Licensing Flash Cards

Question 1

The _______, Supervisor, or Director of Insurance is the chief insurance regulator
who protects the insuring population by regulating all insurers and insurance professionals doing
business in the State.

Answer 1

State Commissioner - Section 1.1

Question 2

A _________ issues non-participating policies and is owned by stockholders who
received taxable corporate dividends as a return of profit.

Answer 2

Stock Insurance Company- Section 1.2

Question 3

A _________ issues participating policies and is owned by the policyholders
who receive non-taxable dividends as a return of unused premium.

Answer 3

Mutual insurance company - Section 1.2

Question 4

______ is the transfer of risk between insurance companies. The reinsurer assumes some or
all of the risk of the ceding, or primary, insurance company

Answer 4

Reinsurance Section 1.3

Question 5

What is a Domicile? and what are the 3 types?

Answer 5

Domicile refers to the state in which an insurer is incorporated.
1 - Domestic insurer is organized under the laws of the resident state
2 - Foreign insurer is organized under the laws of another state
within the United States
3 - Alien insurer is organized under the laws of a country outside
the U.S.
Section 1.4

Question 6

An_______ is authorized to do insurance business in the state and is issued a Certificate
of Authority by the state’s Department of Insurance.

Answer 6

Admitted Insurer - Section 1.4

Question 7

The _______ department of an insurance company is responsible for the selection of risks to
insure and determines the rate to be charged.

Answer 7

Underwriting - Section 1.5

Question 8

An _______ can be the employee of an insurance company that owns the agent’s book
of business, or an independent agent that enters into agency agreements with more than one
insurance company. Independent agent retains ownership of their books of business.

Answer 8

Agent/Producer Section 1.5

Question 9

The _________ is a three-party relationship where a Principal authorizes an Agent to act on
its behalf to create a legal relationship with a Third Party.

Answer 9

Law of Agency Section 1.6

Question 10

______________ is written into the producer’s agency contract; implied authority is that which
the public assumes the agent possesses; and apparent authority is created when the agent
exceeds express authority and the insurer does not respond

Answer 10

Express authority Section 1.6

Question 11

The ____________ protects consumer privacy by ensuring that any data
collected by an insurer remains confidential, and is accurate, relevant, and used for a proper and
specific purpose.

Answer 11

Fair Credit Reporting Act (FCRA) Section 1.6

Question 12

A is the uncertainty of a loss

Answer 12

Risk Section 1.8

Question 13

A ____ is the cause of loss.

Answer 13

Peril Section 1.8

Question 14

A ____ increases the probability of a loss.

Answer 14

Hazard chapter Section 1.8

Question 15

What are the 3 types of Hazards?

Answer 15

Physical- A physical condition that increases the probability of loss; use, condition, or occupancy of property. Example: Flammable material stored near a furnace.
Moral Hazard - Dishonest tendencies that increase the probability of a loss; certain characteristics and behaviors of people. Example: An insured burns down his/her own house to collect the insurance payout.
Morale Hazard - Attitude that increases the probability of a loss. Example: Indifference or carelessness of leaving one’s house or vehicle unlocked.
Section 1.8

Question 16

The _______ does not allow the insured to profit from a loss; instead, it restores
the insured to the same financial or economic condition that existed prior to the loss.

Answer 16

principle of indemnity Section 1.9

Question 17

______________ in property and casualty insurance must exist at the time of the loss.

Answer 17

Insurable interest section 1.9

Question 18

The ________ is one of adhesion; one party (the insurer) prepares the contract and
presents it to the second party (the insured), who must accept it on a “take-it-or-leave-it” basis.

Answer 18

insurance contract section 1.10

Question 19

The _________ used to determine premium include the nature of the risk, hazards,
claims history, and other factors that vary depending upon the risk.

Answer 19

underwriting factors section 1.11

Question 20

_______ is a rate charged to a group of policyholders who have similar exposures and
experience.

Answer 20

Class Rating

Section 1.11

Question 21

What are the 4 types of rating factors?

Answer 21

1. Nature of the risk.
2. Hazards that are present.
3. Claims history.
4. Other factors that depend upon the type of risk being insured.
   Section 1.11

Question 22

______ is The dollar amount charged for a particular unit of insurance, such as $5 per $1,000 of
insurance.

Answer 22

Rate

Section 1.11

Question 23

_______ is the total cost for the amount of insurance purchased.
$50,000 of coverage = $5 rate x 50 (per $1,000 of insurance) for a $250 premium.

Answer 23

Premium

Section 1.11

Question 24

_______ is a rate based on the policyholder’s actual loss history when compared to
the loss history of similar risks.

Answer 24

Experience Rating

Section 1.11

Question 25

________ is a rate used for a policyholder because a large enough pool of similar
risks is not available to any other type of rate. Primarily used for commercial and specialty
risks because of the number of unique variables involved.

