Jerry built a home in a flood plain. He did not purchase flood insurance. Recently, a
noted meteorologist predicted torrential rains for the area for the next 7 days. Jerry
attempted to purchase flood insurance through the National Flood Insurance Program.
Which flood insurance provision is likely to block Jerry’s efforts to obtain coverage for
protection against the predicted torrential rain?
A) waiting period
B) definition of covered flood
C) deductible
D) insurance limit
Duties of an insured after a collision loss covered under the PAP include which of the
following?
I. Take reasonable steps to protect the vehicle from further damage.
II. Admit fault if the insured believes he or she caused the collision.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which statement is true about medical expense coverage under the boatowners package
policy?
A) It pays the medical expenses of a covered person who is injured while in the boat.
B) It pays the medical expenses of another boat operator who is injured as a result of
negligent operation of the boat by the insured.
C) It pays the medical expenses of a swimmer or a water skier being towed by another
boat if he or she is hit by the insured’s boat.
D) It pays the medical expenses of someone on a dock or pier if the insured’s boat hits
the dock or pier and injures someone.
In reviewing his company’s operations, a risk manager noticed that all of the company’s
finished goods were stored in a single warehouse. The risk manager recommended that
the finished goods be divided among three warehouses to prevent all of the finished
goods from being destroyed by the same peril. Dividing the finished goods among three
warehouses illustrates
A) risk avoidance.
B) risk control.
C) insurance.
D) noninsurance transfer.
Ken purchased a PAP with liability limits of 100/300/50, medical payments coverage,
and collision coverage. Ken fell asleep while driving late at night. He crossed the center
line and hit a car approaching from the other direction. The following losses occurred.
– The driver of the other car suffered $30,000 in bodily injuries.
– Ken’s car sustained $5,000 in damages.
– Ken incurred $5,000 in medical expenses.
– The car that Ken hit was a total loss.
Which of Ken’s Personal Auto Policy (PAP) coverages will cover the damage to the car
that Ken hit?
A) bodily injury liability
B) collision coverage
C) medical payments coverage
D) property damage liability
All of the following are disadvantages of noninsurance transfers EXCEPT
A) The party to whom the potential loss is transferred may be unable to pay.
B) The transfer may fail because the contract language is ambiguous.
C) The only potential losses that can be transferred are those that are not commercially
insurable.
D) The noninsurance transfer may be costly.
One benefit payable under a typical no-fault plan is “essential services expenses.”
Which of the following would be covered under this benefit?
A) funeral expenses
B) housekeeping expenses
C) hospital bills
D) loss of income
Which of the following statements about the protection provided by the Pension Benefit
Guaranty Corporation is (are) true?
I. Only defined benefit plans are insured.
II. Only benefits that are not yet vested are guaranteed.
A) I only
B) II only
C) both I and II
D) neither I nor II
Beth’s disability income insurance policy provides benefits for accidental death,
dismemberment, and loss of sight. The maximum amount payable under this benefit is
known as the
A) face value.
B) cash value.
C) principal sum.
D) monthly benefit.
Insurers offering variable annuities charge a number of expenses. One category of
expenses is to pay the fund manager and to pay brokerage fees. This expense is the
A) investment management charge.
B) administrative charge.
C) surrender charge.
D) front-end load.
Which of the following statements about endorsements to the homeowners policy is
(are) true?
I. The purpose of the inflation guard endorsement is to help prevent home owners from
being under-insured.
II. The purpose of the watercraft endorsement is to provide coverage for watercraft
when they are used outside the United States.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements concerning the scheduled personal property
endorsement with agreed value loss settlement is (are) true?
I. The endorsement provides open-perils (“all-risks”) coverage on the scheduled
property.
II. Losses under the endorsement are settled on an actual cash value basis.
A) I only
B) II only
C) both I and II
D) neither I nor II
The corporate structure of mutual insurers is changing rapidly. All of the following are
current trends EXCEPT
A) demutualization of some insurers.
B) sharp increase in the number of mutual insurance companies.
C) increase in company mergers.
D) formation of mutual holding companies.
Which of the following statements about unemployment insurance benefits is true?
A) Benefits are a flat amount regardless of a worker’s previous wages.
B) Because of federal legislation, the maximum benefit is the same in all states.
C) Most states pay regular benefits for a maximum duration of 26 weeks.
D) Under the extended benefits program, the federal government continues benefit
payments for up to 3 years for workers who have exhausted their regular benefits.
All of the following are considered to be instrumentalities of transportation and
communication for purposes of inland marine insurance EXCEPT
A) trains.
B) tunnels.
C) transmission lines.
D) television towers.
Graham is a cashier at a convenience store. A customer pulled a gun on him, and said
that he would shoot Graham unless he gave him all the money in the cash register. This
crime, which is covered under the ISO commercial crime coverage form, is called
A) extortion.
B) murder.
C) robbery.
D) burglary.