ILLINOIS PERSONAL LINES AD
BANKER COMPREHENSIVE EXAM
QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS 100%
CORRECT RATED A+
Question 1: An agency contract explicitly grants an insurance producer the
express authority to solicit insurance applications for an insurer. Although the
written contract is completely silent on the matter, the producer also routinely
collects initial premiums and features the insurer's corporate logo on their
professional business cards. Because these actions are necessary, reasonable, and
typical to carry out the express duty of soliciting applications, they are legal
examples of the producer's:
A) Express authority
B) Implied authority ✔✔
C) Apparent authority
D) Inherent structural authority
Question 2: The Terrorism Risk Insurance Act (TRIA) created a federal backstop
for commercial property and casualty losses resulting from certified acts of
terrorism. Which federal entity is charged with administering the Terrorism
Insurance Program?
A) Department of Homeland Security
B) Department of Defense
C) Department of the Treasury ✔✔
D) National Association of Insurance Commissioners (NAIC)
TRIA's Terrorism Insurance Program protects consumers by addressing market
disruptions and ensuring the availability and affordability of commercial property
,and casualty insurance for terrorism risks. It is administered by the Department of
the Treasury, specifically the Secretary of the Treasury.
An NFIP flood policy would provide which of the following coverages?
A
Flood loss to appliances inside the dwelling
B
Loss of business income due to a flood loss to commercial property
C
Flood loss to money or securities
D
Additional living expenses incurred after a flood loss to residential property -
ANSWER ✔✔Flood loss to appliances inside the dwelling
An insured has a property policy that provides $50,000 of personal property
coverage and $100,000 of coverage for the building, with a $1,000 deductible and
an 80% coinsurance requirement. If furniture sustains $500 of covered fire
damage, how much does the insurer pay? -ANSWER ✔✔Nothing
The property loss would be subject to the policy deductible. Since the amount of
loss does not exceed the deductible amount, the insurer would not pay for this loss.
This is an example of a deductible reducing the frequency of small claims.
Which of the following is not true about an insurance policy?
A
,An application is a document that provides information for underwriting purposes
B
A deductible is a specified amount of loss that is retained by the insured
C
The Insuring Agreement includes the name of the insured
D
An insurance policy that pays before all other coverage is called primary coverage
-ANSWER ✔✔The Insuring Agreement includes the name of the insured
A Broad Form Homeowners policy would cover which of the following losses?
A
Collapse of the dwelling caused by a sinkhole
B
All losses caused by earth movement, but only if a fire or explosion ensues
C
Building glass breakage caused by an earthquake
D
Tree damage to a detached garage resulting from an earthquake -ANSWER
✔✔Building glass breakage caused by an earthquake
Earth movement is generally an excluded peril, but the Glass or Safety Glazing
Material Additional Coverage will cover breakage of building glass or safety
glazing material that results from earth movement. If a fire, explosion, or theft
results from earth movement and causes a loss, only those ensuing losses are
covered.
, The NFIP would consider all of the following to be a flood, except:
A
Overflow of tidal waters covering only 2 acres of the insured's property
B
Overflow of tidal waters covering the insured's 1-acre property and an adjacent 1-
acre property
C
Overflow of tidal waters covering the insured's 2-acre property and an adjacent 5-
acre property
D
Overflow of tidal waters covering only the insured's 1-acre property -ANSWER
✔✔Overflow of tidal waters covering only the insured's 1-acre property
The NFIP defines flood as a general or temporary condition of partial or complete
inundation of land that is normally dry. It must involve at least 2 acres of the
insured's property, or both the insured's entire property and an adjacent piece of
property.
N purchases a Broad Form Homeowners policy to protect a dwelling under
construction. Which of the following statements about the policy's coverage is
NOT correct?
A
The dwelling is protected on an open perils basis
B
The contents are protected on a named perils basis
C
BANKER COMPREHENSIVE EXAM
QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS 100%
CORRECT RATED A+
Question 1: An agency contract explicitly grants an insurance producer the
express authority to solicit insurance applications for an insurer. Although the
written contract is completely silent on the matter, the producer also routinely
collects initial premiums and features the insurer's corporate logo on their
professional business cards. Because these actions are necessary, reasonable, and
typical to carry out the express duty of soliciting applications, they are legal
examples of the producer's:
A) Express authority
B) Implied authority ✔✔
C) Apparent authority
D) Inherent structural authority
Question 2: The Terrorism Risk Insurance Act (TRIA) created a federal backstop
for commercial property and casualty losses resulting from certified acts of
terrorism. Which federal entity is charged with administering the Terrorism
Insurance Program?
A) Department of Homeland Security
B) Department of Defense
C) Department of the Treasury ✔✔
D) National Association of Insurance Commissioners (NAIC)
TRIA's Terrorism Insurance Program protects consumers by addressing market
disruptions and ensuring the availability and affordability of commercial property
,and casualty insurance for terrorism risks. It is administered by the Department of
the Treasury, specifically the Secretary of the Treasury.
An NFIP flood policy would provide which of the following coverages?
A
Flood loss to appliances inside the dwelling
B
Loss of business income due to a flood loss to commercial property
C
Flood loss to money or securities
D
Additional living expenses incurred after a flood loss to residential property -
ANSWER ✔✔Flood loss to appliances inside the dwelling
An insured has a property policy that provides $50,000 of personal property
coverage and $100,000 of coverage for the building, with a $1,000 deductible and
an 80% coinsurance requirement. If furniture sustains $500 of covered fire
damage, how much does the insurer pay? -ANSWER ✔✔Nothing
The property loss would be subject to the policy deductible. Since the amount of
loss does not exceed the deductible amount, the insurer would not pay for this loss.
This is an example of a deductible reducing the frequency of small claims.
Which of the following is not true about an insurance policy?
A
,An application is a document that provides information for underwriting purposes
B
A deductible is a specified amount of loss that is retained by the insured
C
The Insuring Agreement includes the name of the insured
D
An insurance policy that pays before all other coverage is called primary coverage
-ANSWER ✔✔The Insuring Agreement includes the name of the insured
A Broad Form Homeowners policy would cover which of the following losses?
A
Collapse of the dwelling caused by a sinkhole
B
All losses caused by earth movement, but only if a fire or explosion ensues
C
Building glass breakage caused by an earthquake
D
Tree damage to a detached garage resulting from an earthquake -ANSWER
✔✔Building glass breakage caused by an earthquake
Earth movement is generally an excluded peril, but the Glass or Safety Glazing
Material Additional Coverage will cover breakage of building glass or safety
glazing material that results from earth movement. If a fire, explosion, or theft
results from earth movement and causes a loss, only those ensuing losses are
covered.
, The NFIP would consider all of the following to be a flood, except:
A
Overflow of tidal waters covering only 2 acres of the insured's property
B
Overflow of tidal waters covering the insured's 1-acre property and an adjacent 1-
acre property
C
Overflow of tidal waters covering the insured's 2-acre property and an adjacent 5-
acre property
D
Overflow of tidal waters covering only the insured's 1-acre property -ANSWER
✔✔Overflow of tidal waters covering only the insured's 1-acre property
The NFIP defines flood as a general or temporary condition of partial or complete
inundation of land that is normally dry. It must involve at least 2 acres of the
insured's property, or both the insured's entire property and an adjacent piece of
property.
N purchases a Broad Form Homeowners policy to protect a dwelling under
construction. Which of the following statements about the policy's coverage is
NOT correct?
A
The dwelling is protected on an open perils basis
B
The contents are protected on a named perils basis
C
