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Texas Insurance Practice Exam
Subrogration may follow which of the following events? - ✔️ ✔️ An insured collects from her insurance company for damages caused by a third party
Medical payments coverage under a BOP applies to expenses incurred by non-insureds for bodily injury and reported to the insurer within: - ✔️ ✔️ One year after the accident
Claims expenses covered under Section II - Personal Liability of the standard Homeowners forms do NOT pay for which of the following? - ✔️ ✔️ Loss of the insured's earnings subject to a pre-determined limit of $300 per day
Which statement best describes "defense" coverage under the Section II - Liability coverage of the Businessowners policy? - ✔️ ✔️ Defense costs are not subject to a limit
Under an aircraft policy what is NOT a covered territory usually covered (unless endorsed) while the aircraft is in flight? - ✔️ ✔️ Costa Rico
Under a standard Equipment Breakdown policy, the full replacement cost will be paid on the claim, if the equipment is repaired within what time period following the loss? - ✔️ ✔️ 24 months
When a licensee in Texas receives an inquiry from the Insurance Department regarding their insurance transactions, he or she must respond in writing: - ✔️ ✔️ Not later than the 15th day after the date the inquiry is received
The sprinkler leakage coverage of a Commercial Property form does not provide coverage for: - ✔️ ✔️ damage to growing crops from malfunctioning sprinklers
Under the appraisal clause in a commercial inland form, which of the following is true? - ✔️ ✔️ the insurer still retains its right to deny the claim entirely
All of the following statements are true regarding state Guaranty Associations, Except: - ✔️ ✔️ The fund assists insurers in gaining new insurance business by allowing them to advertise their membership in the Guaranty Association.
The Personal Inland Marine coverage form that covers clothing, cameras and other portable property worn or carried by tourists and travelers is known as a: - ✔️ ✔️ Personal Effects floater.
Each of the following is a feature of Business Income Coverage, EXCEPT - ✔️ ✔️ Monetary deductibles..
The limits of the Employers' Liability section of a standard workers' compensation policy are: - ✔️ ✔️ Listed on the Information page..
The term "time element coverage" is used when the amount of loss depends on: - ✔️ ✔️ The time it takes to repair, rebuild or restore damaged property.
Under a personal automobile policy with uninsured motorists coverage, a disagreement between an insurance company and an insured on the amount of a loss can be settled by: - ✔️ ✔️ Arbitration
Aaron purchases a Homeowners insurance policy for $700,000 with a 4% deductible. A few months later, a heavy hailstorm destroys his roof, porch, and windows, causing $50,000 in damages. How much should Aaron expect to receive from the insurance company to pay for the damages? - ✔️ ✔️ $22,
A Personal Umbrella policy will cover an insured for an "occurrence" or "offense" that occurs - ✔️ ✔️ Anywhere in the world.
The NAIC Model Unfair Claim Settlement Practice Act provides for a financial penalty of _________ for each violation of the Act. - ✔️ ✔️ $1,
If a building insured under a BOP has been vacant or unoccupied beyond _____ the insurer can send the insured a notice of cancellation. - ✔️ ✔️ 60 days
Risk retention and purchasing groups are used to provide which of the following types of coverage? - ✔️ ✔️ Products Liability insurance..
The Now Company carries a special BOP policy with a liability limit of $500,000. The company is involved in an accident causing $200,000 bodily injury damage and $200,000 property damage. The total amount collectible under the policy is: - ✔️ ✔️ $400,
Which of the following would be covered under an aviation policy? - ✔️ ✔️ A temporary substitute aircraft.
Generally, an employee's average weekly wage is determined in Texas by which of the following computations? - ✔️ ✔️ The employee's wages for the 13 consecutive weeks preceding the injury divided by 13..
All of the following injuries occurring on the job would probably be deemed compensable, EXCEPT - ✔️ ✔️ A cerebral hemorrhage occurring at work and caused from years of high blood pressure.
When must a Texas insurer notify a claimant of either the acceptance or rejection of a claim after receiving all of the requested items, statements, and forms requested from the claimant? - ✔️ ✔️ Not later than the 15th business day.
