Claims Adjuster Florida

For purposes of insurance, a "loss" is best defined as:

an unwelcomed, unplanned reduction in economic value

An automatic sprinkler system in a hotel building is a risk reduction measure because it:

reduces the amount of damage that a fire is likely to do

Insuring a new restaurant against business failure is not possible because business success or failure is:

a speculative risk

Which of the following is an example of pure risk?

the possibility of a business being flooded

Zenith Insurance Company issues a policy to Best Manufacturing Company. A dispute arises between Zenith and Best on the meaning of an ambiguous clause in their contract. The matter goes to court, which can be expected to interpret the clause in a manner that:

favors Best Manufacturing

The fact that insurance policy language is written by an insurance company and is nonnegotiable makes insurance policies:

contracts of adhesion

Which of the following correctly identifies three elements that must be present to create an enforceable contract?

acceptance, consideration, and offer

Rhonda's parents bought her a car for her sixteenth birthday and made her responsible for maintaining and insuring it. However, when Rhonda applied for auto insurance after getting her driver's license, she was told that she could not enter into a binding insurance contract because, according to the law in her state, a 16-year-old does not qualify as a(n):

competent party

A fire severely damages Carl's home, making it uninhabitable. He moves his family to a hotel while the house is repaired. The additional expenses incurs in housing the family are considered what type of loss?

indirect

Butch's Meat Market loses electrical power during a flood. The business closes for several days, during which time there is no refrigeration and a large quantity of meat spoils. The loss of the meat is what type of loss?

consequential

"Replacement cost minus physical depreciation" describes which type of loss valuation method?

actual cash value

From a property insurance perspective, which of the following is NOT a basic type of construction?

steel

For an insurer to pay a property insurance claim, when must the policyholder have an insurable interest in the insured property?

at the time of the loss

Ken's house has an exterior layer of brick that covers wooden walls supported by wooden 2-by-4 studs. What type of construction does Ken's house have?

masonry veneer

Corinne purchased her home with a 10 percent down payment and a 90 percent mortgage from Sidney Bank. Why does Sidney Bank have an insurable interest in Corinne's house?

The bank faces the possibility of a loss if Corinne's house is damaged or destroyed.

All of the following are perils EXCEPT: texting while driving theft lightning windstorm

texting while driving

A dump truck collided with a tall oak tree in Marian's front yard. The tree fell onto her house, breaking a glass picture window and knocking a lamp off the table inside it. Sparks from the lamp started a fire that destroyed half the house. What is the proximate cause of the damage to Marian's house?

the collision

All of the following causes of loss are commonly listed as excluded perils in open perils property insurance policies, EXCEPT: wear and tear flood war vandalism

vandalism

While a homeowner is out of town, a group of teenagers break into her house, throw a beer party, and damage the interior without stealing anything. Connie's resulting property insurance claim will be covered if her policy covers what peril(s)?

vandalism

Laura owns poisonous snakes on her property, which she uses for venom research purposes. One of the snakes escaped and within hours bit a neighbor who sued Laura. Though Laura was not negligent in her ownership of the snakes, the plaintiff easily won the suit based on the doctrine of:

strict (absolute) liability

Which one of the following incidents is an example of vicarious liability? Rudy is held responsible for an accident caused by his employee. Dominic is held responsible for food poisoning due to a pizza he delivered. Edie is held responsible for striking a pedestrian with her bicycle. Lilly is held responsible for her cat's injury to Lilly's guest.

Rudy is held responsible for an accident caused by his employee.

Bill's children have grown up and moved away, but the tree house that he built for them now draws other neighborhood children despite his handmade "No Trespassing" sign. If a neighbor's child is injured by falling from the tree house, Bill might be held liable for the child's injuries under what legal doctrine or principle?

attractive nuisance

Lorraine was parking her car when her brakes failed, and she struck the car next to her, which was owned by Marty. In this case, all the following statements are correct EXCEPT: The rolling of Lorraine's car into Marty's car was the proximate cause of the damage. The costs to repair Marty's car represent compensable damages. The accident was a breach of duty on Lorraine's part. Lorraine had a duty to keep her car from striking Marty's car.

The rolling of Lorraine's car into Marty's car was the proximate cause of the damage.

