Under Part A of a Personal Auto Policy, which of the following losses would be covered?
A.) Damage to property being transported by the insured
B.) Damage to a neighbor’s parked car
C.) Damage to a neighbor’s lawn mower in the care of the insured
D.) Damage to the home the insured owns
B.) Damage to a neighbor’s parked car
Which of the following is true regarding the Fine Arts Floater?
A.) Coverage is limited to the United States, Canada, and Mexico
B.) Coverage is primarily for stamps and coins
C.) It provides automatic coverage on newly acquired items for 90 days
D.) It settles losses on an ACV basis
C.) It provides automatic coverage on newly acquired items for 90 days
All of the following statements are correct about a Homeowners Policy, except:
A.) Home schooling is covered under a Homeowners Policy
B.) Coverage D of a Homeowners Policy includes loss of income from an incidental business
C.) A Homeowners Policy will not cover theft of a boat away from premises
D.) Coverage D of a Homeowners Policy covers additional living expenses
B.) Coverage D of a Homeowners Policy includes loss of income from an incidental business
Under disability income insurance, a monthly benefit will be __ of the insured’s monthly income.
A.) 80 1/2%
B.) 66 2/3%
C.) 70 2/3%
D.) 50 3/4%
B.) 66 2/3%
All of the following items of property are considered property not covered under Coverage C of a Homeowners policy, except:
A.) Credit cards
B.) Personal property of a guest
C.) Pets
D.) Personal property of a tenant
B.) Personal property of a guest
Which of the following is NOT a purpose of licensing?
A.) For the applicant to be familiar with the Florida insurance laws
B.) To authorize and enable the licensee to actively and in good faith engage in the insurance business as an agent
C.) To facilitate the public supervision of such activities in the public interest
D.) To authorize the agent to insure risks
D.) To authorize the agent to insure risks
Liability coverage provided by a Personal Auto policy would cover which of the following damages?
A.) Damage to property being transported by the insured in a covered auto
B.) Damage to a private garage rented to the insured, caused by the insured’s child driving a covered auto
C.) Damage to a neighbor’s riding lawn mower that is in the care of the insured
D.) Damage to a storefront caused by a valet driver operating a covered auto
B.) Damage to a private garage rented to the insured, caused by the insured’s child driving a covered auto
Which policy provision omits certain risks from coverage?
A.) Conditions
B.) Additional Coverages
C.) Exclusions
D.) Declarations
C.) Exclusions
When an underlying policy does not cover a particular loss, the insured’s Umbrella Liability policy will drop down and cover the entire loss, after payment by the insured of a:
A.) Deductible
B.) Self-insured retention
C.) Copayment
D.) Commission
B.) Self-insured retention
Liability coverage may be provided by a Homeowners policy for the insured’s use of which of the following watercraft?
A.) 20-foot sailing boat
B.) Private yacht owned by the insured
C.) Rented pontoon boat to entertain business clients
D.) Racing cruiser
A.) 20-foot sailing boat
An insured owns a home with a replacement cost of $300,000 and a market value of $250,000. What is the most a valued policy will pay in the event of a total loss without a deductible?
A.) $240,000
B.) $250,000
C.) The policy limit
D.) $300,000
C.) The policy limit
Policyholder J hit a deer with their Honda. J has collision coverage with a $250 deductible and other than collision coverage with a $50 deductible. The damage to J’s car was $450. How much will the policy pay?
A.) $200
B.) Nothing
C.) $400
D.) $150
C.) $400
Under all the Dwelling Forms, the dwelling described in the Declarations is covered under:
A.) Coverage A
B.) Coverage B
C.) Coverage E
D.) Coverage C
A.) Coverage A
If an owner-occupied home is totally destroyed without fraud by a fire, the amount of the loss is based on:
A.) The coinsurance value
B.) The replacement value
C.) The market value
D.) The policy limit
D.) The policy limit
A false statement in the application for insurance is called a:
A.) Warranty
B.) Concealment
C.) Representation
D.) Misrepresentation
D.) Misrepresentation
When a claimant brings a negligence claim against the insured, the court determines that the claimant is partially responsible for the loss, and the damages they are owed is reduced by the amount of their responsibility. This describes which defense against negligence?
A.) Comparative negligence
B.) Contributory negligence
C.) Contributory risk
D.) Comparative risk
A.) Comparative negligence
All of the following statements about liability are true, except:
A.) The burden of proof is on the injured party to prove that the other party was negligent
B.) Liability policies pay costs incurred by an insured to sue negligent third parties
C.) An insured may be liable for damages to an injured party, even if they are not deemed negligent
D.) Breach of contract is not considered an act of negligence
B.) Liability policies pay costs incurred by an insured to sue negligent third parties
Under Part A – Liability Coverage of a Personal Auto policy, which of the following statements regarding the limit of liability is incorrect?
A.) The limit of liability is the maximum the policy will pay regardless of the number of insureds
B.) The limit of liability is the maximum the policy will pay regardless of the number of vehicles involved in the accident
C.) If the loss is covered under more than one part of the policy, payment will be duplicated
D.) A combined single limit is the maximum the policy will pay in any one accident for bodily injury and property damage
C.) If the loss is covered under more than one part of the policy, payment will be duplicated
Actual cash value may be defined as:
A.) The cost to replace or repair property, minus depreciation
B.) The cost to replace or repair the property
C.) The original purchase price of property, minus depreciation
D.) The agreed upon specific value determined before the policy was issued
A.) The cost to replace or repair property, minus depreciation
Policyholder N insures an owner-occupied home under a Special Form Dwelling Policy with a limit of $100,000. If the dwelling is damaged in a fire, what is the limit of insurance that will apply to Coverage E – Additional Living Expense?
A.) $50,000
B.) $20,000
C.) $10,000
D.) $40,000
B.) $20,000
As used in casualty insurance, bodily injury is best described as:
A.) Any injury causing hospitalization, disability, or loss of income
B.) Physical injury, sickness, or death arising from the negligent acts of an insured
C.) All financially measurable injuries directly sustained, including libel and false arrest
D.) Any injury resulting in bleeding, bruising, bone fractures, or disfigurement
B.) Physical injury, sickness, or death arising from the negligent acts of an insured
Which part of a property insurance policy describes the perils?
A.) Declarations
B.) Insuring Agreement
C.) Definitions
D.) Additional Coverages
B.) Insuring Agreement
If a bird hits a windshield and breaks it, which Personal Auto policy coverage would pay the loss?
A.) Other than collision coverage
B.) Supplementary payments
C.) Uninsured motorists coverage
D.) Collision coverage
A.) Other than collision coverage
An agent that enters into agreements with more than one insurer is which of the following?
A.) Captive
B.) Direct
C.) Independent
D.) Exclusive
C.) Independent
Choose the true statement about the state insurance fraud department.
A.) The Bureau only conducts investigations within the borders of Florida
B.) The Bureau of Insurance Investigations is responsible for conducting investigations
C.) The investigators are former police officers
D.) If a criminal law has been violated, the office will refer it to the appropriate law enforcement agency
D.) If a criminal law has been violated, the office will refer it to the appropriate law enforcement agency
Under a Personal Auto policy, Part A would provide coverage to all of the following people as insureds, except:
A.) A mechanic servicing the auto
B.) A neighbor borrowing the auto to deliver food to a relative
C.) A nonresident relative using the named insured’s auto with permission
D.) The named insured’s unlicensed child
A.) A mechanic servicing the auto
When an individual faces the risk of economic loss in the event of property damage, this indicates which of the following?
A.) Limit of recovery
B.) Merit rating
C.) Insurable interest
D.) Subrogation
C.) Insurable interest
When writing an application for car insurance, Producer M asked the client, B, if B had been convicted of driving while intoxicated (DWI) in the past 10 years. B answered no, even though B had been convicted of a DWI last year. B is guilty of which of the following?
A.) Waiver
B.) Unilateral statement
C.) Representation
D.) Misrepresentation
D.) Misrepresentation
Which of the following is not a qualification to apply for an insurance license in Florida?
A.) Must have a high school diploma or GED
B.) Must be at least 18 years old
C.) Legal alien with U.S. work authorization
D.) U.S. Citizen
A.) Must have a high school diploma or GED
The DP-3 provides what coverage for damage to the insured’s dwelling due to a power failure when lightning strikes a power transformer 2 miles away?
A.) Coverage A amount
B.) No coverage
C.) 10% of Coverage C
D.) 10% of Coverage A
B.) No coverage
Which of the following is a legal liability imposed without demonstrated negligence?
A.) Proximate liability
B.) Direct liability
C.) Contingent liability
D.) Absolute liability
D.) Absolute liability
Which of the following vehicles is not considered an uninsured motor vehicle under Part C of a Personal Auto policy?
A.) A vehicle that disappears after a collision and cannot be identified
B.) A vehicle insured for less than the state’s minimum required liability coverage
C.) A vehicle owned by the government
D.) A vehicle with liability insurance whose coverage is denied by its insurer
C.) A vehicle owned by the government
Which of the following statements is false regarding Certificates of Authority?
A.) Any person who acts as an insurer, transacts insurance, or otherwise engages in insurance activities in this state without a Certificate of Authority commits a misdemeanor
B.) No person can act as an insurer unless authorized by a Certificate of Authority
C.) A Certificate of Authority is not required for authorized reinsurance transactions
D.) A Certificate of Authority is not required to transact surplus lines insurance
A.) Any person who acts as an insurer, transacts insurance, or otherwise engages in insurance activities in this state without a Certificate of Authority commits a misdemeanor
Part B of a Personal Auto policy would pay for which of the following expenses?
A.) Loss of income after an insured is slandered
B.) Funeral service expenses incurred by an insured
C.) An insured’s pain and suffering
D.) Cost of an ambulance after a third party is injured in an accident caused by an insured
B.) Funeral service expenses incurred by an insured
The loss of property when the cause of loss is not known is considered:
A.) Burglary
B.) Robbery
C.) Theft
D.) Mysterious disappearance
D.) Mysterious disappearance
Which of the following most accurately describes the Abandonment condition?
A.) The insured must cooperate with the company in the investigation of a claim
B.) The insured must make reasonable and necessary repairs to protect the property
C.) Abandoned property must be protected from further damage
D.) The insured cannot abandon damaged property to the insurer
D.) The insured cannot abandon damaged property to the insurer
Choose the statement that is true about the payment of claims.
A.) An insurer must pay or deny any claim no later than 90 days after receiving the claim
B.) An insurer must contact the Department of Highway Safety and Motor Vehicles records to determine whether a partially damaged vehicle owned by the insured is subject to any liens
C.) As long as the claim is settled, it doesn’t matter how the third-party spends the claim benefit
D.) A property insurer must transmit claims payments directly to the primary policyholder
D.) A property insurer must transmit claims payments directly to the primary policyholder
Which of the following losses could be covered under Part D of a Personal Auto policy?
A.) Theft loss to a portable CD player
B.) Damage to a radar detector
C.) Flood damage to a convertible when the top is left down
D.) Damage to a van used as a livery conveyance
C.) Flood damage to a convertible when the top is left down
Choose the false statement about the Contributory Negligence Law.
A.) Negligence is a duty that was breached causing an injury to another person
B.) Medical expenses are an example of economic damages
C.) Comparative fault is determined by charging liability proportionately
D.) Contributory fault bars recovery in any other means
D.) Contributory fault bars recovery in any other means
When an insured fails to disclose known facts in an application for insurance, they may be guilty of:
A.) Concealment
B.) Breach of warranty
C.) Twisting
D.) Waiver
A.) Concealment
Actual cash value is best defined as which of the following?
A.) Today’s current price, minus depreciation
B.) Replacement cost, including depreciation
C.) Appraised value
D.) Market value, minus depreciation
A.) Today’s current price, minus depreciation
Which of the following is not a function of insurance?
A.) To transfer risk from the insured to the insurer
B.) To protect against uncertainty and reduce anxiety
C.) To exchange a small certain expense for a large uncertain loss
D.) To act as an investment vehicle for the insured
D.) To act as an investment vehicle for the insured
A claimant brings suit against the insured for negligence. The insured’s defense argues that the claimant participated in causing the loss and was partially negligent, meaning the claimant is not owed any damages for the loss. This is an example of:
A.) Contributory negligence
B.) Comparative negligence
C.) Vicarious negligence
D.) Proximate negligence
A.) Contributory negligence
Which of the following is not true about an insurance policy?
