Insurance Terminology and Concepts, Exams of Property Law

Download Insurance Terminology and Concepts and more Exams Property Law in PDF only on Docsity!

NJ Property Producer Exam Questions with Complete

Solutions.

Dwelling Policy - Correct Answer only insures property DP-1 - Correct Answer Basic Form DP-2 - Correct Answer Broad Form DP-3 - Correct Answer Special Form Dwelling Coverage A - Correct Answer Dwelling- Covers dwelling, structures attached to dwelling, and materials/supplies for the dwelling. Dwelling Coverage B - Correct Answer Other Structures- Insures buildings on premise but separate from the dwelling. Dwelling Coverage C - Correct Answer Personal Property- Covers the insured's personal property and must be requested. If rental property, a tenant's property is not covered. Dwelling Coverage D - Correct Answer Fair Rental Value- Covers insured in the event a covered loss makes the rental portion of a property unfit for normal use. Dwelling Coverage E - Correct Answer Additional Living Expense- Included in DP-2 & DP-3 and pays for additional living expenses the insured incurs after a loss. DP-1 by endorsement. HO-2 - Correct Answer Broad Form. Owner Occupied HO-3 - Correct Answer Special Form. Owner Occupied HO-4 - Correct Answer Tenants or Renters. HO-5 - Correct Answer Comprehensive Form (Open). Covers everything minus named exclusions. HO-6 - Correct Answer Condominium Owners HO-8 - Correct Answer Modified form. For special Risks. Think Antique homes. Mobile Homes - Correct Answer By endorsement to a DP or HO policy. Can be a separate policy. Insures home, other structures (10%) and contents. Personal property - 40% of coverage. Permanent Foundation.

Time Element Coverage Forms - Correct Answer Business Income. Covers loss of income and expenses due to suspension of business following a covered loss. Commercial Package Policy (CPP) - Correct Answer must have at least 2 kinds of coverage. CPP's can't contain: - Correct Answer Workers' Compensation, Life Insurance, Health and Disability Insurance, Certain types of Professional Liability Equipment Breakdown Coverage - Correct Answer NOT a maintenance policy, Designed to cover breakdown, Failure of pressure or vacuum equipment, Mechanical failure (including rupture or bursting caused by centrifugal force), Electrical failure. Business-owners Policy - Correct Answer Similar to CPP, but more for small business owners. Inland Marine - Correct Answer Insurance for property in transit Personal Floaters - Correct Answer for individuals who want to insure their belongings while traveling. Commercial Property Floaters - Correct Answer Protect property that a company does not store at a permanent location. National Flood Insurance Program (NFIP) - Correct Answer Created in 1968 to offer flood insurance to eligible communities. What are the two types of Flood Insurance? - Correct Answer Emergency & Regular Building Limits for Flood Insurance - Correct Answer Emergency: $35, Regular: $250, Contents Limits for Flood Insurance - Correct Answer Emergency: $10, Regular: $100, Commercial Building Limits for Flood Insurance - Correct Answer Emergency: $100, Regular: $500, Business Personal Property for Flood Insurance - Correct Answer Emergency: $100, Regular: $500, How many hours for an Earthquake occurrence? - Correct Answer 168 Hours Insurance - Correct Answer Transfer of risk from a person or a business to an insurer

