Unit 3 Exam Questions

Question 1

Brady and his wife Julie had an insurance policy that was canceled by the insurer before the expiration date. They will received a portion of their premium back on a ___________.

Answer 1

Prorated basis

Question 2

The provision that states, where a loss must occur for it to be covered, is known as ________.

Answer 2

The policy territory provision

Question 3

Which of the following isn’t a factor that determines the premium rate?
Operating Expenses,
Loss  Reserves, 
Cost of handling claims,
Insurer’s credit

Answer 3

Insurer’s Credit

Question 4

The declarations section  of a policy contains all of the following  information  except;
Current  Address,
Covered  Perils,
Policy Deductibles,
Name of  the insured

Answer 4

Covered Perils

Question 5

The amount of money that the insurance company makes by providing insurance for a designated period is called ____________.

Answer 5

The earned premium

Question 6

Randall has an insurance policy that states that his policy began at 10:00 AM EST on 01/17/2020 and ends at 12:01 AM EST on 01/17/2021of the following year. These details are known as ____________.

Answer 6

The policy period

Question 7

Glenn’s Insurance policy was canceled by the insurer on the effective date. This is called _______.

Answer 7

Flat cancellation

Question 8

A written statement that gives an insured immediate coverage for a specified time is known as _______.

Answer 8

Binder

Question 9

Which of the following isn’t apart of the underwriting process?
Evaluating premium expense tools,
Assessing risks and exposures,
Determining premium and coverage amounts,
Accepting or rejecting applications

Answer 9

Evaluating premium expense loads

Question 10

All of the following statements about the Fair Credit Reporting Act are true except;
The maximum penalty for obtaining consumer information reports under false pretenses is a $5000 fine, imprisonment for one year, or both,
Reports on consumers are prohibited unless the consumer is made aware that an investigative report may be made,
Consumers that feel that something in their files is inaccurate may dispute the information,
Notice to the applicant must be sent within 5 days after the report is requested

Answer 10

Notice to the applicant must be sent within 5 days after the report is requested

Question 11

Which of the following isn’t an example of an insurable interest?
Dry cleaner’s interest in his customers’ clothing in his custody, care, or control
Person’s interest in the care that he owns,
Person’s interest in property she sold,
Person’s Interest in the home she owns

Answer 11

Person’s interest in property she sold

Question 12

A car speeds through a red light at an intersection, totaling their car. After his insurer paid for the total loss of his car, his insurance company pays suit against the negligent party to recover the amount paid for the loss. This is known as ____________.

Answer 12

Subrogation

Question 13

Casualty insurance_______________.

Answer 13

Protects an insured from legal liability arising from injury or damage to the property of others

Question 14

According to the Gramm-Leach Bliley Act, anyone who has an ongoing relationship with a financial institution is considered to be a ____________.

Answer 14

Customer

Question 15

Which of the following states that a policy may not be transferred to anyone else without the written consent of the insurer?
The estoppel condition,
The indemnification condition,
The assignment condition,
The transfer condition

Answer 15

The assignment condition

Question 16

All of the following statements about property insurance are correct except;
Property insurance provides protection on damage to your belongings from theft,
Property insurance primarily provides coverage for damage to the property of others,
Property insurance provides protection for structures and contents,
Property insurance pays the insured for covered losses to a property

Answer 16

Property insurance primarily provides coverage for damage to the property of others,

Question 17

Natalie has an insurance policy that specifically doesn’t cover flood damage. This information can be found in which section of the policy?

Answer 17

Exclusions Section

Question 18

What part of the policy states the rules of conduct, duties, and obligations that are required for coverage?

Answer 18

Conditions section

Question 19

The person that is listed on the declarations page when there are multiple people insured ina policy, and may have higher-level duties or rights in the policy is known as ___________

Answer 19

First named insured

Question 20

Which of the following statements about the deductible in an insurance policy is correct?
The lower the deductible the lower the premium
The deductible rate doesn’t influence the premium rate
The lower the deductible the higher the premium
The higher the deductible the higher the premium

Answer 20

The lower the deductible the higher the premium

Question 21

A promise to pay and perils covered are described in

Answer 21

The insuring agreement

Question 22

All of the following are included in the duties after loss provision except
Notify insurer/agent of loss
Salvage damaged property
Provided detailed proof of loss
Make property available for inspection

Answer 22

Salvage damaged property

Question 23

Nathan & Allison have 2 insurance policies on their home. Policy A has a coverage limit of $100,000. Policy B has a policy limit of $200,000. When Nathan and Allison have a house fire and file a $100,000 claim policy A paid 50,000 and policy B paid 50,000. This is an example of what insurance provision?

Answer 23

Contribution by equal shares

Question 24

The penalty for early cancellation of an insurance policy by the insured is applied on;

Answer 24

A short-rated basis

Question 25

All of the following statements about cancellation and non-renewal of an insurance policy is true except;
The named insured can only cancel the policy on the renewal or expiration date
When an insured cancels a policy the insurer is entitled to keep a percentage of the unearned premium
An insurance policy can be canceled by the insured before the expiration date
When an insurer cancels a policy any unearned premium must be prorated and returned to the insured

Answer 25

The named insured can only cancel the policy on the renewal or expiration date