Kansas Property & Casualty Insurance License, Practice Exams

Which of these IS capable of being a covered claim under K.S.A. 40-2903?

1. An amount due a reinsurer or an insurance pool as subrogation recoveries or otherwise.
2. A claim by an affiliate of the insolvent insurer for unearned premiums.
3. An amount awarded as punitive damages, where those damages were covered under the insolvent insurer's policy. ✓
4. An amount of exemplary damages awarded against the insured, not covered by the insolvent insurer's policy.

Why: K.S.A. 40-2903(c)(3) provides that COVERED CLAIM DOES NOT INCLUDE (A) ANY AMOUNT DUE ANY REINSURER, INSURER, INSURANCE POOL OR UNDERWRITING ASSOCIATION AS SUBROGATION RECOVERIES OR OTHERWISE; (B) ANY AMOUNT AWARDED AS PUNITIVE OR EXEMPLARY DAMAGES UNLESS SUCH DAMAGES WERE COVERED UNDER THE POLICY OF THE INSOLVENT INSURER; OR (C) ANY CLAIM BY AN AFFILIATE OF THE INSOLVENT INSURER. The punitive damages exclusion carries an express exception - UNLESS SUCH DAMAGES WERE COVERED UNDER THE POLICY - and that exception is the answer. The pattern of the three exclusions is consistent: the association exists for policyholders and claimants, not to settle accounts between insurers, and not to enrich the insolvent insurer's own corporate family. The same instinct appears in 40-2909(d), which lets the association RECOVER FROM ANY PERSON WHO IS AN AFFILIATE OF THE INSOLVENT INSURER whose liability obligations are satisfied by payments under the act.

A Kansas surplus lines producer places cover for an exempt commercial purchaser. Under K.S.A. 40-246g, what replaces the signed diligent-effort statement?

1. Nothing; an exempt commercial purchaser stands outside every requirement of the surplus lines act.
2. A disclosure that admitted cover may be available; no written request from the buyer is needed.
3. The purchaser's written request alone; no disclosure is owed to such a buyer.
4. A disclosure that admitted cover may be available, and the purchaser's written request. ✓

Why: K.S.A. 40-246g(a) provides that a surplus lines producer seeking to place non-admitted insurance for an EXEMPT COMMERCIAL PURCHASER IS NOT REQUIRED TO FILE THE SIGNED STATEMENT UNDER K.S.A. 40-246b - but only IF THE PRODUCER HAS DISCLOSED TO THE PURCHASER THAT SUCH INSURANCE MAY OR MAY NOT BE AVAILABLE FROM THE ADMITTED MARKET THAT MAY PROVIDE GREATER PROTECTION WITH MORE REGULATORY OVERSIGHT, AND THE PURCHASER HAS SUBSEQUENTLY REQUESTED IN WRITING that the producer procure or place the insurance from a nonadmitted insurer. Both limbs are needed and they run in sequence - disclosure first, then the written request. K.S.A. 40-246i(a) defines the exempt commercial purchaser by three cumulative requirements: employing or retaining a QUALIFIED RISK MANAGER; having paid AGGREGATE NATIONWIDE COMMERCIAL PROPERTY AND CASUALTY PREMIUMS IN EXCESS OF $100,000 in the preceding twelve months; and meeting one of five size tests on net worth, revenues, employees, budgeted expenditures or population - several of which the commissioner adjusts every five years for the consumer price index. The section took effect on and after 1 January 2016.

A Kansas public adjuster proposes a fee of 15% of the settlement, payable half on signing. Under K.S.A. 40-5513, what is wrong with that?

1. The percentage only; an advance on the fee is permitted where the written contract with the insured expressly provides for it.
2. Both: the fee may not exceed 10% of the settlement, and nothing of value may be required or accepted before the claim is settled. ✓
3. The advance payment only; the percentage is a matter for agreement.
4. Neither; both are permitted where the insured signs a written contract.

Why: K.S.A. 40-5513(a) provides that NO PUBLIC ADJUSTER SHALL CHARGE, AGREE TO OR ACCEPT AS COMPENSATION OR REIMBURSEMENT ANY PAYMENT, COMMISSION, FEE OR OTHER THING OF VALUE EQUAL TO MORE THAN 10% OF ANY INSURANCE SETTLEMENT OR PROCEEDS. CHARGE, AGREE TO OR ACCEPT - the agreement is caught as well as the payment, so a 15% contract is a violation the day it is signed. Subsection (d) is the second problem: NO PUBLIC ADJUSTER SHALL REQUIRE, DEMAND OR ACCEPT ANY FEE, RETAINER, COMPENSATION, DEPOSIT OR OTHER THING OF VALUE, PRIOR TO SETTLEMENT OF A CLAIM. The adjuster is paid out of a result, or not at all. Subsections (b) and (c) close the circle around unlicensed help: a public adjuster may not pay, and no person may accept, a commission, service fee or other valuable consideration for investigating or settling first party claims in this state where that person is a business entity or is an individual required to be licensed and is not.

A Kansas applicant is found trustworthy and competent, passes the examination, and is issued an insurance agent licence. No insurance company has yet certified the new agent. Under K.S.A. 40-241, what may the agent do?

1. Transact business in any line the licence names, since the licence has now been issued.
2. Transact business for 90 days, after which certification by a company is required.
3. Nothing yet - the licence confers no authority to transact until a company certifies. ✓
4. Transact only limited lines business until a company certification is recorded.

Why: Section 40-241 requires the commissioner, on finding the applicant trustworthy, competent and successful in the examination, to issue a licence forthwith - and then says in terms that 'the issuance of such license shall confer no authority to transact business in this state until the agent has been certified by a company pursuant to K.S.A. 40-4912'. Holding the licence and being authorised to act are two different things in Kansas, with no grace period and no partial authority in the meantime. K.S.A. 40-4912 then governs how a company makes that appointment and certification.

Under the PAP, glass breakage is typically covered under:

1. Medical Payments under Part B
2. Liability under Part A of the pap
3. Collision coverage under Part D
4. Other Than Collision (comprehensive) ✓

Why: Glass breakage is normally covered as an Other Than Collision (comprehensive) loss, though it can be claimed as collision when caused by a collision event.

Under the PAP, a non-owned auto driven by the insured (e.g., a borrowed car) is covered for physical damage:

1. At the broadest level of coverage applying to any covered auto on the policy ✓
2. Only under Part A liability, since Part D reaches only scheduled autos
3. Only if the borrowed auto is added to the Declarations before the insured takes custody of it
4. Never, because Part D applies only to autos the insured owns

Why: Part D extends to a non-owned auto in the insured's custody, providing the broadest physical damage coverage that applies to any one auto shown on the policy.

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.

Which statement about no-fault auto insurance CONCEPTS is generally correct?

1. No-fault systems let injured parties recover certain economic losses from their own insurer regardless of fault ✓
2. No-fault means no one pays for accident losses until a court or arbitration panel first assigns fault to one of the drivers
3. No-fault eliminates the need for liability coverage entirely, so states adopting it repeal their financial responsibility laws
4. No-fault applies only to property damage claims, with every bodily injury claim still settled through the tort system

Why: Under no-fault concepts, an injured person's own insurer pays specified personal injury/economic losses regardless of who caused the accident, with limits on lawsuits.

The criminal anti-fraud division of the Kansas insurance department finishes an investigation and has a case it believes should be prosecuted. Under K.S.A. 40-113, where does the division refer it?

