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Guarantee Exam Q's
Property and Casualty
| Question | Answer |
|---|---|
| An insurer's right to take possession of property after having paid for the loss is referred to as the right to: Salvage, Exchange, Retain, or Replace | Salvage |
| In order to receive transportation expenses under the personal auto policy following damage to an auto caused by collision, an insured must have: Supplementary payments, Other-than-collision coverage, or Collision coverage? | Collision coverage |
| A liability policy that provides increased limits and expanded coverage over underlying casualty coverages is called what? | Umbrella liability |
| What federal act provided more favorable benefits for interstate railroad workers by allowing the injured worker to sue the employer for negligence? | Federal Employers Liability Act (FELA) |
| Prior to paying a claimant under a professional liability policy, the insurer must do what? | Obtain the consent of the insured |
| What is the purpose of purchasing an umbrella liability policy? | To provide excess insurance over the primary liability policy |
| What are the types of compensatory damages? | Special and general |
| Under employee theft coverage, when a covered employee is found to have participated in a dishonest act, the coverage for that employee will terminate when? | Immediately |
| An insured is injured while driving in his car. Which coverage will pay for the loss: Part A-Liability, Part B-Medical Payments, Part C-Uninsured Motorist, or Part D-Damage to Your Auto | Part B-Medical Payments |
| The insured fills a storage room is with combustible materials in front of the furnace. What type of hazard is this? | Morale hazard |
| To have insurable interest, what risk must the policyowner face? | Financial loss |
| True or false: In a liability coverage of a business auto policy, the company will reimburse the insured for all loss of earnings. | False; only a limited amount of lost earning per day will be paid. |
| True or false: In a liability coverage of a business auto policy, the company will pay any interest accruing between the time of judgement and payment. | True |
| A corporation is insured under a CGL policy and is named in a lawsuit to recover expenses for BI and PD from a claim. The insurance co. is obligated to provide coverage for all of the following EXCEPT: employees, spouses of officers/stockholders, officers | Spouses if officers/stockholders |
| Under a CGL, which is NOT considered mobile equipment: An automobile used as a company car, A combine used on a farm, The Dept of Transportation's resurfacing equipment, or The bulldozer for an excavating co? | An auto used as a company car. |
| For there to be negligent liability, all of the following must exist EXCEPT: A reasonable expectation that the act may cause injury, a breach of legal duty, a legal duty to act/not to act, or proximate cause between the act and the damage? | A reasonable expectation that the act may cause injury or damage. |
| Coverage B - Personal and Advertising Injury Liability responds to claims arising from: Suits alleging infringement of a copyright, Scope of patent protection, Premises and operations claims, or Failure of products to perform as advertised? | Suits alleging infringement of a copyright. |
| Workers compensation rating is developed by applying a rating bureau job classification rate to which of the following: Noncash compensation, Minimum wage, Job title, or Payroll | Payroll; workers comp applies a rating bureau classification rate to each $100 of payroll. |
| Which of these would be covered by the medical payments coverage in a personal auto policy: 1. A runaway shopping cart in a mall parking lot knocks an insured down and breaks his leg OR 2. An insured slams a hand in his car door and breaks it. | 2. An insured slams a hand in his car door and breaks it. |
| The supplementary payments section of the CGL would cover: Court costs assessed against the insured in a suit, Loss of the insured's earnings, up to $300/day, or Up to the policy limit for BI and PD? | Court costs |
| When does an adjuster's license expire? | May 31st. |
| For there to be negligent liability, all of the following must exist EXCEPT: A breach of the legal duty which results in injury, A legal duty to act/not to act, or A reasonable expectation that the act may cause injury or damage? | A reasonable expectation that the act may cause injury or damage. |
| Using the pro rata method, if a property is covered by Company A for $20k and Company B for $40k, what would Company A pay on a $24k loss?: $20k, $12k, $8k, or $0 | $8,000; each policy pays a percentage of the loss based on the percentage of coverage the policy provides. |
| Which of the following losses meets the definition of flood and would be covered by a NFIP policy?: Windblown rain/sleet/snow, Landslides, Backup of sewers, or Mudflow and collapse? | Mudflow and collapse |
| What is a bailee responsible for? | A bailee accepts another's property into his or her care and, for a price, will provide a specific service. |
