An insurance policy written on a special (open) perils basis includes losses caused by
Dishonesty of the insured
Theft
Wear and Tear
Inherent vice or defect
Under the condominium Unit-Owners Form of a Homeowners Policy, all of the following are covered EXCEPT
Real property pertaining exclusively to the residence premises
Property which is the insured’s responsibility under an association’s agreement
Personal property of the insured while it is anywhere in the world.
Common grounds used by the insured which are adjacent to the insured’s property
The voluntary giving up of a known right is called
An indemnity
A warranty
A waiver
An estoppel
Under the Dwelling Policy, for replacement cost coverage to apply, what percent of the value of the building at the time of loss must be insured?
100%
95%
90%
80%
The Broad Form Dwelling Policy protects against all of the following perils EXCEPT
Smoke from a fireplace
Damage caused by burglars
Weight of ice, snow, or sleet
Smoke damage from industrial operations
Fire is a
Hazard
Condition
Cause of loss
Loss
A valid contract requires all of the following EXCEPT
Competent parties
Consideration
Written evidence
Offer and acceptance
Under the Building and Personal Property Coverage Form of the Commercial Property Policy, which one of the following is NOT a duty of the named insured in the event of loss or damage to covered property?
Notify the police if a law may have been broken
Take all reasonable steps to protect the covered property from further damage
Cooperate with the investigation of the loss
Initiate subrogation against the responsible party
The conditions section of a liability insurance policy includes the
Duties of the insurer and the insured
Individuals and property not covered by the policy
Promise by the insurer to investigate, defend, and settle any suits brought against the insured
Promise by the insurer to pay any sums which the insured becomes legally obligated to pay.
Under the Motor Carrier Act of 1980, the Department of Transportation is authorized to issue financial responsibility requirements for motor carriers. These financial requirements are most commonly met by
Posting a surety bond
Purchasing insurance
Retention
Filing a financial statement
Under the Business Income Coverage Property Policy, the extra expense coverage will pay expenses incurred for all of the following EXCEPT
Minimizing the suspension of business
Operating at temporary locations
Relocating to a replacement premises
Continuing normal operating expenses
In the Personal Auto Policy, the definition of a covered auto includes all of the following EXCEPT
A non-owned vehicle furnished to the insured for regular use
A trailer which is owned by the insured
A private passenger auto described in the policy declarations
A temporary substitute auto to replace an owned auto being repaired.
Which bond guarantees a person’s appearance in court?
Performance bond
Fiduciary bond
Bail bond
Injunction bond
Under the Commercial Property Policy, the Extra Expense ONLY Coverage Form covers?
Net income that would have been earned
Necessary additional expenses incurred during a period of restoration
Net losses that would have been incurred
Continuing normal operating expenses
Which one of the following statements is true about the supplementary payments under the Personal Auto Policy?
These payments are in addition to the policy’s limit of liability
These payments are optional coverages for the insured
An additional premium is required to obtain these coverages
A deductible applies to supplementary payments.
The Homeowners HO-2 Policy provides coverage for damage caused by the weight of ice, snow, or sleet to a
Fence
Garage
Patio
Dock
The limit of insurance for any one person in the Commercial General Liability Policy applies to which one of the following coverages
Medical payments
Fire damage limit
Products-completed operations
Supplementary payments
The declarations section in a property policy includes
Causes of loss which are not covered
The insurer’s promise to pay all valid claims
The insured’s promise to pay future premiums
The limits of coverage
Most personal umbrella policies provide coverage for:
Officer or director liability
Libel and slander
Businessowners liability
Ownership, maintenance, or use of aircraft
In property policies, the replacement cost provision requires the insured to maintain insurance that equals or exceeds a specified percentage of a building’s:
Actual cash value
Replacement cost
Replacement cost minus depreciation
Original cost
Under the Broad Form Dwelling Policy, which one of the following is true?
It provides open perils coverage on the dwelling
It includes replacement cost coverage on the dwelling
It includes liability coverage
It covers damage caused by nuclear contamination
Who can enter into a contract that is enforceable by both parties?
A person who signs under threat of harm
An elementary school child
A person who is intoxicated
A person adjudged sane
Which is the best example of an unoccupied dwelling?
A house with furniture and fixtures but without occupants
A house without furniture, fixtures, or occupants
A dwelling under construction and without furniture or fixtures
An unfurnished apartment held for rental
The statement “We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’…” is found in which part of a liability policy?