1. To the attorney general, or in consultation with the attorney general to the county or district attorney. ✓
2. To the county or district attorney alone, who may charge only after filing the attorney general's written consent.
3. To the commissioner of insurance, who decides in the commissioner's own discretion whether any charge is brought.
4. To the district court directly, on a complaint sworn by the division's own investigator and filed with the clerk.

Why: Section 40-113(a) requires the division to prepare and refer criminal cases to the attorney general, or - in consultation with the attorney general - to the proper county or district attorney. The consultation is what allows the local route; it is not a consent the local prosecutor must go and obtain. The commissioner is not the charging authority, and the division does not initiate proceedings itself, though the same section allows the commissioner to pay extradition and witness expenses and other costs associated with a case.

The Kansas commissioner wants to widen the premium variance band for a line of insurance. Under K.S.A. 40-955b, how, and on what findings?

1. By order after a hearing, on a finding that competition in the line is inadequate.
2. By rules and regulations, on a finding that the existing band is producing rates that are inadequate, excessive or unfairly discriminatory in that line of insurance, made after a hearing on notice to every affected insurer.
3. By rules and regulations, on findings that use of the section has clustered modifications at the limits and that those modifiers correlate predominantly with individual risk factors relating to expected losses and expenses. ✓
4. The commissioner has no power to widen the band; only the legislature may change it.

Why: K.S.A. 40-955b(b) provides that BY RULES AND REGULATIONS ADOPTED IN ACCORDANCE WITH THE RULES AND REGULATIONS FILING ACT, THE COMMISSIONER OF INSURANCE MAY BROADEN THE RANGE OF PLUS OR MINUS 40% FOR ANY LINE OR TYPE OF INSURANCE SUBJECT TO K.S.A. 40-955 if the commissioner finds that (1) UTILIZATION OF THIS SECTION BY THE INSURANCE INDUSTRY HAS PRODUCED A SIGNIFICANT NUMBER OF RATE MODIFICATIONS AT OR NEAR THE UPPER LIMIT AND AT THE LOWER LIMIT OF THE ALLOWABLE RANGE OF MODIFICATION; AND (2) MODIFIERS AT AND NEAR THE UPPER AND LOWER LIMITS OF THE ALLOWABLE RANGE OF MODIFICATION APPEAR TO BE PREDOMINANTLY CORRELATED WITH INDIVIDUAL RISK FACTORS THAT RELATE TO EXPECTED LOSSES AND EXPENSES. Both findings are required and they work together: bunching at the limits shows the band is too narrow, and the correlation test shows the bunching reflects real differences in risk rather than mere discounting. The instrument is rules and regulations, not an order in a case.

The Kansas commissioner has reason to believe an insurer is engaging in a deceptive practice, and that a proceeding would be in the public interest. The practice does not match any paragraph of K.S.A. 40-2404. Under K.S.A. 40-2406, what may the commissioner do?

1. Nothing, unless the practice can be brought within one of the defined paragraphs.
2. Ask the legislature to add the practice to the list of defined unfair practices.
3. Issue a regulation defining the practice, and then proceed against future conduct only.
4. Issue a statement of charges and hold a hearing under the administrative procedure act. ✓

Why: Section 40-2406(a) applies wherever the commissioner has reason to believe a person has been or is engaging in an unfair method of competition or an unfair or deceptive act or practice - 'WHETHER OR NOT DEFINED IN K.S.A. 40-2404' - and that a proceeding would be in the interest of the public. The commissioner then issues and serves a statement of the charges and conducts a hearing under the Kansas administrative procedure act. This is the determination route K.S.A. 40-2403 refers to, and it means the defined list is a floor. Nothing in the section requires new legislation or a regulation first, and it operates on conduct that has already occurred as well as conduct that is continuing.

Directors and Officers (D&O) liability insurance primarily protects:

1. The company's products against claims that they failed to perform in the way the sales literature had promised buyers they would
2. Customers who slip and fall in the lobby of the corporate headquarters while they are waiting to meet with an officer of the firm
3. Employees who are hurt on the job, by paying for their medical treatment and lost wages until they are able to return to work
4. Corporate directors and officers (and often the entity) against claims alleging wrongful acts in managing the organization ✓

Why: D&O covers directors, officers, and frequently the entity for losses from alleged wrongful management acts.

Under K.S.A. 40-1136, which of these does NOT make a person a 'title insurance agent'?

1. Determining insurability and issuing title insurance reports or policies on a search or abstract.
2. Collecting or disbursing premiums, escrow or security deposits or other funds.
3. Being a bona fide employee of the title insurer who does those things for it. ✓
4. Handling escrow, settlements or closings, or recording closing documents.

Why: K.S.A. 40-1136(e) defines TITLE INSURANCE AGENT as AN AUTHORIZED PERSON, OTHER THAN A BONA FIDE EMPLOYEE OF THE TITLE INSURER WHO, ON BEHALF OF THE TITLE INSURER, PERFORMS THE FOLLOWING ACTS, IN CONJUNCTION WITH THE ISSUANCE OF A TITLE INSURANCE REPORT OR POLICY: (1) DETERMINES INSURABILITY AND ISSUES TITLE INSURANCE REPORTS OR POLICIES, OR BOTH, BASED UPON THE PERFORMANCE OR REVIEW OF A SEARCH, OR AN ABSTRACT OF TITLE; (2) COLLECTS OR DISBURSES PREMIUMS, ESCROW OR SECURITY DEPOSITS OR OTHER FUNDS; (3) HANDLES ESCROW, SETTLEMENTS OR CLOSINGS; (4) SOLICITS OR NEGOTIATES TITLE INSURANCE BUSINESS; OR (5) RECORDS CLOSING DOCUMENTS. The bona fide employee carve-out is the answer, and it matters: an insurer's own staff doing this work are the insurer, and the act's obligations - trust accounts, audits, the $100,000 bond - fall on the independent agency, not on them. Note the OR at the end of the list: any one of the five acts is enough.

A Kansas motorcycle owner rejects personal injury protection cover in writing. Under K.S.A. 40-3107, what follows for the renewal, and for the motorcycle's status?

1. The cover need not be provided on renewal unless requested in writing, and the machine is not thereby uninsured. ✓
2. The cover must be offered afresh at every renewal, and the machine is not thereby uninsured.
3. The cover need not be provided on renewal unless requested in writing, but the machine is then an uninsured motor vehicle.
4. The rejection is ineffective; personal injury protection cannot be rejected in Kansas at all.

Why: K.S.A. 40-3107(f) gives one exception to compulsory PIP. THE OWNER OF A MOTORCYCLE, AS DEFINED BY K.S.A. 8-1438, OR MOTOR-DRIVEN CYCLE, DEFINED BY K.S.A. 8-1439, WHO IS THE NAMED INSURED, SHALL HAVE THE RIGHT TO REJECT IN WRITING INSURANCE COVERAGE INCLUDING SUCH BENEFITS FOR INJURY TO A PERSON WHICH OCCURS WHILE THE NAMED INSURED IS OPERATING OR IS A PASSENGER ON SUCH MOTORCYCLE OR MOTOR-DRIVEN CYCLE; AND UNLESS THE NAMED INSURED REQUESTS SUCH COVERAGE IN WRITING, SUCH COVERAGE NEED NOT BE PROVIDED IN OR SUPPLEMENTAL TO A RENEWAL POLICY WHEN THE NAMED INSURED HAS REJECTED THE COVERAGE IN CONNECTION WITH A POLICY PREVIOUSLY ISSUED BY THE SAME INSURER. The rejection therefore carries forward and the burden of undoing it is on the insured, in writing. The subsection then protects the rider from an unintended consequence: THE FACT THAT THE INSURED HAS REJECTED SUCH COVERAGE SHALL NOT CAUSE SUCH MOTORCYCLE OR MOTOR-DRIVEN CYCLE TO BE AN UNINSURED MOTOR VEHICLE. Note the limit of the rejection - it reaches injury while the named insured is on the machine, not injury to a pedestrian the machine strikes.

