Insurance Purr

What are the continuing education requirements for producers in this state?

All licensees, except for limited lines and temporary licensees, must complete 24 hours of CE credits every 2 years, with at least 3 of those hours in ethics.

The insured with a homeowners policy has had damage to his property caused by a volcano. Which of the following is true?

All volcanic eruptions within a 72 hour period are considered one occurrence

Indirect Loss

Also known as consequential losses, are losses considered a result of direct loss.

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

What is proof of loss?

Is a sworn statement that must usually be furnished by the insured to an insurer before any loss under a policy can be paid

All of the following statements are true regarding employee dishonesty optional coverage under the business owners policy except

It provides coverage for all employees, even those who were terminated in the past 90 days

What coverage is provided by the hired and nonowned auto liability endorsement?

It provides coverage for liability arising out of the use or maintenance of hired or nonowned auto

What does coverage C - Medical Payments provide?

It provides for necessary medical or funeral expenses for third parties injured because of the insured's business operations.

What does coverage A of the commercial general liability policy provide coverage for?

It provides protection for injury or death suffered by third parties and protection for damage to property of others.

If an employer in a state with elective workers compensation laws chooses not to be subject to those laws, what does the employer lose?

Its common law defenses against liability suits

Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy?

The insured would be responsible for the amount required as underlying limits in the event of a claim

What are the 2 main parts of workers compensation insurance?

Part I is workers compensation, and Part II is employers liability.

An insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. Which type of limit of liability does this insured's policy have?

Per Occurrence

What type of coverage is provided by coverage E- Personal Liability?

Personal liability (coverage E) will respond if a claim is made or a suit is brought against an insured for damages due to bodily injury or property damage caused by an occurrence to which the coverage applies.

What coverages are available in the physical damage section of the personal auto policy?

Physical damage coverage includes both collision and other than collision coverage.

What parts make up a commercial policy?

Policy cover, common policy declarations, interline endorsements, line(s) of insurance declaration page(s), line(s) of insurance coverage form(s), common policy conditions, line(s) of insurance conditions, causes of loss forms, and endorsements.

With respect to commercial auto policies, the Garage Coverage Form provides liability protection for all of the following EXCEPT

The insured's business income losses due to personal injury.

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

The insurer will have to pay a fine.

If more than one person has an insurable interest in the property, is the insurer liable for more than the insured's interest in the loss or damaged property?

The insurer will not be liable for more than the insured's interest in the loss or damaged property

Which of the following statements would be an example of product liability claim?

Faulty packaging of a cereal caused by spoilage that resulted in someone getting sick

Which of the following statements would be an example of a product liability claim?

Faulty packaging of a cereal caused spoilage that resulted in someone getting sick.

In a commercial package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer?

First named insured

When is an appraisal needed? How is it requested?

If there is a disagreement between the insured and the insurer on the value of any property loss, either party can make a written demand for an appraisal. Each party will select a competent appraiser who will then select an umpire if they are unable to agree on a fair value.

Under HO-6, where may business property be stored?

HO-6 will cover a structure that contains business property solely owned by an insured or a tenant of the dwelling, provided that the business property does not include gaseous or liquid fuel, other than fuel in a permanently installed fuel tank of a vehicle or craft parked or stored in the structure.

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

Hazards

What coverages does the extra expense coverage form provide?

IT reimburses the insured for extra expenses the insured incurs to keep operational after a loss

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

If it's intentional

What does fair rental value include?

If property under coverage A, B, or C becomes damaged or destroyed and unfit for normal use, the policy will pay the fair rental value of the described premises under coverage D. Fair rental value, or part of it used as rental property

Employment practices liability insurance (EPLI)

Insurance that provides employers with protection against claims of discrimination, wrongful termination, sexual harassment, or other employment-related issues.

All of the following are conditions commonly found in the insurance policy EXCEPT

Insuring agreement

The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property is called

Pro rata liability

Who would want professional liability coverage and why?

Professional liability coverage is beneficial to individuals who provide professional services to others for a fee. It protects them against legal liability that can result from negligence, errors and omissions, and the rendering or failure to render professional service.

What does it mean for a vehicle owner to provide proof of financial responsibility?

Proof of financial responsibility may be shown by any of the following: A certificate of insurance (with the same effective date as the date of the motor vehicle liability policy); a bond of an authorized surety company

What are the advantages of prepackaging?

Property and liability coverage is packaged; options most frequently needed are included or available for small additional premium: and the rates for the entire package are extremely favorable.

While an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of the insured's auto policy would pay for the damage to the store?

Property damage liability

What do utility services include?

Provides coverage for direct damage caused by utility service disruption stemming from a covered peril.

All of the following are considered parts of the policy structure EXCEPT

Provisions

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 risk of loss may be classified as

Pure risk and speculative risk.

What are the broad powers and duties of the Commissioner of Insurance?

Regulate the affairs of the Insurance Department, prescribe forms and procedures, aid in interpretation of laws.

The Federal Fair Credit Reporting Act

Regulates consumer reports

What type of information would be found in a policy's insuring agreement?

Renewal dates

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

Replacement Cost

Which of the following is used in the formula for calculating the actual cash value of a property?

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

What does representation mean and how does it differ from warranty?

Representations are statements believed to be true to the best of one's knowledge. A warranty is an absolutely true statement upon which the validity of the insurance policy depends.

The endorsement that provides coverage for losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formations is a/an

Sinkhole collapse endorsement

What businesses qualify for coverage under a businessowners policy?

Small to medium sized businesses

Name the 3 types of legal entities

Sole Proprietor, Partnerships, Corporations

What is included under the term insurance transaction?