| When an insured's gardener was spraying weeds the wind blew the spray and destroyed the neighbors flower bed. The insured was found legally liable. What kind of liability is this an example of? | Vicarious |
| True or False: Coverage E (personal liability) and/or Coverage F (medical payments) would respond to a claim arising from an insured's 14-year old son throwing rocks at the neighbors house. | False, intentional damage is not covered. |
| For an additional premium, the extended coverages written on the basic form dwelling policy would cover which of the following: glass breakage, fire, riot, or vandalism? | Riot |
| True or False: The business income losses are payable under a BOP for 12 consecutive months following the occurrence. | True |
| A homeowner has misplaces some of her insured personal property and has no idea what may have happened to it. Which HO form would cover this loss? | HO-5 covers misplacement/losing as a theft loss. |
| Which of the following types of property would be covered under Coverage C - Personal Property in a dwelling policy?: Rowboats, 2-passenger aircrafts, personal watercrafts, motor vehicles | Rowboats |
| True or False: An HO policy would consider a strawberry patch owned by the insured as an insured property. | False; insured locations cannot be farmland or used for business purposes |
| Which HO form provides open peril coverage for dwelling and contents (Coverages A and C)? | Form 5 |
| With regard to homeowners Section II, which of the following does NOT meet the definition of an insured location: A cabin rented to the insured, A secondary residence, A plot of farmland, or A meeting hall rented to the insured? | A plot of farmland |
| An individual's app was denied and he requested a hearing. How soon will it take place? | Within 30 days |
| Which of the following conditions is NOT required for becoming a nonresident producer in this state?: Paying fees, Passing the proper exams, Being a resident producer in a home state, or Being licensed as a resident producer. | Passing the proper exams |
| If a producer decides to renew his license online, within how many days of license expiration can this be done? | 60 days |
| If an individual willfully violated provisions of the Fair Credit Reporting Act, what is the max civil penalty? | $2,500 |
| Licensees transacting surplus lines insurance must pay a recurring fee of what amount? | $50 |
| All of the following are the functions of the MS State Rating Bureau EXCEPT: Oversee state Residential Insurance Underwriting Association, Compile manuals for insurers/agents, Establish adequate market for fire coverage in this state, Prepare rate plans | Establish adequate market for fire coverage in this state |
| A golfer slices a tee shot and the ball goes through the window of a house beside the fairway. The glass is paid for by: The property covg of the golf course, The golfer's homeowner liability coverage, or The liability policy of the golf course? | The golfer's homeowners liability covg |
| True or False: In a BOP, replacement cost coverages have an 80% insurance-to-value requirement is in place. | True; the insurance-to-value requirement is nearly the same as that of HO insurance-to-value. |
| Under a Business Personal Property Limit - Seasonal Increase, if no percentage is specified in the declarations, seasonal fluctuations will automatically increase the limit for business personal property by what percentage? | 25%, unless otherwise specified in the declarations of the policy. |
| Which of the following would be eligible for Homeowners Coverage F - Medical Payments in the event of injury at the insured's premises: The named insured's spouse, A person regularly residing with the insured, or A full-time maid | A full time maid; coverages do not apply to any insured or regular resident of the premises, except resident employees not covered by workers compensation. |
| An insured is the owner of a clothing boutique with a Floor Plan Merchandise Floater to cover the property. She noticed 3 dresses were stolen about a month ago but didn't file a report until recently. How much will the insurer pay for the loss? (What %) | 90% of the limit written, if the insured has not filed a report at the time of loss, the insurer will be liable for only 90% of the written limit. |
| An agent delivers a policy to an applicant who pays the initial premium but refuses to submit a statement of good health. Which of the following terms best describes what the applicant has violated: Contractual agreement, Consideration, or Representation | Consideration |
| In a DP-1, if the insured elects to apply Coverage B to a detached garage, how will that effect Coverage A? | It will reduce Coverage A by 10%. (does not reduce limit of liability) |
| Under Cov B, a HO policy provides coverage for other structures on the residence. Which of the following is NOT true of this coverage? 1. A detached garage may be covered if rented. or 2. Any loss paid under Cov B reduces the Cov A limit of liability? | 2. Any loss paid under Cov B reduces the Cov A limit of liability |