During a Kansas examination the officers of an insurer refuse to comply with a reasonable written request of the examiners. Under K.S.A. 40-222, what does that refusal amount to?

1. A misdemeanour, prosecuted by the county attorney where the refusal occurred.
2. Grounds for suspending, refusing or not renewing any licence the company holds. ✓
3. Contempt of the district court, punishable once the commissioner applies for an order.
4. Nothing by itself; the commissioner must first obtain a court order compelling access.

Why: Section 40-222(g) makes the refusal of a company, by its officers, directors, employees or agents, to submit to examination or to comply with any reasonable written request of the examiners grounds for suspension of, refusal of, or nonrenewal of any licence or authority the company holds to engage in an insurance or other business subject to the commissioner's jurisdiction. The consequence is regulatory and it attaches to the refusal itself; any resulting proceeding is then conducted under the Kansas administrative procedure act. Contempt is the sanction attached to a subpoena issued for a fact-finding hearing under a different section, not to this refusal.

Which best describes "non-owned autos" in commercial auto?

1. New and used autos held in a dealer's showroom inventory for sale, which Symbol 9 picks up while they sit on the display lot
2. Rental cars the named insured hires under short-term agreements while its own fleet units are in the shop being repaired
3. Autos used in the business but not owned, leased, or borrowed by the named insured — typically employees' own vehicles ✓
4. Autos titled to the named insured but assigned to a single employee for that employee's exclusive use during the workweek

Why: Non-owned autos (Symbol 9) are vehicles not owned/hired by the insured but used in its business, most often employees' personal autos.

A Kansas insurer files a new homeowners policy form on 1 March and hears nothing. Under K.S.A. 40-216, when may it issue policies on that form?

1. On 1 March, the form being effective on filing like any other contract.
2. On 31 March, personal lines forms being on file 30 days before becoming effective. ✓
3. Not at all until the commissioner approves the form affirmatively.
4. On 1 June, personal lines forms being on file 90 days before becoming effective.

Why: K.S.A. 40-216(a)(3) puts personal lines on the opposite default from every other contract: EACH PERSONAL LINES CONTRACT OF INSURANCE OR INDEMNITY ISSUED OR DELIVERED IN THIS STATE SHALL BE ON FILE FOR A PERIOD OF 30 DAYS BEFORE BECOMING EFFECTIVE, unless the commissioner disapproves it within 30 days after filing. Same number as the disapproval window in paragraph (2)(A), opposite effect - there the form is on risk immediately and the commissioner has thirty days to stop it; here the form waits. The paragraph defines PERSONAL LINES as insurance for NONCOMMERCIAL AUTOMOBILE, HOMEOWNERS, DWELLING, FIRE AND RENTERS policies as defined by the commissioner by rules and regulations, so a homeowners form is squarely inside it.

A Kansas insured buys a commercial umbrella policy that sits above several primary policies. Must the umbrella insurer offer uninsured motorist coverage under K.S.A. 40-284?

1. No; no insurer need offer conforming coverage on an excess or umbrella policy. ✓
2. Yes; the requirement applies to every policy covering automobile liability in this state.
3. Yes, the umbrella insurer must offer it unless the underlying primary policy already carries the coverage.
4. No; but only where the umbrella policy expressly excludes automobile liability.

Why: K.S.A. 40-284(a) closes with an express carve-out: NO INSURER SHALL BE REQUIRED TO OFFER, PROVIDE OR MAKE AVAILABLE COVERAGE CONFORMING TO THIS SECTION IN CONNECTION WITH ANY EXCESS POLICY, UMBRELLA POLICY OR ANY OTHER POLICY WHICH DOES NOT PROVIDE PRIMARY MOTOR VEHICLE INSURANCE FOR LIABILITIES ARISING OUT OF THE OWNERSHIP, MAINTENANCE, OPERATION OR USE OF A SPECIFICALLY INSURED MOTOR VEHICLE. The test in that sentence is not the label on the policy but the function: the mandate attaches to a policy providing PRIMARY motor vehicle insurance on a SPECIFICALLY INSURED vehicle. A policy that sits above other insurance and names no vehicle is outside it. Nothing stops an insurer from writing uninsured motorist cover into an umbrella if it chooses; the statute simply does not compel it.

An insured's son is away at college and keeps belongings in a dorm. Under the Homeowners policy, that property is:

1. Never covered once the student has been away from the residence premises for more than 45 consecutive days
2. Often covered as an insured's property at another residence, subject to the off-premises limit ✓
3. Covered only under Section ii liability for damage the son causes
4. Subject to no limits, since dormitory property is scheduled automatically

Why: A student who is an insured may have personal property at another residence covered subject to the off-premises 10%/$1,000 limitation, depending on form conditions.

The Joint Ownership Coverage endorsement is used when a PAP needs to cover:

1. A fleet of vehicles leased to the insured by a rental company for one year
2. Individuals who are not married but jointly own a covered auto (or non-resident relatives) ✓
3. A vehicle titled to a corporation and driven by its officers for personal errands
4. A vehicle the insured uses to carry passengers for a fee

Why: Joint ownership coverage adapts the PAP for vehicles owned by two or more individuals not married to each other, or by an individual and one or more relatives who don't all reside together.

Under the BACF, newly acquired autos are covered automatically if:

1. They are reported to the insurer within 90 days of purchase, whatever symbol appears on the Declarations page
2. Only when the new unit is a private passenger auto
3. No notice is ever needed, since every symbol picks up new units automatically
4. They fall within the description of covered autos (symbol) and the insurer is notified per policy terms ✓

Why: A newly acquired auto is automatically covered if it qualifies under the symbol designation, often with a notice requirement (e.g., 30 days) for some coverages.

The Permitted Incidental Occupancies endorsement allows the insured to:

1. Rent the dwelling to as many as four separate families while keeping owner-occupant eligibility
2. Add an automobile used in the business to the policy
3. Operate a manufacturing shop on the premises
4. Conduct a limited business or professional office within the residence ✓

Why: This endorsement modifies the policy to permit a small, incidental business or office (such as a professional studio) on the residence premises.

Which marine coverage would insure a bank's exposure for valuable customer securities documents lost in a fire on premises?

1. Ocean marine freight coverage on the shipowner's earnings
2. Ocean marine cargo insurance on goods in transit
3. Hull and machinery coverage
4. Valuable Papers and Records floater ✓

Why: The Valuable Papers and Records inland marine floater covers the cost to reconstruct or replace important documents and records destroyed by a covered peril.

PAP Part C provides protection when the insured is injured by:

1. A driver whose liability limits exceed the state's required minimums by a wide margin
2. The insured's own negligence in a single-car crash
3. An uninsured or underinsured motorist who is legally liable ✓
4. A defective part installed by the auto's manufacturer

Why: Part C — Uninsured/Underinsured Motorists coverage pays damages the insured is legally entitled to recover from an owner/operator of an uninsured or underinsured vehicle.

Under the CGL, which limit applies to the cost of medical care for a third party regardless of fault?

