NJ PSI PROPERTY AND CASUALTY EXAM TEST BANK 2024 | 350+ EXAM QUESTIONS AND CORRECT ANSWERS, Exams of Real Estate Management

Download NJ PSI PROPERTY AND CASUALTY EXAM TEST BANK 2024 | 350+ EXAM QUESTIONS AND CORRECT ANSWERS and more Exams Real Estate Management in PDF only on Docsity! NJ PSI PROPERTY AND CASUALTY EXAM TEST BANK 2024 | 350+ EXAM QUESTIONS AND CORRECT ANSWERS | ALREADY GRADED A+ | LATEST UPDATE The Mobile Home Endorsement of a Homeowners policy affords coverage to mobile homes under the? A. HO-1 (Basic Form) B. HO-2 (Broad Form) C. HO-3 (Special Form) D. HO-2 or HO-3 (Broad and Special) ------CORRECT ANSWER--------------D. HO-2 or HO-3 (Broad and Special) All of the following are eligible for coverage under Homeowners policy except? A. A condominium unit owner. B. A farm owner. C. A mobile home owner. D. A tenant in an apartment building. ------CORRECT ANSWER--------------B. A farm owner. The term Insured Location under Section II of Homeowners policies refers to all of the following except? A. The insured premises. B. Farm land. C. A non-owned premises where an insured temporarily resides. D. A newly-acquired premises. ------CORRECT ANSWER--------------B. Farm land. All of the following would be considered insured's under a Homeowner's policy expect? A. Resident relatives of the insured. B. A non-relative resident under age 21 in the care of the insured. C. The insured's spouse if the spouse lives in the household. D. A non-relative resident over age 21. ------CORRECT ANSWER--------------D. A non- relative resident over age 21. All of the following homeowners policies provide dwelling coverage except? A. HO-2 B. HO-3 C. HO-4 D. HO-1 ------CORRECT ANSWER--------------C. HO-4 Dwelling coverage A includes all of the following except? A. The dwelling. B. The deck on the back of the dwelling. C. A Gazebo. D. Construction materials on the residence premises for use in the repair of the dwelling. ------CORRECT ANSWER--------------C. A Gazebo. Under Homeowners policies, the base deductible applicable to property losses, Section I, is? A. $100 B. $250 C. $500 D. $1000 ------CORRECT ANSWER--------------B. $250 The National Flood Insurance Program (NFIP) is a ________ program? A. State. B. Municipal. C. Federal. D. Worldwide. ------CORRECT ANSWER--------------C. Federal. All of the following are optional coverage's under Homeowners policies except? A. Personal Property Replacement Cost coverage. B. Increased coverage limits from items suck as jewelry, furs, and silverware. C. Loss of Use coverage. D. Earthquake coverage. ------CORRECT ANSWER--------------C. Loss of Use Coverage. Under Section II Additional Coverage's of Homeowners policies, the insurer agrees to pay? A. The costs of defending a claim. B. Premiums on bonds required in a suit. C. Court costs. D. All of the above. ------CORRECT ANSWER--------------D. All of the above. Under Homeowners and other policies, ACV is the abbreviation for which property insurance valuation? A. Approved Coverage Valuation. B. Approximate Cash Value. C. Actual Coverage Valuation. D. Actual Cash Value. ------CORRECT ANSWER--------------D. Actual Cash Value. Under Homeowners and other policies, the definition of the property insurance valuation known as Actual Cash Value (ACV) is? A. Replacement Cost plus a cash payment. B. Replacement Cost minus the cost of new material. C. Replacement Cost minus depreciation. D. Replacement Cost plus market value. ------CORRECT ANSWER--------------C. Replacement Cost minus depreciation. When dealing with jewelry, furs, or silverware, which carry special limits, a producer should advise a client that if the value exceeds the limits specified in the policy, the client should purchase? A. A Scheduled Personal Property Endorsement. B. Less Jewelry. C. A Fine arts Endorsement. D. Another policy. ------CORRECT ANSWER--------------A. A Scheduled Personal Property Endorsement. Under an NFIP Flood policy, the maximum amount of building coverage that can be written on a single family property is? A. $100,000. B. $150,000. C. $200,000. D. $250,000. ------CORRECT ANSWER--------------D. $250,000. Which of the following applies as regards either a Scheduled Personal Property Endorsement or a Personal Articles Floater? A. Fine arts can be covered on either a named perils or a special perils basis. B. The personal property insured on either form is not subject to the policy deductible. C. All personal property must be described and an amount of insurance must be shown for each item. D. All of the above. ------CORRECT ANSWER--------------D. All of the above. Under an NFIP Flood policy, in most cases the waiting period before an increase in the coverage amount can be made effective is? A. 15 days. B. 30 days. C. 45 days. D. 60 days. ------CORRECT ANSWER--------------B. 30 days. All of the following are Additional Coverage's under Homeowners policies except? A. Removal coverage for 30 days. B. Debris removal expense. C. Loss of use. D. Fire department service charges. ------CORRECT ANSWER--------------C. Loss of use. Under Homeowners policies, Medical Payments do not apply to bodily injury to? A. An insured. B. Any person eligible to receive Workers Compensation. C. Any person who regularly resides on the premises. D. All of the above. ------CORRECT ANSWER--------------D. All of the above. Under homeowners policies, theft coverage does not cover theft? A. Committed by the insured. B. Any person eligible to receive Workers Compensation. C. Any person who regularly resides on the premises. D. All of the above. ------CORRECT ANSWER--------------D. All of the above. under an NFIP Flood policy, the maximum amount of personal property coverage that can be written on a single family property is? A. $50,000. B. $75,000. C. $100,000. D. $150,000. ------CORRECT ANSWER--------------C. $100,000. Under an NFIP Flood policy, producers may issue blinders to effect flood coverage for? A. $50,000. B. $100,000. C. $250,000. D. producers may not issue binders to effect flood coverage. ------CORRECT ANSWER- -------------D. Producers may not issue binders to effect flood coverage. In property insurance, insurable interest must exist at the/ A. Inception of the policy. B. Time of the premium payment. C. Time of the application. D. Time of the loss. ------CORRECT ANSWER--------------D. Time of the loss. Property Insurance Basics All of the following may be listed as an insured on a property policy, except: A . mortgagee listed as an additional insured B. The policyowner C. A business with temporary custody of the insured property D. A named insured's legal representative ------CORRECT ANSWER----------------C under no benefit to bailee remember 3 C's, care,custody, control of an insured's property does NOT benefit from claim, payment and cannot be named on policy Property Insurance Basics- listed on a property policy ------CORRECT ANSWER-----------------mortgagees -loss payees -legal insured Property Insurance Basics- when you think of liability think of money going to the ------CORRECT ANSWER----------- -----third party Casualty (liability) insurance basics Property damage covered by a liability policy includes which of the following? A Damage to property owned by, or leased to, the insured B Damage to tangible property belonging to a third party, including loss of use of that property, caused by the insured's negligence C Damage to the insured's products arising out of the products D Damage to property of others in the insured's care, custody, or control that results from a criminal wrong ------CORRECT ANSWER----------------B Casualty Basics what does a liability policy cover ------CORRECT ANSWER----------------medical and legal fees if you're held legally responsible for someone else's injury, or damage to someone else's property.--including loss of use of that property caused by acts of the insured casualty basics what are supplementary payments ------CORRECT ANSWER----------------payments that the insurer makes to the insured for costs to resolve claims or investigate casualty basics: explain the order of limits #/#/# ------CORRECT ANSWER----------------per person, per occurence, aggregate limit casualty basics: what does it mean when something is so inherently dangerous that negligence cannot be defend the insured who is liable- example d's child plays with H's venomous snake at neighbors. ------CORRECT ANSWER----------------Absolute Liability (strict liability-party is liable even when no negligent act is committed) even though H is not being negligent they are still legally liable Causality Basics- what are the 4 elements of negligence ------CORRECT ANSWER-----------------duty owed to a third party -breach of that duty (breach when a persons conduct fails to meet a standard of care, example failing to look at traffic signals breaches the duty to drive safely ) -wrongful act was the direct cause -forseeable consequence casualty basics: gross negligence and intentional torts are excluded from the liability policy, ------ CORRECT ANSWER----------------gross negligence- the act of not caring at all intentional torts- premeditated or planned and harm another person negligence vs gross negligence ------CORRECT ANSWER----------------gross negligence- running a red light while also driving under the influence negligence- running a red light tort vs unintentional tort ------CORRECT ANSWER----------------wrongful civil act not including criminal act or breach of contract that violates a duty or right of another unintentional tort (negligence)- not caused by a delibertate act but is the result of the failure to act as a reasonable or prudent person would gross negligence vs negligence ------CORRECT ANSWER----------------negligence is an unintentional tort Casuality Basics: Which of the following defenses against negligence reduces damages in proportion to the degree of negligence? A Statute of limitations B Assumption of risk C Comparative negligence D Contributory negligence ------CORRECT ANSWER----------------C casualty basics: personal injury liability includes which of the following: A Libel and slander B Sickness and disease C Theft D Medical payments it is injury other than bodily injury or property damage ------CORRECT ANSWER---------- ------A personal injury includes, libel, slander, false arrest, invasion of privary and copy infringment casualty basics: what are punitive damages Punitive damages are so limited as to be punitive toward the plaintiff B Punitive damages are assessed in addition to specific damages and are typically covered by insurance policies C Punitive damages are assessed as a punishment for extremely objectionable conduct by a negligent party D Punitive damages are limited to disfigurement and mental anguish ------CORRECT ANSWER----------------C what is a component of a rate ------CORRECT ANSWER----------------loss reserves, loss adjusting expenses, operating expenses, profits ambiguous wording on an insurance contract would be most helpful towards ------ CORRECT ANSWER----------------the insured Which HO form covers damage to the DWELLING that occurs as the result of any event that is not specifically excluded in the polic ------CORRECT ANSWER----------------HO-3 Special Form Coverage for the home and other structures is written on an all-risk basis - damage from any peril is covered, unless specifically excluded. Broad coverages extends to dwelling A temporary license may be issued without state examination to all of the following EXCEPT ------CORRECT ANSWER----------------A prospective producer who is currently enrolled in a pre-licensing insurance class Garage liability insurance ------CORRECT ANSWER----------------offers financial protection against lawsuits for those who sell, store, and service vehicles. This includes auto dealers, service stations, and parking garage What is the term if the buyer of an insurance policy receives any part of the producers commission or anything else of significant values as an inducement to purchase a policy. ------CORRECT ANSWER----------------rebating which of the following would be a component of a rate?a) service bureausb) loss costsc) dividendsd) ratification ------CORRECT ANSWER----------------b the dwelling policy endorsement coverage M-Medical Payment to Others pays for ... EXCEPT one that is caused bya) a fight with the insuredb) conditions on the insured's locationc) the activities of the insuredd) an animal in the insured's car ------CORRECT ANSWER----------------a on a dwelling policy, what percentage of the coverage C - Personal property .. A 5% b) 10%. c) 20%. d) 50% ------CORRECT ANSWER----------------b A customer at a local deli trips over a folded rug while entering the establishment. This would be considered what type of business liability? a)products exposure b)completed operations exposure c)operations exposure d)premises exposure ------CORRECT ANSWER----------------D Which endorsement can an insured add to their business automobile policy to cover the owner of the leased vehicle?a) miscellaneous vehicle endorsementb) drive other car coverage endorsementc) additional insured-lessor endorsementd) individual named insured endorsement ------CORRECT ANSWER----------------additional insured lessor replacement cost coverage under the homeowners forms applies if a dwelling ...a) 50%b) 60%c) 80%d) 90% ------CORRECT ANSWER----------------80% the application that is made with facts that are believed to be true without doubt are called ------CORRECT ANSWER----------------warranties which of the following water damage losses are not covered by a dwelling policy special form -flood water -leaky sprinkler heads -broken water pipes -appliance overflow ------CORRECT ANSWER----------------flood water - leaky sprinkler head is covered and overflowing of appliances, broken pipes covered which endorsement is used to eliminate depreciation on the settlement of your personal property ------CORRECT ANSWER----------------personal property replacement cost- will pay to replace without any deduction while driving on a country road an insured individual hits a deer that ran infront of the car a. specified cause of loss b. collision coverage c. comprehensive coverage d. liability insurance ------CORRECT ANSWER----------------comprehensive which coverage would a condominium owner purchase ------CORRECT ANSWER-------- --------HO-6 FORK LIFT is a mobile endorsement ------CORRECT ANSWER---------------- the standard deductible under the businessowners policy (BOP) is $500 and applies to which of the following a. fire department service charge b. business personal property c. civil authority d. extra expense ------CORRECT ANSWER----------------b personal property Optional Coverages in a BOP insured can cover ------CORRECT ANSWER----------------outdoor signs; money & securities; employee dishonesty and equipment breakdown. In order for coverage to apply MUST be shown in the Declarations. BOP SECTION I ------CORRECT ANSWER----------------employee dishonesty; equipment breakdown; money & securities; outdoor signs; vacancy. Businessowners Section II - Liability c. Intentional tort d. Unintentional tort ------CORRECT ANSWER----------------c 10. Under a Commercial Package policy (CPP) the first named insured possess all of the following responsibilities EXCEPT a. canceling the policy in writing b. Requesting changes of the limits of the policy c. Submitting surveys of the insured business to the insurer d. Receiving any return premiums ------CORRECT ANSWER----------------c 2. An individual purchases a vehicle and financed it though his credit union. Which party does NOT have an insurance interest? a. The owner b. The insurer c. The title holder d. The credit union ------CORRECT ANSWER----------------The insurer coverage D of the farm property provides additional coverage for which of the following a. Poultry and livestock incidental to farm use b. Growing crops beyond 250 feet of the covered residence c Living expenses for the loss of use of living quarters in residence premises d. Barns or farm outbuildings or structures other than private garages that are used primarily for farming purposes ------CORRECT ANSWER----------------c 1. Under a dwelling policy, which coverage part insures buildings on the premises that are connected to the dwelling only by a fence?a. Coverage Ab. Coverage Bc. Coverage Cd. Coverage D ------CORRECT ANSWER----------------coverage B 1. What type of liability is based on a product being unreasonable dangerous?a. Generalb. Strictc. Contractuald. Negligence ------CORRECT ANSWER----------------strict also known as absolute liability where its so dangerous youre at fault anyway (playing w venomous snake) 1. Which type of insurance protection guarantees protection against legal liability from any risk arising from the ownership, maintenance, or use a. Errors and omission insurance b. Professional liability c. Employment related practices liability d. Commercial general liability ------CORRECT ANSWER----------------b 1. In PA, what is the minimum amount required for damages for liability to cover motor vehicles accidents? a. 5K,10K,3K b. 10K, 20K, 5K c. 15K, 30K, 5K d. 25K, 50K, 10K ------CORRECT ANSWER----------------c 1. Under an equipment breakdown coverage form, a breakdown would include a. Wear and tear b. Leakage of valves c. Explosion of a pressure vessel d. Failure of a safety device ------CORRECT ANSWER----------------explosion of a power vessel. EQUIPMENT BREAKDOWN- sudden and accidental breakdowns of covered machinery and equipment, which can include pressure vessels. 1. Which of the following benefits are not paid under workers comp laws a. Medical b. Rehab c. Pain and suffering d. Disability income ------CORRECT ANSWER----------------c workers compensation covers the following ------CORRECT ANSWER----------------- survivor benefits -death and survivor benefits -rehabilitation -medical benefits unlimited IF THEY ARE IN JAIL NO THEY DONT GET WC 1. What is the effect on a personal automobile policy in PA, if an insured switches from a $250 deductible for a $500 deductible a. The physical damage premium is reduced b. The physical damge limits are increased c. There is no deduction for depreciation when losses are settled d. The policy no longer satisfies the commonwealths financial reposibility law ------ CORRECT ANSWER----------------physical damage premium is reduced the builders risk coverage form will not cover which of the following a. fixtures attached to the completed structure b. service equipment c. roof antenna D. building material within 100 feet ------CORRECT ANSWER----------------antenna A builders risk coverage form provides protection against losses on the building, equipment, and supplies, but not to accidents on the job, the land, scaffolding, and theft. The policy does not cover war, nuclear hazards, extreme weather, or government seizure. 