Module 4 Quiz Flashcards
The process of deciding how much and what kind of insurance to buy is called _____.
Insurance management
Liability risk is _____.
One form of pure risk
Which of these is NOT a requirement for an insurable risk from the insurance company’s perspective?
The loss must be catastrophic for the insurance company
All of the following statements regarding insurable interest are correct except _____.
The beneficiary of a life insurance policy must have an insurable interest in the insured when the insured dies
Which of the following is NOT one of the basic, or standard, sections of an insurance policy?
Rider and endorsements
Which of the following is NOT one of the primary factors in determining the cost of automobile insurance in any given state?
Gas mileage of vehicle
Which of the following statements regarding umbrella insurance coverage is CORRECT?
Umbrella insurance generally comes in $1 million increments
Which of the following events would other than collision coverage under a personal auto policy (PAP) cover?
A tree falling on a parked car in a storm
Which of the following statements concerning negligence is CORRECT?
An individual can still be sued for negligence even if he behaves responsibly and hasn’t done anything wrong
Which of these statements regarding property insurance coverage is CORRECT?
Homeowners and personal auto policies cover personal property and liability, not business property and liability
Nicholas and Ashley are buying their first home. Which of the following risks will be facilitated when they purchase homeowners insurance?
Risk transfer
The cause of a loss is called _____.
A peril
Someone who determines whether an insurance company will cover given risks is _____.
An underwriter
Which of the following statements is CORRECT?
In order to avoid a coinsurance penalty, insureds must have coverage for at least 80% of their home’s replacement cost
Which of the following is an example of speculative risk?
Stock market investment
A risk management plan can _____.
Protect against possible large losses
Choosing to live in a well-lit, gated community is an example of _____.
Risk reduction
Which of the following statements about insurance agents is CORRECT?
The insurance field has one area that deals with life and health related coverage and another deals with property and casualty coverage, and insurance agents tend to work primarily in one area or the other
Which of the following statements best describes the difference between an insurance agent and an insurance broker?
An agent makes the insurance company accountable to information given by the client to the agent, and a broker does not
Which of the following perils is NOT covered under a typical homeowners insurance policy?
Flood
Which of the following is NOT one of the rules of risk management?
The law of large numbers
Which of these would be an example of a peril?
Theft or jewelry
Under a personal auto policy (PAP), which of the following is NOT one of the insured’s duties after an accident?
Providing emergency care to injured parties
Which of the following statements about auto insurance is CORRECT?
I. Most states require liability insurance, but they do not require collision insurance.
II. The state-mandated liability limits for auto insurance are appropriate for most drivers.
I only
Which of these statement regarding agents and brokers is correct?
Most brokers cannot bind coverage with an insurance company
Which of these represents the best protection against financial loss due to premature death?
Life insurance
Which of the following statements is CORRECT?
Nonparticipating policies are sold by stock companies only
Which of the following would NOT be considered an insured as described in a personal automobile policy?
Your estranged son who lives in another state
A major issue with standard homeowners and automobile liability insurance is _____.
Inadequate liability coverage limits
Comprehensive personal liability insurance (umbrella policies) was designed to _____.
Provide personal catastrophic liability protection
