Property and Casualty-NJ

1. A contract in which only one party - the insurer - makes an enforceable promise is said to be
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Terms in this set (161)
1. A contract in which only one party - the insurer - makes an enforceable promise is said to be
A- Quotation

B- Unilateral

C- A contract of Indemnity

D- A contract of Adhesion

B- Unilateral

An insurance policy is considered to be unilateral, since only one party to the contract, the insurance company, makes an enforceable promise.
2. An insurer whose main home office is domiciled in the state where they write business is known as a
A- Alien Insurer

B- Foreign Insurer

C- Surplus Lines Insurer

D- Domestic Insurer

D- Domestic Insurer

A Domestic insurer is one whose main home office is located in the state they are doing business. A Surplus Lines insurer could be a domestic carrier but the best answer choice is D.
3. All of the following are true regarding the Assigned Risk Plan for Workers Compensation in New Jersey, Except
A. It's a method for employers to obtain Workers Compensation insurance when they are having difficulty in the normal marketplace

B. If an employer is unable to obtain coverage in the normal marketplace, the state will assign an insurer to write the risk

C. The plan approves the rate structures used by all insurers writing workers compensation coverage in the state.

D. All admitted carriers writing workers compensation insurance in the state must belong to the plan

C- The Assigned Risk Plan is NOT involved in approving rating plans of the various insurers in the state. The other choices are all correct
4. Which of the following is true regarding coverage for a domestic employee for workers compensation in New Jersey?
A. The assigned risk plan for workers compensation in new jersey would provide the coverage automatically

B. Domestic employees are exempt from coverage

C. Coverage must be provided by the homeowners policy if the injured is to a resident or hired domestic servant in the home

D. The employer must buy workers compensation insurance on the domestic employee

C- If a domestic servant is injured while working in the home, the homeowners insurance for the employer must provide the workers compensation coverage for the domestic employee
5. Vacancy on the BOP can eliminate certain perils
A. After 60 Days

If the premises have been vacant for over 60 days, many important perils (such as glass breakage, vandalism, and theft) will be excluded.
6. An insurer's shared participation percentage in the Urban Enterprise Zone (UEZ)program is based on:
A. The number of written policies in the urban enterprise zone.

B. The discretion of the commissioner of insurance

C. The number of years operating in the state

D. the financial size of the insurer.

A- The insurer's participation percentage in the UEZ program is based on the number of policies the insurer has in force in that urban enterprise zone.
7. The minimum limits of a basic automobile liability insurance required by the state of New Jersey is:
A. 20/40/10

B. 25/50/25

C. 12.5/ 25/ 7.5

D. $15,000 of PIP and $5,000 of PDL

D- By state law, the basic auto policy must contain PIP coverage and an optional $5,000 for property damage liability.
8. The Commissioner may suspend, revoke, refuse to renew, or refuse to issue a license. Prior to the revocation or denial of a license, the Commissioner must provide to the licensee or applicant
A. An opportunity for the individual to have a hearing

B. Neither of the answers

C. Both of the answers

D. The findings which led to the commissioner's decision.

C- Before the Commissioner can take any action against an agent, the agent has the right to a hearing regarding the Commissioner's findings.
9. An agent must notify the Department of Insurance of any administrative actions levied against her within
A. 30 days of the final
disposition of the matter

B.60 days.

C.10 days of being charged.

D.24 hours.

A- An agent must notify the Department of Insurance of any administrative actions taken against her within 30 days of the disposition of the action.
10. Which of the following is an optional coverage on the standard auto policy but not available on the basic auto policy?
A. Personal injury protection

