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New York State General Adjuster 17-70 Exam Graded A+
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New York State General Adjuster 17-70 Exam Graded A+
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New York State General Adjuster 17-70Exam Graded A+
"Sinkhole collapse" is a peril covered under which of the following Commercial property
Cause of Loss forms? - ANS-The Basic, Broad and Special forms.
Even the Basic Form provides this coverage.
"W" is covered under an employer-sponsored disability income plan. The premium is
$100 a month, and "W" pays $20 and the employer pays $80. Assuming "W" becomes
disabled and receives monthly disability income benefits of $1200 from this plan, how
much, if any, of the monthly income would be income tax free?
1 $1200.
2 All of the monthly benefit is income taxable.
3 $960.
4 $240. - ANS-4 $240.
"W" is paying 20% of the premium, and therefore 20% of the monthly benefit, $240, is
income tax free.
4 Elements of a legal Contract - ANS-1) Competent parties- Insurer and insured must
have legal capacity to enter into a contract. Those without legal capacity include: A.
Minors *Exceptions do exist such as for the purchase of auto insurance. B. The mentally
incompetent or incapacitated. C. Persons under the influence of drugs or alcohol.
2) Legal Purpose- All parties must enter in good faith and all parties to a contract must
enter it for a legal purpose; public policy cannot be violated by a legal contract.
3) Agreement- One party must make and communicate an offer to the party and the
second party must accept that offer. A. offer- the offer for entering an insurance contract
is the application submitted by the applicant. B. Acceptance- The acceptance of an
insurance contract takes place when the insurance company agrees to issue insurance.
A counteroffer by the insurance company is not acceptance until the applicant accepts
the counteroffer.
4) Consideration- something of value is exchanged the exchange of an act for a
promise. (Ex: The consideration made by the applicant is the premium and the
consideration made from the insurer is its promise to pay for covered losses.)
A 36 foot ocean sailing vessel with auxiliary power would best be covered under what
type of policy? - ANS-Yacht Policy
Since the watercraft is used for ocean travel, the yacht policy would be the best choice.
A bailment is: - ANS-A temporary entrustment of the property to another
,A baliee customers policy - ANS-Covers damage to customers property when the
insured is liable
A blanket employee dishonesty bond will: - ANS-Does not name the individuals.
A boat damaged out of the water and at a lake would be covered under the
Homeowners Policy for: - ANS-The policy limits physical damage to only $1,500. Also,
theft that occurs off the insured's premises is not covered. Watercraft is covered for the
perils of wind and hail only while in a fully enclosed building.
A boatowners policy would pay for which of the following losses?
I. A boat's motor is stolen before the insured reports its acquisition to the insurance
company.
II. A boat that sank in 40 feet of water is re floated at a cost of $700 - ANS-II. A boat that
sank in 40 feet of water is re floated at a cost of $700
A brand new house costing $500,000 to build would need to be covered for what
minimum limit according to the "insurance to value" clause, in order for the insured to
receive full replacement cost coverage in the event of a $50,000 fire loss? - ANS-
$400,000
The "insurance to value" clause requires a home to be covered with a limit of at least
80% of the home's full replacement value.
A building insured under a Commercial Property policy suffers a fire and it is obvious
that the building is underinsured. The policyholder demands payment for the entire loss
on a replacement cost basis. The insurance company can: - ANS-Pay only the actual
cash value of the lost or damaged property or apply the coinsurance clause
The insurer can pay the actual cash value of the loss or apply the coinsurance clause
because the insured is underinsured.
A building valued at $500,000 is insured at $300,000 on a policy containing an 80%
coinsurance clause. How much would be paid on a covered $200,000 loss? - ANS-The
answer is $150,000. Per the coinsurance clause, the required amount of insurance is
80% of $500,000, which equals $400,000. However, the insured's limit of $300,000 is
only ¾ of the insurance required. That same fraction, ¾, is applied to the loss amount.
¾ of $200,000 is $150,000. Thus there is a "coinsurance penalty" of ¼ of the loss, or
$50,000.
