Adjusting Exam (pages 1-45)
During a severe wind storm, a large tree in Jeff's yard was blown down and two large bushes were ripped from the ground. Jeff has an H03. What is the maximum amount that Jeff can receive for the replacement of the tree and bushes that were damaged by the wind storm?
-$0
Frank purchased a $150,000 insurance policy for his home, which is valued at $125,000, with the hopes of making a $25,000 profit in the event his home is destroyed. After Frank burned his house down, he files a claim against his homeowners policy. Assuming that Frank's policy includes an over insurance provision, how much will his insurer indemnify Frank for his loss?
-$0
Sam, who has a typical H03 policy, is forced to evacuate his home by civil authorities due to rising floodwaters in his neighborhood. It takes a month before Sam is allowed to come back to his home. During this time, he has spent $3000 in hotel expenses, on top of his monthly mortgage payment of $150. When he files a claim, how much will Sam receive under coverage D-Loss of use?
-$0
While making a right hand turn from the right lane,Ben is sideswiped by Roxanne, totaling the car he bought new 12 years ago for $15,000. Roxanne is judged to be at fault. She has an auto policy with limits of 50/100/25 and a $500 deductible on her collision coverage. Assuming Ben's car depreciates at a rate of $1100 a year how much will Roxanne have to pay out of pocket when Ben files a claim against her insurer for the damages?
-$0
Tim's $2500 boat trailer was stolen from his driveway. Ignoring any deductibles, how much can Time receive for a stolen trailer when he files a claim against his homeowners policy?
-$1,500
Kevin has a homeowners policy with replacement cost valuation and a coverage limit of $90,000 for his personal property. Three years ago, Kevin purchased a sofa and loveseat for $1000 and $500 respectively. Both pieces of furniture depreciate at $100 per year. A house fire damaged many of Kevin's belongings, including the sofa and loveseat, which now cost $1200 and $700 to purchase today. Ignoring any deductibles, how much will Kevin's insured give him for the damage sofa and loveseat?
-$1,900
Clara plays the harp in an orchestra. Her harp cost $12,000, and she had it for five years before it was stolen from her locker at a symphony hall. She recently found out a new harp will cost $15,000. Assuming her harp depreciated at $1000 a year, how much will an actual cash value policy indemnify Clara?
-$10,000: ACV pays at current market value minus depreciation
Both Steve and his wife, Arlene, carry DP-2 policies on their $135,000 home. Steve's policy has a limit of $110,000 and Arlene's has a $25,000 limit, and both policies pay on a pro rata basis. After a hailstorm causes $13,000 in damage to the roof, how much of the damage will be covered by Steve's policy ignoring any deductible ?
-$10,400
Mullaney's $300,000 home suffers $90,000 in damage from the fire. The adjuster finds the homes value since 2008 has depreciated 25%, making the ACV lost $67,500. Although Mullaney's policy covers repairs at the replacement cost, she receives $67,500 at the time of loss. Repairs to her home end up totaling $79,500. How much, if any, for the indemnification may Mulaney receive from the loss?
-$12,000
Craig has an H03 policy covering his primary residence with coverage A limit of $250,000, coverage B limit of $25,000, and a coverage C Limit of $150,000. Craig also has a cabin on the lake, which has been burglarized. The thieves stole much of the cabins contents, for a total loss of $18,500. Ignoring any deductibles, how much will Craigs HO-3 policy pay for this claim?
-$15,000
Sherry's roof and fence are damaged in a violent windstorm. Sherry has a typical HO-3 policy with a $150,000 limit for coverage A-dwelling. Assuming she has no endorsements, how much coverage does she have available for the damage to her fence?
-$15,000
James owns a masonry business and has a commercial liability policy with the following aggregate limits: $150,000/$500,000. While at a job site, his cement trucks chute cannot reach the poor site, so the operator adds two extra chutes, extending its length. The chute collapses under the weight of the concrete, causing $35,000 an injury to one of the workers. The loss is covered by the policy, and James insured pays the claim. What will the new limits before the remainder of the policy term?
-$150,000/$465,000
Adjuster Andy is trying to determine a final settlement amount for Stacy's claim. Stacy's house was destroyed in a fire and it will cost $185,000 to rebuild it. Stacy's homeowners policy has a limit of $178,000 and a $1800 deductible. Typically, how much would adjuster Andy calculate Stacy's final settlement amount to be?
-$178,000
James is walking down the street when Andrea, an uninsured motorist, strikes him with her car. James suffers $12,000 in injuries from the accident. He has personal injury protection of $10,000 from his own automobile insurance policy, which immediately pays him the full amount. By accepting $10,000 from his own insurance company, James has waived the right to sue Andrea for more than ( ) for personal injury.
-$2,000
Lightning strikes one of Christie's trees in her backyard and starts a fire that spreads to two other trees before firefighters are able to put it out. The fire department charges her $600 for responding to her call. Christie's DP-2 policy has a coverage A limit of $95,000. What is the maximum amount of indemnification that Christie can expect to receive for this loss ignoring any deductible?
-$2,000
Adjuster Alice is trying to determine the final settlement amount for Todd's claim. Ted's house was damaged in a covered loss, and Alice has estimated that it will cost $25,000 to make the necessary repairs. Ted's homeowners policy has a $100,000 limit and a $2000 deductible typically, how much would adjuster Alice calculate his final settlement amount to be?
-$23,000
Diana is insured under a DP-2 policy with the following coverage limits: coverage A $150,000, coverage B $15,000, and coverage C $25,000. She and her fiancé had planned a destination wedding, but their hotel catches fire shortly after their arrival. Smoke from the fire damages all of their belongings, including Diana's $4000 wedding dress. Diana's loss totals $5200. When she files a claim with her insurance company, how much can she expect to receive for this loss under her DP-2 ignoring any deductible?
-$2500
During a strong storm, Missy's grain drill was mangled by a tornado, which rendered it useless. Before the damage, the grain drill was worth $25,000, but it will cost $45,000 to buy a new one today. Missy's farm policy has a replacement cost endorsement, and the grain drill is scheduled on a mobile agricultural machinery and equipment form with a $36,000 limit. Missy replaces her grain drill with one she found on sale for $40,000. How much total indemnification will she receive?
-$36,000
Jane has a $150,000 homeowners policy with a 3% percentage deductible. One night, an oven fire destroys her kitchen, causing $50,000 in damage. How much of the damage falls under Jane's responsibility?
-$4,500
Jessie's home is worth $199,000 and he has a homeowners policy with a $150,000 limit. After burglars broken, stole several items of his personal property, and broke his glass patio door, Jesse is left with a total of $5300 in damages. Assuming the insurer decides to invoke the standard coinsurance penalty, approximately how much can Jesse hope to receive in indemnification?
-$4,992
To meet the 80% level of coinsurance required by his lender, Tom discovers he must insure his home for at least $320,000. What is the value of Tom's home?
