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review test 1
Insurance test prep prop
| Question | Answer |
|---|---|
| The principle that states that an insured should be restored to approximately the same financial position after a loss as before is known as | indemnity |
| An individual with a terminal illness purchases health insurance this is an example of what? | Adverse selection |
| Statements made on an application that are guaranteed to be true are? | warranties |
| The homeowners form that provides special peril coverage on the dwelling and broad coverage on personal property is | the HO-3 |
| An additional loss that results from a direct loss to property is called | an indirect/consequential loss |
| True or false, the elements of a legal contract that an insurance premium payment represents is consideration | true |
| the condition that provides a means to settle the amount of a loss when the insured and the insurance company cannot agree is | the appraisal condition |
| What covers a carrier liability for loss or damage of cargo while it is being transported in a truck | motor truck cargo policy |
| the type of insurance company in which the policyholder is considered an owner and also shares in the profit is | a mutual company |
| It will cost Gary 5,000 to put a new roof on his home to replace a roof destroyed in a windstorm. Assume that the original roof, which Gary paid 3,500 for 10 years ago, depreciated 300 per year. What was the actual cash value of the roof that was destroy | 2,000 |
| According to the nationwide definition, imports and exports are | eligible for ocean marine insurance |
| The purpose of a binder is to | provide temporary protection for the insured between the time the application is made and the policy is issued or the binder expires |
| What type of insurance covers exposures that involve property and merchandise while in transit or floating? | Inland marine insurance |
| is a tv covered under personal property items covered in coverage c of the dwelling policy? | yes |
| Furniture that is destroyed when a building burns down is an example of what kind of loss? | Direct |
| Would a sudden and accidental rupture of a heating system be covered by the HO-2 and H0-3? | yes |
| An insurance company doing business in a state other than the one where it is incorporated? | foreign |
| true or false a farm would be permitted in a dwelling insured under a dwelling form. | false farm not insured under dwelling policy |
| is the refund of premium condition one of the common policy conditions in a commercial package policy | no, the common policy condition s apply to all of the coverage parts contained in the CPP. |
| Are autos for sale covered under a building and personal property coverage? | no the autos are excluded |
| Can commercial property coverage, health and disability insurance, commercial casualty coverage, general liability be included in a commercial property policy? | Everything can be included except health and disability insurance |
| According to the cancellation condition in the common policy conditions form, if the insurance company is canceling a homeowners policy for any reason, the insurance company must give 10 days written notice to the insured during the first | 60 days of the policy term |
| are medical bills included under section 1 of the homeowners policy? | no, personal property, other structures, and the dwelling itself are covered. |
| The cause of a loss is called | a peril |
| is equal risk for all parties a required element of a legal contract | no, but legal purpose, offer and acceptance and competent parties are required elements |
| The insu red has 20,000 insurance with company A and 40,000 with company B Assume both policies contain another insurance clause specifying pro rata. What would company A pay if there was a 24,000 loss? | 8,000 |
| A morale hazard is | something that arises through an individuals carelessness or irresponsible actions |
| is the personal items coverage form a type of inland marine coverage form? | no |
| Of the four coverages provided under section 1 often homeowners policy which one provides against loss of use, an indirect loss? | Coverage D |
| Most flood insurance coverage is provided by | a federal government program |
| are imports and exports eligible for commercial inland marine insurance? | No but domestic shipments, instrumentalities of communication, and commercial floater risks are eligible for commercial inland marine insurance |
| Special open peril coverage for both the dwelling and personal property is provided by | the HO-5 |
| The insureds home is covered by a dp-3 two years ago the insured bought the home for 88,000 today its replacement value is 100,000. How much coverage A does the the insured need to qualify for replacement cost coverage? | 80,000 |
| is War covered by a dwelling policy? | No war isnt covered by any policy |
| If a building insured under the building and personal property coverage form was vacant for 90 days | a vandalism loss would not be covered |
| would heavy rains that cause a lake to overflow and flood the basement and the first floor of a house be covered by a flood policy? | yes |