1. General Aggregate
2. Personal and Advertising Injury Limit
3. Medical Expense Limit ✓
4. Each Occurrence Limit

Why: The Medical Expense Limit (Coverage C) caps no-fault medical payments per person for third parties.

A Kansas insured reaches a tentative agreement to settle with an underinsured driver for that driver's liability limits. Under K.S.A. 40-284, what must the insured do, and how?

1. Nothing, until the settlement is actually concluded and the money received.
2. Give notice to the underinsured motorist coverage insurer, by any means that can be evidenced.
3. Obtain the underinsured motorist coverage insurer's written consent before agreeing anything.
4. Give written notice to the underinsured motorist coverage insurer, by certified mail. ✓

Why: K.S.A. 40-284(f) provides that IF A TENTATIVE AGREEMENT TO SETTLE FOR LIABILITY LIMITS HAS BEEN REACHED WITH AN UNDERINSURED TORTFEASOR, WRITTEN NOTICE MUST BE GIVEN BY CERTIFIED MAIL TO THE UNDERINSURED MOTORIST COVERAGE INSURER BY ITS INSURED. Three things are fixed. The trigger is a TENTATIVE agreement, so the duty bites before the settlement is concluded, not after. The form is certified mail, so an email or a telephone call to the adjuster does not discharge it. And it is NOTICE, not consent - the insured does not need the insurer's permission to settle, but must give it the chance to respond, which is what the rest of the subsection is about.

In property insurance, the insured generally may NOT abandon damaged property to the insurer because:

1. Abandonment forfeits the insurer's right of subrogation
2. The insured, not the insurer, owns any salvage after payment
3. The abandonment clause prohibits forcing the insurer to take the property ✓
4. Abandoned property triggers a premium surcharge at the next renewal

Why: Most property policies state the insured cannot abandon property to the insurer; the insurer is not required to accept it.

An insurer incorporated in the state where it is transacting business is classified as:

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

Why: A domestic insurer is one organized under the laws of the state in which it is doing business.

A Kansas insured is injured by a driver whose liability insurer has since gone insolvent and cannot pay. Under K.S.A. 40-285, how is that driver's vehicle treated?

1. As an insured vehicle; the claim lies against the receiver of the insolvent company.
2. As an uninsured motor vehicle, subject to the terms and conditions of the coverage. ✓
3. As an underinsured vehicle, the limits being treated as nil.
4. As neither; the insured's only remedy is against the Kansas insurance guaranty association.

Why: K.S.A. 40-285 provides that FOR THE PURPOSE OF THIS ACT, THE TERM 'UNINSURED MOTOR VEHICLE' SHALL, SUBJECT TO THE TERMS AND CONDITIONS OF SUCH COVERAGE, BE DEEMED TO INCLUDE AN INSURED MOTOR VEHICLE WHERE THE LIABILITY INSURER THEREOF IS UNABLE TO MAKE PAYMENT WITH RESPECT TO THE LEGAL LIABILITY OF ITS INSURED WITHIN THE LIMITS SPECIFIED HEREIN BECAUSE OF INSOLVENCY. A vehicle that was properly insured on the day of the accident becomes an uninsured motor vehicle for this purpose, so the insured's own uninsured motorist coverage answers rather than her having to chase a failed company. SUBJECT TO THE TERMS AND CONDITIONS OF SUCH COVERAGE keeps the policy's own machinery in place, and K.S.A. 40-286 adds a time limit to the protection. The existence of the Kansas insurance guaranty association does not displace the deeming provision.

Which statement about MPCI and the role of private insurers is correct?

1. Private insurers are barred from MPCI, which the Risk Management Agency writes and services itself
2. Private insurers sell and service MPCI policies under federal reinsurance through the RMA/FCIC ✓
3. MPCI is sold only by agricultural lenders as a condition of an operating loan
4. FEMA sells and adjusts all MPCI policies through the same regional offices that administer flood coverage

Why: MPCI is delivered by private insurers who sell and service the policies, with federal reinsurance and oversight provided through the RMA and the Federal Crop Insurance Corporation.

For a property owner to be eligible to purchase NFIP flood insurance, the property must be located in:

1. A coastal county
2. A federally declared disaster area
3. A community that participates in the NFIP ✓
4. A state with a FAIR Plan

Why: NFIP coverage is only available in communities that have agreed to adopt and enforce floodplain management ordinances and thus participate in the program.

The Kansas commissioner of insurance concludes that an authorized insurer's financial condition has reached a point where continued operation might be hazardous to the insuring public, and wants to order it to reduce the volume of new business it accepts. Under K.S.A. 40-222b, what must come first?

1. Notice and a hearing in accordance with the Kansas administrative procedure act. ✓
2. A financial examination of the company completed within the past year.
3. The attorney general's written concurrence in the proposed order.
4. A referral to the Kansas life and health guaranty association.

Why: Section 40-222b(a) conditions the whole of the commissioner's corrective power on notice and hearing in accordance with the Kansas administrative procedure act. Only then may an order issue requiring the company to take action reasonably necessary to rectify the condition, and the subsection's list of measures is expressly not exhaustive - reducing the volume of new or renewal business is the first of them, alongside submitting reinsurance contracts for approval, reinsuring Kansas business on a bulk or portfolio basis, a contribution to surplus, and deposits with the commissioner.

A Kansas injured person received disability benefits for four months and then died of the injury, leaving a spouse. Under K.S.A. 40-3103, for how long may survivors' benefits be paid?

1. Four months, matching the period for which disability benefits were received.
2. One year running from the death, the disability payments being disregarded.
3. One year running from the injury, the death not restarting the period.
4. Eight months - one year less the four months of disability benefits already received. ✓

Why: K.S.A. 40-3103(y) caps survivors' benefits by providing that SURVIVORS' BENEFITS SHALL NOT BE PAID FOR MORE THAN ONE YEAR AFTER THE INJURED PERSON'S DEATH, LESS THE NUMBER OF MONTHS THE INJURED PERSON RECEIVED DISABILITY BENEFITS PRIOR TO SUCH PERSON'S DEATH. So the two benefits share a single twelve-month allowance and four months drawn before death leave eight. The benefit itself is total allowances to all survivors for (1) loss of the injured person's monthly earnings after death, UP TO A MAXIMUM OF NOT LESS THAN $900 PER MONTH - the same monthly figure as disability benefits in 40-3103(b)(3) - and (2) substitution benefits following the death; EXPENSES OF THE SURVIVORS WHICH HAVE BEEN AVOIDED BY REASON OF THE INJURED PERSON'S DEATH SHALL BE SUBTRACTED. SURVIVOR is defined narrowly in 40-3103(x): a spouse, or a child under the age of 18.

The characteristic that requires certain acts, such as paying premium and providing proof of loss, before the insurer must pay a claim is that insurance is a contract of:

1. Aleatory nature
2. Conditional nature ✓
3. Indemnity
4. Adhesion

Why: Insurance is a conditional contract because both parties must meet certain conditions before the contract can be enforced.

A Supplemental Extended Reporting Period (supplemental tail) differs from the basic ERP in that it:

1. Is furnished automatically at no charge for 60 days after the policy expires
2. Applies only to occurrence policies, since claims-made forms already report on a delayed basis
3. Cuts the General Aggregate in half for every claim reported during the tail
4. Must be purchased for additional premium and provides an unlimited reporting period ✓

Why: The supplemental ERP requires an extra premium and a written request, providing an unlimited reporting window for covered occurrences.

