WebCE Exam #1 with all Correct & 100% Verified Answers
|Actual Complete Update |Already Graded A+
Which of the following is a "newly acquired auto"?
the named insured's motorcycle
the named insured's private passenger car
the named insured's rental car
the named insured's company car ✔Correct Answer-the named insured's private passenger
car
After Hazel transfers full ownership in her house to her son Jimmie, Hazel continues to pay the
premium on a policy that lists the house and lists only Hazel as the named insured. If the house
is damaged, the insurer
Will pay Hazel and subrogate against Jimmie.
Will pay Hazel because she had an insurable interest in the house when she first bought the
policy.
Will pay Jimmie and subrogate against Hazel.
Will not pay Hazel because she had no insurable interest in the home at the time of the loss.
✔Correct Answer-Will not pay Hazel because she had no insurable interest in the home at the
time of the loss.
After considering whether to add an earthquake endorsement to his homeowners policy or to
buy a separate California Earthquake Association (CEA) policy, Rick chose the CEA policy because
it includes limited coverage for all the following additional coverages, EXCEPT: ✔Correct
Answer-Costs of removing property for safekeeping when an earthquake is expected.
What is the basic principle underlying the law of large numbers?
Prediction becomes more accurate as the number of exposure units decreases.
Prediction becomes less accurate as the number of exposure units increases.
Prediction becomes more accurate as the number of exposure units increases.
Prediction is most accurate when the number of exposure units stabilizes. ✔Correct Answer-
Prediction becomes more accurate as the number of exposure units increases.
Maria intends to buy a dwelling policy on some rental property she owns. She tells her agent
she wants the broadest coverage possible. Which policy form should the agent recommend?
DP 1
DP 2
DP 3
Broad Form HO policy ✔Correct Answer-DP 3
A general liability policy covers all the following exposures EXCEPT:
premises and operations liability
,professional liability
products and completed operations liability
contractual liability ✔Correct Answer-professional liability
Jack takes his computer to Atlas Computer Repair to have it repaired. The computer is damaged
while at the repair shop. Atlas tells Jack that his homeowners coverage will cover Atlas since
Atlas is a third-party beneficiary of the policy. What provision in Jack's homeowners policy will
eliminate coverage in this situation?
loss payee clause
no benefit to bailee clause
liberalization clause
definitions ✔Correct Answer-no benefit to bailee clause
Dr. Lenard purchased an commercial general liability policy on his office. With his insurer's
consent, Dr. Lenard is able to transfer his interest in the policy to Dr. Brown. Which of the
following policy provisions applies in this case?
Concurrent.
Assignment.
Transfer of risk.
Liberalization. ✔Correct Answer-Assignment.
A vessel owned by Del Mar Shipping was damaged during a storm. Adjusters have determined
that the cost of salvaging the cargo is more than the value of the cargo. What type of loss did
Del Mar Shipping suffer?
constructive total loss
actual total loss
actual total loss
partial average ✔Correct Answer-constructive total loss
Diane's agency agreement specifically gives her the authority to collect insurance premiums.
This type of authority is called:
apparent authority
implied authority
inherent authority
express authority ✔Correct Answer-express authority
In an insurance contract, only the insurer makes a legally enforceable promise (to pay covered
claims). The policyholder makes no legally enforceable promise, which means insurance policies
are:
personal contracts
conditional contracts
aleatory contracts
unilateral contracts ✔Correct Answer-unilateral contracts
, John and Peter, business partners, purchased a new property insurance policy from Colossal
Casualty. The policy will cover claims one insured makes against another insured. This policy
includes what provision?
Liberalization
Removal
Severability
Supplemental Payments ✔Correct Answer-Severability
Mary offers piano and guitar lessons in her home on a part-time basis and wants liability
coverage to cover the risk of a student's parents suing her for some reason. If she wants
additional liability coverage than her homeowners policy provides, which of the following is the
most practical solution?
add the Home Day Care Coverage endorsement
purchase a second homeowners policy
add the permitted incidental occupancies endorsement
purchase a dwelling policy ✔Correct Answer-add the permitted incidental occupancies
endorsement
Ryan operates an appliance repair shop. He usually has a dozen appliances from customers in
the shop. What type of commercial inland marine policy should his agent recommend for him to
be covered in the event he damages any of these appliances?
contractors equipment floater
accounts receivable floater
bailees' customer floater
equipment dealers floater ✔Correct Answer-bailees' customer floater
Brendan, a mail clerk, often uses his car to run errands for his employer. If he has an accident
while running one of these errands, his employer's business auto policy (BAP) will treat
Brendan's car as a(n)
Hired auto.
Nonowned auto.
Owned auto.
Public or livery conveyance. ✔Correct Answer-Nonowned auto
Cynthia's business is covered by a commercial package policy that uses ISO forms. A California
amendatory endorsement attached to the policy seems to contradict some of the provisions
elsewhere in the policy. How should Cynthia interpret these contradictions?
Cynthia should ask the California Department of Insurance for assistance in resolving any
discrepancies between these two documents.
Interpreting contradictions is the role of the courts, not the policyholder.
The endorsement takes precedence over the policy it is attached to.
