Chapter 22: Practice Exam 2
Property and Casualty Insurance License Exam Cram™
Practice Exam 2 Questions
- 1.
The term "time element coverage" is used when the amount of loss depends on which of the following?
- A.
The time between the date of loss and the policy expiration date
- B.
The time between the policy effective date and date of loss
- C.
The time of year when a seasonal business suffers a loss
- D.
The time it takes to repair, rebuild, or restore damaged property
Correct Answer
D. The time it takes to repair, rebuild, or restore damaged propertyExplanation
Answer D is correct. The term "time element coverage" is used for many indirect losses, such as a business income loss, because the amount of loss might not be directly related to the amount of property damage that occurred, yet it is related to the time it takes to repair, rebuild, or restore the damaged property. Many factors can influence the ultimate loss, including the availability of supplies and replacement parts.Rate this question:
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- 2.
Which of the following is not one of the common law defenses against an employer's liability?
- A.
Assumption of risk
- B.
Fellow servant rule
- C.
Proximate cause
- D.
Contributory negligence
Correct Answer
C. Proximate causeExplanation
Answer C is correct. Assumption of risk, contributory negligence, and the fellow servant rule are the traditional common law defenses against employer liability. Proximate cause is a concept applied to determine which peril or event actually caused a loss.Rate this question:
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- 3.
Vehicles that might be insured by a personal auto policy are described in the eligibility rules and the policy definitions. Each of the following is true about vehicles eligible for PAP coverage except
- A.
Vehicles with fewer than four wheels are not eligible.
- B.
Vehicles owned by an individual or married couple may be insured.
- C.
Private passenger autos, pickup trucks, and vans used for personal transportation may be insured.
- D.
Vans used in a delivery business are eligible for coverage.
Correct Answer
D. Vans used in a delivery business are eligible for coverage.Explanation
Answer D is correct. Generally, four-wheel private passenger autos, pickups, and vans owned by an individual or married couple are eligible if used for pleasure or general transportation. Pickups and vans used in a business, other than farming or ranching, are not eligible.Rate this question:
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- 4.
Businessowners policies provide an additional coverage for preservation of property when it is removed from the premises to protect it from loss by a covered peril. The coverage will apply at other locations for up to
- A.
60 days
- B.
30 days
- C.
20 days
- D.
15 days
Correct Answer
B. 30 daysExplanation
Answer B is correct. The preservation of property additional coverage under a businessowners policy covers direct physical loss or damage from any cause if the property has been removed to another location in order to protect it from loss by a covered peril. Coverage applies while the property is being moved and while it is temporarily stored at another location, but only for 30 days after the property is first moved.Rate this question:
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- 5.
Which of the following losses is not excluded under the physical damage coverage of a personal auto policy?
- A.
Loss of custom furnishings in a customized van
- B.
Loss caused by freezing of the cooling system
- C.
Damage to equipment designed for the detection of radar
- D.
Damage to a covered auto while being used as part of a car pool
Correct Answer
D. Damage to a covered auto while being used as part of a car poolExplanation
Answer D is correct. Damage to a covered auto while being used as part of a car pool is not excluded. All of the other answer choices are specifically excluded.Rate this question:
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- 6.
Under the business auto coverage part, liability insurance applies to mobile equipment while which of the following occurs?
- A.
It is being operated on public roads.
- B.
It is being carried or towed by a covered auto.
- C.
It is being operated away from the insured's premises and work sites.
- D.
It is being used for the purpose for which it was designed.
Correct Answer
B. It is being carried or towed by a covered auto.Explanation
Answer B is correct. Although mobile equipment exposures are usually covered by CGL insurance, it is covered by business auto insurance while being carried or towed by a covered auto because in such cases it is considered an extension of the covered auto.Rate this question:
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- 7.
Insurance is a mechanism used to manage which of the following types of risk?
- A.
Pure risks
- B.
Speculative risks
- C.
Both pure and speculative risks
- D.