1. Which of the following is covered under the builders risk forma. A contractors pick up truck b. A contactors tools c. A sig on the property advertising a contractors work d. Lumber stored on site to be used in framing ------CORRECT ANSWER----------------b 1. The coverage that covers beyond the expiration of a liability policy written on a claims made basis is referred to as a. Extension coverage b. Umbrella coverage c. Extended reporting periods ------CORRECT ANSWER----------------c The main purpose of the Nationwide Maritime Definition is to a. Define the categories of risk for which underwriters can write coverages b. Describe the imports that are allowed to be sold and delivered c. Allow producers to customize coverage for a variety of perils d. Define the insurable interest of shippers ------CORRECT ANSWER----------------a 1. A producer who offers a potential insured $50 from their commission as an incentive to buy insurance is guilty of a. Coercion b. Inducement c. Redlining d. Twisting ------CORRECT ANSWER----------------b 1. Falsifying the terms benefits advantages or conditions of an insurance policy is an example of the following a. Forgery b. Coercion c. Concealment d. Misrepresentation ------CORRECT ANSWER----------------d 1. The national flood insurance program policies cover a. Property against all from a flood b. Water damage caused by a burst pipe c. Sewer back up into a dwelling d. Loss of use ------CORRECT ANSWER----------------A 1. The PA insurance department is responsible for which of the following except a. Insurers b. Producers c. Shareholders d. Form approvals ------CORRECT ANSWER----------------shareholders 1. When the commissioner believes a producer is violated an insurance law the commissioner has the authority to a. Terminate the producer's appointment b. Cancel the producer's fiduciary responsibility c. Issue a cease and desist order against the producer after a hearing d. Increase the producers continuing education ------CORRECT ANSWER----------------c 1. A commercial general policy occurrence form covers claims that only a. Occur within the policy period b. Occur outside the policy period c. Are reported within the policy period d. Are settled within the policy period ------CORRECT ANSWER----------------occur within policy period 1. Which of the following would be a specific duty of the insurer in a liability policy? a. Reporting a loss b. Subrogation of a loss c. Providing a legal defense d. Protecting property from further loss ------CORRECT ANSWER----------------C providing legal defense 1. Which type of authority is not granted in the contract, but a producer is assumed to have in order to conduct ------CORRECT ANSWER----------------implied 1. Leah provides transportation for her client to their business lunch. Leah's client closes the car door on her own hand. What type of coverage applies a. Physical damage b. Liability c. Medical Payments d. Health Insurance ------CORRECT ANSWER----------------c 1. All of the following are considered covered under vehicle under a personal automobile policy except a. Private passenger vehicle acquired during the policy period b. Vehicle listed in the delcarations c. Trailer owned by the insured d. Motorcycle ------CORRECT ANSWER----------------D 1. Lightning strikes a house and causes a fire. The fire department extinguished the fire which results in water damage. The water damage represents which type of loss. a. Direct b. Excluded c. Indirect d. Residual ------CORRECT ANSWER----------------C 1. Which of the following is not covered under supplementary payment coverage of the liability section of the personal automobile policy? a. Bail Bonds b. Post judement interest c. Rental costs d. Appeal bonds ------CORRECT ANSWER----------------c 1. After the hearing, the insurance commissioner has determined a licensee has committed a violation of PA insurance laws what can the insurance commissioner do? a. Impose an administrative penalty b. Suspend the licensees premium accounts c. Immediately terminate insurer appointments d. Sentence the licensee up to 30 days in jail ------CORRECT ANSWER----------------a 1. Which of the following situations is excluded in the homeowner's policy? a. Hitting a swimmer with a sailboat under 26 feet b. Running over the neighbors fence in a fit of rage c. Breaking a neighbors window while playing basketball d. Accidentally hitting another golfer in the head with a ball while golfing ------CORRECT ANSWER----------------b Which of the following is in the common policy declaration of commercial package policy? a. A list of perils insured against b. A description of the business being covered c. The circumstances under which the policy may be canceled d. Conditions specifying the insureds duties following a loss ------CORRECT ANSWER----------------b 1. According to the PA assigned risk plan, all the following statements are true except a. All motor vehicle liability insurers shall subscribe and participate in the plan b. The rates for the plan shall not be inadequate excessive or unfair c. The plan may provide the transfer of individuals into the ordinary market at high rates d. The program was established to provide motor vehicle liability insurance for those who are entitles but unable to procure insurance through ordinary methods ------ CORRECT ANSWER----------------c a. The entire loss will be paid b. One half of the loss will be paid c. No portion of the loss will be paid d. Only a proportion of the loss will be paid ------CORRECT ANSWER----------------d 1. In PA commercial property and casualty risk insurance does not included which of the following a. Aviation b. Mortgage guaranty c. Surety and fidelity d. Owner occupied private residential property ------CORRECT ANSWER----------------A 1. Which terms describes a PA corporation whose primary activity consists of assuming and spreading all, or any portion of that liability exposure to its group membersa. High risk poolb. Admitted insurerc. Non admitted insurerd. ------CORRECT ANSWER----------- -----RRG 1. If a named insured elects the limited tort option in PA, the insured can seek recovery for pain and suffering for other non-monetary damages for all of the following scenarios except. If the at fault driver a. Causes the insured to sustain serious injury b. Has automobile policy limits greater than 500k c. Is operating a motor vehicle registered in another stated. Is convicted of driving under the influence of alcohol in the accident ------CORRECT ANSWER----------------Causes the insured to sustain serious injury 1. Which type of insurance policy is characterized by the identification of several items, each with its own description and limit? a. Specific b. Blanket c. Scheduled d. Lump sum ------CORRECT ANSWER----------------specific 1. Dwelling and Homeowners policies exclude coverage for a. Flood b. Debris removal c. Fire department chaged. d.Property removed to protect it from covered peril ------CORRECT ANSWER-------------- --flood 1. An insurance producer may NOT withdraw funds from a premium trust account to a. Pay premium to insurance b. Pay claims to an insured c. Return deposits to insureds d. Return premiums to an insured ------CORRECT ANSWER----------------pay claims to an insured 1. What is a benefit of a commercial package policy? a. To extend the policy limits b. To add more than 100 vehicles c. To allow for more additional insureds d. To replace the need for multiple policies ------CORRECT ANSWER----------------d . What coverage part in a homeowner's policy includes building materials on the premises used to repair the covered property? a. Dwelling b. Loss of use c. Other structures d. Personal property ------CORRECT ANSWER----------------a 1. The entity that has the power to revoke an insurance license is the a. Attorney general b. Insurance company c. Insurance commissioner d. National Association of Insurance Commissioners ------CORRECT ANSWER----------- -----c Which of the following example of a loss covered by collision coverage under a business auto policy a. Hitting a bird b. Hitting a tree c. A falling rock d. Breakage of glass ------CORRECT ANSWER----------------B 1. What type of property does an insured suffer if they do not carry sufficient if they don't NOT carry sufficient property insurance to meet the policy requirements? a. Coinsurance b. Excess c. Cancellation d. Loss payable ------CORRECT ANSWER----------------coinsurance 1. A deliberate lie by an insured to the insurer to obtain a lower premium is an example of a. Fraud b. Estoppel c. A warranty d. Concealment ------CORRECT ANSWER----------------a 1. Under the building and business personal property coverage form, in addition to the building itself building coverage includes which of the following a. Money b. Motor vehicle c. Patio furniture d. Unattached sign ------CORRECT ANSWER----------------patio furniture no deductible ------CORRECT ANSWER----------------Fire Department Service Charge Fire Extinguisher Systems Recharge Expense Business Income Extra Expense Civil Authority 1. What is the purpose of difference in conditions insurance on a commercial policy? a. Provides named perils coverage to fill gaps b. Provides personal injury liability coverage c. Provides catastrophic liability coverage d. Provides broad coverage to fill gaps ------CORRECT ANSWER----------------a 1. If a claims mobile insurance policy is cancelled in PA, the insurer must offer the insured the option to purchase an extended reporting coverage endorsement under which of the following conditions a. At the time of application b. At the time of policy delivery c. Within 30 days of cancellation or nonrenewal d. Within 60 days of cancellation or non-renewal ------CORRECT ANSWER---------------- d 1. According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss?A. 30 daysB. 60 daysC. 90 daysD. 120 days ------CORRECT ANSWER----------------60 1. Ro/ro ships are used to transport: a. Motor vehicles b. Containerized cargo c. Coal, grain, phosphates, and other "loose" cargo d. Break-bulk cargo ------CORRECT ANSWER----------------motor vehicles 1. Who provides and sells coverage under a FAIR plan? ------CORRECT ANSWER------ ----------private insurance companies 1. In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called: a. Self-insured retention b. Stop loss c. Coinsurance d. Participation requirement ------CORRECT ANSWER----------------a 1. What is the limit for the forgery or altercation coverage in the businessowners policy? ------CORRECT ANSWER----------------2500 . Covered under miscellaneous automobile? ------CORRECT ANSWER---------------- golfcarts a policy with an 80% coinsurance clause protects a building at 100k. the insured carrier is 85k for coverage and a 30k loss covered. how much will the insurer pay?1. 15k2. 24k3. 26k ------CORRECT ANSWER----------------24k farm coverage G ------CORRECT ANSWER----------------barns and other structures for a contract to be valid it must ------CORRECT ANSWER----------------must include offer and acceptance which statement is true regarding the motor carrier act of 1980? 1. the required liability are divided into 4 categories.... 2. vehicles subject to the motor carrier act of 1980 must provide limits of 500k 3. vehicles subject to the motor carrier act of 1980 must provide limits of 700k 4. it required trucking companies to certify that they are able to meet... ------CORRECT ANSWER----------------4 . According to the PA law, upon notification of a claim an insurer must acknowledge receipt within ------CORRECT ANSWER----------------10 working days Differences in conditions policy are usually written on ? ------CORRECT ANSWER-------- --------large risks with unusual exposure a commercial inland marine coverage form for valuable papers does not cover ------ CORRECT ANSWER----------------securities a binder for a new homeowner policy must include all of the following except?1. a paid reciept for full amount of premium 2. the name and address of lender 3. a provision regarding the cancellation of a binder 4. a descriptin of the insured residential property ------CORRECT ANSWER---------------- 1- a binder is temporary therefore there will be no receipt of payment The issuer that assumes some of all the potential costs of the potential costs of insured loss exposures of the primary insurer is: ------CORRECT ANSWER---------------- Reinsurer all of the following are examples of loss exposure? ------CORRECT ANSWER-------------- --completed operations an individual is shopping at the local supermarket and slips on a wet floor .the supermarkets GLP will cover payments except:1. first aid2. loss wages3. dental expenses4. ambulance service ------CORRECT ANSWER----------------loss wages what does the fair credit reporting act give the consumer the right to do ? deny the insurer access to their credit report ------CORRECT ANSWER----------------deny insurer access to their credit report fair credit reporting act ------CORRECT ANSWER----------------protects consumer right to privacy of credit and financial info which of the following types of policies would cover a chief executive for suits by stockholders directors and officer insurance ------CORRECT ANSWER----------------directors and officer insurance an example of the insured consideration is? ------CORRECT ANSWER----------------paid premium O B. lost employee wages. O C. employers liability. 0 D. employee theft. ------CORRECT ANSWER----------------employers liability Which of the following is NOT part of the Common Policy Conditions under a Businessowners Policy (BOP)? D. Premium payment. ------CORRECT ANSWER----------------premium payment 1. The commercial inland marine conditions form, when attracted to the commercial inland marine coverage provides which of the followinga. The insureds party's duties in the event of a lossb. Transportation and communication coveragec. Natural disaster coveraged. Warranty of property packed cargo ------CORRECT ANSWER----------------b transportation and communication extended non owned coverage ------CORRECT ANSWER----------------Extended non- owned coverage is an add-on to a driver's personal car insurance policy that extends liability and medical payments insurance to a company car. 1. A contract in which only one party - the insurer - makes an enforceable promise is said to be -------CORRECT ANSWER--------------A- Quotation B- Unilateral C- A contract of Indemnity D- A contract of Adhesion B- Unilateral An insurance policy is considered to be unilateral, since only one party to the contract, the insurance company, makes an enforceable promise. 2. An insurer whose main home office is domiciled in the state where they write business is known as a -------CORRECT ANSWER--------------A- Alien Insurer B- Foreign Insurer C- Surplus Lines Insurer D- Domestic Insurer D- Domestic Insurer A Domestic insurer is one whose main home office is located in the state they are doing business. A Surplus Lines insurer could be a domestic carrier but the best answer choice is D. 3. All of the following are true regarding the Assigned Risk Plan for Workers Compensation in New Jersey, Except -------CORRECT ANSWER--------------A. It's a method for employers to obtain Workers Compensation insurance when they are having difficulty in the normal marketplace B. If an employer is unable to obtain coverage in the normal marketplace, the state will assign an insurer to write the risk C. The plan approves the rate structures used by all insurers writing workers compensation coverage in the state. D. All admitted carriers writing workers compensation insurance in the state must belong to the plan C- The Assigned Risk Plan is NOT involved in approving rating plans of the various insurers in the state. The other choices are all correct 4. Which of the following is true regarding coverage for a domestic employee for workers compensation in New Jersey? -------CORRECT ANSWER--------------A. The assigned risk plan for workers compensation in new jersey would provide the coverage automatically B. Domestic employees are exempt from coverage C. Coverage must be provided by the homeowners policy if the injured is to a resident or hired domestic servant in the home D. The employer must buy workers compensation insurance on the domestic employee C- If a domestic servant is injured while working in the home, the homeowners insurance for the employer must provide the workers compensation coverage for the domestic employee 5. Vacancy on the BOP can eliminate certain perils -------CORRECT ANSWER------------ --A. After 60 Days If the premises have been vacant for over 60 days, many important perils (such as glass breakage, vandalism, and theft) will be excluded. 6. An insurer's shared participation percentage in the Urban Enterprise Zone (UEZ)program is based on: -------CORRECT ANSWER--------------A. The number of written policies in the urban enterprise zone. B. The discretion of the commissioner of insurance C. The number of years operating in the state D. the financial size of the insurer. A- The insurer's participation percentage in the UEZ program is based on the number of policies the insurer has in force in that urban enterprise zone. 7. The minimum limits of a basic automobile liability insurance required by the state of New Jersey is: -------CORRECT ANSWER--------------A. 20/40/10 B. 25/50/25 C. 12.5/ 25/ 7.5 D. $15,000 of PIP and $5,000 of PDL D- By state law, the basic auto policy must contain PIP coverage and an optional $5,000 for property damage liability. 8. The Commissioner may suspend, revoke, refuse to renew, or refuse to issue a license. Prior to the revocation or denial of a license, the Commissioner must provide to Surplus Lines companies can charge whatever they want and their policies can say whatever they want. They are NOT authorized to do business in the state and therefore not subject to state approved policy forms, rules and rates. 14. Making any misrepresentation or incomplete comparison of policies to any person for the purpose of inducing that person to lapse a current policy best describes ------- CORRECT ANSWER--------------A. coercion. B. false advertising. C. rebating. D. misrepresentation. D- State law defines Unfair insurance trade practices as inducement to lapse a policy based upon misrepresentation of the terms of that contract. 15. In liability insurance, paying defense costs and expenses in a suit brought against the insured is a contractual obligation known as the -------CORRECT ANSWER------------ --A. Doctrine of Estoppel. B. Doctrine of Adhesion. C. Duty to Defend. D. Indemnification principle. C- Duty to defend The insurer's contractual obligation and duty to defend the insured in a liability lawsuit and pay all of the costs of the defense regardless of the outcome of the lawsuit is the core of liability protection. Without that, an insured could go bankrupt paying defense costs even if found not to be negligent in the lawsuit. 16. What is NOT a requirement of the Fair Credit Reporting Act? -------CORRECT ANSWER--------------A. Contact information of the suppliers of information must be made available to the consumer. B. The consumer can decide if the report will be used for underwriting purposes. C. Permission is needed prior to running the reports. D. Insurance companies using information contained on reports must inform the consumer by written statement of its intended use. B- The consumer does not have the right to decide if the information on the report will be used or not in the underwriting process. That is up to the insurer. 17. What statement concerning the Dwelling Property Special Form (DP-3) is NOT true? -------CORRECT ANSWER--------------A. The insured may apply 10% of the "Coverage A" amount for farm property. B. An extension of 10% of the contents limit is provided while property is off the premises. C. The insured may apply 10% of the "Coverage A" amount for a detached garage. D. The insured may apply 20% of the "Coverage A" amount for rental income. A- Up to 10% of the dwelling amount may be applied to a detached garage and 20% toward rental value. Contents off the premises are covered up to 10% of the contents limit. There is no coverage under the dwelling policy for farms; that is better covered with other forms. 18. Which of the following is NOT required to be licensed in the State of New Jersey? --- ----CORRECT ANSWER--------------A. A person helping enroll a group benefit program. B. A CSR binding coverage for a client C. A person transacting the business of insurance D. A person selling auto insurance A- Someone performing clerical duties in helping enroll a group benefit program is not required to be licensed in New Jersey. The other three are all performing insurance transactions and must be licensed. 