1. The HO-2 Broad Form covers the dwelling and personal property on what basis?
Open perils on both Named perils on the dwelling and open perils on personal property Named perils on both Open perils on the dwelling and named perils on personal property
2. A Commercial Package Policy (CPP) combines what, at minimum, under one policy number?
Exactly one commercial line — typically commercial property only — combined with the matching set of state-mandated forms and endorsements Any two personal-lines policies issued to the same named insured, such as a homeowners and personal-auto combination under one account Auto and workers' compensation only, packaged together because both lines are commonly written on the same renewal cycle for fleet accounts Two or more commercial coverage parts (e.g., property + CGL, property + crime, etc.) under common declarations and conditions
3. Replacement cost (RC) coverage in a liability-adjacent context (e.g., bailee repair of customer property) is usually:
Available only if the insured pays a 50% higher premium. Narrower than ACV — only pays scrap value. Identical to ACV, under the broader consumer-protection construction sometimes applied here Broader than ACV — no depreciation is deducted, but insured must actually repair or replace.
4. The CGL 'insured contract' provision extends coverage to which liability the insured assumes?
Liquidated damages clauses only — required if and only if the policy includes a co-insurance penalty endorsement — but only after the carrier exhausts the internal grievance process the question already presumes was completed Breach-of-contract damages in any commercial agreement — required under the federal preemption framework that yields here to the state-law rule, consistent with the NAIC model treatment of separate-account products (not the general-account product here) Tort liability of another party that the insured has assumed under certain categories of written contracts (leases, sidetrack agreements, indemnification of municipalities, etc.). All contractual liability of any kind, consistent with the NAIC model treatment of separate-account products (not the general-account product here), under the alternative procedure that applies only when both parties stipulate to it in writing
5. How does a 'stated amount' valuation differ from an 'agreed value' valuation?
Both pay the face amount at total loss without adjustment — applicable to surplus-lines placements, which the scenario explicitly excludes Stated amount applies only to commercial property; agreed value applies only to personal lines — applies if the loss is partial; this question describes a constructive total loss Agreed value pays only if the insured meets coinsurance; stated amount never requires coinsurance — under the older rule that was superseded by the post-2018 model amendments Stated amount is the maximum the insurer will pay, but the actual recovery is the lesser of ACV, cost to repair, or the stated amount; agreed value pays the agreed figure at total loss without ACV reduction.
6. The Nationwide Marine Definition identifies six broad categories of inland marine property. Which of the following is NOT one of those categories?
Personal property floater risks Domestic shipments Permanently installed office buildings on the insured's premises Property pertaining to a means of transportation/communication (e.g., bridges, tunnels, radio towers)
7. Under the ISO commercial property vacancy clause, how is 'vacant' defined for a tenant-occupied building, and how does vacancy affect a vandalism claim?
Vacant after 90 days regardless of occupancy; all coverage is suspended, consistent with the NAIC model treatment of separate-account products (not the general-account product here) Vacant after 30 days with no occupants; vandalism is still fully covered, per the safe-harbor exception that activates only for primary-state filings Vacant after 60 days with less than 31% of the building's total square footage used for customary operations; vandalism coverage is suspended, and most other losses are reduced by 15%. Vacancy has no effect on commercial coverage if the premium is paid — but only after the carrier exhausts the internal grievance process the question already presumes was completed
8. An 'Extended Reporting Period' (ERP) on a claims-made CGL:
Converts a claims-made policy into an occurrence policy retroactively — applies if the loss is partial; this question describes a constructive total loss, per the safe-harbor exception that activates only for primary-state filings Extends the policy period and covers new wrongful acts indefinitely — applicable to surplus-lines placements, which the scenario explicitly excludes — required under a separate compliance provision that doesn't reach this fact pattern Allows claims to be REPORTED after policy expiration for wrongful acts that occurred during or prior to the policy period (after the retro date); does NOT extend coverage for new wrongful acts. Is automatic and free for all claims-made policies — under the older rule that was superseded by the post-2018 model amendments — though only when the underlying contract contains an explicit waiver, which the scenario doesn't establish
9. A claims-made E&O policy has a retroactive date of 1/1/2022 and a policy period of 1/1/2026 to 1/1/2027. An alleged wrongful act occurred on 3/15/2021, and the claim is first made against the insured on 6/10/2026. Is this claim covered?