A building with an actual cash value of $240,000 is insured for $200,000. The policy has
an 80% coinsurance requirement. If there are no deductibles, how much would be paid
for a $60,000 loss? - ANS-$60,000
,The insured needs to be covered for at least 80% x $240,000 or $192,000 to avoid a
penalty in case of a partial loss. In this case, the insured carries more than is required,
and therefore, all the loss is covered.
A business adjacent to an insured's business is damaged by fire. Because of the
damage to the adjoining property, the insured is denied access to his business by the
fire department. The insured's Commercial Property policy contains a Business Income
coverage form, the insurance company will cover the loss of business income - ANS-
For a maximum of four weeks.
Coverage is limited to only four weeks, after a waiting period of 72 hours. In some
cases, the insurer will extend this provision for an additional premium.
A business owner who is careless about property left in his care may be guilty of which
of the following hazards: - ANS-Morale
A car's cowl - ANS-is the front part of the automobile's frame that supports the rear of
the hood, windshield, dashboard, pedals and instrument panel. The cowl separates the
passenger compartment from the engine
A chemical company accidentally released toxic fumes into the air. The fumes reached
two other businesses which eventually had to be evacuated for two business days while
the air cleared. The evacuation caused loss of income to the businesses due to their
inability to open their doors for business. This situation is an example of:
1 The insured's work.
2 Completed operations.
3 Property damage.
4 An intentional tort. - ANS-3 Property damage.
This is an example of a property damage loss which includes "loss of use". For this type
of claim to be covered under a CGL policy the insured may have to add the pollution
liability endorsement to the policy.
A commercial property policy specifies which of the following responsibilities as a duty
of the insured? - ANS-To provide a proof of loss statement following a loss if requested
by the company.
If the insured reports a covered loss, the insurer may request the insured to complete a
proof of loss statement. If this request is made, the insured must complete the proof of
loss relatively quickly. Some policies give the insured only 60 days to complete the
proof of loss after the insurer makes its request.
A commercial umbrella policy would, in most cases, provide which of the following
coverages?
1 Excess coverage over an insured auto liability claim
2 Primary coverage for liability claims
, 3 Underlying coverage for liability claims
4 Primary liability coverage for auto claims - ANS-1 Excess coverage over an insured
auto liability claim
The main purpose of the commercial umbrella policy is to provide excess coverage over
the primary or underlying liability coverages. In the rare event that an umbrella policy
covered a claim that the underlying policies did not, the umbrella would provide its limits
over $0 of primary coverage (and may impose a self-insured retention, sometimes
called a deductible, on the insured).
A common element that links inland marine and ocean marine risks is: - ANS-
Transportation.
Ships transport the cargo over water. When unloaded, the transportation of the cargo
continues inland. Hence the link of transportation.
A communication sent to an insured stating that the insurer will NOT give up a right is
called: - ANS-Reservation of Rights Letter
The key word in the question is a communication sent to the insured. A Non-Waiver is
agreed to by the insured and usually signed by the insured.
A company adjuster primarily represents the interests of: - ANS-The insurer.
A company adjuster is an adjuster representing the interests of the insurer.
A constructive total loss. - ANS-a building is not a total loss but the cost to repair the
building is greater than the value of the building
This is an example of a constructive total loss. The loss is too great to rebuild the
structure.
A contract between a public adjuster and an insured must be:
1 Must be in written form.
2 May be either written or oral.
3 Are noncancellable.
4 Must be made orally. - ANS-4 Must be in written form
All contracts between the public adjuster and the insured must be in writing.
A coverage issue - ANS-Non waiver agreements and reservation of rights letters both
serve the following general purposes: 1.To advise the insured that any action taken by
the insurance company in investigating the cause of loss or in ascertaining the amount
of loss is not intended to waive or invalidate any policy condition. 2.To clarify that the
intent of the agreement is to permit an investigation of the claim and that neither the
insured nor the insurer will thereby waive any respective rights or obligations.
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