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Georgia Property & Casualty Course > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

The rules of conduct between the Insurer and Insured are set forth in which section of the policy?

Select one:

a. Declarations
b. Insuring Agreement
c. Exclusions
d. Conditions

A

The correct answer is: Conditions

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2
Q

Which insurance policy section contains the Insured’s duties in the event of a loss?

Select one:

a. Insuring Agreements
b. Declaration
c. Exclusions
d. Conditions

A

The correct answer is: Conditions

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3
Q

Which section of the policy contains the precise description of covered perils?

Select one:

a. Insuring Agreements
b. Conditions
c. Exclusions
d. Declaration

A

Although the dec sheet may have a “check the box” for basic or broad, the description (list) of covered perils will be found in the Insuring Agreement.

The correct answer is: Insuring Agreements

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4
Q

Al fill’s out an application for insurance on his home and gives it to the Insurance company. This is considered:

Select one:

a. a legal purpose
b. an offer
c. an invitation
d. an acceptance

A

The offer originates when you fill out an application for coverage. This differs a little from the Life Health content/exam so be sure to know it this way for the PC exam.

The correct answer is: an offer

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5
Q

Which section of the policy states the reasons for which the Insurer will pay claims?

Select one:

a. Exclusions
b. Declaration
c. Conditions
d. Insuring Agreements

A

Again, not a “nice” question. The “reasons for which the Insurer will pay claims” are the perils covered. The covered perils are listed in the Insuring Agreement (at least that is true for the Basic and Broad Form coverages). For a Special Form policy, we would look in the Exclusions section.

The correct answer is: Insuring Agreements

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6
Q

Which section of the policy determines the coverage?

Select one:

a. Conditions
b. Insuring Agreements
c. Exclusions
d. Declaration

A

The correct answer is: Insuring Agreements

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7
Q

Which section of the policy specifies the Insured’s responsibilities?

Select one:

a. Conditions
b. Declaration
c. Exclusions
d. Insuring Agreements

A

The correct answer is: Conditions

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8
Q

Which section of the policy specifies which stores owned by an Insured are covered?

Select one:

a. Conditions
b. Insuring Agreements
c. Declaration
d. Exclusions

A

The dec sheet is the “fill-in-the-blanks” section. That section describes which property is covered.

The correct answer is: Declaration

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9
Q

The Insurer decides to nonrenew Alice’s policy based on information contained in a consumer report. Is the Insurer required to tell Alice that the decision to nonrenew was based on information contained in the consumer report?

Select one:

a. Yes
b. No

A

The insurer must notify the consumer if there is a negative outcome based on information contained in a consumer report. A nonrenewal is a negative outcome.

The correct answer is: Yes

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10
Q

Which section of the policy contains the Insurer’s obligation to repair, replace or pay?

Select one:

a. Declaration
b. Insuring Agreements
c. Conditions
d. Exclusions

A

The Insuring Agreement contains the Insurer’s obligation which is the promise to pay covered claims.

The correct answer is: Insuring Agreements

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11
Q

Under the Federal Fair Credit Reporting Act, the Insured has NO right to:

Select one:

a. require that the insurer supply a copy of the report.
b. be told the name and address of the consumer reporting agency
c. demand that an incorrect report be corrected.
d. insert a corrective statement in the report.

A

The correct answer is: require that the insurer supply a copy of the report.

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12
Q

Representations given by the insured to the insurer are located in the?

Select one:

a. Conditions
b. Declarations
c. Insuring agreements
d. Application

A

The correct answer is: Application

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13
Q

Which section of the policy may require the Insured to use the claim payment to replace the destroyed property?

Select one:

a. Conditions
b. Exclusions
c. Insuring Agreements
d. Declaration

A

The correct answer is: Conditions

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14
Q

Insurance covers:

Select one:

a. physical hazards
b. morale hazards
c. moral hazards
d. All of the above

A

The correct answer is: All of the above

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15
Q

Concealment involves:

Select one:

a. unintentionally failing to disclose a material fact.
b. intentionally failing to disclose an immaterial fact.
c. unintentionally failing to disclose an immaterial fact.
d. intentionally failing to disclose a material fact.

