Question: 3
An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have?
1 Blanket
2 Specific
3 Schedule
4 Special
Specific
Reasoning
Specific insurance provides a specific amount of coverage for each property. A blanket insurance policy provides coverage for more than one property with a single limit of coverage.
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| Term | Definition |
|---|---|
| Question: 3 An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have? 1 Blanket 2 Specific 3 Schedule 4 Special | Specific Reasoning Specific insurance provides a specific amount of coverage for each property. A blanket insurance policy provides coverage for more than one property with a single limit of coverage. |
| Question: 4 Which method of loss valuation is contrary to the basic concept of indemnity? 1 Replacement cost 2 Functional replacement cost 3 Market value 4 Agreed value | Replacement Cost Reasoning The replacement cost method of loss valuation is contrary to the basic concept of indemnity because following a loss it may provide the insured with a settlement in excess of the property’s actual cash value. |
| Question: 5 An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? 1 Adhesion 2 Consideration 3 Representation 4 Good faith | Consideration Reasoning The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss. |
| Question: 10 A beauty parlor burns to the ground. What type of loss is this to the owner? 1 Specific 2 Consecutive 3 Consequential 4 Direct | Direct Reasoning Damage caused by a peril that is insured against is classified as direct loss. |
| Question: 11 Which of the following is a mandatory part of an insurance policy that varies with each individual policy? 1 Declarations 2 Insuring agreement 3 Conditions 4 Exclusions | Declarations Reasoning Because the declarations tell who, what, when and where, this information is different in each contract. |
| Question: 13 Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? 1 Additional coverage 2 Insuring agreement 3 Exclusions 4 Declarations | Additional Coverage Reasoning The additional coverage portion of a policy provides an additional amount of coverage for specific loss expense, at no additional premium. |
| Question: 14 All of the following are additional liability coverages automatically provided in a homeowners policy EXCEPT 1 Claims expenses. 2 Loss assessment coverage. 3 Personal injury. 4 Damage to the property of others. | Personal Injury Reasoning Personal injury may be added by endorsement. |
| Question: 18 Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss? 1 Liability coverage 2 Comprehensive coverage 3 Collision coverage 4 Medical payments | Liability Coverage Reasoning Supplementary payments, found in Part A – Liability, include expenses incurred by the insured at the insurer's request, including $200 per day for attending trials or hearings. |
| Question: 25 Which of the following would NOT be considered a newly acquired vehicle under a personal auto policy? 1 A station wagon that is purchased for personal use 2 A pickup truck with a gross vehicle weight of 6,000 pounds 3 A two-wheeled trailer designed to be towed by a station wagon 4 A truck used solely for farming | A truck used solely for farming Reasoning A personal auto policy would cover a newly acquired pickup or van, as long as the vehicle is not used for farming or ranching, has a gross vehicle weight of less than 10,000 pounds, and is not used for the delivery or transportation of goods and materials, unless use is incidental to a business of installing, maintaining, or repairing furnishings or equipment. |
| Question: 27 Which of the following types of insurance would be covered under the Terrorism Risk Insurance Act (TRIA)? 1 Crop insurance 2 Commercial auto insurance 3 Burglary and theft insurance 4 Workers compensation insurance | workers compensation insurance Reasoning TRIA applies to commercial property and liability insurance, including excess insurance, workers compensation, and directors and officers insurance. The other answer choices are specifically excluded. |
| Question: 29 The part of a property policy that shows the amount of insurance, premium, and policy term is the 1 Declarations. 2 Endorsements. 3 Conditions. 4 Insuring clause. | Declarations Reasoning Who, what, when, where, and how much insurance and premium all are stated in the policy Declarations. |
| Question: 33 All of the following statements describe the concept of strict liability EXCEPT 1 Claimants may need to provide proof that a product defect caused an injury. 2 It is applied in product liability cases. 3 It is imposed regardless of fault. 4 It is imposed on defendants engaged in hazardous activities. | It is imposed on defendants engaged in hazardous activities. Reasoning Strict liability is commonly applied in product liability cases. The business is then liable for defective products, regardless of fault or negligence. |
| Question: 37 According to the Personal Auto ('18) ISO form, transportation expenses are covered under a personal auto policy for 1 $50 per day, for a maximum of $1,000. 2 $25 per day, for a maximum of $500. 3 $30 per day, for a maximum of $900. 4 $40 per day, for a maximum of $800. | $30 per day, for a maximum of $900. Reasoning Other-than-collision coverage provides $30 a day for up to 30 days, up to a maximum of $900, following the theft of the entire auto, providing the auto is not recovered within 48 hours. |
| Question: 39 Duties of the insurer found in property policy conditions include all of the following EXCEPT 1 Notify the insured in the event of financial difficulty. 2 Return any premiums to the insured. 3 Provide advance notice of cancellation. 4 Pay covered losses. | Notify the insured in the event of financial difficulty. Reasoning The insurance department monitors the financial conditions of insurers. The insurers report to the state, not to policyholders. |