Answer 25

Individual Rating

Section 1.11

Question 26

_______ is an individual rate that doesn’t use loss history as a
component and that is derived largely from the underwriter’s evaluation and best judgment
the risk poses to the insurer

Answer 26

“A” Rating or Judgment Rating

Section 1.11

Question 27

_______ A rating organization provides insurers with the portion of a rate that does
not include provisions for expenses or profit.
a. The expense and profit components to develop the final rate must be added by individual
insurers based upon their projections.
b. Loss cost rating is used on risks for which the insurer may not have enough data to
develop the rate, other than for expenses and profit.

Answer 27

Loss Cost Rating

Section 1.11

Question 28

_________ The use of rates contained in a manual published by the insurer or those of
the rating organization of which it is a member.

Answer 28

Manual Rating

Section 1.11

Question 29

_______ is the use of rates that rewards a policyholder that takes measures to decrease
the probability of loss by the implementation of safety programs, loss control programs, etc.

Answer 29

Merit Rating

Section 1.11

Question 30

____________ The use of rates that adjust the policy premium to reflect the current loss experience of the policyholder. Premium adjustments are subject to minimums and maximums.

Answer 30

Retrospective Rating

Section 1.11

Question 31

_______ is the required initial premium paid into the policy that is
subject to adjustment. A premium audit will be used to determine the actual premium based
on the risk exposures

Answer 31

Deposit Premium

Question 32

\_\_\_\_\_\_\_ is a method of rating property and liability risks by using charges and credits
to modify a class rate based on the nature of the particular risk being rated.

Answer 32

Schedule Rating

Question 33

_____ Rates must be filed with the state insurance regulatory authority (Department
of Insurance) and may be used as soon as they are filed.

Answer 33

File and Use Rate Approval

Question 34

_________ Insurers cannot use rates until approved by the Department of Insurance, or
until a specific time period has expired after the filing.

Answer 34

Prior Approval

Question 35

________ Some states require that mandatory rates be used for certain lines of
insurance.

Answer 35

Mandatory Rates

Question 36

_______ A state relies on competition between insurers to produce fair and
adequate rates.

Answer 36

Open Competition

Question 37

Loss reserve Method

_______ – A loss reserve established for each claim, when reported.

Answer 37

Case Reserve Method

Question 38

Loss Reserves
_______ A loss reserve established based on average settlements of
particular claim types.

Answer 38

Average Value Method

Question 39

Loss Reserve
________ A loss reserve formula based upon the expected losses for a
particular class or line.

Answer 39

Loss Ratio Method

Question 40

Loss Reserve-
___________ A loss reserve based upon the estimated length of an insured’s or
claimant’s life or expected disability.

Answer 40

Tabular Method

Question 41

Financial Ratios-
_______ - Determined by dividing Paid Losses + Loss Reserves by Total Earned
Premiums.

Answer 41

Loss Ratio

Question 42

Financial Ratio -
________ – Determined by dividing an insurer’s Total Operating Expenses by Written
Premiums.

Answer 42

Expense Ratio

Question 43

Financial Ratios -

_________ – Sum of the loss ratio and expense ratio.

Answer 43

Combined Ratio

Question 44

_________ – A valid contract that for reasons satisfactory to a court, may be set aside by
one of the parties. An example is an insurer may void or revoke coverage for misrepresentation
or fraud.

Answer 44

Voidable Contract

Question 45

_________ – An agreement without legal effect because it was made illegally or it was
declared void by the courts because it doesn’t contain all the elements of a legal contract.

Answer 45

Void Contract

Question 46

________ – One party writes the contract, without input from the other party. One
party (insurer) prepares the contract and presents it to the other party (applicant) on a “take-it-or-leave-
it” basis, without negotiation. Any doubt or ambiguity found in the document is construed
in favor of the party that did not write it (insured).

Answer 46

Contract of Adhesion

Question 47

________ – The exchange of value is unequal. Insured’s premium payment is less than
the potential benefit to be received in the event of a loss. The insurer’s payment in the event of
a loss may be much greater, or much less (e.g., $0 in the event a loss doesn’t occur), than the
insured’s premium payment.

Answer 47

Aleatory Contract

Question 48

______ – A contract that pays a stated amount in the event of a loss. (Most insurance
policies are NOT valued contracts unless they are endorsed.)

Answer 48

Valued Contract

Question 49

______ – An agreement to pay on behalf of another party under specified
circumstances, such as when a loss occurs.

Answer 49

Indemnity Contract

Question 50

_____ – The party submitting an application for insurance.

Answer 50

Applicant

Question 51

_______ – A document submitted by an applicant to an insurer that provides information
needed for the insurer to underwrite a risk; becomes part of the insurance contract. Most
applications require statements on the application to be true to the best knowledge and belief of
the applicant.

