State: Ohio | Category: Property and Casualty Insurance | All tests in this Category:
Practice Test 1 Practice Test 21. Under Institute Cargo Clauses, which statement best describes the difference between Clause A (All Risks) and Clause B (Named Perils)?
Clause A provides broad coverage for all risks unless specifically excluded; Clause B covers only perils that are named in the policy.
2. Piracy coverage in standard Ocean Marine cargo forms is generally:
Piracy is typically encompassed within the standard perils of the sea in many Ocean Marine cargo forms, though endorsements can modify coverage.
3. If an insurer becomes financially insolvent, what action may the Ohio Director take?
The Director has authority to appoint receivership, rehabilitation, or liquidation proceedings to protect policyholders when an insurer is insolvent.
4. Insurable interest in property insurance must exist at what time for a valid claim?
For property insurance, insurable interest must exist at the time of loss to establish a valid claim and ensure the interest is genuine.
5. Which clause requires the insurer to obtain the insured's consent before accepting a settlement that could impose obligations on the insured?
Consent to settle provisions protect the insured from settlements that may admit fault or impose obligations beyond coverage. Without consent, the insurer may not settle a claim on behalf of the insured.
6. During the initial contact after a loss, which action should the adjuster take?
Early contact should establish duties, collect essential information, and preserve evidence to support a fair adjustment.
7. Which statement correctly contrasts replacement cost (RC) and actual cash value (ACV) valuation?
Replacement cost is the current cost to replace the property with new, without subtracting depreciation. Actual cash value equals replacement cost minus depreciation.
8. A fidelity bond primarily covers losses caused by:
Fidelity bonds protect employers from losses due to employee dishonesty, such as theft or fraud.
9. The peril described as 'weight of ice, snow, or sleet' is typically included as a covered peril for which property under most homeowners forms?
Weight of ice, snow, or sleet on roofs is a peril commonly listed for the dwelling as part of many homeowners forms.
10. Under a standard HO-3 policy, Coverage C (Personal Property) is typically written on which basis?
In HO-3, dwellig and other structures are open peril, while personal property (Coverage C) is typically insured on a named-peril basis.
11. Property Damage (PD) liability coverage pays for damage to:
PD liability covers damage to third-party property caused by an at-fault insured, not damage to the insured's own property or personal belongings.
12. Products-Completed Operations Hazard provides coverage for claims arising from which of the following?
This hazard covers injuries or damages arising from products or completed work after the product has been sold or work completed.
13. What does a 'prior acts' endorsement address in a claims-made policy?
A 'prior acts' endorsement aligns with the retroactive date. It ensures coverage for acts occurring after that date that are first claimed during the policy period, preventing gaps when switching carriers.
14. A policy shows BI limits of 50/100 and a PD limit of 50,000. What does the middle number (100) represent?
In a split limit notation, the first number is BI per person, the second is BI per accident (total for all injured in the accident), and the third (if present) is PD per accident.
15. Replacement Cost vs Actual Cash Value in a Commercial Property policy is generally:
Most CP policies default to Actual Cash Value unless Replacement Cost coverage is added by endorsement; RC coverage is common for buildings and can be extended to personal property with the right endorsements.
16. Supplementary Payments under CGL typically include which of the following?
Supplementary Payments cover defense costs and certain bonds; they are paid in addition to the policy limits.
17. The Contractual Liability Exclusion in CGL generally excludes liability assumed under contract, except for which of the following?
The exclusion typically excludes liability assumed under contract, but insured contracts listed in the policy are often covered.
18. Under HO-2 broad form, personal property is insured on which type of peril basis?
HO-2 applies personal property coverage on a named-perils basis, listing specific perils that are covered.
19. Salvage is used in loss adjustment to:
Salvage allows the insurer to recover some value from damaged property, reducing the net amount paid for the loss.
20. The Ohio Director may adopt rules and regulations governing which of the following areas?
Ohio's Department of Insurance has rulemaking authority over licensee conduct and the regulation of rates and forms for property and casualty lines.
21. Which of the following is NOT typically covered as part of covered injuries & benefits?
Injuries off premises that are unrelated to work are generally not covered, whereas occupational diseases, work-related injuries, and related medical treatment are covered.
22. General Average refers to which of the following concepts in marine risk?
General Average is a deliberate sacrifice to save the voyage, and the resulting costs are shared by all parties with an insurable interest.
23. Which statement best describes the indemnity principle in property & casualty insurance?
Indemnity aims to restore the insured to the financial position they had before the loss. It should not allow profit or windfalls beyond the actual loss.
24. Who is considered an insured under CGL?
An insured includes the named insured and other persons or organizations described in the declarations and endorsements.
25. Waiver in an insurance contract is best described as:
Waiver occurs when a party voluntarily gives up a known right, which may affect future enforcement of that right.