NJ Property, Casualty, and Auto Licensing Exam Questions and Answers

Insuring Agreement - ANSWER-company's obligation to pay, includes the perils and coverage for specific or named peril policies Exclusions - ANSWER-what the policy will not pay for Definitions - ANSWER-names of the persons insured in addition to the named insured are listed here, along with any other (blank) of terms in the policy Additional Coverage - ANSWER-coverages under a policy that are provided by the insurer at no extra cost Casualty Policies - ANSWER-defense costs over and above liability limits, post-judgement interest, bail bonds and appeal bonds Property Policies - ANSWER-debris removal, falls within the insured dwelling limit and cannot exceed the limit Binder - ANSWER-temporary proof of coverage before policy is issued (oral is good for 10 days, written for 60 days) Bodily Injury and Property Damage Coverage Amounts - ANSWER-Minimum: 15k per person/30k per accident/5k for property; Max is $500k Auto - Personal Assigned Risk Policy - ANSWER-PAIP; standard risk 0 points, non-standard risk 1-8 points, assigned risk 9 points. (blank) classification runs for 3 years Auto - Commercial Assigned Risk Policy - ANSWER-CAIP; assigned risk policy for commercial vehicles, including private vehicles owned by the business Personal Injury Protection - ANSWER-PIP or No-Fault, NJ Representations Act; mandatory, encourage the insured to recover under his/her own policy, tries to reduce premiums and hasten settlements through avoidance of lengthy litigation that would normally be the case. The benefits of the standard policy are statutory and therefor minimal Fire - ANSWER-A named peril policy. (blank) policies must be filed with the DOBI commissioner before use and must provide a fairly uniform look, and provide ample space for coverage, limits, rates, policy inception, and expiration dates Friendly Fire - ANSWER-fire is within it's intended confines (not covered) Hostile Fire - ANSWER-fire is outside it's intended confines Covered Fire Perils - ANSWER-fire - hostile, lightening, debris removal, theft within first 5 days Excluded Fire Perils - ANSWER-theft (after first 5 days of fire), neglect that gives rise to proximate cause of fire, war, government action, fire - friendly Fair Plan - ANSWER-(blank) policies are designed to prevent redlining in urban areas: improve property conditions from an availability standpoint, stabilize the property insurance market, provide coverage for risks which insurance cannot be obtained in the open market $1.5 million - ANSWER-FAIR Plan max limit Covered FAIR Plan Perils - ANSWER-FAIR: fire, lightening, debris removal Excluded FAIR Plan Perils - ANSWER-FAIR: burglary damage, flood, farms (farms are not urban) Dwelling Policy - ANSWER-1st party coverage only, not necessary to be owner-occupied, no more than 4 families or 5 roomers Basic Peril Coverage - DP1 - ANSWER-basic peril coverage - named perils - most basic dwelling policy Broad Peril Coverage - DP2 - ANSWER-named perils, but more perils than DP1 Special Peril Coverage - DP3 - ANSWER-ALL-RISK on dwelling unless specifically excluded and BROAD on contents or personal property Coverage A - ANSWER-dwelling + attached structures - no co-insurance requirement unlike homeowners policy Coverage B - ANSWER-detached structures - limited to 10% of coverage A amount Coverage C - ANSWER-personal property - limited to 50% of coverage A amount / 10% of secondary insurance Coverage D - ANSWER-fair rental value - limited to 10% of coverage A amount Coverage E - ANSWER-additional living expense - limited to 20% of coverage A amount Boat Owner's Policy - ANSWER-similar to auto insurance policy, except that PIP or "no-fault" is not available. damage from waves is referred to as "hull-damage" and is covered. no workers' compensation coverage Yacht Owner's Policy - ANSWER-for boats that ply international waters, high seas, and engage in commercial fishing. workers' compensation coverage is included Flood Insurance Policy - ANSWER-operated by HUD to provide coverage in flood-prone areas for one-family residential homes, commercial buildings, and house contents. basic policy covers loss due to flood, inundation of tidal waters, mudslide, and soil erosion. can request additional coverage at any time, but there is a 30 day waiting perod before the insurance can go into effect Flood Insurance Policy Exclusions - ANSWER-landslide, damage from water main breakage, sewer main breakage, and wind-driven rain. not a general flood condition (your house is the only one that is flooded but your neighbor's houses are not - your house is not covered) Personal Injury - ANSWER-defamation (slander-oral, libel-written), false arrest or imprisonment, wrongful eviction, invasion of privacy, copyright infringement, industrial espionage - do not confuse with bodily injury Advertising Liability - ANSWER-injury arising from advertising activities, libel in an advertisement, and misrepresentation of a competitor Contractual Liability - ANSWER-coverage is restricted to those that are automatically covered; Lease, Easement, Agreement to indemnity municipality, Side track also known as spur agreement for a rail road loading facility, and Elevator maintenance or L.E.A.S.E Medical Payments - ANSWER-party must incur and report (blank) within 1 year, must arise from business operations on or off premises. max amount is $5,000 Occurrence Basis - ANSWER-incident must have occurred during the policy period, report of incident may be made after the policy period Claims-made Basis - ANSWER-Incident must have happened during the policy period, and not before a retroactive date arising from an arbitrary period of time incorporated in the policy that can be made longer by additional premium Extended Reporting Period - ANSWER-basic - 60 days after expiration