ADJUSTER PRO REAL EXAM 2024 ACTUAL EXAM QUESTIONS AND CORRECT ANSWERS ALREADY GRADED A, Exams of Nursing

Download ADJUSTER PRO REAL EXAM 2024 ACTUAL EXAM QUESTIONS AND CORRECT ANSWERS ALREADY GRADED A and more Exams Nursing in PDF only on Docsity! ADJUSTER PRO REAL EXAM 2024 ACTUAL EXAM QUESTIONS AND CORRECT ANSWERS ALREADY GRADED A+ BRAND NEW!! Bobby just purchased an insurance policy for his home from XYZ Insurance. Which of the following would be a reason this policy may not be legally binding? - ANSWER >>>>A. Bobby is only 19 years old. B. Bobby paid his first premium when he and his agent agreed on a policy, but he is waiting for the policy documents to be prepared so he can sign them. C. Bobby has an outstanding warrant for selling marijuana. A contract is only legally binding if both parties are competent. If Bobby is not mentally competent, he cannot enter into a contract. D. Bobby has been diagnosed as mentally incompetent. ANSWER: D In a __________, only one party is legally obligated to perform. - ANSWER >>>>A. contract of adhesion B. unilateral contract C. conditional contract That is incorrect. In a unilateral contract, only one party is legally obligated to perform. D. contract of utmost good faith ANSWER: B. Unilateral contract Mark incurred $8,000 damage to his car in an accident. He received $8,000 from his insurance company and $4,000 from the other driver. By receiving a profit from the loss, Mark could be in violation of: - ANSWER >>>>A. the principle of profit and loss. B. the principle of financial status. C. the principle of financial restoration. D. the principle of indemnity. ANSWER: D Greg plays trombone in his school band during football games. During a rally song in the stands one day, Greg annoys one of the opposing team's fans, who grabs his $400 trombone and hurls it down the bleachers, completely destroying it. Greg's insurance pays him $400 to replace the trombone, but then the opposing team's coach also offers to replace the instrument, at whatever the cost. So Greg orders a new $3,200 trombone and has the opposing team's athletic department absorb the cost. Which principle has Greg violated? - ANSWER >>>>The Principle of Indemnity The fee paid by the insured in exchange for an insurance policy is called a: - ANSWER >>>>Premium Which of the following best describes a Fraternal Benefit Society? - ANSWER >>>>A. A fraternal benefit society is a for-profit provider of insurance. B. A fraternal benefit society is a social organization based around common interests and beliefs. C. A fraternal benefit society uses investors' money to pay claims. Fraternal Benefit Societies are non-profit, mutual aid organizations that engage primarily in charitable activities. They offer their members insurance against death, disease, and disability. D. A fraternal benefit society pays dividends to its stockholders. ANSWER: B company turns a profit. From which type of company has Frank purchased insurance? - ANSWER >>>>A. Stock insurer B. Mutual insurer C. Re-Insurer D. Reciprocal insurer ANSWER: A A "hazard" is defined as: - ANSWER >>>>A. an insured item. B. something that increases the chance of a loss. C. the likelihood of experiencing a loss. D. an unexpected event that causes loss. ANSWER: B When Louise goes online and fills out phony applications with XYZ Auto Insurance in order to print the temporary insurance cards and sell them for a profit on the black market, she is: - ANSWER >>>>A. using a Ponzi Scheme. B. using a regular business practice. C. committing soft fraud. D. committing hard fraud. ANSWER: D Which of the following situations does NOT involve an insurable risk? - ANSWER >>>>A. Melody just bought a gas station and convenience store. B. Dale just bought 30 shares of a hot new startup company online. C. Hank just bought a new outboard motor for his fishing boat. D. Christine just bought her husband an expensive new watch. ANSWER: B Dr. Nelson routinely schedules her patients for lab tests that they don't need so she can charge their insurers for more money. - ANSWER >>>>A. operating within the letter of the law, if not its intent. B. committing a tortfeasor. C. committing subrogation. D. committing health insurance fraud. ANSWER: D Six Stars Development Company has just purchased several large properties in Las Vegas. As a result of this large purchase, they are a little short on money and decide to save money by not purchasing insurance on their new properties. Six Stars is practicing: - ANSWER >>>>A. risk retention. B. risk reduction. C. risk transference. D. risk avoidance. ANSWER: A Six Stars Development Company has just been offered a great deal on ten large properties in Las Vegas. The economy in Las Vegas has been declining recently, but the CEO of Six Stars expects it to recover soon. This could be an exceptional opportunity for Six Stars, but it's also pretty