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OK License Exam Questions With
Answers
Roxanne bought her 50" TV four years ago for $2,400. During a storm, her house was struck by lightning and the current fried her TV. The TV depreciates at $400 per year and a similar TV costs $1,200 today. Assuming Roxanne's homeowners policy has a replacement cost endorsement for personal property, how much can she expect to receive in indemnification for her damaged TV? A. $ B. $1, C. $2, D. $800 - ANSWER>>B. $1,
the TV is four years old and has depreciated $400 per year. This means the total depreciation = $1,600. The replacement cost is $1,800. So, subtract $1,600 from $1,800 and you get $200.
A reservation of rights: A. lets the insurer begin to investigate a claim, without later being forced to pay it if it turns out not to be covered. B. is a letter that needs to be signed by the policyholder. C. informs the policyholder that his claim has been denied. D. means that the insurer does not need to defend a policyholder in court. - ANSWER>>A. lets the insurer begin to investigate a claim, without later being forced to pay it if it turns out not to be covered.
A Reservation of Rights letter is sent by: A. the policyholder to the insurance company.
B. by the claimant to his legal counsel. C. a third party to the responsible first party. D. the insurer to the claimant. - ANSWER>>D. the insurer to the claimant.
Which of the following is excluded from liability insurance coverage? A. vicarious liability B. intentional acts of tort or wrongdoing C. carelessness D. unintentional acts of negligence - ANSWER>>B. intentional acts of tort or wrongdoing
Larry accidentally left a candle burning when he went to sleep one night, and his house caught fire. Larry disagrees with the amount of the adjuster's estimate to repair the damage, so he and his insurer have each chosen a representative, and the two representatives have also mutually decided upon an umpire. These three individuals will attempt to reach a settlement amount, and if at least two of them agree, the decision will be legally binding. What type of negotiation technique are Larry and his insurer using? A. Mediation B. Arbitration C. Litigation. D. Appraisal - ANSWER>>D. Appraisal
Common law is based upon: A. written laws promulgated by the federal government. B. state law. C. court decisions and customs. D. tort law. - ANSWER>>C. court decisions and customs.
After wrecking her car on an icy road, Lilly filed a claim with her insurer, ABM Insurance, who dispatched Richard to investigate her claim. Who is the principal in this scenario?
C. coverage is not negotiable. D. the adjuster is trying to save the insurer from paying any claims. - ANSWER>>C. coverage is not negotiable.
Missy lives on the top floor at Lakewood Condominiums. One day, a windstorm severely damages the building, including structural damage, broken windows, and interior water damage to most of the units. Part of the roof over Missy's unit is torn off by the high winds, and the rain ruins her furniture and hardwood floors. Which of these losses would be covered by Missy's HO-6 policy? A. Missy would be indemnified for all of the damage to her unit, including the roof, furniture, and hardwood floors. B. Missy would not receive any indemnification because all of the damage would be covered under Lakewood Condominiums' policy. C. Missy would be indemnified for her furniture, but the roof and floors would fall under Lakewood Condominiums' policy. D. Missy would be indemnified for her furniture and floors, but not the roof. - ANSWER>>B. Missy would not receive any indemnification because all of the damage would be covered under Lakewood Condominiums' policy.
In order to be considered "fully insured" at 80% or more, Richard must carry at least $240, in insurance coverage on his home. What is the value of Richard's home? A. $192, B. $240, C. $300, D. $216,000 - ANSWER>>C. $300,
Which of the following is NOT one of the four types of Ocean Marine Insurance? A. Cargo Coverage B. Hull Coverage
C. Prevention & Insurance D. Freight Insurance - ANSWER>>C. Prevention & Insurance
Under Business Interruption Coverage, "Extra Expenses" may be covered if: A. the extra money spent on debris removal exceeds policy limits. B. the extra measure expands the company's product mix. C. the extra measure reduces the amount of income lost due to the covered peril. D. the lost income exceeds the limit of the commercial insurance policy limits. - ANSWER>>C. the extra measure reduces the amount of income lost due to the covered peril.
Jared is fishing from his 22-foot sailboat when he is caught in a sudden hailstorm. His boat suffers extensive hail damage. When he files a claim against his homeowners policy, he is upset to learn that his claim is denied because: A. the boat was not fully enclosed inside a building during the hailstorm. B. damage to sail boats is not covered by a homeowners policy. C. a homeowners policy will only cover watercraft smaller than 20 feet. D. damage to sail boats is only covered by endorsement. - ANSWER>>A. the boat was not fully enclosed inside a building during the hailstorm.
