Exam two Flashcards
All of the following are essential elements of a contract, except:
A)
consideration
B)
legal purpose
C)
incompetent parties
D)
agreement (offer, and acceptance)
C) incompetent parties
What term describes the statement made by an individual at application?
A)
warranty
B)
concealment
C)
misrepresentation
D) representation
D) representation
An insurance contract feature that permits all ambiguous areas to be construed in favor of the insured is:
A) aleatory
B)
adhesion
C)
utmost good faith
D)
fraud
B) adhesion
All of the following are characteristics of insurance contracts, except:
A) aleatory
B)
personal contract
C)
adhesion
D)
bilateral contract
D) bilateral contract
The legal right of an insurance company to seek reimbursement from a negligent third party is:
A)
parole evidence rule
B)
warranty
C) subrogation
D) adhesion
C) subrogation
Which of the following is NOT a type of warranty?
A) affirmative warranty
B) continued or promissory warranty
C) implied warranty
D) guaranteed warranty
D) guaranteed warranty
Which term describes a failure to disclose a fact to the application for insurance?
A) representation
B) misrepresentation
C) concealment
D) aleatory
C) concealment
If a property is determined to be unoccupied at the time of loss:
A)
coverage will be voided
B) coverage will apply
C)
coverage will be denied
D)
coverage will be subject to a 15% penalty
B) coverage will apply
The principle of insurance that restores one to approximately the same condition that they enjoyed prior to their loss is:
A)
valued contracts
B)
subrogation
C)
retention
D)
indemnification
D) indemnification
To place insurance coverage into affect:
A)
the policy must always be issued by and insurer
B)
a policy must always be issued and a premium collected by the insurer
C) coverage may be verbally bound with no premium by an appointed insurance agent
D)
coverage may only be bound by insurance broker
C) coverage may be verbally bound with no premium by an appointed insurance agent
Under an insurance contract, both insured and insurer give up something of value which is called:
A)
reasonable expectations
B)
consideration
C)
subrogation
D) estoppel
B) consideration
How will a court of law interpret an insurance contract contains policy language that is ambiguous?
A) finding favor of the company since the insured should have read the policy
B) finding favor of the insured, since the insured had no duty to read the policy
C) find in favor of both insured and Company by apportioning each party’s fault at 50% of the total verdict amount
D) find in favor of the insured since the policy is a contract of adhesion
D) find in favor of the insured since the policy is a contract of adhesion
Which of the following is NOT a common type of Hazzard?
A) physical hazard
B) moral hazard
C) morale hazard
D) ethical hazard
D) ethical hazard
Of all the following would be considered a hazard EXCEPT?
A) trash and debris in the basement of a home
B) paint and related solvents stored in original container
C) broken steps in handrails
D) overloaded, electrical wiring
B) paint and related solvents stored in original container
Illegal gambling, or the illegal use of narcotics would be an example of:
A) physical hazard
B) moral hazard
C) morale hazard
D) psychology hazard
B) moral hazard
The perils covered in a policy may be described as:
A) something that increases the possibility of loss
B) the certainty of a loss
C) the cause of loss
D) the uncertainty of loss
C) the cause of loss
Which of the following definitions best describes Special (Open Peril) coverage?
A)
only perils listed in the policy are covered
B)
provides coverage for direct loss, unless specifically excluded
C) provides coverage for “all risks”
D)
none of the above
B) provides coverage for direct loss, unless specifically excluded
Which of the following definitions best describes specific (Named Peril) coverage?
A)
only perils listed in the policy are covered
B)
provides coverage for a direct physical loss, unless specifically excluded
C) provides coverage for “all risks”
D)
none of the above
A) only perils listed in the policy are covered
Which of the following definitions best describes a direct loss?
A)
consequential damage to a building
B)
actual physical damage to an insured risk
C)
any covered peril is a direct loss
D)
any unintentional act
B) actual physical damage to an insured risk
Which of the following would be an example of a direct loss?
A) loss of business income due to a covered peril
B) additional living expenses due to fire
C) fire to a house
D) extra expense incurred due to a covered peril
C) fire to a house
All of the following are direct losses, except?