| Additional living expense coverage that is included under the broad and special dwelling forms protects the insured against | extra living costs incurred when the home becomes uninhabitable due to damage by a peril insured against |
| is a sign that breaks during installation covered in the inland marine sign coverage form? | no because it broke during installation should be covered by the installers |
| The primary purpose of the business income coverage forms is to reimburse the insured for | loss of income resulting from property damage at the insureds property. |
| what is an available coverage option under the equipment breakdown protection coverage form | Utility interruption |
| An individual who owns and lives in a condominium can obtain broad coverage for personal property in the condo under which homeowners form? | HO-6 |
| is attacks on covered livestock by wild animals covered under the basic section in farm coverage? | no but fire, explosion, and earthquake or flood loss to livestock is. |
| A hardware store is insured under a business income coverage form with the basic causes of loss form. Would damage from the weight of ice, sleet, or snow be covered? | No, but explosion, vandalism, or fungus, wet rot, and bacteria up to 15,000 would be covered |
| What commercial property coverage form covers damage to the property of others in the insureds care, custody, or control, but only if the insured is legally liable? | Legal liability coverage form |
| Would fixtures be covered under the building coverage of the building and personal property coverage form? | yes |
| Assume the following items were stolen from the insureds home. Which one of these losses would be fully covered under coverage C of the homeowners policy, assuming the loss was for the full value of the property described? | A 2,000 laptop computer the insured uses for her in-home accounting business |
| Widget enterprises wants property insurance for a new warehouse it is building. Widget also wants the policy's limit of insurance to gradually increase as the value of the building under construction increases. which commercial property coverage form | Builders risk reporting form |
| Under the commercial package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer? | First-named insured |
| Coverage L provides coverage for damages that the insured becomes legally obligated to pay because an occurrence caused bodily injury or property damage. This coverage is also known as | personal liability supplement |
| The builders risk reporting rom insures a building under construction for | an amount that increases at intervals to correspond with the increasing value of the building |
| What is a common name for Part D of the personal auto policy? | Physical damage coverage |
| In the business auto coverage form, employers that want to cover employees use of their own cars in the employers business should opt to have liability coverage apply to what group of autos | nonowned |
| An insured is driving her car to work, swerves into the next lane, and causes an accident. This accident occurred because of the insureds negligence while driving. This cause of the accident is known as what? | the proximate cause |
| The personal auto policy's medical payments coverage would not provide protection for occupants of a car that was struck by the insured true or false | true |
| Is pain and suffering one of the benefits that is generally not provided by a states workers compensation law? | yes, however disability, rehabilitation and medical coverage is provided to state workers. |
| The party to a surety bond who promises to do or not do a specific thing is | the principal |
| the type of insurance company in which the policyholder is considered an owner and also shares in the profits, is | a mutual company |
| In fidelity bonds, the party to whom the promise is made and for whose protection the bond is written is | the obligee |
| true or false Under the business auto coverage form, the insureds liability arising from bodily injury resulting from loading or unloading a covered auto would be covered | true but damage to property in the insureds custody wouldnt be covered |
| true or false intentional injury, personal and advertising injury, bodily injury and property damage liability, and medical payments are provided under the commercial general liability policy? | False because intentional injury isnt covered. |
| Is damage to property owned by the insured included in the supplementary payments portion of a liability policy? | No |
| the insured has 20,000 insurance with company a and 40,000 with company b assume both contain another insurance clause specifying pro rata. What would company a pay if there were a 24,000 loss? | 8,000 |
| An additional loss that results from a direct loss to property is called? | an indirect/ consequential loss |
| A business can obtain coverage for liability arising out of discrimination and sexual harassment by purchasing what? | employment practices liability insurance |
| True or false, legal duty owed, breach of legal duty owed, proximate cause, or damages would establish a charge of negligence? | True |
| What describes an insurance company doing business in a state other than the one where it is incorporated? | foreign, alien is a different country. |
| what is a morale hazard? | it arises through an individuals carelessness or irresponsible actions |
