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Exam FX Property and Casualty Insurance
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The causes of loss insured against in an insurance policy are known as - ✔✔Perils Before an insurer will pay any loss under a policy, what is usually required from the insured? - ✔✔Proof of loss An insured works outside the home. The insured's sister lives with him and cares for his four children. When the insured's home is severely damaged by fire, the family moves into an apartment while repairs are being made. The largest apartment available in the area has two bedrooms, so the insured's sister has to stay at a motel. How much will the HO-3 form pay for these additional living expense? - ✔✔All of the expense up to the Coverage D limit All of the following statements concerning coinsurance are true EXCEPT - ✔✔The coinsurance formula will also be applied to total losses. What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk? - ✔✔Other insurance What is the purpose of the coinsurance clause found in property insurance policies? - ✔✔Encourage the insured to insure the property closer to its full value With respect to the business of insurance, a hazard is - ✔✔Any condition or exposure that increases the possibility of loss. A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint, the building is considered - ✔✔Vacant
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become - ✔✔Larger The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period? - ✔✔1 year An insured is driving her auto and strikes a large pothole, causing a flat tire. Which coverage of the insured's personal auto policy will pay for the repair? - ✔✔This loss is not covered Which of the following coverages in dwelling and homeowners policies is for indirect losses? - ✔✔Loss of use Which of the following types of valuation works best for property whose value does not fluctuate much?
- ✔✔Agreed value Under the limits of insurance provision found in the Physical Damage Coverage Form in a Commercial Auto policy, how much will an insurer pay to repair or replace a covered auto? - ✔✔The lesser of the actual cash value or the cost to repair or replace a covered auto All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT - ✔✔The injury or damage must occur within 90 days after the insured's work is completed. The type of professional liability coverage a medical doctor needs is - ✔✔Malpractice coverage. How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card? - ✔✔$ Burglary is defined as - ✔✔Taking of property from within the premises leaving visible signs of forced entry.
In a participation plan, the insured may be eligible for which of the following? - ✔✔A partial premium refund Coverage for water backup or sump pump overflow is excluded from the Dwelling Policy. However, with the purchase of the water backup and sump pump overflow endorsement, coverage for up to $5,000 in loss or damage can be provided for an additional premium. What is the deductible associated with this coverage? - ✔✔$ An applicant is purchasing a homeowners policy. A producer comes to her home, fills out the paperwork, and tells the applicant that her home will be covered as soon she signs all of the paperwork, and that she will receive a new policy in the mail in 5 business days. Even though the policy is not issued, the applicant's home is temporarily covered until then. Which of the following makes that possible? - ✔✔Binder Which of the following provisions requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time? - ✔✔Duties after loss Events or conditions that increase the chances of an insured loss occurring are referred to as - ✔✔Hazards In property insurance, actual cash value is defined as which of the following? - ✔✔Replacement cost at the time of the loss, less depreciation Which of the following is the basis for a claim against an insurance policy? - ✔✔Loss Which of the following is most likely to occur if it is determined by the audit that the deposit premium was too high? - ✔✔The insured will receive a return premium. In terms of parties to a contract, which of the following does NOT describe a competent party? - ✔✔The person must have at least completed secondary education.
A small restaurant was forced to close for 10 days in August when the power company's transformer was destroyed by lightning, and the restaurant was without electricity. Which of the following endorsements could be added to the businessowners policy that would provide protection against loss of income from such events? - ✔✔Utility services - time element endorsement Coverage for all of the following is found in Section I of a homeowners policy EXCEPT - ✔✔Personal liability. Which of the following policies will help an auto dealership cover most of its liability exposures? - ✔✔A garage liability coverage If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person? - ✔✔$50, Surety bonds are written for a definite limit called - ✔✔The bond penalty. The War, Military Act, and Terrorism Exclusion will only apply to an incident of terrorism in which the total of insured damage to all types of property in the United States, its territories and possessions, Puerto Rico and Canada exceeds what amount? - ✔✔$25,000, What term includes damage where the insured peril was the proximate cause of loss? - ✔✔Direct loss A used car dealer takes a car in trade as partial payment for a car on its car lot. The customer promises to bring in the car's title but does not. Another customer takes the trade-in for a test drive and has an accident. In regard to the dealership's business auto physical damage coverage, which of the following it true? - ✔✔There is no coverage. What type of information would be found in a policy's insuring agreement? - ✔✔Renewal dates For a contract to be enforceable by law, the purpose of the contract must be - ✔✔Legal and not against public policy.
