Law and Risk Management Practice Test

Question 1

Mae is considering becoming a legal tenant at Playa Estates. In clarifying liability concerns with her legal advisor, she discovered that unless otherwise agreed, _______________ is/are obliged to ensure that the use of her premises does not cause injury to others.

Answer 1

the tenant

Question 2

What are you engaged in when comparing insurance services capability proposals?

Answer 2

a conceptual competition that compares their loss exposure, risk management, and insurance needs analyses of your business, as well as their conceptual proposals

Question 3

In the third-party liability claim against Rough-House Sports Company, as the insured, which of the following is the duty of Rough-House Sports?

Answer 3

submit a proof-of-loss form

Question 4

Carella was tasked by her property manager to locate their written verification of the type, term, and amount of insurance they were carrying across the board. What type of document was she searching for?

Answer 4

a certificate of insurance

Question 5

The residents of Valley View Homes sued the nearby refinery for a recent exposure to toxic fumes based on an accidental release coming from its facility. The refinery turned to its _______________ insurance for protection.

Answer 5

pollution legal liability

Question 6

Mrs. Palovska, the seller, and Mr. Damas, the buyer, decide to amend their contract. Mr. Damas owes Delphi Lending, Inc., money for purchase of the property. The amendment of the original contract serves to:

Answer 6

address only the terms mentioned in the amendment.

Question 7

Able Accounting abandoned its leased office premises and ceased to pay rent because of continuous elevator breakdowns, lack of heat, and unlit hallways. Jones Leasing, the landlord, fortunately had a clause in the lease that enabled them to convert Able Accounting’s rent obligation into an obligation to pay damages. This type of lease clause is referred to as a:

Answer 7

survival clause.

Question 8

Edward is making coffee in his office for a prospective tenant. He turns to answer his cell phone and knocks over the coffee pot, severely scalding the prospective tenant and ruining her clothes. This is an example of which legal concept?

Answer 8

negligence

Question 9

McHale Construction estimated the payroll for each type of employee it had for the policy period of its insurance. The classification of insurance premium McHale elected to use is referred to as a(n):

Answer 9

deposit premium.

Question 10

The fact that you exercise control over the house you live in means that you have:

Answer 10

possession of the property.

Question 11

George knew this was a criminal prosecution because:

Answer 11

the defendant’s guilt had to be proven beyond a reasonable doubt.

Question 12

A key component in risk management is ensuring that the right entities are involved in the loss control process. Four parties that share responsibility in the loss control process are:

Answer 12

individual businesses, property management firms, insurance companies, and government.

Question 13

Which elements of a contract result in mutual assent, which is often referred to as “a meeting of the minds?”

Answer 13

offer and acceptance

Question 14

Mrs. Sanchez’s office was flooded and severely damaged due to a blockage in the building’s drainage system. She is claiming:

Answer 14

compensatory damages.

Question 15

Joseph, a property owner for the Hilton Building, found an antique clock that a former tenant had placed in the building basement two years earlier. He wants to keep it, as it is a very nice clock. Legally, what is Joseph’s obligation under common law practices?

Answer 15

view the clock as having been placed in his custody where it was found and return it to the original owner

Question 16

Veiled Properties selected an insurer that operates out of its home state of New York to be its provider. According to classifications of private insurers, this would define the insurer of Veiled Properties as a _______________ insurer.

Answer 16

domestic

Question 17

In a net lease, the tenant pays:

Answer 17

a fixed rent plus other costs, taxes, utilities, repair, maintenance, and insurance costs.

Question 18

When Gwen, property manager for the Alliance Building, expands the scope of her legal authority beyond what the principal explicitly gave to her as the agent, but in a manner that the principal by his conduct allows, she is exercising:

Answer 18

apparent authority.

Question 19

Which of the following is the least likely to be a reliable tool for identifying loss exposure?

Answer 19

advice from close family members and friends

Question 20

National Property Holdings provided a list of its insurable property, loss of income, and extra expense value for each insured location to allow the insurer to calculate a blanket insurance limit. This list was a(n):

Answer 20

statement of values.

Question 21

Your insurance agent has draft authority, meaning that she can:

Answer 21

make payments on small claims.

Question 22

Fred had a customer who slipped while shopping in his store. What type of loss exposure does this represent to Fred?

Answer 22

liability

Question 23

The state was awarded _______________ damages based on damages that were too speculative to calculate for contract breaches agreed to by the bridge construction company.

Answer 23

nominal

Question 24

Under CERCLA, which of the following cannot be held liable for the cost of cleaning up contaminated sites?

Answer 24

a tenant no longer in control of the premises for spills or releases that occur after lease termination

Question 25

Jose is reviewing a document containing a legal description of his property and notices that the description is done in the form of a survey that offers a sequence of compass directions and distances corresponding to the property’s boundaries. This type of legal property description is referred to as:

Answer 25

a metes and bounds description.

Question 26

Tri-Towers Complex has 23 owners. As a result, the recommendation to ownership for the most effective governance method focused on:

Answer 26

centralized management.

