Indiana Property & Casualty Insurance License, Practice Exams

Under IC 27-7-5-2, unless rejected in writing, UM/UIM must be provided in limits at least equal to:

1. The policy's bodily injury liability limits ✓
2. Twice the minimum bodily injury limits set for financial responsibility
3. The federal motor carrier minimum
4. The property damage liability limit

Why: IC 27-7-5-2(a) requires UM/UIM at limits at least equal to the bodily injury liability limits unless rejected in writing — therefore the BI limits.

Under IC 27-1-15.6-2, 'solicit' means:

1. Adjusting a first-party property loss for the insurer
2. Filing a rate schedule with the department
3. Countersigning a policy already issued
4. Attempting to sell insurance or urging application ✓

Why: IC 27-1-15.6-2 defines 'solicit' as attempting to sell insurance or asking or urging a person to apply for insurance — therefore that is correct.

Which of the following is typically EXCLUDED property under the BPP?

1. Office furniture
2. Tenant's improvements
3. Money and securities ✓
4. Stock for sale

Why: Money and securities are excluded from the BPP; they require a crime policy or special form. The other items are covered property.

Under IC 27-1-15.6-16, the commissioner waives most license requirements for a nonresident applicant with a valid home-state license only if the home state:

1. Licenses Indiana residents reciprocally ✓
2. Is an accredited member state of the NAIC
3. Shares a common border with Indiana
4. Imposes continuing education requirements at least equal to Indiana's

Why: IC 27-1-15.6-16(a) requires the home state to award nonresident licenses to Indiana residents on the same basis — therefore reciprocity.

A public adjuster wants to file an unfair-claim complaint for a homeowner. Under IC 27-4-1-5.6 the adjuster may do so only if:

1. The homeowner gives written consent ✓
2. The claim exceeds ten thousand dollars
3. The insurer agrees in writing
4. The commissioner pre-approves it

Why: IC 27-4-1-5.6(b) provides a public adjuster may not file a complaint on a person's behalf unless the person gives written consent.

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.

Under the Homeowners definition, an 'insured' typically includes:

1. The named insured, resident relatives, and other persons under 21 in their care ✓
2. The insurer's agent, whose acts in servicing the policy are treated as acts of the named insured
3. Only the person shown on the declarations page, with relatives added by written endorsement
4. Any visitor to the home, for as long as that person remains on the residence premises

Why: Insured generally includes the named insured, resident relatives, and others under 21 in the care of an insured, plus students away under certain conditions.

Part A of the PAP provides coverage for:

1. Damage to the insured's own auto from collision or other than collision
2. Medical payments to occupants of the insured auto regardless of who was at fault
3. Bodily injury and property damage liability the insured becomes legally responsible for ✓
4. Theft of the insured vehicle and its contents

Why: Part A — Liability covers bodily injury and property damage for which an insured becomes legally liable due to an auto accident.

Under the law of agency, the acts of the producer (agent) are generally considered to be the acts of the:

1. Reinsurer
2. Insured
3. State insurance department
4. Insurer ✓

Why: An agent represents the insurer; under the law of agency, the agent's actions within authority are treated as those of the insurer (principal).

Under the Business Auto Coverage Form, the named insured is an insured for any covered auto. Additionally, who qualifies as an insured?

1. Only the corporation's officers and directors, and only while they are on company business
2. Any member of the public who is injured near a covered auto, whether or not anyone was at fault
3. Anyone using a covered auto with the named insured's permission (with some exceptions) ✓
4. Only employees on the company payroll, and only while driving during scheduled work hours

Why: Permissive users of a covered auto are insureds, subject to exceptions such as employees using their own autos and certain auto-business operations.

Under the PAP, "occupying" means:

1. Seated behind the wheel with the engine running and the transmission in gear
2. Driving the vehicle on a public road open to traffic
3. In, upon, getting in, on, out, or off a vehicle ✓
4. Holding title to or leasing the vehicle

Why: "Occupying" is defined as in, upon, getting in, on, out, or off of a vehicle, which is broader than merely riding inside it.

