PE 2 Florida Test
Florida PE 2 Insurance Knowledge Quiz
Challenge your understanding of insurance concepts with our Florida PE 2 quiz. This comprehensive quiz covers a wide range of topics including property insurance, liability, and workers compensation policies.
Take this quiz to:
- Test your knowledge of insurance policies and regulations.
- Prepare for your exams with 174 challenging questions.
- Enhance your understanding of essential insurance concepts.
1. Which of the following dwelling policy forms generally insures a structure on an actual cash value basis?
A. DP-1
B. DP-2
C. DP-3
D. All DP forms
2. All of the following are contained in the Declarations section of a policy EXCEPT the
A. Limits of insurance.
B. Exclusions.
C. Policy premiums.
D. Name of the insured.
3. Under which of the following situations will workers compensation pay?
A. Only when the employee engages in a negligent act
B. Only when an employee is at fault
C. It is paid without consideration of negligence or fault on the part of either the employer or employee
D. Only when the employer engages in a negligent act
4. Losses resulting from repeated or continuous exposure to conditions causing injury to individuals or damage to property that is neither expected nor intended is the definition of which of the following terms?
A. Occurrence
B. Peril
C. Hazard
D. Accident
5. Under a business auto policy, who is not insured for liability?
A. The owner of a car that the insured borrows
B. Anyone using a covered auto with permission
C. Anyone liable for the insured’s conduct
D. The named insured in any covered auto
6. Regarding coinsurance, all of the following statements are true EXCEPT
A. The coinsurance formula will also apply to total losses.
B. It is used to help equity and adequacy in rates.
C. The insured agrees to maintain insurance equal to a certain percentage of the property’s value.
D. If the insurance carried is less than required, the insurance might not pay for the entire loss.
7. A policy owner’s building has an ACV of $200,000, and they have insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss takes place. How much will the policy cover?
A. $0
B. $30,000
C. $32,000
D. $40,000
8. The National Flood Insurance Program (NFIP) emergency program
A. Goes into effect after the community receives a Flood Hazard Boundary Map and ends when the normal program starts.
B. Offers limited coverage amounts at subsidized rates.
C. Offers more coverage than the normal program.
D. Both A and B
9. Which of the following personal auto coverages would apply to damage resulting from a bird hitting the windshield?
A. Property damage coverage
B. Uninsured motorist coverage
C. Collision coverage
D. Other-than-collision coverage
10. Concerning the supplementary payments of a commercial general liability policy, all of the following are true statements EXCEPT
A. They cover pre-judgment and post- judgment interest.
B. They cover all reasonable costs sustained by the policy owner in helping to investigate or defend a claim.
C. They cover defense costs even after reaching the aggregate limit.
D. They cover all expenses sustained by the insurance provider.
11. Which of the following is used in the formula for determining a property’s actual cash value?
A. Replacement cost
B. Stated value
C. Fair market value
D. Agreed value
12. A policy owner owns and operates a ranch. The policy owner has several vehicles used in the ranching operation and for personal use. Under a personal auto policy, which of the following could NOT be insured?
A. A station wagon that is used personally
B. A two-ton grain truck with a 6,500-pound capacity
C. A two-wheeled trailer intended to be towed by the station wagon
D. A farm pickup truck with a 1,000-pound capacity
13. An insured insists that the insurance company owes her $10,000 for liability damages. In contrast, her insurance company asserts that they owe her no more than $7,000. Which of the following would more than likely describe the type of claim settlement that is pursued in this instance?
A. Independent audit
B. Appraisal hearing
C. Arbitration
D. Small claims court
14. All of these are true under the provisions of the business income coverage form EXCEPT
A. The policy owner agrees to resume part of or all operations as quickly as possible.
B. The policy owner is reimbursed for payroll that continues after the loss begins.
C. The policy owner is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first.
D. If the policy owner and insurance provider cannot agree on the value of the loss, either party can make a written demand for an appraisal.
15. The business income coverage form pays for consequential loss of business income when a business has to suspend operations due to a direct loss. Which of the following terms best describes this type of coverage?
A. Time element
B. Claims-made
C. Occurrence
D. Direct damage
16. Under the Broad Form (DP-2) policy’s falling object peril, which of the following would be covered?
A. Outdoor television antenna damage if there is no interior damage
B. Patio and exterior pavement damage
C. Damage to the building’s interior if the exterior was damaged first
D. Building awning damage
17. Under the dwelling policy, all of the following are other coverages EXCEPT
A. Debris removal.
B. Improvements, alterations, and additions.
C. Earth movement.
D. Other structures.
18. Which one of the following business auto coverage symbols is correctly described?
A. Symbol 9 – non-owned autos only
B. Symbol 1 – owned auto only
C. Symbol 2 – owned autos subject to no-fault
D. Symbol 7 – hired autos only
19. Most fidelity bonds have a period where losses that occurred while the bond was in force are covered even though they are not found until after the coverage has ended. This period is known as a/an
A. Discovery period.
B. Indemnity period.
C. Retro period.
D. Look back period.
20. Which of these would NOT be regarded as an insurance company’s source of insurability information?
A. The marital status of the applicant
B. Interviews with the neighbors and friends of the applicant
C. Motor vehicle records
D. Insurance history
21. Which valuation type would be best suited for property whose value does not fluctuate very much?
A. Stated amount
B. Inflation guard
C. Agreed value
D. Market value
22. An insured bakeshop is sued because its marketing specifies that the products of another bakeshop might not be safe. Which coverage of a commercial general liability policy will defend a lawsuit?