A

The correct answer is: intentionally failing to disclose a material fact.

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16
Q

Which section of the policy contains the premium?

Select one:

a. Conditions
b. Exclusions
c. Insuring Agreements
d. Declaration

A

The correct answer is: Declaration

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17
Q

A binder is:

Select one:

a. a type of permanent insurance
b. a temporary substitute for a permanent policy
c. a claim settlement technique
d. a method of paying for insurance

A

The correct answer is: a temporary substitute for a permanent policy

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18
Q

Insurable losses will be listed in what section of the policy?

Select one:

a. Declaration
b. Insuring Agreements
c. Conditions
d. Exclusions

A

The correct answer is: Insuring Agreements

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19
Q

To collect on a loss, the Insured must comply with the procedures set forth in the?

Select one:

a. Insuring Agreements
b. Declaration
c. Conditions
d. Exclusions

A

The correct answer is: Conditions

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20
Q

The applicant believes the statement to be true with a/an?

Select one:

a. warranty
b. misrepresentation
c. concealment
d. representation

A

The correct answer is: representation

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21
Q

Which section of the policy contains the Other Insurance provision?

Select one:

a. Conditions
b. Exclusions
c. Declaration
d. Insuring Agreements

A

The Conditions section of the policy is the biggest section. It contains most of the legal trivia. So, if you aren’t sure where to find something, there is a good chance that it is in the Conditions section. The “Other Insurance” provision is typical of the legal trivia in the Conditions section.

The correct answer is: Conditions

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22
Q

The conditions section of the policy contains:

Select one:

a. the insured’s obligations if a loss occurs
b. the insurer’s obligations if a loss occurs

A

The correct answer is: the insured’s obligations if a loss occurs

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23
Q

Which policy section should the Insured check to determine if a particular coverage is provided in a named peril policy?

Select one:

a. Insuring Agreements
b. Conditions
c. Exclusions
d. Declaration

A

The correct answer is: Insuring Agreements

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24
Q

Which section of a property policy requires the Insured to submit a sworn proof of loss form?

Select one:

a. Insuring Agreement
b. Exclusions
c. Conditions
d. Declarations

A

The correct answer is: Conditions

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25
Q

Which section of the policy contains the location of the risk (the insured property)?

Select one:

a. Declaration
b. Conditions
c. Exclusions
d. Insuring Agreements

A

The Dec page lists the property covered by describing the location of the risk insured.

The correct answer is: Declaration

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26
Q

An Insuring Agreement is:

Select one:

a. an exclusion
b. a promise to pay

A

The correct answer is: a promise to pay

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27
Q

Failure to file a Proof of Loss may result in:

Select one:

a. denial of the claim
b. policy cancellation

A

The correct answer is: denial of the claim

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28
Q

A binder is:

Select one:

a. a policy of insurance
b. confirmation of temporary insurance

A

The correct answer is: confirmation of temporary insurance

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29
Q

A written statement of fact guaranteed to be true is a/an?

Select one:

a. warranty
b. representation
c. concealment
d. misrepresentation

A

The correct answer is: warranty

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30
Q

The insured is entitled to:

Select one:

a. be told the name and address of the consumer reporting company.
b. receive a copy of the investigative report from the insurer.

A

The correct answer is: be told the name and address of the consumer reporting company.

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31
Q

The purpose of the Fair Credit Reporting Act is to?

Select one:

a. provide fair and accurate consumer credit reporting.
b. make credit available to all persons regardless of credit history.

A

The correct answer is: provide fair and accurate consumer credit reporting.

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32
Q

Which section of the policy contains the Insured’s right to bring legal action against the Insurer?