risky. Ultimately, the Six Stars executive team decides not to purchase the properties. This is an example of: - ANSWER >>>>A. risk avoidance. B. risk retention. C. risk transference. D. risk reduction. ANSWER: A Which of the following is a hazard? - ANSWER >>>>A. Lightning B. A driver's tendency to text while driving C. A skiing accident D. Vandalism ANSWER: B Lucy has insurance on an expensive necklace she likes to wear to work every day. After work, she takes it off and leaves it in her car's cupholder so she can put it back on in the morning on her way to work. Lucy's behavior would be considered a: - ANSWER >>>>A. moral hazard. B. morale hazard. C. hazard. D. physical hazard. ANSWER: B Each of the following would classify as an insurable risk, except: - ANSWER >>>>A. a marriage. B. a rocket. C. a brick patio. D. a barn. ANSWER: A Jared hopes to purchase a new insurance policy for his car, but he has an extremely poor driving record. The insurance company decides to issue Jared an insurance policy, but charges him a premium much higher than the average driver. The insurance company is practicing: - ANSWER >>>>A. risk retention. B. risk avoidance. C. risk reduction. D. risk transference. ANSWER: C B. The insurer will deny the claim and cancel Jason's policy because he is more than 30 days late with his payment. C. The insurer will deny the claim and cancel Jason's policy because of the implied waiver they have made by not canceling his policy the previous times he was late with his payments. D. The insurer will pay the claim because of the express waiver they have made by not canceling Jason's policy the previous times he was late with his payments. ANSWER: A Clark is filling out an application for an insurance policy. The application asks for his birth date, and Clark writes 1-24-67. His actual birthday is 1-24-63, but he likes to appear younger so he uses a different date. This would be called: - ANSWER >>>>A. warranty. B. misrepresentation C. representation. D. concealment. ANSWER: B Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home, causing extensive damage to the East wall and roof. As a result, Sandra and her family must move into a hotel until the repairs are completed. The cost of staying in a hotel is: - ANSWER >>>>A. an indirect loss. B. a direct loss. C. a physical hazard. D. the proximate cause. ANSWER: A Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home, causing extensive damage to the East wall and roof. As a result, Sandra and her family must move into a hotel until the repairs are completed. Sam's car crashing into the house would be considered: - ANSWER >>>>A. a physical hazard. B. an out-of-pocket expense. C. an indirect loss. D. an occurrence. ANSWER: D An oral or written statement providing temporary insurance coverage until an insurance policy can be issued is called a: - ANSWER >>>>A. binder. B. agreement. C. consideration. D. contract. ANSWER: A In order to qualify for an insurance policy, Lydia's Fine Jewels must agree to have a security guard on the premises 24/7. This is called a: - ANSWER >>>>A. representation. B. warranty. C. waiver. D. binder. ANSWER: B During a storm, lightning strikes a tree in Harry's yard and starts a fire that spreads to his shed where he keeps all his equipment for his landscaping business. In addition to the shed, Harry has to purchase all new equipment to stay in business. The cost to replace the equipment would be considered: - ANSWER >>>>A. a peril. B. an indirect loss. C. a direct loss. D. an occurrence. ANSWER: C The factual statements of the insured upon which an insurance policy is based are called: - ANSWER >>>>A. representations. B. utmost good faith. C. misrepresentations. D. allegations. ANSWER: A Jane's shed burns to the ground during a tornado, when the high winds break a wall of the shed, knocking over a lantern inside. What is the proximate cause of the loss? - ANSWER >>>>A. Fire B. Wind C. The lantern D. Wall collapse ANSWER: B What is a binder? - ANSWER >>>>A. A legal principle that binds the insurer to its guarantees B. A voluntary surrender of a privilege C. Temporary coverage for an insurance applicant until the policy is issued D. A promise or guarantee that certain conditions will be met ANSWER: C Which of the following is most likely a third party claim? - ANSWER >>>>A. A man files a homeowners claim when his house is struck by lightning. ANSWER: C Sarah is playing with a basketball on the stairs at Bob's house. In doing so, she trips, falls, and breaks her leg. She files a claim against Bob's insurance policy for her injuries. The adjuster determines that Sarah was 50% responsible for her own injuries, and therefore should only receive indemnification for 50% of her medical bills. What defense is the adjuster using? - ANSWER >>>>A. Third-party negligence B. Assumption of risk C. Comparative negligence D. Contributory