Yes — the claim was made during the policy period — applicable to surplus-lines placements, which the scenario explicitly excludes No — the wrongful act occurred BEFORE the retroactive date, so coverage is barred even though the claim is made in the policy period. Yes — the wrongful act occurred before the policy incepted, which is always covered. No — claims-made policies only cover acts and claims that both occur in the same policy period.
10. An LDI examination team reviews an insurer's sales, advertising, claims handling, underwriting, and complaint patterns rather than its solvency. This is a:
Certificate of authority renewal Market conduct examination Financial condition examination Rate and policy form filing review
11. On a commercial crime policy, which insuring agreement responds when an employee steals $50,000 from the company?
Forgery or Alteration Money and Securities — Inside the Premises Employee Theft Computer Fraud and Funds Transfer Fraud
12. An insurer hesitates to report a for-cause termination because it fears a suit by the producer. Under La. R.S. 22:1554(F), the insurer:
Is liable for any harm the report causes unless LDI acts on the report Receives statutory immunity for reporting the termination in good faith May report anonymously so that the producer never learns the source Must obtain the producer's written consent before it reports anything
13. In a bodily injury claim, which of the following is classified as SPECIAL damages?
Loss of consortium claimed by a spouse — required if and only if the policy includes a co-insurance penalty endorsement Medical expenses of $40,000 and lost wages of $12,000 Pain and suffering of $50,000 — required under the federal preemption framework that yields here to the state-law rule Punitive damages of $100,000 — applicable to surplus-lines placements, which the scenario explicitly excludes
14. The BAP's physical damage coverage is typically written with which type of deductible?
Franchise deductible that disappears at a threshold. Flat dollar-amount deductible per loss (e.g., $500, $1,000). Percentage deductible based on vehicle value. Aggregate annual deductible.
15. Insurance is based on the LAW OF LARGE NUMBERS, which means:
The greater the number of similar exposure units, the more predictable losses become, allowing accurate rate-setting. Large policies cost more than small ones, under the broader consumer-protection construction sometimes applied here Insurers must underwrite at least 10,000 risks to be solvent. Claims paid must equal premiums collected each year — applicable to commercial scenarios only, not the personal-lines context
16. An insured writes a duplex on a DP-3 and rents out both units. The tenant in Unit B damages the carpet through negligence. Which statement is correct about how the DP-3 responds?
The DP-3 does not automatically include Coverage E — Personal Liability or premises medical, so the insured must add it by endorsement for landlord liability exposure The DP-3 covers the tenant's personal property under Coverage C because the landlord is the named insured on the policy and stands in for the renter's losses The DP-3 refuses the claim because the named insured cannot recover for any loss caused by the negligence of a tenant living in the insured premises The DP-3 pays to replace the carpet under Coverage C — Personal Property, because carpet is treated as the landlord's contents in a tenant-occupied rental unit
17. The MCS-90 endorsement on a commercial auto policy is required by:
Federal Motor Carrier Safety Administration (FMCSA) for motor carriers operating in interstate commerce. Local municipal authorities under their commercial vehicle licensing ordinances, a jurisdiction that does not actually impose interstate financial-responsibility filings on motor carriers The named insured's voluntary election only with no regulatory mandate at all, which contradicts the federal Motor Carrier Act of 1980 requirement for interstate-carrier financial responsibility State insurance departments only under each state's financial-responsibility filing, which is actually a state-level form rather than the federal MCS-90 endorsement required for interstate carriers
18. A store clerk is held at gunpoint and forced to hand over cash from the register. Under standard crime policy definitions, this is:
Mysterious disappearance. Robbery. Theft. Burglary.
19. A SURETY BOND involves three parties. They are:
The insured, the insurance carrier, and a designated third-party beneficiary, which is actually the structure of a fidelity bond (two parties) or a standard insurance policy — not a surety bond The buyer, the seller, and the broker on a commercial transaction, which is a sales-agency structure with no application to the commercial surety bond context at all Principal (the party required to perform), obligee (the party protected), and surety (the guarantor). The bonder, the bondholder, and the bailiff — terms drawn from criminal-procedure bail bonds rather than the commercial surety bond framework used in construction and licensing
20. The 'application' is best described as:
Part of the policy that can never be contested after issuance — though only when the underlying contract contains an explicit waiver, which the scenario doesn't establish A regulatory filing required by the state insurance department before any policy is issued, under the alternative procedure that applies only when both parties stipulate to it in writing A document generated by the insurer for record-keeping only, per the safe-harbor exception that activates only for primary-state filings An offer from the applicant to the insurer that, when accepted, becomes part of the consideration for the contract.