An insurer pulls a credit-based report on an applicant to underwrite an auto policy. Under the FCRA this is permitted because the insurer has:

1. Signed authorization from three neighbors willing to vouch for the applicant's driving history
2. A permissible purpose (underwriting the consumer's insurance) ✓
3. A federal subpoena issued by a United States district court before any credit file may be released
4. A standing court order, which the FCRA makes the only lawful route to any consumer's credit file

Why: The FCRA allows access to consumer reports for a permissible purpose, which includes underwriting insurance involving the consumer.

Under the PAP, an insured loses control on ice and slides into a tree. This loss is covered under:

1. Liability
2. Other Than Collision
3. Medical Payments
4. Collision ✓

Why: Striking a tree as the result of losing control is a collision loss, since collision includes upset or impact with an object.

Under IC 27-1-15.6-12, the civil penalty range that may be imposed on a producer after a hearing is:

1. Fifty dollars to ten thousand dollars ✓
2. One hundred to five thousand dollars
3. Fifty dollars to five thousand dollars
4. Five hundred to twenty thousand dollars

Why: IC 27-1-15.6-12 authorizes a civil penalty of not less than fifty dollars ($50) and not more than ten thousand dollars ($10,000) — therefore that range is correct.

Under the Business Auto Coverage Form, the covered "auto" definition generally includes:

1. Mobile equipment such as forklifts kept entirely on the insured's premises
2. Company aircraft and watercraft used to carry employees
3. Railcars operated on a private siding
4. Land motor vehicles, trailers, and semitrailers designed for use on public roads ✓

Why: A covered auto is a land motor vehicle, trailer, or semitrailer designed for travel on public roads, including attached machinery, but not most mobile equipment.

The policy period condition specifies:

1. The deductible that applies to each covered loss during the term
2. The territory within which a covered loss must occur for coverage to apply
3. The number of persons who may qualify as insureds under the contract
4. The dates and times during which coverage is effective ✓

Why: The policy period sets the effective and expiration dates/times defining when coverage applies.

Under IC 27-1-31-2, a commercial cancellation for a substantial change in the scale of risk requires notice at least:

1. Twenty (20) days before
2. Forty-five (45) days before ✓
3. Thirty (30) days before
4. Ten (10) days before

Why: IC 27-1-31-2(b)(1) requires at least forty-five days' notice for cancellation based on a substantial change in risk.

Under IC 27-1-15.8-3, surplus lines qualification is available for kinds of insurance in:

1. Class 1 only, the life and accident and health class of IC 27-1-5-1
2. Class 2 and Class 3 of IC 27-1-5-1 ✓
3. Life and annuities, placed through a licensed surplus lines producer
4. Title and surety only

Why: IC 27-1-15.8-3(a) authorizes surplus lines qualification in Class 2 and Class 3 of IC 27-1-5-1.

Storing oily rags near a furnace is an example of which type of hazard?

1. Speculative hazard
2. Moral hazard
3. Physical hazard ✓
4. Morale hazard

Why: A physical hazard is a tangible condition of property or environment that increases the chance of loss, such as flammable materials near a heat source.

Experience rating in workers' compensation works by comparing an individual employer's actual losses to:

1. The employer's payroll growth over the past three policy years
2. A benefit schedule published each year by the U.S. Labor Department
3. The expected (average) losses for employers in the same classifications ✓
4. The losses of employers in unrelated industries

Why: Experience rating compares an employer's actual loss experience to the average expected losses for similar employers, producing a credit or debit modification.

The Extended Non-Owned Coverage for Named Individual endorsement is used to:

1. Add a second owned vehicle to the Declarations at a reduced multi-car rate
2. Add comprehensive and collision coverage to any borrowed, non-owned auto the named individual drives, subject to the owner's deductible
3. Provide liability coverage to a named individual who regularly uses a non-owned vehicle (e.g., a furnished company car) ✓
4. Cover a resident teenage driver's first vehicle until they obtain a separate policy

Why: This endorsement removes the regular-use exclusion and extends liability (and optionally medical/UM) to a named individual using a non-owned auto regularly, such as a furnished or available company car.

Which statement about how coverage parts combine in a CPP is correct?

1. Two or more coverage parts share the Common Declarations and Common Conditions to form a package ✓
2. A monoline policy brings every available coverage part together under one set of common declarations
3. A package may combine property coverage parts only, since liability parts must always be written by themselves
4. Each coverage part must be issued as a separate policy with its own declarations

Why: In a package, two or more coverage parts attach to common declarations and common conditions; a single coverage part written alone is monoline.