negligence ANSWER: C Jim is out turkey hunting on a private ranch when he hears some movement in the brush. Assuming it's a turkey, Jim raises his shotgun and fires. Unfortunately for Jim, he has not taken a turkey, but has severely injured one of the landowner's calves instead. Jim is responsible for the cost of the calf because he acted with: - ANSWER >>>>A. great care. B. negligence. C. liability. D. responsibility. ANSWER: B Tim is the plaintiff in a case involving an auto accident. To recover monies he feels are due him, Tim produces documents to prove he had to pay over $55,000 in medical bills. If the court were to award Tim $55,000, the damages would be classified as: - ANSWER >>>>A. imperative damages. B. general damages. C. tort damages. D. special damages. ANSWER: D Ricky was watching a baseball game at XYZ Stadium, when the railing on which he was leaning gave way and he fell two stories. As a result of his fall, Ricky broke his back and is now paralyzed from the waist down. Ricky sued the owners of XYZ Stadium and was awarded $150,000 to cover his medical bills and $2.5 million in __________ because of the permanent nature of his injury. - ANSWER >>>>A. punitive damages B. general damages C. tort damages D. special damages ANSWER: B Which of the following incidents would a liability insurance policy cover? - ANSWER >>>>A. A man crashes his car into his own fence. B. A man slips inside a grocery store and injures himself. C. A fire damages the back bedroom of your house. D. The company van is stolen from your warehouse. ANSWER: B ABC Masonry, Inc. has an aggregate liability policy with limits of 100,000/300,000. One day, an accident at a construction site leads to $150,000 in damage to public property. Assuming the cause of loss is covered under ABC Masonry's liability policy, how will this claim be paid? - ANSWER >>>>A. The insurer pays $150,000 and the aggregate limit is still $300,000. B. The insurer pays $150,000 and the aggregate limit is now $200,000. C. The insurer pays $100,000; the aggregate limit is now $200,000; and ABC Masonry must pay $50,000. D. The insurer pays $100,000; the aggregate limit is still $300,000; and ABC Masonry must pay $50,000. ANSWER: C Since the per-occurrence limit is only $100,000, that's all the insurer will pay. This payment reduces the aggregate to $200,000 and leaves $50,000 that ABC Masonry is responsible for paying. James and Eric want to play a prank on Bob for Halloween. They dress up like headless horsemen and throw ignited Jack O'Lanterns at his house. Unfortunately, one of the inflamed pumpkins catches the porch on fire, causing $3,500 in damages. Bob doesn't find this tomfoolery very entertaining and sues both James and Eric for the cost of the repairs. In court, James and Eric would be: - ANSWER >>>>A. the plaintiffs. B. a joint tortfeasor. C. a tortfeasor. D. intentional tort. ANSWER: B When would a default judgment occur? - ANSWER >>>>A. When a defendant submits an ANSWER B. When a defendant does not ANSWER a complaint C. When an insurer sends a reservation of rights D. In cases that involve an intentional tort ANSWER: B Which of these is NOT typically excluded from coverage in a property insurance policy? - ANSWER >>>>A. Off-premises power failure B. Nuclear events C. Civil confiscation D. Lightning While a claim remains open, an insurer may require the adjuster to submit an interim report: - ANSWER >>>>A. every week for the purpose of documenting the adjuster's claim-related expenses. B. every day, which lists the amount of time spent working the claim. C. every 15 days, which explains why the claim is still open and when the adjuster expects to close it. D. at regular set intervals, which lists any new or important information about the claim. ANSWER: ? Jim is an insurance adjuster working a theft claim. As part of his investigation, Jim might want to do all of the following, EXCEPT: - ANSWER >>>>A. review any available police reports. B. take statements from all witnesses. C. look for ways to lower the settlement for the claimant. D. thoroughly inspect all damages related to the theft. ANSWER: C Stephanie is in the process of adjusting George's auto claim. Currently, she is interviewing Shana, who witnessed George's accident and stopped to help. In what stage of the claim process is Stephanie currently working? - ANSWER >>>>A. Evaluation B. Acknowledgement C. Negotiation D. Investigation ANSWER: D In a declaratory judgment action: - ANSWER >>>>A. the court makes a judgment about an insurer's unfair settlement practices. B. the court resolves the case. C. the court decides the legal rights of both parties. D. the court's decision about the legal rights of the parties is not binding. ANSWER: C Barbara has been negotiating a property claim with a claimant for a few hours now. She has displayed her assessments, gone over the policy, and offered a