D

Who would participate in a WYO program? A. Lloyd's associations B. Government insurance companies that write and service National Flood Insurance policies C. Businesses requiring National Flood Insurance policies D. Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis Answer: D

Under which of the following conditions can broad theft coverage be added to a dwelling policy? A. If the insured is owner-occupant of the dwelling B. If permission is granted by the department of insurance C. Broad theft coverage cannot be added to a dwelling policy. D. If the policy has been in effect for 60 days Answer: A

The dwelling insured on HO-2, HO-3, or HO-5 forms is covered for replacement, provided that it is insured for at least what percentage of replacement cost on the date of loss? A. 25% B. 40% C. 75% D. 80% Answer: D. 80%

All of the following people would be considered insureds under the liability section of a homeowners policy, EXCEPT. A. The legal representative of a deceased insured. B. The 22-year old niece of the insured, who is only visiting. C. A 15-year old foster child residing in the premises. D. The mother of the insured who is residing in the household. Answer: B.

All of the following are true regarding the "mobile agricultural machinery and equipment" form, EXCEPT: The form is "open peril" with few exclusions. Coverage is written on a blanket basis for most items. Combines and cotton pickers are eligible for coverage. All responses listed are correct. Answer: Combines and cotton pickers are eligible for coverage.

An employer is about to start working in a new state and will hire workers who reside there. Would the employer's current standard-form workers compensation policy automatically provide coverage for this new state? Never Yes, if the new state was listed on the information page in part 3C. Other States Insurance Only if form WC0244 "New States Coverage" endorsement was attached to the policy Yes, but only for 30 days Answer: Yes, if the new state was listed on the information page in part 3C. Other States Insurance

Under the dwelling policy, what is the purpose of adding the EC (extended coverage) endorsement? It adds additional perils to the coverage. It adds broad form perils to the policy. It adds open peril coverage to the policy. It limits coverage. Answer: It adds additional perils to the coverage.

Which endorsement is necessary to cover the damage caused to a freezer by the interruption of a power source under a BOP? Non owned and Hired Auto Earthquake Utility Services - Time Element Utility Services - Direct Damage Answer: Utility Services - Direct Damage

In ocean marine insurance, what is the purpose of the IVEL clause? To provide excess hull and collision liability coverage. To cover bulk shipments. To require the insured to take all reasonable steps to protect the property from further loss. To pay for the loss of shipper's fees. Answer: To provide excess hull and collision liability coverage.

Which of the commercial causes of loss forms provide theft coverage? The Special Form only The Basic, Broad and Special Forms The Broad and Special Forms only None of the forms provide theft coverage Answer: The Special Form only

The business auto policy liability exclusion pertaining to pollution removes coverage for each of the following, EXCEPT: The cost of governmentally ordered clean-up of pollutants. The escape of pollutants while being transported by a covered auto. The escape of pollutants caused by damage to the property containing them when the damage results from the use of a covered auto. The escape of pollutants before they are accepted by the insured for movement onto a covered auto. Answer: The escape of pollutants caused by damage to the property containing them when the damage results from the use of a covered auto.

When it is known that an employee is guilty of theft or other dishonest act, how is coverage affected? Coverage will continue if the employee agrees to make complete restitution. Coverage continues until the expiration date of the coverage. Coverage is cancelled immediately. Coverage will continue if an additional premium is charged for the increased exposure. Answer: Coverage is cancelled immediately.

An initial premium charged the insured under a reporting form type of policy is called the: Estimated premium Full annual premium Deposit premium Auditable premium Answer: Deposit premium

In the ocean marine insurance policy, the term "average" means: Loss or damage. The ACV of the ship. The average value of the claim insured against by the perils of the sea . That coverage is written on a named peril basis Answer: Loss or damage.