Under K.S.A. 40-3103, what is the maximum monthly disability allowance a Kansas policy must provide, and for how long must it run?

1. Not less than $900 per month, for not more than six months.
2. Not less than $900 per month, for as long as the disability lasts.
3. Not less than $4,500 per month, for not more than one year.
4. Not less than $900 per month, for not more than one year. ✓

Why: K.S.A. 40-3103(b)(3) requires that ALLOWANCES SHALL BE MADE UP TO A MAXIMUM OF NOT LESS THAN $900 PER MONTH FOR NOT TO EXCEED ONE YEAR AFTER THE DATE THE INJURED PERSON BECOMES UNABLE TO ENGAGE IN AVAILABLE AND APPROPRIATE GAINFUL ACTIVITY. The $900 is a floor the policy must at least reach and may exceed, while the one year is a ceiling on duration: the clock starts not at the accident but at the date the person BECOMES UNABLE to work, and it stops at one year whether or not the disability continues. Personal injury protection is a first-response benefit, not a disability income policy - what lies beyond the year is a matter for the tort claim, workers compensation or the claimant's own cover. The $4,500 option borrows the medical and rehabilitation limit from 40-3103(k) and (r), which is a per-claim total and not a monthly rate.

The primary purpose of a coinsurance clause in property insurance is to:

1. Increase the deductible automatically whenever property values rise during the term
2. Lower every insured's premium by a fixed percentage regardless of the amount carried
3. Extend liability protection to others who share ownership of the insured property
4. Encourage insureds to carry coverage close to the full value of the property ✓

Why: Coinsurance encourages insureds to insure to value (e.g., 80%, 90%, or 100%) by penalizing underinsurance at the time of a loss.

Protection and Indemnity (P&I) coverage in ocean marine provides:

1. Freight coverage on the shipowner's earnings if the cargo is never delivered to the consignee
2. Cargo coverage on the goods carried in the holds
3. Hull physical damage to the vessel, its machinery, and its equipment from perils of the sea
4. Third-party liability coverage for the shipowner (injury, cargo damage, etc.) ✓

Why: P&I provides broad third-party liability protection for shipowners, including bodily injury, illness of crew, damage to cargo, and other liabilities not covered by hull policies.

A Kansas insured gives notice of a fire loss and asks in writing for proof of loss forms. The insurer sends nothing. Under K.S.A. 40-924, what follows?

1. The claim is deemed admitted, the insurer having failed to respond.
2. Failure to make proper proof before suit is no defence to a suit on the policy. ✓
3. Nothing at all; the insured must still make proof in whatever form they can devise.
4. The insured must wait 60 days and may then sue without proof of loss.

Why: K.S.A. 40-924 makes it THE DUTY OF THE INSURING COMPANY OR COMPANIES, WITHIN TEN DAYS AFTER RECEIVING NOTICE THEREOF AND UPON WRITTEN REQUEST, TO FURNISH TO THE INSURED PROPER BLANKS UPON WHICH TO MAKE THE REQUIRED PROOF OF SUCH LOSS WITH FULL DIRECTIONS AS TO WHAT PROOF IS REQUIRED. Both conditions must be met before the duty bites: notice and a written request. IF ANY SUCH COMPANY FAILS TO COMPLY, THE FAILURE OF THE INSURED TO MAKE PROPER PROOF OF LOSS PRIOR TO THE SUIT SHALL BE NO DEFENSE TO A SUIT UPON THE POLICY, and in all cases the insured has a reasonable time to make proof after the blanks and directions are received. The insurer loses a defence; the claim is not deemed admitted, and the section sets no 60-day waiting period. The section ends with a protection for the insurer: the furnishing of blanks and directions is in no wise an admission of liability.

For a property insurance policy, when must the insured generally have an insurable interest?

1. At the time of loss (typically), and arguably at policy inception ✓
2. Only at the time of the loss, and never at any earlier point
3. Never - insurable interest is a life insurance requirement and has no application to property
4. Only at the time the policy is purchased, and never afterwards

Why: In property insurance, insurable interest must exist at the time of loss because the policy indemnifies actual financial loss to the property. Many insurers also expect it at inception.

A Kansas automobile liability policy is 30 days old. A separate policy is a renewal in its first week. Under K.S.A. 40-277, when do the limits on the insurer's right to cancel apply to each?

1. To the new policy after 60 days; to the renewal after a further 60 days.
2. To both immediately; the limits are a condition of issuing the policy.
3. To the new policy after 60 days; to the renewal immediately. ✓
4. To the new policy after 30 days; to the renewal immediately on issue.

Why: K.S.A. 40-277 forbids any insurer to ISSUE A POLICY OF AUTOMOBILE LIABILITY INSURANCE IN THIS STATE UNLESS THE CANCELLATION CONDITION OF THE POLICY OR ENDORSEMENT THEREON INCLUDES the limitations the section then prints, so the limits reach the insurer through a compulsory policy term. The printed condition opens: AFTER THIS POLICY HAS BEEN IN EFFECT FOR 60 DAYS, OR IF THE POLICY IS A RENEWAL, EFFECTIVE IMMEDIATELY, THE COMPANY SHALL NOT EXERCISE ITS RIGHT TO CANCEL the insurance SOLELY BECAUSE OF AGE OR UNLESS one of the listed grounds applies. Two different starting points in one clause: a new policy gives the insurer 60 days before the limits apply, not 30, while a renewal is covered from the start, because the insurer has already had its look at the risk.

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.

Which Dwelling Policy coverage reimburses the owner for lost rents when a rented dwelling becomes uninhabitable due to a covered loss?

1. Coverage D — Fair Rental Value ✓
2. Coverage B — Other Structures
3. Coverage E — Additional Living Expense
4. Coverage C — Personal Property

Why: Coverage D — Fair Rental Value pays the landlord for lost rental income when the rented premises cannot be used because of a covered peril.

A Kansas insured is covered by three of her own policies, with uninsured motorist limits of $50,000, $100,000 and $250,000. Under K.S.A. 40-284, what is the most available to her in total?

1. $100,000, the limit on the policy for the car she drove.
2. $300,000, the two lower limits stacked on the highest.
3. $250,000, the highest limit of any single applicable policy. ✓
4. $400,000, the sum of all three applicable limits.

Why: K.S.A. 40-284(d) provides that COVERAGE UNDER THE POLICY SHALL BE LIMITED TO THE EXTENT THAT THE TOTAL LIMITS AVAILABLE CANNOT EXCEED THE HIGHEST LIMITS OF ANY SINGLE APPLICABLE POLICY. The arithmetic is a ceiling, not a sum: she reaches $250,000 and stops. This is the Kansas antistacking rule for uninsured and underinsured motorist coverage, and unlike the liability antistacking provision in K.S.A. 40-3107(i)(5) - which is drafted as an exclusion an insurer MAY write - it is a statutory limit that applies of its own force. The parallel cap on personal injury protection benefits is in K.S.A. 40-3109(b). Three rules, three coverages, same arithmetic.

A Kansas pedestrian dives clear of a car and is hurt striking the kerb; the car never touches her. Under K.S.A. 40-3109, is she entitled to personal injury protection benefits from that car's insurer?

1. Yes; any injury at all arising out of the ownership, maintenance or use of the vehicle is within the section.
2. No; for a person who is not an occupant the injury must be caused by physical contact with the vehicle. ✓
3. Yes, provided the driver was negligent in causing her to take the evasive action that led to the injury.
4. No; a pedestrian is outside every class of claimant the section names, whether or not the vehicle touched her.