The gradually expanding brown spot on the ceiling of his barbershop suggests that Edmond might have a plumbing leak, but he ignores it because any drips from the ceiling fall into a sink. When the ceiling collapses because of water damage, Edmond finally submits an insurance claim that the insurer denies because his policy has an exclusion for:

water leakage or seepage

Many endorsements are attached to Bettie's policy. If she examines them closely, she will probably find one or more endorsements that do all the following EXCEPT: expand coverage to cover a specific exposure add exclusions eliminate an exclusion cancel the policy

cancel the policy

Why do insurance policies use quotation marks with certain words and phrases?

to identify words and phrases that are defined in the policy

Which one of the following is NOT a type of provision found in property and casualty insurance policies? declarations insertions definitions conditions

insertions

The standard mortgage (mortgagee) clause in a property insurance policy covering real property does which of the following? -It requires the lender to purchase property insurance on the mortgaged property. -It ensures that the mortgage lender is paid if mortgaged property suffers a loss. -It makes the lender the owner of the property if the borrower does not maintain insurance on the mortgaged property. -It requires the lender to pay off the mortgage should a loss occur on the mortgaged property.

It ensures that the mortgage lender is paid if mortgaged property suffers a loss.

With respect to property and casualty insurance policies, "subrogation" refers to:

the insurer's right to recover its claim payment from the party that was responsible for the loss

When a bank is named as a mortgagee in a customer's homeowners insurance policy, the bank:

is entitled to advance written notice of any policy cancellation

While working at his service station, Bert mistakenly fueled a customer's truck with gasoline rather than diesel fuel, damaging the truck's engine. In responding to the trucker's liability claim for damages, Bert's insurance policy requires him to perform all the following duties EXCEPT:

try to settle the claim on his own

How do public adjusters primarily differ from staff or independent adjusters?

Public adjusters represent insureds, while other adjusters represent insurers.

Most policies require the insured to do all of the following EXCEPT: notify the insurer promptly identify the cause of a loss protect the property from further damage notify the police if the law has been violated

identify the cause of a loss

When settling a property claim, an insurer may offer the insured a choice of each of the following EXCEPT: payment of the insured value of the property replacement of the damaged property reduction in premium to insure the damaged property reparation of the damaged property

reduction in premium to insure the damaged property

A claims adjuster is required to maintain a complete and accurate claim file for all of the following reasons EXCEPT: to support denial of the claim to record the activities that occurred during the adjustment of the claim to facilitate examination by insurance regulators to permit others to service the claim if the adjuster is unavailable

to support denial of the claim

Jeff is a licensed insurance agent in both New York and Florida. He is was charged with embezzlement in New York, and pleaded guilty to the charge on March 1. He must notify the Florida Department of Financial Services of the charge within how many days?

30

Which of the following is a requirement to operate as an insurance agency in Florida? having transacted insurance in Florida for at least two years before applying for a license submitting an application and appointing the Office as its agent for service of process obtaining a license or registration from the state appointment of at least two agents to manage the agency

obtaining a license or registration from the state

BBX Insurers terminated Henry's appointment as its adjuster on December 1. How long will Henry remain eligible to be appointed as an adjuster by another insurer?

48 months

Sasha, Kendall, Adam, and Julio are licensed agents in Florida. The Department of Financial Services would NOT be able to suspend or revoke which agent's license for engaging in the following acts? Julio, who used insurance premiums he collected to renovate his business office Sasha, who sold insurance policies to family members and friends this year Kendall, who intentionally violated an order issued by the Office of Insurance Regulation Adam, who offered season football tickets to prospects who purchased policies

Sasha, who sold insurance policies to family members and friends this year

The Dwelling Property 3-Special Form provides more coverage than the Dwelling Property 2-Broad Form because the DP 3 automatically provides:

open perils coverage rather than named perils coverage on the building

David's job requires him to move from his suburban home to a distant city. He rents it to a couple in his absence. How can he maintain property insurance on the home now that he is leasing it to others?

He should replace the homeowners policy with a dwelling policy.

Dalton rents an unfurnished house. Dalton's dwelling policy is most likely to have Coverage C-Personal Property and:

Coverage E-Additional Living Expense

After buying a DP 1 basic policy, Clement realizes that he has no personal liability coverage. How can he get this coverage?

add the personal liability supplement

Which ISO homeowners insurance form provides open perils coverage on the dwelling and named perils coverage on personal property?