19. The most common co-insurance percentage amount that appears in a property contract is -------CORRECT ANSWER--------------A. 80% B. 60% C. 90% D. 75% A- 80% Co-insurance requirements are usually offered as 70, 80, 90, or 100 percentage amounts, with 80% being the most commonly chosen. 20. What insurance policy clause best illustrates the principle of indemnity? ------- CORRECT ANSWER--------------A. Inspection and Audit B. Other Insurance C. Liberalization D. Cancellation B- Other Insurance Under the "Other Insurance Clause," if more than one carrier is involved in insuring the property, each carrier is responsible for its share of claims equal to its share of the total insurance. This way, the customer cannot collect the total claim amount from more than one carrier. After each carrier has paid its share of the loss, the insured has been indemnified for the actual loss only. 21. A driver swerves to avoid a pedestrian and strikes a parked auto. The proximate cause of this loss would involve the -------CORRECT ANSWER--------------A. driver's auto. B. parked auto. C. none of the choices presented D. pedestrian. D- Pedestrian A proximate cause is an "unbroken chain of events." The pedestrian caused you to swerve, which in turn caused you to hit the parked car. D. the agent may request an appeal of the ruling. C- Obviously, if the agent's license is revoked by the Department of Insurance, all insurer appointments held by the agent are also canceled. 28. Interstate trucking operations are required to carry minimum liability limits based on what is being transported. Which of the following is required to prove the required limits are in force? -------CORRECT ANSWER--------------A. SR-22 B. BAP-90 endorsement C. MCS-90 endorsement D. Motor Carrier policy C- The MCS 90 endorsement to the Motor Carrier/Truckers form will provide proof to the state and federal highway department that the required minimum liability limits are in force based on what is being transported. 29. A surplus lines carrier is normally -------CORRECT ANSWER--------------A. a qualified domestic insurance company. B. an agent of a foreign insurance company licensed in this state. C. an agent of a qualified domestic insurance company. D. free from state regulation in the area of rates and policy forms. D- Free from state regulation A surplus lines company is usually not authorized to do business in the state, so it is not under state regulation when it comes to rates and policy forms. 30. Contents are covered anywhere in the world unless they are regularly or permanently located in another residence. If so, what is the limit of coverage on those items regularly off the premises? -------CORRECT ANSWER--------------A. 25% of the Coverage C limit B. 10% of the Coverage C limit C. 75% of the Coverage C limit D. 50% of the Coverage C limit B- Although the homeowners form extends coverage to contents anywhere in the world, there is a 10% limit of Coverage C on anything regularly or permanently off the premises or $1,000 whichever is greater. 31. Larry just bought his first home - a cheap fixer-upper in a town where the average snowfall exceeds 80 inches per year. It may be an old house in a rundown neighborhood, but he still wants to protect his initial investment. What is the cheapest policy option that would protect Larry's financial interest in his home, even in the winters? -------CORRECT ANSWER--------------A.HO-4 B.HO-2 C.HO-5 D.HO-3 B- HO-2 The question is asking which policy form would be the cheapest. The HO-2 is a named peril broad form policy which would be cheaper than the all risk HO-3 or HO-5. The HO- 4 would not provide any coverage for the building. 32. St. Mark's church is having their annual pancake breakfast. The pastor is concerned if someone is injured while donating their time to serve guests. Which of the following, if any, will be necessary for the Workers Compensation coverage for the church to apply? -------CORRECT ANSWER--------------A. Make sure the Volunteer Coverage endorsement is added to the Workers Compensation policy. B.Make sure these volunteers do not work more than 6 hours. C. Hire these volunteer people for the day as employees. D. Make sure these volunteers sign a waiver a liability before the event begins. A- Although the attorney for the church would like to see the waiver signed by all volunteers, the Voluntary Coverage endorsement would cover these people if hurt while serving the breakfast 33. A robbery is best defined as -------CORRECT ANSWER--------------A. a mysterious disappearance of property. B. visible signs of a forced entry or exit. C. stealing. D. taking of property by threat of bodily harm. D- Taking Property by threat or bodily harm. Robbery is taking property by threatening someone with bodily harm. 34. Loss Prevention service is a feature on Equipment Breakdown Coverage which includes all of the following EXCEPT -------CORRECT ANSWER--------------A.direct notice of cancellation. B.no advance notice/inspection. C.red tagging. D.suspension of coverage. A- Equipment Breakdown Coverage is an older type of coverage, but has been expanded to cover various mechanical devices. A direct notice of cancellation is not a loss prevention service. 35. Toni's policy states that it will provide a $100,000 liability limit per -------CORRECT ANSWER--------------A. aggregate limit. B. occurrence limit. C. combined D. single limit. per person limit. C- Combined Single Limit 42. Someone breaks down the door to a store and steals merchandise. This loss is related to the peril of -------CORRECT ANSWER--------------A.embezzlement. B.barratry. C.burglary. D.robbery. C- Burglary is the taking of property through visibly forced entry or exit. 43. What is NOT true about insurable risks? -------CORRECT ANSWER--------------A. The loss must not be catastrophic B. The loss must not be definite and definable C. The loss must be large enough to create economic hardship D. The law of large numbers should apply B- The loss must not be definite and definable Just the opposite is true. In order to be insurable, losses must be definite and definable. 44. Insurers must be able to predict with reasonable accuracy the number and the amounts of losses they can expect. This is the principle of -------CORRECT ANSWER--- -----------A. Indemnity. B. Adhesion. C. Utmost Good Faith. D. Law of Large Numbers. D- The law of large numbers Insurers need to collect from a large number of people to pay for the claims of a few people. The larger the number of risks insured the more accurate the claim predications become. This is the basis of the Law of Large Numbers. 45. The Commissioner of Insurance does NOT have the authority to -------CORRECT ANSWER--------------A.request the attorney general to commence an action for a declaratory judgment in a case in which there is no administrative procedure available to the Commissioner to resolve an issue. B.administer oaths, summon and compel by order, or subpoena the attendance of a witness to testify. C.terminate an agent's license for failure to meet the company's minimum production requirements. D.initiate criminal proceedings by presenting evidence of any criminal offense. C- B, C, and D are all regulatory powers of the Commissioner of Insurance. It is up to each insurer to regulate the production of its agency staff. 46. What statement is true concerning the homeowners policy coverage for your 200- horsepower motorboat? -------CORRECT ANSWER--------------A. There is $1,500 property coverage and no liability coverage. B.There is no property coverage and limited liability coverage. C.There is full property and liability coverage. D.There is no property or liability coverage. A- The homeowners policy will pay up to $1,500 for physical damage to any watercraft, but liability caused by the boat is excluded if it is an outboard motorboat with more than 25 horsepower or an inboard motorboat over 50 horsepower. 47. A statement that can be relied on all of the time is called a(n) -------CORRECT ANSWER--------------A. warranty. B. representation. C. implied response. D. all of the choices presented A- Warranty A warranty is an absolute, literal fact that can be relied on all of the time. 48. Leroy became a licensed property and casualty agent on August 22, 2013. Assuming his birthday is in August, when must he have his 24 hours of continuing education completed? -------CORRECT ANSWER--------------A.8/31/15 B.12/31/11 C.7/31/11 D.12/31/12 A- Each agent has two years to complete the required 24 hours of continuing education hours. After the initial qualifying period, you must re-qualify every two years by the last day of your birth month. 49. Under a personal auto policy, what type of physical damage loss is NOT covered? -- -----CORRECT ANSWER--------------A.collision with an animal B.loss to stereo equipment that is not permanently installed C.glass breakage caused by vandals D.transportation expenses following theft of the entire auto B- The auto policy will pay only for equipment permanently mounted in the car (and sometimes even that can be denied), but something that is not permanently attached is not covered by the auto policy. 50. Which of the following would not be grounds for disciplinary actions by the Commissioner of Insurance -------CORRECT ANSWER--------------A. Failing to meet the insurer's quarterly objectives B. Cheating on a licensing exam C. Failing to timely submit an application for insurance D. Conviction of a misdemeanor involving theft of money or property B.50% C.100% D.25% B- 50% This follows the "other insurance" clause. Since each company is covering the property for 50% of the total insurance in force, each company will pay 50% of the incurred claims. 57. Who is responsible for the expenses of an insurer audit by the state Department of Insurance? -------CORRECT ANSWER--------------A. the State Auditor's Office B. the insurer being audited C. the State General Fund Account D. the state of Ohio Department of Insurance B- It is the insurer's responsibility to be financially solvent. Therefore, the expenses incurred in an insurance department audit are borne by the insurer. 58. Which of the following would NOT be considered an unfair claims settlement practice? -------CORRECT ANSWER--------------A.knowingly misrepresenting pertinent facts or policy provisions relating to the coverage at issue to claimants B. compelling insureds to institute suits to recover amounts due by offering substantially less than the amounts ultimately recovered in suits brought by the insurer C.failing to make payment within 30 days of receipt of all required documentation D.failing to pay an unsubstantiated claim D- The insurer must make every effort to settle the claim in a fair and prompt manner. Not paying a claim that is not documented or substantiated is not unfair 59. After a covered loss, the insurer may do all of the following, EXCEPT ------- CORRECT ANSWER--------------A.make an Actual Cash Value settlement. B.replace the damage property with new. C.repair with like kind and quality. D.pay the difference between the cost new and the actual cash value. D- Pay difference between cost new and actual cash value The insurer should make the insured whole again. Answers A and D would make the insured whole again. Answer B would actually make the insured better if the company uses that method. The company cannot offer the difference between the replacement cost and the cash value. 60. Which of the following is NOT considered a consequential loss? -------CORRECT ANSWER--------------A.loss of rents B.loss of business income while a building is closed for repairs C.extra expense involved in repairing damaged property D.damage to personal property D- Damage to Personal Property There must be a direct loss for a second loss or consequential loss to be involved. 61. What entity may be licensed by the state to solicit or negotiate insurance contracts? -------CORRECT ANSWER--------------A. individual B. All of the answers C. partnership D. corporation B- According to state law, an individual, corporation, or partnership can all be licensed with insurance companies as a business entity 62. The Fair Credit Reporting Act provides that -------CORRECT ANSWER-------------- A.credit life insurance must be issued on a standard basis. B.the applicant for insurance must be aware that a consumer report may be requested with regard to his or her application for insurance. C.the face amount of a life insurance policy must be paid to the primary beneficiary in the event the insured dies. D.insurable interest must exist at the time of application. B- The first requirement of the federal Fair Credit Reporting Act is that the consumer be given notice that a consumer report (credit bureau report) may be ordered and used by the insurance company in making its decision. The Act also outlines what actions a consumer may take if denied a policy due to the consumer report. 63. If a violation has caused or is about to cause substantial and material harm, the Commissioner may: -------CORRECT ANSWER--------------A. Immediately fine the individual up to $25,000 B. Revoke the agent's license for two years. C. Issue an order that the person in violation cease and desist from the activity. D. Suspend the agent's license for 30 days C- The Commissioner will issue a Cease and Desist order and could ask the Attorney General to file charges against the agent. 64. Actual cash value may be arrived at by taking the property's replacement cost and subtracting the -------CORRECT ANSWER--------------A. original purchase price. B. market value. C. depreciation value due to wear and tear. D. assessed value. C- Depreciation value due to wear and tear D.55% of the average weekly wage C- The payment will be 70% of the average weekly wage at the time of the disability. 71. Requiring the insured to use a specific body shop or not replacing a totaled vehicle with a comparable vehicle is an example of: -------CORRECT ANSWER--------------A. Indemnity B. Actual Cash value C. Unfair Insurance trade practices D. Unfair Insurance claims practices D- An insurer cannot require an insured to use a specific body shop in order to get a claim paid. If the vehicle is considered totaled, it must be replaced with a substantial similar vehicle. 72. Survivor benefits will be paid to the dependents of a deceased worker until they are 18 or _____if a full time student. -------CORRECT ANSWER--------------A.23 B.21 C.25 D.24 A- Benefits for surviving dependents are payable up to age 23 if enrolled as a full time student. 73. Kim shows up at the agent's office to pay her premium on her policy that cancelled last night. The agent accepts the premium and Kim believes her policy is paid. This is an example of what kind of agent authority? -------CORRECT ANSWER--------------A. assumed B. apparent C. implied D. expressed B- Apparent The agent's actions have given Kim the impression that the company has accepted the premium on the cancelled policy. This is an example of apparent authority based on the agent's actions. To Kim, apparently, the agent can do this by his actions and in her eyes the actions of the agent are the actions of the company and the law would agree with her. 74. What is NOT a defense against negligence? -------CORRECT ANSWER-------------- A.comparative negligence B.contributory negligence C.assumption of the risk D.vicarious negligence D- Vic Negligence Vicarious negligence is a nonsense term, and is not a defense. 75. All of the following are true regarding personal injury protection in New Jersey, except: -------CORRECT ANSWER--------------A.Loss of income benefits are paid at 70% of monthly earnings B.Coverage will be issued at a minimum of $15,000 per person C.After a $250 deductible medical bills are paid at 80% D.Coverage can be increased to $250,000 per person at the option of the insured A- Loss of income benefits are payable at 75% of monthly earnings. The other three choices are all correct regarding personal injury protection in New Jersey. 76. Your vehicle is totaled. The insurer is required to replace it or give you the actual cash value of a comparable vehicle which means all of the following, EXCEPT: ------- CORRECT ANSWER--------------A.Same color B. The cost of a comparable auto available in the local market area C.Same year, make and model D.Same equipment and features A- Substantially similar vehicle does not require the color to be the same but it should be the same year, make, model with the same features or the cost of a comparable vehicle available in the market area 77. What does NOT need to be present in order for a contract to be legally binding to both parties? -------CORRECT ANSWER--------------A. legal purpose B. consideration C. offer and acceptance D. written agreement D- Written Agreement Oral contracts are acceptable in many states; having the contract in writing is not necessarily required. Common sense, however, points out the difficulties of enforcing the terms of the contract unless they are written. 78. Being held responsible for someone's injuries, even though you might not have been negligent, is defined as -------CORRECT ANSWER--------------A. presumed negligence. B. vicarious liability. C. imputed liability. D. strict liability. D-Strict Liability Some actions are so dangerous that liability is strict or absolute and you are responsible without having to prove negligence, like explosives/fireworks. D. establishing rates for new policies D- Establishing rates for new policies Agents are not involved in the actual work done to establish rates charged for insurance. This is done by the individual insurance company in the actuarial and underwriting department. 85. These coverage's are in addition to the limit of insurance, but at no extra cost, EXCEPT -------CORRECT ANSWER--------------A.debris removal. B.cost of defense. C.additional coverage. D.off premises power interruption. D- HO policies also contain several additional coverage's, most of which are in addition to the policy limits. These additional coverage's are built into the contract and require no additional premium. Off premises power failure is a peril that is excluded on all homeowner forms. 86. Which of the following is NOT an Uninsured Motorist? -------CORRECT ANSWER---- ----------A. Someone who has insurance written for the state legal minimums. B. Someone whose insurance does not comply with state financial responsibility laws. C. Someone whose insurance denied the claim or is bankrupt. D. Someone who is a hit and run driver. A- Someone with insurance written for at least the state legal minimums is not UNINSURED. 87. Upon receipt of all requested information, how long does a company have to accept or deny a first party claim? -------CORRECT ANSWER--------------A.10 days B.90 days C.30 days D.5 days C- Once the insurer has all of the required or requested documentation from the insured or any other outside source, they must accept or deny the claim within 30 days. 88. Transferring risk by accumulating funds best describes the concept of ------- CORRECT ANSWER--------------A. indemnity. B. insurance. C. occurrence. D. insurable interest. B- Insurance Insurance is a means of "transferring" the risk of one (the insured) to a group (the insurance carrier or insurer.) 89. What is NOT found on the declaration pages of the homeowners policy? ------- CORRECT ANSWER--------------A.location of the dwelling B.deductible C.exclusions D.policy term C- Items not covered are listed in a separate exclusions section of the policy. 90. In Workers' Compensation insurance, the "other states" coverage does NOT protect employees of a firm who may be injured in -------CORRECT ANSWER--------------A.New York. B.Canada. C.Delaware. D.Alabama. B- Other states coverage is designed for the other states of the U.S. If you have an employee working outside of the country, coverage will need to be amended by endorsement to cover this exposure. 