Insurable Interest - Correct Answer Risk of financial loss Risk - Correct Answer the uncertainty of financial loss Speculative Risk - Correct Answer Chance of loss or gain; Not insurable Pure Risk - Correct Answer Chance of loss only; insurable Hazard - Correct Answer Physical or moral conditions which may create or increase the probability of a loss Physical Hazard - Correct Answer The hazard can be seen Moral Hazard - Correct Answer Dishonesty that intentionally causing a loss is acceptable Morale Hazard - Correct Answer Carelessness Peril - Correct Answer the cause of a loss Direct Loss - Correct Answer Physical Loss Indirect Loss - Correct Answer Consequence of physical loss Proximate Cause - Correct Answer what caused the accident? Deductible - Correct Answer a provision in an insurance policy requiring the insured to pay a flat amount before the insurer will make any benefit payments. Indemnity - Correct Answer Pay for the loss with no gain Actual Cash Value - Correct Answer The cost of repairing or replacing damaged property with other of like kind and quality, less depreciation of the damaged property. Equation for ACV - Correct Answer Replacement Cost - Depreciation = Actual Cash Value Replacement Cost - Correct Answer How much it would cost to replace in today's market Limits of Liability - Correct answer the maximum amount that the insurer will pay in the event of a loss. Coinsurance - Correct Answer Total value of insurance should equal 80% of total value. Accident - Correct Answer an unforeseen. Unintended event.

Occurrence - Correct Answer Accident, including continuous or repeated exposure to the same general harmful conditions. Cancellation - Correct Answer Occurs before the policy's expiration date Pro Rata - Correct Answer Full refund of unearned premium. Insurer cancellation requires advanced notice. Short Rate - Correct Answer Insured Cancellations - no advanced notice. Partial refund or unearned premium. Nonrenewal - Correct Answer Occurs at the expiration date. Insurer must give advanced notice. No advanced notice required by the insured. Vacant - Correct Answer Empty building not containing no people nor contents. Insured penalized after 60 days of vacancy. Occupancy - Correct Answer Contents remain but no people. No loss coverage. Liability - Correct Answer Covers the insured for losses that cause injury or property damage to another person and which the insured is found to be legally responsible. Negligence - Correct Answer Failure to act or not act reasonably Declarations - Correct Answer Who, what, when, where, and how much Insuring Agreement - Correct Answer Promise to pay and perils covered Conditions - Correct Answer Rules for the policy Endorsements - Correct Answer Changes to the original policy Exclusions - Correct Answer Items not covered Named Insured - Correct Answer Listed on the declarations First-named insured - Correct Answer First on the declarations Insured’s - Correct Answer By definition Additional Insured - Correct Answer Added by endorsement Duties of the Insured: Prompt - Correct Answer Notice of claim to the insurer or agent Duties of the Insured: Protect - Correct Answer The property from the further damage

Duties of the Insured: Complete - Correct Answer Detailed proof of loss Duties of the Insured: Make - Correct Answer The property available for inspection by the company Duties of the Insured: Submit - Correct Answer To examination under oath if required Duties of the Insured: Cooperate - Correct Answer With the insurer as required during the claim investigation procedure Liberalization - Correct Answer Extended coverage to insured. No additional premium charged. No action required by insured. Mortgagee Rights - Correct Answer Filing proof of loss if the insured fails to do so. Paying the premium if the insured fails to do so. Proof of Loss - Correct Answer Official inventory of the damages Appraisal - Correct Answer Disagreement on the amount of the loss Appraisal conditions - Correct Answer Company and insured pay their own appraiser. Appraisers get an umpire if they can't agree (cost shared). Agreement of any two of the three determines the amount. Arbitration - Correct Answer Disagreement about other areas of the loss. Nonoccurrence - Correct Answer Two or more policies covering the same property but providing different or non-identical coverage. Primary Insurance - Correct Answer Attaches immediately upon the occurrence or loss Excess coverage - Correct Answer Pays whatever is not paid by the primary policy up to the amount of the loss or excess coverage limit Pro Rate Provision - Correct Answer each insurer's liable for a portion of the loss Assignment - Correct Answer Transfer of rights. Policy cannot be transferred without written consent from the insurer. Subrogation - Correct Answer Insurer has the right to sue an at-fault party for damages the insurer had to pay to the insured. Warranties - Correct Answer Promise Representations - Correct Answer Believed to be true