date if occurrence is within policy period, but was unknown/unreported Supplemental Basis of Claim - ANSWER-provides coverage for claims resulting from occurrences before the inception date but after the retroactive date (max is 3 years) Business Income Coverage Form - ANSWER-net loss of profit during interruption of business i.e. the restoration period. starts on date of loss and ends on expected date of restoration as determined by the insurance company Extra Expense Coverage Form - ANSWER-appropriate for business that cannot afford to shut down or they might permanently lose their client base (newspapers, magazines, banks, dairies, dry cleaners, potato chip manufacturers) Special Multi-Peril Policy - ANSWER-SMP; a policy for a small business that is not a package, the insured selects what is needed and pays for each part separately Nationwide Inland Marine Policy - ANSWER-covers property that has no fixed location - property in transit, imports and exports, domestic shipments, means of transportation, communication - bridges, tunnels, transmission lines etc. Buildings, skyscrapers, and cement mixers are NOT covered Ocean Marine Policy - ANSWER-covers property at sea, international waters, or high sea Destruction Policy - ANSWER-covers moneys and securities on and off the premises; dishonest acts of customers (shop-lifting) and mysterious disappearance Workers' Compensation Policy - ANSWER-covers all active employees whose sickness or injury arises out of the course of the employer's business, whether or not on the premises Assumption of Risk - ANSWER-by taking the job, the employee assumed the risk, known and unknown Contributory Negligence - ANSWER-the relative negligence of the plaintiff and defendant contributed to the injury or sickness Fellow Servant Negligence - ANSWER-an employer was not liable because the sickness or injury was the result or a fellow servant or co-employee's acts Aggregate Limit - ANSWER-total amount of coverage available for all claims during a policy period, e.g. $1 million per year Insurance Limit - ANSWER-limit of an insurance policy is its policy limit e.g. $100,000 per incident Penalty - ANSWER-limit of a bond - fidelity or surety bond Warranty - ANSWER-A pledge, a promise, a guaranty - what one is warranting must be true in all aspects - existence of a sprinkler system, security guard, or limitation of boat usage Representation - ANSWER-true to the best of one's belief and knowledge. answers to questions on an insurance application and proof of loss are (blank)s. Material Fact - ANSWER-something done or existed of such importance whose disclosure would alter the underwriter's decision or loss settlement. e.g. brother is a convicted arsonist and he lives with insured, if insured told the insurance company about him, they would not write the policy Concealment - ANSWER-act of not disclosing a material fact; would void a policy Peril - ANSWER-cause of a possible loss - fire, lightening, etc Hazard - ANSWER-any condition that may cause or increase the chance of loss from a covered peril Physical Hazard - ANSWER-hazards - broken sidewalk & faulty wiring Moral Hazard - ANSWER-hazards - character defect such as dishonesty, arsonist, etc Morale Hazard - ANSWER-hazards - indifference, "i don't care", business owner places expensive computer on the edge of a table and does not care if it falls because it is covered Inherent Vice - ANSWER-natural ability of the property to self-destruct e.g. wear-and-tear is not covered Theft - ANSWER-stealing of property without visible signs of forcible entry or robbery. can be all by itself, or can be included in robbery or burglary Burglary - ANSWER-theft of articles where forcible entry or exit is evident Premises Burglary - ANSWER-premises must be closed/locked for there to be a claim for (blank) Vacant - ANSWER-totally empty, commercial coverage void after 60 days, home owners coverage void after 30 days, fire is always covered Unoccupied - ANSWER-no occupants, but furnishings remain. same coverage rules at vacant - if you go away for 60 days on vacation from your business or 30 days away from your home, you need additional coverage Robbery and Safe - ANSWER-there is a threat of violence or actual violence involved in the theft; gold coins are covered Barratry - ANSWER-criminal acts by a ship's master or crew Inchmaree - ANSWER-negligence of a ship's captain or crew members - includes navigational errors Moral Responsibiity - ANSWER-a homeowner borrows a neighbor's lawnmower and damages is by striking a rock while using it. the homeowner can request up to $500 from the insurance company to pay the neighbor Event or Accident - ANSWER-1. definite time and place 2. neither expected nor intended 3. results in bodily injury or property damage 4. sudden, unforeseen, fortuitous. (blank)s must occur during the policy period but may be reported after the policy expires Occurrence - ANSWER-accident + continuous and repeated exposure to injurious conditions. example: fumes over an extended time caused death, working with asbestos. (blank) must occur during the policy but may be reported after the policy expires Statute of Limitations - ANSWER-the time period after the incident during which one is allowed to use Direct Loss - ANSWER-(blank) happening immediately and direction from a hazard that has been insured against e.g. wind knocks down a lamp; the lamp starts a fire and the damage resulting from the fireman putting out the fire , all give rise to (blank) Indirect Loss - ANSWER-(blank) resulting from a peril, but not resulting directly and immediately from the peril e.g. loss of income during restoration period - usually covered by an endorsement Proof of Loss - ANSWER-insured must fill this out and submit to the insurance company within 60 days: describe what happened, demand for payment, pr