Property & Casualty TC 99 - massagent.com · Property & Casualty PM 14 1. Businessowner’s policy...

EXTRA PRACTICE

Property & Casualty PM 14

1. Businessowner’s policy includes commercial property and liability coverage. This contract for small commercial businesses also provides coverage for boiler and machinery exposures on which of the following bases:

A. Such coverage is automatically includedB. Such coverage may be added by endorsementC. Such coverage is an option that may be addedD. Such coverage is excluded

2. The Farm Property Coverage Part was developed to address the unique exposures that occur when insuring farming type

risks. One type of property covered by the farm property coverage form includes livestock. Each of the following is acovered type of livestock, EXCEPT:

A. Mules C. SheepB. Swine D. Poultry

3. The Longshoreman and Harbor Workers Act provide compensation benefit for which of the following types ofemployment?

A. Crew members in the U.S. Navy C. Interstate railroad workersB. Those who repair ships D. Sailors

4. One form of professional liability coverage includes a Lawyers Professional Liability policy. Which of the following isnot covered by this type of contract?

A. Improper defense by an attorney C. Bodily injury or property damage to othersB. Malpractice by the lawyer D. Wrongful representation

5. Which of the following policies would be appropriate for the tenant of a condominium?

A. HO-2 C. HO-4B. HO-3 D. HO-6

6. What type of insurance would an employer purchase to protect him or her against claims by employees according to thePension Act of 1974 under ERISA?

A. Fiduciary bond C. Employee benefits liabilityB. Fiduciary liability D. Retirement planning liability

7. Which of the following is not a penalty assessed a producer who engages in an unfair sales or marketing practice ?

A. License suspensionB. Community serviceC. ImprisonmentD. Revocation of one’s right to transact insurance

8. An endorsement that may be added to a Dwelling Property form is the “automatic increase in insurance” endorsement. This endorsement affects which of the following parts of a dwelling property form?

STC ©PC Extra Practice Exam – 1

A. Coverage C only C. Coverages B and CB. Coverage A only D. Coverages A and B

9. There are several types of Professional Liability insurance available today. Which of the following would be covered bya Directors and Officers Liability policy?

A. Bodily injury as a result of a misdiagnosisB. A corporate official who supports and votes for a corporate reorganization and is sued by shareholdersC. An individual assessed punitive damages as a result of the failure of an attorney to provide competent adviceD. Damage to a client resulting from the failure to suggest necessary coverage.

10. Tom has a Homeowners Broad Form (HO-2) covering his two-story 4-bedroom residence. Which of the following losseswould be covered by the peril of vehicle damage?

A. Tom accidently damages his detached garageB. Tom’s spouse accidently damages a fence on the premisesC. Tom’s 16-year old daughter damages the drivewayD. Tom accidently damages the sidewalk leading to his front door

11. Which of the following best identifies the voluntary abandonment or relinquishment of a known right in an insurancecontract?

A. Estoppel C. AssignmentB. Warranty D. Waiver

12. Which of the following insurance principles restores an insured to the extent of her loss or makes the insured “financially whole” again?

A. Subrogation C. IndemnityB. Assignment D. Insurable interest

13. The replacement cost provision in a DP-2 or DP-3 policy encourages insurance to value. The 80% coverage requirement,however, only applies to which of the following?

A. Coverages A and B C. Coverages B and CB. Coverages A and C D. Coverages A and D

14 An insurance binder provides temporary or interim protection until an actual policy can be provided. Which of thefollowing statements is TRUE concerning a binder?

A. An offer by the applicant constitutes a binderB. Binders may be oral onlyC. A binder is usually issued for 30 days but rarely more than 60 daysD. A policy quote is considered a binder

15. Which of the following types of insurance cannot be protected by personal lines or commercial lines umbrella coverage?

A. Auto insurance C. Boiler and machinery coverageB. Commercial general liability D. Workers’ Compensation


16. A mortgagee possesses insurable interest in an insured’s home since it lent money in order for it to be purchased. Theinsurer providing homeowners protection has a responsibility to the lender as well as the insured when coverage isaffected. The mortgagee must be notified by an insurer in each of the following situations, EXCEPT:

A. The insured failed to pay the premiumB. The insurer plans to non-renew coverageC. The insured moves to another cityD. The insured fails to submit a proof of loss form after suffering damage to the dwelling

17. Each of the following appears on the Common Declarations pages in a Commercial Package Policy, EXCEPT:

A. Policy period C. DeductibleB. Total premium D. Name of the insured

18. Each of the following appears on the Common Conditions page of a Commercial Package Policy, EXCEPT:

A. Cancellation information C. Transfer of rights and dutiesB. Transfer of rights of recovery D. Policy changes

19. An insurance contract states that the “insurer promises to pay legitimate claims on behalf of the insured” in which of thefollowing policy sections?

A. Declarations page C. Insuring agreementB. Conditions section D. Exclusions section

20. Which of the following involves an opportunity for gain that could also result in loss but is not legally insurable?

A. Pure risk C. Retained riskB. Speculative risk D. Excess risk

21. A type of rating utilized when an underwriter determines the rate to be charged based on his or her experience is knownas:

A. Experience rating C. Manual ratingB. Merit rating D. Judgment rating

22. Each of the following is subject to a special limit of liability for loss in a homeowners policy, EXCEPT:

A. Jewelry C. Airline ticketsB. Silverware D. Furnishings

23. Joe owns an antique gun collection worth $8,000. A fire destroys the entire collection. Joe’s Homeowners Special Form(HO-3) will pay what portion of this loss?

A. Fifty percent of the loss since the property damaged was classified as an antiqueB. $2,000C. The actual cash value of the lossD. $2,500

24. Each of the following is a condition or provision that appears in Section I of a Homeowners Policy, EXCEPT:

A. Pair or set provision C. Loss settlement provisionB. Mortgagee clause D. Limit of liability clause


25. Homeowners and auto policies generally include a declarations page. All of the following appears in the declarations of these policies, EXCEPT:

A. Exclusions C. Name of the insuredB. Coverage limits D. Inception date of coverage

26. Section II of a Homeowners policy provides coverage for personal liability and medical payments to others. Someadditional coverages are also provided such as claim expenses and first aid expenses. Which of the following would becovered by first aid expenses?

A. The insured sprains his ankle while in the back yardB. The insured’s resident grandmother falls down the front steps and is injuredC. The insured’s friend hurts his back while helping to shovel snow off the drivewayD. The insured’s live-in cook slips and is hurt while in the kitchen

27. A homeowners policy provides coverage for an insured’s real and personal property. Which of the following would NOTbe covered by this policy?

A. Watercraft C. Vehicles of any kindB. Business property D. The insured’s pet

28. A Dwelling Property Broad form provides coverage for some volcanic eruption losses. Each of the following would becovered by this peril, EXCEPT:

A. Airborne shock losses C. Ash and dust lossesB. Land shocks or tremor losses D. Lava flow losses

29. Workers’ Compensation insurance provides benefits to injured employees, as well as protection for employers against thirdparty suits. One such benefit for employees is loss of income. Which of the following best describes an injured employeewho is unable to perform all of her duties for a short duration of time?

A. Total temporary disability C. Partial temporary disabilityB. Total permanent disability D. Partial permanent disability

30. An insured is covered by an auto policy with limits of 250/500/100. Prior to the court awarding a bodily injury award toan injured party, the insurer defending the insured incurs $100,000 of defense costs. How much coverage remains whenthe judgment is finally awarded?

A. 150/500/100 C. 250/500/0B. 250/400/100 D. 250/500/100

31. In the Commercial Package policy, the contract stipulates that which of the following is responsible for the payment ofthe premium?