Under IC 27-7-9-8.5, the amount payable for all damage caused by one mine subsidence occurrence is limited to:

1. The mine subsidence fund's yearly balance
2. Twice the annual premium paid
3. Full replacement cost without limit
4. The insurance in force on the damaged structures ✓

Why: IC 27-7-9-8.5(a) caps payment at the amount of insurance in force (and reinsured under section 9) on the damaged structures — therefore that limit.

Insurable interest in property insurance requires that the insured:

1. Hold a state insurance license before the property can be covered at all
2. Own the property outright, free of any mortgage, lien or other encumbrance
3. Be related by blood or marriage to the previous owner of the property
4. Will suffer a financial loss if the property is damaged or destroyed ✓

Why: Insurable interest exists when a person would suffer a genuine financial loss from damage to or destruction of the property.

Under IC 27-7-6-3, a policy written for a term longer than one year may be terminated at an annual anniversary on how many days' notice?

1. 10 days
2. 30 days
3. 45 days
4. 20 days ✓

Why: IC 27-7-6-3 treats a policy longer than one year as successive one-year terms terminable at anniversary on 20 days' notice — therefore 20 days.

The principle of utmost good faith (uberrimae fidei) means that:

1. Only the insurer must act honestly, the applicant being free to answer as he sees fit
2. The insured may exaggerate a claim without consequence, since the insurer drafted the wording
3. Both parties are entitled to rely on the honesty and full disclosure of the other ✓
4. The insurer guarantees the insured a profit on any loss the policy covers

Why: Utmost good faith requires both parties to deal honestly and disclose all material facts when forming the contract.

PAP Part B — Medical Payments covers:

1. Lost wages and the cost of household services the named insured cannot perform while recovering from the accident
2. Medical expenses of the other driver only, and only after that driver's own liability insurer has denied the claim
3. Repair costs for damage to the covered auto, plus any medical bills the insured cannot recover from the at-fault driver
4. Reasonable medical and funeral expenses for the insured and occupants of the covered auto, regardless of fault ✓

Why: Medical Payments covers reasonable and necessary medical and funeral expenses for an insured injured in an auto accident, paid without regard to fault.

A loss payable clause in a property policy primarily protects:

1. The state guaranty association, which is reimbursed first out of any loss payment
2. A secured creditor or lender with an interest in covered personal property ✓
3. A bailee holding the property for repair, giving it a direct claim on the proceeds
4. The named insured alone, to the exclusion of any lender

Why: A loss payable clause directs claim payments to a designated party (such as a lender) holding an interest in the covered property.

To win a client, a producer offers to refund part of the premium out of pocket, not stated in the policy. Under IC 27-1-22-18 this is:

1. A prohibited rebate ✓
2. A permitted courtesy discount
3. A lawful policy dividend
4. An allowed producer commission

Why: IC 27-1-22-18 prohibits giving any rebate or reduction of premium not specified in the policy as an inducement — therefore prohibited.

What is an interline endorsement in a CPP?

1. A separate stand-alone policy
2. An endorsement that applies to a single coverage part only
3. A type of declarations page
4. An endorsement affecting more than one coverage part ✓

Why: Interline endorsements modify provisions that apply to more than one coverage part, such as common policy changes affecting both property and liability.

An 'insured contract' in the CGL includes:

1. Any written or oral agreement the insured enters into, so long as the other party demands indemnification as a condition of the deal
2. Only purchase orders issued to suppliers for materials delivered to the job site
3. Only employment contracts between the insured and its workers, including union collective bargaining agreements
4. A contract in which the insured assumes the tort liability of another, such as a lease or sidetrack agreement ✓

Why: Insured contracts are specified agreements (leases, easements, sidetrack agreements, etc.) in which the insured assumes another party's tort liability.

Employee Benefits Liability (EBL) coverage protects an employer against:

1. Errors or omissions in the administration of the company's employee benefit programs ✓
2. Discrimination and harassment claims brought by job applicants and current employees alike
3. Bodily injury to an employee occurring in the course of employment
4. Liability for injuries caused by products the employer made and sold

Why: EBL covers negligent acts, errors, or omissions in administering employee benefit plans (e.g., failing to enroll an employee).

