WEBCE PRACTICE EXAM 1 | QUESTIONS AND ANSWERS |
VERIFIED ANSWERS GRADED A+ | LATEST EXAM UPDATE
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)
VERIFIED ANSWERS GRADED A+ | LATEST EXAM UPDATE
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)