Which of the following statements about flood insurance is FALSE? A. Flood insurance policies are often sold as "write your own" policies B. Flood insurance rates are based on the location of the insured property. C. Flood insurance is sold through private insurers. D. Flood insurance rates are determined by private insurers. - ANSWER>>D. Flood insurance rates are determined by private insurers.
Company Q has a BOP with a Protective Safeguards endorsement that lists a sprinkler system. What does this endorsement do?
All of the following are true of the liability coverage in a Business Owner's Policy, except: A. Coverage is provided for both bodily injury and property damage from business operations and premises. B. Coverage is provided on a "claims-made" basis. C. Coverage comes with a series of separate aggregate limits. D. Coverage is provided for product and operation liability. - ANSWER>>B. Coverage is provided on a "claims-made" basis.
Which Inland Marine Business Floater would cover a slab of marble that the insured business has sold if it gets dropped and destroyed while being delivered to the buyer? A. Valuable Stones and Metals coverage B. Installation coverage C. Delivery coverage D. Dealer's coverage - ANSWER>>B. Installation coverage
Which of the following will be covered under Harry's DP-3 policy? A. Janice swerves off the road and plows through Harry's kitchen wall with her car. B. A large bird flies into Harry's living room window and cracks it. C. Wind blows down a $400 tree in Harry's front yard. D. Harry's neighbor Bob puts smudge pots all over his orchard to protect the trees from frost, and the smoke seeps into Harry's house and causes tremendous smoke damage. - ANSWER>>A. Janice swerves off the road and plows through Harry's kitchen wall with her car.
The Hometown Paint store burns down one night, and almost everything is destroyed. Which of the following items would NOT be covered under Coverage B in the store's commercial property policy? A. Computers used for matching paint colors B. A small, portable table top paint mixer
C. A large paint mixer permanently affixed to the floor D. Paint and supplies for sale - ANSWER>>C. A large paint mixer permanently affixed to the floor
When a fire breaks out in Bill's small woodworking business, it quickly builds momentum by igniting the scrap wood and other building materials. The fire department manages to contain and extinguish the fire, but the inside of the shop needs some serious repair. During these repairs, Bill cannot fill his orders and loses vital income. Which additional coverage could help replace Bill's lost income? A. Electronic Data Processing Insurance B. Valuable Papers Business Insurance C. Time Element Insurance D. Fire Insurance - ANSWER>>C. Time Element Insurance
Jill was forced to close her convenience store and evacuate because of a strong hurricane that hit her town. Jill was not allowed to reopen her store for two weeks, so she lost two full weeks of income. Which additional coverage would indemnify Jill for this loss? A. Law and Ordinance Coverage B. Business Interruption Insurance C. Business Owners Liability Insurance D. Extra Expenses Coverage - ANSWER>>B. Business Interruption Insurance
While driving the company car on business, Jack causes an accident with a bus carrying a sports team. Five people were injured in the accident, and the injuries totaled $240,000. Jack's company's business auto policy only covers up to $100,000 in bodily injury per accident. Which of the following would help cover the remaining liability caused by Jack's accident? A. Commercial general liability policy B. Extended liability policy C. Excess liability policy
C. Medical Payments coverage in Acme Hardware's CGL will pay for Gary's medical expenses, but not his dental expenses. D. Operations liability coverage in Acme Hardware's CGL will pay for Gary's medical expenses, but not his dental expenses. - ANSWER>>B. Medical Payments coverage in Acme Hardware's CGL will pay for both Gary's medical and dental expenses
An insurance policy's declarations page contains all of the following, EXCEPT: A. the deductible. B. the dates of the policy term. C. the perils insured against. D. the coverage limit. - ANSWER>>C. the perils insured against.
An adjuster has several tasks to complete during the adjusting process. All of the following are examples of the types of tasks an adjuster may be required to perform, EXCEPT: A. Suzanne calls Gary about his hail claim to schedule a time when she can come out and look at his roof. B. During a meeting with Darlene, Mindy collects various pieces of information and writes an auto policy for Darlene to purchase. C. David crawls up into Ian's attic to check for the source of the water damage to his ceiling. D. Matt collects various pieces of information and writes an estimate for the amount of indemnification he believes Sara is due. - ANSWER>>B. During a meeting with Darlene, Mindy collects various pieces of information and writes an auto policy for Darlene to purchase.