A. Business partnerB. The insured’s spouse who is active in community affairsC. The policyownerD. First named insured

32. Each of the following is covered if they cause the collapse of a covered building or dwelling, EXCEPT:

A. Hidden termite damageB. Sinking, settling or cracking of the covered structureC. Weight of rain that collects on a roofD. Weight of animals or people that cause collapse damage


33. Each of the following is covered under a Commercial General Liability policy, EXCEPT:

A. Sidetrack agreement C. Host liquor liabilityB. Impaired property D. An easement

34. Dwelling 02 Property forms provide property coverage only. However, personal liability coverage under these policiesis:

A. Never providedB. Also provided automaticallyC. Based upon the coverage limit carried to cover the dwellingD. Available by endorsement

35. One of the primary reasons why a business owner purchases a Supplemental Extended Reporting Period (SERP) is to:

A. Provide vicarious liability coverageB. Provide coverage for an exposure that will exist after the business ceases operationC. Provide off premises coverage at various locationsD. Provide supplementary coverage for losses not covered by the underlying policy

36. All of the following appear on the Equipment Breakdown form declarations page, EXCEPT:

A. Entity servicing the equipment C. Loss payeeB. Location of the object D. Address of the mortgageholder

37. According to the Common Policy Conditions of the CPP, the insurer is allowed to audit or examine the insured’s booksand records with:

A. One year of the end of the policy period C. Three years of the end of the policy periodB. Two years of the end of the policy period D. Five years of the end of the policy period

38. A Businessowners Policy covers all of the following losses, EXCEPT:

A. Medical payment claims submitted within three years of the accidentB. Fire legal liability up to the policy’s sublimitC. Host liquor liability lossesD. Bodily injury to others suffered on the premises

39. In order for a proper assignment to take place regarding an insurance policy, which of the following need occur?

A. Written consent from the insured C. A transfer of rights and dutiesB. Written consent from the insurer D. Consent from Commissioner of Insurance

40. Which of the following is covered by the Business Pursuits endorsement when it is added to a homeowners policy?

A. Any business undertaking in which the insured is involvedB. Only partnership activitiesC. Joint ventures if permitted by state authoritiesD. Only the business specifically listed in the endorsement

41. Each of the following is a type of personal injury loss covered by Coverage B of a general liability policy, EXCEPT:

A. Malicious prosecution C. Wrongful entry by a landlordB. Violation of a statutory or penal order D. Wrongful detention


42. Pollution losses are generally excluded in most standard commercial liability policy forms. In a Business Auto Policy,however, which of the following pollution related losses would be covered?

A. Wear and tear due to pollutantsB. Damage caused by engine oil following an accidentC. Damage caused by gasoline that leaks due to a defective gas tankD. Damage to the structure if due to smoke from industrial operations

43. Which of the following concepts reduces the amount of a loss settlement?

A. AppraisalB. Investigative expensesC. SalvageD. Expenses to save covered property from further loss

44. The primary purpose of the Difference in Conditions (DIC) policy is to:

A. Provide excess coverage over underlying limitsB. Fill in gaps left by exclusions in other policies the insured possessesC. Provide primary coverageD. Exclude catastrophic or uninsurable type perils not covered by any other insurance

45. Which of the following is covered if damaged by freezing in a Dwelling Property Broad Form (DP-2) ?

A. DrivewayB. PatioC. FenceD. Shingles

46. Which of the following determines when coverage begins under a Claims-Made Commercial General Liability policy?

A. Extended reporting period C. Inception date of business operationsB. Retroactive date D. Expiration date

47. Each of the following is considered to be an insured location according to a standard homeowners policy, EXCEPT:

A. A hotel ballroom rented by an insured for a wedding receptionB. A picnic rented by an insured for a high school class reunionC. The residence premisesD. The insured’s one family dwelling rented to a tenant

48. An insurer may deny coverage for a sprinkler leakage loss if it determines that the insured was aware of a defect in thesystem prior to the loss. In order to have coverage, the insured is generally required to notify the insurer of anymalfunctioning sprinkler system within:

A. 24 hours of discovery of the malfunctioning systemB. 48 hours of discovery of the malfunctioning systemC. 72 hours of discovery of the malfunctioning systemD. 96 hours of discovery of the malfunctioning system

49. Barbara leaves her auto at Mike’s Service Station to be repaired. Mike may be referred to as a:

A. Property owner C. GrantorB. Bailee D. Indemnitor


50. A Special Businessowners Policy provides open-peril coverage. The unendorsed policy limits coverage for a fire loss ifthe premises has been vacant for more than:

A. 60 consecutive days C. 180 consecutive daysB. 90 consecutive days D. 360 consecutive days

51. A Homeowners Policy provides coverage for loss as a result of which of the following?

A. Damaged caused by floodB. Damage caused by power failure occurring off the premisesC. Water damage from frozen pipes at a vacant dwelling if the insured maintained heatD. Intentionally scorching a kitchen counter top with a hot iron

52. The ABC Corporation manufacturers computers and insures its commercial property and liability exposures with a BOP. ABC Holds a company sponsored summer outing with an open bar. A liquor liability loss later results. How will ABC’spolicy respond?

A. Excludes liquor liability losses C. Coverage is only provided by endorsementB. It will cover a loss up to its limits of liability D. Provides medical payment coverage only

53. According to the National Flood Insurance Program, the maximum amount of coverage available for non-residential orsmall building coverage is:

A. $30,000 C. $200,000B. $100,000 D. $500,000

54. The peril of flood is excluded in most types of property damage contracts. Coverage for this peril is available through theNational Flood Insurance Program. Each of the following is covered under the definition of “flood,” EXCEPT:

A. Tidal watersB. Overflow of surface waters from any sourceC. MudslideD. Water from a source originating on the residence premises

55. The bonding process involves three parties whereas insurance is characterized by a two party contract. Which of thefollowing is the party to which a surety must pay if the principal fails to perform?

A. Obligee C. ObligorB. Indemnitor D. Underwriter

56. A Supplemental Extended Reporting Period may be added by an insured to a claims-made policy. Which of the followingis true with regard to the aggregate limit provided by this extended reporting period?

A. The aggregate limit will be whatever it was on the policy’s initial inception dateB. The aggregate limit will be whatever the general and products aggregate were at the start of the last policy termC. The aggregate limit will provide 200% more coverage once the current policy term comes to an endD. The aggregate limit will be whatever coverage amount is remaining at the end of the current policy period

57. Which of the following would be covered by Part II of a Workers’ Compensation policy?

A. Medical expenses of an injured employeeB. Disability incomeC. Funeral expensesD. Legal suits filed by a family member of the injured employee


58. Milwaukee Mutual provides $100,000 of property insurance on a building. Columbus Mutual covers the same buildingwith $300,000 of insurance. Milwaukee Mutual’s policy is written on a primary basis while the Columbus Mutual planis excess. If the insured suffers a $25,000 loss, how will the claim be paid?

A. Both insurers will pay half of the lossB. By using the “contribution by equal shares” method of loss settlementC. Milwaukee Mutual will pay the $25,000 lossD. Columbus Mutual will pay the $25,000 loss

59. Which of the following types of insurance would cover the ownership, maintenance or use of insured aircraft?

A. Aircraft hull coverage C. Aviation insuranceB. Hangarkeepers liability coverage D. Airport liability coverage

60. There are several types of Commercial Crime coverage forms that may be added to the Commercial Package Policy. Which of the following is one such crime coverage form?