| Question: 45 Persons covered under an insurance policy, whether named or not, are known as the 1 Insureds. 2 Additional insureds. 3 Named insureds. 4 First named insureds. | Insureds. Reasoning The insureds are persons covered under a policy, whether named or not. |
| Question: 46 Which of the following is NOT the consideration in a policy? 1 The promise to pay covered losses 2 The application given to a prospective insured 3 The premium amount paid at the time of application 4 Something of value exchanged between parties | The application given to a prospective insured. Reasoning Consideration is something of value that is transferred between the two parties to form a legal contract. |
| Question: 60 According to the Insured Duties after a Loss provision in homeowners policies, if the insurer requires a signed, sworn proof of loss, the insured must provide within how many days? 1 60 days 2 30 days 3 20 days 4 10 days | 60 Days Reasoning If a loss occurs, the insured is required to send a signed, sworn proof of loss within 60 days of the insurer's request. |
| Question: 69 What type of information would be found in a policy’s insuring agreement? 1 Insurer's address 2 Location of premises 3 Policy limits 4 Renewal dates | Renewal Dates Reasoning An Insuring Agreement establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy. The insuring agreement lists the parties to the contract, effective and renewal dates, the description of coverage provided, and perils (among other things). Location of premises, policy limits, supplemental representations, and insurer's name and address can all be found in the Declarations. |
| Question: 92 Which one of the following statements regarding coverage for the flood and earthquake perils is true? 1 Flood insurance is available through a government program earthquake insurance is available by endorsement or through a separate policy. 2 Flood and earthquake coverage is available only through the government. 3 These perils are uninsurable. 4 Flood and earthquake coverage is available only by endorsement. | Flood insurance is available through a goverment program earthquake insurance is available by endoresement through a separate policy. Reasoning Flood and earthquake are both excluded perils, but flood insurance may be purchased through the National Flood Insurance Program and earthquake coverage from property insurers. |
| Question: 3 When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be 1 The direct cause. 2 Strict liability. 3 An intervening cause. 4 The proximate cause. | The proximate clause Reasoning The proximate cause of a chain of events resulting in injury is one that is sufficiently related to an injury that the courts determine it is in fact the cause of that injury. |
| Question: 5 According to the Personal Auto ('18) ISO form, transportation expenses are covered under a personal auto policy for 1 $25 per day, for a maximum of $500. 2 $30 per day, for a maximum of $900. 3 $50 per day, for a maximum of $1,000. 4 $40 per day, for a maximum of $800. | $30 per day, for a maximum of $900. Reasoning Other-than-collision coverage provides $30 a day for up to 30 days, up to a maximum of $900, following the theft of the entire auto, providing the auto is not recovered within 48 hours. |
| Question: 9 An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? 1 Good faith 2 Representation 3 Consideration 4 Adhesion | Consideration Reasoning The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss. |
| Question: 10 Which of the following is a mandatory part of an insurance policy that varies with each individual policy? 1 Insuring agreement 2 Declarations 3 Conditions 4 Exclusions | Declarations Reasoning Because the declarations tell who, what, when and where, this information is different in each contract. |
| Question: 28 With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto? 1 A vehicle leased to the named insured for 12 months by a leasing company 2 A vehicle that is titled to another person, but is being used with permission by an insured 3 A vehicle rented for the insured's personal use 4 A vehicle that is titled and insured by the named insured, but is driven principally by the named insured's son, who is resident of the household | A vehicle that is titled to another person, but us being used by an insured Reasoning Because the personal auto policy provides coverage on both owned and nonowned autos, situations will exist in which two or more policies will apply in a given situation. If the auto is owned and insured by someone other than the operator, then that policy will be primary coverage for that auto, and the operator's insurance would act as excess. |
| Question: 29 What is the maximum number of boarders per unit that would be allowed in the homeowners policy? 1 5 2 3 3 4 4 2 | 2 Reasoning Homeowners policies may insure a property that has no more than 2 families or 2 roomers or boarders per unit. |
| Question: 36 If more than one person has an insurable interest in the property covered under a dwelling policy, 1 All insureds must decide which one will be liable for the loss. 2 All involved insurers must decide which one will be liable for the loss. 3 Liability will be split evenly among all people who have insurable interest. 4 The insurer will be liable for only the insured’s interest in the damaged property. | The insurer will be liable for only the insured’s interest in the damaged property. Reasoning If more than one person has an insurable interest in a property, the insurer will be liable only for the insured's interest in the loss. |