| An insurance agent who needs liability coverage for her professional liability exposure can obtain it by purchasing | errors and omissions insurance |
| Medical benefits under the workers compensation policy are | generally unlimited and do not contain deductibles |
| The cause of a loss is called | peril |
| Under the claims-made commercial general liability coverage form, the first date that a loss may occur and still be covered under the policy is | the retroactive date |
| Does a medical payments coverage reimburse the insured for reasonable expenses incurred within three years of the date of injury without regard to fault? | yes |
| In a commercial liability policy, coverage under a claims-made form is triggered when | the claim is first made against the insured |
| Business auto coverage form is used to? | insure private passenger and commercial auto exposures |
| In a liability loss, the person to whom the insured caused damage is referred to as | the third party |
| What is an individual with a terminal illness purchases health insurance an example of | adverse selection |
| In a monopolistic state, an employer purchases workers compensation insurance from | a state fund |
| What element of a legal contract does n insurance premium payment represent? | consideration |
| Statements made on an application that are guaranteed to be true are known as? | warranties |
| Would the named insureds son who lives with the insured while driving a neighbors car with permission be considered for liability coverage under the personal auto policy? | yes |
| Under the commercial general liability policy, a separate aggregate limit applies to | the products-completed operations |
| Insurance arising out of rendering or failing to render services of a professional nature that was developed for physicians, surgeons, dentists, lawyers, insurance agents, directors, and accountants is known as | professional liability insurance |
| Garagekeepers coverage insures against | damage to autos of others that arein the car, custody, or control of the insured. |
| The insured has a 1 million personal umbrella policy with a retention limit of 1,000. the insured suffers a 15,000 loss that is excluded by the underlying policy, but not the umbrella. How much of this loss would be paid under the umbrella | 14,000 |
| would a mannequin tipping over and injuring a customer, would this be covered on a commercial general liability policy? | yes |
| in most states, workers compensation laws are | compulsory |
| what is the difference between the loss sustained and discovery versions of the commercial crime coverage forms. | coverage trigger |
| Would an accident with a driver who carries the minimum liability limits required by law but whose insurance is not adequate to cover the damages covered under the uninsured motorists coverage of the personal auto policy? | NO not covered they would have to pay the difference between the insureds actual damages for bodily injury and the amount of liability insurance carried by the driver who was at fault |
| an insurance policy has a 25,000 per occurrence limit. if the insured has 5,000 covered loss during the policy period,how much coverage is available for other covered losses that occur during the remainder of the policy period | 25,000 |
| The principle that states that an insured should be restored to approximately the same financial position after a loss as before is known as | indemnity |
| The purpose of a binder is to | provide temporary protection for the insured between the time the application is made and the policy is issued or the binder expires |
| the insured has a personal auto policy with all cars insured by one company. he sells one of the cars and buys a new one to replace it. must the insured take any action for the liability portion of his current policy to apply to the replacement vehicle? | No, the insured does not have to do anything; liability coverage for a replacement vehicle is automatic |
| crime insurance that is written on a loss sustained form covers losses discovered either during the policy period or | up to one year after the policy expires |
| would Will falling asleep at the wheel of his car and striking and inuring a pedestrian be covered under the personal auto policies liability coverage | yes |
| the physical damage section of the personal auto policy excludes | mechanical breakdown |
| trailer interchange coverage is a part of | the truckers coverage form |
| is equal risk for all parties one of the required elements of a legal contract | no |
| coverage for sums an employer becomes legally obligated to pay under common law as a result of a work related injury to an employee is provided by | part two employers liability section of the workers compensation policy |
| nicole has a personal auto policy with limits of 10/20/10 for liability coverage. she causes an accident that results in 12,000 bodily injury damages to the other driver and 5,000 in property damage to the other drivers car. How much would nicoles policy | 15,000 for both the BI and PD losses |
| A company that frequently rents autos and trucks for use in the business should include which symbol in the business auto policy declarations | 8 |
Created by:
beaudroke