Chapters 1-3

Question 1

The termination of an insurance policy at the expiration of its term is known as:

Answer 1

Nonrenewal

Question 2

All of the following statements regarding property insurance are correct, except:

The insurer may cancel a policy, after providing proper notice

A binder is a temporary proof of insurance

The owner of clothing left in the care of a dry cleaner is called a bailee

A property has neither occupants nor personal property is deemed vacant

Answer 2

The owner of clothing left in the care of a dry cleaner is called a bailee

Question 3

True or False: The Declarations part of a property insurance policy describes perils?

Answer 3

False

Question 4

Actual Cash Value is best defined as…?

Answer 4

Today’s current price, minus depreciation

Question 5

The part of an insurance policy that states where the risk is located is in the

Answer 5

Declarations

Question 6

The provision that establishes the method by which coverage will be applied if other insurance applies to the loss, is

Answer 6

Pro Rata Liability

Question 7

Driving while under the influence of alcohol is an example of Assumption of Risk.

Answer 7

False, Driving while Intoxicated is a Pure Risk

Question 8

What relationships would qualify as vicarious liability?

Answer 8

Employer and employee

Question 9

Liability policy per person Bodily Injury $25,000, per occurrence $50,000. If 3 injured persons claim $20,000 each, total paid is:

Answer 9

$50,000 - because though the policy has a per person BI limit of $25K, paying out all three at $20K would be $10K over the liability coverage limit total of $50K

Question 10

True or False: The single limit is the most the policy will pay for all losses in the policy period

Answer 10

False - The Aggregate Limit is the most the policy will pay for all losses in the policy period.

Question 11

Which of the following prevents recovery for injuries caused by a negligent party if the claimant was also negligent?

Absolute liability

Comparative negligence

Contributory negligence

Gross negligence

Answer 11

Contributory negligence

Question 12

Personal Injury includes all of the following, except:

False Arrest

Broken Arm

Copyright Infringement

Slander

Answer 12

Broken Arm - personal injury has nothing to do with physical harm.

Question 13

Liability coverage is designed to:

Permit the insured to countersue the insurer for losses not covered

Protect an insured from being sued by an injured party

Protect insured from bodily injuries & physical damage they are legally responsible for

Cover injuries and damages caused by the insured’s intentional and unintentional

Answer 13

Protect insured from BI & PD they are legally responsible for

Question 14

The person specifically designated in the policy as the person with whom the contract of insurance has been made is the

Answer 14

Named Insured

Question 15

A primary liability policy is one that

Answer 15

…pays first with respect to other policies

Question 16

Loss of income suffered by a storeowner after his/her store is destroyed in a fire is considered a(n):

Delayed Loss

Indirect Loss

Secondary Loss

Provisional Loss

Answer 16

Indirect Loss