Neither pure nor speculative risks
Correct Answer
A. Pure risksExplanation
Answer A is correct. Insurance is only used to manage pure risks that involve only the possibility of loss and no opportunity for gain.Rate this question:
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- 8.
Under the 1989 dwelling policy forms, if coverage for vandalism and malicious mischief is attached to a policy, it will be suspended whenever the building has been vacant for more than how many days?
- A.
45 consecutive days
- B.
30 consecutive days
- C.
20 consecutive days
- D.
10 consecutive days
Correct Answer
B. 30 consecutive daysExplanation
Answer B is correct. If a dwelling policy includes the extended coverage (EC) perils, coverage for vandalism and malicious mischief (V&MM) may also be added. However, this coverage will not apply whenever the building has been vacant for more than 30 consecutive days.Rate this question:
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- 9.
Commercial general liability coverage provides medical expense payments for accidental injuries if the expenses are incurred and reported to the insurer within what date?
- A.
Six months after the accident date
- B.
One year after the accident date
- C.
Two years after the accident date
- D.
Three years after the accident date
Correct Answer
B. One year after the accident dateExplanation
Answer B is correct. CGL insurance policies provide coverage for medical expense payments for accidental injuries if the expenses are incurred and reported to the insurer within one year after the accident date.Rate this question:
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- 10.
An employer purchases a fidelity bond to protect against potential losses by employee dishonesty. In this situation, each of the employees covered by the bond is considered which of the following?
- A.
A fiduciary
- B.
A principal
- C.
A guarantor
- D.
An obligee
Correct Answer
B. A principalExplanation
Answer B is correct. Fidelity bonds are contracts between three parties. The employees who are required to act honestly are the principals. The surety or guarantor, which is usually an insurance company, agrees to be responsible for a loss if a principal violates the terms of the bond. The obligee, the employer, is the party who is being protected by the bond and who will be paid if a loss occurs.Rate this question:
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- 11.
When insurance is written on a dwelling form, each of the following types of property would be insured under Coverage A (dwelling coverage) except which one?
- A.
A storage shed connected to the dwelling by a utility line
- B.
A laundry room attached to the dwelling
- C.
Building equipment and outdoor equipment
- D.
Materials and supplies used for construction or repair of the dwelling
Correct Answer
A. A storage shed connected to the dwelling by a utility lineExplanation
Answer A is correct. A storage shed connected to the dwelling by a utility line would be considered an "other structure" available for insurance under Coverage B. All other answer choices are specifically described in the policy as being part of Coverage A, insurance for the dwelling.Rate this question:
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- 12.
On homeowners policies, "insured location" is a broad term describing where liability coverages apply. It includes each of the following except which one?
- A.
Family cemetery plots
- B.
Any newly acquired premises
- C.
Structures on farm land owned by an insured
- D.
A nonowned premises used as a temporary residence by an insured
Correct Answer
C. Structures on farm land owned by an insuredExplanation
Answer C is correct. Family cemetery plots, newly acquired premises, and premises used as a temporary residence by an insured are all included in the policy definition of "insured location." Farm exposures are specifically excluded by the homeowner eligibility rules.Rate this question:
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- 13.
The most common definition of actual cash value (ACV) in the property insurance field is which of the following?
- A.
Original cost, plus depreciation
- B.
Original cost, less depreciation
- C.
Replacement cost, plus depreciation
- D.
Replacement cost, less depreciation
Correct Answer
D. Replacement cost, less depreciationExplanation
Answer D is correct. Many losses are reimbursed on an actual cash value (ACV) basis. Actual cash value is usually calculated by determining an item's replacement cost and subtracting an amount for depreciation.Rate this question:
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- 14.
Each of the following is true about the National Flood Insurance Program except which one?
- A.
There are maximum limits on the amount of coverage available.
- B.
Coverage may be written by private insurance carriers.
- C.
Eligibility requirements are set by private insurance carriers.
- D.
The federal government reimburses insurance companies for losses that exceed premiums collected.