Why: K.S.A. 40-3109(a)(1)(B) extends PIP to injury sustained while NOT AN OCCUPANT OF A MOTOR VEHICLE IF THE INJURY IS CAUSED BY PHYSICAL CONTACT WITH A MOTOR VEHICLE, and paragraph (a)(3) uses the same formula for any other person, adding that such a person must be a RESIDENT OF THIS STATE. Physical contact is a hard-edged condition and it is what separates this from ordinary fault-based liability: the pedestrian who is missed has no PIP claim however negligent the driving, though she keeps whatever claim in tort she would otherwise have had - K.S.A. 40-3117 governs whether she can recover for pain and suffering. K.S.A. 40-3107(f) describes the same class from the policy's side as OTHER PERSONS STRUCK BY SUCH MOTOR VEHICLE AND SUFFERING BODILY INJURY WHILE NOT AN OCCUPANT OF A MOTOR VEHICLE. STRUCK BY and PHYSICAL CONTACT WITH are the same requirement in different words.

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.

Which policies does the attorney fee provision in K.S.A. 40-908 reach, and does it cover an appeal?

1. Any policy of insurance issued in this state whatever the subject matter; and yes, services on appeal are included.
2. Any policy insuring property in this state against fire, tornado, lightning or hail; but the fee covers the trial of the action only.
3. Any policy insuring property in this state against fire, tornado, lightning or hail; and yes, services on appeal are included. ✓
4. Any policy insuring property in this state against fire or tornado only; and yes, services on appeal are included.

Why: Two limits sit inside K.S.A. 40-908. The section reaches a judgment against an insurer ON ANY POLICY GIVEN TO INSURE ANY PROPERTY IN THIS STATE AGAINST LOSS BY FIRE, TORNADO, LIGHTNING OR HAIL - four named perils and PROPERTY IN THIS STATE, so it is not a general fee-shifting rule for insurance litigation, and a liability or life judgment is outside it. And the fee is FOR SERVICES IN SUCH ACTION INCLUDING PROCEEDING UPON APPEAL, so an insurer that loses at trial and appeals is exposed to the plaintiff's costs of defending the appeal as well. That combination is what gives the section its practical force in a disputed hail or tornado claim, where the amount at stake often would not justify the litigation on its own.

Auto liability limits of 100/300/50 are an example of:

1. Split limits ✓
2. A coinsurance requirement
3. An aggregate limit
4. A combined single limit

Why: Split limits separate coverage into per-person bodily injury, per-accident bodily injury, and property damage amounts.

Under Homeowners Coverage C special limits, money, bank notes, and coins are typically limited to about:

1. $1,500
2. $5,000
3. $2,500
4. $200 ✓

Why: Money, bank notes, gold, and coins carry a low special limit (commonly $200) under Coverage C.

A customer slips on a wet floor in the insured's store and is hurt. This is most clearly a claim under:

1. Employee Benefits Liability
2. Coverage A — Premises and Operations ✓
3. Coverage B — Personal and Advertising Injury
4. A surety bond

Why: A slip-and-fall on the insured's premises is a Coverage A bodily injury (premises and operations) claim.

A Kansas claimant recovers from the association after an insurer's liquidation. Under K.S.A. 40-2909, what happens to the claimant's rights, and what is expected of the claimant?

1. The rights under the policy are extinguished, and nothing further is required of the claimant.
2. The rights under the policy stay with the claimant, and the claimant need cooperate only with the liquidator of the insolvent insurer.
3. The rights under the policy are assigned in full whatever the size of the recovery, and cooperation with the association is voluntary.
4. The rights are assigned to the association to the extent of the recovery, and the claimant must cooperate as with the insolvent insurer. ✓

Why: K.S.A. 40-2909(a) provides that ANY PERSON RECOVERING UNDER THIS ACT SHALL BE DEEMED TO HAVE ASSIGNED HIS RIGHTS UNDER THE POLICY TO THE ASSOCIATION TO THE EXTENT OF HIS RECOVERY FROM THE ASSOCIATION, and that EVERY INSURED OR CLAIMANT SEEKING THE PROTECTION OF THIS ACT SHALL COOPERATE WITH THE ASSOCIATION TO THE SAME EXTENT AS SUCH PERSON WOULD HAVE BEEN REQUIRED TO COOPERATE WITH THE INSOLVENT INSURER. TO THE EXTENT OF HIS RECOVERY is what defeats the answer that the rights are assigned in full whatever the size of the recovery - a claimant paid the $300,000 cap on a larger claim keeps the balance of the claim against the estate. The subsection also protects the insured: THE ASSOCIATION SHALL HAVE NO CAUSE OF ACTION AGAINST THE INSURED OF THE INSOLVENT INSURER FOR ANY SUMS IT HAS PAID OUT, EXCEPT SUCH CAUSES OF ACTION AS THE INSOLVENT INSURER WOULD HAVE HAD. By (b) the receiver, liquidator or statutory successor SHALL BE BOUND BY SETTLEMENTS OF COVERED CLAIMS BY THE ASSOCIATION, the claims take the priority the claimant would have had, and the association's claim-handling expenses rank with the liquidator's own.

If two PAP policies issued by the same insurer apply to the same loss, Part F provides that:

1. Both policies pay their full limits, so the insured may collect twice for the same element of damages
2. Both policies are void for concealment, because the duplicate coverage was never disclosed to the insurer
3. The insurer's maximum liability shall not exceed the highest applicable limit under any one policy ✓
4. The policy issued more recently is canceled flat and the full premium paid for it is refunded to the insured

Why: The "Two or More Auto Policies" provision limits recovery so the insurer pays no more than the highest limit under any one of its policies.

An employer with worse-than-average claims experience for its class would most likely have an experience modification factor that is:

1. Equal to 1.00, with no change
2. Set to zero
3. Below 1.00, producing a credit
4. Above 1.00, producing a debit ✓

Why: A debit mod above 1.00 reflects worse-than-average loss experience and increases the employer's premium relative to the class average.

Fair dealing and good faith in claims handling require an insurer and producer to:

1. Avoid all direct contact with the insured once defense counsel has been retained on the claim file
2. Pay only the largest claims in full and settle the smaller ones for a fraction of their value
3. Delay payment on every claim as long as the statute of limitations allows, to preserve reserves
4. Treat the insured honestly, investigate fairly, and not unreasonably deny valid claims ✓

Why: The duty of good faith and fair dealing requires honest, prompt, and fair treatment of insureds and reasonable handling of valid claims.

Which of the following risks would be considered an ideally insurable risk?

1. An investor's losses on the stock market during a general downturn
2. Expected gradual wear and tear on a roof over its normal service life
3. Losses to civilian property from a nationwide war or act of foreign enemies
4. A homeowner's loss from a sudden, accidental kitchen fire ✓

Why: A sudden, accidental fire is fortuitous, definite, measurable, and not catastrophic to the insurer, meeting the criteria for an insurable risk.

A warehouse roof collapses under the weight of accumulated snow. The insured has only the Basic Causes of Loss form. Is the collapse from snow weight covered?

1. No, weight of snow/ice is added by the Broad and Special forms, not Basic ✓
2. Only if theft accompanied the collapse
3. Yes, weight of snow is listed among the Basic form's named perils
4. Yes, collapse from any cause is a Basic peril

Why: Weight of snow, ice, or sleet is added in the Broad and Special forms; the Basic form does not include it, so the loss would not be covered.