A. Product liability
B. Completed operations
C. Personal and advertising injury liability
D. Premises and operations
23. Under the Building and Personal Property Coverage Form, if an insurance provider elects to cancel a policy for any reason except nonpayment of premium, how many days before the effective cancellation date must the insurer inform the mortgage holder?
A. 10 days
B. 15 days
C. 20 days
D. 30 days
24. Which of the following statements concerning a personal auto policy is true?
A. Medical payments coverage is applied per person, per accident.
B. Coverage is applied while the policy owner travels to Mexico.
C. Coverage for temporary substitute vehicles will not be treated as excess coverage.
D. Uninsured motorist’s coverage is only applied to the named insured and family members.
25. A liability policy that covers all claims resulting from incidents taking place during the policy period, regardless of whether the policy is still effective at the time of the claim, is known as a/an
A. Occurrence policy
B. Claims-made policy
C. Limited policy
D. Aggregate policy
26. If a policy owner covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will cover up to
A. $350.
B. $500.
C. $750.
D. $1,000.
27. Under a personal auto policy, transportation expenses provide coverage for
A. $50 per day, with a $750 maximum.
B. $20 per day, with a $600 maximum.
C. $25 per day, with a $500 maximum.
D. $50 per day, with a $500 maximum.
28. Coverage for medical payments under a personal auto policy applies to expenses after a covered accident and following services rendered within
A. 90 days.
B. 1 year.
C. 3 years.
D. 5 years.
29. Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called.
A. Blanket coverage.
B. Described coverage.
C. Specific coverage.
D. Schedule coverage.
30. The HO policy covers collapse resulting from all of the following EXCEPT
A. Weight of snow.
B. Hidden vermin or insect damage.
C. Weight of too many individuals attending a party hosted in the house.
D. Cracks in the foundation.
31. Which law is the basis of the statistical prediction of loss upon which insurance rates are calculated?
A. Law of large numbers
B. Law of masses
C. Law of averages
D. Law of group evaluation
32. An applicant is obtaining a homeowners policy. An agent comes to his home, fills out the paperwork, and tells the applicant that his house will be covered once he signs the paperwork. The agent also informs the applicant that he will receive a new policy within five business days. Even though the policy is not issued, the applicant’s home is temporarily covered. Which of the following allows this to be possible?
A. Notice of claim
B. Binder
C. Loss settlement provision
D. Mortgagee clause
33. The reduction or disappearance of the value of property or a person covered under a policy by a peril insured against is a/an
A. Exposure.
B. Hazard.
C. Risk.
D. Loss.
34. In the equipment breakdown basic policy, all of the following are excluded EXCEPT
A. Explosion of steam boilers.
B. Ordinance or law coverage.
C. Business interruption.
D. Loss of power, lights, refrigeration, heat, or steam.
35. Under homeowners coverage, which of the following is NOT considered a primary property coverage?
A. Other structures
B. Loss of use
C. Collapse
D. Dwelling
36. A contract between the shipper and the carrier for the transport of goods is called
A. A bill of sale
B. A bill of lading
C. A bailment
D. A binder
37. Under building coverage in a building and personal property policy, which item would NOT be covered?
A. The building that houses a dress shop
B. The frozen yogurt case permanently installed in a frozen yogurt shop
C. The bulldozer that is parked 500 feet from the building being used as part of a business addition under construction
D. The tables and chairs used by a cafe as part of its outdoor seating
38. Which of the following is an additional coverage that is covered by the broad causes of loss form?
A. Collapse
B. Lightning
C. Ordinance or law
D. Settling
39. Rental Reimbursement is available only if the policy contains which coverage?
A. Towing and Labor Costs
B. Named Nonowner Coverage
C. Other Than Collision Coverage
D. Extended Non-owned Coverage for Named Insured
40. Events or conditions that increase the likelihood of an insured loss taking place are known as
A. Hazards.
B. Exposures.
C. Risks.
D. Perils.
41. The section of an insurance policy that specifies what perils are not insured against and what individuals are not insured is called the
A. Declarations.
B. Endorsements.
C. Conditions.
D. Exclusions.
42. Workers compensation statutes provide coverage for diseases that take place as a result of being employed in the employer’s working environment. Which of the following is an example of a disease that an insurer would NOT cover under this provision?