B. Roadside assistance

C. Auto physical damage coverage

D. Uninsured and underinsured motorists

D- Uninsured and underinsured motorist coverage is available as an option on the standard auto policy but not available on the basic. The other three choices are all available on the basic auto policy.
11. Making, circulating or distributing information about benefits which can confuse or mislead a potential customer is an example of:A. Defamation B. False Advertising C. Misrepresentation D. Illegal Inducement B- Advertising must be truthful in all aspects. Illegal inducement is another word for rebating. Defamation is make false statements meant to injure someone in the insurance business12. Policies are written for that person such as a home policy and do not transfer upon the sale of that exposure are what type of contractA. Aleatory Contract B. Unilateral Contract C. Conditional Contract D. Personal Contract D- Personal Contract A policy is personal. In other words, with a sale of a car or house the policy does not automatically transfer to the new owner.13. An unauthorized company writing business in the state that is not subject to state approved policy forms, rates, or rules is known as aA. Stock insurer. B. Surplus Lines insurer. C. Reciprocal insurer. D. Mutual insurer. B- Surplus Lines Insurer Surplus Lines companies can charge whatever they want and their policies can say whatever they want. They are NOT authorized to do business in the state and therefore not subject to state approved policy forms, rules and rates.14. Making any misrepresentation or incomplete comparison of policies to any person for the purpose of inducing that person to lapse a current policy best describesA. coercion. B. false advertising. C. rebating. D. misrepresentation. D- State law defines Unfair insurance trade practices as inducement to lapse a policy based upon misrepresentation of the terms of that contract.15. In liability insurance, paying defense costs and expenses in a suit brought against the insured is a contractual obligation known as theA. Doctrine of Estoppel. B. Doctrine of Adhesion. C. Duty to Defend. D. Indemnification principle. C- Duty to defend The insurer's contractual obligation and duty to defend the insured in a liability lawsuit and pay all of the costs of the defense regardless of the outcome of the lawsuit is the core of liability protection. Without that, an insured could go bankrupt paying defense costs even if found not to be negligent in the lawsuit.16. What is NOT a requirement of the Fair Credit Reporting Act?A. Contact information of the suppliers of information must be made available to the consumer. B. The consumer can decide if the report will be used for underwriting purposes. C. Permission is needed prior to running the reports. D. Insurance companies using information contained on reports must inform the consumer by written statement of its intended use. B- The consumer does not have the right to decide if the information on the report will be used or not in the underwriting process. That is up to the insurer.17. What statement concerning the Dwelling Property Special Form (DP-3) is NOT true?A. The insured may apply 10% of the "Coverage A" amount for farm property. B. An extension of 10% of the contents limit is provided while property is off the premises. C. The insured may apply 10% of the "Coverage A" amount for a detached garage. D. The insured may apply 20% of the "Coverage A" amount for rental income. A- Up to 10% of the dwelling amount may be applied to a detached garage and 20% toward rental value. Contents off the premises are covered up to 10% of the contents limit. There is no coverage under the dwelling policy for farms; that is better covered with other forms.18. Which of the following is NOT required to be licensed in the State of New Jersey?A. A person helping enroll a group benefit program. B. A CSR binding coverage for a client C. A person transacting the business of insurance D. A person selling auto insurance A- Someone performing clerical duties in helping enroll a group benefit program is not required to be licensed in New Jersey. The other three are all performing insurance transactions and must be licensed.19. The most common co-insurance percentage amount that appears in a property contract isA. 80% B. 60% C. 90% D. 75% A- 80% Co-insurance requirements are usually offered as 70, 80, 90, or 100 percentage amounts, with 80% being the most commonly chosen.20. What insurance policy clause best illustrates the principle of indemnity?A. Inspection and Audit B. Other Insurance C. Liberalization D. Cancellation B- Other Insurance Under the "Other Insurance Clause," if more than one carrier is involved in insuring the property, each carrier is responsible for its share of claims equal to its share of the total insurance. This way, the customer cannot collect the total claim amount from more than one carrier. After each carrier has paid its share of the loss, the insured has been indemnified for the actual loss only.21. A driver swerves to avoid a pedestrian and strikes a parked auto. The proximate cause of this loss would involve theA. driver's auto. B. parked auto. C. none of the choices presented D. pedestrian. D- Pedestrian A proximate cause is an "unbroken chain of events." The pedestrian caused you to swerve, which in turn caused you to hit the parked car.22. Bailee rights in property insurance is defined asA.a fee paid to anyone providing temporary service to the insured such as parking attendants, appliance repair, etc. B.long term warehouse storing property. C.someone holding insured property until claim is settled. D.storage of insured property for 60 days. A. A fee paid The party having temporary possession of the property to perform a service is the Bailee. The owner of the property is the Bailor.23. Which of the following would be covered under an HO-4?A.Excess jewelry B.The insured's contents and personal liability C.A detached garage D.The dwelling B- Contents and personal liability The HO-4 tenants form, is designed for people that live in a rented residence. There is no coverage for any structures and excess jewelry should be covered on a personal articles floater.24. A false statement meant to injure a person in the business of insurance is the unfair trade practice ofA. misrepresentation. B. slander. C. twisting. D. defamation. D- False statements regarding the financial condition of an insurer or made with the intent to harm someone in the business of insurance is known as defamation.25. A statement guaranteed to be true is known as aA. warranty. B. misrepresentation. C. representation. D. reliable phrase. A- Warranty A warranty is an absolute, guaranteed truth. It is NOT simply the truth to the best of one's knowledge.26. How often must Telemarketing, Inc. check its calling list against the National Do-Not-Call list?A. once each calendar year B. once every 30 days C. first of every month D. every time they use it B- Anyone making unsolicited cold calls must compare their calling list to the Do-Not-Call list every 30 days and remove any numbers from the list that have been added to the Do-Not-Call list since the last time they checked.27. If the Commissioner of Insurance terminates an agent's license for any reason,A.an agent may appeal the ruling to the state supreme court. B. none of the answers C. all insurers appointing the agent will be notified and all appointments with said insurers are also canceled. D. the agent may request an appeal of the ruling. C- Obviously, if the agent's license is revoked by the Department of Insurance, all insurer appointments held by the agent are also canceled.28. Interstate trucking operations are required to carry minimum liability limits based on what is being transported. Which of the following is required to prove the required limits are in force?A. SR-22 B. BAP-90 endorsement C. MCS-90 endorsement D. Motor Carrier policy C- The MCS 90 endorsement to the Motor Carrier/Truckers form will provide proof to the state and federal highway department that the required minimum liability limits are in force based on what is being transported.29. A surplus lines carrier is normallyA. a qualified domestic insurance company. B. an agent of a foreign insurance company licensed in this state. C. an agent of a qualified domestic insurance company. D. free from state regulation in the area of rates and policy forms. D- Free from state regulation A surplus lines company is usually not authorized to do business in the state, so it is not under state regulation when it comes to rates and policy forms.30. Contents are covered anywhere in the world unless they are regularly or permanently located in another residence. If so, what is the limit of coverage on those items regularly off the premises?A. 25% of the Coverage C limit B. 10% of the Coverage C limit C. 75% of the Coverage C limit D. 50% of the Coverage C limit B- Although the homeowners form extends coverage to contents anywhere in the world, there is a 10% limit of Coverage C on anything regularly or permanently off the premises or $1,000 whichever is greater.31. Larry just bought his first home - a cheap fixer-upper in a town where the average snowfall exceeds 80 inches per year. It may be an old house in a rundown neighborhood, but he still wants to protect his initial investment. What is the cheapest policy option that would protect Larry's financial interest in his home, even in the winters?A.HO-4 B.HO-2 C.HO-5 