Random things I keep Forgetting Flashcards
Which of the following is true of the Insuring Agreement?
A
The promise to indemnify an insured for a covered cause of loss
B
It lists the policy premium amount
C
It provides the name and address of the insured and the name of the insurer
D
It provides the policy conditions
A
The promise to indemnify an insured for a covered cause of loss
The insuring agreement is the company’s commitment (promise) of protection to the insured. It specifies the types of property covered, and the perils insured against.
All of the following are true regarding the structure of a property policy, except:
A
The insured’s duties in case of loss are found in the Insuring Agreement
B
The Declarations include the insured’s name, policy period, policy limits and the amount of premium
C
The bankruptcy condition does not relieve the insurer of its duties or obligations under the policy
D
The Exclusions itemize the perils not covered
A
The insured’s duties in case of loss are found in the Insuring Agreement
The Conditions list the general rules and duties in the event of a loss under the policy.
Which of the following methods of writing insurance is used to provide insurance on properties at different locations, using a single policy, and a single limit of insurance?
A
Unified
B
Scheduled
C
Listed
D
Blanket
D
Blanket
Blanket insurance covers more than one item of property on one policy for a single amount of insurance, which applies to each item as needed.
Under the Other Insurance condition, when two property policies cover the same property, how is a loss apportioned?
A
Each policy will pay an equal share of the loss
B
Each policy will share proportionately according to the total insurance
C
Neither policy will pay because of overinsurance
D
The first policy will pay up to its limits; then the second policy acts as excess coverage
B
Each policy will share proportionately according to the total insurance
For a property policy, the Other Insurance clause generally states that two policies covering the same loss will pay proportionally to their limits of insurance.
Under the Other Insurance condition, when two property policies cover the same property, how is a loss apportioned?
A
Each policy will pay an equal share of the loss
B
Each policy will share proportionately according to the total insurance
C
Neither policy will pay because of overinsurance
D
The first policy will pay up to its limits; then the second policy acts as excess coverage
B
Each policy will share proportionately according to the total insurance
For a property policy, the Other Insurance clause generally states that two policies covering the same loss will pay proportionally to their limits of insurance.
All of the following statements regarding the property policy structure are correct, except:
A
The Declarations Page lists other parties having an insurable interest in the property
B
The Insuring Agreement describes the perils that are covered under the policy
C
Additional Coverages are added to the policy for an additional premium
D
The insured’s duties and obligations are listed in the Conditions section
C
Additional Coverages are added to the policy for an additional premium
Additional Coverages are automatically included without an additional premium.
The transfer of the right of recovery from the insured to the insurance company is called:
A
Subrogation
B
Hold harmless
C
Assignment
D
Indemnity
A
Subrogation
Subrogation allows the insurer to take legal action against the negligent third party.
Which of the following is true of the Insuring Agreement?
A
It provides the name and address of the insured and the name of the insurer
B
It provides the policy conditions
C
It lists the policy premium amount
D
The promise to indemnify an insured for a covered cause of loss
D
The promise to indemnify an insured for a covered cause of loss
The insuring agreement is the company’s commitment (promise) of protection to the insured. It specifies the types of property covered, and the perils insured against.
When firefighters extinguish a house fire with water, the water damage is considered a(n):
A
Loss that will be subrogated to the fire department
B
Indirect loss
C
Consequential Loss
D
Direct loss
D
Direct loss
Water damage is a direct loss to the property.
Most liability policies do not provide coverage for:
A
Special damages
B
General damages
C
Compensatory damages
D
Punitive damages
D
Punitive damages
Punitive damages are awarded to punish and discourage a wrongdoer from repeating negligent acts. Most liability policies do not provide coverage for punitive damages.
The formal statement an insured provides to an insurer, including all the details an insurer needs to assess its liability following a loss, is known as a:
A
Certificate of insurance
B
Proof of loss
C
Binder
D
Notice of loss
B
Proof of loss
A proof of loss is a formal statement made by the insured and provided to the insurer that provides necessary details for the insurer to determine its liability under a policy.
Policy A provides liability coverage to Fred’s Grocery up to $500,000. Policy B provides coverage for the same risks up to $1.5 million. Both policies pay on a pro rata basis. If Fred’s Grocery is determined to have a legal liability of $400,000 to a claimant who was injured on the property, how much will Policy A pay?
A
$500,000
B
$100,000
C
$50,000
D
$400,000
B
$100,000
Pro rata liability requires that each policy pays no more than its share of the loss. The total insured amount carried by Fred’s Grocery is $2 million ($500,000 + $1.5 million). Policy A’s share of that amount is 25% ($500,000 ÷ $2 million). Therefore, its share of any loss would be 25% of the loss amount. 25% of $400,000 is $100,000.
Which of the following is not true about a Reciprocal Insurance Company?