-$400,000
Jerry is using an expensive video recorder near the family pool when he slips and falls in, destroying the camera. Jerry bought the camera three years ago for $4000, and it depreciates at $500 per year. A new, similar camera cost $5000 today. Assuming the loss is covered, if Jerry had a replacement cost policy, how much would Jerry's insurer indemnify Jerry for the destroyed camera?
-$5,000
Marlene has been living in her to $120,000 home for 31 years. Because she has paid off the mortgage, she decides to save some money on her monthly insurance premiums by reducing her homeowners coverage to $40,000. After a severe hailstorm totals her roof, her adjuster estimates the damage at $12,000. Assuming the insurer imposes the standard coinsurance penalty, and ignoring the deductible, how much will Marlene receive in the settlement?
-$5,000
Stephanie owns a house that she rents out for $2500 a month. A massive kitchen fire forces her tenants to move out while the interior is overhauled. After two months, the repairs are complete, and Stephanie contacts her tenants, only to find that they found a new place to live. It takes Stephanie another month and a half to find new tenants. Assuming that Stephanie had a $100,000 DP-2 policy, what is the maximum amount she could receive for lost income under coverage D?
-$5,000
How much of a limit is included for credit card fraud or forgery, and additional coverage and a homeowners policy?
-$500
Stan built a porch for his home three years ago at a cost of $10,000. The value of the porch has depreciated by $6000, and it will cost $12,000 to replace it today. After Stans porch burnt down during a barbecue today, how much would a standard fire policy indemnify stan for his porch?
-$6,000
A fire in Sarah's factory causes her to shut the factory doors for 50 days. To limit her loss of income and keep production going, Sarah spends $125,000 renting equipment and another building. Sarah's commercial property policy doesn't have business income coverage, but it does include extra expense coverage. The limit on her extra expense coverage is $100,000 and she has limits of last payment of 40%/80%/100% during her period of restoration. How much indemnification will Sarah receive for her extra expenses?
-$80,000
Sue decides to get a valued insurance policy on her antique car. She and her insurance company agree to a value of $85,000. Three years later, the car is destroyed when a tree falls on it in a parking lot. The car depreciates at $2000 a year, and its replacement cost is $100,000. Ignoring any deductible how much can sue expect her insurance indemnify her?
-$85,000
If a Florida HO policy has only been in effect for 45 days, the insurer must notify the policyholder at least ( ) days before canceling it for non-payment of premiums, or at least ( ) days before canceling it for any other approved reason.
-10; 20
The standard fire policy is also known by a nickname: the ( ) policy.
-165 Line
according to the commercial property policy, a commercial building is considered vacant if less than ( ) of the available square footage is occupied for ( ) consecutive days.
-31%, 60%
An individual has ( ) to file a lawsuit for false arrest in Florida.
-4 years
Florida, an insurer has ( ) days to pay or deny a claim.
-90
A farm insurance policy may include all of the following except:
-A commercial package policy
A dwelling policy would not be appropriate for:
-A motorhome owned by an individual
Which of the following is most likely a third-party claim?
-A woman files an insurance claim when she is injured by an employee at a local bar
The first step in the claim process is to:
-Acknowledge the claim within the required time frame
Adam is shopping for a car in a local automobile dealership. While visiting the show room, he trips over a rug that has folded over and breaks his arm in the fall. Which of the following is true?
-Adam may file a third-party claim with the dealerships insurance company
Which settlement option is most often used when a claimant misses Work because of bodily injury, but a settlement has not yet been reached?
-Advance payment settlement
Alan works as an adjuster for Insurer B. Which of the following is false?
-Allen is a salaried employee who only sells insurer B's products
A claimant is:
-An individual or business that makes a claim for payment after a loss occurs
Arlene's house suffered a structural damage in an earthquake last year, but her policy does not cover earthquake damage, so Arlene never got it fixed. When a tornado ripped through her neighborhood, it causes some roof damage totaling $2000, and Arlene seized an opportunity in the situation. She files a claim for the roof damage, but also claims that the tornado caused the structural damage to her house that was actually caused by the earthquake last year. Which of the following statements is true?
-Arlene has just committed soft fraud
Bob has been in the construction business a long time and is ready to retire. He sells the company to his friend Scott and then lets the insurer know that any claims against his policy should be paid to Scott from now on. The insurer informs Bob that they cannot do this due to which condition?
-Assignment
Alice is an adjuster and is currently negotiating a settlement with Gail. Which of the following actions that Alice could take would be disrespectful towards Gail, and thus hinder the negotiation process?
-Assuming to know what Gail wants
Bob has a home in Florida with full replacement cost insurance coverage. After severe hurricane levels his home, the property is declared a total loss. Bob was so discouraged that he takes several months to decide whether it is worth it to rebuild. Which of the following statements is true?
-Bob's insurer must pay the full replacement cost of the property without waiting for proof that Bob has rebuilt his home
Bobby just purchased an insurance policy for his home from XYZ insurance. Which of the following would be a reason this policy may not be legally binding?
-Bobby has been diagnosed with schizophrenia
In a DP-2 broad form, which of the following would be covered under the peril of theft?
-Broken windows caused by a burglar breaking in
Dr. Nelson routinely scheduled her patients for lab test that they don't need so she can charge their insurers for more money. Dr. Nelson is:
-Committing health insurance fraud
Cameron is fully insured by DP-2 on his $130,000 home. His monthly mortgage payment is $775 per month, and he usually pays $400 per month and groceries. When a kitchen fire damage is his house,causing $61,000 in damage, he forced to move out for a month while the repairs can be made. Cameron's hotel bill for the month comes to $1250 and he spends $600 eating at restaurants. Based only on this information, how much indemnification can Cameron expect to receive this claim?
-Coverage A: $61,000; Coverage E: $1,450
In Florida, what are the basic limits of liability for coverage E and coverage F in a homeowners policy?
-Coverage E: $100,000 per occurrence; Coverage F: $1,000 per person
Which of the following situations does NOT involve an insurable risk?
-Dale just bought 30 shares of a hot new start up company online
This agent is a salaried employee who sells insurance products for only one insurer.
-Direct writer
Robber is delivery driver for Acme Surplus. On his last stop of the day, he runs a stop sign and broadsides Darryls car, causing $14,000 in damage to Darrell's car, as well as $21,000 in damages company truck. Which type of coverage would help protect Acme Surplus from these losses?
-Employer liability insurance
Jerry is an adjuster and has signed a contract with ABC insurance to adjust claims in an area recently devastated by hurricane. Jerry receives the claims from ABC insurance, completes the inspections, and settle claims on behalf of ABC insurance according to his contract. What type of authority has ABC insurance given Jerry?
