Louisiana Property and Casualty Insurance
Exam (Verified Solution) With Rationale
Driver A has a personal auto policy with Part C: UM/UIM limits of 100/300. He is
injured by Driver B who has Part A: Bodily Injury Liability limits of 50/100. It is
determined that Driver B is at fault for the accident. Driver A has $125,000 in
medical expenses. How much will his Part C: UM/UIM coverage pay?
a) $125,000
b) $75,000
c) $50,000
d) $25,000
c) $50,000
Underinsured motorist coverage acts as excess over the at-fault motorist's coverage. It
will pay the difference between the insured's UIM limits and the at-fault driver's bodily
injury limits (in this scenario, $100,000 of the insured's coverage minus $50,000 of the
other driver's). Because of the per person limits of Driver A's underinsured motorist
coverage, the policy will pay the amount necessary to bring payment up to the per
person limit. The policy will not pay more than the limits of liability.
Because an insured owns a lot of expensive jewelry, her insurance agent has
advised her to purchase a scheduled personal property endorsement. If the
insured adds this endorsement to her homeowners policy, which of the following
statements would be correct?
a) The endorsement becomes primary coverage and the HO contract is
secondary.
b) Coverage C limits will no longer apply to the jewelry insured by the
endorsement.
c) The amount of coverage will be doubled.
d) The endorsement becomes excess coverage.
b) Coverage C limits will no longer apply to the jewelry insured by the endorsement.
When items are scheduled, they are excluded from Coverage C as insured items, and
are covered only under the scheduled personal property endorsement.
Which of the following terms refers to a person's ability to do some work or the
need to do alternative work?
a) Temporary total disability
b) Temporary partial disability
c) Permanent partial disability
d) Permanent total disability
b) Temporary partial disability
,The insuring agreement is the part of the policy structure that describes the insured
perils and the method of indemnification.
Which of the following statements is NOT true regarding a personal umbrella
liability policy?
a) It provides excess liability coverage over underlying personal liability.
b) It provides errors and omissions coverage for an agency.
c) It may cover certain exposures not provided under the primary layer.
d) It may require the payment of a self-insured retention.
b) It provides errors and omissions coverage for an agency.
Personal umbrella policies cover the personal exposure of the insured. Errors and
omissions coverage is provided only in a professional liability policy.
A mortgage company is named as a loss payee on the insured's homeowners
policy, under the standard mortgage clause. If the insured suffers a loss due to a
fire, which of the following is true?
a) The entire loss is payable to the insured.
b) The loss is payable to the insured and the mortgagee.
c) The mortgagee should submit a claim to its insurer, and the insured should
submit a claim to the HO policy.
d) The entire loss is payable to the mortgagee.
b) The loss is payable to the insured and the mortgagee.
Loss is payable to the insured and mortgagee to protect the mortgage company's
interest. This prevents the insured from cashing the check and not completing repairs.
Under which type of coverage does the insurer agree to pay for bodily injury or
property damage liability which the insured has agreed to assume under a written
contractual agreement?
a) Bodily injury liability policy
b) Contractual liability policy
c) Personal liability policy
d) Property damage liability policy
b) Contractual liability policy
With this coverage, the insurer agrees to pay for bodily injury or property damage
liability which the insured has agreed to assume under a written contractual agreement.
In a personal auto policy, the medical payments coverage is similar to
a) Accident insurance, because it pays medical expenses regardless of fault.
b) Accident insurance, because it has the same limits.
c) Bodily injury coverage, because it pays the insured's doctor bills.
d) Bodily injury coverage, because it provides legal protection if the insured
causes injuries to others.
,a) Accident insurance, because it pays medical expenses regardless of fault.
Medical payments will pay for accidental bodily injury of an insured, regardless of fault
or auto. It will pay medical expenses of others occupying the insured auto.
The designation symbols used in commercial auto policies can be found in which
policy section?
a) Conditions
b) Covered Auto
c) Liability Coverage
d) Definitions
b) Covered Auto
Section I - Covered Auto of a commercial auto policy explains the designation symbols
used in that coverage.
Which of the following liability exposures is most likely for a small specialty
clothing retail boutique?
a) Operations liability exposure
b) Product liability exposure
c) Completed operations liability exposure
d) Premises liability exposure
d) Premises liability exposure
The premises liability exposure exists when there is use of the premises. Operations
liability exposure relates to activities in addition to use. Product liability exposure is the
possibility that the public might be injured by the product. Completed operations liability
refers to liability for work already performed or completed. For a boutique retail store,
the only possible liability would arise from customer injury while on the premises.
All of the following are true of Coverage B - Other Structures EXCEPT
a) It must be added by endorsement to a homeowners policy.
b) This coverage is not applicable on the HO-4 policy form.
c) The amount of coverage provided by Coverage B is an amount equal to 10% of
Coverage A.
d) Land where the other structures are located is not covered.
a) It must be added by endorsement to a homeowners policy.