A. An employee of a healthcare facility who suffers from a common cold
B. An employee of a chemical plant who suffers from cancerous tumors
C. An employee of a local fire department who suffers from smoke inhalation
D.An employee of a software engineering company who suffers from carpel tunnel syndrome
43. The mobile home endorsement amends the HO policy to insure a mobile home and other structures on land
A. Leased or owned by a landlord who does not live on the premises.
B. Owned by a landlord who does not use the mobile home located on it.
C. Leased by the land owner.
D. Leased or owned by the mobile home’s resident.
44. Under the Commercial Fine Arts Floater, the extension of coverage contains coverage for newly acquired property for a maximum of
A. $10,000.
B. $15,000.
C. $20,000.
D. $5,000.
45. In the commercial package policy, which of the following lines of insurance is NOT included?
A. Crime
B. Equipment breakdown
C. Inland marine
D. Ocean marine
46. All of the following are supplementary payments included in liability policies EXCEPT
A. Reasonable expenses incurred by the policy owner.
B. Limited amounts for bail bonds and other bonds related to a claim
C. Costs the policy owner incurred in hiring an attorney.
D. All expenses and defense costs incurred by the insurance provider.
47. A medical doctor requires what type of professional liability coverage?
A. Druggist liability
B. Ordinance and law coverage
C. Malpractice coverage
D. Errors and omissions coverage
48. Since the Mail Coverage Form is always written on a reporting form basis, following the end of every reporting period listed in the declarations, reports are due within
A. 30 days.
B. 31 days.
C. 45 days.
D. 15 days.
49. Which policy consists of the declarations, conditions, endorsements, and other attachments that apply to a single line of insurance?
A. Monoline
B. Insurance
C. Casualty
D. Commercial package
50. Which of the following is the foundation for a claim against an insurance policy?
A. Material change
B. Hazard
C. Misrepresentation
D. Loss
51. A policy owner stated on his life insurance application that he had never had a stroke. The reality is that he had a series of minor strokes last year, for which he sought medical attention. Which of these explains why a death benefits claim is denied?
A. Material misrepresentation
B. Waiver
C. Utmost Good Faith
D. Estoppel
52. An insured obtained a National Flood Insurance policy ten days after her community entered an emergency program. When does her coverage become effective?
A. 12:01 p.m. On the 5th day after the endorsement request is mailed
B. 5 days after the application and premium are mailed
C. 12:01 a.m. The day after the application and premium are mailed
D. 30 days after the application is accepted
53. Under the additional living expenses coverage, if a civil authority restricts the policy owner from using the dwelling due to direct damage to a neighboring location from a peril covered in the insured’s policy, an insurer would cover the loss for up to
A. 2 weeks.
B. 1 month.
C. 90 days.
D. 1 week.
54. Under a personal auto policy’s liability section, which of the following would NOT be covered?
A. Property damage to a storefront while the insured driver is under the influence
B. Bodily injury resulting from the insured’s negligence while driving a three-wheel all- terrain vehicle
C. Property damage resulting from a trailer detaching from an insured vehicle
D. Bodily injury caused by an accident while an individual other than the named insured is operating the vehicle
55. Negligence is defined as
A. The failure to use prudent and reasonable care.
B. A scenario that yields a probability of loss.
C. A latent fault or defect of property.
D. The inability to satisfy the burden of proof.
56. An insured owns a building with a value of $400,000. To meet the 80% coinsurance provision of the insurance policy, what amount should the policy owner pay to cover the property?
A. $32,000
B. 80% of the property’s replacement cost or more
C. 100% of the market value
D. $400,000
57. A date specified on the declarations page of a claims-made liability form as the first date when an incident can occur and be covered by the policy is known as the
A. Effective date.
B. Retention date.
C. Retroactive date.
D. Retrocedent date.
58. A situation in which an individual can only lose or have no change represents
A. Speculative risk.
B. Adverse selection.
C. Hazard.
D. Pure risk.
59. Which of the following is included in the business auto coverage territory?
A. The U.S. And its territories, Canada, or globally for private passenger hired autos
B. Only the specific location of the business
C. Only the U.S.
D. The U.S. and Mexico
60. An applicant deliberately fails to communicate information that would assist an underwriter in making a sound decision regarding coverage. This is an example of
A. Breach of warranty.
B. Concealment.
C. Waiver.
D. Fraud.
61. Which of the following statements is true regarding the premium computation for workers compensation insurance?
A. The premium is established at the beginning of the policy period and will not change
B. A premium auditor can examine the insured’s compensation records at the end of the policy period to determine the actual premium basis
C. The premium basis for workers compensation insurance differs according to the industry in which the insured is involved
D. The insured pays a guaranteed premium based on an approximate value of the yearly income received
62. Regarding employee dishonesty, an optional coverage under the businessowners policy, all of the following statements are true EXCEPT
A. It covers losses caused by dishonest acts of the insured’s employees.
B. Coverage includes all property, including money and securities held or owned by the insured.
C. It offers coverage for every employee, even those who were terminated in the previous 90 days.
D. It offers coverage for direct loss or damage to business personal property.
63. Professional musicians and photographers can insure their equipment with
A. An installation floater.
B. A commercial articles floater.
C. A theatrical property coverage form.
D. A contractors equipment floater.
64. An insured is driving his car through a residential area when he loses control and crashes into the front porch of a neighbor’s house. The neighbor was sitting on the porch at the time and was injured. The insured’s liability policy has a $500,000 limit. This amount is applied to the total damages for bodily injury and property damage caused by one accident. The insured has which type of limit of liability?
