home exam

Marjorie is asked by John to not put information on his health insurance application about his last injury on the job. Marjorie knows that John was wronged by his employer, and to deny him coverage would be detrimental to his well-being, so she omits the information. In which area is Marjorie basing her decision?

People: she believes that she should do unto others as she would hope they would do unto her

Tom is considering purchasing flood insurance but first want to obtain a FIRM. What does FIRM stand for?

Flood insurance rate map

The first FIRMs in Ben's community were completed in 2002. The apartment building he owns was originally built in 1969, but it was completely renovated in 2010. Into what category does Ben's building fall?

Post-FIRM

What traits are part of the Six Pillars of Character?

Honesty, loyalty, and courtesy

Because Cosby lives outside the 100-year flood plain and has a standard homeowners insurance policy,

he has no coverage for flood damage to his home or its contents.

Juanita owns a 2-year-old, four-family apartment building and lives in one of the units. Juanita's home is most likely insured under a:

homeowners policy

True or False: Informal ethics training lessons can be passed on to other members of the organization.

True: Regular review of ethical situations and how they were addressed can strengthen the responses to similar dilemmas going forward

Rupert is building a house that is located in an SFHA. When Rupert asks his agent what base flood means, the agent tells him that

it means the probability of a flood occurring in any given year is 1 percent or greater.

Trey Lilpigg's house is constructed entirely of bricks and is specifically designed to be wind resistant. This type of construction is:

masonry

After an earthquake damages or destroys many homes within 10 miles of its epicenter, all the following consequences are likely except:

The actual cost to reconstruct a damaged home decreases.

Rating Erin's flood insurance policy is relatively simple, because Erin's community currently qualifies for flood insurance under the emergency program. Which one of the following factors will not have a bearing on the premium she must pay?

The date on her community's initial FIRM

It would currently cost $250,000 to rebuild Arnold's older home at its current location. However, physical depreciation to the home is estimated at $75,000, since the house badly needs a new roof and siding and a new heating system. A comparable home in the same condition could currently be purchased for $150,000, not counting the cost of the land. The house is insured on replacement cost basis on a homeowners policy with a $300,000 limit on the dwelling building. If Arnold's house is totally destroyed in a wildfire, the insurer would be obligated to pay (ignoring deductibles):

$250,000

Antonio was able to purchase his newly constructed home for $300,000 by making only a $10,000 down payment. A vacant lot similar to his currently sells for $30,000. Based on this information, the replacement cost value of Antonio's home appears to be

$270,000.

After the previous owner defaulted on her mortgage, Carlos was able to purchase a nearly new home for only $300,000 with a 5 percent down payment. Because the house is nearly new, Carlos figures its physical depreciation cannot be more than $30,000. Because the builder now charges $365,000 to construct an identical new home in the same development on a lot that costs an additional $35,000, Carlos figures he got a good deal. Based on this information, the current mortgage holder will probably require Carlos to purchase insurance on the dwelling in an amount of at least

$285,000.

After the previous owner defaulted on her mortgage, Juan was able to purchase a nearly new home for only $300,000. Because the house is nearly new, Juan figures its physical depreciation cannot be more than $30,000. Because the builder now charges $365,000 to construct an identical new home in the same development on a lot that costs an additional $35,000, Juan figures he got a good deal. Based on this information, the replacement cost of Juan's home appears to be:

$365,000.

Jonathan's home has a current insurable value of $500,000, but he expects the value to increase by $50,000 during the next year. If these assumptions are correct, Jonathan can best insure his home for its current full value by buying a homeowners policy with a:

$500,000 limit and a 10 percent inflation guard endorsement.

What trait is not part of an ethical organization?

A strong commission structure

Meryl and Steve are in charge of drafting their company's code of ethics. What items should not be included?

A transparent account of what agent commission rates are

What does a well-crafted code of ethics do?

All of the above

Bill's client Andrew has applied for auto insurance for his three cars. However, he purchased a fourth car for his teenaged daughter but did not contact Bill for 2 weeks about insuring it. Andrew's daughter had had two minor accidents during that time, and Andrew mentioned it to Bill. However, Bill realized if he let the insurer know about these accidents, Andrew would either not receive coverage or would have to go with a more expensive insurer's policy, which came with a lower commission for Bill. When filling out Andrew's application, Bill decided not to mention either accident, as Andrew had paid out of pocket for them. What has Bill done?