Solicitation, negotiating prior to execution of a contract, execution of a contract, and the transaction of any matters that arise as a result of the contract, as well as the actual process of insuring.

An insured owns several buildings, each at a different location and insured on separate policy. What type of coverage does the insured have?

Specific

Special Damages

Specific out-of-pocket expenses for medical, miscellaneous expenses, and loss of wages.

Fair Credit Reporting Act

The law that protects consumers against the circulation of inaccurate or obsolete personal financial information, and to ensure that consumer reporting agencies are fair and equitable in their treatment.

What additional coverages are included with the liability section of the HO policy?

The liability section of the homeowners policy includes claims expense, first aid to others, damage to the property of others, and loss assessment coverage.

The members of a limited liability company are insureds under a businessowners policy (BOP) if

The limited liability company is designated as the named insured.

What coverages are included in the equipment breakdown coverage form?

The policy covers loss to property owned by the insured; loss or damage to property of others in the insured's care; up to $25,000 for expediting expenses and 90 days automatic coverage for newly acquired locations.

Define insured and insured location

The policy defines the insured as the named insured and the residents of the premises who are relatives or under age 21 and in the care of the insured. The insured location is the residence premises or any other premises at the same location, or part of it used by the insured as a home and described in the declarations; a premises not owned by the insured, but where the insured is temporarily living; vacant land owned or rented by the insured, excluding farmland; land owned or rented by the insured where a residential dwelling is being constructed; individual or family cemetery plots or burial vaults; and any part of premises occasionally rented to an insured, except for businesses purposes

What is the purpose of removal, and how long does coverage last in a dwelling policy?

The policy will pay for loss or damage to property removed from the insured premises when threatened by a peril insured against. The basic form policy provides coverage for 5 days, while the broad and special forms provide 30 days of coverage.

Supplementary payments on a CGL provide all of the following except

Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds

Frank's Steaks furnishes meat to steakhouses. An accident on the premises causes the building to lose refrigeration for 32 hours. The state inspectors will not allow the meat in the refrigerating units to be sold for human consumption, and Frank loses $18,500 in disposing of the meat. What coverage under Frank's BOP policy will cover the loss?

Utility service - direct damage

A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint, the building is considered

Vacant

All of the following are essential elements of a commercial package policy (CPP) EXCEPT

Valuations or settlement provisions

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

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

Vicarious liability

Material Misrepresentation

a statement that, if discovered, would alter the underwriting decision of the insurance company. If intentional, could be considered fraud.

Per Occurrence

a sublimit in a liability policy that puts a ceiling on the payment for all claims that arise from a single accident/occurrence

Accident

a sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage that is neither expected nor intended.

Proof of Loss

a sworn statement that must usually be furnished by the insured to an insurer before any loss under a policy can be paid

Named Peril

a term used in property insurance to describe the breadth of coverage provided under an insurance policy that lists specific covered perils.

Endorsements

are printed addendums to a contract that are used to change the policy's original terms, conditions, or coverages.

Split Limits

are separately stated limits of liability for different coverages

What is a peril?

are the causes of loss insured agains in an insurance policy

Policy limits

are the maximum amount an insured may collect, or for which an insured is protected under the terms of a policy.

Physical Hazard

are those arising from the material, structural, or operational features of the risk, apart from the persons owning or managing it.

In equipment breakdown coverage, all accidents would be considered a single accident if they occur

at a single location from the same cause

insurable interest in a property policy must be proven

at the time of loss

Mortagagee Clause

attached to a policy to protect the interest of the mortgagee in the mortgaged property

Define subrogation

is the acquisition by an insurer of an insured's rights against any third party for indemnification of loss or other payment, to the extent that the insurer pays the loss.

Mysterious Disappearance

is the disappearance of property without knowledge as to the location, time or how the property was lost.

Stated value

is the estimated value an asset will realize upon its sale at the end of its useful life.

Concealment

is the legal term for intentional withholding of information of a material fact that is crucial in making a decision.

Per Person

is the maximum amount available for payment of bodily injury to a single person in an accident, regardless of the policy limit stated in the policy for bodily injury claims.

Aggregate Limit

is the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of the number of claims made or the number of accidents that occur.

Declarations

is the section of an insurance policy containing the basic underwriting information, such as the insured's name, address, amount of coverage and premiums, and a description of insured locations.

Insuring agreement

is the section of an insurance policy containing the insurer's promise to pay.

Condition

is the section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy.

Nonrenewal

is the termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or a replacement policy

What is risk?

is the uncertainty or chance of a loss occurring.

All of the following are true regarding deposit premium EXCEPT

it is 50% of the actual premium

All of the following are true regarding the deposit premium except

it is 50% of the actual premium

parties to a contract

must be capable of entering into a contract in the eyes of the law. Generally, this requires that both parties be of legal age, mentally competent to understand the contract, and not under the influence of drugs or alcohol.

Changes to the Policy

must be made by the insurer and be in writing.

exclusions

section of an insurance policy details the perils that are not insured against and what persons are not insured.

What is insurance?

transfers the risk of loss from an individual or business entity to an insurance company, which in turn spreads the costs of unexpected losses to many individuals.

Insured

anyone who is covered under the policy, whether named or not

Acceptance

Takes place when an insurer's underwriter approves the application and issues a policy.

Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective?

12:01 am the day after the application and premium are mailed

Under which of the following conditions can broad theft coverage be added to a dwelling policy?

2. Broad theft coverage cannot be added to a dwelling policy.

Duties of the insurer found in property policy conditions include all of the following EXCEPT

2. Notify the insured in the event of financial difficulty.

How long is the waiting period after the application has been accepted before flood coverage goes into effect?