-Express authority
Roberts tomato crop production was well below the revenue guarantee this year, and Robert files a claim against his Crop-Revenue policy for the low yield. however, the adjuster denies Roberts claim after completing her inspection. What might be a reason for the denial?
-Failure to use the required amount of fertilizer
Farmer Scott owns a farm and raises goats, producing a lot of manure. Occasionally, after strong rain, some of the waste washes into a nearby river. Which insurance coverage can protect Scott from any liability caused by the goat waste run off?
-Farm pollution liability
Which farm policy would cover animal waste overflow and chemical spills?
-Farm pollution liability
Several cases of listeria have been traced back to Aaron's crop of soybeans that he recently sold at market. What type of coverage will pay for the claims filed by those sickened by Aaron soybeans?
-Farm product liability
Farmer Bob would like to sell his recent harvest of lettuce to a local wholesaler. The wholesaler agrees, but only if Bob can prove he has insurance protection in the event that his lettuce causes people to become ill. What type of insurance does Bob need in this situation?
-Farm product liability insurance
Flora is driving in the rain when she's gets off the road and slams into Cam's billboard, totaling her car and causing $2000 in damage to the billboard. Flora has an auto policy with ABC insurance, and both Cam and Flora submit claims against this policy for their damages. Which of the following is TRUE?
-Flora will file a first party claim for the damage to her car, and Cam will file a third-party claim for the damage to his billboard.
Which of the following would be covered under coverage A dwelling policy?
-Gas furnace in the basement
This agent works only for one insurer, and supervisors and trains other agents.
-General agent
Mental anguish would be an example of:
-General damages
After a loss covered under dwelling policy, ordinance or law coverage pays for:
-Increased repair costs due to law or codes
Why should litigation be considered a last resort option?
-It can be costly and unpredictable
Which of the following is true of the vacancy condition in a typical insurance policy?
-It establishes the parameters for considering a building vacant for the purpose of coverage
Which of the following statements about a moral hazard is FALSE?
-It is the result of an unconscious behavior
Which of the following statements about MPCI insurance is false?
-It's coverage applies per acre, not per unit
When discussing farm insurance, which of the following most accurately describes scheduled property?
-Itemized property
Farmer Jane had an MPCI policy in place when her wheat field was ruined by a hail storm. Jane promptly plowed up the wheat and planted a cover crop. Two days later she filed a claim with her insurance. The claim was denied. What might be the reason for the denial?
-Jane did not leave samples of the destroyed crops for the other adjuster to examine
Strong winds have torn a hole in Janets roof. On top of that, heavy rain is expected in her area in the next few days. Figuring it would simply be too much effort to put a tarp over the hole in her roof, Janet elects to do nothing. The rains come and destroy several of her possessions inside her home. Janet files a claim with her insurance for the losses, but it comes back denied. This is because:
-Janet failed to make a reasonable effort to protect the property from further damages
When record-breaking rainfall causes severe flooding in Janie's hometown, Janie's rental property suffers extensive damage. Which of the following is an indirect loss?
-Janie loses a month of rental income when her tenant must move out while repairs are made to the home
Which of the following does NOT have an insurable interest in Big Ed's steakhouse, a local restaurant?
-Jim, who regularly eats at Big Ed's steakhouse because it's his favorite restaurant
After her water heater leaked and damaged her hardwood floors, Claris filed a claim with her insurance, KLM insurance, who sent their adjuster, Bob, to inspect the loss. Claris also hired a public adjuster, Jose, to represent her in her claim. Bob has the responsibility to report to which principle?
-KLM Insurance
Which of the following is an example of a moral hazard?
-Ken lights a candle, sets it right next to the window draperies and leaves the house to go to work
Which of the following losses may qualify for coverage under coverage F-medical payments?
-Kevin accidentally shoots himself in the foot with a nail gun while he is helping Joe build a deck in Joe's backyard
Bob's home was severely damaged by a thunderstorm and he claims it will cost $74,000 to repair. His insurer has investigated the claim, found the repairs could be done for $49,000, and has offered bought this amount of indemnification. Negotiation between Bob and his insurer seems to be failing. Due to the unpredictability of the result, which of the following option should be avoided by the insurer if possible?
-Litigation
In dwelling policies, coverage D pays for:
-Lost rental income
When Zack purposefully burned down Matt's restaurant, Matt's insurer paid the claim and then went after Zack for the damages. Matt is furious about what is Zack did and wants to sue him as well. Why is it NOT possible for Matt to sue Zack?
-Matt has already received indemnification from his insurer
When the dollar amount difference between an adjuster and the claimant is very large, the adjuster said:
-Move to dispute resolution
Nightly insurance company decides not to renew Emma's homeowners policy, which she's had for six years which of these statements is true.?
-Nightly insurance must notify Emma of the non-renewal at least 120 days before her policy expires
For lost settlement purposes, most homeowners policies:
-Pay for damages to personal property or actual cash value, and damages to structures at replacement cost
Which of the following may be covered under a DP3?
-Power failure on the premises
What is the last step in the claim settlement process?
-Preparing the final adjustment reports
What is one thing that an adjuster is not able to negotiate about?
-Punitive damages
Rachel is filling out an application for a homeowners policy. She is truthfully answering the questions regarding her home, location, size, age, etc. Which of the following is a true statement?
-Rachel is providing representations
Which of the following people committed soft fraud?
-Rafael accidentally slipped on a wet floor at the supermarket. Although his only injury was a sprained ankle, he claimed he had a back and neck pain when he sued the supermarket in an effort to get more money in settlement.
Dan works as an adjuster for APC insurance. Which of the following is most likely not one of Don's responsibilities?
-Represent the insured if a claim goes to court
Which of the following activities could be a useful negotiation technique?
-Reviewing video footage with the claimant that contradicts the claimants position
Which of the following is an example of a hazard?
-Sandra's home is in an area of Los Angeles that is often hit by earthquakes
By signing a settlement release, the claimant gives up the rights to:
-Seek any further damages
The DP-3 is known as the:
-Special form
Which of the following is an example of how some insurers are fighting back against insurance fraud?
-Starting fraud busting units staffed with former detectives and police officers
The Liberalization clause in an insurance policy:
-States that any change to a policy form that broadens coverage without increasing the premium will automatically apply to existing policies
Who is responsible for maintaining the claim file during the claim process?
-The adjuster
Cindy, a drunk driver, accidentally crashes into Nancy's house, causing $22,000 in damage. On top of that, Nancy tries to get the adjuster to add an additional $20,000 for punitive damages to punish Cindy for driving while intoxicated. However, Nancy fails in her attemps in negotiation. This is because:
-The adjuster does not have authority to negotiate for punitive damages
An adjuster might deny a claim for all of the following reasons, except:
-The adjuster has a conflict of interest
An insurance adjuster acts as a fiduciary agent for her employer. Which of the following statements is false about the adjusters role as fiduciary agent?