A.) An insurance policy that pays before all other coverage is called primary coverage
B.) An application is a document that provides information for underwriting purposes
C.) The Insuring Agreement includes the name of the insured
D.) A deductible is a specified amount of loss that is retained by the insured
C.) The Insuring Agreement includes the name of the insured
When firefighters extinguish a house fire with water, the water damage is considered a(n):
A.) Indirect loss
B.) Loss that will be subrogated to the fire department
C.) Direct loss
D.) Consequential Loss
C.) Direct loss
The maximum amount a policy will pay in the event of a loss, regardless of the number of insureds, claims made, lawsuits filed, or parties making claims is the:
A.) Premium
B.) Split limit
C.) Deductible
D.) Limit of liability
D.) Limit of liability
All of the following are characteristics of mutual insurers, except:
A.) Surplus premiums may be returned as dividends
B.) Policyholders elect the board of directors
C.) Stockholders have ownership of the company
D.) Mutual insurers provide insurance to members
C.) Stockholders have ownership of the company
Other than collision coverage provided under Part D of an insured’s Personal Auto policy would cover losses to an insured vehicle caused by all of the following, except:
A.) Fire
B.) Larceny
C.) Driving into a tree
D.) Hail
C.) Driving into a tree
Which of the following is an example of special damages?
A.) Compensation for pain, suffering, and disfigurement
B.) Compensation to an injured party for actual medical expenses and loss of earnings
C.) Damages assessed by the court as a penalty for gross negligence
D.) Compensation to a party for the loss of companionship of a spouse
B.) Compensation to an injured party for actual medical expenses and loss of earnings
With regard to market conduct examinations:
A.) The costs of examinations are paid by the Market Investigation Division
B.) The Special Investigations Unit conducts market conduct examinations
C.) All accounts, records, documents, files, etc. must be freely available to the examiners
D.) The Division of Financial Services of the Office conducts market conduct examinations
C.) All accounts, records, documents, files, etc. must be freely available to the examiners
Choose the statement that is false regarding the Citizens Property Insurance Corporation.
A.) Mobile homes are not eligible for coverage even if used as dwellings
B.) The Department requires all insurers holding a certificate of authority, other than joint underwriting associations, to provide windstorm coverage to eligible applicants
C.) The association provides for windstorm coverage on residential properties up to $1 million for personal lines residential risks
D.) Property insurers may make agreements to insure applicants unable to procure windstorm insurance through ordinary methods
A.) Mobile homes are not eligible for coverage even if used as dwellings
Which of the following statements regarding types of property loss is incorrect?
A.) Direct losses include additional living expenses
B.) A direct loss is a loss resulting directly from a peril insured against
C.) Fire damage to an insured home is considered a direct loss from a fire
D.) An indirect loss is the same as a consequential loss
A.) Direct losses include additional living expenses
Which is the best description of punitive damages?
A.) Punitive damages are so limited as to be punitive toward the plaintiff
B.) Punitive damages are limited to disfigurement and mental anguish
C.) Punitive damages are assessed as a punishment for extremely objectionable conduct by a negligent party
D.) Punitive damages are assessed in addition to specific damages and are typically covered by insurance policies
C.) Punitive damages are assessed as a punishment for extremely objectionable conduct by a negligent party
Which of the following is not a function of the Division of Consumer Services?
A.) Report alleged violations of law by persons licensed by the Department of Financial Services, Office of Insurance Regulation, or Office of Financial Regulation to the appropriate regulator
B.) Compile and distribute information the Department of Financial Services deems necessary to assist consumers
C.) Receive inquiries and complaints
D.) Examine and investigate licensees
D.) Examine and investigate licensees
Which of the following statements about medical payments coverage is true?
A.) Payments are made to all persons, including the insured on the premises for any reason
B.) They apply to members of amateur athletic teams sponsored by the insured
C.) Payments are made regardless of fault or negligence
D.) They apply to all expenses incurred within 5 years of the accident
C.) Payments are made regardless of fault or negligence
An exported insurance policy may not provide for deductible amounts other than those available under similar policies in actual and current use, except for:
A.) Commercial policies
B.) Flood policies
C.) Windstorm policies
D.) Auto liability policies
C.) Windstorm policies
When damages are reduced in proportion to the degree of negligence, this is an example of:
A.) Pro rata negligence
B.) Contributory negligence
C.) Comparative negligence
D.) Absolute negligence
C.) Comparative negligence
After the first 60 days a policy is in force, the underwriter cannot cancel for which of the following reasons?
A.) Material misrepresentation
B.) Nonpayment of premium
C.) Unacceptable driving record since effective date
D.) License suspension
C.) Unacceptable driving record since effective date
Property damage covered by a liability policy includes which of the following?
A.) Damage to the insured’s products arising out of the products
B.) Damage to property owned by, or leased to, the insured
C.) Damage to tangible property belonging to a third party, including loss of use of that property, caused by the insured’s negligence
D.) Damage to property of others in the insured’s care, custody, or control that results from a criminal wrong
C.) Damage to tangible property belonging to a third party, including loss of use of that property, caused by the insured’s negligence
Payments for mental anguish or loss of consortium are known as:
A.) Strict liability
B.) General damages
C.) Punitive damages
D.) Specific damages
B.) General damages
When the insurer elects to end coverage at the end of the policy period, the policy is said to be which of the following?
A.) Abandoned
B.) Nonrenewed
C.) Lapsed
D.) Cancelled
B.) Nonrenewed
Which of the following is true about the right of salvage?
A.) Damaged property must be disposed of after a loss.
B.) The insurer has the right to take possession of damaged property after payment of a loss
C.) The insurer is required to take possession of damaged property after a loss
D.) The insured has the right to keep damaged property after payment of a loss
B.) The insurer has the right to take possession of damaged property after payment of a loss
Losses that cannot be calculated objectively, such as pain and suffering or mental anguish, are considered:
A.) Special damages
B.) Physical damages
C.) Punitive damages
D.) General damages
D.) General damages
Under the Personal Auto Policy, when the insured and the insurer do not agree on the insured’s legal right to recovery of damages or the amount recoverable by the insured, what system is used to resolve the disagreement?
A.) Financial Responsibility
B.) Compromise
C.) Subrogation
D.) Arbitration
D.) Arbitration
Who among the following applicants for a motorcycle license would be required to complete a motorcycle education course?
A.) All first-time applicants
B.) First-time applicants under the age of 16
C.) First-time applicants under the age of 21
D.) Applicants with a prior DUI conviction
C.) First-time applicants under the age of 21
When operating a motor vehicle, the holder of a learner’s permit:
A.) May practice driving alone only during daylight hours after 3 months
B.) May practice driving alone only during daylight hours
C.) Must be accompanied by any driver with a valid license and who is sitting in the passenger seat
D.) Must be accompanied by a driver with a valid license and who is at least age 21 and sitting in the passenger seat
D.) Must be accompanied by a driver with a valid license and who is at least age 21 and sitting in the passenger seat
Which of the following defenses against negligence prevents recovery for injuries caused by a negligent party if the claimant was also negligent?
A.) Contributory negligence
B.) Assumption of risk
C.) Intervening cause
D.) Comparative negligence
A.) Contributory negligence
Which of the following is correct with regard to surplus lines?
A.) The policy form under which the insurance is exported may be more favorable in coverage or rates to the insured than similar contracts in actual current use in Florida by the majority of authorized insurers
B.) Residential and multi-peril residential policies are subject to the diligent effort requirements
C.) The premium rate at which the coverage is exported may be lower than the rate in actual and current use by a majority of the authorized insurers for the same coverage on a similar risk
D.) Applicants for surplus lines coverage must verify that a diligent effort has been made to procure the full amount of required insurance from an authorized insurer before pursuing surplus lines coverage
B.) Residential and multi-peril residential policies are subject to the diligent effort requirements
Which of the following statements about liability insurance is false?
A.) Loss of consortium means the loss of companionship of a spouse
B.) Property damage includes physical injury to tangible property and loss of use
C.) Personal injury includes libel, slander, and false arrest
D.) Bodily injury includes personal injury, sickness, and disease
D.) Bodily injury includes personal injury, sickness, and disease
The maximum amount payable for all losses within a policy period is known as the:
A.) Aggregate limit
B.) Combined single limit
C.) Per person limit
D.) Per occurrence limit
A.) Aggregate limit
Which of the following is not eligible for coverage under the Personal Auto Policy?
A.) A pickup
B.) A van weighing 5,200 pounds
C.) A vehicle being used in a share-the-expense carpool
D.) A vehicle with fewer than four wheels
D.) A vehicle with fewer than four wheels
Which type of damages is ordered by the courts to punish a negligent party?
A.) Punitive
B.) Special
C.) General
D.) Specific
A.) Punitive
X’s neighbor shoots off fireworks on July 4th and puts the shells in X’s trash can, causing a fire and damaging X’s garage. X’s company pays the loss and contacts the neighbor for reimbursement. This is an example of:
A.) Subrogation
B.) Loss Settlement
C.) Appraisal
D.) Reimbursement
A.) Subrogation
Short-rate cancellation occurs when:
A.) The policy is nonrenewed
B.) The insured cancels the policy mid-term
C.) An insurer cancels the policy mid-term
D.) A policy is flat cancelled
B.) The insured cancels the policy mid-term
Unendorsed Personal Auto policies would refuse to provide liability coverage for:
A.) A non-owned golf cart
B.) An SUV used in a share-the-expense car pool
C.) A 5,000-pound pickup truck used to transport farm goods
D.) A vehicle with fewer than four wheels
D.) A vehicle with fewer than four wheels
Which state entity decides conflicts between insurance companies and policyholders?
A.) Office of Insurance Regulation
B.) Department of Financial Services Division
C.) State judicial system
D.) State legislature
C.) State judicial system
Which of the following types of liability limits represents the maximum amount payable for a single occurrence, without regard for the number of claimants?
A.) Combined single limit
B.) Split limits
C.) Per person limit
D.) Comprehensive limits
A.) Combined single limit
General damages are those that:
A.) Compensate an injured party for suffering, loss of consortium, and similar types of losses
B.) Can be documented by objective dollar amounts
C.) Are awarded to the negligent party to punish wrongdoing
D.) Are awarded to the general public rather than to a specific party
A.) Compensate an injured party for suffering, loss of consortium, and similar types of losses
All of the following statements regarding property insurance terminology are true, except:
A.) Proximate cause is a secondary cause of loss
B.) Words, terms, or phrases that are described in an insurance policy are definitions
C.) A deductible is a specified amount of loss that is retained by the insured
D.) An insurance policy that pays only after primary coverage has been exhausted is said to be excess
A.) Proximate cause is a secondary cause of loss
If cancelation or nonrenewal of a homeowners policy is to be effective during the duration of a hurricane, the effective date of cancellation or nonrenewal is:
A.) Disregarded
B.) Extended until the end of the duration of the hurricane
C.) Extended for 90 days
D.) Immediately
B.) Extended until the end of the duration of the hurricane
In property insurance, the policy condition that gives the insurer the right to take possession of damaged property after paying the loss is known as:
A.) Abandonment
B.) Indemnity
C.) Loss Payment
D.) Right of Salvage
D.) Right of Salvage
All of the following are true of liability policies, except:
A.) They do not cover medical expenses incurred by the insured
B.) They are designed to cover third party injuries or damages
C.) They will pay sums that the insured becomes legally liable to pay
D.) They will cover damage to the insured’s own property
D.) They will cover damage to the insured’s own property
Which term describes the situation that occurs when two policies covering the same property contain different policy periods?
A.) Nonconcurrency
B.) Blanket coverage
C.) Coinsurance
D.) Concurrent causation
A.) Nonconcurrency
The respective minimum limits of auto liability must be at least:
A.) $20,000, $10,0000, $20,000
B.) $25,000, $60,000, $30,000
C.) $25,000, $50,000, $10,000
D.) $10,000, $20,000, $10,000
D.) $10,000, $20,000, $10,000
Which of the following relationships involves vicarious liability?
A.) Husband and wife
B.) Employer and employee
C.) Wholesaler and retailer
D.) Teacher and student
B.) Employer and employee
Which of the following statements is incorrect with respect to cancellation and nonrenewal of a personal auto policy?
