An insurance company’s loss ratio is determined by dividing the insurer’s :

Incurred losses by its earned premiums

In states with a no-fault law, what coverage may replace the personal auto policy’s medical payments coverage?

Personal injury protection (PIP) coverage

The Oklahoma commissioner of insurance cannot suspend or revoke a producer’s license for which of the following reasons?

Failing to meet projected sales goals

Why do insurance policies use quotation marks with certain words and phrases?

To identify words & phrases that are defined by the policy

The Fair credit Reporting Act (FCRA) regulates the activities of which of the following?

Financial institutions and insurance companies

Which of the following is NOT a power granted to the Oklahoma Commisioner of insurance?

Prosecuting individuals for violating the insurance laws

What is the purpose of no-fault auto insurance?

To lower insurance costs by reducing or eliminating litigation

Which of the following is NOT an unfair claims settlement practice if committed by an insurance company in Oklahoma?

Failing to promptly settle a claim for which liability is uncertain

Which of the following is a requirement of an insurance risk?

A covered loss must be definite as to time, cause, and location

For a building to be insurable under a regular flood insurance policy, which of the following conditions should be met?

It must have at least two rigid walls

Payments in satisfaction of judgments will be considered sufficient

If min liability insurance limits are met

In an auto policy has split limits of 50/100/75, what’s does the “75” represent?

The max amount the insurer will pay for damage to other cars or property

Under the Terrorism Risk Insurance Act, all of the following lines of insurance are covered EXCEPT:

Homeowners and dwelling insurance

Because Ivan’s DP 1 policy provides coverage against the peril of explosion, he is covered if:

The house is damaged by an explosion caused by a leaking gas pipe

An individual has the right to buy uninsured motorist coverage for up to what amount?

The same amount as his/her bodily injury liability insurance coverage limit

A state’s insurance commissioner or director is generally responsible for all of the following EXCEPT:

Assure that ins.companies domiciled in the state meet their profanity goals

GHI reinsurance corporation is an insurance company that:

Insures the other insurance companies exceptionally large risks

Who would be able to buy insurance to cover their potential losses from the activity described ?

Judith, who has just purchased an automobile

Who issues the participant a certificate after successful completion of the auto or moto accident prevention course?

Sponsoring agency of the course

Loss costs, a key component of property and casualty insurance rates, reflect the insurer’s:

Past claims and estimated future claims

The collapse additional coverage in a homeowners policy applies only when:

All or part of the building falls or caves in

Uninsured motorist coverage typically does NOT protect which of the following?

Family members who do not live with the insured

Her home doesn’t qualify for the HO policy she wanted,so Gilda buys a DP 3 po..Under this policy, personal property has:

Named perils coverage on an actual cash value basis

Excess & surplus(E&S) lines insurance is any type of coverage that:

Cannot be placed with an admitted insurer in a certain jurisdiction

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Oklahoma property and casualty practice exam pt2