Answer 51

Application

Question 52

______ – A policy form that alters or adds to the provisions of a property and casualty
insurance contract.

Answer 52

Endorsement

Question 53

________ – Owner cannot transfer or assign ownership of an insurance policy (property
and casualty) to another person.

Answer 53

Personal Contract

Question 54

________ – Owner may transfer or assign ownership of a life or health insurance
policy to another person.

Answer 54

Non-Personal Contract

Question 55

_______ – Policy owners may not assign or transfer their rights under an insurance contract
without the written consent of the insurer.

Answer 55

Assignment

Question 56

_______ – Insured’s original age on the policy issue date.

Answer 56

Issue Age

Question 57

_______ – Insured’s age at any point in time at issuance, renewal or conversion.

Answer 57

Attained Age

Question 58

________ – Only one party is legally bound to the contractual obligations after the
premium is paid to the insurer. Only the insurer makes a promise of future performance, and
only the insurer can be charged with breach of contract.

Answer 58

Unilateral Contract

Question 59

_________– Both parties must perform certain duties and follow rules of conduct to
make the contract enforceable. The insurer must pay claims if the insured has complied with all
the policy’s terms and conditions.

Answer 59

Conditional Contract

Question 60

_________ – What a reasonable and prudent policy owner would expect;
the reasonable expectations of policy owners are honored by the Courts although the strict terms
of the policy may not support these expectations.

Answer 60

Reasonable Expectations Doctrine

Question 61

________ – Statements made by the applicant on the application that are believed to be
true to the best of the knowledge and belief of the applicant; may be withdrawn prior to policy
issuance.

Answer 61

Representations

Question 62

________ – A false statement contained in the application; usually does not void
coverage or the policy. If material to the issuance of coverage, meaning the insurer would not
have issued coverage had the misrepresentation not been made, coverage does not apply. In
some cases, a material misrepresentation may void the policy.

Answer 62

Misrepresentations

Question 63

________ – The willful hiding or obscuring of material facts pertinent to the issuance of
insurance (or a claim). Concealment results in denial of coverage and may void the policy.

Answer 63

Concealment

Question 64

________ – Statements in the application or stipulations in the policy that are guaranteed true
in all respects. If warranties are later discovered untrue or breached (past, present or future),
coverage (and sometimes the contract) is voided.

Answer 64

Warranties

Question 65

________ – Intentional deception of the truth in order to induce another to part with something of
value or to surrender a legal right. Contains 5 elements:

Answer 65

Fraud

Question 66

What are the 5 elements of Fraud?

Answer 66

■ False statement, made intentionally and that pertains to a material fact.
■ Disregard for the victim.
■ Victim believes the false statement.
■ Victim makes a decision and/or acts based on the belief in, or reliance upon, the false
statement.
■ The victim’s decision and/or action results in harm.

Question 67

What are the 4 elements of a Legal Contract?

Question 68

An _________ is an accident and includes continuous or repeated exposure to the same general
harmful conditions

Answer 68

Occurrence Chapter 2 section 1

Question 69

If an insurer cancels an insurance policy before its expiration date, the refund is made on a _________.

Answer 69

pro rata basis

Chapter 2 section 1

Question 70

The primary cause of a loss is referred to as the __________.

Answer 70

proximate cause

Question 71

A _______ stays within its intended boundaries and a hostile fire burns outside its intended
boundaries.

Answer 71

friendly fire

Question 72

An __________is a policy form that alters or adds to the provisions of a property and casualty
insurance contract

Answer 72

endorsement

Question 73

The _________ is the specified amount of each loss that the insured must bear. A larger
________ reduces the premium and the submission of small claims.

Answer 73

deductible

Question 74

A _________ causes damage without an intervening cause, and an indirect loss occurs as the
consequence of a direct loss.

Answer 74

direct loss

Question 75

A _______policy specifically lists the covered causes of loss.

Answer 75

named perils

Question 76

an ________ policy covers all causes of loss except those specifically excluded

Answer 76

open perils

Question 77

The ________of property is the cost to replace it with property of like kind and quality,
at current pricing, without a deduction for depreciation.

Answer 77

replacement value

Question 78

_________ is the replacement value of property minus depreciation.

Answer 78

Actual cash value

Question 79

A _________ requires the insurance company pay the total scheduled limit of insurance for a
total loss.

Answer 79

valued policy

Question 80

A policy insuring property for a ________ insures a single item on a single policy for a single
limit of insurance.

Answer 80

specific limit

Question 81

. A policy insuring property for a _________ insures one or more items on a single policy and
each item is insured at a ________ limit of insurance.

Answer 81

scheduled limit

Question 82

A policy insuring property for a _________ insures multiple items of property on a single policy
with one limit of insurance applying to all insured property

Answer 82

blanket limit

Question 83

The _________ describes basic information about the policy; i.e., the who, what, where,
when, and how much.

Answer 83

declarations page

Question 84

The _____ _____ is the insurer’s promise to pay the insured.