D.HO-3 B- HO-2 The question is asking which policy form would be the cheapest. The HO-2 is a named peril broad form policy which would be cheaper than the all risk HO-3 or HO-5. The HO-4 would not provide any coverage for the building.32. St. Mark's church is having their annual pancake breakfast. The pastor is concerned if someone is injured while donating their time to serve guests. Which of the following, if any, will be necessary for the Workers Compensation coverage for the church to apply?A. Make sure the Volunteer Coverage endorsement is added to the Workers Compensation policy. B.Make sure these volunteers do not work more than 6 hours. C. Hire these volunteer people for the day as employees. D. Make sure these volunteers sign a waiver a liability before the event begins. A- Although the attorney for the church would like to see the waiver signed by all volunteers, the Voluntary Coverage endorsement would cover these people if hurt while serving the breakfast33. A robbery is best defined asA. a mysterious disappearance of property. B. visible signs of a forced entry or exit. C. stealing. D. taking of property by threat of bodily harm. D- Taking Property by threat or bodily harm. Robbery is taking property by threatening someone with bodily harm.34. Loss Prevention service is a feature on Equipment Breakdown Coverage which includes all of the following EXCEPTA.direct notice of cancellation. B.no advance notice/inspection. C.red tagging. D.suspension of coverage. A- Equipment Breakdown Coverage is an older type of coverage, but has been expanded to cover various mechanical devices. A direct notice of cancellation is not a loss prevention service.35. Toni's policy states that it will provide a $100,000 liability limit perA. aggregate limit. B. occurrence limit. C. combined D. single limit. per person limit. C- Combined Single Limit Liability can be stated as bodily injury coverage or property damage coverage. When the policy states one dollar amount for both of these situations, it is known as a Combined SINGLE limit. There is one amount for both bodily injury and/or property damage claims combined per event.36. The "conditions" section of an insurance contract sets forth theA. coverage provided by the contract. B. rules of conduct for the insured and insurance company. C. limits of liability under the contract. D. exclusions of coverage under the contract. B- rules of Insured and insurance company Think of the letter C: Conditions--Conduct.37. Property that is no longer present, but NOT destroyed by a peril or stolen, is a type of loss referred to as aA. burglary. B. robbery. C. mysterious disappearance. D. none of the choices presented C- Mysterious Disappearance If a piece of property has not been damaged or destroyed by a peril and it has not been stolen, then it has "mysteriously disappeared" and the loss may not be covered by the policy, unless specifically scheduled on a policy.38. In New Jersey, If death results from an occupational injury or disease, up to _________ will be paid for burial or funeral expenses.A.3,500 B.2,000 C.5,500 D.4,000 A- In New Jersey, If death results from an occupational injury or disease, up to _________ will be paid for burial or funeral expenses.39. What best describes a broker?A. person who represents the insurance company B. person who represents the client C. person who represents the agent D. captive agent B- Person who represents the client40. A person giving a $10 gift card to people attending a seminar explaining insurance is:A. Twisting B. Rebating C. Acceptable D. Illegal Inducement C- Illegal inducement is another word for rebating which is giving something of value as an enticement to buy insurance. The people attending the seminar do not have to buy insurance to get the gift.41. The Foreign Coverage Endorsement to Workers Compensation will cover US citizens working outside the country for ___days.A.365 B.60 C.90 D.180 C- The endorsement provides temporary coverage for no longer than 90 days.42. Someone breaks down the door to a store and steals merchandise. This loss is related to the peril ofA.embezzlement. B.barratry. C.burglary. D.robbery. C- Burglary is the taking of property through visibly forced entry or exit.43. What is NOT true about insurable risks?A. The loss must not be catastrophic B. The loss must not be definite and definable C. The loss must be large enough to create economic hardship D. The law of large numbers should apply B- The loss must not be definite and definable Just the opposite is true. In order to be insurable, losses must be definite and definable.44. Insurers must be able to predict with reasonable accuracy the number and the amounts of losses they can expect. This is the principle ofA. Indemnity. B. Adhesion. C. Utmost Good Faith. D. Law of Large Numbers. D- The law of large numbers Insurers need to collect from a large number of people to pay for the claims of a few people. The larger the number of risks insured the more accurate the claim predications become. This is the basis of the Law of Large Numbers.45. The Commissioner of Insurance does NOT have the authority toA.request the attorney general to commence an action for a declaratory judgment in a case in which there is no administrative procedure available to the Commissioner to resolve an issue. B.administer oaths, summon and compel by order, or subpoena the attendance of a witness to testify. C.terminate an agent's license for failure to meet the company's minimum production requirements. D.initiate criminal proceedings by presenting evidence of any criminal offense. C- B, C, and D are all regulatory powers of the Commissioner of Insurance. It is up to each insurer to regulate the production of its agency staff.46. What statement is true concerning the homeowners policy coverage for your 200- horsepower motorboat?A. There is $1,500 property coverage and no liability coverage. B.There is no property coverage and limited liability coverage. C.There is full property and liability coverage. D.There is no property or liability coverage. A- The homeowners policy will pay up to $1,500 for physical damage to any watercraft, but liability caused by the boat is excluded if it is an outboard motorboat with more than 25 horsepower or an inboard motorboat over 50 horsepower.47. A statement that can be relied on all of the time is called a(n)A. warranty. B. representation. C. implied response. D. all of the choices presented A- Warranty A warranty is an absolute, literal fact that can be relied on all of the time.48. Leroy became a licensed property and casualty agent on August 22, 2013. Assuming his birthday is in August, when must he have his 24 hours of continuing education completed?A.8/31/15 B.12/31/11 C.7/31/11 D.12/31/12 A- Each agent has two years to complete the required 24 hours of continuing education hours. After the initial qualifying period, you must re-qualify every two years by the last day of your birth month.49. Under a personal auto policy, what type of physical damage loss is NOT covered?A.collision with an animal B.loss to stereo equipment that is not permanently installed C.glass breakage caused by vandals D.transportation expenses following theft of the entire auto B- The auto policy will pay only for equipment permanently mounted in the car (and sometimes even that can be denied), but something that is not permanently attached is not covered by the auto policy.50. Which of the following would not be grounds for disciplinary actions by the Commissioner of InsuranceA. Failing to meet the insurer's quarterly objectives B. Cheating on a licensing exam C. Failing to timely submit an application for insurance D. Conviction of a misdemeanor involving theft of money or property A- Failing to meet the company sales goals might end the agent's relationship with the carrier but it would not be a reason for disciplinary actions by the state.51. The automatic increase in insurance endorsement to the dwelling programA. is automatically included for an additional premium. B.is available only for the DP-3. C.is sometimes referred to as an "inflation guard" endorsement. D. increases contents values throughout the year. The inflation guard endorsement will automatically increase the coverage on the building and other structures to keep up with the rising costs of building materials and labor in the area. It is an endorsement and not free of charge.52. Who makes the offer in an insurance contract?A. agent B. insurance company C. applicant D. home office underwriter C- Applicant The applicant submits a request for insurance, thus the offer. The home office underwriter either accepts the application as applied for or issues a counteroffer, which is either accepted or rejected by the applicant.53. Automobile limits of liability expressed as 25/50/10 meanA.$25,000 bodily injury, $50,000 property damage, and $10,000 medical payments per accident B.$25,000 property damage per accident, $50,000 bodily injury per accident, and $10,000 bodily injury per person C.$25,000 per person bodily injury, $50,000 per occurrence bodily injury, and $10,000 property damage each accident D.