Question 27

Perfect Remediation, Inc., provides both professional services and the actual physical operations for pollution abatement projects. As a result, the company can combine the contractors’ pollution legal liability coverage on an occurrence basis and its professional liability coverage on a(n) _______________ basis.

Answer 27

completed operations

Question 28

Georgina’s 401(k) plan is a type of:

Answer 28

group thrift or savings plan.

Question 29

Being a bona fide purchaser of a property at fair market value means that:

Answer 29

you, as a buyer, have no reason to doubt that the seller has good title.

Question 30

Joe is a property manager at the Tariff Building in a major urban market. He is in the process of determining whether or not a real estate contract he is negotiating needs to be in writing. He recalls that a written contract is required for:

Answer 30

conveyance or sale of land or land interests.

Question 31

Henry is reviewing his company’s insurance policy and has just finished the section that lays out the general ground rules for the policy. This section of an insurance policy is referred to as the:

Answer 31

conditions

Question 32

The lawyer cautioned Jeffrey about naming additional insurees to his general liability policy primarily because adding them might increase premiums for the named insured and _______________.

Answer 32

dilute the available amount of liability coverage

Question 33

Despite warning signs, danger signs, and verbal information from the worksite foreman that the scaffolding was unsteady, the contractor climbed up on it anyway. The contractor slipped and fell, resulting in severe injuries. In a legal decision, he did not receive compensation for negligence. The full legal defense was:

Answer 33

assumption of risk.

Question 34

Coverage provided by its employer’s liability insurance protected Alpha Construction from:

Answer 34

suits brought against the company by relatives of an employee injured on the job.

Question 35

In a legal action for an intentional tort, Harvey was taken to court for using force to get back property that had been taken from him illegally. He had the right to the property and had previously demanded it be returned. His valid legal defense under common law was:

Answer 35

repossession of property.

Question 36

Trustworthy Tires stopped paying rent to the landlord who had defaulted on the mortgage and instead began paying the lender according to the lease’s:

Answer 36

attornment clause.

Question 37

Property Management, Inc., wants to be sure it has insurance to cover itself against accidents involving hit-and-run drivers. Which of the following types of insurance meets this need?

Answer 37

uninsured/underinsured motorist insurance

Question 38

In measuring and analyzing their loss exposure, as well as establishing a positive risk management focus, the building owners appropriately focused on the following key loss exposure areas as related to consequences for business operations.

Answer 38

frequency and severity

Question 39

As the IT manager, Harriett has always kept duplicate digital records at an offsite location distant from her property. This is an example of a(n):

Answer 39

separation of loss exposure.

Question 40

In his commercial general liability insurance policy, Mr. Sanchez’s business is listed as a named insured and designated as a partnership. Who can be covered by the policy besides Mr. Sanchez?

Answer 40

his members, his partners, and his partners’ spouses while working for the company

Question 41

Performance in contractual terms reflects which of the following?

Answer 41

doing the acts required in the manner stipulated and time and place required

Question 42

Harry is hoping to finalize the purchase of a new building in his market to enhance his company’s portfolio. As a buyer, prior to closing, which of the following does not reflect the purpose of the pre-purchase due diligence process?

Answer 42

determining if the asking price is reasonable and fair

Question 43

When reviewing the legalities of discharging an employee in her role as a property manager, Sara discovered that the relationship between employers and employees allows either party to change or end the terms of employment. From a legal perspective, this relationship is referred to as:

Answer 43

at-will employment.

Question 44

Randy is searching to identify all causes of loss that are covered in his insurance policy. So he is looking to locate a specific form referred to as:

Answer 44

Causes of Loss - Special Form.

Question 45

Joe’s landlord refused to provide adequate heat or hot water during the cold winter. For health reasons, Joe abandoned the apartment and was not obligated to pay rent. This was an example of _______________ as it pertained to his lease.

Answer 45

constructive eviction

Question 46

To cover damage or theft loss of construction equipment that is often moved from one location to another, Mr. O’Malley added _______________ insurance to his insurance policy.

Answer 46

equipment

Question 47

For commercial property owners and managers, what is the most likely cause of bodily injury claims?

Answer 47

a condition on the premises relating to safety, maintenance, upkeep, and general management

Question 48

Jennifer insured her $500,000 property under two policies, one for $300,000 and the second for $200,000. When she suffered $100,000 of property damage, each paid a portion that when combined, covered the total loss. This was because of the _______________ in each policy.

Answer 48

other insurance clause

Question 49

Excelsior Insurance is working on a claim payment for property losses and can elect to choose all but one of the following options for payment. Select the one that they cannot use.

Answer 49

pay for new property that exceeds the previous property replacement value by up to 2 percent

Question 50

When a tenant at Bright Manor defaulted on rent, the landlord did not terminate the lease, but instead invoked the right of _______________ in the lease. This enabled him to enter the tenant’s property, seize its goods, and hold them for sale to offset unpaid rent.

Answer 50

distraint and distress common law right