-The adjuster may not give the claimant materials showing how he came up with the settlement amount
Which of the following statements best describes a part of the appraisal process?
-The claimant and the insurer each select an appraiser, and those two select an empire
Which of the following claims might best be settled through negotiations?
-The claimant asks for $37,795; the insurer offers $31,000
In a declaratory judgment action:
-The court decides the legal rights of both parties
Which item would not belong in adjusters initial report on a claim?
-The final settlement amount
A reservation of rights letter is sent by:
-The insurance company
ABC masonry, Inc. has a liability policy with aggregate limits of 100,000/300,000. One day, an accident at a construction site leads to $150,000 in damage to public property. Assuming the cause of loss is covered under ABC masonry liability policy how will this claim be paid?
-The insured pays $100,000; the aggregate limit is now $200,000; and ABC masonry must pay $50,000.
After a rainstorm, Nancy realizes she has left her bedroom windows open the entire time. Now there's extensive water damage to her area rug and furniture, and the laptop that has been sitting on her desk is ruined. Nancy has a broad form homeowners policy, so she called her insurance company and files a claim. What is the likely result in Nancy's claim?
-The insurer will not cover any of the damage, since Nancy left the windows open
Jasons auto policy states that the insurer may cancel coverage if a premium is more than 30 days late. However, Jason is currently more than 30 days late, and has been so five times in the last year, and his insurer has done nothing about it. When Jason gets into an accident and files a claim, which of the following is most likely to happen?
-The insurer will pay the claim because of the implied waiver they have made by not canceling Jason's policy of the previous times he was late with his payments
All of the following are true about mediation, except:
-The mediator's decision is legally binding
While shopping at Acme, marks slips and falls on a wet floor, knocking over some shelves, smashing a window, and injuring his knee. The medical costs for Mark's knee surgery total $8000, and he will live the rest of his life with a limp since his knee may never fully heal. Which of these costs will be most difficult for acme's insurer and Mark to negotiate?
-The mental anguish associated with never fully recovering
According to the mortgagee clause, what is not one of the rights of the mortgagee?
-The mortgagee may change the coverage amount
During a terrible storm, Teresa's home suffers $200,000 in damage. $60,000 of this damage was caused by flooding, which is specifically excluded from Theresa's policy. She attempts to persuade her adjuster to cover at least half of the flood damage, but her efforts are to no avail. This is because:
-The policies coverage is non-negotiable
Who sets the critical production dates and assigns commodity market prices for MPCI policies?
-The risk management agency
When Emma is found guilty of arson for burning down her $175,000 home, her insurance policy is voided and she receives no indemnification for the lost. Emma still had $155,000 left on her mortgage at the time of the fire. Under the mortgagee clause, Emma's mortgage lender can recoup:
-The total amount left on the loan - $155,000
In appraisal, who chooses the umpire?
-The two appraisers
In the case of condominiums:
-The unit owner and condo association share responsibility for insuring the property
How are mediators paid?
-Their fees are split by all parties involved in the dispute
When would a default judgment occur?
-When a defendant does not answer a complaint
During a storm, lightning strikes a tree in Harry's yard and starts a fire that spreads to his shed where he keeps all his equipment for his landscaping business. In addition to the shed, Harry has to purchase all new equipment to stay in business. The cost to replace the equipment would be considered:
-a direct loss
SureTrust Insurance was founded and operates in Texas. In Texas, SureTrust is considered:
-a domestic insurer
Which of the following is a hazard?
-a driver's tendency to text while driving
An insurance company may consider each of the following a risk, EXCEPT:
-a flood zone
Which of the following would be considered an insurable risk?
-a football stadium
Edward is a member of the Knights of Columbus, a religious group dedicated to voluntary service to the benefit of society. He also recently purchased a $100,000 life insurance policy from the organization. This was possible because the Knights of Columbus is:
-a fraternal benefit society
Which of the following best describes a fraternal benefit society?
-a fraternal benefit society is a social organization based around common interests and beliefs
An insurance company might consider any of the following a risk, EXCEPT:
-a high crime neighborhood
James and Eric want to play a prank on Bob for Halloween. They dress up like headless horseman and throw ignited jack-o'-lanterns at his house. Unfortunately, one of the inflamed pumpkins catches the porch on fire, causing $3500 in damages. Bob doesn't find this tomfoolery very entertaining and Sue's both James and Eric for the cost of the repairs. In court, James and Eric would be:
-a joint tortfeasor
Which of the following statements applies to liability insurance?
-a liability insurance policy always indemnifies a third-party
Which of the following incidents would a liability insurance policy cover?
-a man slips inside a grocery store and injuries himself
Each of the following would classify as an insurance risk, except:
-a marriage
What is a reserve, in insurance terms?
-a pool of collected premiums that the insurer sets aside to pay claims
Xavier owns a small insurance company. Recently the company won a bid to ensure a new housing development in Omaha, NE. His company can handle any claims that arise, but if a series of tornadoes were to tear through the area and destroy the entire development, Xavier's company would suffer financially. Which type of ensure could help Xavier's company protect itself the most from this potential loss?
-a re-insurer
Which of the following would be considered an insurable risk?
-a squadron of police cars
Which of the following statements regarding actual cash value is FALSE?
-actual cash value is always most beneficial to a policyholder
Which insurance professional is responsible for investigating and negotiating claims?
-adjuster
Which of the following best defines the principle of indemnity?
-after a loss the, insured should be restored to his approximate financial condition before the loss
Kevin plays in a brass band using two rare antique Alexander tubas. Since they are no longer produced, the value of the tubas is difficult to determine. Which type of policy would best indemnify Kevin in the event that has tubas were ever damaged, lost, or stolen?
-agreed value policy
John moved out of his house and put it up for sale three months ago. While he was waiting for the house to sell, John's plumbing pipes froze and burst in the icy temperatures, which eventually led to water damaging the cabinetry and hardwood floors. Which of the following statements would most likely be true?
-although John's house was still covered under an HO-3, the damage would not be covered because he didn't shut off the water supply
In order to set a yield guarantee for Maren's policy, Marans agent will need a record of the last four years of her crop fields. This record is called:
-an actual production history
Which of the following is not eligible for dwelling coverage?
-an eight unit apartment building in which the owner resides
Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home, causing extensive damage to the east wall and roof. As a result, Sandra and her family must move into a hotel until the repairs are completed. The cost of staying in a hotel is:
-an indirect loss
Which of the following statements is not true of an insurance adjuster?
-an insurance adjuster receives his or her authority to sell products on behalf of the insurer through a written contract
Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home, causing extensive damage to the east wall and roof. As a result, Sandra and her family must move into a hotel until the repairs are completed. Sam's car crashing into the house would be considered:
-an occurrence
An adjuster has a duty to provide which of the following to the claimant?
-an open line of communication
Who is not eligible for a homeowners policy?