Which exclusion applies under PAP Part A — Liability?

1. Damage to property owned by or being transported by the insured ✓
2. Bodily injury caused by a resident family member driving the covered auto
3. Bodily injury to a pedestrian struck by the insured
4. Liability arising from driving a friend's borrowed car

Why: Part A excludes property owned by, rented to, used by, or in the care of the insured, which is why the insured's own/handled property is not covered.

A bond guaranteeing that the contractor will pay subcontractors, laborers, and material suppliers is a:

1. Maintenance bond
2. Performance bond
3. Payment bond ✓
4. Bid bond

Why: A payment bond guarantees that subcontractors and suppliers will be paid, protecting against liens.

A defense holding that an injured party who contributed in ANY way to their own injury cannot recover damages is:

1. Last clear chance
2. Contributory negligence ✓
3. Comparative negligence
4. Assumption of risk

Why: Under pure contributory negligence, any fault by the plaintiff—even slight—bars recovery entirely.

Under IC 27-6-8-2, the guaranty association chapter exists to pay covered claims and avoid excessive delay and loss to claimants because of:

1. Catastrophic weather events
2. The insolvency of an insurer ✓
3. General rate increases
4. Producer misconduct

Why: IC 27-6-8-2 states the purpose is to pay claims and avoid loss to claimants because of an insurer's insolvency — therefore insurer insolvency.

Under IC 27-6-8-5, the association created is a nonprofit unincorporated entity known as the:

1. Indiana Insurance Rating Bureau
2. Indiana Insurance Guaranty Association ✓
3. Indiana Department of Insurance
4. Indiana Fair Plan Association

Why: IC 27-6-8-5 creates the Indiana Insurance Guaranty Association as a nonprofit unincorporated legal entity.

Which best illustrates a partial loss?

1. A car stolen and never recovered by police
2. A kitchen damaged by a small fire while the rest of the home is intact ✓
3. A home burned to the ground, leaving nothing standing but the foundation slab
4. A building condemned by the city and demolished

Why: A partial loss damages only a portion of the property, leaving the rest usable, such as a single damaged room.

Under IC 27-1-15.6-3, a person may sell, solicit, or negotiate P&C insurance in Indiana only if the person:

1. Is appointed by at least one admitted insurer
2. Has completed a prelicensing course
3. Resides within the state of Indiana
4. Is licensed for that line of authority ✓

Why: IC 27-1-15.6-3 requires a person to be licensed for the line of authority before selling, soliciting, or negotiating insurance — therefore that is correct.

The PAP towing and labor costs coverage pays for labor:

1. For accident-related medical transport
2. Only when performed at the place of disablement ✓
3. Anywhere repairs are needed regardless of location
4. For routine maintenance at the shop

Why: Towing and labor costs coverage pays towing plus labor, but only labor performed at the place where the vehicle was disabled.

An applicant is charged a higher auto premium because of information in a consumer report. The producer fails to send any adverse action notice. This most likely violates:

1. The NFIP waiting-period rule
2. The crop insurance rules
3. The Terrorism Risk Insurance Act
4. The Fair Credit Reporting Act ✓

Why: Failing to provide the required adverse action notice after taking action based on a consumer report violates the FCRA.

An insurer wishing to comply with GLBA must provide its initial privacy notice to a customer:

1. Only when the policy is cancelled or nonrenewed, along with the final notice
2. Only after the customer files a first claim under the policy
3. At the time the customer relationship is established (and annually thereafter, as applicable) ✓
4. Only when the customer asks in writing to see the insurer's information-sharing practices

Why: GLBA requires delivery of a privacy notice when the customer relationship is established and, historically, an annual notice describing information-sharing practices.

Under IC 9-25-4-7, proof of financial responsibility requested by a law enforcement officer may be provided:

1. Only on the original paper card
2. Only through the state bureau
3. Only by a notarized affidavit
4. In paper or electronic format ✓

Why: IC 9-25-4-7(b) allows proof to a law enforcement officer in paper or electronic format, including an image on a device — therefore paper or electronic.

Under the PAP, intentional bodily injury or property damage caused by an insured is:

1. Covered under Part B only
2. Covered as a supplementary payment
3. Excluded from liability coverage ✓
4. Covered under Part A

Why: Part A excludes injury or damage caused intentionally by or at the direction of an insured.