A. Discovery period form C. Larceny and theft formB. Mysterious disappearance form D. Forgery and alteration form

61. Each of the following appears on the Common Declarations page of the Commercial Package Policy, EXCEPT?

A. The first named insured C. The annual premiumB. The policy period D. Cancellation information

62. All of the following types of businesses are eligible for coverage under a Businessowners Policy, EXCEPT:

A. Shoe repair shop C. A credit unionB. A thirty unit office building D. A taxidermist

63. If an earthquake endorsement is added to a Dwelling Property or Homeowners Policy form, it states that all loss associatedwith earth movement damage will be considered as one occurrence as long as it occurs within:

A. 24 hours of the start of the damage C. 72 hours of the start of the damageB. 48 hours of the start of the damage D. 168 hours of the start of the damage

64. An auto policy will provide coverage for trailers when they are towed by all of the following, EXCEPT:

A. A pickup truck C. A vehicle only used on a farmB. A dump truck D. A private passenger vehicle

65. Uninsured motorist coverage is part of most auto liability policies. Each of the following is considered to be an uninsuredmotorist, EXCEPT:

A. Hit and run operationB. Phantom operationC. A motor vehicle operator who carries minimum limitsD. A motor vehicle operator with no insurance

66. Which of the following losses is not covered by Aircraft Hull insurance coverage?

A. Physical damage to the craft while in the airB. Physical injury to passengersC. Physical damage to the hull while landingD. Physical damage to the hull while on the ground


67. A Commercial Umbrella Policy may be used to provide excess coverage for all of the following EXCEPT:

A. Business Auto Policy C. Boiler and Machinery coverageB. Workers’ Compensation D. Commercial General Liability coverage

68. In order to void a contract due to concealment, the concealment must be:

A. Intentional and immaterialB. Intentional and materialC. The proximate cause of the concealmentD. Fraudulent

69. Property insurance policies cover various types of volcanic eruption losses except for those associated with earth movement. Each of the following is a covered type of volcanic eruption loss, EXCEPT:

A. Ash C. Land shocksB. Airborne shocks D. Lava flow

70. A Businessowners Policy now covers Extended Business Income as an additional coverage. Once the period of restorationends, income will be extended for:

A. 30 days C. 90 daysB. 60 days D. 180 days

71. Which of the following endorsements may be added to an auto policy to modify the definition of covered auto?

A. A named non-owner endorsementB. Miscellaneous type vehicles endorsementC. Drive Other Car Coverage endorsementD. Joint Ownership Coverage endorsement

72. Which of the following is not covered by a yacht policy?

A. Life preserver C. Survivor benefitsB. Seat cushions D. Sails

73. Section II of a homeowners policy covers personal liability and medical payments. Bodily injury to another would be covered by Section II in which of the following cases?

A. Injury to others caused by an insured while operating a 40-foot long sailing craft with auxiliary powerB. Damage to a 25-horsepower craft rented to the insuredC. Injury to others caused by an insured’s kayakD. Injury to an insured while operating a 25-foot sailboat

74. A Homeowners Special Form provides open-peril protection. It is also referred to as an all-risk package policy. Whattype of protection is afforded to unscheduled personal property under this policy?

A. All-risk coverage C. Open-peril coverageB. Broad form peril coverage D. Replacement cost coverage

75. Workers’ Compensation insurance provides coverage for employee injuries in Part I and protection for an employer againstthird-party suits in Part II. Which of the following is covered by Part II, Employer’s Liability?

A. Medical expenses of the injured employees C. Funeral expensesB. Lost income of the injured employees D. Legal action taken by employee’s family


76. Each of the following are Commercial Crime Coverage Forms, EXCEPT:

A. Forgery and Alteration form C. Employee Dishonesty coverageB. Broad Form theft coverage D. Theft, Disappearance and Destruction form

77. Which of the following helps to reduce small nuisance claims and keep premiums lower?

A. Salvage C. Insurable interestB. Deductibles D. Subrogation

78. Which of the following statements best describe the concept of risk management?

A. It is a process that treats and manages loss exposureB. It is a process that identifies extensions of coverageC. It is the voluntary relinquishment of a known rightD. It transfers risk from one party to another

79. According to the Businessowners Policy, if the insured maintains coverage equal to 100% of her inventory for the twelvemonths preceding a loss, how will the policy or insurer respond?

A. The policy premium will be increased by 25%B. The policy premium will be reduced by 25%C. The policy will only pay 25% of the lossD. The policy will pay an additional 25% of the coverage amount appearing on the declarations page

80. A legal principle which indicates that a business is responsible for the acts of its employees is known as:

A. Strict liability C. Vicarious liabilityB. Absolute liability D. Legal liability

81. Negligence may involve the failure of an individual to demonstrate care to the general public. Each of the following isa defense that may reduce one’s legal liability for injury or damage to another, EXCEPT:

A. Comparative negligence C. Intervening causeB. Strict liability D. Assumption of the risk

82. In a Claims-Made policy, if no retroactive date is indicated on the declarations page, how will the policy respond?

A. Coverage is provided for full prior acts causing bodily injury or property damageB. Coverage is provided for limited prior acts causing bodily injury or property damageC. Coverage is provided for bodily injury or property damage following the inception dateD. Coverage is provided for bodily injury if the claim is reported during the supplemental extended reporting period

83. A property insurance policy covers an insured’s real and personal property. The policy’s coverage limits are affected inwhich of the following ways once a loss occurs:

A. Automatically reduced C. Subject to a lifetime aggregateB. Automatically restored D. Subject to a per occurrence aggregate

84. Which of the following are generally excluded from most forms of liability insurance?

A. Bodily injury C. Punitive damagesB. Property damage to others D. Medical payments


85. A Dwelling Property form provides coverage only for the property exposures of an individual. The policy includes avacancy provision which states that if the dwelling is vacant for more than sixty consecutive days, the insurer will:

A. Only provide coverage against broad form perilsB. Be assessed an increase in premiumC. Exclude loss resulting from vandalismD. Cover loss resulting from malicious mischief

86. The definitions page of a homeowners policy identifies who is considered an insured for personal liability losses. Eachof the following is considered an insured under this policy, EXCEPT:

A. An individual named in the declarations pageB. The named insured’s uncle who lives in the householdC. The divorced husband of the insured who lives abroadD. An 18-year old grandson of the insured residing in the home

87. Section II of the homeowners policy covers personal liability. The contract states that damage to the property of otherswill not be covered if caused intentionally by an insured who is:

A. 11 years of age or older C. 18 years of age or olderB. 13 years of age or older D. 21 years of age or older

88. Each of the following is covered under Section II, Personal Liability, of a homeowners policy, EXCEPT:

A. Damage to property owned by the insured’s 12-year old daughterB. A milkman making a delivery trips on the sidewalk and is injuredC. The insured’s dog bites a neighbor’s childD. The insured’s 9-year old son has a temper tantrum and causes damage to another boy’s bicycle

89. An auto policy is a package policy. Each of the following is considered an eligible auto for coverage under this policy,EXCEPT:

A. A four wheeled motor vehicle that is owned by the insuredB. A private passenger pick-up or vanC. A private passenger auto used to carry people for a feeD. A temporary substitute vehicle

90. A Businessowners Policy provides commercial property and liability coverage to the owner of a small business. Each ofthe following is an “additional coverage” automatically included in this policy, EXCEPT:

A. Accounts receivable C. Valuable paper and recordsB. Preservation of property D. Outdoor sign coverage

91. Which of the following endorsements can be added to an auto policy to provide coverage for two or more unmarried individuals who live together?