-an owner of a house in which she does not live, but rents to a tenant
An "occurrence" is defined as:
-an unexpected event that causes loss
A reciprocal insurer is:
-an unincorporated organization of subscribers that operates through an attorney-in-fact to provide insurance benefits for its members
Which of the following statements is not true of endorsements?
-and endorsed policy will always provide more coverage than an unendorsed policy
A fiduciary agent must regularly report to the principal. Which of the following is the best example of a principal in the context of insurance?
-and insurer that employs an insurance adjuster to investigate damage claims
Joan files a lawsuit against Andy because his dog escaped and caused her to fall on an icy sidewalk. Which of the following statements is false?
-andy's insurer will send Joanne a reservation of rights
Which of the following statements about the negotiation process is false?
-apologizing for minor mistakes can weaken the adjusters power in the negotiations
After her business suffered damage in a fire, Jane filed a claim with acme insurance, which dispatched Bob to adjust it, even though he was not allowed to adjust commercial claims. He investigated Jane's losses and submitted it his estimate to Acme insurance, which issued her settlement check based on the estimate. Bob had ( ) because Acme insurance accepted his estimate and paid Jane's claim.
-apparent authority
While a claim remains open, an insurer may require the adjuster to submit an interim report:
-at regular set intervals, which lists any new or important information about the claim
Which of the following does not apply to commercial property insurance?
-because of their complexity, commercial policies only offer named peril coverage
An oral or written statement providing temporary insurance coverage until an insurance policy can be issued is called a:
-binder
When Sally applies for an auto policy, her agent issues her a ( ) so that she can benefit from insurance protection while he underwrites the policy.
-binder
There are several terms that are often interchangeable with endorsements. Which of the following is not one of those terms?
-binders
Sam suffers $6000 in injuries when Nicole runs a red light and crashes her uninsured car into Sam's. Sam's own insurance company, ABC insurance, immediately paid him $5000 for his injuries. Sam been ponders whether to file a $6000 lawsuit against Nicole. Why can't Sam sue Nicole for the full amount of his injuries?
-by accepting payment from ABC insurance, Sam subrogated a portion of his rights against Nicole to ABC insurance
Which of the following endorsements is mandatory for all Florida residential property policy's?
-catastrophic ground cover collapse
All of the following pieces of information can be found in the conditions section of an insurance policy, EXCEPT:
-causes of loss that are not covered
When Luis goes online and fills out phony applications with XYZ auto insurance in order to print the temporary insurance cards and sell them for profit on the black market, she is:
-committing hard fraud
Sarah is playing with the basketball on the stairs at Bob's house. In doing so she trips, falls, and breaks her leg. She files a claim against Bob's insurance company for his injuries. The adjuster determined that Sarah was 50% partially responsible for her own injuries, and therefore should only receive indemnification for 50% of her medical bills. What defense of the claim is the adjuster using?
-comparative negligence
The job of the adjuster can be best described as:
-comparing claimant losses to promises made in insurance policy
A lightning strike causes one of the storage buildings on John's farm to burn to the ground, aided by the fuel tanks he kept in the building. John knows he wasn't supposed to store any fuel in the building, so he keeps that piece of information himself when he files a claim. John's insurer may deny his claim based on his:
-concealment
In which section of a standard fire policy would you find information on rules of conduct and obligations the policyholder must follow in order for insurance coverage to apply?
-conditions
In which section of an insurance policy might you find the following statements. "Damage to insured property must be reported within 15 days of the damaging occurrence."
-conditions
Sam is a claimant seeking damages from XYZ insurance. The XYZ adjuster comes to meet with Sam to hear the circumstances of her injury. The adjuster determines that Sam played an active role in her own injuries, and therefore XYZ insurance will pay her nothing at all for her injuries. What defense is the adjuster using?
-contributory negligence
Which of the following does not fall under the classification of small grains?
-corn
In a farm insurance policy, which of the following would cover the main dwelling on the insured farm?
-coverage A
A dryer fire scorches the interior of bills home, forcing him to move out while repairs are made. In addition to paying for temporary housing, he also loses the rental income he received from his roommate Frank. Which 2 dwelling policy coverages could help deal with the lost rental income and his additional living expenses?
-coverage D & E
The severability of interest condition states that:
-coverage applies to each insured separately, as if no other insured existed
If an adjuster needs to find clarification about what actually constitutes a collision, in which section of an insurance policy which she find that information?
-definitions
In which section of an insurance policy you might you find the following statement? "We, us, and our' refers to ABC Insurance company."
-definitions
In a homeowners policy, coverage B- other structures provides insurance for which of the following?
-detached garages
Chandler is a photographer who is taking pictures at a reenactment of the battle of Gettysburg, when Harper (union Calvary) crashes through the brush and into Chandler, breaking both his arms and his camera. In court, Chandler demands payment not only for his medical bills and broken camera, but for future lost business; now that he's unable to take pictures for the next six months, his clients are moving on and entering into a contract with other photographers. When Chandler speaks of this total amount of all damages that have resulted and will result from Harper's mistake, he is referring to:
-diminution of value
Phil heads over to visit his friend Josh, who is sick with the flu. While at the house, Josh fails to cover his mouth when he coughs and Phil ends up contacting the flu. Phil files a claim with joshes insurer for medical expenses and lost income while Phil is out sick from work. The insurer denies the claim because:
-disease transmitted from the insured to a third-party is excluded
A large corporation owns a small hunting cabin in the woods, that it uses for occasional weekend getaways. The corporation can insure the cabin against property damage with a:
-dwelling policy
Which of the following best describes who adjusters can work for?
-either insurers or claimants
Risk avoidance is a risk management technique that:
-eliminates risk
What kind of adjuster is only allowed to work on claims relating to a disaster and maybe from another state?
-emergency adjuster
Which of the following statements about the principle of estoppel is TRUE?
-estoppel protects the insured party from an insured who initially approved coverage, but then later denies coverage after the insured pays for repairs
In the standard fire policy, intentional losses and extreme perils that cause catastrophic damage to a large number of policyholders would be considered examples of:
-exclusions
Which section of an insurance policy is designed to OMIT certain risks from coverage?
-exclusions
A captive insurance company:
-exists solely to provide insurance for its parent company
All of the following are typical exclusions in an insurance policy, EXCEPT:
-explosion
Which of the following is not an adjuster's duty in the claim process?
-filing a claim
Coverage C-Personal property of a homeowners policy typically excludes:
-fish
An insurer that adheres to the laws of a state but is located outside of that state is called a ( ) insurer.
-foreign
Ricky was watching a baseball game at XYZ Stadium, when the railing on which he was leaning gave way and he fell 2 stories. As a result of his fall, Ricky broke his back and is now paralyzed from the waist down. Ricky sues the owners of XYZ stadium and was awarded $150,000 to cover his medical bills and $2.5 million in ( ) because of the permanent nature of his injury.
