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AD Banker Exam (New 2024/ 2025 Update)
Questions and Verified Answers| 100%
correct| A Grade
QUESTION
Which property condition requires the insurer broaden coverage during the policy period without an increase in premium? A. Appraisal B. Assignment C. Liberalization D. Other Insurance Answer: C Liberalization The Liberalization Clause states that if the insurance company makes a change that broadens coverage under this edition of the policy without an additional premium charge, the change will automatically apply to this policy.
QUESTION
When coverage applies to losses from all perils except those specifically excluded, the policy is said to be written on which of the following basis? A. Open Perils B. Valued C. Named Perils D. Agreed Amount Answer: A Open Perils The open perils policy insures against all perils that are not excluded, rather than enumerating the perils being insured against.
QUESTION
The part of a property policy that gives basic information such as the named insured, a description of the property, the location of the property, and the amount of premium involved, is known as the: A. Declarations B. Insuring Agreement C. Policy Provisions D. Conditions Answer: A Declarations The Declarations contain the information that is specific to the individual and property being insured.
QUESTION
Actual Cash Value is best defined as which of the following? A. Appraised value B. Replacement cost C. Today's current price, minus depreciation D. Market value Answer: C Today's current price, minus depreciation Actual Cash Value valuation provides that the policy will pay the cost to repair or replace the damaged property at the time of loss, less a depreciation factor based upon the age of the property.
QUESTION
When the insurance company and insured cannot agree upon the amount of the loss, the person selected to help the two hired appraisers is called a(n): A. Adjuster B. Claim representative C. Agent D. Umpire Answer: D Umpire
C. A trampoline D. A candy store Answer: C A trampoline
QUESTION
Bodily Injury may include which of the following? A. Loss of Earnings B. False Arrest C. Invasion of Privacy D. Slander Answer: A Loss of Earnings Bodily injury includes such items as medical expenses, lost wages, mental anguish, death and disfigurement.
QUESTION
The maximum amount a policy will pay in the event of a loss, regardless of the number of insureds, claims made, lawsuits filed, or parties making claims is the: A. Deductible B. Premium C. Limit of liability D. Split limit Answer: C Limit of liability The limit of liability, or limits of insurance, are shown on the policy declarations page and are the most paid by the policy regardless of the number of insureds, claims made, lawsuits filed, or parties making claims or filing lawsuits.
QUESTION
A liability policy contains a per person bodily injury limit of $25,000 and a per occurrence limit of $50,000. If an accident were to occur and three persons have claims of $20,000 each, the total amount paid is: A. $75, B. $50, C. $60, D. $25, Answer: B $50, The policy pays up to $25,000 for each person injured, but no more than $50,000 per occurrence, regardless of the number of persons injured. Therefore, the limit for this accident is $50,000.
QUESTION
When a claimant can prove that a product caused an injury, the fact that the manufacturer will be held liable regardless of whether the product was defective or not, is considered which of the following? A. Contingent Liability B. Direct Liability C. Vicarious Liability D. Strict Liability Answer: D Strict Liability The doctrine of strict liability applies to products and their manufacturers. It holds that the manufacturer can be held responsible for an injury caused by a product, even if the product is not defective.
QUESTION
Which coverage always contains an occurrence limit? A. Strict liability B. Advertising injury C. Personal injury D. Bodily injury and property damage Answer: D Bodily injury and property damage
D. False Arrest Answer: A Bodily Injury Personal Injury is non-bodily injury to a person arising from wrongful conduct.
QUESTION
The person specifically designated in the policy as the person with whom the contract of insurance has been made, is considered to be the: A. Contract Insured B. Contingent Insured C. Named Insured D. Additional Insured Answer: C Named Insured The Named Insured is the entity with whom the insurance contract is made. When there is more than one entity designated as named insured in the policy, then contractual obligations are transacted with the first one designated, known as the first named insured.
QUESTION
Policyholder J has a no-fault auto policy. Upon being hit by a driver that ran a stop light, J suffers a broken leg. Whose insurance company will pay for J's injury? A. J's insurer B. The insurer of the at-fault driver C. The court will determine which insurer is responsible D. J's and the negligent driver's insurer will share the loss Answer: A J's insurer Under no-fault insurance, the injured party collects insurance benefits from his/her own insurance as if it were first-party coverage, eliminating the need to determine negligence or legal liability.