Answer 84

Insuring Agreement

Question 85

The _______section states the obligations of the insurer and the insured, as well as any other
conditions of coverage

Answer 85

conditions

Question 86

The ________ provision states the insured’s obligation to transfer to the insurance company its
right of recovery against any party causing a loss after it accepts payment from the insurer for a
loss.

Answer 86

subrogation

Question 87

Perils that are NOT covered by the policy are listed in the _____ section

Answer 87

exclusions

Question 88

___________ are automatically included in property policies without an additional
premium and include items such as debris removal, collapse, and fire department service
charges

Answer 88

Additional coverages

Question 89

__________ is a common property policy provision that requires the insured maintain a certain
limit of insurance coverage in order to avoid a penalty in the event of a partial loss.

Answer 89

Coinsurance

Question 90

_______ is assigned to one party for the conduct of another, based solely on a
relationship between the two.

Answer 90

Vicarious liability

Question 91

A _______ is a wrongful act, other than a breach of contract or a crime that violates a duty or the
rights of another and for which compensation may be sought from the responsible party.

Answer 91

tort

Question 92

An _______ is a deliberate act that harms another and for which the injured party is
permitted by law to sue the wrongdoer.

Answer 92

intentional tort

Question 93

________ provides coverage for most unintentional torts and excludes intentional torts

Answer 93

Liability insurance

Question 94

________ damages are awarded to an injured party for actual loss sustained.

Answer 94

Compensatory

Question 95

_________ are compensatory damages for tangible expenses such as bills, loss of earnings,
and the costs to repair or replace damaged property.

Answer 95

Special damages

Question 96

__________ are compensatory damages for pain, suffering, mental anguish, disfigurement,
and similar types of losses that cannot be objectively calculated.

Answer 96

General damages

Question 97

_________ is the legal liability arising from physical injury, including sickness, disease,
and death caused by the acts or omissions of an insured. Bodily injury liability expenses include
medical bills, lost wages, mental anguish, disfigurement, pain and suffering, etc.

Answer 97

Bodily injury liability

Question 98

__________ pays for the legal liability arising from physical damage to tangible
property, including loss of use of that property, caused by the acts of an insured. _________ expenses include the actual cost of repair or replacement of the damaged
property as well as the inability to use damaged property (loss of use).

Answer 98

Property damage liability

Question 99

________ coverage pays for necessary medical, surgical, x–ray, dental, ambulance,
hospital, professional nursing, and funeral expenses incurred by a third party on the insured’s
premises regardless of fault.

Answer 99

Medical payments

Question 100

__________ is the legal liability arising from the wrongful conduct of the insured
resulting in injuries to one’s mental or emotional wellbeing and not bodily injury or property
damage.

Answer 100

Personal injury liability

Question 101

An ___________ is a sudden, unforeseen, unintended, and unplanned event from which loss or
damage results.

Answer 101

accident

Question 102

________ is a tort and, specifically, the failure to use the same degree of care a reasonable and
prudent person would use when given the same knowledge and set of circumstances

Answer 102

Negligence

Question 103

___________ is a defense for negligence in which the claimant was also negligent to
any degree

Answer 103

Contributory negligence

Question 104

_______________ involves fault on the part of all parties and the damages are reduced in
proportion to the degree of negligence

Answer 104

Comparative negligence

Question 105

Under ________ , a claimant does not have to prove fault in order to collect damages

Answer 105

absolute liability

Question 106

_________ applies when a manufacturer is held liable whether or not its product was
defective in causing injuries.

Answer 106

Strict liability

Question 107

An ___________ pays a covered claim after the primary policies exhaust their limits or deny
coverage

Answer 107

excess policy

Question 108

A __________ loss payment provision requires each insurer to pay its share of a loss in proportion to
the coverage of that policy as it relates to the total of all insurance on the risk.

Answer 108

pro rata

Question 109

The __________ is the dollar amount of coverage specified for a liability loss.

Answer 109

limit of liability

Question 110

The ___________ is the maximum amount payable for loss per location or per person from all
occurrences within a policy period regardless of the number of separate accidents.

Answer 110

aggregate limit

Question 111

A ___________ is the amount of coverage divided between bodily injury and property
damage.

Answer 111

split limit of liability

Question 112

A ____________ is the policy limit applied to either bodily injury or property damage as
needed or in any combination.

Answer 112

combined single limit

Question 113

To be eligible for ___________ the _______ must be used principally for
residential purposes, cannot contain more than 4 dwelling units, and can have no more than 5
roomers or boarders.

Answer 113

dwelling property program,

Question 114

The _________ perils are fire or lightning and internal explosion. If an additional premium
is paid for Extended Coverage (EC), the following perils are also included: windstorm or hail,
explosion, riot or civil commotion, aircraft, vehicles, smoke, and volcanic eruption. The peril of
vandalism or malicious mischief (VMM) may also be included with the payment of an additional
premium.

Answer 114

DP–1 Basic Form

Question 115

Losses to the DP–1 dwelling, other structures, and contents are paid on an ________ to the insured.