An insured carries property insurance with a limit of $25,000 and an 80% coinsurance requirement. The covered building, however, is worth $40,000. How much would she collect in the event of a total loss? - ✔️ ✔️ $25,
All of the following items have a special limit of liability for Coverage C of the Homeowners forms, EXCEPT: - ✔️ ✔️ Outdoor furniture.
If a dwelling or commercial building has been without occupants for a significant period of time, but personal property still exists within the dwelling or building, it is considered: - ✔️ ✔️ Unoccupied.
Texas insurance licensees must complete _____ hours of continuing education each reporting period. - ✔️ ✔️ 24.
Which of the following would cover "unattached structures" under a Homeowners policy? - ✔️ ✔️ Coverage B..
Sam the shopkeeper mops the floor of his store and forgets to set the "Caution Wet Floor" sign in the area to warn his customers. Sarah walks through the store a few moments later, slips on the floor and injures her arm and leg. This is an example of: - ✔️ ✔️ A negligent tort.
Coverage A of the HO-2 form would cover which of the following items? - ✔️ ✔️ Paint to be used on the building
A building is insured by three insurance companies to spread coverage on a particular type of hazardous risk. In case of a loss under a Commercial Property policy, the payment of the claim would invoke the pro-rata liability clause which means: - ✔️ ✔️ Each insurer pays in accordance to the percentage its coverage bears to the total amount of insurance in force
Accounts receivable insurance will not pay: - ✔️ ✔️ Amounts owned to the insured but left uncollected because of billing errors.
Katherine lives in Texas. A third-party claim has been filed against her insurance policy by Joe, for an accident in which Katherine was liable. Joe's attorney contacts Katherine's insurance company and makes an initial offer to settle the claim. The insurance company must notify Katherine of the offer, in writing: - ✔️ ✔️ Not later than the 10th day after the date the initial offer was made..
Under which of the following claims settlements are the claim invoices presented and paid with no attempt to obtain a separate release? - ✔️ ✔️ A walk-away release
Failure of a Texas licensee to obtain the required number of continuing education credit hours during the required biennium will result in - ✔️ ✔️ An automatic fine of $50 per credit hour not completed
Under the provisions of the standard BOP policy, 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
When a state is "monopolistic" with workers' compensation coverage, employers in that state are: - ✔️ ✔️ Required to purchase their workers' compensation coverage from the state-funded plan..
The insured is covered under an ISO HO-5 policy. What coverage does the insured have for personal property? - ✔️ ✔️ Open perils
When a covered loss disables the insured watercraft, the standard Watercraft policy provides coverage for "towing and assistance" in the amount of: - ✔️ ✔️ $500 for a single event and $1,000 for the entire policy period..
On March 4, 2007, five people were injured at a department store. The store was negligent. Four of the people were injured very seriously and subsequently filed claims against the store's primary and umbrella polices. But one man whose leg was injured said his injury wasn't too bad, and he didn't file a claim against the store at that time. However, in April of 2008, the man's leg began to bother him, and he had trouble walking. He then saw a doctor and filed a claim for the injury. Since the department store is covered under an occurrence form of commercial umbrella liability policy, which was renewed in 2007, the claim: - ✔️ ✔️ Will be covered by the 2007 Commercial Umbrella Liability policy
The insured carries a yacht policy. One of the crew members is injured while performing a work related task. What coverage must be added under the policy that would respond to cover the crew member's injuries? - ✔️ ✔️ Jones Act (crew coverage)
A crew member has been injured on a ship. When his medical expenses are paid, this is known as - ✔️ ✔️ Cure
All of the following are rating factors used to calculate the premium that will be charged for a personal auto policy, EXCEPT: - ✔️ ✔️ Nationality of the owner.
Under an ocean marine policy, damage to the ship would be covered under what marine coverage? - ✔️ ✔️ Hull Insurance
Department before she will be required to take the state licensing exam again? - ✔️ ✔️ 2 months from the date she passed her state licensing exam..