Select one:

a. Declaration
b. Exclusions
c. Insuring Agreements
d. Conditions

A

The correct answer is: Conditions

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33
Q

Before the policy is issued, the insurance agent may provide a written document to prove that insurance is already in effect. This is:

Select one:

a. a binder
b. an endorsement

A

The correct answer is: a binder

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34
Q

Concealment is:

Select one:

a. intentional nondisclosure of material facts
b. misstating material facts

A

The correct answer is: intentional nondisclosure of material facts

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35
Q

A proof of loss form:

Select one:

a. assists the insurer in settling a loss covered by the policy
b. which contains a false statement will automatically void coverage
c. settles disputes regarding whether losses are covered

A

The correct answer is: assists the insurer in settling a loss covered by the policy

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36
Q

An application says no fire wood will be stored on the premises. If a later fire is caused by fire wood stored on the premises, the insurer may refuse coverage if the insured:

Select one:

a. misrepresented material facts.
b. concealed immaterial facts.
c. unintentionally made a misstatement.
d. misrepresented immaterial facts.

A

The correct answer is: misrepresented material facts.

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37
Q

The creation of a contract requires each of these EXCEPT:

Select one:

a. consideration
b. legal purpose
c. notarization
d. competent parties

A

The correct answer is: notarization

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38
Q

Which section of the policy obligates the Insurer to indemnify the Insured?

Select one:

a. Declaration
b. Exclusions
c. Conditions
d. Insuring Agreements

A

The Insuring Agreement contains the Insurer’s promise to pay, which in turn, indemnifies (makes whole) the Insured.

The correct answer is: Insuring Agreements

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39
Q

Which federal law encourages the states to adopt uniform licensing standards?

Select one:

a. TRIA (Terrorism Risk Insurance Act)
b. Federal Fair Credit Reporting Act
c. Graham-Leach-Bliley Act
d. Equal Credit Opportunity Act

A

The correct answer is: Graham-Leach-Bliley Act

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40
Q

The Proof of Loss must contain each of these EXCEPT:

Select one:

a. a sworn statement.
b. the cause of the loss.
c. the original sales receipt.
d. any replacement sales receipt if the item has been replaced.

A

If the fire destroys the dining room set my grandmother purchased in 1962, I don’t need to have her original sales receipt.

The correct answer is: the original sales receipt.

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41
Q

In addition to requiring that Insurers protect clients’ privacy rights, the Gramm-Leach-Bliley Act:

Select one:
a. prohibits the sale of property insurance in America.
b. encourages the states to adopt uniform licensing requirements to make it easier for Producers to sell insurance across state
lines.

A

Sorry, new point that I hadn’t put in the textbook. But you will remember this, right?

The correct answer is: encourages the states to adopt uniform licensing requirements to make it easier for Producers to sell insurance across
state lines.

42
Q

Which of the following is considered to be part of the policy?

Select one:

a. insured
b. premium
c. application
d. proof of loss form

A

The correct answer is: application

43
Q

When must the applicant be told that an investigative report will be obtained?

Select one:

a. prior to payment of the claim.
b. when the loss occurs.
c. when the premium is paid.
d. when the application is made.

A

The correct answer is: when the application is made.

44
Q

Willful failure to disclose material information is a/an?

Select one:

a. warranty
b. misrepresentation
c. representation
d. concealment

Intentional failure to disclose is concealment. An intentional lie is misrepresentation. Subtle difference that really doesn’t matter because both fall under the heading of fraud and permit an Insurer to void a policy.

The correct answer is: concealment

A
45
Q

Which section of the policy contains the covered perils?

Select one:

a. Exclusions
b. Insuring Agreements
c. Conditions
d. Declaration

A

The correct answer is: Insuring Agreements

46
Q

Which of the following is issued by the agent to notify the parties of the date coverage becomes effective?

Select one:

a. quotation
b. binder
c. presumption of proposition
d. condition

A

The binder is issued by the agent, not by the company. The binder will also state the date the coverage becomes effective and thus give notice to both the Insured and the Insurer that coverage is in effect.