A trucking company hauling another company's goods is liable for cargo damaged in a collision it caused. Which coverage responds to the carrier's liability?

1. Accounts receivable coverage for sums the shipper cannot collect
2. Builders risk coverage on a structure under construction
3. Motor truck cargo (carrier's) legal liability ✓
4. Hull coverage, which insures the vessel carrying the goods and the carrier's cargo liability

Why: Motor truck cargo legal liability (a transportation inland marine form) covers a carrier's legal liability for damage to cargo it transports.

Symbol 1 in the Business Auto Coverage Form means:

1. Any auto ✓
2. Non-owned autos only
3. Owned autos only
4. Hired autos only

Why: Symbol 1 represents "Any Auto" and provides the broadest scope; it is most commonly used for liability coverage.

For property and casualty insurance, insurable interest must exist:

1. At the inception of the policy and at the time of the loss ✓
2. Only at the time the policy is purchased, not afterwards
3. Only at the time of the loss, not when the policy is bought
4. At the time of application and at no later point

Why: For P&C insurance, insurable interest must be present both when the policy is issued and at the time of loss.

The policy section that defines the rights and duties of both parties, such as duties after a loss and cancellation, is the:

1. Insuring agreement
2. Declarations
3. Conditions ✓
4. Definitions

Why: The conditions section spells out the rules, rights, and duties governing how the policy operates for both insurer and insured.

Job classification codes in workers' compensation are used to:

1. Record the state in which the employee's home office sits, so that benefits follow that state's schedule
2. Group jobs by their expected loss exposure to set appropriate rates ✓
3. Set the dollar amount of death benefits payable to a surviving spouse and dependent children
4. Determine how many days a worker must be disabled before indemnity benefits begin

Why: Classification codes group occupations by similar hazard/loss potential so that a rate reflecting that exposure can be applied to the payroll in each class.

The Homeowners Policy program differs from the Dwelling Policy primarily because it:

1. Excludes personal property entirely, leaving contents to be insured on a separate inland marine form
2. Is a package combining property and liability coverage ✓
3. Covers only the structure, because Section ii liability must be bought as a stand-alone personal liability policy
4. Never includes theft of personal property, which is available only by endorsement to a Dwelling Policy

Why: Homeowners policies are package policies bundling Section I property coverages with Section II liability coverages, whereas the basic Dwelling Policy is monoline property.

Coverage C under the Dwelling Policy insures:

1. The dwelling structure
2. Personal property of the insured ✓
3. Personal liability
4. Detached other structures

Why: Coverage C — Personal Property covers the household contents and personal belongings of the insured. The Dwelling Policy contains no liability coverage by default.

Under the FCRA, before an insurer obtains an investigative consumer report on an applicant, it must:

1. Notify FEMA that an applicant file has been opened
2. Obtain a court order permitting the interviews
3. Cancel any policy already in force with the applicant before ordering it
4. Clearly and accurately disclose to the consumer that such a report may be obtained ✓

Why: The FCRA requires advance written disclosure to the consumer that an investigative consumer report may be requested, along with a description of the consumer's rights.

A statement made by an applicant on an insurance application that is believed to be true to the best of the applicant's knowledge is a:

1. Waiver
2. Representation ✓
3. Concealment
4. Warranty

Why: A representation is a statement believed to be true to the best of one's knowledge; it need not be absolutely true, only true in material respects.

The standard CGL excludes liability for professional services. An architect, accountant, or doctor would address this gap with:

1. Raising the CGL general aggregate to $4 million at renewal
2. Professional Liability / Errors & Omissions coverage ✓
3. An umbrella following form over the CGL
4. Coverage C medical payments with a higher per-person limit

Why: Professional services are excluded under the CGL and must be insured with a Professional Liability/E&O policy.

Under the ISO Commercial General Liability Coverage Form, which coverage part responds to bodily injury and property damage liability arising out of the insured's premises and operations?

1. Supplementary Payments
2. Coverage B
3. Coverage C
4. Coverage A ✓

Why: Coverage A insures bodily injury and property damage liability. Coverage B is personal and advertising injury; Coverage C is medical payments.

A civilian working for a U.S. defense contractor on a military base overseas is injured. Which act most likely provides workers' compensation coverage?