Which of the following statements is true? A. Replacement cost valuations are usually beneficial to the policyholder. B. A valued policy will always indemnify a policyholder utilizing actual cash value valuation. C. In determining how much to indemnify a policyholder in a replacement cost policy, an insurer must analyze how long the policyholder has owned the insured item.
D. Actual cash value generally reflects what it would cost to replace an item at current prices - ANSWER>>A. Replacement cost valuations are usually beneficial to the policyholder.
Which of the following adjusters is acting improperly as a fiduciary agent? A. Brenda investigates a claim and decides the losses are covered. She issues a settlement check to the claimant and closes the claim. B. Tony is assigned to adjust a claim submitted by his brother. He decides to give the case to a co-worker to avoid a biased decision. C. John calculates that the property damage he is investigating could easily bankrupt the claimant, but he denies the claim because the peril that caused the loss is excluded by the policy. D. Marjorie is trying to calm a claimant who is very upset, so she tells him that she is sure the loss is covered, even though she has not yet determined the cause of loss. - ANSWER>>D. Marjorie is trying to calm a claimant who is very upset, so she tells him that she is sure the loss is covered, even though she has not yet determined the cause of loss.
A person or entity that makes a claim for payment after a loss occurs is a/an: A. claimant. B. liable party. C. adjuster. D. tortfeasor. - ANSWER>>A. claimant.
What is the main difference between a Full Release Settlement and a No Release Settlement? A. In a No Release Settlement, the claimant signs a release form to release the insurer from additional claims; in a Full Release Settlement, the claimant does not sign a release form. B. A No Release Settlement can be used for any type of claim, whereas a Full Release Settlement is generally only used for property damage claims.
A. Policy X pays $50,000; Policy Y pays $50,000; and Policy Z pays $25, B. Policy X pays $71,250; Policy Y pays $36,250; and Policy Z pays $17, C. Each policy pays $41, D. Policy X pays $100,000; Policy Y pays $12,500; and Policy Z pays $12,500 - ANSWER>>A. Policy X pays $50,000; Policy Y pays $50,000; and Policy Z pays $25,
Carol wants to purchase a homeowners policy that includes coverage for hail damage. Before writing a policy for Carol, the insurance company may analyze the history of hail claims in her area to determine their: A. peril. B. exposure. C. speculative risk. D. risk. - ANSWER>>B. exposure.
When an insured signs a document acknowledging that he gives up his right to a certain coverage, such as uninsured motorist coverage in an auto policy, this is called: A. an express waiver. B. an implied waiver. C. a warranty. D. an estoppel. - ANSWER>>A. an express waiver.
_______ authority is directly granted to an agent in writing via the agent's contract. A. Contract B. Implied C. Apparent D. Express - ANSWER>>D. Express
Quincy is in court attempting to convince the jury through a preponderance of evidence that his insurer is deliberately withholding his rightful indemnification for his property claim. In which type of legal proceeding are Quincy and his insurer currently involved? A. Criminal trial B. Civil trial C. Contributory negligence hearing D. Comparative negligence hearing - ANSWER>>B. Civil trial
Marcel's home is valued at $495,000 and he carries a homeowner's policy with a limit of $400,000 and a 2% deductible. During an ice storm, the weight of the ice on a tree in Marcel's front yard causes a large limb to break off and fall on his house, causing $27,200 in damage. How much will Marcel receive in his settlement for this claim? A. $8, B. $26, C. $27, D. $19,200 - ANSWER>>D. $19,
(The 2% deductible comes from the policy limit 400,000 X .02 = 8,0000 which you take out of the total damages 27,200 - 8,000= 19,200)
Chrystal and Craig were renting an apartment from Sandra. However, they skipped out on three month's rent and moved out, leaving behind $1,200 in damage to the apartment. Altogether they owe Sandra $3,300; so Sandra files a civil suit against them. In this case, Chrystal and Craig are: A. a tortfeasor. B. a joint tortfeasor. C. an intentional tort. D. the plaintiffs. - ANSWER>>B. a joint tortfeasor.
A. None B. $1, C. $10, D. $100,000 - ANSWER>>D. $100,
Sharon's SUV has a mechanical breakdown while she was driving to work, so she had it towed to an auto repair shop. The inspection showed that the transmission failed. Sharon files a claim on her MBI policy, but her insurer denied the claim. Which of the following would be a valid reason for this denial? A. The transmission is not covered under an MBI policy. B. The transmission is covered under her regular auto insurance policy. C. Sharon has not had the transmission fluid changed according to the manufacturer's recommendations. D. The vehicle has more than 50,000 miles. - ANSWER>>C. Sharon has not had the transmission fluid changed according to the manufacturer's recommendations.