A. Combined single
B. Split
C. Aggregate
D. Per occurrence
65. A policy that covers all property at multiple locations for a single amount is known as
A. Reporting.
B. Special.
C. Specific.
D. Blanket.
66. The policy section that establishes the rules of conduct, duties, and obligations of the parties is called the
A. Exclusions.
B. Declarations.
C. Insuring clause.
D. Conditions.
67. Under Inside the Premises - Robbery or Safe Burglary of Other Property coverage, which of the following would NOT be covered?
A. An employee is caught stealing from the cash register
B. Someone breaks in after business hours, pries open a wall vault, and steals several expensive paintings
C. A store clerk is locked in the storage room while the criminal steals valuable merchandise
D. Two intruders break a window during an attempted robbery
68. Concerning a homeowners policy, which coverage allows indirect or consequential losses?
A. Coverage A
B. Coverage B
C. Coverage C
D. Coverage D
69. Before state-directed workers compensation statutes were enacted, an employee had
A. No right to sue their employer for work- related injuries.
B. Limited payments for work-related injuries.
C. Guaranteed protection for work-related injuries.
D. To sue their employer for the loss and provide evidence that the employer was at fault
70. What must a common carrier issue to every shipper for whom it transports goods?
A. Transit coverage form
B. Motor truck cargo form
C. Uniform bill of lading
D. Common carrier cargo liability notice
71. The accounts receivable records of an insured have been damaged. The loss can be covered with
A. The accounts receivable coverage form.
B. Commercial property insurance.
C. The commercial articles coverage form.
D. The valuable papers coverage form.
72. How long must the insured maintain records of each production under the conditions of a Film Coverage Form?
A. 7 years after production completion
B. 1 year after production completion
C. 3 years after the policy expires
D. 5 years after the policy expires
73. Commercial General Liability (CGL) Coverage B (Personal and Advertising Injury) will cover
A. An offense committed by a policy owner whose business is advertising
B. Unintentional injury to others caused when advertising the policy owner’s product.
C. The failure of goods to conform to advertised performance or quality.
D. Oral or written publication of material the policy owner knows is false.
74. What happens to policy liability limits in a personal auto policy when a vehicle travels from one state to another?
A. They decrease based on state law
B. They do not change
C. They do not apply
D. They increase based on state law
75. The Declarations section of the homeowners policy provides all of the following information EXCEPT
A. A statement confirming that earthquake damage is not covered
B. The amount of premium charged for each coverage.
C. The address of the insured.
D. The deductible amount applied to each loss covered by the policy.
76. In insurance, an offer is typically made when
A. The producer hands the policy to the policyholder.
B. A producer explains a policy to a potential applicant.
C. An applicant submits an application to the insurance provider.
D. The insurance provider approves the application and receives the first premium.
77. Which of the following personal property coverages would protect contents damaged by fire?
A. Coverage A
B. Coverage B
C. Coverage C
D. Coverage D
78. In an insurance contract, which of the following individuals would qualify as a competent party?
A. The applicant is intoxicated at the time of application.
B. The applicant is 12 years old
C. The applicant is under the influence of a mind-altering drug during the application process
D. The applicant has a felony conviction on their record
79. Under the dwelling policy, if an insurance company chooses to repair or replace lost or damaged property, it must inform the insured within how many days of receiving proof of loss?
A. 10 days
B. 30 days
C. 45 days
D. 60 days
80. An employee at a chemical manufacturing plant was recently diagnosed with a rare blood disease. He told his doctor that his job required him to handle industrial waste chemicals. Under the workers compensation policy, which of the following types of injuries will be covered?
A. Occupational disease caused or aggravated by a condition of employment
B. Injury intentionally caused by the employee
C. Occupational disease that takes place during lunch at a local restaurant
D. Injury that takes place traveling to and from work
81. An insured has $5,000 in medical coverage on a personal auto policy when a covered accident occurs. The policy owner and two passengers are injured. Medical treatment costs $7,000 for the policy owner, $4,000 for the first passenger, and $8,000 for the third passenger. Under medical payments coverage, how much will the policy pay?
A. $5,000 maximum for the accident
B. $5,000 minus the policy deductible
C. $14,000
D. $15,000
82. All of the following coverages are contained in the businessowners policy without requesting coverage extensions EXCEPT
A. Civil authority.
B. Debris removal.
C. Newly acquired or constructed property.
D. Pollutant cleanup and removal.
83. Several insureds have become liable due to a single loss. How will the CGL policy’s limit of liability be impacted?
A. No more than the per occurrence limit applies, regardless of how many insureds are involved
B. Pro rata liability is applied
C. A homeowners policy can have no more than one insured
D. The full limit is applied to each individual insured
84. Sugar Crunch Cereal Company shipped some of its products in faulty containers, resulting in spoilage. The spoiled cereal caused some consumers to become ill. If the company is sued because of this occurrence, it would be an example of a
A. Personal injury claim
B. Contractual liability claim.
C. Product liability claim.
D. Premises and operations claim.
85. A worker is injured while visiting the employer’s out-of-state site. How will the workers compensation benefits be determined?