30 days

Explain the 2 parts of the garage coverage form liability section

"Garage operations - Covered autos" protects the insured from losses resulting from the ownership or use of covered autos. "Garage operations - Other than Covered Autos" protects against loss that is a direct result from the insured's garage operations.

Workers compensation rating is developed by applying a rating bureau job classification rate to each

$100 of Payroll

An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage?

$14,000

Equipment breakdown coverage is written with a single limit of insurance per accident. What is the sublimit for hazardous substance cleanup or repair or replacement of contaminated property?

$25,000

Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?

$5,000

Indemnity

(sometimes referred to as reimbursement) is a provision in an insurance policy that states that in the event of a loss, an insured beneficiary is permitted to collect only to the extent of the financial loss, and is not allowed to gain financially because of the existence of an insurance contract. The purpose of insurance is to restore, but not let an insured or beneficiary profit from the loss.

The broad theft coverage endorsement on the dwelling form specifies all of the following limitations EXCEPT

1,000 on silverware

If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for

30 days

An insured suffers a windstorm loss in which the insured's driveway is blocked by two of the insured's trees and two of the neighbor's trees. The total amount of the removal adds up to the following: three trees at $300 per tree, and one tree at $600. How much will the insurer pay for the loss?

1,000

3 elements of insurable risk

1. Financial (a monetary interest) 2. Blood (a relative) 3. Business (a business partner)

Which professional liability form provides coverage for liability arising out of errors or mistakes made in rendering medical services?

1. Physicians, surgeons and dentists malpractice

What are the 4 ways that a motor vehicle can be classified as uninsured?

1. There is no liability bond or insurance for the vehicle 2. The bond or insurance is less than that required by the financial responsibility laws of the state in which the accident occurred 3. The accident was a hit-and-run, and the driver cannot be identified 4. The bonding company or insurance company denies coverage or is insolvent

Super Value Store has a commercial general liability policy written with a general aggregate limit of $300,000 and an occurrence limit of $100,000. A customer injured on the premises was awarded $45,000 for medical expenses and loss of earnings, and $60,000 for pain and suffering. The court costs and attorney fees were $15,000. How much will the CGL policy pay?

100,000

A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy?

175,000

Under the additional living expenses coverage, if a civil authority prohibits the insured from using the dwelling because of direct damage to a neighboring location from a peril covered in the insured's policy, loss would be covered for up to

2 weeks

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

30,000

An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has been depreciating at $200 per year and his policy is ACV, how much will it pay toward the insured's new roof?

5,000

The employee crime theft policy form includes a coverage extension that applies to employees temporarily outside the coverage territory for up to

90 days

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

250,000

Although the Commissioner must examine the affairs, transactions, records and assets of each authorized insurer as often as deemed advisable, each authorized insurer must be examined at least once every

3 years

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

3. The Fair Credit Reporting Act

Which of these 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?

4. Aggregate limit

A premium discount is the term that describes when an insured owes a total standard premium greater than

5,000

If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person?

50,000

How soon after a direct loss does the period of restoration for business income coverage under business owners property insurance begin?

72 hours

What is the coinsurance requirement for a theatrical property floater under an Inland Marine Policy?

80%

A contract for the transport of goods between the shipper and the carrier is called

A bill of lading

Deposit Premium Audit

A condition that allows the insurer to audit the insured's books or records at the end of the policy term to make sure adequate premium has been collected for the exposure. Usually, the insurer has up to. 3 years from the expiration of the policy to perform the audit.

Define a newly acquired auto.

A newly acquired auto is any vehicle acquired by the insured during the policy period.

Give an example of a nonowned auto

A nonowned auto is any private passenger auto, pickup, van, or trailer operated, but not owned, by the named insured or a family member; for example, a rental car

What is the main purpose of a temporary license, and how long can it be in effect?

A temporary license may be issued for the continuation of business in the event of the producer's death, disability, or military service, and it may remain in effect for 180 days.

What is a material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

The declarations page of the homeowners policy provides all of the following information EXCEPT

A statement that earthquake damage is not covered.

Which of the following definitions best defines the term "accident"?

A sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage neither expected nor intended

An insured owns and operates a ranch. The insured has several vehicles that are used in the ranching operation and for personal use. Which of the following could NOT be insured under a personal auto policy?

A two-ton grain truck with a 6,500-pound capacity

What does the valued policy law state?

A valued policy law states that, in the event of a total loss, the insurer must pay the full amount of the policy limit.

Which of the following would be considered an uninsured vehicle

A vehicle feeling a hit and run accident

In a personal auto policy, the medical payments coverage is similar to

Accident insurance, because it pays for medical expenses regardless of fault

Describe the difference between an uninsured and underinsured motorist in terms of liability insurance limits.

An "uninsured motorist" is a driver whose liability insurance limits are lower than the amount required by the state or whose insurance company is bankrupt. An "underinsured motorist" is a driver whose liability insurance is less than the amount of injuries or damages sustained by the insured.

What is the difference between an authorized/admitted and unauthorized/non admitted insurer?

An admitted or authorized insurer is qualified and received a certificate of Authority from the DOI to transact insurance in the state A non admitted or non authorized insurer is an insurance company that has not applied for, or has been denied a certificate of authority and may not transact insurance.

In insurance, an offer is usually made when

An applicant submits an application to the insurer

Which of the following would not qualify as hired auto?

An auto borrowed from an employee

Which would NOT be covered by the inside the premises - robbery or safe burglary of other property coverage?

An employee is caught stealing cash from the register.

Workers compensation statutes provide coverage for diseases that occur as a result of working in the employer's working environment. Which of the following is an example of a disease that would NOT be covered by such provisions?

An employee of a medical facility who suffers from a common cold

What is the definition of an underinsured motorist?

