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P & C Insurance license prep

P & C Insurance license prep

Last update 

really hard questions about insurance

Items (98)

  • What is vicarious liability?

    Liability that a person or business incurs because of the actions of others, such as family members or employees; also called imputed liability

  • Please define 3 things that count as supplementary payment (do not come out of limits of coverage)

    Expenses the insurer incurs Costs of bail bonds up to $2,000 for violations because of a covered accident Costs of bonds to release attachments, but only within the limit of insurance Costs the insured is required to pay because of a suit

  • What is the fire department service charge alloted homeowners policy?

    $500

  • On a homeowners policy on the earthquake endorsement what is the time of the amount of aftershocks considered part of the same event?

    72 hours

  • Identify all the potential loss settlement methods...

    Actual Cash Value, replacement cost, market value, full face value, stated amount value (for rare types of property that's hard to value), agreed value

  • Identify the three types of hazard and what is a hazard is in general?

    Physical hazards, moral hazards, morale hazards A hazard is an event or instance that increases the possibility of a loss

  • What are the actual the factors needed to establish neglegence?

    A legal duty owed A breach of duty (act of omission) – the breach caused a loss Proximate cause – Damages happened Injury

  • In the DP 1 what's the extended perils endorsement, all the perils

    WCSHAVVER Wind, civil commotion, smoke, hail, aircraft, vehicles, volcanic eruption, external explosion, riots

  • The name for every one of the homeowner's policies 2-6

    lol (BullShit Roxbury Community College) HO-2 Broad HO-3 Special HO-4 Renters HO-5 Comprehensive (baller's) HO-6 Condo

  • Absolute liabtility

    type of liability imposed by law on those participating in certain activities that are considerede especially hazardous; a person involved in such operations may be held liable for the damages of another even though the individual was not negligent

  • Actual Cash Value (ACV)

    the cost to replace an item of property at the time of loss, less an allowance for depreciation; often used to determine the amount of reimbursement

  • additional insured lessor endorsement

    commercial auto endorsement used to make leased vehicles considered owned vehicles for coverage purposes

  • Adhesion contract

    a contract where one party has more power than the other party in drafting the contract

  • agency

    principles governing the authority of any agent that represents the principal

  • aggregate limit

    type of policy limit found in liability policies that limits coverage to a specified total amount for all losses occurring within the policy period

  • agreed value condition

    condition found in some property insurance policies that stipulates a certain value that will meet the coinsurance requirement; if the policy limit equals or exceeds this amount, the insured will not be assessed a coinsurance penalty; also called stated amound condition

  • aleatory contract

    a contract that is contingent on an uncertain event (a loss)

  • appurenant structures

    buildings of a lesser value that are on the same premises as the main building insured under a property policy; they are usually covered by the policy

  • arbitration condition

    policy condition that is similar to the appraisal condition; may be used to resolve other areas of disagreement besides those regarding the value of a loss

  • authorized insurer

    company that meets a state insurance department's standards and is authorized to do business in that state; also called an admitted insurer

  • bailee

    a person or organization that has temporary possession of someone else's property

  • blanket insurance

    type of insurance policy that covers more than one item of property at a single location or one or more items of property at multiple locations 5.4.2

  • business pursuits endorsement

    homeowners policy that provides liability coverage for a business conducted away from the residence premises

  • coinsurance

    policy condition that requires an insured to pay part off a loss if the amount of insurance carried on property is less than a specified percentage of the value of the property at the time of loss

  • combined ratio

    the sum of the loss ratio and the expense ratio; a ratio of 100% is the break even point; a ratio below 100% indicates an underwriting profit; a ratio above 100% indicates a loss see loss ratio and expense ratio

  • contribution by equal shares

    type of other insurance condition found in liability policies; it calls for all insurers to contribute equally up to the amount of the policy having the smallest limit, whereupon that company stops paying; the other companies share in the remainder of the loss until the loss is paid in full or all policy limits are exhausted

  • countersignature

    the signature of a licensed agent that, in most states, must appear on the policy to validate the contract

  • custodian

    someone who has custody of the insured's property inside the premises not a watch person or janitor

  • deductible

    dollar amount the insured must pay on each loss to which the deductible applies; the insurance company pays the remainder of each covered loss up to the policy limits

  • Doctrine of reasonable expectations

    legal principle that provides that an insurance policy includes coverages that an average person would reasonably expect it to include, regardless of what the policy actually provides

  • estoppel

    preventing the re-insertion of that known right or privilege that was previously waived

  • express authority

    legal doctrine that states that an agent has the authority specifically given to the agent, either orally or in writing, by the principal

  • Fair Credit Reporting Act

    federal law that allows consumers who are denied insurance because of information contained in a credit report to be notified and allowed to obtain the information used in the report from the reporting agency

  • what perils are covered under DP 1 ?

    fire, lightning and internal explosions

  • What is covered under DP coverage C ?

    Coverage C – Personal property – provides coverage for: Personal property owned or used by the named insured or resident family members while on the described location Coverage is only provided when an insured pays the premium for coverage A limited amount is provided for personal property away from the premises (up to 10% of the coverage)

  • What is covered under DP coverage D?