The correct answer is: binder

47
Q

Contracts require each of the following EXCEPT:

Select one:

a. notarization
b. legal purpose
c. competent parties
d. consideration

A

The correct answer is: notarization

48
Q

A sworn statement containing information regarding the claim is:

Select one:

a. proof of loss
b. assignment

A

The correct answer is: proof of loss

49
Q

The primary source of insurability information is the:

Select one:

a. state government
b. federal government
c. insurer’s physical inspection of the property to be insured
d. application

A

The correct answer is: application

50
Q

Which section of the policy contains the perils NOT covered?

Select one:

a. Conditions
b. Insuring Agreements
c. Declaration
d. Exclusions

A

The correct answer is: Exclusions

51
Q

Which section of the policy contains the insured’s time limits for bringing suit against the Insurer?

Select one:

a. Exclusions
b. Conditions
c. Insuring Agreements
d. Declaration

A

The correct answer is: Conditions

52
Q

Exclusions are designed to do each of the following EXCEPT:

Select one:

a. reduce moral hazards
b. eliminate catastrophic perils
c. indemnify the Insured
d. reduce physical hazards

A

The correct answer is: indemnify the Insured

53
Q

Which section of the policy contains the Insured’s obligation to give notice of a loss?

Select one:

a. Declaration
b. Exclusions
c. Insuring Agreements
d. Conditions

A

The correct answer is: Conditions

54
Q

Which section of the policy requires the Insurer to provide coverage?

Select one:

a. Exclusions
b. Conditions
c. Declarations
d. Insuring Agreements

A

This is the Insurer’s promise to pay the claim, which is part of the Insuring Agreements.

The correct answer is: Insuring Agreements

55
Q

The binder is actually issued by the:

Select one:

a. the agent
b. the Insurer

A

The correct answer is: the agent

56
Q

Which section of the policy contains the policy limits?

Select one:

a. Declaration
b. Exclusions
c. Insuring Agreements
d. Conditions

A

The correct answer is: Declaration

57
Q

Which section of the policy contains the company’s promise of protection?

Select one:

a. Declaration
b. Conditions
c. Exclusions
d. Insuring Agreements

A

The correct answer is: Insuring Agreements

58
Q

The Insured’s promise to maintain a fire sprinkler system is a?

Select one:

a. representation
b. misrepresentation
c. concealment
d. warranty

A

The correct answer is: warranty

59
Q

An applicant intentionally withholds material facts in an application. This is a?

Select one:

a. concealment
b. representation
c. warranty
d. misrepresentation

A

The correct answer is: concealment

60
Q

The Fair Credit Reporting Act requires the insurer to:

Select one:

a. refrain from using the investigative report as part of its decision making process.
b. inform the applicant that an investigative report will be made.

A

The correct answer is: inform the applicant that an investigative report will be made.

61
Q

A binder:

Select one:

a. provides temporary coverage.
b. must be in writing.
c. requires issuance of a permanent policy.
d. requires prior payment of a premium.

A

The correct answer is: provides temporary coverage.

62
Q

Evidence of temporary coverage is a:

Select one:

a. binder
b. peril

A

The correct answer is: binder

63
Q

Which section of the policy limits the scope of coverage?
Select one:

a. Declaration
b. Exclusions
c. Conditions
d. Insuring Agreements

A

The correct answer is: Exclusions

64
Q

In situations involving misrepresentation, the insurer may:

Select one:

a. charge an extra premium.
b. cancel the policy.

The correct answer is: cancel the policy.

A
65
Q

Which section of the policy contains the Insurer’s promise to pay?

Select one:

a. Conditions
b. Insuring Agreements
c. Exclusions
d. Declaration

A

The correct answer is: Insuring Agreements

66
Q

The Proof of Loss includes each of the following except:

Select one:

a. lienholder identification.
b. a sworn statement regarding other insurance.
c. the names of all persons with an insurable interest.
d. the policy’s limit of liability.

A

The correct answer is: the policy’s limit of liability.

67
Q

Which document specifies the probable cause of a loss and estimates the loss?

