Chapter 7

Question 1

The property casualty insurance policy provisions that indicate who or what is covered, and where and when coverage applies, are found in the

Answer 1

Declarations

Question 2

To determine the extent of coverage a policy provides, pre-loss policy analysis almost exclusively relies on

Answer 2

Scenario Analysis

Question 3

The most common violations of the concept of utmost good faith in insurance policies involve buildup in insurance claims filed by insureds and/or

Answer 3

Fraud

Question 4

Company X sells earth-moving equipment and has a large inventory. The company’s risk management professional wants to make sure that the insurance is carefully designed and has coordinated provisions in the various forms to minimize the possibility of gaps and overlaps in coverage. The most appropriate policy for Company X is a

Answer 4

Modular Policy

Question 5

A policy issued by the reciprocal insurer specifies the attorney-in-fact’s authority to implement its powers on behalf of Edna and the other members of the exchange. Information regarding the powers of the attorney-in-fact is most likely to be found in Edna’s policy’s

Answer 5

Miscellaneous Provisions

Question 6

In certain circumstances, the insurer’s bylaws are incorporated into

Answer 6

an insurance policy.

Question 7

The other insurance provisions clause is used by insurers in most property and liability policies to

Answer 7

Limit overindemnification

Question 8

Auto insured Tom was surprised when he was invited to his mutual auto insurer’s election of its board of directors. Tom would most likely find information relating to this type of election, in his policy’s

Answer 8

Miscellaneous provisions.

Question 9

Having a theoretically infinite number of possible loss scenarios is one of the limitations of

Answer 9

Pre loss policy analysis

Question 10

modular policies are typical to commercial use

Answer 10

manuscript forms are for ultra unique cases

Question 11

declarations: unique information on the insured; list of forms included

Answer 11

outline who or what is covered and where and when coverage a pplies

Question 12

definitions: words with special meanings in olicy

Answer 12

may limit or expand coverage based on definitions of terms

Question 13

Insuring Agreements: promise to make payment

Answer 13

outline circumstances under which the insurer/carrier agrees to pay

Question 14

conditions: qualifications on the promise to make payment

Answer 14

outline steps insured needs to take to enforce policy

Question 15

exclusions: limitation son the promise to make payment

Answer 15

limit insurer’s/carrier’s payments based on excluded persons, places, things, or actions

Question 16

miscellaneous provisions: wide variety of provisions that may alter policly

Answer 16

deal with the relationship between the insured and the insurer or establish procedures for implementing the policy

Question 17

Exclusions have six purposes

Answer 17

1. eliminate coverage for un-insurable loss exposures
2. assist in managing moral and morale hazards
3. reduce likelihood of coverage duplications
4. eliminate coverages not needed by the typical insured
5. eliminate coverages requiring special treatment
6. assist in keeping premiums reasonable

Question 18

DICE Decision tree is used to

Answer 18

determine if policy covers loss