A common carrier has signed a contract to deliver goods of the seller. The goods are to be shipped "Free on Board Destination". When does the responsibility of the seller end? When they are picked up by the carrier. When the goods to be shipped are placed on the loading dock of the seller. Not until the goods are delivered to the buyer in accordance with the contract terms. When the buyer confirms the purchase of transportation coverage. Answer: Not until the goods are delivered to the buyer in accordance with the contract terms

John does not own a vehicle and borrows a friend's car and has an accident. John carries named non-owned auto coverage. Which of the following applies to the accident? John's coverage is excess The friend's coverage is excess since John has coverage Both companies would share in the claim equally John's coverage would pay the majority of the claim Answer: John's coverage is excess

In Alabama workers compensation benefits for "temporary partial" disability and "permanent partial body" disability benefits are limited to ______ weeks of benefits. 300 200 250 500 Answer: 300

The HO-3 provides "special limits" of coverage for certain items of personal property. These do not include: Motorized land vehicles Trailers Jewelry Watercraft Answer: Motorized land vehicles .

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 Smoke damage is excluded The insured will be billed an additional premium. The policy will be cancelled by the insurer for violation of a warranty. Answer: Coverage for fire losses will be excluded

All of the following are reasons for cancellation of a commercial insurance policy, EXCEPT: Several large claims. Nonpayment of premium. Conviction of the named insured of a crime arising out of an act increasing the hazard insured against. Substantial change in the risk assumed by the insurer since the policy was issued. Answer: Several large claims.

Which of the following would be considered in establishing a rate for an employer's workers compensation premium? Number of employees Number of hours worked by the employees Remuneration Unemployed employees Answer: Remuneration

Of the following physical damage losses, which would be covered by a BAP providing comprehensive and collision coverage? The engine is damaged when water in the cooling system freezes. The insured failed to add antifreeze. A front wheel bearing burns out after 70,000 miles of use. Among other items of damage, the front tires are blown out in a high- speed head-on collision. None of the losses would be covered. Answer: Among other items of damage, the front tires are blown out in a high- speed head-on collision.

Basic benefits available under a typical workers compensation policy include which of the following? I. Medical expenses. II. Loss of income. III. Rehabilitation. IV. Pain and suffering. Answer:  I. Medical expenses. II. Loss of income. III. Rehabilitation.

The APEX Corporation purchases widgets from the Holly Company. The following statement is on the back of each invoice: "Purchaser shall hold seller harmless from liability arising out of the sale of these widgets." To cover this possible loss exposure, the APEX Corporation should obtain which of the following types of insurance? Commercial General Liability Contractual Liability Contingent Liability Contractual Liability and Contingent Liability Answer: Commercial General Liability

A CGL policy provides coverage for which of the following exposures? Contractual Liability in "insured contracts" Professional Liability Employee Injury Liability Pollution Liability Answer: Contractual Liability in "insured contracts"

Pro-rata cancellation occurs when: An insurance company cancels a policy mid-term. A policy is nonrenewed. A mortgage has been satisfied. An insured cancels a policy after inception. Answer: An insurance company cancels a policy mid-term.

Robert boards his dog at a kennel while he is on vacation. While at the kennel, the dog bites a meter reader. How would Robert's HO-3 policy respond to the meter reader's request for repayment of his emergency room costs? The insurer will pay for necessary emergency room expenses under the Medical Payments to Others provision. The insurer will pay for the emergency room fees only if Robert is found negligent in leaving his dog at the kennel. The insurer will not pay for the loss because the injuries occurred away from the insured location. The insurer will not pay for the loss because it arose out of the kennel owner's failure to render professional services. Answer: The insurer will pay for necessary emergency room expenses under the Medical Payments to Others provision.

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: Functional replacement cost endorsement Replacement cost endorsement Market value endorsement Actual cash value endorsement Actual cash value endorsement

A major difference between surety bonds and insurance contracts is: Bond underwriters expect few, if any, losses. No transfer of risk occurs when a surety bond is issued. Surety bonds violate the principle of indemnity. Unlike an insurance company, a surety has no subrogation rights. Answer: No transfer of risk occurs when a surety bond is issued.

Each of the following is true about farm coverages, EXCEPT: The principal residence may be covered by farm forms or homeowner forms. Farm coverage may be written as a monoline policy or part of a package. Livestock may be insured. Property and liability coverages may be included. Answer: The principal residence may be covered by farm forms or homeowner forms.

The Commercial Articles Coverage Form is designed to cover: Jewelry in excess of $250,000 Bulldozers and other construction equipment Musical instruments and related equipment; cameras and related equipment Retail sporting equipment Answer: Musical instruments and related equipment; cameras and related equipment

Garagekeeper's coverage excludes all of the following losses, EXCEPT: Loss to a high-value stereo system permanently installed in a covered auto. Loss to CDs from a covered auto. Faulty work performed by a mechanic. Theft of equipment from a covered auto by a garage employee. Answer: Loss to a high-value stereo system permanently installed in a covered auto.