    Coverage D – Rental Value – Provides coverage for: Property held for rental or actually rented that suffers a loss and is deemed uninhabitable Coverage is for Fair Rental Value (FRV) or loss of rental value by a landlord due to a covered peril Calculated as the amount the property could have been rented for the period of time it takes to replace

  • Vandalism and Malicious Mischeif (VMM)

    the willful and malicious damage or destruction or property

  • What is covered under DP coverage E ?

    Coverage E – Additional Living Expense – Provides coverage for: Indemnifies the insured for expenses incurred in excess of his/her regular monthly living expenses if the dwelling is unfit or unlivable Also called loss of use, it is an indirect loss of coverage Coverage available up to 10% of the Coverage A amount

  • aggregate limit of liability

    the maximum limit payable during the policy period

  • Contractual liability

    Liability assumed by one party from another through a written agreement

  • reinsurance intermediary

    Any person, other than an officer or employee of the ceding insurer, firm, association, or business entity who solicits, negotiates, or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of such insurer.

  • scheduled coverage

    property that is a specifically listed in the declarations and covered for a specific amount

  • What are the minimum auto insurance requirements for MA auto insurance policy?

    20/40/5 BI per person/BI per accident/PD PIP 8 Med 5

  • How many days to cancel insurance from non renewal?

    45 days via certified mail

  • How many days to cancel insurance from non payment

    10 days

  • How many days do you have to submit a proof of loss form for auto insurance?

    91 days

  • How many days to you have to submit a proof of loss form for all other kinds of insurance but auto insurance?

    60 days

  • How long does a temporary MA insurance license have before it expires or you have to take the test and get a new one?

    180 days

  • How old must an indivudual be in order to be an insurance producer in MA?

    18 years old

  • How long does an insurance producer in MA have to continue education for the first triennium?

    60 hours

  • How long does an insurance producer in MA have to continue education for the every 3 years after the first triennium?

    45 hours

  • How long is does a building have to have ABSOLUTELY NOTHING in it before it is considered legally 'vacant'?

    ALWAYS 60 days

  • What's the deductible for DP or earthquake coverage?

    $250

  • What's the deductible on a Homeowners, Auto Insurance or BOP policy?

    $500

  • What's the fire department service charge on a DP1?

    $100

  • What's the fire department service charge on a HO policy?

    $250

  • how long is property removed after there's been a damaged claim on a DP1?

    5 days

  • How long is property removed after there's been a damaged claim on everything else besides a DP1?

    30 days

  • What type of peril coverage does a HO2 cover and what compensation method is there for sections A & B?

    broad peril, replacement cost

  • What type of peril coverage is there for a HO2 coverage C and what type of recomepsation method is there?

    broad perils, Actual Cash Value

  • What type of perils protection does HO3 cover and what is the recompensation method for sections A & B?

    special perils, replacement value

  • What type of perils coverage is covered under a HO3 coverage C and what type of recomensation method?

    broad perils, actual cash value

  • What type of perils are covered by an HO4 coverage A & B and what is the recompensation method?

    N/A HO4 is tenant so it's not applicable (trick question haha)

  • What type of perils are covered by an HO4 coverage C and what is the recompensation method?

    broad peril, Actual cash value

  • What type of perils are covered by an HO5 coverage A & B and what is the recompensation method?

    special, replacement

  • What type of perils are covered by an HO5 coverage C and what is the recompensation method?

    special, replacement

  • What type of perils are covered by an HO6 coverage A & B and what is the recompensation method?

    broad, replacement

  • What type of perils are covered by an HO6 coverage C and what is the recompensation method?

    broad, ACV

  • What type of perils are covered by an HO8 coverage A & B and what is the recompensation method?

    basic, market

  • What type of perils are covered by an HO8 coverage C and what is the recompensation method?

    basic, ACV

  • What is meant by 'broad perils'?

    (basic DP1 perils) Fire, lightning, internal explosion, (extended perils) WCSHAVVER - Wind, civil commotion, smoke, hail, aircraft, volcano, vehicle, external explosion, riot, VMM violence & malicious mischeif, bursting pipes, weight of ice/snow, accidental discharge, missles/falling object, collapse, theft

  • What is meant by 'open peril coverage'?

    is any or all perils not specifically excluded

  • What is known by "redlining"?

    An insurer that engages in unfair discrimination

  • Assumption of risk

    no longer existing common law defense that allowed the employer to deny liability on the basis that the employee knew the situation was like before employment and assumed all risk of injury

  • easement agreement

    an agreement that gives someone the right to use property for a specific purpose without transferring the ownership of the property

  • apparent or express authority

    Legal doctrine that states an agent has the authority specifcally given to the agent, either orally or in writing

  • Implied authority

    the authority given by the insurance company to the agent that is not formally expressed or communicated

  • Apparent authority

    a doctrine that holds an agent may have whatever authority a reasonable person would assume the agent has

  • What's the fire department service charge on a dwelling policy?

    $250

  • What's the fire department service charge on a BOP?