Select one:

a. endorsement
b. proof of loss

A

The correct answer is: proof of loss

68
Q

An applicant was denied insurance based on a consumer report. The applicant may:

Select one:

a. obtain a copy of the report through a request to the Insurer.
b. demand that the Insurer correct any error in the consumer report.
c. examine the report after providing the Insurer with verification of identification.
d. receive the name and address of the reporting agency from the Insurer.

A

The correct answer is: receive the name and address of the reporting agency from the Insurer.

69
Q

Which section of the policy contains the cancellation provisions?

Select one:

a. Conditions
b. Declaration
c. Insuring Agreements
d. Exclusions

A

The correct answer is: Conditions

70
Q

TRIA applies to which of the following?

Select one:

a. Acts of terrorism
b. Acts of war
c. Both A and B
d. None of the above

A

TRIA is the Terrorism Risk Insurance Act, which applies to terrorism, not war.

The correct answer is: Acts of terrorism

71
Q

The Proof of Loss form:

Select one:

a. assists in determining the amount of the loss covered by the policy.
b. settles disputes about the covered losses.

A

The correct answer is: assists in determining the amount of the loss covered by the policy.

72
Q

Prior to issuing the policy, the agent may provide evidence of temporary insurance. This is a:

Select one:

a. binder
b. endorsement

A

The correct answer is: binder

73
Q

A statement in the proof of loss form is presumed to be a?

Select one:

a. misrepresentation
b. representation
c. warranty
d. concealment

A

The correct answer is: representation

74
Q

The best source of moral character information is the:

Select one:

a. investigative report
b. application

A

The correct answer is: investigative report

75
Q
  1. A promise by the insured that certain future conditions will exist is a?

Select one:

a. representation
b. warranty
c. misrepresentation
d. concealment

A

The correct answer is: warranty

76
Q

The Fair Credit Reporting Act:

Select one:

a. requires insurers to provide applicants with copies of all investigative reports.
b. allows an insurer to obtain consumer investigative reports without notifying the consumers.
c. allows consumers to insert corrective statements in their consumer reports.
d. prohibits insurers from obtaining credit reports without consent of the consumer.

A

The correct answer is: allows consumers to insert corrective statements in their consumer reports.

77
Q

To determine the applicant’s financial standing, an Insurer may use a:

Select one:

a. proof of loss form.
b. credit report.

A

The correct answer is: credit report.

78
Q

A binder becomes effective when:

Select one:

a. the insured delivers the premium payment.
b. made by the agent.

A

The correct answer is: made by the agent.

79
Q

Which section of the policy contains coverages eliminated?

Select one:

a. Conditions
b. Exclusions
c. Insuring Agreements
d. Declaration

A

The correct answer is: Exclusions

80
Q

The Insured’s sworn statement made to the Insurer regarding the time and cause of the loss is known as:

Select one:

a. certification
b. proof of loss

A

The correct answer is: proof of loss

81
Q

Even though he owns several boats, the applicant states that he owns no boats. This is an example of:

Select one:

a. a warranty
b. misrepresentation
c. subrogation
d. concealment

A

The correct answer is: misrepresentation

82
Q

The named Insured is identified in which section of the policy?

Select one:

a. Conditions
b. Exclusions
c. Insuring Agreements
d. Declaration

A

The correct answer is: Declaration

83
Q

The insured’s promise to maintain specified anti-theft devices is a?

Select one:

a. representation
b. warranty
c. misrepresentation
d. concealment

A

Promises regarding the future condition of the premises, such as the promise to install a smoke, fire, burglar, or fire sprinkler system are considered to be warranties. Warranties are guaranteed to be absolutely true and may void the policy if breached.

The correct answer is: warranty

84
Q

Which federal law requires the insurer to notify the Insured in advance of its intent to obtain an investigative consumer report?

Select one:

a. Insurance Notice Act
b. Equal Credit Opportunity Act
c. Fair Credit Reporting Act
d. Truth in Lending Act

A

The correct answer is: Fair Credit Reporting Act

85
Q

Which section of the policy contains the Insured’s responsibilities?