HO 3

A truck crashes into an insured's house. Before repairs can begin, the truck and damaged portions of the house must be removed. The additional coverage for debris removal in the homeowners insurance policy will:

cover only the expense of removing damaged portions of the house

Gertrude's will specifies that, upon her death, her son Dirk will be the executor of her estate. Coverage for Dirk's actions as the executor are described under what policy condition of the homeowners policy?

death

The collapse additional coverage in a homeowners policy applies only when:

all or part of the building falls or caves in

More than half of Darryl's home suffers tornado damage. Because the home did not comply with current building codes, Darryl must tear down the undamaged portion and rebuild it with more expensive components. The ordinance or law additional coverage in his HO 3 policy will NOT cover:

replacement cost of repairing the damaged portion of the home

A tree limb puts a hole in Lesley's roof, so she buys a tarp and hires a handyman to place it over the hole. She then notifies her insurance company that provides her HO 3 policy. What will the insurer do?

It will pay for the tarp and its installation under her reasonable repairs additional coverage.

Subject to a $15,000 limit, the identity fraud expense coverage endorsement to the homeowners insurance policy will reimburse or cover the insured for all the following EXCEPT:

$5,000 stolen from the insured's bank account

Section II of an Insurance Services Office, Inc. (ISO) homeowners policy provides:

liability coverages

Lightning ignites a fire at the Smith Motors garage which damages seven automobiles owned by customers. Smith's garagekeepers coverage has a $1 million limit and a $1,000 deductible. How much of the deductible will be applied to this loss?

None *While the limit of insurance for garagekeepers coverage is set for each insured location and not per auto, the deductible applies to each covered auto. The deductible does not apply for losses caused by fire, lightning, explosion, or other peril covered as a comprehensive loss.

Overland Express Company is insured under a motor carrier policy. Which person is NOT insured under the policy's liability coverage?

Sunshine Fruit Farms, whose products are transported by Overland Express *The named insured, permissive users, and the owner of a borrowed trailer connected to a covered power unit are covered as insureds.

Vinson Used Autos has an inventory valued at $500,000 at two locations. However, its garage policy has a physical damage coverage limit of $350,000. Why should Vinson increase this coverage limit to match the value of its inventory?

The policy requires Vinson to have full insurance to value on all covered autos. *The policy requires the insured to carry full insurance to value on all covered autos at any of its locations or in transit. Coverage is limited to the lesser of actual cash value at the time of loss or the cost to repair or replace the property with like kind and quality, and this coverage is subject to a limit for each covered location. Even if a loss is below the maximum amount shown on the schedule, the insured may recover only a portion of the loss if actual values exceed the limit of insurance.

The Motor Carrier Act of 1980 requires some motor carriers to:

carry liability insurance with minimum coverage limits that depend on their cargo *Motor carriers subject to the Motor Carrier Act of 1980 must have insurance coverage of $750,000 to $5 million, depending on the cargo they transport.

The errors and omissions coverage in an equipment breakdown policy is most likely to apply in which of the following situations?

The insured made a mistake in describing the property location on the application. *Errors and omissions coverage insures a loss when the form would not otherwise provide coverage due to an unintentional error by the applicant/insured such as incorrectly describing the property owner or the location where coverage was intended to apply.

The declarations page of Julius's equipment breakdown policy lists a number of coverages, such as property damage, expediting expenses, business income and extra expense, and utility interruption. The word "INCLUDED" is shown next to "property damage," but it does not appear elsewhere in the declarations, nor are there any dollar limits listed on the page. Julius's policy provides coverage for:

property damage only *For any coverage option to apply, a dollar limit or the word "INCLUDED" must be shown on the policy for that coverage. Since the word is shown only for property damage, Julius has coverage for property damage only.

An equipment breakdown policy typically would NOT cover which of these incidents?

Failure of a conveyer belt due to extended use. *An equipment breakdown policy defines breakdown to include pressure or vacuum equipment failure, mechanical failure, and electrical failure. It excludes coverage for equipment parts that are normally subject to periodic replacement or routine maintenance.

Which of the following is a coverage option that is available in a standard equipment breakdown policy?

spoilage damage *As long as the insured is legally responsible for the damaged property, spoilage damage is a covered peril. Dry rot, corrosion, and smoke damage are not coverage options.

Which forms are attached to a commercial property policy to broaden or narrow coverage?

endorsements *Endorsements broaden or narrow the coverage of a property or casualty policy. They may also modify it to comply with state requirements.

Haley's new law office is in a commercial condominium unit she purchased. Which form is suitable for insuring her property?

condominium commercial unit owners coverage form *The condominium commercial unit owners form is designed for businesses that own and occupy commercial condominium units.

Dixie's business personal property coverage of her building and personal property commercial property form covers almost everything in her barbershop, but NOT:

cash in the cash register *Money is on the list of property not covered.

