SCPCIP - South Carolina Property and Casualty Insurance Producer Exam

Question 1: A jewelry store owner promised the insurer in writing that a central station alarm system would be maintained at all times. After a claim is filed the insurer discovers no alarm was ever installed. The owner's promise, and the insurer's remedy, rest on which contract concept?

A warranty and its breach

An immaterial misrepresentation

Apparent authority of the producer

Utmost good faith by the insurer

Question 2: A producer submits a completed application with the first premium to the insurer. After reviewing the file, the underwriter agrees to issue coverage but only at a higher premium than the applicant requested. In contract terms, the underwriter's response to the applicant is best described as which of the following?

Unconditional acceptance of the offer

The original offer

A binder issued by the insurer

A counteroffer

Question 3: A company sells its products only through producers who are its own employees rather than independent contractors, pays them by salary or commission, and keeps ownership of the renewals on every policy those producers write. Which marketing and distribution system does this describe?

The independent agency system

The exclusive agency system

A direct writing company

Direct response marketing

Question 4: Two clauses in a policy conflict, and the wording could reasonably be read two ways. The insured had no part in drafting any of it. A court is asked to settle the meaning. Which outcome follows from the way insurance contracts are classified, and why?

The insurer wins as the drafter

The clause is struck and coverage voided

Both parties must renegotiate the wording

The insured wins under contracts of adhesion

Question 5: A new policy arrives and its first page lists the named insured, the mailing address, a description of the property covered, the effective and expiration dates, and the premium charged. Which part of the policy is the insured looking at?

The declarations page

The insuring agreement

The conditions section

The definitions section

Question 6: An underwriter reviewing a new submission draws on inspection reports, motor vehicle records, prior carrier information and the company's own claim files. One document, however, remains the primary source of the information used to accept or decline the risk. Which document is that?

The certificate of insurance

The application

The declarations page

The binder

Question 7: A producer explains to a new client that an insurer will write coverage on the client's warehouse against fire but will not write coverage on the money the client plans to put into a start-up venture. Which distinction supports that answer?

Pure risk is insurable; speculative is not

Direct losses only, never indirect losses

Only catastrophic risks may be insured

Hazards are insurable, perils are not

Question 8: Before ordering an investigative consumer report on an applicant, an insurer must tell the applicant that such a report may be made and may describe character, reputation and lifestyle. Which federal law imposes that notice requirement on insurers and their producers?

The Gramm-Leach-Bliley Act

The doctrine of utmost good faith

The law of agency

The Fair Credit Reporting Act

Question 9: A hotel guest is struck by a light fixture that falls from a lobby ceiling maintained solely by the hotel. She cannot show what the staff did wrong, but such fixtures do not fall unless someone was careless. Which doctrine helps her case?

Assumption of risk

Last clear chance

Res ipsa loquitur

Vicarious liability

Question 10: An underwriter wants a premium that reacts to one insured's own record: credits and debits for specific physical characteristics, an adjustment factor built from three years of actual losses, and a final figure set after the period ends. These belong to which family of rates?

Merit rating

Manual, or class, rating

Judgment rating

Loss cost rating

Question 11: A producer orders business cards and letterhead carrying the insurer's logo, and hands them to prospects. Nothing in the written agency agreement mentions stationery, but doing business this way is customary and necessary. Which kind of authority does the producer exercise here?

Express authority

Apparent authority

Implied authority

Fiduciary authority

Question 12: A producer tells a customer over the phone that coverage is in effect today while the application goes to the home office, and confirms it in writing the same afternoon. A loss occurs before any policy is issued. What did the producer create?

A binder

A warranty of future coverage

An endorsement to a pending policy

A certificate of insurance

Question 13: A shopper who ignored a bright warning cone slips on a wet floor and sues the store. In a jurisdiction applying the strict common law rule, her own carelessness bars her from collecting anything at all. Which defense produced that result?

Comparative negligence

Contributory negligence

Assumption of risk

Res ipsa loquitur

Question 14: A tenant develops lead poisoning after living for six years in an older apartment with deteriorating paint. No single event caused the harm; continuous exposure over years did. A liability policy still treats this as a covered event. Which term best describes what happened?

An accident but not an occurrence

A direct loss, not an occurrence

An occurrence

Neither an accident nor an occurrence

Question 15: A contractor's client wants to be protected under the contractor's policy for work performed on the client's site. The producer arranges for the client to be listed as an insured on that policy. How is such a party normally brought onto the contract?

By endorsement, as an additional insured

Automatically, as an insured by definition

By binder, as a temporary insured

By assignment of the whole policy

Question 16: A storage shed is destroyed by a covered fire and the insurer pays the amount needed to put the owner back in the same financial position enjoyed just before the fire, no better and no worse. Which principle of insurance does that payment reflect?

Law of large numbers

Insurable interest

Proximate cause

Indemnity

Question 17: The insurer's name hangs on the sign outside a producer's office, and the producer routinely takes applications there. The producer emails a customer that a certain loss is covered when the policy actually excludes it. Which principle most likely obligates the insurer to pay?

Apparent authority

Express authority

Utmost good faith

Adhesion

Question 18: Owners of a commercial building knew that a supporting wall had already been damaged, but they never mentioned it while applying for coverage and the insurer never asked. The insurer later discovers the damage. The owners' silence is best described by which term?

Waiver

Estoppel

Warranty

Concealment

Question 19: A homeowner sells her house in March and forgets to cancel the fire policy, which stays in force. In July a fire damages the house and she files a claim. The insurer denies it. Which principle supports the denial?

Coverage ends when the premium lapses

Insurable interest must exist at the loss

Insurable interest is needed only when applying

Proximate cause was broken by the sale

Question 20: A homeowner returns from vacation and finds that lightning struck the roof and started a fire that destroyed part of the attic. The insurance adjuster records lightning on the claim file as the cause of the damage. Which term describes lightning in this claim?

A physical hazard

An exposure unit

An indirect loss

A peril

SCPCIP South Carolina Property and Casualty Insurance Producer Exam - Set 3 - Part 1