A. Joint ownership endorsement C. Drive other car endorsementB. Miscellaneous type vehicles endorsement D. Additional insured endorsement

92. Which of the following is not considered an insured location under Section II of a homeowners policy?

A. The ballroom of a local hotel rented by the insured for her daughter’s weddingB. The recreational area of a state park rented by the insured for a family reunionC. A 2-family dwelling where the insured residesD. A 3-family dwelling that the insured rents to tenants


93. Coverage A in a homeowners policy provides coverage for the insured’s dwelling. Under this policy, theft of buildingmaterials is:

A. ExcludedB. Covered on a broad form peril basisC. Covered if the dwelling is being constructedD. Covered if the insured is going to use the materials to remodel the residence

94. A Businessowners Policy is a commercial package policy for a small business operation. Each of the following isexcluded under this policy, EXCEPT:

A. The business watercraft while afloat and within 100 feet of the premisesB. A business van used to make deliveriesC. The insured’s watchdogD. A lawnmower used to maintain the premises which is in the back of a pickup garaged on the premises

95. Which of the following endorsements may be added to a Businessowners Policy which adds a policy condition thatrequires the insured to maintain a functioning fire or burglar alarm system?

A. Alarms endorsement C. Utility service endorsementB. Protective safeguards endorsement D. Theft and fire endorsement

96. An endorsement entitled “Additional Residence Rented to Others” may be added to a homeowners policy. In order to becovered, this endorsement states that no one residence may contain more than:

A. One family C. Three familiesB. Two families D. Four families

97. Which of the following could be covered by the Business Pursuits endorsement when added to a homeowners policy?

A. Physicians services C. Insurance agent officeB. Teacher D. Operating a clothing store

98. Jack owns a small business that sells rugs. He purchases a Businessowners Standard form to cover his business’ personalproperty. If the building is burglarized and $6,000 worth of rugs are stolen, how much will the policy pay?

A. Nothing C. $6,000B. $5,500 D. The policy limit for theft which is $2,500

99. All of the following are ineligible for a Businessowners policy, EXCEPT:

A. Amusement park C. Auto dealerB. A print shop D. Bank

100. Barbara is operating a 75 horsepower watercraft. While traveling across the lake she injures a water skier. Herhomeowners policy will:

A. Provide coverage only if added by endorsement C. Not provide coverageB. Provide coverage if the craft was borrowed D. Provide coverage if the craft is owned

101. Which of the following coverages in a Commercial General Liability policy pays a benefit regardless of fault?

A. Medical payments C. Property damage liabilityB. Bodily injury liability D. Personal liability


102. An auto policy provides coverage for which of the following vehicles?

A. A taxi C. A moving vanB. A bulldozer D. A trailer

103. An insured covers her ten-unit office building. Currently, three of the units are being used for clerical work and threeothers are being rented as storage space. Four of the units are empty. According to the Building and Personal Propertyform, this building is considered to be:

A. Vacant C. OccupiedB. Condemned D. Excluded

104. Assume that Mr. Johnson owns a strip mall and covers it with a Commercial Property form. Forty percent of the mall isrented but not yet occupied. Only 10% of the total space is currently occupied. Presently this building is considered tobe:

A. Vacant C. UnoccupiedB. Condemned D. Not vacant

105. Which of the following provides coverage to crew members under the Merchant Marine Act?

A. The Defense Base ActB. The Federal Employer's Liability ActC. The U.S. Longshoreman's and Harborworker's ActD. The Jones Act

106. Each of the following are correct with regard to the Surplus Lines Insurance market, EXCEPT:

A. Standard coverages are typically written in the surplus lines marketB. A diligent effort must be made to place business with an admitted insurer prior to seeking surplus lines coverageC. Business written with a surplus lines insurer is subject to a premium taxD. Coverage must be placed through a surplus lines broker

107. Ms. Williams recently cast a vote with regard to a corporate merger. She was subsequently sued as a result of her decision. Which of the following insurance policies will protect her against this exposure?

A. Commercial umbrella policy C. Directors and officers liability policyB. Errors and omissions policy D. Commercial general liability policy

108. The party in a suretyship situation who is required to fulfill an obligation is the:

A. Principal C. SuretyB. Obligee D. Indemnitor

109. Each of the following policies provide watercraft physical damage and personal liability coverage, EXCEPT:

A. Yacht policy C. Personal inland marine policyB. Homeowners policy D. Boatowner's policy

110. The MCS-90 endorsement was developed in response to which of the following acts?

A. 1980 Commissioner's Standard Ordinary Mortality tableB. 1980 Motor Carrier ActC. The Defense Base ActD. The Commercial General Liability Act


111. A Businessowners Policy provides coverage for business income losses for up to what period of time?

A. 30 days C. Twelve monthsB. Six months D. Two years

112. Which of the following would be covered by an Aircraft Hull policy?

A. Bodily injury to passengers when a plane is landingB. Bodily injury to passengers when the plane is in the airC. Injury to the pilot or crew when taxiingD. Direct loss to the aircraft

113. Conrad Limited insures its commercial building with a Building and Personal Property form. The covered buildingincludes ten units, three of which are occupied. Three other units are vacant and four are furnished but not being used. Therefore, this building is considered to be:

A. Vacant C. OccupiedB. Condemned D. In use

114. Each of the following is considered to be a pollutant as defined by most property insurance policies, EXCEPT:

A. Industrial fumes C. SmokeB. Soot D. Fire

115. Under what government department is the National Flood Insurance Program administered:

A. Department of TransportationB. Flood Insurance AdministrationC. Department of Housing and Urban DevelopmentD. Department of Catastrophic Perils

116. All of the following are required elements of a legal contract, EXCEPT:

A. Equity C. Legal capacityB. Consideration D. Meeting of the minds

117. What provision in a property insurance policy states that if an insurer broadens coverage after a policy has been purchased,all insureds receive the broadened protection without an additional charge?

A. Consideration clause C. Assignment provisionB. Liberalization provision D. Mortgagee provision

118. Diane is covered by a homeowners special form. Section I of the policy provides property coverage. Section II provides$300,000 of personal liability coverage. Which of the following would be covered by this policy?

A. Bodily injury to another caused by Diane's 75-horsepower inboard watercraftB. Bodily injury to another caused by Diane's 55-horsepower outboard craftC. Property damage to another caused by Diane's 38-foot sailboatD. Property damage to another caused by a 90-horsepower craft that Diane borrows

119. An employee who is injured on the job and is unable to perform all of his duties for several months is considered to havesuffered:

A. Total permanent disability C. Partial temporary disabilityB. Total temporary disability D. Partial permanent disability


120. According to the Commercial Package Policy (CPP), which of the following entities is permitted to cancel the policy?

A. Any insured under the policyB. The first named insuredC. The legal representative of the insuredD. Anyone with permission from the first named insured

121. Each of the following is excluded property under a Flood Insurance policy, EXCEPT:

A. Lawns C. BooksB. Currency D. Motor vehicles

122. Each of the following is an excluded type of property under Coverage C of a homeowners policy, EXCEPT:

A. Pets C. Growing cropsB. Borrowed books D. A scheduled necklace

123. The maximum amount of available coverage for a single family home under the National Flood Insurance Program is:

A. $100,000 C. $500,000B. $250,000 D. $1,000,000

124. According to a Businessowners Policy, which of the following meets the contract's definition of "vacant building" if theinsured is a tenant?

A. The building is vacant when 70% or more of the building's square footage is not rented.B. The building is vacant when 70% or more of the building's square footage is used to conduct the customary

operations of the insured.C. The building is vacant when it no longer contains enough business personal property to conduct the customary

operations of the insured.D. The building is vacant if less then 70% of the building's square footage is rented to others.