Concealment - Correct Answer Failure to disclose known facts Binders - Correct Answer Temporary insurance agreement pending execution of the policy contract. Underwriting - Correct Answer Process of evaluating a risk Application - Correct Answer Primary source of underwriting information Fair Credit Reporting Act - Correct Answer a federal law giving an applicant for insurance the right to contact a credit reporting agency doing a credit check and be advised about information that may affect the granting of credit. Paul vs. Virginia - Correct Answer Regulation of the sale and issuance of insurance was up to the state. US vs. South-Eastern Underwriters Association - Correct Answer shifted the balance of regulatory control from the state to the federal government. McCarran-Ferguson Act/Public Law 15 - Correct Answer States had to follow federal law, but regulation was up to the state. Broad powers of Commissioner of the Department of Banking and Insurance - Correct Answer Has the power to conduct investigations, administer oaths, interrogate licensees and others, and issue subpoenas to any licensees or other persons with regards to any investigations, hearings, or other proceedings. Notice and Hearing of the Commissioner - Correct Answer Conducted when there is reason to believe that a person has been engaged in or is engaging in any unfair method of competition or any unfair or deceptive act. Commissioner will give notice to whomever is involved. Penalties from the Commissioner - Correct Answer $5,000 for first offence and up to $10,000 for each subsequent violation. Insurance-Related Conduct - Correct Answer Soliciting, negotiating, or binding policies of insurance Domestic Company - Correct Answer In-state Company Foreign Company - Correct Answer Out-of-state Company Alien Company - Correct Answer Out-of-country Company

Stock Company - Correct Answer Insurer incorporated in accordance with the laws of the state of NJ with its capital divided into shares and owned by its stockholders. Mutual Company - Correct Answer Insurer incorporated in accordance with the laws of NJ without permanent capital stock. Owned by its policyholders. Reinsurance - Correct Answer Transfer of insurance business from one insurer to another. Certificate of authority - Correct Answer Issued by the Commissioner of Banking and Insurance demonstrating the authority of an insurer to transact insurance business in this state. Agent - Correct Answer Insurance producer who is authorized, in writing, by any insurance company to act as its agent to solicit, negotiate, or sell insurance contracts on its behalf or to collect insurance premiums. Broker - Correct Answer Producer who, for a commission, brokerage fee, or other consideration, acts or aids in any manner concerning negotiation, solicitation, or sale of insurance contracts as the representative of an insured or prospective insured. Consultant - Correct Answer Person who, for a fee, commission, or other consideration, acts or holds himself out to the public or any licensee as offering any advice, counsel, opinion, or service with respect to the benefits, advantages, or disadvantages under any policy issued in this state. Producer - Correct Answer must have a license from the Commissioner Requirements for first time Producer: - Correct Answer Properly completed application. Resident must complete educational courses and pass licensing exams. Non-resident must certify that they hold a currently valid license in their home state. Might need to prove wellbeing. Required fees must be paid. Must provide criminal history requests and fingerprinting. Resident Completed Applications contain: - Correct Answer Entity's legal name Business mailing and location address Any other business names Names, any license reference numbers, and license authorities of each licensed officer or partner. Any names, addresses, and license reference numbers of all persons owning 10% or more of the business entity. Responses to questions concerning the applicant's character, fitness, and financial responsibility.

Non-resident Completed Applications Contain: - Correct Answer Currently licensed in another state with good standing. Submitted the proper request for licensure and paid required fees. Whose home state awards nonresidents insurance producer licenses to residents of NJ on the same basis? Pre-Licensing Education Requirements - Correct Answer Property: 20 Hours Casualty: 20 Hours Full 40 Hours. Length of Temporary Work Authority - Correct Answer Expires 60 days after issuance. Contractual relationships of a Company/Producer - Correct Answer Must have valid producer license. Contract shall authorize the producer to act as an agent for the company for all lines of insurance that the company is authorized for in NJ. Contract continues until termination How long does a temporary insurance license last? - Correct Answer 180 days Renewal of License - Correct Answer every 2 years and must submit an application and fee at least 10 days before the expiration date. Fraud Fines - Correct Answer $5,