| Question: 39 An insured is driving her automobile and strikes a large pothole that causes a flat tire. Which coverage of the insured's personal auto policy will pay for the repair? 1 Loss is not covered. 2 Collision 3 Comprehensive 4 Transportation expenses | Loss is not covered. Reasoning A flat tire that occurs from a cause other than vandalism is considered a road hazard and is specifically excluded from coverage in the policy. |
| Question: 40 What type of information would be found in a policy’s insuring agreement? 1 Renewal dates 2 Insurer's address 3 Policy limits 4 Location of premises | Renewal dates Reasoning An Insuring Agreement establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy. The insuring agreement lists the parties to the contract, effective and renewal dates, the description of coverage provided, and perils (among other things). Location of premises, policy limits, supplemental representations, and insurer's name and address can all be found in the Declarations. |
| Question: 41 If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT 1 No-fault medical payments. 2 Physical damage. 3 Uninsured motorist. 4 Liability. | physical damage Reasoning Subrogation rights do not apply to physical damage coverage if the damage is caused by a person using the auto with a reasonable belief that they were entitled to do so. |
| Question: 48 An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have? 1 Special 2 Specific 3 Schedule 4 Blanket | Specific Reasoning Specific insurance provides a specific amount of coverage for each property. A blanket insurance policy provides coverage for more than one property with a single limit of coverage. |
| Question: 50 Which one of the following statements regarding coverage for the flood and earthquake perils is true? 1 Flood insurance is usually provided in property policies | |
| earthquake insurance, however, is available by endorsement only. 2 Flood and earthquake coverage is available in all policies. 3 Flood and earthquake coverage is available only through the government. 4 Both are excluded perils in all property policies. | Both are excluded perils in all property policies Reasoning Flood and earthquake are both excluded perils in all property policies; however, coverage for both or either one can usually be purchased separately for an additional premium (by endorsement). |
| Question: 52 A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method? 1 Reproduction cost 2 Stated amount 3 Actual cash value 4 Replacement cost | stated amount Reasoning A stated amount is an amount of insurance scheduled in a property policy which is not subject to any coinsurance requirements in the event of a covered loss. |
| Question: 57 Which of the following statements is true concerning the special form dwelling policy? 1 Both Coverage A and Coverage C are provided on an all-risk basis. 2 Coverage A is for all-risk perils, and Coverage C is for the broad form perils. 3 Both Coverage A and Coverage C are provided for the broad form perils. 4 Coverage A is for all-risk perils, and Coverage C is for basic perils only. | Coverage A is for all-risk perils, and Coverage C is for the broad form perils. Reasoning The all-risk coverage applies to property insured under Coverages A and B only. |
| Question: 73 Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called 1 Described coverage. 2 Specific coverage. 3 Schedule coverage. 4 Blanket coverage. | Specific coverage. Reasoning One location is insured for a specific amount of insurance on the structure and contents. |
| Question: 81 An individual applies for a life policy. Two years ago he suffered a head injury, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of the insured's history one year later. What will probably happen? 1 Because the insured is currently not a drug user, his policy will not be affected. 2 The insurer will sue the insured for committing fraud. 3 The policy will not be affected. 4 The policy will be voided. | The policy will not be affected. Reasoning In insurance, fraud is the intentional misrepresentation of material information that is crucial when deciding whether or not to write a contract for an applicant. If an insurer finds that an applicant has committed fraud, it can void the contract, provided that the discovery occurs within the first two years of the effective policy date. In this particular instance the applicant did not commit intentional fraud. |
| Question: 89 The Florida Automobile Joint Underwriting Association (FAJUA) is a market source for persons unable to purchase auto insurance through the standard markets. All of the following statements concerning FAJUA are TRUE, EXCEPT 1 Agents do not have binding authority. 2 Each licensed agent in Florida is assigned to one of the servicing carriers with which the agent places all risks to be insured in FAJUA. 3 Coverage is available to military nonresidents stationed in Florida. 4 Private passenger autos are eligible for liability coverage with limits up to 100/300/50, PIP, U/M. | Agents do not have binding authority. Reasoning Agents have authority to immediately bind coverage upon securing a completed and signed application and upon payment of the required premium deposit by the applicant. |
| Question: 91 Within how many days must a property insurer pay on a claim after the settlement is reached? 1 10 days 2 30 days 3 60 days 4 20 days | 20 days Reasoning Whenever an insurer in this state agrees in writing to a settlement of a claim, the insurer is required to pay according to the terms of the agreement no later than 20 days after the settlement is reached. |