Correct Answer
C. Eligibility requirements are set by private insurance carriers.Explanation
Answer C is correct. The Federal Insurance Administration sets rates, eligibility requirements, and coverage limitations for flood insurance. Maximum limits do apply to the amount of coverage available, coverage may be written by private insurance carriers, and the FIA reimburses insurance companies for losses that exceed premiums collected.Rate this question:
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- 15.
What is meant by the term "adverse selection"?
- A.
Underwriting practices that discriminate against applicants in certain geographical areas
- B.
Selling types of insurance to applicants who do not need that particular kind of coverage
- C.
Agency marketing practices that promote only the policies that pay the highest commissions
- D.
The tendency of people with greater than average exposure to loss to purchase insurance
Correct Answer
D. The tendency of people with greater than average exposure to loss to purchase insuranceExplanation
Answer D is correct. Adverse selection means the tendency of people with a greater than average exposure to loss to purchase insurance coverage. For example, if insurers only sold earthquake coverage to applicants in earthquake-prone areas, or flood insurance only to those in flood-prone areas, the situation known as adverse selection would exist. Insurers and underwriters guard against adverse selection by trying to sell broad ranges of coverages to a large cross-section of the population in order to increase the premium base and spread the risk of loss.Rate this question:
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- 16.
A commercial building valued at $300,000 is insured for $200,000. If the policy is written with an 80% coinsurance percentage and a standard deductible, how much would be paid for a $60,000 loss?
- A.
$60,000
- B.
$49,500
- C.
$40,000
- D.
$39,500
Correct Answer
B. $49,500Explanation
Answer B is correct. The coinsurance requirement is for the insured to carry 80% of the $300,000 building value, or $240,000 of coverage. Because the insured only has $200,000 of coverage, a penalty applies. The formula is that the amount actually carried ($200,000) is divided by the amount required ($240,000) to produce a fraction that will be multiplied by the loss. In this case, the fraction is 5/6 and the loss was $60,000, so the result is a $50,000 covered loss. However, the standard deductible is $500 per occurrence, so the net amount paid will be $49,500.Rate this question:
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- 17.
Under homeowners coverage for medical payments to others, necessary medical expenses for treating an accidental injury will be covered if it incurred within how many days?
- A.
90 days of the accident date
- B.
1 year of the accident date
- C.
3 years of the accident date
- D.
5 years of the accident date
Correct Answer
C. 3 years of the accident dateExplanation
Answer C is correct. Coverage for medical payments to others under a homeowners policy applies to necessary medical expenses incurred within three years of an accident that causes bodily injury.Rate this question:
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- 18.
Under a Personal Umbrella policy, a self-insured retention is an amount that
- A.
Is in effect a deductible for insured losses.
- B.
Reflects the maximum the insurer will pay for a particular loss.
- C.
Applies between underlying coverage and the umbrella coverage.
- D.
Reduces the amount of underlying coverage available to cover insured losses.
Correct Answer
A. Is in effect a deductible for insured losses.Explanation
Answer A is correct. A Personal Umbrella may cover losses that are excluded by underlying insurancein which case, a self-insured retention limit applies. This operates similar to a deductible because it is the out-of-pocket amount the insured must absorb before the umbrella coverage applies.Rate this question:
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- 19.
Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following except which one?
- A.
Cargo lost or damaged through negligence
- B.
Damage to other vessels when caused by collision
- C.
Damage to or loss of the insured ship
- D.
Job-related injuries to sailors
Correct Answer
C. Damage to or loss of the insured shipExplanation
Answer C is correct. Ocean marine protection and indemnity (P&I) coverage provides liability coverage for job-related injuries to sailors, cargo lost or damaged through negligence, damage to other vessels when caused by collision, and a few other things. Damage to the insured ship is not covered under P&I, but the insurance is available under hull coverage.Rate this question:
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- 20.
National flood insurance is available for which of the following?
- A.
Private residences only
- B.