A.) After the first 60 days, the insurer can only cancel an auto policy for certain specific reasons
B.) Driver’s license suspension is grounds for cancellation
C.) Insurers may cancel a personal auto policy solely due to occupation, marital status, or age
D.) The insurer must provide 45 days’ notice of nonrenewal
C.) Insurers may cancel a personal auto policy solely due to occupation, marital status, or age
Which of the following clauses protects the interests of the loss payee?
A.) Loss Payable clause
B.) Loss Settlement clause
C.) Abandonment clause
D.) Mortgagee clause
A.) Loss Payable clause
Which of the following best describes a hostile fire?
A.) A fire caused by a spark escaping from a fireplace and igniting a carpet
B.) The fire in the firebox of a furnace
C.) A fireplace fire whose heat can be felt through the glass fireplace door
D.) A fire in a trashcan being used to burn leaves
A.) A fire caused by a spark escaping from a fireplace and igniting a carpet
Which provision specifies that no coverage applies if the loss benefits a person who has care, custody, or control of the insured’s property?
A.) Loss Payable Clause
B.) Loss Payment
C.) Assignment
D.) No Benefit to Bailee
D.) No Benefit to Bailee
The location of the insured risk can be found in which part of an insurance policy?
A.) The Declarations
B.) The Insuring Agreement
C.) The Definitions
D.) The Conditions
A.) The Declarations
What is the nonrenewal notice requirement after a homeowners or personal auto policy has been in effect for more than 90 days?
A.) At least 10 days’ written notice
B.) At least 15 days’ written notice
C.) At least 45 days’ written notice
D.) At least 20 days’ written notice
C.) At least 45 days’ written notice
Charging different rates or providing different benefits to insureds of the same actuarial class or hazard category is which of the following?
A.) Fictitious grouping
B.) Unfair discrimination
C.) Defamation
D.) Sliding
B.) Unfair discrimination
A change of address must be reported to the DFS within how many days after moving?
A.) 60
B.) 30
C.) 15
D.) 20
B.) 30
Which of the following is incorrect with regard to commissions and compensation?
A.) Commissions may be shared with a person who is licensed and appointed in a different line of business
B.) An insurer and producer must keep a copy of their producer compensation agreement for 3 years
C.) Commissions are a percentage of the first year premium, and thereafter, a percentage of subsequent renewal premiums
D.) An agent may not share a commission with anyone who does not have a license and appointment for the type of insurance sold
A.) Commissions may be shared with a person who is licensed and appointed in a different line of business
Which of the following statements is NOT correct with respect to premium financing?
A.) The service charge by an insurer may not be more than 1/2 of the additional charge by premium finance companies
B.) A premium finance agreement provides that the premium finance company will forward premiums to the insurer to be repaid by the insured
C.) The service charge allowed for a premium finance company is the same as the service charge allowed for an agent
D.) A premium finance company must file all forms, service charge, and interest rate plans with the Office for approval
C.) The service charge allowed for a premium finance company is the same as the service charge allowed for an agent
Which of the following is least likely to be a factor when determining the eligibility of a person for property insurance?
A.) Whether the premium will be paid in full or billed to the insured
B.) The nature of the risk, such as the type of building and the number of families living in the building
C.) The claims history showing when prior claims occurred and how much was paid to settle the claim
D.) Existence of any hazards, such as a nearby gas station exposure
A.) Whether the premium will be paid in full or billed to the insured
An individual faces the risk of economic loss in the event of property damage because of which of the following insurance concepts?
A.) Legal purpose
B.) Right of recovery
C.) Insurable interest
D.) Principle of indemnity
C.) Insurable interest
Which of the following is an example of risk reduction?
A.) Taking action to minimize the severity of a potential loss
B.) Eliminating exposure to a specific risk
C.) Insuring only those risks that threaten the financial stability of the insured
D.) Transferring risk to an insurance company
A.) Taking action to minimize the severity of a potential loss
Which of the following is an example of vicarious liability?
A.) The liability of a negligent party whose identity cannot be determined
B.) An employer’s liability for the acts of an employee
C.) Liability assigned to a chatroom host for the acts of its users
D.) The liability of any group of people, acting together
B.) An employer’s liability for the acts of an employee
Which of the following is false with respect to pure comparative fault?
A.) Each party would be able to collect from the other for the amount of damages that equal the percent of being free of fault
B.) Only one party may be at fault
C.) There is no recovery if a person is injured while under the influence of drugs or alcohol and more than 50% at fault
D.) Each party to the action will be evaluated and determined to be a certain percent at fault
B.) Only one party may be at fault
Which statement regarding the National Flood Insurance Program is incorrect?
A.) The policy will not provide coverage for buildings or structures that are on or over water
B.) It provides unlimited insurance coverage for qualified property owners
C.) Covered properties may be used for personal or commercial purposes
D.) For contents to be covered, they must be inside a fully enclosed building
B.) It provides unlimited insurance coverage for qualified property owners
Which of the following statements is incorrect with respect to cancellation and nonrenewal of a personal auto policy?
A.) After the first 60 days, the insurer can only cancel an auto policy for certain specific reasons
B.) Driver’s license suspension is grounds for cancellation
C.) The insurer must provide 45 days’ notice of nonrenewal
D.) Insurers may cancel a personal auto policy solely due to occupation, marital status, or age
D.) Insurers may cancel a personal auto policy solely due to occupation, marital status, or age
An insured, whose Personal Auto policy has 25/50/10 limits, is at-fault in a car accident. Claimant A has bodily injuries in the amount of $25,000. Claimant B has bodily injuries equaling $20,500. Claimant C has bodily injuries equaling $4,000. What is the insurer’s liability for this accident?
A.) $60,000
B.) $50,000
C.) $49,500
D.) $25,000
C.) $49,500
Which of the following is true regarding the HO-3 (Special Form)?
A.) The contents (Coverage C) are written on an open perils basis
B.) The dwelling and other structures (Coverages A and B) are written on an open perils basis
C.) Coverages A, B, and C are all written on a replacement cost basis
D.) The dwelling and other structures (Coverages A and B) are written on a named perils basis
B.) The dwelling and other structures (Coverages A and B) are written on an open perils basis
The definition of an uninsured motor vehicle under a standard Personal Auto policy does not include:
A.) A vehicle newly acquired by the named insured that has not been reported to the insurer
B.) A vehicle that has no applicable liability insurance policy
C.) A pickup insured by an insolvent company
D.) A hit-and-run vehicle that cannot be identified
A.) A vehicle newly acquired by the named insured that has not been reported to the insurer
Medical expenses and loss of earnings awarded to an injured party are considered:
A.) Special damages
B.) Physical damages
C.) Punitive damages
D.) General damages
A.) Special damages
Wet leaves on a sidewalk are considered a:
A.) Morale hazard
B.) Natural hazard
C.) Physical hazard
D.) Moral hazard
C.) Physical hazard
Which statement is correct about medical payments provided by a Personal Auto policy?
A.) Medical expenses are paid only when the insured is legally liable
B.) Medical expenses include payments for injuries that result from an auto racing activity
C.) Expenses for medical services sustained by the insured are covered
D.) Medical payments coverage is provided by Part A
C.) Expenses for medical services sustained by the insured are covered
D’s neighbor, H, keeps a venomous snake as a pet. D’s child is bitten after teasing the snake with a stick. After being sued by D, H’s insurance company claimed that the child was acting negligently, and therefore, H was not liable. D’s lawyer claimed that the pet was so dangerous that it did not relieve the owner of liability, an example of which principle?
A.) Assumption of risk
B.) Absolute liability
C.) Last clear chance
D.) Respondent superior
B.) Absolute liability
After an auto loss, the insured is required by their Personal Auto policy to do which of the following?
A.) If the vehicle was stolen, contact the insurer for permission to report the theft to the police
B.) Allow the insurer to inspect and appraise the damage before the auto is repaired
C.) Give notice of the accident to the insurer within 20 days
D.) Immediately initiate repairs to the vehicle to protect it from further damage
B.) Allow the insurer to inspect and appraise the damage before the auto is repaired
Which of the following statements about an aggregate limit is correct?
A.) It is a lifetime limit
B.) It applies to losses from all occurrences within a specified policy period
C.) It applies per occurrence
D.) It replaces the per occurrence limit for each loss
B.) It applies to losses from all occurrences within a specified policy period
The Terrorism Insurance Program created by TRIA is administered by which of the following federal entities?
A.) Department of Defense
B.) Department of the Treasury
C.) White House
D.) Department of State
B.) Department of the Treasury
Which of the following is not a function of the Division of Consumer Services?
A.) Report alleged violations of law by persons licensed by the Department of Financial Services, Office of Insurance Regulation, or Office of Financial Regulation to the appropriate regulator
B.) Examine and investigate licensees
C.) Receive inquiries and complaints
D.) Compile and distribute information the Department of Financial Services deems necessary to assist consumers
B.) Examine and investigate licensees
Coverage C on the HO-3 would cover which of the following losses?
A.) Lightning damage to a structure held for rental to tenants as a private garage
B.) Vandalism loss to property the insured borrows from a neighbor
C.) Fire loss to the personal property of a boarder who is not related to the insured
D.) Damage to furniture caused by wild animals
B.) Vandalism loss to property the insured borrows from a neighbor
Generally, which of the following vehicles is not eligible for coverage under a standard Personal Auto policy?
A.) Pickup with gross vehicle weight of 12,000 lbs.
B.) Automobile used to transport farming materials
C.) SUV for an individual’s personal use
D.) 5,000-pound van with custom furnishings
A.) Pickup with gross vehicle weight of 12,000 lbs.
Which of the following is true regarding the Fine Arts Floater?
A.) Loss is paid on an actual cash value basis
B.) It has automatic coverage for only 30 days on newly acquired articles
C.) Coverage is limited to the United States, Canada, and Mexico
D.) It covers such items as paintings, rare manuscripts and antiques
D.) It covers such items as paintings, rare manuscripts and antiques
Which of the following statements is true regarding loss settlements?
A.) The insurer must pay according to the terms of the agreement within 30 days after the settlement is reached
B.) If the payment is not made within 30 days, it must include interest at a rate of 12% per year from the date of the agreement
C.) If the payment is not made within 20 days, it must include interest at a rate of 10% per year from the date of the agreement
D.) The insurer must pay according to the terms of the agreement within 20 days after the settlement is reached
D.) The insurer must pay according to the terms of the agreement within 20 days after the settlement is reached
For a claim to be paid, insurable interest for a property or casualty contract must exist at the time of:
A.) Premium payment
B.) Policy delivery
C.) Loss
D.) Policy issuance
C.) Loss
Policyowner P has just finished painting the interior walls in their home, and stores leftover paint thinner in the basement near the furnace. What kind of hazard does the stored paint thinner present?
A.) Peril
B.) Morale
C.) Moral
D.) Physical
D.) Physical
Unendorsed Personal Auto policies would refuse to provide liability coverage for:
A.) An SUV used in a share-the-expense car pool
B.) A non-owned golf cart
C.) A 5,000-pound pickup truck used to transport farm goods
D.) A vehicle with fewer than four wheels
D.) A vehicle with fewer than four wheels
When firefighters extinguish a house fire with water, the water damage is considered a(n):
A.) Direct loss
B.) Consequential Loss
C.) Indirect loss
D.) Loss that will be subrogated to the fire department
A.) Direct loss
Coverage D of the Dwelling Policy provides coverage for:
A.) Trees, shrubs, and other plants
B.) Fair rental value
C.) Additional living expenses
D.) Other structures
B.) Fair rental value
When both parties to a contract must perform certain duties in order to make the contract enforceable, this is known as a(n):
A.) Conditional contract
B.) Contract of adhesion
C.) Unilateral contract
D.) Aleatory contract
A.) Conditional contract
Collision coverage provided by a Personal Auto policy applies to:
A.) The insured’s car, only if they are legally liable for the damage
B.) The car the insured ran into, regardless of liability
C.) The insured’s car, regardless of liability
D.) The insured’s car and the car the insured ran into
C.) The insured’s car, regardless of liability
If an owner-occupied home is totally destroyed without fraud by a fire, the amount of the loss is based on:
A.) The coinsurance value
B.) The replacement value
C.) The market value
D.) The policy limit
D.) The policy limit
Which of the following is defined as the failure to act in a reasonable and prudent manner?
A.) Proximate liability
B.) Tort
C.) Legal duty
D.) Negligence
D.) Negligence
Which of the following best describes the Debris Removal coverage under the Homeowners policy?