$25,000 bodily injury per accident, $50,000 property damage per accident, and $10,000 property damage per person C- The first number is the most any one person can receive; the second number is the maximum the policy will pay out for all of the injuries in an accident; the final number is the maximum the policy will pay out for all property damaged in an accident.54. An insurance producer must keep at the insurance producer's principal place of business the records that pertain to transactions under the insurance producer's license for how long?A. Two years B. Three years C. Five years D. Four years C- Insurance producer records must be kept at the principal place of business for at least five years.55. Making or permitting any inequalities between individuals of the same class with regard to premium rates charged best describesA.false information in advertising. B.unfair discrimination. C.misrepresentation. D.defamation. B- Unfair discrimination includes discrimination based upon race, creed, color, country of origin, etc. It is illegal to charge different insurance rates to people based in part upon these factors.56. Company ABC and Company XYZ write equal amounts of property insurance on identical policy forms for the same building. If a partial loss occurs, how much of a loss is XYZ liable for?A.75% B.50% C.100% D.25% B- 50% This follows the "other insurance" clause. Since each company is covering the property for 50% of the total insurance in force, each company will pay 50% of the incurred claims.57. Who is responsible for the expenses of an insurer audit by the state Department of Insurance?A. the State Auditor's Office B. the insurer being audited C. the State General Fund Account D. the state of Ohio Department of Insurance B- It is the insurer's responsibility to be financially solvent. Therefore, the expenses incurred in an insurance department audit are borne by the insurer.58. Which of the following would NOT be considered an unfair claims settlement practice?A.knowingly misrepresenting pertinent facts or policy provisions relating to the coverage at issue to claimants B. compelling insureds to institute suits to recover amounts due by offering substantially less than the amounts ultimately recovered in suits brought by the insurer C.failing to make payment within 30 days of receipt of all required documentation D.failing to pay an unsubstantiated claim D- The insurer must make every effort to settle the claim in a fair and prompt manner. Not paying a claim that is not documented or substantiated is not unfair59. After a covered loss, the insurer may do all of the following, EXCEPTA.make an Actual Cash Value settlement. B.replace the damage property with new. C.repair with like kind and quality. D.pay the difference between the cost new and the actual cash value. D- Pay difference between cost new and actual cash value The insurer should make the insured whole again. Answers A and D would make the insured whole again. Answer B would actually make the insured better if the company uses that method. The company cannot offer the difference between the replacement cost and the cash value.60. Which of the following is NOT considered a consequential loss?A.loss of rents B.loss of business income while a building is closed for repairs C.extra expense involved in repairing damaged property D.damage to personal property D- Damage to Personal Property There must be a direct loss for a second loss or consequential loss to be involved.61. What entity may be licensed by the state to solicit or negotiate insurance contracts?A. individual B. All of the answers C. partnership D. corporation B- According to state law, an individual, corporation, or partnership can all be licensed with insurance companies as a business entity62. The Fair Credit Reporting Act provides thatA.credit life insurance must be issued on a standard basis. B.the applicant for insurance must be aware that a consumer report may be requested with regard to his or her application for insurance. C.the face amount of a life insurance policy must be paid to the primary beneficiary in the event the insured dies. D.insurable interest must exist at the time of application. B- The first requirement of the federal Fair Credit Reporting Act is that the consumer be given notice that a consumer report (credit bureau report) may be ordered and used by the insurance company in making its decision. The Act also outlines what actions a consumer may take if denied a policy due to the consumer report.63. If a violation has caused or is about to cause substantial and material harm, the Commissioner may:A. Immediately fine the individual up to $25,000 B. Revoke the agent's license for two years. C. Issue an order that the person in violation cease and desist from the activity. D. Suspend the agent's license for 30 days C- The Commissioner will issue a Cease and Desist order and could ask the Attorney General to file charges against the agent.64. Actual cash value may be arrived at by taking the property's replacement cost and subtracting theA. original purchase price. B. market value. C. depreciation value due to wear and tear. D. assessed value. C- Depreciation value due to wear and tear Depreciation represents the amount of use the insured has gotten out of the property; it is usually based on the property's age.65. An agent's Property & Casualty license must beA. renewed by taking the licensing exam every two years. B.renewed by June 30th each year. C.perpetual as long as the continuing education requirement is met every two years on or before the last day of the licensee's birth month. D.allowed to continue unless it is suspended or revoked by the Commissioner or surrendered by the agent. C- A New Jersey Property & Casualty license is perpetual as long as the continuing education requirements are met by the last day of the licensee's birth month every two years. It may be suspended or revoked by the Commissioner or surrendered by the agent66. Additional coverage in a homeowners policy would coverA. debris removal. B. other structures. C. materials and supplies. D. the dwelling. A- Debris Removal Debris removal is an additional coverage under the homeowners policy. The materials and supplies on the premises used to construct, alter, or repair the dwelling are considered covered under the dwelling portion.67. Under the terms of a policy, an insurance company is obligated toA. ensure that the hazard remains the same. B. pay covered losses. C. keep records of the covered property. D. ensure that the covered property is safe. B- Pay covered Losses The layout of this policy is simple: the insured pays the premium and the insurer pays for covered losses as long as all of the conditions are met.68. In crime insurance, a custodianA.has authority to watch over property both on and off the premises. B.has authority to watch over property within the premises. C.is the janitor of the insured premises. D.has authority to watch over property away from the premises. B- A custodian is the owner or employee with custody of the business property on the premises.69. On the CGL which of the following will have a separate aggregate limit?A.Medical Payments B.Fire Legal Liability C.Premises Liability D.Products and Completed Operations Liability D- Although Fire Legal Liability, Medical Payments, Premises Liability will have occurrence limits, Products and Completed Operations losses will have a separate aggregate limit stating the most the policy will pay for those types of losses in the policy period.70. In New Jersey, the maximum a worker can collect due to a total disability is:A.85% of the average weekly wage B.60% of the average weekly wage C.70% of the average weekly wage D.55% of the average weekly wage C- The payment will be 70% of the average weekly wage at the time of the disability.71. Requiring the insured to use a specific body shop or not replacing a totaled vehicle with a comparable vehicle is an example of:A. Indemnity B. Actual Cash value C. Unfair Insurance trade practices D. Unfair Insurance claims practices D- An insurer cannot require an insured to use a specific body shop in order to get a claim paid. If the vehicle is considered totaled, it must be replaced with a substantial similar vehicle.72. Survivor benefits will be paid to the dependents of a deceased worker until they are 18 or _____if a full time student.A.23 B.21 C.25 D.24 A- Benefits for surviving dependents are payable up to age 23 if enrolled as a full time student.73. Kim shows up at the agent's office to pay her premium on her policy that cancelled last night. The agent accepts the premium and Kim believes her policy is paid. This is an example of what kind of agent authority?A. assumed B. apparent C. implied D. expressed B- Apparent The agent's actions have given Kim the impression that the company has accepted the premium on the cancelled policy. This is an example of apparent authority based on the agent's actions. To Kim, apparently, the agent can do this by his actions and in her eyes the actions of the agent are the actions of the company and the law would agree with her.74. What is NOT a defense against negligence?A.comparative negligence B.contributory negligence C.assumption of the risk D.vicarious negligence D- Vic Negligence Vicarious negligence is a nonsense term, and is not a defense.75. All of the following are true regarding personal injury protection in New Jersey, except:A.Loss of income benefits are paid at 70% of monthly earnings B.Coverage will be issued at a minimum of $15,000 per person C.After a $250 deductible medical bills are paid at 80% D.Coverage can be increased to $250,000 per person at the option of the insured A- Loss of income benefits are payable at 75% of monthly earnings. The other three choices are all correct regarding personal injury protection