Bill has falsified the application and steered business to an insurer with a better commission structure

Which elements should not be part of an ethics training plan?

Closed-door session to identify troublemakers

Melanie has just heard about an across-the-board rate hike from the insurance insurer with which she works. She is meeting with Jan and Larry, whom she knows can't quite afford a higher premium since Jan just lost her job, to sell them a property policy. What should she do?

Disclose the rate hike and help them find ways to afford coverage

Debra is working with Manny, who has suffered a brain injury that has left him partially paralyzed. Manny is applying for homeowners insurance. At a party that same day, Debra sees a business woman, who mentions she's interviewing Manny for a position. She asks Debra what she knows about Manny. Debra decides not to mention Manny's paralysis. What is this an example of?

Ethical competency and compliance. Debra practiced restraint in not interfering with Manny's life or revealing personal information

Which are not considerations for writing a code of ethics as recommended by the Society for Human Resource Management?

Exclude the CEO and board from compliance with the code

Roger is working with XYZ Company selling property insurance. XYZ has made an agreement with Roger to grant him authority to conduct business on its behalf. In doing so, Roger conducts cold calling in order to win new customers. What law of agency principle(s) applies(y)?

Express and implied: The original agreement was expressly stated. Also, Roger's prospecting is considered an implied part of the job

True or false: The National Insurance Act of 2006 created optional federal regulation of the insurance industry.

False

What are some ways to ensure the success of a code of ethics?

Get CEO buy-in, appoint an ethics management person or team, and establish a board-level ethics committee.

Donna has just filed Peter's application for life insurance when she realizes that Peter did not sign the check. Peter has just left on a 2-week vacation, and his goal was to have the insurance in place should something occur while he is in another country. What should Donna do?

Have Peter send a check immediately and alert the insurer of the misstep on Peter's part

Mark wants to market his company's new life insurance product, but he knows that ABC Insurance Company has a better product. What can he do?

He can showcase his product in comparison with ABC Company only if he relies on an honest representation of both products

Richard gets Martin's auto insurance request 5 minutes before he's to leave the office and catch a flight to Spain. What should Richard not do with the request?

He should put the request on his desk and deal with it personally when he returns from Spain

Carl has been approached by XYZ Insurance Company to sell its products. He is currently under contract with RST Insurance Company, which is XYZ's direct competitor. What should Carl do?

He should refuse the offer because of the conflict of interest

Under what circumstances is it acceptable to alter a claim amount in order to secure a settlement for a client?

Never. Any instance of altering a claim amount is considered fraud

Josie gives Adam her premium payment for her mortgage insurance a few weeks early. Adam is on his way out of the country for business and doesn't have time to put the money in the escrow account. Instead, he locks it in his desk drawer and lets Josie know he'll send it in when he returns. Is this legal?

No. He should take the time to deposit the money in the escrow account or arrange for a staff member to do it while he's away

Russell files a claim with his insurer through his agent, Amy. However, when his claim is denied, he realizes it is because Amy didn't tell him that holding paintball fights for profit in his backyard wasn't covered under the homeowners policy. What is Amy guilty of?

Omission: Amy was aware of Russell's business but didn't procure coverage for the business use of his home.

Jan has a friend who needs a hard-to-find coverage. A representative at Big Insurance Company had told Jan in a phone conversation that he did have the coverage she was looking for. He also said agents who sell Big Insurance Company's policies usually earn a 10-percent commission. Jan went back to her friend and secured the sale. Big Insurance Company sent the policy to Jan for her friend but refused to pay Jan a commission. It contends that Jan is not an agent of its company; therefore, she is not entitled to commission for the sale. What is this arrangement called?

Ostensible authority: Big Insurance Company led Jan to believe she was authorized to act on the company's behalf. They owe her the commission

Anthony doesn't like smokers. Carl is an agent who has a stellar track record, but he smokes constantly. Anthony does not hire Carl because there is no law saying he cannot discriminate against smokers. What method of decision-making has Anthony used?

Rules-based: because there is no law saying it's wrong, Anthony feels he is correct in his decision

How often should ethics training occur within an organization?

Training should be ongoing. Managers and employees should be operating with ethics as a large part of every decision and business interaction.

Which of the following questions are examples of Socratic questioning?

What brought you to your conclusion? What are you implying?

When can an agent's authority not be revoked?

