Property and Casualty Exam Louisiana Insurance Agent Test Review Questions and Answers 100% Correct All of the following situations would be covered under a professional liability policy - ANSWER-An accountant's error that inflated a bid and caused a client to lose a major account., Negligence of an architect who designed an unsafe building., Failure of a doctor to render the quality of care that is customary in the medical field, .EXCEPT The failure of an attorney to properly defend a client due to his personal dislike of the client
Under a professional liability policy - ANSWER-Intentional breach of duty would not be covered
An insured owns a large dog. The first day he has to leave the dog home alone to go to work, the insured comes back to find his $400 couch torn apart, his $100 coffee table chewed up, his $50 window curtain shredded, and a $200 window pane shattered where his dog jumped through. The insured has personal property coverage under a special form dwelling policy. How much of this loss will the policy cover? - ANSWER-$0
Damage that results from domestic animals - ANSWER-is excluded under the special form dwelling policy
What is the basic limit for costs incurred at the place a vehicle is disabled provided by the towing and labor costs endorsement? - ANSWER-$25
The towing and labor costs endorsement - ANSWER-provides a basic limit of $25 for towing and labor costs incurred at the place a vehicle is disabled. Higher limits are available for an additional premium
Which of the following is NOT consideration on the part of an insured? - ANSWER-
Promise to submit timely claims
The binding force in any contract is - ANSWER-consideration
Consideration on the part of the insured is - ANSWER-the payment of premiums and the health representations made in the application.
Consideration on the part of the insurer is - ANSWER-the promise to pay in the event of
loss A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss? - ANSWER-$30,000
For the total amount of a partial loss to be paid - ANSWER-a house must be insured for at least 80% of its value on the date of loss
The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called - ANSWER-Consent to Settle Loss
When insureds accept loss payment from the insurance company, they must - ANSWER-transfer their rights to recovery to the insurer. This prevents the insured from collecting twice for the same loss, and allows the insurer to indemnify the insurance company
Which of the following statements is NOT true regarding mobile agricultural machinery and equipment coverage? - ANSWER-This coverage must be written as part of farm coverage. Mobile agriculture machinery and equipment coverage may also be written on a separate stand-alone policy
The following statements are true regarding mobile agricultural machinery and equipment coverage - ANSWER-It relates to devices used in the everyday farm operation. It covers detached parts and accessories of mobile devices. It insures eligible
equipment for open perils.
Insurer examinations must occur no less frequently than every - ANSWER-5 years
Insurers will be examined at least - ANSWER-every 5 years or more often if based on the recommendation of the Louisiana Insurance Guaranty Association
How much is covered for debris removal under the HO property additional coverages? - ANSWER-All reasonable costs
Under a HO policy if the debris was caused by a peril that is insured against - ANSWER-the reasonable cost of debris removal is paid by the insurer
If an insured operates a home day care business out of his house, how can he ensure the liability exposure coverage? - ANSWER-Attach the home day care coverage endorsement to the HO policy
A home day care coverage endorsement may be attached to the homeowners policy to cover - ANSWER-the liability exposure associated with the a home day care business the insured operates out of his house
Subrogation rights under a personal auto policy do NOT apply to all - ANSWER-
Physical damage In a PAP Subrogation rights do not apply to physical damage coverage if - ANSWER-
the damage is caused by a person using the auto with a reasonable belief that they were entitled to do so
What is the purpose of increased value and excess liability (IVEL) clauses? - ANSWER-
to provide extra coverage for the same losses covered by an underlining policy
Increased value and excess liability (IVEL) clauses provide - ANSWER-excess coverage for the same losses covered by an underlining policy they are written to go with
An insured was involved in an automobile accident for which the insured was at fault. Which of the following coverages would pay for damage to the insured's automobile? - ANSWER-Collision
Collision - ANSWER-is defined as the upset or impact of a covered vehicle with another vehicle or object
When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written - ANSWER-Stated Amount
In stated amount coverage - ANSWER-the value of the insured property is determined at the time the policy is written. In the event of a loss, that amount is paid without regard
to any coinsurance provision. However, if the loss is less than total, the insurer has salvage rights with the insured having first right of refusal of the salvage.)
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act? - ANSWER-Fraud
According to Title 18, Sections 1033 & 1034 of the US Code, any oral or written statements by any person engaged in the business of insurance that are false or any omissions of material fact are considered - ANSWER-unlawful insurance fraud. This includes statements made on an application for insurance, renewal of a policy, claims for payment or benefits, premiums paid, and financial condition of an insurer
According to the Motor Carrier Act of 1980 - ANSWER-the minimum requirements are $750,000 for the transportation of non-hazardous property; $1 million for the transportation of oil, and certain categories of hazardous waste or material; and $5 million for the transportation of other specifically defined hazardous waste and materials, explosives, gas, or radioactive material The personal injury liability endorsement to an HO policy applies to all the following - ANSWER-Invasion of privacy, False arrest, Slander
If a third party breaks a leg when the insured knocks him down, the broken leg is - ANSWER-covered by personal liability coverage, NOT a personal injury liability endorsement to an HO
If the Louisiana Citizens Property Insurance Corporation denies an application, the applicant may appeal to the - ANSWER-Louisiana Insurance Rating Commission.
Even though an insured maintains a valid driver's license and has paid the premium when due, an insurer may modify the deductible of an auto policy after - ANSWER-
payment of a third physical damage claim in 5 years
After payment of the third physical damage claim in 5 years - ANSWER-an insurer may modify the deductible on physical damage coverage in an auto policy
Liability imposed on one party as a result of the actions of another person (i.e., parent/child, employer/employee) is known as - ANSWER-Vicarious Liability
When the child makes the parent liable; the contractor makes the principal liable; the employee makes the employer liable it is termed - ANSWER-Vicarious Liability
When the condominium association coverage form and the condominium commercial unit-owners form both cover the same loss, - ANSWER-The association coverage form will be considered primary and pay the loss. The association form is always considered primary and will pay the entire loss
Which of the following property coverages would provide protection to contents damaged by fire? - ANSWER-Coverage C - Personal Property provides coverage for the contents of an insured dwelling
All of the following are additional liability coverages automatically provided in a homeowners policy - ANSWER-Claims expenses, Damage to the property of others, Loss assessment coverage
In a homeowners policy - ANSWER-Personal injury protection may be added by endorsement
All of the following are optional coverages that may be attached to an HO-3 policy - ANSWER-Home day care coverage, Earthquake coverage, Personal property replacement cost
The HO-3 provides - ANSWER-replacement cost coverage for losses to the dwelling without endorsement or optional coverage being added