Private residences and residential contents only
- C.
Residential and nonresidential buildings only
- D.
Residential and nonresidential buildings and contents
Correct Answer
D. Residential and nonresidential buildings and contentsExplanation
Answer D is correct. Almost any building that is walled and roofed, is principally above ground, and is fixed to a permanent site is eligible to be covered by a flood policy. A policy may cover a building, its contents, or both.Rate this question:
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- 21.
Which dwelling forms can provide replacement cost coverage for buildings?
- A.
The basic and broad forms only
- B.
The broad and special forms only
- C.
The special form only
- D.
The basic, broad, and special forms
Correct Answer
B. The broad and special forms onlyExplanation
Answer B is correct. Although all dwelling forms settle personal property losses at actual cash value, under the broad and special forms (DP-2 and DP-3), replacement cost coverage for buildings is provided if the insured carries insurance equal to at least 80% of the full replacement cost at the time of loss.Rate this question:
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- 22.
Under the commercial property conditions, the coverage territory includes all of the following except which one?
- A.
United States
- B.
Mexico
- C.
Puerto Rico
- D.
Canada
Correct Answer
B. MexicoExplanation
Answer B is correct. The conditions state that the coverage territory includes the United States, its territories and possessions, and Canada. Mexico is not included in the coverage territory.Rate this question:
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- 23.
Which of the following risks might qualify for coverage under a businessowners policy?
- A.
A bank or saving and loan association
- B.
A bar and grill
- C.
An office building of any size
- D.
An apartment building of any size
Correct Answer
D. An apartment building of any sizeExplanation
Answer D is correct. Under the BOP eligibility rules, there is no size limitation on apartment buildings, but a size limit does apply to office buildings. Banks, saving and loan associations, bars, and pubs are specifically described as ineligible risk categories.Rate this question:
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- 24.
Under business auto liability coverage, if an insured takes time off from work at the request of the insurer and suffers loss of earnings, as a supplementary payment, the insurer will pay up to how much?
- A.
$150 a day for lost earnings
- B.
$200 a day for lost earnings
- C.
$250 a day for lost earnings
- D.
$300 a day for lost earnings
Correct Answer
C. $250 a day for lost earningsExplanation
Answer C is correct. The business auto coverage form includes supplementary payments under the liability section that state the insurer will pay expenses incurred by an insured at the insurer's request, including up to $250 a day for lost earnings because of time off from work.Rate this question:
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- 25.
The primary purpose of insurance is to do which of the following?
- A.
Avoid risk
- B.
Eliminate risk
- C.
Transfer risk
- D.
Reduce risk
Correct Answer
C. Transfer riskExplanation
Answer C is correct. The purpose of insurance is not to avoid or eliminate risk, but to transfer risk. Risk reduction efforts play a part in loss control, which helps to keep insurance costs down, but insurance itself is not an example of reducing risk.Rate this question:
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- 26.
Which dwelling forms provide coverage for loss of fair rental value when a dwelling becomes uninhabitable?
- A.
The special form only
- B.
The basic and broad forms only
- C.
The broad and special forms only
- D.
The basic, broad, and special forms
Correct Answer
D. The basic, broad, and special formsExplanation
Answer D is correct. All dwelling policies provide coverage for the loss of fair rental value if a building or other structure becomes uninhabitable because of an insured cause of loss. A limited amount of coverage is provided under the Other Coverages section of the policy, but an insured with a greater exposure might purchase a specific amount of coverage.Rate this question:
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- 27.
On a commercial package policy, interline endorsements are which of the following?
- A.
Attached to the common policy conditions
- B.
Attached to the common policy declarations
- C.
Only apply to commercial property coverages
- D.
Could apply to more than one line of insurance
Correct Answer
D. Could apply to more than one line of insuranceExplanation
Answer D is correct. Interline endorsements attached to a commercial package policy are endorsements that can apply to more than one line of insurance or coverage part.Rate this question:
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- 28.