When the agent is owed money the insurer does not think he or she deserves

A contractor estimates that it would cost $400,000 to construct an identical new home on the vacant lot next door to the Smothers sisters' current home. A detailed breakdown reveals that $10,000 of this amount would be used for the excavation, and another $20,000 for the foundations, pipes, and so forth that would be located under the basement floor. What is the smallest amount of homeowners insurance the Smothers sisters can purchase to qualify for coverage on a replacement cost basis?

a. $296,000 (which is 80 percent of $400,000 - $30,000)

XYZ Insurance Company has a rule that employees will not accept or offer gifts or free meals. Yet Fred, who is the company's top agent, came from a background of schmoozing the client in order to secure the sale, and he argues that the client expects it, so he continues to buy his clients dinner. How would you describe Fred's behavior?

a. Fred is breaking the company's code of ethics.

Jill's client Andrea filed a claim for fire and smoke damage in her home. The damages totaled $13,200. Jill filed a claim in the amount of $14,200, assuming that the insurer would find a way to discount Andrea's final amount. If the claim is paid in full, Jill intends to keep the additional $2,000 as a bonus for working so hard for Andrea. What is this practice known as?

a. Hard fraud-Jill is intentionally claiming higher losses than those actually incurred by Andrea.

Helen is meeting with her agent, Marie. Marie is explaining to Helen that her current term life insurance policy, while adequate to cover her expenses, does not provide an income for her should she need one in the future. Helen is on a fixed income and has begun experiencing some expensive health issues. Marie suggests that Helen consider replacing or augmenting her term policy with a universal life policy, which could allow her to withdraw funds to help cover her bills. What is Marie doing?

a. Marie is giving good advice to Helen based on Helen's lifestyle changes and needs.

Incorrect answer 1. Who is liable to the client in an insurance transaction?

a. The insurer in cases where agent authority has been established

Anne wants to increase her sales territory, so she creates a brochure she sends out to residences within a five-mile radius of her office. In that brochure, she explains how her insurance products are superior to those of XYZ Company. She gives a side-by-side comparison of products. Is Anne acting ethically?

a. Yes

When a home's roof is damaged by a covered peril, and a partial loss to the home is adjusted on an actual cash value basis,

a. a deduction is made for physical depreciation.

Correct answer 2. The exterior wall of a frame construction building may be made of any of the following materials, except:

a. cinderblock

An insurance agent speaking at a countrywide convention of agents and brokers informs them about the common reasons why only a fraction of properties exposed to the risk of flood damage is actually insured against flood. First, he points out that those who own properties that are not subject to an obvious flood hazard tend to discount the possibility of flood damage. The other reason why not many properties are insured is that

agents find it difficult to arrange NFIP policies for their customers.

Which advertising statement is not misleading?

b. Does your current life insurance policy still fit your needs? Call us today for a free policy checkup

Sam, a current member of IIABA, is taking his licensing renewal course. However, he's struggling when it comes to understanding the nuances in some of the questions. He talks it over with Jennie, who just passed the exam a week prior. She offers to share with him photos of the test answers she took with her cell phone. What should Sam do?

b. Refuse and report Jennie to the company for unethical behavior

The Basic Form and Broad Form dwelling policies both:

b. include a specific limit for each coverage that is provided.

Blake's new home has three bedrooms upstairs; a living room, a dining room, and a kitchen on the first floor, which is at ground level; and a finished family room and a storage area on the lower level. For flood insurance rating purposes, the lowest level of Blake's house is considered a(n)

basement.

Wendy has an old-fashioned windmill 30 feet high in her back yard. Assuming adequate limits, Wendy's homeowners policy:

covers the windmill on a replacement cost basis.

Incorrect answer 1. The area where a housing development adjoins natural areas of forest or scrub brush is known as the:

d. wildlife-urban interface.

As a member of the Seaside Condominium Association, Christa approves the association board of directors' proposal to purchase flood insurance. At a later meeting, Christa is shocked to discover that the flood policy, known as an RCBAP, does not cover flood damage to

personal property in her condominium unit.

When the snow melts, a creek overflows and covers six low-lying acres of property that also contain some buildings. This is an example of

river flooding.

All of the following are included in Microsoft's value statement EXCEPT

technology above all else

After hearing that many people qualify for federal disaster assistance following flood damage to their homes, Mari decides not to buy flood insurance. Mari apparently does not realize that

the assistance will be a loan that she has to repay.

Before signing a purchase agreement on the home she is considering, Toni checks to determine what flood zone the property is in. When she finds out that it is in Zone B, Toni realizes that

the house is in a moderate risk area.