An individual who owns or operates a vehicle, but whose liability insurance coverage does not meet the state's financial responsibility.

What is a commercial floater?

An inland marine policy designed to cover movable commercial property, wherever it may be located.

What is a personal floater?

An inland marine policy designed to cover movable personal property

Deposit Premium Audit

An insured is applying for a casualty insurance policy. One of the conditions of the policy allows for 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?

Describe the duties of an insured motorist that is involved in an accident.

An insured motorist is required to promptly notify the insurer of the loss, cooperate with the insurer, forward any legal papers received, submit to a physical exam or to examination under oath when requested, allow the insurer access to medical records- among other duties

What is the difference between vacancy and unoccupancy?

An insured structure in which no people have been living or working and no property has been stored for the specified period of time constitutes vacancy. Unoccupancy refers to an insured structure in which no people have been living or working within the required period of time, but some property is stored.

Which coverage form would provide coverage for all incoming and outgoing shipments?

Annual Transit

A policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal do not agree on the value of a property loss is known as

Appraisal

An insured insists that the insurer owes him $10,000 for liability damages, while the insurer asserts that they owe no more than $7,000. Which of the following would most likely describe the type of claim settlement that the insured and the insurer might pursue?

Arbitration

Which of the following is a method of claim settlement used in casualty insurance when the insured and insurer cannot agree on how to settle a claim?

Arbitration

How often does the Commissioner of Insurance examine books and records of domestic insurers in this state?

As often as deemed necessary, but at least once every 5 years.

Insurable interest in a property policy must be proven

At the time of loss

Upon what grounds can the commissioner revoke or suspend a producer license?

Attempting to obtain a license through fraud or misrepresentation, violating any insurance law or regulations, and failing to pay state income tax are some of the examples

If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy?

Auto policy

What coverages are provided by a business liability coverage form?

Business liability coverage covers bodily injury, property damage, personal injury, advertising injury, and medical expenses.

What is covered in a building and personal property policy?

Buildings, business person property, and property of others on insured's premises.

An insurance contract must contain all of the following to be considered legally binding EXCEPT

Beneficiary's consent.

An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined?

Benefits will be provided if the state was listed on the policy information page

A policy that insures all property at multiple locations for a single amount is referred to as

Blanket

What type of insurance provides coverage for multiple classes of property at one location?

Blanket insurance is a single property insurance policy provides coverage for multiple classes of property at one location, or for more classes of property at multiple locations.

What is the difference between personal injury and advertising injury?

Both personal injuries and advertising injuries are nonphysical, but advertising injuries occur when the insured inadvertently injures another person during the course of advertising a product or service.

What is the difference between accident and occurrence?

Both result in injury to persons or damage to property that is neither intended nor expected; however, an accident is a sudden, unplanned and unexpected event, and an occurrence includes those losses caused by continuous or repeated exposure to certain conditions.

Example of Indemnity

Brenda has a homeowners insurance policy for 200k. Her home is destroyed and the expense to rebuild only comes to 150K. Brenda would only be given 150K (the amount of the loss) and the full 200K that her policy states that she may use

Representations are written or oral statements made by the applicant that are

Considered true to the best of the applicant's knowledge

The at-fault driver in an insured's auto crash had the state required minimums for auto liability coverage, but not enough to pay for all the damage done to the insured. This driver is

Considered underinsured

Dwelling Property Policy

Can be purchased to insure properties solely used for residential purposes in the following situations: -up to 5 roomers or boarders -up to 4 residential units -Properties in the course of construction -owner occupied, tenant occupied or both -Mobile homes on the basic form only, if they contain no more than one apartment, and are located at a permanent location listed in the policy -seasonal dwellings unoccupied for 3 or more months during a 12 month period -not designed as farm property

What is the difference between cancellation and nonrenewal?

Cancellation is the termination of an insurance policy by either party to contract prior to the expiration date shown in the policy. Nonrenewal is the termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or a replacement policy.

A builder's risk form is most often written as which of the following?

Completed value form

Definitions

Component of an insurance policy clarifies terms used in the policy.

In commercial auto insurance, what type of coverage will pay for loss or damage to a covered auto by any cause other that collision or overturn?

Comprehensive

How are compulsory laws different from elective laws?

Compulsory laws require employers to provide workers compensation coverage for employees. Elective laws do not.

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of

Concealment

What term best describes the act of withholding material information that would be crucial to an underwriting decision?

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 individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it?

Contracts equipment floater

A startup used car dealership buys cars at auto auctions in 30 states. It wants to be certain that damage coverage is provided when the cars are driven or transported from the auctions to the dealership. In regard to the business auto physical damage coverage, which is true?

Coverage is provided at additional premium

Which of the following is NOT an essential element of an insurance contract?

Counteroffer

A professional liability policy will provide coverage for loss in all of the following cases, except, when the insured doctor was shown to be

Criminally negligent.

ACV equation

Current Replacement Cost- Depreciation= Actual Cash Value

Which of the following is a mandatory part of an insurance policy that varies with each individual policy?

Declarations

What information is included in a policy's declarations?

Declarations include the basic underwriting information (such as the insured's name, address, amount of coverage and premiums, and a description of insured locations), and any supplemental representations by the insured.

Replacement Cost

Defined as the cost to replace damaged property with like kind quality at today's price, without any deduction for depreciation.

The part of a policy that clarifies terms in the policy is the

Definitions

Employment practices liability insurance (EPLI) would not cover claims arising from

Deliberate law violation

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

How are indirect and direct loss related?

Direct losses can cause indirect losses.

Direct Loss

Direct, physical damage to buildings and/or personal property.

Which commercial crime form would provide coverage for a loss that did not necessarily happen during the policy period but was revealed during the policy period?