    $1000

  • The principal (in bonds)

    is a party whose performance is being guaranteed

  • The obligee (in bonds)

    is the party who is protected by the bond

  • The surety (in bonds)

    is the obligator, the one providiing a financial guarantee

  • Name all coverages under Dwelling Policy

    Coverage A – Dwelling Coverage B – Other Structures Coverage C – Personal Property Coverage D – Fair Rental Value Coverage E – Additional Living Expenses Coverage L – Liability

  • Name all coverages under Homeowner's Policy

    Coverage A – Dwelling Coverage B – Other Structures Coverage C – Personal Property Coverage D – Loss of Use Coverage E – Personal Liability Coverage F – Medical

  • What are the 4 mandatory Personal Auto Policy coverages in MA?

    I - Bodily Injury 20/40 II- Personal Injury Protection (PIP) 8 III – Uninsured Motorist Coverage 20/40 IV- Damage to Someone Else's Property 5

  • What are the remaining optional Personal Auto Coverages in MA?

    V – Optional Bodily Injury to Others 20/40 VI – Medical Payments 5 VII – Collision VIII – Limited Collision IX – Comprehensive Coverage X – Substitute Transportation 15/45 XI – Towing and Labor 50 XII – Underinsured Motorist Coverage 20/40

  • Diminution of value

    is an actual or perceived loss in resale or market value that results from a direct or accidental loss

  • An insurer will not pay for damage to the property of others under Section II of an HO-3 policy in which of the following instances? 1 - The leather jacket of the insured's cousin is torn on a fence post on the covered premises 2 - Intentional property damage to another caused by the insured's eleven year old son 3 - Property of a visitor damaged by the insured's daughter 4 - Property owned by a tenant of the insured

    The correct answer is: 4 -Property owned by a tenant of the insured

  • The Division of Insurance performs all of the following tasks EXCEPT: A) licensing producers. B) enacting insurance laws. C) examining the records of insurers. D) investigating possible violations.

    Answer: B Only the state legislature may enact insurance laws. The Insurance Department is part of the administrative branch of government and is responsible for examining insurers, investigate violations, and license producers and insurers.

  • A producer must report to the Commissioner any administrative action taken against him within how many days of the final disposition of the matter? A) Five. B) Ten. C) 60 D) 30

    Answer: D A producer must report to the Commissioner any administrative action taken against him in another jurisdiction or by another governmental agency in Massachusetts within 30 days of the final disposition of the matter. The report must include a copy of the order, consent to order, and all other relevant legal documents.

  • In order to act as an agent for an insurer, the producer must first: A) be licensed as a producer for 4 years. B) have sold policies for the insurer for 1 year. C) be appointed by the insurer. D) have completed a college insurance program.

    Answer: C An insurance producer may not act as an agent of an insurer unless the producer is appointed as an agent by that insurer.

  • An insured has an $80,000 dwelling policy with a $500 deductible. In addition to the house, the property includes a detached garage, storage shed, and an artist's studio. During a thunderstorm, the garage and storage shed are damaged by lightning. The loss is $3,000 to the garage and $1,000 to the shed. What amount is covered by the policy? A) 3500 B) 0 C) 3000 D) 4000

    Answer: A Coverage B--Other Structures provides coverage for real property located on the described location and separated from the dwelling by clear space. Up to 10% of Coverage A (in this case $8,000) is included for other structures. Lightning is a covered peril so the policy would pay $3,500 (the $4,000 loss less the $500 deductible).

  • A person who is not licensed as a producer but who presents himself as one is guilty of: A) defamation. B) coercion. C) rebating. D) impersonation.

    Answer: D An individual who is not licensed as a producer, but who presents himself as a licensed producer, is guilty of impersonation. Defamation, coercion, and rebating are other types of unethical and illegal behavior.

  • A producer who has allowed his license to lapse may reinstate it within how many months without having to take a new licensing exam? A) Six months. B) 18 months. C) 24 months. D) 12 months.

    Answer: D An individual insurance producer who allows his license to lapse may, within 12 months from the due date of the renewal fee, reinstate the license without passing the written exam, but a penalty of double the unpaid renewal fee must be paid.

  • An examination of an insurer's financial condition must be conducted at least once every: A) time a complaint is filed against them. B) Five years. C) year. D) other year.

    Answer: B The Commissioner must complete a financial examination of every domestic insurance company at least once in every five years.

  • How many days after an insurer appoints a producer as its agent may the producer begin selling the insurer's policies? A) 30 B) 15 C) Five. D) Ten.

    Answer: B To appoint a producer as its agent, the insurer must file, in a format approved by the Commissioner, a notice of appointment within 15 days from the date the agency contract is executed or the first insurance application is submitted. An insurer may also appoint a producer to all insurers within its holding company by filing one appointment.

  • All of the following may be issued an insurance adviser's license EXCEPT: A) a corporation. B) an individual. C) a limited liability company. D) a partnership.

    Answer: C Although an individual, partnership, or corporation may be licensed as an insurance adviser, there is no provision in the law to permit such licensing of a limited liability company.