Declarations
Conditions
Insuring agreement
Schedule
The medical payments coverage under the Farm Liability Coverage Form includes all of the following EXCEPT
First aid at the time of the accident
Rehabilitation expenses
Necessary hospital services
Necessary ambulance service
Under the Building and Personal Property Coverage Form of the Commercial Property, Policy coverage is reduced for certain causes of loss if the building has been
Unoccupied for more than 60 consecutive days before the loss
Vacant for more than 60 consecutive days before the loss
Occupied for less than 30 consecutive days before the loss
Vacant or unoccupied for more than 30 consecutive days before the loss.
Under a Businessowners Policy, all of the following are pollutants EXCEPT
Fumes
Soot
Smoke
Fire
Under the Commercial General Liability Policy, the definition of personal injury includes all of the following EXCEPT
False arrest
Invasion of privacy
Malicious prosecution
Assault and battery
Coverage C – Personal Property of a Homeowners Policy covers losses incurred by all of the following EXCEPT
Boarders are not related to the insured
Children of the insured while attending college
The insured while traveling for business
The insured, while residing in a vacation home
An insured has a liability policy that applies to a boat on an excess basis. The insured also has a boatowners policy that covers the boat. How will the liability coverage of the boatowners policy apply?
On a pro-rata basis
On an excess basis
On a primary basis
On an equal shares’ basis
The limit of liability for a property policy is usually found in the
Declarations
Conditions
Insuring agreement
Endorsements
Under the products-completed operations coverage of the commercial General Liability Policy, all of the following may be covered EXCEPT
Property damage to the named insured’s products
Property damage caused by the named insured’s products.
Loss of use of tangible property due to the named insured’s products
Bodily injury caused by the named insured’s products
The personal liability supplement to the dwelling policy provides coverage for
Personal Injury
Business pursuits
Permitted incidental occupancies
Bodily injury and property damage
A building is covered under a Commercial Property Policy with replacement cost and a building limit of $250,000. If the building is destroyed by fire and rebuilt in another location, the insurer will pay?
The cost that would have been incurred to rebuild at the original location not to exceed $250,000
The actual cash value of the original building
Nothing because not rebuilding at the original location
$250,000 but will retain title to the original location.
Under a property policy, duties of the insured in the event of loss include all of the following EXCEPT
Submit a proof of loss
Prepare an inventory if requested
Abandon the property to the insurer
Submit to examination under oath if requested by the insurer.
Carriers who transport goods of others as opposed to transporting their own goods should purchase a
Business auto policy
Truckers’ policy
Garage policy
Personal auto policy
Uninsured and underinsured motorist coverage provides protection for all of the following EXCEPT?
The owner of the uninsured auto
The named insured as a passenger in any auto
A relative in the insured’s household struck while crossing the street
The named insured’s child as the driver of the insured auto
The insured’s duties in the event of an employee injury include all of the following EXCEPT
Promptly giving the insurer notice of the injury
Providing immediate medical attention to the injured employee
Making all payments immediately after expenses are incurred
Cooperating with the insurer in the investigation of the claim
When an employee dies as a result of a work-related injury, the workers compensation benefits for the employee’s dependent children are payable
For life
Until age 18, or longer when the child is a full-time student
Until the surviving spouse remarries
Only if the employee’s spouse is also decreased.
Generally, a misrepresentation is considered “material” if:
The subject is tangible property
The subject is worth at least a specified minimum value
The insurer would have issued a policy with a small premium increase had the complete facts been given
Knowledge of the true facts would have resulted in the issuance of a policy with substantially different terms.
Medical expenses would be covered by the medical payments coverage on a Homeowners Policy for bodily injuries to
The insured
The insured’s parents living in the home
An overnight guest of the insured
The insured’s child while home on vacation from college
What three exposures is a Personal Auto Policy designed to cover?
Liability, personal injury to insureds, and damage to an insured vehicle
Operations, premises, and completed operations
Personal injury to insureds, bodily injury, and property damage.
Physical, moral, and morale
Under an unendorsed auto policy, losses are covered in all of the following places EXCEPT
The United States
Puerto Rico
Canada
Mexico
All of the following are true of insurance EXCEPT
It transfers risk
It is a means of sharing losses
It eliminates risk
It protects against uncertainty
An insurance policy could be issued to cover losses resulting from any of the following EXCEPT
A drug smuggling operation
A skydiving exhibition
A state-sponsored centennial celebration
A nuclear power plant
Under Part A – Liability Coverage of the Personal Auto Policy, if a person is driving a covered auto of the insured with permission, all of the following losses are covered EXCEPT
Damage to another auto
Damage to a private garage rented by the person
Damage to a neighbor’s house
Damage to property being transported by the person
Which of the following has the greatest impact on a workers compensation experience modification factor?