91. An employee making a workers' compensation claim for loss of income due to an occupational disease will have a ____________waiting period before benefits begin. ---- ---CORRECT ANSWER--------------A.7 day B.15 day C.30 day D.10 day A- Disability benefits under workers compensation will not be paid for the first 7 days of disability, however if the disability continues beyond the first 7 days, the benefit is retroactive back to the date of the disability. 92. Violations of the Urban Enterprise Zone (UEZ) program could result in a fine up to a maximum of: -------CORRECT ANSWER--------------A.25,000 B.5.000 C.10.000 D.1.000 A- The key word in the question is "maximum". The fine can be up to $25,000 for violating the UEZ program 93. What is NOT excluded from liability coverage on the homeowners policy? ------- CORRECT ANSWER--------------A.golf carts used on the golf course B.business pursuits C.intentional acts record B.Sex of the applicant C.Gender D.Marital status A- The driving record of an applicant would be a reason to deny the availability of insurance. However the insurer cannot use the marital status or gender in discriminating against an insured. Sex of the applicant is the same as gender. 100. The retroactive date and the expiration date of the claims made CGL policy are examples of -------CORRECT ANSWER--------------A.limitations in coverage. B.exclusions under the policy. C.nonsense terms on a claims made CGL. D.dates that "trigger" the start or end of coverage. D- In order for a claims made CGL policy to respond, the event had to happen after the retroactive date and be reported during the policy period. These are the "triggers" that activate the policy. 101. What is NOT true about a business owner's policy? -------CORRECT ANSWER----- ---------A.The standard form provides named-peril coverage. B.Money is available only by endorsement on the special form. C.Medical payments coverage is automatically included. D.Business income is covered on an "actual loss sustained" basis with no time limit. D- Business income is covered on an actual loss sustained basis, up to 12 months after the loss. 102. A building is damaged by fire caused by a third party. The insured will receive payment for the loss from whom? -------CORRECT ANSWER--------------A. The insured should collect damages in full from the third party, plus the amount of insurance payable by the insurance company. B.The insurance company will pay the loss (within the limits of coverage). To the extent that payment had been made under the policy, the insured is required to assign to the insurance company any right of recovery from the responsible party. C. The insurance company is not obligated to pay anything; the only recourse the insured has is to try to collect from the responsible third party. D. The insurance company will pay the insured the amount of the loss, up to the amount of the policy. It will expect the insured to collect from the person responsible for the damage and then reimburse the company. Answer is B. This is known as the right of subrogation. Since the insurer has indemnified the insured by paying for the damaged property under the policy, the carrier wants the right to pursue the responsible party for compensation. The agency will require the insured to sign a waiver of subrogation, allowing the carrier to collect from the responsible party. 103. Concealment is defined as -------CORRECT ANSWER--------------A. answering incorrectly on an insurance application. B. hiding information from the agent. C. having someone else fill out your insurance application. D. the deliberate omission of a material fact from the agent or the company. D- The deliberate omission If a customer or claimant intentionally withholds important facts and data from the agent or the insurance company, it is considered an act of concealment, which could deny the claim or void the policy entirely. 104. The CGL will exclude damage to property in the insured's care, custody, and control unless the damage is caused by -------CORRECT ANSWER--------------A.water. B.fire. C.pollution. D.explosion. B- The CGL will pay for damage done to the property of others in the care of the insured if it is caused by a fire. This used to be called Fire Legal Liability but is now known as Damage to Premises Rented to You. 105. A temporary auto insurance ID card is good for: -------CORRECT ANSWER---------- ----A.30 days B.90 days C.Until the end of the policy period D.60 days D- If an auto insurer issues a temporary ID card it must be clearly marked on the card that it expires in 60 days of it being issued. 106. In a property insurance contract, an insured's consideration is the -------CORRECT ANSWER--------------A. payment of the premium. B. recommendation of protection. C. promise to pay. D. selection of proper coverage. A- Payment of the premium Consideration in a contract is the item of value that a party brings to the contractual relationship. 107. When a business will shut down due to a covered loss, the indirect consequential loss that accrues over time would be -------CORRECT ANSWER--------------A.costs to rent other locations. B.loss of income. B.a can of soup falls off a food store's shelf and injures the child of a customer C.an employee cuts her leg on the sharp edge of a metal chair D.a hardware store delivery truck accidentally damages the store's own loading dock during a delivery B- The CGL pays out to "others," not the insured. Employees are considered to be insureds under the policy and their injuries are better covered under Workers' Compensation. The CGL will also exclude damage done to the insured's own property. 114. What best defines concealment? -------CORRECT ANSWER--------------A. deliberate omission of a material fact B. voluntary omission of an underwriting factor C. hiding the truth from the insurer D. hiding the truth from the insured A- Deliberate omission of a material fact. If a material fact involved in the underwriting process is deliberately omitted, it is considered to be concealment. 115. A business has a business owner's policy and an Equipment Breakdown policy on a printing press. If a total loss occurs due to the mechanical breakdown of the press, how will it be paid? -------CORRECT ANSWER--------------A.pro rata B.equal shares C.boiler and machinery policy pays D.business owner's policy pays C- Since the cause of the loss is mechanical breakdown, the BOP will exclude coverage for this peril. The Equipment Breakdown policy does cover damage due to mechanical breakdown, so it will take care of this loss. 116. You have a personal auto policy with $50,000 bodily injury liability and $25,000 property damage liability limits. You borrow Sally's car and strike a pedestrian. Sally has $100,000 limit of bodily injury liability. How much will your insurer have to pay if a $95,000 judgment is rendered against you? -------CORRECT ANSWER-------------- A.$47,500 B.$0; Sally's company must pay C.$95,000 D.$50,000 B- Sally's policy on the auto is primary and must respond first. Since there is enough coverage under Sally's policy to handle the claim, her carrier will take care of it. 117. The home daycare endorsement -------CORRECT ANSWER--------------A.is a mandatory endorsement automatically added to the homeowners policy. B.covers only home daycare services provided to relatives of the insured. C.is a "buy back" of an exclusion that states home daycare is not covered for personal liability because it is considered a business pursuit. D.cannot be added to the HO-4 renter's policy because apartments are generally smaller in size and not conducive to home daycare. C- Home daycare is a business. Business exposures are excluded for liability under the homeowners policy. This endorsement "buys back" the liability coverage. 118. Coverage against loss by some perils (vandalism, theft, etc.) under the "building and personal property" coverage form is EXCLUDED if -------CORRECT ANSWER------- -------A.the insured building is vacant for more than 60 days. B.the insured fails to satisfy the co-insurance provision. C.a loss occurs while a hazard beyond the insured's control is increased. D.an uninsured peril caused a partial loss. A- Vacancy is a physical hazard that increases the chance of loss. After 60 days in commercial insurance, perils such as vandalism and theft are excluded. 119. A business owner's policy with a protective safeguard endorsement would require an insured to notify the insurance company if sprinklers are inoperable for ___ hours. --- ----CORRECT ANSWER--------------A.36 B.48 C.12 D.24 B- If you have received a premium discount because you have a protective safeguard such as an alarm system or sprinkler system, you must notify the carrier within 48 hours if the system becomes inoperable. If not, the warranty you provided about having the system and that it works is voided and a possible claim could be denied. 120. Umbrella policies usually provide additional excess layers of liability and typically feature -------CORRECT ANSWER--------------A.neither a self-insured retention nor policy limits stated in one or more millions of dollars. B.a self-insured retention. C.both a self-insured retention and policy limits stated in one or more millions of dollars. D.policy limits stated in one or more millions of dollars. C- The Self-Insured Retention functions much like a deductible and umbrella limits usually are bundled in layers of $1,000,000. 121. The effective date of issuance of an agent's license for a qualified applicant who has not previously been licensed by the Department of Insurance is -------CORRECT ANSWER--------------A.when approved by the Department of Insurance. B.90 days following the date on which the agent is assigned a license number by the DOI. C.30 days following the date on which the agent is assigned a license number by the DOI. D.60 days following the date on which the agent is assigned a license number by the DOI. D.$15,000 A- The peril causing the damage is covered by the policy; therefore, after the $500 deductible, Jayne will receive $15,500. 128. Sarah wants to find out how financially sound her insurance company is. She can check all of the following sources, EXCEPT -------CORRECT ANSWER--------------A. AM Best Company. B. Department of Insurance. C. Standard and Poor's. D. Moody's. B- Department of Insurance The Department of Insurance does not rate the financial strength of insurance companies. The other three choices are all independent rating services that will provide this information to Sarah. 129. If a person violates the co-insurance provisions of the policy, how much will be received in the event of a total loss? -------CORRECT ANSWER--------------A. nothing B. only a portion of the loss C. the full loss D. the policy limit D- The Policy Limit Co-insurance rules only apply to partial losses, never total loss. In the event of a total loss, the insurer owes the limit of coverage on the policy. 130. Under an 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 -------CORRECT ANSWER--------------A. declaration. B. subrogation. C. elimination. D. arbitration. D- Since "uninsured motorists" coverage is a liability issue between the insurer and the injured insured, the dispute will be settled by arbitration. 131. The time frame of coverage and the location of coverage are referred to as ------- CORRECT ANSWER--------------A. perils covered and proof of loss reporting. B. peril exclusions and proof of loss reporting. C. policy period and policy territory. D. policy exclusions and claim conditions. C- Policy Period and Policy Territory The policy period is the time frame covered and the territory is where coverage applies. Generally, the U.S., its territories, Puerto Rico and Canada. 132. The homeowners permitted incidental occupancies endorsement -------CORRECT ANSWER--------------A.automatically covers teachers for corporal punishment. B.will extend coverage only for corporal punishment to secondary (grades 7-12) school teachers, not primary (grades K-6) school teachers. C.will not cover a teacher for corporal punishment under any circumstance. D.requires an extra premium to cover teachers for corporal punishment. C- Corporal punishment is the physical abuse of a student. This would never be covered. 133. Because an injured worker gives up the right to sue the employer for work related accidents and injuries, workers compensation insurance is considered to be: ------- CORRECT ANSWER--------------A.Primary B.Legal liability C.Exclusive remedy D.Excess C- Giving up the right to sue in return for the prompt and fair payment of a work related accident or injury is the exclusive remedy of the workers compensation laws. 134. You wish to cancel your homeowners policy prior to the expiration date. The insurance company would provide you with what type of a refund? -------CORRECT ANSWER--------------A. short rate B. annual premium C.pro rata D. full refund of premiums you paid A- Short Rate If the customer cancels the policy, the refund is calculated on a "short-rate" basis. 135. The inflation guard endorsement will automatically raise the limits on what part of the homeowners policy? -------CORRECT ANSWER--------------A.Coverage B B.Coverage A C.both Coverage A and B D.neither Coverage A nor B C- Coverage A (dwelling) and B (other structures) are automatically increased to match the cost of inflation. 136. Which of the following best describes the Contribution by Equal Shares claim provision? -------CORRECT ANSWER--------------A. the insurer with the highest limit pays first B. each insurer pays on a pro-rata percentage based on who is most liable 142. Agent Williams states that his policy will be guaranteed renewable for at least 5 years. Williams is guilty of -------CORRECT ANSWER--------------A.misrepresentation. B.being a good salesperson. C.fraud. D.twisting. A- No policy is guaranteed to be renewed for 5 years. This is a misrepresentation of the terms. 143. The principle of indemnity -------CORRECT ANSWER--------------A. allows the company to collect from a third party. B. limits recovery to actual cash value. C. allows the insured to profit from a loss. D. restores the insured to the same condition enjoyed before a loss. D- Restores the insured Indemnity means to "make whole again." The insured is back in the position enjoyed prior to the loss, but with no gain either. 144. On the BOP, in which situation would Utility Service - Time Element coverage apply? -------CORRECT ANSWER--------------A.Anna's Paper Company burns to the ground when a faulty wire starts a fire B.After a tornado causes a pipe to burst at Dunkin' Donuts leaving the shop without water for days, the shop is forced to rent a new space in order to keep the business functioning C.An electrical circuit shorts at the butcher shop during a storm causing a power outage. Despite the shop's best effort to preserve the inventory, half of the meat in the freezer goes bad during the outage D.Steve's Software Solutions loses power for two days when lightning damages the power station. Steve experiences a significant loss of income during the outage D- Time Element is another way of saying an indirect loss. The loss of income from the loss of power is an indirect loss covered by the Utility Service-Time Element coverage. 145. The Do-Not-Call list regulations prohibit -------CORRECT ANSWER-------------- A.calls from a tax-exempt non-profit organization. B.pre-recorded commercial messages from someone without an established business relationship. C.calls that are not commercial or do not include unsolicited advertisements. D.calls from an organization with an established business relationship. B- Calls that are pre-recorded commercial messages from someone who does not have an established business relationship or who does not have permission to call are prohibited. 146. An insurance license may NOT be revoked for what reason? -------CORRECT ANSWER--------------A.cheating on the state insurance exam B.conviction of a misdemeanor C.conviction for a felony D.violating a rule, while in another state, made by that state's insurance Superintendent B- A misdemeanor will not cause you to lose your license. However, you could be subject to other penalties. 147. Under the garage policy, coverage to reimburse the garage to replace the faulty parts would be covered by? -------CORRECT ANSWER--------------A. Broad Form Products coverage B. Employees as insureds C. Non-owned Auto coverage D.- Lessor-Additional Insured A- Product liability does NOT pay to recall or reinstall faulty parts. The Broad Form Products coverage would reimburse the garage for their labor costs to reinstall a new part in place of the faulty one. 148. Which is NOT a rebate? -------CORRECT ANSWER--------------A.offering a flat screen TV B.giving back any or all of the premium paid by the insured C.offering a weekend for two to Disneyland D.offering valuable consideration valued at $10 or less for the opportunity to quote insurance. D- Offering a gift or meal valued at $10 or less to quote or explain insurance is not rebating as long as it is not tied to the purchase of the policy. 149. What is NOT considered an unfair and deceptive practice? -------CORRECT ANSWER--------------A.twisting B.issuing a surcharged policy based on underwriting information. C.rebating D.misrepresentation B- All are things an agent would do to induce a person to buy from him or her, except issuing the policy with a premium surcharged based on factual underwriting information. 150. Swamp Mutual obtains a certificate of authority to do business in the state and agrees to abide by the state laws regulating the insurance business. Swamp Mutual is a(n) -------CORRECT ANSWER--------------A. Mutual insurer. B. Admitted/Authorized insurer. C. Surplus Lines insurer. D. Non admitted/Unauthorized insurer. B- Admitted/ Authorized 157. Which of the following would invalidate a contract? -------CORRECT ANSWER------ --------A. activities laundering funds B. competent parties as defined by the courts C. one for legal purposes D. agreement between and insurer and a 85 year old insured A- Activities laundering funds Contracts, in order to be valid, must be for legal purposes. Laundering money may be an illegal activity. 158. In New Jersey, your insurance license will be deemed active -------CORRECT ANSWER--------------A.as soon as the Department of Insurance receives your grades. B.upon the receipt of the formal license at the applicant's residence. C.after the department reviews the background check and application and notifies the candidate that the license is active. D. at the time you successfully complete the exam. C- Your license is active upon completion of the application to be a producer and the background check being approved by the Department of Insurance. You will be notified when the license is active. 