A
If funds are insufficient to pay claims, the subscribers are assessed for additional premium
B
Each subscriber assumes a share of the risk of all other subscribers
C
Reciprocal companies may only transact liability insurance
D
It allows individuals and corporations to exchange insurance on one another’s risks
C
Reciprocal companies may only transact liability insurance
Reciprocals, unlike Risk Retention Groups, are not restricted on the type of insurance they transact.
Which of the following is a characteristic of a Mutual Insurance Company?
A
Stockholders have ownership
B
Members are provided insurance by the company
C
Dividends are returned profits
D
A policyholder is a voting member on the Board of Directors
B
Members are provided insurance by the company
A mutual insurer is owned by its members (not stockholders) and dividends are a return of unused premium (not a return of profit). Although policyholders are the owners of a mutual insurer, they are not voting members of the Board of Directors. Members are provided insurance by the company.
What is it called when insureds with less desirable risks seek insurance coverage to a greater extent than insureds with average risks?
A
Adverse selection
B
Estoppel
C
Law of Large Numbers
D
Sharing
A
Adverse selection
Adverse selection is the tendency of risks more prone to loss to seek greater than average coverage.
Which of the following vehicles is covered by Liability coverage under the Personal Auto Policy?
A
Uninsured owned vehicle
B
Motorcycle
C
Non-owned golf cart
D
Company car
C
Non-owned golf cart
Non-owned golf carts are exempted from the exclusion on off-road vehicles, and liability arising from their use would be covered under the policy.
The Limited Mexico coverage provides coverage for how many miles into Mexico?
A
25 miles
B
50 miles
C
10 miles
D
100 miles
A
25 miles
The limit is 25 miles and the endorsement also applies only if the insured’s visit to Mexico is for 10 days or less.
On the Personal Auto Policy, the Collision coverage provides payment for losses:
A
To your car, but only if you are legally liable
B
To your car, and regardless of liability
C
To the car you run into, regardless of liability
D
To your car and the car you run into
Nice try! The correct answer was B.
Collision coverage only applies to a vehicle of the insured and is applied regardless of fault. (Damage to another vehicle would fall under Liability coverage.)
Which statement is true of medical payments in a Personal Auto Policy?
A
Medical expenses include insured’s injuries that result from racing activity
B
Medical payments are provided by Part A
C
Expenses for medical services sustained by the insured are covered
D
Medical expenses are paid only when the insured is legally liable
C
Expenses for medical services sustained by the insured are covered
Coverage applies to any occupant of the insured vehicle and also to members of the insured’s household as pedestrians when struck by a motor vehicle or as an occupant of another person’s vehicle.
Policyholder N insures an owner-occupied home under a Special Form Dwelling Policy with a limit of $100,000. If the dwelling is damaged in a fire, what is the limit of insurance that will apply to Coverage E - Additional Living Expense?
A
$10,000
B
$20,000
C
$40,000
D
$50,000
B
$20,000
The Coverage E is 20% of Coverage A.
Any person violating a cease and desist order in South Carolina must pay a fine of up to ____________.
A
$1,000 (up to $5,000 if the violation is willful)
B
$5,000 (up to $10,000 if the violation is willful)
C
$2,500 ($5,000 if the violation is willful)
D
$2,000 (up to $10,00 if the violation is willful)
C
$2,500 ($5,000 if the violation is willful)
Any person, other than an insurer or an HMO, violating a cease and desist order may be fined up to $2,500, have their license suspended or revoked, or both. If the violation is willful, the fine may be up to $5,000.
An alarm system installed in a home is considered which of the following ways to manage risk?
A
Reduction
B
Transfer
C
Avoidance
D
Retention
A
Reduction
The home alarm system may reduce the chance of loss, but not entirely prevent it.
In South Carolina, how many years would a misdemeanor conviction keep someone from being licensed?
A
5
B
2
C
10
D
3
A:5
Before issuing or renewing a license, the Director must find that the applicant has not been convicted of a misdemeanor involving dishonesty, breach of trust, or other financial- or insurance-related crimes within the last 5 years.
Including debris removal, what is the maximum an HO-3 policy with a Coverage A amount of $250,000 will pay if a detached garage burns down?
A
$25,000
B
$1,250
C
$26,250
D
$250,000
C
$26,250
Coverage B, which covers structures that are not attached, is automatically issued for 10% of Coverage A. This means the Coverage B total is $25,000, and the policy allows for an additional 5% for debris removal: $25,000 + 5% or $1,250 = $26,250.
First Aid Expenses under the Homeowners Policy would cover:
A
A neighbor who gets injured while helping the insured install a carpet
B
The Named Insured while on or off the premises
C
Members of the insured’s family while on or off the premises
D
Nonfamily residents of the household while on the premises
A
A neighbor who gets injured while helping the insured install a carpet
First Aid Expenses coverage applies to first aid to others caused by Bodily Injury covered under the policy, but does not pay for first aid to an insured.