A.) The policy will pay the insured for removing debris from a covered loss
B.) The debris must be removed within 30 days of the loss
C.) Debris Removal applies only to loss by fire, lightning, and windstorm
D.) Coverage is limited to 10% of the Coverage A Limit
A.) The policy will pay the insured for removing debris from a covered loss
In liability insurance, which of the following is the maximum amount that the coverage will pay for loss to any one person regardless of overall policy limits?
A.) The per occurrence limit
B.) The per person limit
C.) The split limit
D.) The aggregate limit
B.) The per person limit
Under a Dwelling Policy, the coverage extension of Debris Removal will pay for:
A.) The removal of the debris caused by an insured peril
B.) The removal of debris resulting from the action of a civil authority
C.) The removal of the debris from an automobile accident on the insured location
D.) The removal of debris resulting from demolition required by an ordinance or law
A.) The removal of the debris caused by an insured peril
In a legal insurance contract, all of the following are considered part of the consideration, except:
A.) The legal capacity of the involved parties
B.) Payment of the initial premium
C.) The insurer’s promise to indemnify in the event of loss
D.) The payment of a claim for the insured
A.) The legal capacity of the involved parties
All of the following are eligible for coverage under the Dwelling Program, except:
A.) A single-family home in the suburbs
B.) A duplex occupied by tenants
C.) A beauty shop with a small bedroom attached
D.) A vacation home used as a secondary residence
C.) A beauty shop with a small bedroom attached
Which of the following is not an element of negligence?
A.) Duty owed
B.) Assumption of risk
C.) Foreseeable consequence
D.) Proximate cause
B.) Assumption of risk
To whom must the insured assign recovery rights after being paid by the insurance company for a collision loss caused by another party?
A.) The insured does not have to assign her rights to anyone as she has been paid for the loss
B.) The insured must assign the rights to the insurance company to recover from the negligent party or insurer
C.) The insured must assign rights to the negligent party’s insurer to pay the insured’s company for the damage
D.) The insured must assign rights to the negligent party to pay the insurance company
B.) The insured must assign the rights to the insurance company to recover from the negligent party or insurer
Z is a distributor of natural gas. While connecting gas to B’s house, an explosion occurs and the house is destroyed. Z’s defense is that B did not turn off the pilot light on the furnace before the hookup, as instructed by the company. The court ruled that the activities of connecting gas lines were so dangerous that Z’s defense did not relieve its liability. What legal principle is applicable in this case?
A.) Comparative negligence
B.) Absolute liability
C.) Contributory negligence
D.) Assumption of risk
B.) Absolute liability
Under medical payments coverage provided by a Personal Auto policy, how long after an accident does the insured have coverage for resulting medical expenses?
A.) Five years
B.) Four years
C.) Three years
D.) One year
C.) Three years
A temporary substitute vehicle is not considered a Your Covered Auto if it is used to substitute for which of the following?
A.) A van recently purchased by the named insured
B.) A rental car that broke down
C.) A trailer owned by the named insured’s resident spouse
D.) A private passenger auto shown in the Declarations
B.) A rental car that broke down
Under the Basic Dwelling Form, when is damage caused by vandalism included as covered peril?
A.) When the Extended Coverage perils are added to the DP-1
B.) When the VMM Endorsement is added to the DP-1
C.) When under the unendorsed DP-1
D.) This coverage is not available on the Basic Form Dwelling policy
B.) When the VMM Endorsement is added to the DP-1
Which of the following are the Territorial Limits of the Personal Auto Policy?
A.) The United States, its territories and possessions, Canada, and Mexico
B.) The United States, Puerto Rico, Canada, and Mexico
C.) The United States, Mexico, and Canada
D.) The United States, its territories and possessions, Puerto Rico, and Canada
D.) The United States, its territories and possessions, Puerto Rico, and Canada
When damages are reduced in proportion to the degree of negligence, this is an example of:
A.) Pro rata negligence
B.) Contributory negligence
C.) Comparative negligence
D.) Absolute negligence
C.) Comparative negligence
Which of the following is true regarding liability insurance?
A.) A liability policy provides coverage for unintentional torts
B.) A liability policy provides coverage for all torts
C.) The liability policy provides coverage for all acts of wrongdoing
D.) A liability policy provides coverage for criminal acts
A.) A liability policy provides coverage for unintentional torts
Which of the following statements is false with regard to payment of claims?
A.) A dual endorsement from any mortgage holder or lienholder is required for amounts payable under the policy for personal property and contents
B.) A property insurer must pay claims directly to the primary policyholder, payable to the primary policyholder only
C.) Health insurers must pay all claims, for payment under a health insurance policy, within 45 days after receipt of the claim by the health insurer
D.) If there is a lien on a damaged vehicle, payment of the claim must be made jointly to the owner of the damaged vehicle and the first lienholder of record
A.) A dual endorsement from any mortgage holder or lienholder is required for amounts payable under the policy for personal property and contents
What type of liability policy requires the injured party to collect benefits from his/her own insurance as if it were first-party coverage, eliminating the process of determining negligence?
A.) Pro rata
B.) Excess
C.) Absolute liability
D.) No fault
D.) No fault
Which of the following is not a function of insurance?
A.) To act as an investment vehicle for the insured
B.) To exchange a small certain expense for a large uncertain loss
C.) To protect against uncertainty and reduce anxiety
D.) To transfer risk from the insured to the insurer
A.) To act as an investment vehicle for the insured
When an auto has two Personal Auto policies with the same insurer, the insurer’s liability would not exceed:
A.) The limit of the last one purchased
B.) The limit of the first one purchased
C.) The combined limit of the two policies
D.) The highest limit of the two policies
D.) The highest limit of the two policies
Which of the following best describes short-rate cancellation?
A.) The premium is fully earned by the insurance company
B.) The insured will receive none of the unearned premium
C.) The insured will receive exactly half of the unearned premium
D.) The insured will receive less than the full amount of the unearned premium
D.) The insured will receive less than the full amount of the unearned premium
What is the term for continuous exposure to the same harmful conditions?
A.) Accident
B.) Risk
C.) Proximate cause
D.) Occurrence
D.) Occurrence
Under a Personal Auto policy, which of the following vehicle uses is not excluded by medical payments coverage?
A.) Residence
B.) Livery conveyance
C.) Organized racing
D.) Farm use
D.) Farm use
Which of the following is not essential in determining if an action is due to negligence?
A.) The injured party must prove the actual injuries or damages were foreseeable
B.) The injured party must prove the wrongdoer committed a criminal act
C.) The injured party must prove the wrongdoer failed to act in a reasonable and prudent manner
D.) The injured party must prove the alleged wrongdoer owed a duty to the injured party or to the public
B.) The injured party must prove the wrongdoer committed a criminal act
Charging different rates or providing different benefits to insureds of the same actuarial class or hazard category is which of the following?
A.) Unfair discrimination
B.) Defamation
C.) Fictitious grouping
D.) Sliding
A.) Unfair discrimination
Which of the following is not a condition found in an insurance policy?
A.) Liberalization
B.) Insuring Agreement
C.) Assignment
D.) Subrogation
B.) Insuring Agreement
Which of the following statements is false regarding PIP Coverage under auto insurance?
A.) 80% of all reasonable expenses for medically necessary benefits are covered
B.) Disability benefits payable under this provision must be paid at least every 2 weeks
C.) Death benefits of $2,500 per individual are in addition to the medical and disability benefits provided under the insurance policy
D.) Benefits are not payable to an insured person if they have committed insurance fraud relating to their coverage
C.) Death benefits of $2,500 per individual are in addition to the medical and disability benefits provided under the insurance policy
The Florida Insurance Guaranty Association will assume the contractual obligations of an insolvent insurer up to _ for any one policy.
A.) $250,000
B.) $100,000
C.) $150,000
D.) $300,000
D.) $300,000
An underwriter will consider each of the following factors when evaluating a risk, except:
A.) Hazards
B.) Rates
C.) Claim history
D.) Nature of the risk
B.) Rates
The Department may revoke, suspend, or refuse to renew a license for all the following, except:
A.) Having failed to remit due premiums to an insurer
B.) Having been convicted of a felony
C.) Issued insufficient coverage to a customer through apparent authority
D.) Cheated on an insurance examination
C.) Issued insufficient coverage to a customer through apparent authority
With regard to civil immunity and testimony, which of the following is false?
A.) Any person may provide the Department of Financial Services or Office of Insurance Regulation with information about the financial condition of an insurer
B.) A person providing truthful information about the financial condition of an insurer may still be subject to civil liability
C.) A person may ask to be excused from testifying or producing records involving an examination, hearing, or investigation conducted by the Department of Financial Services or Office of Insurance Regulation, for fear of self-incrimination
D.) Only a person providing untruthful information about the financial condition of an insurer may be subject to civil liability
B.) A person providing truthful information about the financial condition of an insurer may still be subject to civil liability
The predictability of loss improves when the number of similar units increase because of which principle?
A.) The Golden Rule of Underwriting
B.) The Law of Averages
C.) Accumulated Experience
D.) The Law of Large Numbers
D.) The Law of Large Numbers
Which of the following is NOT an exception to the requirement to inspect a motor vehicle prior to issuing physical damage coverage?
A.) A renewal policy
B.) A policyholder who has been insured for at least one year, if the agent of the insurer verifies the previous coverage
C.) An unused motor vehicle purchased from a licensed motor vehicle dealer or leasing company subject to certain requirements
D.) A temporary substitute motor vehicle
B.) A policyholder who has been insured for at least one year, if the agent of the insurer verifies the previous coverage
All of the following are true of liability policies, except:
A.) They do not cover medical expenses incurred by the insured
B.) They are designed to cover third party injuries or damages
C.) They will pay sums that the insured becomes legally liable to pay
D.) They will cover damage to the insured’s own property
D.) They will cover damage to the insured’s own property
Which of the following handles unclaimed property?
A.) The Division of Rehabilitation and Liquidation
B.) The Department of Financial Services
C.) The Division of Consumer Services
D.) The Department of Commerce Division of Unclaimed Funds
D.) The Department of Commerce Division of Unclaimed Funds
Which term describes the equal sharing of a loss by two or more insurers until the loss is paid, or until each insurer has exhausted its limits of insurance, whichever comes first?
A.) Contribution by equal shares
B.) Pro rata liability
C.) Primary insurance
D.) Excess insurance
A.) Contribution by equal shares
Which of the following is incorrect about insurance company appointments?
A.) An agent may broker business
B.) An agent may present a proposal to a company without being appointed
C.) Also applies to health applications
D.) An agent must be appointed for property and casualty insurance separately
D.) An agent must be appointed for property and casualty insurance separately
An insured placed with the FAJUA must be notified in writing that the insurance coverage is not through the private market within _ of placement.
A.) 10 days
B.) 36 hours
C.) 3 days
D.) 14 days
A.) 10 days
Which of the following statements best describes the Other Insurance condition on a standard property insurance policy, when two separate property policies provide coverage for the same loss?
A.) One policy pays up to its limits and the other policy pays the balance
B.) Each policy pays an equal share
C.) Each policy pays its pro rata share of the loss
D.) Neither policy will make payment for the loss
C.) Each policy pays its pro rata share of the loss
An agent may have no more than __ of his total business within a 12-month period be from controlled business.
A.) 25%
B.) 65%
C.) 35%
D.) 50%
D.) 50%
All of the following are included in the Declarations of a property policy, except:
A.) The named insured’s mailing address
B.) The amount of coverage
C.) The amount of premium
D.) The perils insured against
D.) The perils insured against
Property damage covered by a liability policy includes which of the following?
A.) Damage to property owned by, or leased to, the insured
B.) Damage to tangible property belonging to a third party, including loss of use of that property, caused by the insured’s negligence
C.) Damage to property of others in the insured’s care, custody, or control that results from a criminal wrong
D.) Damage to the insured’s products arising out of the products
B.) Damage to tangible property belonging to a third party, including loss of use of that property, caused by the insured’s negligence
Which of the following is true about the right of salvage?
A.) Damaged property must be disposed of after a loss.
B.) The insurer has the right to take possession of damaged property after payment of a loss
C.) The insurer is required to take possession of damaged property after a loss
D.) The insured has the right to keep damaged property after payment of a loss
B.) The insurer has the right to take possession of damaged property after payment of a loss
A second negligent act that interferes with the chain of events leading to a loss is known as a(n):
A.) Loss of consortium
B.) Intervening cause
C.) Tort
D.) Foreseeable consequence
B.) Intervening cause
When the insurer elects to end coverage at the end of the policy period, the policy is said to be which of the following?