159. In New Jersey, If death results from an occupational injury or disease, dependents of the deceased worker will be paid the following: -------CORRECT ANSWER-------------- A.60% of the average weekly wage B.75% of the average weekly wage C.80% of the average weekly wage D.70% of the average weekly wage NJ PSI PROPERTY AND CASUALTY EXAM TEST BANK 2024 | 350+ EXAM QUESTIONS AND CORRECT ANSWERS | ALREADY GRADED A+ | LATEST UPDATE The Mobile Home Endorsement of a Homeowners policy affords coverage to mobile homes under the? A. HO-1 (Basic Form) B. HO-2 (Broad Form) C. HO-3 (Special Form) D. HO-2 or HO-3 (Broad and Special) ------CORRECT ANSWER--------------D. HO-2 or HO-3 (Broad and Special) All of the following are eligible for coverage under Homeowners policy except? A. A condominium unit owner. B. A farm owner. C. A mobile home owner. D. A tenant in an apartment building. ------CORRECT ANSWER--------------B. A farm owner. The term Insured Location under Section II of Homeowners policies refers to all of the following except? A. The insured premises. B. Farm land. C. A non-owned premises where an insured temporarily resides. D. A newly-acquired premises. ------CORRECT ANSWER--------------B. Farm land. All of the following would be considered insured's under a Homeowner's policy expect? A. Resident relatives of the insured. B. A non-relative resident under age 21 in the care of the insured. C. The insured's spouse if the spouse lives in the household. D. A non-relative resident over age 21. ------CORRECT ANSWER--------------D. A non- relative resident over age 21. All of the following homeowners policies provide dwelling coverage except? A. HO-2 B. HO-3 C. HO-4 D. HO-1 ------CORRECT ANSWER--------------C. HO-4 Dwelling coverage A includes all of the following except? A. The dwelling. B. The deck on the back of the dwelling. C. A Gazebo. D. Construction materials on the residence premises for use in the repair of the dwelling. ------CORRECT ANSWER--------------C. A Gazebo. Under Homeowners policies, the base deductible applicable to property losses, Section I, is? A. $100 B. $250 C. $500 D. $1000 ------CORRECT ANSWER--------------B. $250 The National Flood Insurance Program (NFIP) is a ________ program? A. State. B. Municipal. C. Federal. D. Worldwide. ------CORRECT ANSWER--------------C. Federal. All of the following are optional coverage's under Homeowners policies except? A. Personal Property Replacement Cost coverage. B. Increased coverage limits from items suck as jewelry, furs, and silverware. C. Loss of Use coverage. D. Earthquake coverage. ------CORRECT ANSWER--------------C. Loss of Use Coverage. Under Section II Additional Coverage's of Homeowners policies, the insurer agrees to pay? A. The costs of defending a claim. B. Premiums on bonds required in a suit. C. Court costs. D. All of the above. ------CORRECT ANSWER--------------D. All of the above. Under Homeowners and other policies, ACV is the abbreviation for which property insurance valuation? A. Approved Coverage Valuation. B. Approximate Cash Value. C. Actual Coverage Valuation. D. Actual Cash Value. ------CORRECT ANSWER--------------D. Actual Cash Value. Under Homeowners and other policies, the definition of the property insurance valuation known as Actual Cash Value (ACV) is? A. Replacement Cost plus a cash payment. B. Replacement Cost minus the cost of new material. C. Replacement Cost minus depreciation. D. Replacement Cost plus market value. ------CORRECT ANSWER--------------C. Replacement Cost minus depreciation. When dealing with jewelry, furs, or silverware, which carry special limits, a producer should advise a client that if the value exceeds the limits specified in the policy, the client should purchase? A. A Scheduled Personal Property Endorsement. B. Less Jewelry. C. A Fine arts Endorsement. D. Another policy. ------CORRECT ANSWER--------------A. A Scheduled Personal Property Endorsement. Under an NFIP Flood policy, the maximum amount of building coverage that can be written on a single family property is? A. $100,000. B. $150,000. C. $200,000. D. $250,000. ------CORRECT ANSWER--------------D. $250,000. Which of the following applies as regards either a Scheduled Personal Property Endorsement or a Personal Articles Floater? A. Fine arts can be covered on either a named perils or a special perils basis. B. The personal property insured on either form is not subject to the policy deductible. C. All personal property must be described and an amount of insurance must be shown for each item. D. All of the above. ------CORRECT ANSWER--------------D. All of the above. Under an NFIP Flood policy, in most cases the waiting period before an increase in the coverage amount can be made effective is? A. 15 days. B. 30 days. C. 45 days. D. 60 days. ------CORRECT ANSWER--------------B. 30 days. All of the following are Additional Coverage's under Homeowners policies except? A. Removal coverage for 30 days. B. Debris removal expense. C. Loss of use. D. Fire department service charges. ------CORRECT ANSWER--------------C. Loss of use. Under Homeowners policies, Medical Payments do not apply to bodily injury to? A. An insured. B. Any person eligible to receive Workers Compensation. C. Any person who regularly resides on the premises. D. All of the above. ------CORRECT ANSWER--------------D. All of the above. Under homeowners policies, theft coverage does not cover theft? A. Committed by the insured. B. Any person eligible to receive Workers Compensation. C. Any person who regularly resides on the premises. D. All of the above. ------CORRECT ANSWER--------------D. All of the above. under an NFIP Flood policy, the maximum amount of personal property coverage that can be written on a single family property is? A. $50,000. B. $75,000. C. $100,000. D. $150,000. ------CORRECT ANSWER--------------C. $100,000. Under an NFIP Flood policy, producers may issue blinders to effect flood coverage for? A. $50,000. B. $100,000. C. $250,000. D. producers may not issue binders to effect flood coverage. ------CORRECT ANSWER- -------------D. Producers may not issue binders to effect flood coverage. In property insurance, insurable interest must exist at the/ A. Inception of the policy. B. Time of the premium payment. C. Time of the application. D. Time of the loss. ------CORRECT ANSWER--------------D. Time of the loss. Property Insurance Basics All of the following may be listed as an insured on a property policy, except: A . mortgagee listed as an additional insured B. The policyowner C. A business with temporary custody of the insured property D. A named insured's legal representative ------CORRECT ANSWER----------------C under no benefit to bailee remember 3 C's, care,custody, control of an insured's property does NOT benefit from claim, payment and cannot be named on policy Property Insurance Basics- listed on a property policy ------CORRECT ANSWER-----------------mortgagees -loss payees -legal insured Property Insurance Basics- when you think of liability think of money going to the ------CORRECT ANSWER----------- -----third party Casualty (liability) insurance basics Property damage covered by a liability policy includes which of the following? A Damage to property owned by, or leased to, the insured B Damage to tangible property belonging to a third party, including loss of use of that property, caused by the insured's negligence C Damage to the insured's products arising out of the products D Damage to property of others in the insured's care, custody, or control that results from a criminal wrong ------CORRECT ANSWER----------------B Casualty Basics what does a liability policy cover ------CORRECT ANSWER----------------medical and legal fees if you're held legally responsible for someone else's injury, or damage to someone else's property.--including loss of use of that property caused by acts of the insured casualty basics what are supplementary payments ------CORRECT ANSWER----------------payments that the insurer makes to the insured for costs to resolve claims or investigate casualty basics: explain the order of limits #/#/# ------CORRECT ANSWER----------------per person, per occurence, aggregate limit casualty basics: what does it mean when something is so inherently dangerous that negligence cannot be defend the insured who is liable- example d's child plays with H's venomous snake at neighbors. ------CORRECT ANSWER----------------Absolute Liability (strict liability-party is liable even when no negligent act is committed) even though H is not being negligent they are still legally liable Causality Basics- what are the 4 elements of negligence ------CORRECT ANSWER-----------------duty owed to a third party -breach of that duty (breach when a persons conduct fails to meet a standard of care, example failing to look at traffic signals breaches the duty to drive safely ) -wrongful act was the direct cause -forseeable consequence casualty basics: gross negligence and intentional torts are excluded from the liability policy, ------ CORRECT ANSWER----------------gross negligence- the act of not caring at all intentional torts- premeditated or planned and harm another person negligence vs gross negligence ------CORRECT ANSWER----------------gross negligence- running a red light while also driving under the influence negligence- running a red light tort vs unintentional tort ------CORRECT ANSWER----------------wrongful civil act not including criminal act or breach of contract that violates a duty or right of another unintentional tort (negligence)- not caused by a delibertate act but is the result of the failure to act as a reasonable or prudent person would gross negligence vs negligence ------CORRECT ANSWER----------------negligence is an unintentional tort Casuality Basics: Which of the following defenses against negligence reduces damages in proportion to the degree of negligence? A Statute of limitations B Assumption of risk C Comparative negligence D Contributory negligence ------CORRECT ANSWER----------------C casualty basics: personal injury liability includes which of the following: A Libel and slander B Sickness and disease C Theft D Medical payments it is injury other than bodily injury or property damage ------CORRECT ANSWER---------- ------A personal injury includes, libel, slander, false arrest, invasion of privary and copy infringment casualty basics: what are punitive damages Punitive damages are so limited as to be punitive toward the plaintiff B Punitive damages are assessed in addition to specific damages and are typically covered by insurance policies C Punitive damages are assessed as a punishment for extremely objectionable conduct by a negligent party D Punitive damages are limited to disfigurement and mental anguish ------CORRECT ANSWER----------------C what is a component of a rate ------CORRECT ANSWER----------------loss reserves, loss adjusting expenses, operating expenses, profits ambiguous wording on an insurance contract would be most helpful towards ------ CORRECT ANSWER----------------the insured Which HO form covers damage to the DWELLING that occurs as the result of any event that is not specifically excluded in the polic ------CORRECT ANSWER----------------HO-3 Special Form Coverage for the home and other structures is written on an all-risk basis - damage from any peril is covered, unless specifically excluded. Broad coverages extends to dwelling A temporary license may be issued without state examination to all of the following EXCEPT ------CORRECT ANSWER----------------A prospective producer who is currently enrolled in a pre-licensing insurance class Garage liability insurance ------CORRECT ANSWER----------------offers financial protection against lawsuits for those who sell, store, and service vehicles. This includes auto dealers, service stations, and parking garage What is the term if the buyer of an insurance policy receives any part of the producers commission or anything else of significant values as an inducement to purchase a policy. ------CORRECT ANSWER----------------rebating which of the following would be a component of a rate?a) service bureausb) loss costsc) dividendsd) ratification ------CORRECT ANSWER----------------b the dwelling policy endorsement coverage M-Medical Payment to Others pays for ... EXCEPT one that is caused bya) a fight with the insuredb) conditions on the insured's locationc) the activities of the insuredd) an animal in the insured's car ------CORRECT ANSWER----------------a on a dwelling policy, what percentage of the coverage C - Personal property .. A 5% b) 10%. c) 20%. d) 50% ------CORRECT ANSWER----------------b A customer at a local deli trips over a folded rug while entering the establishment. This would be considered what type of business liability? a)products exposure b)completed operations exposure c)operations exposure d)premises exposure ------CORRECT ANSWER----------------D Which endorsement can an insured add to their business automobile policy to cover the owner of the leased vehicle?a) miscellaneous vehicle endorsementb) drive other car coverage endorsementc) additional insured-lessor endorsementd) individual named insured endorsement ------CORRECT ANSWER----------------additional insured lessor replacement cost coverage under the homeowners forms applies if a dwelling ...a) 50%b) 60%c) 80%d) 90% ------CORRECT ANSWER----------------80% the application that is made with facts that are believed to be true without doubt are called ------CORRECT ANSWER----------------warranties which of the following water damage losses are not covered by a dwelling policy special form -flood water -leaky sprinkler heads -broken water pipes -appliance overflow ------CORRECT ANSWER----------------flood water - leaky sprinkler head is covered and overflowing of appliances, broken pipes covered which endorsement is used to eliminate depreciation on the settlement of your personal property ------CORRECT ANSWER----------------personal property replacement cost- will pay to replace without any deduction while driving on a country road an insured individual hits a deer that ran infront of the car a. specified cause of loss b. collision coverage c. comprehensive coverage d. liability insurance ------CORRECT ANSWER----------------comprehensive which coverage would a condominium owner purchase ------CORRECT ANSWER-------- --------HO-6 FORK LIFT is a mobile endorsement ------CORRECT ANSWER---------------- the standard deductible under the businessowners policy (BOP) is $500 and applies to which of the following a. fire department service charge b. business personal property c. civil authority d. extra expense ------CORRECT ANSWER----------------b personal property Optional Coverages in a BOP insured can cover ------CORRECT ANSWER----------------outdoor signs; money & securities; employee dishonesty and equipment breakdown. In order for coverage to apply MUST be shown in the Declarations. BOP SECTION I ------CORRECT ANSWER----------------employee dishonesty; equipment breakdown; money & securities; outdoor signs; vacancy. Businessowners Section II - Liability c. Intentional tort d. Unintentional tort ------CORRECT ANSWER----------------c 10. Under a Commercial Package policy (CPP) the first named insured possess all of the following responsibilities EXCEPT a. canceling the policy in writing b. Requesting changes of the limits of the policy c. Submitting surveys of the insured business to the insurer d. Receiving any return premiums ------CORRECT ANSWER----------------c 2. An individual purchases a vehicle and financed it though his credit union. Which party does NOT have an insurance interest? a. The owner b. The insurer c. The title holder d. The credit union ------CORRECT ANSWER----------------The insurer coverage D of the farm property provides additional coverage for which of the following a. Poultry and livestock incidental to farm use b. Growing crops beyond 250 feet of the covered residence c Living expenses for the loss of use of living quarters in residence premises d. Barns or farm outbuildings or structures other than private garages that are used primarily for farming purposes ------CORRECT ANSWER----------------c 1. Under a dwelling policy, which coverage part insures buildings on the premises that are connected to the dwelling only by a fence?a. Coverage Ab. Coverage Bc. Coverage Cd. Coverage D ------CORRECT ANSWER----------------coverage B 1. What type of liability is based on a product being unreasonable dangerous?a. Generalb. Strictc. Contractuald. Negligence ------CORRECT ANSWER----------------strict also known as absolute liability where its so dangerous youre at fault anyway (playing w venomous snake) 1. Which type of insurance protection guarantees protection against legal liability from any risk arising from the ownership, maintenance, or use a. Errors and omission insurance b. Professional liability c. Employment related practices liability d. Commercial general liability ------CORRECT ANSWER----------------b 1. In PA, what is the minimum amount required for damages for liability to cover motor vehicles accidents? a. 5K,10K,3K b. 10K, 20K, 5K c. 15K, 30K, 5K d. 25K, 50K, 10K ------CORRECT ANSWER----------------c 1. Under an equipment breakdown coverage form, a breakdown would include a. Wear and tear b. Leakage of valves c. Explosion of a pressure vessel d. Failure of a safety device ------CORRECT ANSWER----------------explosion of a power vessel. EQUIPMENT BREAKDOWN- sudden and accidental breakdowns of covered machinery and equipment, which can include pressure vessels. 1. Which of the following benefits are not paid under workers comp laws a. Medical b. Rehab c. Pain and suffering d. Disability income ------CORRECT ANSWER----------------c workers compensation covers the following ------CORRECT ANSWER----------------- survivor benefits -death and survivor benefits -rehabilitation -medical benefits unlimited IF THEY ARE IN JAIL NO THEY DONT GET WC 1. What is the effect on a personal automobile policy in PA, if an insured switches from a $250 deductible for a $500 deductible a. The physical damage premium is reduced b. The physical damge limits are increased c. There is no deduction for depreciation when losses are settled d. The policy no longer satisfies the commonwealths financial reposibility law ------ CORRECT ANSWER----------------physical damage premium is reduced the builders risk coverage form will not cover which of the following a. fixtures attached to the completed structure b. service equipment c. roof antenna D. building material within 100 feet ------CORRECT ANSWER----------------antenna A builders risk coverage form provides protection against losses on the building, equipment, and supplies, but not to accidents on the job, the land, scaffolding, and theft. The policy does not cover war, nuclear hazards, extreme weather, or government seizure. 