Darnell manufactures building components at a constant rate. When sales are slow, the finished-goods inventory increases, and vice versa. Sales depend on the current construction market. Therefore, the policy covering Darnell's fluctuating inventory should include:

a value reporting form *The reporting form coverage available with the value reporting form can be useful to a business with unpredictable, fluctuating property values at risk.

What type of business is ineligible for a BOP regardless of its size?

parking garage Parking lots or garages are ineligible for a BOP regardless of their size.

Whose insurance needs are businessowners policies specifically designed to meet?

small to medium-sized businesses with typical exposures *The businessowners policy is designed to meet the insurance needs of a typical small to medium-sized business with exposures and coverage needs common to other businesses of the same type.

Where do the definitions appear in an ISO businessowners policy?

at the end of the property section and at the end of the liability section *Definitions of terms used in each coverage section of the policy appear at the end of their respective section.

Which provision is NOT found in the common policy conditions section of a businessowners policy?

property loss settlement *The common conditions section applies to both property and liability sections of the policy. A condition that applies only to property would therefore not appear in the common policy conditions section.

Which business would be eligible for coverage under a businessowners policy? -apartment building seven stories tall -motel four stories tall -office building 20 stories tall -construction contractor that works on buildings up to ten stories tall

apartment building seven stories tall *Apartment buildings are eligible for BOP coverage. Also eligible are construction contractors doing work at heights up to three stories, mercantile risks, motels up to three stories tall, and office buildings up to six stories tall.

While a businessowners policy combines coverages that might otherwise be written on several forms, it does NOT include coverage for:

workers compensation *A single BOP combines coverages that might otherwise be written on separate property, liability, crime, and inland marine forms.

Which coverage cannot be combined with other coverage forms under a single businessowners policy?

workers compensation *A single BOP combines coverages that might otherwise be written on separate property, liability, crime, and inland marine forms. It does not combine workers compensation coverage.

Shawn's ice cream parlor gets most of its customers from the health club next door. What coverage, if any, in Shawn's policy would apply if a fire closes the health club?

Business income from dependent properties additional coverage would apply. *Business income from dependent properties coverage applies to loss of business income resulting from damage from a covered cause to property of another business on which the insured depends.

Which loss would the businessowners policy NOT cover?

Manufacturing error causing defective product *The BOP does not cover manufacturing errors that result in worthless or defective products. This kind of loss arises from a business risk, not a peril that property insurance covers.

Ida's boutique at a shopping mall escapes damage when a portion of the atrium roof caves in. However, her business came to a sudden halt when the debris blocks access to her store. Does Ida's businessowners policy cover the resulting loss of income?

Yes, because the BOP's business income and extra expense coverage applies when a business interruption is caused by damage to any area used to gain access to the insured's premises. *overage applies to cessation of the insured's business activities due to uninhabitability of described premises. This includes any area used to gain access to the insured's premises.

A benefit of the extra expense additional coverage in a businessowners policy is that it

is not subject to the limits of insurance *Extra expense coverage is not subject to the limits of insurance but is provided in addition to those limits.

Bert faced two personal liability claims during the past year. His homeowners insurance policy has a $100,000 personal liability limit. The first claim was $125,000 for bodily injury and $50,000 for property damage. The second claim was $2,000 for bodily injury. How much did Bert's insurer pay in damages?

$102,000 *The insurer will pay the $100,000 limit for the first occurrence and $2,000 for the second.

Which incident that resulted in a liability claim against Aida did NOT involve "bodily injury" as defined in her homeowners insurance policy?

A neighbor's reputation was harmed by rumors Aida spread. *Homeowners forms define "bodily injury" as bodily harm, sickness, or disease, including death. Damage to reputation is not considered bodily injury.

While backing out of her garage, Louise accidentally lowers her garage door. The door strikes her car and is damaged. She learns that her homeowners insurance policy excludes liability coverage for damage to the insured's own property. Where might she find coverage?

Section I of the policy *The homeowners insurance policy provides no liability coverage for property damage to property owned by an insured because first-party property coverage is covered by Section I of the policy.

The chlorinated water that splashes out of Amber's backyard swimming pool eventually kills expensive trees that her neighbor Jeffrey planted at the edge of his property. He wants Amber to pay for the damage. Her homeowners policy may cover this liability claim if it involves an occurrence. Is it an occurrence?

Yes, because the damage can arise from continuous or repeated exposure to the same harmful conditions. *An occurrence can include not only sudden accidents but also losses arising from continuous or repeated exposure to the same harmful conditions.

In an attempt to reduce her expenses, Mattie sells her car. What must she do to cancel her auto insurance policy?

notify the insurer in writing of her intent to cancel the policy *The named insured can cancel by giving the insurer advance written notice of the intent to cancel the policy.