The policy takes precedence over any endorsement attached to it. ✔Correct Answer-The
endorsement takes precedence over the policy it is attached to
|Actual Complete Update |Already Graded A+
Which of the following is a "newly acquired auto"?
the named insured's motorcycle
the named insured's private passenger car
the named insured's rental car
the named insured's company car ✔Correct Answer-the named insured's private passenger
car
After Hazel transfers full ownership in her house to her son Jimmie, Hazel continues to pay the
premium on a policy that lists the house and lists only Hazel as the named insured. If the house
is damaged, the insurer
Will pay Hazel and subrogate against Jimmie.
Will pay Hazel because she had an insurable interest in the house when she first bought the
policy.
Will pay Jimmie and subrogate against Hazel.
Will not pay Hazel because she had no insurable interest in the home at the time of the loss.
✔Correct Answer-Will not pay Hazel because she had no insurable interest in the home at the
time of the loss.
After considering whether to add an earthquake endorsement to his homeowners policy or to
buy a separate California Earthquake Association (CEA) policy, Rick chose the CEA policy because
it includes limited coverage for all the following additional coverages, EXCEPT: ✔Correct
Answer-Costs of removing property for safekeeping when an earthquake is expected.
What is the basic principle underlying the law of large numbers?
Prediction becomes more accurate as the number of exposure units decreases.
Prediction becomes less accurate as the number of exposure units increases.
Prediction becomes more accurate as the number of exposure units increases.
Prediction is most accurate when the number of exposure units stabilizes. ✔Correct Answer-
Prediction becomes more accurate as the number of exposure units increases.
Maria intends to buy a dwelling policy on some rental property she owns. She tells her agent
she wants the broadest coverage possible. Which policy form should the agent recommend?
DP 1
DP 2
DP 3
Broad Form HO policy ✔Correct Answer-DP 3
A general liability policy covers all the following exposures EXCEPT:
premises and operations liability
,professional liability
products and completed operations liability
contractual liability ✔Correct Answer-professional liability
Jack takes his computer to Atlas Computer Repair to have it repaired. The computer is damaged
while at the repair shop. Atlas tells Jack that his homeowners coverage will cover Atlas since
Atlas is a third-party beneficiary of the policy. What provision in Jack's homeowners policy will
eliminate coverage in this situation?
loss payee clause
no benefit to bailee clause
liberalization clause
definitions ✔Correct Answer-no benefit to bailee clause
Dr. Lenard purchased an commercial general liability policy on his office. With his insurer's
consent, Dr. Lenard is able to transfer his interest in the policy to Dr. Brown. Which of the
following policy provisions applies in this case?
Concurrent.
Assignment.
Transfer of risk.
Liberalization. ✔Correct Answer-Assignment.
A vessel owned by Del Mar Shipping was damaged during a storm. Adjusters have determined
that the cost of salvaging the cargo is more than the value of the cargo. What type of loss did
Del Mar Shipping suffer?
constructive total loss
actual total loss
actual total loss
partial average ✔Correct Answer-constructive total loss
Diane's agency agreement specifically gives her the authority to collect insurance premiums.
This type of authority is called:
apparent authority
implied authority
inherent authority
express authority ✔Correct Answer-express authority
In an insurance contract, only the insurer makes a legally enforceable promise (to pay covered
claims). The policyholder makes no legally enforceable promise, which means insurance policies
are:
personal contracts
conditional contracts
aleatory contracts
unilateral contracts ✔Correct Answer-unilateral contracts
, John and Peter, business partners, purchased a new property insurance policy from Colossal
Casualty. The policy will cover claims one insured makes against another insured. This policy
includes what provision?
Liberalization
Removal
Severability
Supplemental Payments ✔Correct Answer-Severability
Mary offers piano and guitar lessons in her home on a part-time basis and wants liability
coverage to cover the risk of a student's parents suing her for some reason. If she wants
additional liability coverage than her homeowners policy provides, which of the following is the
most practical solution?
add the Home Day Care Coverage endorsement
purchase a second homeowners policy
add the permitted incidental occupancies endorsement
purchase a dwelling policy ✔Correct Answer-add the permitted incidental occupancies
endorsement
Ryan operates an appliance repair shop. He usually has a dozen appliances from customers in
the shop. What type of commercial inland marine policy should his agent recommend for him to
be covered in the event he damages any of these appliances?
contractors equipment floater
accounts receivable floater
bailees' customer floater
equipment dealers floater ✔Correct Answer-bailees' customer floater
Brendan, a mail clerk, often uses his car to run errands for his employer. If he has an accident
while running one of these errands, his employer's business auto policy (BAP) will treat
Brendan's car as a(n)
Hired auto.
Nonowned auto.
Owned auto.
Public or livery conveyance. ✔Correct Answer-Nonowned auto
Cynthia's business is covered by a commercial package policy that uses ISO forms. A California
amendatory endorsement attached to the policy seems to contradict some of the provisions
elsewhere in the policy. How should Cynthia interpret these contradictions?
Cynthia should ask the California Department of Insurance for assistance in resolving any
discrepancies between these two documents.
Interpreting contradictions is the role of the courts, not the policyholder.
The endorsement takes precedence over the policy it is attached to.
The policy takes precedence over any endorsement attached to it. ✔Correct Answer-The
endorsement takes precedence over the policy it is attached to