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Questions 86

Answers

1
The National Insurance program(NFIP) is an example of what kind of insurance?
Government insurance
Private insurance
Self-insurance
Commercial insurance
2
An insurance company’s loss ratio is determined by dividing the insurer’s :
Unearned premiums by its underwriting expenses
Incurred losses by its earned premiums
Incurred losses by its underwriting expenses
Combined ratio by its expense ratio
3
In states with a no-fault law, what coverage may replace the personal auto policy’s medical payments coverage?
Bodily injury coverage
Personal injury protection (PIP) coverage
Personal and advertising injury (PAI) coverage
Personal injury coverage
4
Mutual insurance companies are owned by their own policyholders through which of the following?
Policyholder shares
Mutual certificates
Participating policies
Stock policies
5
Caleb wants a dwelling policy that will protect the trees and shrubs on his property. He should therefore avoid buying:
A DP 3 policy
And unendorsed DP 2 or DP 3 policy
DP 2 policy
A DP 1 policy
6
Although the DP3 excludes water damage caused by flood,the exclusion does NOT apply when the damage arises from flood by
Fire
Theft
Power failure
Riot
7
The Oklahoma commissioner of insurance cannot suspend or revoke a producer’s license for which of the following reasons?
Being convicted of a felony
Having a producer’s license denied or suspended in another state
Forging an individual’s name on an insurance application
Failing to meet projected sales goals
8
Which of the following is commonly listed as an excluded cause of loss in an open perils property insurance policy?
Vandalism
Flood
Explosion
Windstorm
9
Lamont owns 100 shares of ABC ins Co. stock and receives dividends from this investment. What type of insurer is ABC?
Exclusive
Reciprocal
Stock
Mutual
10
When is an owner of a property or casualty insurance policy required to have an insurable interest in the insured risk?
When the policy is applied for
When the loss occurs
When the policy is purchased
When the policy is delivered
11
ABC Ins.Co is an inc.entity and is ownd by its plcyhldrs.Howver,it dsn’t have cpital stck.what kind of insurer are they?
Domestic insurer
Mutual insurer
Authorized insurer
Stock insurer
12
What is the name for one-yr pd between typical insurance policy’s inception date and it’s expiration date?
Coverage territory
Policy trigger
Retroactive period
Policy period
13
Why do insurance policies use quotation marks with certain words and phrases?
To show that these words and phrases are slang terms
To identify words & phrases that are defined by the policy
To recognize copyrighted material that was taken from another source
To call attention to words & phrases that are especially important
14
The Fair credit Reporting Act (FCRA) regulates the activities of which of the following?
Financial institutions alone
Financial institutions and insurance companies
Consumers, financial institutions, and insurance companies
Insurance companies alone
15
Which of the following is NOT a power granted to the Oklahoma Commisioner of insurance?
Examining insurers
Holding hearings
Issuing rules and regulations to administer insurance laws
Prosecuting individuals for violating the insurance laws
16
What is the purpose of no-fault auto insurance?
To make it easier for an accident victims to collect from at-fault motorist
To eliminate the need for uninsured motorists coverage
To lower insurance costs by reducing or eliminating litigation
To make motorists responsible for their own injuries
17
Which of the following is NOT an unfair claims settlement practice if committed by an insurance company in Oklahoma?
Failing to disclse bnfits & covgs to claimants that are pertinnt to a claim
Failing to promptly settle a claim for which liability is uncertain
Failing to promptly investigate claims
Offering to settle claims for less than due to encourage litigation
18
Which forms value dwelling buildings on the basis of actual cash value?
DP 2
DP 1
DP 1 & 2
DP 2 & 3
19
Which of the following is a requirement of an insurance risk?
The risk must be speculative in nature
The insured event must be within the control of the insured
The insured risk must be catastrophic in nature
A covered loss must be definite as to time, cause, and location
20
For a building to be insurable under a regular flood insurance policy, which of the following conditions should be met?
It must be able to float
It must have at least two rigid walls
It must be 100 percent above ground
It cannot be located in a special flood hazard area(SFHA)
21
Payments in satisfaction of judgments will be considered sufficient
If min liability insurance limits are met
If equal to at least 90 percent of the minimum liability insurance limits
If max liability insurance limits are required to be met
If equal to at least 75 percent of the minimum liability insurance limits
22
In an auto policy has split limits of 50/100/75, what’s does the “75” represent?
The max amount the insurer will pay for damage to other cars or property
The max sun the insurer will pay for injuries to other people and Damages
The max sun the insurer will pay to all injured persons
The max amount that will be paid to any one injured person
23
All the following parties are covered under a property and casualty insurance policy EXCEPT:
Bailes
Additional insureds
Mortgage lenders
Lost payees
24
Under the Terrorism Risk Insurance Act, all of the following lines of insurance are covered EXCEPT:
Worker’s compensation insurance
Homeowners and dwelling insurance
Commercial property insurance
Commercial liability insurance
25
What is the federal regulation that requires businesses to fairly and accurately report consumer information?
The CAN-SPAM act
The Fair Credit Reporting act
The Telemarketing sales rule
The Do-not-call implementation act
26
Because Ivan’s DP 1 policy provides coverage against the peril of explosion, he is covered if:
The house is damaged by an explosion caused by a leaking gas pipe
The steam boiler heats the house explodes
The pressre valve on a hot watr heatr sprays watr that damages the basement
The fuse box is damaged by electric arcing
27