How much advance notice must an insurance company give its policyholder before it cancels a personal auto policy?

At least 10 days *Before an insurance company cancels a personal auto policy, it is required to give the policyholder at least 10 days' written notice in advance.

Pamela lives in a state with a financial responsibility law. When will she be required to prove she has auto liability insurance?

after it is involved in a serious traffic violation or accident. *Financial responsibility laws require motor vehicle owners to furnish evidence of financial responsibility (usually by providing proof of insurance) after a serious traffic violation or accident.

When the front fenders of Bobbie's coupe were damaged in an auto accident, his insurer arranged to replace them with non-original equipment manufacturer (non-OEM) parts. Why does the insurer use non-OEM parts?

to help minimize the cost of repairs and the cost of insurance Insurers' use of aftermarket parts from non-original equipment manufacturers helps minimize the cost of repairs and the cost of insurance.

Because Leanne's personal auto policy (PAP) provides liability coverage on temporary substitute autos, it will protect her if she is driving:

a truck she borrows from a friend while Leanne's car undergoes repairs The truck is a temporary substitute auto because Leanne is using it while her car is temporarily out of operation while it undergoes repairs.

Which is NOT one of the three major parts of a personal auto policy (PAP)? declarations page applicable endorsements personal auto coverage form definitions

definitions Although the PAP definitions are important to the policy, they are not one of its three major parts

Which is least likely to be considered a "covered auto" in a personal auto policy (PAP)? owned private trailer temporary substitute passenger auto newly acquired passenger auto commercial tractor-trailer combination

commercial tractor-trailer combination *The PAP provides only limited coverage for trucks with a GVW of 10,000 pounds or more. These types of vehicles should be insured on a commercial automobile policy if they are principally used to carry or deliver goods as part of a commercial operation.

The complete personal auto policy combines coverage for

property and liability insurance *The ISO personal auto policy combines property and liability insurance in a single policy to protect families and individuals. Property insurance protects the vehicle from loss due to fire or collision. Liability insurance protects the owner or operator if the vehicle is involved in an accident that results in injury or death.

Who usually determines which party is legally responsible for an auto accident?

insurers *A court with a judge, jury, or both sometimes determines legal liability, but usually the insurer makes this determination based on its investigation of the accident.

Trisha is driving Angelo's car with his permission when she causes an accident in which she sustains minor injuries. Trisha and Angelo have personal auto policies (PAP) with medical payments coverage. From what source(s), if any, will Trisha recover her medical expenses?

Angelo's insurer provides primary coverage. *Primary insurance follows the car, so the owner's insurance provides primary coverage for the borrowing driver's injuries.

Phoebe rents her home. She loses control of her car on the icy driveway and crashes into the garage door. It will cost $1,000 to repair or replace the door. The property damage liability coverage of Phoebe's personal auto policy will:

pay for the damage *Although the PAP does not cover liability for damage to others' property that the insured possesses, it does cover such property when the insured rents a residence or private garage.

An insured would be prudent to rely upon health insurance to cover injuries sustained in an auto accident because medical payments coverage under a personal auto policy (PAP):

has relatively low limits *Medical payments coverage pays for relatively small amounts of medical expenses.

Melinda buys specified causes of loss coverage with the business auto policy (BAP) insuring the trucks in her fleet. She will NOT be covered for losses to the trucks caused by:

glass breakage *Glass breakage is not among the list of perils covered by specified causes of loss coverage under the BAP.

Nelson is the president of his company and has a company car. He does not have a personal auto policy because he does not own another vehicle. Which endorsement to his company's business auto policy (BAP) will protect him when he uses another vehicle?

Drive Other Car-Broadened Coverage for Named Individuals

Which expense is NOT covered as property damage by a business auto policy (BAP)?

damage to property transported in a covered auto *The BAP excludes damage to property owned or transported by the insured or in the insured's care, custody, or control.

Sandy requires her employees to use their personal autos when calling on customers. If she adds the Employees as Insureds endorsement to her company's business auto policy (BAP), employees who use their personal cars for business calls will have:

excess coverage under the BAP for losses that exceed their personal auto liability limits *The endorsed BAP will provide excess coverage over the employee's personal auto policy if an employee is liable for a loss involving the business use of his or her personal vehicle

Minestra Company produces a defective quantity of mushroom soup which results in the hospitalization of consumers who become ill from eating it. In anticipation of their claims, Minestra instructs retailers to remove its mushroom soup from their stores. Minestra asks its commercial general liability insurer to cover its expenses in removing the product from the market. Minestra's CGL policy will:

cover consumer claims but not recall expenses *The recall of products exclusion in the CGL policy precludes coverage for recall expenses.