125. Limits of liability found in an insurance contract that are expressed in amounts such as 100/300/50 are known as:

A. Single limits C. Aggregate limitsB. Split limits D. Sub-limits

126. Which of the following is a standard exclusion that appears in a general liability policy?

A. Employee dishonesty C. Auto liabilityB. Animals, birds and fish D. Social Security income

127. Which of the following is an exclusion found in an auto policy?

A. Damage to an insured's property C. Unemployment incomeB. Damage caused by earthquake D. Employee infidelity

128. Which of the following is a standard exclusion found in a personal liability policy?

A. Damage to trees and shrubsB. Property damage to others arising out of use of an 18-foot sailboatC. Medical payments of othersD. Deliberate bodily injury to another

129. Which of the following is an exclusion that appears in commercial property cause of loss form?

A. Cash C. Damage caused by sewer back-upB. Accounts receivable D. Contraband


130. Which of the following is an exclusion that appears in Section I of a homeowners policy?

A. Intentional injury to othersB. Property removedC. Damage to insured property caused by power failure off the premisesD. Damage to insured garage caused by his auto

131. Which of the following may change with regard to an auto policy when an insured purchases a new replacement auto?

A. Liability and medical payment premiums C. Towing and labor premiumsB. Uninsured motorist premiums D. Physical damage premiums

132. An individual steals beef from a small business owner. This loss is known as:

A. Mysterious disappearance C. RobberyB. Burglary D. Theft

133. A mechanic damages an insured's auto while it is being serviced. Coverage for damage to the vehicle is provided by theinsured's auto policy and the carrier will:

A. Cancel the insured's policyB. Non-renew the insured's policyC. Determine the actual cash value of the propertyD. Subrogate against the mechanic's garage liability policy

134. A general contractor must purchase a policy in the named of the project owner for which he is building a parking garage. What type of policy should be purchased?

A. Garage liability C. Independent contractor’s liabilityB. Professional liability D. Personal injury liability

135. Which of the following policies would provide coverage for a 50-foot sailboat with auxiliary power?

A. Yacht policy C. Inland marine policyB. Boatowners policy D. Homeowners policy

136. A ship's cargo valued at $50,000 is destroyed at sea. The cost to salvage it would be $60,000. This loss is known as:

A. Total loss C. Constructive total lossB. Total loss of a part D. Actual total loss

137. John purchases an antique vase worth $20,000. Which of the following would provide the best and most comprehensivecoverage for this item?

A. Contents floater C. Homeowners policyB. Personal articles floater D. Personal property floater

138. Which of the following best describes the action of throwing insured property overboard in order to lighten the load andsave a ship in peril?

A. Barratry C. Particular averageB. Peril of the sea D. Jettison

139. Which of the following is the standard deductible which appears in a homeowners policy?

A. $250 C. $1,000B. $500 D. $2,500


140. All of the following are covered causes of loss under a Personal Articles Floater, EXCEPT:

A. Damage by flood C. Damage from inherent viceB. Loss resulting from earthquake D. Theft

141. What is meant by watercraft that is "laid-up"?

A. The craft is being repaired C. The craft is used seasonallyB. The craft is in storage D. The craft is docked

142. Which of the following is not covered under a mobilehome insurance policy?

A. Attached utility tank C. Mobilehome used as an officeB. Permanently attached cabinet D. A mobilehome sixty feet in length

143. Which of the following deductibles is present in an earthquake cause of loss form?

A. $100 C. A variable amountB. $500 D. A percentage of the coverage amount

144. Losses under a Commercial Inland Marine policy are settled on what basis?

A. Actual cash value C. Market valueB. Replacement cost D. Constructive total loss

145. Which of the following is the amount provided by a Boiler and Machinery or Equipment Breakdown policy for expeditingexpenses?

A. $5,000 C. $50,000B. $25,000 D. $100,000

146. A contractor has been awarded the job to build a bridge for the city of Providence. What type of bond will he be requiredto purchased in order to guarantee that the work will be completed according to the contract with the city?

A. Bid C. SuretyB. Contract D. Performance

147. Which of the following best describes the difference between a personal articles floater and a personal property floater?

A. The personal articles floater covers scheduled personal property and the personal property floater coversunscheduled personal property

B. The personal articles floater covers unscheduled personal property and the personal property floater coversscheduled personal property.

C. The personal articles floater covers property for named perils and the personal property floater provides open-peril coverage

D. None of these are true

148. Which of the following would cover collision damage to a mobilehome while it is being carried to another site?

A. Collision coverage C. Transportation endorsementB. Other than collision coverage D. Mobilehome extension

149. The maximum time for which a binder can be written is:

A. 30 days C. 90 daysB. 60 days D. 180 days


150. All of the following are covered perils that appear in a Dwelling Property Broad Form (DP-2), EXCEPT:

A. Vandalism C. CollapseB. Falling objects D. Weight of ice, snow and sleet

151. Which of the following is covered by a Builder's Risk coverage form?

A. Cash C. Existing structuresB. Shrubbery D. Foundations

152. Coverage under a Builder's Risk coverage form ceases when all of the following occur, EXCEPT:

A. The builder abandons the property with no intention of returningB. The building is taken over by the new ownerC. When the structure is damaged D. When the builder no longer has an insurable interest in the property

153. Which of the following is not covered by Section I of the homeowner's policy?

A. Glass damage by vandals that occurs when the dwelling has been vacant for more than sixty daysB. Debris removalC. Damage caused by land shocks if an earthquake endorsement has been added to the policyD. Theft of a $5,000 diamond ring belonging to an insured

154. How does an HO-4, Tenants Broad Form, differ from other homeowners policy forms?

A. It provides no personal liability coverageB. It limits coverage for theft of silverwareC. It does not provide coverage for watercraftD. It does not provide coverage for real property

155. Which of the following policies includes a provision providing an automatic increase in coverage for an insured building?

A. Dwelling property policy C. Businessowners policyB. Homeowners policy D. Building and personal property form

156. When fine arts are covered by an endorsement added to a homeowners policy, coverage is provided on which of the following basis?

A. Named peril C. BlanketB. Agreed amount D. Broad form peril

157. Which of the following best describes a situation that exists where a loss may occur?

A. Risk C. ExposureB. Peril D. Direct loss

158. Which of the following is not a right of an insured at the time of a loss?

A. Cancellation of coverage C. Assignment of interest in propertyB. Abandonment of property D. Depreciation of property

159. A homeowners special form provides coverage for damage to property caused by the weight of ice, snow and sleet. Eachof the following is not covered by this peril, EXCEPT:

A. Fences C. GarageB. Patios D. Swimming pool


160. Coverage C in a homeowners policy provides coverage for personal property owned by which of the following?

A. Property of others borrowed by the insuredB. Property of a twenty-two year old friend of the insured who resides in the householdC. Scheduled property owned by the insuredD. Property of the insured rented to others and off the premises

161. Which of the following is not covered by the Cause of Loss Basic form?

A. Loss caused by sinkhole collapseB. Loss caused by a malfunctioning sprinkler systemC. Loss caused by vandalismD. Loss caused by an appliance overflow

162. Which of the following is not covered by a boatowners policy?

A. Damage to the hull C. Life preserverB. Unattached gear D. Fire damage to the motor

163. Which of the following unendorsed policies provides coverage for the increased cost of construction following a coveredloss?