Answer 115

actual cash value basis

Question 116

The DP–2 Broad Form perils are __________

Answer 116

DP–1 perils 
EC perils 
VMM 
damage by burglars, falling objects, weight of ice, snow, or sleet, and accidental discharge or overflow of
water or steam.

Question 117

The ________covers the dwelling and other structures on an open perils basis, except
for the perils specifically excluded

Answer 117

DP–3 Special Form

Question 118

____________ applies to the dwelling described in the declarations, used principally for residential
purposes, including structures attached to the dwelling, such as an attached garage, carport,
breezeway or deck.

Answer 118

Coverage A

Question 119

The Coverage A ________ appears on the declarations as a specific limit. It is chosen
by the named insured at the time coverage is applied for and should represent the dwelling’s
replacement value.

Answer 119

limit of insurance

Question 120

_________ applies to other structures on the described location if they are separated or detached
from the dwelling by clear space, a fence, or a utility line

Answer 120

Coverage B

Question 121

The Coverage B limit of insurance is up to _____ of the Coverage A limit and is automatically
provided under each of the dwelling forms.

Answer 121

10%

Question 122

________ applies to household and personal property usual to the occupancy as a dwelling if it
is owned by the insured or by members of the insured’s family who reside with the insured.

Answer 122

Coverage C

Question 123

__________ provides insurance for indirect losses that occur as a result of direct losses to
property insured under Coverages A, B, or C that are covered by the policy.

Answer 123

Coverage D

Question 124

The Coverage D limit of insurance is up to of the Coverage A limit and is automatically
provided under each of the dwelling forms.

Answer 124

20%

Question 125

Under the DP–1, the Coverage B limit does or does not increase the amount of insurance?

Answer 125

Does not

Question 126

under the DP–2 and DP–3 forms, this limit is/ is not additional insurance.

Answer 126

Is not

Question 127

The additional coverage _________ pays the insured’s reasonable expenses for the ________of covered property if the property is damaged by an insured peril.

Answer 127

Debris Removal

Question 128

The additional coverage , pays a tenant up to 10% of
the Coverage C limit for _________made or acquired at the insured’s expense to that part of
the described location he or she rents.

Answer 128

Improvements, Alterations, and Additions

Question 129

The additional coverage ___________ pays the reasonable costs incurred by the insured
for necessary measures taken to protect covered property from further damage.

Answer 129

Reasonable Repairs

Question 130

The ___________ additional coverage covers property against direct loss for all perils while
being _________ from the described location because the property at the described location is
endangered by an insured peril.

Answer 130

Property Removed

Question 131

____________ is an additional coverage that provides insurance at a limit of up
to 5% of the Coverage A limit, with a maximum of $500 for any ________.

Answer 131

Trees, Shrubs, and Other Plants

Question 132

Damage to trees, shrubs, plants, or lawns is or is not covered when caused by wind, hail, weight of
snow; ice or sleet; or loss by theft.

Answer 132

NOT

Question 133

How much will your additional coverage pay for Fire Department Charges incurred when a department other than you own jurisdiction is called to save / protect your property?

Answer 133

500

Question 134

Coverage for the peril of _______ is only provided under the DP–2 and DP–3 forms. Coverage is
provided for direct physical loss to covered property involving ______ of a building or any part
of a building.

Answer 134

collapse

Question 135

_________is excluded and is the increased costs due to the enforcement of any
_________ regulating the use, construction, demolition, remodeling, renovation, or repair
of property – including removal of debris.

Answer 135

Ordinance or Law

Question 136

__________ is excluded, including land shock waves or tremors before, during or after a
volcanic eruption; landslide; mudslide or mudflow; subsidence or sinkhole, earth sinking, rising,
or shifting.

Answer 136

Earth Movement

Question 137

_________ is excluded and includes flood, surface water waves, tidal water, overflow of a
body of water, water or waterborne material that backs up through sewers or drains or overflows
from a sump or sump pump, water or waterborne material below the surface of the ground –
including water that exerts pressure on or seeps or leaks through a building, sidewalk, driveway,
foundation, swimming pool, or other structure (such as basement walls).

Answer 137

Water Damage

Question 138

________ is excluded and is the failure of power or other utility service if it takes place off
the described location. ________ occurring on the described location is covered.

Answer 138

Power Failure

Question 139

________is excluded and is defined as the insured’s_______ to use all reasonable means to save
and preserve property at and after the time of a loss.

Answer 139

Neglect

Question 140

These 3 things are excluded under all the DP policies.

Answer 140

War,
nuclear hazard
intentional loss

Question 141

The __________ is used to provide, at the annual renewal date
of the policy, an automatic increase in the Coverage A and B limits of insurance to help offset
inflation.

Answer 141

Automatic Increase in Insurance Endorsement ( aka inflation guard endorsement )

Question 142

The _______ endorsement provides insurance for the perils of_____ attempted ______,
and vandalism or malicious mischief that results from _____ or attempted _____. It may only be
added to policies insuring owner-occupied dwellings.