| Question: 100 In Florida, the Financial Responsibility Law is administered by 1 Department of Highway Safety and Motor Vehicles. 2 Florida No-Fault Motor Vehicle Commission. 3 State Attorney General. 4 The Department of Financial Services. | Department of Highway Safety and Motor Vehicles. Reasoning The Department of Highway Safety and Motor Vehicles has established specific financial requirement as a condition for registering and operating a motor vehicle in the state. |
| Theft coverage under HO – 8 is restricted to $250. The actual cash value of what was stolen, within limits for certain classes of property There’s no theft coverage under HO – 8 The larger of 10% of the personal property limit or $1000 | the actual cash value of what was stolen, with limits for certain classes of property Reasoning Since HO – 8 policies are for older homes, they insure dwellings at actual cash value, not replacement cost because the cost of rebuilding with the materials and details of the original home would make replacement cost coverage prohibitively expensive. Theft is the actual cash value of what was stolen, with limits for certain classes of property |
| Which of the following covers in the dwelling policy would provide protection to contents damage by fire? Coverage B Coverage D Coverage A Coverage C | Coverage C Reasoning Personal property provide provides coverage for the contents of an insured dwelling |
| All of the following statements, describe the concept of strict liability except It is applied in produc, liability cases. Claimants may need to provide proof that a product defect cause an injury. It is imposed regardless of fault. It is imposed on defendants engages in hazardous activities | It is imposed on descendants engage in hazardous activities Reasoning Strict liability is commonly applied in product liability cases. The business is liable for defective products, regardless of fault or negligence. |
| Additional coverages in the liability section of a homeowners policy, cover all of the following except Damages to a third-party property for which the insured is legally liable. Expenses to the insured, encourage rendering first aid for bodily injury to third parties. Damage to the property of others. Claims expense | Damage to a third-party property for which the insured is legally liable. Reasoning Legal liability coverage is a primary liability coverage, not an additional coverage |
| coverage for all of the following is found in Section I of a homeowners policy except Personal property. Personal liability. Other structures Dwelling | Personal liability Reasoning Personal liability is a Section II coverage that provides protection in the event and insured is charged with liable, slander, etc. |
| All of the following air conditions commonly found in the insurance policy except Appraisal Subrogation Ensuring agreement Cancellation and nonrenewal | Ensuring agreement Reasoning The ensuring agreement provides information on the policies coverages. Condition state the legal obligations and duties of the parties to the contract. |
| The policy condition define The excluded perils The basic underwriting information How parties to the contract must act following a loss The amount of coverage | How parties to the contract must act following a laws Reasoning Conditions is an essential part of a policy structure. Condition to define what each party to the policy is required to do contractually in the event of a loss. |
| Which of the following personal auto coverages would pay for the insured, travel expenses and loss of earnings while involved in the settlement process of a covered loss? Liability coverage Collision coverage Medical payments Comprehensive coverage | Liability coverage Reasoning Supplementarypayments, found in Part A – Liability, include expenses, incurred by the insured at the insurer’s request, including $200 per day for attending trials or hearings. |
| What is the following clauses establishes the procedure for determining the amount of the loss when the insurer and the insured cannot agree on the value of property or amount of loss? Valuation clause Loss settlement clause Appraisal clause Loss payment clause | Appraisal clause Reasoning Either an insured or insurer can request an appraisal. Each is an appraiser. The appraisers didn’t select a disinterested part third-party (umpire). Disagreements between appraisers are settled by the umpire, whose decisions are usually binding on both parties. |
| The part of a property policy that shows the amount of insurance, premium, and policy term is the Ensuring clause Declarations Endorsements Conditions | Declaration Reasoning Who, what, when, where, and how much insurance and premiums are all stated in the policy declarations. |
| Florida has a compulsory No-Fault Motor Vehicle Law that requires that PIP insurance be carried by the owners of motor vehicles, and impose penalties for failing to do so, unless specifically exempt. PIP provides all the following benefits, except Work loss Replacement services Medical Third-party death Benefit | third-party death benefits Reasoning PIP pays medical, work loss, replacement services, and a death benefit for the insured, but does not pay benefits to third parties, unless a Florida resident, struck by the insured vehicle while not occupying a self-propelled vehicle. (I.e. while a pedestrian). |
| The Office of Insurance Regulation is responsible for all of the following ensure activities except Issue of securities Policy form Viatical settlement Premium financing | issue of securities Reasoning The Office of Financial Regulation is responsible for all activities of the financial services commission relating to the regulation of banks, credit unions, finance companies, and the security industry. All the other enlisted activities are their responsibility of the Office of Insurance Regulation. |