A. Homeowners policy C. Boatowners policyB. Building and personal property form D. Businessowners policy

164. All of the following are duties of an insured in an auto policy when he or she suffers an other than collision loss, EXCEPT:

A. Cooperate with the insurer C. Notify the insurer of the lossB. Repair the damage as soon as possible D. Protect the auto from further damage

165. Which of the following statements is true with regard to Employment Practices Liability Insurance?

A. An employer is protected if sued by a rightfully terminated employeeB. This policy generally allows the insurer to settle a claim without the consent of the insuredC. This form of insurance indemnifies an employer for losses caused by employeesD. This is a type of liability policy that responds to suits against an employee alleging personal injury or defamation

to an employer

166. Which of the following is a non-insurance transfer mechanism that is also a risk transfer technique?

A. Liability insurance policy C. RetentionB. Hold-harmless agreement D. Supplementary payment

167. Coverages or benefits are automatically added to a property insurance policy by which of the following provisions?

A. Loss to a pair or set provision C. Abandonment clauseB. Mortgagee clause D. Liberalization clause

168. In a Businessowner's Standard Policy form, which of the following is a covered peril?

A. Preservation of property C. Damage caused by land tremorsB. Extra expense loss D. Sprinkler leakage damage

169. Which of the following types of authority is found in an agency contract or agreement?

A. Implied C. ExpressB. Apparent D. Consensual


170. What type of policy will cover an individual who haul's the goods of another?

A. Truckers form C. Bobtailing formB. Garagekeepers form D. Private carriers form

171. Which of the following concepts states that an insurer is liable for the acts of its agents or an employer is legally responsible for the acts of his or her employees?

A. Strict liability C. Commercial liabilityB. Compensatory liability D. Vicarious liability

172. An Auto Insurance Plan or Assigned Risk Plan makes auto insurance coverages available to:

A. Those who owe premium to a previous carrierB. Those who have a current moving violation recordC. Those who cannot secure it in the normal marketD. Those who merit preferred premium rates

173. Which of the following endorsements may be added to an automobile insurance policy to protect the owners of a leasedor hired vehicle?

A. Drive other car coverage C. Additional insured-lessor endorsementB. Hired auto and non-owned auto coverage D. Miscellaneous type vehicle endorsement

174. An unendorsed auto policy excludes all of the following accessories, EXCEPT:

A. Scanner C. Cell phoneB. CD rom D. Car phone

175. Which of the following endorsements may be added to a businessowners policy to cover damage to property caused bypower failure off the premises?

A. Protective safeguards C. Spoilage coverageB. Utility services D. Ordinance or law

176. Which of the following would be covered by Section II of a homeowners policy?

A. Twenty-seven foot sailing boat C. Inboard craft with a 40-horsepower motorB. Kayak D. Outboard boat with a 40-horsepower motor

177. A homeowners policy is a package policy providing property and personal liability coverage. What part of this policywould cover damage to an insured's dock or moorings?

A. Coverage A C. Coverage CB. Coverage B D. Coverage D

178. If an insured has fine arts covered under a Personal Articles floater or a Scheduled Personal Property endorsement andpurchases a new painting, when must they insurer be notified in order for coverage to be provided for the newly purchasedfine arts?

A. Prior to purchaseB. At policy renewalC. Within ninety days of the new purchaseD. The insurer need not be notified since coverage is provided immediately upon purchase


179. Coverage F in a homeowners policy provides coverage for medical payments. According to the policy, covered expensesunder the policy must be:

A. Illness related C. RevisedB. Required D. Reasonable

180. Section II of a homeowners policy provides personal liability protection. Which of the following is covered by this typeof policy?

A. Bodily injury to another caused by an insured driving a golf cart off the residence premisesB. Bodily injury to another caused by an insured driving a golf cart on a golf courseC. Damage to the property of a resident relative off the residence premisesD. First aid expenses to assist an insured injured on the premises

181. Which of the following policies provides higher limits of coverage but not broader benefits than an underlying policy?

A. Excess liability C. General liabilityB. Umbrella liability D. Operations liability

182. Which of the following policies is best suited for the owner of a condominium unit?

A. HO-2 C. HO-4B. HO-3 D. HO-6

183. Which of the following types of authority is made part of an agency contract or agreement?

A. Apparent C. BilateralB. Actual D. Implied

184. Coverage limits for a liquor liability policy are provided on which of the following bases?

A. Per person C. Aggregate limits onlyB. Per occurrence D. Per occurrence/aggregate

185. If an insured carries physical damage coverage under an auto policy, coverage is provided for damage resulting fromcollision and comprehensive losses subject to a deductible. Comprehensive coverage, also known as "other than collision,"provides coverage for which of the following?

A. Damage to the insured's auto caused by wear and tearB. Damage to the insured's auto caused by freezingC. Damage to the insured's tires caused by vandalismD. Damage to the insured's engine caused by mechanical breakdown

186. Which of the following endorsements may be added to a Business Auto Policy to provide liability coverage for a vehiclethat is not owned by the insured?

A. Additional insured lessor coverage C. Employees as additional insured coverageB. Hired non-owned auto coverage D. Non-owned miscellaneous coverage

187. Workers' Compensation insurance provides mandatory coverage for employee injuries under Part A and protection foremployers who are sued under Part B. Coverage C, Other States coverage, is optional. If added to the policy, it willprovide coverage for:

A. Employers who are sued when out of stateB. Employees who are injured in the state listed in the declarations pageC. Employees who have been injured while working for a previous employerD. Employees who are injured while working abroad.


188. Like any type of casualty insurance policy, Workers' Compensation identifies several duties of the insured when anemployee injury occurs. Which of the following is true when an employee is injured within the scope of his or heremployment?

A. The employer must notify the Industrial Accident Commission within thirty daysB. The employer is to make no payments to injured employeesC. The employer must send the injured employee to a medical providerD. The insured assumes responsibility to settle the claim

189. Which of the following is not covered by aircraft hull coverage?

A. Damage to the aircraft C. Damage to the craft while landingB. Collision damage D. Aircraft liability

190. Which of the following best describes a unilateral contract?

A. A contract where both parties contribute to the negotiation of a considerationB. A contract characterized by an exchange of unequal valuesC. A contract where it only remains for one party to performD. A contract whose language is ambiguous

191. Broader coverage or benefits are automatically provided without an additional premium by which of the following?

A. Bankruptcy provision C. Deposit premium clauseB. Transfer of rights of recovery provision D. Liberalization clause

192. All of the following are duties required of a liability insurance policyholder at the time of loss and thereafter, EXCEPT:

A. Notify the insurer of any incident that has the potential to become a claimB. Provide to the insurer the names of any witnesses or injured partiesC. Make an offer to the injured party for damages resulting from a premises injuryD. Cooperate with the insurer

193. A Workers' Compensation policy provides benefits for employees who are injured within the scope of their employment. It also responds to suits against an employer due to his or her absolute liability for employee injuries or workplace relatedillnesses. In addition to the limits of coverage selected by the employer, which of the following is also paid by the policyon behalf of the employer?

A. Loss of income to the insuredB. Other states coverageC. Dependent and survivor benefitsD. Defense costs even if beyond the coverage limits

194. In a commercial insurance policy, which of the following is responsible for the payment of the premium?

A. The business ownerB. First named insuredC. Anyone falling under the definition of "insured" under the policyD. A partner or employee of the insured

195. Which of the following involves a doctrine that allows liability for loss to be avoided by third party negligence?

A. Comparative negligence C. Assumption of the riskB. Contributory negligence D. Statute of limitations


196. An extended reporting period found in a claims-made policy does not extend the policy period. It only extends the claimreporting period. Which of the following statements is true regarding this type of commercial liability policy?

A. The basic extended reporting period requires an additional premiumB. Coverage provided under the basic extended reporting period is reduced by any claims paid during the policy

periodC. The basic extended reporting period may also be referred to as the supplemental extended reporting periodD. The extended reporting period provides the insured with excess insurance

197. Form C, the Theft, Disappearance and Destruction policy form, provides open-peril coverage for loss of money andsecurities. Which of the following is not covered by this crime coverage form?

A. Acts of employeesB. Robbery of a custodianC. Theft of insured property outside the premisesD. Burglary of stock certificates

198. An insured covered by an auto policy has bodily injury liability limits that are lower than the state required minimum. If he or she is involved in an at-fault accident, the injured party may collect benefits under his or her own policy fromwhich of the following coverage parts?

