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general insurance
| Term | Definition |
|---|---|
| Erica's dire financial condition compels her to consider filing for bankruptcy. What type of hazard does her financial condition represent? | Moral hazard |
| Jack's property insurance policy protects his property against loss by several perils. These perils may also be referred to as | Causes of loss |
| Chandler was in a hurry to walk across the street and did not wait for the traffic signals to give him the right of way in the crosswalk. Eric was driving down the street at an excessive speed and was unable to avoid striking Chandler. What defense might | Contributory negligence |
| Honora noticed that her property insurance policy includes coverage in the event her building collapses. She doesn't believe she needs this coverage and asked the insurer to remove or strike this provision. Her insurer replies | Collapse coverage is included as an additional coverage for collapse caused by one of the specified perils. |
| Patrick has a commercial property insurance policy that does not cover damage caused by an earthquake. He is interested in obtaining earthquake coverage. He read that it is possible to obtain a separate policy insuring against this specific peril and it w | Difference-in-conditions policy |
| Sofia's insurer gives her a proof of loss form to complete after the balcony on her home collapsed. Sofia forgets to submit the completed form to her insurer. What is not a possible consequence of Sofia's failure to submit the form? | The insurer may process the claim because Sofia's failure to act was unintentional. |
| To identify what perils they cover, property insurance policies use either the named perils approach or the | Open perils approach |
| An insurance policy may contain insurance coverages in addition to those contained in the insuring agreement. All of the following terms are used to refer to these secondary coverages EXCEPT: | Exclusions |
| Wanda is governed by the Health Insurance Portability and Accountability Act (HIPAA), which requires her to protect the privacy of the health information she's given by her clients and individuals applying for insurance. Which of the following types of pr | Fire insurance |
| Which of the following is not a common exclusion on a property insurance policy? | Lightning |
| Sara's insurance application was declined because of information provided in a consumer report. She is entitled to receive all the following information about the coverage denial EXCEPT: | Identification of the investigator who collected the information |
| A state ordinance prohibits trucks carrying hazardous materials from using Highway 84 and appropriate notices are posted. Jonas carefully drives his truck on Highway 84. Although his truck is loaded with dynamite, he drives carefully and does everything h | Strict liability Under strict liability, the law holds people responsible for injuries or damage even when they have not been careless or negligent. Some actions are so dangerous that the law simply holds someone liable for any damage or injury that resul |
| Carol buys a policy in her name to insure a neighbor's home because he is unable to afford the coverage. The home is destroyed by a fire and Carol tries to collect the insurance proceeds. Will she be able to collect them? | No, because she did not have an insurable interest in the home. |
| Maurice, the owner of a shoe store, does not take seriously the responsibility to maintain the burglar alarm system in the store because he has insurance. He assumes that insurance will cover any loss due to burglary at the store. Maurice's attitude is an | Morale hazard |
| Lynn attended a backyard barbeque on the 4th of July. Her host distributed sparklers to guests and Lynn knew they were dangerous. After Lynn's sparkler was lit, some burning ashes landed on her nose and caused permanent scarring. If Lynn sues the host for | Assumption of risk Assumption of risk argues that, notwithstanding the defendant's alleged negligence, the plaintiff knew there was a substantial possibility something might occur to cause injury or damage. Because the plaintiff voluntarily exposed himse |
| Adam's truck was rear-ended in an accident and the new stove he was transporting was totally destroyed. Adam files a claim for the cost of the stove, but his insurer elects to replace the stove and may do so because Adam's insurance policy contains what t | Claim settlement option Paying money is not an insurer's only option. A claim settlement option permits an insurer to repair or replace the damaged property with a similar or equivalent item. |
| Which of the following federal regulations requires a violent act--or an act that is dangerous to human life, property, or infrastructure'to be insured as a covered peril on certain commercial P&C insurance policies? | The Terrorism Risk Insurance Act is federal legislation that requires acts of terrorism, as defined in the Act, to be covered by certain commercial lines of insurance unless the policyholder rejects coverage. |
| When Mr. and Mrs. Unger lived in New Hampshire, they didn't buy earthquake insurance because they believed they were unlikely to suffer an earthquake loss. When they moved to California, however, they bought earthquake coverage immediately because of thei | Adverse selection is a condition that results when the only people interested in buying and maintaining insurance are those most likely to have claims. |