A.) Cancelled
B.) Abandoned
C.) Lapsed
D.) Nonrenewed
D.) Nonrenewed
Which of the following is not considered unethical as described in the Unfair Trade and Marketing Practices?
A.) Representation
B.) Churning
C.) Rebating
D.) Twisting
A.) Representation
An unintended and unforeseen event from which a loss results is called which of the following?
A.) Accident
B.) Loss exposure
C.) Peril
D.) Proximate cause
A.) Accident
If other insurance also applies to a loss covered by a policy, which of the following will establish the method for determining how the insurance companies will pay the loss?
A.) Subrogation
B.) Limit of Liability
C.) Pro rata liability
D.) Claim Settlement
C.) Pro rata liability
In property and casualty insurance, when a form is attached to alter or add to policy provisions or conditions, it is known as:
A.) A consideration
B.) An endorsement
C.) An exclusion
D.) A warranty
B.) An endorsement
Which of the following statements is correct concerning the required time periods under loss payments?
A.) An agent or insurer must acknowledge receipt of a communication regarding a claim within 10 working days
B.) The insurer must pay or deny the entire portion of the claim within 90 days after receipt of notice of a property insurance claim
C.) The insurer must pay or deny the entire portion of the claim within 15 days after receipt of notice of a property insurance claim
D.) The insurer must begin investigating the claim within 14 calendar days after receiving proof of loss statements
B.) The insurer must pay or deny the entire portion of the claim within 90 days after receipt of notice of a property insurance claim
K owns several buildings at different locations, with each building insured on a separate policy. Which of the following methods of writing insurance does this describe?
A.) Agreed value
B.) Scheduled limit
C.) Specific limit
D.) Blanket limit
C.) Specific limit
The standard PIP coverage limit is:
A.) $5,000 in medical and disability benefits and $10,000 in death benefits
B.) $10,000 in both medical and disability benefits and in death benefits
C.) $15,000 in medical and disability benefits and $10,000 in death benefits
D.) $10,000 in medical and disability benefits and $5,000 in death benefits
D.) $10,000 in medical and disability benefits and $5,000 in death benefits
Plaintiff K was injured after losing control of their skis on a slope with well-marked signs indicating the degree of difficulty. What legal defense is available to the ski resort to avoid liability for the injury?
A.) Statute of limitations
B.) Contributory negligence
C.) Assumption of risk
D.) Comparative negligence
C.) Assumption of risk
Which of the following constitutes the acceptance of an offer?
A.) When the applicant completes the application
B.) When the insurer makes a counteroffer
C.) When the agent assures the applicant they will be covered
D.) When an insurer issues a binder
D.) When an insurer issues a binder
The standard policy structure for insurance policies includes all of the following sections, except:
A.) Duties
B.) Conditions
C.) Insuring Agreement
D.) Exclusions
A.) Duties
Under disability income insurance, a monthly benefit will be __ of the insured’s monthly income.
A.) 70 2/3%
B.) 66 2/3%
C.) 50 3/4%
D.) 80 1/2%
B.) 66 2/3%
During a tornado, a factory is destroyed when the roof is blown off, causing electrical wires to short and start a fire, burning down the building. The proximate cause of the loss is:
A.) Electrical wiring
B.) Tornado
C.) Fire
D.) Rain and hail
B.) Tornado
Which renewable option provides the greatest degree of protection for the insured?
A.) Conditional
B.) Guaranteed
C.) Noncancellable
D.) Optional
C.) Noncancellable
Catastrophic ground cover collapse must meet four requirements. Which of the following is NOT one of those requirements?
A.) Failure of lateral loads of the structure
B.) Structural damage to the covered building
C.) Abrupt collapse of the ground cover
D.) Depression in the ground cover clearly visible to the naked eye
A.) Failure of lateral loads of the structure
Which of the following is correct with regard to surplus lines?
A.) Residential and multi-peril residential policies are subject to the diligent effort requirements
B.) The premium rate at which the coverage is exported may be lower than the rate in actual and current use by a majority of the authorized insurers for the same coverage on a similar risk
C.) The policy form under which the insurance is exported may be more favorable in coverage or rates to the insured than similar contracts in actual current use in Florida by the majority of authorized insurers
D.) Applicants for surplus lines coverage must verify that a diligent effort has been made to procure the full amount of required insurance from an authorized insurer before pursuing surplus lines coverage
A.) Residential and multi-peril residential policies are subject to the diligent effort requirements
A change of address must be reported to the DFS within how many days after moving?
A.) 15
B.) 30
C.) 20
D.) 60
B.) 30
Which of the following clauses protects the interests of the loss payee?
A.) Mortgagee clause
B.) Loss Payable clause
C.) Loss Settlement clause
D.) Abandonment clause
B.) Loss Payable clause
The agent’s fiduciary responsibility is to turn that money over to the insurer _.
A.) Within 5 days
B.) Within 3 days
C.) Within 24 hours
D.) Immediately
D.) Immediately
A driver’s license may be issued to a 16 or 17 year old who completes an application and the parents certify that they accompanied her for how many hours of behind-the-wheel experience?
A.) 90
B.) 75
C.) 50
D.) 30
C.) 50
Which of the following statements is correct concerning coverage for a catastrophic ground cover collapse?
A.) The contents of personal property is not covered pursuant to a catastrophic ground cover collapse
B.) Most insurers do not cover catastrophic ground cover collapse
C.) Every insurer authorized to transact property insurance in Florida must provide coverage for a catastrophic ground cover collapse
D.) The insurer may not restrict catastrophic ground cover collapse and sinkhole loss coverage just to the principal building
C.) Every insurer authorized to transact property insurance in Florida must provide coverage for a catastrophic ground cover collapse
Actual cash value is best defined as which of the following?
A.) Today’s current price, minus depreciation
B.) Market value, minus depreciation
C.) Appraised value
D.) Replacement cost, including depreciation
A.) Today’s current price, minus depreciation
If the insured and insurer do not agree on the value of a property loss, what condition would apply?
A.) Arbitration
B.) Appraisal
C.) Subrogation
D.) Abandonment
B.) Appraisal
Which of the following is considered a hostile fire?
A.) A fireplace containing a roaring wood fire
B.) The fire in the firebox of a furnace
C.) An uncontrolled campfire in the woods
D.) The fire in a trashcan being used to burn leaves
C.) An uncontrolled campfire in the woods
Which of the following is the broad term for an accident that also includes a continuous and repeated exposure?
A.) Exposure
B.) Occurrence
C.) Disaster
D.) Incident
B.) Occurrence
In property insurance, the policy condition that gives the insurer the right to take possession of damaged property after paying the loss is known as:
A.) Indemnity
B.) Loss Payment
C.) Right of Salvage
D.) Abandonment
C.) Right of Salvage
A building with no physical contents and no occupants is said to be which of the following?
A.) Idle property
B.) Vacant
C.) Unoccupied
D.) Abandoned
B.) Vacant
Which of the following is not found on the Declarations Page?
A.) Insured property address
B.) Exclusions
C.) Limit of liability
D.) Expiration date of the policy
B.) Exclusions
Policyholder A’s insurer is providing coverage on too many homes subject to wind losses. As a result, the company decides to reinsure those policies to share the high risk of wind loss. The reinsurance contract can best be described as which of the following?
A.) An agreement between the insurance company and the reinsurer
B.) An agreement between A and the reinsurance company
C.) An agreement between A’s agent and the insurance company
D.) An agreement between A, the insurance company, and the reinsurer
A.) An agreement between the insurance company and the reinsurer
The provision that establishes the method by which coverage will be applied if other insurance applies to the loss, is sometimes called:
A.) The limit of liability provision
B.) The claim settlement provision
C.) The subrogation provision
D.) The pro rata liability provision
D.) The pro rata liability provision
Which term describes the maximum amount payable for loss from all occurrences within a policy period?
A.) Single limit
B.) Aggregate limit
C.) Per occurrence limit
D.) Split limit
B.) Aggregate limit
What is the only policy section that may change or be different for each customer?
A.) The Exclusions
B.) The Conditions
C.) The Declarations
D.) The Insuring Agreement
C.) The Declarations
A dwelling and detached garage are insured on an HO-2 policy against named perils. If the garage collapses due to the weight of snow, how does coverage apply?
A.) Coverage is only provided by endorsement
B.) Collapse is a Broad Form named peril
C.) Coverage for collapse is not available
D.) Coverage is provided as an Additional Coverage
D.) Coverage is provided as an Additional Coverage
A building with no physical contents and no occupants is said to be which of the following?
A.) Vacant
B.) Unoccupied
C.) Abandoned
D.) Idle property
A.) Vacant
Which of the following is covered under Coverage E of the Dwelling Policy?
A.) Removal of debris of damaged covered property
B.) Other Structures damaged by fire
C.) Additional living expenses incurred after a covered direct loss
D.) Property removed to a newly acquired principal residence
C.) Additional living expenses incurred after a covered direct loss
A property purchased 10 years ago for $100,000 has a replacement value today of $200,000. It has depreciated 3% each year. What is today’s actual cash value?
A.) $200,000
B.) $70,000
C.) $140,000
D.) $100,000
C.) $140,000
A bird hits and breaks the windshield of an insured vehicle. This is covered under which of the following coverages of a Personal Auto policy?
A.) Other than collision coverage
B.) Liability coverage
C.) Collision coverage
D.) Supplementary payments
A.) Other than collision coverage
An insured accidentally backs into the neighbor’s son on his skateboard. The son has medical expenses, and there is damage to the skateboard. Which sections of the insured’s Personal Auto policy will pay?
A.) Bodily injury and property damage
B.) Bodily injury and collision
C.) Medical payments and collision
D.) Personal injury and property damage
A.) Bodily injury and property damage
All of the following are insured’s duties after a loss under a property policy, except:
A.) Giving prompt notice of loss
B.) Furnishing an inventory of damaged property
C.) Submitting to the insurer’s examination
D.) Abandoning the property to the insurer
D.) Abandoning the property to the insurer
If a bird hits a windshield and breaks it, which Personal Auto policy coverage would pay the loss?
A.) Uninsured motorists coverage
B.) Other than collision coverage
C.) Collision coverage
D.) Supplementary payments
B.) Other than collision coverage
A hazard is best defined as:
A.) The loss itself
B.) A reduction in, decrease in, or disappearance of, value
C.) The possibility of a loss
D.) Something that increases the chance of a loss
D.) Something that increases the chance of a loss
Under Florida law, how is the deductible determined when there are hurricane losses on multiple policies issued by the same insurer within a calendar year?
A.) The deductible will be the highest amount stated in any one of the policies
B.) The deductible will be waived
C.) The deductible will be capped at $500
D.) The deductible will be the lowest amount stated in any one of the policies
A.) The deductible will be the highest amount stated in any one of the policies
The agent’s fiduciary responsibility is to turn that money over to the insurer _.
A.) Within 3 days
B.) Within 24 hours
C.) Immediately
D.) Within 5 days
C.) Immediately
Which of the following best describes the situation when a property has neither contents nor occupants?
A.) Abandonment
B.) Mysterious disappearance
C.) Vacancy
D.) Unoccupancy
C.) Vacancy
Which of the following is a false statement about the National Flood Insurance Program?
A.) The federal government administers the program
B.) There is no deductible
C.) It covers direct loss from overflow of inland or tidal waters
D.) It covers direct loss from mudslides caused by the accumulation of water
B.) There is no deductible
A Broad Form Homeowners policy would NOT cover which of the following losses?
A.) Damage to a dwelling’s contents from water used to put out a fire
B.) Water damage to personal property stored in the basement after a sump pump overflows
C.) Water damage resulting from frozen pipes of an automatic fire sprinkler system
D.) Hardwood damage after an accidental discharge of water from a dishwasher
B.) Water damage to personal property stored in the basement after a sump pump overflows
Which type of standard policy includes coverage options that would not exclude damage by flood?
A.) Commercial property policies
B.) Dwelling policies
C.) Personal Auto policies
D.) Homeowners policies
C.) Personal Auto policies
Which kind of contract includes an unequal exchange in value?
A.) Adhesion
B.) Personal
C.) Unilateral
D.) Aleatory
D.) Aleatory
Which statement is true concerning Homeowners policies?