1. Which of the following is covered under the builders risk forma. A contractors pick up truck b. A contactors tools c. A sig on the property advertising a contractors work d. Lumber stored on site to be used in framing ------CORRECT ANSWER----------------b 1. The coverage that covers beyond the expiration of a liability policy written on a claims made basis is referred to as a. Extension coverage b. Umbrella coverage c. Extended reporting periods ------CORRECT ANSWER----------------c The main purpose of the Nationwide Maritime Definition is to a. Define the categories of risk for which underwriters can write coverages b. Describe the imports that are allowed to be sold and delivered c. Allow producers to customize coverage for a variety of perils d. Define the insurable interest of shippers ------CORRECT ANSWER----------------a 1. A producer who offers a potential insured $50 from their commission as an incentive to buy insurance is guilty of a. Coercion b. Inducement c. Redlining d. Twisting ------CORRECT ANSWER----------------b 1. Falsifying the terms benefits advantages or conditions of an insurance policy is an example of the following a. Forgery b. Coercion c. Concealment d. Misrepresentation ------CORRECT ANSWER----------------d 1. The national flood insurance program policies cover a. Property against all from a flood b. Water damage caused by a burst pipe c. Sewer back up into a dwelling d. Loss of use ------CORRECT ANSWER----------------A 1. The PA insurance department is responsible for which of the following except a. Insurers b. Producers c. Shareholders d. Form approvals ------CORRECT ANSWER----------------shareholders 1. When the commissioner believes a producer is violated an insurance law the commissioner has the authority to a. Terminate the producer's appointment b. Cancel the producer's fiduciary responsibility c. Issue a cease and desist order against the producer after a hearing d. Increase the producers continuing education ------CORRECT ANSWER----------------c 1. A commercial general policy occurrence form covers claims that only a. Occur within the policy period b. Occur outside the policy period c. Are reported within the policy period d. Are settled within the policy period ------CORRECT ANSWER----------------occur within policy period 1. Which of the following would be a specific duty of the insurer in a liability policy? a. Reporting a loss b. Subrogation of a loss c. Providing a legal defense d. Protecting property from further loss ------CORRECT ANSWER----------------C providing legal defense 1. Which type of authority is not granted in the contract, but a producer is assumed to have in order to conduct ------CORRECT ANSWER----------------implied 1. Leah provides transportation for her client to their business lunch. Leah's client closes the car door on her own hand. What type of coverage applies a. Physical damage b. Liability c. Medical Payments d. Health Insurance ------CORRECT ANSWER----------------c 1. All of the following are considered covered under vehicle under a personal automobile policy except a. Private passenger vehicle acquired during the policy period b. Vehicle listed in the delcarations c. Trailer owned by the insured d. Motorcycle ------CORRECT ANSWER----------------D 1. Lightning strikes a house and causes a fire. The fire department extinguished the fire which results in water damage. The water damage represents which type of loss. a. Direct b. Excluded c. Indirect d. Residual ------CORRECT ANSWER----------------C 1. Which of the following is not covered under supplementary payment coverage of the liability section of the personal automobile policy? a. Bail Bonds b. Post judement interest c. Rental costs d. Appeal bonds ------CORRECT ANSWER----------------c 1. After the hearing, the insurance commissioner has determined a licensee has committed a violation of PA insurance laws what can the insurance commissioner do? a. Impose an administrative penalty b. Suspend the licensees premium accounts c. Immediately terminate insurer appointments d. Sentence the licensee up to 30 days in jail ------CORRECT ANSWER----------------a 1. Which of the following situations is excluded in the homeowner's policy? a. Hitting a swimmer with a sailboat under 26 feet b. Running over the neighbors fence in a fit of rage c. Breaking a neighbors window while playing basketball d. Accidentally hitting another golfer in the head with a ball while golfing ------CORRECT ANSWER----------------b Which of the following is in the common policy declaration of commercial package policy? a. A list of perils insured against b. A description of the business being covered c. The circumstances under which the policy may be canceled d. Conditions specifying the insureds duties following a loss ------CORRECT ANSWER----------------b 1. According to the PA assigned risk plan, all the following statements are true except a. All motor vehicle liability insurers shall subscribe and participate in the plan b. The rates for the plan shall not be inadequate excessive or unfair c. The plan may provide the transfer of individuals into the ordinary market at high rates d. The program was established to provide motor vehicle liability insurance for those who are entitles but unable to procure insurance through ordinary methods ------ CORRECT ANSWER----------------c a. The entire loss will be paid b. One half of the loss will be paid c. No portion of the loss will be paid d. Only a proportion of the loss will be paid ------CORRECT ANSWER----------------d 1. In PA commercial property and casualty risk insurance does not included which of the following a. Aviation b. Mortgage guaranty c. Surety and fidelity d. Owner occupied private residential property ------CORRECT ANSWER----------------A 1. Which terms describes a PA corporation whose primary activity consists of assuming and spreading all, or any portion of that liability exposure to its group membersa. High risk poolb. Admitted insurerc. Non admitted insurerd. ------CORRECT ANSWER----------- -----RRG 1. If a named insured elects the limited tort option in PA, the insured can seek recovery for pain and suffering for other non-monetary damages for all of the following scenarios except. If the at fault driver a. Causes the insured to sustain serious injury b. Has automobile policy limits greater than 500k c. Is operating a motor vehicle registered in another stated. Is convicted of driving under the influence of alcohol in the accident ------CORRECT ANSWER----------------Causes the insured to sustain serious injury 1. Which type of insurance policy is characterized by the identification of several items, each with its own description and limit? a. Specific b. Blanket c. Scheduled d. Lump sum ------CORRECT ANSWER----------------specific 1. Dwelling and Homeowners policies exclude coverage for a. Flood b. Debris removal c. Fire department chaged. d.Property removed to protect it from covered peril ------CORRECT ANSWER-------------- --flood 1. An insurance producer may NOT withdraw funds from a premium trust account to a. Pay premium to insurance b. Pay claims to an insured c. Return deposits to insureds d. Return premiums to an insured ------CORRECT ANSWER----------------pay claims to an insured 1. What is a benefit of a commercial package policy? a. To extend the policy limits b. To add more than 100 vehicles c. To allow for more additional insureds d. To replace the need for multiple policies ------CORRECT ANSWER----------------d . What coverage part in a homeowner's policy includes building materials on the premises used to repair the covered property? a. Dwelling b. Loss of use c. Other structures d. Personal property ------CORRECT ANSWER----------------a 1. The entity that has the power to revoke an insurance license is the a. Attorney general b. Insurance company c. Insurance commissioner d. National Association of Insurance Commissioners ------CORRECT ANSWER----------- -----c Which of the following example of a loss covered by collision coverage under a business auto policy a. Hitting a bird b. Hitting a tree c. A falling rock d. Breakage of glass ------CORRECT ANSWER----------------B 1. What type of property does an insured suffer if they do not carry sufficient if they don't NOT carry sufficient property insurance to meet the policy requirements? a. Coinsurance b. Excess c. Cancellation d. Loss payable ------CORRECT ANSWER----------------coinsurance 1. A deliberate lie by an insured to the insurer to obtain a lower premium is an example of a. Fraud b. Estoppel c. A warranty d. Concealment ------CORRECT ANSWER----------------a 1. Under the building and business personal property coverage form, in addition to the building itself building coverage includes which of the following a. Money b. Motor vehicle c. Patio furniture d. Unattached sign ------CORRECT ANSWER----------------patio furniture no deductible ------CORRECT ANSWER----------------Fire Department Service Charge Fire Extinguisher Systems Recharge Expense Business Income Extra Expense Civil Authority 1. What is the purpose of difference in conditions insurance on a commercial policy? a. Provides named perils coverage to fill gaps b. Provides personal injury liability coverage c. Provides catastrophic liability coverage d. Provides broad coverage to fill gaps ------CORRECT ANSWER----------------a 1. If a claims mobile insurance policy is cancelled in PA, the insurer must offer the insured the option to purchase an extended reporting coverage endorsement under which of the following conditions a. At the time of application b. At the time of policy delivery c. Within 30 days of cancellation or nonrenewal d. Within 60 days of cancellation or non-renewal ------CORRECT ANSWER---------------- d 1. According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss?A. 30 daysB. 60 daysC. 90 daysD. 120 days ------CORRECT ANSWER----------------60 1. Ro/ro ships are used to transport: a. Motor vehicles b. Containerized cargo c. Coal, grain, phosphates, and other "loose" cargo d. Break-bulk cargo ------CORRECT ANSWER----------------motor vehicles 1. Who provides and sells coverage under a FAIR plan? ------CORRECT ANSWER------ ----------private insurance companies 1. In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called: a. Self-insured retention b. Stop loss c. Coinsurance d. Participation requirement ------CORRECT ANSWER----------------a 1. What is the limit for the forgery or altercation coverage in the businessowners policy? ------CORRECT ANSWER----------------2500 . Covered under miscellaneous automobile? ------CORRECT ANSWER---------------- golfcarts a policy with an 80% coinsurance clause protects a building at 100k. the insured carrier is 85k for coverage and a 30k loss covered. how much will the insurer pay?1. 15k2. 24k3. 26k ------CORRECT ANSWER----------------24k farm coverage G ------CORRECT ANSWER----------------barns and other structures for a contract to be valid it must ------CORRECT ANSWER----------------must include offer and acceptance which statement is true regarding the motor carrier act of 1980? 1. the required liability are divided into 4 categories.... 2. vehicles subject to the motor carrier act of 1980 must provide limits of 500k 3. vehicles subject to the motor carrier act of 1980 must provide limits of 700k 4. it required trucking companies to certify that they are able to meet... ------CORRECT ANSWER----------------4 . According to the PA law, upon notification of a claim an insurer must acknowledge receipt within ------CORRECT ANSWER----------------10 working days Differences in conditions policy are usually written on ? ------CORRECT ANSWER-------- --------large risks with unusual exposure a commercial inland marine coverage form for valuable papers does not cover ------ CORRECT ANSWER----------------securities a binder for a new homeowner policy must include all of the following except?1. a paid reciept for full amount of premium 2. the name and address of lender 3. a provision regarding the cancellation of a binder 4. a descriptin of the insured residential property ------CORRECT ANSWER---------------- 1- a binder is temporary therefore there will be no receipt of payment The issuer that assumes some of all the potential costs of the potential costs of insured loss exposures of the primary insurer is: ------CORRECT ANSWER---------------- Reinsurer all of the following are examples of loss exposure? ------CORRECT ANSWER-------------- --completed operations an individual is shopping at the local supermarket and slips on a wet floor .the supermarkets GLP will cover payments except:1. first aid2. loss wages3. dental expenses4. ambulance service ------CORRECT ANSWER----------------loss wages what does the fair credit reporting act give the consumer the right to do ? deny the insurer access to their credit report ------CORRECT ANSWER----------------deny insurer access to their credit report fair credit reporting act ------CORRECT ANSWER----------------protects consumer right to privacy of credit and financial info which of the following types of policies would cover a chief executive for suits by stockholders directors and officer insurance ------CORRECT ANSWER----------------directors and officer insurance an example of the insured consideration is? ------CORRECT ANSWER----------------paid premium O B. lost employee wages. O C. employers liability. 0 D. employee theft. ------CORRECT ANSWER----------------employers liability Which of the following is NOT part of the Common Policy Conditions under a Businessowners Policy (BOP)? D. Premium payment. ------CORRECT ANSWER----------------premium payment 1. The commercial inland marine conditions form, when attracted to the commercial inland marine coverage provides which of the followinga. The insureds party's duties in the event of a lossb. Transportation and communication coveragec. Natural disaster coveraged. Warranty of property packed cargo ------CORRECT ANSWER----------------b transportation and communication extended non owned coverage ------CORRECT ANSWER----------------Extended non- owned coverage is an add-on to a driver's personal car insurance policy that extends liability and medical payments insurance to a company car. 1. A contract in which only one party - the insurer - makes an enforceable promise is said to be -------CORRECT ANSWER--------------A- Quotation B- Unilateral C- A contract of Indemnity D- A contract of Adhesion B- Unilateral An insurance policy is considered to be unilateral, since only one party to the contract, the insurance company, makes an enforceable promise. 2. An insurer whose main home office is domiciled in the state where they write business is known as a -------CORRECT ANSWER--------------A- Alien Insurer B- Foreign Insurer C- Surplus Lines Insurer D- Domestic Insurer D- Domestic Insurer A Domestic insurer is one whose main home office is located in the state they are doing business. A Surplus Lines insurer could be a domestic carrier but the best answer choice is D. 3. All of the following are true regarding the Assigned Risk Plan for Workers Compensation in New Jersey, Except -------CORRECT ANSWER--------------A. It's a method for employers to obtain Workers Compensation insurance when they are having difficulty in the normal marketplace B. If an employer is unable to obtain coverage in the normal marketplace, the state will assign an insurer to write the risk C. The plan approves the rate structures used by all insurers writing workers compensation coverage in the state. D. All admitted carriers writing workers compensation insurance in the state must belong to the plan C- The Assigned Risk Plan is NOT involved in approving rating plans of the various insurers in the state. The other choices are all correct 4. Which of the following is true regarding coverage for a domestic employee for workers compensation in New Jersey? -------CORRECT ANSWER--------------A. The assigned risk plan for workers compensation in new jersey would provide the coverage automatically B. Domestic employees are exempt from coverage C. Coverage must be provided by the homeowners policy if the injured is to a resident or hired domestic servant in the home D. The employer must buy workers compensation insurance on the domestic employee C- If a domestic servant is injured while working in the home, the homeowners insurance for the employer must provide the workers compensation coverage for the domestic employee 5. Vacancy on the BOP can eliminate certain perils -------CORRECT ANSWER------------ --A. After 60 Days If the premises have been vacant for over 60 days, many important perils (such as glass breakage, vandalism, and theft) will be excluded. 6. An insurer's shared participation percentage in the Urban Enterprise Zone (UEZ)program is based on: -------CORRECT ANSWER--------------A. The number of written policies in the urban enterprise zone. B. The discretion of the commissioner of insurance C. The number of years operating in the state D. the financial size of the insurer. A- The insurer's participation percentage in the UEZ program is based on the number of policies the insurer has in force in that urban enterprise zone. 7. The minimum limits of a basic automobile liability insurance required by the state of New Jersey is: -------CORRECT ANSWER--------------A. 20/40/10 B. 25/50/25 C. 12.5/ 25/ 7.5 D. $15,000 of PIP and $5,000 of PDL D- By state law, the basic auto policy must contain PIP coverage and an optional $5,000 for property damage liability. 8. The Commissioner may suspend, revoke, refuse to renew, or refuse to issue a license. Prior to the revocation or denial of a license, the Commissioner must provide to Surplus Lines companies can charge whatever they want and their policies can say whatever they want. They are NOT authorized to do business in the state and therefore not subject to state approved policy forms, rules and rates. 14. Making any misrepresentation or incomplete comparison of policies to any person for the purpose of inducing that person to lapse a current policy best describes ------- CORRECT ANSWER--------------A. coercion. B. false advertising. C. rebating. D. misrepresentation. D- State law defines Unfair insurance trade practices as inducement to lapse a policy based upon misrepresentation of the terms of that contract. 15. In liability insurance, paying defense costs and expenses in a suit brought against the insured is a contractual obligation known as the -------CORRECT ANSWER------------ --A. Doctrine of Estoppel. B. Doctrine of Adhesion. C. Duty to Defend. D. Indemnification principle. C- Duty to defend The insurer's contractual obligation and duty to defend the insured in a liability lawsuit and pay all of the costs of the defense regardless of the outcome of the lawsuit is the core of liability protection. Without that, an insured could go bankrupt paying defense costs even if found not to be negligent in the lawsuit. 16. What is NOT a requirement of the Fair Credit Reporting Act? -------CORRECT ANSWER--------------A. Contact information of the suppliers of information must be made available to the consumer. B. The consumer can decide if the report will be used for underwriting purposes. C. Permission is needed prior to running the reports. D. Insurance companies using information contained on reports must inform the consumer by written statement of its intended use. B- The consumer does not have the right to decide if the information on the report will be used or not in the underwriting process. That is up to the insurer. 17. What statement concerning the Dwelling Property Special Form (DP-3) is NOT true? -------CORRECT ANSWER--------------A. The insured may apply 10% of the "Coverage A" amount for farm property. B. An extension of 10% of the contents limit is provided while property is off the premises. C. The insured may apply 10% of the "Coverage A" amount for a detached garage. D. The insured may apply 20% of the "Coverage A" amount for rental income. A- Up to 10% of the dwelling amount may be applied to a detached garage and 20% toward rental value. Contents off the premises are covered up to 10% of the contents limit. There is no coverage under the dwelling policy for farms; that is better covered with other forms. 18. Which of the following is NOT required to be licensed in the State of New Jersey? --- ----CORRECT ANSWER--------------A. A person helping enroll a group benefit program. B. A CSR binding coverage for a client C. A person transacting the business of insurance D. A person selling auto insurance A- Someone performing clerical duties in helping enroll a group benefit program is not required to be licensed in New Jersey. The other three are all performing insurance transactions and must be licensed. 19. The most common co-insurance percentage amount that appears in a property contract is -------CORRECT ANSWER--------------A. 80% B. 60% C. 90% D. 75% A- 80% Co-insurance requirements are usually offered as 70, 80, 90, or 100 percentage amounts, with 80% being the most commonly chosen. 