Answer 142

Broad Theft Coverage

Question 143

The____________ endorsement provides the insured an average amount of
insurance for Coverage A during the course of a ___________.

Answer 143

Dwelling under Construction

Question 144

The _________ endorsement provides coverage for personal _______and medical
payments to others and may be added to any of the dwelling forms of coverage.

Answer 144

Personal Liability

Question 145

Who oversees the operations of the insurance business?

Answer 145

Executives

Question 146

Who gathers and interprets statistical information used in rate-making? They also determine the probability of loss and set premium rates.

Answer 146

Actuarial Department

Question 147

What department is responsible for the selection of risks both persons and property and the rating that determines the actual policy premium?

Answer 147

Underwriting

Question 148

What kind of authority is written in a producer’s contract with an insurer?

Answer 148

Express Authority

Question 149

What kind of authority is not specifically stated in a producer’s contract however is assumed to be given if it is necessary and reasonable i.e company logo use and accepting applications or collecting premiums?

Answer 149

Implied Authority

Question 150

This type of authority is when the producer exceeds the authority expressed in the agency contract, the 3rd party is falsely led to believe that the producer has i.e taking payment on a canceled policy.

Answer 150

Apparent ( apparently you have no idea what you are doing )

Question 151

What is someone who represents the interests of the insured but not the interest of the insurer?

Answer 151

A Broker they can negotiate however can not bind a policy legally.

Question 152

What do we call deceit, misrepresentation, untruthfulness, and falisifcation?

Answer 152

Dishonesty

Question 153

What kind of risk is there a possibility of both loss and gain?

Answer 153

Speculative Risk

Question 154

What kind of risk is it when the only outcomes possible are no loss and loss ie no gain to be had?

Answer 154

Pure Risk

Question 155

What do we call a reduction, decrease, or disappearance of value this is the basis for a claim for damages under a policy?

Answer 155

Loss

Question 156

What do we call the cause of a loss?

Answer 156

Peril

Question 157

What do we call a specific condition that increases the likelihood or severity of loss from a peril?

Answer 157

Hazard

Question 158

What do we call the condition of being at risk for loss just by existing property and people incur this risk?

Answer 158

Loss Exposure

Question 159

What kind of Risk Management consists of Investments of a large number of people who may be pooled by use of a
corporation or partnership.

Answer 159

Sharing Risk

Question 160

What kind of risk management is the taking out of an insurance policy giving the risk to another entity through a contract?

Answer 160

Transfer of Risk

Question 161

What kind of risk management is installing automatic fire sprinklers, and burglar alarms?

Answer 161

Reduction of Risk

Question 162

What is the special limit for Money, bank notes, bullion, medals etc for Homeowner’s policies?

Answer 162

200

Question 163

What is the special limit for personal property like securities, deeds, evidence of debt, and notes except bank notes, manuscripts passports, tickets, and stamps?

Answer 163

1500

Question 164

What is the special limit for Watercraft of all types including their trailers, furnishings, equipment, engines, and outboard motors? Loss resulting from wind and hail are excluded unless in a fully enclosed building.

Answer 164

$1500

Question 165

What is the special limit on trailers or semi-trailers not used with watercraft of all types?

Answer 165

$1500

Question 166

Loss by theft of jewelry, watches, furs, precious or semi-precious stones have what special limit?

Answer 166

$1500

Question 167

Loss by theft of firearms and related equipment, such as holsters
and ammunition, have what special limit?

Answer 167

$2500

Question 168

The named insured is listed in the Declarations, and includes the _______ if a resident of the same
household.

Answer 168

spouse

Question 169

A _________ is a person related to the named insured by blood, marriage, or adoption,
including a ward or foster child who is a resident of the household.

Answer 169

family member

Question 170

A _________ is any vehicle shown in the Declarations, a newly acquired auto, any trailer the
insured owns, or a non-owned auto or trailer while being used as a temporary substitute vehicle.

Answer 170

covered auto

Question 171

A ______________ is a non-owned vehicle used in place of an insured vehicle that is
out of normal use due to breakdown, repair, servicing, loss, or destruction.

Answer 171

temporary substitute vehicle

Question 172

A _________ is one to which the named insured takes title and either replaces an
existing vehicle owned by the named insured, or a vehicle that increases the total number of
vehicles owned by the named insured.

Answer 172

newly acquired auto

Question 173

The _________ under Part A – Liability Coverage include the cost of bail bonds,
appeal bonds, post-judgment interest, loss of earnings, and reasonable expenses while assisting
the insurer in the defense of a claim.

Answer 173

Supplementary Payments

Question 174

__________ include bodily injury or property damage intentionally caused by an Insured;
property in the insured’s care, custody, and control; bodily injury to an insured’s employee
while working for the insured; using a vehicle as public or livery conveyance; working in the
automobile business or using a vehicle while engaged in business; and a vehicle used by a
person without the reasonable belief of entitlement to drive it.