A. Uninsured motorist C. Bodily injury liabilityB. Underinsured motorist D. Other that collision coverage

199. An injured employee who is unable to perform all of her regular duties for a short duration of time best describes:

A. Partial permanent disability C. Total temporary disabilityB. Total permanent disability D. Partial temporary disability

200. Which of the following endorsements may be added to an auto policy to cover the residents of a non-traditional household?

A. Extended non-owned coverage for named individualB. Joint ownershipC. Individual named insuredD. Dual capacity

201. Which of the following is a covered accident under the Equipment Breakdown or Boiler and Machinery coverage form?

A. Disintegration of a flywheel C. Leakage of a valveB. Breakdown of a vacuum tube D. Shutdown of equipment by a safety device

202. Negligence is considered to be an unintentional type of tort. Liability insurance will protect an insured who is responsiblefor bodily injury or property damage to others resulting from negligence. Which of the following best describes a "tort?"

A. A condition that increases the likelihood of lossB. The cause of a lossC. A wrongful actD. The uncertainty of a specific exposure

203. An insured is covered by an unendorsed Dwelling Property Basic form (DP-1). Which of the following losses would becovered?

A. Water damage to covered property caused by seepageB. Damage to a fence caused by the weight of ice, snow or sleetC. Water damage to property resulting from a fireD. Damage to the insured's driveway caused by an oil truck making a delivery


204. A Homeowners policy provides property and liability insurance coverage for an insured. This policy includes many policyprovisions and conditions. One such condition called the "suits against us" provision states that if the insured desires totake legal action against the insurer, it must do so within:

A. One year of the date of the accidentB. Two years from the date of the lossC. Two years following the inception date of the policyD. Three years of the date of the accident

205. A dwelling policy may be used to cover an insured's dwelling and personal property. How may an insured provide foran automatic increase in the dwelling coverage each year?

A. By purchasing a new policyB. By replacing the policy with a homeowners policyC. By adding a replacement cost provisionD. By adding an endorsement to the policy

206. Boatowners and other types of watercraft policies generally include a navigational area provision. Which of the followingnavigational areas would include a distance limitation?

A. Lake or canals C. Coastal areaB. Inland waterways D. Tidal basin area

207. Joe owns a boatowners policy providing property and liability coverage. All of the following are excluded by this typeof policy, EXCEPT:

A. Deliberate injury to anotherB. Injury resulting from commercial fishing operationsC. Injury resulting from parasailing or handglidingD. Liability assumed by an insured under a marina rental agreement

208. An unendorsed homeowners policy does not provide coverage for personal injury losses. If coverage for this type of lossis added by endorsement, each of the following will be covered, EXCEPT:

A. Slander C. False arrestB. Assault and battery D. Libel

209. When must an auto insurer inform an insured that he or she is eligible for coverage under an auto assigned risk plan?

A. At each policy renewalB. When an initial policy is issuedC. Following an at-fault accident caused by an insuredD. When an auto policy is canceled or non-renewed

210. A business auto policy is a type of commercial auto policy form. This policy provides bodily injury and property damageliability as well as coverage for medical payments. Claims for medical payments under this policy must be filed andreported within:

A. Two years of the date of the accidentB. Three years of the date of the accidentC. Five years of the date of the accidentD. The policy does not provide coverage for medical payments


211. Under the crime general provisions form in a commercial crime policy, the discovery period indicates that the policy willonly pay for a covered loss if it is discovered:

A. During the policy periodB. No more than five years after the end of the policy periodC. No more than a year after the end of the policy periodD. Within sixty days after the policy period

212. In a Workers' Compensation policy, when a modification factor is applied to the premium, it is based upon:

A. Past losses C. Prospective lossesB. Future losses D. Bodily injury losses

213. Workers' Compensation insurance provides benefits for employees who are injured within the scope of their employment. Which of the following would not be covered by this type of policy?

A. An employee who is injured when violating a safety warningB. An employee who contributes to his own injuryC. An employee who is injured when intoxicated on the jobD. An employee who is injured by a fellow employee

214. Liquor liability insurance provides coverage for a risk that manufacturers, distributes or sells alcoholic beverages. Thistype of insurance is also referred to as:

A. Legal liability C. Professional liabilityB. General liability D. Dramship liability

215. An insured is covered by a personal umbrella policy. The policy requires that he carry specific limits in his personal autopolicy. If the underlying policy is canceled and the insured suffers a loss normally covered by the personal umbrellapolicy, how will this latter policy respond?

A. It will deny the claim since the underlying policy was canceledB. It will drop down and cover the loss from the first dollarC. It will pay that amount of the claim that it would have paid had the underlying policy not been canceledD. It will pay the claim less the self-insured retention limit

216. A flood insurance policy may be purchased by an individual who resides in a flood plain. The policy includes a $500 deductible if the property is situated in a low-risk area. A $1,000 deductible is applies to high-risk properties. Which ofthe following is true regarding the application of these deductibles?

A. The deductible is applied to dwelling lossesB. The deductible is applied to contents losses onlyC. The deductible applies separately to dwelling and contents lossesD. The deductible is applied for all aggregate losses occurring during the policy period

217. Stock and mutual companies are the two primary classifications of insurers in the private market. Which of the followingis correct regarding a stock company?

A. It is owned by policyholdersB. It is owned by stockholdersC. It may pay dividends to insureds out of surplusD. Its principal office is formed under the laws of the state where it is domiciled

218. Which of the following is not covered by a homeowners special form?

A. Personal effects away from the residence premisesB. Riding lawnmowerC. Golf clubs stolen on the golf courseD. Pets


219. Janet is covered by an unendorsed HO-3 policy. Section I includes a deductible of $500. Coverage C, unscheduledpersonal property, provides coverage for which of the following?

A. Damage to the property of others C. Borrowed propertyB. Loss of use D. Personal liability

220. Which of the following entities may make policy changes to the Commercial Package Policy?

A. First named inured C. Any insuredB. Any named insured D. An equal partner of the insured

221. Insurance companies may seek reinsurance for each of the following reasons, EXCEPT:

A. To increase unearned premium reservesB. To transfer excess riskC. To underwrite risks larger than its usual limit of liabilityD. To stabilize profits

222. All of the following conditions must be satisfied for a heart attack to be covered under Workers’ Compensation insurance,EXCEPT:

A. The employee has experienced considerable stressB. The heart attack occurred as a direct result of a work stressorC. The heart attack occurred at a defined time and placeD. The employee’s work was a significant contributing factor to the heart attack.

223. All of the following appear on the Equipment Breakdown Form declarations page, EXCEPT:

A. Location of the equipment C. Loss payeeB. Manufacturer of the equipment D. Address of the mortgage holder

224. Which of the following is a covered accident under the Equipment Breakdown Coverage Form?

A. Deterioration of a vacuum tube C. Leakage of a valveB. Depletion of equipment D. Physical damage that necessitates repai

225. The minimum deductible that applies to coverage for damage to property as a result of earthquake is:

A. $250 C. $1,000B. $500 D. $2,500

226. Which of the following would be covered by the Business Pursuits endorsement when it is added to a homeowners policy?