A.) The Section I deductible does not apply to property covered under the Scheduled Personal Property Endorsement
B.) Section I limits coverage on utility trailers up to $500
C.) Section I limits coverage on fire department service charge to $100
D.) The HO-4 provides open peril coverage on both the dwelling and contents
A.) The Section I deductible does not apply to property covered under the Scheduled Personal Property Endorsement
R owns a home insured by an HO-3 policy and rents out a suite over a detached garage to tenants. R’s furniture used to furnish the suite is:
A.) Subject to a Coverage C special limit of liability of $3,000
B.) Covered up to $2,500 as an Additional Coverage
C.) Considered property not covered under Coverage C
D.) Protected against theft for up to $2,500
B.) Covered up to $2,500 as an Additional Coverage
Under a Dwelling Policy, the coverage extension of Debris Removal will pay for:
A.) The removal of the debris from an automobile accident on the insured location
B.) The removal of debris resulting from demolition required by an ordinance or law
C.) The removal of the debris caused by an insured peril
D.) The removal of debris resulting from the action of a civil authority
C.) The removal of the debris caused by an insured peril
Which of the following best describes a surplus lines broker?
A.) A surplus lines broker accepts business only from non-resident agents
B.) A surplus lines broker places risks with non-admitted insurers when coverage cannot be placed with admitted carriers
C.) A surplus lines broker deals with direct writing companies only
D.) A surplus lines broker deals with admitted carriers only
B.) A surplus lines broker places risks with non-admitted insurers when coverage cannot be placed with admitted carriers
An alarm system installed in a home is considered which of the following ways to manage risk?
A.) Avoidance
B.) Retention
C.) Reduction
D.) Transfer
C.) Reduction
Which type of producer authority is not spelled out in the contract, but is necessary for carrying out the producer’s duties?
A.) Implied
B.) Express
C.) Assumed
D.) Admitted
A.) Implied
N has a Personal Auto policy with 30/60/15 limits. After an accident where N was at fault, $45,000 in damages is awarded against N for bodily injury to the other driver and $10,000 in damages is awarded against N for property damage to the other driver’s car. N also incurred defense costs equal to $30,000. How much will N’s insurer pay?
A.) $60,000
B.) $75,000
C.) $70,000
D.) $85,000
C.) $70,000
The Additional Coverages part of a property insurance policy provides:
A.) The insured the right to request that extra coverage be provided by endorsement
B.) The company the right to voluntarily waive the deductible
C.) The insured the right to request additional coverage to supplement the policy after paying an additional premium
D.) Coverage automatically included in the policy to supplement the basic coverages in the Insuring Agreement without an additional premium
D.) Coverage automatically included in the policy to supplement the basic coverages in the Insuring Agreement without an additional premium
An agent is not considered to be holding a license for the purpose of controlled business as long as:
A.) Not more than 30% of the total volume of premiums per year is derived from controlled business
B.) Not more than 15% of the total volume of premiums per year is derived from controlled business
C.) Not more than 50% of the total volume of premiums per year is derived from controlled business
D.) Not more than 25% of the total volume of premiums per year is derived from controlled business
C.) Not more than 50% of the total volume of premiums per year is derived from controlled business
If an insured has comprehensive physical damage coverage provided by their Personal Auto policy, the insurer would deny which of the following physical damage claims?
A.) Loss to the covered auto’s electronic ignition equipment
B.) Loss to the covered auto’s tires caused by road damage
C.) Loss to sound reproduction equipment permanently installed in the covered auto
D.) Earthquake damage to the covered auto
B.) Loss to the covered auto’s tires caused by road damage
All of the following statements about a Special Form Dwelling policy are correct, except:
A.) Losses to the dwelling are paid on a replacement cost basis
B.) Both the dwelling and contents are covered on an open perils basis
C.) The dwelling must be used principally for residential dwelling purposes
D.) Mobile homes are not eligible
B.) Both the dwelling and contents are covered on an open perils basis
A Personal Auto policy would consider all of the following to be examples of occupying a vehicle, except:
A.) Climbing onto the roof of the car
B.) Jumping off the trunk
C.) Closing a car door
D.) Standing by the car to see damage after an accident
D.) Standing by the car to see damage after an accident
Insurance is an example of which type of risk management technique?
A.) Retention of risk
B.) Reduction of risk
C.) Element of risk
D.) Transfer of risk
Whose policy will be primary for bodily injury coverage for the injured party if a neighbor borrows an insured’s car and injures a pedestrian?
A.) The insured’s Personal Auto policy
B.) The neighbor’s Homeowners policy
C.) There is no coverage for this loss
D.) The neighbor’s Personal Auto policy
A.) The insured’s Personal Auto policy
Which of the following would not be covered under Coverage B of a Broad Form Dwelling policy?
A.) Shed
B.) Grain silo
C.) Pole barn connected to the dwelling by a utility line
D.) Swimming pool
B.) Grain silo
An insured placed with the FAJUA must be notified in writing that the insurance coverage is not through the private market within _ of placement.
A.) 36 hours
B.) 3 days
C.) 10 days
D.) 14 days
C.) 10 days
All of the following are correct about a newly acquired pickup truck being added to a Personal Auto policy, except:
A.) It must be reported to the insurer within 14 days of purchase to have liability coverage from the date of purchase
B.) It can be used to transport commercial merchandise for hire if receipts are less than $2,000
C.) Liability coverage is as broad as the broadest coverage on any vehicle already protected by the policy
D.) It may be used on a farm
B.) It can be used to transport commercial merchandise for hire if receipts are less than $2,000
An insured, whose Personal Auto policy has 25/50/10 limits, is at-ault in a car accident. Claimant A has bodily injuries in the amount of $25,000. Claimant B has bodily injuries equaling $20,500. Claimant C has bodily injuries equaling $4,000. What is the insurer’s liability for this accident?
A.) $60,000
B.) $50,000
C.) $49,500
D.) $25,000
C.) $49,500
For a claim to be paid, insurable interest for a property or casualty contract must exist at the time of:
A.) Policy issuance
B.) Premium payment
C.) Policy delivery
D.) Loss
D.) Loss
Which of the following statements is NOT correct with respect to premium financing?
A.) The service charge by an insurer may not be more than 1/2 of the additional charge by premium finance companies
B.) A premium finance agreement provides that the premium finance company will forward premiums to the insurer to be repaid by the insured
C.) The service charge allowed for a premium finance company is the same as the service charge allowed for an agent
D.) A premium finance company must file all forms, service charge, and interest rate plans with the Office for approval
C.) The service charge allowed for a premium finance company is the same as the service charge allowed for an agent
Which of the following is not considered unethical as described in the Unfair Trade and Marketing Practices?
A.) Churning
B.) Representation
C.) Twisting
D.) Rebating
B.) Representation
Which of the following statements is true regarding loss settlements?
A.) If the payment is not made within 20 days, it must include interest at a rate of 10% per year from the date of the agreement
B.) The insurer must pay according to the terms of the agreement within 20 days after the settlement is reached
C.) The insurer must pay according to the terms of the agreement within 30 days after the settlement is reached
D.) If the payment is not made within 30 days, it must include interest at a rate of 12% per year from the date of the agreement
B.) The insurer must pay according to the terms of the agreement within 20 days after the settlement is reached
Which of the following statements is false with respect to exclusions of windstorm or hail?
A.) Hurricane, windstorm, or hail must be excluded if the property is eligible for coverage from the Citizens Property Insurance Corporation
B.) Coverage may be excluded only if the policyholder rejects the coverage in writing
C.) An exclusion of windstorm coverage must be made available by the insurer at the option of the policyholder
D.) Windstorm coverage may be excluded without regard to any mortgage or lien
D.) Windstorm coverage may be excluded without regard to any mortgage or lien
When filing a property insurance claim, the insured is required to do all of the following, except:
A.) Submit to an examination under oath at the insurer’s request
B.) Protect property from further damage
C.) Hire an appraiser
D.) Give notice of loss as soon as possible
C.) Hire an appraiser
With respect to a producer’s fiduciary capacity, which of the following is true?
A.) An agent may commingle the insurer’s funds with his/her personal funds
B.) The payment of premiums to the agent by the insured is not the same as giving the money directly to the insurer
C.) An agent must maintain separate bank accounts for each insurer he/she represents
D.) An agent must remit premiums to the insurer entitled to them within 60 days after receipt
C.) An agent must maintain separate bank accounts for each insurer he/she represents
Which of the following constitutes the acceptance of an offer?
A.) When an insurer issues a binder
B.) When the agent assures the applicant they will be covered
C.) When the applicant completes the application
D.) When the insurer makes a counteroffer
A.) When an insurer issues a binder
When an insured fails to disclose known facts in an application for insurance, they may be guilty of:
A.) Waiver
B.) Concealment
C.) Twisting
D.) Breach of warranty
B.) Concealment
The administration of state insurance law is the responsibility of which of the following?
A.) Attorney General
B.) Chief Financial Officer
C.) Director of Financial Regulation
D.) Governor
B.) Chief Financial Officer
What is the term for continuous exposure to the same harmful conditions?
A.) Proximate cause
B.) Risk
C.) Accident
D.) Occurrence
D.) Occurrence
Which of the following statements is false with respect to the Citizens Property Insurance Corporation (Citizens)?
A.) All insurers required to be members of the corporation must participate in its writings, expenses, and losses
B.) The corporation is for applicants who are unable to obtain property insurance through ordinary methods
C.) The association must reject a commercial lines residential risk with limits above $10 million or a personal lines residential risk with limits above $1 million
D.) Participation by member insurers is proportional to the net direct premiums of each member insurer during the preceding calendar year
C.) The association must reject a commercial lines residential risk with limits above $10 million or a personal lines residential risk with limits above $1 million
Which of the following has the primary responsibility of determining acceptable risks?
A.) Underwriter
B.) Executives
C.) Adjuster
D.) Producer
A.) Underwriter
What is the name for the termination of an insurance policy before the expiration date?
A.) Nonrenewal
B.) Abandonment
C.) Subrogation
D.) Cancellation
D.) Cancellation
Liability coverage is designed to:
A.) Protect the insured from the cost of damages for bodily injury and property damage that the insured is legally obligated to pay
B.) Cover injuries and damages caused by the insured’s intentional and unintentional actions
C.) Permit the insured to countersue the insurer for losses not covered
D.) Protect an insured from being sued by an injured party
A.) Protect the insured from the cost of damages for bodily injury and property damage that the insured is legally obligated to pay
Construction material having a fire-resistance rating between 1 and 2 hours for walls, floors, and roofs is classified as:
A.) Fire-Resistive
B.) Joisted Masonry
C.) Modified Fire-Resistive
D.) Noncombustible
C.) Modified Fire-Resistive
When the Limited Mexico Coverage Endorsement is added to a Personal Auto policy, it provides coverage while the covered autos is how many miles into Mexico?
A.) 50 miles
B.) 100 miles
C.) 10 miles
D.) 25 miles
D.) 25 miles
When resulting from an accident with an at-fault uninsured motorist, damages owed to the insured for all of the following would be paid by the insured’s uninsured motorist coverage on their standard Personal Auto policy, except:
A.) Death
B.) Sickness
C.) Bodily harm
D.) Property damage
D.) Property damage
Which of the following is not within an agent’s authority?
A.) Representing the insured’s interest
B.) Countersigning insurance contracts
C.) Selling applications on the insurer’s behalf
D.) Using express authority
A.) Representing the insured’s interest
In the event of an accident, all of the following people may receive medical payments under a Personal Auto policy, except:
A.) The named insured’s foster child, who is struck by an auto while on a crosswalk
B.) A family friend, who is a passenger in a covered auto
C.) The named insured, who is occupying a rental car
D.) The named insured, who is struck as a pedestrian by an ATV
D.) The named insured, who is struck as a pedestrian by an ATV
The insurer must offer alternative deductible amount applicable to hurricane losses equal to which of the following?
A.) $250
B.) $1,000
C.) 3%
D.) 5%
D.) 5%
The transfer of the right of recovery from the insured to the insurance company is called:
A.) Hold harmless
B.) Assignment
C.) Indemnity
D.) Subrogation
D.) Subrogation
Which of the following methods of writing insurance is used to provide insurance on properties at different locations, using a single policy, and a single limit of insurance?