Severity of losses
Frequency of losses
Type of losses
Loss projections
Which of the following describes the policy period of an annual policy?
One year from the date the insurer or producer receives the policy premium
One year from the date the producer binds coverage
One year plus 30 days from the inception date shown on the policy
One year from the date the policy is typed and signed by the producer.
The Garagekeepers Coverage under the Garage Coverage For
Covers damage to products held for sale
Replaces the Garage Liability Policy
Covers damage to customers’ vehicles in the insured’s care, custody, or control
Covers owned vehicles on a primary basis.
In the event of a loss, which part of a property policy specifies the duties and rights of the insured?
Conditions
Exclusions
Declarations
Insuring agreements
The Homeowners HO-3 Policy covers direct physical loss to a residence premises caused by
Birds
Vehicles
Rodents
Inherent vice
Under the Building and Personal Property Coverage Form of the Commercial Property Policy, all of the following are considered parts of a covered building EXCEPT
Outdoor fixtures
Permanently installed fixtures
Completed additions
Underground pipes, flues, or drains.
The earth movement general exclusion in the Dwelling policy excludes coverage for a direct loss caused by any of the following EXCEPT
Landslide
Mudflow
Earth sinking
Explosion
To recover for a property loss under a Homeowners Policy, an insured is required to do all of the following EXCEPT
Retain a public adjuster and initiate an investigation
Give prompt notice to the insurer or producer
Allow the insurer to inspect the damaged property
Inform the insurer of any liens against the property
Injuries resulting from professional services covered by a Medical Professional Liability Policy include all of the following EXCEPT
Invasion of privacy
Pain and suffering
Physical injury from slipping on the office steps
Slander by a breach of professional confidentiality
Which one of the following describes a consequential loss?
A burglar steals a valuable antique vase
A windstorm blows a tree over and damages a roof
An explosion results in damages to property belonging to others
A fire damages an apartment building causing loss of rental income
An automatic increase in insurance endorsement to the Dwelling policy increases the limits for Coverages
A and B
B and C
C and D
D and E
How do workers compensation regulations classify the disability of an inured employee who is completely unable to work immediately following the accident, but is expected to recover fully?
Permanent partial
Permanent total
Temporary partial
Temporary total
Which one of the following is covered under the Special Form Dwelling Policy?
Deterioration
Smog
Cracking of the foundation
Damage to covered property caused by burglars
Under the Builders Risk Coverage Form of the Commercial Property Policy, the coverage extension that applies to building materials and supplies of others stipulates that this property must
Be intended to become a permanent part of the building
Be more than 100 feet away from the building
Be scheduled on an endorsement to the policy
Not be within the named insured’s care, custody, or control
Under the Farm Liability Coverage Form, all of the following are covered without an endorsement EXCEPT
Medical payments
Personal injury liability
Property damage liability
Workers compensation liability
For an additional premium charge, the Personal Property Replacement Cost Endorsement to a Homeowners Policy will pay for losses on a replacement cost basis for all of the following, EXCEPT
Household appliances
Pets
Outdoor antennas
Carpeting
Under the Special Form Dwelling Policy, all of the following are true EXCEPT
Contents are covered on the same basis as in the broad form
The dwelling must be insured to 100% of the value
The dwelling is covered by the open perils
Replacement cost coverage applied to the dwelling only
In a Commercial Package Policy (CPP), who is responsible for payment of all premiums
Any named insured
All named insureds
The first named insured
The first two named insureds
If policy A states that it will pay after payment by other applicable policies, Policy A is
Excess
Primary
Pro-rata
Reinsurance
The coverage form most frequently used for insuring auto fleets of a commercial business is the
Umbrella Liability Coverage Form
Business Auto Coverage Form
Employers Non-ownership Liability Coverage Form
Commercial General Liability Coverage Form
An Earthquake Endorsement to a Homeowners Policy defines a single earthquake as all earthquake shocks that occur within a
12-hour period
24-hour period
48-hour period
72-hour period
Under section I (Property) of a Homeowners Policy, there are special limits of liability for loss of
Stereo equipment
Money
Cookware
Furniture
Under section I (Property) of a Homeowners Policy, all of the following are covered EXCEPT
The dwelling
A detached garage
Personal property within the dwelling
Books of accounts and other paper records containing business data
Medical payments under a Commercial General Liability Policy cover all of the following EXCEPT
Medical expenses incurred within one year after the occurrence
Bodily injury caused by a condition on the insured premises
Bodily injury of an employee during the course of employment
Bodily injury arising out of operations of the insured’s business
Which one of the following is an Insuring Agreement in a Commercial Crime Coverage Form?
