Casualty Terms And Concepts

Question 1

The principle of indemnity is designed to:
A. Restore the insured to the same position prior to the loss
B. Require old property to be replaced by new property
C. Require the insurer to pay the policy limit or value of the property, whichever is more
D. Require pro-rate sharing when more than 1 policy covers the same loss

Answer 1

Answer: A.

Question 2

Which is the definition of insurance?
A. Elimination of risk
B. Transfer of risk
C. Avoidance of risk
D. Retention of risk

Answer 2

Answer: B.

Question 3

Absolute or strict liability exists for all of the following situations EXCEPT:
A. Pharmaceutical drugs
B. Explosives
C. Fireworks
D. Wild animals

Answer 3

Answer: A.

Question 4

Actual cash value is defined as:
A. Replacement cost minus depreciation
B. Appraised value minus depreciation
C. Market value minus depreciation
D. Original cost plus appreciation

Answer 4

Answer: A.

Question 5

All of the following are true about negligence EXCEPT:
A. Assumption of the risk is a valid negligence defense
B. It is the failure to act as a reasonable and prudent person
C. You have a duty owed to others not to be negligent
D. The negligent act need not be the proximate cause of the injury

Answer 5

Answer: D.

Question 6

Wet leaves on the sidewalk are considered to be a:
A. Peril
B. Loss
C. Hazard
D. Risk

Answer 6

Answer: C.

Question 7

When a claimant states the truth to the best of his or her knowledge, it is called a:
A. Guarantee
B. Oath
C. Warranty
D. Representation

Answer 7

Answer: D.

Question 8

All of the following are true about casualty insurance binders of coverage EXCEPT:
A. Binders must contain all the provisions of the SFP
B. A mortgage company is required to accept the renewal of a binder
C. Binders are valid only for a specified period of time
D. Binders may be oral or in writing

Answer 8

Answer: B

Question 9

Liability without fault or negligence is defined as:
A. Contributory
B. Vicarious
C. Absolute
D. Conparative

Answer 9

Answer: C.

Question 10

Consumer reports may be ordered for all of the following purposes EXCEPT:
A. To help in underwriting a new application for insurance
B. To gather information regarding a pending lawsuit
C. To help in underwriting a new loan application
D. To help screen applications for employment

Answer 10

Answer: B.

Question 11

All of the following are considered to be hazards that property insurance underwriters are concerned about EXCEPT:
A. Fire
B. Gasoline
C. Oily rags
D. Dead tree

Answer 11

Answer: A

Question 12

All are true about insurance in general EXCEPT:
A. A large number of different risk exposures are combined
B. To be insurable, a loss must be calculable
C. A small ascertain able loss is exchanged for a large uncertain loss
D. The more people an insurer insures, the more losses they will have

Answer 12

Answer: A

Question 13

The federal Fair Credit Reporting Act requires all EXCEPT:
A. Post-notification to the applicant if adverse action will be taken based on the report
B. Pre-notification to the applicant that a consumer report will be ordered
C. That the insurer advise the applicant of the name of the consumer reporting agency
D. That the applicant bring legal action against the agency in order to change inaccurate data

Answer 13

Answer: D.