A.) Blanket
B.) Listed
C.) Unified
D.) Scheduled
A.) Blanket
Which policy provision omits certain risks from coverage?
A.) Exclusions
B.) Conditions
C.) Declarations
D.) Additional Coverages
A.) Exclusions
Which of the following clauses protects the interests of the loss payee?
A.) Mortgagee clause
B.) Loss Settlement clause
C.) Abandonment clause
D.) Loss Payable clause
D.) Loss Payable clause
Which statement regarding liability insurance coverage is incorrect?
A.) Casualty policies must defend the insured against liability claims made against them, but only if the claim is relevant to the policy’s coverage
B.) Pro rata liability is the proportionate distribution of liability among insurers that have policies on the same risk
C.) The per occurrence limit is the maximum amount recoverable during the policy period
D.) If the policy is written as primary coverage, it pays first with respect to other policies
C.) The per occurrence limit is the maximum amount recoverable during the policy period
What is the name for a type of policy that does not pay benefits until the limits of the primary policy has been exhausted?
A.) Liberalization policy
B.) Excess policy
C.) Common law policy
D.) Surplus lines policy
B.) Excess policy
Which section lists the perils insured against by a property insurance policy?
A.) Declarations
B.) Insuring Agreement
C.) Additional Coverages
D.) Definitions
B.) Insuring Agreement
Bodily injury liability coverage includes all of the following, except:
A.) Medical bills
B.) Breach of contract
C.) Lost wages
D.) Mental anguish
B.) Breach of contract
All of the following statements regarding the structure of a property policy are correct, except:
A.) Additional Coverages are added to the policy for an additional premium
B.) The insured’s duties and obligations are listed in the Conditions section
C.) The Declarations page lists other parties that have an insurable interest in the property
D.) The Insuring Agreement describes the perils that are covered under the policy
A.) Additional Coverages are added to the policy for an additional premium
Which of the following is not a duty of the Department of Financial Services?
A.) Liquidate insurance companies
B.) Supervise methods of obtaining business
C.) Investigate fraud
D.) Enforces the Insurance Code by administering criminal penalties
D.) Enforces the Insurance Code by administering criminal penalties
Which coverage is written with a per occurrence limit?
A.) Advertising injury
B.) Strict liability
C.) Personal injury
D.) Bodily injury and property damage
D.) Bodily injury and property damage
Which of the following are true regarding uninsured/underinsured motorists coverage?
A.) UM/UIM limits are less than the bodily injury limits of the liability policy
B.) An insured may request limits that are less than the bodily injury limits
C.) Every auto liability policy must provide uninsured/underinsured motorists coverage
D.) UM/UIM coverage may not be rejected by the insured
B.) An insured may request limits that are less than the bodily injury limits
With regard to agent and adjuster licensing and investigations:
A.) The Chief Financial Officer does not impose penalties for violations of the Insurance Code
B.) The Department of Financial Services does not supervise agent licensing
C.) The Department of Financial Services does not investigate agents or adjusters
D.) The Department of Financial Services may interrogate an applicant or agent on any matter is deemed necessary for the protection of the public
D.) The Department of Financial Services may interrogate an applicant or agent on any matter is deemed necessary for the protection of the public
The taking of property from inside the premises by a person committing forcible entry defines a:
A.) Burglary
B.) Mysterious disappearance
C.) Shoplifting
D.) Robbery
A.) Burglary
A manufacturer is held liable if a product caused an injury whether the product was or was not defective. This describes what type of liability?
A.) Contingent liability
B.) Vicarious liability
C.) Strict liability
D.) Operations liability
C.) Strict liability
Which of the following indicates a disrupted chain of events that frees the defendant from liability?
A.) Lost cause
B.) Intervening cause
C.) Proximate cause
D.) Concurrent causation
B.) Intervening cause
Which of the following is a function of the Bureau of Financial Investigations?
A.) Act as a criminal justice agency within the Department of Financial Services
B.) Prosecute violations of Insurance or Criminal law
C.) Handle consumer complaints
D.) Supervise insurer and agent licensing
A.) Act as a criminal justice agency within the Department of Financial Services
The standard policy structure for insurance policies includes all of the following sections, except:
A.) Insuring Agreement
B.) Exclusions
C.) Conditions
D.) Duties
D.) Duties
Which of the following statements is false regarding the Florida Automobile Joint Underwriting Association (FAJUA)?
A.) Each auto insurer must be a member of the Association
B.) Losses and expenses are equitably apportioned among the member insurers
C.) The FAJUA provides automobile liability insurance when an insurer becomes insolvent
D.) The FAJUA provides automobile liability insurance for individuals who have been unable to obtain auto insurance through normal markets
C.) The FAJUA provides automobile liability insurance when an insurer becomes insolvent
When coverage applies to a property loss by any peril except those that are specifically excluded, the policy is written on which basis?
A.) Named perils
B.) Valued policy
C.) Agreed value
D.) Open perils
D.) Open perils
A homeowners insurance agent may only share a commission or any valuable consideration with one who:
A.) Has an appointment and license to sell homeowner insurance
B.) Does not have an appointment to sell homeowner insurance
C.) Has a license to only sell life insurance
D.) Has a license to sell homeowner insurance
A.) Has an appointment and license to sell homeowner insurance
Which of the following is not true about an insurance policy?
A.) A deductible is a specified amount of loss that is retained by the insured
B.) The Insuring Agreement includes the name of the insured
C.) An insurance policy that pays before all other coverage is called primary coverage
D.) An application is a document that provides information for underwriting purposes
B.) The Insuring Agreement includes the name of the insured
Choose the limit of benefits that is incorrect.
A.) The minimum PIP limit for medical and disability benefits is $10,000
B.) Death benefits of $5,000 per individual are in addition to the medical and disability benefits provided under the PIP
C.) The minimum financial responsibility limits of liability for automobile insurance in Florida for the owner of a motor vehicle are 15/30/10
D.) Florida currently has a partial requirement stating a helmet is required for riders who carry less than $10,000 in medical coverage for motorcycle-related injuries
C.) The minimum financial responsibility limits of liability for automobile insurance in Florida for the owner of a motor vehicle are 15/30/10
Which of the following is true regarding a negligence claim?
A.) An uninjured party to an accident is presumed to be negligent
B.) Every accident resulting in bodily injury or property damage is due to a negligent act
C.) In every accident there is at lest one negligent party
D.) The claimant must demonstrate that the wrongful actions of the insured were the direct cause of the claimed injury or damages
D.) The claimant must demonstrate that the wrongful actions of the insured were the direct cause of the claimed injury or damages
Losses that cannot be calculated objectively, such as pain and suffering or mental anguish, are considered:
A.) Special damages
B.) General damages
C.) Punitive damages
D.) Physical damages
B.) General damages
For a loss to be covered under a standard property policy, the insured must do which of the following?
A.) Obtain a written appraisal of the damages
B.) Contact an independent claims adjuster
C.) Provide proof of loss within a year of the claim
D.) Protect property from further damage
D.) Protect property from further damage
Under the valued policy law:
A.) The valued policy payment applies even, if unknown to the insurer, the risk has increased
B.) An agent or insurer must acknowledge receipt of a communication regarding a claim within 10 working days If the loss is less than the total amount insured, the insurer must increase the amount of the claim payment accordingly
C.) The insurer’s liability under the policy is the amount of money for which the property was insured
D.) The insurer’s liability is the market value of the property insured
C.) The insurer’s liability under the policy is the amount of money for which the property was insured
What is the nonrenewal notice requirement after a homeowners or personal auto policy has been in effect for more than 90 days?
A.) At least 15 days’ written notice
B.) At least 45 days’ written notice
C.) At least 10 days’ written notice
D.) At least 20 days’ written notice
B.) At least 45 days’ written notice
Which is the best description of punitive damages?
A.) Punitive damages are limited to disfigurement and mental anguish
B.) Punitive damages are so limited as to be punitive toward the plaintiff
C.) Punitive damages are assessed in addition to specific damages and are typically covered by insurance policies
D.) Punitive damages are assessed as a punishment for extremely objectionable conduct by a negligent party
D.) Punitive damages are assessed as a punishment for extremely objectionable conduct by a negligent party
Which of the following is defined as the failure to act in a reasonable and prudent manner?
A.) Tort
B.) Negligence
C.) Proximate liability
D.) Legal duty
B.) Negligence
The Department may revoke, suspend, or refuse to renew a license for all the following, except:
A.) Issued insufficient coverage to a customer through apparent authority
B.) Cheated on an insurance examination
C.) Having been convicted of a felony
D.) Having failed to remit due premiums to an insurer
A.) Issued insufficient coverage to a customer through apparent authority
The maximum amount that a policy will pay for loss to any one injured party, regardless of overall policy limits, is known as the:
A.) Per occurrence limit
B.) Per person limit
C.) Aggregate limit
D.) Split limit
B.) Per person limit
Driving while under the influence of alcohol is an example of:
A.) Contributory negligence
B.) Vicarious Liability
C.) Assumption of risk
D.) Gross negligence
D.) Gross negligence
Which of the following statements correctly describes a Guaranteed Renewable health insurance policy?
A.) The insurer must renew the policy to a stated age, but may increase the premium in the underwriting class
B.) The insurer may not cancel during the policy term, but reserves the right to nonrenew the policy upon its expiration
C.) The insurer can refuse to renew the policy only under certain circumstances listed in the policy
D.) The insurer cannot cancel the policy, change the benefits, or increase the premium; and must renew the policy at the option of the insured
A.) The insurer must renew the policy to a stated age, but may increase the premium in the underwriting class
Which of the following statements about medical payments coverage is true?
A.) They apply to all expenses incurred within 5 years of the accident
B.) They apply to members of amateur athletic teams sponsored by the insured
C.) Payments are made to all persons, including the insured on the premises for any reason
D.) Payments are made regardless of fault or negligence
D.) Payments are made regardless of fault or negligence
A general lines agent can finance insurance premiums and charge service charges up to______ per installment.
A.) $1.50
B.) $4.25
C.) $3.00
D.) $5.00
C.) $3.00
Personal injury liability includes which of the following?
A.) Libel and slander
B.) Medical payments
C.) Theft
D.) Sickness and disease
A.) Libel and slander
All of the following are true of liability policies, except:
A.) They do not cover medical expenses incurred by the insured
B.) They will pay sums that the insured becomes legally liable to pay
C.) They will cover damage to the insured’s own property
D.) They are designed to cover third party injuries or damages
C.) They will cover damage to the insured’s own property
Negligence is what kind of tort?
A.) An intentional tort
B.) A criminal tort
C.) A gross tort
D.) An unintentional tort
D.) An unintentional tort
Which of the following is false regarding the Florida Insurance Guaranty Association?
A.) The Association guarantees payments for fidelity and surety bond coverage
B.) Every insurer admitted to transact property and casualty insurance in the state must be a member of the Association
C.) The Association is divided into 2 separate accounts
D.) The maximum amount the association will pay for a covered claim is $300,000 per claimant
A.) The Association guarantees payments for fidelity and surety bond coverage
Which of the following statements about medical payments is false?
A.) Medical payments cover personal injury
B.) Specific damages compensate the injured party for actual damages
C.) General damages compensate the injured party for pain and suffering
D.) Medical payments coverage is provided to discourage lawsuits
A.) Medical payments cover personal injury
General damages are those that:
A.) Can be documented by objective dollar amounts
B.) Are awarded to the negligent party to punish wrongdoing
C.) Are awarded to the general public rather than to a specific party
D.) Compensate an injured party for suffering, loss of consortium, and similar types of losses
D.) Compensate an injured party for suffering, loss of consortium, and similar types of losses
Under a Difference in Conditions policy, which of the following is correct?
A.) The minimum coinsurance requirement provided by all DIC policies is 90% coinsurance
B.) Coverage is excluded for losses caused by flood or windstorm
C.) DIC policies provide only excess amounts of insurance above the primary property policies
D.) A DIC policy carries a high deductible
D.) A DIC policy carries a high deductible
Which of the following is the best explanation of liability insurance?