A. The employee can elect to receive benefits from both the home state and the state where the injury occurred
B. Benefits will be provided if the state is listed on the policy information page
C. The legal system will determine which state’s benefits apply to this loss
D. The state’s benefits that pay the lowest amount will be chosen by the insurance provider
86. Which of the following liability exposures is more than likely for a small specialty retail clothing boutique?
A. Product liability exposure
B. Completed operations liability exposure
C. Premises liability exposure
D. Operations liability exposure
87. Under the HO-3 policy, which of the following examples of paid losses would also be paid under the HO-2 policy?
A. Damage to the dwelling resulting from the insured when moving furniture
B. Accidental scorching caused when a hot iron is placed upon a built-in countertop
C. Interior damage resulting from water seeping under the roof’s shingles
D. Damage to the dwelling resulting from dust or lava from a volcanic eruption
88. Which of the following is an example of a protective safeguard in a businessowners policy (BOP)?
A. Professional liability endorsement
B. Automatic sprinkler system
C. Errors and omissions insurance
D. Recordkeeping
89. Under the coverage of which of the following liability policies can an insured require the insurance company to defend a claim?
A. Auto liability
B. General liability
C. Personal liability
D. Professional liability
90. Events in which an individual has both the opportunity of winning or losing are classified as
A. Retained risk.
B. Speculative risk.
C. Insurable.
D. Pure risk.
91. Under a homeowners policy, how much coverage is provided for unauthorized credit card use or theft?
A. $100
B. $500
C. $1,000
D. $5,000
92. Under the conditions that apply to Section I – Property in the homeowners (HO) policy, in the event of a loss, the insured has all of the following duties EXCEPT
A. Providing the insurance company with a signed, sworn proof of loss within 90 days of the insurer’s request, including an inventory, the time and events leading to the loss, and repair estimates.
B. Protect the property from additional damage, make necessary and reasonable repairs, and keep records of any repair expenses.
C. Allow the insurance provider to inspect the property as often as reasonably necessary.
D. Cooperate with the insurance provider during their investigation of a claim.
93. Insurance is a contract by which an individual seeks to protect another from
A. Exposure.
B. Uncertainty.
C. Hazards
D. Loss.
94. What information is included in the insuring agreement of a policy?
A. Location of the premises
B. Policy limits
C. The insurance provider’s address
D. Renewal dates
95. A company has a BOP on a building with an estimated replacement cost of $300,000. The company carries $150,000 of insurance. How much will the insured company be paid if a loss takes place?
A. Up to $300,000 for the loss
B. Up to $150,000 for the loss
C. The coinsurance formula would be applied
D. Nothing, because the company did not carry the required insurance amount
96. What amount will an insurance provider pay under Coverage D (Loss of Use) in a homeowners policy?
A. A percentage of the loss of use of that asset
B. The loss of rent and additional living expenses for the shortest time required to replace or repair the damage
C. A percentage of the additional living expenses
D. The loss of rent and additional living expenses for as long as it takes the policy owner to relocate
97. What type of compensatory damages will cover pain and suffering and disfigurement?
A. Normal
B. General
C. Special (specific)
D. Tort
98. In a personal umbrella policy, the amount paid by the policyholder for specific losses not covered under the primary coverage is known as
A. Self-insured retention.
B. Stop-loss.
C. Coinsurance.
D. Participation requirement.
99. A policy owner has a special form dwelling policy written for $100,000 on a dwelling. The replacement cost of the dwelling is $115,000. Fire causes $75,000 in damage to the dwelling, $15,000 in damage to a separate garage, and kills ten trees valued at $600 per tree. How much will the policy cover for the trees?
A. $5,000
B. $10,000
C. $60,000
D. $75,000
100. When USA Mower’s marketing stated that its mower was the only safe mowing machine available for purchase in town, USA Mower was sued by Patriot Lawn and Garden. USA Mower’s coverage would come from which part of its commercial general liability coverage?
A. Product liability
B. Personal and advertising injury liability
C. The insurer would not cover this claim
D. Premises and operations
101. If a loss takes place, the insured with a homeowners policy must do the following EXCEPT
A. Inform the police if a loss was the result of theft.
B. Protect the property from additional damage, and keep records of repair costs.
C. Arrange an appraisal performed by an unbiased third party.
D. Provide the insurance provider with prompt notice of the loss.
102. The type of insurance used to insure goods for one specific trip is known as
A. A motor truck cargo policy.
B. Trip transit.
C. Commercial property.
D. A bailee policy.
103. When does the coverage begin under the builders risk form?
A. The date on which the policy is issued
B. The date on which the policy is delivered
C. The date on which the premium is paid
D. The date on which construction begins
104. Under the businessowners policy Section II – Liability, all of the following conditions apply to liability coverage in addition to the policy’s common conditions EXCEPT
A. Separation of the insured.
B. Legal action against the insurance company.
C. Bankruptcy
D. Employers liability.
105. An individual applies for a casualty insurance policy. One of the policy’s conditions permits the insurer to inspect the policy owner’s books at the end of the policy term. This inspection ensures enough premium has been collected for the exposure being covered. Which condition is included in the insured’s policy?
A. Contract Bond
B. Errors and omissions insurance
C. Deposit premium audit
D. Excess liability coverage
106. Employers unable to obtain workers compensation coverage through the voluntary market because of the high-risk nature of their work may qualify for coverage under Florida’s Workers Compensation Joint Underwriting Association (FWCJUA) if they are assigned to
A. Subplan A.
B. Subplan B.
C. Subplan C.
D. Subplan D.
107. An insured carries health insurance with two different companies and is covered on an expense-incurred basis. She has an appendectomy and files the claims to both insurance providers. At the time of the policy issue, neither insurer was informed that the insured had other coverage. What would each insurance company pay?