in New Jersey.76. Your vehicle is totaled. The insurer is required to replace it or give you the actual cash value of a comparable vehicle which means all of the following, EXCEPT:A.Same color B. The cost of a comparable auto available in the local market area C.Same year, make and model D.Same equipment and features A- Substantially similar vehicle does not require the color to be the same but it should be the same year, make, model with the same features or the cost of a comparable vehicle available in the market area77. What does NOT need to be present in order for a contract to be legally binding to both parties?A. legal purpose B. consideration C. offer and acceptance D. written agreement D- Written Agreement Oral contracts are acceptable in many states; having the contract in writing is not necessarily required. Common sense, however, points out the difficulties of enforcing the terms of the contract unless they are written.78. Being held responsible for someone's injuries, even though you might not have been negligent, is defined asA. presumed negligence. B. vicarious liability. C. imputed liability. D. strict liability. D-Strict Liability Some actions are so dangerous that liability is strict or absolute and you are responsible without having to prove negligence, like explosives/fireworks.79. Ben Graham purchases a $100,000 commercial fire policy. The value of his building is $150,000 and the policy contains an 80% co-insurance clause. After suffering a $12,000 loss, the insurer will payA.$8,000. B.$10,000. C.$6,666. D.$4,500. B- 10,000 The co-insurance formula is (Did / Should) x Loss, or (100,000 / [0.80 x 150,000]) x 12,000; (100,00 / 120,000) x 12,000 = 9,999.999 The insurer will pay $10,000.80. Which of the following best describes an injury NOT covered under workers compensation insurance in New Jersey?A.Personal injury by accident arising out of and in the course of employment and received outside of New Jersey B. Personal injury by accident arising out of and in the course of employment C. An injury caused by the willful misconduct of the employee D. An injury caused by the willful act of a third person directed against an employee because of the employees employment C- Injury or disease caused either wholly or partly by the willful misconduct or willful self infliction of the employee is not a covered injury under New Jersey workers compensation. The other three answer choices are all covered.81. What would NOT be eligible for a business owner's policy?A.bars B.six-story office building C.retail business D.condo association A- Bars Bars, have a large liquor liability exposure.82. An agent wishing to place business with a surplus lines broker mustA.have an affidavit signed by the insured acknowledging that the coverage is from an unauthorized carrier and the agent is not responsible for the actions of the Surplus Lines company. B.make a diligent effort to place the coverage with authorized carriers first. C.request permission from the Department of Insurance first. D.make sure the Surplus Lines policy has more favorable insurance coverage. B- Since placing business with an unauthorized carrier is not in the best interest of the consumer, the agent must have made a diligent effort to secure coverage for the client from authorized carriers in the state.83. What statement concerning property insurance is correct?A.Breakage by firemen while attempting to extinguish a fire is covered only in the event of a total loss. B.The fire peril on a dwelling covers smoke damage from a hostile fire. C.The DP-2 would apply to damage caused by rain flooding a cellar through a backed up sewer. D.Fire insurance covers smoke from both friendly and unfriendly fires. B- A friendly fire is one that is intentionally set and in its intended area such as a fire in a fireplace. If a fire is not in its intended area, it is considered to be a hostile fire; the damage caused by a hostile fire is covered under the policy, but not the damage done by a friendly fire.84. What is NOT a responsibility of an insurance agent?A. selling insurance B. helping an insured handle a claim C. binding coverage D. establishing rates for new policies D- Establishing rates for new policies Agents are not involved in the actual work done to establish rates charged for insurance. This is done by the individual insurance company in the actuarial and underwriting department.85. These coverage's are in addition to the limit of insurance, but at no extra cost, EXCEPTA.debris removal. B.cost of defense. C.additional coverage. D.off premises power interruption. D- HO policies also contain several additional coverage's, most of which are in addition to the policy limits. These additional coverage's are built into the contract and require no additional premium. Off premises power failure is a peril that is excluded on all homeowner forms.86. Which of the following is NOT an Uninsured Motorist?A. Someone who has insurance written for the state legal minimums. B. Someone whose insurance does not comply with state financial responsibility laws. C. Someone whose insurance denied the claim or is bankrupt. D. Someone who is a hit and run driver. A- Someone with insurance written for at least the state legal minimums is not UNINSURED.87. Upon receipt of all requested information, how long does a company have to accept or deny a first party claim?A.10 days B.90 days C.30 days D.5 days C- Once the insurer has all of the required or requested documentation from the insured or any other outside source, they must accept or deny the claim within 30 days.88. Transferring risk by accumulating funds best describes the concept ofA. indemnity. B. insurance. C. occurrence. D. insurable interest. B- Insurance Insurance is a means of "transferring" the risk of one (the insured) to a group (the insurance carrier or insurer.)89. What is NOT found on the declaration pages of the homeowners policy?A.location of the dwelling B.deductible C.exclusions D.policy term C- Items not covered are listed in a separate exclusions section of the policy.90. In Workers' Compensation insurance, the "other states" coverage does NOT protect employees of a firm who may be injured inA.New York. B.Canada. C.Delaware. D.Alabama. B- Other states coverage is designed for the other states of the U.S. If you have an employee working outside of the country, coverage will need to be amended by endorsement to cover this exposure.91. An employee making a workers' compensation claim for loss of income due to an occupational disease will have a ____________waiting period before benefits begin.A.7 day B.15 day C.30 day D.10 day A- Disability benefits under workers compensation will not be paid for the first 7 days of disability, however if the disability continues beyond the first 7 days, the benefit is retroactive back to the date of the disability.92. Violations of the Urban Enterprise Zone (UEZ) program could result in a fine up to a maximum of:A.25,000 B.5.000 C.10.000 D.1.000 A- The key word in the question is "maximum". The fine can be up to $25,000 for violating the UEZ program93. What is NOT excluded from liability coverage on the homeowners policy?A.golf carts used on the golf course B.business pursuits C.intentional acts D.off-premises rental properties A- There will be coverage for liability caused by a golf cart if it is being used on the golf course.94. The purpose of the New Jersey Property & Casualty Insurance Guaranty Fund is toA.forbid insurers from using repair parts other than those made by or for the automobile manufacturer. B.require insurers to provide a privacy disclosure notice regarding information gathered on an insured. C.pay the claims of insolvent member insurers. D.require insurers to guarantee the repair or replacement for as long as you own the property. C- The New Jersey Guaranty Fund is made up of all the admitted carriers doing business in the state. The purpose is to pay claims of insolvent members.95. What best describes the purpose of insuring agreements?A.to describe the coverage B.to name the insured C.to explain the duties of the insured D.to set forth conditions and exclusions A- To describe the coverage The insuring agreement will tell the customer what kinds of coverage and/or perils are covering the property. The name of the insured is on the declarations page and the conditions and duties under the policy are in the conditions section.96. A legal principle based on fairness that prevents a person from enforcing a legal right he or she has voluntarily waived is calledA. estoppel. B. waiver. C. warranty. D. subrogation. A- Estoppel Estoppel is a Latin word meaning "to stop." Once you give up a right, you are "stopped" from ever getting it back.97. What cause of loss form does NOT cover volcanic action?A.basic B.broad C.special D.earthquake D- Volcanic action is a covered peril in the basic, broad, and special cause of loss forms. Earthquake is not a cause of loss form, it is an endorsement.98. An insured carries $25,000 property insurance with 80% co-insurance on a building worth $40,000. How much would she collect in the event of a total loss?A.$25,000 B.$40,000 C.