20. What insurance policy clause best illustrates the principle of indemnity? ------- CORRECT ANSWER--------------A. Inspection and Audit B. Other Insurance C. Liberalization D. Cancellation B- Other Insurance Under the "Other Insurance Clause," if more than one carrier is involved in insuring the property, each carrier is responsible for its share of claims equal to its share of the total insurance. This way, the customer cannot collect the total claim amount from more than one carrier. After each carrier has paid its share of the loss, the insured has been indemnified for the actual loss only. 21. A driver swerves to avoid a pedestrian and strikes a parked auto. The proximate cause of this loss would involve the -------CORRECT ANSWER--------------A. driver's auto. B. parked auto. C. none of the choices presented D. pedestrian. D- Pedestrian A proximate cause is an "unbroken chain of events." The pedestrian caused you to swerve, which in turn caused you to hit the parked car. D. the agent may request an appeal of the ruling. C- Obviously, if the agent's license is revoked by the Department of Insurance, all insurer appointments held by the agent are also canceled. 28. Interstate trucking operations are required to carry minimum liability limits based on what is being transported. Which of the following is required to prove the required limits are in force? -------CORRECT ANSWER--------------A. SR-22 B. BAP-90 endorsement C. MCS-90 endorsement D. Motor Carrier policy C- The MCS 90 endorsement to the Motor Carrier/Truckers form will provide proof to the state and federal highway department that the required minimum liability limits are in force based on what is being transported. 29. A surplus lines carrier is normally -------CORRECT ANSWER--------------A. a qualified domestic insurance company. B. an agent of a foreign insurance company licensed in this state. C. an agent of a qualified domestic insurance company. D. free from state regulation in the area of rates and policy forms. D- Free from state regulation A surplus lines company is usually not authorized to do business in the state, so it is not under state regulation when it comes to rates and policy forms. 30. Contents are covered anywhere in the world unless they are regularly or permanently located in another residence. If so, what is the limit of coverage on those items regularly off the premises? -------CORRECT ANSWER--------------A. 25% of the Coverage C limit B. 10% of the Coverage C limit C. 75% of the Coverage C limit D. 50% of the Coverage C limit B- Although the homeowners form extends coverage to contents anywhere in the world, there is a 10% limit of Coverage C on anything regularly or permanently off the premises or $1,000 whichever is greater. 31. Larry just bought his first home - a cheap fixer-upper in a town where the average snowfall exceeds 80 inches per year. It may be an old house in a rundown neighborhood, but he still wants to protect his initial investment. What is the cheapest policy option that would protect Larry's financial interest in his home, even in the winters? -------CORRECT ANSWER--------------A.HO-4 B.HO-2 C.HO-5 D.HO-3 B- HO-2 The question is asking which policy form would be the cheapest. The HO-2 is a named peril broad form policy which would be cheaper than the all risk HO-3 or HO-5. The HO- 4 would not provide any coverage for the building. 32. St. Mark's church is having their annual pancake breakfast. The pastor is concerned if someone is injured while donating their time to serve guests. Which of the following, if any, will be necessary for the Workers Compensation coverage for the church to apply? -------CORRECT ANSWER--------------A. Make sure the Volunteer Coverage endorsement is added to the Workers Compensation policy. B.Make sure these volunteers do not work more than 6 hours. C. Hire these volunteer people for the day as employees. D. Make sure these volunteers sign a waiver a liability before the event begins. A- Although the attorney for the church would like to see the waiver signed by all volunteers, the Voluntary Coverage endorsement would cover these people if hurt while serving the breakfast 33. A robbery is best defined as -------CORRECT ANSWER--------------A. a mysterious disappearance of property. B. visible signs of a forced entry or exit. C. stealing. D. taking of property by threat of bodily harm. D- Taking Property by threat or bodily harm. Robbery is taking property by threatening someone with bodily harm. 34. Loss Prevention service is a feature on Equipment Breakdown Coverage which includes all of the following EXCEPT -------CORRECT ANSWER--------------A.direct notice of cancellation. B.no advance notice/inspection. C.red tagging. D.suspension of coverage. A- Equipment Breakdown Coverage is an older type of coverage, but has been expanded to cover various mechanical devices. A direct notice of cancellation is not a loss prevention service. 35. Toni's policy states that it will provide a $100,000 liability limit per -------CORRECT ANSWER--------------A. aggregate limit. B. occurrence limit. C. combined D. single limit. per person limit. C- Combined Single Limit 42. Someone breaks down the door to a store and steals merchandise. This loss is related to the peril of -------CORRECT ANSWER--------------A.embezzlement. B.barratry. C.burglary. D.robbery. C- Burglary is the taking of property through visibly forced entry or exit. 43. What is NOT true about insurable risks? -------CORRECT ANSWER--------------A. The loss must not be catastrophic B. The loss must not be definite and definable C. The loss must be large enough to create economic hardship D. The law of large numbers should apply B- The loss must not be definite and definable Just the opposite is true. In order to be insurable, losses must be definite and definable. 44. Insurers must be able to predict with reasonable accuracy the number and the amounts of losses they can expect. This is the principle of -------CORRECT ANSWER--- -----------A. Indemnity. B. Adhesion. C. Utmost Good Faith. D. Law of Large Numbers. D- The law of large numbers Insurers need to collect from a large number of people to pay for the claims of a few people. The larger the number of risks insured the more accurate the claim predications become. This is the basis of the Law of Large Numbers. 45. The Commissioner of Insurance does NOT have the authority to -------CORRECT ANSWER--------------A.request the attorney general to commence an action for a declaratory judgment in a case in which there is no administrative procedure available to the Commissioner to resolve an issue. B.administer oaths, summon and compel by order, or subpoena the attendance of a witness to testify. C.terminate an agent's license for failure to meet the company's minimum production requirements. D.initiate criminal proceedings by presenting evidence of any criminal offense. C- B, C, and D are all regulatory powers of the Commissioner of Insurance. It is up to each insurer to regulate the production of its agency staff. 46. What statement is true concerning the homeowners policy coverage for your 200- horsepower motorboat? -------CORRECT ANSWER--------------A. There is $1,500 property coverage and no liability coverage. B.There is no property coverage and limited liability coverage. C.There is full property and liability coverage. D.There is no property or liability coverage. A- The homeowners policy will pay up to $1,500 for physical damage to any watercraft, but liability caused by the boat is excluded if it is an outboard motorboat with more than 25 horsepower or an inboard motorboat over 50 horsepower. 47. A statement that can be relied on all of the time is called a(n) -------CORRECT ANSWER--------------A. warranty. B. representation. C. implied response. D. all of the choices presented A- Warranty A warranty is an absolute, literal fact that can be relied on all of the time. 48. Leroy became a licensed property and casualty agent on August 22, 2013. Assuming his birthday is in August, when must he have his 24 hours of continuing education completed? -------CORRECT ANSWER--------------A.8/31/15 B.12/31/11 C.7/31/11 D.12/31/12 A- Each agent has two years to complete the required 24 hours of continuing education hours. After the initial qualifying period, you must re-qualify every two years by the last day of your birth month. 49. Under a personal auto policy, what type of physical damage loss is NOT covered? -- -----CORRECT ANSWER--------------A.collision with an animal B.loss to stereo equipment that is not permanently installed C.glass breakage caused by vandals D.transportation expenses following theft of the entire auto B- The auto policy will pay only for equipment permanently mounted in the car (and sometimes even that can be denied), but something that is not permanently attached is not covered by the auto policy. 50. Which of the following would not be grounds for disciplinary actions by the Commissioner of Insurance -------CORRECT ANSWER--------------A. Failing to meet the insurer's quarterly objectives B. Cheating on a licensing exam C. Failing to timely submit an application for insurance D. Conviction of a misdemeanor involving theft of money or property B.50% C.100% D.25% B- 50% This follows the "other insurance" clause. Since each company is covering the property for 50% of the total insurance in force, each company will pay 50% of the incurred claims. 57. Who is responsible for the expenses of an insurer audit by the state Department of Insurance? -------CORRECT ANSWER--------------A. the State Auditor's Office B. the insurer being audited C. the State General Fund Account D. the state of Ohio Department of Insurance B- It is the insurer's responsibility to be financially solvent. Therefore, the expenses incurred in an insurance department audit are borne by the insurer. 58. Which of the following would NOT be considered an unfair claims settlement practice? -------CORRECT ANSWER--------------A.knowingly misrepresenting pertinent facts or policy provisions relating to the coverage at issue to claimants B. compelling insureds to institute suits to recover amounts due by offering substantially less than the amounts ultimately recovered in suits brought by the insurer C.failing to make payment within 30 days of receipt of all required documentation D.failing to pay an unsubstantiated claim D- The insurer must make every effort to settle the claim in a fair and prompt manner. Not paying a claim that is not documented or substantiated is not unfair 59. After a covered loss, the insurer may do all of the following, EXCEPT ------- CORRECT ANSWER--------------A.make an Actual Cash Value settlement. B.replace the damage property with new. C.repair with like kind and quality. D.pay the difference between the cost new and the actual cash value. D- Pay difference between cost new and actual cash value The insurer should make the insured whole again. Answers A and D would make the insured whole again. Answer B would actually make the insured better if the company uses that method. The company cannot offer the difference between the replacement cost and the cash value. 60. Which of the following is NOT considered a consequential loss? -------CORRECT ANSWER--------------A.loss of rents B.loss of business income while a building is closed for repairs C.extra expense involved in repairing damaged property D.damage to personal property D- Damage to Personal Property There must be a direct loss for a second loss or consequential loss to be involved. 61. What entity may be licensed by the state to solicit or negotiate insurance contracts? -------CORRECT ANSWER--------------A. individual B. All of the answers C. partnership D. corporation B- According to state law, an individual, corporation, or partnership can all be licensed with insurance companies as a business entity 62. The Fair Credit Reporting Act provides that -------CORRECT ANSWER-------------- A.credit life insurance must be issued on a standard basis. B.the applicant for insurance must be aware that a consumer report may be requested with regard to his or her application for insurance. C.the face amount of a life insurance policy must be paid to the primary beneficiary in the event the insured dies. D.insurable interest must exist at the time of application. B- The first requirement of the federal Fair Credit Reporting Act is that the consumer be given notice that a consumer report (credit bureau report) may be ordered and used by the insurance company in making its decision. The Act also outlines what actions a consumer may take if denied a policy due to the consumer report. 63. If a violation has caused or is about to cause substantial and material harm, the Commissioner may: -------CORRECT ANSWER--------------A. Immediately fine the individual up to $25,000 B. Revoke the agent's license for two years. C. Issue an order that the person in violation cease and desist from the activity. D. Suspend the agent's license for 30 days C- The Commissioner will issue a Cease and Desist order and could ask the Attorney General to file charges against the agent. 64. Actual cash value may be arrived at by taking the property's replacement cost and subtracting the -------CORRECT ANSWER--------------A. original purchase price. B. market value. C. depreciation value due to wear and tear. D. assessed value. C- Depreciation value due to wear and tear D.55% of the average weekly wage C- The payment will be 70% of the average weekly wage at the time of the disability. 71. Requiring the insured to use a specific body shop or not replacing a totaled vehicle with a comparable vehicle is an example of: -------CORRECT ANSWER--------------A. Indemnity B. Actual Cash value C. Unfair Insurance trade practices D. Unfair Insurance claims practices D- An insurer cannot require an insured to use a specific body shop in order to get a claim paid. If the vehicle is considered totaled, it must be replaced with a substantial similar vehicle. 72. Survivor benefits will be paid to the dependents of a deceased worker until they are 18 or _____if a full time student. -------CORRECT ANSWER--------------A.23 B.21 C.25 D.24 A- Benefits for surviving dependents are payable up to age 23 if enrolled as a full time student. 73. Kim shows up at the agent's office to pay her premium on her policy that cancelled last night. The agent accepts the premium and Kim believes her policy is paid. This is an example of what kind of agent authority? -------CORRECT ANSWER--------------A. assumed B. apparent C. implied D. expressed B- Apparent The agent's actions have given Kim the impression that the company has accepted the premium on the cancelled policy. This is an example of apparent authority based on the agent's actions. To Kim, apparently, the agent can do this by his actions and in her eyes the actions of the agent are the actions of the company and the law would agree with her. 74. What is NOT a defense against negligence? -------CORRECT ANSWER-------------- A.comparative negligence B.contributory negligence C.assumption of the risk D.vicarious negligence D- Vic Negligence Vicarious negligence is a nonsense term, and is not a defense. 75. All of the following are true regarding personal injury protection in New Jersey, except: -------CORRECT ANSWER--------------A.Loss of income benefits are paid at 70% of monthly earnings B.Coverage will be issued at a minimum of $15,000 per person C.After a $250 deductible medical bills are paid at 80% D.Coverage can be increased to $250,000 per person at the option of the insured A- Loss of income benefits are payable at 75% of monthly earnings. The other three choices are all correct regarding personal injury protection in New Jersey. 76. Your vehicle is totaled. The insurer is required to replace it or give you the actual cash value of a comparable vehicle which means all of the following, EXCEPT: ------- CORRECT ANSWER--------------A.Same color B. The cost of a comparable auto available in the local market area C.Same year, make and model D.Same equipment and features A- Substantially similar vehicle does not require the color to be the same but it should be the same year, make, model with the same features or the cost of a comparable vehicle available in the market area 77. What does NOT need to be present in order for a contract to be legally binding to both parties? -------CORRECT ANSWER--------------A. legal purpose B. consideration C. offer and acceptance D. written agreement D- Written Agreement Oral contracts are acceptable in many states; having the contract in writing is not necessarily required. Common sense, however, points out the difficulties of enforcing the terms of the contract unless they are written. 78. Being held responsible for someone's injuries, even though you might not have been negligent, is defined as -------CORRECT ANSWER--------------A. presumed negligence. B. vicarious liability. C. imputed liability. D. strict liability. D-Strict Liability Some actions are so dangerous that liability is strict or absolute and you are responsible without having to prove negligence, like explosives/fireworks. D. establishing rates for new policies D- Establishing rates for new policies Agents are not involved in the actual work done to establish rates charged for insurance. This is done by the individual insurance company in the actuarial and underwriting department. 85. These coverage's are in addition to the limit of insurance, but at no extra cost, EXCEPT -------CORRECT ANSWER--------------A.debris removal. B.cost of defense. C.additional coverage. D.off premises power interruption. D- HO policies also contain several additional coverage's, most of which are in addition to the policy limits. These additional coverage's are built into the contract and require no additional premium. Off premises power failure is a peril that is excluded on all homeowner forms. 86. Which of the following is NOT an Uninsured Motorist? -------CORRECT ANSWER---- ----------A. Someone who has insurance written for the state legal minimums. B. Someone whose insurance does not comply with state financial responsibility laws. C. Someone whose insurance denied the claim or is bankrupt. D. Someone who is a hit and run driver. A- Someone with insurance written for at least the state legal minimums is not UNINSURED. 87. Upon receipt of all requested information, how long does a company have to accept or deny a first party claim? -------CORRECT ANSWER--------------A.10 days B.90 days C.30 days D.5 days C- Once the insurer has all of the required or requested documentation from the insured or any other outside source, they must accept or deny the claim within 30 days. 88. Transferring risk by accumulating funds best describes the concept of ------- CORRECT ANSWER--------------A. indemnity. B. insurance. C. occurrence. D. insurable interest. B- Insurance Insurance is a means of "transferring" the risk of one (the insured) to a group (the insurance carrier or insurer.) 89. What is NOT found on the declaration pages of the homeowners policy? ------- CORRECT ANSWER--------------A.location of the dwelling B.deductible C.exclusions D.policy term C- Items not covered are listed in a separate exclusions section of the policy. 90. In Workers' Compensation insurance, the "other states" coverage does NOT protect employees of a firm who may be injured in -------CORRECT ANSWER--------------A.New York. B.Canada. C.Delaware. D.Alabama. B- Other states coverage is designed for the other states of the U.S. If you have an employee working outside of the country, coverage will need to be amended by endorsement to cover this exposure. 91. An employee making a workers' compensation claim for loss of income due to an occupational disease will have a ____________waiting period before benefits begin. ---- ---CORRECT ANSWER--------------A.7 day B.15 day C.30 day D.10 day A- Disability benefits under workers compensation will not be paid for the first 7 days of disability, however if the disability continues beyond the first 7 days, the benefit is retroactive back to the date of the disability. 