If the insurer wishes to nonrenew the CGL policy, unless state law is different, how many days advance notice must be sent to the insured. 30 45 60 90 Answer: 30

Which of the following would be covered under the property damage section of the uninsured motorist coverage? The baby's car seat Luggage Emergency equipment Tapes, discs or other media Answer: Tapes, discs or other media

An insured travels to Europe and has her fur coat stolen. The fur is worth $1,000. She is insured under an HO-4 contents policy. What will be paid by the insurer? $1,000 less the deductible Nothing because the property is out of the US $500 Furs are excluded for theft coverage Answer: $1,000 less the deductible

Jim and Mary are celebrating their 50th wedding anniversary and are on a worldwide cruise. They carry a DP-3 dwelling policy with a personal property limit of $50,000. While off the coast of Africa the ship catches fire and their property is completely destroyed. How much, if anything, will they collect? Nothing $5,000 Up to the personal property limit $1,000 on a replacement cost basis Answer: $5,000

Who is the principal in a bid bond? The Obligee The Auction House The Contractor The Guarantor (surety) Answer: The Contractor

The HO-6 policy provides full replacement cost coverage if it is rendered a total loss by fire, EXCEPT: The structure portion occupied by the insured as a residence Improvements and betterments made to the structure by the insured Structures owned by the insured other than the residence Replacement cost coverage does not apply under the HO-6 form Answer: The structure portion occupied by the insured as a residence

All of the following may use a credit report under the Fair Credit Reporting Act, EXCEPT: In a Court Case For Employment For a Credit Related Transaction Underwriting Insurance Answer: In a Court Case

A commercial umbrella liability policy would usually cover which of the following situations? The insured claimed in a TV ad that the company's product will allow dieters to lose five pounds per week for four weeks without changing their eating habits. Several dissatisfied customers sued the insured when the product did not cause weight loss. The insured was sued for knowingly allowing its advertising agency to make untrue statements about a competitor in an advertisement for the insured's product. The insured owns and rents out a number of subsidized housing units. Feeling justified that he has the right to know what goes on in the rented units, he regularly uses a passkey to let himself in and look around the units. One day he did this while a tenant was sleeping. The tenant woke up, saw the insured and ordered him to leave. The insured refused. Later, the tenant sued the insured for wrongful entry. The insured borrowed a bulldozer from a friend and damaged it while using the

An insured carries an unendorsed HO-2 policy. He has suffered a partial loss to his dwelling and the authorities have advised him that the property cannot be repaired and must be demolished. What will the insurer pay? The insurer will pay nothing The replacement cost value of the entire structure The cost of the value of the damaged property plus 10% The actual cash value of the partial loss Answer: The cost of the value of the damaged property plus 10%

Which of the following is least likely to be considered "transacting insurance" under most state laws? A person mails renewal policies to clients. A person presents insurance quotations to applicants. A person completes applications and transmits them to insurers. A person negotiates with insurers to get the best quotes for clients. Answer: A person mails renewal policies to clients.

A customer deposits items in a safe deposit box at the bank. These items are missing the next time the customer opens the box. What crime coverage is necessary to cover this loss? Safe Depository Guests Property Lessees of Safe Deposit Boxes Extortion-Commercial Entities Answer: Safe Depository

In Alabama, an adjuster must keep records pertaining to transactions under his or her license for at least: 1 year. 2 years. 3 years. 5 years. Answer: 1 year.

What is the limit for medical benefits under workers compensation? $100,000 per injury $500,000 for any one accident 80% of medical bills up to $10,000 per injury There is no set limit Answer: There is no set limit

The insured owns a two family dwelling and is covered under a Homeowner policy. One of the units is rented. The insured also maintains a small incidental business in the structure. In case of a covered loss, which of the following would NOT be paid under Coverage D - Loss of Use? Rental income from the rental unit Additional living expenses incurred by the insured Loss of income from the incidental business Rental income and additional living expenses Answer: Loss of income from the incidental business

Unless revoked or suspended, an Alabama insurance producer license will remain in effect: As long as the renewal fee is paid and the continuing education requirements are met. For 2 years. For 5 years. For 1 year. Answer: As long as the renewal fee is paid and the continuing education requirements are met.