A. Police officer C. AttorneyB. Physician D. Teacher

227. Which of the following would cover a self-propelled amphibious vehicle?

A. Auto policy C. Watercraft policyB. Aircraft policy D. Mobile equipment form

228. Jack wants to start a business and asks Joe to go into a partnership with him. This is an example of risk:

A. Sharing C. PreventionB. Reduction D. Control


229. Which of the following is covered by Coverage C in a Farm Policy?

A. Furniture in the basement C. AnimalsB. Appliances in the kitchen D. Silo

230. Which of the following best describes Free on Board?

A. Free of chargeB. Covers all shipments during policy periodC. Covers single shipments during policy periodD. Shipper is responsible for goods until they are on board

231. Which of the following best describes an appurtenant structure?

A. Structure not attached to a dwelling or buildingB. Property unscheduled but covered by the policyC. Outbuildings connected to a buildingD. Stock or inventory away from the premises

232. Jack makes an offer to Jill. Jill counters the offer with a counteroffer. Which of the following has occurred?

A. Acceptance C. Negotiations ceaseB. The end of negotiations D. The original offer is rejected

233. Which of the following would be covered by a flood insurance policy?

A. Lawn furniture on a patio C. Motor vehicleB. Kitchen appliances D. Bedroom set in the basement

234. Which of the following would be covered by a flood insurance policy?

A. Lawn furniture C. PatioB. Driveway D. A coffee table in the cellar

235. Which of the following best describes when an insurer fails to enforce a provision in an insurance policy?

A. Concealment C. AdhesionB. Waiver D. Fraud

236. Each of the following is an illustration of a hazard, EXCEPT:

A. An oil can with its cap off C. A minor child playing with matchesB. A hot iron sitting on an ironing board D. Trash burning in a barrel

237. A Farm Insurance Policy would cover all of the following types of farm property, EXCEPT:

A. Steer C. SwineB. Chicken D. Cow

238. Which of the following best describes a separate unrelated cause that interrupts a series of events and leads to anotherseries of events?

A. Proximate cause C. Consequential causeB. Common cause D. Intervening cause


239. Which of the following benefits from leasehold interest coverage?

A. The owner of a commercial building C. A building owner completing renovationsB. A tenant who subleases property D. A tenant with a favorable lease

240. Dwelling policies provide property insurance protection for an insured. Why would the insurance company providing thecoverage exclude loss due to wear and tear?

A. Since it is an intentional actB. Since it is not influenced by the loss of large numbersC. Since it is a catastrophic lossD. Since it involves a certainty

241. In a jewelers block policy, which of the following would be covered?

A. A ring sold to a customer but brought back for sizingB. Gold earrings worn for display by a salespersonC. A diamond necklace on display at the storeD. An employee steals a gold watch from a display case

242. In which of the following situations will a terrorism loss be covered?

A. When there is a property loss in excess of $5 million dollarsB. When there is a property loss in excess of $10 million dollarsC. When there is a property loss in excess of $20 million dollarsD. When there is a property loss in excess of $50 million dollars

243. Which of the following losses would be considered terrorism?

A. When the loss involves violence and damage to propertyB. When the loss to property exceeds $1 million dollarsC. When the action resulting in damage is declared by Congress to be terrorismD. Any act that the legislative branch deems terrorism

244. What type of authority may be referred to as unwritten authority granted to an insurance producer?

A. Implied authority C. Apparent authorityB. Actual authority D. Vicarious authority

245. A home builder hires a subcontractor to pour a foundation. Before granting the subcontractor the job, the builder wantsthe former to post a performance bond. In this situation, which of the following is the obligee?

A. The builder C. The suretyB. The subcontractor D. The bonding company

246. An auto is covered by a Business Auto policy and is involved in a collision. Due to the accident, engine oil is spilledwhich requires clean-up. How will the auto policy respond to the clean-up costs?

A. The policy excludes all loss caused by pollutionB. Pollutants that are spilled are covered as long as they are classified as cargoC. The policy covers the spill if it was caused by an accidentD. The clean-up costs are covered if they result from leakage

247. Which of the following types of bonds guarantees that an individual will appear at a court proceeding?

A. Injunction bond C. Bail bondB. Fiduciary bond D. Performance bond


248. Which of the following causes of loss is excluded in a Farm Property form ?

A. Damage to property caused by a civil commotionB. Damage resulting from a floodC. Loss resulting from a windstormD. Loss caused by an internal explosion

249. An Equipment Breakdown policy provides coverage on an actual cash value basis. How would the policy respond todamage to obsolete property ?

A. Pay the replacement cost of the damaged propertyB. Pay the actual cash value of the damaged propertyC. The policy will exclude coverageD. The policy will pay the claim based on the property’s market value at the time of loss

250. An insurer may broaden coverage under a policy without requiring additional premium according to the:

A. Valuation clause C. Liberalization clauseB. Insuring clause D. Consideration clause

251. What limit of coverage is provided for loss to any one type of livestock in a livestock property form ?

A. Per occurrence limit C. Per animal limitB. Per accident limit D. Aggregate limit

252. Which of the following is true with regard to the business pursuits endorsement ?

A. It provides property and liability coverageB. It increases the coverage for business personal property to the Coverage C limitC. It covers only the business activity listedD. It provides coverage for Section I losses only

253. Cease and desist means:

A. That an insurer must stop paying commissionsB. That a producer must stop specific activitiesC. That claims must be paid promptlyD. That the Commissioner prevents an insurer from marketing its products

254. The homeowners policy includes several additional coverages in Section II. Which of the following is true with regardto first aid expenses ?

A. First aid expenses provide coverage for resident relativesB. First aid expenses apply only to others who are injuredC. First aid expenses are included in the Coverage C limitD. First aid expenses are paid when an insured provides assistance to a live-in housekeeper

255. Which of the following is a collision loss under an auto policy ?

A. Damage caused by floodB. Loss resulting from earthquakeC. TheftD. Upset


ANSWERS

1. C 2. D 3. B 4. C 5. C

6. B 7. B 8. D 9. B10. A

11. D12. C13. A14. C15. D

16. C17. C18. B19. C20. B

21. D22. D23. C24. D25. A

26. C27. D28. B29. A30. D

31. D32. B33. B34. D35. B

36. A37. C38. A39. B40. D

41. B42. B43. D44. B45. D

46. B47. D48. B49. B50. A51. C

52. B53. D54. D55. A56. B

57. D58. C59. D60. D

61. D62. C63. C64. B65. C

66. B67. B68. B69. C70. A

71. B72. C73. C74. B75. D

76. B77. B78. A79. D80. C

81. B82. A83. B84. C85. C

86. C87. B88. A89. C90. D

91. A 92. D 93. D 94. D 95. B

96. D 97. B 98. A 99. B100. B101. A102. D

103. C104. D105. D106. A107. C

108. A109. C110. B

111. C112. D113. A114. D115. B

116. A117. B118. D119. B120. B

121. C122. B123. B124. C125. B

126. C127. A128. D129. C130. C

131. D132. D133. D134. C135. A

136. C137. B138. D139. A140. C

141. B142. C143. D144. A145. B

146. D147. A148. C149. B150. C151. D152. C153. A

154. D155. C156. B157. C158. B

159. C160. A161. D162. B

163. D164. B165. B

166. B167. D168. D169. C170. A

171. D172. C173. C174. D175. B

176. B177. B178. C179. D180. B

181. A182. D183. B184. D185. C

186. B187. B188. B189. D190. C

191. D192. C193. D194. B195. B

196. B197. A198. A199. C200. B201. A202. C203. C204. B

205. D206. C207. C208. B209. D

110. B211. C212. A213. C

214. D215. C216. C217. B218. D219. C220. A

221. D222. C223. B224. D225. A

226. D227. C228. A229. A230. D

231. A232. D233. B234. A235. B

236. D237. B238. D239. D240. D

241. C242. A243. A244. A245. A

246. C247. C248. B249. B250. C

251. C252. C253. B254. B255. D


Property & Casualty TC 99 - massagent.com · Property & Casualty PM 14 1. Businessowner’s policy...

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