Answer 174

Part A Exclusions

Question 175

______________ does not apply to vehicles with fewer than four wheels, vehicles that are owned
but not insured, uninsured vehicles owned by family members; vehicles furnished for the regular
use of the named insured or family members; and vehicles inside a racing facility used for
competing in, practicing in, or preparing for a race.

Answer 175

Part A Liability

Question 176

The ___________ paid under Part A – Liability Coverage is shown on the policy’s Declarations
and applies per accident for all bodily injury and property damage arising from one accident,
including damages for care, loss of services, and death.

Answer 176

maximum limit

Question 177

If a loss is covered under more than one Part of the policy, payment will not be ______________ .

Answer 177

duplicated or stacked

Question 178

When a covered auto is driven __________ in which it is principally garaged, Part A
– Liability Coverage extends to provide coverage required by the financial responsibility or
compulsory insurance laws of that state or Canadian province.

Answer 178

outside the state

Question 179

If other insurance applies at the time of the loss, the personal auto policy will only pay its share
of the loss in the _______ the policy’s limit bears to all insurance in place.

Answer 179

proportion

EXAMPLE POLICY A 100K POLICY B 200K TOTAL 300K the most A pays is 1/3 of the claim and 2/3 for B

Question 180

Under Medical Payments coverage, the insurer will pay reasonable expenses incurred within _
________of the accident. The limit applies per person and payments are only made for necessary
medical and funeral services caused by the accident.

Answer 180

3 years

Question 181

True or false Medical Payments under section B will only be paid out if the insured is deemed at fault?

Answer 181

False
Medical payments coverage applies, regardless of fault, to any insured occupying any auto or as
a pedestrian when struck by a motor vehicle designed for use mainly on public roads.

Question 182

_____________________ include an insured occupying a vehicle with fewer than 4
wheels, using a vehicle as a public or livery conveyance or a residence, struck by an uninsured
vehicle owned or furnished to an insured family member, using a vehicle without the reasonable
belief of entitlement to drive it, using a vehicle while engaged in business, or when Workers’
Compensation benefits apply, or injuries sustained due to war, nuclear hazard, or racing.

Answer 182

Part B, Medical Payment EXCLUSIONS

Question 183

_______________ provides insurance to persons injured in accidents
caused by another party who is legally responsible for injuries to an insured that arise out of the
ownership, maintenance, or use of an uninsured motor vehicle.

Answer 183

Part C – Uninsured Motorists Coverage (UM)

Question 184

___________ under Part C are accidents involving an owned vehicle that is uninsured, a vehicle
while being used as a public or livery conveyance, the insured using a vehicle without the
reasonable belief of entitlement to drive it, using a vehicle while engaged in business, when
Workers’ Compensation benefits apply, and punitive or exemplary damages.

Answer 184

Excluded

Question 185

The process of ___________ is used when the insurer and the insured do not agree on the recovery
of damages or the amount recoverable by the insured. Each party selects an arbitrator who then
jointly select a third arbitrator who determines the insured’s amount of damages.

Answer 185

arbitration

Question 186

______________ covers the insured against drivers who have auto
liability insurance but the coverage limits are inadequate. UIM coverage will pay the amount
over the at-fault driver’s coverage up to the UIM limit.

Answer 186

Underinsured Motorists Coverage (UIM)

Question 187

___________also known as the physical damage coverages
collision and other than collision, pays for direct and accidental damage, regardless of fault, to
the insured’s covered vehicles and non-owned autos.

Answer 187

Part D – Coverage for Damage to Your Vehicle,

Question 188

_________ is the upset of the covered vehicle or a non-owned auto or its impact with another
vehicle or object.

Answer 188

Collision

Question 189

_____ ____ _______ provides open perils coverage for loss caused by
any peril that is not excluded in the policy.

Answer 189

Other Than Collision (OTC, Comprehensive)

Question 190

A _________ is any private passenger auto, pickup, van, or trailer not owned by, furnished
to, or available for the regular use of the named insured or a family member, while being used by
the named insured or a family member.

Answer 190

non-owned auto

Question 191

____________ coverage pays for the cost of transportation expenses incurred as a
result of a covered collision or other than collision loss. No deductible applies and the limit of
coverage is up to _____ per day, or a total of ______ .

Answer 191

1- Transportation expenses
2 - $20
3 - $600

Question 192

If a loss is caused by a _______ of the covered auto or a non-owned auto, the insurer will only
pay transportation expenses incurred during the period that begins ___ hours after the theft and
ends when the auto is returned to use or the insurer pays for the loss. Payments begin ____hours
after loss caused by all other covered perils.

Answer 192

1 - total theft
2 - 48
3- 24

Question 193

_________ include an insured vehicle being used as a public or livery conveyance;
damage as a result of wear and tear; freezing; mechanical breakdown; road damage to tires; war
or nuclear hazard; tapes, records, disks, or other media; and electronic equipment unless it’s
permanently installed in the vehicle.