$32,000 D. $20,000 A- $25,000 The key phrase in the question was "total loss." Co-insurance requirements only apply to partial losses. In the event of a total loss, the carrier owes the insured the policy limit, which in this case is $25,000.99. An insurer may not deny availability of an insurance policy based on all of the following, Except:A.Driving record B.Sex of the applicant C.Gender D.Marital status A- The driving record of an applicant would be a reason to deny the availability of insurance. However the insurer cannot use the marital status or gender in discriminating against an insured. Sex of the applicant is the same as gender.100. The retroactive date and the expiration date of the claims made CGL policy are examples ofA.limitations in coverage. B.exclusions under the policy. C.nonsense terms on a claims made CGL. D.dates that "trigger" the start or end of coverage. D- In order for a claims made CGL policy to respond, the event had to happen after the retroactive date and be reported during the policy period. These are the "triggers" that activate the policy.101. What is NOT true about a business owner's policy?A.The standard form provides named-peril coverage. B.Money is available only by endorsement on the special form. C.Medical payments coverage is automatically included. D.Business income is covered on an "actual loss sustained" basis with no time limit. D- Business income is covered on an actual loss sustained basis, up to 12 months after the loss.102. A building is damaged by fire caused by a third party. The insured will receive payment for the loss from whom?A. The insured should collect damages in full from the third party, plus the amount of insurance payable by the insurance company. B.The insurance company will pay the loss (within the limits of coverage). To the extent that payment had been made under the policy, the insured is required to assign to the insurance company any right of recovery from the responsible party. C. The insurance company is not obligated to pay anything; the only recourse the insured has is to try to collect from the responsible third party. D. The insurance company will pay the insured the amount of the loss, up to the amount of the policy. It will expect the insured to collect from the person responsible for the damage and then reimburse the company. Answer is B. This is known as the right of subrogation. Since the insurer has indemnified the insured by paying for the damaged property under the policy, the carrier wants the right to pursue the responsible party for compensation. The agency will require the insured to sign a waiver of subrogation, allowing the carrier to collect from the responsible party.103. Concealment is defined asA. answering incorrectly on an insurance application. B. hiding information from the agent. C. having someone else fill out your insurance application. D. the deliberate omission of a material fact from the agent or the company. D- The deliberate omission If a customer or claimant intentionally withholds important facts and data from the agent or the insurance company, it is considered an act of concealment, which could deny the claim or void the policy entirely.104. The CGL will exclude damage to property in the insured's care, custody, and control unless the damage is caused byA.water. B.fire. C.pollution. D.explosion. B- The CGL will pay for damage done to the property of others in the care of the insured if it is caused by a fire. This used to be called Fire Legal Liability but is now known as Damage to Premises Rented to You.105. A temporary auto insurance ID card is good for:A.30 days B.90 days C.Until the end of the policy period D.60 days D- If an auto insurer issues a temporary ID card it must be clearly marked on the card that it expires in 60 days of it being issued.106. In a property insurance contract, an insured's consideration is theA. payment of the premium. B. recommendation of protection. C. promise to pay. D. selection of proper coverage. A- Payment of the premium Consideration in a contract is the item of value that a party brings to the contractual relationship.107. When a business will shut down due to a covered loss, the indirect consequential loss that accrues over time would beA.costs to rent other locations. B.loss of income. C.extra expenses to keep operating. D.loss of market share. B- A business that will shut down after a loss will suffer a loss of business income over time. A business that must keep operating will have extra expenses including the cost to rent other locations. Either situation may cause a loss of market share, which is a contingent interruption concern.108. Identity Fraud Expense covers which of the following?A.payment for unauthorized charges on a credit card B.expenses incurred to restore a person's identity C.damage to the computer software that was compromised D.balances on fraudulent loans B- Identity Fraud Expense does not pay loan or credit card balances for fraudulent transactions. It does pay the extra expenses including possible lost wages to repair your credit and restore your identity, but not the cost to repair the hacked software.109. Eligible apartment houses for a BOP include those that do NOT exceedA. four stories and 60 units or less. B. six stories and 60 units or more. C. six stories and 60 units or less. D. four stories and 60 units or more. C- Eligibility for the Business Owner's Policy is designed with limits.110. An agent may share commissions in all of the following, EXCEPTA.another licensed agent having the same license for which the commissions are being paid. B.another agent licensed for the same line of insurance. C.An agent not licensed for the same line of insurance but did make the referral D.an agent who is licensed for the same product for which the commissions are being paid. C- Commissions may be shared with any licensed agent as long as the agent has a license for the product or lines that the commissions are being paid on. An agent can NOT share commission with another who is not licensed for that line of insurance being sold.111. What is NOT a type of manageable hazard?A.moral B.morale C.physical D.mental D- Mental There is no "mental" hazard in insurance.112. After an automobile policy has been in force for 60 days, an insurer may cancel or refuse to renew the policy for all of the following, EXCEPT:A.misrepresentation by the insured in obtaining, renewing, or making a claim under the policy. B.Refusing to use the device that monitors driving habits C.loss of driving privileges. D.nonpayment of premium. B- An insurer can cancel for any reason within the first 60 days of issuing a policy. If after 60 days, any of the above occur, however, the insurer would have the opportunity to cancel the policy except for refusing to use the monitoring device.113. A commercial general liability policy protects an insured against what situation?A.a store manager injures his back at work while lifting products B.a can of soup falls off a food store's shelf and injures the child of a customer C.an employee cuts her leg on the sharp edge of a metal chair D.a hardware store delivery truck accidentally damages the store's own loading dock during a delivery B- The CGL pays out to "others," not the insured. Employees are considered to be insureds under the policy and their injuries are better covered under Workers' Compensation. The CGL will also exclude damage done to the insured's own property.114. What best defines concealment?A. deliberate omission of a material fact B. voluntary omission of an underwriting factor C. hiding the truth from the insurer D. hiding the truth from the insured A- Deliberate omission of a material fact. If a material fact involved in the underwriting process is deliberately omitted, it is considered to be concealment.115. A business has a business owner's policy and an Equipment Breakdown policy on a printing press. If a total loss occurs due to the mechanical breakdown of the press, how will it be paid?A.pro rata B.equal shares C.boiler and machinery policy pays D.business owner's policy pays C- Since the cause of the loss is mechanical breakdown, the BOP will exclude coverage for this peril. The Equipment Breakdown policy does cover damage due to mechanical breakdown, so it will take care of this loss.116. You have a personal auto policy with $50,000 bodily injury liability and $25,000 property damage liability limits. You borrow Sally's car and strike a pedestrian. Sally has $100,000 limit of bodily injury liability. How much will your insurer have to pay if a $95,000 judgment is rendered against you?A.$47,500 B.$0; Sally's company must pay C.$95,000 D.