QUESTION
Which of the following best describes a liability policy that is written on a primary basis? A. It pays only after other insurance covering the same loss is exhausted B. It provides only basic coverage C. It shares the loss with other policies covering the same loss D. It is the policy that pays first with respect to other policies Answer: D It is the policy that pays first with respect to other policies Sometimes liability insurance is written in layers to provide higher limits of coverage. When this is done, the primary insurance pays the entire claim until its limits are exhausted, then the excess policy pays the balance of the claim.
QUESTION
Which of the following statements about medical payments is true? A. They apply to all expenses incurred within 5 years of the accident B. Payments are made regardless of fault or negligence C. They apply to members of amateur athletic teams sponsored by the insured D. They apply to all persons, including the insured on the premises for any reason Answer: B Payments are made regardless of fault or negligence Medical payments coverage provides payment of medical and medically associated expenses on a voluntary basis, without regard to negligence or fault on the part of the insured.
QUESTION
Which of the following is true of the Dwelling Under Construction Endorsement of a Dwelling Policy? A. The amount of insurance in force is the limit of liability stated in the Declarations B. Insurance applies to the Dwelling and to other structures C. The premium is based upon the average amount of insurance during construction D. The insured has up to 90 days to notify the company that the dwelling is occupied Answer: C The premium is based upon the average amount of insurance during construction
D. Coverage C provides coverage for the personal property of a guest Answer: D Coverage C provides coverage for the personal property of a guest At the insured's request, Coverage C will apply to personal property of a guest or servant while located on the described location. Personal property of a tenant or boarder is not covered.
QUESTION
In an insurance contract, the value that each party gives the other is called the: A. Acceptance B. Consideration C. Offer D. Subject matter Answer: B Consideration Consideration can take the form of money, goods, a promise to do something, or anything else that changes the legal position of the party. A contract cannot exist without consideration being given by both sides.
QUESTION
An insurer that is authorized to do business in a particular state is said to be: A. Admitted B. Non-Admitted C. Foreign D. Domestic Answer: A Admitted An admitted insurer is an insurer that is authorized to transact insurance in a state by that state's insurance department, as evidenced by a Certificate of Authority to transact business.
QUESTION
A potential cause of loss, such as fire, explosion, flood, or theft is considered to be a(n): A. Peril B. Accident C. Occurrence D. Hazard Answer: A Peril A peril is a cause of potential loss to property such as fire, windstorm, hail, or flood.
QUESTION
Which of the following might be considered a physical hazard? A. Dishonesty on the part of an insured B. The insured's attitude that good housekeeping is not important C. The storage of flammables near a furnace D. The storage of flammables in a fireproof container Answer: C The storage of flammables near a furnace A physical hazard is a condition on the property, or exposed to the property, that increases the probability of loss to the property.
QUESTION
Rates that cannot be used until the Department or Division of Insurance approves them are referred to as: A. Use and file rates B. File and use rates C. Open competition rates D. Prior approval rates Answer: D Prior approval rates In prior approval states, rates cannot be used until the Department or Division of Insurance authorities approve them, or until a specific time has passed after the filing without being disapproved.
Answer: D Stock A stock company is owned by its stockholders who elect the directors and officers.
QUESTION
When writing an application for car insurance, Producer M asked her client, B, if he had been convicted of driving while intoxicated (DWI) in the past 10 years. B answered 'no,' although he had been convicted of a DWI last year. B is guilty of which of the following? A. Waiver B. Unilateral statement C. Representation D. Misrepresentation Answer: D Misrepresentation Misrepresentation is a false statement in the application and if material, meaning the company's decision to issue the application would have been different, the policy would be voided.
QUESTION
The insurance contract is said to be a contract of utmost good faith, because: A. The insured must warrant that his/her representations are true B. The insurer has drawn up the contract and, therefore, there is no intent to deceive C. Concealment of known facts on the part of the insured will void the contract D. Each party is entitled to rely upon the representations of the other that there is nothing concealed or dishonest Answer: D Each party is entitled to rely upon the representations of the other that there is nothing concealed or dishonest It is assumed that utmost good faith exists in both parties to the contract.
QUESTION
D does not agree with the insurance company's value of his property damaged as a result of his recent property loss. Which of the following establishes the procedure D and the insurance company must use to settle this issue? A. Appraisal Clause B. Loss Payable Clause C. Definitions Clause D. Claim Settlement Clause Answer: A Appraisal Clause The Appraisal Clause of the insurance policy provides a method of settling disputes between the insurer and the insured as an alternative to legal action.
QUESTION
Which part of a property insurance policy describes the perils? A. Definitions B. Declarations C. Insuring Agreement D. Additional Coverages Answer: C Insuring Agreement The Insuring Agreement is the company's commitment to protect the insured and includes a description of the perils.