fair settlement amount within the policy limits. However, the claimant has dismissed it completely without any counter-offer. The most appropriate next step is for Barbara to: - ANSWER >>>>A. submit her backup offer. B. enter into arbitration. C. remain silent. D. tell a joke to lighten the mood.A. submit her backup offer. B. enter into arbitration. C. remain silent. D. tell a joke to lighten the mood. ANSWER: A In which section of a Standard Fire Policy would you find information on rules of conduct and obligations the policyholder must follow in order for insurance coverage to apply? - ANSWER >>>>A. Declarations B. Insuring Agreement C. Exclusions D. Conditions ANSWER: D Stu has a collection of rare comic books. He wants to purchase theft insurance for his collection, separate from his home and other property. What term most accurately describes the type of policy Stu would purchase? - ANSWER >>>>A. Valuable Papers Policy B. Actual Cash Value Policy C. Standard Fire Policy D. Monoline Policy ANSWER: D Which of the following statements is NOT true of endorsements? - ANSWER >>>>A. An endorsed policy will always provide more coverage than an unendorsed policy. B. An endorsed policy has been changed from the original version. C. Endorsements may be added to a policy at the time of purchase and at renewal. D. Endorsements may be added to a policy at any time during the policy period. ANSWER: ? In the Standard Fire Policy, "intentional losses" and "extreme perils that cause catastrophic damage to a large number of policyholders" would be considered examples of: - ANSWER >>>>A. conditions. B. hazards. C. insurable risks. D. exclusions. ANSWER: D Which of the following homeowners policies provide coverage on an open-peril basis for personal property without endorsement? - ANSWER >>>>A. HO-3 and HO-5 The HO-5 is the only homeowners policy form that provides open- peril coverage for personal property without an endorsement. B. HO-2 and HO-3 C. HO-5 penalty to the amount of the loss to find the indemnity ($12,000 x 41.67% = $5,000). Andy owns a home in Texas, which is covered by a Texas HO-A policy. Which of the following is FALSE? - ANSWER >>>>A. Andy's policy is standardized, meaning he could get the exact same policy with the exact same coverage provisions from any other insurer selling Texas homeowners policies. B. Any covered damages to Andy's home will only be paid at actual cash value. C. Andy's policy only covers damage caused by the perils that are specifically named in his policy." D. Andy's detached garage is covered under Coverage B in his policy. ANSWER: ? In which section of an insurance policy might you find the following statement? "Damage to insured property must be reported within 15 days of the damaging occurrence." - ANSWER >>>>A. Declarations Page B. Conditions C. Definitions D. Exclusions ANSWER: B In an insurance policy, the summary of what the insurer will do in the event of a covered loss is called: - ANSWER >>>>A. the dec page. B. the conditions section. C. the definitions section. D. the insuring agreement. ANSWER: D A reciprocal insurer is: - ANSWER >>>>A. a non-profit mutual aid organization that engages in charitable or benevolent activities and provides insurance to its members. B. an unincorporated organization of subscribers that operates through an attorney-in-fact to provide insurance benefits for its members. C. an insurance company that is owned by its policyholders, is not traded publicly, and is governed by a board of directors elected by the policyholders. D. a publicly-traded insurance company owned by stockholders, which provide capital and participate in the insurer's profits and losses. ANSWER: B All of the following pieces of information can be found in the Conditions section of an insurance policy, EXCEPT: - ANSWER >>>>A. anything the insured must do for coverage to remain in effect. B. what the insured must do in the event of a lawsuit. C. the insured's duties after a loss. D. causes of loss that are not covered. ANSWER: D Xavier owns a small insurance company. Recently the company won a bid to insure a new housing development in Omaha, NE. His company can handle any claims that arise, but if a series of tornados were to tear through the area and destroy the entire development, Xavier's company would suffer financially. Which type of insurer could help Xavier's company protect itself the most from this potential loss? - ANSWER >>>>A. A re-insurer B. A stock insurer C. A reciprocal insurance group D. A fraternal benefits society ANSWER: A Xavier could purchase re-insurance to insure that his company would not suffer crippling losses. When an insurer buys insurance to reduce its exposure to loss, this is called: - ANSWER >>>>A. co-insurance. Re-insurance is insurance for insurers; it helps insurers reduce their exposure to losses. B. mitigation. C. loss