A) windstorm to a house
B)
Lightning to an apartment building
C)
loss of rental income to the apartment
D)
vandalism to a building
C) loss of rental income to the apartment
Which of the following definitions best describes an indirect or consequential loss?
A) actual physical damage to an uninsured risk
B) the results or consequences of a direct loss
C) the name perils of the policy
D) the intentional damage to covered property
B) the results or consequences of a direct loss
Which of the following is not a common means of writing property insurance?
A) specific coverage
B) blanket coverage
C) scheduled coverage
D) manuscript coverage
D) manuscript coverage
Under a business owners policy, if the insured property is vacant beyond 60 consecutive days:
A)
claim is denied
B)
loss settlement is reduced by 15%
C)
loss settlement is reduced by 25%
D)
claim is paid in full
B) loss settlement is reduced by 15%
All of the following are characteristics of reporting forms, except:
A)
to report accurate values for insurance
B)
used when business has fluctuating inventories
C)
to provide excess insurance
D)
requires timely reporting
C) to provide excess insurance
All the following are true of timely, reporting requirements of reporting forms, except:
A)
a penalty may apply for failure of timely reporting
B)
if reports are not processed timely, the most recent report may be used
C)
reporting forms container, full reporting, (honestly) clause
D)
reporting requirements may be viewed by the insured
D) reporting requirements may be viewed by the insured
The primary purpose of the full reporting or honesty clause is to:
A)
promote proper values and proper coverage amounts
B)
provide excess coverage for inventories
C)
eliminate correspondence between the insured and Company
D)
all of the above
A) promote proper values and proper coverage amounts
All of the following are true, or insurable interest, except:
A)
it is the financial interest one has in property
B)
and property insurance it is required to exist at the time of loss
C)
in property insurance, it is required to exist at time of application
D)
it reduces the possibilities of the speculative wagering
C) in property insurance, it is required to exist at time of application
All of the following are methods to value property, All of the following are methods to value property, except EXCEPT:
A)
excluded value
B)
replacement value
C) actual cash value (ACV)
D)
market value
A) excluded value
Actual cash value (ACV) is:
A)
arbitration value
B)
replacement cost minus depreciation
C)
market value minus depreciation
D)
determined in a court of law
B) replacement cost minus depreciation
The valuation type that after a loss occurs will replace damaged property with like kind and quality at today’s cost is:
A)
market value
B) actual cash value (ACV)
C) replacement value
D) guaranteed value
C) replacement value
Which of the following are the primary components that make up the typical property casualty insurance policy?
A) Declarations, Insuring agreement, Conditions, and Expectations
B) Decorations, Implied agreement, Conditions, and Exclusions
C) Declarations, Insuring agreement, Conditions, and Exclusions
D) Definitions, Insuring agreement, Conditions, and Expectations
C) Declarations, Insuring agreement, Conditions, and Exclusions
Which of the following policies structure components describes insurance terms?
A) definitions
B) declarations
C) insuring agreement
D) exclusions
A) definitions
Which of the following policy structure components indicate the named insured, address, policy, and related specifics about the risk insured?
A)
endorsement
B)
decorations
C)
insuring agreement
D)
exclusions
B) decorations
Which of the following policy structure components specifically eliminate coverage?
A) definitions
B) declarations
C) insuring agreement
D) exclusions
D) exclusions
Which of the following policy components alters the individual policy declarations?
A) definitions
B)
conditions
C)
insuring agreement
D)
endorsements
D) endorsements
Which of the following policy structure components at fourth insured and ensures rights and duties?
A) conditions
B) decorations
C) insuring agreement
D) exclusions
A) conditions
Which of the following policy structural components provide coverages in addition to the covered perils of the policy?
A)
conditions
B)
decorations
C)
supplemental extensions
D)
definitions
C) supplemental extensions
Which of the following describes a deductible?