On homeowners policies, personal property used for business purposes is which of following?
- A.
Cannot be covered
- B.
Covered only if an additional premium is paid
- C.
May be covered only while on the residence premises
- D.
Covered up to $2,500 on the premises and up to $500 off the premises
Correct Answer
D. Covered up to $2,500 on the premises and up to $500 off the premisesExplanation
Answer D is correct. Homeowners policies do cover some property used for business, but the coverage is subject to special limitations. The policy will only provide up to $2,500 of coverage for business property on the residence premises and $500 of coverage for business property away from the premises.Rate this question:
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- 29.
When an insured cancels a policy prior to its expiration date, the insurance company will return a portion of the unused premium on a short rate basis. What does the term "short rate" mean?
- A.
The insurer will keep the earned premium plus an additional amount for policy writing expenses.
- B.
There will be a pro rata adjustment of the premium so that the insured is not charged for the full policy term.
- C.
The agent will return the commission paid on the policy to the insurer.
- D.
The insurer will return the unearned premium plus interest on the amount that was not used.
Correct Answer
A. The insurer will keep the earned premium plus an additional amount for policy writing expenses.Explanation
Answer A is correct. When an insured cancels a policy prior to expiration, the unearned premium may be returned on a short rate basis. This means that the company not only keeps the earned premium for the insurance provided, but also keeps an additional amount for expenses of issuing the policy.Rate this question:
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- 30.
The taking of money or other property from inside a premises by someone who has unlawfully and forcefully entered or exited is an example of what kind of crime?
- A.
Robbery
- B.
Burglary
- C.
Embezzlement
- D.
Safe burglary
Correct Answer
B. BurglaryExplanation
Answer B is correct. Burglary is the taking of money or other property from inside a premises by someone who has unlawfully entered or exited the premises. There must be visible evidence of forced entry or exit. Robbery is taking money or property by force or threat. Embezzlement is taking money by means of bookkeeping fraud. Safe burglary is a special form of burglary that specifically refers only to breaking into a safe to take money or property, as opposed to just breaking in to a premises.Rate this question:
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- 31.
Which method of risk management best describes the use of high deductibles or elements of self-insurance to reduce insurance costs?
- A.
Retention
- B.
Transfer
- C.
Avoidance
- D.
Reduction
Correct Answer
A. RetentionExplanation
Answer A is correct. Risks may be retained in whole or in part by intentionally self-insuring or selecting high deductibles. The other risk management options are not examples of risk reduction. Transfer refers to the purchase of insurance, where the risk of loss is assumed by the insurance company in return for the premium. Avoidance means taking steps to not incur the risk at all, such as never driving a car to avoid the risk of collision. Reduction means taking steps to lower the severity of a loss if it occurs, such as installing a sprinkler systema fire might still occur, but it won't spread if the sprinkler system puts the fire out.Rate this question:
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- 32.
Office buildings are eligible for coverage under a businessowners policy if they do not contain more than 100,000 square feet of space and do not exceed which of the following?
- A.
4 stories in height
- B.
6 stories in height
- C.
8 stories in height
- D.
10 stories in height
Correct Answer
B. 6 stories in heightExplanation
Answer B is correct. Under the eligibility rules, office buildings may qualify for coverage under a businessowners policy if they do not contain more than 100,000 square feet of space and do not exceed 6 stories in height.Rate this question:
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- 33.
The commercial Common Policy declarations would include all of the following types of information except which one?
- A.
The policy period
- B.
The coverage parts purchased and their premiums
- C.
The exclusions that apply to the coverages
- D.
The identity and mailing address of the named insured
Correct Answer
C. The exclusions that apply to the coveragesExplanation
Answer C is correct. The Common Policy Declarations contain vital summary information about the contract, such as name and address of the named insured, policy period, coverage parts attached, premiums, and a list of forms attached to the policy. Exclusions are found in the individual coverage parts. Exclusions may be contained in coverage forms, causes of loss forms, or both.Rate this question:
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- 34.