Answer 193

Part D exclusions

Question 194

Part D exclusions also include total loss by _________ ; loss to radar or laser
detection devices and equipment; coverage for custom furnishings and equipment in any pickup
or van; a non-owned auto being used in the auto business; or any auto when located at a racing
facility for organized racing.

Answer 194

government or civil authorities

Question 195

The Part D limit of liability for loss is the ______ of the actual cash value (ACV) of the vehicle or
the amount necessary to ____ __ _____ the vehicle with another of like kind and quality. Part
D does not pay for betterment.

Answer 195

1 - lesser

2 - repair or replace

Question 196

__________ – Duties After an Accident or Loss include prompt notification of any claims and legal
papers received; cooperation in the claims investigation and settlement; submission to a physical
exam; authorization for the insurer to obtain copies of medical reports and records; submission
of a requested proof of loss; notification to the police if a hit-and-run driver is involved; and
protection of property from further damage.

Answer 196

Part E

Question 197

___________________ is a form of coverage that is written on a homeowners policy
by endorsement or as a stand-alone policy. It insures moveable property against direct loss.

Answer 197

Personal Inland Marine Insurance

Question 198

The ______________________ provides worldwide coverage when

used to insuring individual personal property on an itemized or scheduled basis.

Answer 198

Personal Articles Floater (Scheduled Article Floater)

Question 199

Coverage under a Personal Articles Floater is covered on an , and claims are
settled on an ________ basis with some exceptions.

Answer 199

1 - open perils basis

2 - actual cash value

Question 200

Typical exclusions in a Personal Articles Floater include__________ , _________ ,
, and war. Specific classes of property also have additional exclusions.

Answer 200

1 - wear and tear,
2 - Insects or vermin
3 - intentional loss

Question 201

The _________ policy is a package policy that provides both property and liability coverage and
is used to insure _______that can be towed by a car.

Answer 201

Boatowners

boats

Question 202

A ________ policy is designed for larger vessels with crew members and includes Hull Insurance:
protection and indemnity coverage, medical payments coverage, personal property coverage for
property on the ______, coverage for fuel spills, and commercial towing.

Answer 202

Yacht

Question 203

A ______Warranty applies when the insured boat or yacht is in storage and allows for a return
of premium due to the reduced risk of loss while the boat is laid up. If the insured operates or
lives on the craft during the ________ period, no coverage applies.

Answer 203

Lay Up

Question 204

The _____________ Insurance is an open perils policy with a high deductible. It
is used to fill coverage gaps in a property policy such as the perils of earthquake, flood, collapse,
and subsidence.

Answer 204

Difference in Conditions (DIC)

Question 205

The __________covers earth movement that is excluded on virtually all property
policies, and in some jurisdictions may also be purchased as a separate policy.

Answer 205

Earthquake Endorsement

Question 206

All earth movements occurring within a ________ are considered a single occurrence of
earth movement.

Answer 206

72-hour period

Question 207

The ___________ is a federal program administered by FEMA,
which enables property owners to purchase flood insurance. Losses are paid or subsidized by the
federal government.

Answer 207

National Flood Insurance Program (NFIP)

Question 208

Flood policies are available from participating private insurers under the ____________ as well as directly from the NFIP.

Answer 208

Write Your Own (WYO) Program

Question 209

Communities in flood-prone areas must have established an approved _____________ in
order to participate in the NFIP. Only property located in participating communities is eligible for
flood insurance.

Answer 209

flood control program

Question 210

___________ is a general and temporary condition of partial or complete inundation of at least __
acres of normally dry land. It involves the overflow of inland or tidal waters, unusual and rapid
accumulation or runoff of surface waters, mudflow, or collapse or destabilization of land from
erosion or the effect of waves or water currents exceeding normal, cyclical levels.

Answer 210

1- Flood

2 - 2 acres

Question 211

The ___________ applies when a community is in its earliest stage of participation in the
NFIP.

Answer 211

Emergency Program

Question 212

Each loss to property is subject to a deductible, which applies separately to the building
and to personal property, including any appurtenant structure and debris removal expense.

Answer 212

$500

Question 213

A______________ program, _____ called a plan, provides basic property
insurance to property owners who are unable to secure coverage in the standard property
marketplace. Reasons for ineligibility in the standard market include loss history or the failure of
the client or property to meet other underwriting guidelines of an insurer.

Answer 213

1 - Fair Access to Insurance Requirements

2 - FAIR

Question 214

The policy territory under a personal umbrella is _________and coverage is written at a base
limit of $_______ .

Answer 214

1 - worldwide

2 - 1 million

Question 215

The insured pays ________ , a form of cost-sharing, if the personal umbrella policy
drops down to cover a loss not insured by an underlying primary policy.

Answer 215

self-insured retention