A) the amount paid for underinsured
B) the amount Wade, for compliance of the coinsured provisions
C) the first dollar cost absorbed by the insured, in the event of a covered loss
D) the amount absorbed by an insurer in a time of loss
C) the first dollar cost absorbed by the insured, in the event of a covered loss
All of the following are true of the coinsurance clause, except:
A)
penalizes the insured for not satisfying the coinsurance requirement
B)
usually requires insurance to 80% of properties ACV
C)
it offers the insured a reduced rate, if coinsurance is satisfied
D)
guarantees full payment, regardless of coinsurance requirements
D) guarantees full payment, regardless of coinsurance requirements
A primary purpose of the coinsurance requirement is to:
A)
make the insured a co-insurer
B)
promote adequate amounts of insurance coverage
C)
illuminate the necessity of determining the ACV
D) make the insured to self insurer
B) promote adequate amounts of insurance coverage
Which of the following describes the relationship to determine the loss settlement under a typical coinsurance clause?
A)
Insurance carried over insurance required time loss amount
B) Insurance required over insurance carrier time loss amount
C)
80% of insurance amount time loss
D)
replacement cost minus depreciation
A) Insurance carried over insurance required time loss amount
Determine the payment of the following situation with an 80% coinsurance clause: building value $100,000 - coverage amount $40,000 - loss amount $10,000
A) $10,000
B) $5,000
C) $40,000
D) $80,000
B) $5,000
Determine the payment of the following situation with an 80% insurance clause:
building value $100,000 coverage amount $60,000 loss amount $10,000
A)
$10,000
B)
$5000
C)
$7500
D)
$80,000
C) $7500
Determine the payment of the following situation with an 80% coinsurance clause building value $100,000, coverage amount $80,000, loss amount $90,000
A) $10,000
B) $5000
C) $40,000
D) $80,000
D) $80,000
Which of the following describes the greed value method of insuring property?
A)
a predetermined value is placed on the risk, and the coinsurance clause is waived
B)
Insurance carried over insurance required
Time loss amount
C)
provide special all risk type coverage, regardless of coinsurance clause
D)
Insurance required over insurance carried times loss amount
A) a predetermined value is placed on the risk, and the coinsurance clause is waived
Policies that cover the same property, but on a different coverage basis is:
A)
similar coverage
B)
concurrent coverage
C)
non-concurrent coverage
D)
Open peril coverage
C) non-concurrent coverage
Excess coverage would apply to a loss after:
A)
agreed value coverage
B)
primary coverage
C)
name peril coverage
D)
special form coverage
B) primary coverage
The Pro-Rata clause provides:
A)
proportional coverage to losses when two or more policies apply
B)
excess coverage to losses when two or more policies apply
C)
primary coverage to losses when two or more policies apply
D)
contribution by equal shares with two or more policies apply
A) proportional coverage to losses when two or more policies apply
PRO RATA CLAUSE – A clause in an insurance contract providing that losses will be paid in the proportion that the amount of the contract bears to the entire amount of insurance covering the loss.
The insured under a contract of insurance includes:
A)
only the named insured, as listed in the decorations
B)
anyone who may be covered by the insurance
C)
only the owners of the property insured
D)
anyone who advises the ensurer in writing
A) only the named insured, as listed in the decorations
All of the following are true concerning first name insured except:
A)
first name insured is the primary person responsible for contractual duties
B)
first name insured is responsible for paying insurance premiums
C)
first name insured is responsible for pursuing subrogation
D)
first name insured is responsible for canceling the policy
C) first name insured is responsible for pursuing subrogation
Which of the following losses would be covered if a property is vacant beyond 60 days:
A)
fire damage
B)
vandalism damage
C)
Glass breakage damage
D)
water damage from an accidental discharge
A) fire damage
Which of the following losses would not be covered if a property is vacant beyond 60 days:
A)
Lightning damage
B) damage by burglars
C)
Wind damage
D)
damage caused by an aircraft
B) damage by burglars
Which policy provision provides that in the event, the insured broadens coverage without an additional premium charge the Braaten coverage will apply to all insured immediately?
A) Lost table clause
B) no benefit to Bailee claus
C) liberalization clause
D) subrogation clause
C) liberalization clause
Under the Pennsylvania Insurance, guarantee association act, certain property policies are covered up to:
A)
$100,000
B)
$300,000
C)
$500,000
D)
policies limits
B) $300,000