Discovery form

What are the two forms of commercial crime insurance

Discovery form and loss sustained form

Vicarious Liability

Doctrine comes from the old english law "respodeat superior," in which the master was liable for the acts of their servants.

An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay?

Each policy will pay $25,000 of the loss.

What is the purpose of the coinsurance clause found in property insurance policies

Encourage the insured to insure the property closer to its full value.

Which of the following would modify the original insurance contract by either adding or removing coverage?

Endorsements

What is the term used to describe printed addendums to a contract that are used to change the policy's original terms, conditions, or coverages?

Endorsements are printed addendums to a contract that are used to change the policy's original terms, conditions, or coverages.

What losses are excluded from coverage in the liability section of the Personal Auto Policy?

Excluded losses include intentional injury or damage; bodily injury to an employee during the course of employment; and use of a vehicle as a public or livery conveyance

What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?

Experience modification factor

All of the following are excluded in the equipment breakdown basic policy EXCEPT

Explosion of steam boilers

Replacement cost is defined as

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

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

General

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

What type of policies may include the insurance to value provision?

Homeowners policies

A Mobile Homeowners Policy is structured the same as a

Homeowners policy

The policy conditions define

How parties to the contract must act following a loss.

In liability insurance policies, supplementary payments are made

In addition to the limit of liability

CGL Coverage B (Personal and Advertising Injury) will cover

Inadvertent injury to others caused in the course of advertising the insured's product

Additional insureds

Individuals or business that are not named as insured on the declaration page, but are protected by the policy, usually in regard to a specific interest.

All of the following statements are false regarding garage physical damage coverage except

No coverage is provided for any auto stored for more than forty-five days at a location not shown in the declarations

Which of the following is defined as a covered cause of loss in businessowners property coverage?

Leakage from fire-extinguishing equipment

For a contract to be enforceable by law, the purpose of the contract must be

Legal and not against public policy

What does the liability section of the Personal Auto Policy protect the insured against?

Liability Coverage of the PAP protects the insured against loss arising from legal liability when an automobile that the insured owns, operates or maintains is involved in an accident.

Is liability coverage provided with all HO forms?

Liability coverage is included in all the homeowners policy forms

What are the applicable penalties for violating the Insurance Code in this state?

License suspension, revocation or denial, and/or monetary fines.

Which of the following would be covered under the crime coverage inside the premises - theft of money and securities?

Loss or damage to a locked safe, vault, or cash register

The process of determining the premium charged and how much insurance is required for a particular loss is called

Loss valuation

What services are covered by the medical expenses of a business liability coverage form?

Medical expense coverage form includes ambulance services, X-ray services, and first aid when the accident occurs.

Actual Cash Value (ACV)

Method of valuation reinforces the principle of indemnity because it recognizes the reduction of value of property as it ages and becomes subject to wear and tear and obsolescence.

Which of the following will be covered by the contractors equipment floater in an unfiled inland marine insurance?

Mobile equipment only while it is located on the job site

What is the definition of major cause?

More than 50% of the cause of an injury

What type of policy does a personal floaters policy cover?

Moveable personal property wherever it may be located

An insured owns and operates a commercial business. He has included a business income coverage form with his commercial package policy. When the insured's business is severely damaged by fire, the business income coverage will pay for

Net income plus continuing expenses of the business.

Who is exempt from the licensing requirement in this state?

Officers, directors, or employees of an insurer or of an insurance producer who do not receive commission on policies written or sold, and whose duties are strictly clerical, administrative, and managerial nature are exempt from licensing requirements

What er extended cover perils?

On a basic policy, extended covered perils include windstorm or hail, explosion, smoke, aircraft and vehicles, riot or civil commotion, volcanic eruption, and vandalism and malicious mischief.

Workers compensation benefits are provided for an employee injury or death that arises out of the course of normal employment in all of the following situations except

On his evening stroll, an employee of an advertising company is injured while watching a competitors billboard sign being removed from an advertising site

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

Open peril Policy

The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land

Owned or leased by the resident of the mobilehome.

What constitutes rebating?

Rebating includes premiums payable on the policy, special favors or services, advantages in dividends or benefits, stocks, bonds, securities, and their profits (and similar inducements).

Unoccupancy (nonoccupancy)

Refers to an insured structure in which no people have been living or working within the required period of time, but some property is stored.

Vacancy

Refers to an insured structure in which no people have been living or working, and no property has been stored for the period of the time required as stated in the policy. (usually 60 days)

What is a self-insured retention, and when is it applicable?

Self-insured retention is retained limits that the insured must satisfy before the umbrella policy will respond to certain kinds of losses. The self-insured retention comes into play only for losses that are not covered by any underlying insurance.

In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called

Self-insured retention.

The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called

Subrogation

How are surety bonds different from insurance?

Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses.

Which one of the following symbols used in business auto coverage is correctly described?

Symbol 9

What symbols are used in the business auto coverage form?

Symbols 1-9 and 19 are used in the business auto coverage form

Who is NOT considered an employee in a commercial general liability (CGL) policy?

Temporary worker

All of the following would be considered insureds under the liability section of a homeowners policy except

The 22 y/o niece of the insured that is visiting

What coverage forms are available under the homeowners program?

The 6 coverage forms available under the homeowners program are HO-2 broad form, HO-3 special form, HO-4 contents broad form, HO-5 comprehensive form, HO-6 condominium unit owners, and HO-8 modified coverage form.

What type of coverage does the HO-4 provide?

The HO-4 tenant broad form ensures personal property for the same perils as found in the broad form (HO-2)

When replacement coverage cost is not reasonable, what type of HO coverage is applicable?

The HO-8 modified homeowners form is intended for use when replacement cost coverage is not preactical.

What is the purpose of the fair credit reporting act?

The act established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used. It also protects consumers against the circulations of inaccurate or obsolete information.

What are additional or supplementary payments?

The additional coverage portion of a policy provides an additional amount of coverage for specific loss expense, at no additional premium.

What happens when the automatic increase in insurance endorsement is added to a policy?

The amount of insurance is increased by an annual percentage to offset the effects of inflation.

Which of the following would NOT be considered a source of insurability information by an insurer?

The applicant's marital status

What does the exclusions section of a policy specify?

The exclusions section of a policy details what perils are not insured against and what persons are not insured.

All of the following statements concerning coinsurance are true except

The coinsurance formula will also be applied to total losses

All of the following statements concerning coinsurance are true EXCEPT

The coinsurance formula will also be applied to total losses.

How is the commissioner of the insurance selected for the office, and how long is the term?

The commissioner is appointed by the governor for a 4-year term.

What is covered under the HO-5?

The comprehensive form (HO-5) covers both the dwelling and other structures on an open peril basis.

What is included in the conditions section of a policy?

The conditions section of a policy includes the general rules or procedures that the insurer and insured agree to follow under the terms of the policy.

Legal Purpose

The contract must be for a lawful reason, not against public policy.

Which of the following statements are true regarding the commercial general liability policy's coverage - C - medical payments

The coverage is considered good will because the payments are made without regard to fault

The claims-made trigger is based on which of the following?

The date the claim is first made

A passenger in a friend's car is injured while getting into the car. Which of the following statements would apply if both the passenger and the driver had medical payments coverage under a personal auto policy?

The driver's policy would be primary.

What are the eligibility requirements for a dwelling property policy?

The dwelling policy can insure just the dwelling, only its contents, or both

How does the protective safeguards endorsement modify the policy?

The endorsement adds a policy condition requiring the insured to maintain protective safegaurds.

All of the following situations would be covered under a professional liability policy except

The failure of an attorney to properly defend a client due to his personal dislike of the client

Negligence

The failure to use the care that a reasonable, prudent person would have take under the same or similar circumstances.

Which of the following best describes negligence?

The failure to used reasonable and prudent care

When does the federal emergency flood insurance program go into effect and end?

The federal emergency flood insurance program goes into effect when a community applies for the program and ends when all NFIP criteria have been met and the regular program can begin.

Who has the responsibility for payment of premium in a commercial package policy?

The first named insured is responsible for paying the premiums.

What types of vehicles are covered under the personal auto policy?

The following vehicles are covered under PAP: any vehicle listed on the declaration page; newly acquired vehicles for 30 days; trailers owned by the insured; and temporary substitute vehicles

Several insureds have become liable because of a single loss. How will the policy's limit of liability be affected?

The full limit applies to each insured individually.

First Named Insured

The individual whose name appears first on the policy's declaration

Which of the following losses would be covered under the property damage liability coverage of a personal auto policy?

The insured damages a rented garage when he failed to stop in time.

What must an insured do if a loss occurs?

The insured is required to provide the insurer with prompt notice of the loss, notify the police if a loss is caused by theft, notify the credit card if the loss is covered under the credit card and fund transfer card coverage, protect the property from further damage and keep records of any repair expenses, prepare an inventory of damaged and undamaged property, allow the insurer to inspect the property as often as reasonably necessary, submit to an examination under oath and within 60 days of the insurer's request (if requested), and send a signed sworn proof of loss.

When does worldwide personal property coverage apply? What is not covered?

The insured may elect to apply up to 10% of the personal property limit to pay for losses to personal property away from the premises. There is no coverage for rowboats or canoes, or for property of guests and servants if away from the insured premises.

A dealership loans a car to its customer to use while the dealership is repairing the customer's car. If the dealership has business auto physical damage coverage and a customer's automobile insurance does not cover damages to loaner cars, which of the following is true?

The loaner vehicle is covered by the business auto policy.

What is the difference between domestic, foreign, and alien insurance companies?

The location of incorporation: a domestic insurer is incorporated in this state; a foreign insurer is incorporated in another state; and an alien insurer is incorporated outside the United States.

What is the purpose of coverage D- Loss of use?

The loss of use coverage in the homeowners policy will pay for either additional living expenses related to maintaining the normal standard of living of the household or fair rental value if the premises become uninhabitable due to a covered loss

What is the market assistance program?

The market assistance program (MAP) provides for better availability of earthquake insurance.

How does the mobile home endorsement change the homeowner's policy?

The mobile home endorsement alters the homeowners policy to cover a mobile home and other structures on land owned or leased by the resident of the mobile home.

Who are the parties to a bond?

The parties to a bond are the principal (or obligor), the obligee (or insured), and the guarantor (or surety).

What is the primary objective of workers compensation?

The payment of benefits to the employees for injuries arising out of their employment

What type of coverage is expanded upon from HO-2 to HO-3?

The peril of vehicles insured for the personal property is expanded from what is covered in the broad form (HO-2)

How is insured defined for the Garage coverage form?

The person named in the declarations; people who operate a covered auto; people liable for the conduct of the insured; or an employee of the insured.

What perils are insured against in a special form policy?

The special form is an open peril form. All perils are insured against except those specifically excluded.

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

A used car dealer takes a car in trade as partial payment for a car on its car lot. The customer promises to bring in the car's title but does not. Another customer takes the trade-in for a test drive and has an accident. In regard to the dealership's business auto physical damage coverage, which of the following it true?

There is no coverage

Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value

They are automatically provided with replacement cost coverage

When a vehicle travels from one state to another, what happens to the limits of policy liability in a personal auto policy?