Select one:

a. Conditions
b. Declarations
c. Insuring Agreements
d. Exclusions

A

Generally speaking, the Conditions contain the Insured’s responsibilities (obligations, duties) and the Insuring Agreement contains the Insurer’s responsibilities.

The correct answer is: Conditions

86
Q

The insured’s promise to maintain a burglar alarm system is a?

Select one:

a. representation
b. concealment
c. warranty
d. misrepresentation

A

The issue of warranties won’t arise in Life, Health, or Casualty policies. This only comes up in Property policies. The Insured’s promise to improve the future condition of the premises by installing a smoke alarm, burglar alarm, or fire sprinkler system is a warranty. Warranties are guaranteed to be absolutely true and, if breached, may result in termination of the policy.

The correct answer is: warranty

87
Q

Which section of the policy contains the provisions permitting the Insurer to inspect the Insured’s premises?

Select one:

a. Insuring Agreements
b. Declaration
c. Conditions
d. Exclusions

A

The correct answer is: Conditions

88
Q

Which section of the policy contains the identity of the Insured and Insurer?

Select one:

a. Declaration
b. Insuring Agreements
c. Exclusions
d. Conditions

A

The correct answer is: Declaration

89
Q

Alice and her insurance agent fill out an application for an insurance policy for her new car. The agent then forwards the completed application to the Insurance company. Which of the following statements is CORRECT?

Select one:

a. Forwarding the completed application to the Insurance company automatically provides Alice with coverage, so there is no need to issue a binder.
b. The agent will need to issue a binder to provide Alice with temporary coverage

A

Forwarding the application does not provide temporary coverage. However, it is common for a Property or Casualty agent to issue a binder after the application is completed in order to provide temporary coverage.

The correct answer is: The agent will need to issue a binder to provide Alice with temporary coverage

90
Q

Consideration is evidenced by:

Select one:

a. endorsing a policy
b. paying a premium
c. filing a proof of loss form
d. issuing a policy

A

The correct answer is: paying a premium

91
Q

A policy provision that may void the policy if the provision is violated is a:

Select one:

a. binder
b. warranty

A

The correct answer is: warranty

92
Q

An insurance policy may be voided if a warranty has been:

Select one:

a. notarized.
b. made.
c. explained.
d. breached.

A

The correct answer is: breached.

93
Q

Binders must show each of these EXCEPT:

Select one:

a. list of covered items
b. the amount of the premium
c. name of insurer and insured
d. the date the binder becomes effective

A

The correct answer is: the amount of the premium

94
Q

The insured intentionally did not inform the insurer that the insured owned only 35% of the property. This is an example of:

Select one:

a. conditional coverage
b. error
c. misrepresentation
d. concealment

A

The correct answer is: concealment

95
Q

Concealment involves intentionally hiding:

Select one:

a. a material fact.
b. an immaterial fact.

A

The correct answer is: a material fact.

96
Q

The Terrorism Risk Insurance Act (TRIA) was adopted following:

Select one:

a. Hurricane Katrina
b. The World Trade Center destruction on 9/11/01

A

The correct answer is: The World Trade Center destruction on 9/11/01

97
Q

Which section of the policy describes the coverage?

Select one:

a. Exclusions
b. Conditions
c. Insuring agreements
d. Declaration

A

The correct answer is: Insuring agreements

98
Q

Which section of the policy contains the Insured’s duties in the event of a loss?

Select one:

a. Conditions
b. Declaration
c. Insuring Agreements
d. Exclusions

A

The Insured’s duties are in the Conditions. The Insurer’s duties (pay the claim) are in the Insuring Agreement.

The correct answer is: Conditions

99
Q

Binders:

Select one:

a. may be oral.
b. guarantee a permanent policy will be issued.

A

The correct answer is: may be oral.

100
Q

A warranty:

Select one:

a. Must be complied with strictly.
b. Is made by the insured rather than the insurer.
c. May be part of the contract.
d. All of the above.

A

The correct answer is: All of the above.

Georgia Property & Casualty Course (27 decks)

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