| An insured suffered a fire loss along with water damage and consequential loss of business income for four weeks while repairs were being done. The policy includes direct and indirect loss, what part of the loss would be paid as indirect? | The loss of business income. |
| True or False: The insured's limit of liability is 25% of the sum of the direct loss payment plus the deductible amount regarding the debris removal coverage under the BOP. | True |
| Which statement best describes agreement as it relates to insurance contracts: All parties must offer something of value, One party accepts the exact terms of the other party's offer, or The intent of the contract must be legally acceptable to all parties | One party accepts the exact terms of the other party's offer. |
| The broad cause of loss form in the commercial property policy contains three perils in addition to the basic form perils. Which of the following is NOT one of those three perils: Utility services, Water damage, Weight of snow/ice/sleet, or Falling object | Utility services |
| What part of the insurance contract describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured? | The insuring agreement |
| Other than perils, the difference in the three DP forms is in the coverage provided. Which of the following options is covered by the DP-2 and DP-3 only: Cov D (Fair Rental Value), Cov E (Addtl Living Expense), or Cov B (Other Structures)? | Cov E - Addt'l Living Expenses |
| How much notice is required for a hearing regarding an unfair trade practices? | 10 days |
| An agent who knowingly misrepresents material information for the purpose of inducing | Twisting |
| Which of the following could not qualify for a Certificate of Authority: Fraternal insurance co, Managing general agent, domestic insurance co, or foreign insurance co | Managing General Agent |
| The CGL Coverage Part A - Bodily Injury and Property Damage provides coverage for which of the following: Premises, Hired autos, Employers, or Machinery? | Premises |
| The defendant being released on a surety bail bond is the: Obligee, Insured, Principal, or Surety? | Principal |
| Which of the following would not be covered under the directors and officers liability coverage: Reimbursement for fines and penalties, Wrongful acts while directors and officers are acting in an official capacity, or neglect and breach of duty? | Reimbursement for fines and penalties |
| Which would NOT be covered by an insured's uninsured motorist coverage: The insured causes a head -on collision with the UIM, the insured's son is struck by a hit-and-run driver, or the insured's car is hit by someone whose auto insurer is insolvent. | The insured causes a head-on collision with the car of an uninsured motorist |
| Which of the following would be considered a covered auto on your PAP: farm wagon being towed by your pickup, pickup being used for deliveries, farm tractor, or farm wagon being towed by your tractor? | Your farm wagon being towed by your pickup |
| An individual's application was denied and he requested a hearing, when will it take place? | Within 30 days. |
| An insures has a personal property replacement cost endorsement under her homeowners policy. If an expensive painting and an antique chair are stolen from the insured's home, what will the insured receive on the claim under that endorsement? | Nothing; the personal property replacement cost endorsement excludes property such as art and antiques. |
| The removal coverage included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long? A. 60 days B. 30 days C. 5 days D. 15 days | B. 30 days; Removal coverage is provided for 30 days in the broad and special form, provided that endangerment by a covered peril made the removal necessary. |
| An insured has a special form dwelling policy written for $100k. Fire causes $75k in damage to the dwelling, $15k to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for trees? A. 10k B. 75k C. 60k D. 5k | D. $5000; Trees, shrubs, and plants are covered under Coverage B - Other structures, but limited to no more than $500 for any one tree/plant, not to exceed 5% of Coverage A in total |
| Dwelling policy Coverage C - Personal Property will cover all of the following except: A. Animals and birds B. Hobby aircraft C. Computer software D. Canoes | A. Animals and birds |
| Under the personal articles floater of her homeowners policy, what coverage is offered for a newly acquired painting? A. Actual Cash Value or 25% of the sched. limit for up to 90 days B. Replacement Cost or 25% of the sched. limit for up to 90 days | A. It will be covered for its ACV or 25% of the scheduled limit for up to 90 days. Newly acquired objects of fine art will be covered under a personal articles floater under these terms. |
| The cancellation provision in a businessowners policy specifies all of the following except: A. The insurance company's canx requirements B. Transferring the owner's rights C. Refund of unearned premiums D. The insured's canx requirements | B. The method of transferring the owner's rights; The assignment provision outlines the method of transfer of all or a portion of the policyowner's right under an insurance contract. |