A daughter is attending college and her family carries a tenant's homeowner policy HO-4 with $50,000 contents coverage. The daughter has about $15,000 of personal belongings consisting of clothing, musical instruments and electronic equipment, some appliances and other personal items. Which is the form to use to cover her property exposures? Personal effects form Personal articles form Personal property form The homeowner form Answer: Personal property form

The continuing education requirements do not apply to producers who have been licensed in Alabama for 15 years and are at least ___ years of age. 60 62 55 65 Answer: 60

In ocean marine insurance, each of the following is true about the term "general average" EXCEPT: Only the party having an interest in the lost property suffers a loss. It refers to partial losses to save the ship. It involves a deliberate sacrifice of property. The loss is shared by all interests involved in the voyage. Answer: Only the party having an interest in the lost property suffers a loss.

The insurance department may suspend, revoke, or deny an agent's license for all of the following reasons, EXCEPT: Conviction of a misdemeanor that is unrelated to insurance. Untrue statements on an agent license application. Incompetency. Converting policyholder premium funds. Answer: Conviction of a misdemeanor that is unrelated to insurance.

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. The "impaired property" exclusion of a CGL policy's Coverage A deals mainly with: Loss of use claims due to "impaired property". Physical injury due to the "impaired property of others". Property damage due to "impaired products". Liability due to "impaired property". Answer: Loss of use claims due to "impaired property".

When is abandonment of insured property to an insurer permitted under a commercial property policy? When written prior notice is lawfully delivered to the insurer When the insured desires immediate settlement When the property is certain to be a total loss Never Answer: Never

Smoke damage to the insured premises caused by the sudden faulty operation of the insured's fireplace is covered under the: Both the DP-2 and the DP-3. DP-1. Both the DP-1 and the DP-2. Both the DP-1 and the DP-3. Answer: Both the DP-2 and the DP-3.

Which of the following is a valid reason to deny coverage or charge a higher premium for an automobile policy? Race or religion Adverse driving history or motor vehicle record Sexual orientation Ancestry Answer: Adverse driving history or motor vehicle record

A BOP policy has a $500,000 occurrence limit for liability and a $1,000,000 aggregate limit. If claims for $600,000 and $400,000 have been filed in two separate incidents, how much coverage remains, if any, for any future claims submitted during the policy term? $500,000 -0- $100,000 $1,000,000 Answer: $100,000

Which of the following can be used to provide coverage and comply with the workers compensation laws of Alabama? Purchase coverage from an approved workers' compensation carrier Provide coverage through a group self-insurance fund Individually self-insure, if qualified All of the responses are correct Answer: All of the responses are correct

A Commercial Property Policy on a mortgaged property specifies which of the following responsibilities as a duty of the insured? To provide a sworn proof of loss statement following a loss if requested by the company To return the policy if it is canceled by the insurance company To pay the mortgagee in full in the event of a total loss Hire a public adjuster to appraise damages Answer: To provide a sworn proof of loss statement following a loss if requested by the company

Which of the following is not considered a "breakdown" under Equipment Breakdown coverage? Mechanical failure Rupture or bursting caused by centrifugal force Electrical failure Lack of power, light, heat, steam or refrigeration Answer: Lack of power, light, heat, steam or refrigeration

Pollutant cleanup under the commercial building and personal property form: Is completely excluded Is a coverage extension Is an additional coverage Is an optional coverage Answer: Is an additional coverage

A bid bond is used: As a promise from the surety that if the principal is the low bidder and is awarded the contract, the principal will enter into the contract and provide required performance and other bonds. To indemnify bids posted at auction. To indemnify sealed bids. To insure that there is fairness in the bid selection process. Answer: As a promise from the surety that if the principal is the low bidder and is awarded the contract, the principal will enter into the contract and provide required performance and other bonds.

