New York Property & Casualty Insurance License, Practice Exams

When a worker dies from a compensable injury, workers' compensation typically provides:

1. Death/survivor benefits to dependents plus a burial allowance ✓
2. Only reimbursement of medical bills
3. A lump sum equal to lifetime earnings to the estate
4. Nothing, because death ends the claim

Why: Death benefits provide income (survivor) benefits to the deceased worker's dependents and a statutory burial/funeral allowance.

Under § 2112, when an insurer terminates a producer's certificate of appointment for cause, when must it file a statement of facts with the superintendent?

1. Within thirty days of the termination ✓
2. Within fifteen days of the termination
3. Within sixty days of the termination
4. Before the effective date of the termination

Why: Section 2112(d) requires filing the statement of the facts relative to a termination for cause within thirty days.

The CGL Medical Expense (Coverage C) limit typically applies:

1. Only to the named insured
2. Per occurrence to all persons in that particular circumstance
3. Per person and is subject to the each occurrence limit ✓
4. As a separate aggregate

Why: The Medical Expense Limit applies per person and the total is subject to the Each Occurrence Limit.

Under § 2606, a policy condition that binds the insured to accept less than the full value of the policy on a claim — where no similar condition is imposed on others in similar cases — is:

1. Subject to a $5,000 fine but otherwise valid
2. Void ✓
3. Permitted if disclosed at issuance
4. Enforceable only against commercial insureds

Why: Section 2606(a)(4) provides that such a discriminatory stipulation or condition, made or inserted where not imposed on others in similar cases, shall be void.

A producer knowingly accepts insurance business from a person who is not licensed. Under § 2110, this is:

1. Excused if no commission was actually paid to the unlicensed person
2. Subject only to a written warning for a first occurrence
3. Permissible if the unlicensed person is supervised by the producer
4. A ground on which the superintendent may revoke or suspend the producer's license ✓

Why: Section 2110(a)(12) makes knowingly accepting insurance business from an unlicensed individual a ground for revocation or suspension.

For how long from the date of the accident are No-Fault lost-earnings benefits payable?

1. Three years ✓
2. One year
3. Until basic economic loss is exhausted, without a time limit
4. Two years

Why: Ins. Law §5102(a)(2) pays loss of earnings for not more than three years from the date of the accident.

The Miscellaneous Type Vehicle endorsement to the PAP can extend coverage to:

1. Aircraft
2. A commercial dump truck unless an exception clearly applies for the coverage that is in force
3. Motorcycles, motor homes, golf carts, or all-terrain vehicles ✓
4. Watercraft over 40 feet

Why: The Miscellaneous Type Vehicle endorsement provides PAP coverage for vehicles such as motorcycles, motor homes, dune buggies, golf carts, and ATVs.

A reciprocal insurer is best described as:

1. An insurer owned by the federal government unless an exception clearly applies for the coverage that is in force
2. A corporation owned by stockholders
3. An unincorporated group of subscribers who insure one another, managed by an attorney-in-fact ✓
4. A foreign insurer writing surplus lines

Why: A reciprocal or interinsurance exchange is an unincorporated association of subscribers who exchange insurance among themselves, administered by an attorney-in-fact.

Which is an example of a direct loss?

1. Fire damage to the structure of a building ✓
2. Loss of rental income after a fire
3. Extra expense to operate at a temporary location
4. Spoiled food after a power outage

Why: Direct loss is immediate physical damage to property; the fire damage to the structure is direct, while income/expense impacts are indirect.

For personal lines insurance under §3425, the 'required policy period' during which nonrenewal or conditional renewal is restricted to cancellation-type grounds is:

1. One year
2. Three years ✓
3. Five years
4. Two years

Why: §3425(a)(7) defines the required policy period for personal lines insurance as three years from the date the covered policy is first issued or voluntarily renewed.

The condition requiring the insured to promptly notify the insurer, protect property from further damage, and cooperate after a loss describes:

1. Abandonment
2. Liberalization
3. Subrogation
4. Duties after a loss ✓

Why: The duties after a loss condition lists the insured's obligations, including prompt notice, protecting property, providing proof of loss, and cooperating.

Under §52, an employer that fails to secure the payment of compensation for five or fewer employees within a twelve-month period commits:

1. A misdemeanor punishable by a fine of $1,000 to $5,000 ✓
2. No offense if it later obtains coverage
3. A class E felony
4. A violation punishable only by a civil fine

Why: Section 52(1)(a) makes failure to secure compensation for five or fewer employees within a twelve-month period a misdemeanor, punishable by a fine of not less than $1,000 nor more than $5,000.

When an applicant submits a completed application with the initial premium, the applicant is generally making the:

1. Consideration only
2. Counteroffer by the insurer
3. Offer ✓
4. Acceptance

Why: In insurance, the applicant typically makes the offer by submitting the application and premium; the insurer accepts by issuing the policy.

Under §3425(e), during the required policy period, a notice of nonrenewal or conditional renewal of a personal lines covered policy may be issued only if:

1. The insured consents in writing
2. It is based upon a ground for which the policy could have been cancelled ✓
3. The insurer gives 90 days' notice
4. The Superintendent grants a waiver unless an exception clearly applies for the coverage that is in force

Why: §3425(e) provides that during the required policy period, no nonrenewal or conditional renewal may become effective unless based upon a ground for which the policy could have been cancelled.

