Basics of Casualty Insurance Quiz Flashcards
1
Q
- An aggregate limit is the most a company will pay for
A. any one person or item of property
B. any one event
C. over the policy period
D. an event in the lifetime of the contract
A
- C. An aggregate limit is a limit that applies to all losses occurring within any one policy period. An aggregate limit is not restored after a payment of a loss, but is restored at the policy renewal.
2
Q
2. Failure to use care that is required to protect another person or property from harm is A. negligence B. tort C. assumption of risk D. moral hazard
A
- A. Negligence is the lack of reasonable care that is required to protect others from the unreasonable chance of harm.
3
Q
3. Liability that is imposed as a matter of law without any regards to negligence is A. vicarious liability B. absolute liability C. imputed liability D. prejudgment liability
A
- B. Absolute liability, also known as strict liability, is imposed by law on those participating in certain hazardous activities or occupations.
4
Q
4. Ray’s auto policy has a $50,000 bodily injury limit and a $25,000 property damage limit. This is an example of A. a split limit policy B. a single limit policy C. a per accident policy D. a preoccurrence policy
A
- A. A split limit policy has separate limits for bodily injury and property damage.
5
Q
- Lee sues Matthew for injuries that she sustained in an automobile accident. During the trial, it is determined that Lee’s negligence contributed to 25% of the loss. Under comparative negligence laws,
A. Lee cannot recover any damages from
Matthew
B. Lee’s award will be reduced by 75% of the loss
C. Lee can recover the full amount of the loss from Matthew
D. Lee’s award will be reduced by 25% of the loss
A
- D. Lee will have to pay for 25% of his injury because he was determined to be 25% at fault.
6
Q
- Which of the following would NOT be included as a supplementary payment in a liability policy?
A. First aid costs
B. Premium for a bail
C. Investigation expenses
D. Judgment against the insured for bodily injury liability
A
- D. A judgment against the insured for bodily injury liability would be covered under the policy’s liability coverage.
7
Q
7. Morgan, who has a liability policy with ABC Insurance, is playing golf with his daughter and hits a drive through the bedroom window of a neighbor, Tom. In this example, the first party to the loss is A. Morgan B. ABC Insurance C. Tom D. the window
A
- A. The first party is the insured, the second party is the insurance company, and the third party is the person or business who suffered the damage.
8
Q
8. A liability insurance policy pays A. the first party B. the second party C. the third party D. the insured
A
- C. A liability policy always pays the third party.
9
Q
9. If the courts feel that an individual acted willfully in causing an injured party’s damages, it may award A. punitive damages to the injured party B. punitive damages to the defendant C. general damages to injured party D. compensatory damages to the defendant
A
- A. Punitive damages are intended to punish the defendant and make an example out of him to discourage others from behaving in the same way. Punitive damages are also known as exemplary damages.
10
Q
- Which of the following is NOT one of the duties after a loss in a liability policy?
A. Notify the insurance company in writing of
the loss.
B. Notify the third party’s insurance company of the loss.
C. Forward all demands, notices, or summonses about the case.
D. Be of assistance as needed during the case.
A
- B. The insured is not required to have any contact with the third party’s insurance company.