reduction. D. re-insurance. ANSWER: D Lewis owns a computer store, and he spends many hours a day on the sales floor demonstrating his products to customers. He often gets very animated when showing the electronics and, although he does not intend for anything bad to happen, he doesn't worry too much about handling them carefully, since he knows that his insurance policy will cover any damages. This behavior would be called a: - ANSWER >>>>A. physical hazard. B. fraud. C. morale hazard. D. moral hazard. ANSWER: C A "hazard" is defined as: - ANSWER >>>>A. an insured item. B. something that increases the chance of a loss. C. the likelihood of experiencing a loss. D. an unexpected event that causes loss. ANSWER: B B. Adam is indifferent to any losses he may suffer. C. Adam doesn't consciously choose to take this route. D. The roads present a physical condition that increases the chance of a loss. ANSWER: D Which of the following situations does NOT involve an instance of "pure risk?" - ANSWER >>>>A. Loss of a house due to a hurricane B. Loss of money invested in the stock market C. Loss of a company car in an unfortunate accident D. Loss of crops due to an infestation of parasites ANSWER: B Which of the following is an example of how some insurers are fighting back against insurance fraud? - ANSWER >>>>A. Starting fraud busting units staffed with former detectives and police officers B. Enacting tougher penalties for insurance fraudsters C. Expanding current fraud laws to include all payers D. Imposing stiff fines and prison terms ANSWER: A Which of the following is NOT a risk management technique? - ANSWER >>>>A. Risk reduction B. Risk equality C. Risk avoidance D. Risk retention ANSWER: B John owes a lot more on his car than it is worth. He figures he would be better off if he burned the car and collected an insurance settlement. He has someone set fire to his garage to destroy the car. John's behavior would be considered a: - ANSWER >>>>A. physical hazard. B. hazard. C. morale hazard. D. moral hazard. ANSWER: D An insurance company might consider any of the following a risk, EXCEPT: - ANSWER >>>>A. a high crime neighborhood. B. an automobile. C. a home. D. a jewelry collection. ANSWER: A Which of the following is an example of a moral hazard? - ANSWER >>>>A. Kim is jamming out to her music while driving to work and accidentally runs a red light. B. Nancy falls asleep with a lit cigarette in her hand. C. Ken lights a candle, sets it right next to the window draperies and leaves the house to go to work. D. The road that leads to Mike's house is steep and narrow. ANSWER: C Which of the following would be considered an insurable risk? - ANSWER >>>>A. The gold stored in Fort Knox B. A squadron of police cars C. A riverbank D. A high-crime area ANSWER: B When record-breaking rainfall causes severe flooding in Janie's home town, Janie's rental property suffers extensive damage. Which of the following is an indirect loss? - ANSWER >>>>A. Janie must hire a contractor to reinforce a damaged retaining wall in the backyard of her rental unit. B. Janie's tenant has to replace his sofa that was damaged by the water. C. Janie loses a month of rental income when her tenant must move out while repairs are made to the home. D. Janie must pay to have the wood floors replaced in her rental unit. ANSWER: C As Jonathan was driving through an intersection, another driver ran a red light and crashed into the side of Jonathan's car, which caused significant physical damage to both vehicles. Jonathan must now rent a car while his is being repaired. The rental car expense would be considered a/an: - ANSWER >>>>A. proximate cause. B. physical hazard. C. direct loss. D. indirect loss. ANSWER: D When Sally applies for an auto policy, her agent issues her a ________ so that she can benefit from insurance protection while he underwrites the policy. - ANSWER >>>>A. representation B. binder C. warranty D. waiver Once a claimant files a complaint to the court, the claimant will become the: - ANSWER >>>>A. defendant. B. negligent party. C. ANSWERing party. D. plaintiff. ANSWER: D Sam is a claimant seeking damages from XYZ Insurance. The XYZ adjuster comes to meet with Sam to hear the circumstances of her injury. The adjuster determines that Sam played an active role in her own injuries, and therefore XYZ Insurance will pay her nothing at all for her injuries. What defense is the adjuster using? - ANSWER >>>>A. No negligence B. Contributory negligence C. Comparative negligence D. Full negligence ANSWER: B Chandler is a photographer who is taking pictures at a reenactment of the Battle of Gettysburg, when Harper (Union Cavalry) crashes through the brush and into Chandler, breaking both his arms and his camera. In court, Chandler demands payment not only for his medical bills and broken camera, but for future lost business; now that he is unable to take pictures for the next 6 months, his clients are moving on and entering into contracts with other photographers. When Chandler speaks of this total amount of all damages that have resulted and will result from Harper's mistake, he is referring to: - ANSWER >>>>A. punitive damages. B. diminution of value. C. joint tortfeasors. D. reservation of rights. ANSWER: B When Emma is found guilty of arson for burning down her $175,000 home, her insurance policy is voided and she receives no indemnification for the loss. Emma still had $155,000 left on her mortgage at the time of the fire. Under the mortgagee clause, Emma's mortgage lender can recoup: - ANSWER >>>>A. the total amount of the loss - $175,000. B. HALF the total amount left on the loan - $77,500. C. the total amount left on the loan - $155,000. D. HALF the total amount of the loss - $87,500. ANSWER: C The Liberalization Clause in an insurance policy: - ANSWER >>>>A. voids the policy if the insured deliberately conceals or misstates pertinent info. B. states that the insurer is obligated to pay for covered losses only up to the limit set by the policy. C. states that any change to a policy form that broadens coverage without increasing the premium will automatically apply to existing policies. D. states that, in the event of a loss, the insurer will only pay up to the insured value of the risk. ANSWER: C Frank purchased a $150,000 insurance policy for his home, which is valued at $125,000, with the hopes of making a $25,000 profit in the event his home is destroyed. After Frank burns his house down, he files a claim against his homeowners policy. Assuming that Frank's policy includes an overinsurance provision, how much will his insurer indemnify Frank for his loss? - ANSWER >>>>A. $0 B. $125,000 C. $25,000 D. $150,000 ANSWER: A Jim has two policies that cover the same risk, but they respond differently: Policy X is primary and Policy Z is excess. Policy X has a limit of $50,000 and Policy Z has a limit of $25,000. When Jim suffers an insured loss totaling $62,000, how will each policy respond? - ANSWER >>>>A. Policy X will pay $37,000 and Policy Z will pay $25,000 B. Policy X will pay $41,335 and Policy Z will pay $20,665 C. Policy X will pay $31,000 and Policy Z will pay $31,000 D. Policy X will pay $50,000 and Policy Z will pay $12,000 ANSWER: D Tina has two policies (Policy X and Policy Y) that cover the same risk on a pro rata basis. Policy X has a limit of $100,000 and Policy Y has a limit of $25,000. When Tina suffers a loss totaling $75,000, how will the two policies respond? - ANSWER >>>>A. Policy X will pay $50,000 and Policy Y will pay $25,000 B. Policy X will pay $37,500 and Policy Y will pay $25,000 C. Policy X will pay $75,000 and Policy Y will pay nothing D. Policy X will pay $60,000 and Policy Y will pay $15,000 ANSWER: D The job of the adjuster can best be described as: - ANSWER >>>>A. getting the best possible settlement for the claimant. B. getting the best possible settlement for the insurer. C. comparing claimant's losses to promises made in an insurance policy. D. completing the settlement process as quickly as possible. Mark's homeowners policy will not cover any of this loss because he was outside the US. B. Mark's homeowners policy will cover the entire $2,900 loss. C. Mark's homeowners policy will cover $2,400 of this loss. D. Mark's homeowners policy will cover $2,000 of this loss. ANSWER: C Phil heads over to visit his friend Josh, who is sick with the flu. While at the house, Josh fails to cover his mouth when he coughs and Phil ends up contacting the flu. Phil files a claim with Josh's insurer for medical expenses and lost income while Phil is out sick from work. The insurer denies the claim because: - ANSWER >>>>A. disease transmitted from the insured to a third party is excluded. B. Phil came over to Josh's house of his own accord. C. Phil was contributorily negligent, since he failed to get a flu shot. D. Phil was comparatively negligent, since he failed to get a flu shot. ANSWER: A Tom owns a home in Texas that's insured under an HO-B policy. He is 30 days late in paying his monthly premium, and his insurer wants to cancel his policy. Which of the following is TRUE? - ANSWER >>>>A. Tom's insurer may cancel his policy, but must notify Tom about the cancellation at least 30 days in advance. B. Tom's insurer may cancel his policy, but must notify Tom about the cancellation at least 10 days in advance. C. Tom's insurer cannot cancel coverage until they receive notification from Tom about his desire to cancel the policy. D. Tom's insurer must wait an additional 60 days before cancelling Tom's policy. ANSWER: B John moved out of his house and put it up for sale three months ago. While he was waiting for the house to sell, John's plumbing pipes froze and burst in the icy temperatures, which eventually led to water damaging the cabinetry and hardwood floors. Which of the following statements would most likely be TRUE? - ANSWER >>>>A. Although John's house was still covered under an HO-3, the damage would not be covered because he didn't shut off the water supply. B. Because John's house was still covered under an HO-3, the damage would be covered. C. Although John's house was still covered under an HO-3, the surface water resulting from the damaged pipes is not a covered peril. D. Freezing is not a covered peril in an HO-3, so this loss would not be covered. ANSWER: D In a homeowners policy, Coverage B - Other Structures provides insurance for which of the following? - ANSWER >>>>A. Detached garages B. Structures held for rental purposes C. Detached structures that are wholly rented out D. Detached structures used for business ANSWER: A Which Texas homeowners policy provides the most comprehensive coverage? - ANSWER >>>>A. Texas HO-C B. Texas HO-A C. Texas HO-A+ D. Texas HO-B ANSWER: A Sally has an HO-3 policy on her $150,000 home in the country. One day, a bear breaks down Sally's back door to get into her kitchen for a snack. When Sally comes home to find the damage, she files a claim with her insurance company. Will the damage to Sally's home be covered, and why or why not? - ANSWER >>>>A. No. "Bear-Entry" is not listed as a named peril in Sally's HO-3 policy. B. No. Since Sally did not take reasonable efforts to run the bear off, no damages may be covered. C. Yes. The HO-3 is an open-peril policy, without an exclusion for wildlife. D. Yes. Wildlife is a commonly named-peril found on all homeowner's policies. ANSWER: C The DP-3 is known as the: - ANSWER >>>>A. Broad Form. B. Special Form. C. Basic Form. D. Amended Form. ANSWER: B Diana is insured under a DP-2 policy with the following coverage limits: Coverage A - $150,000, Coverage B - $15,000, and Coverage C - $25,000. She and her fiancé have planned a destination wedding, but their hotel catches fire shortly after their arrival. Smoke from the fire damages all of their belongings, including Diana's $4,000 wedding dress. Diana's loss totals $5,200. When she files a claim with her insurance company, how much can she expect to receive for this loss under her DP-2 (ignoring any deductible)? - ANSWER >>>>A. $5,200 B. $0 D. pedestrians. ANSWER: A Matthew works for Barry John Coal Company. One day, when all the work trucks are busy, Matthew's boss asks him to use his own truck to deliver a load of coal to a customer. On the way, Matt gets distracted looking at directions and swerves into oncoming traffic, causing a serious accident. Why might Matt's PAP liability insurer deny coverage for the damage Matt caused? - ANSWER >>>>A. Matt's accident occurred during employment-related activities, so it will be covered by the employer's liability policy. B. Matt didn't have the commercial license necessary to use his truck for work purposes. C. Matt's accident occurred while he was hauling a heavy load, thereby excluding it from coverage. D. Matt broke the law when he drove distracted, making him at fault for the accident. ANSWER: A Which of the following is NOT one of the differences between a BAP and a truckers policy? - ANSWER >>>>A. A BAP uses coverage symbols to designate covered autos. B. A BAP typically excludes businesses that transport the property of others. C. Liability coverage in a truckers policy includes coverage for people who hire out or lend their cars to the insured for business purposes. D. A truckers policy includes trailer interchange coverage. ANSWER: A Which of the following insurance protections is NOT offered by a garagekeeper's insurance policy? - ANSWER >>>>A. Specific causes of loss B. Collision coverage C. Personal injury protection D. Comprehensive coverage ANSWER: C In which of the following cases would Mechanical Breakdown Insurance NOT apply? - ANSWER >>>>A. The air conditioning system in Sarah's car fails at only 37,000 miles. B. Sam's car transmission wears out. C. A rock strikes and shatters Horace's windshield. D. During a long incline in Colorado, Seth's engine overheats, damaging the pistons. ANSWER: C Under the Earthquake and Volcanic Eruption endorsement in a commercial property policy, what is the time span within which multiple earthquake or volcanic events are considered a "single occurrence" for coverage purposes? - ANSWER >>>>A. 168 hours (7 days) B. 120 hours (5 days) C. 24 hours (1 day) D. 72 hours (3 days) ANSWER: A Greta's Ski Supply is covered under the Building and Personal Property Coverage Form with limits of $50,000 for business personal property and $100,000 for the building. The policy also has a $500 deductible. When a tornado tears through the vicinity, the store suffered $10,000 in damage to the building and $20,000 in losses to the contents. In addition, Greta has to fork out an extra $1,000 for debris removal. How much will Greta