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20-44 Licensing > Chapters 1-4 Review > Flashcards

Chapters 1-4 Review Flashcards

1
Q

What loss valuation would you recommend to someone that wants protection for an expensive painting?

A

Agreed Value

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2
Q

What gives immediate temporary insurance?

A

Binder

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3
Q

The rate is too low for the risk

A

Adverse Selection

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4
Q

Which of the following describes the concept of risk?

Cause of loss
Amount of the loss
Uncertainty of loss
Increase in chance of a loss

A

Uncertainty of loss

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5
Q

The 4 elements that prove negligence

A

Duty to Act
Breach of Duty
Damages
Proximate Cause

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6
Q

What are the 4 parts of the policy?

A

Declarations
Insuring Agreement
Conditions
Exclusions

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7
Q

What coverage pays when the Insured damages someone’s reputation?

A

Personal Injury

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8
Q

What valuation pays the full cost of replacing a home even if it exceeds the policy limit?

A

Guaranteed Replacement Cost

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9
Q

AKA Indirect Loss

A

Consequential Loss

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10
Q

The characteristic where an insurer must stick to the language in a contract and any ambiguity is found in favor of the policyholder

A

Contract of Adhesion

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11
Q

The formula for Actual Cash Value

A

Replacement Cost
Minus (or less)
Depreciation

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12
Q

Where in a named peril policy would the Insured read the perils that will be covered?

A

Insuring Agreement

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13
Q

Time frame credit data is used for underwriting for any adverse action

A

7 years

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14
Q

A loss that is sudden and unexpected or an unforeseen event

A

Accident

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15
Q

Who can cancel the policy at any time for any reason?

A

Named Insured

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16
Q

A customer’s response to the best of their knowledge

A

Representation

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17
Q

The 1st peril in an unbroken chain of events

A

Proximate Cause

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18
Q

Which type of damages does NOT indemnify the injured party?

A

Punitive Damages

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19
Q

Withholding/hiding information

A

Concealment

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20
Q

A lie or incorrect response

A

Misrepresentation

21
Q

The pizzeria tells their delivery drivers if they have an accident while making a delivery, the pizzeria will not be responsible. What will make them responsible anyway?

A

Vicarious Liability

22
Q

What clause describes an insurer’s right to sue an at-fault party after reimbursing their own insured?

A

Subrogation

23
Q

Absolute or guaranteed truth

A

Warranty

24
Q

How will the unearned premium be returned if the policy is cancelled by the policyholder?

A

Short Rate

25
Q

The 3 categories of exclusions

A

Predictable
Catastrophic
Covered by Another Policy

26
Q

What is the MOST important piece of underwriting?

A

Policy Application

27
Q

Where in the contract would the Named Insured be able to read their deductibles?

A

Declarations

28
Q

A new homeowner fails to install a security system on their expensive home. Which hazard would this be considered?

A

Morale Hazard

29
Q

What is it called when an insurer voluntarily gives up a known right in the contract?

A

Waiver

30
Q

Where in the policy would the insured read the rules, duties, and clauses?

A

Conditions

31
Q

How will the unearned premium be returned if the policy is cancelled by the insurance company?

A

Pro-Rata

32
Q

Unequal transfer of value

A

Aleatory

33
Q

A policy should cover what a reasonable Policyholder would expect it to cover

A

Doctrine of Reasonable Expectation

34
Q

In which part of the policy would the Insured find the Insurance Company’s promise to pay?

A

Insuring Agreement

35
Q

Trying to prevent someone from exercising a known right based on their previous actions is called

A

Estoppel

36
Q

What is the consideration of the Policyholder?

A

Truthful statements and paying the premium

37
Q

Legal wrongs between individuals

A

Tort Law

38
Q

Selecting, classifying, pricing and insuring a risk

A

Underwriting

39
Q

What are the consequences of a material misrepresentation?

A

The policy can be voided

40
Q

The 4 defenses against negligence

A

Contributory Fault
Intervening Cause
Statue of Limitations
Assumption of Risk

41
Q

Which part of the policy contains the Insurance Companies consideration?

A

Insuring Agreement

42
Q

A one sided contract written by an insurer where they are making a promise

A

Unilateral

43
Q

The failure to do what a reasonable and prudent person would do – being imprudent

A

Negligence

44
Q

Paying the value of the lost or damaged property, repairing the property, or taking the property at agreed value are examples of this

A

Claims Settlement Options

45
Q

A building is covered by two policies. Policy A covers $200,000 and Policy B covers $100,000. Under pro-rata, what would each company pay towards a $45,000 loss?

A

Co A 2/3 $30,000
Co B 1/3 $15,000

46
Q

All of these will appear on the Declarations Page, EXCEPT?
Policyholder
Effective Dates
Policyholder’s date of birth
Deductible

A

Date of Birth

47
Q

What is the pro-rata formula?

A

(Limit of Policy A/ Total Limit of All Policies ) x Loss

48
Q

What is the coinsurance formula?

A

(Limit of Insurance/80% of Property Value) x loss

20-44 Licensing (8 decks)

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