-general damages
Hayley takes a bottle of water into a store, pours some of it on the floor when no one is looking, and then pretends to slip and fall. She cries out for help in apparent pain until someone comes to her aid. She then sues the store for her fake injury in an effort to collect an insurance settlement. What has Hayley committed?
-hard fraud
When a car stop short in front of Mike's car, he manages to hit the brakes in time and avoid a collision. So Mike surprise, the other driver then throws the car into reverse and backed into Mike's car! The other drivers actions are an example of:
-hard fraud
Bill's new home is in the final stages of construction, and he has purchased an H02 policy to insure his final interest in the property. This morning, bills contractor calls to tell him that an electrical fire has destroyed his new kitchen, and all of the crown molding that was supposed to be installed today has been stolen. It will be $15,000 to rebuild the kitchen and another $4200 to replace the trim. How will bills insurer respond when he files a claim?
-his insurer will pay $15,000 to rebuild the kitchen and nothing for the stolen trim
Which of the following statements is true of a claim dispute litigated in a state that follows the doctrine of contributory negligence?
-if the plaintiff is found to be at all negligent, she will receive no settlement
Jackie lives in an area recently devastated by hurricane and has filed a claim with her insurance company, ABC insurance. Jerry, an Adjuster contracted by ABC insurance, pulls up to Jackie's house in a truck with the ABC insurance logo on the side, and wearing a shirt with the ABC insurance logo on the front. Although Jackie doesn't know that Jerry is contracted by ABC insurance, she has reason to believe he has the authority to adjust her claim. This is an example of:
-implied authority
William is wearing an ABC insurance jacket and has an ABC insurance sign over his rented office. The walk-in customer could reasonably believe that he has the authority to write an insurance contract because of his:
-implied authority
Which of the following is not a form of insurance fraud?
-increasing her insurance coverage when he think a loss is likely
Which of the following refers to being restored to the financial condition you were in before a loss?
-indemnification
This agent is self-employed and able to offer insurance products from more than one company at a time.
-independent sales agent
As Jonathan was driving through an intersection, another driver ran a red light and crashed into the side of Jonathan's car, which caused significant physical damage to both vehicles. Jonathan must now rent a car while his is being repaired. The rental car expense would be considered a:
-indirect loss
When an adjuster has decided to deny a claim, it is necessary to:
-inform the claimant in writing, with a full explanation
Agnese purchased a home 10 years ago in an upcoming neighborhood for $75,000. The homes value has since tripled to $225,000! Agnese has $25,000 left on her mortgage, but has increased her dwelling coverage to $225,000 to keep up with the homes appreciation. When it burns to the ground and a fire, her mortgage company wants to be indemnified to $75,000 because the value of the home has tripled. Which policy condition protects against this claim?
-insurable interest
Stephanie is in the process of adjusting George's auto claim. Currently, she is interviewing Shanna, who witnessed George's accident and stopped to help. In what stage of the claim process is Stephanie currently working?
-investigation
A few weeks ago Christophers garage was destroyed by an out-of-control motorist. Fortunately, the motorist had sufficient liability insurance to cover the damages. However, the insurer insists that Christophers garage is worth far less than the appraisals he has received from contractors. Christopher and the insurer have gone back-and-forth and negotiations for weeks, making a little headway. Christopher decides it's time to:
-issue a complaint against the policyholder
Which of the following statements does not apply to the standard fire policy?
-it automatically covers wind and vandalism
Which of the following is not true about a scheduled payment release?
-it can't be used with Worker's Compensation claims
If a claimant has a history of similar claims, that could mean:
-it is important to investigate for fraud
Which of the following statements about the standard fire policy is true?
-it is no longer used in its original format
Which of the following statements about crop hail insurance is false?
-it is subsidized by the FCIC
How is the power to bind transferred to an adjuster?
-it is transferred through a written contract
Which of the following is NOT a requirement for a legally binding contract?
-it must be a notarized document
Which of the following statements is true about an insurance policy?
-it relies on the utmost good faith of both of the insured and the insurer
Which of the following is not true of the companies options provision in the standard fire policy?
-it requires the insurer to settle the claim, in whichever manner it chooses, within 30 days of receiving notice of the claim
Which of the following statements about the original standard fire policy is false?
-it was the first multi line policy, combining both physical damage and liability coverages
Which of the following is not true of the no release settlement?
-it's also called an advance payment settlement
As a staff adjuster, one of Abigail's most important responsibilities is report to the principal. This would include all of the following except:
-keeping the claimant up-to-date on the progress and status of the claim
Many adjusters prefer arbitration to litigation, because professional arbitrators tend to be more ( ) than civil juries.
-knowledgeable
Medical payments coverage in a farm policy includes all of the following except:
-libel or slander
Which of these is not typically excluded from coverage in a property insurance policy?
-lightning
Which of these perils is not excluded from coverage in a homeowners policy?
-lightning
Jim is an insurance adjuster working a theft claim. As part of his investigation, Jim might want to do all of the following except:
-look for ways to lower the settlement for the claimant
Which of the following situations does NOT involve an instance of "pure risk?"
-loss of money invested in the stock market
Which of the following would be covered under the peril of theft in a homeowners policy?
-losses caused by attempted theft
Which of the following statements about insurable interest is FALSE?
-maintaining property values allows your neighbor to have an insurable interest in your house
Mark is on vacation in Italy when his luggage is stolen, including a $2000 laptop, $500 suitcase, and $400 in clothes. Mark has an HO-3 policy. Excluding any applicable deductible, which of the following statements is true?
-marks homeowner policy will cover $2,400 of this loss
Cindy and her insurer cannot reach an agreement for her property claim, and have gone back-and-forth for weeks without coming within $10,000 of each other. At this point, since both believe they are offering a fair settlement, a third-party is needed to help the silicate the negotiation. Both parties still want to retain their ability to walk away if they cannot reach an agreement. What is the next step for Cindy and her insurer?
-mediation
Nicks home suffered major damages during the tornado. His contractor says it will cost $85,000 to complete repairs, but the adjusters estimate gives a total of $63,000. Nick and his insurer have tried to reach an agreement, but have failed to do so. Both parties are now wanting a third-party to facilitate the negotiations but only in an advisory role. Which of the following is the best option in this case?
-mediation
Clark is filling out an application for an insurance policy. The application asks for his birth date, and Clark writes 1-24-67. His actual birthday is 1-24-63, but he likes to appear younger so he uses a different date. This would be called:
-misrepresentation
Stu has a collection of rare comic books. He wants to purchase theft insurance for his collection, separate from his home and other property. What term most accurately describes the type of policy Steve would purchase?