Injuries to civilian federal government employees (such as a postal or federal agency worker) are covered under:

1. FELA
2. The Defense Base Act in that particular circumstance
3. The Federal Employees' Compensation Act (FECA) ✓
4. The LHWCA

Why: FECA provides workers' compensation benefits to civilian employees of the federal government for job-related injuries and illnesses.

Where an employer is a corporation, §52 provides that liability for failure to secure compensation extends to:

1. The company's insurance broker
2. The president, secretary, and treasurer of the corporation ✓
3. Only the majority shareholder
4. No individuals, only the corporation under the policy's terms

Why: Section 52(1)(c) provides that where the employer is a corporation, the president, secretary, and treasurer are liable for the failure to secure the payment of compensation (subject to an affirmative defense of reasonable steps).

Under §11, if an employer fails to secure the payment of compensation as required by §50, the injured employee may:

1. Recover treble damages automatically
2. Only claim workers' compensation benefits in that particular circumstance
3. Do nothing until the Board acts
4. Elect to claim compensation OR maintain a court action for damages ✓

Why: Section 11 provides that if the employer fails to secure compensation as required by §50, the injured employee (or legal representative if death results) may, at his or her option, elect to claim compensation under the chapter or maintain an action at law for damages.

Section 2119(d) prohibits a broker, absent a proper written fee agreement, from charging the insured more than what?

1. Any greater sum than the rate of premium fixed by the insurer obligated on the contract ✓
2. The broker's customary hourly consulting rate
3. The amount stated in the insurer's published rate manual plus ten percent
4. Twice the standard commission deductible from premiums

Why: Section 2119(d) bars a broker from charging or receiving from the insured any greater sum than the premium rate fixed by the insurer, unless a right to compensation exists under subsection (c).

An insured intentionally damages a third party's property. Under a standard liability policy, this loss is most likely:

1. Covered as an occurrence
2. Covered under supplementary payments in that particular circumstance
3. Excluded because intentional/expected acts are not accidental ✓
4. Covered under salvage

Why: Liability coverage applies to occurrences (accidents); intentional acts are typically excluded because they are not accidental.

Shareholders sue a corporation's board alleging mismanagement caused a stock drop. Which policy responds?

1. CGL Coverage B
2. Directors and Officers (D&O) Liability ✓
3. Liquor liability under the policy's terms
4. EPLI

Why: Claims against directors and officers for wrongful management acts are handled by D&O liability insurance.

PAP Part E — Duties After an Accident or Loss requires the insured to:

1. Promptly notify the insurer and cooperate in the investigation and settlement ✓
2. Pay the claim directly to the third party unless an exception clearly applies for the coverage that is in force
3. Repair the vehicle before reporting
4. Admit fault to the other driver

Why: Part E requires prompt notice of the accident, cooperation, providing proof of loss, and allowing inspection, among other duties.

Which perils does the Broad Causes of Loss form ADD beyond the Basic form?

1. Earthquake and flood
2. War and nuclear hazard unless an exception clearly applies for the coverage that is in force
3. Wear and tear
4. Falling objects; weight of snow, ice, or sleet; and water damage ✓

Why: The Broad form adds falling objects; weight of snow, ice, or sleet; water damage; and includes a limited collapse provision.

Section 2108(o) restricts an adjuster's conduct in transacting business. What does it prohibit?

1. Communicating directly with the insured without the insurer's consent
2. Adjusting more than one claim arising from a single catastrophe
3. Making any misrepresentation of facts or advising any person on questions of law ✓
4. Charging any fee that exceeds ten percent of the claim settlement

Why: Section 2108(o) bars a licensee from making any misrepresentation of facts or advising any person on questions of law in transacting adjuster business.

Which of the following is a residual market mechanism rather than a risk-financing alternative?

1. Captive insurer
2. Self-insurance
3. Joint underwriting association ✓
4. Risk retention group

Why: A joint underwriting association is a residual market providing coverage otherwise unavailable, whereas captives, self-insurance, and RRGs are alternative risk-financing techniques.

Workers' compensation benefits are described as 'no-fault.' What does this mean?

1. Benefits are paid only if the employee was not at fault
2. Benefits are paid regardless of who was at fault for the injury ✓
3. Benefits are paid only if the employer was negligent
4. Benefits are reduced if the employee was partly at fault

Why: Workers' compensation is a no-fault system: an injured worker receives statutory benefits regardless of whether the employer, the employee, or neither was at fault.

How many credit hours of continuing education must a person licensed under Article 21 complete each full biennial licensing period under § 2132?

1. Equivalent to thirty credit hours of instruction
2. Equivalent to twenty credit hours, including three hours of ethics
3. Equivalent to fifteen credit hours of instruction ✓
4. Equivalent to twelve credit hours of instruction

Why: Section 2132(c)(1) requires instruction equivalent to fifteen credit hours during each full biennial licensing period.

A property worth $500,000 has a 90% coinsurance requirement. The insured carries $360,000 and has a $50,000 loss. Ignoring deductible, the insurer pays:

1. $50,000
2. $40,000 ✓
3. $36,000
4. $45,000

Why: Required = 90% x $500,000 = $450,000. Did/should = $360,000/$450,000 = 0.80. Payment = 0.80 x $50,000 = $40,000.