Compulsory automobile insurance laws differ from financial responsibility laws in that compulsory laws:

1. Do away with minimum liability limits entirely, leaving the amount of coverage to the driver
2. Require insurance to be in force before the vehicle can be registered or operated ✓
3. Take effect only after a driver has been in an accident or convicted of a serious violation
4. Apply only to commercial vehicles registered for business use, exempting private passenger autos

Why: Compulsory insurance laws require coverage to be in place before registration/operation, whereas financial responsibility laws may allow proof only after an incident.

Under a value reporting form, what happens if the insured underreports values at the last report before a loss?

1. The insurer pays the full policy limit because the limit was purchased for the year
2. Coverage is voided from inception and the insurer returns all the premium paid
3. The honesty/full reporting clause limits recovery to the proportion reported ✓
4. The deductible is waived on the loss

Why: The full reporting (honesty) clause penalizes underreporting by limiting recovery to the ratio of the value last reported to the actual value.

A Kansas agent holds only the Property qualification and is asked to write a general liability policy for a contractor. Under K.S.A. 40-4903, may they?

1. Yes; Property covers loss or damage to property of every kind, including a contractor's.
2. Yes; a liability policy for a business is commercial lines, which the Property line includes.
3. No; liability cover falls in the Casualty line, for which a separate qualification is needed. ✓
4. No; but the Personal lines qualification would have covered it.

Why: The lines of authority in K.S.A. 40-4903(a) are separate qualifications and an agent receives them in one or more lines. General liability insures the contractor's LEGAL LIABILITY to third parties, which paragraph (4) places squarely in CASUALTY - INSURANCE COVERAGE AGAINST LEGAL LIABILITY, INCLUDING THAT FOR DEATH, INJURY OR DISABILITY OR DAMAGE TO REAL OR PERSONAL PROPERTY. Paragraph (3)'s Property line covers loss or damage TO PROPERTY, meaning the insured's own, so reading 'property of every kind' as reaching a contractor's liability confuses the subject of the loss with the person bearing it. The Personal lines answer fails on a different point: PERSONAL LINES under paragraph (6) is property and casualty cover sold PRIMARILY TO AN INDIVIDUAL OR FAMILY FOR NONCOMMERCIAL PURPOSES, so it would not reach a contractor's business liability either.

Under K.S.A. 40-2914, how does a Kansas member insurer recoup what it pays the guaranty association, and what does the act say about the resulting rates?

1. Rates and premiums shall include amounts sufficient to recoup the assessments paid less any amounts returned, and such rates shall not be deemed excessive because they contain an amount reasonably calculated to recoup them. ✓
2. It cannot; assessments are a cost of membership and may not be passed on.
3. It takes a credit against premium tax equal to the assessment.
4. It may surcharge only those of its own policyholders who are insured in the particular line of business that gave rise to the insolvency, and only for the calendar year in which the assessment in question was actually paid over.

Why: K.S.A. 40-2914 provides that THE RATES AND PREMIUMS CHARGED FOR INSURANCE POLICIES TO WHICH THIS ACT APPLIES SHALL INCLUDE AMOUNTS SUFFICIENT TO RECOUP A SUM EQUAL TO THE AMOUNTS PAID TO THE ASSOCIATION BY THE MEMBER INSURER LESS ANY AMOUNTS RETURNED TO THE MEMBER INSURER BY THE ASSOCIATION AND SUCH RATES SHALL NOT BE DEEMED EXCESSIVE BECAUSE THEY CONTAIN AN AMOUNT REASONABLY CALCULATED TO RECOUP ASSESSMENTS PAID BY THE MEMBER INSURER. This is the answer to the question of who ultimately pays for an insolvency: the buying public, through the rates of the insurers that survive. The section is drafted as a shield against the rating act - a rate carrying a recoupment element is not EXCESSIVE within K.S.A. 40-953 for that reason. Note LESS ANY AMOUNTS RETURNED, which ties back to the year-end refund power in K.S.A. 40-2906(b)(6). Separately, K.S.A. 40-2913 exempts the association itself from ALL FEES AND ALL TAXES LEVIED BY THIS STATE OR ANY OF ITS SUBDIVISIONS EXCEPT TAXES LEVIED ON REAL OR PERSONAL PROPERTY.

A contractor's CGL would NOT cover which of the following because of the 'your work' exclusion?

1. Medical payments under Coverage C for a visitor hurt on the job site
2. The cost to repair the contractor's own defective workmanship on the completed project ✓
3. Property damage to a neighboring building when the contractor's crane collapses
4. Bodily injury to a passerby struck by debris that fell from the contractor's scaffolding on the site

Why: The 'your work' exclusion bars coverage for damage to the insured's own completed work; the CGL is not a warranty of workmanship.

Dividends paid to the policyholders of a mutual insurer are:

1. Not guaranteed and are a return of surplus ✓
2. Guaranteed each year by contract
3. Taxable as ordinary income to the insured
4. Paid only to the stockholders

Why: Mutual policy dividends are not guaranteed; they represent a return of unused premium and are generally not taxable.

PAP Part A supplementary payments include all of the following EXCEPT:

1. Interest that accrues on a judgment after it is entered, until the insurer pays its limit
2. Bail bonds up to $250 after an accident
3. The full bodily injury damages owed to the claimant ✓
4. Attorney fees and the cost of defending a suit

Why: Supplementary payments include defense, bail bonds, post-judgment interest, and certain expenses, but NOT the damages themselves, which are paid within the liability limit.

An applicant is being assessed for a Kansas public adjuster licence. Which of these does K.S.A. 40-5505 not make a condition of issue?

1. Being at least 18 years of age and having passed the public adjuster examination.
2. Holding a resident insurance agent licence in this state. ✓
3. Being trustworthy, reliable and of good reputation, and financially responsible.
4. Maintaining an office in the home state with public access during regular business hours or by reasonable appointment.

Why: K.S.A. 40-5505(a) requires the commissioner to find that the applicant IS ELIGIBLE TO DESIGNATE THIS STATE AS THE APPLICANT'S HOME STATE or is a nonresident not eligible under K.S.A. 40-5508; HAS NOT COMMITTED ANY ACT THAT IS A GROUND FOR DENIAL, SUSPENSION OR REVOCATION under K.S.A. 40-5510; IS TRUSTWORTHY, RELIABLE AND OF GOOD REPUTATION; IS FINANCIALLY RESPONSIBLE ... AND HAS PROVIDED PROOF OF FINANCIAL RESPONSIBILITY AS REQUIRED IN K.S.A. 40-5511; HAS PAID AN APPLICATION FEE NOT TO EXCEED $100; AND MAINTAINS AN OFFICE IN THE HOME STATE WITH PUBLIC ACCESS DURING REGULAR BUSINESS HOURS OR BY REASONABLE APPOINTMENT. Subsection (b) adds that the applicant shall BE AT LEAST 18 YEARS OF AGE and HAVE SUCCESSFULLY PASSED THE PUBLIC ADJUSTER EXAMINATION. An agent licence is nowhere among them - this is a separate licence for a separate occupation. By (d) the commissioner may require fingerprinting and a state and national criminal history record check, at the applicant's cost, and by (e) must set and publish the application fee in the Kansas register not later than 1 December each year.

The federal Do-Not-Call Registry restricts:

1. Only commercial email newsletters sent to consumers who never asked for them, leaving live telephone calls unregulated
2. Unsolicited telemarketing calls to consumers who have registered their numbers ✓
3. Mailed insurance brochures and rate flyers
4. Door-to-door sales visits at a consumer's home

Why: The Do-Not-Call Registry prohibits most telemarketing calls to numbers consumers have placed on the list, with limited exceptions such as an established business relationship.