QUESTION
The termination of an insurance policy, by either the insured or the insurer before the expiration date, is known as: A. Subrogation B. Cancellation C. Nonrenewal D. Abandonment Answer: B Cancellation
D. The insured the right to request additional coverage to supplement the policy after paying an additional premium Answer: B Coverage that supplements the basic coverages in the insuring agreement which is automatically included without an additional premium Additional coverages are automatically included in property policies without an additional premium. The type of additional coverages depends upon the type of policy. Additional coverages are paid in addition to those stated in the insuring agreement and include debris removal, collapse, and fire department service charges.
QUESTION
The following are all found on the Declarations Page, except: A. Location of the insured property B. Amount of the deductible C. Expiration date of the policy D. The exclusions Answer: D The exclusions The Declarations Page contains the information necessary to tailor the policy to the individual and property insured. The exclusions, common to all policies, are found in the Exclusions section of the policy and coverage forms.
QUESTION
Short rate cancellation occurs when: A. An insurer cancels the policy mid-term B. A policy is flat cancelled C. The policy is non-renewed D. The insured cancels the policy mid-term Answer: D The insured cancels the policy mid-term When the insured cancels a policy before the expiration date, a short rate cancellation is issued and the insurer retains a portion of the unearned premium to cover costs.
QUESTION
Policyholder M insures her owner-occupied single family residence under a dwelling property policy (DP-3) with a limit of $100,000. If the dwelling is damaged in a fire, what policy coverage will pay for M's extra costs to stay in a motel and board her pets while the fire damage is being repaired? A. Coverage C B. Coverage D C. Coverage E D. Coverage B Answer: C Coverage E Coverage E pays for the necessary increase in living expenses incurred by the insured if the building is rendered unfit for its normal use.
QUESTION
Under all the Dwelling Forms, the dwelling described in the declarations is covered under: A. Coverage E B. Coverage B C. Coverage C D. Coverage A Answer: D Coverage A Coverage A applies to the Dwelling at the described location; Coverage B, to Other Structures; Coverage C, to Personal Property; Coverage D, to Fair Rental Value, and Coverage E to Additional Living Expenses.
QUESTION
Under a Dwelling Policy, the coverage extension of Debris Removal will pay for: A. The removal of the debris caused by an insured peril B. The removal of debris resulting from the action of a civil authority C. The removal of the debris from an automobile accident on the insured location D. The removal of debris resulting from demolition required by an ordinance or law
B. The coverage for Damage to Property of Others pays the replacement cost of the property damaged up to $1,000 per occurrence C. The Damage to Property of Others duplicates coverage that is included in Section I D. The coverage for Damage to Property of Others excludes property that is covered in Section I Answer: C The Damage to Property of Others duplicates coverage that is included in Section I The Damage to Property of Others Additional Coverage supplements the Property Damage Liability Coverage by providing limited Coverage for damage, caused by the insured, regardless of negligence. Coverage does not apply to property damage covered under Section I of the policy.
QUESTION
Under the Homeowners Policy, Medical Payments coverage will apply to expenses that are incurred within what length of time following an accident? A. 2 years B. 3 years C. 4 years D. 1 year Answer: B 3 years Medical Payments Coverage will pay for necessary medical expenses that are incurred or medically ascertained within 3 years from the date of an accident causing bodily injury.
QUESTION
An insured with a $500,000 HO-5 policy incurs $1,500 in damages due to a flood destroying the wood flooring. The policy will pay: A. Zero B. $1, C. $1, D. $1, Answer: A Zero Flood is a Section I exclusion and is not covered.
QUESTION
L owns a home covered under an HO-3 for $200,000. Under Coverage D, how much coverage does L have for lost income if his basement apartment becomes uninhabitable due to a fire loss? A. $150, B. $30, C. $300, D. $60, Answer: D $60, For a covered loss, the Coverage D limit for additional living expense, fair rental value, and civil authority prohibited use is 30% of Coverage A. 30% of $200,000 is $60,000.
QUESTION
Liability for use of which of the following vehicles is not covered by the Homeowners policy? A. Riding lawn mower B. Motorized custom wheel chair for a resident family member C. Dune buggy used on a public beach D. Motorized golf cart used at the golf course Answer: C Dune buggy used on a public beach An owned vehicle designed for recreational use off public roads must be used on the insured premises for coverage to apply.
QUESTION
Which form is designed for the unit-owner of a condominium? A. HO- 2 B. HO- 8 C. HO- 4 D. HO- 6 Answer:
