| Question | Answer |
| What is proximate cause of loss? | A direct cause of loss |
| What type of handling risk does a deductible represent? | Form of risk retention |
| Finish this sentence:
The higher the deductible.... the ______ the premium | Lower
And opposite is true:
The lower the deductible, the higher the premium |
| All risk properties are also known as what? | Open peril policies |
| What must you read in order to see what is covered for an open-peril policy? | The exclusions |
| Liability without negligence is also known as: | Strict or absolute liability |
| What is the principle of comparative negligence? | Benefits to pay to injured are reduced according to their own (liable person or responsible person) degree of negligence which parents injured collecting damages for their OWN negligence |
| What does CONTRIBUTORY NEGLIGENCE state? | Injured party cannot recover or collect at all if they are partly at fault |
| What is the purpose of subrogation? | To prevent from insured from collecting TWICE |
| Binder of coverage may be presented in what 2 ways? | Oral or writing |
| What four parts make a policy? | D-I-C-E
D - declarations
I - insuring agreement
C - conditions
E - exclusions |
| What does the declarations state? | Lists the names insured, policy limits, premium and policy period |
| Where can the limits of liability be found in a policy? | Declarations |
| What does the insuring agreement describe? | Coverages provides and lists the covered perils |
| What does the conditions state? | Obligations of both parties (the insured and insurer) |
| What does the exclusions state? | The perils that are not covered |
| Why do exclusions exist? | To clarify coverage |
| What is paid in addition to liability limits?
AND where can this be found (in what section of Policy)? | Supplementary payments
And it is found in the liability section |
| What does an endorsement do? | CHANGES term of policy NOT policy conditons |
| What defines policy period? | The time the policy is in effect |
| What is assignment? | When insured transfers rights of ownership to another party |
| What are appraisals? And what is it used for in insurance? | The estimation of value
Used on property policies to determine amount to pay |
| What is arbitration? | Used on liability policies to determine if coverage applies |
| What does it mean to go to arbitration? | Insured and insurer will go to arbitration if there is a disagreement that the liability policy does it does not provide coverage |
| In arbitration, how many arbitrators are there? | 3 |
| What section in the policy can you find cancellation provisions? | Conditions section |
| What must the insured do if they have a claim? | Tell their insurer |
| The maximum in amount an insurer will pay is stated where? | In the limits of liability |
| What is the purpose of coin insurance ? | To make sure the client carries adequate limits |
| What is the pro rate liability clause? | Property policy allows two or more policies insuring the same property to pay claims proportionately |
| What does pro rata mean? | PROPORTIONATE (does not mean equal) |
| What is the liberalization clause? | Permits insurer to increase coverage immediately at no charge |
| What can insurers do to offset the claim expense? | Sell the salvage |
| What does vacancy mean? | You have moved out of your home and taken your furniture with you |
| What does unoccupied mean? | You are I an extended vacation but your furniture is still in your home and you will return |
| What four things need to exist for negligent liability? | Legacy duty owed, breach of legal duty, proximate cause, damages |
| If a person has wild animals or uses explosives, what type of liability would they have? | Absolute |
| Where is the policy period stated? | Declarations page |
| Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss or defense expenses? | Additional coverage |
| Which of the following is defined as the cost to replace damaged property with less expensive and ore modern construction or equipment? | Functional replacement cost |
| Insurable interest in a Property must be proven when... | At the time of loss |
| With regard to fire insurance premium, structures with which if the following type of construction would most likely have the most favorable remount rate for the peril of fire? | Fire resistive |
| What is the purpose of the coinsurance clause found i. Property insurance policies? | Encourage the insured to insure the property closer to its full value - the insurer agreed to give the insured a reduced rate per hundred on the insurance and pay partial losses in full |
| What is provisions? | Refers to the section or clauses of an insurance policy that communicate the policy’s benefits, conditions, etc. |
| Which type of valuation works best for property whose value does not fluctuate much? | Agreed value because when a loss occurs, the policy pays the agreed value as specified on the policy schedule regardless of insured items appreciation or depreciation |
| Persons covered under an insurance policy, whether named or not are known as: | insureds |
| Which of the following policy provisions would automatically broaden coverage under a policy without requiring additional premium? | Liberalization |
| Property condition that precludes the insured from simply turning over damaged property to the insurer and claiming a total loss is called | Abandonment |
| What is the formula for a loss ratio? | Incurred losses + loss adjusting expenses / earned premium |
| To comply with coinsurance, what percentage does it need? | 80% |
| Which of the following is a mandatory part of an insurance policy that varies with each individual policy? (Options is DICE) | Declarations |
| An insurers. Business is damaged because of a fire and he is forced to close the business temporarily for repairs. As a result the insured lost income. What type of loss it this? | Consequential loss (indirect loss) is a second financial loss caused by coveted direct loss |
| In property and casualty what is the amount of loss the an insured must cover out of pocket? | Deductible |
| In liability insurance what is the amount the insured must cover out of pocket? | Retention |
| The policy that pays first in the event of a covered loss is known as... | Primary policy |
| Which coverages in dwelling and homeowners policies is for indirect loss? | Loss of use |
| The part of a policy that clarifies terms in the policy is the: | Definitions |
| What is the transfer of legal right or interest in an insurance policy? | Assignment |
| What factors determine actual cash value: | Replacement cost, age of property and type and quality of property |
| Termination of in-force insurance policy prior to expiration date shown in policy is known as: | Cancellation |