| Ike is very happy when his homeowners insurance company pays his claim, citing a specific exclusion in his policy concerning animals that does not apply. Which animal is responsible for causing Ike's claim? | Ike's dog that bit a neighbor's child The exclusion in a property insurance policy that applies to animals does not apply to liability coverage. |
| Ken asked his insurance agent who his insurance policy refers to when it uses the term 'we.' His agent stated that 'we' is | the insurance company providing the coverage |
| What are the two types of compensatory damages | Special and general: Compensatory damages are amounts a party is required to pay to compensate (reimburse) an injured party for harm he or she caused. The two types of compensatory damages are special damages and general damages. |
| Ari is sued and tells his insurer the lawsuit is without merit. Even if Ari is telling the truth, the insurer still owes him a duty to | Defend |
| An insurance policy that pays before any other applicable coverage pays is considered | Primary coverage A policy that provides primary coverage pays before all other applicable coverage pays |
| How does class rating differ from individual rating? | Class rates are used when insureds have similar characteristics and are charged the same rates |
| How does an insurance rate differ from an insurance premium? | A rate is the price of insurance for each unit of exposure. A premium is a periodic payment for insurance coverage. |
| Because Hollace had little money, she was only able to purchase a home in a neighborhood in which property values had declined. Her home was damaged in a gang territorial dispute and she wants to move. Unable to sell the property, she considers walking aw | She may walk away if she provides the insurer with 30 days' notice. An abandonment provision in property policies specifies that the insured cannot walk away from damaged property and turn it over to the insurer. The insurer is not required to accept any |
| Washington Insurance Company has established the cost of a liability insurance policy at $8.00 per $1,000 of coverage purchased. Which of the following terms BEST describes that cost? | Rate An insurance rate is the price of insurance for each unit of exposure. $8 is the rate for each $1,000 unit of exposure |
| Which legislation prevents a financial institution from disclosing a consumer's nonpublic personal information to an unaffiliated third party unless it provides notice to the consumer and allows the consumer an opportunity to stop this disclosure? | Gramm-Leach-Bliley Act (GLBA) The Gramm-Leach-Bliley Act (GLBA) bars a financial institution from disclosing a consumer's nonpublic personal information to an unaffiliated third party unless it provides notice to the consumer and allows the consumer an op |
| One of Vincent's business associates has requested a document that shows evidence Vincent has a certain type of insurance coverage in place. The document must show the name of Vincent's insurance company, the type of coverage that is in place, and the lim | A certificate of insurance certificate of insurance is a document issued as evidence that a certain type of insurance has been purchased by a particular party. For example, a homeowner may request that a plumber provide a certificate of insurance before b |
| Which of the following is not an example of a peril, or cause of loss? | Blocked exit in a burning building delaying entry to firefighters |
| Malcolm Enterprises sustains a serious fire loss to its factory. Operations are suspended for several weeks while repairs are made. During this time, Malcolm Enterprises cannot produce the goods they sell and lose considerable income. How would you descri | Indirect loss The loss of income that a business sustains while repairing damage to its facility is an indirect loss resulting from the damage. |
| Tricia hosts a lawn party. She knows property owners are obligated to protect people on their property from harm and that different degrees of care are required depending upon the circumstances. To whom does Tricia owe the greatest duty to exercise care? | Candy, who is delivering floral centerpieces ordered by Tricia |
| Ned stores several tanks of gasoline in his basement next to the furnace. This presents an example of a | Physical hazard Physical hazards are individual physical characteristics that increase the chance of loss. They exist due to the presence of some physical condition. Storing gasoline or other flammable liquids near a furnace presents a physical hazard be |
| For a loss to be covered under a property insurance policy, a covered peril must be a | Proximate cause of the loss For a loss to be covered under a property insurance policy, a covered peril (or cause of loss) must be the proximate cause of the loss. The proximate cause is the cause that sets in motion an unbroken chain of events leading to |
| The Health Insurance Portability and Accountability Act (HIPAA) affects property and casualty insurers because medical information may be used in each of the following situations EXCEPT: | Deny strict liability claims The Health Insurance Portability and Accountability Act (HIPAA) limits the use and disclosure of protected health information. Because medical information is often involved in paying auto insurance medical payments claims and |
Created by:
lpjthompson