NJ Property, Casualty, and Auto Licensing Exam With 100% Correct Answers 2023

Insuring Agreement - Correct Answer-company's obligation to pay, includes the perils and coverage for specific or named peril policies Exclusions - Correct Answer-what the policy will not pay for Definitions - Correct 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 - Correct Answer-coverages under a policy that are provided by the insurer at no extra cost Casualty Policies - Correct Answer-defense costs over and above liability limits, postjudgement interest, bail bonds and appeal bonds Property Policies - Correct Answer-debris removal, falls within the insured dwelling limit and cannot exceed the limit Binder - Correct 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 - Correct Answer-Minimum: 15k per person/30k per accident/5k for property; Max is $500k Auto - Personal Assigned Risk Policy - Correct 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 - Correct Answer-CAIP; assigned risk policy for commercial vehicles, including private vehicles owned by the business Personal Injury Protection - Correct 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 - Correct 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 - Correct Answer-fire is within it's intended confines (not covered) Hostile Fire - Correct Answer-fire is outside it's intended confines Covered Fire Perils - Correct Answer-fire - hostile, lightening, debris removal, theft within first 5 days Excluded Fire Perils - Correct Answer-theft (after first 5 days of fire), neglect that gives rise to proximate cause of fire, war, government action, fire - friendly Fair Plan - Correct 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 - Correct Answer-FAIR Plan max limit Covered FAIR Plan Perils - Correct Answer-FAIR: fire, lightening, debris removal Excluded FAIR Plan Perils - Correct Answer-FAIR: burglary damage, flood, farms (farms are not urban) Dwelling Policy - Correct Answer-1st party coverage only, not necessary to be owneroccupied, no more than 4 families or 5 roomers Basic Peril Coverage - DP1 - Correct Answer-basic peril coverage - named perils - most basic dwelling policy Broad Peril Coverage - DP2 - Correct Answer-named perils, but more perils than DP1 Special Peril Coverage - DP3 - Correct Answer-ALL-RISK on dwelling unless specifically excluded and BROAD on contents or personal property Coverage A - Correct Answer-dwelling + attached structures - no co-insurance requirement unlike homeowners policy Coverage B - Correct Answer-detached structures - limited to 10% of coverage A amount Coverage C - Correct Answer-personal property - limited to 50% of coverage A amount / 10% of secondary insurance Coverage D - Correct Answer-fair rental value - limited to 10% of coverage A amount Coverage E - Correct Answer-additional living expense - limited to 20% of coverage A amount Boat Owner's Policy - Correct 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 - Correct Answer-for boats that ply international waters, high seas, and engage in commercial fishing. workers' compensation coverage is included Flood Insurance Policy - Correct Answer-operated by HUD to provide coverage in floodprone 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 - Correct 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 - Correct 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 - Correct Answer-injury arising from advertising activities, libel in an advertisement, and misrepresentation of a competitor Contractual Liability - Correct 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 - Correct 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 - Correct Answer-incident must have occurred during the policy period, report of incident may be made after the policy period Claims-made Basis - Correct 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 - Correct Answer-basic - 60 days after expiration date if occurrence is within policy period, but was unknown/unreported Supplemental Basis of Claim - Correct 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 - Correct 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 - Correct 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 - Correct 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 - Correct 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 - Correct Answer-covers property at sea, international waters, or high sea Destruction Policy - Correct Answer-covers moneys and securities on and off the premises; dishonest acts of customers (shop-lifting) and mysterious disappearance Workers' Compensation Policy - Correct 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 - Correct Answer-by taking the job, the employee assumed the risk, known and unknown Contributory Negligence - Correct Answer-the relative negligence of the plaintiff and defendant contributed to the injury or sickness Fellow Servant Negligence - Correct 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 - Correct Answer-total amount of coverage available for all claims during a policy period, e.g. $1 million per year Insurance Limit - Correct Answer-limit of an insurance policy is its policy limit e.g. $100,000 per incident Penalty - Correct Answer-limit of a bond - fidelity or surety bond Warranty - Correct 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 - Correct 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 - Correct 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 - Correct Answer-act of not disclosing a material fact; would void a policy Peril - Correct Answer-cause of a possible loss - fire, lightening, etc Hazard - Correct Answer-any condition that may cause or increase the chance of loss from a covered peril Physical Hazard - Correct Answer-hazards - broken sidewalk & faulty wiring Moral Hazard - Correct Answer-hazards - character defect such as dishonesty, arsonist, etc Morale Hazard - Correct 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 - Correct Answer-natural ability of the property to self-destruct e.g. wearand-tear is not covered Theft - Correct 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 - Correct Answer-theft of articles where forcible entry or exit is evident Premises Burglary - Correct Answer-premises must be closed/locked for there to be a claim for (blank) Vacant - Correct Answer-totally empty, commercial coverage void after 60 days, home owners coverage void after 30 days, fire is always covered Unoccupied - Correct 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 - Correct Answer-there is a threat of violence or actual violence involved in the theft; gold coins are covered Barratry - Correct Answer-criminal acts by a ship's master or crew Inchmaree - Correct Answer-negligence of a ship's captain or crew members - includes navigational errors Moral Responsibiity - Correct 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 - Correct 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 - Correct 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 - Correct Answer-the time period after the incident during which one is allowed to use Direct Loss - Correct 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 - Correct 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 - Correct Answer-insured must fill this out and submit to the insurance company within 60 days: describe what happened, demand for payment, provide supporting proof Fair Value Reporting - Correct Answer-insured must report true value of inventory every 30 days, if the inventory is underreported the insured is penalized Actual Cash Value - Correct Answer-old for old - replacement cost less depreciation e.g. personal property or contents Pair and Set Clause - Correct Answer-provision specifies that the loss of one item of a set or pair does not constitute or represent the loss of the entire set or pair. states that when a single piece of a set is lost, the value is based on the reduced value of the set. the company may pay difference in value - not more than 50% but less than 100% of the actual loss Arbitration - Correct Answer-when a carrier and an insured cannot agree as to whether there is coverage or not. also uninsured motorist/under insured motorist settlement disputes are settled through (blank) Appraisal - Correct Answer-used when a carried and an insured cannot agree to the amount of the loss. if not settlement, each party selects their own appraisers who settle the dispute. if they cannot agree, both appraisers select an 'umpire', generally the appraisers resolve the settlement Commercial Insurance Deregulation - Correct Answer-attempts to prevent monopolies, increase efficiency and encourage price competition Fair Credit Reporting Act - Correct Answer-customer must sign a disclosure statement notifying him that the insurance may use outside source to verify information. carriers must keep this for 5 years Right of Salvage - Correct Answer-insurer's right to take ownership of property for which it has paid the insured for total loss Salvage - Correct Answer-insurance company retains the insured property after paying a total loss Abandonment - Correct Answer-relinquishment or surrender to an insurance company of all rights and interests in an insured property Jettisoning - Correct Answer-under an ocean marine policy - throw some cargo overboard to save the ship from sinking. all cargo owners share in a loss, not just the cargo owner whose cargo was (blank)ed to save the vessel Subrogation - Correct Answer-the assignment to an insurance company of the insured's rights of recovery against a third party. after paying a first party loss, the carrier stands in the shoes of the insured and can recover from the negligent third party whatever the insured can recover Deductible - Correct Answer-specific amount insured is required to pay of the loss - can be a percentage of the loss Flat Deductible - Correct Answer-definite amount e.g. $500 deductible on property damage, personal auto, and collision and comprehensive Disappearing Deductible - Correct Answer-the higher the covered loss the smaller the deductible; usually associated with commercial policies Ceding Company - Correct Answer-in reinsurance, the company that wrote the original risk Assuming company - Correct Answer-in reinsurance, the company assuming the risk Retrocession - Correct Answer-an arrangement between re-insurers to cede risks, which requires the prior approval of DOBI. the DOBI must also give prior written approval for the reinsurer to do business in NJ Proximate Cause - Correct Answer-immediate cause that is natural and continuous, unbroken by any intervening cause i.e. wind-driven rain Negligence - Correct Answer-failure to act as a responsible, prudent person would Tort - Correct Answer-a civil wrong that is not a wrong arising from non performance of a contract (contract violation) Bodily Injury - Correct Answer-sickness, injury, death as well as pain and suffering Firefighter's Injuries - Correct Answer-workers' compensation provided by the municipality will pay for medical expenses of an injured voluntary fireman for injuries arising out of a firefighter's efforts to put out the fire in a house. the homeowner can request the insurance company pay up to $500 to the volunteer fire department Errors and Omissions - Correct Answer-professional liability: non-medical professionals, agents, brokers, attorneys and accountants Malpractice - Correct Answer-professional liability: medical professionals doctors, nurses Comparative Negligene - Correct Answer-statutory defense; compares the negligence of the plaintiff and the defendant Wrongful death - Correct Answer-statutory defense; survivors have the right of recovery against the wrongdoer Insurable Interest - Correct Answer-the insured must have suffered a financial loss at the time of the loss for the loss to be covered, loss has to be unintended unforeseen and results in a reduction in economic value Indemnity - Correct Answer-payment of an amount to offset all or part of a loss. pro-rata insurance occurs when there are multiple policies for the same location. no company will pay more than it's pro-rated share, thereby upholding the principal of (blank) "back to where you started"