Which of the following would not be covered by Coverage C - Personal Property in a homeowners policy? A. Pets B. Furniture C. Clothes D. Food - ANSWER>>A. Pets
Which of these statements about the Standard Flood Insurance Policy is FALSE? A. Coverage B covers Personal Property. B. Coverage A covers Dwelling. C. Coverage C covers Attached Additions. D. Coverage D covers Increased Cost of Compliance. - ANSWER>>C. Coverage C covers Attached Additions.
A typical homeowners policy without a Home Business endorsement has how much coverage available for business personal property? A. $1, B. $2, C. Coverage C limit D. $0 - ANSWER>>B. $2,
Which of the following is NOT an exclusion commonly found in the Standard Fire Policy? A. Ordinance or law B. Earthquake C. Lightning D. Flood and water damage - ANSWER>>C. Lightning
In the context of Inland Marine Insurance, a "bailee" is: A. an individual who leaves property in the care, custody, and control of another. B. an individual or company who receives the property of another for a special purpose. C. another name for a policyholder under a Personal Articles Floater. D. an individual or company that ships goods by truck, train, boat, or plane. - ANSWER>>B. an individual or company who receives the property of another for a special purpose.
Which of the following items is NOT one of the loss conditions of inland marine insurance? A. Unless the item is considered salvaged, the insured must abandon the property to the insurer. B. Recovery or salvage from a loss will be payable to the insurer, up to the sum the insurer paid out on the claim. C. Rights of recovery from any loss paid by the insurer transfer to the insurer.
fire causes $140,000 in damage to his warehouse, how will each of Tom's policies respond (ignoring any deductible)? A. Policy A will pay $70,000 and Policy B will pay $70,000. B. Policy A will pay $93,333 and Policy B will pay $46,667. C. Policy A will pay $40,000 and Policy B will pay $100,000. D. Policy A will pay $140,000 and Policy B will pay $0. - ANSWER>>D. Policy A will pay $140, and Policy B will pay $0.
According to the Assignment condition in an insurance policy: A. insurance coverage may transfer to an insured's legal representative when the insured dies. B. an insured may transfer a policy to a spouse or dependent, but only if all terms, conditions, and declaration page remain the same. C. an insurer may reassign a policy to another insurance company, but only with the policyholder's notarized written permission. D. an insurer may reassign a policy to another policyholder, as long as it provides all named insureds with 5 days' advanced notice. - ANSWER>>A. insurance coverage may transfer to an insured's legal representative when the insured dies.
Carrie is a member of the Benevolent and Protective Order of the Elks. As such, she receives discounts on things like hotels, bike tours, online shopping, and insurance. She decides to purchase a $20,000 whole life insurance policy through the Order of the Elks. This is possible because the Elks are: A. a fraternal benefit society. B. a mutual insurance company. C. a stock insurance company. D. a reciprocal insurance group. - ANSWER>>A. a fraternal benefit society.
In an insurance contract, the policyholder gives the insurer _____, and the insurer gives the policyholder ______.
A. covered property; a risk pool B. premium payments; peace of mind C. peace of mind; risk D. a surety; premium payments - ANSWER>>B. premium payments; peace of mind
Linda's home is worth $525,000. She has a homeowners policy with a $500,000 limit and a 1.5% deductible. When Linda's husband sets their kitchen on fire while frying a turkey, he accidentally causes $36,000 in damages. How much can Linda and her husband expect to receive in their settlement? A. $28, B. $35, C. $28, D. $35,125 - ANSWER>>C. $28,
That is incorrect. Linda is fully insured with $500,000 in coverage. Her policy has a 1.5% deductible. 1.5% of 500,000 = 7,500. So, when she suffers a $36,000 loss, her settlement will be $36,000 minus $7,500 which equals $28,500.
As a fiduciary agent, an adjuster has the power to bind the insurer. Therefore, which of the following statements is FALSE? A. Only an adjuster's written statements can legally bind an insurer. B. When adjusting a claim, an adjuster's actions are legally considered those of the insurer itself. C. The insurer grants this power to the adjuster in a written contract. D. Even if an adjuster made a mistake in determining the value of the loss, the insurer must pay that amount. - ANSWER>>A. Only an adjuster's written statements can legally bind an insurer.