92. Violations of the Urban Enterprise Zone (UEZ) program could result in a fine up to a maximum of: -------CORRECT ANSWER--------------A.25,000 B.5.000 C.10.000 D.1.000 A- The key word in the question is "maximum". The fine can be up to $25,000 for violating the UEZ program 93. What is NOT excluded from liability coverage on the homeowners policy? ------- CORRECT ANSWER--------------A.golf carts used on the golf course B.business pursuits C.intentional acts record B.Sex of the applicant C.Gender D.Marital status A- The driving record of an applicant would be a reason to deny the availability of insurance. However the insurer cannot use the marital status or gender in discriminating against an insured. Sex of the applicant is the same as gender. 100. The retroactive date and the expiration date of the claims made CGL policy are examples of -------CORRECT ANSWER--------------A.limitations in coverage. B.exclusions under the policy. C.nonsense terms on a claims made CGL. D.dates that "trigger" the start or end of coverage. D- In order for a claims made CGL policy to respond, the event had to happen after the retroactive date and be reported during the policy period. These are the "triggers" that activate the policy. 101. What is NOT true about a business owner's policy? -------CORRECT ANSWER----- ---------A.The standard form provides named-peril coverage. B.Money is available only by endorsement on the special form. C.Medical payments coverage is automatically included. D.Business income is covered on an "actual loss sustained" basis with no time limit. D- Business income is covered on an actual loss sustained basis, up to 12 months after the loss. 102. A building is damaged by fire caused by a third party. The insured will receive payment for the loss from whom? -------CORRECT ANSWER--------------A. The insured should collect damages in full from the third party, plus the amount of insurance payable by the insurance company. B.The insurance company will pay the loss (within the limits of coverage). To the extent that payment had been made under the policy, the insured is required to assign to the insurance company any right of recovery from the responsible party. C. The insurance company is not obligated to pay anything; the only recourse the insured has is to try to collect from the responsible third party. D. The insurance company will pay the insured the amount of the loss, up to the amount of the policy. It will expect the insured to collect from the person responsible for the damage and then reimburse the company. Answer is B. This is known as the right of subrogation. Since the insurer has indemnified the insured by paying for the damaged property under the policy, the carrier wants the right to pursue the responsible party for compensation. The agency will require the insured to sign a waiver of subrogation, allowing the carrier to collect from the responsible party. 103. Concealment is defined as -------CORRECT ANSWER--------------A. answering incorrectly on an insurance application. B. hiding information from the agent. C. having someone else fill out your insurance application. D. the deliberate omission of a material fact from the agent or the company. D- The deliberate omission If a customer or claimant intentionally withholds important facts and data from the agent or the insurance company, it is considered an act of concealment, which could deny the claim or void the policy entirely. 104. The CGL will exclude damage to property in the insured's care, custody, and control unless the damage is caused by -------CORRECT ANSWER--------------A.water. B.fire. C.pollution. D.explosion. B- The CGL will pay for damage done to the property of others in the care of the insured if it is caused by a fire. This used to be called Fire Legal Liability but is now known as Damage to Premises Rented to You. 105. A temporary auto insurance ID card is good for: -------CORRECT ANSWER---------- ----A.30 days B.90 days C.Until the end of the policy period D.60 days D- If an auto insurer issues a temporary ID card it must be clearly marked on the card that it expires in 60 days of it being issued. 106. In a property insurance contract, an insured's consideration is the -------CORRECT ANSWER--------------A. payment of the premium. B. recommendation of protection. C. promise to pay. D. selection of proper coverage. A- Payment of the premium Consideration in a contract is the item of value that a party brings to the contractual relationship. 107. When a business will shut down due to a covered loss, the indirect consequential loss that accrues over time would be -------CORRECT ANSWER--------------A.costs to rent other locations. B.loss of income. B.a can of soup falls off a food store's shelf and injures the child of a customer C.an employee cuts her leg on the sharp edge of a metal chair D.a hardware store delivery truck accidentally damages the store's own loading dock during a delivery B- The CGL pays out to "others," not the insured. Employees are considered to be insureds under the policy and their injuries are better covered under Workers' Compensation. The CGL will also exclude damage done to the insured's own property. 114. What best defines concealment? -------CORRECT ANSWER--------------A. deliberate omission of a material fact B. voluntary omission of an underwriting factor C. hiding the truth from the insurer D. hiding the truth from the insured A- Deliberate omission of a material fact. If a material fact involved in the underwriting process is deliberately omitted, it is considered to be concealment. 115. A business has a business owner's policy and an Equipment Breakdown policy on a printing press. If a total loss occurs due to the mechanical breakdown of the press, how will it be paid? -------CORRECT ANSWER--------------A.pro rata B.equal shares C.boiler and machinery policy pays D.business owner's policy pays C- Since the cause of the loss is mechanical breakdown, the BOP will exclude coverage for this peril. The Equipment Breakdown policy does cover damage due to mechanical breakdown, so it will take care of this loss. 116. You have a personal auto policy with $50,000 bodily injury liability and $25,000 property damage liability limits. You borrow Sally's car and strike a pedestrian. Sally has $100,000 limit of bodily injury liability. How much will your insurer have to pay if a $95,000 judgment is rendered against you? -------CORRECT ANSWER-------------- A.$47,500 B.$0; Sally's company must pay C.$95,000 D.$50,000 B- Sally's policy on the auto is primary and must respond first. Since there is enough coverage under Sally's policy to handle the claim, her carrier will take care of it. 117. The home daycare endorsement -------CORRECT ANSWER--------------A.is a mandatory endorsement automatically added to the homeowners policy. B.covers only home daycare services provided to relatives of the insured. C.is a "buy back" of an exclusion that states home daycare is not covered for personal liability because it is considered a business pursuit. D.cannot be added to the HO-4 renter's policy because apartments are generally smaller in size and not conducive to home daycare. C- Home daycare is a business. Business exposures are excluded for liability under the homeowners policy. This endorsement "buys back" the liability coverage. 118. Coverage against loss by some perils (vandalism, theft, etc.) under the "building and personal property" coverage form is EXCLUDED if -------CORRECT ANSWER------- -------A.the insured building is vacant for more than 60 days. B.the insured fails to satisfy the co-insurance provision. C.a loss occurs while a hazard beyond the insured's control is increased. D.an uninsured peril caused a partial loss. A- Vacancy is a physical hazard that increases the chance of loss. After 60 days in commercial insurance, perils such as vandalism and theft are excluded. 119. A business owner's policy with a protective safeguard endorsement would require an insured to notify the insurance company if sprinklers are inoperable for ___ hours. --- ----CORRECT ANSWER--------------A.36 B.48 C.12 D.24 B- If you have received a premium discount because you have a protective safeguard such as an alarm system or sprinkler system, you must notify the carrier within 48 hours if the system becomes inoperable. If not, the warranty you provided about having the system and that it works is voided and a possible claim could be denied. 120. Umbrella policies usually provide additional excess layers of liability and typically feature -------CORRECT ANSWER--------------A.neither a self-insured retention nor policy limits stated in one or more millions of dollars. B.a self-insured retention. C.both a self-insured retention and policy limits stated in one or more millions of dollars. D.policy limits stated in one or more millions of dollars. C- The Self-Insured Retention functions much like a deductible and umbrella limits usually are bundled in layers of $1,000,000. 121. The effective date of issuance of an agent's license for a qualified applicant who has not previously been licensed by the Department of Insurance is -------CORRECT ANSWER--------------A.when approved by the Department of Insurance. B.90 days following the date on which the agent is assigned a license number by the DOI. C.30 days following the date on which the agent is assigned a license number by the DOI. D.60 days following the date on which the agent is assigned a license number by the DOI. D.$15,000 A- The peril causing the damage is covered by the policy; therefore, after the $500 deductible, Jayne will receive $15,500. 128. Sarah wants to find out how financially sound her insurance company is. She can check all of the following sources, EXCEPT -------CORRECT ANSWER--------------A. AM Best Company. B. Department of Insurance. C. Standard and Poor's. D. Moody's. B- Department of Insurance The Department of Insurance does not rate the financial strength of insurance companies. The other three choices are all independent rating services that will provide this information to Sarah. 129. If a person violates the co-insurance provisions of the policy, how much will be received in the event of a total loss? -------CORRECT ANSWER--------------A. nothing B. only a portion of the loss C. the full loss D. the policy limit D- The Policy Limit Co-insurance rules only apply to partial losses, never total loss. In the event of a total loss, the insurer owes the limit of coverage on the policy. 130. Under an 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 -------CORRECT ANSWER--------------A. declaration. B. subrogation. C. elimination. D. arbitration. D- Since "uninsured motorists" coverage is a liability issue between the insurer and the injured insured, the dispute will be settled by arbitration. 131. The time frame of coverage and the location of coverage are referred to as ------- CORRECT ANSWER--------------A. perils covered and proof of loss reporting. B. peril exclusions and proof of loss reporting. C. policy period and policy territory. D. policy exclusions and claim conditions. C- Policy Period and Policy Territory The policy period is the time frame covered and the territory is where coverage applies. Generally, the U.S., its territories, Puerto Rico and Canada. 132. The homeowners permitted incidental occupancies endorsement -------CORRECT ANSWER--------------A.automatically covers teachers for corporal punishment. B.will extend coverage only for corporal punishment to secondary (grades 7-12) school teachers, not primary (grades K-6) school teachers. C.will not cover a teacher for corporal punishment under any circumstance. D.requires an extra premium to cover teachers for corporal punishment. C- Corporal punishment is the physical abuse of a student. This would never be covered. 133. Because an injured worker gives up the right to sue the employer for work related accidents and injuries, workers compensation insurance is considered to be: ------- CORRECT ANSWER--------------A.Primary B.Legal liability C.Exclusive remedy D.Excess C- Giving up the right to sue in return for the prompt and fair payment of a work related accident or injury is the exclusive remedy of the workers compensation laws. 134. You wish to cancel your homeowners policy prior to the expiration date. The insurance company would provide you with what type of a refund? -------CORRECT ANSWER--------------A. short rate B. annual premium C.pro rata D. full refund of premiums you paid A- Short Rate If the customer cancels the policy, the refund is calculated on a "short-rate" basis. 135. The inflation guard endorsement will automatically raise the limits on what part of the homeowners policy? -------CORRECT ANSWER--------------A.Coverage B B.Coverage A C.both Coverage A and B D.neither Coverage A nor B C- Coverage A (dwelling) and B (other structures) are automatically increased to match the cost of inflation. 136. Which of the following best describes the Contribution by Equal Shares claim provision? -------CORRECT ANSWER--------------A. the insurer with the highest limit pays first B. each insurer pays on a pro-rata percentage based on who is most liable 142. Agent Williams states that his policy will be guaranteed renewable for at least 5 years. Williams is guilty of -------CORRECT ANSWER--------------A.misrepresentation. B.being a good salesperson. C.fraud. D.twisting. A- No policy is guaranteed to be renewed for 5 years. This is a misrepresentation of the terms. 143. The principle of indemnity -------CORRECT ANSWER--------------A. allows the company to collect from a third party. B. limits recovery to actual cash value. C. allows the insured to profit from a loss. D. restores the insured to the same condition enjoyed before a loss. D- Restores the insured Indemnity means to "make whole again." The insured is back in the position enjoyed prior to the loss, but with no gain either. 144. On the BOP, in which situation would Utility Service - Time Element coverage apply? -------CORRECT ANSWER--------------A.Anna's Paper Company burns to the ground when a faulty wire starts a fire B.After a tornado causes a pipe to burst at Dunkin' Donuts leaving the shop without water for days, the shop is forced to rent a new space in order to keep the business functioning C.An electrical circuit shorts at the butcher shop during a storm causing a power outage. Despite the shop's best effort to preserve the inventory, half of the meat in the freezer goes bad during the outage D.Steve's Software Solutions loses power for two days when lightning damages the power station. Steve experiences a significant loss of income during the outage D- Time Element is another way of saying an indirect loss. The loss of income from the loss of power is an indirect loss covered by the Utility Service-Time Element coverage. 145. The Do-Not-Call list regulations prohibit -------CORRECT ANSWER-------------- A.calls from a tax-exempt non-profit organization. B.pre-recorded commercial messages from someone without an established business relationship. C.calls that are not commercial or do not include unsolicited advertisements. D.calls from an organization with an established business relationship. B- Calls that are pre-recorded commercial messages from someone who does not have an established business relationship or who does not have permission to call are prohibited. 146. An insurance license may NOT be revoked for what reason? -------CORRECT ANSWER--------------A.cheating on the state insurance exam B.conviction of a misdemeanor C.conviction for a felony D.violating a rule, while in another state, made by that state's insurance Superintendent B- A misdemeanor will not cause you to lose your license. However, you could be subject to other penalties. 147. Under the garage policy, coverage to reimburse the garage to replace the faulty parts would be covered by? -------CORRECT ANSWER--------------A. Broad Form Products coverage B. Employees as insureds C. Non-owned Auto coverage D.- Lessor-Additional Insured A- Product liability does NOT pay to recall or reinstall faulty parts. The Broad Form Products coverage would reimburse the garage for their labor costs to reinstall a new part in place of the faulty one. 148. Which is NOT a rebate? -------CORRECT ANSWER--------------A.offering a flat screen TV B.giving back any or all of the premium paid by the insured C.offering a weekend for two to Disneyland D.offering valuable consideration valued at $10 or less for the opportunity to quote insurance. D- Offering a gift or meal valued at $10 or less to quote or explain insurance is not rebating as long as it is not tied to the purchase of the policy. 149. What is NOT considered an unfair and deceptive practice? -------CORRECT ANSWER--------------A.twisting B.issuing a surcharged policy based on underwriting information. C.rebating D.misrepresentation B- All are things an agent would do to induce a person to buy from him or her, except issuing the policy with a premium surcharged based on factual underwriting information. 150. Swamp Mutual obtains a certificate of authority to do business in the state and agrees to abide by the state laws regulating the insurance business. Swamp Mutual is a(n) -------CORRECT ANSWER--------------A. Mutual insurer. B. Admitted/Authorized insurer. C. Surplus Lines insurer. D. Non admitted/Unauthorized insurer. B- Admitted/ Authorized 157. Which of the following would invalidate a contract? -------CORRECT ANSWER------ --------A. activities laundering funds B. competent parties as defined by the courts C. one for legal purposes D. agreement between and insurer and a 85 year old insured A- Activities laundering funds Contracts, in order to be valid, must be for legal purposes. Laundering money may be an illegal activity. 158. In New Jersey, your insurance license will be deemed active -------CORRECT ANSWER--------------A.as soon as the Department of Insurance receives your grades. B.upon the receipt of the formal license at the applicant's residence. C.after the department reviews the background check and application and notifies the candidate that the license is active. D. at the time you successfully complete the exam. C- Your license is active upon completion of the application to be a producer and the background check being approved by the Department of Insurance. You will be notified when the license is active. 159. In New Jersey, If death results from an occupational injury or disease, dependents of the deceased worker will be paid the following: -------CORRECT ANSWER-------------- A.60% of the average weekly wage B.75% of the average weekly wage C.80% of the average weekly wage D.70% of the average weekly wage D- If death results from the personal injury of an employee, the employer shall pay to the dependents of the employee who were wholly dependent upon the employee's earnings for support at the time of the injury, a weekly payment equal to 70% of the employee's average weekly wage. 160. What is true about the business owner's policy? -------CORRECT ANSWER---------- ----A. Medical payments to others coverage is automatically included with a maximum limit of $1,000 per person. B. The liability coverage of the business owner's policy is very similar to an "occurrence" version CGL. C. Business income coverage is not automatically included but can be added by endorsement. D. The standard form provides "all risk" coverage. B- The BOP is a piece of commercial insurance, so the liability portion of the BOP is similar to the CGL and is written on an occurrence form. 161. What is an element of a legal contract? -------CORRECT ANSWER--------------A. consideration B. competent parties C. legal purposes D. all of the choices presented D- All of the choices presented In order for a contract to be enforceable, it must have certain characteristics. They are: competent parties, legal purposes, offer and acceptance, and consideration.