Under the loss sustained version of commercial crime coverage forms, the policy will cover losses sustained during the policy period and discovered either during the policy term or no later than which of the following?
- A.
Three years after policy expiration
- B.
Two years after policy expiration
- C.
One year after policy expiration
- D.
Six months after policy expiration
Correct Answer
C. One year after policy expirationExplanation
Answer C is correct. Crime insurance written under a loss sustained form covers losses sustained during the policy period and discovered either during the policy period or up to one year after the policy expires.Rate this question:
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- 35.
Under the NCCI workers compensation and employers liability policy form, the employers liability coverage excludes any claim for which of the following?
- A.
Care and loss of service
- B.
Liability assumed under contract
- C.
Damages to a third party
- D.
Consequential injury to a spouse or relative of an injured worker
Correct Answer
B. Liability assumed under contractExplanation
Answer B is correct. Liability assumed under contract is specifically excluded under the employers liability section of a workers compensation policy. The other answer choices are not excluded and are commonly covered by the policy.Rate this question:
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- 36.
Each of the following is true about farm coverages except which one?
- A.
Livestock and equipment may be insured.
- B.
Property and liability coverages may be included.
- C.
The principal residence may be covered by farm or homeowners forms.
- D.
Farm coverage may be written as a mono-line policy or part of a package.
Correct Answer
C. The principal residence may be covered by farm or homeowners forms.Explanation
Answer C is correct. Farm property, including the principal residence and other structures, may not be covered by homeowner forms. All of the other answer choices reflect exposures that may be covered by farm forms.Rate this question:
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- 37.
Because an insurer writes the policy language and the insured has little or no control over the content, any ambiguity in the wording is usually resolved in favor of the insured. Because the design and wording of a policy are in the hands of the insurer, insurance policies are said to be which of the following?
- A.
Contracts of indemnity
- B.
Unilateral contracts
- C.
Contracts of adhesion
- D.
Aleatory contracts
Correct Answer
C. Contracts of adhesionExplanation
Answer C is correct. Insurance policies are contracts of adhesion. The insurer draws up the contract language, and the insured simply adheres to the terms. For this reason, any ambiguity in the wording is usually resolved in favor of the insured by the courts.Rate this question:
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- 38.
After a homeowners policy has been in effect for at least 60 days, when the insurer cancels for any reason other than nonpayment of premium, it must give the insured advance written notice of at least how many days?
- A.
60 days
- B.
30 days
- C.
20 days
- D.
10 days
Correct Answer
B. 30 daysExplanation
Answer B is correct. The insurance company is only required to give notice 10 days in advance when it cancels a policy for any reason during the first 60 days of coverage or for nonpayment of premium at any time during the policy term. However, after a policy has been in effect for 60 days, the insurer must give notice at least 30 days in advance when canceling for any reason other than nonpayment of premium.Rate this question:
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- 39.
Under which policy provision is an insured's right to recover for a loss from a third party transferred to the insurance company?
- A.
Abandonment
- B.
Pair or set clause
- C.
Subrogation
- D.
Arbitration
Correct Answer
C. SubrogationExplanation
Answer C is correct. The Transfer of Rights of Recovery clause, also known as subrogation, gives the insurance company the right to recover from a third party who was at fault for a loss, up to the amount that the insurer has paid the insured for the loss. The abandonment provision merely states that the insured cannot decide to surrender damaged property to the insurer in return for full payment. (The acquisition of damaged property is at the option of the insurance company.) The pair or set clause states that the settlement for damage to one item that is part of a pair or set will be made with recognition of the reduction in value of the pair or set. Arbitration is a means of settling claims disputes when the insured and the insurance company disagree on the value of damaged property.Rate this question:
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- 40.
A businessowners policy may provide additional coverage for increased cost of construction when required to comply with an existing ordinance or law. However, this coverage is available only for buildings that are insured on a replacement cost basis and it is limited to which of the following amounts?