$50,000 B- Sally's policy on the auto is primary and must respond first. Since there is enough coverage under Sally's policy to handle the claim, her carrier will take care of it.117. The home daycare endorsementA.is a mandatory endorsement automatically added to the homeowners policy. B.covers only home daycare services provided to relatives of the insured. C.is a "buy back" of an exclusion that states home daycare is not covered for personal liability because it is considered a business pursuit. D.cannot be added to the HO-4 renter's policy because apartments are generally smaller in size and not conducive to home daycare. C- Home daycare is a business. Business exposures are excluded for liability under the homeowners policy. This endorsement "buys back" the liability coverage.118. Coverage against loss by some perils (vandalism, theft, etc.) under the "building and personal property" coverage form is EXCLUDED ifA.the insured building is vacant for more than 60 days. B.the insured fails to satisfy the co-insurance provision. C.a loss occurs while a hazard beyond the insured's control is increased. D.an uninsured peril caused a partial loss. A- Vacancy is a physical hazard that increases the chance of loss. After 60 days in commercial insurance, perils such as vandalism and theft are excluded.119. A business owner's policy with a protective safeguard endorsement would require an insured to notify the insurance company if sprinklers are inoperable for ___ hours.A.36 B.48 C.12 D.24 B- If you have received a premium discount because you have a protective safeguard such as an alarm system or sprinkler system, you must notify the carrier within 48 hours if the system becomes inoperable. If not, the warranty you provided about having the system and that it works is voided and a possible claim could be denied.120. Umbrella policies usually provide additional excess layers of liability and typically featureA.neither a self-insured retention nor policy limits stated in one or more millions of dollars. B.a self-insured retention. C.both a self-insured retention and policy limits stated in one or more millions of dollars. D.policy limits stated in one or more millions of dollars. C- The Self-Insured Retention functions much like a deductible and umbrella limits usually are bundled in layers of $1,000,000.121. The effective date of issuance of an agent's license for a qualified applicant who has not previously been licensed by the Department of Insurance isA.when approved by the Department of Insurance. B.90 days following the date on which the agent is assigned a license number by the DOI. C.30 days following the date on which the agent is assigned a license number by the DOI. D.60 days following the date on which the agent is assigned a license number by the DOI. A- The license is deemed active after being approved by the Department of Insurance.122. Which of the following will create an automatic reduction in personal injury protection premium?A.A clean driving record for the past 36 months B.Personal health insurance is set up to be the primary payor for auto accident injuries C.The state requires the carrier to reduce premiums by 10% D.The cover driver reaches the attained age of 65 B- While a clean driving record may create an overall discount on the policy it doesn't directly affect personal injury protection premiums. If the covered person sets their personal health insurance up to be the primary payor for auto related injuries, that will create a reduction in the personal injury protection premium on their auto policy.123. The Do-Not-Call list regulations prohibit telemarketing calls between the hours ofA.10 p.m. and 8 a.m. B.8 p.m. and 7 a.m. C.9 p.m. and 7 a.m. D.9 p.m. and 8 a.m. D- Telephone solicitation calls are prohibited between the hours of 9 p.m. and 8 a.m.124. The Commissioner of Insurance does NOT have the power toA.prosecute the agent in a court of law B.compel witnesses to testify. C.make rules and judgments regarding insurance in the state. D.require people to submit reports relative to complaints received by the department. A- While the Commissioner has full control over the insurance business in the state, he or she cannot prosecute agents in court. That is the responsibility of the Attorney General125. The homeowners "personal property replacement cost" endorsementA.is necessary since contents claims are usually settled ACV. B.is now obsolete because homeowners policies automatically cover contents on a replacement cost basis. C.is extremely expensive due to the nature of the coverage. D.cannot be added to the HO-4 renter's policy. A- All homeowners forms covering contents settle losses on an ACV basis unless this endorsement is purchased.126. What is considered a hazard?A.an unfriendly fire B. removal C. carelessness of an insured D. damage caused by a mudslide C- Carelessness of an insured. Carelessness of the insured is considered to be a "morale" hazard, increasing the likelihood of a loss.127. Jayne has a specified peril policy covering her home. The perils covered include damage caused by fire, lightning, removal, and explosion. Her home is insured for $80,000 with a $500 deductible. After suffering a $16,000 lightning loss, what will Jayne's policy pay?A.$15,500 B.$16,000 C.$80,000 D.$15,000 A- The peril causing the damage is covered by the policy; therefore, after the $500 deductible, Jayne will receive $15,500.128. Sarah wants to find out how financially sound her insurance company is. She can check all of the following sources, EXCEPTA. AM Best Company. B. Department of Insurance. C. Standard and Poor's. D. Moody's. B- Department of Insurance The Department of Insurance does not rate the financial strength of insurance companies. The other three choices are all independent rating services that will provide this information to Sarah.129. If a person violates the co-insurance provisions of the policy, how much will be received in the event of a total loss?A. nothing B. only a portion of the loss C. the full loss D. the policy limit D- The Policy Limit Co-insurance rules only apply to partial losses, never total loss. In the event of a total loss, the insurer owes the limit of coverage on the policy.130. Under an automobile policy with "uninsured motorists" coverage, a disagreement between an insurance company and an insured on the amount of a loss can be settled byA. declaration. B. subrogation. C. elimination. D. arbitration. D- Since "uninsured motorists" coverage is a liability issue between the insurer and the injured insured, the dispute will be settled by arbitration.131. The time frame of coverage and the location of coverage are referred to asA. perils covered and proof of loss reporting. B. peril exclusions and proof of loss reporting. C. policy period and policy territory. D. policy exclusions and claim conditions. C- Policy Period and Policy Territory The policy period is the time frame covered and the territory is where coverage applies. Generally, the U.S., its territories, Puerto Rico and Canada.132. The homeowners permitted incidental occupancies endorsementA.automatically covers teachers for corporal punishment. B.will extend coverage only for corporal punishment to secondary (grades 7-12) school teachers, not primary (grades K-6) school teachers. C.will not cover a teacher for corporal punishment under any circumstance. D.requires an extra premium to cover teachers for corporal punishment. C- Corporal punishment is the physical abuse of a student. This would never be covered.133. Because an injured worker gives up the right to sue the employer for work related accidents and injuries, workers compensation insurance is considered to be:A.Primary B.Legal liability C.Exclusive remedy D.Excess C- Giving up the right to sue in return for the prompt and fair payment of a work related accident or injury is the exclusive remedy of the workers compensation laws.134. You wish to cancel your homeowners policy prior to the expiration date. The insurance company would provide you with what type of a refund?A. short rate B. annual premium C.pro rata D. full refund of premiums you paid A- Short Rate If the customer cancels the policy, the refund is calculated on a "short-rate" basis.135. The inflation guard endorsement will automatically raise the limits on what part of the homeowners policy?A.Coverage B B.Coverage A C.both Coverage A and B D.neither Coverage A nor B C- Coverage A (dwelling) and B (other structures) are automatically increased to match the cost of inflation.136. Which of the following best describes the Contribution by Equal Shares claim provision?A. the insurer with the highest limit pays first B. each insurer pays on a pro-rata percentage based on who is most liable C. the insurer with the lowest limit pays first until the limit is exhausted D. each insurer shares the claim equally until their limit is exhausted D- Equally until limit is exhausted When multiple insurers are responsible in a liability loss, the courts can demand that they all share in the claim equally until each insurer has exhausted the coverage upon which they are excused. The remaining insurers share the balance equally up to their respective coverage limit.137. Which of the following is not true about insurance fraud regulations?A.Fraud is a sixth degree felony B.Aiding or abetting someone to commit fraud is a fraud violation C.Those providing testimony in a fraud investigation are not immune from civil liability D.Diverting monies owed to the insurer is a fraud violation C- Those providing testimony in a fraud investigation are immune from any civil liability and defamation suits that could result. The other three choices are all true about fraud.138. Each agent licensed in this state must notify the Commissioner regarding a change of address within how many days?A.10 B.7 C.30 D.15 C- A 30 day notice for any change in the licensee's name, address, residential or business address is required in New Jersey.139. Under a personal auto policy, "the insured" would NOT includeA.a neighbor using the insured's auto without permission. B.a neighbor using the insured's auto with permission. C.the insured's named in the declarations. D.the insured's 12-year-old son. A- The neighbor is not a "family member" by definition, and would therefore need permission to use the auto.140. Which of the following would not be a reason to cancel a property policy other than for nonpayment of premium?A.Acts or omissions by the insured constituting fraud B.Conviction of a crime arising out of acts increasing the hazard C.A substantial change in the risk assumed and not contemplated by the insurer D.Complying with reasonable