Which of the following prevents someone from collecting payment for negligence under the laws of some states? Contributory Negligence Comparative Negligence Intervening Cause Assumption of Risk Answer: Contributory Negligence

A deductible usually applies to which of the following automobile policy coverages? Physical Damage Bodily Injury Liability Property Damage Liability Medical Payments Answer: Physical Damage

Bill Walters is named in the "drive other car" endorsement attached to the business auto policy of his brother, John Walters, and a premium is shown in the endorsement for liability coverage. Which of the following vehicles would be covered autos under the "drive other car" endorsement? A van being driven by Bill. The van is owned by Kathy Webster. A station wagon being driven by Tanya Walters, Bill's wife. She and Bill live together and she owns the station wagon. A pickup being driven by Bill as part of his job in a repair garage. The truck is owned by Ted Armor, Bill's boss. A sedan being driven by Bob Walter's, Bill's son. The car belongs to Bill. Answer: A van being driven by Bill. The van is owned by Kathy Webster.

Medical payments coverage under a BOP applies to expenses incurred by non-insureds for bodily injury and reported to the insurer within: Four years after the accident date. Three years after the accident date. One year after the accident date. Two years after the accident date. Answer: One year after the accident date.

All of the following would have an insurable interest in a home and be insurable under the homeowners program, EXCEPT: A co-owner of a 2-family house occupying the second floor apartment. The owner of a seasonal dwelling who has his primary dwelling insured under an HO-3. A non-occupant realtor. An individual who owns a house under construction. Answer: A non-occupant realtor.

Which of the following would be covered under employee dishonesty? Money lost on the way to the bank Inventory shortages Embezzlement Robbery of the employee Answer: Embezzlement

A person may be negligent if he or she: Fails to do what a reasonable and prudent person would do. Injures another person even though he acted prudently. Commits a deliberate act that injures another. Hires someone to damage another's property. Answer: Fails to do what a reasonable and prudent person would do.

In crime insurance, which of the following individuals is NOT considered to be a custodian? Janitor Employee Partner Insured Answer: Janitor

In ocean marine, what is covered by protection and indemnity coverage? All of the responses are correct. Loss of life, injury and illness. Crew member burial expense. Damage to docks, buoys and other structures not owned, leased, or hired by the insured. Answer: All of the responses are correct.

Most inland marine "all risk" forms exclude loss or damage caused by: Smoke. Vandalism. War. Vehicles. Answer: War.

Which of the following conditions is not found in the commercial inland marine conditions form? Appraisal Pair, Set or Parts No Benefit to Bailee Maintenance of Security Systems Answer: Maintenance of Security Systems

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 ACV until the proof of loss is sent to the insurer ACV until the loss is paid by the insurer ACV unless the 80% of the total loss Answer: ACV until repairs are completed and then the full replacement cost is paid

Boats and their trailers are subject to a theft limitation of $1,500. However, theft is not covered if the property is off the insured's residence premises. A tort is: I. A civil wrong. II. A legal obligation. I only II only Both I and II Neither I nor II Answer: I. A civil wrong.

Under the HO-3 policy, the maximum coverage limit available for boats and trailers lost due to theft is: $500 $1,500 $2,000 $2,500 Answer: $1,500

Which of the following is an ideal form of protection for the frequent shipper of goods? Annual Transit Policy Trip Transit Policy Monthly Transit Policy Common Carrier Motor Truck Cargo Policy Answer: Annual Transit Policy

Which of the following is not considered to be an unfair claims settlement practice? Attempting to settle a claim on the basis of an application which was altered without the knowledge of the insured Making a claims payment and omitting the coverage under which payment is being made Denying a claim that is not covered by the policy. Stating to claimants that it always appeals arbitration awards for the purpose of compelling them to accept lower settlements Answer: Denying a claim that is not covered by the policy.

The insured owns an expensive rare painting. He has it appraised by an art dealer and has it insured for $50,000 under a personal articles floater. There is a market decline for this item. It is destroyed in a fire at his office. The company offers him $40,000, the current market value. How will the loss be handled? The item is not covered because it was away from the insured's residence at the time of the loss. The insurance company will cover the item for the full $50,000 amount. The insurance company is correct in offering fair market value at the time of the loss. The insurance company will ask for a reevaluation of the item based on records and documentation of the price paid, the current market value and the appraised value. Answer: The insurance company will cover the item for the full $50,000 amount.