- A.
$10,000
- B.
$7,500
- C.
$5,000
- D.
$2,500
Correct Answer
A. $10,000Explanation
Answer A is correct. If a building is insured on a replacement cost basis, a businessowners policy will provide additional coverage for increased cost of construction when required to comply with an existing ordinance or law. This coverage is limited to 10,000.Rate this question:
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- 41.
Which of the following is not an optional property coverage on homeowners policies?
- A.
Personal property replacement cost
- B.
Permitted incidental occupancies
- C.
Increased limits for jewelry, watches, and furs
- D.
Coverage for loss of use of the premises
Correct Answer
D. Coverage for loss of use of the premisesExplanation
Answer D is correct. All homeowner policies provide some coverage for loss of use. The other answer choices reflect available optional coverages, but they must be added by endorsement.Rate this question:
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- 42.
Which of the following is true about commercial crime coverage written on a discovery policy form?
- A.
In order to be covered, losses must be sustained and discovered during the policy period.
- B.
Losses may be covered if they are discovered at any time up to 18 months after the policy expires.
- C.
No exclusions apply to the types of losses that may be covered by this form.
- D.
A loss discovered during the policy period will be covered even if it was sustained years earlier.
Correct Answer
D. A loss discovered during the policy period will be covered even if it was sustained years earlier.Explanation
Answer D is correct. Commercial crime coverage written on a discovery policy form will cover a loss discovered during the policy period even if it was sustained months or years earlier. It will also cover a loss discovered up to 60 days after the policy expires. Exclusions do apply to this coverage.Rate this question:
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- 43.
Withholding, rather than misstating, a material fact on an insurance application is an act of which of the following?
- A.
Misrepresentation
- B.
Concealment
- C.
Waiver and estoppel
- D.
Fraud
Correct Answer
B. ConcealmentExplanation
Answer B is correct. Concealment is similar to misrepresentation, except that it involves withholding a material fact where misrepresentation involves misstating a material fact. Fraud has a more extensive definition, which includes the insurance company relying on and being harmed by the misstatement of a material fact. Waiver and estoppel are terms that involve someone giving up a known right.Rate this question:
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- 44.
When an insurer cancels a commercial package policy for reasons other than nonpayment of premium, it must give written notice to the first named insured at least how long?
- A.
60 days in advance
- B.
30 days in advance
- C.
20 days in advance
- D.
10 days in advance
Correct Answer
B. 30 days in advanceExplanation
Answer B is correct. If the insurer cancels a commercial package policy, it must mail a written notice to the last known address of the first named insured. Ten days' notice is required for cancellation for nonpayment of premium; 30 days notice is required for cancellation for any other reason permitted by the policy.Rate this question:
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- 45.
Which of the following coverages may be included in a personal auto policy without the necessity of issuing an endorsement?
- A.
Miscellaneous type vehicles
- B.
Towing and labor costs
- C.
Transportation expenses
- D.
Named nonowner coverage
Correct Answer
C. Transportation expensesExplanation
Answer C is correct. Coverage for transportation expenses is included in the physical damage section of a personal auto policy. All of the other answer choices are optional coverages that may be added by endorsement.Rate this question:
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- 46.
The commercial building and personal property coverage form provides a number of coverage extensions but only if which of the following is true?
- A.
The coverage for buildings is written on a replacement basis.
- B.
All coverages are written on a blanket basis.
- C.
They are shown in the declarations and an additional premium is paid.
- D.
An 80% or higher coinsurance percentage or a value reporting symbol is shown in the declarations.
Correct Answer
D. An 80% or higher coinsurance percentage or a value reporting symbol is shown in the declarations.Explanation
Answer D is correct. The commercial building and personal property coverage form does provide a number of coverage extensions but only if an 80% or higher coinsurance percentage or a value reporting symbol is shown in the declarations.Rate this question:
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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Mar 21, 2023Quiz Edited by
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Feb 25, 2009Quiz Created by
Fsspc
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