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AD Banker Comprehensive Exam| Questions
and Verified Answers| 100% Correct| A
Grade (New Update 2024/ 2025)
QUESTION
In the event of a liability claim made against the insured, the insured must perform all of the following duties for their liability coverage to apply, except: Answer: Provide their own legal defense
QUESTION
Market value loss valuation means that the insurer will pay: Answer: The price a willing buyer would pay under fair market conditions
QUESTION
The limit of liability that applies to bodily injury, property damages, or both in any one occurrence is the: Answer: Combined single limit
QUESTION
Before issuing a nonresident license, the Director must find that the applicant: Answer: Is in good standing in their resident state
QUESTION
Which loss valuation basis often requires the policyholder to carry insurance to value? Answer: Replacement cost
QUESTION
A lender who finances an auto loan could receive claim payments under which policy condition? Answer: The Loss Payable condition protects a loss payee's interest in property, such as a creditor, lender, or lienholder.
QUESTION
When is a producer considered to be financing premiums? Answer: If the producer accepts over 10% of total accounts in installments and any portion of the accounts is collected 90 days or more after the premium due date
QUESTION
An auto policy that has been in force for 6 years may not be cancelled for reasons other than nonpayment of premiums without how many days' notice? Answer: 60
QUESTION
An insurance company in Illinois may cancel a property or casualty policy for nonpayment by giving notice of:
The Director may revoke, suspend, or refuse to renew a license for all the following, except: Answer: Issued insufficient coverage to a customer through apparent authority
QUESTION
In Illinois, which of the following is not allowed regarding the payment of commissions? Answer: A licensed producer paying a commission to another licensed producer who is licensed for a different class of insurance
QUESTION
Driving discounts are available for ____ years for drivers ____ and over who complete a defensive driving course. Answer: 3/
QUESTION
The Illinois Automobile Insurance Plan provides auto coverage for: Answer: Insurable individuals rejected by at least 3 insurers in the normal market
QUESTION
Which of the following statements is correct with regard to the FAIR Plan? Answer: Redlining is prohibited
QUESTION
Creating the impression that a governmental agency guarantees the terms of a policy is an example of: Answer: Misrepresentation
QUESTION
All of the following are true regarding the Illinois Guaranty Fund, except: Answer: The Fund pays up to $500,000 for covered Workers' Compensation claims
QUESTION
Which of the following statements is correct with respect to the Workers' Compensation Assigned Risk Pool? Answer: Insurers must receive the Department's written approval before terminating Pool coverage except for nonpayment of premium
QUESTION
Which of the following is not correct regarding premium fund trust accounts for producers in Illinois? Answer: The premium fund trust account may be with any U.S. financial institution
QUESTION
Which of the following is not a valid reason to cancel a policy?
QUESTION
A leased auto is eligible for coverage under a Personal Auto policy if the lease contract is for a continuous period of at least: Answer: 6 months
QUESTION
Which injury would be covered by a CGL policy? Answer: A customer injured while standing in an area marked as being for employees only
QUESTION
Livestock is not eligible for coverage under which Covered Causes of Loss option available to Farm Property policies? Answer: Covered Causes of Loss - Special
QUESTION
Which of the following is an Additional Coverage under Section II of a Homeowners policy? Answer: Loss Assessment
QUESTION
Part Two - Employers Liability Insurance of a Workers' Compensation and Employers Liability policy will cover which of the following damages? Answer: Damages owed to an injured worker's dependents for loss of services
QUESTION
Which of the following is a characteristic of a mutual insurance company? Answer: Members are provided insurance by the company
QUESTION
Under the BOP, which of the following is not an Optional Coverage? Answer: Electronic Data
QUESTION
A single-family dwelling may purchase up to what amount of flood insurance in the NFIP's Emergency Program? Answer: $35,
QUESTION
Which type of Commercial Auto policy would be best suited for a business that wished to cover its owned and hired autos against physical damage only? Answer: Business Auto Physical Damage Coverage Form
QUESTION
Under an unendorsed Personal Auto policy, which of the following vehicles would not be considered Your Covered Auto?
QUESTION
Commercial General Liability policies define bodily injury to refer to all of the following, except: Answer: Personal injury
QUESTION
Which of the following is not an Optional Coverage on the Business Income and Extra Expense Coverage Form? Answer: Extra Expenses Stated Value
QUESTION
Under a Commercial General Liability policy, which of the following would cause the insured's legal liability associated with a product to be excluded from policy coverage? Answer: Expected or intended injury
QUESTION
Which part of a property insurance policy describes the perils? Answer: Insuring Agreement
QUESTION
Pursuant to the Insurance Claims Fraud Prevention Act, insurers are to report suspected insurance fraud related to the following, except: Answer:
A Answer: Policy provisions B. Claims C. Applications D. Premiums
QUESTION
Under a Commercial General Liability policy, which of the following is considered an insured's product? Answer: Goods sold by the insured at a trade show
QUESTION
Which of the following statements about an aggregate limit is correct? Answer: It applies to losses from all occurrences within a specified policy period
QUESTION
A manufacturer is held liable if a product caused an injury whether the product was or was not defective. This describes what type of liability? Answer: Strict liability
QUESTION
Damaged household and personal property in transit between the insured's old and new residences is covered by the DP-1 for up to: Answer: 10% of the Coverage C limit
J has a Personal Auto policy with liability limits of 50/100/25, a medical payments limit of $5,000, and comprehensive and collision deductibles of $500. J's vehicle slides on ice and hits a guardrail, causing $9,500 in damage to the vehicle and $11,000 damage to the guardrail. J also sustains $1,000 in injuries. How much will the policy pay for all damages? Answer: The policy will pay $11,000 in property damage liability under Part A - Liability Coverage, $1,000 for J's bodily injuries under Part B - Medical Payments Coverage, and $9,000 for physical damage to the insured's auto after the deductible is met under Part D - Coverage for Damage to Your Auto, totaling $21,000.