Homeowners policies automatically provide an amount of insurance in Coverage B that
is equal to 10% of the amount written as Coverage A. This amount may be increased by
endorsement.
All of the following are supplemental payments included in the liability section of
a personal auto policy EXCEPT
a) Up to $100 for the cost to secure the release of a vehicle from an impoundment
lot following a covered accident.
, b) Up to $200 a day for loss of earnings due to attendance at hearings or trials.
c) Premiums on appeal bonds in any suit the insurer defends.
d) Up to $250 for bail bonds required because of a covered accident.
a) Up to $100 for the cost to secure the release of a vehicle from an impoundment lot
following a covered accident.
A personal auto policy does not pay the cost of the release of a vehicle impounded by a
law enforcement agency.
A large antenna is damaged when a tree branch hits an insured farm dwelling
during a storm. Coverage A of a farm property coverage form would insure
damages for this occurrence up to
a) $1,000.
b) $2,000.
c) $3,000.
d) $4,000.
Antennas, towers, and satellite dishes attached to the dwelling are covered under
Coverage A, but have a special limit of insurance of $1,000 in any 1 occurrence.
a) $1,000.
Antennas, towers, and satellite dishes attached to the dwelling are covered under
Coverage A, but have a special limit of insurance of $1,000 in any 1 occurrence.
Charla wants to serve as a producer for Commissions Galore Insurance
Company. In addition to obtaining her producer's license, what else must happen
before she can officially transact insurance for CGIC?
a) She must submit a list of 5 references to CGIC.
b) She must be appointed by the Commissioner.
c) She must be appointed specifically by CGIC.
d) She must get a certificate of authority.
c) She must be appointed specifically by CGIC.
Before a producer can serve as an agent for a given insurance company, the producer
must first be appointed by the company.
The main difference between an HO-4 and an HO-6 is
a) HO-6 provides limited dwelling coverage as well as contents coverage.
b) HO-4 does not cover additional living expenses.
c) HO-6 does not cover additional living expenses.
d) HO-4 provides limited dwelling coverage as well as contents coverage.
a) HO-6 provides limited dwelling coverage as well as contents coverage.
HO-4 provides no dwelling coverage because a tenant does not own the dwelling; the
condo owner does own the condo and is provided with coverage for improvements.
Both HO-4 and HO-6 cover theft and additional living expenses.
Exam (Verified Solution) With Rationale
Driver A has a personal auto policy with Part C: UM/UIM limits of 100/300. He is
injured by Driver B who has Part A: Bodily Injury Liability limits of 50/100. It is
determined that Driver B is at fault for the accident. Driver A has $125,000 in
medical expenses. How much will his Part C: UM/UIM coverage pay?
a) $125,000
b) $75,000
c) $50,000
d) $25,000
c) $50,000
Underinsured motorist coverage acts as excess over the at-fault motorist's coverage. It
will pay the difference between the insured's UIM limits and the at-fault driver's bodily
injury limits (in this scenario, $100,000 of the insured's coverage minus $50,000 of the
other driver's). Because of the per person limits of Driver A's underinsured motorist
coverage, the policy will pay the amount necessary to bring payment up to the per
person limit. The policy will not pay more than the limits of liability.
Because an insured owns a lot of expensive jewelry, her insurance agent has
advised her to purchase a scheduled personal property endorsement. If the
insured adds this endorsement to her homeowners policy, which of the following
statements would be correct?
a) The endorsement becomes primary coverage and the HO contract is
secondary.
b) Coverage C limits will no longer apply to the jewelry insured by the
endorsement.
c) The amount of coverage will be doubled.
d) The endorsement becomes excess coverage.
b) Coverage C limits will no longer apply to the jewelry insured by the endorsement.
When items are scheduled, they are excluded from Coverage C as insured items, and
are covered only under the scheduled personal property endorsement.
Which of the following terms refers to a person's ability to do some work or the
need to do alternative work?
a) Temporary total disability
b) Temporary partial disability
c) Permanent partial disability
d) Permanent total disability
b) Temporary partial disability
,The insuring agreement is the part of the policy structure that describes the insured
perils and the method of indemnification.
Which of the following statements is NOT true regarding a personal umbrella
liability policy?
a) It provides excess liability coverage over underlying personal liability.
b) It provides errors and omissions coverage for an agency.
c) It may cover certain exposures not provided under the primary layer.
d) It may require the payment of a self-insured retention.
b) It provides errors and omissions coverage for an agency.
Personal umbrella policies cover the personal exposure of the insured. Errors and
omissions coverage is provided only in a professional liability policy.
A mortgage company is named as a loss payee on the insured's homeowners
policy, under the standard mortgage clause. If the insured suffers a loss due to a
fire, which of the following is true?
a) The entire loss is payable to the insured.
b) The loss is payable to the insured and the mortgagee.
c) The mortgagee should submit a claim to its insurer, and the insured should
submit a claim to the HO policy.
d) The entire loss is payable to the mortgagee.
b) The loss is payable to the insured and the mortgagee.
Loss is payable to the insured and mortgagee to protect the mortgage company's
interest. This prevents the insured from cashing the check and not completing repairs.
Under which type of coverage does the insurer agree to pay for bodily injury or
property damage liability which the insured has agreed to assume under a written
contractual agreement?
a) Bodily injury liability policy
b) Contractual liability policy
c) Personal liability policy
d) Property damage liability policy
b) Contractual liability policy
With this coverage, the insurer agrees to pay for bodily injury or property damage
liability which the insured has agreed to assume under a written contractual agreement.
In a personal auto policy, the medical payments coverage is similar to
a) Accident insurance, because it pays medical expenses regardless of fault.
b) Accident insurance, because it has the same limits.
c) Bodily injury coverage, because it pays the insured's doctor bills.
d) Bodily injury coverage, because it provides legal protection if the insured
causes injuries to others.
,a) Accident insurance, because it pays medical expenses regardless of fault.
Medical payments will pay for accidental bodily injury of an insured, regardless of fault
or auto. It will pay medical expenses of others occupying the insured auto.
The designation symbols used in commercial auto policies can be found in which
policy section?
a) Conditions
b) Covered Auto
c) Liability Coverage
d) Definitions
b) Covered Auto
Section I - Covered Auto of a commercial auto policy explains the designation symbols
used in that coverage.
Which of the following liability exposures is most likely for a small specialty
clothing retail boutique?
a) Operations liability exposure
b) Product liability exposure
c) Completed operations liability exposure
d) Premises liability exposure
d) Premises liability exposure
The premises liability exposure exists when there is use of the premises. Operations
liability exposure relates to activities in addition to use. Product liability exposure is the
possibility that the public might be injured by the product. Completed operations liability
refers to liability for work already performed or completed. For a boutique retail store,
the only possible liability would arise from customer injury while on the premises.
All of the following are true of Coverage B - Other Structures EXCEPT
a) It must be added by endorsement to a homeowners policy.
b) This coverage is not applicable on the HO-4 policy form.
c) The amount of coverage provided by Coverage B is an amount equal to 10% of
Coverage A.
d) Land where the other structures are located is not covered.
a) It must be added by endorsement to a homeowners policy.
Homeowners policies automatically provide an amount of insurance in Coverage B that
is equal to 10% of the amount written as Coverage A. This amount may be increased by
endorsement.
All of the following are supplemental payments included in the liability section of
a personal auto policy EXCEPT
a) Up to $100 for the cost to secure the release of a vehicle from an impoundment
lot following a covered accident.
, b) Up to $200 a day for loss of earnings due to attendance at hearings or trials.
c) Premiums on appeal bonds in any suit the insurer defends.
d) Up to $250 for bail bonds required because of a covered accident.
a) Up to $100 for the cost to secure the release of a vehicle from an impoundment lot
following a covered accident.
A personal auto policy does not pay the cost of the release of a vehicle impounded by a
law enforcement agency.
A large antenna is damaged when a tree branch hits an insured farm dwelling
during a storm. Coverage A of a farm property coverage form would insure
damages for this occurrence up to
a) $1,000.
b) $2,000.
c) $3,000.
d) $4,000.
Antennas, towers, and satellite dishes attached to the dwelling are covered under
Coverage A, but have a special limit of insurance of $1,000 in any 1 occurrence.
a) $1,000.
Antennas, towers, and satellite dishes attached to the dwelling are covered under
Coverage A, but have a special limit of insurance of $1,000 in any 1 occurrence.
Charla wants to serve as a producer for Commissions Galore Insurance
Company. In addition to obtaining her producer's license, what else must happen
before she can officially transact insurance for CGIC?
a) She must submit a list of 5 references to CGIC.
b) She must be appointed by the Commissioner.
c) She must be appointed specifically by CGIC.
d) She must get a certificate of authority.
c) She must be appointed specifically by CGIC.
Before a producer can serve as an agent for a given insurance company, the producer
must first be appointed by the company.
The main difference between an HO-4 and an HO-6 is
a) HO-6 provides limited dwelling coverage as well as contents coverage.
b) HO-4 does not cover additional living expenses.
c) HO-6 does not cover additional living expenses.
d) HO-4 provides limited dwelling coverage as well as contents coverage.
a) HO-6 provides limited dwelling coverage as well as contents coverage.
HO-4 provides no dwelling coverage because a tenant does not own the dwelling; the
condo owner does own the condo and is provided with coverage for improvements.
Both HO-4 and HO-6 cover theft and additional living expenses.