1. The Jones Act
2. FECA
3. FELA
4. The Defense Base Act ✓

Why: The Defense Base Act extends LHWCA-style workers' compensation benefits to civilian employees of U.S. government contractors working on overseas military bases and similar locations.

A policy designated as 'excess' over other coverage will:

1. Never pay anything once any other collectible insurance exists
2. Share each loss pro rata with the primary from the first dollar
3. Pay first and then seek reimbursement
4. Pay only after the primary policy's limits are exhausted ✓

Why: Excess coverage applies only after the underlying (primary) insurance limits have been used up.

A Contractors Equipment floater typically covers:

1. Completed buildings the contractor has turned over to the project owner and been paid for
2. Mobile equipment and tools such as bulldozers and cranes used by a contractor ✓
3. Office furniture and files at the contractor's headquarters
4. The contractor's accounts receivable records

Why: The Contractors Equipment floater is an inland marine form covering mobile tools, machinery, and equipment a contractor uses at various job sites.

Transportation expenses coverage under PAP Part D typically reimburses the insured for:

1. Rental/temporary transportation costs after a covered loss, subject to a daily and total maximum ✓
2. Lost wages for the days the insured cannot drive to work while the auto is repaired
3. Towing and labor at the scene of any mechanical breakdown, whether or not a loss occurred
4. The full daily cost of a rental car until the insured chooses to return it

Why: Transportation expenses coverage pays temporary transportation (e.g., rental) costs following a covered Part D loss, subject to per-day and per-occurrence limits.

When an employer is held responsible for the negligent acts of an employee committed within the scope of employment, this is:

1. Contributory negligence
2. Vicarious liability ✓
3. Absolute liability
4. Strict liability

Why: Vicarious liability holds one party (e.g., an employer) responsible for the actions of another (e.g., an employee acting within the scope of employment).

Under IC 27-4-1.5-6, a 'new body part' means a body part that:

1. Has not previously been attached to a vehicle ✓
2. Is manufactured by or for the vehicle's original maker
3. Carries the vehicle maker's factory warranty
4. Is installed by a repair shop chosen by the insured

Why: IC 27-4-1.5-6 defines a new body part as one that has not previously been attached to a motor vehicle — therefore that answer.

Which Part of the Workers Compensation and Employers Liability Policy sets out the insured's responsibilities, such as notifying the insurer promptly of an injury and cooperating in the investigation?

1. Part Four ✓
2. Part One
3. Part Three
4. Part Two

Why: Part Four — Your Duties If Injury Occurs lists the insured's obligations, including prompt notice, providing information, and cooperating with the insurer.

Under IC 27-1-2-3, an insurance company organized under the laws of a country other than the United States is a(n):

1. Foreign company
2. Domestic company
3. Alien company ✓
4. Reciprocal insurer

Why: IC 27-1-2-3 defines an alien company as one organized under the laws of a country other than the United States — therefore alien company is correct.

A bookkeeper embezzles $50,000 from her employer over two years. Which form responds?

1. Liquor liability, since the thefts occurred during business hours
2. A fidelity bond / employee dishonesty coverage ✓
3. A performance bond guaranteeing the bookkeeper's work
4. CGL Coverage A, treating the missing funds as property damage

Why: Employee theft of employer funds is covered by a fidelity bond/employee dishonesty coverage, not the CGL.

In the Homeowners program, the loss assessment additional coverage is most relevant to which insured?

1. A renter under an HO-4 form, whose landlord may pass building repair costs through as added rent
2. A landlord who insures a rented dwelling and bills tenants for damage to common hallways
3. The owner of a vacant home awaiting sale
4. A condominium or association member who may be assessed for shared property damage ✓

Why: Loss assessment coverage helps pay an insured's share of an assessment charged by a homeowners or condo association for a covered loss to commonly owned property.

For an injury to be compensable under workers' compensation, it generally must arise:

1. Solely from the employer's negligence
2. From a single sudden accident only
3. During regularly scheduled hours only
4. Out of and in the course of employment ✓

Why: The basic compensability test is that the injury must 'arise out of and in the course of employment' — connected to the work and occurring within the scope of the job.