QUESTION
An insured has a commercial property policy with the Replacement Cost Optional Coverage. Replacement cost coverage applies to all of the following types of property, except: Answer: Personal property of others
QUESTION
A policy contains a provision stating that after the insurer pays for a covered claim, the insurer will reinstate the policy limit to its initial value. This is provided by which policy condition? Answer: Restoration of Limits
QUESTION
Which of the following indicates a disrupted chain of events that frees the defendant from liability? Answer: Intervening cause breaks a natural and continuous sequence of events that are necessary to establish negligence.
QUESTION
Because only the insurance company makes a promise to fulfill an obligation by paying a future covered claim, the insurance contract is: Answer: Unilateral
QUESTION
Z is a distributor of natural gas. While connecting gas to B's house, an explosion occurs and the house is destroyed. Z's defense is that B did not turn off the pilot light on the furnace before the hookup, as instructed by the company. The court ruled that the activities of connecting gas lines were so dangerous that Z's defense did not relieve its liability. What legal principle is applicable in this case? Answer: Absolute liability; Some activities are so inherently dangerous that they are bound by the principle of absolute liability, which automatically assigns liability to the responsible party because of highly hazardous activities, without needing to establish negligence.
QUESTION
Insurers in Illinois must respond to inquiries and complaints from policyholders within: Answer: 21 days of receipt
QUESTION
The insurer's promise to pay covered claims within a specified time frame after receiving the sworn proof of loss is included in which section of the policy? Answer: Conditions
QUESTION
QUESTION
Under the Auto Dealers Coverage Form, all of the following coverages are included in Section I
- Covered Autos Coverages, except: Answer: Premises liability coverage
QUESTION
Which of the following is not an element of negligence? Answer: Assumption of risk
QUESTION
A commercial building insured on the Building and Personal Property Coverage Form is vacant for more than 60 consecutive days. Coverage is suspended for all of the following perils, except: Answer: Vehicles and aircraft
QUESTION
All of the following perils are included under the Dwelling Program's Broad Form, except: Answer: Smoke damage from agricultural smudging
QUESTION
V has a three-unit dwelling. V lives in one unit, rents out the other two units, and converted a detached garage at the location to use as a retail space for V's small business. The dwelling is insured on a Broad Form Dwelling policy for $160,000. After a storm, the weight of rain caused
the roof of the detached garage to collapse, resulting in $10,000 in damage. How much will V's insurer pay for the loss? Answer: $0; Dwelling policies are intended to insure residential dwellings, not commercial spaces, so the detached garage V uses commercially is not covered by the Dwelling policy. If the detached garage was not used for commercial purposes, the Collapse Additional Coverage would apply to provide coverage.
QUESTION
Which of the following is not eligible for coverage under a Personal Auto policy? Answer: A private passenger auto used as a taxicab; A vehicle used to transport people or goods for hire is not eligible for a Personal Auto policy.
QUESTION
The insurer's promise to pay a covered loss and the insured's payment of the first premium are examples of: Answer: Consideration
QUESTION
Which of the following would be covered by a Commercial General Liability policy as an instance of the insured's product liability? Answer: A restaurant customer contracts food poisoning
QUESTION
In a legal insurance contract, all of the following are considered part of the consideration, except:
Damage to the roof caused by a severe windstorm
QUESTION
What is the correct risk management term for minimizing the chance of a loss? Answer: Risk reduction
QUESTION
An insurer with capital that is divided into shares, and is owned by shareholders, is considered a: Answer: Stock insurance company
QUESTION
Under the Causes of Loss - Basic Form of a commercial property policy, all of the following perils are excluded from coverage, except: Answer: Aircraft or vehicles
QUESTION
Which of the following would be found in Section I of a Commercial General Liability policy? Answer: Coverage for bodily injury and property damage liability
QUESTION
Which Causes of Loss form available for the property coverage forms on a Commercial Package policy will cover loss of merchandise due to a burglary?
Answer: The Special Form only
QUESTION
Which of the following statements is correct regarding cease and desist orders? Answer: A person violating a cease and desist order relating to an unfair trade practice may be fined up to $1,000 per violation
QUESTION
K owns several buildings at different locations, with each building insured on a separate policy. Which of the following methods of writing insurance does this describe? Answer: Specific limit
QUESTION
Which of the following statements is true concerning the Illinois Mine Subsidence Insurance Fund? Answer: The Fund consists of a Residential sub-fund and a Commercial sub-fund
QUESTION
An insured owns a home with a replacement cost of $300,000 and a market value of $250,000. What is the most a valued policy will pay in the event of a total loss without a deductible? Answer:
