Insurance

What is a Certificate of Insurance?

A written document showing the types and amounts of insurance that have been issued to the insured.

An additional loss that results from a direct loss of property is called a/an

Indirect loss

Persons covered under an insurance policy, whether named or not, are known as

Insureds

The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and insured is called the

Insuring agreement

Which of the following coverages in dwelling and homeowners policies is for indirect losses?

Loss of use

Which of the following does the term proximate cause refer to?

Negligence that leads to an injury.

When an insurance policy does not offer a continuation or replacement at its expiration date, it is considered a

Nonrenewal

What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy?

Open peril policy

Before an insurer will pay any loss under a policy, what is usually required from the insured?

Proof of loss

The risk of loss may be classified as

Pure risk and speculative risk

Which method of loss valuation is contrary to the basic concept of indemnity?

Replacement cost

In property insurance, actual cash value is defined as which of the following?

Replacement cost at the time of the loss, less depreciation.

Events in which a person has both the chance of winning and losing are classified as

Speculative risk

An insured's 9 year-old son threw a ball, accidentally breaking a neighbor's plate glass window. The insured was found legally liable for the cost of replacing the window. This is an example of

Vicarious Liability

When a parent is required to pay for damages caused by his or her children, this is an example of

Vicarious Liability

What is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty

When forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage.

The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to

$250,000

What type of liability would a person who owns a swimming pool have?

Absolute

A person who is not named as an insured on the declarations page of a policy but is protected by the policy is known as the

Additional insured

What is defined as the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims that may be made or the number of accidents that may occur?

Aggregate limit of liability

In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation?

Agreed value

Which of the following types of valuation works best for property whose value does not fluctuate much?

Agreed value

In return for premium, an insurance company must

Be fair in underwriting and pay covered losses.

Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as

Cancellation

When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of

Concealment

The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the

Conditions

Something of value exchanged between the insurer and the insured is considered a/an

Consideration

What types of compensatory damages will pay for pain and suffering and disfigurement?

General

Which of the following is not an element of negligence?

Libel

An insured carries a property policy on her home in the amount of $250,000. A bank is shown as the mortgagor in the policy. Last month, the insured made her final mortgage payment, but did not remove the bank from the policy. In the event of a covered loss to her home, how much will the bank receive?

Nothing

Losses caused by continuous or repeated exposure to conditions resulting in injury persons or damage to property that is neither intended nor expected is the definition of

Occurence

What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?

Other insurance

A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is

Proof of loss

The Gramm-Leach-Bliley Act was passed to

Protect private customer information filed with a financial institution.

What type of damages may be awarded by the court to create disincentives that discourage behavior that is deemed highly undesirable by society?

Punitive

The Federal Fair Credit Reporting Act does what?

Regulates consumer reports

The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as

Subrogation

The transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses?

Subrogation

Robbery is

Taking of property by use of force, violence, or fear.

What protects consumers against the circulation of inaccurate or obsolete personal or financial information?

The Fair Credit Reporting Act

In insurance, an offer is usually made when

The completed application is submitted

Liability imposed on one party as a result of the actions of another person is known as

Vicarious Liability

An advertising company has its annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupants of the other car involved in the accident sue the company for serving the customer too much alcohol. Will the company's businessowners policy provide coverage?

Yes, none of the exclusions will apply.

Under business owners policy Section I, if an insurer wants to nonrenew a policy, how many days before the expiration date must the insurer notify the mortgage holder?

10 days

A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss?

$30,000

Three years ago, an insured moved to an unfinished apartment. She bought new furniture that cost $9,000. Last week, there was a fire in the apartment that destroyed the furniture. Replacement cost is $10,500. The adjuster told the insured her furniture depreciated $2,500. If insurance is written on an actual cash value basis, how much will it pay for the loss?

$8,000

An insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for how many days?

30 days

In the event of a loss covered by the policy, if the insurer requests a signed sworn proof of loss, the named insured is required to submit it within

A specified time

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?

Additional coverage

What clause establishes the procedure for determining the amount of loss when the insurer and the insured cannot agree on the value of property or the amount of loss?

Appraisal clause

What is a method of claim settlement used when the insured and insurer cannot agree on how to settle a claim?

Arbitration

What describes the transfer of a legal right or interest in an insurance policy?

Assignment

Insurable interest in the property covered in a policy must be proven when?

At the time of loss.

An insured intentionally did not disclose a material fact on an application for insurance. This would be considered

Concealment

An insured's business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this?

Consequential

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which insurance principle has the insurer violated?

Consideration

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as

Consideration

Which property coverage would provide protection to contents damaged by fire? (Coverage A, B, C, or D)

Coverage C

The part of a property policy that shows the amount of insurance, premium, and policy term is the

Declarations

What is a mandatory part of an insurance policy that varies with each individual policy?

Declarations

An insured is applying for a casualty insurance policy. One of the conditions of the policy allows the insurance company to inspect the insured's books at the end of the policy term to make sure sufficient premium has been collected for the exposure she plans to insure. Which condition is part of the insured's policy?

Deposit premium audit

What would modify the original insurance contract by either adding or removing coverage?

Endorsement

The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the

Exclusions

What would be named on the declarations page of a property or liability policy?

First name insured

Replacement cost is defined as

Full replacement of property at its current cost, new and without reduction for depreciation.

Under the professional liability loss settlement provision, what must an insurer do before offering to pay a claimant to settle a claim?

Get the insured's consent

Events or conditions that increase the chances of an insured loss occurring are referred to as

Hazards

The policy conditions define

How parties to the contract must act following a loss

When would a misrepresentation on the insurance application be considered fraud?

If it is intentional and material.

Under which condition can broad theft coverage be added to a dwelling policy?

If the insured is owner-occupant of the dwelling.

Burglary is defined as

Taking of property from within the premises leaving visible signs of forced entry.

Who is responsible for filling out the Notice of Claim Form?

The insured

Which of the following is most likely occur if it is determined by the audit that the deposit premium was too high?

The insured will receive a return premium.

A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean?

There is no coverage.

Which of the following best expresses the purpose of a stated value contract?

To pre-establish the amount of coverage available for property items that are difficult to value.

An insured relocated to another state for work. However, she still owns and insures a house in this state, but has had no one living in it for 3 months. She is also storing furniture and clothes in the house. From an insurance standpoint, the insured's house is considered

Unoccupied