Virginia Insurance FREE Sample Exam — Fixed Set

What single question best separates first-party from third-party bad faith?

Was the loss caused by fire or by water, as governed by the policy language applicable to the period in which the event occurred, and as the form itself provides?

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Whose claim against whom created the duty — the insured's own benefits claim, or a claim against the insured that the insurer failed to settle?

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Did the policy include a deductible?

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Was the adjuster a staff employee?

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A business consultant’s flawed inventory forecast leads a client to over-order perishable stock that must be discarded. The client has no bodily injury and no damage to tangible property belonging to others, only a pure financial loss. Which coverage is designed for this claim?

Commercial general liability insurance, because every business loss is a premises loss

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Workers compensation insurance, because the stock belonged to an employer

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Commercial property insurance, because discarded stock is always a covered peril

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Errors and omissions insurance, because it responds to financial loss from negligent professional advice

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A business buys an auto mid-term under a specifically described autos policy and timely asks for coverage on day 12. From what date does the newly acquired auto coverage for that auto run?

From day 30, when the reporting window closes

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From the acquisition date, because the request was made within the 30-day condition

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From the next audit date only

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From the date the auto is first driven on a public road

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Under a directors and officers policy, which people are insured in their capacity as leaders of the organization?

Customers who bought the company's products last year

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Past, present, and duly elected or appointed future directors and officers acting in that capacity

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Outside vendors who supply the company's office paper

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Shareholders solely because they own one share and never serve

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A directors and officers policy has a single $2,000,000 limit shared by its coverage parts. A covered Side C securities settlement of $1,200,000 is paid from that limit. How much of the shared limit remains for other covered claims in the same period, ignoring any retention or defense payments?

$1,200,000

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$2,000,000

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$3,200,000

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$800,000

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A building insured for an agreed value of $800,000 suffers a partial fire loss causing $90,000 of damage. What does the agreed value provision do with this partial loss?

It pays the full $800,000, because any covered loss triggers the agreed amount

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The partial loss is settled on the applicable loss basis for the damage done, not by paying the full $800,000 agreed amount

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It pays nothing, because agreed value responds only after the building is repaired and final repair invoices are submitted for the damaged building

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It pays $800,000 minus the building's remaining value as a bonus

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A regional carrier hauls freight for customers every week throughout the year and wants one cargo arrangement for the continuing flow of loads. Which arrangement matches that need?

A trip policy that must be rewritten from scratch after every delivery

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A policy that covers only one named load on one named date

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A policy that ends automatically when the first shipment is delivered

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An annual motor truck cargo policy covering shipments made during the policy period

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A producer discovers, before submission, that a client understated the number of wood stoves in a home on a draft application. What action best honors utmost good faith?

Submit it as written because the client signed it

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Correct the application to state the true number before it is submitted to the insurer

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Remove the question from the application

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Submit it and correct it only if a fire occurs

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Under a residential NFIP contents policy, covered personal property includes belongings of the named insured and

Any neighbor who stored items in the home temporarily

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Customers of a business run from the home

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The prior owner's property left behind years ago

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Members of the insured's household who live at the insured location

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An excess policy lists a specific underlying primary policy that the insured is required to keep in force during the excess policy’s term. The insured lets that primary policy lapse and then suffers a loss. What problem has the insured created?

The insured may have to bear the underlying layer personally, because the excess policy was priced and written to attach above that primary limit

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The loss is automatically uninsured in every possible respect

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The excess policy automatically becomes a primary policy at no charge and pays from the ground up at the same premium, deductible, and terms as though the required primary policy were still in force

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The former primary insurer must pay even though its policy lapsed

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A tenant’s sofa and clothing are damaged by a covered peril inside the insured rental house. The landlord asks whether those items are part of the landlord’s Coverage A loss. What is the correct answer?

No, because Coverage A insures the structure, and contents are addressed, if at all, under Coverage C for property the policy covers

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Yes, because everything inside the dwelling is Coverage A property, as reflected in the renewal review completed before the expiring policy was extended

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Yes, but only up to 10 percent of the Coverage A limit

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No, because tenant property is paid under Coverage D

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An insurer’s direct gross premium income for flood insurance is $8,000. Its assessment for the dam safety and flood protection fund is:

$80

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$100

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$800

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$300

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Virginia Insurance FREE Sample Exam — Fixed Set

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