A contractor in need of a bid bond to obtain a contract is an example of a(n): - ✔️ ✔️ Principal..
What type of insurance is usually provided or subsidized by the state or federal government because it is not ordinarily available from private insurers? - ✔️ ✔️ Residual market insurance
Mr. Thompson carries the minimum auto limits in his state. He drives his car to New York which requires bodily injury limits of $25/50 and a wrongful death limit of $50/ and no fault coverage. If he has an accident in New York what coverage would he have
- ✔️ ✔️ The coverage will automatically be modified to comply with the New York requirements..
Isaac owns a home with an older furnace in need of repair. He leaves his home for a month to avoid the cold weather. He returns to find that the furnace had stopped working. Water pipes have frozen and burst and his property has been damaged. Since the water ran for almost a month, his water bill is extremely high. What will the adjuster pay? - ✔️ ✔️ The water damage
All of the following would be covered under a Builders Risk Policy, EXCEPT: - ✔️ ✔️ Prospective buyer
Which of the following is considered a surety? - ✔️ ✔️ A bond that guarantees the performance of contracts..
A commercial property policy is written to Tom Smith and Jim Jones, d/b/a Smith & Jones Hardware. If the insurer chooses to cancel the policy, the cancelation notice will be mailed to: - ✔️ ✔️ Tom Smith only.
All of the following are criteria for an accident to have occurred "in the course of" the employment under a workers' compensation policy, EXCEPT: - ✔️ ✔️ While performing a task that a fellow worker requested, that was unusual to the employee's job description, but occurred on the employer's premises during working hours. is correct.
Which of the following statements is correct regarding pollution caused by smoke released from an industrial operation covered under the Commercial Property Policy? - ✔️ ✔️ Covered if caused by a covered cause of loss peril.
In the event of a loss under a personal auto policy, an insured is required to submit to the insurance company all of the following information, EXCEPT: - ✔️ ✔️ An appraisal of the damaged property.
A tornado blows over a wall of a barn which, in turn, knocks over a lamp and starts a fire. What is the proximate cause of loss? - ✔️ ✔️ Tornado.
Which of the following statements describes an action that the adjuster cannot take after a claimant has hired an attorney to represent him/her in handing a claim? - ✔️ ✔️ Contact the claimant without the consent of the attorney
All of the following statements are true of liability insurance, EXCEPT: - ✔️ ✔️ Liability insurance provides indemnification for the insured.
Bill Berry was at fault in an automobile accident. Which of the coverages listed would apply to the rental car expense incurred by the other driver while his damaged auto was being repaired? - ✔️ ✔️ Property Damage Liability.
All of the following situations involve misrepresentation, EXCEPT: - ✔️ ✔️ Michael manages an insurance agency and posts the sales numbers of all agents publicly each month, to promote competition..
The NAIC Unfair Claim Settlement Practices Act is intended to cover all of the following types of insurance claims, EXCEPT: - ✔️ ✔️ Boiler & Machinery (Equipment Breakdown) insurance claims..
An insured is covered under a DP-2 broad form Dwelling policy. A water pipe has frozen and burst and the insured has suffered floor and ceiling damage in his two-story home. The cost to remove and replace the walls to get to the pipe is $300. The cost to repair the floor is $400. The pipe that burst must now be replaced with a more expensive option to meet newer building codes. The cost to replace the pipe is $200. How much will the insurer pay? - ✔️ ✔️ $
Which of the following best describes "covered property" under the Equipment Breakdown coverage form? - ✔️ ✔️ Any property that the insured owns or is in the insured's care.
What does the phrase "free on board destination" mean? - ✔️ ✔️ Makes the seller responsible to the buyer until the goods have been delivered as agreed..
Under a liability policy the insurance company will pay damages on behalf of an insured when - ✔️ ✔️ When it is established that the insured is legally liable..
Which of the following is covered under the Commercial Property broad cause of loss form, but is not covered by the basic cause of loss form? - ✔️ ✔️ Weight of ice and snow
All of the following are types of "independent adjusters", EXCEPT: - ✔️ ✔️ A public adjuster