-monoline policy
John owes a lot more on his car than it is worth. He figures he would be better off if he burned the car and collected an insurance settlement. He has someone set fire to his garage to destroy the car. John's behavior would be considered a:
-moral hazard
Lewis owns a computer store, and he spends many hours a day on the sales floor demonstrating his products to customers. He often gets very animated when showing the electronics and, although he does not intend for anything bad to happen, he doesn't worry too much about handling them carefully, since he knows that his insurance policy will cover any damages. This behavior would be called a:
-morale hazard
Lucy has insurance on an expensive necklace she likes to wear to work every day. After work, she takes off and leaves it in her car's cupholder so she can put it back on in the morning on her way to work. Lucy's behavior would be considered a:
-morale hazard
Cindy holds an insurance policy from Sine Nomine Insurance. This is not a publicly traded company, and Cindy can participate in the election of the board, receiving dividends if the company does well. Sine Nomine Insurance could be best described as a:
-mutual insurance company
Jim is out turkey hunting on a private ranch when he hears some movement in the brush. Assuming it's a turkey, Jim raises a shotgun and fires. Unfortunately for Jim, he has not taken a turkey, but he has severely injured one of the landowners cows instead. Jim is responsible for the cost of the calf because he acted with:
-negligence
If an insurer is unwilling to pay what the claimant is asking, the adjuster must:
-negotiate a settlement
A tree falls onto Melissa's house, damaging the roof and front porch in the amount of $11,276. An adjuster for ABC insurance finds that the peril is covered under her policy and investigate the damages. Upon investigation, the adjuster comes up with a total for damages of $9,186. Of the following options, which course of action best describes how the adjuster will move forward with the claim?
-negotiate a settlement with the claimant
Which of the following steps would occur last in the processing of the claim?
-negotiate a settlement with the claimant
Gills restaurant is doing more business than ever, so Gail decides to add more dining space. Three weeks into the project, a hurricane blows through town, reducing the new construction to rubble. Gail maintains commercial property insurance coverage valued at 70% of her properties replacement cost, although her policy says she must maintain at least 80% to be fully insured. Which coverage on her policy could pay to rebuild her restaurant at replacement cost?
-none
Insurance policies are unilateral contracts. This means:
-only one party has an obligation to perform
Having a positive attitude can help an adjuster during negotiations. Which of the following aspects of an adjuster's attitude can hinder negotiations?
-overconfident or arrogant
Indemnification may include all of the following except:
-payment for pain and suffering
Once the claimant files a complaint to the court, the claimant will become the:
-plaintiff
Jim has two policies that cover the same risk, but they respond differently: policy X is primary and policy Z is excess. Policy X has a limit of $50,000 in policies he has a limit of $25,000. When Jim suffers and insured lost totaling $62,000, how much will each policy respond?
-policy X will pay $50,000 and policy Z will pay $12,000
Tina has two policies that cover the same risk on a pro rata basis policy X has a limit of $100,000 in policy Y has a limit of $25,000. When Tina suffers a loss totaling $75,000, how will the two policies respond?
-policy X will pay $60,000 and policy Y will pay $15,000
Which one of the adjusters reports usually includes the initial claim reserve amount?
-preliminary report
The fee paid by the insured in exchange for an insurance policy is called a:
-premium
Which of the following factors holds the least relevance when an adjusters evaluating an insurance claim?
-premium
Alex owns a manufacturing business creating toys for young children. Some of the toys have small parts which, if used inappropriately, could cause harm to small children. He has a warning label printed on his packaging, cautioning parents of the potential risks, but needs insurance to handle any potential claims against his product. Which type of insurance would best cover Alex's insurance needs?
-product liability insurance
After an earthquake, Jake's home is still standing, but it is a little shaken. The damage is not extensive, but Jake wants to cash in on the situation, so he takes a sledgehammer to some of the extra belongings and adds them to his claim. Adam has committed:
-property insurance fraud
Dwelling policies cover:
-property, and liability with an endorsement
As an adjuster for KLM insurance, Crystal has the most important role of fiduciary agent. While acting in this capacity, Crystal's primary responsibility is to:
-protect the financial and property interest of KLM insurance
An insurance adjuster will do all of the following regarding a claim EXCEPT:
-protect the insurer from the claim
One December morning, Alex arrives at his business to find freshly fallen snow on his property. Before he has a chance to shovel the snow, a customer slips and falls on the sidewalk, breaking her hip. What type of insurance might help pay for her injury?
-public liability insurance
When an insurer buys insurance to reduce its exposure to loss, this is called:
-reinsurance
When taking recorded witness statements, the adjuster should:
-remain objective
The factual statements of the insured upon which an insurance policy is based are called:
-representations
When an insurer issues an insurance policy, the actual item, person, or organization that is being insured is called the:
-risk
Six stars development company has just been offered a great deal on 10 large properties in Las Vegas. The economy in Las Vegas has been declining recently, but the CEO of six stars expects it to recover soon. This could be an exceptional opportunity for six stars, but it's also pretty risky. Ultimately, the six stars executive team decides not to purchase the property. This is an example of:
-risk avoidance
Which of the following is NOT a risk management technique?
-risk equality
Amy needs more floor space and her antique furniture store, so she buys a storage building 3 miles away. She is worried about keeping the furniture in the storage building safe, so she puts in an alarm system and smoke detectors. By purchasing the alarm system and smoke detectors, Amy is practicing:
-risk reduction
Jared hopes to purchase a new insurance policy for his car, but he has an extremely poor driving record. The insurance company decides to issue Jared an insurance policy, but charges him a premium much higher than the average driver. The insurance company is practicing:
-risk reduction
Six stars development company has just purchased several large properties in Las Vegas. As a result of this large purchase, they are a little short on money and decide to save money by not purchasing insurance on their new properties. Six stars is practicing:
-risk retention
Six stars development company has just been offered a great deal on a bulk purchase of dishwashers from a new company called clean machines. They've never purchased appliances from clean machines, so they're hesitant to make such a large purchase. Finally, clean machines offers to provide a 10 year warranty's for each of the dishwashers. This is an example of:
-risk transference
A staff adjuster is a:
-salaried employee working for only one insurer
Monica's husband, Sam, likes to buy her expensive jewelry, and she has amassed quite the collection over the years. What endorsement with Monica and Sam need to add to their homeowners policy to fully cover Monica's jewelry collection?
-scheduled personal property
Which of the following is not the responsibility of the claimant?
-seek the assistance of an adjuster
Which of the following is NOT a characteristic of social insurance programs?
-social insurance programs are for-profit programs
When Emmas house was burglarized, the thieves stole several pieces from her art collection. Although the pieces were only prints, Emma files a claim stating that they were originals, and therefore was a good deal more than they really are. What has Emma committed?
-soft fraud
When Jane rear ends Frank, she causes minor damage to Frank's car, but Frank is not hurt. However, when Jane's insurer asked him about the accident, Frank claims that his back and neck hurt because of the collision, even though he's actually fine. Frank is guilty of:
-soft fraud
A "hazard" is defined as:
-something that increases the chance of a loss
Tim is the plaintiff in a case involving an auto accident. To recover monies he feels are due him, Tim produces documents to prove he had to pay over $55,000 in medical bills. If the court were to award $55,000, the damages would be classified as:
-special damages
( ) is a law set forth by a governing body such as a state or city.