A. A proportionate amount
B. Half of the benefit
C. Nothing, as the insured did not disclose the dual nature of coverage, so the insurance providers are not responsible for covering any claims
D. The full amount
108. Which of the following will be covered by aviation hull insurance?
A. Fuselage and wings
B. Cargo inside the plane
C. Airport premises
D. Crew members
109. The operation of the Florida Financial Responsibility Law could be triggered by any of the following events, EXCEPT
A. Being involved in an accident that results in bodily injury.
B. Being involved in an accident resulting in property damage to a vehicle that renders it inoperative.
C. Registering a vehicle with the Florida Department of Highway Safety and Motor Vehicles
D. Being convicted of certain serious traffic violations.
110. Under special circumstances, continuing education (CE) requirements can be extended beyond the 2-year period for a maximum of
A. 3 months.
B. 6 months.
C. 9 months.
D. 12 months
111. In Florida, it is unlawful for a licensee’s commissions from controlled business to exceed what percentage of the total commissions in a given year?
A. 20%
B. 35%
C. 50%
D. 60%
112. What is the primary difference between a mutual company and a stock company?
A. Ownership
B. Amount of death benefit
C. Number of producers
D. Ypes of whole life policies
113. Which term describes a specific dollar amount of the cost of care that the HMO member must pay?
A. Cost share
B. Prepayment
C. Contractual cost
D. Copayment
114. What is the maximum service charge a general lines agent can charge per year for financial insurance premiums on policies issued by the agent?
A. $3
B. $18
C. $36
D. $100
115. Regarding the agent’s appointments, which of the following is true?
A. An agent can only have one appointment
B. An agent only needs one appointment for all the insurers they represent if it is in the same line of authority
C. An agent does not have to be licensed to hold an insurance appointment
D. An agent can hold several appointments at one time
116. License holders must meet continuing education requirements every
A. Year.
B. Two years.
C. Three years.
D. Five years.
117. The insurer must retain all advertising materials for at least how many years from the date it first used them?
A. One year
B. Two years
C. Three years
D. Five years
118. All of the following are true regarding uniform mandatory provisions concerning claims procedures EXCEPT
A. In Florida, the time for payment of claims is 45 days after the insurance provider first receives the claim submitted by the insured.
B. The insured is required to give notice of claim within 20 days.
C. The insured has to submit proof of loss as soon as possible or within 90 days, not exceeding one year.
D. An insured has to notify the insurance provider of a claim on forms provided by the insurer.
119. All of the following would be regarded as rebating EXCEPT
A. A producer offers tickets to a basketball game as an inducement to buy insurance.
B. A producer misrepresents policy benefits to convince a policy owner to replace policies.
C. A producer offers the use of her beach house to a client as an inducement to buy an insurance policy.
D. A producer offers to share his commission with a policy owner.
120. When a written settlement is achieved, the insured has how many business days to rescind the settlement?
A. 3 business days
B. 5 business days
C. 10 business days
D. 15 business days
121. The provision in a health insurance policy that ensures the provider cannot refer to any document that is not found in the contract is known as the
A. Entire contract clause.
B. Time limit on certain defenses clause.
C. Incontestability clause.
D. Legal action against us clause.
122. If a producer is in the military, which of the following is true?
A. The producer cannot sell a policy to someone outside the military base
B. The producer cannot sell any policies during times of conflict or war
C. The producer cannot sell policies while on active duty
D. The producer cannot sell a policy to active military personnel of a lower rank
123. When an insurance company elects not to renew a commercial property insurance policy, it is required to
A. Provide the policy owner at least 60 days advance written notice of its intent.
B. Provide the policy owner at least 30 days advance written notice of its intent.
C. Provide the policy owner at least 45 days advance written notice of its intent.
D. Provide the policy owner at least 45 days advance written notice of its intent and state the reason(s) why the policy is not to be renewed.
124. Which of these is NOT a responsibility of the Office of Insurance Regulation (OIR)?
A. Reviewing an insurer’s books and records
B. Enacting new insurance laws
C. Enforcing the Florida Insurance Code
D. Supervising rate making
125. Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as
A. Twisting.
B. False advertising.
C. Coercion.
D. Rebating.
126. A licensed producer has to complete how many hours of continuing education specific to a law and ethics update course?