loss control recommendations D- Complying with reasonable loss control recommendations is cooperating and reducing the risk and is therefore not a reason to cancel a property policy. The other three choices are all reasons to cancel a policy.141. What is NOT a type of agent authority?A. apparent B. implied C. reasonable inference D. express C- Reasonable Inference An agent's overall authority stems from three separate sources: express--authority granted by the company in an oral or written agreement (e.g., contract with insurer); implied--authority the public may believe an agent to have (e.g., if an agent issues policies, it is reasonable to expect the agent also issues endorsements); and apparent--authority created when action or inaction by the insurer gives the impression that the authority exists (e.g., binding authority).142. Agent Williams states that his policy will be guaranteed renewable for at least 5 years. Williams is guilty ofA.misrepresentation. B.being a good salesperson. C.fraud. D.twisting. A- No policy is guaranteed to be renewed for 5 years. This is a misrepresentation of the terms.143. The principle of indemnityA. allows the company to collect from a third party. B. limits recovery to actual cash value. C. allows the insured to profit from a loss. D. restores the insured to the same condition enjoyed before a loss. D- Restores the insured Indemnity means to "make whole again." The insured is back in the position enjoyed prior to the loss, but with no gain either.144. On the BOP, in which situation would Utility Service - Time Element coverage apply?A.Anna's Paper Company burns to the ground when a faulty wire starts a fire B.After a tornado causes a pipe to burst at Dunkin' Donuts leaving the shop without water for days, the shop is forced to rent a new space in order to keep the business functioning C.An electrical circuit shorts at the butcher shop during a storm causing a power outage. Despite the shop's best effort to preserve the inventory, half of the meat in the freezer goes bad during the outage D.Steve's Software Solutions loses power for two days when lightning damages the power station. Steve experiences a significant loss of income during the outage D- Time Element is another way of saying an indirect loss. The loss of income from the loss of power is an indirect loss covered by the Utility Service-Time Element coverage.145. The Do-Not-Call list regulations prohibitA.calls from a tax-exempt non-profit organization. B.pre-recorded commercial messages from someone without an established business relationship. C.calls that are not commercial or do not include unsolicited advertisements. D.calls from an organization with an established business relationship. B- Calls that are pre-recorded commercial messages from someone who does not have an established business relationship or who does not have permission to call are prohibited.146. An insurance license may NOT be revoked for what reason?A.cheating on the state insurance exam B.conviction of a misdemeanor C.conviction for a felony D.violating a rule, while in another state, made by that state's insurance Superintendent B- A misdemeanor will not cause you to lose your license. However, you could be subject to other penalties.147. Under the garage policy, coverage to reimburse the garage to replace the faulty parts would be covered by?A. Broad Form Products coverage B. Employees as insureds C. Non-owned Auto coverage D.- Lessor-Additional Insured A- Product liability does NOT pay to recall or reinstall faulty parts. The Broad Form Products coverage would reimburse the garage for their labor costs to reinstall a new part in place of the faulty one.148. Which is NOT a rebate?A.offering a flat screen TV B.giving back any or all of the premium paid by the insured C.offering a weekend for two to Disneyland D.offering valuable consideration valued at $10 or less for the opportunity to quote insurance. D- Offering a gift or meal valued at $10 or less to quote or explain insurance is not rebating as long as it is not tied to the purchase of the policy.149. What is NOT considered an unfair and deceptive practice?A.twisting B.issuing a surcharged policy based on underwriting information. C.rebating D.misrepresentation B- All are things an agent would do to induce a person to buy from him or her, except issuing the policy with a premium surcharged based on factual underwriting information.150. Swamp Mutual obtains a certificate of authority to do business in the state and agrees to abide by the state laws regulating the insurance business. Swamp Mutual is a(n)A. Mutual insurer. B. Admitted/Authorized insurer. C. Surplus Lines insurer. D. Non admitted/Unauthorized insurer. B- Admitted/ Authorized Applying for a certificate of authority to operate in the state and agreeing to abide by the laws and regulations of that state describes an Admitted/Authorized insurer in the state.151. Which of the following is not considered a covered employee under workers compensation in New Jersey?A.A person in the service of any employer B. Regular members of volunteer fire departments C. Casual labor D.A person in the service of the state, county, city, town, or municipal corporation C- Casual laborers are not considered employees under workers compensation152. Under the BOP, up to how many years can the insurer request to examine the books and records of an insured?A.Three years B.Four years C.One year D.Two years A- Similar to the CPP, the condition section of a BOP allows the insurer to audit anytime during the policy period and up to three years after its expiration.153. The most amount of commissions a company can pay an unlicensed agent is?A.None B.500 C.100 D.250 A- New Jersey law expressly states commissions paid by an insurer are paid only to licensed agents.154. ABC Leasing has leased a car to Dwight. They need a loss payable clause for their interest if the car is damaged. But since it is still titled to ABC Leasing, they want the liability coverage of the policy to protect them as well in case of lawsuit. ABC will request a(n)A. additional insured clause. B. assignment clause. C. loss payable clause. D. mortgagee clause. A- Additional Insured Clause The Lessor of a vehicle or property will request to be listed as an additional insured on the policy so that all of the coverage provided by the policy will apply to them.155. The privacy disclosure notice must notA. require the applicant to give permission to in writing to use the information B. contain a provision for the consumer to opt out. C. be written in plain language. D. specify what information is being used and shared. A- Regulations regarding the use and disclosure of private information requires a privacy notice be mailed to the insured containing all of the information contained in answers A, B, and C but written permission is not required. Permission can be expressed orally156. Which property would NOT be eligible for coverage under an HO policy?A.modular home used as permanent residence B.tenants living in an apartment C.farm residence D.condo unit owner C- Farm residence would be covered by a Commercial Farm policy.157. Which of the following would invalidate a contract?A. activities laundering funds B. competent parties as defined by the courts C. one for legal purposes D. agreement between and insurer and a 85 year old insured A- Activities laundering funds Contracts, in order to be valid, must be for legal purposes. Laundering money may be an illegal activity.158. In New Jersey, your insurance license will be deemed activeA.as soon as the Department of Insurance receives your grades. B.upon the receipt of the formal license at the applicant's residence. C.after the department reviews the background check and application and notifies the candidate that the license is active. D. at the time you successfully complete the exam. C- Your license is active upon completion of the application to be a producer and the background check being approved by the Department of Insurance. You will be notified when the license is active.159. In New Jersey, If death results from an occupational injury or disease, dependents of the deceased worker will be paid the following:A.60% of the average weekly wage B.75% of the average weekly wage C.80% of the average weekly wage D.70% of the average weekly wage D- If death results from the personal injury of an employee, the employer shall pay to the dependents of the employee who were wholly dependent upon the employee's earnings for support at the time of the injury, a weekly payment equal to 70% of the employee's average weekly wage.160. What is true about the business owner's policy?A. Medical payments to others coverage is automatically included with a maximum limit of $1,000 per person. B. The liability coverage of the business owner's policy is very similar to an "occurrence" version CGL. C. Business income coverage is not automatically included but can be added by endorsement. D. The standard form provides "all risk" coverage. B- The BOP is a piece of commercial insurance, so the liability portion of the BOP is similar to the CGL and is written on an occurrence form.161. What is an element of a legal contract?A. consideration B. competent parties C. legal purposes D. all of the choices presented D- All of the choices presented In order for a contract to be enforceable, it must have certain characteristics. They are: competent parties, legal purposes, offer and acceptance, and consideration.