Which dwelling form provides coverage on a named-perils basis using the broad form list of perils?

1. DP-2 (Broad Form) ✓
2. DP-4 (Comprehensive Form)
3. DP-3 (Special Form)
4. DP-1 (Basic Form)

Why: The DP-2 Broad Form insures on a named-perils basis using the expanded broad-form list of perils. DP-1 uses basic perils and DP-3 uses open perils on the dwelling.

A retail employee sues the company for sexual harassment and wrongful termination. Which policy is designed to respond?

1. Workers Compensation and Employers Liability
2. CGL Coverage A, Bodily Injury Liability
3. Commercial Property, Special Form
4. Employment Practices Liability (EPLI) ✓

Why: Harassment and wrongful termination are employment practices claims handled by EPLI, not the CGL.

A Kansas agency knowingly accepts a book of business from someone who is not licensed. Under K.S.A. 40-4909, what may the commissioner do about the agency's licence?

1. Nothing to the agency; the sanction falls on the unlicensed individual alone.
2. Suspend it, but only if the unlicensed person received a commission on the business.
3. Nothing, unless the business also went to an unauthorised insurer.
4. Deny, suspend, revoke or refuse renewal; it is a listed ground on its own. ✓

Why: K.S.A. 40-4909(a)(12) makes it a ground that the applicant or license holder has KNOWINGLY ACCEPTED INSURANCE BUSINESS FROM AN INDIVIDUAL WHO IS NOT LICENSED. The word doing the work is KNOWINGLY. Nothing turns on whether the unlicensed person received a commission, and the ground stands on its own rather than depending on the business also going to an unauthorised insurer. Every ground in subsection (a) supports the full range of action: the subsection opens by letting the commissioner DENY, SUSPEND, REVOKE OR REFUSE RENEWAL OF ANY LICENSE if the finding is made. Nor does the sanction fall only on the unlicensed individual; it reaches the licence of whoever knowingly took the business.

The CGL contractual liability exclusion contains an important exception for:

1. Liability the insured would have without the contract, and liability assumed in an 'insured contract' ✓
2. Cleanup of pollutants released at a job site whenever the insured has agreed in a written contract to restore the property
3. Punitive damages assessed against the party the insured indemnified, provided the state allows them to be insured
4. War risks, when the contract is with a government agency

Why: Liability assumed under an 'insured contract' (and liability that would exist absent the contract) is excepted from the contractual liability exclusion, so it remains covered.

Under the PAP, coverage for an auto used in the business of selling, repairing, or servicing autos (the "auto business" exclusion) is:

1. Excluded for liability when an insured is employed in the auto business and using a non-owned auto in that business ✓
2. Always covered, because Part A liability follows the insured into any occupation that involves driving a customer's vehicle
3. Covered under Part D only, so damage to the customer's auto is paid while the employer's garage policy handles liability
4. Covered under Part B for the insured's own injuries only

Why: The PAP excludes liability for any insured maintaining or using vehicles in the auto business (e.g., garages, sales) for non-owned autos; such exposure belongs on a garage/dealers policy.

Under the Building and Personal Property Coverage Form, which coverage applies to the building structure and permanently installed fixtures?

1. Coverage A — Building ✓
2. Coverage C — Personal Property of Others
3. Coverage B — Business Personal Property
4. Coverage D — Extra Expense

Why: Coverage A (Building) covers the described building, completed additions, fixtures, permanently installed machinery, and equipment.

A Kansas public adjuster's surety bond, required by the commissioner as evidence of financial responsibility, is terminated by the insurer. Under K.S.A. 40-5511, what notice was required and what happens to the licence?

1. At least 30 days' prior written notice given to the licensee and to nobody else; and the licence continues in force until the commissioner acts to suspend it.
2. At least 30 days' prior written notice filed with the commissioner and given to the licensee; and the authority to act as a public adjuster terminates automatically. ✓
3. At least 10 days' prior written notice filed with the commissioner by the insurer; and the authority to act terminates automatically when that notice is filed.
4. No notice is required of the surety; but the licence is suspended until fresh evidence of financial responsibility is filed with the commissioner.

Why: K.S.A. 40-5511(a) lets the commissioner require evidence of financial responsibility, before issue and FOR THE DURATION OF THE LICENSE, in one of two forms. A SURETY BOND executed by an insurer authorized to issue surety bonds here, IN SUCH REASONABLE AMOUNT AS THE COMMISSIONER MAY REQUIRE, IN FAVOR OF THE COMMISSIONER, specifically authorizing RECOVERY BY THE COMMISSIONER ON BEHALF OF ANY PERSON IN THIS STATE WHO SUSTAINS DAMAGES AS THE RESULT OF ERRONEOUS ACTS, FAILURE TO ACT, CONVICTION OF FRAUD OR CONVICTION OF UNFAIR PRACTICES; or AN IRREVOCABLE LETTER OF CREDIT issued by a qualified financial institution, to an account of the commissioner and subject to lawful levy of execution. Each may be terminated only on AT LEAST 30-DAYS PRIOR WRITTEN NOTICE filed WITH THE COMMISSIONER AND GIVEN TO THE LICENSEE, by the insurer for a bond and by the issuer for a letter of credit. Subsection (b)(3) supplies the consequence: THE AUTHORITY TO ACT AS A PUBLIC ADJUSTER SHALL TERMINATE AUTOMATICALLY IF THE EVIDENCE OF FINANCIAL RESPONSIBILITY TERMINATES OR BECOMES IMPAIRED. No order is needed, and IMPAIRED is wider than terminated.

The requirement that contracting parties be of legal age, sane, and not under the influence refers to which contract element?

1. Offer and acceptance
2. Competent parties ✓
3. Legal purpose
4. Consideration

Why: Competent parties means each party must have the legal capacity to contract, being of legal age, mentally competent, and sober.

The primary purpose of underwriting is to:

1. Settle claims quickly so that the insured is restored without delay
2. Investigate suspected fraud after a loss has already been reported
3. Select and classify risks to determine acceptability and proper pricing ✓
4. Sell as many policies as possible to spread the insurer's fixed costs

Why: Underwriting is the process of evaluating, selecting, classifying, and pricing risks to maintain a profitable book of business.

Under the NFIP, deductibles apply:

1. Only to contents coverage
2. Only after a federal disaster is declared
3. Only to building coverage
4. Separately to building and contents losses ✓

Why: The NFIP applies separate deductibles to building and to contents losses arising from the same flood event.

Professional Liability / Errors & Omissions (E&O) coverage responds to claims arising from:

1. Negligent acts, errors, or omissions in rendering professional services ✓
2. Fire damage to the professional's own office building, contents, and client records, including errors or omissions in keeping them
3. Auto accidents involving the firm's company car
4. Slip-and-fall injuries to clients in the lobby

Why: E&O covers financial harm to clients from a professional's negligent acts, errors, or omissions in delivering services.

What is the primary purpose of a Commercial Package Policy (CPP)?

1. To insure only commercial automobiles owned by a single named insured
2. To provide property coverage only, and only for large corporations
3. To combine two or more coverage parts into a single policy for one insured ✓
4. To replace the need for separate liability coverage entirely

Why: A CPP allows two or more coverage parts (e.g., property, general liability, crime) to be combined under a single policy with shared declarations and conditions.