They do not change

An insured is driving her auto and strikes a large pothole, causing a flat tire. Which coverage of the insured's personal auto policy will pay for the repair?

This loss is not covered

What are interline endorsements?

Those that apply, or could apply, to more than one coverage part.

What is the purpose of business income insurance?

To cover the loss of business income that occurs when a business must suspend operations because of a direct loss.

What is the function of an adjuster?

To investigate and negotiate settlement of claims arising under insurance contracts

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

What is the purpose of the rural risk underwriting association?

To provide property insurance for people who live in rural areas.

What is the purpose of OSHA?

To set minimum standards for work safety

An insured covered under a Mobile Homeowners Policy wants to move the location of the covered mobile home. Which of the following must the insured obtain from the insurer?

Transport/ permission to move endorsement

An insured covered under a mobile homeowners policy wants to move the location of the covered mobile home. Which of the following should the insured obtain from the insurer?

Transportation/ permission to move endorsement

what is another name for "umbrella liability"?

Umbrella Liability is sometimes called catastrophe insurance.

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 some furniture and clothes in the house. From an insurance standpoint, the insured's house is considered

Unoccupied

Misrepresentations

Untrue statements on the application and could void the contract

What is a WYO insurance company, and how is it used?

WYO stands for write your own insurance company. The private insurers that participate in a WYO program write and service policies on a no risk-bearing basis through a special arrangement with the Federal Insurance Administration. They retain part of the flood insurance premium to pay for commissions and administrative costs. The remaining premiums, plus investment, are used to cover losses.

Explain what balance billing is.

When an insurance company does not pay the full bill for medical services and the service provider bills the injured worker for the balance.

Describe the circumstances under which a person would obtain coverage from a surplus lines insurer.

When the person cannot get the coverage he or she wants from an insurer admitted to do business within the state.

What is a certificate of insurance?

Written evidence showing that an insurance policy has been issued

Application

a printed form that includes questions about a prospective insured and desired insurance coverage and limits

Additional Coverages

a provision in an insurance policy that provides an additional amount of coverage for specific loss expenses, at no additional premium. Examples; claim-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, and defense expenses.

What type of liability would a person who owns wild animals have?

absolute

Elements of a Contract

agreement, consideration, competent parties, legal purpose

Proximate Cause

an act or event considered a natural and reasonably foreseeable cause of the damage or event that occurs and damages property or injures a plaintiff

Which of the following is an additional coverage that is covered by the broad causes of loss form?

collapse

Strict Liability

commonly applied in product liability cases.

General Damages

compensate the injured person for pain and suffering, mental anguish, disfigurement, and other similar types of losses.

A plasterer has finished a job. What kind of liability coverage would protect him if the plaster falls and hurts someone because he did not do the job correctly?

completed operations

Hazards

conditions or situations that increase the probability of an insured loss occurring. Conditions such as slippery floors, or congested traffic may increase the chance of a loss occurring.

In property and casualty insurance, what is the term for the amount of a loss that the insured must cover out of pocket, and the insurer will only pay for the additional amount of the loss above this limit?

deductible

Terrorism Risk Insurance Act (TRIA)

defines an act of terrorism as an act certified by the secretary of treasury, in concurrence with the secretary of state, and the attorney general of the united states with the following characteristics: -the act must be violet or dangerous to human life property or infrastructure -

Return of Premium

dictates the method that will be used to calculate the return premium when the policy is cancelled before the expiration date.

Liberalization Clause

ensures that if the insurer introduces an improved free coverage, the insured will get the benefit of the new coverage immediately and will not have to wait for policy renewal

Fair Credit Reporting Act (FCRA)

established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used. The law protects consumers against the circulation of inaccurate or obsolete personal or financial information.

Proximate cause for loss

example; an insured building catches fire. When the fire department applies water to put out the fire, the wall and floor coverings suffer water damage. Although water damage is not an insured peril,, the damage is paid under the peril of fire because fire was the proximate cause.

Earth movements and water damage

examples of exclusions from coverage in a property policy.

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

exclusions

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 is excluded from business liability coverage?

expected or intended injury, contractual liability, and liquor liability

All of the following are excluded in the equipment breakdown policy except

explosion of steam boilers

Which of the following policies will help an auto dealership cover most of its liability exposures?

garage liability coverage

What do individuals use to transfer their risk of loss to a larger group?

insurance

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

insureds

What is the purpose of a homeowners policy?

homeowners policies are designed to cover dwellings primarily used as private homes.

Appraisal

if there is a disagreement between the insured and the insurer on the value of any property loss either party can make a written demand for an _____

The proof of loss statement must be

in writing

Speculative Risk

involves the opportunity for either gain or loss. Example; speculative risk is gambling. These types of risks are not insurable.

occurrence

is a broader definition of loss than accident because it includes those losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended or nor expected.

Deductible

is a dollar amount an insured must pay on a claim before the insurance policy provides coverage.

Loss Valuation

is a factor in determining the premium charged and the amount of insurance required.

Notice of Claim

is a form or statement from an insured to an insurer, informing the insurer that events leading to a possible claim have occurred.

Arbitration

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

Specific Insurance

is a property insurance policy that covers a specific kind or unit of property for a specific amount of insurance.

Agreed Value

is a property policy with a provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written and suspends any coinsurance or other contribution clauses in the policy

Pro Rata

is a provision found in some property insurance policies that provides for the sharing of loss with other insurance that may be written on the same risk in the same proportion as their limits of insurance bear to the total of coverage of all policies covering the risk, whether collectible or not.

other insurance

is a provision in an insurance policy that defines how the policy will respond if there is other valid insurance written on the same risk

Market Value

is a seldom-used method of valuing a loss based upon the amount a willing buyer would pay to a willing seller for the property prior to the loss. This method take into consideration the value of land and location, rather than just the cost of rebuilding the structure itself.