A. Two
B. Three
C. Four
D. Five
127. A producer’s client requires additional insurance, which the producer’s insurer cannot provide. The producer has to solicit additional coverage from another authorized insurer. This coverage is called
A. Rejected.
B. Excess.
C. Authorized.
D. Controlled business.
128. Regarding insurance, what is the definition of fiduciary responsibility?
A. Promptly forwarding premiums to the insurer
B. Helping insureds with filing claims
C. Performing reviews of an insured’s coverage
D. Offering additional coverage to clients
129. The part of Medicare that helps cover inpatient hospital care, home health care, and hospice care is
A. Part A.
B. Part B.
C. Part C.
D. Part D.
130. A health insurance applicant is provided with which of the following?
A. A guarantee that the policy will be issued
B. The period during which the insured may return the policy for a full premium refund
C. Immediate coverage for pre-existing disease
D. Immediate protection when the application is signed
131. All of the following LTC coverages would permit an insured to receive care at home EXCEPT
A. Respite care.
B. Home health care.
C. Skilled care.
D. Custodial care in the insured’s house.
132. If a person purchased a health insurance policy for themselves, they would be considered
A. A subscriber only.
B. A producer.
C. An insured only.
D. Both a subscriber and an insured.
133. An insured submits a proof of loss form within ten days of a loss. The insurance company, however, does not acknowledge the form for three months. Which of the following violations has the insurance company committed?
A. Rebating
B. Inappropriate delay
C. Dragging
D. Unfair claims settlement
134. In what way can an agent demonstrate a high standard of ethics?
A. Recommending qualified retirement plans to every client
B. Putting the best interests of the client before their own
C. Earning sufficient commissions to cover personal expenses
D. Setting and meeting monthly production goals
135. When an insurance company appoints an agent,
A. The agent is required to represent the insurance company’s clients.
B. Other insurance companies cannot appoint the agent.
C. That appointment is for life.
D. The agent’s acts bind the insurance company.
136. A medical insurance plan in which the health care provider is paid a regular fixed amount for delivering care to the insured and does not receive additional compensation depending upon the procedure performed is known as a/an
A. Prepaid plan.
B. Indemnity plan.
C. Reimbursement plan
D. Fee-for-service plan.
137. The Florida Workers Compensation Joint Underwriting Association (FWCJUA) has how many subplans?
A. Two
B. Three
C. Four
D. Five
138. If an insurance provider satisfies the state’s financial requirements and is approved to conduct business in the state, it is considered to be
A. Qualified.
B. Approved.
C. Authorized.
D. Certified.
139. After being hospitalized due to an accident, an insured was confined in a skilled nursing facility. For how many days will Medicare pay full benefits in this facility?
A. 3
B. 20
C. 100
D. 80
140. Which of the following insurance providers are owned by stockholders?
A. Reciprocal
B. Fraternal
C. Stock
D. Mutual
141. Which of these terms best describes a limited or reduced amount of coverages, other than the combined single limit, that is available to cover claims caused by passenger bodily injury?
A. Limited liability
B. Sublimit
C. Smooth limit
D. Lower limit
142. Which of the following would be an example of the unfair trade practice of sliding?
A. An agent encourages an employer to seek insurance from another insurer because of the employer’s industry
B. An agent is maliciously critical of the financial condition of another insurer
C. An insurer refuses to issue a policy to an individual based on marital status
D. An agent falsely leads an applicant to believe that additional coverage is required by law
143. Twin sisters applied for life insurance from Insurer A. The provider found that while neither smoked and both lived similar lifestyles, one of the twins was in a considerably stronger financial position than the other. Due to this factor, the insurer charged her a higher rate for her insurance. This practice is known as
A. Controlled business.
B. Adverse selection.
C. Discrimination.
D. Twisting.
144. The agent in charge of an agency is required to hold which of the following licenses?
A. Limited lines
B. Securities
C. Surplus lines
D. General lines
145. An applicant for an insurance producer’s license has to
A. Be a resident of Florida for a minimum of six months.
B. Submit a minimum of two insurance company appointments to the Insurance Department.
C. Complete a pre-licensing education course.
D. Have at least 24 college credits in insurance-related courses
146. Florida has a Financial Responsibility Law that requires personal injury protection (PIP) insurance to be carried by motor vehicle owners. It imposes penalties for failing to do so unless specifically exempt. PIP provides all of the following benefits EXCEPT
A. Lost wages.
B. Third-party death benefits.
C. Replacement services.
D. Medically necessary expenses.
147. What authority is given to the Office of Insurance Regulation to examine an insurance provider’s activities to determine compliance with Unfair Trade Practice laws?
A. Limited
B. Civil
C. Absolute
D. Voluntary
148. An insured has Medicare Part D. Upon reaching the initial benefit limit, what percentage of the prescription drug cost must the insured pay?
A. 15%
B. 16%
C. 23%
D. 25%
149. Which of the following types of property are covered in any of the homeowners coverage forms?
A. Structures rented to other individuals who are not the dwelling’s tenants, other than a garage
B. Birds, animals, or fish
C. The furnishings of a landlord in an on- premises apartment
D. Structures used for business purposes
150. What organization offers coverage on properties in areas of Florida deemed especially susceptible to windstorm damages?