A.) It provides protection in the event the insured’s negligence causes bodily injury or property damage to others and the insured becomes legally obligated to pay damages
B.) It provides coverage for bodily injury or property damage to the insured and the insured’s property
C.) It provides coverage for bodily injury or property damage arising out of the insured’s premises or operations regardless of fault or negligence
D.) It provides coverage to any party for injury that is expected to happen
A.) It provides protection in the event the insured’s negligence causes bodily injury or property damage to others and the insured becomes legally obligated to pay damages
The formal statement an insured provides to an insurer, including all the details an insurer needs to assess its liability following a loss, is known as a:
A.) Binder
B.) Proof of loss
C.) Notice of loss
D.) Certificate of insurance
Misrepresentation
Willful deception of an insurance policy done by dissemination of information
Controlled business
When the majority of insurance written is for family members
Temporary License
Good for 6 months
Foreign
An insurance company formed under the laws of another state
Domestic
And insurance company formed under the laws of Florida
Alien
And insurance company formed in another country
Appointment
When authority is given to a licensee to transact or adjust insurance
Authorized insurance company
An insurance company that is licensed to do business in Florida
Twisting
Knowingly using at incomplete comparison of insurance policies in order to get the insured to buy apology from you
Sliding
Charging an applicant for a specific ancillary coverage in addition to the cost of the auto insurance coverage applied for with out his consent
Coercion
Bank loan officer tells them that in order to qualify for the loan they must purchase insurance from the bank
FAJUA
Florida Joint Underwritting Association
Warranty
policy condition, either based on information in the insured’s application or inserted by the insurer
Misrepresentation
an untrue statement by the insured, made in an application but does not become a part of the policy
Broad Evidence Rule
a method of determing the true insurable worth of a structure or vehicle according to any measure that will prvoide the most accurate analysis of that property’s value
State
a jurisdiction other than the state of Florida (any state, district, territory, or commonwealth in the U.S.)
authorized insurer
one authorized by a subsisting certificate of authority issued by the department to transact insurance in this state
Office of Insurance Regulation
regulation, compliance, and enforcement of statutes related to the business of insurance and the monitoring of industry markets (regulatory oversight of company solvency, policy forms and rates, market conduct performance, and new company entrants in the FL market
Causes of Loss Form
specifies what perils are insured against and lists exclusions. Several different versions provide increasingly broad coverage from Basic to Broad to special. An earthquake form is also available
Split Limits
policy limits that apply one limit to each person injured, another for BI claims of all persons insured in a single accident, and a separate limit for all property damage arising out of a single accident (i.e. 15/30/10)
Severability
insurance applies separately to each insureds
Arbitration Clause
in the event the insured and the insurer cannot agree on amount of claim settlement, each appoints an appraiser
Liberalization
if insurer broadens coverage w/out additional premium w/in some period of time prior to the policy period (60 days) or during the policy period, the insured receives the benefit
Pro Rata
pay the proportion (limit: all limits) (i.e.$25,000/$100,000 =1/4)
Primary
applies 1st up to its limit
Excess
all other insurances exhausted before the policy will apply
Equal Shares
contribution based on the amount of policies regardless of their limits
Assignment
policy transfer from one insured to another
Subrogation
insured has the right to collect damages from another party but elects to claim the damages from her own insurance policy
Indemnity
a principle of insurance which provides that when a loss occurs, the insured should be restored to the approximate financial condition occupied before the loss occured, no better, no worse
Loss Payee
the person designated on an insurance policy as the one to be paid in case the property is damaged/destroyed
Damages
money amount w/ which liability insurance is concerned
Special Damages
reimbursement for out of pocket expenses
General Damages
reimbursement for damages that do not readily have quantitative measurement
Punitive Damages
due to negligence by defendent
Insurance
a contract whereby one undertakes to indemnify another or pay or allow a specified amount or a determinable benefit upon determinable contingencies
Binder
an oral/written statement providing immediate insurance protection, valid for a specified period. Designed to provide temporary coverage until a policy can be issued or denied
Contracts of Adhesion
the parties are of unequal bargaining power, and the insured cannot negotiate the terms having to take the offer of the insurer as made
Controlled Business
when the majority of insurance written is for family members
Insurer
every person engaed as indemnitor, surety, or contractor in the business of entering into contracts of insurance or of annuity
Comparative Negligence Rule
reduces a plaintiff’s damages by the plaintiff’s degree of negligence
Contributory Negligence Rule
if one contributed to their own injuries in any way, they could not recovera dime from others
Declarations
the section of an insurance contract which shows who is insured, what property or risk is covered, when and where coverage is effective and how much coverage applies
Percentage Deductible
percentage of the property value of percentage or percentage of the policy limits
Limited Customer Representative
customer representative appointed by a general lines agent/agency to assit that agent/agency in transacting only the business of private passenger motor vehicle insurance
SR-22 Filing
a form which must be filed by the insurance company stating that auto liability insurance is in effect for aparticular individiaul. Required when insurance provided to an individual who was in an accident or was convicted of a traffic offense and was unable to show financial responsibility
Inland Marine Insurance
an extension of Ocean Marine coverage to insure transporation of goods over land. Also covers a variety of portable property
Inflation Guard
a property insurance option which provides that policy limits will increase a certain percentage at regular intervals (i.e. annually)
Domestic
insurance formed under the laws of this state
Sliding
charging an applicant for a specific ancillary coverage in addition to the cost of the auto insurance coverage aplied for without his consent
Foreign
insurance formed under laws of any state, district, territory, or commonwealth of the U.S. other than this state
Twisting
knowingly using an incomplete comparison of insurance policies in order to the get the insured to buy a policy from you
Representations
statement an applicant for insurance believes to be true
Temporary License
- not to exceed 6 months
- issued for the purpose of continuing or winding up the business affairs of the agent/agency in the event the licensed agent has died or is unable to perform his/her duties b/c of military service or illness, or other physical/mental disability
Domicile
the state/country/providence under the laws of which the insurer was formed
All Risk Insurance
“open perils” insurance – protecting the insured from loss arising from any peril other than those perils specifically excluded by name
Single Limits
policy limits that apply to all BI and property damage arising from a single accident
Transacting Insurance
- solicitation or inducement
- preliminary negotiations
- effecutuation of a contract of insurance
- transaction of matters subsequent to effectuation of a contract of insurance and arising out of it
Captive Insurance Company
a company that provides risk mitigation services for its parent company
Line of Authority
a kind, line, or class of insurance an agent is authorized to transact
Uniform Application
the uniform application of the National Association of Insurance Commissioners for nonresident agent licensing, effective Jan 15, 2001, or susequent versions adopted by rule by the department
Private Passenger Autos
ordinary cars, station wagons, jeeps, utility autos (pickups, panel trucks, and delivery vans 1,5000 lbs or less, not used commercially) and utility trailers designed to be pulled by a private passenger auto
Replacement Cost Endorsement
an endorsement that can be added to an HO3 form to provide replacement cost coverage on personal property (with limitations)
Endorsement
a document which is attached to the policy and modifies or changes the original policy in some way
Certificate of Authority
- act as an insurer
- transact insurance (directly or indirectly)
- solicit insurance applications
If does so w/out certificate, commits 3rd degree felony
Loss of Use Coverage
covers the insured’s increased cost of living after loss and rental value of any portion of the dwelling which is rented out
Named Nonowner Coverage
an endorsement that can be added to the Personal Auto Policy to provide coverage for a named individual who does not own an auto while the insured is operating autos owned by others
Brokering Agent
an originating general lines agent placing business w/ a company w/ which he/she is not appointed
Self-Insurance
insurance established by or on behalf of any individual, partnership, association, corporation, trustee, governmental unit, employer, or employee organization, or any other organized group (covering more than 10 employees)
Commercially Domiciled Insurer
- foreign or alien insurer authorized to do business in this state
- during 3 fiscal years – written avg 25%+ direct premiums in this state than in state of domicile
- direct premiums are 55%+ of its total premiums written in U.S. during 3 fiscal years
Indirect Loss
economic loss which is a result of direct loss
Bureaus of Life and Health and Insurer Solvency and Property and Casualty Insurer Solvency
monitors the solvency of life and health and property and casualty insurers authorized to operate in the state of FL
- ensure financial viability of insurers
Bureau of Market Conduct
monitors the conduct of insurers as it realtes to policyholder treatment
- protect the public from unethical insurance practices
Bureaus of LIfe and Health Forms and Rates and Property and Casualty Forms and Rates
reveiwing life and health and property and casualty policies that are to be issued to FL residents
- reviews and analyzes insurance reates for certain products
Direct Loss
physical harm to property due to peril, efforts to end peril, and exposure following peril
Personal Auto Policy (PAP)
provides broad coverage for both owned and non-owned autos, used maintained or operated by the insured and family
Personal Injury Protection (PIP)
coverage provided in auto policies in FL that covers the insured’s own injuries on a 1st part basis w/out regard to fault
**required & must be carried by all owners of motor vehicles in FL
Hazard
something that increases the probability that a loss will occur
Proximate Cause
an unbroken connection between an occurence and damage that grows out of the occurence
Risk
the chance of financial loss
Appointment
the authority given by an insurer or employer to a licensee to transact insurance or adjust claims on behalf of an insurer or employer
Home State
the District of Columbia and any state or territory of the U.S. in which an insurance agent maintains his/her principle place of residence or principal place of business and is licensed to act as an insurance agent
Actual Cash Value (ACV)
the cost to replace an item or property at the time of loss, minus depreciation
Replacement Cost
the cost to replace a damaged or destroyed item of property, w/out deducting depreciation
Valued Policy Law
if total loss by a covered peril to a building structure, mobile home, or manufactured housing unit, the insurer must pay the amouynt provided in the policy for whyich the premium has been paid
Coinsurance
lower rates for insureds who insure a high percentage of the value of the subject property
Coinsurance Clause
requires insured to pay part of loss if coverage is less than the specified percentage of the value of the property at the time of loss
Loss x (Limit of Insurance/Value of Property x Coinsurance %) = Loss Settlement
Specific Insurance
each property named and covered for a separate amount
Blanket Insurance
single amount of coverage applies to ANY loss of injury up to the single amount
Aggregate Limit
a type of policy limit which limits coverage to a specified total amount for all losses occuring w/in the policy period
Franchise Deductible
no payment is made until loss equals or exceeds proscribed amount, then the loss is paid in full
Alien
insurer other than a domestic or foreign insurer
WPMLU
Workers Comp, PIP, Med Pay, Liability, Uninsured Motorists
Unauthorized Insurer
one not authorized by the department to transact insurance in this state
blanket insurance
insurance where a single amount of insurance applies to two or more coverage items
misrepresentation
any untrue statement made in application so policy will issue
mutual company
have no stockholders owned by policy owners
stock company
is incorporated and is owned by its stockholders
churning
is taking values from existing policy to buy another with same insurer without a benefit for the client
twisting
is replacing a policy with company A to B for new commissions only
sliding
telling insured additional coverage is required by the law to purchase auto or home, or additional coverage without the insured knowing
coercion
any intimidation in the business of insurance
defamation
to harm the reputation by libel or slander to an agent or insurer
unfair methods competition & unfair deceptive act
can be advertising or misrepresentations non-willful u to $5,000 willful $40,000
criminal action
must report within 30 days to the department if you plead guilty
unaffiliated agent
self-appoint and may not be working is good for 24 months
estoppel
a legal process used when a wavier has occurred
wavier
voluntary relinquishment of known rights
controlled business
written on family members or organizations (50/50)
unauthorized
has no certificate of authority issued from the OIR
fraternal
membership based on religious, ethics or charitable sells to members
reinsurance
an arrangement where the insurance company transfers part of its risk to another insurer called the reinsurer (also knowing as ceding company)
transacting insurance
solict, negotiate, contract, or transact insurance
liberalization
insurer adopts a condition which would broaden in other similar policies. then the insured receives the benefit of such coverage without additional premiums
risk
is a change of loss not a loss itself
insurance policy
written contract with all rider and endorsements
doctrine of proximate cause
an unbroken connection between the occurrence and damage that grows out of the occurrence then the results damages is still part of the occurrence
appraisal
when there is a dispute over the payment of a claim
subrogation
is transferring rights from the insured to another insurer to collect damages after a claim is paid
arbitration
is to help resolve disagreement between the insured and insurer by third party
robbery
the taking or attempted taking of property by one who has caused or threatened to cause bodily harm or committed and witnessed an obviously unlawful act
peril
the cause of loss
EXAMPLE: fire, windstorm, explosion
inflation guard
property insurance option that provides the policy limits will increase a certain percentage at regular intervals
endorsement
a documents that is attached to the policy & modifies or changes the original policy in some way
concealment
the withholding of a material fact from the insurance company