Combined Single

is a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined, resulting from one accident or occurrence.

Blanket Insurance

is a single property insurance policy that provides coverage for multiple classes of property at one location or for one or more classes of property at multiple locations.

Binder

is a temporary agreement issued by an agent or insurer providing temporary coverage until the policy can be issued. Usually in writing but may be oral. Expires when the policy is issued.

Open Peril

is a term used in property insurance to describe the breadth of coverage provided under an insurance policy form that insures against any risk of loss that is not specifically excluded.

Warranty

is an absolutely true statement upon which the validity of the insurance policy depends.

What is proximate cause?

is an act or event considered a natural and reasonably foreseeable cause of the damage to property or injures a plaintiff

Deposit Premium

is an estimated premium paid in advance at the time the policy is issued that may be adjusted based on actual exposures.

Absolute Liability

is imposed on defendants engaged in hazardous activities, such as harboring wild animals, using explosives, etc. The injured party does not need to prove negligence.

Which of the following would NOT be considered causes for flood conditions covered by the National Flood Insurance Program?

landslides

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become

larger

In which type of commercial crime policy coverage is triggered by a loss that happens during the policy period but is not necessarily discovered during the policy period?

loss sustained form

The type of professional liability coverage a medical doctor needs is

malpractice coverage

Inspections

may be made as needed by the insurer. The insurance company reserves the right to inspect or examine the insured's location or books to determine the exact exposer for underwriting and rating purposes.

Bodily Injury

may lead to claims by the injured party not only for medical expenses and lost wages, but also for disfigurement, pain and suffering, mental anguish, and loss of consortium.

Named Insured

means the individual(s) whose name appears on the policy's declaration.

A tornado that destroys property would be an example of which of the following?

peril

Moral Hazard

refer to those applicants that may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer.

Morale Hazard

refers to an increase in the hazard presented by a risk. arising from the insured's indifference to loss because of the existence of insurance.

Pure Risk

refers to situations that can only result in a loss or no change. There is no opportunity for financial gain. is the only type of risk that insurance companies are willing to accept.

Explain the actual cash value method of valuation

reinforces the principle of indemnity because it recognizes the reduction of value of property as it ages and becomes subject to wear and tear and obsolescence

In case of loss, the indemnity provision in insurance policies

restores an insured person to the same financial state as before the loss

Insurance is the transfer of

risk

Consideration

something of value that each party gives to the other. On the part of the insured is the payment of premium and the representative made in the application. On the part of the insurer is the promise to pay in the event of loss.

What are the two types of compensatory damages?

special and general

When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as

stated amount

Representations

statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true. For insurance purposes, _____ are the answers the insured gives to the questions on the insurance application.

Coinsurance Clause

states that, in consideration of a reduced rate, the insured agrees to maintain a certain minimum amount of insurance on the insured property.

Gramm-Leach-Bliley Act (GLBA)

stipulates that in general, an insurance company may not disclose nonpublic personal information to a non-affiliated third party except when: -the insurance company clearly and conspicuously discloses to the consumer in writing that information may be disclosed to a third party -the consumer is given the opportunity, before the time that information is initially disclosed -the consumer is given an explanation of how the consumer can exercise a nondisclosure option

If a product is unsafe, what kind of liability applies to the manufacturer?

strict liability

When absolute liability is involved, does the injured party need to prove negligence?

the injured party does not need to prove negligence.

Subrogation

the insurer's legal right to seek damages from third parties, after it has been reimbursed the insured for the loss.

Limits of Liabilty

the insurer's liability for payment as stated in an insurance policy.

Law of Large Numbers

the larger number of people with a similar exposure to loss, the more predictable actual losses will be. this law forms the basis for statistical prediction of loss upon which insurance rates are calculated.

Compensatory Damages

that may be awarded are special and general damages

What homeowners form provides protection for losses from named perils?

the HO-2 broad form provides protection for losses from named perils.

What is the deductible of a personal liability umbrella policy called?

the SIR

Audit

the actual premium is determined by the ______ of the insured's records at the end of the insuring period.

Peril is most easily defined as

the cause of loss insured against

Perils

the causes of loss insured against in an insurance policy.

Property damage

the extent of the loss usually simple to determine; it is measured by the actual monetary loss that injured party suffered, which is measured by the value of the property damaged or destroyed and the loss of use that asset.

Insurable Interest

the person or property covered by an insurance policy.

What coverage is provided in the liability section of the business auto coverage form?

the policy will pay for injury or property damage to third parties

Transfer

the risk of loss from an individual or business entity to an insurance company, which in turn spreads the costs of unexpected losses to many individuals.

cancellation

the termination of an in-force insurance policy, by either the insured or the insurer, prior to the expiration date shown in the policy.

Risk

the uncertainty or chance of a loss occurring.

The business income coverage form covers consequential loss of business income that occurs when a business must suspend operations because of a direct loss. Which of the following terms best describes the nature of this type of coverage?

time element

What does indemnify mean?

to restore an insured to the same financial status as before the loss

Insurance-to-value provision

usually found in homeowners policies, provides a replacement cost settlement to the policyholder who carries adequate insurance, which means that the property is insured to the exact dollar amount or percentage of value.

Punitive Damages

which is a form of punishment for extreme outrageous behavior, gross negligence or willful intent.

Coverage under a floor plan merchandise form is written on a reporting form basis that requires the insured to provide reports with the insurer. What is the time frame for those reports?

within 30 days after the end of each month

Certificate of Insurance

written evidence showing that an insurance policy or policies have been issued