A. Florida Workers Compensation Joint Underwriting Association
B. Citizens Liability Insurance Corporation
C. Residents Property and Liability Corporation
D. Citizens Property Insurance Corporation
151. A health insurance policy that pays a lump sum if the insured suffers a stroke or heart attack is known as
A. Medical expense.
B. Critical illness.
C. Major medical.
D. Accidental death and dismemberment.
152. Which of the following would be required to be licensed as an insurance producer?
A. An individual whose activities are limited to producing insurance advertisements
B. A salaried full-time employee who provides information for group insurance
C. An insurance company director who performs administrative, executive, and managerial duties
D. A salaried employee who advertises and solicits insurance business
153. No insurance policy form can be issued, delivered, or used in Florida unless it has been
A. Filed with and approved by the Office of Insurance Regulation.
B. Reviewed by the Office of Insurance Regulation and approved by the Governor.
C. Approved by the Office of Financial Regulation.
D. Developed by the Chief Financial Officer.
154. On a participating insurance policy issued by a mutual insurer, dividends paid to policy owners are
A. Guaranteed.
B. Not taxed because the IRS treats them as a return of a portion of the paid premium.
C. Paid at a fixed rate each year.
D. Taxed as ordinary income.
155. Florida’s UM law requires that every auto policy providing primary liability coverage for a specific motor vehicle has to include “stacked” UM at the same limits that apply for liability coverage unless the insured, in writing
A. Rejects the UM coverage.
B. Elects UM coverage at limits lower than those that apply to liability.
C. Elects nonstackable UM coverage.
D. Any of the above
156. Which of the following must an insurance provider obtain to conduct insurance business within a given state?
A. A business entity license
B. An insurer’s license
C. A certificate of authority
D. A producer’s certificate
157. Which of these is an example of an agent being involved in the unfair trade practice of rebating?
A. Telling a client that their first premium will be waived if they buy the insurance policy today
B. Inducing the insured to drop a policy in favor of another one when it is not in the best interest of the insured
C. Charging a higher premium to the client for the same policy as another client in the same insuring class
D. Making deceptive statements regarding a competitor
158. An insurance producer just sold an insurance policy to her brother. What kind of business is this called?
A. Controlled
B. Illegal
C. Internal
D. Personal
159. An insurance provider publishes intimidating brochures that portray the insurance company’s competition as professionally and financially unstable. The insurance provider hopes this advertising will help eliminate the competition and create a monopoly. This scenario is
A. Legal, as long as the information can be verified.
B. Legal, if it is endorsed by the Guaranty Association.
C. Legal, as long as the other insurance providers are paid royalties for using their names.
D. Illegal.
160. Which health care plan would likely provide the subscriber (insured) comprehensive health care coverage?
A. Group dental insurance plan
B. Medical-surgical expense plan
C. Basic medical expense plan
D. Health Maintenance Organization plan
161. What term is used to describe replacing insurance policies for the exclusive purpose of earning commissions?
A. Misrepresentation
B. Replacement
C. Coercion
D. Churning
162. What maximum service charge can a general lines producer charge per installment for financial insurance premiums?
A. $1
B. $2
C. $3
D. $10
163. Regarding branch agency licensing, which of the following is true?
A. All of its agents have to be licensed
B. The branch has to secure an agency license
C. There are no special licensing requirements
D. The agent in charge has to be licensed
164. If a licensee changes their residence address, within how many days must the Department be informed?
A. 15
B. 30
C. 45
D. The Department only has to be notified if a person’s business address changes
165. A producer has been convicted of a crime punishable by 1-year imprisonment. Within how many days must the producer inform the Department?
A. 10 days
B. 30 days
C. 90 days
D. 180 days
166. Which of the following groups would probably be covered by blanket insurance?
A. People who obtain temporary insurance
B. A college sports team
C. A large family
D. A publishing company
167. An insured has a liability policy establishing the amount for all claims resulting from a single incident at $50,000. Which type of limit of liability does this policy owner have?
A. Aggregate
B. Split
C. Per occurrence
D. Per person
168. The policy provision included in a property insurance policy that prevents the policy owner from collecting twice for the same loss is called
A. Appraisal.
B. Subrogation.
C. Consent to settle the loss.
D. Right of salvage. #100. When USA Mower’s marketing stated that its mower was the only safe mowing machine available for purchase in town, USA Mower was sued by Patriot Lawn and Garden. USA Mower’s coverage would
169. The section of a policy that explains the terms found in the policy is known as the
A. Definitions.
B. Insuring agreement.
C. Conditions.
D. Exclusions.
170. A customer was injured in a grocery store parking lot when a shopping cart collided with the customer. Coverage for this customer’s claim would be provided under
A. Premises and operations.
B. Completed operations.
C. Contractual liability.
C. Product liability.
171. The insured may be eligible for which of the following in a participation plan?
A. An increase in insurance over time
B. Lower premiums
C. Guaranteed dividends
D. A partial premium refund
172. A property policy’s conditions section contains the duties of the insurance provider, which include all of the following EXCEPT
A. Provide advance notice of cancellation.
B. Return any premiums to the policy owner.
C. Inform the policy owner in the event of financial difficulty.
D. Pay covered losses.
173. All of the following are factors that determine actual cash value EXCEPT
A. Insurance premium paid.
B. Type and quality of the property.
C. Age of the property.
D. Replacement cost.
174. The supplemental extended reporting period under the claims-made commercial general liability (CGL) policy
A. Automatically provides an unlimited extension for losses during the policy period but for which a claim is not made until following policy expiration.
B. Automatically extends coverage for losses during the policy period and are claimed within 60 days after policy expiration.
C. Provides an indefinite extension for making claims for losses during the policy period; the insured is required to pay an additional premium.
D. Automatically extends coverage to include claims made within five years of policy expiration, as long as the losses took place during the policy period.
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