If an applicant is entitled to have an auto liab.policy but can’t do so on ordinary methods.What Plan will comiss. Make?
Apportioned risk plan
Assigned risk plan
Compensatory plan
Limited liability plan
28
Which exclusion in a DP 3 policy applies only to the dwelling and other structures coverages?
Intentional loss
War
Power failures
Weather conditions
29
An individual has the right to buy uninsured motorist coverage for up to what amount?
The same amount as his/her bodily injury liability insurance coverage limit
One-half the amount of his/her bodily injury liability insurance cov limit
2x the amount of his/her bodily injury liability insurance coverage limit
3 times the amount of his/her bodily injury liability insurance cov limit
30
The Federal Fait Credit Reporting Act provides the rights of:
The Department of Insurance
Insurers
Consumers
Creditors
31
How much advance notice must an insurance co give Its policy holder if it doesnt intend to renew a personal auto policy?
At least 14 days
At least 7 days
At least 10 days
At least 20 days
32
In insurance terms, the basic state of being suspect to a possible loss is called :
Risk
Accident
Peril
Hazard
33
Greg ruins a wheel while driving over one of these potholes. These potholes present a(n):
Peril
Exposure
Hazard
Risk
34
What are inland marine policies often referred to ?
Gliders
Sliders
Drifters
Floaters
35
Insuring a new restaurant against business failure is not possible because business success or failure is:
Impossible to predict
A pure risk
A speculative risk
Not measurable
36
A state’s insurance commissioner or director is generally responsible for all of the following EXCEPT:
Approve insurer’s premium rates
Assure that ins.companies domiciled in the state meet their profanity goals
Regulate the market conduct of insurance producers
Regulate the licensing of producers and insurers in the state
37
GHI reinsurance corporation is an insurance company that:
Operates as a primary insurer
Is owned by the companies it insured
Insures the other insurance companies exceptionally large risks
Is chartered as a risk retention group
38
Long life insurnce company is incorporated in NV but transacts insurance in OK.Which type of insurer is long life in OK?
Domestic
Foreign
Alien
No admitted
39
Who would be able to buy insurance to cover their potential losses from the activity described ?
Darryl, who buys land as a speculative investment
Suzanne, who trades stocks online
Judith, who has just purchased an automobile
Jimmy, who places bets on horse races
40
For an insurer to pay p/s claim,when must the policyholder have an insurance interest in the uninsured risk ?
Only when the policy is purchased or renewed
At the time of the loss
Only when the claim is submitted
Only when the insurance is purchased
41
Who issues the participant a certificate after successful completion of the auto or moto accident prevention course?
Commissioner of insurance
Sponsoring agency of the course
Oklahoma department of insurance
The course’s instructor
42
When referring to the subject that is being insured under an insurance policy, the term that is used is:
Exposure
Hazard
Peril
Risk
43
Which of the following is NOT a duty of the Oklahoma Comissioner of insurance?
Examining insurers and producers
Making rules and regulations
Soliciting insurance contracts
Enforcing the insurance laws
44
In Oklahoma, what is another name for an insurance agent?
Broker
Consultant
Intermediary
Producer
45
The money that a property insurance policyholder pays for insurance covering his building is called a(n):
Loss cost
Rate
Exposure unit
Premium
46
Loss costs, a key component of property and casualty insurance rates, reflect the insurer’s:
Past claims and estimated future claims
Actual claims paid during the policy period
Commissions payable to producers and other underwriting expenses
Expenses during the previous policy year
47
The collapse additional coverage in a homeowners policy applies only when:
All or part of the building falls or caves in
Earth movement damages a building
A flood causes the collapse
A structural building component weakens
48
Uninsured motorist coverage typically does NOT protect which of the following?
Family members who live with the insured
Family members who do not live with the insured
The insured
Any people who are injured while riding in the insured’s car
49
Her home doesn’t qualify for the HO policy she wanted,so Gilda buys a DP 3 po..Under this policy, personal property has:
Open perils coverage on a replacement cost basis
Named perils coverage on an actual cash value basis
Open perils coverage on an actual cash value basis
Named perils coverage on a replacement cost basis
50
Pierre’s homeowners policy often refers to “we”. He correctly determines that “we” means:
Pierre and his family
The insurance company
The insurance agent who sold the policy
The insurance industry
51
Excess & surplus(E&S) lines insurance is any type of coverage that:
Has unused limits that are left over after paying a large loss
Cannot be placed with an admitted insurer in a certain jurisdiction
Provides coverage once a primary policy’s limits have been exhausted
Is not essential but is desirable
52
The standard perils covered in every dwelling property 1-Basic form, do NOT include:
Internal explosion
Windstorm
Fire
Lightning
53
Emil, a producer licensed in OK, moves to GA on April 30. By what date is he required to notify the OK ins. comissioner?
May 15
October 31
May 7
May 30
54
In the context of a property or casualty insurance policy, which of the following is considered to be personal property?
In-ground garden fountain
Heating, ventilation, and air conditioning(HVAC) system
Tool shed
Movable gas grill
55
Which of the following provides an insurance co.With fairly accurte means of determinng liklihood in an event to happen?
Adverse selection
Insurance risk
The law of large numbers
Risk management
56
Which is least likely to be considered a “covered auto” in a personal auto policy (PAP)?
Temporary substitute passenger auto
Newly acquired passenger auto
Commercial tractor-trailer combination
Owned private trailer
57
Osbaldo & his insurer agree to submit their dispute to arbitration, What can they expect from the arbitration?