receive from her insurer? - ANSWER >>>>A. $19,500 B. $33,500 C. $0 D. $30,500 ANSWER: D A fire in Sarah's factory causes her to shut the factory doors for 50 days. To limit her loss of income and keep production going, Sarah spends $125,000 renting equipment and another building. Sarah's commercial property policy doesn't have Business Income Coverage, but it does include Extra Expense Coverage. The limit on her Extra Expense coverage is $100,000 and she has Limits of Loss Payment of 40%/80%/100% during her period of restoration. How much indemnification will Sarah receive for her extra expenses? - ANSWER >>>>A. $80,000 B. $100,000 C. $50,000 D. $125,000 ANSWER: A Helen's business is growing rapidly, so she decided to add an annex onto her office and hire another worker. While under construction, a storm blows down most of the annex structure, forcing Helen to restart from scratch. Her commercial policy provides insurance coverage equal to 75% of the property value, despite the fact that her policy requires 80% coverage to be fully insured. Which coverage extension could help Helen rebuild at replacement cost? - ANSWER >>>>A. Newly Acquired Property extension - covers all new buildings under construction B. Reasonable Repairs extension - covers all new buildings under construction ANSWER: A Dr. Smith has a claims-made malpractice insurance policy with a policy period from June 30, 2006 to June 30, 2007. Which claim would trigger this policy? - ANSWER >>>>A. A claim filed on December 7, 2007 for surgery performed on June 1, 2006. B. A claim filed on January 13, 2007 for surgery performed on June 28, 2005. C. A claim filed on October 24, 2007 for surgery performed on November 15, 2006. D. A claim filed on September 20, 2007 for surgery performed on June 1, 2007. ANSWER: D In a BOP, the purpose of Supplementary Payments in conjunction with liability coverage is to: - ANSWER >>>>A. make incidental payments to an injured claimant before the final settlement amount is reached. B. cover the cost of additional damage that was discovered after the settlement was paid. C. cover costs associated with defending and investigating a claim against the insured. D. cover a claimant's lost wages after suffering an injury caused by the insured. ANSWER: C Assuming Ernie holds a BOP with a Selected Per Occurrence limit of $300,000, what would Ernie's Completed Operations and General Aggregate limits equal? - ANSWER >>>>A. Completed Operations: $600,000; General Aggregate: $600,000 B. Completed Operations: $1,200,000; General Aggregate: $2,000,000 C. Completed Operations: $300,000; General Aggregate: $500,000 D. Completed Operations: $1,000,000; General Aggregate: $1,000,000 ANSWER: A When a fire breaks out inside XYZ Printing, it damages the building structure, and two of the printing presses, which were bolted to the floor. What coverage within the BOP policy would cover the printing presses? - ANSWER >>>>A. Coverage A B. Coverage B C. None D. Coverage C ANSWER: A One morning, Jill arrives to open the bank, only to find the door already unlocked. Upon entering the bank, she sees the vault door has been blown open and a large amount of money has been burned when an explosive charge went off. Which commercial crime insurance coverage might cover the loss? - ANSWER >>>>A. Forgery B. Computer Fraud C. Inside the Premises: Theft of Money and Securities D. Inside the Premises: Robbery or Safe Burglary ANSWER: C Jeremy owns a business with several machines covered under an Equipment Breakdown Protection Coverage Form with a $500,000 limit. He has three deductibles on his policy: 1) a percentage deductible of 3% per loss, 2) a minimum deductible of $500, and 3) a maximum deductible of $10,000. After experiencing a covered loss of $85,000, how much will Jeremy have to pay out of his own pocket for the loss? - ANSWER >>>>A. $10,000 B. $500 C. $15,000 D. $2,550 ANSWER:B Joe (the principal) is handling the disbursement of a deceased executive's estate, and he is required to carry a bond guaranteeing such work. The surety company requires one of its accountants to be a second signer on the disbursement checks that Joe writes. In this case, the surety has established: - ANSWER >>>>A. penal sum guarantee. B. dual representation. C. joint control. D. collateral. ANSWER: C XYZ Films is getting ready to shoot a new Western film. As with most film productions, XYZ Films uses a surety bond from ABC Bonds to help protect the distributor's financial investment in the movie. Because of the magnitude of the budget for the film, ABC Bonds has XYZ Films secure a/an _____________ to act as a co- signer. - ANSWER >>>>A. indemnitor B. suretyship C. co-principal D. obligee ANSWER: A Acme Insurance Group agrees to act as a surety to Willis Construction in the development and construction of a new shopping mall. As a condition of the agreement, Acme Insurance