Coverage E under the farm forms covers which of the following? Unscheduled personal property Scheduled personal property Scheduled real property coverage Blanket real property coverage Answer: Scheduled personal property

After a claim has been paid, any recovery rights applying to the amount paid by the insurance company belong to: The insured. The insurance company. Both the insured and the insurance company. Either the insured or the insurance company, depending upon which paid the greater share of the loss. Answer: The insurance company.

The liability coverage on the BOP would provide coverage for which of the following? Injury or damage caused by the operation of mobile equipment An injury that is also covered by Workers Compensation Law Liability that is caused by the operation of a business auto Liability resulting from the accidental escape of pollutants Answer: Injury or damage caused by the operation of mobile equipment

What coverage is used to cover damage to a customer's vehicle in the care and custody of a repair garage? Garagekeeper's legal liability. Garage liability. Drive other car coverage. General liability. Answer: Garagekeeper's legal liability.

An Alabama licensee must inform the insurance department of a change in legal name or address within ___ of the change. 30 days 6 months 10 days 2 weeks Answer: 30 days

Under the National Flood Insurance Program, replacement cost coverage is available for: Single family dwellings only. Any residential property. Both residential and non-residential buildings. All types of buildings and their contents. Answer: Single family dwellings only.

Al has an umbrella liability policy which does not pay damages until such time as Al is legally obligated to pay them. This type of policy is known as: A reimbursement policy. A pay-on-behalf-of policy. An indemnification policy. An obligation policy. Answer: An indemnification policy.

All of the following statements about claims-made coverage in a CGL policy are correct, EXCEPT: The basic extended reporting period gives the insured ten years to report claims that allegedly occurred during the policy period. The claims-made form includes Personal and Advertising Injury coverage. Under the claims-made form, claims filed during the policy period can be covered even if the event occurred prior to the policy's effective date. The date before which no claim will be accepted is known as the retroactive date. Answer: The basic extended reporting period gives the insured ten years to report claims that allegedly occurred during the policy period.

A surplus lines broker in Alabama must file a bond in the amount of: $50,000. $100,000. $25,000. $10,000. Answer: $50,000.

In property and casualty insurance, when must a person absolutely have an insurable interest? At the time of the loss At the time of the application completion At any time Before the loss occurs Answer: At the time of the loss

Bridges and tunnels may be insured under: Inland Marine Forms Business floater forms. Transportation forms. Equipment dealer's forms. Answer: Inland Marine Forms

Which of the following coverages are not automatically included in the BOP? Seasonal increase in contents coverage Loss of income Employee dishonesty General liability coverages Answer: Employee dishonesty

Which of the following watercraft would be covered for liability under "Section II - Liability" of the Homeowners policy? A 28 foot sailboat owned by an insured. A 100 HP jet ski rented to the insured. An outboard motor boat with a 50 horsepower motor. None of the responses listed are correct. Answer: None of the responses listed are correct.

Under Homeowners insurance, "Medical Payments to Others" coverage will cover necessary medical expenses incurred within: 1 year of the accident causing the injury. 4 years of the accident causing the injury. 3 years of the accident causing the injury. 2 years of the accident causing the injury. Answer: 3 years of the accident causing the injury.

The liability coverage section of the personal auto policy does not extend coverage to which of the following vehicles Mr. Love owns? A camper-trailer pulled by the family car The family car A pick-up truck with a gross vehicle weight of 7,000 pounds, used to deliver quotations for plumbing work. Motorcycles used for cross country travel Answer: Motorcycles used for cross country travel

Which of the following is NOT covered under a premise burglary claim? Product is stolen Damage to a door Fire to the building caused from the break in Damage to a show case Answer: Fire to the building caused from the break in

What is the limit that is paid for water damage under an Equipment Breakdown policy? $10,000 $15,000 $25,000 Nothing Answer: $25,000

The maximum amount a policy will pay in the event of a loss is called the: Limits of liability. Coinsurance amount. Deductible. Pro rata return. Answer: Limits of liability.

Which of the following coverages provides payments to a third party, rather than to the named insured? Bodily injury and property damage liability Commercial property building coverage Automobile comprehensive coverage Medical payments under a personal auto policy Answer: Bodily injury and property damage liability

An insured has injured a third party while loading his private passenger automobile. Which of the following would respond to cover the claim? The Personal Auto Policy Section II of the Homeowner Policy A CGL Policy A Boatowners Policy Answer: The Personal Auto Policy

All the following are true regarding a warranty, EXCEPT: A certain order of words, written or spoken, is necessary to create a warranty. A warranty can be expressed or implied. A warranty can refer to the past, present or future. A warrranty is guaranteed to be true. Answer: A certain order of words, written or spoken, is necessary to create a warranty.