Mercantile open stock
Commercial blanket bond
Innkeeper’s liability
Forgery or alteration
Under the Building and Personal Property Coverage Form of the Commercial Property Policy, the initial notice of loss must be made to the insurer
Immediately and in writing
Promptly but need not be in writing
Within 1- day of loss but need not be in writing
Within 10 days of loss and in writing
Coverage C – Personal Property of a Homeowners Policy is extended to all of the following EXCEPT
Property borrowed for use by the insured
Machinery used in maintenance of the premises
Pets owned by the insured
Clothing of a child living in a college dormitory
Bonds used in connection with court proceedings are called
Contract bonds
Performance bonds
Supply bonds
Judicial bonds
Which water damage loss would be covered by a Basic Dwelling Policy with intended coverage?
Water which seeps through a building foundation
Water which leaks through a roof damaged by hail
Overflow from a sump
Overflow from a river
Coverage B – Other Structures of the Homeowners Policy EXCLUDES coverage for a garage when used by
A tenant for a private garage
An insured for storage of lawn tools
A non-tenant for storing mercantile goods
A tenant of the dwelling for gardening supplies
Coverage E – Personal Liability of a Homeowners Policy covers bodily injury due to
Business pursuits liability
Professional services liability
Workers compensation liability
Premises liability
The Homeowners HO-3 Policy covers direct physical losses to a dwelling caused by
Falling objects
Smog
Rust
Latent defects
In the Commercial Package Policy (CPP), the first named insured.
Has the same authorization to cancel the policy as the other named insureds
Is the only named insured authorized to cancel the policy
Needs the signature of one other named insured to cancel the policy
Can only cancel the policy with the signatures of all named insureds
Which is true about the deductibles under the Personal Auto Policy for Part D – Coverage for Damage to Your Auto?
They lower premiums
They prevent overlapping of coverage
They encourage insurance to value
They apply only to collision
An insured who has a Commercial Property Policy rents a trailer that is later stolen from the insured premises. Coverage is provided in all of the following situations EXCEPT
When the insured is contractually obligated to pay for damage
When the trailer is in the insured’s care, custody, and control
When the insured has business personal property coverage
When the trailer is attached to a motor vehicle
When a Dwelling Policy in Maryland is canceled by the insurer for reasons other than non-payment of premium
There is no return premium
The return premium is short rate
The return premium is pro rata
The return premium is 50% of the annual premium
A hazard is defined as a condition which
Causes a loss
Increases the chance of a loss
Eliminates the chance of a loss
Reduces the chance of a loss
When the insurer terminates a policy on its expiration date, it is called
Non-renewal
Assignment
Cancellation
Estoppel
When the replacement cost of an entire loss is more than $500, payment under the Homeowners Policy Personal Property Replacement Cost Endorsement is limited to the actual cash value unless the
Actual repair or replacement has been completed
Estimates for the replacement have been completed
Replacement item has been ordered
Insurer has received the billing for the replacement or repair
Under the Medical Expense and Income Loss Benefits Coverage endorsement of a Personal Auto Policy, loss of income as a result of an automobile accident is computed from the
First work day lost
Second work day lost
Third work day lost
Tenth work day lost
Which one of the following is a requirement of an insurable risk?
The loss must be intentional
The loss must be catastrophic
The chance of loss must be calculable
There must be a large number of different loss exposures
Under a Homeowners Policy, if fire damage makes an insured dwelling uninhabitable, the insured may be compensated for additional living expense under which one of the following coverages?
Dwelling
Personal property
Personal liability
Loss of use
When someone is held legally liable regardless of fault or negligence, this is known as
Contributory liability
Absolute liability
General liability
Comparative liability
A business is often required to buy a license and permit bond to guarantee that the business will
Sell products that are safe for use
Avoid unfair competition practices
Maintain adequate public liability insurance limits
Comply with statutes or ordinances that regulate its activities