-statutory law
Frank purchases an automobile policy from publicly traded XYZ insurance. He pays regular monthly premiums, and also purchases stock in XYZ and receives dividends when the company turns a profit. From which type of company has Frank purchased insurance?
-stock insurer
Which settlement option is usually reserved for the largest claims?
-structured settlement
Barbara has been negotiating a property claim with the claimant for a few hours now. She has displayed her assessments, gone over the policy, and offered a fair settlement amount in the policy limits. However, the claimant has dismissed it completely without any counter offer. The most appropriate next step is for Barbara to:
-submit her back up offer
While driving, Ben was struck by another driver, Roxanne. Ben then filed a claim with Roxannes insurer. In essence, what was Ben doing when he filed this claim?
-submitting a formal request to settle the damages with Roxanne's insurer
Sally throws a cigarette butt into Neil's dumpster, starting a fire on Neil's property that cost him $10,000. Neil files a claim with his insurance. The insurance pays Neil and then demands $10,000 from Sally to pay for the loss she caused. What gives the insurer the right to collect payment from Sally?
-subrogation
What is a binder?
-temporary coverage for an insurance applicant until the policy is issued
Who must sign a non-waiver agreement?
-the claimant
Which of the following would you find in the conditions section of an insurance policy?
-the insured's duty after a loss
Jared recently purchased a 25 foot watercraft with a 250 horse power motor. While cruising on the lake, he accidentally runs into Gary's boat, causing $2500 in damage to Gary's hole. How much will Jared's insurer respond when Gary files a claim against Jared's homeowners policy for the damage she caused?
-the insurer will deny the claim because Jared's boat is excluded from his liability coverage
In an insurance policy, the summary of what the insurer will do in the invent of a covered loss is called:
-the insuring agreement
Which of the following is found in the declarations page of an insurance policy?
-the name of the insured party
A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system. The water from the sprinklers soak the carpets and short out all the computers, causing thousands of dollars in damage. What is the proximate cause of the loss?
-the power surge
Greg plays trombone in his school band during football games. During a rally song in the stands one day Greg annoys one of the opposing teams fans who grabs his $400 trombone and Hurles it's on the bleachers completely destroying at. Greg's insurance pays them $400 to replace the trombone but then the opposing teams coach also offers to replace the instrument at whatever the cost. So Greg orders a new $3200 trombone and has the opposing teams athletic department absorb the cost. Which principle has Greg violated?
-the principle of indemnity
Mark incurred $8000 damage to his car in an accident. He received $8000 from his insurance company and $4000 from the other driver. By receiving a profit from the loss Mark could be in violation of:
-the principle of indemnity
Steve just has just purchased a wedding ring for his new bride. If something were to happen to the ring, he'd be out of a lot of money, so he purchases an insurance policy. He is able to do this because:
-the ring is a pure risk
Adam has a treacherous drive to work every day. Not only does he have to drive down the pothole-strewn access road to the highway, but he also must traverse several icy Bridges on the way to work. Why does the insurance company call these hazards "physical hazards?"
-the roads present a physical condition that increases the chance of a loss
Adjusters are required to give claimants:
-their business address and phone number
The purpose of the principle of indemnity is:
-to prevent an insured from making a profit on a loss
Which of the following statements applies to replacement cost valuation?
-under replacement cost valuation, insurers may safeguard the principle of indemnity by requiring policyholders to replace insured items before making full reparations
In a ( ), only one party is legally obligated to perform
-unilateral contract
Which of the following is NOT a characteristic of insurance contracts?
-universal
In a dwelling policy, how much will the fire department service charge coverage pay?
-up to $500 if the fire department charges for responding to a covered peril
Which of the following is not useful in moving the negotiation process forward toward a successful resolution?
-using sarcasm in response to the claimants anger
An insurance contract is an agreement between two parties where each side promises to be truthful, factual, and honest about their respective positions. Therefore, an insurance contract is said to be a contract of:
-utmost good faith
While out playing one day, Bill's son throws rocks at a neighbors home and breaks several windows. Bill is responsible for the damages because of:
-vicarious Liability
In order to qualify for an insurance policy, Lydia's Fine Jewels must agree to have a security guard on the premises 24/7. This is called A:
-warranty
Farmer Steve barely escapes a massive tornado, but the storm does completely destroy one of the barns on this property. Luckily, Steve has an insurance policy on his barn with the replacement cost endorsement, in the barn was fully insured. At the time of the laws, the actual cash value of the barn was $65,000, and it's replacement cost is currently $85,000. When will Steve receive full indemnification for his losses on the barn?
-when he replaces the barn and submits receipts to the insurer
Janes shed burns to the ground during a tornado, when the high winds break a wall of the shed, knocking over a lantern inside. What is the proximate cause of the loss?
-wind
Susan is insured with the homeowners policy. After someone destroyed her late husband's grave stone with a vehicle, Susan filed a claim against her homeowners policy. Which of the following statements is true?
-with grave marker coverage, Susan can receive a maximum of $5000 to pay for the damaged gravestone
Sally has an H03 policy on her $150,000 home in the country. One day, a bear breaks down Sally's back door to get into her kitchen for a snack. When Sally comes home to find the damage, she files a claim with her insurance company. Will the damage to Sally's home be covered, and why or why not?
-yes. The H03 is an open peril policy, without an exclusion for wildlife
Anton is purchasing homeowners insurance for his new house. He wants to make sure his policy offers the best coverage available. Which policy should Anton choose?
HO-5
Which of the following homeowners policies provide coverage on an open peril basis for personal property without endorsement?
HO-5
Strict liability:
Holds a person liable for his actions regardless of how much care he demonstrates
Tamara is fully insured by DP1 on her $175,000 home. When a portion of Tamara's attached garage burns in a small fire, the adjuster estimates it will take $8000 to repair the damage. However, based on the age of the structure, the adjuster writes Tamara a check for $5500. Once repairs are complete, Tamara submits the proof and receives how much more from her insurer?
$0
Christine spinach field was partially destroyed by fire that resulted from a lightning strike during a recent storm. She lost 23 of her 150 acres. The adjuster writes her a check for the value of the damage to 23 acres, even though the yield from the rest of the field is doing exceptionally well and may make up for the damaged portion. What type of insurance policy does Christine have?
crop-hail
Due to increased demand, the market prices of beets dropped dramatically during the recent growing season. Consequently, Michelle's crop of beets did not make as much money as she was expecting this year, based on her production history and the harvest time futures prices. However, Michelle is insured for this type of situation. What kind of insurance does she have?
crop-revenue