The difference between the Pollution Liability Coverage Form (CG 00 39) and the Pollution Liability Limited Coverage Form (CG 00 40) is that the Limited Coverage form:

does not cover cleanup costs *CG 00 40 provides the same bodily injury and property damage liability coverage as CG 00 39 with the exception of coverage for cleanup costs.

For the past four years, Cheryl has insured her business with four different commercial general liability (CGL) insurance policies, each with an occurrence trigger. For a claim to be covered by Cheryl's current policy:

The injury or damage must have occurred during the current policy period. *With an occurrence trigger, the date of the injury or damage-not the date of the event that results in bodily injury or property damage-triggers coverage.

The swimming pool in the atrium of the Highland Court Apartment Building creates a humid environment that encourages mold growth. To limit exposure to mold-related claims, what kind of endorsement should be added to the building's CGL policy?

limited fungi or bacteria coverage *The limited fungi or bacteria coverage endorsement subjects mold coverage to a separate fungi and bacteria liability aggregate limit.

Banemore Manufacturing Company's operations involve hazardous materials and processes. Which situation does NOT involve a pollutant as defined in the pollution liability coverage forms?

Banemore's operations interfere with data transmissions in a nearby neighborhood.

Antoinette's Antiques is the named insured under an ISO pollution liability form. The form's extended reporting period option allows Antoinette to:

get an endorsement to cover claims reported within one year after the policy period ends

What does the limited pollution liability extension endorsement do when added to the CGL insurance policy?

It expands pollution coverage.

Marty drives to Ritzy Restaurant. After parking in a nearby lot, he slips on the icy pavement and breaks his ankle. Two months later, he submits his $1,000 medical bill to Ritzy Restaurant for payment. Why might Ritzy's commercial general liability insurer refuse to pay this claim under Coverage C-medical payments?

The injury occurred off the insured premises. *Medical payments coverage is no-fault coverage that protects members of the public while on the insured's premises or exposed to the insured's operations. It applies without regard to the insured's legal liability.

Which activity would fall outside the definition of "farming" in the standard farm liability coverage form? -Field irrigation -Selling tee shirts at a farmer's market in the city -Crop dusting -Selling farm produce from a roadside stand

Selling tee shirts at a farmer's market in the city *The farm liability coverage form defines "farming" as the operation of an agricultural or aquacultural enterprise, including the operation of roadside stands, on the farm premises, maintained for the sale of farm products produced primarily by the named insured. Farming usually does not include mechanized processing operations or retail activity other than that described.

Which coverages does the standard farm liability coverage form provide?

Bodily injury and prop *The standard farm liability form provides coverage for bodily injury and property damage (Coverage H), personal injury and advertising injury (Coverage I), and medical payments (Coverage J), all on an occurrence basis.

As defined in the farm liability coverage form, farming does NOT include:

mechanized processing operations *Unless otherwise indicated on the declarations, farming does not include mechanized processing operations.

The farm insurance bodily injury and property damage liability form (Coverage H) contains exclusions for all the following losses EXCEPT:

loss of use *Coverage H includes the other party's loss of use of tangible property that is not physically damaged.

Colin hires Sal, a retired farmer, to help him with the harvest. Sal is seriously injured when he falls off the tractor he was operating in Colin's field. Colin's farm liability coverage form:

covers Sal's injuries as long as the loss is not subject to the state's workers compensation laws *The workers compensation exclusion precludes coverage if state law requires Colin to provide Sal with workers compensation benefits, which is usually done by purchasing workers compensation insurance.

Which of the following activities, if located on the farm premises, would NOT be considered a farming operation covered by the farm liability coverage form? harvesting of shellfish cultivation of aquatic plants roadside produce stand gift shop

gift shop *The form defines "farming" as an agricultural or aquacultural enterprise, including the operation of roadside stands, on the farm premises. It typically does not include retail activity.

Which of the following activities is covered under the basic farm liability coverage form (FL 00 20)?

Farmer operates a mower mounted on his tractor in his own hay field. *Although the farm liability coverage form contains an exclusion for mobile equipment, that applies only to the transportation of mobile equipment by a motor vehicle. No coverage is provided for losses due to custom farming, aircraft discharge (crop dusting), or use of livestock to provide rides for a fee or in connection with a charitable function.

