IPCI - Indiana Property and Casualty Insurance Exam

Question 21: A trucking firm applying for commercial liability coverage promises its insurer that every driver it employs will hold a current commercial license. The insurer relies on that promise when accepting the account. Which term describes a statement guaranteed to be true?

A representation

A warranty

A binder

A waiver

Question 22: A commercial auto liability insurer settles with the motorist whose sedan was struck by the insured company's delivery van, covering her medical bills and repairs. The money goes to someone other than the insured and the insurer. Which term names a loss of that kind?

A third party loss

A first party property loss

A subrogation recovery by the insurer

A supplementary payment beyond the limit

Question 23: An injured claimant waits several years before filing suit against an insured, and the court dismisses the case because the filing deadline set by law had already run. Which defense against a negligence action does that dismissal illustrate?

Assumption of risk

Contributory negligence

The statute of limitations

Last clear chance

Question 24: A store manager mops a floor and leaves no warning sign. A shopper slips on the wet tile and fractures a hip. The unbroken chain linking the manager's careless act to that specific injury is identified by which element?

Legal duty owed to shoppers

Proximate cause of the injury

Assumption of risk

Vicarious liability of the store

Question 25: An adjuster handling a commercial auto total loss consults dealer listings and recent sales of similar vehicles to determine what a willing buyer would pay a willing seller for the wrecked unit. Which valuation concept is the adjuster using?

Replacement cost

Agreed value

Market value

Salvage value

Question 26: A roofing contractor telephones his producer for general liability coverage because a large job starts the next morning. The producer confirms that protection is effective at once while the underwriter reviews the account, although the insurer has issued nothing. Which term fits?

A binder

A certificate of authority

A premium audit worksheet

An endorsement

Question 27: A department store guard wrongly detains a shopper he suspects of theft, and the shopper sues for false arrest and invasion of privacy. She was never touched and suffered no physical harm at all. Which insurance term names this category of harm?

Bodily injury

Personal injury

Property damage

Special damages

Question 28: A manufacturer needs its commercial general liability policy changed so that a newly acquired subsidiary is covered as an additional insured. The insurer prepares a form and attaches it to the existing contract. Which part of the policy accomplishes that change?

An endorsement

The declarations

The insuring agreement

A certificate of insurance

Question 29: An insurer reviews an account and decides it will let the coverage run to the end of the term but will not offer another term afterward, sending the first-named insured written notice in advance. Which action has the insurer taken?

Flat cancellation of the policy

Nonrenewal of the policy

Midterm cancellation of the policy

Rescission of the original contract

Question 30: Three partners are listed one after another on the declarations of a commercial package policy. The partner whose name appears at the top receives certain rights and duties the other two do not have. Which designation describes that partner?

Additional insured

Insured by definition

Primary policyholder of record

First named insured

Question 31: After a liability insurer settles a claim on behalf of its insured, it learns that the insured had already signed a document releasing the responsible third party from every further obligation. What effect does that earlier release have on the insurer?

It impairs the insurer's right of recovery

It ends the insurer's duty to defend

It converts the loss to excess coverage

It voids the policy from inception

Question 32: A business carries two liability contracts that reach the same claim. The second responds only for amounts the first did not pay, and never beyond its own limit or the size of the loss. Which term describes that second contract?

Primary coverage

Contribution by equal shares

Excess coverage

Pro rata contribution

Question 33: A producer is asked whether the professional liability contracts being sold today generally allow an insured professional to block a settlement that the company wishes to make. Which statement accurately describes current practice on consent to settle a loss?

Most policies no longer require insured consent

All policies require written consent before settlement

Consent applies only to bodily injury claims

Consent must come from the claimant instead

Question 34: A company's business auto coverage form responds to an accident involving a delivery truck the company borrowed from another firm rather than a vehicle it owns itself. How does the form's other insurance condition treat a loss of that kind?

It is primary for the borrowed auto

It is excess over other applicable coverage

It pays contribution by equal shares only

It denies coverage for nonowned autos

Question 35: Following an auto accident that leads to a liability suit, the insured needs a bail bond, and later an appeal bond is required while the verdict is challenged. A liability policy treats the premiums for those bonds in which manner?

They reduce the per occurrence limit

They are excluded from all coverage

They are treated as punitive damages

They are paid as supplementary payments

Question 36: Two commercial liability insurers both cover the same third party claim on a primary basis. Each company pays a share of the judgment sized to how its own limit compares with the total insurance available. Which method is being applied?

Contribution by equal shares

Contribution by limits

Primary and excess layering

Subrogation among insurers

Question 37: A customer files a baseless suit claiming that the insured's cleaning crew ruined her hardwood floors, and the insurer hires counsel and wins a dismissal. Under the liability policy, how are the attorney fees for that defense handled?

Charged against the per occurrence limit

Billed back to the insured later

Paid in addition to the limit

Split evenly between insurer and insured

Question 38: Under the federal terrorism risk insurance program, a commercial property and casualty insurer writing a new policy must handle the terrorism exposure in a particular way at the time coverage is placed. Which requirement applies to that insurer?

It must exclude terrorism from every policy

It must obtain approval from Homeland Security

It must reinsure terrorism losses privately

It must offer coverage and disclose premium

Question 39: An insurer defending its insured in a bodily injury suit asks the insured to appear at a deposition, help identify witnesses and later testify at trial. The duties after loss condition of a liability policy addresses that request through which requirement?

The proof of loss requirement

The prompt notice requirement

The duty to assist and cooperate

The voluntary payment prohibition

Question 40: After his forklift damages a customer's trailer, an insured wants to settle the matter on the spot by promising to pay for the repairs himself before calling his insurer. The duties after loss condition treats that promise in which way?

It satisfies the cooperation duty

It counts as prompt notice

It is required to limit damages

It is prohibited without the insurer's consent

IPCI Indiana Property and Casualty Insurance Exam - Set 5 - Part 2