A court of law will rule on the out come
The panel will consist of three experts
They can choose the state law that will govern the outcome
The hearing will take place at the insurer’s home office
58
Ina’s home is located in a special flood hazard area(SFHA).What does this mean with the area’s tendency to flood?
It has one flood every 100 hrs
It will always have at least one flood during any 100-yr period
It has 1 percent chance of being flooded any given year
It will never have more than one flood during any 100-yr period
59
For an insurer to pay a property ins. Claim, when must the policyholder have an ins interest in the insured property?
Only when the insurance was purchased
At the time of the loss
Only at the start of the policy year
Any time during the past year
60
Purchasing an insurance policy is an example of:
Risk retention
Risk transfer
Risk avoidance
Risk control
61
What does the coverage territory provision in a property and casualty insurance policy explain?
In what state the policy was issued
In what country the policy was Issued
Which state’s laws apply in interpreting the policy
In which countries coverage applies
62
Which of the following does NOT constitute insurance-related conduct?
Preparing advertisements for an insurance contract
Negotiating an insurance contract
Processing claims
Collecting and transmitting insurance premiums
63
An automobile liability ins. policy expires on the expiration date stated in the policy. At what time does this occur?
12:01 am(standard time)
Noon(standard time)
Midnight (standard time)
5:00 pm ( standard time)
64
Liability insurance basically involves:
International law
Contract law
Criminal law
Tort law
65
VWX insurance company is considered an alien insurer, which means it is domiciled:
In the commissioner’s state
In a different state
On the internet
Outside the United States
66
Which is NOT one of the three major parts of a personal auto policy (PAP)?
Personal auto coverage form
Declarations page
Definitions
Applicable endorsements
67
As compared with fire insurance policies, inland marine floaters typically provide coverage:
Against more causes of loss
With inadequate limits
At fewer locations
Against specifically defined perils only
68
Which coverage does a homeowners insurance policy provide that a standard dwelling policy does not?
Additional living expenses
Personal property
Liability
Other structures
69
Which would not qualify for a temp insurance producer’s license in OK and must obtain a regular producer’s license?
Person designated by a producer on active military duty
Wife of a disabled producer
Surviving spouse of a deceased producer
Part-time producer of a licensed agency
70
Another name for perils is
Difference-in-conditions
Causes of loss
Risks
Hazards
71
Property & casualty insurance rates are based on all the following components EXCEPT:
Competitors’ rates
Margin for profits and contingencies
Expenses
Loss cost data
72
Why does an underwriter guard against adverse selection?
To insure only persons who can afford the premiums
To prevent premium inflation
To minimize insuring persons with the most risk
To insure only persons with the least risk
73
If a group of insureds are rated by class, they will
Experience the same losses
Be charged the same premium rate
File the same claims
Be exposed to the same risks
74
How does an excess insurance policy differ from an umbrella insurance policy?
It does not replace primary coverage that has been exhausted
It doesn’t provide broader cov than the underlying primary policies
It provides cov for certain losses not covered by the underlying prim. Po.
It provides excess cov over two or more underlying primary policies
75
What is the surplus lines premium tax that must be paid based on total gross premiums charged with any broker-procured?
3 percent
6 percent
5 percent
10 percent
76
What is the max amount of cov allowed for each vehicle liab policy for bodily injury/death of one person in any one acc?
The max allowed is $25,000
The max allowed is $50,000
The max allowed is $20,000
There are no limits
77
Charlene’s PAP provides coverage not only in her home state but also when she is driving her car in all areas EXCEPT:
Mexico
Puerto Rico
Quebec
Hawaii
78
When completing an application, Dusty lied about his age to obtain a lower rate. What is Dusty’s lie considered ?
Estoppel
Concealment
A misrepresentation
A waiver
79
Tom is an insurer broker.He sells a life ins.policy issued by ABC Insurers to his client Ella.Which party does Tom rep?
ABC insurers
Both ABC insurers and Ella
Neither ABC insurer’s nor Ella
Ella
80
Lucinda plans to buy a condominium in the city. She had an HO3 for her country home . Which HO policy form is best ?
HO 6
HO 3
HO 4
HO 5
81
Leopold’s 2-car garage is connected to his house by an enclosed breezeway. Which cov of his HO ins policy applies?
Coverage D
Coverage A
Coverage C
Coverage B
82
In deciding not to own a car out of concern for the risks of accidents or theft,what risk management technique is taken?
Risk prevention
Risk avoidance
Risk reduction
Risk retention
83
According to the”motor vehicle” definition in Donell’s HO ins.policy,which would NOT be considered a motor vehicle?
A bicycle
A self-propelled snowblower
A lawn tractor
A trailer attached to a lawn tractor
84
What type of motor vehicle liability policy explicitly designated the vehicles to which coverage applies?
Neither an owner’s policy nor an operator’s policy
Both an owner’s policy and an operator’s policy
An owners policy of liability insurance
An operator’s policy of liability insurance
85
After commissioners assigned risk plan is approved, each insurance company issuing auto liability policies in OK must:
Consider whether it will reject the plan
Take no action required
Determine whether it will participate in the plan
Participate in the plan
86
A homeowners insurance policy does NOT provide liability coverage for anyone who:
Makes false statements with respect to the insurance
Is not a legal citizen of the United States at the time of the loss
Makes a liability claim under another policy
Has been added to the named insured’s family during the policy term

Oklahoma property and casualty practice exam pt2 Flashcards | StudBud