Under IC 27-4-1.5-3 (auto repair claims), 'insured' means a person who is:

1. Licensed to sell auto insurance
2. Named on the vehicle title only
3. Entitled to the coverage of a policy ✓
4. Employed by the repair facility

Why: IC 27-4-1.5-3 defines 'insured' as a person entitled to the coverage provided by an insurance policy.

Under IC 27-7-9-7, the mine subsidence insurance fund is administered by:

1. The treasurer of state
2. The guaranty association
3. A private trustee
4. The commissioner ✓

Why: IC 27-7-9-7(a) provides the mine subsidence insurance fund is administered by the commissioner — therefore the commissioner.

Equipment Breakdown (Boiler and Machinery) coverage primarily insures loss caused by:

1. Sudden mechanical or electrical breakdown of covered equipment such as boilers and pressure vessels ✓
2. Flood and surface water reaching equipment in a basement, which requires a separate NFIP flood policy
3. Fire spreading from an adjoining building, which is already a named peril on every causes of loss form
4. Theft of portable equipment from a jobsite by employees, which a crime or fidelity bond would address

Why: Equipment Breakdown coverage responds to sudden and accidental breakdown of pressure, mechanical, and electrical equipment, including resulting damage—exposures excluded by standard property forms.

Under a Homeowners policy, loss to a covered building caused by freezing of plumbing is generally covered only if the insured:

1. Used reasonable care to maintain heat or shut off and drained the water ✓
2. Reported the burst pipe to the insurer within 24 hours of discovering the water
3. Lives in a climate where freezing is uncommon
4. Has paid the extra premium for a freezing endorsement

Why: Freezing losses are covered only if the insured maintained heat in the building or shut off the water supply and drained the systems; otherwise the loss is excluded.

A newly hired staffer wants a surplus lines license. Under IC 27-1-15.8-3, the applicant must first be:

1. A licensed public adjuster in Indiana
2. Appointed by at least three admitted insurers
3. A licensed Indiana insurance producer ✓
4. An Indiana resident for at least five years

Why: IC 27-1-15.8-3(b) requires the applicant to be a licensed Indiana insurance producer qualified in the lines to be written.

A statement that is guaranteed to be true and becomes part of the contract is a:

1. Concealment
2. Representation
3. Warranty ✓
4. Waiver

Why: A warranty is a statement that is guaranteed true and becomes part of the policy; its breach can void coverage.

The section of a policy that contains the named insured, address, policy period, limits, and premium is the:

1. Declarations ✓
2. Exclusions
3. Conditions
4. Insuring agreement

Why: The declarations page personalizes the policy with the insured's identifying information, coverage limits, and premium.

An employee files a claim, and the only question is whether to pay statutory benefits set by the state law. Which Part of the policy responds?

1. Part One ✓
2. Part Two
3. Part Four
4. Part Three

Why: Payment of the benefits required by the state WC statute is handled by Part One — Workers Compensation.

Private flood insurance, as opposed to NFIP coverage, is best described as:

1. Flood coverage that may be written by private agents only after they complete FEMA certification training each year
2. Excess coverage that responds only after the maximum NFIP building and contents limits have been exhausted
3. Coverage that federal law requires every mortgage lender to demand in place of an NFIP policy on all loans
4. Flood coverage offered by private insurers, often with higher limits or broader terms than the NFIP ✓

Why: Private flood insurers compete with the NFIP and frequently offer higher limits, replacement cost on contents, or additional living expense not available under standard NFIP forms.

A building valued at $1,000,000 carries an 80% coinsurance clause. The insured carries $600,000 of coverage and suffers a $200,000 loss (before deductible). What does coinsurance pay?

1. $200,000
2. $120,000
3. $160,000
4. $150,000 ✓

Why: Required = 80% of $1,000,000 = $800,000. Penalty factor = $600,000/$800,000 = 0.75. Payment = 0.75 x $200,000 = $150,000.

Electronic Data Processing (EDP) / electronic equipment floaters are notable because they often cover:

1. Liability claims brought against the insured by customers whose personal information was exposed in a system breach
2. Perils such as electrical injury, mechanical breakdown, and data loss not covered by standard property forms ✓
3. Only fire damage to the insured's computer hardware and media
4. Flood damage to computer hardware and nothing else

Why: EDP floaters provide broad coverage for computer hardware, software, and data, including perils like electrical/mechanical breakdown that standard property forms typically exclude.