Which of the following best describes the purpose of workers compensation coverage? Medical Disability Indemnity Burial, loss of wage coverage and disability benefits Answer: Indemnity

"Policy territory" in the CGL includes: The United States only The United States and Canada The United States, Canada, and Mexico The United States, Canada, Mexico, and England Answer: The United States and Canada

The doctrine which relates to legal liability is: Strict Vicarious Res ipsa loquitor All responses listed are correct. Answer: All responses listed are correct.

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. It is a contract which alleges certain facts to be true in the written agreement. It is a contract in which one party offers payment in exchange for the other party's performance. It is a contract which alters a previous agreement. Answer: It is a contract in which the performance of one party is contingent upon the occurrence of a fortuitous (accidental) event.

You have an HO-3 policy on your home. Coverage F will pay medical expenses for: Anyone invited onto your property and injured while there A son or daughter away at college You and all resident relatives Roomers and boarders Answer: Anyone invited onto your property and injured while there

Equipment Breakdown coverage does not apply to which of the following losses? Vandals have destroyed a boiler A boiler safety relief valve has malfunctioned and caused the boiler to crack A boiler has exploded due to a water flow problem An electric motor has self-destructed as a result of a broken part Answer: Vandals have destroyed a boiler

Minimum coverage provided by the basic dwelling form (DP-1) includes coverage against loss by: Fire, lightning and internal explosion. Fire and lightning only. Fire, lightning, and extended coverages (EC). Fire, lightning, extended coverages (EC), and vandalism and malicious mischief (VMM). Answer: Fire, lightning and internal explosion.

Which of the following is covered by a flood policy? Overflow of inland or tidal water Vehicles A broken water main Livestock Answer: Overflow of inland or tidal water

Under the HO Policy, loss of use would cover which of the following? Additional Living Expense and Fair Rental Value Personal Property The Insured's Liability Other Structures Answer: Additional Living Expense and Fair Rental Value

The insured owns a 20-foot fishing boat with a 50-horsepower motor. Which of the following policies would be best suited to cover a theft loss on a lake? Homeowner policy Personal article floater Boatowners policy Yacht policy Answer: Boatowners policy

Which of the following would NOT be a prospect for errors and omissions insurance? Dentists Insurance Agents Real Estates Agents Lawyers Answer: Dentists

The insured carries a workers compensation policy which includes employer's liability coverage. Which of the following is not covered by employer's liability coverage? Statutory benefits Suits brought by injured employees, in case of employer's gross negligence Suits brought by spouses or dependent of injured workers Legal defense costs Answer: Statutory benefits

Under a personal auto policy, which of the following persons would be excluded from coverage for bodily injury and property damage liability? An employee of the named insured, while transporting passengers for a fee. The named insured's spouse who resides in the same household as the insured. Any person using the car with the permission of the insured. Any person legally responsible for the use of the automobile with the insured's permission. Answer: An employee of the named insured, while transporting passengers for a fee.

Fly-By-Night Construction Company has a CGL policy with coverage dates of 03/01/11 to 03/01/12. The per occurrence limit is $500,000 and the general aggregate limit is $1,000,000. The maximum that can be paid during the policy period on the insured's behalf is:. $1,000,000. $500,000. $1,500,000. $2,000,000. Answer: $1,000,000.

Which of the following is not needed for rating the premium in the BOP? Square foot area Gross sales Protection class Rate group Answer: Square foot area

What type of coverage would a physician, surgeon, or dentist require? Businessowner's Homeowners endorsement Commercial Professional Answer: Professional

The named insured is an auto dealer with a single insured location. Physical damage coverage under the insured's garage policy is written on a reporting basis. On the date of the insured's last report, the value of covered autos at the insured's location was $400,000; the insured's report on that date showed values of $300,000. A covered loss occurs, with damage totaling $80,000. How much of this loss will the garage insurer pay? $80,000 $60,000 $40,000 $0 Answer: $60,000