Chapter quiz: insurance terms and related concepts

*A policy that ensures all property at multiple locations for a single amount is referred to as... A. Specific B. Blanket C. Reporting D. Special

B

Adventure conditions and increase the chances of an insured loss occurring are referred to as... A. Hazards B. Exposures C. Risks D. Perils

A

Negligence may be defined as A. The failure to use reasonable and prudent care B. A situation that creates a probability of loss C. Latent latent defect or fault in property D. The inability to meet the burden of proof

A. The failure to use reasonable and prudent care

And 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 would the policy pay? A. $0 B. $30,000 C. $32,000 D. $40,000

B — this insured only Carrie 75% of the amount of insurance he had agreed to carry ($120,000 of the agreed $160,000), so the insurable pay only 75% of the loss, or $30,000. If the insured had carried the required amount of insurance, partial losses would be paid in full. In the event of a total loss, the face of the policy would be paid. If the full amount is not carried, divide the actual amount carried by the amount that should be carried (the coinsurance amount), and multiply it by the loss

The risk of loss may be classified as... A. High risk and low risk B. Pure risk and speculative risk C. Certain risk and uncertain risk D. Named risk an unnamed risk

B. Pure risk and speculative risk

Negligence is defined as... A. The failure to do what a reasonable prudent person would do on her given circumstances B. An unbroken chain of events that results in bodily injury or property damage to another person C. Conduct that is so hazardous that the individual engaging in it will be held fully responsible for any resulting injury or damage D. The intentional act that results in bodily injury or property damage to another person

A

Property insurance and provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called... A. Described coverage B. Specified coverage C. Schedule coverage D. Blanket coverage

B. Specified coverage

*An insured relocated to another state for work. However, she is still owns and ensures a house in this state, but has had no one living in it for three months. She is also storing some furniture and clothes in the house. From an insurance standpoint, the insured's house is considered... A. Condemned B. Under repair C. Vacant D. Unoccupied

D

A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use white loss valuation method? A. Actual cash value B. Replacement cost C. Reproduction cost D. Stated amount

D

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... A. Smaller B. Older C. More active D. Larger

D

Loss is caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected is the definition of which of the following terms?

D

*Which method of loss valuation is contrary to the basic concept of indemnity? A. Market value B. Agreed value C. Replacement cost D. Functional replacement cost

D — because following a loss replacement costs may provide the insured with a settlement in excess of the property's actual cash value

For the purpose of insurance, risk is defined as... A. An event that increases the amount of loss B. The uncertainty or chance of loss C. The certainty of loss D. The cause of loss

B

Insurable interest in a property policy must be proven... A. At the time of loss B. Wanna policy owner is changed C. When claim is paid D. At the time of application

A

Which of these is defined as the maximum limit of coverage available under a liability product during a policy year, regardless of the number of claims that may be made or the number of accidents that may occur? A. Aggregate limit of liability B. Combined single limit of liability C. Per occurrence limit of liability D.Split limit of liability

A