Chapter 2 Quiz
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?
Additional coverage
A person who is not named as an insured on the declarations page of a policy but is protected by the policy is known as the...
Additional insured
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 in known as...
Appraisal
A policy condition that stipulates how the amount of damaged or lost property will bee determined if the insured and the principal do not agree on the value of a property loss is known as...
Appraisal
Who is responsible for filling out a notice of claim form?
Insured
Duties of the insurer found in property policy conditions include all of the following EXCEPT...
Notify the insured in the event of financial difficulty
The other insurance provision the 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
A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called...
Proof of loss
Before an insurer will pay any loss under a policy, what is usually required from the insured?
Proof of loss
The Gramm-Leach-Bliley Act was passed to...te
Protect private customer information filed with a financial institution
All of the following are considered parts of the policy structure EXCEPT...
Provisions
The Federal Fair Credit Reporting Act...
Regulates consumer reports
What is 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
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriting approves coverage
Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss?
Appraisal clause
In return for premium, an insurance company must...
Be fair in underwriting and pay covered losses
An applicant is purchasing a homeowners policy. A producer come to her home, fills out the paperwork, and tells the applicant that her home will be covered as soon as she signs all of the paperwork, and that she will receive a new policy in the mail in 5 business days. Even though the policy is not issued, the applicants home is temporarily covered until then. Which of the following makes that possible?
Binder
Termination of an in-force insurance policy prior to the expiration dates shown in the policy is known as...
Cancellation
The ABC Corporation has $100,000 of coverage on its building through insurance Company A, and 50,000 of identical coverage on the same building through insurance Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs and the pro rata method is used, how much will each insurer pay?
Company A will pay $16,000; Company B will pay $8,000.
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
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
Consideration
Representations are written or oral statements made by the applicants that are...
Considered true to the best of the applicant's knowledge
Which of the following is NOT an essential element of an insurance contract?
Counteroffer
The part of the policy that clarifies terms in the policy is the...
Definitions
Which of the following would modify the original insurance contract by either adding or removing coverage?tio
Endorsements
All of the following are found in the declarations section of a policy EXCEPT 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
When would a misrepresentation on the insurance application be considered fraud?
If it is intentional and material
The pro rata liability clause is designed to protect the principle of...
Indemnity
Persons covered under an insurance policy, whether named or not, are known as the...
Insured
All of the following are conditions commonly found in the insurance policy EXCEPT...
Insuring agreement
For a contract to be enforceable by law, the purpose of the contract must be...
Legal and against public policy
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?
The Fair Credit Reporting Act
Which of the following would qualify as a competent party in an insurance contract?
The applicant has a prior felony conviction
Which of the following would NOT be considered a source of insurability information by an insurer?
The applicants marital status
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
In terms of parties to a contract, which of the following does NOT describe a competent party?
The person must have a least completed secondary education
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
consideration