| Additional living expense coverage... A. Is automatically paid after a loss B. Does not begin until the family is out for 7days C. Provides the least expensive accommodations available D. Allows the family to maintain normal standard of living | D. Is intended to allow the family to maintain its normal standard of living while waiting for its house to be repaired after a covered loss. |
| An insured has a $200k equip. breakdown policy. If a boiler explosion causes $100k damage to the boiler, $50k to the building and $30k of addt'l expenses, how much will the insured collect? A. 200k B. 175k C. 180k D. 100k | B. $175k; The limit of the equipment breakdown policy applies to property of the inured, property of others, and expediting expenses in any combination as long as expediting expenses do not exceed $25k. |
| The members of a limited liability company are insureds under a BOP if... A. Each individual is listed as a named insured B. Members of a LLC cannot be insureds under a BOP C. The LLC is designated as the named insured D. At least one member is listed | C. The limited liability company is designated as the named insured; If the named insured is designated as a LLC, the named insured and members are also insureds, but only with respect to the conduct of the business. |
| Additional coverages in the liability section of a homeowners policy cover all of the following except: A. Claims expense B. Expenses incurred rendering first aid C. Damage to third-party property for which the insured is liable | C. Damage to a third-party property for which the insured is legally liable; Legal liability coverage is the primary coverage, not an additional coverage. |
| A grave marker was damaged by vandals and it will cost $3000 to have it repaired. How much would a homeowners policy pay? A. $3000 B. $0 C. $500 D. $1000 | A. $3000; Homeowners 2000 policy will pay up to $5000 for grave markers, including mausoleums, on or away from the premises for loss caused by a peril insured against under Coverage C. |
| The endorsement that covers losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formations is a/an: A. Mine subsidence B. Earth subsidence C. Earthquake D. Sinkhole collapse | D. Sinkhole collapse endorsement; Will provide coverage for sinkhole collapse, which means a sudden settlement or collapse of the earth supporting the property resulting form an underground sinkhole caused by water on limestone or other rock formations. |
| True or false: Under a BOP with employee dishonesty optional coverage, all employees of the insured are covered, even those employees who were terminated in the past 90 days. | False. By definition, an employee covered under the employee dishonesty optional coverage is one who is currently employed or who was terminated in the past 30 days. |
| Individuals in the business of selling construction and mobile equipment should insure with a/an: A. Equipment dealers coverage form B. Personal prop. floater C. Contractors equip. floater D. Installation floater | A. Equipment dealers; Covers a dealer's stock primarily of mobile agricultural equipment and construction equipment. Also cover property of others in the dealer's care, custody, or control. Excludes autos, motorcycles, aircraft and watercraft. |
| During renovations to a home, a roof opening is left exposed and rain causes $20k damage to the interior of the home. How much will the HO-2 policy pay? A. Nothing B. 80% replacement cost C. $20k D. $4000 | A. Nothing; HO-2 is a named peril policy, and rain is not a covered peril. The policy would pay for the damage if the hold was caused by a covered peril such as wind or hail |
| Which of the following would cover a business under cyber attack? A. Third-party cyber ins B. Crime ins C. First-party cyber ins D. Personal & advertising injury ins | C. First-party cyber insurance; Unlike 3rd party insc, which covers legal costs, 1st party covers losses directly from cyberattacks and data breaches such as ransom payments, business interruption, and customer notification |
| If the actual values exceed the limit of insurance, the BOP contains a seasonal increase provision that auto-increases the limit of ins for business pers. prop. by: A. 50% B. 30% C. 25% D. 10% | C. 25% |
| The pollutant cleanup and removal coverage in the BOP has a limit of: A. $20k in any 6mo period B. $5k in any 6mo period C. $10k in any 12mo period D. $2.5k in any 12mo period | C. $10,000 in any 12month period; if the release was also caused by a covered loss, during the policy period. |
| Which of the following is not settled on ACV while covered under the business property coverage form? A. Valuable papers/records B. Manuscripts C. Property of others D. Works of art/antiques | A. Valuable papers and records; Valued at the cost of blank materials for reproducing the records and labor to copy the records. |
| What could be used to insure mobile equipment & construction machinery on the job site until the project is complete: A. Bailee's customers form B. Gen. property form C. Contractors equipment floater D. Builders risk form | C. Contractors equipment floater; Covers equipment left unattended on a job site until the project is finished. |