Al's farm does not produce enough income to support his family, so he supplements his farming income by working as a carpenter. Which exclusion in Al's farm liability coverage form precludes coverage for any loss resulting from his carpentry activities?

business pursuits *No coverage applies to losses arising out of non-farming business pursuits engaged in by the insured.

As an attorney, Ben has lawyers professional liability insurance that provides him with liability coverage for clients' claims arising out of all the following, EXCEPT:

property damage liability *Ben should have a commercial general liability policy to cover himself against liability claims for damage to the property of others.

Physicians professional liability insurance is designed to cover all the following exposures a medical practitioner faces EXCEPT:

failing to meet continuing education requirements *Failing to meet continuing education requirements may create other problems for the doctor, but it is not likely to be the grounds for a professional liability claim.

After several violations, Napoleon Bar and Grill's liquor license was revoked. Napoleon did not inform its insurer of this fact and continued to serve alcohol to its regular customers, including Brett. After a long night at the bar, Brett was involved in a serious auto accident and sued Napoleon under the applicable dram shop act. Napoleon's liquor liability insurance:

provides no coverage because Napoleon's required license was not in effect *Liquor liability policies exclude coverage while any required license is not in effect.

An insurance agent's E&O policy covers insurance producers against errors and omissions claims brought by:

both clients and insurers *The two major classes of claimants under insurance agents errors and omissions policies are clients and insurers.

Which one of the following entities is most likely to purchase a crime policy with the safe depository endorsement?

a hotel *The endorsement is designed for businesses other than financial institutions that provide safe deposit boxes for their customers.

Beck Company's insurance policies include a crime policy that includes blanket coverage on employee theft. Beck's policy would apply to theft of covered property by any of the following individuals EXCEPT:

Alton, an independent contractor who writes advertising copy for Beck *An independent contractor who is paid to perform a service but is not under the insured's direction and control in performing that service is not considered an employee. Therefore, a crime policy does not cover theft of property by an independent contractor.

When an insurance policy provides crime coverage on a discovery basis, coverage is triggered by a loss that:

is discovered during the policy period or within 60 days after the policy period ends *Discovery-based coverage applies to loss discovered during the policy period or within 60 days after the policy period ends. Loss sustained coverage applies to loss that occurs during the policy period and is discovered within one year after the policy period ends.

When an insurance policy provides crime coverage on a loss sustained basis, coverage is triggered by a loss that occurs:

after the retroactive date and is discovered during the policy period *

Unlike an insurance policy, a surety bond:

is a three-party contract *Three parties-the principal, the obligee, and the surety-are involved in a bonding relationship.

Linwood requires each of its public officials to furnish a public officials bond. These bonds will normally terminate:

when the bonded public official leaves office *Public officials bonds usually terminate only when successors have been elected or appointed or the current official leaves office for any reason .

An insurance policy is different from a surety bond in that an insurance policy:

is issued with the expectation that some insureds will have losses *Although they do not know which insureds will suffer a loss, insurance underwriters anticipate that a certain number of losses will occur; insurance is a mechanism for spreading the financial impact of those losses.

License and permit bonds, often required by a municipality or other public body, guarantee that the party seeking the license or permit will:

comply with applicable laws or regulations *Public bodies require license and permit bonds as a condition to granting a license or permit to engage in a certain activity. The bond guarantees that the bonded party will comply with applicable laws or regulations.

Which of the following employees of the Seaside Marina is subject to the Longshore and Harbor Workers' Compensation Act?

Sydney, an employee of a company that repairs ships *Unlike the others, Sydney's job involves repairing ships, which is within the scope of the LHWCA.

Before workers compensation statutes were enacted, employers could defend themselves against negligence claims by injured workers by employing certain common-law defenses. Which is NOT one of those defenses? act of God assumption of risk contributory negligence negligence of a fellow employee

act of God *The common-law defenses available to employers were assumption of risk, contributory negligence, and negligence of a fellow employee.

In most states, what workers compensation coverage is available for sole proprietors and partners?

They are not covered as employees under the state workers compensation act but may voluntarily choose to purchase coverage. *Under most states' workers compensation acts, sole proprietors and partners are not covered employees, but they may voluntarily choose to buy coverage.

Newton, a garbage truck driver, breaks a hip when he falls from the cab. Doctors expect a full recovery, but Newton must remain in bed with the hip immobilized until the cast is removed. Newton's condition would be categorized as a:

temporary total disability *Newton is expected to recover from the injury and return to employment, but he is unable to do any type of work while he is recovering because he is temporarily totally disabled.