Which of the following liability exposures is most likely for a small specialty clothing retail boutique? - ✔✔Premises liability exposure Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value? - ✔✔They are automatically provided with replacement cost coverage. A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy? - ✔✔$175, Which of the following would be named on the declarations page of a property or liability policy? - ✔✔First named insured Which of the following special liability coverages will provide protection to managers of a corporation for claims arising from a wrongful act committed by the manager while in an official capacity? - ✔✔Directors and officers liability Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT - ✔✔Conditions How much is the premium for the dwelling under construction endorsement under the dwelling policy? - ✔✔The average amount of insurance during construction Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? - ✔✔The insured would be responsible for the amount required as underlying limits in the event of a claim. The occurrence form trigger is based on which of the following? - ✔✔The date when injury or damage occurs A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called - ✔✔Proof of loss.
Which of the following would qualify as a competent party in an insurance contract? - ✔✔The applicant has a prior felony conviction. The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information - ✔✔Within 45 days. Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated? - ✔✔Law of large numbers In which type of commercial crime policy coverage is triggered by a loss that happens during the policy period but is not necessarily discovered during the policy period? - ✔✔Loss sustained form Which of the following IS considered a work-related injury/occupational disease under Workers Compensation law? - ✔✔Tom works as a painter in an auto body shop. The chemicals from the paint aggravate Tom's asthma to the point that he must be hospitalized for several days. If more than one person has an insurable interest in the property covered under a dwelling policy, - ✔✔The insurer will be liable for only the insured's interest in the damaged property. In forming an insurance contract, when does acceptance usually occur? - ✔✔When an insurer's underwriter approves coverage The type of insurance used to cover goods for one specific trip is called - ✔✔Trip transit. Robbery is - ✔✔Taking of property by use of force, violence, or fear. Under the coverage of which of the following liability policies may an insured require the insurer to defend a claim? - ✔✔Professional liability Which of the following is NOT an essential element of an insurance contract? - ✔✔Counteroffer
Which of the following definitions best defines the term "accident"? - ✔✔A sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage neither expected nor intended An employee may be eligible for supplemental income benefits upon - ✔✔The expiration of the impairment income benefit period. A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of - ✔✔Coercion. Which of the following best describes a misrepresentation? - ✔✔Issuing sales material with exaggerated statements about policy benefits If a licensed agent in Texas receives a criminal conviction, that information must be reported to - ✔✔Department of Insurance. In Texas, unless higher optional limits are purchased, the maximum amount payable for all auto personal injury protection benefits arising out of a single accident shall not exceed - ✔✔$2,500. An insurer must acknowledge receipt of a Notice of Claim within how many days? - ✔✔ 15 All of the following are requirements for applicants for a Risk Manager license in Texas EXCEPT - ✔✔Have at least 2 years of insurance experience Which of the following would NOT be considered rebating? - ✔✔Giving a client a $25 pen with the insurer's logo during the insurance application process An employee who refuses services or refuses to cooperate with services provided by the Rehabilitation Commission will - ✔✔Lose entitlement to supplemental income benefits.
The Texas Windstorm Insurance Association provides windstorm and hail insurance - ✔✔In the seacoast territory of this state only. On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of - ✔✔Misrepresentation. Lifetime benefits are paid until the employee's death for all of the following injuries except - ✔✔Loss of hearing in both ears. An insurer can cancel a personal auto policy by giving the named insured 10 days prior written notice for any of the following reasons EXCEPT if - ✔✔The cancellation is to take effect on the 12-month anniversary of the policy. Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? - ✔✔Defamation Which of the following is a TRUE statement about a temporary license issued in this state? - ✔✔It can only be issued once in any 6-month period. All of the following are true regarding rebates EXCEPT - ✔✔Rebates are allowed if it's in the best interest of the client. Insurance procured from an unauthorized insurer is called - ✔✔Surplus lines insurance. Which of the following was created to pay benefits due to insureds after their insurance companies have been declared insolvent? - ✔✔Property and Casualty Insurance Guaranty Association An insured has a policy with an insurance company that became insolvent. The policy has $1,600 of unearned premium. How much of this premium will the insured be able to recover from the Texas Property and Casualty Insurance Guaranty Association? - ✔✔$1,
If a deceased employee is survived by a eligible spouse and 3 dependent children, what percentage of the death benefit will be paid to the spouse? - ✔✔50%