| What are the eligibility requirements for a dwelling property policy? (Seven requirements total) | -Up to 5 roomers/boarders -Up to 4 residential units -Properties in the course of construction -Owner occupied, tenant occupied, or both -Mobile homes on basic form only (more to this) - Seasonal dwellings (more to this) -Not a farm property |
| What are the three dwelling policy forms? | Basic (DP-1); named peril Broad (DP-2); named peril Special (DP-3), open & named peril |
| What are extended covered perils on a basic policy? (WHARVES) | Windstorm Hail Aircraft/vehicles Riot/civil commotion Volcanic eruption Explosion Smoke **if ext. coverages are insured, covg can be added for vandalism and malicious mischief** |
| What perils are insured against in a basic form policy? | 1. Fire/lightning 2. Internal Explosion **Extended coverages (WHARVES) can be added to this. |
| What perils are insured against in a broad form policy? (BB BICE-GOLF) | 1. Burglary 2. Falling objects 3. Weight or ice/snow/sleet 4. Accidental discharge/overflow of water 5. S/A tearing apart, cracking, burning or bulging 6. Freezing 7. S/A damage from artificially generated electrical current |
| An insured's accounts receivable records have been damaged. The loss may be covered with: A. Commercial articles covg form B. Commercial prop. insurance C. Valuable papers covg. form D. Accounts receivable covg form | D. Accounts receivable coverage form; Reimburses the insured for amounts that can't be collected from customers due to damage to the company's records. |
| Which of the following must be added by endorsement to a homeowners policy to apply? A. Personal injury B. Property damage liability C. Bodily injury D. Medical payments to others | A. Personal injury; Applies only if added by endorsement and an additional premium is paid. |
| A builder's risk form is most often written as... A. Specific value form B. Scheduled form C. Reporting form D. Completed value form | D. Completed value form; A building under construction could be insured on reporting forms, but the value of the building should only increase during the policy period. To prevent all the administrative work required, completed value forms are used. |
| When is a hired and non-owned auto liability endorsement available in a businessowners policy? A. Only if the insured does not have comm. auto covg B. Only if the insured has 4+ employees C. Only in addition to comm. auto covg D. Never | A. Only if the insured does not have commercial auto coverage; This coverage is excess over any primary insurance coverage on the hired or non-owned auto. |
| What type of property would NOT be covered under the dwelling policy special form Coverage A - Dwelling? A. Attached structures B. Outdoor equipment located on the premises C. Materials/supplies on the premises D. Land on which the dwelling is located | D. Land on which the dwelling is located; The insurer will not cover land. |
| Losses that result from the freezing of a plumbing system while vacant would be excluded UNLESS the insured: A. Vacated no more than 90 days ago B. Drained the plumbing system C. Purchased special form covg D. Purchased water damage endorsement | B. Drained the plumbing system; The insured would need to have made reasonable efforts to maintain heat in the insured building or have drained the plumbing system. |
| Which of the following would most likely not be covered under Coverage A in the dwelling policy? A. Fire damage to building material on the premises B. Outdoor personal property of the insured C. Theft of a renter's lawnmower D. Supplies on premises | C. Theft of a renter's lawnmower; The lawnmower would not be covered bc the dwelling is rented to others without content coverage. |
| The Mail Coverage Form is always written on a reporting form basis; after the end of each reporting period shown in the declarations, reports are due in: A. 15 days B. 45 days C. 30 days D. 31 days | C. 30 days; Due after the end of each reporting period shown in the declarations. |
| Which of the following perils is covered by the HO-2 and HO-3? A. War B. Flood C. Sudden and accidental rupture of a heating system D. Loss due to power interruption that occurs off the premises | C. Sudden and accidental rupture of a heating system; Off-premises power failure, flood, and war are excluded from all DP and HO policies. |
| Which of the following coverages in the dwelling policy would provide protection to contents damaged by fire: Coverage C Coverage D Coverage B Coverage A | Coverage C; Personal property provides coverage for the contents of an insured dwelling. |
| A business owner has a building and personal property policy that covers a shed in which he stores extra parts. If he buys a second shed for the same purposes, this will be covered automatically for how long? A. 30 days B. 20 days C. 15 days D. 45 day | A. 30 days |
| All of the following are exclusions that apply in all three types of dwelling policies except: A. Government action B. Water damage C. Earth movement D. Fire or lightning | D. Fire or lightning; This is covered in all policy forms. All the other choices are exclusions. |
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