All the following are standard exclusions in the employers liability insurance section of the workers compensation policy EXCEPT: -claims by a covered worker's spouse for loss of consortium -claims of bodily injury to an employee employed in violation of the law -claims arising out of harassment, discrimination, or employment-related practices -fines or penalties imposed for violation of federal or state law

claims by a covered worker's spouse for loss of consortium *Claims for loss of consortium are not excluded from employers liability coverage.

A contractor hires 15-year-old Kevin as a part-time employee to cut lumber, knowing the law does not permit Kevin to work near power tools because of his age. Kevin accidentally cuts his finger off while using a power saw. The liability coverage of the contractor's workers compensation and employers liability insurance policy:

does not cover this claim because the contractor knew it employed Kevin in violation of the law *Employers liability coverage is excluded for bodily injury to an employee whom the employer knew was illegally employed.

A workers compensation insurance policy with an Outer Continental Shelf Lands Act Coverage endorsement excludes coverage for workers subject to all the following legislation EXCEPT: the Longshore and Harbor Workers' Compensation Act the Defense Base Act the Jones Act the Outer Continental Shelf Lands Act

the Outer Continental Shelf Lands Act *The endorsement provides workers compensation and employers liability coverage for workers subject to the Outer Continental Shelf Lands Act and specifically excludes coverage for other Acts that can be addressed with other endorsement

When an independent contractor discovered he had asbestosis, he submitted a workers compensation claim to Iva Builders, the contractor that employed him. Iva's risk manager submitted the claim to its insurer, but asserted that the contractor got the disease elsewhere and told the insurer to refuse the claim. Which of the following statements is true? -The insurer can settle this claim only with Iva's consent, so it must refuse to investigate or pay the claim. -The insurer has no right to consider a defense and is obligated to pay the claim. -The insurer has a right to investigate and settle the claim regardless of Iva's consent. -The insurer has a contractual obligation to investigate the case, but must refuse to settle the claim.

The insurer has the right to investigate and settle workers compensation claims or suits without the insured employer's consent.

What unfair trade practice has a person committed if he knowingly and with intent to defraud files an insurance claim that is false?

fraud

Delta Insurers typically affirms or denies claims within 120 days after it receives proof of loss statements. Which statement is correct? Delta is engaged in lawful claims settlement practices. Delta is engaged in unfair claims settlement practices. Delta is legally required to pay its claims within 90 days. Delta has committed insurance fraud.

Delta is engaged in unfair claims settlement practices. *It is an unfair claims settlement practice for insurers to fail to affirm or deny coverage of claims within 30 days after receiving proof of loss statements.

In which of the following cases would the applicant be eligible for coverage through an insurer in the residual insurance market? The applicant is a business entity. The applicant is entitled to insurance but cannot buy it through the voluntary market. The applicant wants the most affordable premium available. The applicant has been rejected by an insurer.

The applicant is entitled to insurance but cannot buy it through the voluntary market. *The residual market is a source of coverage of last resort for individuals and businesses that have been rejected by insurers in the voluntary market. These individuals and businesses are otherwise in good faith entitled to buy insurance from these insurers but are prevented from doing so.

Residual markets systems provide a source of insurance coverage for individuals and businesses that

are entitled to it but cannot buy it through the voluntary market.

An insured's health insurance policy pays a flat rate of $200 a month if she becomes disabled, regardless of her actual income. What kind of policy does she have?

valued policy *Valued policies pay a fixed sum that is stipulated in the contract. A policy that pays a flat rate of $200 a month in case of disability is a valued contract.

How does health insurance differ from life insurance?

Health insurance protects against risks that may arise more than once in a lifetime. *Unlike the risk of death, a person may face health risks many times during his or her life.

Which statement about group health insurance is true? Requirements for individual and group plans are the same. Insurers may impose restrictions and exclusions on individual and group policies. The federal government cannot impose requirements on group plans. The federal government dictates the provisions of individual health plans.

Insurers may impose restrictions and exclusions on individual and group policies. *The federal government has imposed requirements on group plans to protect workers and their dependents.

What level of government mainly regulates health insurance?

state level *Health insurance is regulated mainly at the state level, but the federal government is becoming increasingly involved.

Which statement about health insurance is correct? Health insurance is available through private insurers and the government. Health insurance is only available through the federal government. Only employers provide health insurance to groups. Health insurance is only available through private carriers.

Health insurance is available through private insurers and the government.

Through what source is a person with a family most likely to obtain medical expense coverage?

Individual or group health insurance policy *Individual or group health insurance policies providing medical expense coverage can also cover one person and the family under a single plan.